Greetings, and welcome to Alliance Resource Partners LP Third Quarter 2024 Earnings Conference Call. At this time, participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Cary Marshall, Senior Vice President and Chief Financial Officer. Thank you. You may begin.

Thank you. Good morning, and welcome, everyone. Earlier this morning, Alliance Resource Partners released its third quarter 2024 financial and operating results and we will now discuss those results as well as our perspective on current market conditions and outlook for 2024. Following our prepared remarks, we will open the call to answer your questions. Before beginning, a reminder that some of our remarks today may include forward-looking statements subject to a variety of risks, uncertainties and assumptions contained in our filings from time to time with the Securities and Exchange Commission and are also reflected in this morning's press release. While these forward-looking statements are based on information currently available to us, if one or more of these risks or uncertainties materialize or if our underlying assumptions prove incorrect, actual results may vary materially from those we projected or expected. In providing these remarks, the partnership has no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, unless required by law to do so. Finally, we will also be discussing certain non-GAAP financial measures. Definitions and reconciliations of the differences between these non-GAAP financial measures and the most directly comparable GAAP financial measures are contained at the end of this morning's press release, which has been posted on our website and furnished to the SEC on Form 8-K. With the required preliminaries out of the way, I will begin with a review of our results for the third quarter, touch on our guidance for the year and then turn the call over to Joe Craft, our Chairman, President and Chief Executive Officer for his comments. Starting with our coal operations, our performance during the third quarter of 2024, which we refer to as our 2024 quarter, continued to be impacted by persistently low natural gas prices, low export market activity and difficult mining conditions at our Appalachian operations. However, our total and domestic coal sales shipments did improve from the previous quarter, increasing 6.7% and 11.9%, respectively. Additionally, and in response to the soft market conditions, we took proactive steps during the third quarter to more closely align production with shipments. The increased shipments and adjustments to production resulted in a reduction of our coal inventory by over 500,000 tons, which we expect will continue to decline over the coming months to an end-of-year target range of 500,000 tons to 1 million tons. Coal sales volumes of 8.4 million tons were essentially in line with the 2023 quarter and increased 6.7% sequentially, while coal production of 7.8 million tons declined 7.2% year-over-year and 8.1% sequentially. In the Illinois Basin, tons sold increased by 3.1% sequentially due to higher sales volumes from our River View and Hamilton mines. In Appalachia, tons sold increased by 16.9% in the 2024 quarter compared to the sequential quarter, primarily due to improved conditions on the Ohio River allowing for higher shipments from our Tunnel Ridge operation. For the 2024 quarter, coal sales price per ton sold of $63.57 was down 2.1% year-over-year and 2.6% sequentially, primarily due to lower Appalachia volumes and pricing related to our export sales from our MC Mining and Mettiki operations. Appalachia coal sales price per ton declined 5.8% and 7.7% compared to the prior year and sequential quarters, respectively. Segment adjusted EBITDA expense per ton sold was $46.11 during the 2024 quarter, increasing 11.9% year-over-year and 1.6% sequentially. In Appalachia, segment adjusted EBITDA expense per ton sold increased 19.3% versus the 2023 quarter, but declined 1.3% versus the sequential quarter. The increase in year-over-year costs was due to a longwall move at our Tunnel Ridge operation, higher subsidence costs and challenging mining conditions at all three Appalachia operations that lowered recoveries, and increased costs related to roof control and maintenance. In the Illinois Basin, segment adjusted EBITDA expense per ton sold was $37.79, an increase of 7.2% year-over-year and 1.2% sequentially. The increase versus the 2023 quarter was due primarily to lower shipments and an extended longwall move at our Hamilton operation due to high inventories at the mine. Turning to our Oil and Gas Royalties segment. Our third quarter volumes reached 864,000 barrels of oil equivalent or BOE, representing an 11.9% increase year-over-year and a 5.8% increase sequentially, driven by new well activity on our royalty acres in the Permian Basin. Higher volumes were largely offset by lower commodity pricing for crude, natural gas and NGLs. Average realized sales prices per BOE were down 9.8% versus the 2023 quarter and down 10.6% sequentially. During the 2024 quarter, our Coal Royalties segment reported a 2.3% increase in coal royalty volumes and a 3% decrease in coal royalty revenue per ton compared to the prior year. Sequentially, coal royalty tons were up 2.7%. Overall, consolidated revenue was $613.6 million, down 3.6% from $636.5 million in the year-ago period. Sequentially, consolidated revenue was up 3.4% due to higher coal sales tons. Our net income for the 2024 quarter attributable to ARLP was $86.3 million or $0.66 per unit, which compares to $153.7 million or $1.18 per unit in the year-ago period. Adjusted EBITDA in the 2024 quarter was $170.4 million, which compares to $227.6 million in the prior-year period. These decreases reflect the lower revenues and higher total operating costs previously disclosed. Now turning to our balance sheet and uses of cash. Alliance generated $209.3 million of cash flow from operating activities in the 2024 quarter compared to $215.8 million in the sequential quarter, invested $110.3 million in capital expenditures and paid our quarterly distribution of $0.70 per unit. At quarter end, our total and net leverage ratios were 0.64 and 0.39 times total debt to trailing 12 months adjusted EBITDA and liquidity was $657.7 million, which included approximately $195.4 million of cash on the balance sheet. During the 2024 quarter, we continued to make good progress on all of the capital and infrastructure projects at our operations that we have discussed throughout previous earnings calls. The new portal at our Warrior operations should be occupied by the beginning of 2025, which will consolidate three portals into one and generate meaningful expense savings. The West Alexander portal at Tunnel Ridge is anticipated to be fully completed by the beginning of 2025 and will allow us to access better mining conditions than the current panel and reduce over time in other expenses next year. We are beginning to receive shipments of the new longwall shields at our Hamilton operation and anticipate all of the shields to be delivered and in place in mid-2025, which we expect will enhance productivity and generate considerable maintenance-related savings for Hamilton at that mine. And finally, at the River View complex, the Henderson County Mine slope is approaching completion one month ahead of schedule. The first unit is now scheduled to start December 1st. By September of 2025, we expect the production mix at the River View complex will be three units at the River View Mine and six units at the Henderson County Mine. This project, when completed, should also contribute to lower operating costs per ton beginning next year from our River View Complex with the full benefit of the investment occurring in 2026. Now turning to our guidance. Based on our results year-to-date, current visibility into our order book and outlook for markets through year-end, we are maintaining our full-year guidance for coal sales volumes, coal sales prices per ton sold, segment adjusted EBITDA expense per ton sold, royalties volumes and royalties unit expenses. We now expect total coal volumes and realized coal sales prices to be closer to the bottom of their respective ranges and for segment adjusted EBITDA expense per ton to be at the high end of the range. For modeling purposes, the two longwall moves previously scheduled for the fourth quarter of this year at Tunnel Ridge and Mettiki are now planned to occur in the first quarter of 2025, leaving one in the fourth quarter at our Hamilton mine. We made some minor adjustments to our 2024 committed and priced sales tons to reflect modest net contracting activity and movement in the timing of customer shipments that occurred during the 2024 quarter. At the end of the 2024 quarter, our committed tonnage for 2024 was 33.4 million tons. Of that total, 28.2 million tons are currently committed to the domestic market, while 5.2 million tons are committed to the export markets. More notably, we increased our committed tonnage for 2025 by 5.9 million tons with significant contracting activity from our domestic customers. In total, we are in the process of finalizing new contract commitments for approximately 21.7 million tons over the 2025 to 2030 timeframe. We are also in active discussions with our customers to add to future commitments that if secured, will lift our 2025 domestic sales order book to a level near our historical contracted positions heading into the new year. The remainder of our guidance ranges remain the same. And with that, I will turn the call over to Joe for comments on the market and his outlook for ARLP.

Thank you, Cary, and good morning, everyone. I want to begin my comments by thanking the entire Alliance organization for their resilience, continued hard work and dedication. At our coal operations, we had our lowest injury rate for a quarter since the fourth quarter of 2017, excluding the 2020 COVID-impacted quarters. Every operations' safety statistics have improved from 2023 to 2024. Our results year-to-date are currently 32% below the ARLP 2023 year-end comparable incident rate. In addition to the excellent safety results, Alliance had two national champions from the National Mine Rescue Contest in August, Jake Sayra from Tunnel Ridge in the bench competition and James Forrest from Warrior in the free ship competition. Congratulations to Jake and James. Cary did an excellent job summarizing challenging near-term market conditions and adverse mining conditions that impacted our third quarter 2024 results. Unfortunately, the hotter-than-normal weather we saw at the start of the summer in several regions of the country failed to carry through in the back half of the 2024 quarter, limiting spot domestic sales opportunities and caused shipments on some of our higher contracted coal sales to be deferred. This, coupled with export pricing keeping us out of the market, led to our sales volumes being below expectations for the 2024 quarter. During the 2024 quarter, our coal segment operating team focused on improving the safe operation of our facilities, providing reliable service to our customers, managing through difficult operating conditions and adjusting production lower to meet demand. During the quarter, we advanced major capital and infrastructure projects at our Tunnel Ridge, Hamilton, Warrior and River View complexes as part of our stated long-term commitment to our customers and our operations. These investments will make our operations more productive, improve their future cost structure beginning in early 2025 and extend their mine lives, allowing us to remain the most reliable, low-cost producer in our operating regions for many years to come. The overall mild summer that followed a mild winter last year continues to impact prompt coal demand. However, looking at the intermediate and longer term, the underlying coal demand fundamentals of non-traditional demand growth from data centers, AI and onshoring of manufacturing capacity are accelerating, particularly in the markets we serve in the Midwest, Mid-Atlantic and Southeast United States. On October 16th, the Federal Energy Regulatory Commission hosted a major conference focused on electric reliability. Participants discussed the urgent need to preserve baseload generation to meet the growing demand for electricity. Recent integrated resource plans filed by utilities also support the view that power demand will exceed generating supply, increasing dangers to grid reliability. The harsh reality is that the push to electrify many aspects of our economy coupled with accelerating computation and storage speed demand requires more generation capacity than our current renewables-based energy policy can provide. The sources of this new demand require 24/7 reliability, which we believe only fossil fuel and nuclear generation sources can provide. A recent report by McCloskey echoes this. Calling for a doubling of data center electric demand from 17 gigawatts in 2022 to 35 gigawatts by the end of the decade, which they estimate represents 74 million tons of incremental utility coal burn during that time period and an additional 179 million tons across the next decade. They plus other third-party sources also importantly point out that over 40% of previously announced nationwide coal plant retirements have pushed back their planned closure dates, some indefinitely, while new announcements of coal unit retirements have virtually stopped. The chronic underinvestment in fossil fuel and nuclear generation became readily visible in the results of the recent PJM capacity auction. Capacity payments, which are the market signal mechanism used to incentivize the construction of new generation sources, increased almost tenfold. This is a clear market signal that our power grid continues to become more unreliable in a time of rising demand forecast. This situation is not limited to PJM, but extends to all regions we market to and we believe it will continue. Many of our largest customers have been in the market recently with solicitations for significant tonnage to serve their plants in 2025 and beyond, with some looking for volume commitments through 2030. As our customers look to fulfill their long-term and short-term coal needs, we will leverage our well-capitalized operations and history of reliability to maintain and opportunistically grow our market share in the coming months. Before I wrap up, I would like to highlight a few points related to our oil and gas royalties business. As Cary mentioned, we realized another solid quarter of year-over-year volumetric growth. We continue to reap the benefits of a minerals portfolio that is heavily weighted towards the Permian Basin, where top-tier upstream operators are actively drilling and completing new wells on our minerals. Additionally, we continue to enhance our position in the Permian, successfully closing $10.5 million of ground game acquisitions during the 2024 quarter. As we previously mentioned, the value and prospects for our Oil and Gas Royalties segment was a major contributor to the successful completion of our June 2024 senior notes offering. We remain committed to growing this segment as a complement to our coal operations. And as we scale the business, we believe investors will continue to recognize the intrinsic value this segment possesses as a growth vehicle. In closing, while our 2024 quarter results reflect the difficult market and operating conditions, I will repeat what I said on our last quarterly call. We believe the fundamentals for electricity demand over the next five years and beyond are poised for rapid growth. We also believe reliable, affordable baseload generation is a cornerstone of our nation's economy. With our well-capitalized and strategically located coal mines and growing minerals acreage portfolio, we are well-positioned to benefit from the anticipated increased demand for many years to come. That concludes our prepared comments, and I will now ask the operator to open the call for questions.

Our first question is from Nathan Martin with The Benchmark Company. Please proceed.

Thanks, operator. Good morning, Joe. Good morning, Cary.

Good morning, Nate.

Cary, you gave some updates on the full year guidance ranges. Maybe starting on the shipment front. I believe you said the expectation is now to be towards the lower end of that range. Clearly, what transpired with the mild summer and low gas prices likely caused your 3Q shipments to be a little bit shorter than you planned, as Joe mentioned. But thinking about the export side, right, so prompt API2, I think, was around $115 for the third quarter. It's close to $120 today, which I think is kind of your target level. Are there any opportunities for you guys to ramp up export sales in the fourth quarter? And could that determine ultimately where you end in that full year shipment range?

Yeah. I mean I do think that is fair that we do have opportunities in the fourth quarter to be able to anticipate in the export market. We have been in active discussions with our partners on the export market to commit to volumes, some in the fourth quarter, and we are obviously having discussions as we move into the new year, given where the pricing range is right now. The discounts are still a little bit higher than what we have typically seen in terms of participating in the export market, but certainly with where the API2 pricing is today, you're certainly getting within that range, particularly for our lower sulfur Gibson product to be able to have some conversations to where we can participate in that export market in the fourth quarter and into the new year as well. Joe, I don't know if you'd like to add to that as well?

Yeah. The only other thing that I would add is that we do have one customer that, of contracted tons, declared force majeure in the third quarter, and we're trying to determine whether that will be lifted or not. I think that will not forgive the times, but it may impact the timing of the tons. So even if we do pick up some volume, it could be offset by timing from this one customer that's declared a force majeure for some operational difficulties that they have, that they use our product as a blend into their shipments. So I think that our midpoint is still 34. We’d love to get to that right at this 10 seconds. I think it's a little bit less than that, but there is that potential just based on how the market times out.

Okay. Thank you for those thoughts, guys. And then maybe just related on the inventory front, what amount of inventory drawdown is kind of assumed in getting to that range? I think, Cary, you mentioned you wanted to get down to 0.5 million to 1 million tons by year-end. Where are you today?

Today, at quarter-end, we were right at 2 million tons at quarter-end. So as we look into the fourth quarter, we do anticipate that inventory level coming down to being within that range here within the fourth quarter.

Got it, thank you. And then maybe on the cost side, as you guys talked about, Appalachian costs, well above the high end of four-year guidance. I think that's second quarter in a row, right? So longwall move, challenging mining conditions at all three operations. It looks like Appalachian costs in particular will need to improve kind of meaningfully in the fourth quarter if you want to get within your four-year guidance of $57 to $60 for that segment. Cary, you said, I think overall I'm assuming that overall company costs will be at the higher end of the range. Is there any risk to not hitting that range? Are you through those challenging mining conditions? Any other color there would be great.

I believe that when I mentioned being toward the higher end of the range, I was referring specifically to total costs. When you look at both the Illinois Basin and Appalachia regions, the costs for the Illinois Basin have remained quite consistent and are within that range. However, as you noted, the costs in Appalachia are at the higher end. Therefore, as we approach the fourth quarter, it may be difficult to reach the upper end of that range related to Appalachia. It's possible that Appalachia may not meet the range for the entire year, but we still believe that when we combine both regions, being towards the upper end of the range makes sense. Regarding conditions, we've started to see some improvement in late October, especially at Tunnel Ridge. We expect this trend to continue into November and December. However, we anticipate that levels in the Appalachia region will slightly decrease in the fourth quarter, which will affect our overall numbers. To your question about improvements, yes, we've begun to see some progress as we move into November.

Got it, Cary. I appreciate that. I have one last question. Looking ahead to 2025, it seems you added 5.9 million tons that are committed and priced since last quarter. Out of that, 5.5 million tons are domestic and about 400,000 tons are for export. Can you provide some insight on the pricing for those tons?

I believe that for 2025, our target is to achieve sales of 35 million, with 30 million domestically and 5 million in exports. This year, if we reach our goal, we will need an additional million tons in the domestic market next year. Considering the cost savings discussed by Cary and myself, we expect to maintain margins overall. Our target margin is 30%, which we believe we can achieve this year and maintain going forward. While we may see a decrease in average sales price, we also expect to have corresponding cost savings. It's still a bit early to provide specific pricing as we are in the midst of negotiations and do not have all sales contracts finalized. However, we anticipate that our margins will remain around 30% in the coal segment this year and next year, along with an extra million tons in sales.

Appreciate that, Joe. Thank you both for your time and best of luck here in the fourth quarter.

Thanks, Nate.

Our next question is from Mark Reichman with Noble Capital Markets. Please proceed.

Just focusing on Appalachia for a moment, roof control and maintenance expenses were an issue in the second and third quarters and in the second quarter of 2023 when there was a roof fall in July of 2023. So what steps is the partnership taking to cure this issue? And then what factors will have the biggest impact on improving Appalachia segment adjusted EBITDA expense going forward?

The impact is, in large part has been geologic. So as we look to the future mine plans, as we indicated with the Tunnel Ridge longwall move, the first part of next year, right in the beginning of January, we're getting into a new district, new reserve area that is going to be better conditions than what we experienced. I mean, Tunnel Ridge has been a very consistent mine for us ever since we've opened it. Unfortunately, this last panel that we have in this district has been the worst conditions we've seen. Unfortunately, we're moving out of this district and into the new district that we've already planned or we are in the process of developing. And so we know the conditions are going to be better there than they have been in this panel that we're currently in. And as we look at Mettiki, we've got a similar situation. We knew that the longwall panel that we were in this particular quarter or this past quarter had some challenging geology. And we don't anticipate to have the same situation in the next panel as we had in the one that we are currently in. So I think those are two observations that give us hope that our cost will improve next year at both Mettiki and Tunnel Ridge. MC is just tough. It's a thin seam. It's really driven more by the fact that it is such a thin seam. In order to mine that seam, we do have higher recoveries or lower recoveries just because of the amount of overburden we have to take to cut that coal seam. So there's not much we can do there. Geology is what it is, but we do believe that both at Mettiki and Tunnel Ridge, brighter days are ahead starting next year.

And then Alliance experienced an equity method investment loss of $2.3 million in the third quarter. I was just kind of curious what your expectations are for that line item going forward. And does it cause you to rethink any of your investments?

I think as it relates to the number going forward, we don't anticipate any of those on a going forward basis. It was related to one of the investments that we've made historically, where related to the EV charging side of it, our Francis Energy investment was related to some adjustments we made for that particular investment we made where we marked to market on that.

And just one last question. Considering the pending merger between Arch and Consol, do you think there are any more consolidation opportunities within the US coal industry? And then what is your outlook for the US versus international market?

I don't expect any significant consolidation to occur. Personally, I don't foresee any. Regarding its effect on the markets, I don't think it will impact the domestic market. It might actually create better opportunities for domestic players, as the merger could lead to efficiencies that improve export capabilities. This could result in increased exports compared to domestic shipments, but that's something they'll need to address. In terms of our competitiveness, we don't see any influence from that merger on our current market position.

Thank you very much. This is very helpful.

Thank you, Mark.

Our next question is from David Marsh with Singular Research. Please proceed.

Hi. Thanks, guys, for taking the questions. First, I just want to touch on the crypto briefly, if we could. Since the halving is behind us, could you give us an update on your cost to mine Bitcoin? Are you continuing to do that?

We are continuing to mine Bitcoin. At quarter-end, we don't really provide too much guidance as it relates to the cost side of that but as we as we look at quarter-end, total holdings of Bitcoin was a little bit over 457 coins, which at quarter-end price was $63,330. It was $29 million in total of coins that we owned at the end of the quarter. The net addition of about five coins for us over the quarter, as we mentioned in previous quarters talking about those operations, we do sell on a monthly basis to cover our operating costs. So that is a net addition of, as I mentioned, five coins during the quarter.

During the quarter, we did buy some miners and retire some of our older miners, about one-third of the fleet, and we think that will improve our efficiency going forward to where we should be in position to mine, end up realizing or retaining a little higher bitcoins on a quarterly basis than what we've done most recently.

Okay, that's good. And then just kind of a bigger picture question, with the election in front of us, and obviously it's tough to predict where things end up, But if we were to have an election result that was kind of a blue heavy, if you will, what do you see on the legislative landscape that could be potentially adverse to the company? And what do you think the timing would be of enacting any type of legislation that would be harmful to the company and the industry overall?

I believe we are in a unique position regarding the growth of AI, which poses a national security concern. The main investors in this sector, the hyperscalers, tend to prefer renewable energy over fossil fuels for power generation. We are currently witnessing significant growth in this area, with expectations extending through 2025 to 2028 and beyond. The growth metrics are impressive. During the recent FERC conference, there was a strong emphasis on the need to preserve existing capacity while also addressing the anticipated shortfalls due to delays in meeting the demands of AI. Consequently, the economic and national security factors will likely limit any negative legislation aimed at restricting generation, given the expected demand from hyperscalers. Much of this growth is concentrated in the Washington, D.C. region, driven by the Department of Defense and other government sectors, which explains the increases we see in PJM and surrounding areas. I do not foresee any harmful legislation. However, there will be ongoing discussions regarding the timing of transitions in the regulatory landscape. We have consistently expressed that the rapid transition advocated by the Harris-Biden administration is too swift and conflicts with their goal to electrify America. There will be a pushback on this. I also believe that as politically motivated regulations move through the courts, they will likely be overturned. The need for reliable, low-cost power will diminish any political pressures to expedite the closure of coal-fired plants. Elections have significant implications. While there are other reasons to consider that I could discuss, it’s not the right time for that. Many are aware of my prior viewpoints. However, I can't help but wonder about the potential impact if the political landscape shifts. I remain confident that we are well-positioned, as there will always be a demand for our generation. One of our largest clients recently released their Integrated Resource Plan, stating they anticipate low growth of around 30% to 45% by 2032 compared to 2024. They have decided against closing plants mentioned in their previous IRP from 2022, acknowledging that these plants will be necessary until 2035 to 2040. We have consistently heard similar feedback from our domestic customers. It would be beneficial if our energy policy aligned with our domestic on-shoring and electrification strategies, providing clarity to the markets. Nonetheless, even if there are political motivations driving a conflicting agenda, I believe the demand from AI will prevail, and scientific considerations will take precedence over political ones. That is my perspective.

Very helpful. Thank you very much. Appreciate it.

Our next question is from Dave Storms with Stonegate. Please proceed.

Good morning. I'm just hoping we could start with outside purchases were a little bit above expectations. Is that just a lingering challenge or how should we think about that going forward?

I think going forward for the quarter, I think you're referring to, we came in outside purchases were about $8.2 million for the quarter. As we've talked in the past, we do purchase some blend coal at our Mettiki operation for our metallurgical exports. And so that's what those purchases are related to. That is a little bit higher than where I would anticipate the fourth quarter number to come in. We do anticipate continuing to purchase some coal in the fourth quarter. I think in the past it's ranged anywhere from $2 million to $2.5 million per month of purchased coal. I would imagine somewhere within that range is a good estimate in terms of where we would anticipate the fourth quarter number to come in this year.

Perfect, thank you. And then just looking forward to the contract negotiations and increased order book, how would you classify some of that order book pickup? Is that new customers coming into the fold or is that current customers increasing their demand?

It's current customers basically fulfilling their book for contracts that are expiring. So we're in most cases maintaining market share with those customers. In some cases, we're actually increasing our market share. But in most cases, they're just maintaining their purchasing with some optionality to increase volume in anticipation of this growing demand that they anticipate will occur starting in 2026. So there's some optionality to the upside for increased demand on their part. But when we're looking at the 30 million commitment, we're just maintaining or anticipating maintaining the market share we've had with existing customers. So there is potentially some upside to that. But our primary planning horizon is to be consistent at a 35 million ton production rate, 5 million export, 30 million domestic.

Understood. Thank you. And then just one more for me. You made the $10.5 million oil and gas closing. I understand that's in the primary units. Anything else you can tell us about this acquisition? Was it just opportunistic? Maybe how it all came together, anything like that?

So these are several small transactions. So we have what we call a ground game, where we contracted land with land men that are going out and buying individual tracks. That just add to our portfolio, so we allocate around $25 million a year for that program. And so I would not say it's opportunistic. I'd say that we have underwriting standards and if there are people that would like to sell their middle position, and we will make offers at economics that are pretty much consistent to what the market is, but it's definitely consistent with what our normal underwriting standards are to get attractive returns. So, we do anticipate that there will be opportunities for us on a year in, year out basis in that range and we feel that we can't execute on that based on the normal activity in the marketplace where there are sellers trying to look to monetize their assets for whatever reason.

Understood. Thank you for taking my questions and good luck in the fourth quarter.

Thank you. Our next question is from Yves Siegel with Siegel Asset Management. Please proceed.

Thank you. Hey, good morning.

Good morning.

Hey, guys, can you just update more broadly your thinking on capital allocation and then also within that context, how you're thinking about the new venture's investments going forward?

Yeah, so I think from a capital allocation standpoint, we've indicated that first priority will be maintaining our coal operations. So we've done that over the last two to three years with the major projects that we've talked about in addition to their normal maintenance. Starting in ‘25, we expect that the capital for maintenance capital or the actual capital expenditures and our operations will decrease to a level, Cary?

Somewhere in the neighborhood of $6.75 to $7.75 per ton produced is kind of what the current thinking is right now, somewhere within that range.

Yeah, so that's a decrease of $100 million from what we...

In terms of total capital.

Yes. This year.

That's right.

So then the next allocation goes to our minerals group, which we've taken a position historically that whatever cash flow they generate that they could reinvest within the minerals group. And then the third would be for other type investments that could include what we're doing at our Matrix subsidiary that we discussed in the past that most of their growth is organic in nature but does take some working capital. And then as far as looking at participating in the transition, we've continued to be active in that area to evaluate the landscape. And as you know, we've made some investments in battery recycling with Ascend. We've made investments with Infinitum on their innovative motor design. We've got the joint development agreement with Infinitum that's going well. We expect to see some benefit in that in 2025 and 2026 for sure. As we think through the rest of the transition, I think the election may matter. So we're trying to wait and see what happens. If the current incentives stay in place, if customers demand more EVs, et cetera, trying to understand what the demand for batteries are, we're continuing to look in the battery space, whether it's recycling or battery storage, but we're waiting to see what happens with the election. And if Trump wins, there's been some indication he'll look at some of the tax credits in the Inflation Reduction Act. So I think the investment in that space is all trying to anticipate what the policy of the new administration is going to be before they take any major steps in making investments. So, we're still very interested in looking at opportunities. We're very focused on trying to continue to grow year after year. And we do believe because of our relationships with our utilities, because of our knowledge in the space and our strategic location and the human resources we have to participate in that space, that there are opportunities for us to invest and add value to our shareholders over the next decade. But exactly what that strategy is going to be in large part is going to be dependent on what the next administration is and what incentives are either continuing or discontinued and how the market reacts to that.

Hey, Joe, you didn't mention distributions.

Yeah, we like those too. That's definitely high on my list.

Just a quick follow-up, though. Has your thinking changed at all, given that the narrative has changed in terms of, I think folks are recognizing that fossil fuels and coal are going to be here for a long time. Has that changed or informed how you think about capital allocation going forward?

I think we've made significant capital investments in our own operations. We believe that the operations that we have invested in do put us in a position to be the low-cost producer in the regions where we operate. I think that if Harris wins, the disconnect between the enormous increase in electricity demand versus the policies and EPA rules that they continue to advocate make it challenging to think in terms of wanting to do something different. I think in answer to your question, if Trump wins, a lot of it's again going to have to see how our customers react. I do believe, just like the customer I just quoted a few minutes ago with their most recent IRP, we're going to see that more and more in the domestic market. Utilities are not going to want to close those plants, but they're not adding plants. And so each of these plants do have useful life that still mirror the 2035, 2040 time period. I think we'll really focus on coal being steady and stable, but I don't see us growing and devoting capital to that area in a large amount that would be at the expense of what we're doing in minerals as an example. We do believe the runway for minerals is significantly longer than coal. We believe we've had success in it, about to go in steady as we go, year in, year out, adding and hitting our underwriting standards. We would not want to do anything that would challenge or would change the course we're doing there. So we got decisions to make rather than back to distributions or investing in coal. And I think we're pleased with where we are on the coal space. So I don't see us wanting to invest significant payout capital to participate in acquiring things, believing that coal is going to be here for the next 25 or 30 years on these new projects, if that makes sense.

Yep, yep it does. Alrighty, well thank you so much.

Thank you.

Our final question is a follow-up from Mark Reichman with Noble Capital Markets. Please proceed.

The Supreme Court recently turned down a request from parties seeking to put a hold on the EPA emissions rule when the litigation moved forward in federal appeals court. And from what I read, at least three of the justices seem somewhat sympathetic to the states and the energy companies bringing the case. So do you think this is going to get overturned in the lower court? And if not, would you prevail at the Supreme Court level? Or if Trump is elected, would he just undo it? Kind of your thoughts on the EPA emissions rule?

I believe the pattern is unlikely to change. Historically, the DC Circuit has not favored these rules and has granted more discretion to the EPA and other federal agencies. Given the recent court changes with the West Virginia decision and the Chevron preference, I think it's likely that the Supreme Court will overturn the rule. Industry feedback on the 111(d), or Clean Power Plan 2, indicates that it is unrealistic. The evidence supporting its defeat is substantial, in my view. I perceive that the court's decision was more about procedural issues rather than the fundamental case aspects. The Supreme Court has faced criticism for making decisions during politically charged times, which may have influenced their judgment. Nonetheless, I believe that if Harris wins, the rule and others will be challenged and likely overturned, which seems a misuse of the judicial process. If Trump wins, I expect the EPA to reassess these rules and adopt a different stance, much like in his first term. The Biden administration has strategically pushed for these regulations to be finalized before they can be reviewed by Congress, making immediate reversal by Trump more complex. However, he can still pursue the usual regulatory pathways to achieve his aims. Additionally, I believe that the demand in the hyperscale sector will align with national security interests, pushing for onshore investments in artificial intelligence. I think these issues will be addressed as policy matters under a Trump administration rather than the political context seen with the Biden-Harris administration.

Alright. Well thank you very much. That's really helpful.

Appreciate it, Mark.

We have reached the end of our question-and-answer session. I would like to turn the conference back over to Cary Marshall for closing remarks.

Thank you, operator. And to everyone on the call, we appreciate your time this morning, as well as your continued support and interest in Alliance. Our next call to discuss our fourth quarter and fiscal year 2024 financial and operating results is currently expected to occur in early February and we hope everyone will join us again at that time. This concludes our call for the day. Thank you.

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