EX-96.1 12 exhibit961.htm EX-96.1 Document

Exhibit 96.1
TECHNICAL REPORT SUMMARY
COAL RESOURCES AND COAL RESERVES
PENNSYLVANIA MINING COMPLEX
Pennsylvania and West Virginia






Prepared For
CONSOL ENERGY INC.
Canonsburg, Pennsylvania








By
John T. Boyd Company
Mining and Geological Consultants
Pittsburgh, Pennsylvania

logo1a.jpg

Report No. 2755.091
JANUARY 2023

logo2a.gif
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. Steenkamp

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
January 31, 2023
File: 2755.091



CONSOL Energy Inc.
275 Technology Drive, Suite 101
Canonsburg, PA 15317-9565
Attention:     Mr. Michael Bohan
    Senior Geologist

Subject:    Technical Report Summary
        Coal Resources and Coal Reserves
        Pennsylvania Mining Complex
        Pennsylvania and West Virginia

Ladies and Gentlemen:

The John T. Boyd Company (BOYD) was retained by CONSOL Energy Inc. (CONSOL) to complete an independent technical assessment of the coal resource and coal reserves estimates for the Pennsylvania Mining Complex (PAMC) as of December 31, 2022.

This technical report summary: 1) identifies and summarizes the scientific and technical information supporting the coal resource and coal reserves estimates for the PAMC and 2) provides BOYD’s conclusions resulting from our independent assessment.

Respectfully submitted,

JOHN T. BOYD COMPANY
By:
sig1a.jpg
John T. Boyd II
President and CEO

Q:\ENG_WP\2755.091 CEI - PMAC 22\WP\Cover Letter.docxc


TABLE OF CONTENTS


JOHN T. BOYD COMPANY
TABLE OF CONTENTS    - Continued

Page
3-4
4-1
4-1
4-1
4-1
4-2
5-1
5-1
5-1
6-1
6-1
6-2
6-3
6-3
6-3
6-3
6-3
6-6
6-7
7-1
7-1
7-1
7-1
7-3
7-4
7-5
7-5
7-5
7-7
7-7
8-1
9-1
10-1
JOHN T. BOYD COMPANY
TABLE OF CONTENTS    - Continued

Page
11-1
11-1
11-2
11-2
11.2.2Criteria
11-2
11-2
11-3
11-3
12-1
12-1
12-2
12-2
12-2
12-5
12-5
12-11
13-1
13-1
13-3
13-3
13.2.2Staffing
13-3
13-4
13-4
13-6
13-6
13-8
13-8
13-9
14-1
14-1
14-5
14-5
14-5
15-1
15-1
15-1
16-1
JOHN T. BOYD COMPANY
TABLE OF CONTENTS    - Continued

Page
16-1
16-2
16-3
16-4
16-5
17-1
17-1
17-1
17-2
18-1
18-1
18-2
18-4
18-4
18-5
18-6
18-7
19-1
19-1
19-2
19-2
19-3
19-3
19-4
20-1
21-1
22-1
22-1
22-1
23-1
24-1
25-1
JOHN T. BOYD COMPANY
TABLE OF CONTENTS    - Continued

List of Tables
1.1
1-4
3.1
3-3
4.1
4-1
5.1
5-1
7.1
7-5
7.2
7-7
11.1
11-3
12.1
12-3
12.2
12-7
12.3
12-5
12.4
12-8
13.1
13-4
14.1
14-1
15.1
15-2
15.2
15-2
16.1
16-1
16.2
16-2
16.3
16-2
16.4
16-3
18.1
18-4
18.2
18-5
19.1
19-2
19.2
19-2
19.3
19-3
19.4
19-3
19.5
19-4
19.6
19-5

JOHN T. BOYD COMPANY
TABLE OF CONTENTS    - Continued

List of Figures
1.1
1-2
3.1
3-2
6.1
6-2
6.2
6-4
6.3:
6-5
7.1
7-6
12.1
12-2
12.2
12-4
12.3
12-6
12.4
12-9
12.5
12-10
12.6
12-8
12.7
12-11
13.1
13-1
13.2
13-4
13.3
13-5
13.4
13-6
14.1
14-3
14.2
14-4
18.1
18-2
18.2
18-3
18.3
18-6
18.4
18-7

q:\eng_wp\2755.091 cei - pmac 22\wp\toc.doc
JOHN T. BOYD COMPANY
        i


DISCLAIMERS AND QUALIFICATIONS


This report is intended for use by CONSOL subject to the terms and conditions of its professional services agreement with BOYD. The agreement permits CONSOL to file this report as a technical report summary with the U.S. Securities and Exchange Commission (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 or reliance on this report by any third party is at that party’s sole risk. The responsibility for this disclosure remains with CONSOL. 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.

This report provides BOYD’s assessment of CONSOL’s coal resources and coal reserves. Our assessment was performed to obtain reasonable assurance that CONSOL's estimates of coal reserves and coal resources are free from material misstatement. We did not independently estimate coal resources or coal reserves as it was not required for the purposes of the assessment. The Economic Analysis and resulting net present value (NPV) estimate in this report were made for the purposes of confirming the economic viability of the reported coal reserves and not for the purposes of valuing CONSOL 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.

The ability of CONSOL to recover all 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.


Cautionary Statements Regarding Forward-Looking Statements
Certain statements in this technical report summary are “forward-looking statements” within the meaning of the federal securities laws. Except for historical matters, the matters discussed in this technical report summary are forward-looking statements (as defined in Section 21E of the Securities Exchange Act of 1934, as amended) that involve risks and uncertainties that could cause actual results to differ materially from results projected in or implied by such forward-looking statements. Accordingly, investors should
    JOHN T. BOYD COMPANY
        ii


not place undue reliance on forward-looking statements as a prediction of actual results. The forward-looking statements may include projections and estimates concerning the timing and success of specific projects and CONSOL’s future production, revenues, income, and capital spending. When the words “anticipate,” “believe,” “could,” “continue,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,” “will,” or their negatives, or other similar expressions are used in this technical report summary, the statements which include those words are usually forward-looking
statements. Any expectations with respect to the PAMC or any other strategy that involves risks or uncertainties are forward-looking statements. These forward-looking statements are based on current expectations and assumptions about future events. While BOYD considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory, and other risks, contingencies and uncertainties, most of which are difficult to predict and many of which are beyond BOYD’s control. The forward-looking statements in this report speak only as of the date of this technical report summary and BOYD disclaims any intention or obligation to update publicly any forward-looking statements in this technical report summary, whether in response to new information, future events, or otherwise, except as required by applicable law.

q:\eng_wp\2755.091 cei - pmac 22\jan 23 report work\updated text\disclaimers and qualifications.docx
    JOHN T. BOYD COMPANY
        1
GLOSSARY OF ABBREVIATIONS AND DEFINITIONS

$:US dollar(s)
%:Percent or percentage
AFC:Armored Face Conveyor
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)
BMX:Bailey Mine Expansion
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.
CAPP:Central Appalachian Basin. Coal producing region consisting of Eastern Kentucky, Virginia, Southern West Virginia, and the Tennessee counties of: Anderson, Campbell, Claiborne, Cumberland, Fentress, Morgan, Overton, Pickett, Putnam, Roane, and Scott.
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.
JOHN T. BOYD COMPANY
2


    GLOSSARY OF ABBREVIATIONS AND DEFINITIONS - Continued 

    

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.
CONSOL:CONSOL Energy Inc. and its subsidiaries
CRDA:Coal Refuse Disposal Area
CSX:CSX Corporation. A rail-based freight transportation company
CY:Cubic yards
DCF:Discounted Cash Flow
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
ILB:Illinois Basin. Coal producing region consisting of Illinois, Indiana, and Western Kentucky.
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.
JOHN T. BOYD COMPANY
3


    GLOSSARY OF ABBREVIATIONS AND DEFINITIONS - Continued 

    

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
ISO:International Organization for Standardization
lb:Pound
LOM:Life-of-Mine
LW:Longwall
MB:Miner-Bolter
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”
MM:Million
JOHN T. BOYD COMPANY
4


    GLOSSARY OF ABBREVIATIONS AND DEFINITIONS - Continued 

    

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
NAPP:
Northern Appalachian Basin. Coal producing region consisting of Maryland, Ohio, Pennsylvania, and Northern West Virginia
NAR:Net As Received
NS:Norfolk Southern Corporation. A rail-based freight transportation company.
NPV:Net Present Value
OSD:Out-of-Seam Dilution. Rock impurities recovered from above and below the coal seam with the coal seam during the normal mining process
PAMC:Pennsylvania Mining Complex. Includes the Bailey Mine, the Enlow Fork Mine, the Harvey Mine, and the Central Coal Preparation Plant
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
JOHN T. BOYD COMPANY
5


    GLOSSARY OF ABBREVIATIONS AND DEFINITIONS - Continued 

    

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.
ROM:Run-of-Mine. The as-mined material including coal, in-seam rock partings mined with the coal, and out-of-seam dilution.
RSA:Republic of South Africa
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
Ton:Short Ton. A unit of weight equal to 2,000 pounds
TPH:Tons per Hour
TPEH:Tons per Employee-Hour

Q:\ENG_WP\2755.091 CEI - PMAC 22\WP\Glossary.docx
JOHN T. BOYD COMPANY
        1-1


1.0    EXECUTIVE SUMMARY


1.1    Introduction
CONSOL's Pennsylvania Mining Complex (PAMC) is a complex that includes three
active underground longwall (LW) mines—Bailey Mine, Enlow Fork Mine, and Harvey
Mine—and the Central Coal Preparation Plant (CPP). BOYD was retained by CONSOL to complete an independent technical assessment of coal resource and coal reserve estimates for the PAMC.

BOYD’s findings as a result of the audit of PAMC's coal resource and coal reserve estimates are based on our detailed examination of the supporting geologic, technical, and economic information obtained from: (1) CONSOL files, (2) discussions with CONSOL 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 PAMC
coal reserves and independent assessment of the economic viability of extracts of the
PAMC coal reserves over the life of the mine and satisfies the requirements for
CONSOL'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 second technical report summary for the PAMC. BOYD is a qualified person as defined in S-K 1300.

Weights and measurements are expressed in US customary units. Unless otherwise noted, the effective date of the information, including estimates of coal reserves, is December 31, 2022.


1.2    Property Description
The PAMC is an active underground coal mining and processing operation located in Greene and Washington counties, Pennsylvania, and Marshall County, West Virginia. The general location of the PAMC is provided in Figure 1.1, following this page. The project lies in a well-developed region with a robust infrastructure.

The PAMC comprises approximately 178,394 acres—or 279 square miles—within the Northern Appalachian Basin (NAPP) coal-producing region of the eastern United States.

    JOHN T. BOYD COMPANY

figure1-11a.jpg

        1-3


The PAMC mines coal exclusively from the Pittsburgh Seam. Within the PAMC boundaries, CONSOL maintains the right to mine and remove almost all (approximately 99.7%) of the Pittsburgh Seam through whole or fractional mineral ownership and/or lease agreements. Several small adverse (uncontrolled) tracts exist within the proposed life-of-mine (LOM) plan; however, CONSOL has demonstrated success in acquiring these as required during the ordinary course of business, although there can be no assurance that it will be similarly successful in the future. BOYD is not aware of any encumbrances, litigation, or orders which would hinder continued development of the property.

As illustrated in Figure 1.1, the Pittsburgh Seam has historically been and continues to be extensively mined in and around the PAMC area. CONSOL has a lengthy history of successfully mining the Pittsburgh Seam and other coal beds in the region. CONSOL’s involvement with the PAMC dates to the 1920s and it has been actively mining and developing the PAMC since 1984.


1.3    Geology
The PAMC is situated in the Allegheny Plateau of the NAPP coal fields region. Near-surface geology of this area primarily consists of Pennsylvanian and Lower Permian coal-bearing strata. Coal seams mined in this region are generally classified as high- to low-volatile bituminous, characterized by low-to-high sulfur content and high heating value.

The Pittsburgh Seam is the only coal seam of economic interest on the property. Structurally, the Pittsburgh Seam consists of three rather distinct and relatively consistent intervals: the main bench coal, an overlying draw slate, and a roof coal zone. With an average thickness of 5.5 ft, the main bench coal constitutes most of the mineable interval. The Pittsburgh Seam is relatively flat-lying, typically dipping less than one degree, and is located at depths ranging from approximately 300 ft to 1,400 ft below ground surface within the PAMC area.

The Pittsburgh Seam coal bed is characterized as a high-rank, high-volatile bituminous, medium-ash, and medium- to high-sulfur coal that is used for both thermal and metallurgical purposes.


1.4    Exploration
The Pittsburgh Seam has been extensively explored and mined in the region, with drilling records dating back to at least the 1920s. CONSOL provided data for 7,289 drill
    JOHN T. BOYD COMPANY
        1-4


holes, totaling more than 4 million ft of drilling, that have intercepted the Pittsburgh Seam. Of these, results from 2,349 drill holes were utilized to define the lateral extent, thickness, and qualities (both raw and clean) of the Pittsburgh Seam in the immediate PAMC project area.

BOYD’s audit indicates that in general: (1) CONSOL 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 Pittsburgh Seam, is sufficient to confirm the thickness, lateral extents, and quality characteristics of the Pittsburgh Seam.


1.5    Coal Reserves
CONSOL’s estimated underground mineable coal reserves for the PAMC total 622.1 million recoverable (clean) product tons remaining as of December 31, 2022. The coal reserves controlled by CONSOL are summarized in Table 1.1.

Table 1.1: Coal Reserves Summary
Product Tons (millions) by Classification
MineProvenProbableTotal
Bailey71.9 80.6 152.5 
Enlow Fork223.4 38.1 261.5 
Harvey104.3 103.8 208.1 
Total399.6 222.5 622.1 

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 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 PAMC.





    JOHN T. BOYD COMPANY
        1-5


1.6    Operations
1.6.1    Mining
The PAMC is comprised of the Bailey, Enlow Fork, and Harvey underground mines. Each mine utilizes LW mining for primary production with supporting mine development performed by continuous miners (CM). This mining method is highly productive and commercially demonstrated; it has been the primary approach by coal mine operators to mine the Pittsburgh Seam for decades. PAMC has utilized this mining method since the inception of its mining operation in 1984. The complex is currently configured to operate multiple LW sections and has the ability to produce 28.5 million tons per year. The PAMC is generally considered an industry leader in terms of mining productivity and its mining costs are in the lower quartile when compared to its peers.

In the aggregate, the PAMC LOM plan projects the complex will produce approximately 1,113 million tons of run-of-mine (ROM) coal (622 million saleable tons after processing) over the expected life of the operations.

1.6.2    Processing
All coal mined from the three mines is directed to the Central CPP. The Central CPP serves as the coal washing facility for the PAMC’s three LW mines. The plant was commissioned in 1984 to wash coal produced by the Bailey Mine. Since then, the Central CPP has undergone many expansions and has a current processing capacity of 8,200 raw tons-per-hour (TPH). It is the largest coal preparation plant in the United States.

The beneficiation process utilized at the PAMC has a proven record of accomplishment and has remained relatively unchanged for decades. Straightforward when compared to many other mineral processing techniques, the coal washing process is largely based on separating non-coal (rock) material from coal material by mechanically reducing the size of the feed and utilizing the materials’ different densities to gravitationally separate one from the other. Largely, the process only requires water, magnetite, and frothing agents.

The plant’s ability to blend raw coal production from the three underground mines into a singular plant feed allows for both more consistent plant operation and the ability to achieve a range of clean coal qualities for various coal markets.
    JOHN T. BOYD COMPANY
        1-6


1.6.3    Other Infrastructure
The PAMC is 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 rail loading systems.

Product coal from the PAMC is transported to its customer base via rail. The Central CPP is served by both the Norfolk Southern (NS) and CSX railroads via a rail spur that connects the complex with the mainline rail at Waynesburg, Pennsylvania.

The Bailey refuse facility serves as the disposal location for all waste rock (coarse coal refuse) and fine coal slurry (fine coal refuse) produced during the processing of coal.


1.7    Financial Analysis
1.7.1    Market Analysis
The PAMC produces a thermal coal that is sold into the domestic United States and international export markets. The high calorific value thermal coal produced by PAMC is currently used in the United States by electricity generators located in the PJM Interconnection, Southeast, and Midcontinent Independent System Operator regional electricity markets and by domestic industrial customers. In addition to the domestic market, PAMC also services international power generation and industrial customers in Europe, Africa, Asia, and other parts of North America. The coal’s high quality enables it to receive premium pricing relative to regional price indices.

The PAMC also supplies lesser quantities—approximately 1.0 to 2.0 million tons per annum—of a secondary metallurgical coal product into Asia, Europe, and South America.

1.7.2    Capital and Operating Cost Estimates
The Pittsburgh Seam is widely recognized as being ideally suited for LW mining operations and conducive to efficient, low-cost production operations. In terms of total dollars expended per year, cash operating costs for LW mines are mostly fixed. 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 2018–2022, total annual cash operating costs for the PAMC were within the range of $28.00 to $35.00 per saleable ton.

    JOHN T. BOYD COMPANY
        1-7


The PAMC is regarded as being highly capitalized and comprising of state-of-the-art operations when compared to industry peers. Continual capital expenditures have been ongoing by CONSOL in recent years to support mine infrastructure expansions, maintenance of production equipment, refuse placement, etc.

During the review of LOM plans and associated financial projections, BOYD found future operating and capital costs forecasted by CONSOL to be reflective of historical norms.

1.7.3    Economic Analysis
BOYD independently evaluated the economics of the PAMC over the forecasted life of the project. The results of our indicative economic analysis for PAMC over the remaining life of the operations (2023 to 2064) shows a NPV of approximately $3.3 billion for the expected case at a 12% discount rate. The cash flow estimates are positive even after performing independent sensitivity analyses of up to 10% variation in sales price. From this we conclude that the stated coal reserves are economically viable under reasonable market price expectations for the coal produced from the PAMC.

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


1.8    Permitting Requirements
Numerous permits are required by federal and state law for underground mining, coal preparation and related facilities, and other incidental activities. CONSOL reports that 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, CONSOL 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 CONSOL 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 regulatory requirements of the permit are fully satisfied. As of December 31, 2022, CONSOL held more than $370 million in surety bonds to cover its obligations relating to mining and reclamation, mine subsidence, stream restoration, water loss, and dam safety.
    JOHN T. BOYD COMPANY
        1-8


Periodic amendments to existing mining permits to add additional acreage (reserve
tonnage) in order to sustain coal production are common practice. We are not aware
of any issues which 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.


1.9    Conclusions
It is BOYD’s overall conclusion that CONSOL’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.

Given the lengthy 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.

It is BOYD’s opinion that extraction of the PAMC's reported coal reserves is technically
achievable and economically viable after the consideration of potentially material
modifying factors. The ability of CONSOL, 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.

q:\eng_wp\2755.091 cei - pmac 22\wp\ch-1 - executive summary.docx
    JOHN T. BOYD COMPANY
        2-1


2.0    INTRODUCTION


2.1    Registrant
CONSOL is a US-based mining company headquartered in Canonsburg, Pennsylvania whose common stock is listed on the New York stock exchange (NYSE:CEIX). CONSOL is actively engaged in the production and export of thermal coal and metallurgical coal from the PAMC. The company also operates a mine in Wyoming County, West Virginia that produces metallurgical coal. In addition, CONSOL controls considerable greenfield (i.e., undeveloped) thermal and metallurgical coal resources located in the major coal-producing basins of the eastern United States. The company also owns and operates the CONSOL Marine Terminal, which is in the Port of Baltimore, Maryland. Additional information regarding CONSOL can be found at www.consolenergy.com.

This technical report summary was prepared for CONSOL in support of their disclosure of coal resources and coal reserves for the PAMC.


2.2    Terms of Reference and Purpose
CONSOL retained BOYD to complete an independent assessment of CONSOL’s internally-prepared coal resource and coal reserve estimates and supporting information for the PAMC. CONSOL also retained BOYD to perform an independent assessment of the economic viability of the PAMC coal reserves for the life of the mine. Our objective was to review and evaluate the scientific and technical information on which CONSOL's calculation of its coal resources and coal reserve estimates are based and also an evaluation that the extraction of the coal resources and coal reserves are economically viable over the life of the PAMC.

The technical summary of our third-party assessment, presented in report form herein, was 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 technical and scientific information for the subject mining properties, (2) to provide the conclusions of our technical audit, (3) to provide a statement of coal resources and/or coal reserves for the PAMC, and (4) provide our conclusion of the economic viability of the PAMC’s coal reserves.

BOYD’s findings are based on our detailed examination of the supporting geologic and other scientific, technical, and economic information provided by CONSOL, as well as our assessment of the methodology and practices applied by CONSOL in formulating
    JOHN T. BOYD COMPANY
        2-2


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.

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.

This report is intended for use by CONSOL subject to the terms and conditions of its professional services agreement with BOYD. We also consent to CONSOL filing this report as a technical report summary with the SEC pursuant to Subpart 1300 and Item 601(b)(96) of Regulation S-K.


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 CONSOL. An overview of BOYD can be found on our website at www.jtboyd.com.

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

Neither BOYD nor its staff employed in the preparation of this report have any beneficial interest in CONSOL, and are not insiders, associates, or affiliates of CONSOL. 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 CONSOL 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 CONSOL and its representatives.

    JOHN T. BOYD COMPANY
        2-3


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

The following information was provided by CONSOL:

•Year-end reserve statements and reports for 2021 and 2022.
•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.
•Mine plans, production schedules, and supporting documentation.
•Historical information, including:
–Production reports and reconciliation statements.
–Financial statements.
–Product sales and pricing.

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

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

2.5    Personal Inspections
Although an inspection of the PAMC properties was not conducted as part of this study, BOYD has well-established knowledge of the subject mining operations having performed over 100 engineering studies on the Pittsburgh coal seam, including the PAMC and adjacent properties. BOYD’s most recent visits to PAMC were in July and August, 2021.



    JOHN T. BOYD COMPANY
        2-4


2.6    Report Version
The coal resources and coal reserves presented in this technical report summary are effective as of December 31, 2022. The effective (i.e., “as of”) date of the report is December 31, 2022.

This is the second technical report summary filed by CONSOL for the PAMC and supersedes the following previously filed report:

John T. Boyd Company; February 2022; Technical Report Summary, Coal Resources and Coal Reserves, Pennsylvania Mining Complex, Pennsylvania and West Virginia (Report No. 2755.080).

The user of this document should ensure that this is the most recent disclosure of coal resources and coal reserves for the PAMC as it is no longer valid if more recent estimates have been issued.


2.7    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 2022 US Dollars ($).

q:\eng_wp\2755.091 cei - pmac 22\wp\ch-2 - introduction.docx
    JOHN T. BOYD COMPANY
        3-1


3.0    PROPERTY DESCRIPTION


3.1    Property Location
The PAMC is a coal mining and processing operation located in Greene and Washington counties, Pennsylvania, and Marshall County, West Virginia. The PAMC comprises almost 279 square miles within the NAPP coal-producing region of the eastern United States. The PAMC operations currently consist of three active underground mines—Bailey, Enlow Fork, and Harvey—and related infrastructure.

The PAMC is commercially operated as a single entity, although each of the three mines operate under a unique Mine Safety and Health Administration (MSHA) mine identification number and has a separate direct management team. All mine output is delivered by belt conveyors to a central coal processing facility, the Central Preparation Plant, that is the largest in the country (8,200 raw tons per hour) and reports to MSHA under the Bailey Mine identification number. The ROM coal is segregated by mine, and sophisticated analysis and processing systems are utilized to meet customer specifications. Plant reject-material reports to the coarse and fine refuse disposal facilities. Saleable output is shipped to a diverse customer base via the rail load-out on a dedicated rail spur serviced by NS and CSX.

The PAMC is located approximately 26 miles southwest of Pittsburgh, near the city of Washington and the borough of Waynesburg, all in Pennsylvania. The city of Wheeling, West Virginia lies about 12 miles due west and the city of Morgantown, West Virginia, is located approximately 22 miles southeast. The project area is flanked by Interstate 70 to the northwest and Interstate 79 to the east. US Route 250 intersects the south-west corner of the property.

Geographically, the Central Preparation Plant is located at approximately 39°58’23.7” N latitude and 80°24’43.6” W longitude. Figures 1.1 (page 1-2) and 3.1, following this page, illustrate the location and general layout of the PAMC.



    JOHN T. BOYD COMPANY

figure3-11a.jpg

        3-3


3.2    Property Control
Within the PAMC area, CONSOL controls approximately 178,394 acres of mineral and/or surface rights. This control exists as a complex collection of 2,734 owned and/or leased tracts that 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. CONSOL and its predecessors have acquired the necessary rights to support development and operations through purchase or lease agreements with predominantly private owners or entities.

As it is outside the scope of our expertise, BOYD has not independently verified
ownership of the PAMC area and the underlying property agreements. Ownership data including maps, deeds, lease agreements, and royalty rate furnished to us have been accepted as being true and accurate for the purpose of this report.

3.2.1    Coal Ownership
CONSOL maintains the right to mine and remove almost all of the Pittsburgh Seam within the PAMC boundaries through whole or fractional mineral ownership and/or lease agreements. In 2022, CONSOL sold approximately 12,644 contiguous acres of coal rights to a neighboring mine operator and purchased rights to approximately 9,510 contiguous acres from another neighboring mine operator. CONSOL’s revised coal control is summarized in Table 3.1.

Table 3.1: Summary of Coal Ownership
All TractsTract Covering Coal Reserves
MineAcres%Acres%
Owned:
Fully107,084 60.0 75,250 87.2 
Fractionally32,202 18.1 8,672 10.0 
Subtotal139,286 78.1 83,922 97.3 
Leased38,493 21.6 2,023 2.3 
Adverse/Uncontrolled615 0.3 342 0.4 
Total178,394 100 86,287 100 

The 2,734 tracts of the PAMC are covered by 1,253 coal deeds and 80 coal lease agreements. Lease terms generally extend until all the coal is removed from the subject tract. Where applicable, royalty rates typically range from 3% to 8% of the gross sales price of the coal.
    JOHN T. BOYD COMPANY
        3-4


As shown in Table 3.1, almost all the Pittsburgh Seam coal (on an acreage basis) is controlled by CONSOL within in the PAMC area (99.7%) and covering the remaining coal reserves (99.6%). Small adverse (uncontrolled) tracts within the project limits are common; however, we believe it is generally reasonable to assume that such tracts can be acquired or leased in the ordinary course of business. It is BOYD’s opinion that adverse coal control does not pose a material risk to the estimate of coal reserves reported herein.

3.2.2    Surface Ownership
As part of the PAMC, CONSOL controls surface rights to approximately 16,593 acres through fee simple ownership. This includes ownership of the property upon which the surface facilities for mine access, processing, storing, and shipping are located, as well as 3,509 permitted acres for coarse and fine refuse disposal facilities.

CONSOL 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. 


3.3    Regulation and Liabilities
Mining and related support activities on the PAMC properties are subject to various federal, state, and local environmental regulations. The more significant federal laws include:

•    Clean Air Act
•    Clean Water Act
•    Surface Mining Control and Reclamation Act
•    Endangered Species Act
•    National Environmental Policy Act
•    Comprehensive Environmental Response, Compensation, and Liability Act
•    Resource Conservation and Recovery Act

Operations on the PAMC properties must comply with other state, federal, and local environmental laws in addition to those listed above. These laws include, for example, the Safe Drinking Water Act, the Emergency Planning and Community Right to Know Act, the Toxic Release Inventory, and the rules governing the use and storage of explosives regulated by the U.S. Bureau of Alcohol, Tobacco, and Firearms and the Department of Homeland Security.
    JOHN T. BOYD COMPANY
        3-5



As mandated by these laws and regulations, numerous permits are required for underground mining, coal preparation and related facilities, and other incidental activities. CONSOL 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, we believe CONSOL 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 regulatory requirements of the permit are fully satisfied. CONSOL reports holding more than $370 million in surety bonds to cover its obligations relating to mining and reclamation, mine subsidence, stream restoration, water loss, and dam safety.

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.

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

q:\eng_wp\2755.091 cei - pmac 22\wp\ch-3 - property description.docx
    JOHN T. BOYD COMPANY
        4-1


4.0    PHYSIOGRAPHY, ACCESSIBILITY, AND INFRASTRUCTURE

4.1    Topography, Elevation, and Vegetation
The PAMC lies within the Waynesburg Hills Section of the Appalachian Plateaus physiographic province of Pennsylvania. This region is characterized by very hilly topography, with narrow hilltops and dendritic valleys which display steeply sloping hillsides and moderate relief. Surface elevations within the PAMC area range from approximately 860 ft to 1,580 ft above mean sea-level. There is a vast network of overlying streams and waterways which cover complex area.

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


4.2    Accessibility
General access to the PAMC 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. In addition, PAMC is supported by Class 1 railroads to transport processed coal products to various markets/consumers.


4.3    Climate
Climate in and around the PAMC is typical of southwestern Pennsylvania, 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 year while the low temperatures drop below freezing 5 months of the year. Table 4.1 provides monthly average climate data collected from 2000 through 2022 in Waynesburg, Pennsylvania.
Table 4.1: Monthly Average Climate Data, Waynesburg, PA
AverageUnitJanFebMarAprMayJunJulAugSepOctNovDec
High Temp°F38 42 51 63 72 80 83 82 76 65 54 42 
Low Temp°F19 20 27 26 46 55 60 58 50 38 30 23 
Precipitationinches3.0 2.6 3.7 3.1 4.4 3.7 4.2 3.7 3.2 2.8 3.4 2.9 
days15 14 13 13 15 14 12 11 10 12 12 14 
Snowfallinches9.0 8.0 5.0 1.0 — — — — — — 1.0 5.0 
days8 7 3 1 — — — — — — 1 5 
Source: National Oceanic and Atmospheric Administration
    JOHN T. BOYD COMPANY
        4-2


In general, the operating season for the PAMC is year-round. Adverse weather conditions seldom limit the PAMC coal mining, processing, and loading operations; however, extreme weather conditions may temporarily impact operations.


4.4    Infrastructure Availability and Sources
The PAMC lies within a well-developed region of southwestern Pennsylvania, with an extensive history related not only to coal mining, processing, and transportation, but also many other industries and services. A reported 3.1 million people live within 60 miles of the PAMC, according to the U.S. Census of 2010.

Coal produced at the PAMC is transported primarily by rail. A rail load-out facility and dedicated rail spur—19.3 miles of track that includes three side tracks—facilitate transportation of the coal on the NS and CSX railroads.

Several regional airports are located near the PAMC, and the Pittsburgh International Airport is located approximately 25 miles north of the complex.

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.

q:\eng_wp\2755.091 cei - pmac 22\wp\ch-4 -physiography access infrastructure.docx
    JOHN T. BOYD COMPANY
        5-1


5.0    HISTORY


5.1    Reserve Acquisition
CONSOL’s involvement with the PAMC dates to the 1920s with the acquisition of certain coal leases by its forebearer. As shown in Table 5.1, CONSOL has actively acquired additional coal properties to expand the PAMC to its current size.

Table 5.1: Historical Reserve Acquisition
Reserve AreaAcquisition YearReported Reserves
(million tons)
NinevahPrior to 1965262 
Manor1977209 
Alexander198193 
Berkshire1985174 
Chevron-Penn Central199392 
Green Hill1995220 
Alliance, Drummond, and Mine 841996-2015208 
Note: "Reported Reserves" are historical estimates. A qualified person 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. In 2022, CONSOL executed several coal reserve transactions with coal companies operating mines adjacent to PAMC (see Chapter 11 for details).

Despite a lengthy ownership history, commercial production on the property did not begin until 1984.


5.2    Mine Development
The Bailey Mine is the first mine that CONSOL developed at the PAMC. Construction of the slope and initial air shaft began in 1982. Following development of the slope and shaft, commercial coal production began in 1984. LW mining production commenced in the mid-1980s. In 2010, a new slope and overland belt system was commissioned, which allowed a large percentage of the Bailey Mine to be sealed off. The current workings are situated in the southwestern portion of the PAMC area.

Construction of the Enlow Fork Mine, which is located directly north of the Bailey Mine, began in 1989. Initial underground development was started from the Bailey Mine while the Enlow Fork slope was being constructed. Once the slope bottom was developed and the slope belt became operational, seals were constructed to separate the two mines.
    JOHN T. BOYD COMPANY
        5-2


LW mining production commenced in 1991 with the second LW coming online in 1992. In 2014, a new slope and overland belt system was commissioned and a substantial portion of the Enlow Fork Mine was sealed. The current workings are situated in the northern-most portion of the PAMC area.

In 2009, the Bailey Mine Expansion (BMX) project was initiated to develop reserves to the east of the original Bailey Mine portal. The project utilized the original Bailey Mine slope and airshaft/portal, which required an extensive underground sealing project to isolate the bottom area from the rest of the soon-to-be-sealed old works at the Bailey Mine. An extended underground corridor was developed between the Bailey and Enlow Fork Mine workings to a new shaft and portal facility. Construction of the supporting surface facilities commenced in 2011. In 2014, the BMX project was completely severed from Bailey Mine; a new MSHA identification number was issued and the mine was renamed as the Harvey Mine. LW mining production commenced in March 2014.

In 2022, CONSOL executed several coal reserve transactions with coal mining companies with active operations adjacent to the PAMC. The effect of this exchange has been reflected in the estimate of coal reserves provided in Chapter 11.

There are no significant Pittsburgh Seam mining activities known to have occurred within the PAMC bounds preceding CONSOL’s development of the property.

q:\eng_wp\2755.091 cei - pmac 22\wp\ch-5 -history.docx
    JOHN T. BOYD COMPANY
        6-1

6.0    GEOLOGICAL SETTING, MINERALIZATION, AND DEPOSIT


6.1    Regional Geology
The PAMC is located within the Appalachian Basin, an oblong synclinal, sedimentary basin which extends from central Alabama to central New York State. The Appalachian Basin spans an area of about 185,000 square miles, with a length of around 1,075 miles, consisting of Paleozoic sedimentary rocks, dating from the Early Cambrian through the Early Permian periods.

The Appalachian Basin has informally been subdivided into three coal regions—the northern, central, and southern Appalachian Basin coal regions—based on characteristics of the sediments and the coals that are found there. The three coal regions contain both formal and informal coal fields. Physiographically, the Appalachian Basin is divided into four distinct provinces, which from east to west are: the Piedmont, the Blue Ridge, the Valley and Ridge, and the Appalachian Plateaus. The PAMC is located within the NAPP basin coal region of the Appalachian Plateaus province. This region is known to contain much of the coal, oil, and shale gas resources of the eastern United States.

The Allegheny Plateau, in which the PAMC is located, is a major part of the Appalachian Plateaus province, underlain by essentially flat-lying strata, predominately of Mississippian and Pennsylvanian age. Throughout the region, the strata of the Allegheny Plateau have been broadly uplifted and, in some areas, broadly folded as well, but in general these bedrock units are only minimally deformed.

A large portion of the Allegheny Plateau consists of a coalfield comprising Pennsylvanian and Lower Permian coal-bearing strata and include, in depositional order, bedrock of the Pottsville, Allegheny, Conemaugh, Monongahela, and Dunkard groups. These coal-bearing formations contain approximately two-fifths of the nation’s bituminous coal deposits. In some portions, the coalfield contains over 60 coal seams of varying economic significance. Seams are typically between 1 ft and 6 ft in thickness, with relatively little structural deformation. Coal in the region is classified as high- to low-volatile bituminous with rank increasing to the east. Coals are typically characterized as low to high sulfur and high heating value.


    JOHN T. BOYD COMPANY
        6-2

6.2    Local Stratigraphy
Pennsylvanian and Permian sedimentary strata comprise the uppermost stratigraphic units in and around the PAMC. These units primarily include bedrock of, in ascending stratigraphic order, the Conemaugh and Monongahela Groups of the Pennsylvanian Series, and the Permian Dunkard Group.

The strata of the Pennsylvanian and Permian systems locally are predominantly clastic and contain subordinate amounts of coal and limestone. The Pittsburgh coal seam is the basal member of the Monongahela Group. The stratigraphic relationship between these groups is presented in Figure 6.1 as follows.
a611a.jpg

    JOHN T. BOYD COMPANY
        6-3

6.2.1    Conemaugh Group
The Conemaugh Group is characterized by sequences of red and green mudstone, claystone, and siltstone. Extending from the top of the Upper Freeport Coal to the base of the Pittsburgh Coal, it ranges in thickness from about 400 ft to 850 ft. The Conemaugh Group contains several thin marine limestone beds but only a few thin coal beds. The Conemaugh Group is divided into the Glenshaw and Casselman formations at the top of the regionally persistent Ames limestone. The bituminous coal beds present in the unit are impure and considered to be of limited-to-no economic value.

6.2.2    Monongahela Group
The Monongahela Group extends from the base of the Pittsburgh Coal to the base of the Waynesburg Coal. The unit is divided into the Pittsburgh and Uniontown formations at the base of the Uniontown Coal. The Monongahela Group is a sedimentary sequence of non-marine rocks (sandstone, siltstone, red and gray shale, dolomitic limestone, and coal) ranging in thickness from approximately 250 ft to 400 ft. Regionally, the Monongahela Group contains several commercial coal beds, including the Pittsburgh, Redstone, Sewickley, and Uniontown; however, within the vicinity of the PAMC, only the Pittsburgh coal seam is of economic interest. The Pittsburgh coal seam is unusually uniform in continuity and thickness for a coal seam in western Pennsylvania, and covers thousands of square miles.

6.2.3    Dunkard Group
The Dunkard Group includes all strata above the base of the Waynesburg coal bed. It is made up of Waynesburg, Washington, and Greene formations. The Dunkard Group reaches a maximum thickness of about 1,100 ft in Greene County and the upper surface is the modern-day erosional surface. Strata of the group are very similar to those of the underlying Monongahela Group, except that the Dunkard Group contains only thin discontinuous coal beds of little or no commercial value.


6.3    Coal Seam Geology
The Pittsburgh Seam is the only coal seam of economic interest within the PAMC. The Pittsburgh Seam is very uniform in depositional nature and continuity throughout much of the surrounding region, with a lengthy history of economically viable mining operations being very well documented.

6.3.1    Lithology
The Pittsburgh Seam coal bed is composed of three distinct and relatively consistent intervals, in order of deposition being the thick “main bench” coal, an overlying “draw
    JOHN T. BOYD COMPANY
        6-4

slate”, and one or more “roof coal” zones. Mining methods employed at the PAMC generally necessitate extraction of the first (lowermost) roof coal zone, along with the draw slate and main bench coal. Figure 6.2 illustrates the various intervals of the Pittsburgh Seam coal bed.
a62a.jpg

The main bench coal thickness across the PAMC area is generally between the 5.0 ft to 6.0 ft range, averaging 5.5 ft over most of the mine plan area. Isolated pockets of both thinner and thicker coal do exist, and extreme but generally isolated occurrences may range from below 1 ft to above 11 ft thick. Figure 6.3, following this page, provides a map of the Pittsburgh Seam main bench 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.



    JOHN T. BOYD COMPANY


figure6-31a.jpg

        6-6

The draw slate is a prominent, laterally persistent shale parting that immediately overlies the main bench coal. Thickness generally ranges from 0 to 2.0 ft, averaging less than 1.0 ft across much of the PAMC area. Isolated drilling within the study area have recorded instances of the draw slate being over 4-ft thick.

The roof coals tend to be of lesser quality when compared to the main bench coal, as well as being highly inconsistent in depositional nature. In some areas the roof coal may be completely absent; present as a solid interval of relatively thick coal; or split into several plies separated by shale, clay, and/or impure coal partings. Average roof coal zone thickness across the PAMC area is just under 2-ft thick.

The immediate roof overlying the Pittsburgh Seam coal bed consists of two different assemblages of strata:

1.A “normal roof”, composed of interbedded shales and sandy shales, with one to several rider or roof coals.
2.A “sandstone roof”, composed of paleochannel sandstone fill, known as the Pittsburgh Sandstone, which scoured and replaced part or all of the normal roof strata.

The Pittsburgh Sandstone represents a major fluvial system that flowed north-northwest from West Virginia, through Greene and Washington counties, depositing sandstone in an elongated body up to 80-ft thick and several miles wide. The Pittsburgh Sandstone is a result of several instances of paleochannelization eroding the typical roof strata, and in some localized areas eroding some of the main bench of the Pittsburgh Seam. Areas of the deposit with sandstone channels in close proximity to the Pittsburgh 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. CONSOL has implemented various programs to identify and mitigate, where possible, problems associated with poor roof conditions.

The immediate floor beneath the Pittsburgh Seam coal bed consists of an interval of typically 1 ft or less of underclay. The underclay provides a generally competent floor, however poor floor conditions can develop when the underclay is exposed to water.

6.3.2    Structure
The Pittsburgh Seam coal bed is located at depths ranging from approximately 300 ft to over 1,400 ft below ground surface within the PAMC area. Seam structure shows a general seam dip of less than 1 degree to the south-southwest, with slightly steeper
    JOHN T. BOYD COMPANY
        6-7

areas dipping up to 4 degrees in a southeast-northwest trend. 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 Pittsburgh Seam is well-known and widely-accepted to be a very uniform deposit.

6.3.3    Coal Quality
Overall, the Pittsburgh Seam coal bed is a high-rank, high-volatile bituminous, medium-ash, and medium-to high-sulfur coal that is used for both thermal and metallurgical purposes. The roof coal zones exhibit overall higher sulfur and ash contents, combined with lower calorific value; however, this is offset by the consistently superior quality of the main bench coal.

q:\eng_wp\2755.091 cei - pmac 22\wp\ch-6 - geology.docx
    JOHN T. BOYD COMPANY
        7-1


7.0    EXPLORATION DATA


7.1    Background
The Pittsburgh Seam has been the subject of extensive exploration drilling and sampling by CONSOL and other parties, dating back to at least the 1920s. Records from exploration drilling comprise the primary data used in the evaluation of coal resources on the property. A database compiling the results of 7,289 drill holes—totaling more than 4 million ft of drilling which covers a large portion of the known extents of the PAMC area Pittsburgh Seam—along with electronic copies of original drilling and sampling logs, were provided for our review.

Additionally, CONSOL provided written field and exploration guidelines which outline some of their standard exploration and sampling methodologies. These guidelines were compiled by personnel from various company-wide exploration departments in the 1980s and are very thorough in regard to how CONSOL wanted drilling and sampling to be conducted. 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. CONSOL’s provided exploration standards highlight their focus on obtaining the highest accuracy of data possible from the various exploration campaigns they completed.

Due to many company-wide restructurings, closures of various mining operations, and reorganization of departments as CONSOL evolved as a company over its many years in existence, specific drilling campaign reports, which would provide detailed information on the drilling and sampling methodologies utilized from year to year were placed into archival storage, and 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 PAMC, CONSOL has also demonstrated that they have been very thorough in exploring and sampling, and have been able to consistently and economically mine coal from this deposit for nearly 40 years, and from the Pittsburgh No. 8 Seam for more than a century.


7.2    Procedures
7.2.1    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 PAMC. Some drill holes were rotary drilled for purposes of completing geophysical
    JOHN T. BOYD COMPANY
        7-2


logging, while others were completed using continuous core drilling methods to provide more detailed geologic records and sampling opportunities.

CONSOL geologists 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, depending on the goal of a specific drilling and sampling program, consists generally of one or both of:
–Continuous NQ-sized (1.988 in. diameter) diamond core rigs.
–Air rotary with either 4 in. or 6 in. diameter barrels.
•Presently, core logging activities are completed in the field. Cored intervals are photographed, with special attention paid to the coal interval. Cored coal is initially photographed in its entirety, and then again on 1-ft intervals from top to bottom to provide a detailed record of the coal core prior to sampling.
•Coal roof rock (approximately 30 ft) and floor rock (up to 5 ft) are photographed and then boxed for archival purposes. Drilling campaigns from 2018 on have archival cores stored at CONSOL Headquarters, in Canonsburg, Pennsylvania. Historically, CONSOL maintained regionally located core repositories, however these locations have been closed, and all core prior to 2018 have been disposed of.
•Geophysical logging on drill holes became standard starting in the mid-to-late 1970s. Prior to this time, geophysical logs were located for some drill holes, however they were much less frequently noted in the provided drill hole data files. CONSOL 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. 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 CONSOL 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 CONSOL’s geologic modeling and mine production forecasting programs.

BOYD’s review of the observed methodologies and procedures indicate the data obtained and utilized by CONSOL for the PAMC project area were carefully and professionally collected, prepared, and documented, conforming with general industry
    JOHN T. BOYD COMPANY
        7-3


standards, and are appropriate for use of evaluating and estimating coal resources and reserves.

7.2.2    Coal Quality Sampling
The PAMC coal quality testing was performed on a large number of coal samples obtained from the Pittsburgh 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 various potential products that could be produced from the PAMC.

All coal intercepts of PAMC exploration were geologically logged, photographed, and sampled in the field by CONSOL geologists. Explicit instructions are given to drilling teams to keep any cored coal intervals inside of core barrels until a CONSOL geologist is on-site to observe and record characteristics of the coal interval.

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 (i.e., entire seam, main bench, roof coal, etc.) 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. It is important to note that CONSOL has various internal departments that may request exploration and sampling work be conducted, and the requesting department is given priority as to how the coal intercept is split, and as to the types of coal analyses that are run.

CONSOL 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 CONSOL headquarters by exploration personnel, at which time they are handed over to CONSOL’s quality control department. The quality control department arranges pick up by the selected lab that will perform the
    JOHN T. BOYD COMPANY
        7-4


required analyses. Currently, CONSOL contracts all testing to an independent laboratory (Geochemical Testing in Somerset, Pennsylvania). Typical analyses performed include moisture content (total and air dried at 60 mesh), full proximate, and specific gravity. 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 a myriad of 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 ASTM International (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 field and sampling procedures noted above showed 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.

7.2.3    Coal Washability Testing
Coal washability tests (proximate analysis) were conducted at various specific gravities, generally ranging from 1.40 specific gravity float (SGF) through 1.60 SGF. Estimated coal reserves for the PAMC are currently reported using a combination of 1.50 SGF and 1.60 SGF testing results, being reported as a composited “adjusted clean” coal quality over the entire PAMC project area. Proximate analysis test results were completed on 1,586 drill core samples, which were used in estimating quantity and quality of the remaining PAMC coal reserves. Additional washed coal yield testing was also performed, with an additional 756 core samples being analyzed (or a total of 2,342 drill core samples being tested) for wash yields.

Lab testing of the cored coal intervals was generally conducted in one of two manners: (1) by splitting the three main intervals that comprise the entire Pittsburgh coal seam (the Pittsburgh roof coal interval, the draw slate, the Pittsburgh main bench coal interval) into separate intervals that are individually analyzed, or by (2) creating a “B Sample”, consisting of the roof coal interval and the draw slate together, and a separate “A Sample”, consisting of the main bench coal interval. In either scenario, a composited Pittsburgh seam quality was then calculated by combining results from the individual analyses, in order to examine different mining scenarios and outcomes, which
    JOHN T. BOYD COMPANY
        7-5


were used to maximize both the quality and quantity of coal that may be mined over the PAMC.

Although it was noted that CONSOL generally does not perform any randomized sample verification in order to conduct quality control testing of individual coal analyses, CONSOL’s quality department typically will perform channel sampling and quality analyses, roughly every 1,000 ft throughout development sections. The channel sample data are then utilized to update quality and production forecasting models. A quarterly audit is also performed to verify that the forecasted quality data matches coal product quality.

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


7.3    Results
7.3.1    Summary of Exploration
A total of 2,349 drill holes and in-mine samples are in and around the PAMC area. The distribution of these drill holes is shown on Figure 7.1, following this page. 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 three intervals of the Pittsburgh Seam are provided in Table 7.1. As shown, the thickness of the main bench is very consistent. Our analysis of drilling data indicates a very minor decrease in the thickness of the main bench when traversing the deposit from south to north.

Table 7.1: Descriptive Statistics, Pittsburgh Seam Thickness
Interval Thickness (feet)
Main BenchDraw SlateRoof Coal
Mean5.48 0.82 1.95 
Minimum0.78 0.000.00
Maximum11.38 4.31 11.10 
Standard Deviation0.73 0.56 1.70 
Coefficient of Variance0.13 0.68 0.87 


    JOHN T. BOYD COMPANY

figure7-11a.jpg

        7-7


The results of the coal quality analyses from 1,688 holes are summarized in Table 7.2.

Table 7.2: Descriptive Statistics, Pittsburgh Seam Coal Quality
UnitsMeanMinimumMaximumStandard DeviationCoefficient of Variance
Apparent Specific Gravityg/cc1.521.122.370.10.07
Raw Coal Quality:
Ash%28.67 8.79 71.95 8.03 0.28 
Sulfur%2.38 0.77 6.78 0.94 0.39 
Heating Valuebtu/lb10,4363,30113,7231,2920.12
Volatile Matter%30.52 15.92 40.69 3.55 0.12 
Clean Coal Quality:
Yield%70.27 6.01 95.35 10.65 0.15 
Ash%7.33 4.67 12.15 0.95 0.13 
Sulfure%2.39 0.89 5.19 0.83 0.35 
Heating Valuebtu/lb13,92313,11814,4011970.01
Volatile Matter%39.35 32.69 43.77 1.5 0.4 

Raw and clean (washed) coal quality data demonstrate the consistency of the Pittsburgh Seam as a high-rank, high-volatile bituminous, medium-ash, and medium-sulfur coal.

7.3.2    Adequacy of Exploration
BOYD’s review indicates that in general, CONSOL 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 Pittsburgh Seam, is sufficient to confirm seam uniformity and continuity throughout the PAMC deposit.


7.4    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.

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 PAMC area. These records were compared with their corresponding database records for transcription errors; of which
    JOHN T. BOYD COMPANY
        7-8


none were found. Lithologic and coal quality data points were compared via visual and statistical inspection with geologic mapping and cross-sections.

q:\eng_wp\2755.091 cei - pmac 22\wp\ch-7 - exploration.docx
    JOHN T. BOYD COMPANY
        8-1


8.0    SAMPLE PREPARATION, ANALYSIS, AND SECURITY


The reader is referred to Sections 7.2 and 7.3 of this report for details regarding sample preparation, analysis, and security.

q:\eng_wp\2755.091 cei - pmac 22\wp\ch-8 -sample prep.docx
    JOHN T. BOYD COMPANY
        9-1


9.0    DATA VERIFICATION


The reader is referred to Section 7.4     of this report for details regarding data verification.

q:\eng_wp\2755.091 cei - pmac 22\wp\ch-9 -data verification.docx
    JOHN T. BOYD COMPANY
        10-1


10.0    MINERAL PROCESSING AND METALLURGICAL TESTING


Information regarding coal washability testing is provided in Chapter 7.

q:\eng_wp\2755.091 cei - pmac 22\wp\ch-10 -mineral processing and testing.docx
    JOHN T. BOYD COMPANY
        11-1


11.0    COAL RESOURCE ESTIMATE


11.1    Applicable Standards and Definitions
Unless noted, coal resource 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 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. 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.



    JOHN T. BOYD COMPANY
        11-2


11.2    Coal Resources
11.2.1    Methodology
Based on provided information, CONSOL’s coal resources estimation and modeling techniques consist of:

1.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.
2.Boundaries of the respective resource classification regions are developed using the data points.
3.ROM coal thickness and coal qualities for each data point are derived from the application of dilution parameters.
4.Clean product qualities for each data point are derived from coal washability analysis and plant efficiency factors.
5.The approved LOM design is subdivided into small mining blocks and sequenced using CONSOL’s proprietary mine planning software.
6.In-place, ROM, and clean product estimates of coal volume and qualities for each mining block are estimated within the mine planning software by inverse distance interpolation of the data points developed in Steps 1 and 2.
7.The mining blocks (and associated volumetric data) are further subdivided by resource classification and property tract polygons.
8.Relevant regional and periodic summaries are prepared within CONSOL’s software to support planning and coal resource/reserve reporting.

11.2.2    Criteria
Development of the coal resource estimate for the PAMC assumes mining using standard underground development and LW methods and equipment, which have been utilized successfully at the PAMC for over 35 years.

A minimum mineable seam thickness of 5 ft was used to limit the coal resources. This thickness includes the Pittsburgh Seam main bench plus portions of the draw slate and roof coal as necessitated by the assumed mining methods. No other cut-offs were applied.

11.2.3    Classification
Geologic assuredness is established by the availability of both structural (thickness and elevation) and quality information for the Pittsburgh Seam. Classification is generally based on the concentration or spacing of exploration data, which can be used to
    JOHN T. BOYD COMPANY
        11-3


demonstrate the geologic continuity of the deposit. Table 11.1 provides the general criteria employed in the classification of the coal resources.

Table 11.1: Coal Resource Classification Criteria
ClassificationData Point Spacing
(Geologic Confidence)FeetMiles
Measured0 - 3,0000 - 0.57
Indicated3,000 - 7,9200.57 - 1.50
Inferred7,920 - 15,8401.50 - 3.00

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 CONSOL with regards to data density, data quality, geological continuity and/or complexity, and estimation quality. The Pittsburgh 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 PAMC area are very well-defined throughout nearly all areas of the mine plan. Observed drill hole spacing averages approximately 1,470 ft and generally ranges between 500 ft and 2,500 ft.

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

11.2.4    Coal Resource Estimate
There are no reportable coal resources excluding those converted to coal reserves for the PAMC. Quantities of coal controlled by CONSOL within the defined boundaries of the PAMC which are not reported as coal reserves, are not considered to have potential economic viability; as such, they are not reportable as coal resources.

11.2.5    Validation
BOYD independently estimated coal resources and reserves for portions of the PAMC mine plan representing approximately 20 years of mining under full-capacity conditions and other current operating assumptions. Our analysis utilized industry-standard grid modeling and estimation techniques and resulted in no material differences with estimates provided by CONSOL.

Based on our review of CONSOL’s well-documented geologic modeling and estimation techniques and the results of our data validation efforts (described
    JOHN T. BOYD COMPANY
        11-4


earlier), we are of the opinion that CONSOL’s resource estimation procedures are reasonable and appropriate. Furthermore, it is BOYD’s opinion that the assigned resource classifications appropriately reflect the degree of uncertainty (assurance) associated with the quality of the exploration and sampling data, and the natural geological variability of Pittsburgh Seam.

q:\eng_wp\2755.091 cei - pmac 22\wp\ch-11 - coal resource estimate.docx
    JOHN T. BOYD COMPANY
        12-1


12.0    COAL RESERVE ESTIMATE


12.1    Applicable Standards and Definitions
Unless noted, 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 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 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) 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.

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.


    JOHN T. BOYD COMPANY
        12-2


Figure 12.1 shows the relationship between coal resources and coal reserves.
a1211.jpg
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.


12.2    Coal Reserves
12.2.1    Methodology
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.

12.2.2    Parameters and Assumptions
The underground mining operation uses a conventional retreating LW mining method. The underground mine plans 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.


    JOHN T. BOYD COMPANY
        12-3


Table 12.1 summarizes the mining-related parameters used by CONSOL in the estimation of coal reserves.

Table 12.1: Mining Parameters
Mining Method
ParameterUnitsDevelopmentLongwall
Mining Recovery%21 - 8099
Dilution:
Amountfeet0.650.65
ASGg/cc2.502.50
Ash%, db80.080.0
Sulfur%, db2.002.00
Heating Valuebtu/lb, db1,0001,000
ROM Adjustments:
Moisture%, ar6.156.15
Ash%, db1.01.0
Sulfur%, db0.080.08

Mining recovery varies by mining method and design, with LW mining typically having the highest recovery factor. The average mining recovery for PAMC is expected to range between 75% to 85%.

Minor adjustments to ROM coal ash and sulfur content are made based on recent historical reconciliation studies.

Clean coal estimates are based on washability data, which are adjusted (reduced) to reflect practical yields achieved by the preparation plant. The preparation plant efficiency used in the estimation of coal reserves is 95.0%. The average product yield for the coal reserves is 58.6%. Figure 12.2 depicts the estimated product yield for the Pittsburgh Seam across the PAMC deposit.

Product moisture was estimated at 6.15% (as-received basis).

    JOHN T. BOYD COMPANY

figure122a.jpg

        12-5


12.2.3    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 12.3 illustrates the reserve classification of the Pittsburgh Seam within the PAMC.

12.2.4    Coal Reserve Estimate
CONSOL’s estimated underground mineable coal reserves for the PAMC total 622.1 million recoverable (clean) product tons remaining as of December 31, 2022. The coal reserves reported in Table 12.2 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.

Coal reserves for the PAMC (as of December 31, 2022) are summarized by mine in Table 12.3.

Table 12.3: Coal Reserves Summary
Product Tons (millions) by Classification
MineProvenProbableTotal
Bailey71.9 80.6 152.5 
Enlow Fork223.4 38.1 261.5 
Harvey104.3 103.8 208.1 
Total399.6 222.5 622.1 

In terms of ownership, coal owned in fee by PAMC totals 560.4 million product tons (90% of the total reserve base), with the remaining reserves (61.7 million tons) held under lease agreements.

At the time of reporting, 184.5 million product tons (approximately 30% of the reported reserve base) are permitted for mining by appropriate federal and state regulatory authorities. While the remaining 437.6 million product tons are not permitted, it is typical for coal operations to only hold mining permits for the reserves currently being mined or expected to be mined in the near future. As mining progresses, mining permits are periodically amended to add acreage/tonnage 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.

    JOHN T. BOYD COMPANY

figure123a.jpg

        12-7


TABLE 12.2
ESTIMATED COAL RESERVES BY MINE
AS OF DECEMBER 31, 2022
PENNSYLVANIA MINING COMPLEX
Pennsylvania and West Virginia
Prepared for
CONSOL ENERGY INC.
By
John T. Boyd Company
Mining and Geological Consultants
January 2023
Product Tons (millions)Average Product Quality (As Received Basis)
By Permit Status
By SO2 Content (lbs per MMBtu)
%Heating Value (Btu/lb)
ControlClassificationTotalPermittedNot Permitted<2.52.5 to 4.54.5 to 6.5> 6.5Total MoistureAshVolatile MatterSulfur
Bailey Mine
OwnedProven52.642.010.62.723.59.516.96.15 8.3 37.9 3.22 12,838
Probable55.28.746.50.654.6——6.15 7.9 36.0 2.15 12,956
Subtotal107.850.757.13.378.19.516.96.15 8.1 37.0 2.68 12,898
LeasedProven19.317.12.22.516.7—0.16.15 7.5 36.4 2.14 13,044
Probable25.411.813.6—25.4——6.15 7.8 36.3 2.27 12,998
Subtotal44.728.915.82.542.1—0.16.15 7.6 36.4 2.21 13,019
TotalProven71.959.112.85.240.29.517.06.15 8.1 37.5 2.91 12,896
Probable80.620.560.10.680.0——6.15 7.8 36.1 2.19 12,969
Subtotal152.579.672.95.8120.29.517.06.15 7.9 36.8 2.54 12,934
Enlow Fork Mine
OwnedProven219.375.1144.236.8182.5——6.15 7.5 35.8 1.97 13,017
Probable38.05.033.02.535.5——6.15 7.5 35.8 2.00 13,045
Subtotal257.380.1177.239.3218.0——6.15 7.5 35.8 1.98 13,021
LeasedProven4.10.23.90.23.9——6.15 7.4 35.7 1.87 13,006
Probable0.1—0.1—0.1——6.15 7.3 35.6 1.89 13,016
Subtotal4.20.24.00.24.0——6.15 7.4 35.7 1.87 13,006
TotalProven223.475.3148.137.0186.4——6.15 7.5 35.8 1.97 13,017
Probable38.15.033.12.535.6——6.15 7.5 35.8 2.00 13,045
Subtotal261.580.3181.239.5222.0——6.15 7.5 35.8 1.97 13,021
Harvey Mine
OwnedProven94.921.973.00.575.119.3—6.15 7.9 36.8 2.60 12,957
Probable100.42.797.7—74.126.3—6.15 8.1 37.0 2.72 12,919
Subtotal195.324.6170.70.5149.245.6—6.15 8.0 36.9 2.66 12,937
LeasedProven9.4—9.40.19.3——6.15 7.8 34.9 2.03 12,978
Probable3.4—3.4—3.4——6.15 7.8 35.1 2.06 12,976
Subtotal12.8—12.80.112.7——6.15 7.8 35.0 2.0412,977
TotalProven104.321.982.40.684.419.3—6.15 7.9 36.7 2.5512,959
Probable103.82.7101.1—77.526.3—6.15 8.1 36.9 2.7012,920
Subtotal208.124.6183.50.6161.945.6—6.15 8.0 36.8 2.6212,940
Total - All Mines
OwnedProven366.8139.0227.840.0281.128.816.96.15 7.7 36.4 2.3112,976
Probable193.616.4177.23.1164.226.3—6.15 7.9 36.5 2.4112,954
Subtotal560.4155.4405.043.1445.355.116.96.15 7.8 36.4 2.3512,968
LeasedProven32.817.315.52.829.9—0.16.15 7.5 35.9 2.0713,020
Probable28.911.817.1—28.9——6.15 7.8 36.2 2.2512,995
Subtotal61.729.132.62.858.8—0.16.15 7.6 36.0 2.1513,009
TotalProven399.6156.3243.342.8311.028.817.06.15 7.7 36.3 2.2912,979
Probable222.528.2194.33.1193.126.3—6.15 7.9 36.5 2.3912,960
Subtotal622.1184.5437.645.9504.155.117.06.15 7.8 36.4 2.3312,972
    JOHN T. BOYD COMPANY
        12-8


The coal reserves of the PAMC are well-explored and defined. It is our conclusion that nearly two-thirds 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 Pittsburgh Seam in and around the PAMC, it is reasonable to assume that further exploration and testing will confirm the occurrence of coal reserves and increase the percentage reportable as proven.

Table 12.4 below summarizes the washed coal quality for each mine of the PAMC. The reported coal reserves generally consist of high-rank, high-volatile bituminous, medium ash, and medium-to high-sulfur coal that may be used for thermal and limited metallurgical purposes.

Table 12.4: Coal Reserves Product Quality Summary
Average Product Quality (As Received Basis)
%Heating Value (Btw/lb)
MineTotal MoistureAshVolatile MatterSulfur
Bailey6.15 7.9 36.8 2.54 12,934 
Enlow Fork6.15 7.5 35.8 1.97 13,021 
Harvey6.15 8.0 36.8 2.62 12,940 
Average6.15 7.8 36.4 2.33 12,972 

Figures 12.4 and 12.5 illustrate the product ash and product sulfur content over the PAMC area. As shown, there are slight increases in both ash and sulfur content from east to west across the property. The distribution of PAMC’s coal reserves by sulfur dioxide (SO2) emission category (reported in pounds (lbs) per million Btu [MMBtu]) is shown in Figure 12.6. Approximately 88% of the reported coal reserves are considered medium-sulfur or better coals.
a126a.jpg
Figure 12.6: Distribution of PAMC Coal Reserves by Sulfur Dioxide Category
    JOHN T. BOYD COMPANY

figure124a.jpg


figure125a.jpg

        12-11


The PAMC is an established underground coal mining and processing complex with a lengthy 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 the opinion of BOYD that CONSOL 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 CONSOL, as of December 31, 2022.

12.2.5    Reconciliation with Previous Estimates
When comparing CONSOL’s coal reserve estimates as of December 31, 2022, with those reported as of December 31, 2021, we note a net increase resulting from property, acquisitions, revisions to mine plans and associated modifying factors, and depletion through ordinary mining operations and inventory sales. Figure 12.7 illustrates the effects of each of these changes.

a127a.jpg
Figure 12.7
Reconciliation with Previous Coal Reserves Estimates

q:\eng_wp\2755.091 cei - pmac 22\wp\ch-12 - coal reserve estimate.docx
    JOHN T. BOYD COMPANY
        13-1


13.0    MINING METHODS


13.1    Mining Method Description
PAMC is comprised of the Bailey, Enlow Fork, and Harvey underground mines (see Figure 3.1 for the general layout of each mine). Each mine utilizes LW mining for primary production with supporting mine development performed by CM. LW mining supported by CM development has been the primary approach to mining the Pittsburgh Seam (within which PAMC operates) for decades. Mining methods utilized by the Bailey Mine, which first began LW production in 1984 and is the oldest of the PAMC’s three operations, are largely identical to those utilized at the Enlow Fork Mine and the Harvey Mine.

The LW mining method is centered around a dual-drummed coal cutting machine (shearer) that traverses the coal face of the developed LW panels. An illustration of a typical LW mining operation is provided in Figure 13.1
a131a.jpg
Figure 13.1
Longwall Mining Method
Source: Eickhoff America Corp.
    JOHN T. BOYD COMPANY
        13-2


The shearer advances through the developed LW panels by cutting a uniform slice of coal (approximately 42 in. in depth) as it travels back and forth across the length of the LW panel width (approximately 1,500 ft). Each pass or cut by the shearer completely removes the coal directly in front of the cutting drum. Hydraulically powered LW shields are used to support the immediate mine roof at the face, above the shearer. As the shearer cuts across the faceline (advancing 42 in. at a time), the LW shields similarly advance forward. In normal supporting conditions, the canopy of the LW shield is set tightly against the roof strata using the supporting resistances of the shield’s hydraulic legs. When the shearer cuts and passes several shield units, the shield support legs for each shield unit are sequentially lowered and pulled forward the distance equal to the depth of cut (i.e., 42 in.). Upon advancing, the unsupported mine roof immediately behind the LW shields will collapse. In addition to providing roof support, the LW shields also allow production and maintenance employees to safely access/travel across the entire length of the LW face during the mining process.

Coal cut by the LW shearer is removed via an armored face conveyor (AFC) which runs along and parallel to the LW face, beneath the LW shields. The AFC serves as the track for the shearer to move on and as a guide to hold the machine in place. Coal cut by the shearer is continuously loaded onto the AFC and is transported to the “headgate” area where the LW face intersects perpendicularly with the adjacent, developed mine entry (i.e., the “headgate-entry”). Here the coal is passed through a crusher unit and is dumped onto a stageloader system, which in turn empties onto a belt conveyor located in the adjacent entry (some distance outby the headgate area). After the coal has been loaded onto the conveyor belt, it begins a multiple mile egress through existing underground mine workings to be discharged into ROM storage facilities on the surface.

Each of the PAMC underground mines have multiple CM development sections which develop the underground network of main entries, gate entries, setup entries, etc., necessary to support the LW production unit(s). Mine entry development is performed on each section by a piece of equipment known as a Miner Bolter (MB). The MB is a machine capable of cutting coal with a rotating drumhead while simultaneously supporting the newly exposed mine roof via the installation of roof bolts. The MB is outfitted with drill booms which drill holes into the newly exposed mine roof. The MB then inserts a high strength metal roof bolt (or roof bolt and adhesive glue combination) into the freshly drilled holes, thus securing (or “bolting”) the immediate exposed mine roof to more component rock strata directly above the entry.

Coal cut by the MB is stockpiled behind the unit where a loading machine with oscillating gathering arms is positioned. The loading machine loads the stockpiled coal onto an
    JOHN T. BOYD COMPANY
        13-3


electric-powered transport vehicle (known as a “shuttle-car”) which then transports the mined coal to the development section’s feeder. Here the coal is crushed and then loaded onto a rubber conveyor belt for removal. Like the coal mined from the LW operation, development section ROM coal is transported through the mine workings on a series of conveyor belts until it reaches the surface.

The MB will continue mining in a single entry for a specified length according to ventilation requirements and/or mine operator preferences for completing the desired network of mine entries. Once the MB has developed the specified area, the MB will be moved to an adjacent entry to begin development. The freshly developed entry will then have additional roof bolts installed throughout its entirety by a roof bolting machine. These additional roof bolts will be installed as necessitated by the mine’s roof control plan or to the preferences of the mine operator. The process of developing the specified length of entries will be continued until the required entries have been developed and connected. The developmental belt will then be advanced (along with the section power supply) to shorten the required shuttle or ram car haul distance from the production faces. Once completed, the CM section mining cycle will resume, and be continuously repeated until necessary supporting entry infrastructure has been fully developed.


13.2     Mine Equipment and Staffing
13.2.1     Mine Equipment
The equipment utilized at the three PAMC underground LW mines is nearly identical to one another. This allows for synergies between the operations, including equipment, critical spare parts sharing, as well as buying power with equipment providers. Additionally, mining equipment utilized by PAMC is not unique to the Pittsburgh Seam LW region and is similar to the equipment commonly used by competitor LW mines in the region.

PAMC plans to operate multiple LW faces and CM sections annually to achieve forecasted production. Based on BOYD’s review of the PAMC equipment and asset listings, the operations’ current complement of equipment aligns with the projected level of production outlined in the LOM plan. In BOYD’s opinion, all mining equipment utilized on the PAMC LW and CM sections is suitable for the mining conditions anticipated, as well as for the currently anticipated rates of production.

13.2.2     Staffing
PAMC’s underground mines and coal preparation facility are staffed by a workforce primarily from the surrounding southwestern Pennsylvania, eastern Ohio, and northern
    JOHN T. BOYD COMPANY
        13-4


West Virginia areas. The workforce is comprised of both hourly and salary employees, in a similar fashion to those of other operating mines within the region. Unlike many competing mines within the region, the PAMC work force has no labor union affiliation. Table 13.1 provides recent historical end-of-year employment for PAMC:

Table 13.1: PAMC Historical Employee Count
20182019202020212022
1,5081,5931,4501,3201,498
Source: Mine Safety and Health Administration

Except for a drop in employment in 2020 (attributed to poor market conditions during the COVID pandemic), staffing levels across the operational sites have largely remained consistent1. Excluding the 2020 decline, forecasted employment levels align with historical levels. Going forward, given CONSOL’s ability to hire and retain employees, staffing is not expected to hinder PAMC’s currently anticipated production forecast.

13.3    Mine Production
13.3.1 Historical Mine Production
Historical mine production data (through year-end 2022) for the three PAMC underground LW mines, based on publicly available information reported by the MSHA, are shown in Figure 13.2.

a132a.jpg

__________________________
1 It is not uncommon for coal operators in the region to fluctuate employment to match market conditions.
    JOHN T. BOYD COMPANY
        13-5


Relevant information regarding the three PAMC operations includes:

–Bailey Mine first recorded production from development mining during 1984, and subsequently experienced its first LW production in 1985. Through 2022, Bailey Mine has produced approximately 338 million tons since beginning operations. During its operating life, Bailey has been known as one of the most productive LW operations in the United States on a tons per employee hour (TPEH) basis.
–Enlow Fork first recorded production from development mining during 1989, which was followed by its first LW production recorded in 1991. Enlow Fork has produced approximately 288 million tons since beginning development mining in 1989 through 2022. Enlow Fork has historically operated two LW faces.
–Harvey, which is the newest of the PAMC mines, first recorded production from development mining during 2009 under the Bailey Mine MSHA identification number. The Harvey Mine officially began recording production under its own MSHA identification number during 2014. Harvey has produced approximately 40 million tons attributable to its own mine identification number. Harvey operates one LW face.
As a complex, PAMC has produced a combined 665.8 million tons of clean coal from 1984 to 2022. Through the same period, the complex has recorded an average productivity level of 7.4 TPEH. Figure 13.3 shows historic mining productivity for PAMC and each mine individually since their start.

a133a.jpg
    JOHN T. BOYD COMPANY
        13-6


13.3.2    Forecasted Production
BOYD reviewed the LOM plans for each of the PAMC underground LW mines to determine whether the plans: (1) utilize generally accepted engineering practices, and (2) align with historical and industry norms. Based on our assessment, it is BOYD’s opinion that the forecasted production levels for the PAMC operations are reasonable, logical, and consistent with typical LW mining practices in the Pittsburgh Seam and historical practices utilized by PAMC.

Currently anticipated PAMC coal production (through 2065) is shown in Figure 13.4:

a134a.jpg
Figure 13.4
Projected PAMC Coal Production

In the aggregate, the PAMC LOM plan projects the complex will produce approximately 622 million tons of clean coal over its operational horizon. The rate at which the PAMC produces coal can vary based upon how the mines are operated.

While individual mines may encounter local areas of high ash and/or sulfur, PAMC’s infrastructure enables the output from each of the individual mines to be strategically blended, 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.

13.3.3    Mining Recovery and Dilution Factors
The PAMC’s underground LW 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., LW panel widths and lengths are relatively similar, as are the dimensions
    JOHN T. BOYD COMPANY
        13-7


for CM development support pillars). As a result, mining recoveries within the individual mine plans are largely similar. The estimated mining recoveries for PAMC’s LW production panels is 99% and for the CM development areas ranges from 25% to 40%. Based on our audit of PAMC’s reserves by individual mining areas, it is BOYD’s opinion that the mining area recoveries 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 across the PAMC mines. The mining horizon targeted by each of the mines includes the main bench of the Pittsburgh Seam, draw slate (or binder), and overlying roof coal (refer to Chapter 4 for a generalized stratigraphic column of the Pittsburgh Seam). Each of the mines operate in a similar manner where the entirety of the main bench of coal and immediate draw slate (or binder) is removed. Subsequently, the roof coal immediately above the draw slate layer may be completely or partially removed based on the thickness of the total mining horizon.

The CM development sections have minimum mining heights which must be maintained to transport equipment and employees, provide ventilation airways, provide adequate clearances at belt transfers, etc., regardless of the targeted mining horizon thickness. As a result, out-of-seam dilution (OSD) variances on the CM development sections are more sporadic versus the LW sections; these variances are more likely a result of mine infrastructure and design rather than fluctuations in geology.

The LW production panels have minimum mining heights which must be maintained to provide clearance for LW equipment operation throughout the panel. The PAMC operations will mine to a certain mining horizon to provide the sufficient height necessary to mitigate operational risks (e.g., localized seam rolling, dipping, and zones of increased loading on LW shields, etc.), while also attempting to keep OSD to a minimum. Typically, this will result in mining the main bench of coal and draw slate in their entirety and leaving a portion of the roof coal (if mining horizon clearances allow). Estimated mining heights for the PAMC mines generally range from 7.5 ft to 8.5 ft but can reach 8.75 ft in portions of the Bailey Mine. BOYD views these mining heights as reasonably accurate and acceptable within the Pittsburgh Seam LW mining industry. These mining heights generally correlate with the OSD estimates for the Bailey, Enlow Fork, and Harvey mines (i.e., 25% OSD plus-or-minus 5%) which appears to agree with the PAMC forecasted production outputs.


    JOHN T. BOYD COMPANY
        13-8


13.4    Other Mining Considerations
13.4.1    Mine Design
The Pittsburgh Seam is widely recognized as being ideally suited for LW mining. The region’s massive extent of reserves, good overall mining conditions, seam consistency, and relatively low population density on the overlying surface (vital to minimizing the impact of mine subsidence and the cost associated) are conducive to efficient, low-cost production operations.

Mining plans for large LW mines are simple but relatively inflexible, as major modifications to these mine plans require significant foresight and planning well in advance of mining. The entire foundation of the mining plan is based upon economies of scale resulting from a defined mining plan with high levels of annual output through all projected areas. The PAMC LW panels are large, typically measuring between 1,400 ft to 1,600 ft in width and up to 15,000 ft in length. This approach minimizes the percentage of high-cost CM output relative to low cost LW coal. Furthermore, the use of enormous panels maximizes the LW’s operating time (i.e., less LW panel transfers throughout reserve exhaustion). Lead times for the development of LW panels are extensive, as CM development mining must be performed months or years in advance of the commencement of LW production. The application of the LW mining system is rigid. Therefore, there is minimal opportunity to alter the mining plan so as to avoid specific (localized) areas with adverse mining conditions (such as thin coal, poor roof, etc.) or poor coal quality (such as high sulfur, etc.). The only practical option is to mine through these adverse areas as CONSOL has successfully done in the past. On an annualized basis, this philosophy results in maximized recovery of reserves and minimized unit operating costs.

Coal mining operations are unlike other industrial facilities in that mines are not “assembly lines” or “factories” that are engineered to an exact design capacity or specific cost structure. Mining operations are conducted in the earth’s strata, rather than within a homogeneous environment. There is inherent geologic risk, and mine operators must therefore contend with periodic adverse or variable geological conditions that cannot be fully anticipated in advance of actual mining activity. While the occurrences of these physical conditions are beyond the control of site management, it should not be interpreted that coal mining is inherently risky. On the contrary, there are established measures that mine operators utilize to minimize the operational and financial impacts associated with such encounters. Coal mining operations, such as the PAMC LW mines, have demonstrated a longer-term track record of sustaining consistent and predictable levels of performance on an annualized basis.

    JOHN T. BOYD COMPANY
        13-9


There remains substantial public and environmental group opposition to mining in general, particularly to LW mining and the effects of subsidence on surface structures and, more recently perennial streams. Ultimately, there is no current alternative to continued coal utilization for coal-fired electricity generation, manufacturing of coke, etc. While coal mining will continue, there are no indications that external pressures on the industry will lessen. CONSOL has historically demonstrated the ability to apply for and obtain the necessary permits for continued LW mining within their controlled reserves, even while being met with some environmental pushback. The established track record gives confidence in CONSOL’s ability to work with environmental and regulatory agencies to achieve mine designs which allow for large reserve extractions while still maintaining environmental efficacy and good relationships with the surrounding communities.

13.4.2    Mining Risk
LW 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. PAMC engineered mining plans and projections appear to incorporate historic 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 PAMC mining operations or otherwise compromising their forecasted performance.

    JOHN T. BOYD COMPANY
        13-10


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 of time (measured in months, and perhaps years) and/or result in the sterilization of coal reserves.

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, and underground LW mining is largely a predictable and safe industry. BOYD does not regard the PAMC mining operations and their 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 any of the PAMC mining operations.

q:\eng_wp\2755.091 cei - pmac 22\wp\ch-13 - mining methods.docx
    JOHN T. BOYD COMPANY
        14-1


14.0    PROCESSING OPERATIONS


14.1    Overview
The centrally located Central CPP is designed to process the combined ROM output produced by PAMC’s three underground LW mines. Comprised of ROM coal storage silos, a coal processing plant, clean coal storage silos, and a rail loadout facility, the 300-acre processing complex is located within proximity of the active operations.

The Central (or “Bailey Central”) CPP first began operation as the coal washing facility for the Bailey Mine in 1984. Since then, the Central CPP has undergone many expansions. In 2011, major renovations were made to the Central CPP to accommodate additional tonnage supplied from the newly commissioned Harvey Mine. Major process upgrades focused on improving processing circuit efficiencies and throughput as well as improved rail car loading capacity.

The Central CPP consists of two state-of-the-art PLC controlled heavy media plants with a combined rated raw coal capacity of 8,200 TPH. The plant employs five separate modules as shown in Table 14.1:


Table 14.1: Bailey CPP Module Summary
PlantModuleCommission DateProcessing Capacity (Raw TPH)
Plant 11A19892,000
1B19892,000
Subtotal4,000
Plant 22A19911,400
2B19911,400
2C20041,400
Subtotal4,200
Total8,200

A single plant operator can operate all five plant modules.

With a current processing capacity of 8,200 raw TPH, it is the largest CPP in the United States.

While the capacity of the facility has grown, the coal preparation process at Central CPP, like other preparation plants in the Pittsburgh Seam mining region, has largely remained
    JOHN T. BOYD COMPANY
        14-2


unchanged over the decades. Processing circuits within the Central CPP consist of heavy media bath, heavy media cyclones, hydro-spirals, and froth flotation. Rudimentary 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 is shipped to the complex from the Bailey and Enlow Fork mines via two independently operated overland conveyor belts1 while the centrally located Harvey Mine’s slope conveyor belt delivers coal directly to the complex. There are nine ROM coal storage silos that provide approximately 153,000 tons of above-ground storage for the PAMC underground mines, six of which are located at the Central CPP complex. The ROM coal storage silos enable each mine to provide their plant feed separately to the preparation facility. The clean coal product is dried with screen-bowl centrifuges. Processed product is then stored in concrete silos with a total capacity of over 100,000 tons.

Clean coal is sampled and loaded into 130-car unit trains through a batch weigh system. The Central CPP is served by both the NS and CSX via a 19-mile rail spur that connects the complex with the mainline rail at Waynesburg, Pennsylvania. Two rail sidings are employed to facilitate railroad transportation logistics. At any time, the plant can accommodate four-unit trains: one unit train on the siding heading into the train load-out loop; one unit train being loaded; one unit train loaded and on the newly installed 8,000-ft siding; and one unit train loaded and leaving the facility. The train loadout system has a capacity of approximately 36 million tons per year.

Following this page are Figure 14.1, which provides an aerial overview of the preparation facility area, and Figure 14.2, which provides a generic flow sheet of the CPP and related facilities.



1 The length of the overland belt from the Bailey Mine to the Central CPP is 4.2 miles; the length of the overland belt from the Enlow Fork Mine to the Central CPP is 5.5 miles.
    JOHN T. BOYD COMPANY

figure14-11a.jpg


figure14-21a.jpg

        14-5


14.2    Historical Operation
Due to the evolution and enlargement of CONSOL’s PAMC operations, the Central CPP has undergone modifications and expansions to accommodate the complex’s increased coal production and washing requirements. The plant has historically operated at 75% of capacity.

The Central CPP produces a very consistent clean coal product, averaging on an as-received basis between 12,900 to 13,000 Btu per lb, 2.0 to 2.5% sulfur, and 7.0% to 8.0% ash. The plant’s ability to blend raw coal production from the three underground mines into a singular plant feed allows for both more consistent plant operation and coal product qualities.


14.3    Future Operations
CONSOL intends to utilize the Central CPP to process coal from the PAMC underground LW mines throughout the complex’s LOM plan.


14.4    Conclusions
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 Central CPP will be sufficient for currently anticipated coal processing at PAMC.

q:\eng_wp\2755.091 cei - pmac 22\wp\ch-14 - processing operations.docx
    JOHN T. BOYD COMPANY
        15-1


15.0    MINE INFRASTRUCTURE


15.1    Mine Surface Facilities
Operations at PAMC are supported by several surface facilities located within the areal proximity of the mine 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, ROM coal conveyor belt structure, 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 underground). Figure 3.1 (Page 3-2) provides a general location map highlighting the layout of the three PAMC underground mines and the surface location of their primary deep mine access points. Each of the PAMC underground LW mines maintain their own separate surface facilities. In terms of industry standards, the PAMC operations’ surface infrastructure is comparable to or superior to facilities typically found within the Pittsburgh Seam mining region.

The current surface facilities located at each of the mines are well constructed and have the necessary capacity/capabilities to support the PAMC’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 operational limitations of the existing infrastructure, additional surface facilities of comparable design will be required to support continued mining (refer to Chapter 18 for a discussion regarding expectations for future capital expenditures).

Given CONSOL’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 select mines of PAMC is not seen as a hindrance for the execution of the LOM plans.

All ROM output from the PAMC mines is processed in the Central CPP, which is discussed in Chapter 14.


15.2    Bailey Refuse Facility
The Bailey refuse facility serves as the disposal location for all waste rock (coarse coal refuse) and fine coal slurry (fine coal refuse) produced during the processing of ROM coal from the three PAMC underground LW mines. The current Bailey refuse facility
    JOHN T. BOYD COMPANY
        15-2


encompasses approximately 3,509 permitted acres adjacent to the Central CPP. A summary of the currently permitted coal refuse disposal areas (CRDA) is provided in Table 15.1:

Table 15.1: CRDA Summary
Permitted Acres
CRDA No.Refuse Disposal AreaSupporting Activity AreaTotal
No. 1 & 2402483885
No. 3 & 4373184557
No. 5 & 6448170618
No. 7 & 88376121,449
Total2,0601,4493,509

CRDA No. 7, the most recent permitted disposal site, received approval from the Pennsylvania Department of Environmental Protection in August 2020.

The Bailey refuse facility includes multiple disposal areas for coarse coal refuse and fine coal refuse disposal. Table 15.2 details the inventory of CRDA sites servicing the PAMC operations.

Table 15.2: Summary of CRDA Remaining Capacity
Course Refuse Areas 1
Fine Refuse Areas 2
No.Capacity (CY)No.Capacity (CY)
1207,0001—
38,270,0003—
4—599,269,681
536,789,000783,000,000
6—817,200,000
733,357,000Total199,469,681
869,600,000
Total148,223,000
1CONSOL coarse coal refuse capacity estimate as of Dec. 21, 2022
2CONSOL fine coal refuse capacity estimate as of Dec. 29, 2022

According to forecasted LOM coal refuse disposal requirements, currently permitted refuse areas can accommodate coarse coal refuse disposal (properly staged) through 2035 while fine coal refuse disposal can be accommodated through 2067.

CONSOL indicated that the refuse disposal plan post-2035 will be based on proven practices and approaches. CONSOL has historically demonstrated the ability to steadily
    JOHN T. BOYD COMPANY
        15-3


acquire the required land for the refuse facility, associated permits, and to execute construction of disposal areas in a timely fashion. It is BOYD’s opinion that CONSOL’s staged refuse disposal through 2035 will meet or exceed the practices demonstrated by other industry peers. At this time, the absence of a staged and detailed refuse disposal plan post-2035 is not seen as a major hindrance to PAMC meeting its LOM plans.

q:\eng_wp\2755.091 cei - pmac 22\wp\ch-15 - infrastructure.docx
    JOHN T. BOYD COMPANY
        16-1


16.0    MARKET STUDIES


16.1    Product Specifications
The PAMC produces a thermal coal that is sold into the domestic US and international export markets. Indicative quality specifications for the PAMC thermal product are listed in Table 16.1 below.

Table 16.1: Indicative Thermal Coal Quality
ParameterUnitsValue
Moisture%, arb6.15
Ash%, arb7.5
Fixed Carbon%, arb51.2
Volatile matter%, arb36.5
Sulfur%, arb2.3
Heating ValueBtu/lb, arb12,950
Heating ValueBTU/lb, MAF15,000
SO2
lbs,MMBtu, arb3.6
HGI54

The high calorific value thermal coal produced by PAMC is currently used in the United States by electricity generators located in the PJM Interconnection, Southeast, and Midcontinent Independent System Operator regional electricity markets and by domestic industrial customers. In addition to the domestic market, PAMC also services international power generation and industrial customers in Europe, Africa, Asia, and other parts of North America. The coal’s high quality enables it to receive premium pricing relative to regional price indices2.

The PAMC also supplies lesser quantities—approximately 1.0 to 2.0 million tons per annum—of a secondary metallurgical coal product into the international export market.

2 The main value driver for thermal coal is always energy or heat content, typically measured as a calorific value. With a typical heating value of 12,950 Btu/lb., PAMC’s thermal coal is among the highest heat content US bituminous coals. In the international market, PAMC’s thermal coal, which typically converts to 6,900 kcal/kg net as received (NAR), surpasses the major international bituminous coal benchmark products (e.g., the Republic of South Africa’s [RSA]benchmark Richards Bay 6,000 kcal/kg NAR thermal product or Australia’s Newcastle 6,000 kcal/kg NAR benchmark thermal coal) and is typically benchmarked against the API 2 index (6,000 kcal/kg NAR coal delivered into the Amsterdam, Rotterdam region in the Netherlands, and Antwerp region in Belgium)
    JOHN T. BOYD COMPANY
        16-2


Indicative quality characteristics for the PAMC metallurgical coal product are detailed in Table 16.2.

Table 16.2: Indicative Metallugrical Coal Quality
ParameterUnitsValue
Moisture%, arb6.3
Ash%, db7.8
Volatile matter%, db37.5
Sulfur%, db2.0-2.6

Due to its higher sulfur and high volatile matter contents, high fluidity, and a reflectance value less than 0.9%, PAMC’s metallurgical coal product is ranked as a cross-over coking coal. This grade of metallurgical coal generally displays strong thermoplastic properties (e.g., fluidity), but its lower rank and higher sulfur content constrain its use in coking coal blends relative to premium coking coals. Despite its lower rank, PAMC has successfully marketed its metallurgical coal product to steel makers in South America (primarily Brazil), Asia, and Europe.


16.2    Primary Markets
A summary of PAMC’s historical coal sales by product, market, and segment for 2020 through 2022 is provided in Table 16.3, below.

Table 16.3: PAMC Sales by Product and Market Segment (Tons 000)
202020212022
Domestic
Power Gen11,324 12,333 13,218 
Industrial487 255 337 
Subtotal11,811 12,588 13,555 
Export
Power Gen2,064 2,683 4,366 
Industrial3,722 7,204 4,693 
Metallurgical1,075 1,245 1,489 
Subtotal6,861 11,132 10,548 
Total18,672 23,720 24,104 
Percent of Total Sales
Power Gen Coal71.7 63.3 73.0 
Metallurgical Coal5.8 5.2 6.2 
Industrial Coal22.5 31.5 20.9 
100.0 100.0 100.0 
Source: CONSOL
    JOHN T. BOYD COMPANY
        16-3



PAMC’s primary focus is on growing sales into the export, industrial, and metallurgical segments while continuing to serve its key domestic customers.

16.2.1    Domestic Sales
A summary of PAMC thermal coal sales into the domestic market (i.e., US generating stations and industrial customers) during the period 2018 through year-to-date October 2022 (most recent as of the time of this report), as reported by the U.S. Energy Information Administration (EIA), is shown in Table 16.4 below:

Table 16.4: Summary of PAMC Historical Thermal Coal Deliveries by State (Tons 000)
YTD OctoberTotal Deliveries
201820192020202120222018 - Oct 2022
% of% of% of% of% of% of
Tons (000)TotalTons (000)TotalTons (000)TotalTons (000)TotalTons (000)TotalTons (000)Total
PA6,882 35.0 6,699 36.6 4,032 31.2 4,028 31.0 3,668 33.3 25,309 25.1 
NC4,536 23.1 4,331 23.7 2,419 18.7 3,239 24.9 2,500 22.7 17,025 21.7 
MD3,261 16.6 1,791 9.8 680 5.3 1,260 9.7 713 6.5 7,705 14.8 
MI1,455 7.4 1,533 8.4 711 5.5 692 5.3 521 4.7 4,912 7.3 
GA765 3.9 918 5.0 506 3.9 893 6.9 592 5.4 3,674 5.4 
SC86 0.4 1,437 7.9 874 6.8 1,111 8.6 1,214 11.0 4,721 5.4 
WV781 4.0 404 2.2 618 4.8 996 7.7 1,117 10.2 3,917 4.7 
VA390 2.0 187 1.0 380 2.9 11 0.1 — 968 2.6 
WI78 0.4 358 2.0 529 4.1 469 3.6 453 4.1 1,888 2.2 
NJ345 1.8 348 1.9 428 3.3 288 2.2 143 1.3 1,551 1.8 
OH— — — — — — — — — — 1.1 
FL— — — — — — — — — — 0.9 
IN30 0.2 44 0.2 118 0.9 — — — 192 0.8 
DE24 0.1 71 0.4 — — — 84 0.8 179 0.7 
KY— — — — — — — — — — 0.4 
NH— — — — — — — — — — 0.2 
NY— — — — — — — — — — 0.1 
AL— — — — — — — — — — 0.0 
Other1,023 5.2 180 1.0 1,609 12.5 — — — — 2,811 4.8 
Total19,654 100 18,300 100 12,904 100 12,987 100 11,005 100 74,850 100 
Source: EIA Form 923.

According to EIA data, PAMC shipped thermal coal to 10 states from January through October 2022. From January 2018 through October 2022, PAMC customers in the top three sales states (Pennsylvania, North Carolina, and Maryland) were delivered over 50 million tons or 62% of the complex’s total sales.


    JOHN T. BOYD COMPANY
        16-4


16.2.2    Export Sales
The PAMC also sells a significant amount of its coal outside the United States. The company’s participation in the export market is influenced by several factors, including: prevailing international price indices, ocean freight tariffs, the status of the global supply/demand balance, and price premium and/or discounts that PAMC’s products receive in the market because of the beneficial or detrimental qualities that its coal will afford its end users relative to benchmarks (i.e., the “value in use” proposition). The extent to which these factors influence PAMC’s export sales will vary from year to year, by customer and region. PAMC’s presence in the international thermal and metallurgical coal market has grown over the past five years, reflecting global demand for the products produced by PAMC, CONSOL’s well-established international sales network, as well as developing trends/behaviors within the export market, including:

–As sales into the domestic thermal market have declined over the recent past (reflecting the United States’ growing shift away from coal-fired generation towards other competing forms of generation), PAMC has steadily increased shipments into the international market. As developing economies expand their portfolio of thermal coal suppliers, utility and industrial customers in these regions are recognizing the value that high quality thermal coals—like the product produced by PAMC—provides to their operations.
–PAMC thermal coal competes with Illinois Basin coals in the European and Indian thermal markets. Due to its higher heating value, lower sulfur content, and transportation cost advantage, PAMC coal is highly competitive versus Illinois Basin products (which are exported through the US Gulf Coast) into these markets. Despite this advantage, PAMC can only profitably compete in certain international thermal coal markets so long as benchmark pricing3 supports the transaction.
–PAMC’s metallurgical product is directed into the international market where steel producers commonly utilize high fluidity, low reflectance, and relatively high sulfur content metallurgical coal. Normally priced at a discount to higher rank US met coal products, PAMC met product is viewed as a low-cost blend material, routinely utilized by steel makers seeking to reduce their overall raw material expenditures (to the extent such moves are economically and technologically practical). PAMC’s presence in the international met market has been enhanced by CONSOL’s use of an internationally recognized third-party coal sales agent. Future sales into this sector are expected to range between 1.0 to 2.0 million tons annually.

PAMC’s sales into the export market are advantaged by its access to the CONSOLMarine Terminal. The Terminal, located in the Port of Baltimore, features high-
3 In the case of shipments into Europe, the delivered price of PAMC coal (including the cost of the coal at the mine, rail, port, and ocean freight charges and high-sulfur pricing discounts) must be comparable to the API2 index price which reflects the cost-insurance-freight coal price to the port of Amsterdam-Rotterdam-Antwerp on a metric ton basis.
    JOHN T. BOYD COMPANY
        16-5


speed, high-capacity equipment that transloads coal from rail cars to ocean-going vessels. With an annual throughput capacity of approximately 15 million tons and on-site ground storage of approximately 1.1 million tons, the terminal is uniquely serviced by both the NS and CSX railroads. According to CONSOL, PAMC coal shipped through the Terminal has been directed to markets in Africa, Europe, North America, South America, and Asia.


16.3    Market Outlook
Coal use among domestic US power generators has reduced as competition from renewable forms of power generation has increased. In response to this development, CONSOL anticipates its domestic thermal markets will continue to erode over the mid- to long-term, in line with coal plant retirements and the associated drop in coal demand. Offsetting much of this decline is CONSOL’s expectation of an expanded role for PAMC thermal coal in the international market. Additionally, CONSOL reasonably anticipates PAMC metallurgical coal will continue to find acceptance in the export market at levels slightly above current sales.

q:\eng_wp\2755.091 cei - pmac 22\wp\ch-16 - market studies.docx
    JOHN T. BOYD COMPANY
        17-1


17.0    PERMITTING AND COMPLIANCE


17.1    Permitting
Numerous permits are required by federal and state law for underground mining, coal preparation and related facilities, and other incidental activities. CONSOL reports that 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 believe CONSOL 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 LW mining and related activities in Pennsylvania and West Virginia. The primary contributing factors are the effects of subsidence on overlying streams and the ability to permit refuse sites.

Please refer to Section 3.3 for additional information.


17.2    Compliance
CONSOL reports having an extensive environmental management system and compliance process.

In its 2021 corporate sustainability report, CONSOL reports:

–Over 99.9% environmental compliance with NPDES permit requirements.
–CONSOL Marine Terminal and Itmann each achieved a 100% environmental compliance record, with zero violations in 2021.
–The company announced its greenhouse gas emissions reduction targets, seeking to achieve a 50% reduction in scopes 1 and 2 emissions in a 5-year period (or by 2026), and net zero scope 1 and 2 emissions by 2040.

Based on our review of information provided by CONSOL, it is BOYD’s opinion that CONSOL 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
        17-2


17.3    Socio-Economic Impact
CONSOL's 2021 corporate sustainability report outlines the components of its core sustainability initiatives. It's stated financial priorities include continued support of local economic prosperity, regular stakeholder engagement, and creation of opportunities for the local communities.

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

q:\eng_wp\2755.091 cei - pmac 22\wp\ch-17 - environmental.docx
    JOHN T. BOYD COMPANY
        18-1


18.0    CAPITAL AND OPERATING COSTS


18.1    Introduction
BOYD independently developed a discounted cash flow analysis to determine that in BOYD’s opinion, extraction of the coal reserves of PAMC are economically viable. BOYD’s calculations and determinations included in this chapter are based on what BOYD believes to be reasonable, appropriate, and relatively conservative investment and market assumptions and estimates, including all assumptions made about future prices and market conditions, production and sales volumes, operating costs, capital expenditures and other results and measures that are necessary and are used to determine the economic viability of the reported coal reserves.

BOYD’s assumptions and estimates have been calculated and presented in this report
solely for the purpose of confirming that future extraction of the coal reserves of PAMC are economically viable as required under S-K 1300. BOYD’s estimates and assumptions underlying the discounted cash flow analysis and other calculations are based on future estimates of spot prices, PAMC historic performance from 1984 through December 31, 2022, BOYD’s extensive knowledge of the Pittsburgh Seam, assumed future production at PAMC using multiple LWs as well as other assumptions and estimates detailed in this chapter. Actual future operating results and investment and market conditions may differ significantly from PAMC historic results or from the estimates of future investment and market conditions as well as from future PAMC performance assumed by BOYD in the discounted cash flow analysis as a result of various factors and risks, some of which may be outside of CONSOL’s control. CONSOL, as with all coal mining companies, actively evaluates, changes, and modifies business and operating plans in response to various factors that may affect PAMC production, operations, and financial results. Actual PAMC future results, production levels, operating expenses, number of operating LWs and CMs, sales realizations, and all other modifying factors could vary significantly year to year from the assumptions and estimates used by BOYD in the calculations in this chapter.

In terms of the combination of productivity, cost, and production, CONSOL’s PAMC complex is the preeminent underground coal operator within the Pittsburgh Seam. Comprised of three state-of-the-art underground LW mines, PAMC is among the largest underground sources of coal production in the United States. The complex’s ability to consistently achieve high levels of annual output at generally low operating costs is attributed to its highly capitalized LW operations and financial controls.

    JOHN T. BOYD COMPANY
        18-2


The following section provides a review of recent historical operating costs and capital expenditures for the PAMC complex. A discussion of BOYD’s outlook for the complex over the five-year period 2023 to 2027, including projected production and sales, operating costs, and capital expenditures, is also provided.


18.2 Historical Operating Costs
The following figure (Figure 18.1) presents PAMC’s historical operating costs and average annual realizations for the period 2018 through 2022:

a1811a.jpg
Figure 18.1
PAMC Historical Operating Costs and Sales Realizations ($/Ton)
Note: Indirect Costs include SG&A, But excludes interest expense and DD&A.

Over the five-year period, the complex’s average annual operating costs have ranged from $28.00 to $35.00 per ton. The increase in the 2022 average operating costs was more than offset by the increase in the average sales price in that year (to approximately $70.00 per ton).
    JOHN T. BOYD COMPANY
        18-3


Cost performance for the individual mines is portrayed graphically in Figure 18.2.

a182a.jpg
Figure 18.2
PAMC Historical Cash Operating Cost by Mine
($/Ton Sold)

Historically Bailey, Enlow Fork, and Harvey have had relatively low operating costs in comparison to other industry producers. Salient factors influencing the mines’ recent performance include:

–Of the three PAMC underground LW mines, Harvey has demonstrated the lowest annual operating cost during the 2018 to 2022 time period. Unlike Bailey and Enlow Fork, which operate multiple LW faces, the Harvey Mine employs a single LW, thus limiting the mine’s potential gains through economies of scale4. However, Harvey is the newest of the three PAMC LW mines. As a result, it supports less infrastructure and mine workings than Bailey and Enlow Fork, thus avoiding the costs associated with maintaining an expansive underground infrastructure.
–Enlow Fork’s annual operating costs increased during the 2018 to 2022 period. The increase was attributable to added mine development and infrastructure associated with: (1) shorter than normal LW panels in the northern extent of the mine, and (2) the development of new LW panel districts in the eastern portion of the mine property.
–Bailey Mine annual cash operating costs during 2018 through 2022 ranged from $28 to $35 per ton, averaging approximately $30/ton over the five-year period.


4 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 LW 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
        18-4


18.3    Historical Capital Expenditures
Relative to industry peers, the three PAMC underground LW mines and supporting centralized preparation facility are highly capitalized, state-of-the-art operations which have benefited from CONSOL’s continual attention to capital upgrade/replacement programs and routine investment in mine infrastructure expansions, maintenance of production equipment, refuse placement, etc. A summary of the 2018 to 2022 historical capital expenditures for PAMC (including the three underground LW mines and Central CPP) is provided in Table 18.1.

Table 18.1: PAMC Historical Capital Expenditures ($00)
20182019202020212022
113,876128,61764,08595,945107,401


It is BOYD's experience that operations such as PAMC will have annual maintenance of production capital expenditures ranging between $3.00 and $5.00 per ton in any given year, with variations based on mine plan, mining conditions, rebuild and replacement schedules, equipment markets, etc. This is consistent with CONSOL historical performance and likely future capital requirements for continued operations.


18.4    Projected Five-Year Mine Plan
BOYD’s projected five-year mine plan for the PAMC is based on engineered mine layouts5 which were designed for optimum reserve recovery, using efficient mining methods and practices6. Historical 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 forecasts (based on constant 2022 dollars). The individual min
5 Mining plans for large LW mines are simple but relatively inflexible, as major modifications to these mine plans require significant foresight and planning well in advance of mining. The entire foundation of the mining plan is based upon economies of scale resulting from a defined mining plan with high levels of annual output through all projected areas. CONSOL’s LW panels are large, typically measuring 1,300 ft to 1,600 ft in width and up to 15,000 ft in length, which equates to approximately 5 million product tons of coal per panel. This approach minimizes the percentage of high-cost CM output relative to low-cost LW coal.
6 LW mines are supported by CM units that develop the main, submain, and gate entries that provide underground roadways for transportation access, ventilation, and mine infrastructure. CM units contribute between 5% and 20% of total tonnage at a typical LW mine (with the LW being the primary production unit), but represent a significant portion of a mine’s cost structure. CM development and associated construction and mine support activities must be performed in advance of the LW face in order to maintain annual levels of output. It is BOYD’s opinion that CONSOL’s approach to gate development and support activities, which are managed as an integrated portion of the overall mining cycle, are regarded as efficient and well organized.
    JOHN T. BOYD COMPANY
        18-5


ing plans recognize the impact of variations in physical mining conditions, mechanical failures, and operational activities that can temporarily disrupt production activities. BOYD believes the plans developed for PAMC 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. Risk mitigation is factored into the forecasted production schedule by projecting an operating level sustained by the use of multiple LW faces.

BOYD’s mine plan assumes no major abnormalities are encountered within the coal market or at the individual mine level. The five-year forecasted operating and capital costs per saleable ton align with LW coal mines operating in the Pittsburgh Seam region. Subject to the guidelines outlined in Subpart 229 and Item 1302(d) of the S-K 1300, 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 LW mines operating in the Pittsburgh Seam. We did not assign a contingency budget to the extended LOM projection estimates.

18.4.1    Forecasted Production and Sales
The five-year financial projections reflect a slight reduction in sales tonnage from PAMC as coal prices begin to recover post COVID-19 pandemic. The forecast reflects a stable revenue stream, driven by BOYD’s view that CONSOL’s Pittsburgh Seam reserves and PAMC are in a strong competitive position to take advantage of improved coal pricing and demand. BOYD’s projected saleable production and average realizations from coal sales from 2023 through 2027 for the PAMC are summarized in Table 18.2.

Table 18.2: Projected Saleable Production and Realization Estimates for PAMC
ActualForecast
202220232024 - 2027
Annual Saleable Production (Million Tons)24.124.724.9-26.2
Average Sales Price ($/ton)81.7979.1047.50-55.50


    JOHN T. BOYD COMPANY
        18-6


PAMC’s future production over the five-year forecast period will remain well within the complex’s previously achieved output levels and in line with current infrastructure capacities and capabilities.

18.4.2    Forecasted Operating Costs
BOYD anticipates PAMC will continue to operate at a stable operating cost level between2023 and 2027 . This is primarily reflects consistent performance from the operation’s five LW faces, with production ranging from 25 to 26 million tons annually during this period. Operating costs per ton sold for the forecasted period of 2023 to 2027 are shown in Figure 18.3:

a183a.jpg
Figure 18.3
PAMC Project Operating Costs and Sales Price
Note: Indirect Costs include SG&A, But excludes interest expense and DD&A.

    JOHN T. BOYD COMPANY
        18-7


Projected unit cash costs for the Bailey Mine, Enlow Fork, and Harvey mines during the forecasted period of 2023 to 2027 are shown in Figure 18.4:
a184a.jpg
Figure 18.4
PAMC's Projected Cash Operating Costs

PAMC’s average cash operating cost for the five-year forecast is expected to be consistent with its historical performance. In general, the projected operating costs within the PAMC five-year forecast align with the forecasted LOM plans.

18.4.3 Forecasted Capital Expenditures
BOYD projects PAMC will increase its level of capital expenditures over the 2023 to 2027 period, with spending focused on mine infrastructure expansion (air shafts, buildings, belt systems, etc.), maintenance of production equipment (new equipment purchases and/or rebuilds), and refuse area infrastructure. Capital expenditure appears to be logical and consistent with CONSOL’s typical level of capitalization and maintaining of state-of-the-art LW and associated processing facilities.

In general, the projected capital expenditures within the five-year forecast agree with general engineering disciplines and industry norms and are reasonable for forecasting LOM capital requirements.

q:\eng_wp\2755.091 cei - pmac 22\wp\ch-18 - capital and operating costs.docx
    JOHN T. BOYD COMPANY
        19-1


19.0    ECONOMIC ANALYSIS


19.1    Introduction
BOYD independently developed a discounted cash flow analysis to determine in BOYD’s opinion that extraction of the coal reserves of PAMC are economically viable. BOYD’s calculations and determinations included in this chapter are based on what BOYD believes to be reasonable, appropriate, and relatively conservative investment and market assumptions and estimates, including all assumptions made about future prices and market conditions, production and sales volumes, operating costs, capital expenditures and other results and measures that are necessary and are used to determine the economic viability of the reported coal reserves.

BOYD’s assumptions and estimates have been calculated and presented in this report
solely for the purpose of confirming that future extraction of the coal reserves of PAMC are economically viable as required under S-K 1300. BOYD’s estimates and assumptions underlying the discounted cash flow analysis and other calculations are based on future estimates of spot prices, PAMC historic performance from 1984 through December 31, 2022, BOYD’s deep knowledge of the Pittsburgh Seam, assumed future production at PAMC using four LWs as well as other assumptions and estimates detailed in this chapter. Actual future operating results and investment and market conditions may differ significantly from PAMC historic results or from the estimates of future investment and market conditions as well as from future PAMC performance assumed by BOYD in the discounted cash flow analysis as a result of various factors and risks, some of which may be outside of CONSOL’s control. CONSOL, as with all coal mining companies, actively evaluates, changes, and modifies business and operating plans in response to various factors that may affect PAMC production, operations, and financial results. Actual PAMC future results, production levels, operating expenses, number of operating LWs and CMs, sales realizations, and all other modifying factors could vary significantly year to year from the assumptions and estimates used by BOYD in the calculations in this chapter.

Results of our analysis for PAMC, which encompasses the economic contribution/impact of the Bailey, Enlow Fork, Harvey, and the Central CPP operations over the 42-year period (2023 to 2064), are discussed below.


    JOHN T. BOYD COMPANY
        19-2


19.1.1    Production Schedule
The production schedule to mine and process the remaining reserves is based on the existing production capacity of the PAMC mines and CPP. The following table summarizes the LOM production for the complex:

Table 19.1: Projected PAMC Saleable Production
Period000 Tons
2023 - 2027127,739 
2028 - 2032127,007 
2033 - 2042173,699 
2043 - 2052121,794 
2053 - 206471,810 
Total622,049 

BOYD has assumed that all necessary rights and approvals will be obtained in advance of mining. For the purposes of this analysis, BOYD assumed tons produced would be sold in that year (i.e., saleable production equates to total tons sold in the year). The production schedule and mine plan are described in more detail in Chapter 13 of this report.

19.1.2    Coal Pricing
The projected average price realized by PAMC for the LOM is shown in Table 19.2 below.
Table 19.2: Projected
Average PAMC Sales Price
PeriodUS$ per Ton (Constant 2023)
2023 - 202756.70 
2028 - 203254.90 
2033 - 204255.90 
2043 - 205256.70 
2053 - 206456.80 
Total56.10 

Prices for coal used in our analysis are based on the BOYD’s internal price forecast for Pittsburgh Seam thermal coal meeting the PAMC quality specification for the period 2023 through 2027. Forecasted realizations are conservative compared to January 2023 market conditions. For purposes of this analysis, BOYD conservatively assumed 100% of the coal produced and sold would be directed into the thermal market; consequently,
    JOHN T. BOYD COMPANY
        19-3


additional revenue potential that would be realized through the sale of PAMC met coal into the higher value metallurgical markets were excluded. Prices shown are FOB Central CPP site in Pennsylvania. Pricing from 2028 forward is consistent with the average price over the 2023 through 2027 time-period.

19.1.3    Cash Production Costs
As described in Chapter 18, cash production costs include direct and indirect mining costs, including labor, material and supplies, processing, royalties and production taxes, insurance, and administrative costs. Administrative costs include sales and mine administration and corporate overhead allocations but exclude interest expense and DD&A. Total projected cash production costs are shown in Table 19.3 below.

Table 19.3: Projected PAMC Cash Operating Costs
Period$ (millions)$/Ton
2023 - 20274,504 35.30 
2028 - 20324,675 36.80 
2033 - 20426,109 35.20 
2043 - 20524,152 34.10 
2053 - 20642,698 37.60 
Total22,138 35.60 
The operating costs for each operation are based on historical PAMC performance and BOYD’s experience with LW mines operating in the Pittsburgh Seam. As noted in Chapter 18 of this report, BOYD reviewed the PAMC historical costs and found them to be reasonable.

19.1.4    Capital Expenditures
Capital expenditures are generally for sustaining capital, with spending focused on mine infrastructure expansion (air shafts, buildings, belt systems, etc.), maintenance of
production equipment (new equipment purchases and/or rebuilds), and refuse area infrastructure. Total capital expenditures are shown in Table 19.4 below.
Table 19.4: Projected
PAMC Capital Expenditures
Period$ (millions)
2023 - 2027660 
2028 - 2032685 
2033 - 2042930 
2043 - 2052671 
2053 - 2064383 
Total3,329 
    JOHN T. BOYD COMPANY
        19-4


As noted in Section 18.4 of this report, actual capital expenditures from 2016 through 2022 were analyzed to determine an annual average requirement for the individual mines. The historic average or “run rate” is the basis of the long-range capital forecast for the PAMC.


19.2    Pre-Tax Net Present Value Analysis
Results of BOYD’s LOM economic analysis for PAMC, which reflects the DCF-NPV (pre-tax, discounted at 12% on a full year basis) over the life of the project, is shown in the following table. For reporting purposes, the cumulative DCF-NPV is shown for 15-year, 30-year, and LOM periods in Table 19.5:

Table 19.5: PAMC Cumulative
NPV by Timeframe
(US$ million)
15-Year30-YearLOM
2,955 3,292 3,315 

The primary assumptions which were utilized in the pre-tax NPV analysis are as follows:

•Recoverable Reserves – We utilized CONSOL’s recoverable reserves estimates for each mine after performing our analysis of the available geologic data. BOYD reviewed CONSOL’s mine plans for each PAMC entity, including the projected sequence of mining by areas designated for CM and LW extraction by year. Overall advance/extraction rates were reviewed and found to be consistent with historic Pittsburgh Seam performance. Mining units were sequenced through the recoverable areas of the reserves until mined out in their entirety. Bailey Mine depleted assigned reserves in 2039, Harvey Mine in 2064, and finally Enlow Fork depleted assigned reserves in 2060. BOYD’s projected mine production is conservative, but pragmatic, and aligned with industry standards for forecasting and actual recoveries of mine plans experienced by regional operators.
•Annual Mine Output –BOYD forecasted annual mine production based on the individual characteristics of each deposit, including: seam thickness, OSD amounts, overall size, optimum mine life, capabilities of mining equipment, expected coal quality, and our view of the potential markets and demand for PAMC’s coal products.
•Estimated cash flow and DCF-NPV analysis for PAMC is presented in Table 19.6. In addition to the assumed base coal pricing, BOYD also ran sensitivities with upside


    JOHN T. BOYD COMPANY
        19-5


(+10%) and downside (-10%) pricing scenarios. Table 19.6 provides a comparison of 15-year, 30-year, and LOM NPVs at different discount factors and pricing scenarios:

Table 19.6 NPV Sensitivity Analysis
Pre-Tax DCF NPV ($ million)
by Discount Factor
Timeframe/ Scenario:10%12%15%18%
15-Year
Upside (+10%)4,320 4,016 3,643 3,346 
Base3,168 2,956 2,696 2,489 
Downside (-10%)2,017 1,896 1,749 1,633 
30-Year
Upside (+10%)4,960 4,466 3,913 3,512 
Base3,647 3,292 2,898 2,613 
Downside (-10%)2,336 2,120 1,884 1,716 
LOM
Upside (+10%)5,018 4,498 3,926 3,518 
Base3,688 3,315 2,907 2,617 
Downside (-10%)2,360 2,134 1,889 1,718 
•In both the upside and downside sensitivity cases, no adjustments were made by BOYD to the base operating scenario. While BOYD realizes that CONSOL would likely execute short-term fluctuations in production levels in order to minimize the impact of a period of low coal pricing and/or maximize the opportunity of high coal pricing, we deemed it likely immaterial in the assessment of economic mineability of reserves over LOM plans extending to 2064.
•Operating Costs –BOYD was provided with historical cash operating costs for the PAMC entities for years 2017 to 2022. BOYD utilized the historical actuals as the basis to develop line-by-line projections of cash operating costs at each mine and facility. We considered fixed and variable components within the overall mine plans, historical costs experienced, and operating cost structures of regional mine operators when making these estimates. The primary unit costs included: hourly and salary labor and benefits, mine operating supplies, and equipment maintenance costs.
•Capital Expenditures – BOYD considers the near-term detailed capital expenditure schedule as presented by CONSOL to be reasonable and representative of the capital necessary to operate the individual PAMC operations. The majority of expenditures are associated with infrastructure expansion (air shafts, buildings, belt systems, etc.), maintenance of production equipment (new equipment purchases and/or rebuilds), and refuse area infrastructure. CONSOL did not provide long-term projections of sustaining or maintenance of production capital corresponding to the LOM plans. To more accurately portray capital expenditures incurred to sustain long-term production, BOYD made assumptions for airshaft capital expenditure timing corresponding to the LOM plan. Additionally, BOYD made assumptions of annual
    JOHN T. BOYD COMPANY
        19-6


capital expenditures consistent with historical and near-term forecasted capital expenditures ranging between $2.50 and $3.00 per ROM ton for PAMC to account for sustaining capital.
•Coal Processing – PAMC has historically processed all of its output through the Central CPP and is forecasting all future output to be processed through the preparation facility as well. The processing facility is of substantial operating capacity to achieve the projected throughputs of the forecasted PAMC LOM plans. As the Bailey Mine reserves are depleted, there will be a diminished requirement for throughput capacity. Within the operating cost forecast for the Central CPP, as throughput requirements diminished, BOYD made corresponding assumptions regarding reductions in employment levels, as well as reductions in plant capacities (removal/closure or diminished maintenance of applicable processing circuits). We consider these assumptions to be reasonable and to align with general engineering principles and industry standards.
•Refuse Disposal – As previously discussed, the current refuse disposal plan provided by CONSOL outlined adequate staging of fine coal refuse and coarse coal refuse through 2035. In discussions with CONSOL, PAMC plans to continue their historic process of acquiring and permitting adjacent properties for refuse facility expansion. While the refuse disposal plan is not to a complete, detailed level for LOM planning purposes, BOYD views it as being to an adequate level of detail for purposes of this indicative economic analysis. In order to project operating and capital expenditures associated with future refuse disposal, BOYD utilized the historic and detailed five-year forecast data as a base average which then fluctuates with projected refuse volumes.
•Revenue for the washed thermal product is based on BOYD’s five-year forward outlook which was extrapolated for the remainder of the LOM plan. Additional costs beyond the preparation plant for transportation, loading, and unloading at railroads, river terminals, and/or ocean terminals are assumed to be incurred by the customer (or added as a pass-through to FOB, mine prices).
•BOYD has applied a portion of the estimated closure costs for the underground mines within the LOM forecast period as mine reserves are depleted. While we acknowledge that most often these costs are accrued over the life of a mine/project, we have shown a portion of estimated mine closure costs as a lump sum operating cost during the last year of the project during the cash flow periods when mineable reserves have been exhausted. We deem this as a conservative approach to enhance the likelihood that adequate funds for mine site closure and reclamation have been accounted for in the economic reserve analysis.

q:\eng_wp\2755.091 cei - pmac 22\wp\ch-19 - economic analysis.docx
    JOHN T. BOYD COMPANY
        20-1


20.0    ADJACENT PROPERTIES


As illustrated in Figures 1.1 and 3.1, the PAMC is surrounded by several adverse and CONSOL-controlled mining properties. As shown, the Pittsburgh coal seam has been extensively mined within and surrounding the PAMC. CONSOL’s mine plans include sufficient barrier zones to mitigate any risk associated with current and prior mining activities on the adjacent properties.

q:\eng_wp\2755.091 cei - pmac 22\wp\ch-20 - adjacent properties.docx
    JOHN T. BOYD COMPANY
        21-1


21.0    OTHER RELEVANT DATA AND INFORMATION


BOYD is not aware of any additional information which would materially impact the coal reserve estimates reported herein.

q:\eng_wp\2755.091 cei - pmac 22\wp\ch-21 - other relevant data and information.docx
    JOHN T. BOYD COMPANY
        22-1


22.0    INTERPRETATION AND CONCLUSIONS


22.1    Audit Findings
BOYD’s independent technical audit 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 Pittsburgh Seam situated within the bounds of the PAMC. 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 622.1 million tons of underground coal reserves identified on the property (reported as of December 31, 2022) are economically mineable under reasonable expectations of market prices for thermal and metallurgical coal products, estimated operation costs, and capital expenditures.
•There is no other relevant data or information material to the PAMC that is necessary to make this technical report summary not misleading.


22.2    Significant Risks and Uncertainties
As a mining operation with a lengthy operating history, the purpose of CONSOL’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.

q:\eng_wp\2755.091 cei - pmac 22\wp\ch-22 - interpretation and conclusions.docx
    JOHN T. BOYD COMPANY
        23-1


23.0    RECOMMENDATIONS


BOYD makes no recommendations regarding the PAMC as it is fully operational.

q:\eng_wp\2755.091 cei - pmac 22\wp\ch-23 - recommendations.docx
    JOHN T. BOYD COMPANY
        24-1


24.0    REFERENCES


There are no citations in this technical report summary. Therefore, there are no references to list.

q:\eng_wp\2755.091 cei - pmac 22\wp\ch-24 - references.docx
    JOHN T. BOYD COMPANY
        25-1


25.0    RELIANCE ON INFORMATION PROVIDED BY REGISTRANT


In the preparation of this report, BOYD has relied, without independent verification, upon information furnished by CONSOL 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 CONSOL 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 CONSOL.

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.

q:\eng_wp\2755.091 cei - pmac 22\wp\ch-25 - reliance on registrant.docx
    JOHN T. BOYD COMPANY