SGQ.V · 2026-03-27

Southgobi Announces Fourth Quarter and Full Year 2025 Financial and Operating Results

Production Results Financials

R E S O U R C E S

March 27, 2026

SOUTHGOBI ANNOUNCES FOURTH QUARTER AND FULL YEAR 2025 FINANCIAL AND OPERATING RESULTS

HONG KONG – SouthGobi Resources Ltd. (Hong Kong Stock Exchange (“HKEX”): 1878, TSX Venture Exchange (“TSX-V”): SGQ) (the “Company” or “SouthGobi”) today announces its financial and operating results for the quarter and year ended December 31, 2025. All figures are in U.S. dollars (“USD”) unless otherwise stated.

The Board of Directors (the “Board”) wish to inform that the Company’s independent auditors, BDO Limited, have completed their audit of the consolidated financial statements of the Company for the year ended December 31, 2025 in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”) and would like to announce the audited annual results of the Company for the year ended December 31, 2025 together with the comparative figures for the previous year and the respective notes in this announcement.

SIGNIFICANT EVENTS AND HIGHLIGHTS

The Company’s significant events and highlights for the year ended December 31, 2025 and the subsequent period to March 27, 2026 are as follows:

Operating Results – The Company increased the scale of its mining operations since 2024, as well as implementing various coal processing methods, including screening, wet washing and dry coal processing, which have resulted in improved coal quality and enhanced production volume and growth of coal export volume into China during the year.

In response to the market demand for different coal products, the Company focused on expanding the categories of coal products in its portfolio, including mixed coal, wet washed coal and dry processed coal. In addition, the Company has experienced success with processing its inventory of F-grade coal products through cost-effective screening procedures. As a result of the improvement in the quality of the processed F-grade coal, the Company was able to meet the import coal quality standards established by Chinese authorities and has been exporting this product to China for sale since the first quarter of 2024, further enhancing the Company’s coal export volume.

The Company recorded sales volume of 11.2 million tonnes in 2025 compared to 7.0 million tonnes in 2024, while the Company recorded an average realised selling price of $53.5 per tonne in 2025 compared to $70.4 per tonne in 2024. The decrease in the average realised selling price was mainly due to the Company facing headwinds in the China coal market since 2024, leading to the Company changing its product mix to sell a greater percentage of lowerpriced coal products.

Financial Results – The Company recorded a $133.2 million loss from operations in 2025 compared to a $153.9 million profit from operations in 2024. The financial results were impacted by the decreased average realised selling price in 2025 as compared to 2024, the change in product mix year-over-year (as the Company sold more processed coal with higher production costs) and impairment losses on coal stockpile and items of property, plant and equipment of $77.3 million and $42.0 million were recorded respectively in 2025.
Notice from Mongolian Government Plenipotentiary and designation of Company’s mining deposits as mineral deposits of strategic importance – On April 2, 2025, Southgobi Sands LLC (“SGS”) received a letter from a plenipotentiary representative of the Mongolian government (the “Letter”) which invited SGS to participate in negotiations in relation to determining the Mongolian state’s ownership interest in SGS, being the legal entity which holds the Company’s coal mining and exploration licenses in Mongolia.

The Letter states that, in furtherance of Mongolia’s National Wealth Fund Law which was passed in April 2024, the Mongolian government resolved on February 5, 2025 to appoint a plenipotentiary representative (the “Plenipotentiary Representative of the Mongolian Government”) to negotiate with legal persons holding a mining license for a deposit designated by the Mongolian government as a strategically important deposit (“Mineral Deposits of Strategic Importance”) in relation to determining the proportionate interest the Mongolian state has in such legal entity or whether to replace the Mongolian state’s interest with a royalty interest.

The Company has been advised by its Mongolian legal counsel that, the Government of Mongolia is empowered to participate on an equity ownership basis with the license holder in the exploitation and/or mining of each Mineral Deposit of Strategic Importance on terms to be negotiated between the Government of Mongolia and such license holder. Based solely on the knowledge of the Company’s Mongolian legal counsel, the Company is aware that various other license holders of Mineral Deposits of Strategic Importance have entered into similar negotiations with the Plenipotentiary Representative of the Mongolian Government. The Company also understands that any legal person holding a special licence for a Mineral Deposit of Strategic Importance shall not, individually or jointly with other entities having a common interest, hold more than 34% of the total issued and outstanding shares of such legal person. However, there is uncertainty as to how these regulations will be interpreted and applied to a publicly-listed company which is the beneficial owner of a Mineral Deposit of Strategic Importance. In the event that the aforementioned ownership restriction is not complied with, the Government of Mongolia shall have the right to appoint a Plenipotentiary Representative to take charge of managing such legal person to ensure legal compliance.

On April 24, 2025, SGS initiated preliminary discussions with the Plenipotentiary Representative of the Mongolian Government. The Company anticipates that the discussion between SGS and the Plenipotentiary Representative of the Mongolian Government will continue and both parties will endeavour to engage in good faith for the purpose of arriving at a mutual and constructive understanding and agreement. The Company intends to fully cooperate with the Mongolian government and provide all necessary information to the extent permitted by applicable law.

As at the date of this press release, the deposits covered by four of the Company’s Mongolian mining licenses have been designated as Mineral Deposits of Strategic Importance by Mongolian government authorities. The relevant mining licenses relate to the Company’s Ovoot Tolgoi Mine and the Soumber Deposit.

2025 March Deferral Agreement – On March 20, 2025, the Company and JD Zhixing Fund L.P. (“JDZF”) entered into a deferral agreement (the “2025 March Deferral Agreement”) pursuant to which JDZF agreed to grant the Company a deferral of (i) the cash and paymentin-kind interest (“PIK Interest”), management fees, and related deferral fees in the aggregate amount of approximately $111.6 million which will be due and payable to JDZF on or before August 31, 2025 pursuant to the deferral agreement dated March 19, 2024 and the deferral agreement dated April 30, 2024; (ii) semi-annual cash interest payment of approximately $7.9 million payable to JDZF on May 19, 2025 under the Convertible Debenture; (iii) semi-annual cash interest payments of approximately $8.1 million payable to JDZF on November 19, 2025 and the $4.0 million in PIK Interest payable to JDZF on November 19, 2025 under the Convertible Debenture; and (iv) management fees in the aggregate amount of approximately $6.1 million payable to JDZF on May 16, 2025, August 15, 2025, November 15, 2025 and February 15, 2026, respectively, under the amended and restated mutual cooperation agreement (the “Amended and Restated Cooperation Agreement”) (collectively, the “2025 March Deferred Amounts”).

The effectiveness of the 2025 March Deferral Agreement and the respective covenants, agreements and obligations of each party under the 2025 March Deferral Agreement was subject to the Company obtaining the requisite approval of the 2025 March Deferral Agreement from shareholders in accordance with the requirements of applicable Canadian securities laws and Rule 14.33 and Rule 14A.36 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”). The 2025 March Deferral Agreement was approved by the Company’s disinterested shareholders at the annual general meeting (“AGM”) of shareholders convened on June 27, 2025.

The principal terms of the 2025 March Deferral Agreement are as follows:

Payment of the 2025 March Deferred Amounts will be deferred until August 31, 2026 (the “2025 March Deferral Agreement Deferral Date”).
As consideration for the deferral of the 2025 March Deferred Amounts which relate to the

March Deferred Amounts, commencing on the date on which each such 2025 March

As consideration for the deferral of the 2025 March Deferred Amounts which relate to

outstanding balance of such 2025 March Deferred Amounts commencing on the date on which each such 2025 March Deferred Amounts would otherwise have been due and

The 2025 March Deferral Agreement does not contemplate a fixed repayment schedule for the 2025 March Deferred Amounts or related deferral fees. Instead, the 2025 March

date of the 2025 March Deferral Agreement and ending as of the 2025 March Deferral

basis discuss and assess in good faith the amount (if any) of the 2025 March Deferred

If at any time before the 2025 March Deferred Amounts and related deferral fees are

On March 23, 2026, the Company and JDZF entered into a subsequent deferral agreement with respect to the 2025 March Deferred Amounts. Refer below under the heading entitled “2026 March Deferral Agreement”.

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Additional Tax and Tax Penalty Imposed by the Mongolian Tax Authority (“MTA”) – On July 18, 2023, SGS received an official notice (the “Notice”) issued by the MTA stating that the MTA had completed a periodic tax audit (the “Audit”) on the financial information of SGS for the tax assessment years between 2017 and 2020, including transfer pricing, royalty, airpollution fee and unpaid tax payables. As a result of the Audit, the MTA notified SGS that it is imposing a tax penalty against SGS in the amount of approximately $75.0 million. The penalty mainly relates to the different view on the interpretation of tax law between the Company and the MTA. Under Mongolian law, the Company had a period of 30 days from the date of receipt of the Notice to file an appeal in relation to the Audit. Subsequently the Company engaged an independent tax consultant in Mongolia to provide tax advice and support to the Company and filed an appeal letter in relation to the Audit with the MTA in accordance with Mongolian laws on August 17, 2023.

On February 8, 2024, SGS received notice from the Tax Dispute Resolution Council (“TDRC”) which stated that, after the TDRC’s review, the TDRC issued a decision in relation to SGS’ appeal of the Audit, and ordered that the audit assessments set forth in the Notice of July 18, 2023 be sent back to the MTA for review and re-assessment.

On February 22, 2024, SGS received another notice from the MTA stating that the MTA anticipated commencing the re-assessment process on or about March 7, 2024 and the duration of such process will be approximately 45 working days.

On May 15, 2024, SGS received a notice (the “Revised Notice”) from the MTA regarding the re-assessment result on the Audit (the “Re-assessment Result”). The re-assessed amount of the tax penalty is approximately $80.0 million. In accordance with applicable Mongolian laws, SGS is entitled to file an appeal to the TDRC regarding the Re-assessment Result within a 30-day period from the date of receiving the Revised Notice.

On June 12, 2024, following consultation with its independent tax consultant in Mongolia, SGS submitted an appeal letter to the TDRC regarding the Re-assessment Result, in accordance with applicable Mongolian laws.

On January 10, 2025, SGS received a resolution dated December 19, 2024 (the “Resolution”) from the TDRC in response to the appeal letter sent by SGS to the TDRC on June 12, 2024, relating to the Re-assessment Result. As set forth in the Resolution, the TDRC has determined to reduce the re-assessed amount of tax penalty against SGS from approximately $80.0 million to approximately $26.5 million (the “Revised Re-assessment Result”). In accordance with applicable Mongolian laws, SGS is entitled to file an appeal to the Administrative Court of First Instance in Ulaanbaatar, Mongolia (the “Administrative Court of First Instance”) regarding the Revised Re-assessment Result within a 30-day period from the date of receiving the Resolution. After careful consideration and consultation with the Company’s independent tax consultant in Mongolia, the Company has determined not to pursue a further appeal of the Revised Re-assessment Result with the Administrative Court of First Instance.

On March 19, 2025, SGS received correspondence from the Administrative Court of First Instance requesting supplemental information regarding a court proceeding initiated by certain officers of the MTA (the “MTA Officials”) against the TDRC. Upon further enquiry, SGS obtained a copy of an order dated March 7, 2025 issued by the Administrative Court of First Instance regarding commencement of court proceedings brought by the MTA Officials. The MTA Officials petitioned the court to overturn the TDRC’s ruling that reduced SGS’s tax penalty from approximately $80.0 million to approximately $26.5 million (the “Proposed Case”).

On April 25, 2025, SGS obtained a copy of an order dated April 15, 2025 (the “Latest Court Order”) issued by the Administrative Court of First Instance refusing to accept the Proposed Case. According to the Latest Court Order, the Proposed Case was dismissed by the Administrative Court of First Instance. According to applicable Mongolian laws, the plaintiff is entitled to file an appeal to the appellate court, and the Company understood that the MTA Officials, as plaintiff in the Proposed Case, filed an appeal.

On June 9, 2025, SGS obtained a copy of a judgement dated May 27, 2025 (the “Appellate Court Judgement”) issued by the Appellate Court for Administrative in Ulaanbaatar, Mongolia (the “Appellate Court”). As per the Appellate Court Judgement, the Appellate Court upheld the court order issued by the Judge of the Administrative Court of First Instance on April 15, 2025. As a result, the claim brought by the MTA Officials against the TDRC in an attempt to dispute or overturn the previous decision made by the TDRC regarding the Re-assessment Result has been dismissed and rejected. According to applicable Mongolian law, the Appellate Court Judgement shall be final and is not subject to further appeal.

In the prior year, the Company recorded an additional tax and tax penalty in the amount of $45.5 million, which consists of a tax penalty payable of $26.5 million and a provision for additional late tax penalty of $19.0 million. As a result of the Revised Re-assessment Result, the Company recorded a reversal of additional tax and tax penalty of $48.5 million in 2024. To date, the Company has paid the MTA an aggregate of $22.2 million in relation to the aforementioned tax penalty. The Company anticipates paying down the outstanding amount of the tax and tax penalty from cash generated from operations in the normal course. According to Mongolian tax law, the MTA has a legal authority to demand payment of the outstanding amount of the Revised Re-assessment Result from the Company at its discretion.

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Bank Loan – On October 7, 2025, SGS has entered into a bank loan (the “2025 Bank Loan”) for a principal amount of up to RMB235 million (equivalent to approximately $33.1 million) from Khan Bank JSC (the “Bank”) with the key commercial terms as follows:
Maturity date set at 18 months from drawdown (the “Term”);
Interest rate of 10% per annum on the outstanding principal and interest is calculated on a 365-day year basis;
Loan repayments will consist of interest-only payments during the initial 12 months of the Term, followed by principal amortisation payments during months 13 to 18 of the Term;
Certain items of property, plant and equipment with carrying amount of $2.2 million, land-use rights and intangible assets were pledged as security for the 2025 Bank Loan; and
The Company intends to use the proceeds of the 2025 Bank Loan to support working capital, operating expenses, taxes and the settlement of accounts payable of SGS.
Lawsuit – In January 2014, Siskinds LLP, a Canadian law firm, filed a class action (the “Class Action”) against the Company, certain of its former senior officers and directors, and its former auditors (the “Former Auditors”), in the Ontario Court in relation to the Company’s restatement of certain financial statements previously disclosed in the Company’s public fillings (the “Restatement”).

To commence and proceed with the Class Action, the plaintiff was required to seek leave of the Court under the Ontario Securities Act (the “Leave Motion”) and certify the action as a class proceeding under the Ontario Class Proceedings Act. The Ontario Court rendered its decision on the Leave Motion on November 5, 2015, dismissing the action against the former senior officers and directors and allowing the action to proceed against the Company in respect of alleged misrepresentation affecting trades in the secondary market for the Company’s securities arising from the Restatement. The action against the Former Auditors was settled by the plaintiff on the eve of the Leave Motion.

Both the plaintiff and the Company appealed the Leave Motion decision to the Ontario Court of Appeal. On September 18, 2017, the Ontario Court of Appeal dismissed the Company’s appeal of the Leave Motion to permit the plaintiff to commence and proceed with the Class Action. Concurrently, the Ontario Court of Appeal granted leave for the plaintiff to proceed with their action against the former senior officers and directors in relation to the Restatement.

The Company filed an application for leave to appeal to the Supreme Court of Canada in November 2017, but the leave to appeal to the Supreme Court of Canada was dismissed in June 2018.

In December 2018, the parties agreed to a consent Certification Order, whereby the action against the former senior officers and directors was withdrawn and the Class Action would only proceed against the Company, creating the class plaintiffs (the “Class Plaintiffs”) and permitting the Class Plaintiffs to proceed with the Class Action against only the Company.

Counsel for the plaintiffs and defendant have: (i) completed document production and oral examinations for discovery; (ii) served expert reports on liability and damages; and

(iii) designed a mediation process and finalised, with the participation of the relevant Company’s insurers, the mediation under the guidance of former Chief Justice of Ontario George Strathy, which mediation was held and completed on August 11, 2025 (the “Mediation”).

As a result of the Mediation, the Class Plaintiffs and the Company have conditionally settled (the “Settlement”) the Class Action for CA$6.8 million, including all liability and class counsel fees, notice and administrative costs, fees, costs and expenses related to the litigation and the settlement (the “Settlement Payments”). The Settlement Payments are the obligation of the Company’s insurers as of January 2014.

The Settlement was approved by Justice Morgan of the Ontario Superior Court of Justice on December 2, 2025. No appeals have been filed and the time to file an appeal has expired.

2026 March Deferral Agreement – On March 23, 2026, the Company and JDZF entered into an agreement (the “2026 March Deferral Agreement”) pursuant to which JDZF agreed to grant the Company a deferral of (i) the cash and PIK Interest, management fees, and related deferral fees in the aggregate amount of approximately $140.5 million which will be due and payable to JDZF on or before August 31, 2026 pursuant to the deferral agreement dated March 20, 2025; (ii) semi-annual cash interest payment of approximately $7.9 million payable to JDZF on May 19, 2026 under the Convertible Debenture; (iii) semi-annual cash interest payments of approximately $8.1 million payable to JDZF on November 19, 2026 and the $4.0 million in PIK Interest payable to JDZF on November 19, 2026 under the Convertible Debenture; and (iv) management fees in the aggregate amount of approximately $7.6 million payable to JDZF on May 16, 2026, August 15, 2026, November 15, 2026 and February 15, 2027, respectively, under the Amended and Restated Cooperation Agreement (collectively, the “2026 March Deferred Amounts”).

The effectiveness of the 2026 March Deferral Agreement and the respective covenants, agreements and obligations of each party under the 2026 March Deferral Agreement are subject to the Company obtaining the requisite approval of the 2026 March Deferral Agreement from shareholders in accordance with the requirements of applicable Canadian securities laws and Rule 14.33 and Rule 14A.36 of the Listing Rules. The Company will be seeking approval of the 2026 March Deferral Agreement from disinterested shareholders at the Company’s upcoming AGM of shareholders, which will be held at a future date to be set by the Board.

The principal terms of the 2026 March Deferral Agreement are as follows:

Payment of the 2026 March Deferred Amounts will be deferred until August 31, 2027 (the “2026 March Deferral Agreement Deferral Date”).
As consideration for the deferral of the 2026 March Deferred Amounts which relate to the

March Deferred Amounts, commencing on the date on which each such 2026 March

As consideration for the deferral of the 2026 March Deferred Amounts which relate to

outstanding balance of such 2026 March Deferred Amounts commencing on the date on which each such 2026 March Deferred Amounts would otherwise have been due and

The 2026 March Deferral Agreement does not contemplate a fixed repayment schedule for the 2026 March Deferred Amounts or related deferral fees. Instead, the 2026 March

date of the 2026 March Deferral Agreement and ending as of the 2026 March Deferral

basis discuss and assess in good faith the amount (if any) of the 2026 March Deferred

If at any time before the 2026 March Deferred Amounts and related deferral fees are
Going Concern – Several adverse conditions and material uncertainties relating to the Company cast significant doubt upon the going concern assumption which includes the deficiencies in assets and working capital.

See section “Liquidity and Capital Resources” of this press release for details.

OVERVIEW OF OPERATIONAL DATA AND FINANCIAL RESULTS

Summary of Annual Operational Data

Year ended December 31, 2025

2024

Sales Volumes, Prices and Costs

Premium semi-soft coking coal

0.89

Coal sales (millions of tonnes) 0.91 $ 66.21 $ Average realised selling price (per tonne) 105.10 Standard semi-soft coking coal/ premium thermal coal

4.98

Coal sales (millions of tonnes) 2.96 $ 58.02 $ Average realised selling price (per tonne) 71.86 Standard thermal coal

0.94

Coal sales (millions of tonnes) 0.86 $ 21.80 $ Average realised selling price (per tonne) 38.40 Processed coal

4.39

Coal sales (millions of tonnes) 2.29 $ 52.53 $ Average realised selling price (per tonne) 66.62 Total

11.20

Coal sales (millions of tonnes) 7.02 $ 53.49 $ Average realised selling price (per tonne) 70.40

16.63

Raw coal production (millions of tonnes) 10.20

$ 53.46 $ Cost of sales of product sold (per tonne) 51.37 $ 44.06 $ Direct cash costs of product sold (per tonne) ⁽ⁱ⁾ 39.56 $ 1.29 $ Mine administration cash costs of product sold (per tonne) ⁽ⁱ⁾ 1.58 $ 45.35 $ Total cash costs of product sold (per tonne) ⁽ⁱ⁾ 41.14

Other Operational Data 80.61

Production waste material moved (millions of bank cubic meters) 59.47 Strip ratio (bank cubic meters of waste material per tonne of

4.85

coal produced) 5.84

0.00

Lost time injury frequency rate ⁽ⁱⁱ⁾ 0.06

(i) A Non-International Financial Reporting Standards (“non-IFRS”) financial measure. Refer to “Non-IFRS Financial Measures” section. Cash costs of product sold exclude idled mine asset cash costs.

(ii) Per 200,000 man hours and calculated based on a rolling 12 month average.

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Overview of Annual Operational Data

The Company recorded an average realised selling price of $53.5 per tonne in 2025 compared to $70.4 per tonne in 2024. The decrease was mainly due to the Company facing headwinds in the China coal market since 2024, leading to the Company changing its product mix to sell a greater percentage of lower-priced coal products. The product mix for 2025 consisted of approximately 8% of premium semi-soft coking coal, 45% of standard semi-soft coking coal/premium thermal coal, 8% of standard thermal coal and 39% of processed coal compared to approximately 13% of premium semi-soft coking coal, 42% of standard semi-soft coking coal/premium thermal coal, 12% of standard thermal coal and 33% of processed coal for 2024.

The Company’s unit cost of sales of product sold was $53.5 per tonne in 2025 compared to $51.4 per tonne in 2024. The increase was due to the change in product mix year-over-year, as the Company sold more processed coal with higher production costs.

There was no lost time injury recorded in 2025, while there was a lost time injury frequency rate of 0.06 in 2024.

Summary of Annual Financial Results

Year ended December 31, 2025

$ in thousands, except per share information 2024

Revenue(i)	$ 598,819 $	493,378
Cost of sales(i)	(598,719)	(360,588)
Gross profit excluding idled mine asset costs(ii)	1,339	133,286

Gross profit 132,790

Other operating income/(expenses), net	1,038	(3,698)
Administration expenses	(14,724)	(13,454)
Evaluation and exploration expenses	(337)	(1,362)

(77,334)

Impairment loss on coal stockpiles –

Impairment loss on items of property, plant and equipment	(41,960)	–
Reversal of additional tax and tax penalty	–	39,666
Profit/(loss) from operations	(133,217)	153,942

(37,845)

Finance costs (37,766)

Finance income		2,001	3,626
Share of earning of a joint venture		3,982	3,227
Share of earnings of associates		556	587
Current income tax expenses		(4,243)	(31,119)
Net profit/(loss) attributable to equity holders of the Company		(168,766)	92,497
Basic earnings/(loss) per share	$	(0.569) $	0.312
Diluted earnings/(loss) per share	$	(0.569) $	0.311

(i) Revenue and cost of sales related to the Company’s Ovoot Tolgoi Mine within the Coal Division operating segment. Refer to note 2 of the selected information from the notes to the consolidated financial statements in this press release for further analysis regarding the Company’s reportable operating segments.

(ii) A non-IFRS financial measure, idled mine asset costs represents the depreciation expense relates to the Company’s idled plant and equipment.

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Overview of Annual Financial Results

The Company recorded a $133.2 million loss from operations in 2025 compared to $153.9 million profit from operations in 2024. The decrease was mainly due to the decreased average realised selling price in 2025 as compared to 2024, the change in product mix year-over-year (as the Company sold more processed coal with higher production costs) and impairment losses on coal stockpile and items of property, plant and equipment of $77.3 million and $42.0 million were recorded respectively in 2025.

Revenue was $598.8 million in 2025 compared to $493.4 million in 2024. The financial results were impacted by increased sales volume year-over-year, as a result of an expansion of the Company’s sales network, diversification of its customer base and expansion of the categories of coal products in its portfolio.

Cost of sales was $598.7 million in 2025 compared to $360.6 million in 2024. The increase in cost of sales was mainly due to increased sales volume year-over-year, the Company expanding into certain categories of processed coal with higher production costs and more sales were made to a farther destination with higher transportation cost.

Cost of sales consists of operating expenses, share-based compensation expense, equipment depreciation, depletion of mineral properties, royalties and idled mine asset costs. Operating expenses in cost of sales reflect the total cash costs of product sold (a Non-IFRS financial measure, refer to “Non-IFRS Financial Measures” section of this press release for further analysis) during the year.

Year ended December 31, 2025

$ in thousands 2024

$ 507,911 $ Operating expenses 288,773

–

Share-based compensation expense 18

46,495

Depreciation and depletion 19,924

43,074

Royalties 51,377

Cost of sales from mine operations	$	597,480 $	360,092
Cost of sales related to idled mine assets		1,239	496
Cost of sales	$	598,719 $	360,588

Operating expenses in cost of sales were $507.9 million in 2025 compared to $288.8 million in 2024. The overall increase in operating expenses was due to the Company expanding into certain categories of processed coal with higher production costs and more sales were made to a farther destination with higher transportation cost.

Cost of sales related to idled mine assets in 2025 included $1.2 million related to depreciation expenses for idled equipment (2024: $0.5 million).

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