NOTE

—COMMITMENTS AND CONTINGENCIES

Leases

The Company leases coal reserves under agreements that require royalties to be paid as the coal is mined and sold. Many of these agreements require minimum annual royalties to be paid regardless of the amount of coal mined and sold. Total royalty expense was

$11.6

million,

$1.8

million and

$0.1

million for the years ended

December

31,

2018,

2017

and

2016,

respectively. These agreements generally have terms running through exhaustion of all the mineable and merchantable coal covered by the respective lease. Royalties or throughput payments are based on a percentage of the gross selling price received for the coal mined by the Company. Payments of minimum coal royalties and throughput payments for leases with Ramaco Coal, LLC commenced in

2017

pursuant to the terms of the agreements.

The Company also leases facilities under various noncancelable lease agreements. Rent expense for facilities totaled

$0.1

million,

$0.4

million and

$0.4

million in

2018,

2017

and

2016,

respectively.

Future minimum lease and royalty payments as of

December

31,

2018

are as follows:

			Coal Lease
			and
(In thousands)	Operating		Royalty
Year Ending December 31,	Leases		Obligations

2019	$	155	$	3,598
2020		117		3,798
2021		99		4,360
2022		41		4,361
2023		—		4,372
Thereafter		—		15,653
Total minimum payments	$	412	$	36,142

Environmental Liabilities

Environmental liabilities are recognized when the expenditures are considered probable and can be reasonably estimated. Measurement of liabilities is based on currently enacted laws and regulations, existing technology and undiscounted site-specific costs. Generally, such recognition would coincide with a commitment to a formal plan of action.

amounts have been recognized for environmental liabilities.

Surety Bond

In accordance with state laws, the Company is required to post reclamation bonds to assure that reclamation work is completed. Reclamation bonds outstanding at

December 31, 2018

totaled approximately

$12.7

million.

Purchase Commitments

We secured the ability to transport coal through rail contracts and export terminals that are sometimes funded through take-or-pay arrangements. As of

December

31,

2018,

commitments under take-or-pay arrangements totaled

$0.9

million, all of which is obligated within the next year.

Litigation

From time to time, the Company is subject to various litigation and other claims in the normal course of business.

amounts have been accrued in the consolidated financial statements with respect to any matters.