Warrior Met Coal, Inc.

Good afternoon. My name is Matt, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Warrior Met Call Second Quarter 2022 Financial Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press stars and the number two. This call is being recorded and will be available for replay on the company's website. Before we begin, I have been asked to note that today's discussion may contain forward-looking statements, and actual results may differ materially from those discussed. For more information regarding forward-looking statements, please refer to the company's press release and SEC filings. I have also been asked to note that the company has posted reconciliations of the non-GAAP financial measures discussed during this call in the tables accompanying the company's earnings press release located on the investor section of the company's website at www.warriormetcoal.com. In addition to the earnings release, the company has posted a brief supplemental slide presentation to the investor section at its website at www.warriormetcoal.com. Here today to discuss the company's results are Mr. Walt Scheller, Chief Executive Officer and Mr. Dale Boyles, Chief Financial Officer. Mr. Scheller, you may begin your remarks.

Thanks, operator. Hello, everyone, and thank you for taking the time to join us today to discuss our second quarter 2022 results. After my remarks, Dale will review our results in additional detail, and then you'll have the opportunity to ask questions. I'm excited to share the results from yet another very strong quarter. It represented our third consecutive quarter of record net income and earnings per share since the start of the COVID-19 pandemic. We again demonstrated our ability to leverage our efficient business model to meet strong customer demand for our premium met coal and taking advantage of strong met coal pricing to deliver these results. In addition to net income and earnings per share, this resulted in record high amounts of revenue, adjusted EBITDA, cash flow from operations, free cash flow, and liquidity. We were clearly the beneficiary of macroeconomic conditions driving higher pricing and strong customer demand. We're pleased with how well positioned the company is to be able to take advantage of these tailwinds. But it's the strength, efficiency, and nimbleness of our business model that are the key differentiators for us in good times and bad. We were able to see those strengths in action this past quarter in response to both industry and non-industry related issues. For example, we felt the impact of the significant inflationary environment on our cost of sales, which Dale will speak to later. Despite these increased costs, we were able to deliver strong profitability. In addition, many industries, including ours, were impacted by shipment delays related to port maintenance, the lack of available rail transportation, and port congestion. Yet we were able to overcome these issues to deliver our premium products to our customers around the world. That's why our thinking always remains ultimately defensive. It is important for us to lean into these supercharged periods while maintaining a strong buffer during periods of macroeconomic headwinds. And most important is for us to know how to be able to definitely adjust given how market conditions can change very quickly. We experienced this dynamic in part during this past quarter, which is a roller coaster of supply and demand. We entered the second quarter expecting our markets to experience price erosion as steel fundamentals were weakening. However, the first half of the quarter played out stronger than we had anticipated as pricing levels stayed quite high while we saw several pricing dips that were caused by end-user selling cargoes immediately reverse. The global supply of VET coal remained tight most of the second quarter despite lower global steel production. Eventually, a clear downward trend was established later in May, which remained unchallenged until the very end of the quarter. With lower steel prices across the globe and heavy recessionary pressures affecting most economies, it was no surprise that steel demand then deteriorated. We were expecting to see buying activity from China emerge during the quarter, but their highly restrictive COVID policies, strong domestic coal production, higher availability of Russian coals, and higher than historical imports from Mongolia limited the need to purchase U.S. met coals. To illustrate how this dynamic played out, our primary index, the PLV FOB Australia, started the quarter at $467 per short-ton, then climbed to its peak of $481 on May 18, while closing the quarter at $274 per short-ton. This correction represents a 43% decrease from its peak price achieved in the second quarter. The absolute value of the correction is by itself almost 170% higher than the 10-year average of the index. In short, we believe the first half of 2022 will go down as one of the most volatile periods in our markets, and we are pleased to emerge from it with strong results in hand. During the end of the quarter, we started to see a shift in customer demand for steel in certain industries. Overall, the World Steel Association recently reported that global pig iron production decreased by 5.5% in the first six months of 2022. China recorded a decrease in production of 4.7% for the period, while the rest of the world's pig iron production decreased by 7.1%. China's lower steel production is largely due to recent shutdowns related to stringent COVID restrictions and lower demand, especially in the property sector. Discussions with our customers continue to indicate that steel demand for the oil and gas, aerospace, and shipbuilding sectors is strong. Automotive demand is still reported to be strong, but production remains constrained by the availability of semiconductors and components. However, all other sectors have experienced weaker demand since the latter half of the second quarter. As for Warrior, our sales volume in the second quarter this year was 1.5 million short tons compared to 1.8 million short tons in the same quarter last year. Sales for this quarter were lower than last year primarily due to shipment delays due to port maintenance, lack of rail car availability, and port congestion, which have hampered our ability to ship more volume this year. With the high demand for seaborne thermal coal, we're seeing higher volumes in thermal coal move through the port, creating some congestion and impacting loading dates and times. By far, the largest impact to our second quarter results was the poor performance of our rail transportation provider that delayed getting our product to the port in a timely manner. We were not immune to the challenges posed by a very chaotic national rail system. Rail performance for the past quarter was one of the lowest we've ever experienced. causing higher than expected coal inventory levels at our mine sites, higher vessel to merge costs, and missed quarterly sales targets. We understand that our rail partners have plans in place to address the shortage, but we expect the return to normal operations to be lengthy and lumpy. Therefore, we expect outbound logistics to remain challenged for the foreseeable future. Our coal inventory rose to 735,000 short tons at the end of the second quarter. We expect to bring down the level of inventory in the second half of the year as some of the shipment delay issues improve. Our sales by geography in the second quarter were 62% into Europe, 18% into South America, and 20% into Asia. We sold a small amount of volume into China during the second quarter as the CFR China index price was below the Australian FOB price for most of the quarter. Production volume in the second quarter with 1.7 million short tons compared to 1.2 million short tons in the same quarter of last year. The production tons produced in the second quarter resulted from running both long walls and five continual miner units in mine seven and three continuous miner units in the long wall of mine four. Our lead days on the long walls continue to remain solid. The mines ran well and were very efficient in the second quarter as we continued to ramp up production in mine four. We finished the quarter running the mines with a combination of salaried and hourly employees, representing approximately 60% of the normal workforce, while producing nearly 83% of the normal production volume. Employee productivity was strong again during the second quarter compared to historical periods. Over the past year, the mines have trended higher in clean tons produced per million-hour work. This increase in productivity has helped offset some of the inflation we've been experiencing. We appreciate the significant efforts by our employees to drive higher production levels while continuing to maintain a safe working environment. During the second quarter, we spent a record high amount on CAPEX and mine development of $79 million. This amount included normal sustaining capital plus discretionary capital, including the development of our Blue Creek Reserves, work on the Four North Portal, and the deposits on the new Longwall Shield. As previously disclosed, Our Board approved the purchase of two new sets of longwall shields for the existing mines, which should be delivered in the third quarter of 2023. We made down payments on these shields in the second quarter of approximately $48 million. These shields represent another significant investment of approximately $100 million over two years to keep our mines well capitalized and performing most efficiently. We continue to see rising inflation and long lead times impacting our business the remainder of this year. Despite partial mitigation of these issues with our improved productivity at the mines, we are experiencing 25 to 35% increases in cost of operating supplies and materials, repairs, and major equipment rebuilds. Those price increases led to a $4 per short time negative impact on our second quarter results. As U.S. inflation in June hit another four-decade high of 9.1%, the Federal Reserve shifted to a faster pace of interest rate increases in its efforts to bring down inflation. There are growing fears of slowing economic growth worldwide, which has led to a decline in commodity prices in recent weeks, including met coal. Before I ask Gail to address our second quarter results in greater detail, I wanted to take a moment to comment on the exciting and important announcements that we made during the second quarter. Specifically, we announced on May 3rd, first, the relaunch of the development of our Blue Creek reserves, second, our decision to accelerate stockholder returns of special cash dividends, and the first special dividend of 50 cents per share, and third, an update on our approach to capital allocation. The development of Blue Creek represents a transformational opportunity for Warrior. During the second quarter, we began developing the site and constructing the service shaft and slope. We are in the preliminary stages of development and expect activities and spending to continue to ramp up over the remainder of this year. We are extremely excited about this project and look forward to seeing the results of our investment once the development is finally completed. As a result of our strong free cash flow generation, we paid a special dividend of 50 cents per share during the second quarter. In addition, we just announced additional returns to stockholders of a second special dividend of 80 cents per share to be paid in the third quarter. These returns are on top of the significant investments we are making into the business, as I mentioned earlier, as part of our capital allocation strategy. I'll now ask Dale to address our circled quarter results in greater detail.

Thanks, Walt. In the press release we issued on May 3rd, we laid out our current policy in regard to capital allocation. which focuses on our ability to fund the operations regardless of volatility in the met coal market, investing in highly accretive growth opportunities such as Blue Crete, and leveraging our free cash flow to return cash to stockholders through special cash dividends or stock repurchases. Using the strong cash flow generated during the second quarter, we deployed the highest quarterly amount of capital spending in mine development ever in the business of $79 million, as Walt noted earlier. We expect full-year capital spending of approximately $200 million to be a record high for the company. While deploying that capital into the business during the second quarter, we also paid a special dividend to stockholders of 50 cents per share. In addition, earlier this week, we announced our second special dividend of the year that will be paid to stockholders in late August on top of the regular quarterly dividend. As previously disclosed, there are certain key metrics that we're continuing to focus on achieving as we make those capital allocation decisions during the five-year development of Blue Creek. They include, first, maintaining a higher amount of minimum total liquidity of $250 million, including a minimum cash balance of $150 million at all times during the development of Blue Creek. Second, staying no more than one and a half to two times levered over that same period, and third, balancing the value of our NOLs with stock repurchases, which could jeopardize those NOLs until they're fully utilized. While the current cash balance and total liquidity well exceeds those minimums, we continue to stockpile cash for the anticipated capital spending for the new Longwall Shields and the development of Blue Green, while returning excess cash to stockholders, as we have demonstrated this year. Now that we have nearly enough cash to pre-fund the entire Blue Creek project, we're pleased to be able to continue to balance capital investments for medium to long-term growth with near-term returns to our stockholders without incurring any debt. We believe strongly that our capital allocation policy and our key metric guidelines provide the right approach. With that, I'll now turn to the second quarter results. For the second quarter of 2022, the company recorded its third consecutive quarter of record quarterly results with net income on a GAAP basis of $297 million, or $5.74 per diluted share, compared to a net loss of $5 million, or $0.09 per diluted share in the same quarter last year. Non-GAAP adjusted net income for the second quarter was an all-time record, excluding the non-recurring business interruption expenses and idle mine expenses and was $5.87 per diluted share, compared to an adjusted net income of 25 cents per diluted share in the same quarter last year. We achieved an all-time record high of $431 million of adjusted EBITDA in the second quarter this year, compared to $65 million in the same quarter last year. The quarterly increase was primarily driven by a 227% increase in average net selling prices partially offset by a 15% decrease in sales volume, plus the impact of inflation on materials and supplies, labor and parts on repairs and major equipment rebuilds. Our adjusted EBITDA margin was 69% in the second quarter this year, compared to 29% in the same quarter last year. Total revenues, another record high, were $625 million in the second quarter, compared to $227 million in the same quarter last year. This 175% increase was primarily due to the 227% increase in average net selling prices, partially offset by a 15% lower sales volume. In addition, other revenues were positively impacted in the second quarter this year by a 130% increase in natural gas prices offset by a non-cash mark-to-market loss on our gas hedges of approximately $14 million. This mark-to-mark hedge loss was attributed to the hedges put into place prior to the run-up in natural gas prices. During the second quarter, we terminated all outstanding gas hedges, and our gas operations should report revenue more consistently with current market prices in future quarters. The Platts Premium Low Vault FOB Australian Index price averaged $280 per short-ton higher and was up 225% in the second quarter this year compared to the same quarter last year. The index price averaged $404 per short-ton for the second quarter. The merge and other charges reduced our gross price realization to an average net selling price of $404 per short-ton in the second quarter this year. compared to $123 per short ton in the same quarter last year. The merge and other charges were approximately $14 million higher in the second quarter this year versus last year, primarily due to higher pricing and the shipment delays that Walt discussed earlier. Cash cost of sales was $190 million for 30% of mining revenues in the second quarter, compared to $152 million, or 68% of mining revenues, in the same quarter last year. Increase in total dollars was primarily due to $61 million of higher variable costs associated with price-sensitive wages, transportation, and royalty costs, partially offset by a $23 million impact, a 15% lower sales volume. In addition, our costs were higher due to inflation, resulting in increased costs for belt structure, root bolts, cable, magnetite, rock dust, and other materials. plus labor and parts on repairs and major equipment rebuilds. Despite the higher variable costs and inflation, cash margins were $281 per short time in the second quarter, compared to only $40 per short time in the same period last year, demonstrating the leverage to higher met coal prices, driving both profitability and free cash flow. Cash cost of sales per short time, FOB port, was approximately $123 in the second quarter, compared to $83 in the same quarter last year. Transportation royalty costs accounted for $39 of the increase, plus an increase in production costs due to the rising inflation of approximately $4 per short time. Cash costs on price-sensitive items such as wages, transportation royalties that vary with met coal pricing were significantly higher in the second quarter of this year compared to the same quarter last year. As you may remember, transportation costs lag on a one-quarter basis, and index prices averaged $280 higher in the second quarter versus the same quarter last year. As a result of the significantly higher prices period over period, variable transportation royalty costs are significantly larger components of the cost per ton than the normal approximately one-third percentage. Variable transportation royalty costs were 54% of the cost per ton of $123 in the second quarter this year, compared to only 33% in the same quarter last year, driven primarily by higher met coal pricing. We expect our transportation costs to be higher in the third quarter due to the lag effect. SE&A expenses were about $13 million, or 2% of total revenues, in the second quarter this year, and were higher than the same quarter last year, primarily due to higher employee-related expenses. During the second quarter, we incurred incremental non-recurring business interruption expenses of $6 million that were directly related to the ongoing labor strike. These non-recurring expenses were primarily for incremental safety and security, legal and labor negotiations, and other expenses. There is no update on the ongoing labor strike as we continue to negotiate in good faith to resolve the matter. Idle mine expenses were $2 million in the second quarter and represent expenses incurred with the operations at both mines running at reduced capacities, such as electricity, insurance, maintenance, labor, taxes, and are primarily fixed in nature. Turning to cash flow, during the second quarter this year, we generated an all-time record high $250 million of free cash flow, which resulted from record high cash flows provided by operating activities of $329 million, less cash used for capital expenditures and mine development costs of $79 million. This resulted in free cash flow conversion of 58% this quarter versus last year's second quarter of 82%. Free cash flow in the second quarter of this year was negatively impacted by a $67 million increase in net working capital from the first quarter of this year. Increase in net working capital was primarily due to an increase in accounts receivable on higher met coal pricing, combined with higher inventories due to the shipment delays previously discussed. A total available liquidity at the end of the second quarter was a record $768 million, representing an increase of $211 million, or 38% over the first quarter of 2022. and consisted of cash and cash equivalents of $645 million and $123 million under our ABL facility. Now turning to our outlook and guidance for 2022, we believe we're well positioned to fulfill anticipated customer commitments for the year. In the current operating environment and without a new union contract, we believe that we will be able to meet our production and sales volumes, including the outlook section of our earnings release. I'll now turn it back to Walt for his final comments.

Thanks, Dale. Before we move on to Q&A, I'd like to make some final comments on our outlook for the third quarter and full year of 2022. As Dale noted earlier in his remarks, our cash cost per short term in the second quarter of 2022 was significantly higher due to the variable components of our cost structure, such as wages, transportation, and royalties, and the impact of inflation. As you may remember, our transportation costs lagged MECRO pricing by one quarter. Therefore, our third quarter transportation costs will be based on the average price of the second quarter, and we are not expected to decline further until the fourth quarter. Another factor that may negatively affect our cash costs is the impact of inflation. As we also mentioned, our inventory levels peaked again at the end of the second quarter as a result of strong production and the shipment delays in getting our coal to the port. We expect to draw down on those inventory levels in the third quarter as we perform maintenance on the skips at mine seven for approximately six weeks. We expect third quarter production to be slightly lower than the second quarter, but still on track for the year. Normally the third quarter tends to be the weakest quarter in terms of demand for most steel producing regions. This time the third quarter does not feel like it'll be normal. Steel production cuts in the form of extended or anticipated maintenance or even idling of blast and electric arc furnaces have already been announced, and hopefully will provide a floor for steel prices to settle on. Although a recession in Europe seems to be a given, the uncertainty around access to Russian natural gas and subsequent impact to the industrial sectors is a concern. We are aware that China's recently announced fiscal stimulus package has the potential to provide a stronger business environment for the steel and met coal markets in the second half of the year. but we remain cautious on China due to the fragility of their property sector and the reality of their rigid COVID restrictions. As noted in previous earnings calls, we believe the global supply of met coal should improve as the year progresses, mainly coming from the Australian producers. As such, softer demand with stable supply should keep met coal prices at much lower levels than those we've experienced in the first half of this year. We do, however, believe that pricing will remain at or above cost curve economics for the period due to the impact of the ban on Russian coals, the potential for a prolonged period of thermal coal pricing premiums, and the overall vulnerability of the global supply chain. Despite all of these headwinds, we remain focused on ramping up production in the existing mines as we add headcount, control our costs, and continue the development of a world-class asset, Blue Creek. which represents a key development project launching at the right time to meet the significant future demand for a unique premium product to deliver value to our stockholders. With that, we would like to open the call for questions. Operator?

At this time, I would like to remind everyone that to ask a question, please press star then the number one on your telephone keypad. We will pause just for a moment to compile the Q&A roster. Our first question will come from David Gagliano with BMO. Please go ahead.

Hi, thanks for taking my questions. And congratulations on a very strong quarter, by the way. I wanted to just ask about the cost guidance for the second half of the year and for the full year. The full year guide obviously didn't change the range, and it implies kind of a flat second half versus the first half. You talked up the third quarter number because of the lag in transport costs, and then we'll get some relief. So it's kind of a two-part question here. First is, can you frame the order of magnitude, the increased quarter-over-quarter in cash costs, and also talk about what price assumptions you're using for the second half of the year embedded in that four-year range that hasn't changed?

Sure, Dave. This is Dale. If you look into our range, for the first half, we're right in the middle of that range. If you look at cash costs based on what we're looking at right now, they're going to be very similar to the third quarter. While prices have decreased and you'll have a decrease in royalties, transportation will be virtually the same because of the one-quarter lag effect there. And, you know, we are experiencing roughly $4 in increased costs related to inflation. So I think that keeps us right in that range for the year. And that was pretty much what we were focused on last time. And so, you know, our pricing is, you know, somewhere in the mid, I think for the whole year, it's in the mid 300s, a little bit above the mid 300s. Now, that obviously can change, and as prices continue to drop, we'll just have to see where we are, but that's kind of where we are right now.

Okay, so maybe I misunderstood. So overall cash cost per ton, third quarter, flattish versus the second quarter? Is that what you're saying? Or I thought I heard up versus second quarter because of higher lag transportation costs.

Well, they'll be flattish because you have opposing forces here going on. You'll have royalties decreasing, but transportation will be virtually the same, but you've got inflation we're having as well. So you're going to be net-net very close, very similar to where we were in the second quarter.

Understood. Okay, I appreciate that clarification. Then on a different note, recently, obviously, MET has come down very sharply, and I think there was a bit of a bounce today, but nevertheless, quite a decline in MET. Um, if, if, you know, the world stays where it is, um, I haven't had a chance to actually go through the math. Um, but you know, with CapEx accelerating, um, in the second half and, and, and into 2023 from blue Creek, you know, we're sitting around 180, 200 ish, you know, Pacific basin benchmark pricing will warrior continue to pay out special dividends during a second half of 22 and into 2023.

I think that's a possibility. We continue to execute our capital allocation strategy, obviously investing in growth in the existing business with the new shields, but you also have the growth with Blue Creek. And when you think about next year, our capital spending should be in that $100 million range outside of Blue Creek. So right now with nearly $700 million, which is pretty much pre-funding Blue Creek entirely, to the extent we generate cash above that, and the board determines that we can return that, we will. And so there's opportunity. It just depends on where the markets go. You're looking at the second half and the potential slowdown in the different markets. We'll just have to see where the markets are at the end of the next quarter and just kind of take it quarter by quarter.

Okay, that's helpful. Thanks.

Thank you. Again, if you have a question, please press star then 1. Our next question will come from Lucas Pipes with B Reilly Securities. Please go ahead.

Thank you very much and good afternoon, everyone. First wanted to ask a bit on the labor situation. Are you adding headcount at my number seven, my number four? Thank you.

We continue to add headcount incrementally. We continue to hire folks, so yes, we continue to hire.

Is there possible to put some numbers around it in terms of kind of pace of additions now versus fourth quarter or first quarter?

The pace slowed down late in the third quarter, early fourth quarter last year, and it's been slower since then, and it continues to kind of trickle in. We still have some folks continue to cross the picket line, and we continue to get some new hires. So it's just been kind of a steady trickle, and as you can see, we built a little inventory in the second quarter. So we're really pretty happy with where things are right now. We continue to hire and move forward with that.

That's very helpful. And then across the industry, a lot of executives are noting skilled labor is difficult to come by. What's your experience in this market? Is it challenging to find skilled labor, or would you say you're well-positioned from that perspective?

In terms of finding skilled labor, it continues to be very difficult. Basically, all coal mines are operational if they can be, so finding skilled, experienced labor has been difficult. We're just having to train some new folks up, and they're doing great.

Good. The last point I wanted to touch on is thermal coal pricing versus met coal pricing. Of course, there's a big spread between the two. Are you able to sell into the thermal coal market? And if so, is there a way to quantify it here at this point? Thank you very much.

We will continue. We are looking into selling into the thermal market. As you know, these quality coals, a met coal like this one from a BTU standpoint is a a much stronger cold than normal thermal colds. So we'll continue to explore that, and as we have opportunities to present themselves and we can achieve higher realizations and still meet our customer commitments, we'll do so.

All right. I appreciate it very much. Best of luck. Thank you.

Thank you.

Our next question will come from Nathan Martin with The Benchmark Company.

Please go ahead. Hey, good afternoon, guys. Thanks for taking my questions. Congrats on the quarter. Thank you.

Thanks, Dave.

I'm just maybe just trying to think about production and sales shipments kind of as we move from the second quarter to the third quarter. Just going back to the comments you guys made, I guess you commented that there were some maybe some downtime on line number seven, I think, in Q3. So production should likely be down a quarter of a quarter. But on the sales side, obviously, you guys called out the inventory levels. More importantly, maybe the transportation issues that seem to be persisting, especially on the rail side. I was hoping to get a little more color on the transportation side of things. Would you expect, hopefully, an increase in shipments quarter to quarter? Maybe as that improves a little bit and you unload some of the inventory? Thank you.

That's our intent is to reduce our inventory from now through the end of the year and definitely in the third quarter. As I mentioned, CSX is implementing some plans to hopefully improve their performance, and we'll see how long those take to come to fruition. We're hopeful that that will begin to take shape. We also had some major maintenance work done at the port in the second quarter, which included rebuilding one of the car dumps. for rail cars. So those two things slowed the port down a bit, and again, the additional congestion from other coals coming in, including thermal, to go out of that port facility. So we expect there's going to continue to be congestion. The port facility should be completed and get up and running pretty quickly, and hopefully we'll see improved performance out of the railroad.

Very helpful, Walt. I guess you guys still have the ability to barge some coal as well?

We do. We barge some of our coal. We have our own barge loadout. We barge some Mine 4 and Mine 7 coal, and we continue to do that to the extent we can. We're pushing the barge facilities as much as we can.

Got it. Perfect. That's all I really had left. I appreciate it, guys. Best of luck in the second half.

Thank you. Thank you.

Our next question will come from Ken Kamen with Pacific Rim Investments LLC.

Please go ahead. Hi, Walt and Dale. Lucas basically already asked my question about the thermal coal, but I might ask you if you could elaborate a bit the quality, the specific qualities of our coals, the low volatile and mid-volatile products. are they amenable to use in thermal plants? I understand that sometimes, you know, like a good coking, quality coke, the coking qualities can kind of backfire on you if you have to use it in a thermal plant. Would we have to perhaps, would the coal perhaps have to be mixed with a different product to create something that could be burned? I'm just kind of wondering about the probability that we we may be able to take advantage of these higher thermal prices before the opportunity's gone.

That's really a power plant by power plant issue. Power plants in different parts of the world are able to operate with different coals. You're right, some of the vols can create issues when being utilized as a thermal coal. But again, the BTU quality kind of makes them want to figure out a way to blend it in and utilize it because it's about a 15% or 20% premium in terms of quality.

Thanks for that. So it's, I guess, something that, you know, we'll know with time.

Yeah, no one's going to be able to just completely, I agree with you, no one's going to be able to completely switch over to Metcoals because it would cause them problems, but I think you'll see it, it find its way in and it'll cause things to balance out a bit.

Yeah, thanks for that.

Thank you.

At this time, there are no further questions. I will now turn the call back to Mr. Scheller for any comments.

That concludes our call this afternoon. Thank you again for joining us today. We appreciate your interest in Warrior Met Gold.

Thank you. That concludes today's conference. Thank you all for participating.