ARCH RESOURCES, INC. MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND OPERATING RESULTS. (Form 10-K)

COVID-19[female[feminine


In the first quarter of 2020, COVID-19 emerged as a global pandemic. The
continuing responses to the COVID-19 outbreak include actions that have a
significant impact on domestic and global economies, including travel
restrictions, gathering bans, stay at home orders, and many other restrictive
measures. All of our operations have been classified as essential in the states
in which we operate. We instituted many policies and procedures, in alignment
with CDC guidelines along with state and local mandates, to protect our
employees during the COVID-19 outbreak. These policies and procedures included,
but were not limited to, staggering shift times to limit the number of people in
common areas at one time, limiting meetings and meeting sizes, continual
cleaning and disinfecting of high touch and high traffic areas, including door
handles, bathrooms, bathhouses, access elevators, mining equipment, and other
areas, limiting contractor access to our properties, limiting business travel,
and instituting work from home for administrative employees. We continually
evaluate our policies and procedures, in accordance with CDC, state, and local
guidelines, and make any necessary adjustments to respond to the particular
circumstances in the areas in which we operate. During the second half of 2021,
the advent of the Delta and Omicron variants has led to increased infection
rates among our workforce at certain operations, and we have reinstated stricter
protocols at affected operations. During the second half of 2021, over fifty
unit production shifts in our metallurgical segment were adversely impacted by
staffing shortfalls related to increased COVID-19 case rates, and our requisite
quarantine protocols. We continue to encourage vaccination among our workforce
and adjust our COVID-19 responses.

We recognize that the COVID-19 outbreak and responses thereto also continue to
impact both our customers and suppliers. To date, we have not had any
significant issues with critical suppliers, and we continue to communicate with
them and closely monitor developments to ensure we have access to the goods and
services required to maintain our operations. Our customers have reacted, and
continue to react, in various ways and to varying degrees to changes in demand
for their products. In early 2022, increased case rates have negatively impacted
rail transportation, primarily for our export shipments. We remain in close
communication with our rail service providers, and work diligently with them to
mitigate potential delays. Our current view of our customer demand and logistics
situation is discussed in greater detail in the "Overview" section below.

Overview

Our results for the year ended December 31, 2021 benefited from improvement in
metallurgical and thermal coal markets. Global economic growth accelerated over
the course of the year as pent up demand from the responses to the global
pandemic seeks to be fulfilled. Global steel production in 2021 is likely to
exceed pre-pandemic levels, and energy demand is increasing with economic
growth. At the same time, certain metallurgical and thermal coal producing
jurisdictions were, at times during 2021, adversely impacted by the resurgence
of COVID-19 and its variants, weather, and logistical constraints. Specifically,
the major coal producing regions in Australia, Indonesia, China, Mongolia, and
western Canada have been adversely impacted by one or more of these factors at
various points throughout 2021. Through the year ended December 31, 2021, these
constraints have had a relatively minor impact on our shipment volumes, although
we did have one coking coal vessel and one thermal coal vessel that we planned
to ship late in the fourth quarter of 2021, delayed to early 2022. On December
30, 2021, an explosion occurred at the Curtis Bay Terminal, one of two United
States East Coast terminals we utilize to export our coking coal product
overseas. This event, coupled with the increased COVID-19 case rates our rail
service providers are experiencing, has negatively impacted our volume of coking
coal shipments in the first quarter of 2022. While we are working diligently
with our rail service provider to mitigate these impacts, our first quarter of
2022 coking coal shipment volume could be as much as 25% below our coking coal
shipment volume in the fourth quarter of 2021. At this time, we believe we will
make up the first quarter of 2022 shipment shortfall over the course of the
remainder of 2022; however, our ability to make up this shortfall will, at least
in part, be based on factors that are outside of our direct control.

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During the year ended December 31, 2021, accelerating global economic growth,
led to historically high steel prices. Steel prices did moderate some late in
the year, but remain at levels that provide steel producers with healthy
margins. On the coking coal supply side, production and supply chain constraints
combined to drive international coking coal indices to historically high levels.
Despite these historically high coking coal prices, North American coking coal
supply remains constrained compared to pre-COVID-19 levels. Some new supplies
have been added to the market, in particular, our new Leer South longwall
operation that has been be ramping up production throughout the fourth quarter
of 2021. Still, some of the high cost coking coal mine idlings announced during
2020 remain in place, and more recent supply disruptions also constrain supply.
The duration of specific supply disruptions is unknown. We believe that
underinvestment in the sector in recent years underlies the current market
situation. In the current environment, we expect coking coal prices to be
volatile. Longer term, we believe continued limited global capital investment in
new coking coal production capacity, normal reserve depletion, and continuing
economic growth will provide support to coking coal markets.

During the fourth quarter of 2020, a major political dispute that manifested
itself as a trade dispute, escalated between China, a major importer of coking
coal, and Australia, the world's largest exporter of coking coal. Specifically,
China has effectively banned the import of coking coal and thermal coal, among
other export products, from Australia. Historical trade patterns remain
disrupted, and new trade patterns have emerged in the international coking coal
markets. Indices for United States (US) East Coast coking coal reached
historically high levels in the second half of 2021 and retained most of the
increase through the end of the year. In late October, China decided to allow
several million tons of impounded Australian coal to clear customs and enter
their domestic market. Release of this previously impounded coal alleviated
supply constraints and reduced index pricing for coking coal delivered to China.
Lower pricing for coal delivered to China did weigh on US East Coast coking coal
indices in the fourth quarter of 2021; however, due to increased demand for
coking coal outside of China and related strength of Australian Premium Low
Volatile ("PLV") coking coal indices, the impact on US East Coast coking coal
indices has been muted. Despite historically high PLV indices, Australian export
volumes remain below pre-pandemic levels. China has also reduced domestic steel
production during the fourth quarter of 2021. Continuing reduction in Chinese
steel production could negatively impact coking coal prices, but a return to
previous production levels could positively impact coking coal prices.

Domestic thermal coal consumption increased during the year ended December 31,
2021, compared to the year ended December 31, 2020, due to significantly
increased natural gas prices and economic recovery from the responses to
COVID-19. Longer term, we continue to believe thermal coal demand will remain
pressured by planned closure of coal fueled generating facilities, continuing
increases in subsidized renewable generation sources, particularly wind and
solar, and the development of battery storage to support the increase in
intermittent renewable generation sources. However, during 2021, the significant
increase in natural gas prices led to an increase in coal fired generation. We
believe coal generator stockpiles likely declined significantly during 2021, and
domestic thermal coal indices have reached historically high levels.
Importantly, this increase in domestic prices has allowed us to place
significant volumes of domestic thermal coal business at prices meaningfully
higher than those seen prior to the third quarter of 2021. During the year ended
December 31, 2021, international thermal coal indices also increased to
historical highs, and although pricing retreated some during the fourth quarter
of 2021, international thermal coal indices remain at levels that economically
support exports from our thermal operations.

On September 29, 2020, the U.S. District Court ruled against our proposal with
Peabody to form a joint venture that would have combined our Powder River Basin
and Colorado mining operations with Peabody's, and we subsequently announced the
termination of our joint venture efforts. We continue to pursue other strategic
alternatives for our thermal assets, including, among other things, potential
divestiture. We are concurrently shrinking our operational footprint at our
thermal operations. During the year ended December 31, 2021, we completed
approximately $33.5 million of Asset Retirement Obligation (ARO) work at these
operations, compared to approximately $6.8 million in the year ended December
31, 2020. During the fourth quarter of 2021 we established a fund to pay for
future ARO costs at our thermal operations, with an initial $20 million deposit.
We plan to continue to grow this self-funding mechanism for our long-term
reclamation ARO liabilities at our thermal operations. For further information
on this fund, see Note 16, "Asset Retirement Obligations" to the Consolidated
Financial Statements. During the current year, we exercised our operational
flexibility to maximize cash generation from our thermal operations, and plan to
do so again in the coming year. Longer term, we will maintain our focus on
aligning our thermal production rates with the secular decline in domestic
thermal coal demand, while adjusting our thermal operating plans to minimize
future cash

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requirements and maintain flexibility to react to future short-term market
fluctuations. We continue to streamline our entire organizational structure to
reflect our long-term strategic direction as a leading producer of metallurgical
products for the steelmaking industry.

During the fourth quarter of 2021, we sold our 49.5% equity interest in Knight
Hawk Holdings, LLC. For further information on the sale of and our prior equity
investment in Knight Hawk Holdings, LLC, please see Note 4, "Divestitures", and
Note 11, "Equity Method Investments and Membership Interests in Joint Ventures"
to the Consolidated Financial Statements.

On December 31, 2020, we sold our Viper operation in Illinois, which had been
part of our Other Thermal segment, to Knight Hawk Holdings, LLC. Viper's results
for the full year of 2020 are included in our full year 2020 results, and in all
preceding periods' results presented herein. For further information on the sale
of Viper and our prior equity investment in Knight Hawk Holdings, LLC, please
see Note 4, "Divestitures", and Note 11, "Equity Method Investments and
Membership Interests in Joint Ventures" to the Consolidated Financial
Statements.

The following discussion and analysis are for the year ended December 31, 2021,
compared to the same period in 2020 unless otherwise stated. For a discussion
and analysis of the year ended December 31, 2020, compared to the same period in
2019, please refer to Management's Discussion and Analysis of Financial
Condition and Results of Operations included in Part II, Item 7 of our Annual
Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on
February 12, 2021.

Results of Operations

Year ended December 31, 2021 and 2020

Revenues. Our revenues include sales to customers of coal produced at our operations and coal purchased from third parties. Transportation costs are included in the cost of sales of coal and the amounts we charge our customers for transportation are included in revenue.

Coal sales. The following table summarizes our coal sales information for the years ended December 31, 2021 and 2020:

                            Year Ended December 31,
                 2021           2020         (Decrease) / Increase

                                 (In thousands)
Coal sales    $ 2,208,042    $ 1,467,592    $               740,450
Tons sold          73,005         63,343                      9,662


On a consolidated basis, coal sales in 2021 increased $740.5 million or 50.5%
from 2020, and tons sold increased 9.7 million tons, or 15.3%. Coal sales from
Metallurgical operations increased $507.6 million due primarily to higher
realized pricing and secondarily increased volume. Thermal coal sales increased
$255.8 million due to increased pricing and volume. In the year ended December
31, 2020, our Viper operation, which was sold in December 2020, provided
approximately $34.3 million in coal sales and 0.9 million tons sold. See
discussion in "Operational Performance" for further information about segment
results.

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Costs, expenses and other. The following table summarizes costs, expenses and
other components of operating income for the years ended December 31, 2021
and
2020:

                                                           Year Ended December 31,
                                                                                  Increase
                                                                                 (Decrease)
                                                                                   in Net
                                                     2021           2020           Income

                                                                (In thousands)
Cost of sales (exclusive of items shown
separately below)                                 $ 1,579,836    $ 1,378,479    $  (201,357)
Depreciation, depletion and amortization              120,327        121,552           1,225
Accretion on asset retirement obligations              21,748         19,887         (1,861)
Change in fair value of coal derivatives and
coal trading activities, net                          (2,392)          5,219           7,611
Selling, general and administrative expenses           92,342         82,397         (9,945)
Costs related to proposed joint venture with
Peabody Energy                                              -         16,087          16,087
Asset impairment and restructuring                          -        221,380         221,380
Gain on property insurance recovery related to
Mountain Laurel longwall                                    -       (23,518)        (23,518)
Loss (Gain) on divestitures                            24,225        (1,505)        (25,730)
Other operating loss (income), net                      4,826       (22,246)        (27,072)
Total costs, expenses and other                   $ 1,840,912    $ 

1,797,732 ($43,180)



Cost of sales. Our cost of sales for the year ended December 31, 2021 increased
$201.4 million, or 14.6%, versus the year ended December 31, 2020. In the prior
year period, our Viper operation, which was sold in December 2020, accounted for
approximately $45.5 million in cost of sales. The increase in cost of sales at
ongoing operations is directly attributable to higher sales volumes and prices;
which consists of increased transportation costs of approximately $118.3
million, increased repairs and supplies costs of approximately $90.5 million,
increased operating taxes and royalties of approximately $72.8 million, and
increased compensation costs of approximately $21.1 million. These cost
increases were partially offset by an increase in credit for ARO reclamation
work completed primarily in our Thermal Segment of approximately $24.7 million
and decreased purchased coal cost of approximately $16.4 million. See discussion
in "Operational Performance" for further information about segment results.

Depreciation, depletion and amortization. Our depreciation, depletion and
amortization costs for the year ended December 31, 2021 decreased slightly
versus the year ended December 31, 2020 primarily due to the reduced
depreciation expense resulting from the asset impairment we recorded in the
third quarter of 2020 in our Thermal Segment, partially offset by the increased
depreciation of plant and equipment, amortization of development, and depletion
in our Metallurgical Segment.

Accretion on asset retirement obligations. The increase in accretion expense during the year ended December 31, 2021 is mainly related to changes in the planned schedule of refurbishment work to be carried out in our thermal sector, more specifically in the coal stream mine.

Change in fair value of coal derivatives and coal trading activities, net. The
benefit in the year ended December 31, 2021 is primarily related to
mark-to-market gains on coal derivatives that we had entered to hedge our price
risk for anticipated international thermal coal shipments, while we had
mark-to-market losses on such coal derivatives for the year ended December 31,
2020.

Selling, general and administrative expenses. Selling, general and
administrative expenses in the year ended December 31, 2021 increased versus the
year ended December 31, 2020 due primarily to increased compensation costs of
approximately $11.3 million, primarily related to higher incentive compensation
accruals recorded in the year ended December 31, 2021, partially offset by
reduced information technology related costs of approximately $1.1 million.

Costs related to proposed joint venture with Peabody Energy. We incurred
expenses of $16.1 million in the year ended December 31, 2020 associated with
the regulatory approval process related to the proposed joint venture with
Peabody that was terminated jointly by the parties following the Federal Trade
Commission's successful lawsuit to block

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the joint venture. For more information on our proposed joint venture with Peabody Energy, see Note 6, “Joint Venture with Peabody Energy,” to the consolidated financial statements.


Asset impairment and restructuring. During the year ended December 31, 2020, we
recorded $208.0 million of impairment charges primarily relating to three of our
thermal operations, Coal Creek, West Elk, and Viper, as well as, our equity
investment in Knight Hawk Holdings, LLC. Also, during the year ended December
31, 2020, we incurred $13.4 million of restructuring expense related to employee
severance from the voluntary separation plans that were accepted by 254
employees of our thermal operations and corporate staff. For further information
on our Asset Impairment costs, see Note 5, "Asset Impairment and Restructuring"
to the Consolidated Financial Statements.

Gain on property insurance recovery related to Mountain Laurel longwall. In the
year ended December 31, 2020 we recorded a $23.5 million benefit from insurance
proceeds related to the loss of certain longwall shields at our Mountain Laurel
operation. For further information on our gain on property insurance recovery,
see Note 7, "Gain on Property Insurance Recovery Related to Mountain Laurel
Longwall" to the Consolidated Financial Statements.

Loss (Gain) on Divestitures. During the fourth quarter of 2021, we sold our
49.5% ownership in Knight Hawk Holdings, LLC for $38.0 million. We received
$20.5 million during the fourth quarter of 2021 and will receive the remainder
in monthly installments through 2024. We recorded a non-cash loss in the amount
of $24.2 million during the fourth quarter of 2021. During the year ended
December 31, 2020, we recorded a $1.5 million gain on the sale of our Dal-Tex,
Briar Branch, and Viper properties. For further information on these gains and
losses, see Note 4, "Divestitures" to the Consolidated Financial Statements.

Other operating loss (income), net. The decrease in other operating income, net
in the year ended December, 31, 2021 as compared to the year ended December, 31,
2020 results primarily from the net unfavorable impact of certain coal
derivative settlements of approximately $36.7 million, partially offset by
increased income from equity investments of approximately $7.1 million and an
unfavorable impact of mark to market movements on heating oil positions of
approximately $1.8 million recorded in the year ended December 31, 2020.

Non-operating expenses. The following table summarizes non-operating expenses for the years ended December 31, 2021 and 2020:

                                                           Year Ended December 31,
                                                                                   Increase
                                                                                  (Decrease)
                                                                               in Provision for
                                                   2021            2020        Net Income Taxes

                                                                (In thousands)
Non-service related pension and
postretirement benefit costs                    $   (4,339)    $    (3,884)    $          (455)
Reorganization items, net                                 -              26                (26)
Total non-operating expenses                    $   (4,339)    $    (3,858)    $          (481)

Non-service related pension and postretirement benefit costs. The increase in
non-service related pension and postretirement benefit costs in the year ended
December 31, 2021 versus the year ended December 31, 2020 is primarily due to
increased postretirement benefit loss amortization in the year ended December
31, 2021, partially offset by increased pension settlement recorded in the
same
year period.

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Provision for (benefit from) income taxes. The following table summarizes our provision for income taxes for the years ended December 31, 2021 and 2020:

                                                      Year Ended December 31,
                                                                    Increase (Decrease)
                                               2021       2020         in Net Income

                                                           (In thousands)

Provision for (profit) income taxes $1,874 $ (7) $

(1,881)

See Note 15 to the Consolidated Financial Statements “Taxes” for a reconciliation of the statutory federal income tax provision (benefit) at the statutory rate to the actual tax benefit.

Operational performance

Year ended December 31, 2021 and 2020

On December 31, 2020, we sold our Viper operation. As a result, we revised our
reportable segments beginning in the first quarter of 2021 to better reflect the
manner in which the chief operating decision maker (CODM) views our businesses
going forward for purposes of reviewing performance, allocating resources and
assessing future prospects and strategic execution. Prior to the first quarter
of 2021, we had three reportable segments: Metallurgical, Powder River Basin
(PRB), and Other Thermal. After the divestment of Viper, we have three remaining
active thermal mines: West Elk, Black Thunder, and Coal Creek. With two distinct
lines of business, metallurgical and thermal, the movement to two segments
better aligns with how we make decisions and allocate resources. No changes were
made to the Metallurgical Segment and the three remaining thermal mines have
been combined as the "Thermal Segment". The prior periods have been recasted to
reflect the change in reportable segments.

Our mining operations are evaluated based on Adjusted EBITDA, per-ton cash
operating costs (defined as including all mining costs except depreciation,
depletion, amortization, accretion on asset retirements obligations, and
pass-through transportation expenses divided by segment tons sold), and on other
non-financial measures, such as safety and environmental performance. Adjusted
EBITDA is defined as net income (loss) attributable to the Company before the
effect of net interest expense, income taxes, depreciation, depletion and
amortization, the amortization of sales contracts, the accretion on asset
retirement obligations, and non-operating income (expense). Adjusted EBITDA may
also be adjusted for items that may not reflect the trend of future results by
excluding transactions that are not indicative of our core operating
performance. Adjusted EBITDA is not a measure of financial performance in
accordance with generally accepted accounting principles, and items excluded
from Adjusted EBITDA are significant in understanding and assessing our
financial condition. Therefore, Adjusted EBITDA should not be considered in
isolation, nor as an alternative to net income (loss), income (loss) from
operations, cash flows from operations or as a measure of our profitability,
liquidity or performance under generally accepted accounting principles.
Furthermore, analogous measures are used by industry analysts to evaluate the
Company's operating performance. Investors should be aware that our presentation
of Adjusted EBITDA may not be comparable to similarly titled measures used
by
other companies.

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The following table shows the operating results of coal operations for the years ended December 31, 2021 and 2020.

                                      Year Ended             Year Ended
                                   December 31, 2021      December 31, 2020        Variance
Metallurgical
Tons sold (in thousands)                        7,690                  6,979               711
Coal sales per ton sold           $            126.44    $             74.17    $        52.27
Cash cost per ton sold            $             68.84    $             61.13    $       (7.71)
Cash margin per ton sold          $             57.60    $             13.04    $        44.56
Adjusted EBITDA (in thousands)    $           442,830    $            91,322    $      351,508
Thermal
Tons sold (in thousands)                       65,280                 55,722             9,558
Coal sales per ton sold           $             13.95    $             13.55    $         0.40
Cash cost per ton sold            $             11.35    $             13.00    $         1.65
Cash margin per ton sold          $              2.60    $              0.55    $         2.05
Adjusted EBITDA (in thousands)    $           175,709    $            

34,035 $141,674



This table reflects numbers reported under a basis that differs from U.S. GAAP.
See the "Reconciliation of Non-GAAP measures" below for explanation and
reconciliation of these amounts to the nearest GAAP figures. Other companies may
calculate these per ton amounts differently, and our calculation may not be
comparable to other similarly titled measures.

Metallurgical - Adjusted EBITDA for the year ended December 31, 2021 increased
from the year ended December 31, 2020 due to increased pricing and increased
volume. These benefits were partially offset by increased cash cost of sales per
ton sold. The improvement in the current year over the prior year is largely due
to the difference in trajectory of the COVID-19 pandemic during the respective
periods in time. During 2021, increasing vaccine availability and generally
decreasing restrictions led to accelerating economic growth, and increasing
steel demand and pricing, improving prompt coking coal index prices. In
contrast, during 2020, coking coal prices fell as large-scale industrial
shutdowns were initiated in response to the emergence of COVID-19. Particularly,
in the second half of 2021, surging coking coal demand, largely from Asia, and
supply constrained by various disruptions, led to historically high pricing
across all coking coal indices. The increase in cash cost per ton sold is
primarily due to increased taxes and royalties that are based on a percentage of
coal sales per ton sold, and the expected ramp up of production levels at our
new Leer South longwall.

During the end of the third quarter of 2021, we completed our Leer South
longwall development, and initiated longwall production in late August of 2021.
The ramp up to planned production levels is ongoing, and productivity continued
to increase over the course of the fourth quarter of 2021. We expect to achieve
planned long-term productivity levels by the second quarter of 2022. The
addition of this second longwall operation to our Metallurgical Segment is
expected to significantly increase our future volumes and strengthen our low
average segment cost structure relative to our peers.

Our Metallurgical segment sold 7.0 million tons of coking coal and 0.7 million
tons of associated thermal coal in the year ended December 31, 2021, compared to
6.0 million tons of coking coal and 1.0 million tons of associated thermal coal
in the year ended December 31, 2020. Longwall operations accounted for
approximately 71% of our shipment volume in the year ended December 31, 2021,
compared to approximately 60% of our shipment volume in the year ended December
31, 2020.

Thermal - Adjusted EBITDA for the year ended December 31, 2021 increased versus
the year ended December 31, 2020, due to increased sales volume, increased coal
sales per ton sold, and decreased cash cost per ton sold. The improvement in
sales volume in the current year over the prior year is primarily due to
increased domestic utility coal burn, resulting from higher natural gas pricing
and improved economic growth. Sales volume also benefitted from increased
thermal exports, which more than tripled over the prior year to approximately
2.2 million tons. The increase in coal sales per ton sold reflects higher
realized prices at all of our thermal operations, and the reduction in

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cash cost per ton sold is driven by both the increase in sales volume and the
increased percentage of volume from our lower cost Black Thunder operation. Our
cash cost per ton sold benefited from our operational flexibility to take
advantage of increasing demand, despite the substantial progress we have made in
our efforts to align production levels with the secular decline in domestic
thermal coal demand. Also, contributing to the decreases in cost is the
inclusion of approximately 0.9 million tons sold from our former Viper operation
in the year ended December 31, 2020. During 2021, we completed approximately
$33.5 million of ARO work at our current Thermal Segment operations primarily in
the Powder River Basin, compared to $6.8 million during 2020.

On December 31, 2020, we sold our Other Thermal operation, Viper, to Knight Hawk
Holdings, LLC. For further information on the sale of Viper, please see Note 4,
"Divestitures" to the Consolidated Financial Statements.

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Reconciliation of NON-GAAP Measures

Non-GAAP segment coal sales per ton sold


Non-GAAP Segment coal sales per ton sold is calculated as segment coal sales
revenues divided by segment tons sold. Segment coal sales revenues are adjusted
for transportation costs, and may be adjusted for other items that, due to
generally accepted accounting principles, are classified in "other income" on
the consolidated income statements, but relate to price protection on the sale
of coal. Segment coal sales per ton sold is not a measure of financial
performance in accordance with generally accepted accounting principles. We
believe segment coal sales per ton sold provides useful information to investors
as it better reflects our revenue for the quality of coal sold and our operating
results by including all income from coal sales. The adjustments made to arrive
at these measures are significant in understanding and assessing our financial
condition. Therefore, segment coal sales revenues should not be considered in
isolation, nor as an alternative to coal sales revenues under generally accepted
accounting principles.

                                                                              Idle and
Year Ended December 31, 2021                Metallurgical       Thermal        Other        Consolidated
(In thousands)
GAAP Revenues in the Consolidated
Statements of Operations                   $     1,149,132    $ 1,057,481    $    1,429    $    2,208,042
Less: Adjustments to reconcile to
Non-GAAP Segment coal sales revenue
Coal risk management derivative
settlements classified in "other
income"                                            (1,192)         28,656             -            27,464
Coal sales revenues from idled or
otherwise disposed operations not
included in segments                                     -              -         1,424             1,424
Transportation costs                               177,917        118,270             5           296,192
Non-GAAP Segment coal sales revenues       $       972,407    $   910,555  
 $        -    $    1,882,962
Tons sold                                            7,690         65,280
Coal sales per ton sold                    $        126.44    $     13.95


                                                                            Idle and
Year Ended December 31, 2020                Metallurgical      Thermal       Other        Consolidated
(In thousands)
GAAP Revenues in the Consolidated
Statements of Operations                   $       641,536    $ 801,632    $   24,424    $    1,467,592
Less: Adjustments to reconcile to
Non-GAAP Segment coal sales revenue
Coal risk management derivative
settlements classified in "other
income"                                              (577)      (8,632)             -           (9,209)
Coal sales revenues from idled or
otherwise disposed operations not
included in segments                                     -            -        24,322            24,322
Transportation costs                               124,494       55,477           102           180,073
Non-GAAP Segment coal sales revenues       $       517,619    $ 754,787    $        -    $    1,272,406
Tons sold                                            6,979       55,722
Coal sales per ton sold                    $         74.17    $   13.55


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Non-GAAP Segment Cash Cost per Ton Sold

Non-GAAP Segment cash cost per ton sold is calculated as segment cash cost of
coal sales divided by segment tons sold. Segment cash cost of coal sales is
adjusted for transportation costs, and may be adjusted for other items that, due
to generally accepted accounting principles, are classified in "other income" on
the consolidated income statements, but relate directly to the costs incurred to
produce coal. Segment cash cost per ton sold is not a measure of financial
performance in accordance with generally accepted accounting principles. We
believe segment cash cost per ton sold better reflects our controllable costs
and our operating results by including all costs incurred to produce coal. The
adjustments made to arrive at these measures are significant in understanding
and assessing our financial condition. Therefore, segment cash cost of coal
sales should not be considered in isolation, nor as an alternative to cost of
sales under generally accepted accounting principles.

                                                                            Idle and
Year Ended December 31, 2021                Metallurgical      Thermal       Other        Consolidated
(In thousands)
GAAP Cost of sales in the Consolidated
Statements of Operations                   $       707,312    $ 859,070    $   13,454    $    1,579,836
Less: Adjustments to reconcile to
Non-GAAP Segment cash cost of coal
sales
Transportation costs                               177,917      118,270             5           296,192
Cost of coal sales from idled or
otherwise disposed operations not
included in segments                                     -            -         5,838             5,838
Other (operating overhead, certain
actuarial, etc.)                                         -            -         7,611             7,611
Non-GAAP Segment cash cost of coal
sales                                      $       529,395    $ 740,800 $           -    $    1,270,195
Tons sold                                            7,690       65,280
Cash Cost Per Ton Sold                     $         68.84    $   11.35


                                                                            Idle and
Year Ended December 31, 2020                Metallurgical      Thermal       Other        Consolidated
(In thousands)
GAAP Cost of sales in the Consolidated
Statements of Operations                   $       551,133    $ 778,267    $   49,079    $    1,378,479
Less: Adjustments to reconcile to
Non-GAAP Segment cash cost of coal
sales
Diesel fuel risk management derivative
settlements classified in "other
income"                                                  -      (1,788)             -           (1,788)
Transportation costs                               124,494       55,477           102           180,073
Cost of coal sales from idled or
otherwise disposed operations not
included in segments                                     -            -        41,322            41,322
Other (operating overhead, certain
actuarial, etc.)                                         -            -         7,655             7,655
Non-GAAP Segment cash cost of coal
sales                                      $       426,639    $ 724,578    $        -    $    1,151,217
Tons sold                                            6,979       55,722
Cash Cost Per Ton Sold                     $         61.13    $   13.00


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Reconciliation of segment adjusted EBITDA to net income (loss)

The discussion in "Results of Operations" above includes references to our
Adjusted EBITDA for each of our reportable segments. Adjusted EBITDA is defined
as net income (loss) attributable to the Company before the effect of net
interest expense, income taxes, depreciation, depletion and amortization, the
amortization of sales contracts, and the accretion on asset retirement
obligations. Adjusted EBITDA may also be adjusted for items that may not reflect
the trend of future results by excluding transactions that are not indicative of
our core operating performance. We use Adjusted EBITDA to measure the operating
performance of our segments and allocate resources to our segments. Adjusted
EBITDA is not a measure of financial performance in accordance with generally
accepted accounting principles, and items excluded from Adjusted EBITDA are
significant in understanding and assessing our financial condition. Therefore,
Adjusted EBITDA should not be considered in isolation, nor as an alternative to
net income (loss), income (loss) from operations, cash flows from operations or
as a measure of our profitability, liquidity or performance under generally
accepted accounting principles. Investors should be aware that our presentation
of Adjusted EBITDA may not be comparable to similarly titled measures used by
other companies. The table below shows how we calculate Adjusted EBITDA.

                                                           Year Ended         Year Ended
                                                          December 31,       December 31,
                                                              2021               2020

Net income (loss)                                        $       337,573    $     (344,615)
Provision for (benefit from) income taxes                          1,874                (7)
Interest expense, net                                             23,344   

10,624

Depreciation, depletion and amortization                         120,327   

121,552

Accretion on asset retirement obligations                         21,748   

19,887

Costs related to proposed joint venture with
Peabody Energy                                                         -   

16,087

Asset impairment and restructuring                                     -   

221,380

Gain on property insurance recovery related to
Mountain Laurel longwall                                               -   

(23,518)

Loss (Gain) on divestitures                                       24,225   

(1,505)

Preference Rights Lease Application settlement
income                                                                 -                  -
Non-service related pension and postretirement
benefit costs                                                      4,339              3,884
Reorganization items, net                                              -               (26)
Adjusted EBITDA                                                  533,430             23,743
EBITDA from idled or otherwise disposed operations                 2,469   

15,858

Selling, general and administrative expenses                      92,342   

82,397

Other                                                            (9,702)   

3,359

Segment Adjusted EBITDA from coal operations             $       618,539   

$125,357



Other includes primarily income from our equity investments, certain changes in
the fair value of coal derivatives and coal trading activities, certain changes
in fair value of heating oil derivatives we use to manage our exposure to diesel
fuel pricing, net EBITDA provided by our land company, and certain miscellaneous
revenue.

For the year ended December 31, 2021, amounts included in Other increased
Adjusted EBITDA by approximately $9.7 million versus decreasing Adjusted EBITDA
approximately $3.4 million in the year ended December 31, 2020. The net increase
in Adjusted EBITDA from Other was primarily related to favorable change in value
of coal derivatives of approximately $7.7 million, and increased income from
equity investments of approximately $7.1 million.

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Cash and capital resources

Our primary sources of liquidity are proceeds from coal sales to customers and
certain financing arrangements. Excluding significant investing activity, we
intend to satisfy our working capital requirements and fund capital expenditures
and debt-service obligations with cash generated from operations and cash on
hand. We remain focused on prudently managing costs, including capital
expenditures, maintaining a strong balance sheet, and ensuring adequate
liquidity.

Given the volatile nature of coal markets, and the significant challenges and
uncertainty surrounding the COVID-19 pandemic, we believe it remains important
to take a prudent approach to managing our balance sheet and liquidity.
Additionally, banks and other lenders have become increasingly unwilling to
provide financing to coal producers, especially those with significant thermal
coal exposure. Due to the nature of our business, we may be limited in accessing
debt capital markets or obtaining additional bank financing, or the cost of
accessing this financing could become more expensive.

With the completion of the Leer South development, our capital spending returned
to maintenance levels in the fourth quarter of 2021, and we expect our capital
spending to remain at maintenance levels for the foreseeable future. In light of
the reduced capital requirements and current favorable pricing environment, we
generated significant cash flows in the fourth quarter of 2021 and expect cash
flows to remain strong in 2022. Our priority is to improve our financial
position, through enhancing liquidity and reducing our debt and other
liabilities. During the fourth quarter of 2021, our cash balance increased
$129.9 million and we ended the year with cash of $339.7 million and total
liquidity of $389.9 million. Also, during the fourth quarter, we made an initial
deposit of $20.0 million into a fund to pay for future ARO costs at our legacy
thermal operations, primarily in the Powder River Basin, and repurchased $5.0
million of our term loan at a slight discount. We believe our current liquidity
level is sufficient to fund our business and meet both our short-term (next
twelve months) and reasonably foreseeable long-term requirements and
obligations, especially in light of reduced capital spending requirements. In
2022, we have continued to reduce debt by repaying an additional $271.3 million
of our term loan throughout January and the first half of February.
Additionally, during 2022, we plan to make contributions to the thermal ARO fund
on a quarterly basis and expect total contributions could be at least $100.0
million if market conditions remain favorable.

On March 7, 2017, we entered into a senior secured term loan credit agreement in
an aggregate principal amount of $300 million (the "Term Loan Debt Facility")
with Credit Suisse AG, Cayman Islands Branch, as administrative agent and
collateral agent and the other financial institutions from time to time party
thereto. The Term Loan Debt Facility was issued at 99.50% of the face amount and
will mature on March 7, 2024. The term loans provided under the Term Loan Debt
Facility (the "Term Loans") are subject to quarterly principal amortization
payments in an amount equal to $0.8 million. Proceeds from the Term Loan Debt
Facility were used to repay all outstanding obligations under our previously
existing term loan credit agreement, dated as of October 5, 2016. The interest
rate on the Term Loan is, at our option, either (i) the London interbank offered
rate ("LIBOR") plus an applicable margin of 2.75%, subject to a 1.00% LIBOR
floor, or (ii) a base rate plus an applicable margin of 1.75%. For further
information regarding the Term Loan Debt Facility, see Note 14, "Debt and
Financing Arrangements" to the Consolidated Financial Statements.

We have entered into a series of interest rate swaps to fix a portion of the
LIBOR interest payments due under the term loan. As interest payments are made
on the term loan, amounts in accumulated other comprehensive income will be
reclassified into earnings through interest expense to reflect a net interest on
the term loan equal to the effective yield of the fixed rate of the swap plus
2.75% which is the spread on the LIBOR term loan as amended. For further
information regarding the interest rate swaps see Note 14, "Debt and Financing
Arrangements" to the Consolidated Financial Statements.

On September 30, 2020, we extended and amended our existing trade accounts
receivable securitization facility provided to Arch Receivable Company, LLC, a
special-purpose entity that is a wholly owned subsidiary of Arch Resources
("Arch Receivable") (the "Securitization Facility"), which supports the issuance
of letters of credit and requests for cash advances. The amendment to the
Securitization Facility reduced the facility size from $160 million to

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$110 million and extended the due date to September 29, 2023. For more information regarding the securitization facility, see note 14, “Debts and financing arrangements” to the consolidated financial statements.


On September 30, 2020, we amended the senior secured inventory-based revolving
credit facility in an aggregate principal amount of $50 million (the "Inventory
Facility") with Regions Bank ("Regions") as administrative agent and collateral
agent, as lender and swingline lender (in such capacities, the "Lender") and as
letter of credit issuer. Availability under the Inventory Facility is subject to
a borrowing base consisting of (i) 85% of the net orderly liquidation value of
eligible coal inventory, plus (ii) the lesser of (x) 85% of the net orderly
liquidation value of eligible parts and supplies inventory and (y) 35% of the
amount determined pursuant to clause (i), plus (iii) 100% of our Eligible Cash
(defined in the Inventory Facility), subject to reduction for reserves imposed
by Regions. The amendment of the Inventory Facility extended the maturity date
to September 29, 2023, eliminated the provision that accelerated maturity of the
facility upon falling below a specified level of liquidity, and reduced the
minimum liquidity requirement from $175 million to $100 million. Additionally,
the amendment includes provisions that reduce the advance rates for coal
inventory and parts and supplies, depending on liquidity. For further
information regarding the Inventory Facility, see Note 14, "Debt and Financing
Arrangements" to the Consolidated Financial Statements.

On July 2, 2020, the West Virginia Economic Development Authority (the "Issuer")
issued $53.1 million aggregate principal amount of Solid Waste Disposal Facility
Revenue Bonds (Arch Resources Project), Series 2020 (the "2020 Tax Exempt
Bonds") pursuant to an Indenture of Trust dated as of June 1, 2020 (the
"Indenture of Trust") between the Issuer and Citibank, N.A., as trustee (the
"Trustee"). As a follow-on to our $53.1 million offering, on March 4, 2021, the
Issuer issued an additional $45.0 million in Series 2021 Tax Exempt Bonds (the
"2021 Tax Exempt Bonds" and together with the 2020 Tax Exempt Bonds, the "Tax
Exempt Bonds"). The proceeds of the Tax Exempt Bonds were loaned to us as we
made qualifying expenditures pursuant to a Loan Agreement dated as of June 1,
2020, as supplemented by a First Amendment to the Loan Agreement dated March 1,
2021 (collectively, the "Loan Agreement"), each between the Issuer and us. The
Tax Exempt Bonds are payable solely from payments to be made by us under the
Loan Agreement as evidenced by Notes from us to the Trustee. The proceeds of the
Tax Exempt Bonds were used to finance certain costs of the acquisition,
construction, reconstruction, and equipping of solid waste disposal facilities
at our Leer South development, and for capitalized interest and certain costs
related to the issuance of the Tax Exempt Bonds. As of December 31, 2021, we
have utilized the total Tax Exempt Bond proceeds. For further information
regarding the Tax Exempt Bonds, see Note 14, "Debt and Financing Arrangements"
to the Consolidated Financial Statements.

In November, 2020, we issued $155.3 million in aggregate principal amount of
5.25% convertible senior notes due 2025 ("Convertible Notes" or "Convertible
Debt"). The net proceeds from the issuance of the Convertible Notes, after
deducting offering related costs of $5.1 million and the cost of a capped call
transaction of $17.5 million, were approximately $132.7 million. The Convertible
Notes bear interest at the annual rate of 5.25%, payable semiannually in arrears
on May 15 and November 15 of each year, and will mature on November 15, 2025,
unless earlier converted, redeemed or repurchased by us. For further information
regarding the Convertible Debt, see Note 14, "Debt and Financing Arrangements"
to the Consolidated Financial Statements.

During the fourth quarter of 2021, the common stock price condition of the
Convertible Notes was satisfied, as the closing stock price exceeded 130% of the
conversion price of approximately $37.208 for at least 20 trading days of the
last 30 trading days prior to quarter end. As a result, the Convertible Notes
are convertible at the election of the noteholders during the first quarter of
2022, and due to our stated intent to settle the principal value in cash, the
liability portion of $121.6 million of the Convertible Notes is included in
current maturities of debt on our Consolidated Balance Sheet at December 31,
2021. As of the date of this Annual Report on Form 10-K, we have not received
any conversion requests for the Convertible Notes and do not anticipate
receiving any conversion requests, as the market value of the Convertible Notes
exceeds the conversion value of the Convertible Notes. As of December 31, 2021,
the if-converted value of the Convertible Notes exceeded the principal amount by
$225.3 million. For further information regarding the Convertible Notes and the
capped call transactions, see Note 14, "Debt and Financing Arrangements" to the
Consolidated Financial Statements.

At April 27, 2017, our Board of Directors has authorized a capital repayment program consisting of a share buyback program and a quarterly cash dividend. The share buyback plan has a total authorization of $1.05 billion of which we


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have used $827.4 million. During the year ended December 31, 2021, we did not
repurchase any shares of our stock. On April 23, 2020, we announced the
suspension of our quarterly dividend due to the significant economic uncertainty
surrounding the COVID-19 pandemic and the steps being taken to control the
virus. On October 26, 2021, as a result of improved liquidity, we announced the
initiation of a $0.25 per share quarterly dividend. Through the addition of Leer
South, we believe we have significantly increased our future cash-generating
capabilities and as a result we plan to launch an adjusted and more
comprehensive capital return program in the second quarter of 2022. We plan to
return to stockholders approximately 50% of the prior quarter's discretionary
cash flow via a variable rate quarterly cash dividend that will complement our
existing fixed rate cash dividend of $0.25 per share, and to use the remaining
50% of our discretionary cash flow for potential share buybacks, special
dividends, the repurchase of potentially dilutive securities, and capital
preservation. All of these potential uses of capital are subject to board
approval and declaration. Any shares acquired would be in the open market or
through private transactions in accordance with Securities and Exchange
Commission requirements.

On December 31, 2021, we had total liquidity of approximately $389.9 million
including $339.7 million in unrestricted cash and equivalents, and short-term
investments in debt securities, with the remainder provided by availability
under our credit facilities, and funds withdrawable from brokerage accounts. The
table below summarizes our availability under our credit facilities as of
December 31, 2021:

                                                                  Letters of
                                                   Borrowing        Credit                            Contractual
                                   Face Amount        Base       Outstanding     Availability          Expiration
                                                                 (Dollars in thousands)
Securitization Facility           $     110,000    $  110,000    $     67,483   $       42,517      September 29, 2023
Inventory Facility                       50,000        34,111          27,712            6,399      September 29, 2023
Total                             $     160,000    $  144,111    $     95,195   $       48,916

The above standby letters of credit outstanding have primarily been issued to
satisfy certain insurance-related collateral requirements. The amount of
collateral required by counterparties is based on their assessment of our
ability to satisfy our obligations and may change at the time of policy renewal
or based on a change in their assessment. Future increases in the amount of
collateral required by counterparties would reduce our available liquidity.

Contractual obligations


The table below summarizes our contractual obligations as of December 31, 2021:

                                                                    Payments Due by Period
                                                2022       2023-2024     2025-2026      after 2026       Total

                                                                    (Dollars in thousands)
Long-term debt, including related interest    $ 133,624    $  279,017    $ 
267,075    $          -    $ 679,716
Leases                                            4,599         8,976         8,376           1,533       23,484
Coal lease rights                                 3,248         6,082         5,037          37,009       51,376
Coal purchase obligations                         3,336             -             -               -        3,336
Unconditional purchase obligations              129,351             -             -               -      129,351
Total contractual obligations                 $ 274,158    $  294,075    $ 

280 488 $38,542 $887,263

The related interest on long-term debt was calculated using rates in effect at
December 31, 2021, for the remaining term of outstanding borrowings. In 2022, we
have continued to reduce debt by repaying an additional $271.3 million of our
term loan throughout January and the first half of February.

Coal lease rights represent non-cancellable royalty leases, as well as lease premiums due.

Unconditional purchase obligations include outstanding purchase orders and other purchase commitments, which have not been recognized as a liability. The commitments shown in the table above relate to contractual commitments for the purchase of materials and supplies, payments for services and capital expenditures.


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The table above excludes our asset retirement obligations. Our consolidated
balance sheet reflects a liability of $214.5 million including amounts
classified as a current liability for asset retirement obligations that arise
from SMCRA and similar state statutes, which require that mine property be
restored in accordance with specified standards and an approved reclamation
plan. Asset retirement obligations are recorded at fair value when incurred and
accretion expense is recognized through the expected date of settlement.
Determining the fair value of asset retirement obligations involves a number of
estimates, as discussed in the section entitled "Critical Accounting Estimates"
below, including the timing of payments to satisfy the obligations. The timing
of payments to satisfy asset retirement obligations is based on numerous
factors, including mine closure dates. Please see Note 16, "Asset Retirement
Obligations" to our Consolidated Financial Statements for further information
about our asset retirement obligations.

The table above also excludes certain other obligations reflected in our
consolidated balance sheet, including estimated funding for pension and
postretirement benefit plans and worker's compensation obligations. The timing
of contributions to our pension plans varies based on a number of factors,
including changes in the fair value of plan assets and actuarial assumptions.
Please see the section entitled "Critical Accounting Estimates" below for more
information about these assumptions. We expect to make no contributions to our
pension plans in 2022.

Please see Note 20, "Workers' Compensation Expense", and Note 21, "Employee
Benefit Plans" to our Consolidated Financial Statements for more information
about the amounts we have recorded for workers' compensation and pension and
postretirement benefit obligations, respectively.

Off-balance sheet arrangements


In the normal course of business, we are a party to certain off-balance sheet
arrangements. These arrangements include guarantees, indemnifications, financial
instruments with off-balance sheet risk, such as bank letters of credit and
performance or surety bonds. Liabilities related to these arrangements are not
reflected in our consolidated balance sheets, and we do not expect any material
adverse effects on our financial condition, results of operations or cash flows
to result from these off-balance sheet arrangements.

We use a combination of surety bonds and letters of credit to secure our financial obligations for reclamation, workers’ compensation, coal lease obligations and other obligations as follows from December 31, 2021:

                                                         Workers'
                      Reclamation         Lease        Compensation
                      Obligations      Obligations      Obligations      Other        Total

                                              (Dollars in thousands)
Surety bonds         $     500,486    $      26,013    $      50,028    $  7,530    $  584,057
Letters of credit           20,000                -           65,683       1,354        87,037


Cash Flow

The following is a summary of the cash provided or used in each of the types of activities indicated during the year ended December 31, 2021 and 2020:


                                 Year Ended December 31,
                                   2021            2020
(In thousands)
Cash provided by (used in):
Operating activities           $     238,284    $    61,106
Investing activities               (141,215)      (226,009)
Financing activities                  35,781        205,328

Cash provided by operating activities increased in the year ended December 31,
2021 versus the year ended December 31, 2020 mainly due to the improvement in
results from operations discussed in the "Overview" and "Operational
Performance" sections above, partially offset by a greater increase in working
capital requirements of

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about $207 million, mainly in receivables; receipt of approximately $38 million income tax refund during the previous year period; an increase in the restoration work carried out by approximately $25 million; and the creation and financing of a fund for retirement obligations of approximately $20 million in the current period of the year.

Cash used in investing activities decreased in the year ended December 31, 2021
versus the year ended December 31, 2020 primarily due to an approximately $49
million increase in net proceeds from short term investments; decreased capital
expenditures of approximately $40 million, as the Leer South mine completed
development; and an approximately $20 million increase from proceeds of
disposals and divestitures, mainly proceeds from the divestiture of Knight Hawk
Holdings; which were partially offset by an approximately $24 million in
property insurance proceeds on our Mountain Laurel longwall claim in the prior
year period.

Cash provided by financing activities decreased in the year ended December 31,
2021 versus the year ended December 31, 2020 primarily due to the net proceeds
of approximately $138 million from issuance of the Convertible Notes in the
prior year period; a net decrease in proceeds from Equipment Financing
transactions of approximately $34 million; and a net decrease in proceeds from
the issuance of our Tax Exempt Bonds of approximately $8 million; which were
partially offset by a decrease in debt financing costs of approximately $8
million; and a decrease in dividends paid of approximately $4 million.

Critical accounting estimates


We prepare our financial statements in accordance with accounting principles
that are generally accepted in the United States. The preparation of these
financial statements requires management to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses as
well as the disclosure of contingent assets and liabilities. Management bases
our estimates and judgments on historical experience and other factors that are
believed to be reasonable under the circumstances. Additionally, these estimates
and judgments are discussed with our audit committee on a periodic basis. Actual
results may differ from the estimates used under different assumptions or
conditions. We have provided a description of all significant accounting
policies in the notes to our Consolidated Financial Statements. We believe that
of these significant accounting policies, the following may involve a
significant level of estimation uncertainty and have had or are reasonably
likely to have a material impact on our financial condition or results of
operations:

Derivative financial instruments


We utilize derivative instruments to manage exposures to commodity prices and
interest rate risk on long-term debt. Additionally, we may hold certain coal
derivative instruments for trading purposes. Derivative financial instruments
are recognized in the balance sheet at fair value. Certain coal contracts may
meet the definition of a derivative instrument, but because they provide for the
physical purchase or sale of coal in quantities expected to be used or sold by
us over a reasonable period in the normal course of business, they are not
recognized on the balance sheet and changes in the fair value of the derivative
instrument are recorded in the consolidated statements of operations.

Certain derivative instruments are designated as the hedge instrument in a
hedging relationship. In a cash flow hedge, we hedge the risk of changes in
future cash flows related to the underlying item being hedged. Changes in the
fair value of the derivative instrument used as a hedge instrument in a cash
flow hedge are recorded in other comprehensive income. Amounts in other
comprehensive income are reclassified to earnings when the hedged transaction
affects earnings and are classified in a manner consistent with the transaction
being hedged.

We formally document all relationships between hedging instruments and hedged
items, as well as our risk management objectives for undertaking various hedge
transactions. We evaluate the effectiveness of our hedging relationships both at
the hedge inception and on an ongoing basis.

See note 12 to the consolidated financial statements, “Derivatives”, for further information on the Company’s derivative instruments.


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Impairment of long-lived assets


We review our long-lived assets for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. These events and circumstances include, but are not limited to, a
current expectation that a long-lived asset will be disposed of significantly
before the end of its previously estimated useful life, a significant adverse
change in the extent or manner in which we use a long-lived asset or a change in
its physical condition.

When such events or changes in circumstances occur, a recoverability test is
performed comparing projected undiscounted cash flows from the use and eventual
disposition of an asset or asset group to its carrying amount. If the projected
undiscounted cash flows are less than the carrying amount, an impairment is
recorded for the excess of the carrying amount over the estimate fair value,
which is generally determined using discounted future cash flows. If we
recognize an impairment loss, the adjusted carrying amount of the asset becomes
the new cost basis. For a depreciable long-lived asset, the new cost basis will
be depreciated (amortized) over the remaining estimated useful life of the
asset.

We make various assumptions, including assumptions regarding future cash flows
in our assessments of long-lived assets for impairment. The assumptions about
future cash flows and growth rates are based on the current and long-term
business plans related to the long-lived assets. Discount rate assumptions are
based on an assessment of the risk inherent in the future cash flows of the
long-lived assets. These assumptions require significant judgments on our part,
and the conclusions that we reach could vary significantly based upon these
judgments.

During the year ended December, 31, 2020, we determined that we had indicators
of impairment related to three of our thermal operations, Coal Creek, West Elk,
and Viper, as well as, our equity investment in Knight Hawk Holdings, LLC. Our
analyses of future expected cash flows from these assets indicated full
impairment of our listed thermal operations and partial impairment of our equity
investment in Knight Hawk Holdings, LLC. As of December 31, 2021, there were no
indicators of impairment identified.

Please see the Note 5, "Asset impairment and restructuring" to our Consolidated
Financial Statements for more information about the amounts we have recorded for
Asset Impairment.

Asset retirement obligations


Our asset retirement obligations arise from SMCRA and similar state statutes,
which require that mine property be restored in accordance with specified
standards and an approved reclamation plan. Significant reclamation activities
include reclaiming refuse and slurry ponds, reclaiming the pit and support
acreage at surface mines, and sealing portals at deep mines. Our asset
retirement obligations are initially recorded at fair value, or the amount at
which the obligations could be settled in a current transaction between willing
parties. This involves determining the present value of estimated future cash
flows on a mine-by-mine basis based upon current permit requirements and various
estimates and assumptions, including estimates of disturbed acreage, reclamation
costs and assumptions regarding equipment productivity. We estimate disturbed
acreage based on approved mining plans and related engineering data. Since we
plan to use internal resources to perform the majority of our reclamation
activities, our estimate of reclamation costs involves estimating third-party
profit margins, which we base on our historical experience with contractors that
perform certain types of reclamation activities. We base productivity
assumptions on historical experience with the equipment that we expect to
utilize in the reclamation activities. In order to determine fair value, we
discount our estimates of cash flows to their present value. We base our
discount rate on the rates of treasury bonds with maturities similar to expected
mine lives, adjusted for our credit standing.

Accretion expense is recognized on the obligation through the expected
settlement date. On at least an annual basis, we review our entire reclamation
liability and make necessary adjustments for permit changes as granted by state
authorities, changes in the timing and extent of reclamation activities, and
revisions to cost estimates and productivity assumptions, to reflect current
experience. Any difference between the recorded amount of the liability and the
actual cost of reclamation will be recognized as a gain or loss when the
obligation is settled. We expect our actual cost to reclaim our properties will
be less than the expected cash flows used to determine the asset retirement
obligation. At December 31, 2021, our balance sheet reflected asset retirement
obligation liabilities of $214.5 million, including

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amounts classified as current liabilities. From December 31, 2021we estimate the total uninflated and undiscounted cost of final mine closures to be approximately $346.0 million.

See the deferral of the asset retirement obligation liability in Note 16, “Asset retirement obligations”, to the consolidated financial statements.

Employee benefit plans

We have non-contributory defined benefit pension plans covering certain of our
salaried and hourly employees. Benefits are generally based on the
employee's years of service and compensation. The actuarially-determined funded
status of the defined benefit plans is reflected in the balance sheet.

The calculation of our net periodic benefit costs (pension expense) and benefit
obligation (pension liability) associated with our defined benefit pension plan
requires the use of a number of assumptions. These assumptions are summarized in
Note 21, "Employee Benefit Plans", to the Consolidated Financial Statements.
Changes in these assumptions can result in different pension expense and
liability amounts, and actual experience can differ from the assumptions.

? The expected long-term rate of return on plan assets is an assumption
reflecting the average rate of earnings expected on the funds invested or to be
invested to provide for the benefits included in the projected benefit
obligation. We establish the expected long-term rate of return at the beginning
of each fiscal year based upon historical returns and projected returns on the
underlying mix of invested assets. The pension plan's investment targets are 15%
equity and 85% fixed income securities. Investments are rebalanced on a periodic
basis to approximate these targeted guidelines. The long-term rate of return
assumptions are less than the plan's actual life-to-date returns.

? The discount rate represents our estimate of the interest rate at which
pension benefits could be effectively settled. Assumed discount rates are used
in the measurement of the projected, accumulated and vested benefit obligations
and the service and interest cost components of the net periodic pension cost.
The determination of the discount rate was updated from our actuary's
proprietary Yield Curve model, under which the expected benefit payments of the
plan are matched against a series of spot rates from a market basket of high
quality fixed income securities.

The differences generated from changes in assumed discount rates and returns on
plan assets are amortized into earnings using the corridor method, whereby the
unrecognized (gains)/losses in excess of 10% of the greater of the beginning of
the year projected benefit obligation or market-related value of assets are
amortized over the average remaining life expectancy of the plan participants.

We also currently provide certain post-retirement health and life insurance coverage to eligible employees. Generally, covered employees who terminate their employment after meeting the eligibility criteria are eligible for post-retirement coverage for themselves and their dependents. The post-retirement benefit plans for salaried employees are contributory, with retiree contributions adjusted periodically, and contain other cost-sharing elements such as deductibles and coinsurance.


Actuarial assumptions are required to determine the amounts reported as
obligations and costs related to the postretirement benefit plan. The discount
rate assumption reflects the rates available on high-quality fixed-income debt
instruments at year-end and is calculated in the same manner as discussed above
for the pension plan.

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Income Taxes
We provide for deferred income taxes for temporary differences arising from
differences between the financial statement and tax basis of assets and
liabilities existing at each balance sheet date using enacted tax rates expected
to be in effect when the related taxes are expected to be paid or recovered. We
initially recognize the effects of a tax position when it is more than 50%
likely, based on the technical merits, that that position will be sustained upon
examination, including resolution of the related appeals or litigation
processes, if any. Our determination of whether or not a tax position has met
the recognition threshold considers the facts, circumstances, and information
available at the reporting date.

On the basis of this evaluation, a full valuation allowance has been in place
against the Company's net deferred tax assets since 2015. Through December 31,
2018, the Company was in a cumulative loss position. Since 2019, the Company has
been in a cumulative income position, however, the Company has fluctuated
between income and loss for individual years and quarters within each cumulative
three-year period.

We utilize three years of pre-tax income or loss to measure of our cumulative
results in recent years. A valuation allowance is difficult to avoid when a
company is in a cumulative loss position, as it constitutes significant negative
evidence with regards to future taxable income. However, a cumulative loss is
not solely determinative of the need for a valuation allowance. The Company
considers all other positive and negative evidence available as part of its
assessment of the need for a valuation allowance, including but not limited to
future taxable income, available tax planning strategies and the reversal of
temporary differences.

See Note 15 to the consolidated financial statements, “Taxes”, for further information on income taxes.


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