Here is what I noted from the meeting. I was one of maybe...

Here is what I noted from the meeting. I was one of maybe 10?

Mark Grey and their CFO were running the meeting with Jon on video call from the USA.

They opened by apologising for the SP freefall, and issues plaguing the business and clearly were embarrassed about the whole situation.

The reason we are essentially in this mess is due to the transportation issues (the trains). AHQ only get paid when the coal is on the boat. With coal sitting waiting to go, they couldn’t meet their immediate payments or minimum balance sheet requirements.

The main points and answers to questions:

· Directors have an obligation to look after shareholders and the board should take that into account for any future actions planned – noted by an institution.

· Strategic review

o Due end of August, working through it fast as possible.

o Strategic review really is focused on New Elk.

o Equipment challenges, labour issues, productivity.

o What do we do with New Elk? New Elk coal is getting very attractive bids for long-term fixed prices from Germany (thermal) which is positive and making them think New Elk might still be salvable… pay for itself or maybe run at a profit. Railway challenges with BSNF – chronically short of the crew due to covid and retracements. The normal train cycle time is 12 days now it's 22 days. BSNF have said 6 months to fix the issue.

o To counter this issue, AHQ have a second train is coming online soon (a couple of weeks).

· Plan to recapitalise in a relatively non-dilutionary way but there is every chance it will be dilutionary.

· Black Warrior

o Making good money. Was 16,000 t/m now just below 30,000 t/m with a week off in July. So should be around 35,000 t/m.

o Want to get to 40,000+ in the next step change

o Need the extra 4x150 ton dump trucks to hit the 40,000+ mark

o Less operators, bigger kit is the plan

o Generally, the workforce is held together well at Black Warrior.

o Trying to get 2 more drills as the current ones are old and having issues.

o Blasting is ahead of big digger for the first time.

· New Elk

o Losing money due to productivity (labour, fuel up drastically) however month on month there are improvements.

o Last week they had the best back-to-back shifts so far.

o Really struggling on keeping the crew working even with rotation.

o They are implementing a 7 on-7 off rotation with US East Coast coal miners.

o Machines are working harder and issues are starting to come up. Hence the need for better machinery.

o Mechanics, Electricians in the state of Colorado are still a big issue.

· Legacy contracts

o Working to negotiate out of the legacy contracts ($109) – try to restructure these to get a better outcome for AHQ. Mark seem this will happen.

· Met vs Thermal

o AHQ has converted largely to thermal.

o Yielding 10% more at New Elk due to fewer specs required than Met Coal.

o Plan is to get 12-month contracts that will allow Jon to then drive down costs.

· Reporting

o They would like to do monthly reporting but they require the operations to be more consistently operating. The same goes for guidance.

· Short Creek and Tenas

o Financial obligations are manageable. Tenas cost is largely fixed and minimal.

o The federal government decided not to review the Tenas project. Mark was very happy about that and said it was massive. Cannot stress how monumental it was to not be reviewed.

· Finance issues for equipment

o No one will finance anyone for underground equipment.

o Surface equipment will be financed in some way shape or form.

o Not to do with AHQ credit history.

· Roof falls

o Changed the bolting density from 5ft to 6ft and a 9ft cable bolt star pattern at intersections. The land above the underground mine is hilly and hard to review ahead of time.

o Also increased the size of the pillars.

o Roof falls are not at the face, they were behind the workers.

o Not happening at the face thus you can keep mining whilst the roof fall is being repaired so as not to drop productivity. An expert (second one to now) comes in next week to review the roofing design.

· 250 feet per shit is the new standard for underground digging. New record last week 318 feet in consecutive shits.

· Share price drop

o They didn’t anticipate the share price would collapse.

o They don’t want to draw more funds from Regal as they could then end up with a large % of the company.

o Regal and all other major shareholders are still holding, not selling and likely not shorting as there has been no change in substantial holdings.

o Sell off was smaller shareholders, sophisticated shareholders, and small institutions.

o Top 10 shareholders are still holding.

Hopefully, this helps. Seems like If they can just get through the next few months, they might come out the other side. September/October is important for the company.

The biggest takeaways for me are the second train should be running by end of the month. This combined with possibly renegotiating the legacy contracts could make a good boost of $ for AHQ. Then if Jon can sort out the labour issues at New Elk or at least get them to break even, they could then take the money from Black Warrior and buy the new equipment to make New Elks productively go up to a point they make money.

No one questioned Mark on his timely selling of shares. Wish I did but man it would have been awkward!