NATURAL RESOURCE PARTNERS LP

Natural Resource Partners LP owns, manages and leases a diversified portfolio of mineral properties in the United States, including interests in coal and other natural resources, and owns a non-controlling 49% interest in Sisecam Wyoming LLC, a trona ore mining and soda ash production business. The company's business is organized into two operating segments: Mineral Rights, which consists of approximately 13 million acres of mineral interests and other subsurface rights across the United States, and Soda Ash, which consists of its 49% non-controlling equity interest in Sisecam Wyoming, one of the world's lowest-cost producers of soda ash. The company does not mine, drill or produce minerals; instead, it leases its acreage to companies engaged in the extraction of minerals in exchange for the payment of royalties and various other fees. The majority of Mineral Rights segment revenues come from royalties related to the sale of coal from its properties, with coal primarily located in the Appalachia Basin, the Illinois Basin and the Northern Powder River Basin in the United States. The company also owns oil and gas, industrial minerals and aggregates that generate a portion of Mineral Rights segment revenues, and additional revenues come from carbon neutral activities such as the sale of carbon offset credits from forestlands, potential sub-surface carbon dioxide sequestration and opportunities to generate energy from renewable resources.

The company faces competition from land companies, coal producers, international steel companies and private equity firms in purchasing coal and royalty producing properties. Numerous producers in the coal industry make coal marketing intensely competitive, with lessees competing among themselves and with coal producers in various regions of the United States for domestic sales on the basis of coal price at the mine, coal quality, transportation cost from the mine to the customer and the reliability of supply. Sisecam Wyoming's trona mining and soda ash refinery business faces competition from a number of soda ash producers in the United States, Europe and Asia, some of which have greater market share and greater financial, production and other resources. The company has a significant concentration of revenues from Alpha Metallurgical Resources Inc., with total revenues of $52.9 million ¹ in 2025 from several different mining operations, from Foresight Energy Resources LLC and its subsidiaries with total revenues of $42.5 million ² in 2025, and from Alabama Kanu Holdings LLC with total revenues of $22.1 million ³ in 2025 from one mining operation.

The company generates revenue primarily by leasing its acreage to companies engaged in the extraction of minerals in exchange for the payment of royalties and various other fees. The royalties received are generally a percentage of the gross revenue received by lessees, typically supported by a floor price and minimum payment obligation. Approximately two-thirds of the company's royalty-based leases have initial terms of five to 40 years, with substantially all lessees having the option to extend the lease for additional terms. The company also owns and manages coal-related transportation and processing assets in the Illinois Basin that generate additional revenues generally based on throughput or rents. Through its 49% non-controlling equity interest in Sisecam Wyoming, the company realizes cash flow when distributions are paid to it. The company does not operate any mines, drills or production facilities; its royalty business does not bear ordinary operating costs and has limited direct exposure to environmental, permitting and labor risks, as lessees bear those costs.

The Mineral Rights segment consists of approximately 13 million acres of mineral interests and other subsurface rights across the United States. For the year ended December 31, 2025, total Mineral Rights segment revenues and other income were $204.2 million ⁴, comprising 99% of total company revenues and other income. Coal royalty revenues were $133.5 million ⁵ for 2025, with approximately 65% of coal royalty revenues and approximately 45% of coal royalty sales volumes derived from metallurgical coal. Total coal sales volumes were 29.2 million tons ⁶ in 2025, with 13.4 million tons ⁷ of metallurgical coal and 15.8 million tons ⁸ of thermal coal. The combined average coal royalty revenue per ton was $4.58 ⁹ in 2025. Other revenues within the segment totaled $57.5 million ¹⁰ in 2025, including production lease minimum revenues of $5.0 million ¹¹, minimum lease straight-line revenues of $16.6 million ¹², oil and gas royalty revenues of $7.6 million ¹³, carbon neutral revenues of $1.5 million ¹⁴, property tax revenues of $6.8 million ¹⁵, wheelage revenues of $8.4 million ¹⁶, coal overriding royalty revenues of $2.2 million ¹⁷, lease amendment revenues of $4.9 million ¹⁸, aggregates royalty revenues of $3.7 million ¹⁹, and other revenues of $1.0 million ²⁰. Transportation and processing services revenues were $11.3 million ²¹ in 2025, and gain on asset sales and disposals was $1.9 million ²². The segment's net income was $165.6 million ²³ and Adjusted EBITDA was $180.5 million ²⁴ for 2025.

The Soda Ash segment consists of the company's 49% non-controlling equity interest in Sisecam Wyoming, a trona ore mining and soda ash production business located in the Green River Basin of Wyoming. For the year ended December 31, 2025, Soda Ash segment revenues and other income were $3.1 million ²⁵, comprising 1% of total company revenues and other income. Sisecam Wyoming produced 2.3 million short tons ²⁶ of soda ash in 2025 (of which the Partnership's interest is 1.1 million short tons ²⁷) and sold 2.3 million short tons ²⁸ (of which the Partnership's interest is 1.1 million short tons ²⁹). Sisecam Wyoming had net sales of $529.4 million ³⁰ in 2025 (of which the Partnership's interest is $259.4 million ³¹). The segment's net income was $2.9 million ³² and Adjusted EBITDA was $7.7 million ³³ for 2025. Sisecam Wyoming's proven and probable trona reserves as of December 31, 2025 were 213.5 million short tons ³⁴ (of which the Partnership's interest is 104.6 million short tons ³⁵), with a grade of 85.6% ³⁶. Based on the current mining rate of approximately 4.3 million short tons of trona per year, Sisecam Wyoming has enough proven and probable trona reserves to continue mining for approximately 50 years ³⁷.

During the year ended December 31, 2025, the company paid cash distributions of $0.75 ³⁸ per common unit for each of the four quarters and a special cash distribution of $1.21 ³⁹ per common unit in March 2025 to help cover unitholder tax liabilities associated with owning NRP's common units in 2024. In February 2026, the Board of Directors declared and paid a cash distribution of $0.75 ⁴⁰ per common unit with respect to the fourth quarter of 2025, and the company announced it will pay a special cash distribution of $0.12 ⁴¹ in March 2026 to help cover unitholder tax liabilities associated with owning NRP's common units in 2025. The company had total liquidity of $211.2 million ⁴² as of December 31, 2025, consisting of $30.1 million ⁴³ of cash and cash equivalents and $181.1 million ⁴⁴ of borrowing capacity under the Opco Credit Facility. The leverage ratio was 0.2x ⁴⁵ as of December 31, 2025. In February 2026, the company and Sisecam Wyoming's managing partner agreed to make an additional capital investment into Sisecam Wyoming of $39.2 million ⁴⁶ for NRP's 49% interest to reduce outstanding amounts under Sisecam Wyoming's bank credit facility.

For the year ended December 31, 2025, total revenues and other income were $207.3 million ⁴⁷, compared to $268.0 million ⁴⁸ in 2024 and $370.0 million ⁴⁹ in 2023. Net income was $136.4 million ⁵⁰ in 2025, compared to $183.6 million ⁵¹ in 2024 and $278.4 million ⁵² in 2023. Net cash provided by operating activities was $165.9 million ⁵³ in 2025, compared to $248.5 million ⁵⁴ in 2024 and $311.0 million ⁵⁵ in 2023. Free cash flow was $168.7 million ⁵⁶ in 2025, compared to $251.2 million ⁵⁷ in 2024. Adjusted EBITDA was $164.1 million ⁵⁸ in 2025, compared to $235.5 million ⁵⁹ in 2024. The decreases in revenues and cash flows were primarily due to lower metallurgical coal sales prices and volumes, one-time carbon neutral revenues in 2024, and lower cash distributions received from Sisecam Wyoming in 2025.

The company continues to explore carbon neutral revenue opportunities across its mineral and surface assets, including the sequestration of carbon dioxide underground and in standing forests, lithium production, and electric generation via renewable energy sources. The company owns approximately 3.5 million acres ⁶⁰ of specifically reserved subsurface rights in the southern United States with the potential for permanent sequestration of greenhouse gases, and believes it owns one of the largest inventories of acreage with potential for carbon sequestration activities in the United States. The company also believes portions of its asset base across the United States possess the geologic characteristics and geographical locations necessary for geothermal, solar and wind energy development, with geothermal opportunities predominately located in the South, Midwest and Northwest parts of the United States and wind and solar energy opportunities predominantly in Kentucky and West Virginia. However, the company notes that the markets for its carbon neutral revenue opportunities remain weak, and the burdens on the carbon sequestration industry, including insufficient revenue streams, high operational and capital costs, and an uncertain regulatory environment, continue to create formidable barriers that operators have yet to overcome.

The company's Soda Ash segment represents a growth vector through its 49% non-controlling equity interest in Sisecam Wyoming, which is one of the largest and lowest cost producers of soda ash in the world, serving a global market from its facility in the Green River Basin of Wyoming. Sisecam Wyoming has enough proven and probable trona reserves to continue mining using current methods for approximately 50 years ⁶¹ based on the current mining rate of approximately 4.3 million short tons of trona per year. However, the soda ash market continues to be significantly oversupplied from the influx of new capacity from China and sales prices remain below the cost of production for most producers. The company expects soda ash prices to remain at these lower levels for the foreseeable future and does not expect distributions from Sisecam Wyoming to resume for several years until high-cost capacity is forced to retire. In February 2026, the company and Sisecam Wyoming's managing partner agreed to make an additional capital investment into Sisecam Wyoming of $39.2 million ⁶² for NRP's 49% interest to reduce outstanding amounts under Sisecam Wyoming's bank credit facility and better position it to compete in the current environment.

Total operating expenses decreased $5.9 million ⁶³ during the year ended December 31, 2025 as compared to the prior year, primarily due to a $4.2 million ⁶⁴ decrease in operating and maintenance expenses, which was primarily due to lower bad debt expense in 2025 as compared to 2024. Interest expense, net decreased $7.6 million ⁶⁵ during the year ended December 31, 2025 as compared to the prior year primarily due to lower borrowings outstanding on the Opco Credit Facility. The company expects that metallurgical and thermal coal prices will remain weak in 2026 due to sluggish steel demand impacting metallurgical coal and low natural gas prices and ample thermal coal supply at power plants impacting thermal coal.

The company's operations are conducted through Opco and its operating assets are owned by its subsidiaries. As of December 31, 2025, affiliates of the general partner employed 51 ⁶⁶ people who directly supported the company's operations, none of whom were subject to a collective bargaining agreement. The company has regional offices through which it conducts its operations, the largest of which is located in Huntington, West Virginia. The company's principal executive office is located in Houston, Texas. The company does not operate any mines, drills or production facilities; instead, it leases its acreage to companies engaged in the extraction of minerals.

The company had total debt, net of $33.1 million ⁶⁷ as of December 31, 2025, compared to $142.1 million ⁶⁸ as of December 31, 2024. The company has debt service obligations including approximately $14.3 million ⁶⁹ of principal repayments on Opco's senior notes in 2026. The company's leverage ratio was 0.2x ⁷⁰ as of December 31, 2025. The company has been and continues to be in compliance with the terms of the financial covenants contained in its debt agreements. The company's partnership agreement requires its consolidated leverage ratio to be less than 3.25x ⁷¹ in order to make quarterly distributions on the common units in an amount in excess of $0.45 ⁷² per unit. The company paid cash distributions of $0.75 ⁷³ per common unit for each quarter in 2025 and a special distribution of $1.21 ⁷⁴ per common unit in March 2025.

Metallurgical and thermal coal prices remained weak throughout 2025 due to sluggish steel demand impacting metallurgical coal and low natural gas prices and ample thermal coal supply at power plants impacting thermal coal. The company does not expect any material changes to pricing in 2026. The markets for the company's carbon neutral revenue opportunities also remain weak, with the company noting that the burdens on the carbon sequestration industry, including insufficient revenue streams, high operational and capital costs, and an uncertain regulatory environment, continue to create formidable barriers that operators have yet to overcome. The soda ash market continues to be significantly oversupplied from the influx of new capacity from China and sales prices remain below the cost of production for most producers, with the company expecting soda ash prices to remain at these lower levels for the foreseeable future and not expecting distributions from Sisecam Wyoming to resume for several years until high-cost capacity is forced to retire.

The company's business is subject to numerous federal, state and local laws and regulations that may limit production from its properties and its profitability, including the Clean Air Act, the Clean Water Act, the Surface Mining Control and Reclamation Act, the Mine Safety and Health Act, and various climate change and greenhouse gas emissions regulations. The adoption of climate change legislation and regulations restricting emissions of greenhouse gases and other hazardous air pollutants has resulted in changes in fuel consumption patterns by electric power generators and a corresponding decrease in coal production by the company's lessees and reduced coal-related revenues. The company expects that substantially all newly constructed power plants in the United States will be fired by natural gas because of lower construction and compliance costs compared to coal-fired plants and because natural gas is a cleaner burning fuel. Concerns about the environmental impacts of coal combustion are also resulting in unfavorable lending and investment policies by institutions and insurance companies which could significantly affect the company's ability to raise capital or maintain current insurance levels.

The company derives a large percentage of its revenues from a small number of coal lessees, with Alpha Metallurgical Resources Inc. accounting for approximately 26% ⁷⁵ of total revenues in 2025, Foresight Energy Resources LLC accounting for approximately 21% ⁷⁶, and Alabama Kanu Holdings LLC accounting for approximately 11% ⁷⁷. Any interruption in these lessees' ability to make royalty payments could have a disproportionate material adverse effect. Prices for both metallurgical and thermal coal are volatile and depend on factors beyond the company's control, and the combined average coal royalty revenue per ton declined from $6.83 ⁷⁸ in 2023 to $5.74 ⁷⁹ in 2024 and $4.58 ⁸⁰ in 2025. The soda ash market is significantly oversupplied from new capacity from China, with sales prices below the cost of production for most producers, and the company does not expect distributions from Sisecam Wyoming to resume for several years. The company had approximately $33.2 million ⁸¹ of total indebtedness as of December 31, 2025, with debt service obligations including approximately $14.3 million ⁸² of principal repayments on senior notes in 2026, and the terms of its debt agreements require meeting certain leverage and interest coverage ratios. The adoption of climate change legislation and regulations restricting emissions of greenhouse gases has resulted in decreased coal production by the company's lessees and reduced coal-related revenues, and the company expects that substantially all newly constructed power plants in the United States will be fired by natural gas.

Management's message emphasizes that the company generated $165.9 million ⁸³ of operating cash flow and $168.7 million ⁸⁴ of free cash flow during the year ended December 31, 2025, and ended the year with $211.2 million ⁸⁵ of liquidity consisting of $30.1 million ⁸⁶ of cash and cash equivalents and $181.1 million ⁸⁷ of borrowing capacity under the Opco Credit Facility, with a leverage ratio of 0.2x ⁸⁸. Management notes that metallurgical and thermal coal prices remained weak throughout 2025 due to sluggish steel demand impacting metallurgical coal and low natural gas prices and ample thermal coal supply at power plants impacting thermal coal, and does not expect any material changes to pricing in 2026. Regarding the Soda Ash segment, management states that the soda ash market continues to be significantly oversupplied from the influx of new capacity from China and sales prices remain below the cost of production for most producers, and expects soda ash prices to remain at these lower levels for the foreseeable future and does not expect distributions from Sisecam Wyoming to resume for several years until high-cost capacity is forced to retire. Management highlights that in February 2026, the company and Sisecam Wyoming's managing partner agreed to make an additional capital investment into Sisecam Wyoming of $39.2 million ⁸⁹ for NRP's 49% interest, which management evaluated as they would any other capital allocation opportunity with the goal of maximizing NRP's intrinsic value per unit. The strategic priorities emphasized for the period ahead include maintaining a strong balance sheet with low leverage, continuing to return capital to unitholders through quarterly and special distributions, and positioning the Sisecam Wyoming investment to compete in the current soda ash market environment.