6. ASSET RETIREMENT OBLIGATIONS

Reclamation. The Company’s asset retirement obligations arise from the Federal Surface Mining Control and Reclamation Act of 1977 and similar state statutes, which require that mine property be restored in accordance with specified standards and an approved reclamation plan. Significant reclamation activities include reclaiming refuse and slurry ponds, reclaiming the pit and support acreage at surface mines, sealing portals at deep mines, and the treatment of water. The Company determines the future cash flows necessary to satisfy its reclamation obligations on a permit-by-permit basis based upon current permit requirements and various estimates and assumptions, including estimates of disturbed acreage, cost estimates, and assumptions regarding productivity. The Company is also faced with increasingly stringent environmental regulations, many of which are beyond its control, which could increase its costs and materially increase its asset retirement obligations. Estimates of disturbed acreage are determined based on approved mining plans and related engineering data. Cost estimates are based upon third-party costs. Productivity assumptions are based on historical experience with the equipment that is expected to be utilized in the reclamation activities. The Company’s asset retirement obligations are initially recorded at fair value. In order to determine fair value, it uses assumptions including a discount rate and third-party margin. Each is discussed further below:

Discount Rate. The Company’s asset retirement obligations are initially recorded at fair value. The Company utilizes discounted cash flow techniques to estimate the fair value of its obligations. The Company bases its discount rate on the rates of treasury bonds with maturities similar to expected mine lives and adjust for its credit standing as necessary after considering funding and assurance provisions. Changes in the Company’s credit standing could have a material impact on the valuation of its asset retirement obligations. The discount rate used to calculate the Fola Mine and Premier Cambrian Mine asset retirement obligations are 7.18% and 7.75%, respectively. The annual inflation rate used to calculate the Fola Mine and Premier Cambrian Mine asset retirement obligations are 2.72% and 2.77%, respectively.

Third-Party Margin. The measurement of an obligation at fair value is based upon the amount a third party would demand to perform the obligation. Because the Company plans to perform a significant amount of the reclamation activities with internal resources, a third-party margin was added to the estimated costs of these activities. This margin was estimated based upon the Company’s historical experience with contractors performing similar types of reclamation activities. The inclusion of this margin will result in a recorded obligation that is greater than its estimates of its cost to perform the reclamation activities. If the Company’s cost estimates are accurate, the excess of the recorded obligation over the cost incurred to perform the work will be recorded as a reduction to amortization within its Consolidated Statements of Operations at the time that reclamation work is completed.

On at least an annual basis, the Company reviews its reclamation liabilities and make necessary adjustments for permit changes, if any, as granted by state authorities, additional costs resulting from accelerated mine closures, and revisions to cost estimates and productivity assumptions to reflect current experience and updated plans. At December 31, 2025, the Company recorded asset retirement obligation liabilities of $79,344,297, including amounts reported as current. While the precise amount of these future costs cannot be determined with certainty, as of December 31, 2025, the Company estimates that the aggregate undiscounted cost of final mine closures is approximately $129,445,432. The Company estimates annual aggregated amortization expense related to the long-term intangible assets of $3,170,377 for each of the next five years. Refer to Notes 4 and 5 to the Consolidated Financial Statements included elsewhere in this Annual Report on Form 10-K for reclamation disclosures including a table summarizing the changes in asset retirement obligations for the year ended December 31, 2025.

Minimum standards for mine reclamation have been established by various regulatory agencies and dictate the reclamation requirements at the Company’s operations. The Company’s asset retirement obligations consist principally of costs to reclaim acreage disturbed at surface operations and estimated costs to reclaim support acreage, treat mine water discharge, and perform other related functions at underground mines. The Company records these reclamation obligations at fair value in the period in which the legal obligation associated with the retirement of the long-lived asset is incurred. Changes to the asset retirement obligation resulting from permitted sites being added or deleted or changes in future cash flow estimates are made in the period in which the change occurs and are offset by increasing or decreasing the carrying value of the related long-lived asset by an equal amount.  Changes to the asset retirement obligation are also recognized as accretive expense in future periods.  Changes to long-lived assets are also recognized as amortization expense in future periods. On at least an annual basis, the Company reviews its estimated future cash flows for its asset retirement obligations. The Company’s asset retirement obligations are based on management’s best estimate and may change from period to period as estimated future cash flows change.

 SCHEDULE OF ASSET RETIREMENT OBLIGATION