Good day, and welcome to the Arch Resources, Inc. Third Quarter 2021 Earnings Conference Call. Today's conference call is being recorded. I would now like to turn the call over to you, Deck Slone, Senior Vice President of Strategy. Good morning from St. Louis, and thanks for joining us today. While we're conducting this morning's call from Arch's boardroom, I wanna assure you that the team is widely spaced and following CDC guidelines closely. Before we begin, let me remind you that certain statements made during this call, including statements relating to our expected future business and financial performance, may be considered forward-looking statements according to the Private Securities Litigation Reform Act. Forward-looking statements, by their nature, address matters that are, to different degrees, uncertain. These uncertainties, which are described in more detail in the annual and quarterly reports that we file with the SEC, may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements, whether as a result of new information, future events, or otherwise, except as may be required by law. I'd also like to remind you that you can find a reconciliation of the non-GAAP financial measures that we plan to discuss this morning at the end of our press release, a copy of which we have posted in the Investor section of our website at archrsc.com. Also participating on this morning's call will be Paul Lang, our CEO, John Drexler, our COO, and Matt Giljum, our CFO. After our formal remarks, we'll be happy to take questions. With that, I'll now turn the call over to Paul. Paul? Thanks, Deck, and good morning, everyone. We're glad you could join us on the call today. I'm pleased to report that the Arch team continued to deliver across a wide range of strategic and operating objectives during the last quarter. In our core metallurgical segment, we commenced longwall production at the Leer South Mine after a well-executed 2.5-year build-out, capitalized on strong market dynamics, generating $118 million in gross margin, which was nearly 100% increase for the segment from the prior period. We achieved another strong shipping quarter and maintained our highly competitive cost structure despite the planned pre-startup outage at Leer South and an increase in sales-sensitive costs related to higher sales prices. In our legacy thermal segment, where we're focused on simultaneously harvesting cash and paring down our long-term closure obligations, we generated approximately $58 million in gross margin, or a 43% improvement from the prior quarter. We further reduced our Powder River Basin ARO with additional final reclamation work at Coal Creek, flexed up production to capitalize on strong pricing in both domestic and international markets, and leveraged those near-term volumes into a greatly expanded book of higher-priced business, not only in 2021, but also in the outer years. In short, we continue to execute on our clear and actionable strategy for long-term growth and value creation throughout the quarter. In doing so, we set the stage for upward momentum in sales volumes, operating margins, and free cash flow yield this coming quarter and in 2022. Turning to our rapidly evolving capital allocation plans, with the Leer South longwall now commissioned and in ramp-up mode, we intend, as previously stated, to prioritize the restoration of our balance sheet to its pre-2020 level. Central to that effort, we intend to pay down debt and/or build cash in order to return to a minimal net debt position. At the same time, we plan to maintain our sharp focus on simultaneously reducing and defeasing the long-term closure obligations at our thermal assets through the establishment of a sinking fund. Fortunately, given the excellent near-term cash generation outlook, we believe we can make excellent progress on all of these objectives over the next few quarters, even as we take the first steps towards resuming a modest capital return program. In keeping with this view, the board has initiated a $0.25 per share quarterly dividend beginning in the fourth quarter. Should circumstances continue to merit, the board plans to evaluate more robust capital return mechanisms in the coming quarters. Overall, we continue to progress in our strategic pivot towards steel and coking coal markets and away from power and thermal coal markets. With the start-up of the Leer South longwall, we took a quantum step forward in our transformation into a premier global producer of high-quality coking coal. At the same time, we continue to drive forward with our efforts to reduce the operational footprint of our thermal assets while simultaneously unlocking their still significant value. Central to this effort, Arch expects to reduce the asset retirement obligation for its Powder River Basin mines by about 15% during 2021, principally through accelerated reclamation of our Coal Creek mine. Year- to- date, we've trimmed the ARO from roughly $190 million to approximately $170 million and expect to reduce another $10 million by year-end. At the same time, we intend to direct a small portion of the free cash generated by the thermal segment during 2021 to a sinking fund that will serve to set cash aside to pre-fund the final closure obligations for these mines. Given the strong committed book of thermal business we now have in place for 2022 and beyond, we should be in an excellent position to continue to build this fund during future periods in a smart and systematic manner using cash generated from our thermal assets. Longer term, we still expect the cash generation from these assets to far exceed their closure obligations, with the balance available to fund other corporate priorities and objectives. With this, we continue to drive forward with our efforts to unlock the significant remaining value in these legacy thermal assets. Toward this end, we leveraged our hard-earned capacity to flex up our production in 2021 during a period of intense market tightness to secure commitments for the outer years. Over the last five months, we've made thermal coal commitments totaling more than 100 million tons for shipments in 2022 and beyond. We've now built a strong contract base for both our Powder River Basin and Colorado operations for several years into the future. Most importantly, of course, this strong book of business should ensure robust and predictable cash flows from these assets in the near to intermediate term. As we've stated many times in the past, Arch's objective is to transition into a pure-play metallurgical producer. However, we're intent on winding down our thermal assets in a careful, orderly, and responsible way, and in a manner that takes into consideration the interests of our many stakeholders, including our thermal segment employees, the communities in which we operate, and U.S. power consumers. Before I turn the call over to John, let me share a few comments on the coking coal markets. The ongoing rebound in global steel production in the wake of the pandemic continues to drive strong demand and robust pricing in the seaborne metallurgical coal markets. Through August, world steel production was up more than 6% versus the pre-pandemic year of 2019, which is an incredible snapback. Meanwhile, global coking coal supply continues to lag, with exports from the world's largest suppliers, Australia, the United States, and Canada, down more than 20 million metric tons when compared to 2019. As you would expect, that mismatch in supply and demand has put significant upward pressure on the market, lifting the prompt price of our principal product, High-Vol A coal, to $390 per metric ton FOB the vessel. While volatility is a fact of life in the commodity business, we believe the overall dynamics appear constructive in the near to intermediate term. In short, we see this as an exceptionally opportune time to be ramping up our Leer South Mine, and in doing so, greatly expanding our overall coking coal volumes. Looking ahead, we expect global steel demand to continue to increase around the world, supported by the ongoing build-out of large, new integrated steel mills in Asia as the world gears up for the new green economy. With our world-class metallurgical asset base, premium product slate, industry-leading ESG performance, and top-tier marketing and logistics expertise, we're confident that we're well-positioned to generate substantial long-term value for our stockholder base and other key stakeholders. With that, I'll now turn the call over to John Drexler for further details on our operational and marketing performance. John? Thanks, Paul, and good morning, everyone. As Paul laid out, we made excellent progress on virtually every one of our key operating, marketing, and ESG objectives during the third quarter. On behalf of the entire senior management team, I want to commend the Arch Resources workforce for yet another quarter of tremendous dedication, exemplary work, and consummate professionalism. I'm proud to be associated with such a high-performing and talented group, and I fully believe that the team's unwavering focus on operational excellence sets the stage for even greater success in the future. Let me start with our core coking coal segment, where the most momentous development of the quarter, quite obviously, was the startup of the Leer South longwall. As Paul noted, the operations team did a spectacular job of bringing that world-class asset to completion in the face of a pandemic, supply chain constraints, an inflationary environment that collectively stressed the cost and availability of key goods and services at all of our operations. Of course, because of the team's Herculean efforts to keep the project on schedule and on budget, we are currently in the process of ramping the longwall in an environment that should deliver exceptional shareholder value and shorten an already rapid payback period still further. As indicated, the Leer South longwall started up on August 27th, and we have spent the first two months of operation lining out the technology and integrating the various systems. I'm pleased to report that we are making excellent headway in that effort, that the Leer South operating team is moving up the learning curve very quickly with the assistance of key personnel from Leer and our other metallurgical mines, and that we are well on our way to achieving a strong, sustainable run rate by early 2022. While the 30-day outage in advance of the longwall startup, the gradual ramp in production at Leer South, early inflationary pressures, and about a $2 per ton increase in sales sensitive costs associated with higher realizations all weighed on our average per ton metallurgical segment costs, we nevertheless executed efficiently during the quarter and maintained our strong position on the low end of the U.S. coking coal cost curve. Of course, we expect to achieve steady improvements in operating performance at Leer South going forward, which should act to counterbalance many of the inflationary pressures noted earlier. We also achieved a solid shipping quarter despite seeing two vessels with late-quarter laycans slip from Q3 into Q4. Given the systematic ongoing ramp at Leer South, as well as logistics chain-related challenges in several late-year laycans, we have adjusted our coking coal volumes for full year 2021. We hope to outperform against the midpoint of the guidance, but there are a number of moving parts here, and we think a more conservative approach is warranted. As previously indicated, Arch is focused on obtaining the best price for its high-quality products, whether in the 350 million ton seaborne coking coal market, where we expect to ship 75% of our volumes in 2021, or in the approximately 20 million ton North American market. In recent weeks, in keeping with past practice, the North American steel producers have begun to lock in their coking coal requirements for 2022. We have participated in these tenders and have committed approximately 400,000 tons of 2022 business to date. Of these awards, we have committed low -vol and High-V ol A coal at both fixed prices of approximately $230 per ton and prices linked to the U.S. East Coast indexes. We are pleased with these commitments and view them as a good fit for our overall contract book and are continuing to participate in the remaining North American tenders. As the North American business concludes, we will continue to focus our attention on the international arena, where we plan to leverage our significant terminal throughput capacity, strong brand awareness, logistical expertise, and where the outlook for both demand and pricing remains robust. Looking ahead to the fourth quarter, we expect a modest increase in coking coal sales volumes when compared to Q3, followed by a more significant step-up in quarterly volumes beginning in the first quarter of 2022. While markets will continue to be volatile, we project significant improvement in our fourth quarter realizations with an expectation that 25% of our metallurgical output will be shipped to North American customers and 75% will be exported. Of the 75% to be exported, 1/3 will be shipped into Asian markets with a total of three vessels into China. The remaining 2/3 of our export volumes will move into Europe and South America. I'm also pleased to report that our thermal team continues to deliver exceptional results as well, despite the ongoing pressures associated with a declining domestic marketplace. As you know, our focus on the legacy thermal side of the house is to exercise extreme capital discipline and to systematically shrink and offset our long-term closure obligations, while at the same time optimizing the still significant value of these assets in a smart and responsible manner. Paul detailed the strong progress we continue to make in shrinking our operational footprint. What was most impressive in Q3, in my view, was the fact that we accomplished this while at the same time flexing up our production levels to serve the near-term needs of our utility customers who are grappling with a rapidly rebounding domestic economy and escalating natural gas prices. The upshot was a 25% sequential increase in our third quarter thermal shipments to a level that we expect to be sustainable in the fourth quarter as well. Perhaps most significantly, we leveraged these incremental 2021 commitments into a significant expansion of our book of business in 2022, in 2023, and even beyond. Through today, we've committed more than 70 million tons of PRB coal for delivery in 2022 at an average price across all those tons at approximately $16 per ton. As a reminder, of course, we typically provide guidance for the thermal segment as a whole, which includes West Elk in the mix. Based on our existing domestic commitments as well, as well as already locked in but not necessarily priced export volumes, our expectation is that West Elk will produce more than 4 million tons in 2022, with roughly half of those tons going into the export market. As indicated, we intend to provide more explicit guidance for the segment as a whole in February, but hopefully that provides you with some useful building blocks for modeling purposes. That effectively leaves our Powder River Basin assets sold out for 2022, and our West Elk mine is fully committed domestically for 2022, with only a small amount of export business yet to be finalized for next year's back half. We believe that we have locked in volumes and pricing in 2022 alone that should deliver a gross margin dramatically in excess of our entire asset retirement obligation in the Powder River Basin. Now let's turn to a quick recap of our ESG execution. As those of you who have followed the company for some time know, the Arch team's deep commitment to excellence in safety, environmental stewardship, community engagement, and the highest business ethics is a hallmark of our corporate culture. During the third quarter, Arch once again demonstrated our overarching commitment to safety as our single highest value, achieving a lost time incident rate of 0.98 per 200,000 employee hours worked, which is roughly three times better than the industry average. While we aren't satisfied with that result and won't be until every one of our operations achieves a perfect zero every single year, we continue to set the industry standard for safety performance among large integrated coal producers. In addition, we maintained our perfect record in both environmental and water quality compliance during the first nine months of 2022. When you consider that we have tested over 100,000 water quality parameters at more than 570 water outfalls during the course of this year without even a minor exceedance, you begin to understand the level of precision and care that is being applied by the Arch operations team every single day. In summary, we are pleased with the ongoing transformation of our already advantaged metallurgical franchise and remain constructive on the near to immediate- intermediate term outlook for global coking coal markets. Moreover, we believe that our legacy thermal assets are better positioned than ever to contribute significant excess cash and substantial complementary value for our shareholders, even as we execute upon our careful, responsible, and well-funded long-term wind down plan for these assets. With that, I will turn the call over to Matt for thoughts on our financial performance. Matt? Thanks, John, and good morning, everyone. I'll begin as usual with the discussion of liquidity and cash flows. We finished the third quarter with unrestricted cash of $210 million and total liquidity of $254 million, both slightly higher than June 30 levels. While earnings were much improved in Q3, not all of that improvement was converted to cash in the quarter. Operating cash flows totaled $65 million, well below our reported EBITDA. We experienced another significant build in accounts receivable totaling $66 million, primarily due to the increase in seaborne metallurgical prices that accelerated in the back half of the quarter. Additionally, we were required to provide $19 million for margin requirements related to export thermal hedge positions that are tied to Newcastle pricing. Lastly, we spent $8 million in the quarter for reclamation as we continue to aggressively reduce our closure liabilities in the Powder River Basin. Capital spending was $64 million, including the final development expenditures and capitalized interest for Leer South. Looking ahead to the fourth quarter, cash flows will increase significantly as market conditions in both segments remain extremely favorable and capital expenditures return to maintenance levels. While we may see continued growth in working capital if prices remain elevated, margin requirements will reverse as the hedged physical sales are completed. Additionally, reclamation spending is projected to decline from the levels seen earlier in the year as we near completion of our planned near-term efforts at Coal Creek. Next, I'd like to elaborate on a couple of topics that Paul discussed, starting with our approach to reducing the liabilities at our thermal operations. We have always viewed this effort as having two prongs. The first prong, and our priority, is to perform reclamation work when possible. As Paul and John have both discussed, that is exactly what we've done this year on an accelerated basis. The second part of our approach acknowledges that there will be times in the mining sequence that don't allow for significant reclamation. Given the progress made at Coal Creek to date, we will reach one of those points in the fourth quarter, and we now plan to shift to the second prong by directing some of the cash flows from our thermal mines to a sinking fund. We have collaborated with our surety partners to develop a program for building this fund to pay for future reclamation. As part of that program, we have agreed to contribute minimum amounts of $15 million in the fourth quarter and $30 million next year to this fund. Given the solid thermal outlook that John just outlined, we will likely make contributions above those minimum amounts. In short, we plan to pre-fund the mine's closure obligations and would expect the funds to build to the ARO amount over time in advance of drawing down the funds in future periods to pay for final reclamation as it's performed. I also wanted to provide some additional thoughts around capital allocation. As just discussed, fourth quarter cash flows will be much improved, and we expect that strength to extend into 2022. We have been clear that our initial priority is to strengthen the balance sheet, and in the fourth quarter, that will primarily be in the form of increasing liquidity. As we move into next year, we plan to pivot to reducing debt. While we have not settled on the specific mechanism for that yet, we will consider both the term loan, which while low cost, is also the nearest maturity, as well as the convertible bonds. As a reminder, our intent with respect to the convertibles is to utilize cash for the principal amount at a minimum in order to minimize dilution. Finally, the improved outlook, along with the Leer South startup and reduced capital spending, makes this an appropriate time to resume a recurring quarterly dividend. For the fourth quarter, the board has approved a dividend of $0.25 per share to be paid on December 15 to stockholders of record on November 30. With that, we are ready to take questions. Operator, I will turn the call back over to you. Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, press star one to ask a question. We'll pause for just a few moments to allow everyone an opportunity to signal for questions. We'll take our first question from David Gagliano with BMO Capital Markets. Okay, great. Thanks for taking my questions. Obviously, we could take this a lot of different ways. There's a lot of information here. A lot going on. I think I'm gonna try and focus in on the thermal side first. On the PRB, I think you said, or maybe not PRB, you said 70 million tons of thermal committed at $16 a ton for 2022. Is that correct? And if so, does that include any of that West Elk volume and how much, and what was the price for that West Elk volume? Hey, Dave, this is John Drexler, and you're exactly right. There's a lot going on, and it's an exciting time, so happy to report on all of that. Let me clarify. The 70 million tons that we discussed in the prepared remarks, that's PRB. That PRB that we said is priced at approximately $16 per ton. As you know, we reported the thermal segment, and we indicated that we've got 4 million tons that we expect to ship from West Elk next year, which is higher than it has been previously, given the market dynamics there. Of the 4 million tons, about half of it will go into the domestic market, and half of it will go into the export market. At this point, we're not ready to provide any specific pricing guidance for that. Wanted to give you the basic building blocks, especially with the PRB foundation to lay out there. Obviously, that's a good piece for us as we move forward. Okay. A couple of related questions. The remaining volumes in the out years, can you give us the breakdown of how much you have committed in 2023, and at what price, same numbers as 2022? If you could, bigger picture, speak to, you know, the previous plans, I believe were to kind of wind down the business 50%, roughly from, I think it was like 2020 to kind of 2023. Obviously, with this guidance, 70 million tons, it's kind of flat. Year-over-year it's actually up a little bit in 2022 versus 2021. What's the slope after 2022 of the wind down as we go to 2023 and 2024? Dave, I'm sure others will jump in here, but I'll go ahead and start. I think from the beginning, you know, as we've looked at our strategy in the PRB and in the thermal segment specifically, you know, I think we're very clear-eyed that over the long term, we're gonna continue to see pressure as plants close down over time. It's why we've had such a tremendous focus on reducing and managing the footprint there. That doesn't change for us. But what we've said from the beginning is that we would be responsive to whatever market conditions present themselves, and do it in a way that doesn't require us to provide significant and meaningful CapEx to the segment. I'm real proud of the team that is managing all of the thermal segment, and how they're responding to the opportunity that we have here. You know, as we sit here today, we'll continue to be responsive to a you know, a very positive market environment. You know, longer term, as that market will shrink, we'll be responsive as we have been. We won't change our focus on managing the footprint. I think one of your most important questions is kind of the path going forward. You know, we're not gonna provide specific guidance for years beyond 2022, but you know, as we indicated in our prepared remarks, in this market environment and with what we're seeing from utility interest, we are layering in significant volumes into 2023 and 2024, which once again just gives us more confidence in our ability to generate cash as we move forward in multiple years. We've already talked about you know, a portion of that cash you know, being set aside for final reclamation as we go forward. You know, David, this is Paul. I think the bottom line is, nothing has changed kind of in the macro picture in our view. What you saw us do in the last five months was take advantage of kind of a unique situation. The market got tight. We still had the ability to flex up and respond to that market. In order to provide short-term volumes, we leveraged those into long-term volumes from 2023-2025. We were able to do it at some very good prices. At the end of the day, the glide path down, you know, we're gonna do exactly what we said. We're gonna shrink this footprint. We're gonna do it in a logical way. We're gonna be systematic about it. If the opportunity arises where we can, you know, generate a little extra cash, we will. You know, I think we're pretty sober about where this is heading and how we should be addressing it. The best example of that's Coal Creek. You know, we'll keep mining at Coal Creek in a limited fashion as we complete reclamation. You know, the end game is the same. We're working towards closing the operation permanently. David, this is Deck. Just to reiterate what both John and Paul has said. Look, the harvest strategy for us for the thermal assets was always, you know, principally about one thing, which is minimizing the amount of capital spend. You know, our objective there continues to be to invest as little capital as possible, really just sort of subsistence levels, and continue to operate at, you know, at current run rates to the extent possible. As Paul said, you know, it was an opportunistic move here to take advantage of the market that we saw. You know, look, our goal is to meet consumer requirements, to generate cash for final closure. That continues to be a strong focus of ours. You know, Paul indicated that at Coal Creek, we will continue to mine there, you know, in a limited fashion as long as there is demand, or at least in the near term. We still have skinnied that footprint down dramatically, and by the end of this year, you know, the total ARO at Coal Creek will be, you know, less than $20 million. We've done what we said we would do, which is, again, skinny down the footprint, reduce the asset retirement obligation. We still wanna generate as much cash as we can as we look to long-term closure obligations, and also to avoid leaving, you know, meaningful stranded assets. We'll continue to be opportunistic, but the focus will, you know, be to, you know, maintain as little capital spending in the basin and at West Elk as we possibly can, and simply harvest the cash that's still available for an asset and assets that are still, you know, have significant value. Okay. Thank you for that. Just two quick follow-ups. So first of all, on the thermal just to round it out. I think in the prepared remarks or the press release, wherever, I think you said a total of 120 million tons sold forward at this point in future years. We got 70 million tons for 2022. You know, Dave, we said—Dave, it's Deck. We said more than 100 million tons, and we haven't really broken it out. We obviously, you know, the 70 million tons that we've committed for 2022, only a small portion of that was actually committed, you know, this year. There's a lot of volume in the out years. You know, so if you assume that we were sitting at whatever, 50 million tons or so, and we've done an additional 20 million tons for 2022, that would mean there's another, you know, 80 million tons or so for the out years. Just to reiterate what John said, you know, it's a substantial book for 2023. We are in a very solid position, really strong foundation for 2023. At least into 2023 and even into 2024, you're looking at meaningful continuing cash flows from the thermal assets that are already, at this point, locked in. Okay, thank you for that. Relative to the $16 price for the 70 million tons that's been locked in for 2022, you know, 2023 and the volumes, the 80 million tons that's been locked in on the out years, up or down versus that $16 price. If you wanna just tell us the number, that'd be great. Yeah. We're not gonna give specifics in that number. You know, as you look at what's happened in the market here recently, Dave, and you've seen all of the near-term pricing indications in the market and those that follow the market. There's been a real opportunity here near term, and we've seen substantial improvement in price. You know, beyond that 2022 period, it might be a little bit backward dated from there. However, you know, rest assured, we're building a very strong book in those outer years, and it levels and it prices for new commitments in those outer years that have been above where you've seen those outer periods from a historical perspective. The prices in those outer years are moving up, Dave. We've seen, you know, some lift here, continue to see lift. You know, the reality is there's just been very limited investment in new coal production really everywhere, domestically and as well as internationally. As a result, you know, there's a bit of a scramble right now as generators look to find additional volumes with gas prices as high as they are at around $5. You know, there's just been a strong level of burn. Inventories have come down. Look, we're very focused on meeting the requirements of our customers. They have a need, and we are, you know, doing what we can to respond, and that goes beyond just 2022. We're trying to help them build out their needs and requirements for 2023 and 2024 and beyond as well. Okay. Just really quickly, and then I'll get back in the queue because I've got more. Just turning to the other, you know, vast majority of the business on that side. The one thing I wanted to ask, the 400,000 tons committed, I think at $230 a ton with the U.S. steel producers for 2022. Can you just give us a sense as to, you know, what was that number last year for that same quality of coal? $90, $85. Nine. Oh, yeah. The pricing was $90. The average that we gave was $91. We did 1.8 million tons at $91 last year. That was last meaning- And this $230... The, the- Meaning the fall of 2020 for shipments in 2021 to North American customers. Okay, understood. This 400,000 tons that was priced at $230 is sort of average quality? Dave, what we indicated was of the 400,000 tons committed, there's a portion of that that was fixed at that $230 price, and there was a portion of that that was actually indexed into the domestic market. Maybe split that 400,000 tons in two. Half of it, you know, at the $230 price, half of it at an index. We indicated that the volumes were low- vol and High- Vol A. High- Vol A being our largest product, obviously from Leer and Leer South, and then low- vol from our Beckley operation. Okay, great. Thanks very much for the time. I'll get back in. Thank you. Thank you, David. Thanks. We'll take our next question from Lucas Pipes with B. Riley Securities. Hey, good morning, everyone. First, the good news is Dave's questions remind me of his questions from 2011 to 2015 when he asked one of your peers about pricing every single quarter. They wouldn't quite answer it either. But anyways, good job. I wanted to maybe hone in a little bit on Q4. You mentioned, John, 75% is going export, if I recall correctly. Obviously there are a few moving parts here in this market. We have lags, you know, different end markets, Europe, Asia. If you had to give us a range for net back pricing on those export tons in Q4, I would really appreciate it. Just rough ballpark. Thank you. Yeah, Lucas, that's always one of the hardest, you know, questions to answer, especially in a market that's as volatile as it is now. You know, if you look at average pricing for, you know, the East Coast markers for the third quarter and you compare it to where, you know, we are today on a prompt basis. You know, the markets are 50% higher than they were for the average for the third quarter. And then there's backwardation that comes off of that. You know, predicting where that's gonna go is virtually impossible. But I think what it tells everyone is we expect a substantial increase in our pricing as we move forward. You know, we can talk offline a variety of ways to try to net all of those back, you know, to the mine. If you just take, you know, High-Vol A, which, you know, is our most important metallurgical product and take a, you know, a price today that's at $390 East Coast Platts, convert that to short, so back out, you know, $39, so you're at $350. Back out transportation, you know, at these prices. You know, there's a variability in that price depending on where costs are. For the third quarter, it's at $35 a ton roughly. You know, you're at $300 a ton net back pricing. Once again, that's changing every day. It's been volatile. You know, it's very difficult to give you a specific number. Once again, we are expecting a meaningful improvement in fourth quarter pricing from the third quarter. ±$300 kind of on your export tons, is that reasonable? Yeah. I mean, I'm giving you the spot daily price today. As you know, that's probably come up from where we, you know, even started the quarter at. There'll be volatility in that. You know, that East Coast Platts, there's a variety of pricing mechanisms as well. There's different markets and differentials for all of the variety of products that we have going into Asia, into Europe, into South America. Once again, hard to triangulate for you, around those numbers. Lucas, we are selling at the index. We're not you know, the numbers that you're seeing reported are the numbers we are receiving. As John said, there are different markers out there. There's a Queensland price when we talk about our Asian business, et cetera. You know, as you look at those markers, that's what you would expect us to be receiving, except for, you know, that 25% of North American business, you know, that, as we indicated earlier, was locked in last you know, last fall at $91. That's ongoing through the course of this year. The remaining 75% of the international business is in fact at those markers that we've just discussed. Got it. Very helpful. The Chinese vessels, would they be above or below that rough marker? You know, Lucas, really, we've been selling, mainly we've been selling the Chinese volumes FOB the vessel U.S. East Coast. While there is a delivered-in price in China that gets quoted. Really, the Chinese have come to sort of, you know, look to buying based really on that U.S. East Coast price. They buy FOB the vessel, and they manage the logistics. You know, that's fine for us. That works well. Obviously that additional sort of, you know, that additional activity on the East Coast is useful and tends to, you know, add some upward lift to pricing there as well. We've been happy to have the Chinese buy in that manner rather than on a delivered-in basis. Got it. Thank you very much for all of that. I know you'll issue 2022 guidance at the appropriate time, but obviously there are a few moving pieces here with the ramp up of Leer South. I wondered if you could remind us kind of ballpark what you're looking for on met coal volumes 2022, and then the potential cost impact. Obviously on the cost side you have this low cost super low cost mine coming online, but then also you noted the inflationary pressure. Qualitative, quantitative comments would be super. Thank you. Yeah. Thanks, Lucas. You know, I think as we look here and sometimes better to be lucky than good, but we couldn't have brought Leer South on at a more exciting time in the marketplace. As we've indicated, you know, the opportunity for a rapid payback for our investment in that asset just shortens with the market environment that we have. You know, I think we've been pretty consistent on what we expect as we step into a normal ramp and get to Leer South up to a full production rate, which we expect by the beginning of 2022, to incrementally add about 3 million tons of additional metallurgical coal into our portfolio. Taking us, you know, roughly next year to 10 million tons. Now we've not provided specific guidance yet. We're still looking at all of our budgets, and we'll provide that. But nothing has changed from kind of our views and how we've been communicating the addition of Leer South into the portfolio. Obviously, you know, our expectation once we get it up and ramped with the volumes that you'll get from that asset is you'll have a very constructive cost environment that will help us with the overall portfolio. You know, you referred to some of the inflationary pressures that the industry is facing. You know, some of those same pressures are the ones that we're benefiting out from on the top line, right? You know, part of us wants to see steel pricing at all-time record levels and quite frankly, energy costs high. That helps on the thermal side significantly as well. Clearly, we use a lot of steel in our business. We use a lot of diesel fuel across our portfolio as well. Those inflationary pressures will be out there. We'll manage them. We haven't provided any specific guidance yet, once again, going through the budget process. Especially with the additional volumes at Leer South, we think that you know we're gonna be able to manage that effectively going forward as we step into 2022. Lucas, remember, one advantage of our asset base, our coking coal portfolio is that we own the vast majority of our reserves at Leer and Leer South in fee. Our sales sensitive costs are lower and tend to be lower. We also increasingly own the vast majority of our reserves at Mountain Laurel that we're currently mining in the No. 2 Gas seam. It's really only Beckley where we're paying a royalty of consequence. We do have about a 5% severance tax we pay based on the top line and the net back in the state of West Virginia. We do have sales sensitive costs. Clearly we're going to have some upward pressure from the sales sensitive cost, but would say that, you know, we are on a relative basis advantage given our reserve base and the fact that we own, you know, so much of our own reserve base. Terrific. No, that really makes a difference when you're selling for $300 at the mine. My last question and then I'll turn it over. You commented on the tightness in the thermal coal market. What would it take to increase your 2022 thermal coal production? Lucas, I think you know if you look at the run rate that we have in the third quarter that we say is sustainable into the fourth quarter and beyond, you know that gets you back into some of the numbers we were reporting for the thermal segment. You know as we you know look at our portfolio without significant and material additional capital investment with the fleet of equipment that we have that you know we had scaled down the utilization of that fleet you know to be responsive to the market environment. You know to bring some of that back online, it's minimal levels of capital. We're making sure that we're managing it prudently. We think that, you know, at these levels, we can sustain through 2022, and we'll continue to evaluate then moving forward where the market's at and what type of capital is required. Once again, in the overall portfolio of our CapEx requirements, it should be insignificant. Lucas, this is Paul. I guess the bottom line is you just we're not gonna get back on that treadmill. We had an opportunity to ramp up production in Q3 and Q4. We leveraged that into sales in 2022 and beyond. We did that without spending any capital to speak of and without really having any issues with people. You know, you're just not gonna see us spend cash and try and ramp this mine back up. We're gonna be smart about what we do. As Deck said, you know, the intent here is to harvest cash. Probably more importantly, set aside the cash for the ultimate closure. You know, we do that. We have lots of flexibility when that cash is sitting in the sinking fund. We'll make the right decision at the right time to close that mine. Got it. Terrific. Well, really appreciate it, and continue. Best of luck. Thanks. Thanks, Lucas. We'll take our next question from Nathan Martin with Benchmark Company. Hey, good morning, guys. Morning, Nate. Pretty good discussion already. A lot of my questions have probably been addressed. Maybe just a couple of quick points of clarification. You know, obviously with the PRB guidance of around 70 million tons for 2022, there seems a little bit of a ramp up there. I heard John's comments just saying, you know, the 19 million tons± in this quarter is a kind of a good run rate to think about. Just confirming, I think you guys had mentioned that Coal Creek, as you're kind of winding it down, but it sounds like maybe you could run that some in 2022 as well. Just kind of curious about where you expect the bulk of the, you know, the increase there on the thermal side to come from? Yeah, Nate. A good question. You know, as we've indicated, Coal Creek, our expectation continues to be that we'll close that down. You know, and we talked about the significant progress that we've made there, you know, even through where we sit today. Our expectation is through the end of the year, of all of the disturbed yardage there, we'll have essentially reclaimed about 70% of all of that disturbed yardage. You can see we're dramatically and significantly shrinking that footprint. That has been ongoing. What's left and where the opportunity lies for us is a very small piece, one pit, that you know, quite frankly, continues to have outstanding cost structure, and it's a small piece of the overall footprint, remains. In this market environment, if prices continue to indicate that coal is needed, we have the opportunity to continue to evaluate that and move that forward. We wouldn't expect a significant increase in volumes from Coal Creek. That's a lower quality product. It's an 8,400 product. You know, we've been at very minimal levels of production there. While we may flex that up a little bit, the vast majority of the opportunity that we have is gonna come out of Black Thunder, the 8,800 BTU product. Nate, it is also very low cost, though. It's a nice margin, and it's worth it to us. It's worth maintaining that small footprint. Again, a bit of a postage stamp with just the active pit, you know, if in fact there's a need for that quality, and so far we're seeing some level of need. We'll see where we go with the ultimate closure, but again, the objective at Coal Creek was always, you know, to reduce that reclamation obligation, and we've done a tremendous amount of work. We'll continue to over the next couple of quarters. Got it. Yeah. I mean, that makes sense. I just wanted to clarify that 70 million tons for next year kind of assumes a little bit of Coal Creek, and it sounds like it. I mean, and then Deck, you just kind of touched on the cost side, which is where I was gonna go next. I mean, Lucas touched some on the met side of things. Maybe with the thermal business, again, you know, higher tons looks like, which is usually positive for on a cost per ton basis, but maybe some pressure, you know, from inflation, labor. I mean, any commentary on where thermal costs kind of could go next year also with, you know, West Elk just ramping up from, let's call it 3 million tons± this year up to 4 million tons+, it sounds like? Nate. You know, an interesting dynamic. You've got increased volumes that are occurring. You know, one thing, Deck talked about it in the Eastern portfolio or the met portfolio where, you know, sales sensitive costs, we have a lessened impact given the ownership of the reserves. You know, in the PRB, as a reminder, you know, a third of the sales price is in the form of sales sensitive costs. As you see the ramp up in for us, that's a good cost pressure to have, but it's one that you need to factor into, you know, any type of projection and cost. You know, outside of that, you know, you look at least in the PRB, the types of cost pressures we have. One of the biggest ones will be, you know, diesel fuel. We consume about 30 million gal on an annual basis. You know, where our average diesel price has been over the course of 2021 to date, where we are today, it you know, it's a 25% increase on those costs, you know, alone. You know, as we've looked at the overall kind of portfolio and tried to at least maybe give you guys a little bit of direction, and once again, this is not formal guidance at this point. We'll update that post our budget as we report our fourth quarter numbers for next year. It you know, wouldn't be outside the range to expect you know, a 5%-7% type increase, inflationary pressures, outside the sales sensitive costs. Once again, you look at fuel costs such as diesel. You look at, you know, you can look at steel pricing. You know, we use a lot of steel. Obviously steel costs have doubled from 2020 to 2021. You know, those are the types of things we'll continue to look at and manage, and we think we can manage effectively, but you know, we will be affected by that. Thanks. John, just to confirm, I think you said for thermal specifically, and again, not formal guidance, I completely understand that, but up 5%-7% next year outside of that 1/3 sales price sensitive piece. Is that correct? That's correct. I think that's a good way to look at it, Nate. Okay, perfect. I appreciate that, guys. Maybe just one other housekeeping type thought. I mean, transportation-wise with net prices being where they are today, any thoughts on how is transportation helpful for you guys, you know, to the export markets? That was obviously the vessel slipped, you know, about 200,000 tons, I should say, from the third quarter to the fourth quarter with some of that transportation related, labor related, et cetera. Then, you know, what are you guys seeing on the cost side right now from a rail transportation perspective? Thanks. Yeah, Nate, I'll start it off. This is Paul. You know, I'll tell you that Q3 started off a little rough for rail transportation, then kind of planed out as the quarter wore on. You know, in general, not a lot of complaints about the eastern railroads. The western railroads also struggled in the early part of the quarter, particularly out of Colorado, the West Coast, because of the fires. Set that aside, you know, rail service is, I think, tight. We're all concerned about what's gonna happen on these vaccine requirements and those issues and, you know, how that all plays out between the big railroads and their employees. On the cost side, you know, particularly in the East, obviously, as you know, we've talked many times in the past, our rail rate is tied to the East Coast indexes, and it's usually a one-quarter lag. We'll see, as we saw, the prices step up in Q3, we'll see that increase in rail in Q4. You know, it's relatively substantial. If it, you know, just round numbers, it could go from the low to mid $30s to the upper $40s, low $50s. You know, that is what it is on these rail rates. Nate, just to one point on that. Ultimately, that rail rate does get capped, so it doesn't just continue to climb, you know, beyond those levels. As Paul said, certainly could see, you know, that kind of level in Q4 and probably worth considering. Then would also say that, look, on the rail service, while, as Paul said, it's been very solid, we are ramping at Leer South. One of the cautions here on Q4 for volumes has been, you know, we need to make sure that as Leer South ramps, we get sufficient service to, you know, to make sure that we are, you know, able to deliver those higher volumes. That will happen whether it's a little, you know, slower in Q4 or not remains to be seen. Nate, where those cap at, you know, as you kind of once again look through all the modelings, probably around $60 is kind of that level. At these prices, you know, ultimately we could see that. John, you read my mind 'cause that was gonna be my next question, so I appreciate that. Thank you guys as always for all your color, and appreciate the time, and best of luck through the end of the year. Thank you, Nate. Thanks, Nate. We'll take our next question from Alex Hacking with Citi. Yeah, good morning, and thanks for the time. I apologize. I missed the first few minutes of the call. If this was already addressed, then I apologize. In terms of the sinking fund, I mean, you know, back of the envelope, 70 million tons, you know, $16 price, you know, even conservatively $4 margin, that's gonna more than cover that cash generation's gonna more than cover the existing ARO. I mean, are you looking to fully fund that next year in terms of how you're thinking about it today? Thanks. Alex, this is Matt Giljum. I'd say you know, the ultimate timing for when that sinking fund really fills is gonna be dependent not only on the thermal cash flows, but you know, the other priorities we've got in terms of debt reduction and balance sheet strengthening as well. In certain scenarios where cash flows are strong across the business, you know, I don't think it's unreasonable to think that you could see it you know, be completed in the timeframe of next year. But probably, you know, it's more likely to maybe think about it in terms of the next couple of years, given the strength on the thermal side. Again, if net prices stay where they're at, clearly that could accelerate. You know, if we see those come off, it's probably better to think about over a one-two-year timeframe. I mean, at the end of the day, Alex, if you think about it, you know, there's the argument about how fast you do this, but if the faster it's done, you know, we take this issue off the table and it's, you know, you basically ring-fence the thermal assets. To the extent we could do that without breaking a sweat is what we need to strive to do. Alex, just one- Yeah. One point on modeling. I wouldn't think about a $4 margin for the PRB anyway. We're probably, you know, remember a $3 increase, you know, $3.50 increase translates into another $1 sales-sensitive cost. You know, you should factor that in. Now we'll see what West Elk does, and clearly, West Elk could push that margin up meaningfully. If you're talking broadly, that makes sense. From a PRB perspective, that might be aggressive. Okay. Thanks for the color, and it makes sense. Just on the CapEx side, you know, for next year, any change to, you know, kind of your previous thoughts around CapEx next year? You've obviously got the additional, you know, thermal volumes coming through, but as you mentioned, that's really CapEx kind of light volume. You know, any commentary around CapEx next year would be helpful. Thanks. You know, Alex, we're sticking with, you know, we're headed into maintenance capex. You know, the only thing I'd say is the inflationary cost pressure we're seeing, you know, on the capital side is real. You know, if you model somewhere between, you know, I think next year, given the inflation and what's going on, you know, $125-$150. You know, those are still pretty loose numbers, you know, as we work through the budget, but I think that gives you the zip code of where things are at. Okay, thanks so much. It's very helpful. Those are my questions. Thanks, Alex. We'll take our next question from Michael Dudas with Vertical Research. Good morning, gentlemen. Morning, Michael. How are you? I'm great. Thank you. The big nor'easter here in the New York area, but we're surviving. No leaks in the roof yet. Can you remind, on Black Thunder, like, how long does the lease run, and what's the recoverable reserves left in that mine as you're operating it today? Just to give a ballpark, because I don't think you've had that question had to be brought up here. Yeah. Michael, I'll take a shot. You know, I don't track it as good as I used to. It's about 700 million tons-800 million tons, and the lease runs. It renews automatically every five years. Right. Right. Okay. 700 million tons. 700 million tons, yeah. What would be the run rate this year? Would it be? You know, what we just indicated for 2022, it's 70 million tons kind of sold out in the, you know, in the PRB. Okay. A decade's worth. Right. You know, we also indicate and I think acknowledge that we expect that to come down over time. While markets are strong right now, as we've done in the past, we'll responsibly shrink production if markets aren't requiring that, so that would extend the opportunity there as well. Once again, if the markets are given the opportunity to continue to sell coal. And Mike, I mean, reminder, you know, obviously, we've come down from 1.1 billion tons of thermal coal consumption in the U.S., you know, in 2008 to about 500 million tons, you know, this year. So clearly, with about 20 GW of additional closures for the next two years, our expectation is the market continues to shrink, and we will continue to manage down our production appropriately. The opportunity is long-lasting, should there continue to be a market. Right. No, that's what I kind of wanted to point towards given what's been going on. Though things have happened so very quickly here in the last several months, any chance to accelerate that value creation in the marketplace? Is anybody paying attention? I mean, Mike, if you mean, I mean, obviously, you know, we have taken advantage of the opportunity obviously by selling into 2022 aggressively. Right. You know, that's been the goal, is to take advantage of what you've described, which is, you know, this energy crunch that we're seeing here in the U.S. and really internationally, as the world economy has really snapped back. there's been underinvestment in coal production really everywhere. you know, we've talked a lot about the thermal assets here on this call, but, you know, it's been really, you know, profound on the coking side as well, which creates a really attractive opportunity and potentially, you know, an attractive supply-demand balance, even with, you know, that downward pressure on consumption that we just discussed. What we've said all along, Michael, is, you know, we've got a great asset in the PRB. Great quality, great cost structure, great people running the operation. What we've seen in the marketplace is we've seen, you know, with what's happening in the marketplace, we've seen utilities come and they're interested in multi-year deals. We've tried to take and leverage the near-term opportunity as we've indicated and build out our book of business, to give us some stability and cash flows well beyond 2022. So, you know, those are the types of things we'll continue to look at and evaluate as we move forward. Do you think this is cyclical, or is there a little bit of like structural kind of shorts given what's going on in the world? It's amazing how much you've seen the word coal in the news over the last 30-45 days. You know, look, we've said it for some time. There's been a significant lack of investment in new supply. We think there'll continue to be a lack of significant new investment in coal supply. We think the future is gonna look interesting as we move forward. Okay. Obviously, Mike. Go ahead, Paul. Well, I was just gonna say, Mike, at the end of the day, you know, it's not dissimilar to what we talked about last quarter. I think you asked me a similar question. You know, we got high natural gas prices. You know, we have low utility inventories. The ability for the producers to respond is not what, you know, the utilities I think thought it was. It just doesn't exist anymore. The investment has not been there. Throw in higher-priced exports. Look, some of these things will work themselves out and, you know, as we said, we saw an opportunity, and that's what we did. We took advantage of it. You know, Mike, obviously, we're not equipped to talk about oil and gas side of things, but right now, clearly, with domestic natural gas at $5, with gas trading at the equivalent of $30 in Europe, you know, that certainly feels like the oil and gas side is experiencing some of the same pressures. If, you know, if the alternative fuels continue to be really quite expensive and we've seen some sort of shift here, then yeah, I mean, obviously the opportunity could be longer lasting. I think it's important we continue to point out that regardless of what we see here, you know, our strategy is really quite clear. We're not going to deviate from that. Our plan is to continue this pivot towards coking coal markets, but you know, continue to be opportunistic with the assets we still have in place, which are great assets, as John said, you know, tremendous cost structure, high quality and all of that, but not to start to put additional capital into those assets. Instead, just harvest the remaining value, potentially over many years, but harvest the remaining value. Yeah, I guess the bottom line is it's good to have well-capitalized assets to own these days in the energy market. Absolutely. Absolutely. One final question for me. On the coking coal side, a little observation from Paul or John on the ability to, you know, meet the world's needs for this coking coal, on the ground, labor, productivity. You read stories, you hear anecdotally about, you know, retention, getting miners. Do you get a sense now, I'm assuming you guys are pretty locked down given your long life reserves and quality. But do you get maybe some thoughts on what's happening around you, and is that something that could lead to some more dislocation as people are anticipating some flows coming out of the U.S. over the next several quarters? Yeah, Michael, I think, you know, quite frankly, you know, labor is an issue, and you've heard us talk about our views on that. Just to reiterate, you know, we feel good, and clearly our most important asset is our people. Given the long life nature of our assets and the cost structure, the fact that we operate them very safely, and have a competitive wage and benefit structure, you know, is always something that our team minimizes the impact to our operations. It's something we're paying close attention to, right? Because we are seeing, you know, that labor and some of the challenges around it, around us, especially. I mean, you've seen wage opportunities present themselves in other industries. You know, we've heard stories where, you know, someone can go out and you know work for the cable company as a lineman and make equivalent money to what they're making underground or even drive a bus, a school bus. You know, those are the types of stories anecdotally we're hearing. Those didn't use to be challenges or opportunities you know for someone to step out and make that kind of money. You know, those will be things that we continue to look at and evaluate. We're seeing it across a lot of the industries that we work with, but we'll continue to manage it, and we don't see any issues from our perspective as we move forward. You know, Michael, the only other thing I'd add to what John said is, you know, if you think about it, if we were to bring Leer South online or start that construction today, you know, we debate this number, but the cost of that project, if you could get the financing, you know, is probably, I don't know, John, 25% increase over what it was for us. Look, as John said, maybe we were just good and lucky, but the fact is, this incremental expense, my guess is it's gonna be higher cost and require some capital, and those aren't good recipes for the long term. Yeah, I remember there was some controversy on you guys actually announcing that you're gonna do this in the midst of a difficult market and the patience you showed. Great decision on that. Well done. Thanks, gentlemen. Thank you, Michael. Due to time constraints, that concludes today's question- and- answer session. At this time, I will turn the conference back to Paul Lang for closing remarks. I'd like to again thank everyone for their interest today. These are exciting times at Arch. We delivered Leer South into a robust market environment, capping off our transformation into a premier producer of metallurgical coal for global markets. We sold our thermal segment production forward at historically strong prices and in a manner that ensures healthy levels of cash generation well in excess of their final closure obligations. We've taken the first step towards resuming a healthy capital return program through the reinstatement of our quarterly dividend, and we've laid the foundation for returning our balance sheet to its historically strong status, which we view as an invaluable point given the inherent volatility in the markets. In short, we've maintained our clear, consistent and actionable strategy, and in doing so, have set the stage for ongoing value creation and future growth. With that, operator, we'll conclude the call, and we look forward to reporting to the group in February. Stay safe and healthy, everyone. This concludes today's call. Thank you for your participation. You may now disconnect.