Form 10-K/A - Annual report [Section 13 and 15(d), not S-K Item 405]: [Amend]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 10-K/A

(Amendment No. 1)

x	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2022 OR

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-3473

“COAL KEEPS YOUR LIGHTS ON”		“COAL KEEPS YOUR LIGHTS ON”

HALLADOR ENERGY COMPANY (www.halladorenergy.com)

Colorado		84-1014610
(State of incorporation)		(IRS Employer Identification No.)

1183 East Canvasback Drive, Terre Haute, Indiana		47802
(Address of principal executive offices)		(Zip Code)

Issuer’s telephone number: 812.299.2800

Securities registered pursuant to Section 12(b) of the Act:

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.01 par value per share		HNRG		Nasdaq Capital Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15 (d) of the Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of "Large accelerated filer," "accelerated filer", "smaller reporting company," and “emerging growth company” in Rule 12b-2 of the Exchange Act.

¨ Large accelerated filer	x Accelerated filer
¨ Non-accelerated filer	x Smaller reporting company
	¨ Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ¨

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ¨

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

The aggregate market value of the common stock held by non-affiliates (public float) on June 30, 2022 was $116,685,277, based on the closing price reported that date by the NASDAQ of $5.41 per share.

As of March 16, 2023, we had 32,982,605 shares outstanding. Our Annual Meeting of Shareholders will be held on June 1, 2023, in Terre Haute, IN.

Auditor Name	Auditor Location	Auditor Firm Id
GRANT THORNTON LLP	Tulsa, Oklahoma	248

EXPLANATORY NOTE

Hallador Energy Company (the “Company”) is filing this Form 10-K/A (Amendment No. 1) (the “Form 10-K/A”) to its Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as originally filed with the United States Securities and Exchange Commission (the “SEC”) on March 16, 2023 (the “Original Report”), to amend the disclosure contained in Items 7 and 15 of the Original Report pursuant to correspondence with the staff (the “Staff”) of the SEC in connection with the Staff’s review of the Original Report, including the Staff’s review of property disclosure requirements for registrants engaged in mining operations. The following items were impacted by these amended disclosures:

•

Item 7 of the Original Report has been amended to (i) add a summary paragraph of all Mining Properties with appropriate references to the Technical Report Summary (as defined below), with the accompanying map of all Mining Properties; (ii) include additional disclosures of the Company’s mineral reserve estimates by incorporating by reference certain sections of the Technical Report Summary; (iii) revise certain of the disclosures of mineralization under “Other Properties” (specifically, to remove the 1.0 million controlled saleable tons for the Ace in the Hole Mine #2, the 0.3 million tons of low sulfur coal at Prosperity, and the 1.7 million tons of saleable coal with an additional 0.6 million available at Freelandville); and (iv) add disclosure of the Company’s internal controls used in reserve estimates.

•

Item 15 of the Original Report has been amended to contain: (i) currently dated certifications from the Company’s Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), as required by Securities Exchange Act Rule 13a-14(a) and 13a-14(b), attached as Exhibits 31.1, 31.2 and 32.1 to this Form 10-K/A; (ii) an updated Technical Report Summary from John T. Boyd Company dated October 2023 in accordance with Subpart 1300 of Regulation S-K (Coal Resources and Coal Reserves, Oaktown Mining Complex, Indiana and Illinois) attached as Exhibit 99.1 to this Form 10-K/A (the “Technical Report Summary”), together with a consent of the qualified person author (John T. Boyd Company) to such Technical Report Summary attached as Exhibit 23.3; and (iii) a letter, dated February 10, 2023, from John T. Boyd Company providing an update of estimated coal reserves at the Oaktown Mining Complex as of December 31, 2022, attached as Exhibit 99.2 to this Form 10-K/A.

This Form 10-K/A sets forth only those Items of the Company’s Annual Report that have been amended since the filing of the Original Report, as set forth above. Other than these amendments, none of the disclosure contained in any other Item of the Original Report has been amended, updated or otherwise revised. For the avoidance of doubt, the Company’s audited consolidated financial statements and accompanying notes for the fiscal year ended December 31, 2022 as included in the Original Report have not been restated or amended in any manner. Furthermore, none of the Items, including the amendments to Items 7 and 15 as noted above, have been amended, updated or otherwise revised to reflect material subsequent events occurring after the filing date of the Original Report on March 16, 2023. Such subsequent matters are or will be addressed in subsequent reports filed by the Company with the SEC.

TABLE OF CONTENTS

Page

PART II

Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4

PART IV

Item 15.	Exhibits and Financial Statement Schedules	19

PART II

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Our consolidated financial statements should be read in conjunction with this discussion. The following analysis includes a discussion of metrics on a per ton basis derived from the condensed consolidated financial statements, which are considered non-GAAP measurements. These metrics are significant factors in assessing our operating results and profitability.

OVERVIEW

Hallador Energy Company (the "Company" or "Hallador") is an energy company operating in the state of Indiana. Historically, the largest portion of our business has been devoted to coal mining in the State of Indiana through Sunrise Coal, LLC (a wholly-owned subsidiary) serving the electric power generation industry.

On October 21, 2022, the Company, through its subsidiary Hallador Power Company, LLC, completed its acquisition of the one Gigawatt ("GW") Merom Generating Station ("Merom") located in Sullivan County, Indiana pursuant to an Asset Purchase Agreement (the "Purchase Agreement") with Hoosier Energy (the "Seller").

As a result of the Merom acquisition, commencing with this Form 10-K, the Company has two reportable segments: coal operations (operated by Sunrise Coal, LLC) and electric operations (operated by Hallador Power Company, LLC).

In addition to our reportable segments, the remainder of our operations are presented as "Corporate and Other" and primarily are comprised of unallocated corporate costs in addition to activities such as a 50% interest in Sunrise Energy, LLC, a private gas exploration company with operations in Indiana, accounted for using the equity method, and our wholly-owned subsidiary Summit Terminal LLC, a logistics transport facility located on the Ohio River.

Fiscal year 2022 was a transitional year for Hallador. The market price for coal approached all-time highs. We were successful in signing 2.2 million tons of new coal sales contracts at an average price of ~$125 per ton in the summer of 2022, of which a small percentage of deliveries were completed in 2022 and will continue through 2025 with the majority contracted to be delivered in 2023. To fulfill these obligations, we invested substantially in 2022 to expand our coal production capacity from ~6 million tons annually to ~7.5 million tons in 2023.

In addition to our acquisition of Merom in Q4 2022 described above, we also expanded our coal production capacity by adding more units of production at our Oaktown Mining Complex, opening a small surface mine pit near Freelandville, Indiana ("Freelandville"), and moving our Ace in the Hole production to a small surface mine pit near Petersburg, Indiana ("Prosperity"). Freelandville and Prosperity production began in Q3 2022. Volumes from these new pits are expected to be higher cost, and our newer workforce and surface pits will require a ramp to reach peak productivity. We will continue to evaluate the productivity of these mines in connection with market conditions to determine the appropriate operational balance.

To help fund our investment in expanded mine production, improve our liquidity, and position us to efficiently operate Merom, we issued $29 million of convertible notes, $10 million in Q2 2022 and $19 million in Q3 2022. The $10 million of notes issued in Q2 2022 have been converted into the Company's common stock, bringing our outstanding share count to 33.0 million shares as of December 31, 2022. If the additional notes issued in Q3 2022 were to also convert, our outstanding share count would increase to approximately 36.1 million shares, representing an approximate 17% increase in share count.

Bank debt was reduced during the year by $26.5 million bringing the balance owed at the end of fiscal 2022 to $85.2 million, bringing the Debt to EBITDA covenant under our credit agreement to 2.05X at the end of fiscal 2022. See Note 5 to our consolidated financial statements for additional discussion about our bank debt and related liquidity.

Internal Controls Disclosure

The preparation of coal reserve and resource estimates is conducted by independent individuals who are by virtue of their education, experience and professional association considered qualified persons (as defined in SEC rules). Company personnel meet on an annual basis with the independent qualified person to provide updates to the reserve and resource estimates. Company personnel review the work of the qualified person to ensure such work is prepared in accordance with applicable rules and regulations and that the data and assumptions provided were properly applied to the final reserve and resource model. The Company’s engineering personnel ensure estimates are based on current mine plans, incorporate the most recent drilling and lab data, properly reflect changes in permitting status, consider known encumbrances, and are consistent with operating knowledge and expectations in terms of mining methods, recovery rates, minimum seam heights or maximum strip ratios, and saleable qualities.

An American National Standards Institute-certified third-party laboratory is utilized to support reserve and resource estimates. The laboratory follows standard sample preparation, security and environmental procedures. In addition, the Company’s qualified person performs independent data verification procedures to ensure data is of sufficient quantity and reliability to reasonably support the coal reserve and resource estimates.

Estimates of any mineral reserve and resources are always subject to a degree of uncertainty. The level of confidence that can be applied to a particular estimate is a function of, among other things, the amount, quality, and completeness of exploration data; geological complexity of the deposit; and economic, legal, social and environmental factors associated with mining the reserve/resource. The Company’s current coal reserves and resource estimates are based on the best information available and are subject to updates as conditions change. Also refer to Item 1A. Risk Factors for discussion of risks associated with the estimates of the Company’s reserves and resources.

Summary of All Mining Properties

The Company has six total mining properties. These properties are the Oaktown Mining Complex, which is comprised of Oaktown Fuels No. 1 Mine and Oaktown Fuels No. 2 Mine, the Ace in the Hole Mine, the Ace in the Hole Mine #2 Reserves, Prosperity, and Freelandville. The Oaktown Fuels No. 1 Mine is an underground mine in the Illinois Basin located near Oaktown in Knox County, Indiana. Oaktown Fuels No. 1 Mine utilizes continuous mining units operating in room and pillar mining techniques to produce high-sulfur coal. The Oaktown Fuels No. 2 Mine is an underground mine in the Illinois Basin located near Oaktown in Knox County, Indiana. The Oaktown Fuels No. 2 Mine utilizes continuous mining units operating in room and pillar mining techniques to produce high-sulfur coal. The preparation plant at the Oaktown Mine Complex has a throughput capacity of 1,600 tons of raw coal per hour. Freelandville is a surface mine in the Illinois Basin located near Freelandville in Knox County, Indiana. Freelandville utilizes surface mining techniques to produce high-sulfur coal from as many as three seams. The coal is trucked to the Carlisle Washplant for washing before being shipped by rail at the Carlisle loadout, by truck to other Sunrise Coal logistic facilities or directly to customers. Prosperity is a surface mine in the Illinois Basin located near Petersburg in Pike County, Indiana. Prosperity utilizes surface mining techniques to produce low-sulfur coal. The low-sulfur coal is trucked to the Oaktown Complex and other Sunrise Coal logistic facilities where it is blended with coal from the Oaktown Mines. Ace in the Hole Mine is now depleted. Ace in the Hole Mine #2 Reserves is a leased coal reserve being held for potential future development and is not in production.

These properties and further summaries concerning property description, purpose, property overview, geology, background, processing operations, mine infrastructure, and market analysis can be found and are hereby incorporated by reference from Sections 1.1, 1.2, 1.3, 1.6, 2.1, 3, 4, 5, 6, 7.1, 7.3, 7.4, 8, 9, and 10 from the October 2023 Technical Report Summary prepared by the John T. Boyd Company, attached as Exhibit 99.1 to this Form 10-K/A.

The following figure shows the general location of All Mining Properties discussed above:

Individual Mining Properties

The following information concerning our mining properties has been prepared in accordance with the requirements of subpart 1300 of Regulation S-K, which first became applicable to us for the fiscal year ended December 31, 2021. These requirements differ from the previously applicable disclosure requirements of SEC Industry Guide 7. Among other differences, subpart 1300 of Regulation S-K requires us to disclose our mineral (coal) resources, which we have none, in addition to our mineral (coal) reserves, as of the end of our most recently completed fiscal year both in the aggregate and for each of our individually material mining properties.

As used in this Annual Report on Form 10-K, the terms “mineral resources,” “mineral reserve,” “proven mineral reserve” and “probable mineral reserve” are defined and used in accordance with subpart 1300 of Regulation S-K. Under subpart 1300 of Regulation S-K, mineral resources may not be classified as “mineral reserves” unless the determination has been made by a qualified person (QP) that the mineral resources can be the basis of an economically viable project. You are specifically cautioned not to assume that any part or all of the mineral deposits (including any mineral resources) in these categories will ever be converted into mineral reserves, as defined by the SEC.

Internal qualified person(s) have estimated the Company’s mineral reserves and mineral resources based on geologic data, coal ownership (control) information, and current and/or proposed operating plans. Periodic updates occur to mineral reserve and mineral resource estimates attributable to revised mine plans, new exploration data, depletion from coal production, property acquisitions or dispositions, and/or other geologic or mining data. Sunrise’s estimates of mineral reserves are proven and probable reserves that could be extracted or produced at the time of the reserve determination, economically, legally, and after considering all material modifying factors. Modifications or updates of the estimates of the Company’s mineral reserves is limited to qualified geologists and mining engineers. All modifications or updates of the estimates of recoverable coal reserves are documented. The John T. Boyd Company, a qualified person firm, has assessed the Company’s estimates of mineral reserves and mineral resources and supporting information. Based upon the review, John T. Boyd Company provided modification to the Company’s estimates of mineral reserves where warranted.

The information that follows is derived, for the most part, from, and in some instances is extracted from, the Oaktown Mining Complex technical report summary (“TRS”) from John T. Boyd Company dated October, 2023 in accordance with Subpart 1300 of Regulation S-K (Coal Resources and Coal Reserves, Oaktown Mining Complex) attached hereto as Exhibit 99.1 to this Form 10-K/A; and a letter, dated February 10, 2023, from John T. Boyd Company providing an update of estimated coal reserves at the Oaktown Mining Complex as of December 31, 2022, attached as Exhibit 99.2 to this Form 10-K/A. The Oaktown Mining Complex is the Company’s individually material property. Sections of the following information provided herein do not fully describe assumptions, qualifications, and procedures. Reference should be made to the full text of the TRS which is made a part of this Annual report on Form 10-K and incorporated hereby by reference. The Oaktown Mining Complex TRS was prepared by the John T. Boyd Company in compliance with the Item 60(b)(96) and subpart 1300 of Regulation S-K.

The Company hereby incorporates by reference Section 6.3 “Coal Reserves” from the TRS, attached as Exhibit 99.1 to this Form 10-K/A, as to the mineral price, cut-off grade, and metallurgical recovery factors utilized in John T. Boyd Company’s preparation of the mineral reserve estimates. The Company hereby incorporates the letter, dated February 10, 2023, from John T. Boyd Company, attached as Exhibit 99.2 to this Form 10-K/A, providing an update of the Company's mineral reserves at the Oaktown Mining Complex as of December 31, 2022 and including a comparison of the Company’s mineral reserves at the Oaktown Mining Complex as of December 31, 2022 and as of December 31, 2021. The following table provides a summary of all of the Company’s mineral reserves determined by the John T. Boyd Company as of the end of the fiscal year ended December 31, 2022:

SUMMARY MINERAL RESERVES AT END OF THE

FISCAL YEAR ENDED DECEMBER 31, 2022

	Mineral Reserves (tons in millions)
	Proven		Probable		Total
Oaktown Mining Complex
Oaktown Fuels No. 1 Mine		36.2		0.5		36.7
Oaktown Fuels No. 2 Mine		28.5		1.1		29.6
Total		64.7		1.6		66.3

Oaktown Mining Complex

The Oaktown Mining Complex is a coal mining and processing operation located in Knox and Sullivan counties, Indiana, and Crawford and Lawrence counties, Illinois. The following figure shows the general location of the Oaktown Mining Complex:

Comprising 118 square miles within the ILB coal-producing region of the mid-western United States, the Oaktown Mining Complex is one of the largest underground Room-and-Pillar (R&P) coal mining complexes in North America. The Oaktown Mining Complex operations currently consist of two active underground mines - Oaktown Fuels No. 1 Mine and Oaktown Fuels No. 2 Mine - and related infrastructure. Geographically, the Oaktown Complex Coal Preparation Plant is located at approximately 28°51’24.7” N latitude and 87°25’30.9” W longitude. Within the Oaktown Mining Complex area and immediate vicinity, our Company controls approximately 75,000 acres of mineral rights. This control exists as a complex collection of leases that apply to more than 2,000 tracts. Each of which range from less than an acre to several hundred acres in size. Ownership of the surface rights and the mineral rights is often severed for the properties and the estates are often fractions, in which mineral rights are split between several owners. The Company and its predecessors have acquired the necessary rights to support development and operations through purchase or lease agreements with predominately private owners or entities. As part of the Oaktown Mining Complex, the Company controls surface rights through fee simple ownership for over 1,700 permitted acres. Upon those acres resides the surface facilities for mine accesses, processing, storing, shipping, and refuse disposal facilities (i.e., refuse impoundment site and fine refuse injection sites). Our involvement with the Oaktown Mining Complex dates to 2014 with the acquisition of Oaktown Fuels No. 1 and No. 2 Mines from Vectren Fuels.

Each mine of the Oaktown Mining Complex utilizes R&P mining (employing Continuous Miners, or CM) for primary production. This mining method is highly productive and commercially demonstrated; it has been one of the primary approaches to underground mining the Indiana V Seam for decades. Oaktown Mining Complex has utilized this mining method since the inception of each operation. To date, Oaktown Mining Complex has produced a combined 64.7 million tons of clean coal. The complex is configured to operate up to 7 CM sections, with an annual production target of approximately 7 million product tons. The Oaktown Complex Coal Preparation Plant serves as the coal washing and shipment facility for the Oaktown Mining Complex’s two R&P mines. The plant was commissioned in 2009 to wash coal by the Oaktown Fuels No. 1 Mine. The Oaktown Complex Coal Preparation Plant's processing capacity is in the process of being upgraded to 1,800 raw tons-per-hour (TPH) from its current 1,600 raw TPH. Product coal from the Oaktown Mining Complex is transported to its customer base via rail, truck, or a combination of both. The Oaktown Complex Coal Preparation Plant is served by both the CSX Railroad and Indiana Railroad (INRD) via a rail spur and rail loop that connects the complex with the mainline rail just north of Oaktown, Indiana.

Additionally, the Oaktown Complex Coal Preparation Plant can facilitate the loading of trucks for direct transport to select customers, or to our transload facility in Princeton, Indiana serviced by the Norfolk Southern (NS) Railroad.

Sources of electrical power, water, supplies, and materials are readily available. Electrical power is provided to the mines and facilities by regional utility companies. Water is supplied by public water services, surface impoundments, or water wells.

Multiple permits are required by federal and state law for underground mining, coal preparation and related facilities, and other incidental activities. All necessary permits to support current operations are in place or pending approval. New permits or permit revisions may be necessary from time to time to facilitate future operations. Given sufficient time and planning, we should be able to secure new permits, as required, to maintain our planned operations within the context of the current regulations.

Permits generally require that the Company post a performance bond in an amount established by the regulator program to: (1) provide assurance that any disturbance or liability created during mining operation is properly mitigated, and (2) assure that all regulation requirements of the permit are fully satisfied. We hold surety bonds to cover obligations relating to mining and reclamation, road repair, etc. Those obligations are currently estimated at $6.8 million.

Additional information is provided in the following table regarding the Oaktown Mining Complex mineral reserves:

OAKTOWN MINING COMPLEX

Recoverable Coal Reserves as of December 31, 2022 and 2021

	As Received		As Received
	Heat		SO2
	Value		Content
	(Btu/lb)		(lbs/MMBtu)		Owned		Leased		Recoverable Coal Reserves (As-Received)
Mine/Reserve	Approximate		Approximate		(%)		(%)		Proven		Probable		12/31/2022		12/31/2021
Oaktown Mining Complex
Oaktown Fuels No. 1 Mine		11,522		6.1		—		100.0		36.2		0.5		36.7		40.5
Oaktown Fuels No. 2 Mine		11,534		5.7		—		100.0		28.5		1.1		29.6		30.9
Total										64.7		1.6		66.3		71.4

Oaktown Fuels No. 1 Mine

As of December 31, 2022, the assigned and accessible reserve base for the Oaktown Fuels No. 1 Mine contains 36.7 million tons of recoverable Indiana V seam coal, of which 36.7 million tons are currently permitted. The reserve contains saleable tons which average heating content of approximately 11,522 Btu per pound with approximately 6.1 pounds of sulfur dioxide per MMBtu on an as-received basis. Access to the Oaktown Fuels No. 1 Mine is via a 90-foot-deep box cut and a 2,200-foot slope, which facilitates the egress of coals being mined in excess of 375 feet below the surface. Since beginning first commercial coal production in 2009, the mine workings have substantially grown, and an additional mine access (elevator) was constructed for employee and supply ingress/egress closer to the active production faces.

Oaktown Fuels No. 2 Mine

As of December 31, 2022, the assigned and accessible reserve base for the Oaktown Fuels No. 2 Mine contains 29.7 million tons of recoverable Indiana V seam coal, of which 23.8 million tons are currently permitted. The reserve contains saleable tons which average heating content of approximately 11,534 Btu per pound with approximately 5.7 pounds of sulfur dioxide per MMBtu on an as-received basis. Access to the Oaktown Fuels No. 2 Mine is via an 80-foot-deep box cut and 2,600-foot slope, which facilitates the egress of coals being mined in excess of 400 feet below the surface. Since beginning first commercial coal production in 2013 the mines workings have substantially grown and, during 2021, an additional mine access (elevator) has been constructed for employee and supply ingress/egress closer to the active production faces.

Tonnages are reported on a clean recoverable basis with average long-term pricing based on available third-party forecasts and historical pricing adjusted for quality at the end of 2022, with the coal sales price estimated over the life of the reserve averaging approximately $47 (ranging from $42.50 to $64 per short ton), which are the coal sales prices used by John T. Boyd Company to estimate the amount of coal mineral reserves for the Oaktown Fuels No. 1 Mine and Oaktown No. 2 Mine as listed above. Coal sales prices vary based on coal quality, access to transportation, and other factors at each location. All reserves are classified as underground mineable in the production stage.

The Company hereby incorporates by reference the TRS, attached as Exhibit 99.1 to this Form 10-K/A, including Section 6.3 thereof titled “Coal Reserves”, as to the recoverable coal reserves reported above for the Oaktown Fuels No. 1 Mine and Oaktown No. 2 Mine; and (ii) letter, dated February 10, 2023, from John T. Boyd Company, attached as Exhibit 99.2 to this Form 10-K/A, providing an update of the Company's mineral reserves at the Oaktown Mining Complex as of December 31, 2022 and including a comparison of the Company’s mineral reserves at the Oaktown Mining Complex as of December 31, 2022 and as of December 31, 2021.

Historical production for our Oaktown Mining Complex during the years ended December 31, 2022, 2021, and 2020 is provided in the following table:

	Annual Saleable Production Tons
	(Million Tons)
Mine/Reserve		2022	2021	2020
Oaktown Mining Complex
Oaktown Fuels No. 1 Mine		3.9	3.5	3.4
Oaktown Fuels No. 2 Mine		2.5	2.1	1.8
Total Oaktown Mining Complex Production		6.4	5.6	5.2

Other Properties

The Company holds other recoverable coal reserves in the ILB, which are not deemed individually material.

Ace in the Hole Mine (Ace) (surface) - Assigned

Ace in the Hole Mine is now depleted. Remaining inventory of coal and base is scheduled to be moved to our Carlisle and Oaktown wash plants in early 2023. Reclamation will resume in the Spring of 2023. We expect Phase 1 reclamation should be substantially complete by the end of 2023.

Our Coal Contracts

In 2022, Sunrise sold 6.3 million tons of coal to 14 power plants in five different states across nine different customers.

During 2022, we derived 90% of our revenue from five customers (10 power plants), with each of the five customers representing at least 10% of our coal sales. During 2021, we derived 95% of our revenue from five customers (10 power plants), with each of the five customers representing at least 10% of our coal sales.

Significant customers in 2022 include Vectren Corporation, a wholly-owned subsidiary of CenterPoint Energy (NYSE: CNP), Orlando Utility Commission (OUC), Alcoa Power Generating, Inc., a subsidiary of Alcoa Corporation (NYSE: AA), Indianapolis Power & Light Company (IPL), a wholly-owned subsidiary of The AES Corporation (NYSE: AES), and Duke Energy Corporation (NYSE: DUK).

Of our 2022 sales, 74% were shipped to locations in the State of Indiana.

In the summer of 2022, customer coal inventories and natural gas (a competitor to coal) inventory levels were lower than normal. Customers paid near record prices in 2022 to secure limited fuel supply. We invested in expanding our mining production to meet the demand. As discussed above we have opened the Prosperity and Freelandville surface mines to meet the demand resulting in contracts being signed raising our estimated average sales price for 2023 to $58.70 per ton.

	Contracted		Estimated
	tons		price
Year	(millions)*		per ton
2023		7.5	$	58.70
2024 - 2027 (total)		7.3		**
Total		14.8

*      Contracted tons are subject to adjustment in instances of force majeure and exercise of customer options to either take additional tons or reduce tonnage if such option exists in the customer contract.

**    Unpriced or partially priced tons

As of December 31, 2022, we are committed to supplying our customers up to a maximum of 14.8 million tons of coal through 2027 of which 10.8 million tons are priced.

Beginning in 2024, with the acquisition of the Merom power plant, we have the optionality to sell up to 3.0 million tons of our coal directly to the Merom plant, which would be in addition to the contracted tons to our third party customers described above. We anticipate our mines will need to produce at a 7 million-ton annualized pace for the foreseeable future to meet the Merom plant and third party market demand.

We expect to continue selling a significant portion of our coal under supply agreements with terms of one year or longer. Typically, customers enter into coal supply agreements to secure reliable sources of coal at predictable prices while we seek stable sources of revenue to support the investments required to open, expand and maintain, or improve productivity at the mines needed to supply these contracts. The terms of coal supply agreements result from competitive bidding and extensive negotiations with customers.

Some utility customers have proposed shuttering certain plant units or entire plants in the coming years. It remains to be seen whether these plans will be implemented.

Liquidity and Capital Resources

As set forth in our Consolidated Statements of Cash Flows, cash provided by operations was $54.2 million and $48.0 million for the years ended December 31, 2022 and 2021 respectively. Operating cash flow increased primarily due to an increase in operating margins at our coal mines brought on by the addition of higher priced contracts in the summer of 2022. Operating margin per ton at our coal mines increased in 2022 to $8.35 per ton from $7.35 per ton in 2021, increasing operating cash flow by $7.6 million.

Our capital expenditure budget for 2023 is $69 million, of which $35 million is for maintenance capex. Of the $69 million, the budget for coal operations is $34 million and the budget for electric operations is $35 million.

We paid down debt of $26.5 million in 2022. As of December 31, 2022, our bank debt was $85.2 million. On March 13, 2023, we executed an amendment to our credit agreement with PNC Bank, National Association (in its capacity as administrative agent, "PNC"), administrative agent for our lenders under our credit agreement. The primary purpose of the amendment is to convert $35 million of the revolver into a new term loan with a maturity of March 31, 2024 (with principal payments of $10.0 million due by June 30, 2023; $10.0 million by September 30, 2023; $10.0 million by December 31, 2023, and $5.0 million by March 31, 2024), and extend the maturity date of the revolver to May 31, 2024. The effect of the amendment on our future cash flow is to extend the maturity date of $44.7 million of our outstanding debt as of December 31, 2022 to May 2024. In addition, the amendment reduced the total capacity under the revolver to $85.0 million (previously $120 million). Subsequent to the amendment, the current portion of our outstanding debt as of December 31, 2022, is $35.5 million.

We expect cash from operations generated primarily by our expected higher coal margins in 2023 to fund our capital expenditures and our debt service.

See Note 5 to our consolidated financial statements for additional discussion about our bank debt and related liquidity.

Off-Balance Sheet Arrangements

Other than our surety bonds for reclamation, we have no material off-balance sheet arrangements. We have recorded the present value of reclamation obligations of $20.8 million, including $7.2 million at Merom, presented as asset retirement obligations (ARO) in our accompanying balance sheets. In the event we are not able to perform reclamation, we have surety bonds in place totaling $36.9 million to cover ARO.

Capital Expenditures (capex)

For the year ended December 31, 2022, our capex was $54.0 million allocated as follows (in millions):

Oaktown – maintenance capex	$	21.0
Oaktown – investment		22.1
Prosperity mine		3.6
Freelandville mine		2.5
Merom plant		3.7
Other		1.1
Capex per the Consolidated Statements of Cash Flows	$	54.0

Results of Operations

Presentation of Segment Information

Our operations are divided into two primary reportable segments: coal operations and electric operations. The remainder of our operations, which are not significant enough on a stand-alone basis to warrant treatment as an operating segment, are presented as "Corporate and Other" within the Notes to the Consolidated Financial Statements and primarily are comprised of unallocated corporate costs and activities, including a 50% interest in Sunrise Energy, LLC, a private gas exploration company with operations in Indiana, which we account for using the equity method, and our wholly-owned subsidiary Summit Terminal LLC, a logistics transport facility located on the Ohio River.

Coal Operations

	2022		2021
OPERATING REVENUES:	$	293,344	$	246,396

EXPENSES:
Operating expenses		236,416		198,442
Depreciation, depletion and amortization		43,612		39,829
Asset impairment		—		1,588
Asset retirement obligations accretion		1,010		1,504
Asset retirement obligations change in estimate		—		(3,510	)
Exploration costs		651		482
General and administrative		7,919		6,069
Total operating expenses		289,608		244,404

INCOME (LOSS) FROM OPERATIONS		3,736		1,992

Operating revenues from coal operations increased 19% over 2021 due in large part to unprecedented increases in natural gas prices. As a result, higher priced contracts sold in the summer of 2022 and delivered in Q4 of 2022 increased our average sales price by over $6 per ton from 2021. We also sold 168,000 additional tons over 2022 at the higher average price due to lower inventories and the higher gas prices.

Operating expenses increased, however, by ~$5 per ton. The addition of the higher cost Freelandville and Prosperity surface mines as well as significant inflationary pressures contributed significantly to the increased costs. We continue to experience significant onboarding of new employees which takes time provide training and gain the experience to reach maximum productivity which is also contributing to higher costs.

Depreciation, depletion, and amortization increased 9% as a significant amount of our assets are depreciated and amortized based on production which increased approximately 13% over 2021.

Changes in asset retirement obligation accretion and change in estimate are a result of a review in 2021 that determined the liabilities we have recorded and the future liabilities were overstated due to a change in estimate when factoring time to reclamation, discount rates used, and inflationary factors used. Our review in 2022 did not result in any significant adjustments.

General and administrative expenses increased 30% over 2022 due in large part to additional professional fees related to bank refinancing and additional audit requirements. Increased wages due to bonuses and incentives to retain and attract talent also contributed to the increased costs.

Electric Operations

	2022		2021
OPERATING REVENUES:	$	66,316	$	—

EXPENSES:
Operating expenses		29,608		—
Depreciation, depletion and amortization		3,117		—
General and administrative		2,086		—
Total operating expenses		34,811		—

INCOME (LOSS) FROM OPERATIONS		31,505		—

A comparative discussion is not relevant as the Electric Operations did not begin until the Merom Acquisition closed in October 2022.

Operating revenue is derived from a power purchase agreement signed with Hoosier in conjunction with the Merom Acquisition at fixed prices which were below market prices at the date we entered into the agreement. The power purchase agreement expires in 2025 and requires us to provide a fixed amount of power over the term of the agreement. As a result of the below market contract, we recorded a contract liability at the close of the acquisition totaling $184.5 million that will be amortized over the term of the agreement as the contract is fulfilled. For the year ended December 31, 2022, we recorded $23.3 million of revenue as a result of amortizing the contract liability.

Operating expenses include coal purchased under an agreement signed with Hoosier in conjunction with the Merom acquisition at fixed prices which were below market prices at the date we entered into the agreement. The coal purchase agreement expires in May 2023 and requires us to purchase a fixed amount of coal over the term of the agreement. As a result of the below market contract, we recorded a contract asset at the close of the acquisition totaling $34.3 million that will be amortized over the term of the agreement as the contract is fulfilled. For the year ended December 31, 2022, we recorded $3.6 million in additional operating expense for coal purchased and used and an additional $11.2 million to inventory for coal purchased and unused as a result of amortizing the contract asset.

The following tables presenting our quarterly results of operations should be read in conjunction with the consolidated financial statements and related notes included in Item 8 of this Form 10-K. We have prepared the unaudited information on the same basis as our audited consolidated financial statements. Our operating results for any quarter are not necessarily indicative of results for any future quarters or for a full year. The tables present our unaudited quarterly results of operations for the eight quarters ended December 31, 2022, and include all adjustments, consisting only of normal recurring adjustments, that we consider necessary for fair presentation of our consolidated operating results for the quarters presented.

	Mar-31			Jun-30			Sep-30			Dec-31
	2022			2022			2022			2022			Total 2022
SALES AND OPERATING REVENUES:
Coal sales	$	57,010		$	64,161		$	83,562		$	84,643		$	289,376
Electric sales		—			0			—			66,252			66,252
Other revenues		1,897			1,768			1,522			1,176			6,363
Total revenue		58,907			65,929			85,084			152,071			361,991

EXPENSES:
Operating expenses		54,601			51,394			64,557			96,056			266,608
Depreciation, depletion and amortization		9,531			11,164			11,187			14,993			46,875
Asset retirement obligations accretion		246			250			255			259			1,010
Exploration costs		57			215			121			258			651
General and administrative		3,149			3,722			3,569			5,977			16,417
Total operating expenses		67,584			66,745			79,689			117,543			331,561

INCOME (LOSS) FROM OPERATIONS		(8,677	)		(816	)		5,395			34,528			30,430

Bank debt and other interest		(1,710	)		(1,770	)		(2,360	)		(2,438	)		(8,278	)
Amortization and swap related interest		(74	)		(567	)		(995	)		(1,098	)		(2,734	)
Equity method investment income		150			188			168			(63	)		443
INCOME (LOSS) BEFORE INCOME TAXES		(10,311	)		(2,965	)		2,208			30,929			19,861

INCOME TAX EXPENSE (BENEFIT):
Current		—			—			—			—			—
Deferred		(177	)		421			596			916			1,756
Total income tax expense (benefit)		(177	)		421			596			916			1,756

NET INCOME (LOSS)	$	(10,134	)	$	(3,386	)	$	1,612		$	30,013		$	18,105

NET INCOME (LOSS) PER SHARE:
Basic	$	(0.33	)	$	(0.11	)	$	0.05		$	0.91		$	0.57
Diluted	$	(0.33	)	$	(0.11	)	$	0.05		$	0.83		$	0.55

WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic		30,785			30,785			32,983			32,983			32,043
Diluted		30,785			30,809			33,268			36,428			33,649

	Mar-31			Jun-30			Sep-30			Dec-31
	2021			2021			2021			2021			Total 2021
SALES AND OPERATING REVENUES:
Coal sales	$	45,879		$	54,600		$	79,036		$	64,388		$	243,903
Other revenues		816			1,038			786			1,123			3,763
Total revenue		46,695			55,638			79,822			65,511			247,666

EXPENSES:
Operating expenses		34,009			42,456			67,792			54,583			198,840
Depreciation, depletion and amortization		10,307			9,715			9,842			10,109			39,973
Asset impairment		—			—			—			1,588			1,588
Asset retirement obligations accretion		363			373			380			388			1,504
Asset retirement obligations change in estimate		—			—			—			(3,510	)		(3,510	)
Exploration costs		58			159			96			169			482
General and administrative		2,821			3,383			3,067			5,562			14,833
Total operating expenses		47,558			56,086			81,177			68,889			253,710

LOSS FROM OPERATIONS		(863	)		(448	)		(1,355	)		(3,378	)		(6,044	)

Bank debt and other interest		(2,135	)		(2,307	)		(2,167	)		(1,901	)		(8,510	)
Amortization and swap related interest		237			125			59			41			462
Gain on extinguishment of debt		—			—			10,000			—			10,000
Equity method investment income		—			63			90			211			364
INCOME (LOSS) BEFORE INCOME TAXES		(2,761	)		(2,567	)		6,627			(5,027	)		(3,728	)

INCOME TAX EXPENSE (BENEFIT):
Current		—			—			—			—			—
Deferred		(1,729	)		397			(1,359	)		2,717			26
Total income tax expense (benefit)		(1,729	)		397			(1,359	)		2,717			26

NET INCOME (LOSS)	$	(1,032	)	$	(2,964	)	$	7,986		$	(7,744	)	$	(3,754	)

NET INCOME (LOSS) PER SHARE:
Basic and diluted	$	(0.03	)	$	(0.10	)	$	0.26		$	(0.25	)	$	(0.12	)

Quarterly coal sales and cost data follow (in 000’s, except for per ton data and wash plant recovery percentage):

All Mines	1st 2022			2nd 2022			3rd 2022			4th 2022			T4Qs
Tons produced		1,397			1,762			1,663			1,721			6,543
Tons sold		1,377			1,595			1,705			1,664			6,341
Coal sales	$	57,010		$	64,161		$	83,563		$	84,641		$	289,375
Average price per ton	$	41.40		$	40.23		$	49.01		$	50.87		$	45.64
Wash plant recovery in %		67	%		71	%		69	%		68	%
Operating costs	$	54,443		$	50,776		$	63,876		$	67,319		$	236,414
Average cost per ton	$	39.54		$	31.83		$	37.46		$	40.46		$	37.28
Margin	$	2,567		$	13,385		$	19,687		$	17,322		$	52,961
Margin per ton	$	1.86		$	8.39		$	11.55		$	10.41		$	8.35
Capex	$	9,082		$	13,821		$	15,096		$	12,368		$	50,367
Maintenance capex	$	4,481		$	7,600		$	6,625		$	5,748		$	24,454
Maintenance capex per ton	$	3.25		$	4.76		$	3.89		$	3.45		$	3.86

All Mines	1st 2021			2nd 2021			3rd 2021			4th 2021			T4Qs
Tons produced		1,592			1,292			1,440			1,447			5,771
Tons sold		1,174			1,403			2,042			1,554			6,173
Coal sales	$	45,879		$	54,600		$	79,036		$	64,388		$	243,903
Average price per ton	$	39.08		$	38.92		$	38.71		$	41.43		$	39.51
Wash plant recovery in %		74	%		69	%		73	%		70	%
Operating costs	$	33,907		$	42,364		$	67,694		$	54,583		$	198,548
Average cost per ton	$	28.88		$	30.20		$	33.15		$	35.12		$	32.16
Margin	$	11,972		$	12,236		$	11,342		$	9,805		$	45,355
Margin per ton	$	10.20		$	8.72		$	5.55		$	6.31		$	7.35
Capex	$	5,720		$	5,117		$	7,238		$	9,975		$	28,050
Maintenance capex	$	2,343		$	1,049		$	2,324		$	3,302		$	9,018
Maintenance capex per ton	$	2.00		$	0.75		$	1.14		$	2.12		$	1.46

Critical Accounting Estimates

We believe that the estimates of our coal reserves, our asset retirement obligation liabilities, our deferred tax accounts, our valuation of inventory, our treatment of business combinations, and the estimates used in our impairment analysis are our critical accounting estimates.

The reserve estimates are used in the depreciation, depletion and amortization calculations and our internal cash flow projections. If these estimates turn out to be materially under or over-stated, our depreciation, depletion and amortization expense and impairment test may be affected. The process of estimating reserves is complex, requiring significant judgment in the evaluation of all available geological, geophysical, engineering and economic data. The reserve estimates are prepared by professional engineers, both internal and external, and are subject to change over time as more data becomes available. Changes in the reserves estimates from the prior year were nominal.

We have analyzed our filing positions in all of the federal and state jurisdictions where we are required to file income tax returns, as well as all open tax years in these jurisdictions. We identified our federal tax return and our Indiana state tax return as “major” tax jurisdictions. We believe that our income tax filing positions and deductions would be sustained on audit and do not anticipate any adjustments that will result in a material change to our consolidated financial position. We have not taken any significant uncertain tax positions and our tax provision and returns are prepared by a large public accounting firm with significant experience in energy related industries. Changes to the estimates from reported amounts in the prior year were not significant.

Inventory is valued at lower of cost or net realizable value (NRV). Anticipated utilization of low sulfur, higher-cost coal from our Ace in the Hole, Freelandville, and Prosperity mines has the potential to create NRV adjustments as our estimated needs change. The NRV adjustments are subject to change as our costs may fluctuate due to higher or lower production and our NRV may fluctuate based on sales contracts we enter into from time to time. There were no significant changes to our NRV adjustment estimates from the prior year.

We account for business acquisitions as either asset acquisitions or business combination depending on the circumstances as outlined in ASC 805-50. For acquisitions accounted for as a business combination, we record the assets acquired, including identified intangible assets and liabilities assumed at their fair value. For acquisitions accounted for as asset acquisitions, we allocate the fair value of consideration exchanged in the transaction to each of the acquired assets based upon their relative fair value. Fair value in many instances involves estimates based on third-party valuations, such as appraisals, or internal valuations based on discounted cash flow analyses or other valuation techniques. Those estimates are subject to a high degree of uncertainty, thus we typically will retain professionals in the relevant industries of the acquiree to assist us with our analysis and valuations. See "Item 8. Financial Statements - Note 16 - Acquisition" for more information on the Merom Acquisition.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

See Item 8 for an index of our financial statements.

Our exhibit index is as follows:

3.1	Second Restated Articles of Incorporation of Hallador Energy Company effective December 24, 2009 (1)
3.2	By-laws of Hallador Energy Company, effective December 24, 2009 (2)
4.1	Description of Securities (3)
10.1	2009 Stock Bonus Plan (4)
10.2	Third Amended and Restated Credit Agreement dated May 21, 2018 (5)
10.3	Second Amendment to the Third Amended and Restated Credit Agreement and Waiver dated September 30, 2019 (6)
10.4	Third Amendment to the Third Amended and Restated Credit Agreement and Waiver (7)
10.5	Sixth Amendment to the Third Amended and Restated Credit Agreement dated March 25, 2022 (10)
10.	Seventh Amendment to the Third Amended and Restated Credit Agreement dated May 20, 2022 (12)
10.6	Eighth Amendment to the Third Amended and Restated Credit Agreement dated August 5, 2022 (14)
10.7	Ninth Amendment to the Third Amended and Restated Credit Agreement dated September 28, 2022 (16)
10.8	Tenth Amendment to the Third Amended and Restated Credit Agreement dated March 13, 2023†
10.9	US SBA Loan (PPP) dated April 16, 2020 (7).
10.10	Amended and Restated Hallador Energy Company 2008 Restricted Stock Unit Plan (8)
10.11	Form of Hallador Energy Company Restricted Stock Unit Issuance Agreement** (8)
10.12	Hallador Energy Company 2020 Compensation Plan adopted March 5, 2020** (2)
10.13	2022 Executive Officer Compensation Plan**(17)
10.14	Asset and Purchase Agreement dated February 14, 2022 (9)
10.15	Hallador Energy Company Unsecured Convertible Promissory Note dated May 2, 2022 - Charles R. Wesley, IV Revocable Trust U/A dated October 30, 2020 (11)
10.16	Hallador Energy Company Unsecured Convertible Promissory Note dated May 2, 2022 - Lubar Opportunities Fund I, LLC (11)
10.17	Hallador Energy Company Unsecured Convertible Promissory Note - dated May 2, 2022 - NextG Partners LLC (11)
10.18	Hallador Energy Company Unsecured Convertible Promissory Note - dated May 2, 2022 - Hallador Alternative Asset Fund, LLC (11)
10.19	Hallador Energy Company Unsecured Convertible Promissory Note dated May 20, 2022 - NextG Partners, LLC (12)
10.20	Hallador Energy Company Unsecured Convertible Promissory Note dated May 20, 2022 - Hallador Alternative Asset Fund, LLC (12)
10.21	Hallador Energy Company Unsecured Convertible Promissory Note dated May 20, 2022, - Lubar Opportunities Fund I, LLC (12)
10.22	Hallador Energy Company Unsecured Convertible Promissory Note dated May 20, 2020 - Murchison Capital Partners, LP (12)
10.21	Hallador Energy Company Convertible Note Purchase Agreement dated July 29, 2022 (13)
10.23	Hallador Energy Company Unsecured Convertible Promissory Note dated July 29, 2022 - Lubar Opportunities Fund I LLC (13)
10.24	Hallador Energy Company Unsecured Convertible Promissory Note dated August 8, 2022 - Lubar Opportunities Fund I, LLC (14)
10.25	Hallador Energy Company Unsecured Convertible Promissory Note dated August 8, 2022 - Hallador Alternative Assets Fund, LLC (14)
10.26	Hallador Energy Company Unsecured Convertible Promissory Note dated August 12, 2022 - ALJ (15)
14.1	Code of Ethics for Senior Officers (18)
21.1	List of Subsidiaries†
23.1	Consent of Grant Thornton LLP†
23.2	Consent of Plante & Moran, PLLC†
23.3	Consent of John T. Boyd Company*
31.1	SOX 302 Certification - President and CEO*
31.2	SOX 302 Certifications - CFO*
31.3	SOX 302 Certifications - CAO*
32	SOX 906 Certification*
95	Mine Safety Disclosure†

99.1	Technical Report Summary (Coal Resources and Coal Reserves, Oaktown Mining Complex), dated October 2023*

99.2	Letter from Boyd and Company, dated February 10, 2023*

101.INS	Inline XBRL Instance Document†
101.SCH	Inline XBRL Schema Document†
101.CAL	Inline XBRL Calculation Linkbase Document†
101.LAB	Inline XBRL Labels Linkbase Document†
101.PRE	Inline XBRL Presentation Linkbase Document†
101.DEF	Inline XBRL Definition Linkbase Document†
104*	Cover Page Interactive Data File (embedded within the Inline XBRL and contained in Exhibit 101)

(1)	IBR to Form 8-K dated December 31, 2009
(2)	IBR to Form 10-K/A amendment 1, filed June 12, 2020
(3)	IBR to Form 10-K filed March 9, 2020
(4)	IBR to Form S-8 dated December 1, 2009
(5)	IBR to Form 10-Q filed August 6, 2018
(6)	IBR to Form 10-Q filed November 4, 2019
(7)	IBR to Form 10-Q filed May 11, 2020
(8)	IBR to Form DEF 14A dated April 11, 2017
(9)	IBR to Form 8-K/A filed February 18, 2022
(10)	IBR to Form 10-K filed March 28, 2022
(11)	IBR to Form 8-K filed May 6, 2022
(12)	IBR to Form 10-Q filed May 23, 2022
(13)	IBR to Form 8-K filed August 4, 2022
(14)	IBR to Form 8-K dated August 11, 2022
(15)	IBR to Form 10-Q filed August 15, 2022
(16)	IBR to Form 8-K filed October 4, 2022
(17)	IBR to Form 10-Q filed November 14, 2022
(18)	IBR to Form 10KSB dated April 14, 2006
*	Filed herewith.

** Management Agreements

† Previously filed as an exhibit to the Original 10-K.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	HALLADOR ENERGY COMPANY


Date: November 1, 2023	/s/ Lawrence D. Martin
	Lawrence D. Martin, CFO


	/s/ R. Todd Davis
Date: November 1, 2023	R. Todd Davis, CAO

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ David Hardie
David Hardie	Director	November 1, 2023


/s/ Bryan Lawrence
Bryan Lawrence	Director	November 1, 2023


/s/ Brent Bilsland
Brent Bilsland	Board Chairman, President and CEO	November 1, 2023


/s/ Steven Hardie
Steven Hardie	Director	November 1, 2023


/s/ Charles Ray Wesley IV
Charles Ray Wesley IV	Director	November 1, 2023

Exhibit 23.3

Chairman

James W. Boyd

President and CEO

John T. Boyd II

Managing Director and COO

Ronald L. Lewis

Vice Presidents

Robert J. Farmer

Jisheng (Jason) Han

John L. Weiss

Michael F. Wick

William P. Wolf

Managing Director - Australia

Jacques G. Steenekamp

Managing Director - China

Rongjie (Jeff) Li

Managing Director – South America

Carlos F. Barrera

Pittsburgh

4000 Town Center Boulevard, Suite 300

Canonsburg, PA 15317

(724) 873-4400

(724) 873-4401 Fax

jtboydp@jtboyd.com

Denver

(303) 293-8988

jtboydd@jtboyd.com

Brisbane

61 7 3232-5000

jtboydau@jtboyd.com

Beijing

86 10 6500-5854

jtboydcn@jtboyd.com

Bogota

+57-3115382113

jtboydcol@jtboyd.com

www.jtboyd.com

November 1, 2023

File: 3467.002

Subject:

CONSENT OF JOHN T. BOYD COMPANY
TO BE NAMED IN REGISTRATION
STATEMENT

Ladies and Gentlemen,

The undersigned hereby consents to the references to our firm in the form and context in which they appear in this Annual Report on Form 10-K for the year ended December 31, 2022, as amended (the “Annual Report”). We hereby further consent to (i) the use in the Annual Report of information relating to our Technical Report Summary, Coal Resources and Coal Reserves, Oaktown Mining Complex (the “Report”) and (ii) the incorporation by reference of the Report in the Registration Statements on Form S-3 (Nos. 333-273325 and 333-273327) and the Registration Statements on Form S-8 (Forms S-8 (Nos. 333-171778 and 333-261930) of Hallador Energy Company, including any amendment thereto, any related prospectus and any related prospectus supplement of such information.

Respectfully submitted,

JOHN T. BOYD COMPANY

By:

Ronald L. Lewis

Managing Director and COO

Exhibit 31.1

Certification

I, Brent K. Bilsland, certify that:

1. I have reviewed this annual report on Form 10-K/A of Hallador Energy Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent function):

(a)

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 1, 2023	By:	/s/ Brent K. Bilsland
		Brent K. Bilsland
		Chairman, President and CEO

Exhibit 31.2

Certification

I, Lawrence D. Martin, certify that:

1. I have reviewed this annual report on Form 10-K/A of Hallador Energy Company;

(a)

(b)

(c)

(d)

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 1, 2023	By:	/s/ Lawrence D. Martin
		Lawrence D. Martin
		CFO

Exhibit 31.3

Certification

I, R. Todd Davis, certify that:

1. I have reviewed this annual report on Form 10-K/A of Hallador Energy Company;

(a)

(b)

(c)

(d)

(a)

(b)

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 1, 2023	By:	/s/ R. Todd Davis
		R. Todd Davis
		CAO

Exhibit 32

Certification Pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002

In connection with this Annual Report (the “Report”), of Hallador Energy Company (the “Company”), on Form 10-K/A for the period ended December 31, 2022 as filed with the Securities and Exchange Commission on the date hereof the undersigned, in the capacities and date indicated below, each hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

(1)

The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

(2)

The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

November 1, 2023	By:	/s/ Brent K. Bilsland
		Brent K. Bilsland
		Chairman, President and CEO

November 1, 2023	By:	/s/ Lawrence D. Martin
		Lawrence D. Martin
		CFO

November 1, 2023	By:	/s/ R. Todd Davis
		R. Todd Davis
		CAO

Exhibit 99.1

TECHNICAL REPORT SUMMARY

COAL RESOURCES AND COAL RESERVES OAKTOWN MINING COMPLEX

Indiana and Illinois

Prepared For

SUNRISE COAL, LLC

John T. Boyd Company

Mining and Geological Consultants

Pittsburgh, Pennsylvania, USA

Report No.  3467.002

OCTOBER 2023

John T. Boyd Company

Mining and Geological Consultants

Chairman	October 27, 2023
James W. Boyd	File: 3467.002

President and CEO
John T. Boyd II

Managing Director and COO	Sunrise Coal, LLC.
Ronald L. Lewis	1183 E. Canvasback Drive
	Terre Haute, IN 47802
Vice Presidents
Robert J. Farmer	Attention:	Mr. Todd Davis
Jisheng (Jason) Han		Chief Accounting Officer
John L. Weiss
Michael F. Wick		Mr. Scott McGuire
William P. Wolf		Corporate Engineering

Managing Director - Australia	Subject:	Technical Report Summary
Jacques G. Steenekamp		Coal Resources and Coal Reserves
		Oaktown Mining Complex

Managing Director - China		Indiana and Illinois
Rongjie (Jeff) Li
	Ladies and Gentlemen:
Managing Director – South America
Carlos F. Barrera	This technical report summary provides the results of John T. Boyd Company’s (BOYD) independent technical assessment of the coal resource and coal reserve estimates reported by Sunrise Coal, LLC (Sunrise) for the Oaktown Mining Complex as of December 31, 2021.

Pittsburgh 4000 Town Center Boulevard, Suite 300 Canonsburg, PA 15317 (724) 873-4400 (724) 873-4401 Fax jtboydp@jtboyd.com	We wish to acknowledge the cooperation of Sunrise management and staff for providing the technical, financial, and legal information used in completing this project. Our findings are based on BOYD’s extensive experience in preparing coal reserve estimates used in US Securities and Exchange Commission (SEC) filings, and our knowledge of coal mining operations in the Illinois Basin (ILB) and throughout the world.

	Respectfully submitted,


Denver	JOHN T. BOYD COMPANY
(303) 293-8988
jtboydd@jtboyd.com Brisbane 61 7 3232-5000 jtboydau@jtboyd.com	By:
Beijing	John T. Boyd II
86 10 6500-5854	President and CEO
jtboydcn@jtboyd.com

Bogota
+57-3115382113
jtboydcol@jtboyd.com

www.jtboyd.com

TABLE OF CONTENTS

				Page
LETTER OF TRANSMITTAL

TABLE OF CONTENTS

GLOSSARY AND ABBREVIATIONS

1.0	EXECUTIVE SUMMARY			1-1
	1.1	Introduction		1-1
	1.2	Property Description		1-1
	1.3	Geology		1-3
	1.4	Exploration		1-3
	1.5	Coal Resources/Reserves		1-4
	1.6	Operations		1-5
		1.6.1	Mining	1-5
		1.6.2	Processing	1-6
		1.6.3	Other Infrastructure	1-6
	1.7	Financial Analysis		1-7
		1.7.1	Market Analysis	1-7
		1.7.2	Capital and Operating Costs	1-7
		1.7.3	Economic Analysis	1-8
	1.8	Regulation and Liabilities		1-8
	1.9	Conclusions		1-9

2.0	INTRODUCTION			2-1
	2.1	Registrant and Purpose		2-1
	2.2	Terms of Reference		2-1
	2.3	Expert Qualifications		2-2
	2.4	Principal Sources of Information		2-3
		2.4.1	Site Visits	2-4
		2.4.2	Reliance on Information Provided by the Registrant	2-4
	2.5	Effective Date		2-4
	2.6	Units of Measure		2-5

3.0	PROPERTY OVERVIEW			3-1
	3.1	Description and Location		3-1
	3.2	History		3-3
	3.3	Property Control		3-3
		3.3.1	Coal Ownership	3-4
		3.3.2	Surface Ownership	3-4

JOHN T. BOYD COMPANY

TABLE OF CONTENTS - Continued

				Page

	3.4	Adjacent Properties		3-4
	3.5	Regulation and Liabilities		3-5
	3.6	Accessibility, Local Resources, and Infrastructure		3-6
	3.7	Physiography		3-6
	3.8	Climate		3-7

4.0	GEOLOGY			4-1
	4.1	Regional Geology		4-1
	4.2	Local Stratigraphy		4-2
		4.2.1	McLeansboro Group	4-2
		4.2.2	Carbondale Group	4-3
		4.2.3	Racoon Creek Group	4-3
	4.3	Coal Seam Geology		4-3
		4.3.1	Lithology	4-3
		4.3.2	Structure	4-5
		4.3.3	Coal Quality	4-5

5.0	EXPLORATION DATA			5-1
	5.1	Background		5-1
	5.2	Procedures		5-1
		5.2.1	Drilling	5-1
		5.2.2	Coal Quality Sampling	5-2
		5.2.3	Coal Washability Testing	5-4
		5.2.4	Other Exploration Methods	5-4
	5.3	Results		5-4
	5.4	Data Verification		5-6

6.0	COAL RESOURCES AND RESERVES			6-1
	6.1	Applicable Standards and Definitions		6-1
	6.2	Coal Resources		6-2
		6.2.1	Methodology	6-2
		6.2.2	Criteria	6-3
		6.2.3	Classification	6-3
		6.2.4	Coal Resource Estimate	6-4
	6.3	Coal Reserves		6-4
		6.3.1	Methodology	6-4
		6.3.2	Parameters and Assumptions	6-5
		6.3.3	Classification	6-6
		6.3.4	Coal Reserve Estimate	6-6
		6.3.5	Validation	6-11
		6.3.6	Reconciliation with Previous Coal Reserve Estimate	6-14

JOHN T. BOYD COMPANY

TABLE OF CONTENTS - Continued

				Page

7.0	MINING OPERATIONS			7-1
	7.1	Mining Method Description		7-1
	7.2	Mine Equipment and Staffing		7-5
		7.2.1	Mine Equipment	7-5
		7.2.2	Staffing	7-6
	7.3	Mine Production		7-7
		7.3.1	Historical Mine Production	7-7
		7.3.2	Forecasted Production	7-8
		7.3.3	Mining Recovery and Dilution Factors	7-10
		7.3.4	Expected Mine Life	7-11
	7.4	Other Mining Considerations		7-12
		7.4.1	Mine Design	7-12
		7.4.2	Mining Risk	7-13

8.0	PROCESSING OPERATIONS			8-1
	8.1	Overview		8-1
	8.2	Historical Operation		8-2
	8.3	Future Operations		8-2
	8.4	Conclusion		8-5

9.0	MINE INFRASTRUCTURE			9-1
	9.1	Mine Surface Facilities		9-1
	9.2	Oaktown Complex Refuse Facility		9-2

10.0	MARKET ANALYSIS			10-1
	10.1	Indiana Coal Industry Background		10-1
		10.1.1	Coal Reserves	10-1
		10.1.2	Coal Quality	10-2
		10.1.3	Transportation	10-3
		10.1.4	Production Evolution	10-4
		10.1.5	Mining Methods	10-4
`		10.1.6	Coal Demand by Market	10-5
	10.2	Sunrise Coal		10-7
		10.2.1	Product Specifications	10-7
		10.2.2	Primary Markets	10-7
		10.2.3	Market Outlook	10-8
		10.2.4	Future Sales	10-9
		10.2.5	Price Forecast	10-10

11.0	CAPITAL AND OPERATING COSTS			11-1
	11.1	Historical Financial Performance		11-1
	11.2	Estimated Costs		11-3
		11.2.1	Forecasted Production	11-4
		11.2.2	Projected Operating Costs	11-5
		11.2.3	Projected Capital Expenditures	11-7

JOHN T. BOYD COMPANY

TABLE OF CONTENTS - Continued

			Page

12.0	ECONOMIC ANALYSIS		12-1
	12.1	Approach	12-1
	12.2	Assumptions and Limitations	12-2
	12.3	Financial Model Results	12-3
	12.4	Sensitivity Analysis	12-6

13.0	PERMITTING AND COMPLIANCE		13-1
	13.1	Permitting Requirements and Status	13-1
	13.2	Environmental Studies	13-3
	13.3	Waste Disposal and Water Management	13-3
	13.4	Compliance	13-3
	13.5	Plans, Negotiations, or Agreements	13-4
	13.6	Mine Closure	13-4
	13.7	Local Procurement and Hiring	13-4

14.0	INTERPRETATION AND CONCLUSIONS		14-1
	14.1	Findings	14-1
	14.2	Significant Risks and Uncertainties	14-1

JOHN T. BOYD COMPANY

TABLE OF CONTENTS - Continued

		Page

List of Tables
1.1	Coal Reserves Summary	1-4
1.2	Coal Reserves by Category	1-5
3.1	Monthly Average Climate Data, Vincennes, Indiana	3-7
5.1	Indiana V Seam Thickness (feet) Statistics	5-4
5.2	Descriptive Statistics, Indiana V Seam Coal Quality	5-6
6.1	Coal Resource Classification Criteria	6-4
6.2	Estimated Coal Reserves by Mine as of 31 December 2021	6-9
6.3	Coal Reserves Summary	6-10
6.4	Coal Reserves Product Quality Summary	6-11
7.1	Projected Number of Operating CM Sections	7-5
7.2	Summary of Production Unit Equipment	7-5
7.3	Historical Employment	7-6
7.4	Historical Mine Production	7-7
7.5	Life-of-Mine Plan Coal Production Summary	7-9
7.6	Life-of-Mine Plan Coal Quality Summary	7-10
7.7	Mine Life Projection	7-11
9.1	CRDA Capacity	9-2
10.1	Historical Indiana Production by County	10-1
10.2	2020 Quality Specifications for Indiana Coal Shipped to Domestic Utilities	10-2
10.3	Indiana Coal Quality by County of Origin	10-2
10.4	Historical Indiana Coal Production and Mine Count	10-4
10.5	Distribution of Indiana Coal Shipments by Market Sector	10-6
10.6	Historical Indiana Coal Deliveries to Utility Market by Destination State	10-6
10.7	Indicative Thermal Coal Quality Specifications by Mine	10-7
10.8	Sunrise Coal Deliveries to Utility Market by Destination State	10-8
10.9	Coal Price Forecast	10-11
11.1	Historical Financials	11-1
11.2	Estimate of Cash Operating Costs	11-6
11.3	Estimate of Capital Expenditures	11-8
12.1	Discounted Cash Flow – Net Present Value Analysis	12-4
12.2	Financial Results	12-5
12.3	DCF-NPV Results	12-5
12.4	After-Tax NPV₁₂ Sensitivity Analysis	12-6
13.1	Summary of Current Permits	13-2

JOHN T. BOYD COMPANY

TABLE OF CONTENTS - Continued

		Page

List of Figures
1.1	General Location Map	1-2
3.1	Map Showing General Layout and Mineral Control	3-2
4.1	Generalized Stratigraphic Chart, Southwestern Indiana	4-2
4.2	Map Showing Indiana V Seam Isopachs	4-4
5.1	Map Showing Drill Hole Locations Indiana V Seam	5-5
6.1	Relationship Between Coal Resources and Coal Reserves	6-2
6.2	Map Showing Product Yield Isopleths, Indiana V Seam	6-7
6.3	Map Showing Reserve Classification, Indiana V Seam	6-8
6.4	Map Showing Product Ash Isopleths, Indiana V Seam	6-12
6.5	Map Showing Product Sulfur Isopleths, Indiana V Seam	6-13
6.6	Reconciliation with Previous Coal Reserves Estimate	6-14
7.1	Room-and-Pillar Mining Method	7-1
7.2	Historic Mining Productivity Levels	7-8
8.1	Aerial Map Showing Oaktown Complex Preparation Plant Facilities	8-3
8.2	Generic Flowsheet, Dense Medium Cyclone/Spiral/Flotation, Oaktown Complex Preparation Plant Facility	8-4
10.1	Indiana Coal Production by Mining Method	10-5
10.2	Future Coal Sales by Order Type	10-9
11.1	Historical Operating Costs by Mine	11-2
11.2	Oaktown Mining Complex Projected Saleable Production	11-4

JOHN T. BOYD COMPANY

GLOSSARY OF ABBREVIATIONS AND DEFINITIONS

$	:	US dollar(s)

%	:	Percent or percentage

AC	:	Alternating current

ARO	:	Asset Retirement Obligations

As-Received Basis	:	Data or results are calculated to the moisture condition of the coal sample when it arrived at the testing facility.

ASTM	:	ASTM International (formerly American Society for Testing and Materials)

BOYD	:	John T. Boyd Company

Btu	:	British thermal unit. A unit of heat; it is defined as the amount of heat required to raise the temperature of one pound of water by one degree Fahrenheit.

CM	:	Continuous Miner

CPP	:	Coal Preparation Plant

Coal	:	Combustible sedimentary rock in which organic matter, including residual moisture comprises more than 50% by weight and more than 70% by volume of carbonaceous material formed from altered plant remains.

Coal Reserve	:	An estimate of tonnage and grade or quality of indicated and measured coal resources that, in the opinion of the qualified person, can be the basis of an economically viable project. More specifically, it is the economically mineable part of a measured or indicated coal resource, which includes diluting materials and allowances for losses that may occur when the material is mined or extracted.

Coal Resource	:	A concentration or occurrence of coal of economic interest in or on the Earth's crust in such form, quality, and quantity that there are reasonable prospects for economic extraction. A coal resource is a reasonable estimate of mineralization, considering relevant factors such as cut-off grade, likely mining dimensions, location, or continuity, that, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable. It is not merely an inventory of all mineralization drilled or sampled.

CRDA	:	Coal Refuse Disposal Area

CSX	:	CSX Corporation. A rail-based freight transportation company

JOHN T. BOYD COMPANY

GLOSSARY OF ABBREVIATIONS AND DEFINITIONS - Continued

CY	:	Cubic yards

DCF	:	Discounted Cash Flow

DOR	:	Indiana Department of Natural Resources’ Division of Reclamation

Dry Basis	:	Data or results are calculated to a theoretical base as if there were no moisture in the coal sample.

EIA	:	U.S. Energy Information Administration

FOB	:	Free-on-Board

Hallador	:	Hallador Energy Company and its subsidiaries

ILB	:	Illinois Basin. Coal producing region consisting of Illinois, Indiana, and Western Kentucky.

IL-EPA	:	Illinois’s Environmental Protection Agency

IN-DNR	:	Indiana’s Department of Natural Resources

Indicated Coal Resource	:	That part of a coal resource for which quantity and quality are estimated based on adequate geological evidence and sampling. The level of geological certainty associated with an indicated coal resource is sufficient to allow a qualified person to apply modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Because an indicated coal resource has a lower level of confidence than the level of confidence of a measured coal resource, an indicated coal resource may only be converted to a probable coal reserve.

INRD	:	Indiana Railroad Company. A rail-based freight transportation company

Inferred Coal Resource	:	That part of a coal resource for which quantity and quality are estimated based on limited geological evidence and sampling. The level of geological uncertainty associated with an inferred coal resource is too high to apply relevant technical and economic factors likely to influence the prospects of economic extraction in a manner useful for evaluation of economic viability. Because an inferred coal resource has the lowest level of geological confidence of all coal resources, which prevents the application of the modifying factors in a manner useful for evaluation of economic viability, an inferred coal resource may not be considered when assessing the economic viability of a mining project, and may not be converted to a coal reserve.

IRR	:	Internal rate-of-return

JOHN T. BOYD COMPANY

GLOSSARY OF ABBREVIATIONS AND DEFINITIONS - Continued

ISO	:	International Organization for Standardization

lb	:	Pound

LOM	:	Life-of-Mine

LW	:	Longwall

Measured Coal Resource	:	That part of a coal resource for which quantity and quality are estimated based on conclusive geological evidence and sampling. The level of geological certainty associated with a measured coal resource is sufficient to allow a qualified person to apply modifying factors, as defined herein, in sufficient detail to support detailed mine planning and final evaluation of the economic viability of the deposit. Because a measured coal resource has a higher level of confidence than the level of confidence of either an indicated coal resource or an inferred coal resource, a measured coal resource may be converted to a proven coal reserve or to a probable coal reserve

Mineral Reserve	:	See “Coal Reserve”

Mineral Resource	:	See “Coal Resource”

Modifying Factors	:	The factors that a qualified person must apply to indicated and measured coal resources and then evaluate to establish the economic viability of coal reserves. A qualified person must apply and evaluate modifying factors to convert measured and indicated coal resources to proven and probable coal reserves. These factors include, but are not restricted to: mining; processing; infrastructure; economic; marketing; legal; environmental compliance; plans, negotiations, or agreements with local individuals or groups; and governmental factors. The number, type and specific characteristics of the modifying factors applied will necessarily be a function of and depend upon the mineral, mine, property, or project.

MSHA	:	Mine Safety and Health Administration. A division of the U.S. Department of Labor

NPDES	:	National Pollutant Discharge Elimination System

NS	:	Norfolk Southern Corporation. A rail-based freight transportation company.

NPV	:	Net Present Value

JOHN T. BOYD COMPANY

GLOSSARY OF ABBREVIATIONS AND DEFINITIONS - Continued

Oaktown Mining Complex	:	Oaktown Mining Complex. Includes the Oaktown Fuels No. 1 Mine, Oaktown Fuels No. 2 Mine, and Oaktown Complex Coal Preparation Plant

OSD	:	Out-of-Seam Dilution. Rock, impurities recovered from above and below the coal seam with the coal seam during the normal mining process

OSMRE	:	Office of Surface Mining, Reclamation and Enforcement

Probable Coal Reserve	:	The economically mineable part of an indicated and, in some cases, a measured coal resource.

Production Stage Property	:	A property with material extraction of coal reserves.

Proven Coal Reserve	:	The economically mineable part of a measured coal resource which can only result from conversion of a measured coal resource.

QP	:	Qualified Person

Qualified Person	:	An individual who is: 1.     A mineral industry professional with at least five years of relevant experience in the type of mineralization and type of deposit under consideration and in the specific type of activity that person is undertaking on behalf of the registrant; and 2.     An eligible member or licensee in good standing of a recognized professional organization at the time the technical report is prepared. For an organization to be a recognized professional organization, it must: a.       Be either:   i.      An organization recognized within the mining industry as a reputable professional association; or ii.     A board authorized by U.S. federal, state, or foreign statute to regulate professionals in the mining, geoscience, or related field; b.     Admit eligible members primarily based on their academic qualifications and experience; c.     Establish and require compliance with professional standards of competence and ethics; d.     Require or encourage continuing professional development; e.      Have and apply disciplinary powers, including the power to suspend or expel a member regardless of where the member practices or resides; and f.      Provide a public list of members in good standing.

JOHN T. BOYD COMPANY

GLOSSARY OF ABBREVIATIONS AND DEFINITIONS - Continued

R&P	:	Room-and-pillar

RC	:	Ram cars

ROM	:	Run-of-Mine. The as-mined material including coal, in-seam rock partings mired with the coal, and out-of-seam dilution.

SC	:	Shuttle cars

SGF	:	Specific gravity float

SEC	:	U.S. Securities and Exchange Commission

S-K 1300	:	Subpart 1300 and Item 601(b)(96) of the U.S. Securities and Exchange Commission’s Regulation S-K

SMCRA	:	Surface Mining Control and Reclamation Act of 1977

Sunrise	:	Sunrise Coal, LLC and its subsidiaries

Ton	:	Short Ton. A unit of weight equal to 2,000 pounds

TPH	:	Tons per Hour

TPEH	:	Tons per Employee-Hour

JOHN T. BOYD COMPANY

1-1

1.0             EXECUTIVE SUMMARY

1.1        Introduction

Sunrise’s Oaktown Mining Complex is a mining complex that includes two active underground room-and-pillar (R&P) mines—Oaktown Fuels No. 1 Mine and Oaktown Fuels No. 2 Mine—and the Oaktown Complex Coal Preparation Plant (CPP). BOYD was retained by Sunrise to complete an independent technical assessment of coal resource and coal reserve estimates for the Oaktown Mining Complex.

BOYD’s findings as a result of the audit of Oaktown Mining Complex’s coal resource and coal reserve estimates are based on our detailed examination of the supporting geologic, technical, and economic information obtained from: (1) Sunrise files, (2) discussions with Sunrise personnel, (3) records on file with regulatory agencies, (4) public sources, and (5) nonconfidential BOYD files.

This technical report identifies and summarizes the results of our audit of the Oaktown Mining Complex coal reserves and independent assessment of the economic viability of extracts of the Oaktown Mining Complex coal reserves over the life of the mine and satisfies the requirements for Sunrise’s disclosure of coal reserves set forth in Subpart 1300 and Item 601(b)(96) of the SEC's Regulation S-K (S-K 1300). This is the first technical report summary for the Oaktown Mining Complex. BOYD is a qualified person as defined in Regulation S-K 1300.

Weights and measurements are expressed in US customary units. Unless noted, the effective date of the information, including estimates of coal reserves, is December 31, 2021.

1.2         Property Description

The Oaktown Mining Complex is an active underground coal mining and processing operation located in Knox and Sullivan counties, Indiana, and Lawrence County, Illinois. The general location of the Oaktown Mining Complex is provided in Figure 1.1, following this page. The project lies in a well-developed region with a robust infrastructure.

JOHN T. BOYD COMPANY

1-2

JOHN T. BOYD COMPANY

1-3

Located within the ILB coal-producing region of the midwestern US, the Oaktown Mining Complex is one of the largest underground R&P coal mining complexes in North America.

The Oaktown Mining Complex mines coal exclusively from the Indiana V Seam (Illinois No. 5 Springfield Seam). Within the Oaktown Mining Complex mine plan boundaries, Sunrise currently maintains the right to mine and remove approximately 78% of the Indiana V Seam through lease agreements. Several small adverse (uncontrolled) tracts exist within the proposed life-of-mine (LOM) plan; however, Sunrise has demonstrated success in acquiring these as required during the ordinary course of business. BOYD is not aware of any encumbrances, litigation, or orders that would hinder the continued development of the property.

The Indiana V Seam has been extensively mined in the ILB region and is one of two predominant coal seams of economic interest. Sunrise has demonstrated a history of successfully mining the Indiana V Seam at the Oaktown Mining Complex, with initial mining at the complex dating to 2009.

1.3            Geology

The Oaktown Mining Complex is situated in the Carbondale Group (Formation) of the Pennsylvania System. Near-surface geology of this area primarily consists of the overlying Quarternary System. Coal seams mined in this region are generally classified as medium- to high-sulfur content and moderate ash thermal coal products.

The Indiana V Seam is the only coal seam of economic interest on the property. Structurally, the Indiana V Seam consists of a singular and relatively consistent horizon averaging between 4 ft to 8 ft thick containing little in-seam parting. The Indiana V Seam globally dips in the general westerly direction and experiences localized areas where the seam elevations vary. Pronounced gradients can occur periodically in the form of rolls in the seam. Depths for the Indiana V Seam range from approximately 300 ft to 450 ft below ground surface within the Oaktown Mining Complex area.

The Indiana V Seam coal bed is characterized as high sulfur and moderate ash coal that is used for steam purposes.

JOHN T. BOYD COMPANY

1-4

1.4            Exploration

The Indiana V Seam has been extensively explored and mined in the region, with drilling records dating prior to the inception of the Oaktown Mining Complex. Sunrise provided data for 1,895 drill holes that have intercepted the Indiana V Seam and have been complied for defining the lateral extent, thickness, and qualities (both raw and clean) of the Indiana V Seam in the immediate Oaktown Mining Complex project area.

BOYD’s audit indicates that in general: (1) Sunrise has performed extensive drilling and sampling work on the subject property, (2) the work completed has been done by competent personnel, and (3) the amount of data available combined with wide-spread knowledge of the Indiana V Seam, is sufficient to confirm the thickness, lateral extents, and quality characteristics of the Indiana V Seam.

1.5            Coal Resources/Reserves

Table 1.1: Coal Reserves Summary


				Average Product Quality (As Received Basis)
		Product				%				Heating		SO₂
		Tons		Total						Value		(lbs per
Mine	Classification	millions		Moisture		Ash		Sulfur		(Btu/lb)		MMBtu)
Oaktown Fuels No. 1	Proven		40.1		13.00		7.4		3.5		11,519		6.0
	Probable		0.4		13.00		7.4		3.6		11,525		6.2
	Total		40.5		13.00		7.4		3.5		11,519		6.0
Oaktown Fuels No. 2	Proven		29.7		13.00		7.9		3.3		11,540		5.7
	Probable		1.1		13.00		8.0		3.2		11,520		5.6
	Total		30.9		13.00		7.9		3.3		11,540		5.6
Total - Oaktown Mining Complex	Proven		69.8		13.00		7.6		3.4		11,528		5.9
	Probable		1.6		13.00		7.8		3.3		11,522		5.8
	Total		71.4		13.00		7.6		3.4		11,528		5.9

JOHN T. BOYD COMPANY

1-5

Table 1.2, below, provides a breakdown of the coal reserves by control type and permit status.

Table 1.2: Coal Reserves by Category
	Product Tons
	(millions)		%
Control Type
Owned		-		-
Leased		71.4		100.0
Permit Status
Permitted		66.1		92.6
Not Permitted		5.3		7.4

It is BOYD’s opinion that extraction of the reported coal reserves is technically achievable and economically viable after the consideration of potentially material modifying factors. Periodic amendments to existing mining permits to add additional acreage (reserve tonnage) in order to sustain coal production is common practice. We are not aware of any issues that would impact or prevent the present “Not Permitted” reserves to be permitted as future mining needs dictate. We are also not aware of any prohibition against the proposed mining and processing activities.

There are no reportable coal resources excluding those converted to coal reserves for the Oaktown Mining Complex.

1.6            Operations

1.6.1         Mining

The Oaktown Mining Complex is comprised of the Oaktown Fuels No. 1 and Oaktown Fuels No. 2 underground mines. Each mine utilizes R&P mining (employing continuous miners [CMs]) for primary production. This mining method is highly productive and commercially demonstrated; it has been one of the primary approaches to mining the Indiana V Seam for decades. Oaktown Mining Complex has utilized this mining method since the inception of each operation. To date, Oaktown Mining Complex has produced a combined 58.3 million tons of clean coal. The complex is configured to operate up to seven CM sections, with an annual production target of approximately 8 million product tons. The Oaktown Mining Complex is generally considered an industry leader in terms of mining productivity and mining costs when compared to other R&P underground operations.

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It is BOYD’s opinion that the forecasted production levels for the Oaktown Mining Complex operations are reasonable, logical, and consistent with typical R&P mining practices in the Indiana V Seam and historical practices utilized by Sunrise. The Oaktown Mining Complex LOM plans developed by BOYD show a relatively stable production output until individual production sections are retired corresponding to reserve exhaustion. In the aggregate, the Oaktown Mining Complex LOM plan projects the complex will produce approximately 131.6 million tons of run-of-mine (ROM) coal (91.6 million saleable tons after processing) during the next 17 years (through 2038).

1.6.2         Processing

The Oaktown Complex CPP serves as the coal washing facility for the Oaktown Mining Complex’s two R&P mines. The plant was commissioned in 2009 to wash coal produced by the Oaktown Fuels No. 1 Mine. The Oaktown Complex CPP has a current processing capacity of 1,600 raw tons-per-hour (TPH).

The beneficiation process utilized at the Oaktown Mining Complex has a proven performance record and has remained relatively unchanged for decades. The plant’s ability to blend raw coal production from the two underground mines into a singular plant feed allows for both more consistent plant operation and the ability to achieve differing clean coal qualities for various customer specifications.

1.6.3         Other Infrastructure

The Oaktown Mining Complex underground mines and CPP are supported by several surface infrastructure sites. Major surface infrastructure includes ancillary buildings, high-voltage power distribution stations, ROM coal conveyor belts, CPP refuse facilities, underground access and ventilation structures, and truck/rail loading systems.

Product coal from the Oaktown Mining Complex is transported to its customer base via rail, truck, or a combination of both. The Oaktown Complex CPP is served by both the CSX Railroad and Indiana Railroad (INRD) via a rail spur and rail loop that connects the complex with the mainline rail just north of Oaktown, Indiana. Additionally, the Oaktown Complex CPP can facilitate the loading of trucks for direct transport to select customers, or to Sunrise’s transload facility in Princeton, Indiana serviced by the Norfolk Southern (NS) Railroad.

The Oaktown Complex refuse facility serves as the disposal location for all waste rock (coarse coal refuse) and portions of the fine coal slurry (fine coal refuse) produced during the processing of coal. The majority of the fine coal slurry is transported overland via a network of pumps and pipelines for underground disposal within mined-out void areas of the Oaktown Fuels No. 1 and No. 2 mines.

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1.7            Financial Analysis

1.7.1         Market Analysis

The Oaktown Mining Complex’s product is thermal coal that is directed into the US coal-fired generation market. Historically, this market accounts for all of the Oaktown Mining Complex annual sales.

Coal use among domestic power generators has fallen out of favor in several of the individual states of the US and is being replaced by natural gas and renewable forms of generation. However, several states are positioned to remain largely reliant upon coal for power generation, such as Indiana. Sunrise anticipates its geographical location, reputation for sustained production, and well-capitalized infrastructure well position the complex to continue supplying coal into the Indiana market and other domestic coal markets when opportunities present.

1.7.2         Capital and Operating Costs

The ILB is widely recognized as being ideally suited for commercial scale mining through R&P mining methods. The region’s Indiana V Seam is conducive to efficient, low-cost production R&P operations. In terms of total dollars expended per year, cash operating costs for R&P mines contain a mixture of variable and fixed costs. Unit costs, therefore, will vary mostly due to changes in production and less so with regard to general inflation and major mine site changes.

During the historical review period of 2018 through 2021, total cash operating costs per saleable ton for the Oaktown Mining Complex were within the range of $27 to $31 per saleable ton. While each of the individual mines may have realized higher or lower operating costs annually, their operation in parallel aids in the complex’s ability to minimize short-term periods of individual mine coal production decreases and/or increases in operating costs.

The Oaktown Mining Complex is regarded as being well-capitalized comparatively to industry peers. Continual capital expenditures have been ongoing by Sunrise in recent years to support mine infrastructure expansions, maintenance of production equipment, refuse placement, etc. Historical annual capital expenditures were found to be within the range of $4 to $5 per saleable ton for the Oaktown Mining Complex.

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BOYD found Sunrise’s forecasted operating and capital costs to be indicative of the complex’s historical performance and in general agreement with BOYD’s independent LOM forecasts.

1.7.3         Economic Analysis

The results of our indicative economic analysis for Oaktown Mining Complex over the 15-year period (2022 to 2036) shows an after-tax net present value (NPV) of $400 million for the expected case at a 12% discount rate. The coal sales price estimated over the life of the reserves averages approximately $47 (ranging from $42.50 to $64). The cash flow estimates are positive even after performing independent sensitivity analyses of up to 10% variation in operating costs and sales prices. Based on this analysis, BOYD concludes that the stated coal reserves are economically viable under reasonable market price expectations for the coal produced from the Oaktown Mining Complex.

The NPV estimate was made for purposes of confirming the economic viability of the reported coal reserves and not for purposes of valuing Sunrise or its assets. Internal rate-of-return (IRR) and project payback were not calculated, as there was no initial investment considered in the financial model.

1.8            Regulation and Liabilities

Multiple permits are required by federal and state law for underground mining, coal preparation and related facilities, and other incidental activities. Sunrise reports that all necessary permits to support current operations are in place or pending approval. New permits or permit revisions may be necessary from time to time to facilitate future operations. Given sufficient time and planning, Sunrise should be able to secure new permits, as required, to maintain its planned operations within the context of the current regulations.

Permits generally require that Sunrise post a performance bond in an amount established by the regulator program to: (1) provide assurance that any disturbance or liability created during mining operation is properly mitigated, and (2) assure that all regulation requirements of the permit are fully satisfied. Sunrise reports holding surety bonds to cover its current obligations relating to mining and reclamation, road repair, etc. Those obligations currently equate to $5.8 million.

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1.9            Conclusions

It is BOYD’s overall conclusion that Sunrise’s estimates of coal reserves, as reported herein: (1) were prepared in conformance with accepted industry standards and practices, and (2) are reasonably and appropriately supported by technical evaluations, which consider all relevant modifying factors. We do not believe there is other relevant data or information material to the Oaktown Mining Complex that would render this technical report summary misleading. Our conclusions represent only informed professional judgment.

Given the operating history and status of evolution, residual uncertainty for this project is considered minor under the current and foreseeable operating environment. A general assessment of risk is presented in the relevant sections of this report.

The ability of Sunrise, or any mine operator, to recover all of the reported coal reserves is dependent on numerous factors that are beyond the control of, and cannot be anticipated by, BOYD. These factors include mining and geologic conditions, the capabilities of management and employees, the securing of required approvals and permits in a timely manner, future coal prices, etc. Unforeseen changes in regulations could also impact performance. Opinions presented in this report apply to the site conditions and features as they existed at the time of BOYD’s investigations and those reasonably foreseeable.

JOHN T. BOYD COMPANY

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2.0            INTRODUCTION

2.1            Registrant and Purpose

This technical report summary was prepared for Hallador Energy (Hallador) in support of their disclosure of their subsidiary, Sunrise’s, coal resources and coal reserves for the Oaktown Mining Complex.

Hallador is a US-based energy solutions company headquartered in Terre Haute, Indiana, and is listed on the National Association of Securities Dealers Automated Quotations (NASDAQ:HNRG) stock exchange. A large portion of Hallador’s business focuses upon coal mining through their subsidiary Sunrise. Sunrise is actively engaged in the production and export of thermal coal from mines located in the ILB. The company also owns and operates the Princeton Rail Loop, which is located near Princeton, Indiana on the NS Railroad. Additional information regarding Hallador (and Sunrise) can be found on their website at www.halladorenergy.com.

2.2            Terms of Reference

Sunrise retained BOYD to complete an independent technical assessment of mineral resource and mineral reserve estimates and supporting information for the Oaktown Mining Complex. Our objective was to obtain reasonable assurance that the coal resource and coal reserve statements for Oaktown Mining Complex are free from material misstatement.

The results of our third-party study, presented in report form herein, were prepared in accordance with the disclosure requirements set forth in Subpart 1300 and Item 601(b)(96) of the SEC’s Regulation S-K. The purpose of this report is: (1) to summarize available information for the subject mining properties, (2) to provide the conclusions of our technical assessment, (3) to provide a statement of coal resources and/or coal reserves for the Oaktown Mining Complex, and (4) provide our conclusion of the economic viability of the Oaktown Mining Complex’s coal reserves. This is the first technical report summary filed by Sunrise for the Oaktown Mining Complex.

BOYD’s findings are based on our detailed examination of the supporting geologic and other scientific, technical, and economic information provided by Sunrise, as well as our assessment of the methodology and practices applied by Sunrise in formulating the estimates of coal resources and coal reserves disclosed in this report. We did not independently estimate coal resources or coal reserves from first principles.

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We used standard engineering and geoscience methods, or a combination of methods, that we considered to be appropriate and necessary to establish the conclusions set forth herein. As in all aspects of mining property evaluation, there are uncertainties inherent in the interpretation of engineering and geoscience data; therefore, our conclusions necessarily represent only informed professional judgment.

The ability of Sunrise, or any mine operator, to recover all of the estimated coal reserves presented in this report is dependent on numerous factors that are beyond the control of, and cannot be anticipated by, BOYD. These factors include mining and geologic conditions, the capabilities of management and employees, the securing of required approvals and permits in a timely manner, future coal prices, etc. Unforeseen changes in regulations could also impact performance. Opinions presented in this report apply to the site conditions and features as they existed at the time of BOYD’s investigations and those reasonably foreseeable.

This report is intended for use by Sunrise subject to the terms and conditions of its professional services agreement with BOYD. The agreement permits Sunrise to file this report as a technical report summary with the SEC pursuant to Subpart 1300 and Item 601(b)(96) of Regulation S-K. Except for the purposes legislated under US securities law, any other uses of our reliance on this report by any third party is at that party’s sole risk. The responsibility for this disclosure remains with Sunrise. The user of this document should ensure that this is the most recent disclosure of coal resources and coal reserves for the subject property as it is no longer valid if more recent estimates have been issued.

2.3            Expert Qualifications

BOYD is an independent consulting firm specializing in mining-related engineering and financial consulting services. Since 1943, BOYD has completed over 4,000 projects in the United States and more than 60 other countries. Our full-time staff comprises mining experts in: civil, environmental, geotechnical, and mining engineering; geology; mineral economics; and market analysis. Our extensive experience in coal resources/reserve estimation and our knowledge of the subject coal properties, provides BOYD an informed basis on which to opine on the reasonableness of the estimates provided by Sunrise. An overview of BOYD can be found on our website at www.jtboyd.com.

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The individuals primarily responsible for this independent technical assessment and the preparation of this report are by virtue of their education, experience, and professional association considered qualified persons as defined in Subpart 1300 of Regulation S-K.

Neither BOYD nor its staff employed in the preparation of this report have any beneficial interest in Sunrise, and are not insiders, associates, or affiliates of Sunrise. The results of our audit were not dependent upon any prior agreements concerning the conclusions to be reached, nor were there any undisclosed understandings concerning any future business dealings between Sunrise and BOYD. This report was prepared in return for fees based upon agreed commercial rates, and the payment for our services was not contingent upon our opinions regarding the project or approval of our work by Sunrise and its representatives.

2.4            Principal Sources of Information

Information used in this assignment was obtained from: (1) Sunrise files, (2) discussions with Sunrise personnel, (3) records on file with regulatory agencies, (4) public sources, and (5) nonconfidential BOYD files.

The following information was provided by Sunrise:

	·	Year-end reserve statements and reports for 2021.
	·	Exploration records (e.g., drilling logs, lab sheets).
	·	Geologic databases of lithology and coal quality.
	·	Computerized geologic models.
	·	Mapping data, with:

	-	Mineral tenure boundaries.
	-	Permit boundaries.
	-	Limits of previous mining.

	·	LOM plans and supporting documentation.
	·	Financial forecasting models.
	·	Historical information, including:

	-	Production reports and reconciliation statements.
	-	Financial statements.
	-	Product sales and pricing.

Information from sources external to BOYD and/or Sunrise are referenced accordingly.

The data and work papers used in the preparation of this report are on file in our offices.

JOHN T. BOYD COMPANY

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2.4.1         Site Visits

A personal inspection of the Oaktown Fuels No. 1 and No. 2 mines was made by two of BOYD’s senior mining engineers—qualified persons and co-authors of this report—on December 2, 2021. The site visit included: (1) observation of both mine’s active underground workings, belt lines, outby areas, and portal (mine access) locations; (2) a tour of the mine site’s surface infrastructure; and (3) a tour of the Oaktown Complex CPP, truck and rail loadout, and refuse disposal facility. BOYD’s representatives were accompanied by senior Sunrise management personnel who openly and cooperatively answered questions regarding, but not limited to: site geology, mining conditions and operations, equipment usage, labor relations, operating and capital costs, current coal washing operations, and coal marketing.

2.4.2         Reliance on Information Provided by the Registrant

In the preparation of this report we have relied, without independent verification, upon information furnished by Sunrise with respect to: property interests; exploration results; current and historical production from such properties; current and historical costs of operation and production; and agreements relating to current and future operations and sale of production.

BOYD exercised due care in reviewing the information provided by Sunrise within the scope of our expertise and experience (which is in technical and financial mining issues) and concluded the data are valid and appropriate considering the status of the subject properties and the purpose for which this report was prepared. BOYD is not qualified to provide findings of a legal or accounting nature. We have no reason to believe that any material facts have been withheld, or that further analysis may reveal additional material information. However, the accuracy of the results and conclusions of this report are reliant on the accuracy of the information provided by Sunrise.

While we are not responsible for any material omissions in the information provided for use in this report, we do not disclaim responsibility for the disclosure of information contained herein which is within the realm of our expertise.

2.5            Effective Date

The coal resources and coal reserves presented in this technical report summary are effective as of December 31, 2021. The report effective date is December 31, 2021.

JOHN T. BOYD COMPANY

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2.6            Units of Measure

The US customary measurement system has been used throughout this report. Tons are short tons of 2,000 pounds-mass. Unless otherwise stated, all currency is expressed in constant 2021 US Dollars ($).

JOHN T. BOYD COMPANY

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3.0            PROPERTY OVERVIEW

3.1            Description and Location

The Oaktown Mining Complex is a coal mining and processing operation located in Knox and Sullivan counties, Indiana, and Crawford and Lawrence counties, Illinois. Comprising almost 118 square miles within the ILB coal-producing region of the midwestern US, the Oaktown Mining Complex is one of the largest underground R&P coal mining complexes in North America. The Oaktown Mining Complex operations currently consist of two active underground mines—Oaktown Fuels No. 1 Mine and Oaktown Fuels No. 2 Mine—and related infrastructure.

While each of the two mines operate under a unique Mine Safety and Health Administration (MSHA) mine identification number and has a separate direct management team, the Oaktown Mining Complex is commercially operated as a single entity. All mine output is delivered by belt conveyors to a central coal processing facility, the Oaktown Complex CPP, that is rated at 1,600 raw TPH and reports to MSHA under its own identification number. The ROM coal is segregated by mine, and refined analysis and processing systems are utilized to meet customer specifications. Plant reject-material reports to the coarse and fine refuse disposal facilities or is placed into abandoned mine void areas through slurry (fine refuse) injection. Saleable output is shipped to a diverse customer base via truck or rail facilitated by the rail load-out on a dedicated rail spur serviced by CSX and INRD.

The Oaktown Mining Complex is located approximately 44 miles south of Terre Haute, Indiana near the town of Oaktown, Indiana. The city of Vincennes, Indiana lies about 14 miles to the southwest. The project area is essentially bisected by U.S. Route 41.

Geographically, the Oaktown Complex CPP is located at approximately 38°51’24.7” N latitude and 87°25’30.9” W longitude. Figures 1.1 (page 1-2) and 3.1, following this page, illustrate the location and general layout of the Oaktown Mining Complex.

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JOHN T. BOYD COMPANY

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3.2           History

Vectren Fuels was the original developer of the property. Construction of the Oaktown No. 1 Mine slope, surface mine infrastructure and CPP began in 2008. Following development of the slope, commercial coal production began in 2009. Processing of the Oaktown No. 1 Mine coals was facilitated by the then 800 raw feed TPH capacity CPP. Development of Oaktown No. 2 Mine followed shortly after, with commercial coal production beginning in 2013. The commercial production status of Oaktown No. 2 Mine coincided with the expansion of the CPP’s 800 TPH capacity to its present 1,600 TPH capacity.

Sunrise’s involvement with the Oaktown Mining Complex dates to 2014 with the acquisition of Oaktown Fuels No. 1 and No. 2 mines from Vectren Fuels. Since the acquisition, Sunrise has steadily increased annual production from the Oaktown Mining Complex—now averaging between 6 to 7 million product tons annually. The mine workings have substantially grown since 2014, and both mines have installed new shafts (mine accesses) for employee ingress/egress from the active production faces. The new Oaktown No. 1 Mine portal location is approximately 4.5 miles southeast of the town of Oaktown, Indiana while the new Oaktown No. 2 Mine portal location is approximately 1.5 miles northwest of the village of Russellville, Illinois.

There are no significant Indiana V Seam mining activities known to have occurred within the Oaktown Mining Complex bounds preceding Vectren Fuel’s and Sunrise’s involvement.

3.3           Property Control

Within the Oaktown Mining Complex area and immediate vicinity, Sunrise controls approximately 75,000 acres of mineral rights. This control exists as a complex collection of leases that apply to more than 2,000 tracts. Each of which range from less than an acre to several hundred acres in size. Ownership of the surface rights and the mineral rights is often severed for the properties and the estates are often fractional, in which mineral rights are split between several owners. Sunrise and its predecessors have acquired the necessary rights to support development and operations through purchase or lease agreements with predominantly private owners or entities.

BOYD has not independently verified ownership of the Oaktown Mining Complex area and the underlying property agreements. Ownership data provided to BOYD, including maps and summaries of lease agreements, have been accepted as being true and accurate for the purpose of this report.

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3.3.1        Coal Ownership

Sunrise maintains the right to mine and remove approximately 77% of the Indiana V Seam within the Oaktown Mining Complex area, with the balance (approximately 18,400 acres) currently reported as adverse.

Sunrise currently controls approximately 78% of the coal within projected mine plan boundaries through lease agreements. Reportedly, lease terms generally extend until all the coal is removed from the subject tract. Where applicable, royalty rates are typically based upon a percentage of the gross sales price of the coal. No material amounts of mineral within the Oaktown Mining Complex mine plan boundaries is owned in fee.

Adverse (uncontrolled) tracts within the project limits are common; however, it is generally reasonable to assume that such tracts can be acquired or leased in the ordinary course of business as has been demonstrated historically by Sunrise. It is BOYD’s opinion that adverse coal control does not pose a material risk to the estimate of coal reserves reported herein.

3.3.2        Surface Ownership

As part of the Oaktown Mining Complex, Sunrise controls surface rights through fee simple ownership for over 1,700 permitted acres. Upon those acres resides the surface facilities for mine accesses, processing, storing, shipping, and refuse disposal facilities (i.e., refuse impoundment site and fine refuse injection sites).

Sunrise reports it controls adequate surface rights to sustain current mining operations in the near term. Additional surface property will likely be required during the life of the mine for the placement of additional infrastructure. It is generally reasonable to assume the required property can be acquired or leased in the ordinary course of business; as such, we do not believe there is any undue risk associated with surface ownership to the estimated reserves reported herein.

3.4            Adjacent Properties

As illustrated in Figures 1.1 and 3.1, there are no other operating mines or mines/properties controlled by Sunrise adjacent to the Oaktown Mining Complex. As shown, some existence of Indiana V Seam mining has taken place near the Oaktown Mining Complex to the northeast. Sunrise’s mine plans include sufficient barrier zones to mitigate any risk associated with prior mining activities of the adjacent properties.

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3.5            Regulation and Liabilities

Mining and related activities on the Oaktown Mining Complex properties is regulated by both federal and state laws. The relevant federal laws include:

	·	Clean Air Act of 1970/1977.
	·	Clean Air Act Amendments of 1990.
	·	Clean Water Act of 1977.
	·	Surface Mining Control and Reclamation Act of 1977.
	·	Resource Conservation and Recovery Act of 1976.

In Indiana and Illinois, responsibility for enforcing these acts, with the aid of numerous state laws and legislative rules, lies with Illinois’s Environmental Protection Agency (IL-EPA) and Indiana’s Department of Natural Resources (IN-DNR).

As mandated by these laws and regulations, numerous permits are required for underground mining, coal preparation and related facilities, and other incidental activities. Sunrise reports that necessary permits are in place or applied for to support current operations. New permits or permit revisions may be necessary from time to time to facilitate future operations. Given sufficient time and planning, Sunrise should be able to secure new permits, as required, to maintain its planned operations within the context of the current regulations.

Permits generally require that the permittee post a performance bond in an amount established by the regulator program to: (1) provide assurance that any disturbance or liability created during mining operation is properly mitigated, and (2) assure that all regulations requirements of the permit are fully satisfied. Sunrise reports holding surety bonds to cover its current obligations relating to mining and reclamation, road repair, etc. Those obligations currently equate $5.8 million.

Regular inspection of the mines and related facilities are conducted by MSHA for health and safety compliance. On finding any violation of a health or safety standard, an inspector will issue a citation that specifies the standard violated and evaluates the gravity of the violation by several factors, including likelihood of injury. Any infraction that is reasonably likely to result in a serious injury or illness or is caused by the operator's unwarrantable failure to comply with regulatory requirements will carry additional fines and could result in temporary closure. Typically, the civil penalties for regular assessments are not considered material.

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BOYD is not aware of any prohibition of mining and processing activities for the Oaktown Mining Complex. However, the reported coal reserves may be materially impacted by: Sunrise’s failure to comply with permit conditions and rules; delays in obtaining required government or other regulatory approvals or permits; Sunrise’s inability to obtain such required approvals or permits; or changes in governmental regulations.

3.6            Accessibility, Local Resources, and Infrastructure

The Oaktown Mining Complex lies within a rural but well-developed region of southwestern Indiana and southeastern Illinois, with an extensive history related not only to coal mining, processing, and transportation, but also many other industries and services. A reported 1.4 million people live within 75 miles of the Oaktown Mining Complex, according to the U.S. Census of 2020.

General access to the Oaktown Mining Complex is via a well-developed network of primary and secondary roads serviced by state and local governments. These roads offer direct access to the mine and processing facilities and are generally open year-round.

Coal produced at the Oaktown Mining Complex is transported primarily by rail, truck, or a combination of both. A rail load-out facility and dedicated rail spur loop facilitate transportation of the coal on the INRD and CSX railroads. Additionally, Oaktown Mining Complex can facilitate the loading of trucks for direct transport to select customers, or to Sunrise’s transload facility in Princeton, Indiana serviced by the NS Railroad.

Several regional airports are located near the Oaktown Mining Complex and the Indianapolis International Airport is located approximately 100 miles northeast of the complex.

3.7            Physiography

The Oaktown Mining Complex lies within the Southern Hills and Lowland areas of the Southwest Indiana region. This region is characterized by relatively flat topography possessing gentle gradients associated with drainages. Surface elevations within the Oaktown Mining Complex area range from approximately 410 ft to 590 ft above mean sea-level. The region possesses a network of overlying tributaries and waterways flowing to the Wabash River; all of which overlay the complex area.

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Land cover within the area consists predominantly of mixed crop/pastureland and forest dotted with medium- to low-density (rural) residential areas.

3.8            Climate

Climate in and around the Oaktown Mining Complex is typical of southwestern Indiana, with four distinct seasons: cold winters; hot and humid summers; and mild falls and springs. The average daily high temperatures are above freezing 12 months of the year while the low temperatures drop below freezing 3 months of the year. Table 3.1 provides monthly average climate data collected from 2020 through 2021 in Vincennes, Indiana.

Table 3.1: Monthly Average Climate Data, Vincennes, Indiana

Average	Unit	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
High Temp	°F	38	43	54	66	76	84	88	87	81	69	56	42
Low Temp	°F	21	24	33	44	54	63	66	64	56	44	35	25

Source: US Climate Normals.

The area experiences on average 46 in. of rain and 9 in. of snowfall per year. Adverse weather conditions seldom limit the Oaktown Mining Complex coal mining, processing, and loading operations; however, extreme weather conditions may temporarily impact operations.

JOHN T. BOYD COMPANY

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4.0       GEOLOGY

4.1            Regional Geology

The Oaktown Mining Complex is located within the eastern portion of the ILB region, a sedimentary basin which coal-bearing areas cover approximately 50,000 square miles across the majority of Illinois, southwestern Indiana and portions of western Kentucky. The coal bearing members of the ILB consist of Pennsylvanian rocks, formed approximately 290 – 330 million years ago. The Indiana VI (Herrin) and Indiana V (Springfield) seams are accredited with the vast majority of the economically mineable coals within the ILB.

The ILB has informally been subdivided into eight mining regions—Northern Illinois, Western Illinois, West-central Illinois, East-central Illinois, Southwestern Illinois, Southeastern Illinois, Southwestern Indiana, and Western Kentucky. The majority of current coal mining from the ILB occurs within the West-central Illinois, Southeastern Illinois, Southwestern Illinois, Southwestern Indiana, and Western Kentucky regions. The Oaktown Mining Complex is located within the Southwestern Indiana region of the ILB.

There are three predominant structural features within the ILB which include the DuQuoin monocline, La Salle anticlinal belt, and the Cottage Grove-Rough Creek fault system. The features surround the Fairfield Basin area which contain the deepest extents of the ILB. The DuQuoin monocline on the west, the La Salle anticlinal belt on the north, and the Cottage Grove-Rough Creek fault system on the south, all flank the Fairfield Basin. In general, the Illinois and Indiana portions of the ILB dip gently towards the interior, Fairfield Basin. The Southwestern Indiana mining region, in which the Oaktown Mining Complex is located, experiences localized rolling of the coal seams but predominately dips in a westerly direction.

The Carbondale Formation is the primary coal-bearing formation containing the majority of the ILB economically mineable bituminous coals. The Indiana VI (Herrin) and Indiana V (Springfield) seams that are heavily exploited within the ILB, are typically between 2 ft and 6 ft in thickness. Coal in the region is classified as high-volatile bituminous with rank increasing to the south. Sulfur content is generally related to the overlying strata of the coals within the ILB. Generally, coals possess sulfur contents ranging from 3% to 5% and heating values above 11,000 Btu/lb.

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4.2            Local Stratigraphy

Pennsylvanian sedimentary strata comprise the uppermost stratigraphic units of bedrock in and around the Oaktown Mining Complex. These units primarily include bedrock of, in descending stratigraphic order, the McLeansboro, Carbondale and Racoon Creek Group.

The strata of the Pennsylvanian system are predominantly clastic and contain subordinate amounts of coal and limestone. The Indiana V (Springfield) coal seam resides within the Carbondale Group, specifically the Petersburg formation. The stratigraphic relationship between these groups is presented in Figure 4.1 as follows.

System	Group	Formation
		Mattoon
		Bond
	McLeansboro	Patoka
		Shelbum
		Dugger
	Carbondale	Petersburg
Pennsylvanian		Linton
		Staunton
		Brazil
	Raccoon Creek
		Mansfield
Figure 4.1
Generalized Stratigraphic Chart,
Southwestern Indiana

4.2.1        McLeansboro Group

The McLeansboro Group ranges in thickness of approximately 150 to 750 ft; beginning with the Mattoon Formation. The uppermost Mattoon Formation is predominately formed of sandstone and/or conglomerate type rocks. The remaining Bond, Patoka, and Shelburn formations, in descending stratigraphic order, are characterized by sequences of shale, mudstone, and siltstone with interspersed limestones. The predominant limestones of presence are the Livingston, Carthage, Vigo and West Franklin. There are no bituminous coal beds present possessing economic value.

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4.2.2        Carbondale Group

The Carbondale Group extends from the Indiana VII (Danville) coal seam to the base of the Indiana III (Seelyville) coal seam. The unit is divided into the Dugger, Petersburg, and Linton formations. The Carbondale Group is a sedimentary sequence of non-marine rocks (sandstone, siltstone, mudstone, shale, limestone, and coal) ranging in thickness from approximately 300 ft to 450 ft. Regionally, the Carbondale Group contains several commercial coal beds, including the Indiana VII (Danville), Indiana VI (Herrin), Indiana V (Springfield) and others; however, within the vicinity of the Oaktown Mining Complex, only the Indiana V Seam is of economic interest. The Indiana V coal seam possesses moderate continuity (instances of sandstone paleochannel erosion) and ideal mining thickness (4 ft to 8 ft).

4.2.3        Raccoon Creek Group

The Raccoon Group includes all strata below the base of the Indiana III (Seelyville) coal bed. It is made up of Staunton, Brazil, and Mansfield formations. The Raccoon Group reaches a maximum thickness of about 1,000 ft in southwestern Indiana. Strata of the group are very similar to those of the overlying Carbondale Group, except that the Raccoon Creek Group contains coal beds of little or no commercial value.

4.3           Coal Seam Geology

The Indiana V Seam is the only coal seam of economic interest within the Oaktown Mining Complex. The Indiana V Seam is fairly uniform in depositional nature (typically 4 ft to 8 ft thickness) and continuity throughout much of the project’s surrounding area.

4.3.1        Lithology

The Indiana V Seam coal bed is relatively consistent containing a singular interval of coal within minimal in-seam partings. Mining methods employed at the Oaktown Mining Complex generally extract the entirety of the coal seam with minimal out-of-seam (OSD) dilution.

The coal thickness across the Oaktown Mining Complex area is generally between the 4.0 ft to 8.0 ft range, averaging 4.8 ft over the extents of mine plan areas. Isolated pockets of both thinner and thicker coal do exist, and extreme but generally isolated occurrences may range from less than a foot to above 12 ft thick. Figure 4.2, following this page, provides a map of the Indiana V Seam thickness. The locations of thinner coal occurrences are generally well-defined by the extensive exploration performed in and around the study area, and mine plans have been developed to avoid these low coal occurrences.

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The immediate roof overlying the Indiana V Seam coal bed generally consists of interbedded shales and sandy shales. Occasional instances of sandstone roof can occur within the project area, where paleochannel sandstone fill has scoured and replaced part or all the normal roof strata. The most prominent existence of paleochannel sandstone fill resides within the sandstone channel that divides the Oaktown Fuels No. 1 and No. 2 mines mineable reserves. Other, less prominent, localized paleochannelization eroding of the typical roof strata and possibly portions of the Indiana V Seam are likely to be found within the Oaktown Mining Complex mineable reserves. Areas of the deposit with sandstone channels in close proximity to the Indiana V Seam commonly exhibit discontinuities and rolls in the coal bed. Poor roof conditions are also common along margins of the channels, where the roof type transitions between the sandstone roof and normal shale roof. Sunrise has implemented various programs to identify and mitigate, where possible, problems associated with poor roof conditions.

The immediate floor beneath the Indiana V Seam coal bed consists of an interval of underclay. The underclay provides a generally competent floor, however poor floor conditions can develop when the underclay is exposed to water.

4.3.2        Structure

The Indiana V Seam coal bed is located at depths ranging from approximately 150 ft to over 600 ft below ground surface, averaging 350 ft within the Oaktown Mining Complex area. Seam structure shows a general seam dip of less than 2 degrees in a westerly direction. There are not any major structural faulting or tectonic features known to occur in the deposit. Small-displacement faults and compaction-related faults may be present, but are not expected to materially affect mine plans.

The structural setting for the deposit is generally considered to be simple in terms of geological complexity. Some areas exhibit evidence of localized channelization; as such, isolated areas of the deposit may be considered moderate in geological complexity. Having been widely studied and extensively mined, the Indiana V Seam is well-known and widely-accepted to be a uniform deposit.

4.3.3        Coal Quality

Overall, the Indiana V Seam coal bed is a high-sulfur moderate ash coal that is used for steam purposes.

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5.0       EXPLORATION DATA

5.1            Background

The Indiana V Seam has been the subject of extensive exploration drilling and sampling by Sunrise and other parties, over a timespan of decades. Records from exploration drilling comprise the primary data used in the evaluation of coal resources on the property. A database compiling the results of 1,895 drill holes—covering Oaktown Mining Complex and surrounding area Indiana V Seam—along with electronic copies of original drilling and sampling logs for a representative sample (approximately 42%), was provided for our review.

Additionally, discussions were held between BOYD and Sunrise concerning their standard exploration and sampling methodologies. Topics covered standard procedures ranging from site safety and mapping, to how to select proper drilling equipment, recording accurate and detailed geological logs, performing coal sampling, supervising geophysical logging, and plugging drill holes once work was complete. Sunrise’s provided explanation of exploration standards highlight their focus on obtaining the highest accuracy of data possible from the various exploration campaigns they completed.

Due to archival storage of some physical records of drill holes and detailed information on the drilling and sampling methodologies utilized, some documents were not provided for our review. While this limits the ability to provide a completely transparent and detailed overview of the work completed in developing the Oaktown Mining Complex, Sunrise has also demonstrated that they have been very thorough in exploring and sampling and the complex has been able to consistently and economically mine coal from this deposit for more than a decade.

5.2           Procedures

5.2.1        Drilling

Drill holes on the subject property were completed using various drilling procedures based on specific goals and data needs at various stages of planning and developing the Oaktown Mining Complex. Some drill holes were rotary drilled for purposes of completing geophysical logging, while others were completed using continuous core drilling methods to provide more detailed geologic records and sampling opportunities.

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Sunrise technical staff were able to summarize the standard types of equipment and procedures they generally utilized in exploration work completed on the property. This information, combined with information BOYD was able to gather from our review of drilling records are as follows:

Frequently used drilling equipment that is utilized during exploration is typical of the ILB region. Typical drilling equipment that Sunrise uses for exploration, depending on the goal of a specific drilling and sampling program, may consist of one or both of:

Continuous NQ-sized (3.0 in. outside diameter) diamond core rigs.

Water rotary with 4.875 in. diameter barrels.

Presently, core logging activities are completed in the field. Reportedly current practices for Sunrise are for cored intervals to be photographed, with special attention paid to the coal interval. Cored coal is initially photographed in its entirety.

Select intervals of coal roof rock and floor rock are photographed and then boxed for archival purposes.

Geophysical logging has been performed for some drill holes, while others may or may not have been completed/recorded. Sunrise has noted that geophysical logging is currently completed on all holes drilled.

Due to the large extent of historic exploration work, any recent drilling is generally for infilling areas with lower geologic assurance or for establishing confidence of sandstone channel locations. In such instances, nearby drill hole records are referenced prior to commencing any new drill holes, to show the anticipated depth to the coal horizons.

Geophysical logs obtained from newly drilled holes are correlated by Sunrise geologists by aligning known “marker beds”, and then checking coal seam depths, elevations, and thicknesses to ensure seam continuity. These data are formatted and then imported into Sunrise’s geologic modeling programs.

BOYD’s review of the methodologies and procedures indicate the data obtained and utilized by Sunrise for the Oaktown Mining Complex project area were carefully and professionally collected, prepared, and documented, conforming with general industry standards, and are appropriate for use of evaluating and estimating coal resources and reserves.

5.2.2        Coal Quality Sampling

The Oaktown Mining Complex coal quality testing was performed on a large number of coal samples obtained from the Indiana V Seam, in and around the project area. The relatively dense core drilling coverage, combined with channel samples being taken regularly from underground development areas, provides a thorough understanding of the clean coal product that could be produced from the Oaktown Mining Complex.

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All coal intercepts of Oaktown Mining Complex exploration were geologically logged, photographed, and sampled in the field by competent geologists. Sampling methodologies consist of first pushing the cored intervals of coal out of the core barrel, directly into a clean single-row wooden core box. Prior to removing coal core from the drilling barrel, the core box is lined with durable plastic sheeting, which helps retain moisture content and minimize coal core oxidation. Once the coal core is fully extruded from the core barrel, it is then inspected, photographed, and logged by the on-site geologist, and cardboard inserts are installed in the wooden core box to maintain coal core integrity.

Upon completing detailed recording (geologic logging and photographing) of the coal interval, coal cores are split into the desired intervals to be analyzed and bagged. An order sheet is placed inside the sample bag, which specifies drill hole information, split information, and testing to be completed on the bagged sample. Sample bags are then zip tied closed, labeled, and then double bagged to eliminate incidental core loss due to potential damage during transportation to the testing lab.

Sunrise maintains all control of coal core samples, up to the point that samples are handed over to the lab performing testing. Once logging and sampling is complete, the sampled coal core intervals are transported to the selected lab that will perform the required analyses. Typically, washability analysis is performed on the majority of drillhole samples with select drillholes being expanded to include full proximate or other analyses (i.e., ultimate, ash content, etc.). The lab manager signs off on the return analysis sheet, indicating that testing results are accurate and that the sample provided was sufficient for testing purposes.

Past programs utilized various accredited coal testing laboratories, again depending on what testing needed to be completed on the coal core at a given time. All analytical work was conducted to International Organization of Standardization (ISO) or American Society for Testing and Materials (ASTM) standards, and various available laboratory sample sheets were provided for review with drilling log data.

Available testing sheets were reviewed by BOYD during our drill hole data audit, and our review of the discussed field and sampling procedures noted above indicated that the general description and sampling work were conducted to appropriate standards. Based on the stated standards and laboratory used, BOYD considers the sample preparation and analytical procedures were adequate for the coal quality results for inclusion in geological modelling and coal resource estimation.

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5.2.3        Coal Washability Testing

Coal washability tests (proximate analysis) were conducted at various specific gravities, generally ranging from 1.45 specific gravity float (SGF) through 1.55 SGF. Estimated coal reserves for the Oaktown Mining Complex are currently reported using 1.55 SGF testing results over the entire Oaktown Mining Complex project area. Proximate analysis test results were completed on 723 drill core samples, which were used in estimating quantity and quality of the remaining Oaktown Mining Complex coal reserves.

Although it was noted that Sunrise generally does not perform any randomized sample verification in order to conduct quality control testing of individual coal analyses, Sunrise will typically perform channel sampling and quality analyses throughout mine workings. The channel sample data are then utilized to update quality models.

5.2.4        Other Exploration Methods

There is no known ore reported via other methods of exploration (such as airborne or ground geophysical surveys) completed for the project area.

5.3           Results

A total of 1,922 drill holes and in-mine samples are in and around the Oaktown Mining Complex area. The distribution of these drill holes is shown on Figure 5.1. Lithologic and coal quality data from these holes only were used for geologic modeling and coal resource assessment for the property.

General descriptive statistics for the Indiana V Seam thickness are provided in Table 5.1 below.

Table 5.1: Indiana V Seam Thickness (feet) Statisitcs

	Oaktown Fuels No. 1 Mine		Oaktown Fuels No. 2 Mine
Mean		5.2		4.8
Minimum		0.5		2.1
Maximum		8.7		12.1
Standard Deviation		0.8		0.9

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JOHN T. BOYD COMPANY

As shown, the thickness of the seam can range from less than a foot to over 12 ft across the Oaktown Mining Complex area. Average thickness of the Indiana V Seam for the project area is approximately 5.2 ft for the Oaktown Fuels No. 1 Mine area and 4.8 ft for the Oaktown Fuels No. 2 Mine area.

The results of the coal quality analyses from 723 samples are summarized in Table 5.2.

Table 5.2: Descriptive Statistics, Indiana V Seam Coal Quality

				Oaktown Fuels No. 1 Mine				Oaktown Fuels No. 2 Mine
		Units		Raw		Clean		Raw		Clean
Float (i.e., Yield)	Mean		%				88.7				87.9
	Minimum		%				59.1				51.6
	Maximum		%				98.3				97.9
	Standard Deviation						3.1				4.0
Ash	Mean		%		14.5		8.5		14.5		8.9
	Minimum		%		4.0		6.8		4.0		6.7
	Maximum		%		62.5		13.8		62.5		12.5
	Standard Deviation						0.8				0.6
Sulfur	Mean		%		4.9		3.5		4.9		3.1
	Minimum		%		0.6		2.3		0.6		1.0
	Maximum		%		14.0		5.0		14.0		5.6
	Standard Deviation						0.3				0.4
Heating Value	Mean		Btu/lb		11,961		13,246		11,961		13,283
	Minimum		Btu/lb		4,904		12,510		4,904		12,625
	Maximum		Btu/lb		13,389		13,656		13,389		14,564
	Standard Deviation						106				120

Note: Raw and Clean coal qualities are provided on a dry basis.

Raw and clean (washed) coal quality data demonstrate the consistency of the Indiana V Seam as a high-sulfur, moderate ash coal.

5.4          Data Verification

For purposes of this report, BOYD did not verify historic drill hole data by conducting independent drilling in areas already explored. It is customary in preparing coal resource and reserve estimates to accept basic drilling and coal quality data as provided by the client subject to the reported results being judged representative and reasonable.

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BOYD’s efforts to judge the appropriateness and reasonability of the source exploration data included reviewing a representative sample of drilling logs and coal quality test results for holes located in unmined portions of the Oaktown Mining Complex area. These records were compared with their corresponding database records for transcription errors, noting the vast majority of the information being consistent. Lithologic and coal quality data points were compared via visual and statistical inspection with geologic mapping.

BOYD’s review indicates that in general, Sunrise has performed extensive drilling and sampling work on the subject property, the work completed has been done so by competent personnel, and the amount of data available combined with wide-spread knowledge of the Indiana V Seam, is sufficient to confirm seam uniformity and continuity throughout the Oaktown Mining Complex deposit.

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6.0       COAL RESOURCES AND RESERVES

6.1          Applicable Standards and Definitions

Unless noted, coal resource and coal reserve estimates disclosed herein are done so in accordance with the standards and definitions provided by S-K 1300. It should be noted that BOYD considers the terms “mineral” and “coal” to be generally interchangeable within the relevant sections of S-K 1300.

Estimates of coal resources and reserves are always subject to a degree of uncertainty. The level of confidence that can be applied to a particular estimate is a function of, among other things: the amount, quality, and completeness of exploration data; the geological complexity of the deposit; and economic, legal, social, and environmental factors associated with mining the resource/reserve. By assignment, BOYD used the definitions provided in S-K 1300 to describe the varying degree of certainty associated with the estimates reported herein.

The definition of mineral (coal) resource provided by S-K 1300 is:

Mineral resource is a concentration or occurrence of material of economic interest in or on the Earth's crust in such form, grade or quality, and quantity that there are reasonable prospects for economic extraction. A mineral resource is a reasonable estimate of mineralization, taking into account relevant factors such as cut-off grade, likely mining dimensions, location or continuity, that, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable. It is not merely an inventory of all mineralization drilled or sampled.

Estimates of coal resources are subdivided to reflect different levels of geological confidence into measured (highest geologic assurance), indicated, and inferred (lowest geologic assurance). See Glossary of Abbreviations and Definitions.

The definition of mineral (coal) reserve provided by S-K 1300 is:

Mineral reserve is an estimate of tonnage and grade or quality of indicated and measured mineral resources that, in the opinion of the qualified person, can be the basis of an economically viable project. More specifically, it is the economically mineable part of a measured or indicated mineral resource, which includes diluting materials and allowances for losses that may occur when the material is mined or extracted.

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Estimates of coal reserves are subdivided to reflect geologic confidence, and potential uncertainties in the modifying factors, into proven (highest assurance) and probable. See Glossary of Abbreviations and Definitions.

Figure 6.1 shows the relationship between coal resources and coal reserves.

In this report, the term “coal reserves” represents the tonnage and coal quality of product coal that will be available for sale after beneficiation of the ROM coal.

6.2          Coal Resources

6.2.1       Methodology

Based on provided information, Sunrise’s coal resources (and coal reserves) estimation and modeling techniques consists of:

Interpreted and correlated coal seam intercepts are compiled and validated. Seam thickness is aggregated and coal qualities are composited, based on assumed mining methods, for each data point.

Boundaries of the respective resource classification regions are developed using the data points.

ROM coal thickness and coal qualities for each data point are derived from the application of dilution parameters.

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Clean product qualities for each data point are derived from coal washability analysis and plant efficiency factors.

The approved LOM design is subdivided into small mining blocks and sequenced using mine planning software.

In-place, ROM, and clean product estimates of coal volume and qualities for each mining block are estimated within the mine planning software by linear least squares interpolation of the data points developed in Steps 1 and 2.

The mining blocks (and associated volumetric data) are further subdivided by resource classification and property tract polygons.

Relevant and periodic summaries are prepared by Sunrise to support planning and coal resource/reserve reporting.

6.2.2       Criteria

Development of the coal resource estimate for the Oaktown Mining Complex assumes mining using standard underground R&P methods and equipment, which have been utilized successfully at the Oaktown Mining Complex for over a decade.

Within the area of study, the Indiana V Seam exhibits consistent and well-characterized clean (i.e., washed) coal qualities which are within existing marketable limits for ILB coal products. BOYD did not discover any areas within the property where clean coal quality was deficient relative to Sunrise’s historical coal sales and current sales contract specifications for high-sulfur thermal coal. As such, no reductions have been made to the coal resources due to coal quality.

A minimum mineable seam thickness of 4 ft was used to limit the coal resources of the Indiana V Seam. This cut-off is a function of the employed mining techniques and equipment. Mining heights less than 4 ft result in operational difficulties and increase OSD, thereby reducing productivity and increasing costs.

There were not any other cut-offs applied.

6.2.3       Classification

Geologic assuredness is established by the availability of both structural (thickness and elevation) and quality information for the Indiana V Seam. Classification is generally based on the concentration or spacing of exploration data, which can be used to demonstrate the geologic continuity of the deposit. Table 6.1 provides the general criteria employed in the classification of the coal resources.

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Table 6.1: Coal Resource Classification Criteria

Classification	Data Point Spacing
(Geologic Confidence)	Feet				Miles
Measured		0	-	2,000		0	-	0.38
Indicated		2,000	-	4,000		0.38	-	0.76
Inferred		4,000	-	16,000		0.76	-	3.03

Extrapolation or projection of resources in any category beyond any data point does not exceed half the point spacing distance.

BOYD reviewed the classification criteria employed by Sunrise with regards to data density, data quality, geological continuity and/or complexity, and estimation quality. The Indiana V Seam is well-known and of low complexity. We believe these criteria appropriately reflect the interpreted geology and the estimation constraints of the deposit. Coal resources in the Oaktown Mining Complex area are well-defined throughout nearly all areas of the mine plan. Observed drill hole spacing averages approximately 1,995 ft and generally ranges between 444 ft and 8,000 ft.

BOYD is of the opinion that there is a high degree of certainty (assurance) associated with each of the resource classifications.

6.2.4       Coal Resource Estimate

There are no reportable coal resources excluding those converted to coal reserves for the Oaktown Mining Complex. Quantities of coal controlled by Sunrise within the defined boundaries of the Oaktown Mining Complex which are not reported as coal reserves, are not considered to have potential economic viability; as such, they are not reportable as coal resources.

6.3          Coal Reserves

6.3.1       Methodology

Estimates of coal reserves are derived contemporaneously with estimates of coal resources for the LOM plans through the application of appropriate modifying factors. Economic viability of the coal reserves is subsequently confirmed via a LOM financial forecast.

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The coal reserve estimates have been prepared using generally accepted industry methodology to provide reasonable assurance that the coal reserves are economic and recoverable at the time of evaluation.

6.3.2       Parameters and Assumptions

The following parameters and assumptions were relied upon to determine the coal reserves:

The underground operation is mined using R&P methods.

The mine plans were developed to address anticipated geologic, geotechnical, and hydrogeologic conditions.

Mining and processing parameters are revised periodically, to assure that the conversion of in-place coal to saleable product are: (1) in reasonable conformity with present and recent historical operational performance, and (2) reflective of expected mining and processing operations.

Mining recovery, which is dependent on numerous factors associated with R&P mining, historically ranges between 40 and 50% (averaging 44.4%) for the Indiana V Seam. Within the Oaktown Mining Complex’s LOM plan areas, the estimated average mining recovery is 46.1% for the Oaktown Fuels No. 1 Mine and 41.6% for the Oaktown Fuels No. 2 Mine. Theses recoveries are considered reasonable.

Clean coal estimates are based on coal washability data. These estimates have been conservatively adjusted downward to reflect practical yields achieved by the preparation plant. Salient coal preparation factors used to estimate the coal reserves include:

The preparation plant efficiency is 95%.

Sulfur content within clean coal estimates is adjusted upward by approximately 15% above washability data (consistent with historical clean coal processing results).

Product moisture was estimated at 13.0% (as-received basis).

The average product yield for the coal reserves is 69.5%.

Figure 6.2 depicts the estimated product yield for the Indiana V Seam across the Oaktown Mining Complex deposit.

The Indiana V Seam across the Oaktown Mining Complex property exhibits clean coal quality which is consistent with Sunrise’s historical production and current sales contract specifications. Furthermore, the projected coal quality over the life of the coal reserves is consistent with coals produced by other ILB operators (please refer to Chapter 10 for further information). As such, BOYD does foresee any quality deviations that would adversely affect the marketability future coal production from the Oaktown Mining Complex.

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The economic viability of the stated coal reserves is demonstrated by the production and financial projections presented in Chapters 10 through 12 of this report. The forecasted sales prices (FOB CPP) used in the estimation of coal reserves for the Oaktown Mining Complex vary by year, ranging from $42.50 to $63.99 and averaging $46.88 per clean ton (refer to Section 10.2.5 for further details).

6.3.3       Classification

Proven and probable coal reserves are derived from measured and indicated coal resources, respectively, in accordance with S-K 1300. BOYD is satisfied that the stated coal reserve classification reflects the outcome of technical and economic studies. Figure 6.3 illustrates the reserve classification of the Indiana V Seam within the Oaktown Mining Complex.

6.3.4       Coal Reserve Estimate

Sunrise’s estimated underground mineable coal reserves for the Oaktown Mining Complex total 71.4 million recoverable (clean) product tons remaining as of December 31, 2021. The coal reserves reported in Table 6.2 are based on the approved LOM plan which, in BOYD’s opinion, is technically achievable and economically viable after the consideration of all material modifying factors.

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TABLE 6.2

ESTIMATED COAL RESERVES BY MINE
AS OF 31 DECEMBER 2021
OAKTOWN MINING COMPLEX
Indiana and Illinois

Prepared For

SUNRISE COAL. LLC
By

John T. Boyd Company

Mining and Geological Consultants
  October 2023

		Product Tons (millions)						Average Product Quality (As Received Basis)
				By Permit Status				%						Heating		SO₂
						Not		Total						Value		(lbs per
Control	Classification	Total		Permitted		Permitted		Moisture		Ash		Sulfur		(Btu/lb)		MMBtu)

Oaktown Fuels No. 1 Mine
Owned	Proven		-		-		-		-		-		-		-		-
	Probable		-		-		-		-		-		-		-		-
	Subtotal		-		-		-		-		-		-		-		-
Leased	Proven		40.1		40.1		-		13.0		7.4		3.5		11,519		6.0
	Probable		0.4		0.4		-		13.0		7.4		3.6		11,525		6.2
	Subtotal		40.5		40.5		-		13.0		7.4		3.5		11,519		6.0
Total	Proven		40.1		40.1		-		13.0		7.4		3.5		11,519		6.0
	Probable		0.4		0.4		-		13.0		7.4		3.6		11,525		6.2
	Total		40.5		40.5		-		13.0		7.4		3.5		11,519		6.0
Oaktown Fuels No. 2 Mine
Owned	Proven		-		-		-		-		-		-		-		-
	Probable		-		-		-		-		-		-		-		-
	Subtotal		-		-		-		-		-		-		-		-
Leased	Proven		29.7		25.3		4.4		13.0		7.9		3.3		11,540		5.7
	Probable		1.2		0.3		0.9		13.0		8.0		3.2		11,520		5.6
	Subtotal		30.9		25.6		5.3		13.0		7.9		3.3		11,540		5.6
Total	Proven		29.7		25.3		4.4		13.0		7.9		3.3		11,540		5.7
	Probable		1.2		0.3		0.9		13.0		8.0		3.2		11,520		5.6
	Total		30.9		25.6		5.3		13.0		7.9		3.3		11,540		5.6
Total - Oaktown Mining Complex
Owned	Proven		-		-		-		-		-		-		-		-
	Probable		-		-		-		-		-		-		-		-
	Subtotal		-		-		-		-		-		-		-		-
Leased	Proven		69.8		65.4		4.4		13.0		7.6		3.4		11,528		5.9
	Probable		1.6		0.7		0.9		13.0		7.8		3.3		11,522		5.8
	Subtotal		71.4		66.1		5.3		13.0		7.6		3.4		11,528		5.9
Total	Proven		69.8		65.4		4.4		13.0		7.6		3.4		11,528		5.9
	Probable		1.6		0.7		0.9		13.0		7.8		3.3		11,522		5.8
	Total		71.4		66.1		5.3		13.0		7.6		3.4		11,528		5.9

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Coal reserves for the Oaktown Mining Complex are summarized by mine in Table 6.3.

Table 6.3: Coal Reserves Summary

	Classification
Mine	Proven		Probable		Total
Oaktown Fuels No. 1		40.1		0.4		40.5
Oaktown Fuels No. 2		29.7		1.1		30.9
Total - Oaktown Mining Complex		69.8		1.5		71.4

The reported coal reserves include only coal that is controlled by the company under lease agreement as of December 31, 2021. It should be noted that the Oaktown Mining Complex’s permitted underground mining area includes approximately 20.2 million product tons which are currently uncontrolled (i.e., owned by other parties). Sunrise anticipates gaining control of the mineral rights to this uncontrolled coal in due time and adjusting its mine plans accordingly. BOYD is not aware of any encumbrances, litigation, or orders that would hinder the continued development of the property.

At the time of reporting, 66.1 million product tons, or over 92% of the reported reserves, are permitted for mining by appropriate federal and state regulatory authorities. The remaining 5.3 million product tons are not permitted. It is typical for mining permits to be periodically amended as mining progresses to add acreage (tonnage) in order to sustain coal production. It is reasonable to expect that all necessary permits to recover the coal will be successfully obtained in advance of mining.

The coal reserves of the Oaktown Mining Complex are well-explored and defined. It is our conclusion that over 96% of the stated reserves can be classified in the proven reliability category (the highest level of assurance) with the remainder classified as probable. Given the uniformity of the Indiana V Seam in and around the Oaktown Mining Complex, it is reasonable to assume that further exploration and testing will confirm the occurrence of coal reserves, resulting in an increase in the percentage of coal reported in the proven category.

JOHN T. BOYD COMPANY

6-11

Table 6.4 below summarizes the washed coal quality for each mine of the Oaktown Mining Complex. The reported coal reserves generally consist of high-sulfur moderate ash coal that may be used for steam purposes.

Table 6.4: Coal Reserves Product Quality Summary

	Average Product Quality (As Received Basis)
	%						Heating		SO2
	Total						Value		(lb per
Mine	Moisture		Ash		Sulfur		(Btu/lb)		MMBtu)
Oaktown Fuels No. 1		13.0		7.4		3.5		11,519		6.0
Oaktown Fuels No. 2		13.0		7.9		3.3		11,540		5.6
Average		13.0		7.6		3.4		11,528		5.9

Figures 6.4 and 6.5, respectively, illustrate the product ash and product sulfur content over the Oaktown Mining Complex area. As shown, there are slight increases in both ash and sulfur content from southeast to northwest across the property.

The Oaktown Mining Complex is an established underground coal mining and processing complex with a consistent operating history. BOYD has assessed that sufficient studies have been undertaken to enable the coal resources to be converted to coal reserves based on current operating methods and practices. Changes in the factors and assumptions employed in these studies may materially affect the coal reserve estimate.

The extent to which the coal reserves may be affected by any known geological, operational, environmental, permitting, legal, title, variation, socio-economic, marketing, political, or other relevant issues has been reviewed as warranted. It is BOYD’s opinion that Sunrise has appropriately mitigated, or has the operational acumen to mitigate, the risks associated with these factors. BOYD is not aware of any additional risks that could materially affect the development of the reserves.

Based on our audit review, we have a high degree of confidence that the estimates shown in this report accurately represent the available coal reserves controlled by Sunrise, as of December 31, 2021.

6.3.5       Validation

BOYD independently estimated coal reserves for the Oaktown Mining Complex mine plan from geologic data and models provided by Sunrise. Based on our review of Sunrise’s well-documented geologic modeling and estimation techniques and the results of our data validation efforts (described earlier), we are of the opinion that Sunrises’ modeling procedures are reasonable and appropriate. We consider the LOM plan and economic forecast sufficiently detailed to support the estimate of coal reserves reported herein. Furthermore, it is BOYD’s opinion that there is a high degree of assurance associated with the stated coal reserves due to the current amount of exploration and sampling, mine planning, and economic analyses that have been completed on the Indiana V Seam within the Oaktown Mining Complex area.

JOHN T. BOYD COMPANY

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JOHN T. BOYD COMPANY

6-13

JOHN T. BOYD COMPANY

6-14

6.3.6       Reconciliation with Previous Estimates

Figure 6.6 illustrates the comparison of Sunrise’s coal reserve estimates as of December 31, 2021, with the historical estimate¹ of December 31, 2020:

The net decrease in reserves reflects: (1) revisions to mine plans and/or associated modifying factors as determined by Sunrise management or BOYD, (2) depletion through ordinary mining operations and inventory sales, and (3) exclusion of a small block of coal for which BOYD opines there does not exist reasonable prospects for economic extraction.

¹Note: BOYD has not done sufficient work to classify historical estimates as current coal resources or coal reserves and the issuer is not treating the historical estimate as current coal resources or coal reserves.

JOHN T. BOYD COMPANY

7-1

7.0       MINING OPERATIONS

7.1       Mining Method Description

Coal is produced by the Oaktown Fuels No. 1 and No. 2 underground mines using the R&P mining method. R&P mining is a partial extraction technique that recovers a portion of a coal seam. An illustration of a typical R&P mining operation is provided in Figure 7.1

R&P mining utilizes the systematic development of interconnected underground entries or openings with rectangular roadways that are driven in the coal seam and are typically supported by roof bolts installed in the immediate roof. The parallel mine entries are connected by crosscuts which result in a series of mine openings separated by solid coal pillars that support the main roof. R&P mining systems, which generally utilize CMs, can be used for coal production (like the underground mines of the Oaktown Mining Complex) or as a development technique to support longwall (LW) production. This flexible mining system is widely used across the US coal industry, at large and small mines with varying seam thicknesses and mining conditions.

JOHN T. BOYD COMPANY

7-2

A typical R&P production section will include one or two CM units, one to three roof bolting machines, and between two and three coal haulage machines (most commonly either ram cars [RC] or shuttle cars [SC]) per CM. The main piece of equipment is the CM, which is a heavy, steel framed machine (often over 40 tons) mounted on cat tracks, that operates on AC power. Key components of a CM include:

Electric and hydraulic motors that power the CM’s operation.

A tram mechanism that propels the machine.

A horizontally mounted, cylindrical cutting head used to cut the coal seam.

A pair of gathering arms that pick-up/clear away the mined material.

An internal conveyor system used to load the mined product into a haulage vehicle.

Although there have been ongoing advances in CM equipment technology, the basic R&P mining process has been utilized for decades and has remained largely unchanged over that time. The CM is used to extract the coal seam by mining a rectangular opening or “cut”. The cut typically ranges from 18 ft to 20 ft in width and extends the height² of the coal seam plus some increment of extraneous non-coal roof and floor material extracted during the mining process (known as OSD). The depth that the CM cuts into the coal seam (i.e., the cut length) is dependent upon mining conditions, regulations, operating practices, etc. but is generally in the range of 15 ft to 40 ft. Shorter cuts are taken in areas where there are difficult roof conditions.

A critical element of R&P mining is the interaction between the CM, the roof-bolting machine and supporting haulage units. Known as “place-changing”, the following steps will typically occur during mining cycle:

The CM penetrates the cut. As the coal and associated OSD are extracted, the CM unit loads the broken material into one of the haulage vehicles/RC.

Once fully loaded, the RC carries the product from the CM to a “feeder,” where the coal is discharged from the car and gradually metered onto a conveyor belt for transport out of the mine. The empty RC then trams back to the CM to be reloaded. While this is taking place, the second RC is subsequently loaded. If additional RCs are utilized, these units follow in sequence. This operating pattern continues until the coal volume within the cut is fully extracted.

The CM then backs out of the cut and trams to the next location where the mining process is continued.

After a cut is completed, the exposed roof in the cut (just completed by the CM) must be supported. A roof bolting machine trams into the freshly mined area, drills holes into the roof and installs roof bolts—steel rods that strengthen the integrity of the roof. The principle of roof bolting is to physically tie together the weaker individual layers of roof strata to create a single “laminated” unit of rock that is stronger than the unsupported strata.

²In instances where a CM is operating in thick seam conditions (i.e., the coal thickness is greater than 8 ft), the height of the cut may be less than the full thickness of the seam.

JOHN T. BOYD COMPANY

7-3

Place-change mining is an efficient form of R&P mining, although the process will routinely incur delays during a production shift (perhaps 5 to 20 minutes per occurrence, depending upon site-specific considerations). Where roof conditions permit (and approval is granted by regulatory agencies), mine operators will employ "deep cut" mining plans to reduce the impact of place-changing delays. Longer cuts (usually 30 ft to 40 ft in length) enable the CM to spend a greater portion of available shift time in cutting and loading activities.

Place-changing CM equipment has steadily evolved over the years via technological breakthroughs to become sophisticated, productive, and durable. Today’s state-of-the-art CM units are equipped with efficient motors, computer diagnostics, solid-state electronics, advanced remote-control systems, and scrubbing mechanisms (which preserve underground air quality by capturing a significant percentage of respirable dust that is generated by the breaking/grinding of coal and rock during the mining process). Ever-improving technological gains have resulted in dramatic improvements in productivity, machine availability, employee safety, and unit operating costs over the past four decades.

An R&P mine may operate a single production section, or multiple sections (like the mines of the Oaktown Mining Complex). This is dependent upon the size of the reserve, supporting infrastructure, capitalization, markets, etc. A variation of the traditional R&P place-changing method is the “super-section”. Under this system, the CM production section is equipped with two CM machines, two sets of haulage vehicles, and multiple roof bolters. Under this variation, each “super-section” essentially operates two production units per belt dumping point enhancing the productive output of the mine section. This variation of traditional R&P mining is employed at both Oaktown Fuels No. 1 and No. 2 mines.

R&P extraction may be performed as either “first mining” or “secondary extraction”. First or “advance-only” mining is where a system of entries or openings are driven/advanced and the remaining coal pillars are left intact. Under this system, after a section has reached its intended advance distance, the section equipment is recovered and relocated to a new area, leaving the developed pillars untouched (i.e., no secondary mining of the pillars occurs). Reasons for employing this type of R&P mining may include equipment specifications, geological conditions, subsidence restrictions, operator preferences, etc.

JOHN T. BOYD COMPANY

7-4

Secondary extraction or “retreat mining” is the process whereby, after the mine workings have reached the end of the advance stage of mining, the direction of mining is reversed (i.e., the mine operator retreats towards the mouth of the production section, employing a prescribed series of cuts to sequentially recover coal from the pillars). Retreat mining systems can be complex and may include partial or full pillar extraction (which allows the roof to systematically collapse and subsequently results in subsidence of the overlying surface).

Reserve recovery (extraction ratio) varies at R&P mines. Generally, 40% to 50% extraction of the in-place coal is typical, with extraction ratios ranging from 30% to 70%. Retreat mining may or may not offer higher extraction ratios than advance only mining; actual recoveries are dependent upon pillar dimensions and a variety of operational considerations.

The Oaktown Fuels No. 1 Mine typically operates as a three to four super-section operation, and Oaktown Fuels No. 2 Mine typically operates as a two to three super-section operation. Currently, the mines are performing first mining only; Sunrise has no projections for retreat mining in production panels within its LOM plan and has not historically utilized “retreat mining” at the Oaktown Mining Complex.

R&P mining has been one of the predominant approaches to mining the Indiana V Seam (within which Oaktown Mining Complex operates) for decades. Mining in the Oaktown Fuels No. 1 Mine, which first began production in 2009 and is the oldest of the Oaktown Mining Complex’s two operations, is largely identical to the practices used at the Oaktown Fuels No. 2 Mine. In terms of mining methodology, the application of R&P mining techniques at the Oaktown Fuels No. 1 and No. 2 mines is viewed as a prudent operating decision based on: (1) the extent of the complex’s overall coal reserve base, (2) Sunrise’s targeted annual production levels, (3) the mines’ historic and expected mining conditions and seam orientation, and (4) the successful application of R&P technology at nearby historical and active mining operations. The use of R&P mining at the Oaktown Mining Complex is further justified based on Sunrise’s experience operating R&P mines and their reputation for having refined the technical, operational, and financial elements of this mining technique for site specific conditions over the years.

JOHN T. BOYD COMPANY

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7.2        Mine Equipment and Staffing

7.2.1     Mine Equipment

The equipment utilized at the two Oaktown Mining Complex underground R&P mines is nearly identical to one another. This allows for synergies between the operations, including the sharing of equipment and critical spare parts. Additionally, mining equipment utilized by Oaktown Mining Complex is not unique to the ILB region (i.e., Oaktown Mining Complex’s mining equipment is similar to the equipment commonly used by competitor underground mines in the region).

Table 7.1 presents Oaktown Mining Complex’s projected number of CM super-sections for 2022 through 2036 according to BOYD’s conceptual LOM:

Table 7.1: Projected Number of Operating CM Sections

	Year
Mine	2022-2031		2032-2034		2035		2036
Oaktown Fuels No. 1		4		3		2		0
Oaktown Fuels No. 2		3		3		3		2

A listing of equipment typically employed by the two mines’ CM super-sections is shown in Table 7.2, below.

Table 7.2: Summary of Production Unit Equipment

Section Type	Equipment Type	Manufacturer	Quantity
CM Sections	Continuous Miner	Joy		2
	Shuttle Car/Ram Car	Joy, Stamler		2-3
	Bolter	Fletcher		1-3
	Scoop	Fairchild		1-3
	Power Center	Line Power		1-2
	Feeder	Joy, Stamler		1

Based on BOYD’s review of the Oaktown Mining Complex’s equipment and asset listings, the operations’ current complement of equipment is sufficient to meet the production levels projected for each of the operations over their conceptual LOM plans. Additionally, capital projections prepared by Sunrise have accounted for future equipment related expenditures to maintain production at forecasted levels. In BOYD’s opinion, all mining equipment utilized on the Oaktown Mining Complex’s CM super-sections is suitable for the mining conditions anticipated, as well as for the future proposed rates of production.

JOHN T. BOYD COMPANY

7-6

7.2.2        Staffing

Oaktown Mining Complex’s underground mines and coal preparation facility are staffed by a workforce primarily from the surrounding southwestern Indiana and southeastern Illinois areas. The workforce, which is comprised of both hourly and salary employees, has no labor affiliation (i.e., the Oaktown Mining Complex is union-free). Table 7.3 provides recent historical employment for each operational site:

Table 7.3: Historical Employment

	Employee	Employee Count by Year
Operational Site	Classifcation	2018		2019		2020		2021
Oaktown Fuels No. 1 Mine	Underground		301		296		300		286
	Surface		32		36		33		32
	Office		8		11		11		10
	Subtotal		341		343		344		328
Oaktown Fuels No. 2 Mine	Underground		265		249		215		263
	Surface		2		3		4		8
	Office		5		6		5		3
	Subtotal		272		258		224		274
Oaktown Complex CPP	Surface		59		72		61		68
Total - Oaktown Mining Complex			672		673		629		670

Source: MSHA Form 7000-2

Future employment levels are expected to resemble historical levels. Given Sunrise’s ability to hire and retain employees, staffing is not expected to hinder the Oaktown Mining Complex operations’ ability to achieve forecasted production levels.

JOHN T. BOYD COMPANY

7-7

7.3       Mine Production

7.3.1       Historical Mine Production

Historical mine production data for the two Oaktown Mining Complex underground R&P mines, based on publicly available information reported by MSHA, are detailed in Table 7.4, below.

Table 7.4: Historical Mine Production

	Oaktown Fuels No. 1 Mine						Oaktown Fuels No. 2 Mine						Total - Oaktown Mining Complex
	Tons		Hours				Tons		Hours				Tons		Hours
Year	(000)		(000)		TPEH		(000)		(000)		TPEH		(000)		(000)		TPEH
2008		-		33		-		-		-		-		-		33		-
2009		47		145		0.3		-		-		-		47		145		0.3
2010		1,015		333		3.0		-		11		-		1,015		344		2.9
2011		2,668		715		3.7		-		26		-		2,668		741		3.6
2012		2,754		709		3.9		-		50		-		2,754		759		3.6
2013		3,376		741		4.6		1,039		176		5.9		4,415		917		4.8
2014		3,341		739		4.5		2,092		378		5.5		5,433		1,117		4.9
2015		3,519		780		4.5		2,180		480		4.5		5,699		1,260		4.5
2016		3,828		844		4.5		1,947		553		3.5		5,775		1,397		4.1
2017		3,684		784		4.7		2,547		608		4.2		6,231		1,392		4.5
2018		4,072		779		5.2		2,867		680		4.2		6,939		1,458		4.8
2019		4,167		816		5.1		2,298		637		3.6		6,464		1,453		4.4
2020		3,433		718		4.8		1,810		495		3.7		5,243		1,213		4.3
2021		3,489		732		4.8		2,147		626		3.4		5,636		1,358		4.2
Total/Average		39,392		8,868		4.4		18,926		4,719		4.0		58,318		13,587		4.3

Notes:

	(1)	Employee Hours for each operation includes Underground, Surface at Underground, and Office Workers employees as listed by MSHA.
	(2)	Employees Hours for Oaktow n Fuels includes all operational employee hours and additionally all preparation/mill site employee hours for each operation as listed by MSHA.
	(3)	Tons reported as Product (i.e., Clean Coal) Tons.
	(4)	TPEH is tons per employee-hour.

JOHN T. BOYD COMPANY

7-8

As a complex, Oaktown Mining Complex has produced a combined 58.3 million tons of clean coal during 2009 to 2021. Through the same period, the complex has recorded an average productivity level of 4.3 tons per employee-hour (TPEH). Figure 7.2 shows historic mining productivity for Oaktown Mining Complex and each mine individually since their start.

Figure 7.2: Historic Mining Productivity Levels

7.3.2       Forecasted Production

BOYD developed LOM plans for each of the Oaktown Mining Complex underground mines based on generally accepted engineering practices, and in alignment with historical and industry norms. It is BOYD’s opinion that the forecasted production levels for the Oaktown Mining Complex operations are reasonable, logical, and consistent with typical CM mining practices within the ILB and historical practices utilized by the Oaktown Mining Complex.

JOHN T. BOYD COMPANY

7-9

The Oaktown Mining Complex LOM plans, as shown in Table 7.5, following this page, portray a consistent production output during 2022 through 2031 and then a decline in production as the number of CM units are reduced gradually as the mining reserves are depleted. In the aggregate, the Oaktown Mining Complex LOM plan projects the complex will produce approximately 101.8 million tons of ROM and approximately 71.4 million tons of clean coal over its operational horizon.

Table 7.5: Life-of-Mine Coal Production Summary

	Tons (000)
	Oaktown Fuels No. 1 Mine				Oaktown Fuels No. 2 Mine				Total - Oaktown Mining Complex
Year	ROM Coal		Clean Coal		ROM Coal		Clean Coal		ROM Coal		Clean Coal
2022	5,724		4,048		4,115		2,776		9,839		6,824
2023		4,084		2,973		4,267		2,921		8,351		5,894
2024		3,298		2,434		3,358		2,218		6,656		4,652
2025		4,312		3,159		2,959		1,953		7,271		5,112
2026		4,300		3,137		3,386		2,307		7,686		5,444
2027		4,140		3,041		2,836		1,897		6,976		4,938
2028		4,230		3,125		2,926		1,935		7,156		5,060
2029		4,549		3,328		3,088		2,040		7,637		5,368
2030		4,607		3,417		3,672		2,450		8,279		5,867
2031		4,541		3,327		2,835		1,923		7,376		5,250
2032		3,223		2,356		2,762		1,802		5,985		4,158
2033		2,981		2,163		2,839		1,902		5,820		4,065
2034		3,771		2,748		2,902		1,847		6,673		4,595
2035		1,778		1,278		2,544		1,714		4,322		2,992
2036		-		-		1,789		1,185		1,789		1,185
Total		55,538		40,534		46,278		30,870		101,816		71,404

JOHN T. BOYD COMPANY

7-10

Average clean yield and quality on an annual basis over the life of the Oaktown Mining Complex is provided in Table 7.6, below.

Table 7.6: Life-of-Mine Plan Coal Quality Summary

					Plant		Average Clean Coal Quality (As-Received Basis)
	Production (Tons 000)				Yield		Ash		Sulfur		Heating Value		SO₂
Year	ROM Coal		Clean Coal		(%)		(%)		(%)		(Btu/lb)		(lbs/MMBtu)
2022		9,839		6,824		69.4		8.3		3.5		11,440		6.0
2023		8,351		5,894		70.6		7.4		3.3		11,560		5.8
2024		6,656		4,652		69.9		7.6		3.4		11,536		5.9
2025		7,271		5,112		70.3		7.5		3.3		11,544		5.8
2026		7,686		5,444		70.8		7.4		3.4		11,562		5.9
2027		6,976		4,938		70.8		7.5		3.4		11,558		6.0
2028		7,156		5,060		70.7		7.3		3.4		11,587		5.8
2029		7,637		5,368		70.3		7.1		3.3		11,586		5.8
2030		8,279		5,867		70.9		7.2		3.4		11,593		5.8
2031		7,376		5,250		71.2		7.4		3.4		11,561		5.8
2032		5,985		4,158		69.5		7.5		3.4		11,530		5.9
2033		5,820		4,065		69.8		7.4		3.4		11,552		5.9
2034		6,673		4,595		68.9		7.5		3.3		11,525		5.7
2035		4,322		2,992		69.2		8.1		3.2		11,454		5.5
2036		1,789		1,185		66.2		8.4		3.4		11,446		5.9
Total/Average		101,816		71,404		70.1		7.5		3.4		11,542		5.8
Minimum		1,789		1,185.0		66.2		7.1		3.2		11,440		5.5
Maximum		9,839		6,824.0		71.2		8.4		3.5		11,593		6.0

In general, Oaktown Mining Complex’s annual clean coal yield and quality is relatively consistent over the 15-year period; this consistency is indicative of the local Indiana V Seam coal geology.

During the 15-year life of mine, the Oaktown Mining Complex is forecasted to produce approximately 71.4 million tons of clean coal. While it is expected that the mines will encounter local areas of high ash and/or sulfur from either individual mine, the aggregate product from Oaktown Mining Complex should see minimal impact. This reflects the fact that Oaktown Mining Complex’s infrastructure allows for the blending of each the individual mines’ segregated ROM product, thus mitigating the influence/impact that an individual mine or production unit (producing in a localized area of lesser coal quality) could have on the complex’s overall product quality.

JOHN T. BOYD COMPANY

7-11

7.3.3       Mining Recovery and Dilution Factors

The Oaktown Mining Complex’s underground R&P mines operate within the same geological setting and coal seam with little distinguishable differences. As such, the design of each mine is largely the same (e.g., mains width, panel width and length, and CM support pillars). As a result, mining recoveries within the individual mine plans are largely similar. The estimated mining recoveries for Oaktown Mining Complex generally range from 40% to 50%. Based on our review of Oaktown Mining Complex’s reserves by individual mining areas, it is BOYD’s opinion that the mining area recoveries utilized are reasonable and align with general engineering principles.

The proximity of the operations within the same geologic setting and coal seam also results in similar dilution factors for both Oaktown Mining Complex’s mines. The mining horizon targeted by each of the mines includes the main bench of the Indiana V Seam and any in-seam partings. Both mines traditionally operate within the seam as much as possible with little OSD.

The CM mains sections are more subject to sporadic OSD due to maintaining proper ventilation airways, airway intersection locations with planned undercasts, provide adequate clearances for belt transfers, etc., regardless of the targeted mining horizon thickness. These variances are more likely a result of mine infrastructure and design rather than fluctuations in geology.

7.3.4        Expected Mine Life

The LOM plan for each of the Oaktown Mining Complex mines’ operation was developed with input from both Sunrise and BOYD. The LOM plan was developed with consideration taken for mineral control and timing based upon forecasted production levels for each mine. The depicted general layout and mineral control for Oaktown Fuels No. 1 and No. 2 mines are shown in Figure 3.1.

The final year of the Oaktown LOM plan is 2036. While Oaktown Mining Complex is forecasted to operate through 2036, each mine has a different expected mining life. Table 7.7 provides the expected mine life for each of the individual underground R&P mines:

Table 7.7: Mine Life Projection

	Expected		Last Year of
Mine	Life (years)		Mining
Oaktown Fuels No. 1		14		2035
Oaktown Fuels No. 2		15		2036

Production units will start to decrease following 2031 as the coal reserves are gradually depleted at Oaktown Fuels No. 1 Mine with the final year of production being 2035 for the mine. The Oaktown Fuels No. 2 Mine is scheduled to maintain three production units until its second to last year of operation in 2035. Coal reserve at the Oaktown Fuels No. 2 Mine and resultantly, the Oaktown Mining Complex are expected to be exhausted in 2036.

JOHN T. BOYD COMPANY

7-12

7.4       Other Mining Considerations

7.4.1       Mine Design

Mines in the ILB region utilize a wide range of techniques for the extraction of coal including both surface and underground mining methods. However, the majority of coal mining production from the ILB region focuses largely on the Indiana V (Springfield) and Indiana VI (Herrin) seams extracted through underground mining methods.

Given the large extent of reported coal reserves, overall good mining conditions, general coal seam consistency, consistent depth of cover, and relatively low population density on the overlying surface, the Oaktown Mining Complex is well suited for underground R&P mining. Mining plans for R&P mines without secondary extraction are relatively simple yet highly flexible. Unlike LW operations (having a rigid system), the Oaktown Fuels No. 1 and No. 2 mines’ mining method allows for the opportunity to alter the mining plan to avoid specific areas with adverse mining conditions (such as thin coal, poor roof, etc.) or poor coal quality (such as high sulfur, etc.). Mains and sub-mains are typically established in areas where confidence is highest regarding good mining conditions, roof conditions, coal thicknesses, etc. Panels are then developed out to a desired length (whether that be operationally, or engineering based) or until adverse mining conditions or poor coal quality warrant the cessation of development. When the mine panels reach the end of their advance stage of mining, the mine operator removes the production equipment and reinstalls it to another location within the mine to commence production.

The Oaktown Mining Complex is approved for “first only” mining, and Sunrise has no intentions of employing secondary (retreat) mining methods at either of the operations. The use of “first only” mining is common for the ILB region R&P underground mines. There remains substantial public and environmental group opposition to mining in general, however this is more particularly targeted towards LW mining and secondary mining (retreat mining) and the effects of subsidence on surface structures and, more recently, perennial streams. The Oaktown Mining Complex is shielded from a portion of this opposition given the implementation of “first only” mining methods. While there are likely to be some instances of heightened environmental and communal concern regarding mining within the Oaktown Mining Complex plans, Sunrise has historically demonstrated the ability to apply for and obtain the necessary permits for continued mining within their controlled coal reserves, even while being met with some environmental pushback.

JOHN T. BOYD COMPANY

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7.4.2       Mining Risk

Underground R&P mines face two primary types of operational risks. The first category of risk includes those daily variations in physical mining conditions, mechanical failures, and operational activities that can temporarily disrupt production activities. Several examples are as follows:

Roof control problems and roof falls.

Water accumulations/soft floor conditions.

Ventilation disruption and concentrations of methane gas.

Variations in seam consistency, thickness, and structure.

Failures or breakdowns of operating equipment and supporting infrastructure.

Weather disruptions (power outages, inability to load barges due to flooding of rivers, etc.).

The above conditions/circumstances can adversely affect production on any given day, but are not regarded as “risk issues” relative to the long-term operation of a mining operation. Instead, these are considered “nuisance items” that, while undesirable, are encountered on a periodic basis at virtually all mining operations. Engineered mining plans and projections for the Oaktown Mining Complex appear to incorporate generally-accepted industry and Sunrise historical performance levels as a basis, and thereby mitigate the likelihood that the mines will experience such disruptions to production operations to the extent that they have previously occurred. BOYD does not regard the issues listed above as being material to the Oaktown Mining Complex mining operations or otherwise compromising the forecasted performance.

The second type of risk is categorized as “event risk.” Items in this category are rare, but significant occurrences that are confined to an individual mine, and ultimately have a pronounced impact on production activities and corresponding financial outcomes. Examples of event risks are major fires or explosions, floods, or unforeseen geological anomalies that disrupt extensive areas of underground mine workings and require alterations of mining plans. Such an event can result in the cessation of production activities for an undefined but extended period (measured in months, and perhaps years) and/or result in the sterilization of coal reserves.

JOHN T. BOYD COMPANY

7-14

The US mining industry has made tremendous strides in enhancing employee safety and reducing the likelihood of fires, explosions, and other dramatic events over the past several decades. Underground R&P mining is largely a predictable and safe industry. BOYD does not regard the Oaktown Fuels No. 1 and No. 2 mining operations and mine plans as being particularly risky, inadequately managed, or otherwise susceptible to major events. There is no basis to predict or otherwise anticipate major operational shortfalls and/or extraction of coal reserves at the subject mining operation.

JOHN T. BOYD COMPANY

8-1

8.0       PROCESSING OPERATIONS

8.1       Overview

The centrally located Oaktown Complex CPP is designed to process the combined ROM output produced by Oaktown Mining Complex’s two underground R&P mines. Comprised of ROM coal stockpile areas, a coal processing plant, clean coal storage, a rail loadout facility, and truck scales/loading, the approximate 150-acre processing complex is located within proximity of the active operations.

The Oaktown Complex CPP first began operation as the coal washing facility for the Oaktown Fuels No. 1 Mine in 2009. In 2013, major renovations were made to the Oaktown Complex CPP to accommodate additional tonnage supplied from the newly developed Oaktown Fuels No. 2 Mine. Major process upgrades focused on adding a second 800 TPH circuit, increasing total CPP throughput capacity to 1,600 TPH.

While the capacity of the facility has grown, the coal preparation process at Oaktown Complex CPP, like other preparation plants in the ILB mining region, has largely remained unchanged since commissioning. Processing circuits within the Oaktown Complex CPP consist of heavy media bath, heavy media cyclones, hydro-spirals, and froth flotation. Straightforward when compared to many other mineral processing techniques, the coal process is largely based on separating rock material from coal material contained in the raw coal feed by mechanically reducing the size of the feed and utilizing the materials’ different densities to gravitationally separate one from the other. Largely, the process requires water, magnetite, and frothing agents.

ROM coal arrives directly to the complex from the Oaktown Fuels No. 1 and No. 2 mines via two independent slope conveyor belts. There are two ROM coal storage areas that provide approximately 1.2 million tons of above-ground storage capacity for the Oaktown Mining Complex underground mines. The ROM coal storage areas enable each mine to provide their plant feed separately to the preparation facility, or to be combined for a blended product. The clean coal product is dried with screen-bowl centrifuges. Processed product is then transported via overland conveyor belt just over 1 mile to the north and stored at the open-air clean coal storage area. The main clean coal storage area has a capacity of approximately 980,000 tons, with an auxiliary clean coal storage located adjacently (capacity of approximately 290,000 tons) that can be utilized as necessary.

JOHN T. BOYD COMPANY

8-2

Clean coal is sampled and loaded into 120-car unit trains through a flood load system. The Oaktown Complex CPP is served by both CSX and INRD via a short rail spur that connects the complex’s double loop rail system with the mainline rail just north of Oaktown, Indiana. Two rail sidings are employed to facilitate railroad transportation logistics and allowing the accommodation of two-unit trains at any time.

Following this page are Figure 8.1, which provides an aerial overview of the preparation facility area, and Figure 8.2, which provides a generic flow sheet of the CPP and related facilities.

8.2       Historical Operation

Due to the evolution and enlargement of Sunrise’s Oaktown Mining Complex operations, the Oaktown Complex CPP underwent modification and expansion to accommodate the complex’s increased coal production and washing requirements. The plant’s expanded capacity is evidenced by its current average annual plant feed, which has grown from approximately 6.2 million tons processed in 2012 and 2013, to an average plant feed of 8.6 million ROM tons between 2017 to 2021.

The Oaktown Complex CPP has historically produced a very consistent clean coal product that possesses medium ash and high sulfur characteristics and between 11,000 to 12,000 Btu per lb on an as received basis. The plant’s ability to blend raw coal production from the two underground mines into a singular plant feed allows for both more consistent plant operation and coal product qualities.

8.3       Future Operations

Sunrise intends to utilize the Oaktown Complex CPP throughout the LOM. Table 7.6 (page 7-10) summarizes the planned production from the Oaktown Complex CPP over the expected life of the operations.

JOHN T. BOYD COMPANY

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JOHN T. BOYD COMPANY

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JOHN T. BOYD COMPANY

8-5

Annual plant feed (i.e., ROM coal) and clean coal production tonnages over the balance of the LOM are within the capacities of the Oaktown Complex CPP.

8.4       Conclusion

Based on our review of historical processing data and forecasts of future production, it is BOYD’s opinion that the present processing methods found at Oaktown Complex CPP will be sufficient for future processing of coals at Oaktown Mining Complex.

JOHN T. BOYD COMPANY

9-1

9.0       MINE INFRASTRUCTURE

9.1       Mine Surface Facilities

Operations at each of the two Oaktown Mining Complex underground mines are supported by multiple surface facilities located within the areal proximity of the mines’ reserve boundary. Major surface infrastructure elements include: engineering and business offices, personnel bathhouses, parking areas, supply yards, warehouse buildings, ventilation fan structures, ventilation air shafts, high voltage power distribution stations, and primary underground access points, including slope tunnels (for transporting supplies underground/conveying ROM coal to the surface) and mine portals (shafts for transporting employees/supplies underground). Figure 3.1 provides a general location map highlighting the layout of the two Oaktown Mining Complex underground mines and the surface location of their primary deep mine access points. Each of the Oaktown Mining Complex underground R&P mines maintains their own separate surface facilities. In terms of industry standards, the Oaktown Mining Complex operations’ surface infrastructure is comparable to facilities typically found within the ILB mining region.

The current surface facilities located at each of the mines are well constructed and have the necessary capacity/capabilities to support the Oaktown Mining Complex’s near-term mining plans. Longer term, as the individual mines progress beyond their near-term mine plans and the location of future mining activities is centered outside the physical and/or operationally efficient limitations of the existing infrastructure, additional surface facilities of comparable design may be required to support continued mining (refer to Chapter 11 for a discussion regarding Sunrise’s expectations for future capital expenditures).

Given Sunrise’s demonstrated ability to steadily construct its expanding surface facility infrastructure in a timely fashion (relative to underground mine production), the need for continued surface facilities at the mines of Oaktown Mining Complex is not seen as a hindrance for the execution of the LOM plans.

All ROM output from the Oaktown Mining Complex mines is processed in the Oaktown Complex CPP, which is discussed in Chapter 8.

JOHN T. BOYD COMPANY

9-2

9.2       Oaktown Complex Refuse Facility

The Oaktown Complex refuse facility serves as the disposal location for all waste rock (coarse coal refuse) and a portion of fine coal slurry (fine coal refuse) produced during the processing of ROM coal from the two Oaktown Mining Complex underground R&P mines. The majority of the fine coal slurry is transported overland via a network of pumps and pipelines for underground disposal within mined-out void areas. The current Oaktown Complex refuse facility encompasses more than 320 permitted acres located adjacent to the Oaktown Complex CPP and across the Oaktown Mining Complex surface (i.e., to facilitate slurry injection).

The Oaktown Complex refuse facility includes one main disposal area for coarse coal refuse and surface fine coal refuse disposal. In addition to the one main disposal area, multiple underground slurry injection locations are located across the Oaktown Mining Complex to utilize void space within mined out areas of the Oaktown Fuels No. 1 and No. 2 mines. Table 9.1 details the capacity of the Coal Refuse Disposal Area (CRDA) sites servicing the Oaktown Mining Complex operations.

Table 9.1: CRDA Capacity

	Remaining
Refuse Disposal Type	Capacity (000 CY)
Coarse Coal Refuse		13,641
Fine Coal Refuse		12,345

Note: Fine and Coarse Coal Refuse capacities as of September 2021. Numbers do not reflect fine coal refuse disposal space within the current Impoundment Stage 5 or future Stage 7.

According to forecasted LOM coal refuse disposal requirements, currently permitted refuse areas can accommodate coarse disposal through approximately 2031 and fine coal refuse disposal through 2025.

Sunrise representatives indicated that the fine refuse disposal plan post-2025 and coarse refuse disposal plan post-2031 will be based on proven practices and approaches. Sunrise has historically demonstrated the ability to operate the refuse facility and injection sites in a prudent manner, obtain associated permits, and to execute construction of disposal areas (injection sites) in a timely fashion. It is BOYD’s opinion that Sunrise’s staged injection disposal through 2025 will meet the practices demonstrated by other industry peers. At this time, lack of a properly staged and detailed fine coal refuse disposal plan post-2025 and coarse refuse disposal plan post-2031 is not seen as a major hindrance to Oaktown Mining Complex meeting the LOM plans.

JOHN T. BOYD COMPANY

10-1

10.0  MARKET ANALYSIS

10.1       Indiana Coal Industry Background

The following section provides a brief description of the Indiana coal mining industry.

10.1.1       Coal Reserves

The coalfield of Indiana covers an area of 6,500 square miles in the southwestern portion of the state forming the east-central portion of the ILB. The configuration of the coal-bearing area in Indiana is roughly triangular in shape, with a maximum east-west width of approximately 80 miles along the Ohio River and extending approximately 200 miles to the north to Benton County. The state’s coal-bearing strata dip in a southwesterly direction at about 30 ft per mile toward the center of the ILB in southeastern Illinois.

According to the Indiana Geological Survey, Indiana’s total coal geological resources are approximately 57 billion tons, of which 17 billion tons is recoverable using current technology. A distribution by mining method suggests 88% of the state’s mineable resources (15 billion tons) are recoverable by underground mining techniques with the balance recoverable by surface mining. Based on current production rates, Indiana's 17 billion tons of available mineable coal resources could last more than 500 years. Twenty counties within, or partly within, the Indiana coalfield have significant coal resources. As seen in Table 10.1, coal production within the state has been primarily centered within Sullivan, Knox, and Gibson counties over the past five years:

Table 10.1: Historical Indiana Production by County (Tons 000)

											Through
County	2016		2017		2018		2019		2020		Q3 2021
Sullivan		7,287.1		7,271.2		7,290.5		8,302.3		5,322.3		4,389.9
Knox		5,899.9		6,231.3		6,938.5		6,464.4		5,243.0		4,215.0
Gibson		8,192.3		10,115.5		11,985.7		10,210.7		4,469.1		3,521.8
Warrick		3,771.3		4,236.9		4,512.1		2,774.4		2,313.9		1,843.4
Daviess		1,112.8		1,371.7		2,189.2		2,063.1		2,101.2		48.6
Clay		334.7		381.1		265.8		272.0		253.0		108.7
Pike		852.1		223.2		-		363.5		118.4		10.2
Dubois		1,301.5		1,477.4		1,542.7		1,169.1		111.4		7.7
Spencer		-		-		-		-		10.1		-
Greene		14.9		-		-		-		-		-
Ohio		212.4		-		-		-		-		-
Vigo		-		-		-		-		-		-
Total		28,979.1		31,308.2		34,724.5		31,619.5		19,942.4		14,145.3

Source: MSHA

JOHN T. BOYD COMPANY

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Currently, the Indiana V (Springfield) and VII (Danville) are the Indiana coal seams most extensively mined, although limited mining is also conducted in the Colchester and Survant seams. The Indiana VI (Herrin), which is one of the predominant economically mineable seams of the ILB, has limited presence within Indiana.

10.1.2       Coal Quality

Coal produced in Indiana is typically a medium to high volatile (25% to 30+%) bituminous rank coal with medium to high thermal content (i.e., ranges from approximately 11,000 to 11,500 Btu/lb) and relatively high sulfur content. The primary market for Indiana coal is the in-state coal-fired utility market. The following lists the average Indiana coal quality for coal shipped to domestic coal-fired generating plants that burned Indiana coal in 2020 (i.e., U.S. Energy Information Administration [EIA] coal delivery data):

Table 10.2: 2020 Quality Specifications for Indiana Coal Shipped to Domestic Utilities

	Btu/lb		Sulfur (%)		Ash (%)
Wt. Avg		11,302		2.84		8.9
Min		10,760		0.87		5.0
Max		12,020		5.20		13.5

Source: EIA Form 923

Relative to chlorine content, Indiana coals are generally advantaged by relatively low levels of chlorine across the mining region. A summary of Indiana coal quality, including available chlorine content data derived from studies completed by the US Geological Survey and other sources, are summarized below:

Table 10.3: Indiana Coal Quality by County of Origin

County	Btu/lb		Sulfur (%)		Ash (%)		CI (%)
Clay		10,855		0.75		9.0		0.025
Daviess		11,712		2.82		7.1		0.020
Gibson		11,395		2.64		8.0		0.031
Dubois		11,101		3.05		10.3		0.036
Knox		11,525		3.12		8.2		0.037
Pike		11,203		2.88		8.6		0.020
Spencer		10,544		1.65		9.2		na
Sullivan		11,134		2.80		9.2		0.032
Warrick		11,274		3.49		9.0		0.023

By comparison, the chlorine content of the Illinois No. 5 (Springfield) and No. 6 (Herrin) coal seams, which are the two seams mined extensively throughout Illinois, typically ranges from 0.1% to 0.6%. Coals having chlorine content above 0.3% is found to cause damaging boiler corrosion, a fact that negatively impacts the marketability of high-chlorine coal produced in Illinois.

JOHN T. BOYD COMPANY

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10.1.3       Transportation

ILB coal producers are supported by a multi-modal transportation infrastructure system capable of moving coal to end users by truck, rail, and barge (operating alone and/or in combination). Class I railroads operating in the region include the Union Pacific, CSX, NS, and the Canadian National. The ILB is also supported by several regional short-line railways. In many instances, due to geographic location of the mine in relation to the end-user or river loading facility, rail delivery must be conducted via multi-line movements. Any coal movement could involve multiple rail-line hauls, third-party controlled river loading facilities, short rail haul distances or long truck haul distances.

Multiple transportation carriers and multiple transportation modes can have a significant influence on overall delivered costs. Situations can arise where two mines can be in fairly close proximity with one another, but one has a decided transportation advantage based on its access to a particular rail service provider.

Several coal producers in the basin have direct or indirect access to the inland waterway system providing river borne transportation options on the Green, Ohio, and/or Mississippi rivers. Mines located in western Kentucky are generally better suited to direct river loading than those in Indiana and Illinois.

The Indiana coal fields are crossed by numerous roads and railroads. Feeder lines from Class 1 railroads support numerous loadout facilities found in the State’s coal-producing counties. In addition, a well-developed network of federal and state highways crosses the coal-producing region (as well as a supporting system of secondary all weather roads) and provide adequate truck hauling capacity.

JOHN T. BOYD COMPANY

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10.1.4       Production Evolution

The following table illustrates the progression of Indiana’s coal producers and their associated mines operating over the period 2016 to Q3 2021:

Table 10.4: Historical Indiana Coal Production and Mine Count

		2016		2017		2018		2019		2020		2021 through Q3
ARLP	Tons (000)		3,943		5,956		7,878		7,052		2,191		2,353
	No. Mines		2		2		3		3		2		3
Blackhawk/Triad Mining	Tons (000)		791		2		-		-		-		-
	No. Mines		5		5		-		-		-		-
Peabody Energy	Tons (000)		14,130		14,106		13,553		12,383		9,300		7,402
	No. Mines		5		4		4		4		4		4
Sun Energy Group	Tons (000)		76		118		156		117		12		-
	No. Mines		1		1		1		2		2		-
Sunrise Coal	Tons (000)		6,113		6,612		7,609		8,221		5,636		4,324
	No. Mines		4		4		4		4		4		3
United Minerals Co.	Tons (000)		218		301		184		-		-		-
	No. Mines		2		2		2		-		-		-
White Stallion Energy	Tons (000)		3,480		4,134		4,925		3,659		2,329		66
	No. Mines		5		5		5		5		5		5
Other	Tons (000)		227		80		419		187		475		-
	No. Mines		3		3		2		2		3		-
Total	Tons (000)		28,979		31,308		34,725		31,620		19,942		14,145
	No. Mines		27		26		21		20		20		15

Source: MSHA

In 2016, Indiana’s coal industry produced approximately 29 million tons from 27 mines. By 2020, the number of operating mines decreased by 26% (to 20) while coal production from the State declined by 31% (to 20 million tons). The modest production rationalization that ensued over the fived-year period was primarily driven by the closure of less productive, marginal operations. During this period, only Peabody Energy, Sunrise, and Alliance Resource maintained relatively consistent operations in the Indiana coalfields.

JOHN T. BOYD COMPANY

10-5

10.1.5       Mining Methods

Indiana coal operators utilize traditional surface and underground mining technology to produce nearly 20 million tons annually. Surface mines primarily employ truck/shovel operations and draglines (at select mines); underground mines typically utilize continuous miners in R&P and/or super-section applications. There are no LW operations in Indiana. Historical state coal production by mining method is shown in Figure 10.1:

Figure 10.1: Indiana Coal Production by Mining Method

In 2001, Indiana coal output totaled 37 million tons. In that year, approximately 80% (29.4 million tons) was produced from surface operations. Due to the depletion of mineable reserves with economic stripping ratios, as well as the encroachment of urban and farm development over time, coal mining in Indiana has gradually shifted towards underground operations. In 2020, of the 19.9 million tons produced, approximately 54% (10.8 million tons) was attributed to surface mines.

JOHN T. BOYD COMPANY

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10.1.6       Coal Demand by Market

Historically, coal produced from mines in Indiana has been used primarily for electric power generation with the balance directed into the industrial coal market (including process heat, steam, and space heating). A major portion of the Indiana coal industry is located on or near major Class 1 railroads, enabling coal suppliers to service the regional markets and/or some out of state customers. In 2020, Indiana coal mines supplied approximately 19.9 million tons into the general coal market. Of the total Indiana coal sales, approximately 19.1 million tons (or 96%) went to electric generators, with the remaining balance shipped to industrial customers (e.g., cement and sugar plants). The distribution of Indiana coal shipments by market sector for the past five years is shown in the following table:

Table 10.5 : Distribution of Indiana Coal Shipments by Market Sector

	2016				2017				2018				2019				2020
	Tons				Tons				Tons				Tons				Tons
Market Segment	(000)		%		(000)		%		(000)		%		(000)		%		(000)		%
Domestic Coke Plants		19		0.1		-		-		-		-		-		-		-		-
Electric Power Sector		28,321		95.9		28,331		92.8		28,290		85.9		26,024		90.1		19,133		95.1
Industrial Plants *		956		3.2		753		2.5		728		2.2		668		2.3		670		3.3
Commercial		53		0.2		43		0.1		50		0.2		52		0.2		35		0.2
Export Market		172.00		0.6		1,400		4.6		3,860		11.7		2,147		7.4		285		1.4
Total		29,521		100.0		30,527		100.0		32,928		100.0		28,891		100.0		20,123		100.0

* Excluding coke.

In the past five years, Indiana coal had a limited presence in the international export markets. The majority of Indiana produced thermal coal is shipped to electricity generating plants in Indiana. Table 10.6 details historical Indiana thermal coal shipments by state and generating station:

Table 10.6 : Historical Indiana Coal Deliveries to Utility Market by Destination State (Tons 000)

	2017				2018				2019				2020				2021 (Jan-Oct)
	Tons		No. of		Tons		No. of		Tons		No. of		Tons		No. of		Tons		No. of
Plant State	(000)		Plants		(000)		Plants		(000)		Plants		(000)		Plants		(000)		Plants
Indiana		21,183		10		20,981		9		19,006		10		15,619		9		11,947		8
Kentucky		2,174		8		2,119		8		1,462		6		965		3		939		2
Florida		1,851		5		1,183		3		1,246		3		984		3		1,180		3
Ohio		1,706		2		1,399		2		763		2		-		-		-		-
Alabama		303		2		467		2		447		2		-		-		-		-
Tennesse		667		2		746		2		998		3		389		2		197		2
Georgia		24		2		354		2		1,153		2		509		1		208		1
Illinois		1		1		1		1		1		1		1		1		165		1
Michigan		-		-		53		1		107		1		106		1		53		1
N Carolina		412		3		885		1		829		2		560		1		341		1
New York		11		1		-		-		-		-		-		-		-		-
S Carolina		-		-		104		1		13		1		-		-		-		-
Total		28,332		36		28,291		32		26,025		33		19,133		21		15,030		19

Percentage of Utility Deliveries by State

Indiana	74.8	74.2	73.0	81.6	79.5
Kentucky	7.7	7.5	5.6	5.0	6.2
Florida	6.5	4.2	4.8	5.1	7.9
Ohio	6.0	4.9	2.9	-	-
Others	5.0	9.2	13.6	8.2	6.4
Total	100.0	100.0	100.0	100.0	100.0

Source: EIA Form 923

JOHN T. BOYD COMPANY

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In 2020, Indiana thermal coal directed into the domestic US utility market totaled 19.1 million tons. Of this amount, generating plants operating in Indiana consumed 15.6 million tons or approximately 82% of Indiana’s total thermal coal deliveries.

10.2       Sunrise Coal

10.2.1    Product Specifications

Sunrise’s primary product from their main mining operations is a thermal coal that is directed into the US generation market. Indicative quality specifications for Sunrise by mine are shown in Table 10.7, below.

Table 10.7: Indicative Thermal Coal Quality Specifications by Mine (As Received Basis)

Mine

Quality

Oaktown

Ace in the

Parameter

Units

Fuels No. 1

Fuels No. 2

Hole

Sulfur

3.5

3.2

1.1

Heating Value

Btu/lb

11,500

11,600

11,100

SO₂

lbs/MMBtu

6.0

5.6

2.0

Source: Halador Energy Company 2021 10-K

The thermal coal produced by Sunrise is currently used by electricity generators and some domestic industrial customers.

10.2.2       Primary Markets

Sales into the domestic thermal coal market is Sunrise’s primary focus, accounting for over 97% of the company’s annual coal production tonnage over the past five years. A summary of Sunrise’s 2016 to 2020 deliveries by state is provided in Table 10.8, on the following page.

JOHN T. BOYD COMPANY

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Table 10.8: Sunrise Coal Deliveries to Utility Market by Destination State (Tons 000)

	2016				2017				2018				2019				2020
	Tons		No. of		Tons		No. of		Tons		No. of		Tons		No. of		Tons		No. of
Plant State	(000)		Plants		(000)		Plants		(000)		Plants		(000)		Plants		(000)		Plants
Indiana		5,266		8		4,207		8		5,206		9		5,547		8		4,184		6
Kentucky		56		1		500		1		302		1		183		2		-		-
Florida		1,248		2		1,848		4		1,081		2		1,158		1		891		2
Alabama		-		-		-		-		162		1		-		-		-		-
Tennesse		-		-		-		-		12		1		198		1		47		1
Georgia		-		-		-		-		65		1		611		1		493		1
N Carolina		-		-		-		-		409		1		335		2		103		1
S Carolina		-		-		-		-		104		1		13		1		-		-
Total		6,570		11		6,555		13		7,341		17		8,045		16		5,718		11

	Percentage of Utility Deliveries by State

Indiana		80.2				64.2				70.9				68.9				73.2
Florida		19.0				28.2				14.7				14.4				15.6
Georgia		-				-				0.9				7.6				8.6
Kentucky		0.9				7.6				4.1				2.3				-
N Carolina		-				-				5.6				4.2				1.8
Others		-				-				3.8				2.6				0.8
Total		100.0				100.0				100.0				100.0				100.0

During this period, the primary markets for Sunrise have been Indiana and Florida.

As an existing producer with a lengthy commercial history and established customer base, it is BOYD’s opinion that market entry strategies are not required for continued sale of the Oaktown Mining Complex’s thermal coal products.

10.2.3

Market Outlook

While its impacts are expected to ease over the next three to nine months, the magnitude of the COVID-19 pandemic is now expected to result in the largest economic contraction since World War II. At the time of this writing, progress towards sustained economic recovery remained unclear as the rollout of vaccines begins to take hold. While the economic downturn has been primarily concentrated in the service industries (mainly travel, hospitality, and retail), the steel-intensive manufacturing segment has gained some momentum, with conditions improving initially in China followed by a gradual improvement in the United States.

It is anticipated that the US Federal Reserve will continue to keep the supply of money high, provide credit/relief packages as required, and cut interest rates in order to support the economy. Additionally, government-sponsored infrastructure projects will be pushed forward to offset the likely continued weakness in the service sector industries. If realized, increased economic activity will provide a needed boost to the electricity generation and electricity-generating fuels, including thermal coal.

JOHN T. BOYD COMPANY

10-9

Following the effects of the global pandemic witnessed during 2021, US GDP growth is expected to stage a modest recovery during 2022 and regain typical levels. On the strength of this projection (and barring the re-implementation of sustained, stringent containment measures and/or renewed significant virus outbreaks), BOYD anticipates the demand for thermal coal to slowly recover to pre-pandemic levels by the 2023-2024 period.

10.2.4

Future Sales

Coal use among domestic power generators has fallen out of favor in the United States and is systematically being replaced by natural gas and renewable forms of generation. In response to this development, domestic thermal markets are expected to weaken over the near term, in line with coal plant retirements and the associated drop in coal demand. Sunrise is expected to align its future sales with these trends, although the regional Indiana market is expected to remain relatively firm over the near term.

As shown in Figure 10.2, below, a significant portion of Sunrise’s near-term coal production is “committed” (i.e., allocated) to existing supply contracts/agreements. It is reasonable to expect Sunrise to commit future production on an ongoing basis according to its business strategies.

Figure 10.2: Future Coal Sales by Order Type

JOHN T. BOYD COMPANY

10-10

Historically, the top-five customers by sales revenue account for approximately 75% to 85% of total coal sales from the Oaktown Mining Complex annually.

10.2.5

Price Forecast

Market prices for Sunrise’s thermal coal products are influenced by many factors, and the coal market environment can be volatile. The primary factors influencing future prices include: (1) demand, primarily at scrubbed base-load stations, (2) competition in the form of other regional coal suppliers, natural gas-fired generation, and renewables, (3) exhaustion of competing regional mines (thereby reducing local fuel supply), (4) transportation differentials, and (5) cost structures associated with sustained coal production levels.

Coal prices can change quickly. This has been demonstrated in the current market environment, as the price of Illinois Basin coal has rebounded by somewhere between $10/ton and $20/ton in various marketplaces in the span of a few months; coal prices have moved from the $30s in early 2021 to somewhere in the $40s or $50s by the end of 2021. This is the result of increased demand coupled with declining stockpiles and a relatively constrained production response from mine operators.

The prices of competing fuel sources for power generation are meaningful, with the price of natural gas being the most significant. Coal and natural gas are at relative parity at a natural gas price of $2.50/MMBtu, and when natural gas prices are more than $3/MMBtu, coal becomes the fuel of choice. The relative scarcity of natural gas in the marketplace has resulted in prices that have recently surpassed $5/MMBtu, which has further enhanced the competitiveness of coal, even at robust coal prices. While it is reasonable that there will eventually be some pullback in this marketplace, the current market for Illinois Basin coal is likely to remain strong for the next two years. Likewise, the lack of recent investment throughout the Illinois Basin will preclude meaningful coal production responses across that Basin that could contribute to oversupply.

BOYD anticipates the recent uptick in coal pricing to be indicative of the market conditions over the next four years (2022 through 2025). Thereafter, we expect a gradual return to pricing that is in the mid-to-low $40s/ton (FOB CPP) range when expressed in constant dollars.

JOHN T. BOYD COMPANY

10-11

BOYD’s price forecast for the Oaktown Mining Complex’s future coal sales is a weighted average of Sunrise’s committed sales prices and our forecasted prices for uncommitted (or spot) sales. Our coal price forecast for the Oaktown Mining Complex is provided in Table 10.9, below.

Table 10.9: Coal Price Forecast

Year	Coal Sales (000 tons)		Average Sales Price* ($/ton)
2022		6,824		42.71
2023		5,894		51.25
2024		4,652		57.09
2025		5,112		63.99
2026		5,444		50.00
2027		4,938		46.00
2028		5,060		45.00
2029		5,368		44.00
2030		5,867		43.00
2031		5,250		42.50
2032		4,158		42.50
2033		4,065		42.50
2034		4,595		42.50
2035		2,992		42.50
2036		1,185		42.50
Total/Average		71,404		46.88

* FOB Oaktown Complex CPP

As shown, BOYD expects selling prices (FOB CPP) for the Oaktown Mining Complex’s thermal coal products to range from $42.50 to $63.99 and average $46.88 per clean ton over the life of the reserves.

JOHN T. BOYD COMPANY

11-1

11.0 CAPITAL AND OPERATING COSTS

11.1

Historical Financial Performance

Oaktown Mining Complex’s performance relative to productivity, cost control, and production has made it one of the leading underground coal operators within the ILB region. Comprised of two state-of-the-art underground R&P mines, the operation’s ability to consistently achieve high annual output at generally low operating costs is attributed to its well-capitalized operations and financial controls.

Table 11.1 summarizes the past three years of financial data for the Oaktown Mining Complex.

Table 11.1: Historical Financials

	2019		2020		2021
Clean Coal Production (000 tons)		6,464		5,243		5,633

Average Selling Price ($/clean ton)		39.57		40.66		39.50

Cash Operating Costs ($/clean ton):
Direct Labor		11.98		13.02		13.92
Direct Operating		11.17		11.57		10.81
Indirect Operating		4.58		4.02		4.13
Selling and General Administrative		0.99		1.68		1.58
Total - Cash Operating Costs		28.72		30.29		30.44

Capital Expenditures ($/clean ton)		4.59		3.91		4.97

Over the three-year period:

Oaktown Mining Complex’s average realization (i.e., coal selling price) was range-bound between $39.50 and $40.66 per ton.

Cash cost of sales for the complex was approximately $1.72 per ton higher in 2021 than 2019.

In response to weakening market conditions caused by the global pandemic, Sunrise reduced production from Oaktown Mining Complex in 2020 and early 2021. The drop in overall output in 2020 and in early 2021 resulted in an increase to the complex’s average unit cost (and declining cash margins) for those years.

JOHN T. BOYD COMPANY

11-2

Cost performance for the individual mines is portrayed graphically in Figure 11.1.

Figure 11.1: Historical Operating Costs by Mine

Historically, the Oaktown Fuels No. 1 and No. 2 mines have had operating costs that compare favorably with other industry producers.

Of the two Oaktown Mining Complex underground R&P mines, Oaktown Fuels No. 1 Mine has demonstrated the lowest operating cost during the 2019 to 2021 time period.

This is predominantly attributable to more favorable geologic conditions experienced and increased economies of scale³.

Relative to industry peers, the Oaktown Mining Complex (including its supporting centralized preparation facilities) is well capitalized. This reflects Sunrise’s ongoing attention to prudent capital upgrade/replacement programs, routine investment in mine infrastructure expansions, and maintenance of production equipment. The amount of capital spent (per individual mine or for the Oaktown Complex CPP) has varied on an annual basis as a percent of Oaktown Mining Complex’s total expenditures, illustrating differing capital requirements and/or operational timelines for each operation. Despite the capital spending variations, Oaktown Mining Complex’s aggregate capital expenditure level (on a dollar per clean ton basis) was relatively consistent and generally within the range of $4.00 to $5.00 per clean ton.

³ Economies of scale are of fundamental importance; a mine that has a productive year versus its budgeted plan can expect to have low unit costs while surpassing projected margins. Alternatively, a R&P mine that achieves poor production levels would see a proportional reduction in revenue, but this would not be accompanied by a corresponding reduction in total costs. Such a mine would instead see high unit costs, and most of the revenue loss would flow through to the bottom line.

JOHN T. BOYD COMPANY

11-3

11.2

Estimated Costs

BOYD developed mine plans for the Oaktown Mining Complex based on engineered mine layouts⁴ which were designed for optimum reserve recovery, using efficient mining methods and practices. Sunrise’s historical and generally accepted industry operating performance parameters and mining rates were applied to the mine plan to develop coal production and mining schedules. Financial budgets were then prepared (based on mine plan outputs and labor requirements), resulting in operating cost projections (based on constant 2021 dollars). The individual mining plans recognize the impact of variations in physical mining conditions, mechanical failures, and operational activities that can temporarily disrupt production activities. The mine plans for Oaktown Mining Complex are reasonable and achievable, provided no major abnormalities are encountered.

Forecasting performance based on the continuation of consistent mining conditions, excluding impacts from unforeseen events, increases the risk of underperformance versus the mine plan. BOYD’s approach does not directly account for situations that can occur in underground coal mining, such as fire, water inundations, geological anomalies, etc. However, risk mitigation has been reflected in the production schedules through the use of multiple CM sections operating in various locations throughout the mine reserve. The geographical distribution of mining sections throughout the area of the mine plan mitigates the likelihood that all CM sections will experience adverse mining conditions at a given time. Each CM section also utilizes production contingency factors, which are incorporated into the mining forecast.

BOYD reviewed historical Sunrise mining plans (including development strategy, production and productivity, capital expenditures, and total cash costs) and concluded: (1) the Sunrise pro-forma plans are reasonable and achievable and align with BOYD’s independent LOM plans, (2) Sunrise’s market view that coal markets will rebound from the COVID-19 pandemic influences experienced during 2020/21 is reasonable, and (3) Oaktown Mining Complex is well-positioned to achieve the conceptual LOM plan as projected by BOYD provided no major abnormalities are encountered: within the coal market, or at the mine level.

⁴ The mining plans for R&P operations are relatively simple and highly flexible when compared to LW mines. The entire foundation of the mining plan is based upon locating mains and sub-mains in areas of the deposit where coal quality and mining conditions are most suitable. Panels are then developed out to a desired length or until adverse mining conditions (or poor coal quality) warrant the cessation of development. This results in the opportunity to alter the mining plan so as to avoid specific areas with adverse mining conditions (such as thin coal, poor roof, etc.) or poor coal quality (such as high sulfur, etc.).

JOHN T. BOYD COMPANY

11-4

The Sunrise forecasted financial performance aligns with what BOYD would anticipate for an established underground R&P coal facility operating in the ILB region. BOYD developed an independent LOM projection for operating and capital costs which aligns with general industry standards and the Sunrise forecasted figures. BOYD believes the extended LOM projection of operating and capital costs to be accurate to within ±25% of the operating and capital costs of other similarly capitalized mining complexes operating in the ILB region. We did not assign a contingency budget to the extended mine life projection estimates.

11.2.1

Forecasted Production

BOYD’s LOM plans reflect a return to increased sales tonnage from Oaktown Mining Complex as coal prices recover post-COVID-19 pandemic. BOYD’s forecast reflects a stable revenue stream, driven by Sunrise’s view that their Indiana V Seam reserves and Oaktown Mining Complex are in a strong competitive position to take advantage of improved coal pricing and demand as domestic and international markets recover from the COVID-19 pandemic. The Oaktown Mining Complex forecast of saleable tons producedis summarized in Figure 11.2.

JOHN T. BOYD COMPANY

11-5

Oaktown Mining Complex’s future production over the forecast period is projected to remain within current infrastructure capacities and capabilities. This results in a less capital-intensive forward forecast, as capital expenditures are associated with sustaining production rather than new mine development and/or production capacity expansion.

11.2.2

Projected Operating Costs

Operating cost estimates were developed based on recent actual costs and considering specific operational activity levels and cost drivers. The estimates consider current and expected labor headcount and salaries, major consumables and unit prices, power costs, and equipment and maintenance costs. The total operating cost estimate includes all site costs related to mining, processing, and general and administrative activities.

As Sunrise capitalizes on coal markets increasing demands and increases production in 2022, operating costs for Oaktown Mining Complex are projected to be more favorable versus those witnessed during the COVID-19 pandemic. This is primarily a result of reduced direct operating costs associated with Sunrise’s current strategic plan that sees Oaktown Mining Complex producing between 5 to 7 million product tons per annum.

BOYD’s estimate of operating costs over the life of the Oaktown Mining Complex as presented in Table 11.2, on the following page.

JOHN T. BOYD COMPANY

11-6

TABLE 11.2

ESTIMATE OF CASH OPERATING COSTS
OAKTOWN MINING COMPLEX
Prepared For

SUNRISE COAL. LLC

John T. Boyd Company

Mining and Geological Consultants

October 2023

Period Year	1 2022		2 2023		3 2024		4 2025		5 2026		6 2027		7 2028		8 2029		9 2030		10 2031		11 2032		12 2033		13 2034		14 2035		15 2036		Total
Production (000 tons):
ROM Coal		9,839		8,351		6,656		7,271		7,886		6,976		7,156		7,637		8,279		7,376		5,985		5,820		6,673		4,322		1,789		101,816
Clean Coal		6,824		5,894		4,652		5,112		5,444		4,938		5,060		5,368		5,867		5,250		4,158		4,065		4,595		2,992		1,185		71,404

Direct Labor ($ 000)
Labor (incl. Payroll Taxes and Works Comp.)		56,385		48,910		38,572		42,185		45,025		40,757		41,762		44,295		48,506		43,301		34,400		33,683		37,956		24,915		10,069		590,721
Retirement Benefits/401k		22,554		19,564		15,429		16,874		18,010		16,303		16,705		17,718		19,403		17,320		13,760		13,473		15,182		9,966		4,027		236,288
Subtotal - Direct Labor		78,939		68,474		54,001		59,059		63,035		57,060		58,467		62,013		67,909		60,621		48,160		47,156		53,138		34,881		14,096		827,009

Direct Operating ($ 000)
Operating Supplies		32,746		29,021		23,220		24,405		26,119		23,488		24,078		25,556		28,078		24,603		20,629		20,313		22,615		15,874		7,401		348,146
Maintenance		23,962		22,693		20,802		21,386		21,929		21,131		21,310		21,763		22,552		21,574		20,018		19,910		20,639		18,367		7,562		305,598
Utilities		12,918		12,174		11,180		11,548		11,814		11,409		11,507		11,753		12,152		11,659		10,785		10,710		11,134		7,517		3,737		161,997
Other Operating Costs		3,013		2,617		2,063		2,253		2,406		2,177		2,231		2,366		2,592		2,313		1,839		1,801		2,028		1,334		542		31,575
Subtotal - Direct Operating		72,639		66,505		57,265		59,592		62,268		58,205		59,126		61,438		65,374		60,149		53,271		52,734		56,416		43,092		19,242		847,316

Indirect Operating* ($ 000)
Insurance, Real Estate Tax, Penalties		1,100		1,100		1,100		1,100		1,100		1,100		1,100		1,100		1,100		1,100		1,100		1,100		1,100		1,100		550		15,950
Royalties		17,487		18,124		15,936		19,626		16,334		13,629		13,663		14,171		15,138		13,389		10,603		10,364		11,716		7,628		3,021		200,829
Preparation, Surface, and Coal Handling		14,151		12,744		9,972		10,474		11,383		10,129		10,371		10,989		12,231		10,677		8,732		8,676		9,506		6,698		3,156		149,889
Reclamation/Mine Closure		-		-		-		-		-		-		-		-		-		-		-		-		-		-		3,000		3,000
Other Costs		741		711		549		537		603		521		532		563		645		541		466		475		496		392		224		7,996
Subtotal - Indirect Operating		33,479		32,679		27,557		31,737		29,420		25,379		25,666		26,823		29,114		25,707		20,901		20,615		22,818		15,818		9,951		377,664

Selling and General Administrative ($ 000)		9,530		8,455		6,987		7,510		7,910		7,306		7,450		7,811		8,407		7,671		6,397		6,292		6,906		5,471		2,070		106,173

Total Cash Operating Costs ($ 000)		194,587		176,113		145,810		157,898		162,633		147,950		150,709		158,085		170,804		154,148		128,729		126,797		139,278		99,262		45,359		2,158,182

*Indirect Operating Costs do not include Interest Expense or DD&A

JOHN T. BOYD COMPANY

11-7

11.2.3

Projected Capital Expenditures

The Oaktown Mining Complex and related facilities are fully developed and should not require any near-term major capital investment to maintain full commercial production. Historically, the timing and amount of capital expenditures have been largely discretionary and within Sunrise’s control.

Oaktown Mining Complex is expected to maintain a consistent level of capital expenditures over the LOM period, with spending focused on mine infrastructure expansion, maintenance of production equipment (new equipment purchases and/or rebuilds), and refuse placement (injection) expansions. BOYD projected sustaining capital expenditures using nominal unit cost rates which includes maintenance of production equipment as well as other items for the operation. These unit cost rates are based on our experience with other ILB underground R&P operations. From 2022 to 2032, annual capital expenses will be focused on maintenance of production and are expected to average $4.00 per ton of clean coal. Over the final four years of the Complex’s operation, capital expenditures are projected to decline as production decreases. BOYD’s estimates of capital expenditure requirements over the life of the Oaktown Mining Complex are presented in Table 11.3, on the following page.

JOHN T. BOYD COMPANY

11-8

TABLE 11.3

ESTIMATE OF CAPITAL EXPENDITURES
OAKTOWN MINING COMPLEX
Prepared For

SUNRISE COAL. LLC

John T. Boyd Company

Mining and Geological Consultants

October 2023

Period Year	1 2022		2 2023		3 2024		4 2025		5 2026		6 2027		7 2028		8 2029		9 2030		10 2031		11 2032		12 2033		13 2034		14 2035		15 2036		Total
Production (000 tons):
ROM Coal		9,839		8,351		6,656		7,271		7,686		6,976		7,156		7,637		8,279		7,376		5,985		5,820		6,673		4,322		1,789		101,816
Clean Coal		6,824		5,894		4,652		5,112		5,444		4,938		5,060		5,368		5,867		5,250		4,158		4,065		4,595		2,992		1,185		71,404

Capital Expenditures ($ 000):
Expansion		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-		-
Sustaining/Maintenance		27,296		23,576		18,608		20,448		21,776		19,752		20,240		21,472		23,468		21,000		16,632		14,228		13,785		7,480		2,370		272,131
Total		27,296		23,576		18,608		20,448		21,776		19,752		20,240		21,472		23,468		21,000		16,632		14,228		13,785		7,480		2,370		272,131

JOHN T. BOYD COMPANY

11-9

Total capital expenditure for Oaktown Mining Complex appears to be logical and consistent with Sunrise’s typical level of capitalization and maintaining of state-of-the-art R&P underground mines and associated processing facilities and are reasonably aligned with extended LOM plans.

JOHN T. BOYD COMPANY

12-1

12.0 ECONOMIC ANALYSIS

12.1

Approach

The economic analysis presented in this chapter was prepared by BOYD for the purpose of confirming the commercial viability of the Oaktown Mining Complex’s reported coal reserves and not for the purpose of valuing the Oaktown Mining Complex, or its assets. The economic analysis contains forward-looking information related to the projected operating and financial performance of the Oaktown Mining Complex. This projection involves inherent known and unknown risks and uncertainties, some of which may be outside of Sunrise’s control. Sunrise, as with all mining companies, actively evaluates, changes, and modifies business and operating plans in response to various factors that may affect operational and/or financial results. Actual results, production levels, operating expenses, sales realizations, and all other modifying factors could vary significantly from the assumptions and estimates provided in this analysis. Risk is subjective, as such, BOYD recommends that each reader should evaluate the project based on their own investment criteria.

The financial model used for the purposes of the economic analysis forecasts future free cash flow from coal production and sales over the life cycle of the Oaktown Mining Complex using the annual forecasts of production, sales revenues, and operating and capital costs discussed earlier in this report. A DCF analysis, in which future free cash flows are discounted to present value, is used to derive an NPV for the coal reserves. The use of DCF-NPV analysis is a standard method within the mining industry to assess the economic value of a project after allowing for the cost of capital invested.

The financial evaluation of the Oaktown Mining Complex has been undertaken on a simplified after-tax basis and does not reflect Sunrise’s corporate tax structure. NPV is calculated using an after-tax discount rate of 12% (NPV₁₂). Cash flows were assumed to occur in the middle of each year and are discounted to January 1, 2022. Cost estimates and other inputs to the cash flow model for the project have been prepared using constant 2021 money terms, i.e., without provision for inflation. The internal rate of return and project payback were not calculated, as there was no initial investment (sunk costs) considered in the financial model provided herein.

A suite of sensitivities was calculated to evaluate the effect of the main drivers of economic performance (including variations in sales prices, operating costs, and capital costs).

JOHN T. BOYD COMPANY

12-2

It is BOYD’s opinion that the financial model provides a reasonable and accurate reflection of the Oaktown Mining Complex’s expected economic performance based on the assumptions and information available at the time of our review.

12.2

Assumptions and Limitations

Cash flow projections for the Oaktown Mining Complex have been generated from the annual forecasts of production, sales prices, and operating and capital costs discussed earlier in this report. A summary of the key assumptions and limitations is provided below:

Production quantities are based on BOYD’s independently developed LOM plans for the Oaktown Mining Complex. Please refer to Chapters 7 and 8 for further information.

Forecasted revenues are based on BOYD’s FOB sales price forecast for washed thermal coal from the Oaktown Mining Complex’s CPP (i.e., FOB CPP). Additional transportation and delivery costs are assumed to be incurred by the customer or added as a pass-through to the FOB CPP price. Market specifications and forecasted sales prices for the Oaktown Mining Complex’s washed thermal coal are provided in Chapter 10.

Capital and operating costs are discussed in Chapter 11. Capital expenditures and unit operating costs are expected to remain relatively constant over the life of the operation.

No allowance for changes in or the recapture of working capital has been made in the financial analysis as the Oaktown Mining Complex has been in operation for many years. Exclusion of working capital from the financial analysis does not have a material impact on the NPV calculation.

Depreciation and amortization expenses for existing assets are derived from Sunrise’s depreciation schedules. Sustaining capital is depreciated over 8 years on a straight-line basis.

A combined federal and state corporate tax rate of 25% has been applied on all taxable income. All other taxes and fees are included in the estimates of operating costs.

Asset recovery/salvage values were not included in the financial analysis.

Post-mining reclamation costs are included as a lump sum operating cost in the final year of the financial analysis.

It is BOYD’s opinion that the production and financial projections provided herein are reasonable and are accurate to within ±25%.

JOHN T. BOYD COMPANY

12-3

12.3

Financial Model Results

Estimated LOM pre-tax and after-tax cash flows for coal production from the Oaktown Mining Complex are presented in Table 12.1, on the following page.

JOHN T. BOYD COMPANY

12-4

TABLE 12.1

DISCOUNTED CASH FLOW - NET PRESENT VALUE ANALYSIS

OAKTOWN MINING COMPLEX

Prepared For

SUNRISE COAL. LLC

John T. Boyd Company

Mining and Geological Consultants

October 2023

Period Year	1 2022		2 2023		3 2024		4 2025		5 2026		6 2027		7 2028		8 2029		9 2030		10 2031		11 2032		12 2033		13 2034		14 2035		15 2036			Total/ Average
Production (000 tons):
ROM Coal		9,839		8,351		6,656		7,271		7,686		6,976		7,156		7,637		8,279		7,376		5,985		5,820		6,673		4,322		1,789			101,816
Clean Coal		6,824		5,894		4,652		5,112		5,444		4,838		5,060		5,368		5,867		5,250		4,158		4,065		4,595		2,992		1,185			71,404

Revenues:
Coal Sales (000 tons)		6,824		5,894		4,652		5,112		5,444		4,938		5,060		5,368		5,867		5,250		4,158		4,065		4,595		2,992		1,185			71,404
Average Sales Price ($/ton FOB CPP)		42.71		51.25		57.09		63.99		50.00		46.00		45.00		44.00		43.00		42.50		42.50		42.50		42.50		42.50		42.50			46.88
Total Revenues ($ 000)		291,453		302,068		265,583		327,117		272,200		227,148		227,700		236,192		252,281		223,125		176,715		172,763		195,288		127,160		50,363			3,347,156

Cash Operating Costs ($ 000)		194,587		176,113		145,810		157,898		162,633		147,950		150,709		158,085		170,804		154,148		128,729		126,797		139,278		99,262		45,359			2,158,162

Gross Pre-Tax Cash Flow ($ 000)		96,866		125,955		119,773		169,219		109,567		79,198		76,991		78,107		81,477		68,977		47,986		45,966		56,010		27,898		5,004			1,188,994

Depreciation & Amortization ($ 000)		17,278		16,661		16,525		17,536		19,836		21,905		23,774		24,872		22,983		21,720		20,996		20,434		19,449		18,087		16,179			298,235

Operating Income ($ 000)		79,588		109,294		103,248		151,683		89,731		57,293		53,217		53,235		58,494		47,257		26,990		25,532		36,561		9,811		(11,175	)		890,759

Income Taxes ($ 000)		19,897		27,324		25,812		37,921		22,433		14,323		13,304		13,309		14,624		11,814		6,748		6,383		9,140		2,453		-			225,485

Net Income ($ 000)		59,691		81,970		77,436		113,762		67,298		42,970		39,913		39,926		43,870		35,443		20,242		19,149		27,421		7,358		(11,175	)		665,274

Capital Expenditures ($ 000)		27,296		23,576		18,608		20,448		21,776		19,752		20,240		21,472		23,468		21,000		16,632		14,228		13,785		7,480		2,370			272,131

Net Pre-Tax Cash Flow ($ 000)		69,570		102,379		101,165		148,771		87,791		59,446		56,751		56,635		58,009		47,977		31,354		31,739		42,225		20,418		2,634			916,864

Net After-Tax Cash Flow ($ 000)		49,673		75,055		75,353		110,850		65,358		45,123		43,447		43,326		43,385		36,163		24,606		25,356		33,085		17,965		2,634			691,379

DCF - NPV Analysis ($ 000):
Discounted Net Pre-Tax Cash Flow at 12%		65,737		86,374		76,205		100,059		52,719		31,873		27,168		24,207		22,138		16,348		9,539		8,621		10,241		4,422		509			536,162
Discounted Net After-Tax Cash Flow at 12%		46,937		63,322		56,762		74,554		39,248		24,194		20,799		18,519		16,557		12,322		7,486		6,888		8,024		3,890		509			400,011

JOHN T. BOYD COMPANY

12-5

Table 12.2, below, provides a summary of the estimated remaining life of mine financial results for the Oaktown Mining Complex.

Table 12.2: Financial Results

Financial Metric	Remaining Life of Mine Total
Expected Remaining Life (years)	15

Production (000 tons):
ROM Coal		101,816
Clean Coal		71,404

Total Revenues ($ millions)		3,347.2
Average Sales Price ($/clean ton)		46.88

Total Cash Operating Costs ($ millions)		2,158.2
Average Cash Operating Costs ($/clean ton)		30.22

Capital Expenditures ($ millions)		272.1
Average Capital Expenditure ($/clean ton)		3.81

Cash Flows ($ millions):
Total Pre-Tax Cash Flow		916.9
Discounted Pre-Tax Cash Flow at 12%		536.2

Total After-Tax Cash Flow		691.4
Discounted After-Tax Cash Flow at 12%		400.0

DCF-NPV on a pre-tax and after-tax basis, using discount rates of 10%, 12% (the base case), 15%, and 18% were calculated utilizing the projected cash flows. Table 12.3 summarizes the results of the pre-tax and after-tax DCF-NPV analyses:

Table 12.3: DCF-NPV Results

	NPV ($ millions)
	10%		12%		15%		18%
Pre-Tax		578.4		536.2		482.3		437.6

After-Tax		432.2		400.0		359.2		325.3

As shown, the pre-tax DCF-NPV ranges from approximately $437.6 million to $578.4 million. The after-tax DCF-NPV ranges from approximately $325.3 million to $432.2 million.

The economic analysis confirms that the Oaktown Mining Complex generates positive pre- and after-tax financial results and a real NPV₁₂ of $400 million. As such, it is BOYD’s opinion that the coal reserves of the Oaktown Mining Complex have demonstrated economic viability.

JOHN T. BOYD COMPANY

12-6

12.4

Sensitivity Analysis

Table 12.4, below, shows the sensitivity of the project after-tax for a cash flow discounted at 12% (NPV₁₂) to a variation over a range of 20% above and below the base case in: (1) average selling prices and (2) operating costs.

Table 12.4: After-Tax NPV₁₂ Sensitivity Analysis ($ millions)

		Sales Price
		-20%			-10%		-5%		0%		5%		10%		20%
	-20%		310.6			439.6		504.1		568.5		633.0		697.4		826.1
	-10%		227.7			356.1		420.2		484.3		548.4		612.5		740.5
	-5%		186.1			314.4		378.3		442.1		506.0		569.9		697.6
Operating Costs	0%		143.6			272.6		336.4		400.0		463.7		527.4		654.7
	5%		100.5			230.6		294.4		357.9		421.4		484.8		611.8
	10%		55.2			188.2		252.2		315.7		379.0		442.3		568.8
	20%		(42.1	)		101.4		166.7		230.9		294.2		357.2		482.9

As expected, the project is most sensitive to changes in product pricing and operating costs. The project is less sensitive to changes in capital costs. There are only very minor impacts to the NPV₁₂ when varying the capital costs from 80% to 120% of the base case.

This analysis demonstrates the project value to be relatively robust, with positive NPVs reported across the range of values assessed. Additionally, BOYD recognizes that Sunrise is likely to modify operation plans and/or production levels to minimize the impact (or conversely, maximize the opportunity) of short-term coal price fluctuations. BOYD opines that such minor adjustments are likely to be immaterial to the economic viability of the Oaktown Mining Complex’s coal reserves.

JOHN T. BOYD COMPANY

13-1

13.0 PERMITTING AND COMPLIANCE

13.1

Permitting Requirements and Status

Mining and related activities on the Oaktown Mining Complex properties is regulated by both federal and state laws. The relevant federal laws include:

Clean Air Act of 1970/1977.

Clean Air Act Amendments of 1990.

Clean Water Act of 1977.

Surface Mining Control and Reclamation Act of 1977 (SMCRA).

Resource Conservation and Recovery Act of 1976.

In Indiana and Illinois, responsibility for enforcing these acts primarily lies with the IL-EPA and IN-DNR and their various subdivisions.

Numerous permits are required by federal and state law for underground mining, coal preparation and related facilities, and other incidental activities. BOYD reviewed the permits for the Oaktown Mining Complex that are necessary for continued operations. Such required permits appear to be valid and in good standing. The approved permits and certifications are adequate for the continued operation of the facility. A listing of the current permits for the Oaktown Mining Complex is provided in Table 13.1, on the following page.

JOHN T. BOYD COMPANY

13-2

Table 13.1: Summary of Current Permits

			Expiration
Permit / Registration / Authorization	Permit / ID No.	Agency*	Date
MSHA ID
Oaktown Fuels Mine No. 1	1202394	MSHA	None
Oaktown Fuels Mine No. 2	1202418	MSHA	None
Oaktown Fuels Preparation Plant	1202462	MSHA	None

Mine Operating (SMCRA)	U-031	IN-DNR	12/12/2027
	452	IL-DNR	3/16/2028

Minor Source Operating Permit (MSOP)	M-083-42294-00051	IDEM	3/10/2030

National Pollutant Discharge Elimination System (NPDES)
Individual Permit	IN0064629	IDEM	8/31/2028
Coal Mine General Permit	ING040222	IDEM	10/31/2023
Individual Permit	IL0080226	IL-EPA	1/31/2026

Wetlands Dredge and Fill	LRL-2008-623-RJB	USACOE	12/31/2029
Mining Under Navigable Waterway	LRL-2018-786-SEW	USACOE	12/31/2033
Section 401 Water Quality Certification	2008-569-42-JWR-A	IDEM

Underground Mine Backfill / Coal Slurry Injection	IN-083-5X13-0001 to IN-083-5X13-0010	USEPA

* Regulatory Agencies

MSHA: Mine Safety and Health Administration
IN-DNR Indiana Department of Natural Resources
IL-DNR Illinois Department of Natural Resources
IDEM: Indiana Department of Environmental Management
USACOE United States Army Corps of Engineers
USEPA: United States Environmental Protection Agency

New permits and/or permit revisions/amendments may be necessary from time to time to facilitate future operations. Given sufficient time and planning, Sunrise should be able to secure new permits, as required, to maintain its planned operations within the context of the current regulations. Continuously increasing efforts are required to obtain permits for R&P mining and related activities in Indiana and Illinois. The primary contributing factors are the effects on protected surface areas and the ability to permit refuse sites.

JOHN T. BOYD COMPANY

13-3

13.2

Environmental Studies

It is BOYD’s understanding that no standalone environmental studies have been conducted for the Oaktown Mining Complex. As part of the state and federal permitting process, various environmental assessments have been conducted and reviewed by the relevant local, state, and federal agencies. As the necessary permits for mining and processing operations have been issued, it is BOYD’s understanding that all environmental assessments have been accepted by the relevant regulatory bodies and no material issues were found.

13.3

Waste Disposal and Water Management

The coarse refuse generated from the coal preparation process is used in the construction of the existing permitted, on-site slurry impoundment. The fine refuse generated from the coal preparation process is disposed of by pumping it into the slurry impoundment or by injecting it into former underground mining areas. Waste disposal facilities are in place for current mining operations, with plans to expand the disposal facilities to meet life of reserve storage requirements. Please refer to Section 9.2 for a detailed description of these facilities.

The underground mines are below drainage with shaft/slope access. Such mines are designed and permitted to avoid water break out and acid mine discharge. The potential for discharge of acid mine drainage at underground mines is limited to minor run off from disposal and other surface sites.

Water control structures are in place and function as required by regulatory agencies. All runoff from the slurry impoundment(s) is managed by sediment control structures including diversions, sumps, and sediment basins. Prior to discharge from the permitted areas, water must meet compliance standards as defined in the NPDES permits. Water samples at discharge locations are collected in accordance with the approved permit and analyzed by an independent laboratory.

13.4

Compliance

Based on our review of information provided by Sunrise and other public information sources, it is BOYD’s opinion that Sunrise has a generally typical coal industry record of compliance with applicable mining, water quality, and environmental regulations. BOYD is not aware of any regulatory violation or compliance issue that would materially impact the coal reserve estimate.

JOHN T. BOYD COMPANY

13-4

13.5

Plans, Negotiations, or Agreements

New permits and certain permit amendments/revisions require public notification. The public is made aware of pending permits by advertisement in local newspapers. Additionally, a copy of the application is retained at the local county’s public library for review. A comment period follows the last advertisement date to allow the public to submit comments to the regulatory authority.

BOYD is not aware of any community or stakeholder concerns, impacts, negotiations, or agreements that would materially impact the coal reserve estimate.

13.6

Mine Closure

A detailed plan for reclamation activities upon completion of mining required at the Oaktown Mining Complex has been prepared. Given the application of underground mining methods at the operation, the disturbed acreage on the surface is relatively limited. The primary reclamation liabilities are associated with the refuse disposal sites.

Mine site reclamation costs are funded from Sunrise’s Asset Retirement Obligations (ARO) account. Funding of the ARO account is included in the Oaktown Mining Complex’s operating costs discussed in Chapter 11 and included in the economic analysis presented in Chapter 12. ARO costs estimates are reviewed annually and currently estimated at approximately $5.8 million for the Oaktown Mining Complex. In BOYD’s opinion, the estimated reclamation liability is adequate to estimate mine closure and reclamation costs at the property.

13.7

Local Procurement and Hiring

BOYD is not aware of any commitments for local procurement or hiring. However, Sunrise reports making efforts to source supplies and materials from regional vendors. The workforce is likewise located in the regional area.

JOHN T. BOYD COMPANY

14-1

14.0 INTERPRETATION AND CONCLUSIONS

14.1

Findings

BOYD’s independent technical assessment conducted in accordance with S-K 1300 concludes:

Sufficient data have been obtained through various exploration and sampling programs and mining operations to support the geological interpretations of seam structure, thickness, and quality for the portions of the Indiana V Seam situated within the bounds of the Oaktown Mining Complex area. The data are of sufficient quantity and reliability to reasonably support the coal resource and coal reserve estimates in this technical report summary.

Estimates of coal reserves reported herein are reasonably and appropriately supported by technical studies, which consider mining plans, revenue, and operating and capital cost estimates.

The 71.4 million tons of underground coal reserves identified on the property are economically mineable under reasonable expectations of market prices for thermal coal products, estimated operation costs, and capital expenditures.

There is no other relevant data or information material to the Oaktown Mining Complex that is necessary to make this technical report summary not misleading.

14.2

Significant Risks and Uncertainties

As a mining operation with a lengthy operating history, the purpose of Sunrise’s periodic mine planning exercises is to collect and analyze sufficient data to reduce or eliminate risk in the technical components of the project and to refine economic projections based on current data. There is a high degree of certainty for this project under the current and foreseeable operating environment. A general assessment of risk is presented in the relevant sections of this report.

JOHN T. BOYD COMPANY

Exhibit 99.2

John T. Boyd Company
Mining and Geological Consultants

Chairman

James W. Boyd

President and CEO

John T. Boyd II

Managing Director and COO

Ronald L. Lewis

Vice Presidents

Robert J. Farmer

John L. Weiss

Michael F. Wick

William P. Wolf

Managing Director - Australia

Jacques G. Steenekamp

Managing Director - China

Jisheng (Jason) Han

Managing Director- South America

Carlos F. Barrera

Managing Director - Metals

Gregory B. Sparks

Pittsburgh

4000 Town Center Boulevard, Suite 300 Canonsburg, PA 15317

(724) 873-4400

(724) 873-4401 Fax

jtboydp @jtboyd.com

Denver

(303) 293-8988

jtboydd@jtboyd.com

Brisbane

61 7 3232-5000

jtboydau@jtboyd.com

Beijing

86 10 6500-5854

jtboydcn@jtboyd.com

Bogota

+57-3115382113

jtboydcol@jtboyd.com

www.jtboyd.com

February 10, 2023

File: 3467.006

Sunrise Coal, LLC.

1183 E. Canvasback Drive

Terre Haute, IN 47802

Attention: Mr. Todd Davis

                   Chief Accounting Officer

                   Mr. Scott McGuire
                   Corporate Engineering

Subject:     Estimation of Sunrise Coal, LLC
                   2022 Year-End Reserves
                   Oaktown Mining Complex
                   Indiana and Illinois

Ladies and Gentleman:

This letter provides John T. Boyd Company's (BOYD) update of estimated coal reserves remaining as of December 31, 2022, at the Oaktown Mining Complex. BOYD is familiar with the Sunrise Coal, LLC (Sunrise) reserve holdings, having completed a Technical Report Summary (TRS) for the property, as of December 31, 2021. The reader is referred to the March 2022 TRS (BOYD Report No. 3467.002) for definitions and general resource and reserve procedures used by BOYD, as well as additional information pertaining to the subject property.

Sunrise believes, and BOYD concurs, that there are no material adjustments to the coal resources and reserve of the Oaktown Mining Complex necessitating the filing of an amended or revised TRS.

This resource/reserve summary update was prepared for Sunrise in support of their disclosure of coal resources and reserves for the Oaktown Mining Complex in accordance with

Messrs. Davis and McGuire

Sunrise Coal, LLC

February 10, 2023

Page 2

Subpart 1300 of the SEC's Regulation S-K (S-K 1300) and is intended to satisfy the requirements of §229.1304(e), Individual Property Disclosure:

Compare the property's mineral resources and mineral reserves as of the end of the last fiscal year with the mineral resources and mineral reserves as of the end of the preceding fiscal year and explain any material change between the two.

Unless otherwise stated, coal resource and coal reserve estimates disclosed herein are completed in accordance with the standards and definitions provided by S-K 1300. It should be noted that BOYD considers the terms "mineral" and "coal" to be generally interchangeable within the relevant sections of S-K 1300.

Reserve Opinion

It is our professional opinion that as of December 31, 2022, Sunrise controlled 66.4 million tons of Proven and Probable Reserves at the Oaktown Mining Complex, located in Knox and Sullivan counties, Indiana, and Crawford and Lawrence counties, Illinois.

Year-Over-Year (YOY) Changes to Estimated Resources and Reserves Summarized in the table below, the estimated total reportable coal reserves for the Oaktown Mining Complex as of December 31, 2021, were 71.4 million tons (per the TRS).

Oaktown Mining Complex - Summary of Coal Reserves as of December 31, 2021

			Average Product Quality (As Received Basis)
			%				Heating
Mine	Classification	Product Tons (millions)	Total Moisture	Sulfur	Ash	SO₂ (lbs/MMBtu)	Value (Btu/lb)
Oaktown No. 1	Proven	40.1	13.0	3.5	7.4	6.0	11,519
	Probable	0.4	13.0	3.6	7.4	6.2	11,525
	Total	40.5	13.0	3.5	7.4	6.0	11,519

Oaktown No. 2	Proven	29.7	13.0	3.3	7.9	5.7	11,540
	Probable	1.1	13.0	3.2	8.0	5.6	11,520
	Total	30.9	13.0	3.3	7.9	5.6	11,540

Total - All Mines	Proven	69.8	13.0	3.4	7.6	5.9	11,528
	Probable	1.6	13.0	3.3	7.8	5.8	11,522
	Total	71.4	13.0	3.4	7.6	5.9	11,528

JOHN T. BOYD COMPANY

Messrs. Davis and McGuire

Sunrise Coal, LLC

February 10, 2023

Page 3

The estimated total reportable coal reserves for the Oaktown Mining Complex as of December 31, 2022, were 66.4 million tons, as summarized in the table below.

Oaktown Mining Complex - Summary of Coal Reserves as of December 31, 2022

			Average Product Quality (As Received Basis)
			%				Heating
Mine	Classification	Product Tons (millions)	Total Moisture	Sulfur	Ash	SO2 (lbs/MMBtu)	Value (Btu/lb)
Oaktown No. 1	Proven	36.2	13.0	3.5	7.4	6.1	11,522
	Probable	0.5	13.0	3.4	7.5	5.9	11,521
	Total	36.7	13.0	3.5	7.4	6.1	11,522
Oaktown No. 2	Proven	28.5	13.0	3.3	7.9	5.7	11,535
	Probable	1.1	13.0	3.2	8.0	5.6	11,520
	Total	29.7	13.0	3.3	7.9	5.7	11,534
Total - All Mines	Proven	64.7	13.0	3.4	7.6	5.9	11,528
	Probable	1.7	13.0	3.3	7.8	5.7	11,520
	Total	66.4	13.0	3.4	7.6	5.9	11,527

As shown, coal reserves of the Oaktown Mining Complex decreased by approximately 5 million product tons, or 7%, in 2022. As summarized in the table below, the YOY change is the result of: (1) ordinary mining production (depletion), and (2) mining lease acquisitions.

Oaktown Mining Complex - Year-Over-Year Changes in Coal Reserves

	Proven		Probable	Total
Oaktown No. 1
Lease Acquisitions	-		0.1	0.1
Mining Production	(3.9	)	-	(3.9	)
Subtotal	(3.9	)	0.1	(3.8	)
Oaktown No. 2
Lease Acquisitions	1.3		-	1.3
Mining Production	(2.5	)	-	(2.5	)
Subtotal	(1.2	)	-	(1.2	)
Total - All Mines
Lease Acquisitions	1.3		0.1	1.4
Mining Production	(6.4	)	-	(6.4	)
Grand Total	(5.1	)	0.1	(5.0	)

There are no reportable coal resources excluding those converted to coal reserves for the Oaktown Mining Complex, as of December 31, 2022.

JOHN T. BOYD COMPANY

Messrs. Davis and McGuire

Sunrise Coal, LLC

February 10, 2023

Page 4

Report Qualifying Statements

Based on the work efforts conducted during our mineral resource/mineral reserve update, it is BOYD's opinion that the above reserve statement provides an estimate of the available controlled coal reserves that can reasonably be expected to be technically, legally, and economically extractable at the time of determination. The statements are therefore considered suitable and appropriate for public reporting.

Our update was performed to obtain reasonable assurance regarding Sunrise's latest reserve statements. We have relied on information provided by Sunrise regarding the property, as well as the 2022 TRS for the Oaktown Mining Complex. BOYD notes that nothing has come to our attention while preparing this resource/reserve estimate letter that would indicate the information provided to us is false or misleading, or that any material information has been withheld. Our methodology and practices applied in formulating this estimate are consistent with generally accepted mining geology and engineering practices. We believe our audit provides a reasonable basis for our opinion.

The individuals primarily responsible for this resource/reserve update letter are by virtue of their education, experience, and professional association considered Qualified Persons as defined in Subpart 1300 of Regulation S-K.

Estimates of any mineral resources and reserves are always subject to a degree of uncertainty. The level of confidence that can be applied to a particular estimate is a function of, among other things: the amount, quality, and completeness of exploration data; the geological complexity of the deposit; and economic, legal, social, and environmental factors associated with mining the resource/reserve. By assignment, BOYD used the definitions provided in S-K 1300 to describe the degree of uncertainty associated with the estimates reported herein.

Respectfully submitted,

JOHN T. BOYD COMPANY

By:	/s/ John T. Boyd II
John T. Boyd II
President and CEO

JOHN T. BOYD COMPANY

Cover - USD ($)	12 Months Ended
Cover - USD ($)	Dec. 31, 2022	Mar. 16, 2023	Jun. 30, 2022
Cover [Abstract]
Document Type	10-K/A
Amendment Flag	false
Document Annual Report	true
Document Transition Report	false
Document Period End Date	Dec. 31, 2022
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2022
Current Fiscal Year End Date	--12-31
Entity File Number	001-3473
Entity Registrant Name	HALLADOR ENERGY COMPANY
Entity Central Index Key	0000788965
Entity Tax Identification Number	84-1014610
Entity Incorporation, State or Country Code	CO
Entity Address, Address Line One	1183 East Canvasback Drive
Entity Address, City or Town	Terre Haute
Entity Address, State or Province	IN
Entity Address, Postal Zip Code	47802
City Area Code	812
Local Phone Number	299.2800
Title of 12(b) Security	Common Stock, $0.01 par value per share
Trading Symbol	HNRG
Security Exchange Name	NASDAQ
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Public Float			$ 116,685,277
Entity Common Stock, Shares Outstanding		32,982,605
ICFR Auditor Attestation Flag	false
Auditor Name	GRANT THORNTON LLP
Auditor Location	Tulsa, Oklahoma
Auditor Firm ID	248