Note 4 - Fair Values of Financial Instruments

9 Months Ended

Sep. 30, 2017

Fair Value of Financial Instruments

The carrying amounts and fair values of the Company

’s financial assets and liabilities were as follows:

	September 30, 2017						December 31, 2016
	Carrying Amount			Fair Value			Carrying Amount			Fair Value

Financial Assets:
Cash and cash equivalents	$	9,263,356		$	9,263,356		$	5,196,914		$	5,196,914
Accounts receivable		2,616,727			2,616,727			914,741			914,741
Short-term investments:
U. S. agency securities		19,859,952			19,844,499			45,289,747			45,245,318
Certificates of deposit		-			-			9,948,000			9,948,000
Total short-term investments		19,859,952			19,844,499			55,237,747			55,193,318
Long-term investments
U. S. agency securities		-			-			5,199,077			5,190,640
Financial liabilities:
Accounts payable		(14,484,726	)		(14,484,726	)		(8,955,884	)		(8,955,884	)
Note payable		-			-			(500,000	)		(500,000	)
Note payable - Ramaco Coal, LLC		-			-			(10,629,275	)		(10,629,275	)

The Company invests in highly-rated securities with the primary objective of minimizing the potential risk of principal loss. Fair values were determined for each individual security based on observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the securities. At

September 30, 2017,

four

securities had total unrealized losses of approximately

$15,453.

The Company considers the declines in market value of its marketable securities investment portfolio to be temporary in nature. When evaluating an investment for other-than-temporary impairment, the Company reviews factors such as the length of time and extent to which fair value has been below its cost basis, the financial condition of the issuer and any changes thereto, changes in market interest rates and the Company’s intent to sell, or whether it is more likely than

not

it will be required to sell the investment before recovery of the investment’s cost basis.

The Company uses a market approach to determine the fair value of its fixed-rate debt using observable market data, which results in a Level

fair-value measurement.

The Company

’s nonrecurring fair value measurements include asset retirement obligations, the estimated fair value of which is calculated as the present value of estimated cash flows related to its reclamation liabilities using Level

inputs. The significant inputs used to calculate such liabilities include estimates of costs to be incurred, the Company’s credit adjusted discount rate, inflation rates and estimated date of reclamation.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details