Note 8 - Leases

12 Months Ended

Dec. 31, 2021

Notes To Financial Statements

LEASES

NOTE 8—LEASES

The Company has various financing leases for mining equipment which originated in the second and third quarters of 2021. These leases are generally for terms up to 36 months and expire through 2024. We have one operating lease for office space that will expire mid-2022. Operating lease expense was $0.1 million per year in 2021, 2020 and 2019.

Right-of-use assets and lease liabilities are determined as the present value of the lease payments, discounted using either the implicit interest rate in the lease or our estimated incremental borrowing rate based on similar terms, payments and the economic environment where the leased asset is located. Below is a summary of our leases:

(In thousands)	Classification	December 31, 2021		December 31, 2020
Right-of-use assets
Financing	Financing lease right-of-use assets, net	$	9,128	$	—
Operating	Other assets		25		110
Total right-of-use assets		$	9,153	$	110
Current lease liabilities
Financing	Current portion of financing lease obligations	$	3,461	$	—
Operating	Other current liabilities		25		79
Non-current lease liabilities
Financing	Long-term portion of financing lease obligations	$	4,599	$	—
Operating	Other long-term liabilities		—		31
Total lease liabilities		$	8,085	$	110

Minimum lease payments for our lease obligations are as follows:

	December 31, 2021
(In thousands)	Financing		Operating		Total
Future minimum lease payments:
2022	$	3,716	$	33	$	3,749
2023		3,452		—		3,452
2024		1,204		—		1,204
Total undiscounted lease payments		8,372		33		8,405
Less: Amounts representing interest		(312)		(8)		(320)
Present value of lease obligations	$	8,060	$	25	$	8,085
Weighted average remaining term (years)		2.4		0.3
Weighted average discount rate		4.1%		8.5%

As of December 31, 2021, we had financing lease obligations of $8.1 million and $0.02 million of operating leases. Of this amount, $3.5 million was included in current liabilities within the consolidated balance sheets. As of December 31, 2020, we had no financing lease obligations and $0.1 million of operating leases.

Coal Leases and Associated Royalty Commitments—Leases of mineral reserves and related land leases are exempted under U.S. GAAP from recognition within the financial statements. We lease coal reserves under agreements that require royalties to be paid as the coal is mined and sold. Many of these agreements require minimum annual royalties to be paid regardless of the amount of coal mined and sold. Total royalty expense was $18.5 million, $11.8 million and $15.6 million for the years ended December 31, 2021, 2020 and 2019, respectively. These agreements generally have terms running through exhaustion of all the mineable and merchantable coal covered by the respective lease. Royalties or throughput payments are based on a percentage of the gross selling price received for the coal we mine. Payments of minimum coal royalties and throughput payments for leases with Ramaco Coal, LLC commenced in

2017 pursuant to the terms of the agreements. Please see Note 12 to the Notes to Consolidated Financial Statements for further discussion related parties.

Future minimum coal lease and royalty payments for each of the next five years and thereafter are as follows:

(In thousands)
Years ending December 31:
2022	$	5,965
2023		5,975
2024		5,975
2025		5,975
2026		2,810
Thereafter		11,588
Total minimum payments	$	38,288