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IMPAIRMENT OF COAL PROPERTIES | 12 Months Ended
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Dec. 31, 2024
IMPAIRMENT OF COAL PROPERTIES |
IMPAIRMENT OF COAL PROPERTIES | (19) IMPAIRMENT OF COAL PROPERTIES Annually, the Company reviews its business plans for the next several years, with specific emphasis on the upcoming year. This business plan review involves updates to its mining plans that take into account many factors, such as changes in market price trends, cost trends, expected demand trends, its latest engineering studies and current year operational and financial results. During the fourth quarter of 2024, the Company began its annual business plan review. The Company evaluated core hole samples at several of its mines, reviewing the quality of the mine seam and density of the coal. Based upon market price trends, the Company believes the required course of action is to only produce those reserves that will allow it the lowest possible cost, and therefore capture the highest possible margins. The core hole samples at the Oaktown 2 mine were of a lower quality and density than that of the Oaktown 1 mine. As such, at the conclusion of the Company’s annual business plan review during the fourth quarter of 2024, it decided to temporarily seal the Oaktown 2 mine, and to focus coal production at the Oaktown 1 mine, which has lower recovery costs. As a result of the Company’s decision to temporarily seal the Oaktown 2 mine, the Company determined a triggering event had occurred. The Company then completed an impairment review to determine if the carrying value of its coal properties were impaired. The Company compared the net book value of its coal properties to estimated undiscounted future net cash flows. The result of this undiscounted cash flow test indicated the carrying amount of its coal properties may not be recoverable. As a result, the Company prepared a discounted cash flow model (Level 3 fair value measurement under the fair value hierarchy) to estimate fair value. Significant inputs used to determine fair value include estimates of future cash flows from coal sales and minimum payments, an appropriate discount rate and the useful economic life. The estimated cash flows are the product of a process that began with current realized pricing as of the measurement date and included an adjustment for risk related to the realization of such future cash flows. The discounted cash flow model used assumptions regarding the projected economics of the Coal Operations assets, given prevailing commodity prices and operating expense levels, which are classified as Level 3 inputs. Coal Operations assets include all of our coal mining properties as these properties are all within the same asset group given the near proximity to one another and their sharing of personnel and assets used to fulfill customer contracts. The Company utilized an estimated market participant discount rate of 11.5% and assumed production that is consistent with our current mining plans and reserve estimates that equate to approximately 3.6 million tons per year until all reserves are produced as part of the analysis. The result of the discounted cash flow analysis confirmed that fourth quarter of 2024 changes to the mining plans caused the carrying amount of its coal properties to not be recoverable. As a result, the Company recorded an impairment expense during the fourth quarter of 2024 of $215.1 million. The Company did not record an impairment during the year ended December 31, 2023.

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- Definition The entire disclosure for the details of the charge against earnings resulting from the aggregate write down of all assets from their carrying value to their fair value. Disclosure may also include a description of the impaired asset and facts and circumstances leading to the impairment, amount of the impairment loss and where the loss is located in the income statement, method(s) for determining fair value, and the segment in which the impaired asset is reported. + References No definition available. + Details
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