Natural Resource Partners LP: Form 10-Q for the period ended Sep 30, 2024

The following review of operations for the three and nine month periods ended September 30, 2024 and 2023 should be read in conjunction with our Consolidated Financial Statements and the Notes to Consolidated Financial Statements included in this Form 10-Q and with the Consolidated Financial Statements, Notes to Consolidated Financial Statements and Management’s Discussion and Analysis included in the Natural Resource Partners L.P. Annual Report on Form 10-K for the year ended December 31, 2023.

As used herein, unless the context otherwise requires: "we," "our," "us" and the "Partnership" refer to Natural Resource Partners L.P. and, where the context requires, our subsidiaries. References to "NRP" and "Natural Resource Partners" refer to Natural Resource Partners L.P. only, and not to NRP (Operating) LLC or any of Natural Resource Partners L.P.’s subsidiaries. References to "Opco" refer to NRP (Operating) LLC, a wholly owned subsidiary of NRP, and its subsidiaries.

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

Statements included in this 10-Q may constitute forward-looking statements. In addition, we and our representatives may from time to time make other oral or written statements which are also forward-looking statements. Such forward-looking statements include, among other things, statements regarding: future distributions on our common and preferred units; our business strategy; our liquidity and access to capital and financing sources; our financial strategy; prices of and demand for coal, trona and soda ash, and other natural resources; estimated revenues, expenses and results of operations; projected future performance by our lessees; Sisecam Wyoming LLC’s ("Sisecam Wyoming's") trona mining and soda ash refinery operations; distributions from our soda ash joint venture; the impact of governmental policies, laws and regulations, as well as regulatory and legal proceedings involving us, and of scheduled or potential regulatory or legal changes; and global and U.S. economic conditions.

These forward-looking statements speak only as of the date hereof and are made based upon our current plans, expectations, estimates, assumptions and beliefs concerning future events impacting us and involve a number of risks and uncertainties. We caution that forward-looking statements are not guarantees and that actual results could differ materially from those expressed or implied in the forward-looking statements. You should not put undue reliance on any forward-looking statements. See "Item 1A. Risk Factors" included in this Form 10-Q and in our Annual Report on Form 10-K for the year ended December 31, 2023 for important factors that could cause our actual results of operations or our actual financial condition to differ.

NON-GAAP FINANCIAL MEASURES

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure that we define as net income (loss) less equity earnings from unconsolidated investment; plus total distributions from unconsolidated investment, interest expense, net, debt modification expense, loss on extinguishment of debt, depreciation, depletion and amortization and asset impairments. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net income or loss, net income or loss attributable to partners, operating income or loss, cash flows from operating activities or any other measure of financial performance presented in accordance with GAAP as measures of operating performance, liquidity or ability to service debt obligations. There are significant limitations to using Adjusted EBITDA as a measure of performance, including the inability to analyze the effect of certain recurring items that materially affect our net income, the lack of comparability of results of operations of different companies and the different methods of calculating Adjusted EBITDA reported by different companies. In addition, Adjusted EBITDA presented below is not calculated or presented on the same basis as Consolidated EBITDA as defined in our partnership agreement or Consolidated EBITDDA as defined in Opco's debt agreements. For a description of Opco's debt agreements, see Note 9. Debt, Net in the Notes to Consolidated Financial Statements included herein as well as in "Item 8. Financial Statements and Supplementary Data—Note 11. Debt, Net" in our Annual Report on Form 10-K for the year ended December 31, 2023. Adjusted EBITDA is a supplemental performance measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess the financial performance of our assets without regard to financing methods, capital structure or historical cost basis.

Distributable Cash Flow

Distributable cash flow ("DCF") represents net cash provided by (used in) operating activities plus distributions from unconsolidated investment in excess of cumulative earnings, proceeds from asset sales and disposals, including sales of discontinued operations, and return of long-term contract receivable; less maintenance capital expenditures. DCF is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities. DCF may not be calculated the same for us as for other companies. In addition, DCF presented below is not calculated or presented on the same basis as distributable cash flow as defined in our partnership agreement, which is used as a metric to determine whether we are able to increase quarterly distributions to our common unitholders. DCF is a supplemental liquidity measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess our ability to make cash distributions and repay debt.

Free Cash Flow

Free cash flow ("FCF") represents net cash provided by (used in) operating activities plus distributions from unconsolidated investment in excess of cumulative earnings and return of long-term contract receivable; less maintenance and expansion capital expenditures and cash flow used in acquisition costs classified as investing or financing activities. FCF is calculated before mandatory debt repayments. FCF is not a measure of financial performance under GAAP and should not be considered as an alternative to cash flows from operating, investing or financing activities. FCF may not be calculated the same for us as for other companies. FCF is a supplemental liquidity measure used by our management and by external users of our financial statements, such as investors, commercial banks, research analysts and others to assess our ability to make cash distributions and repay debt.

Leverage Ratio

Leverage ratio represents the outstanding principal of our debt at the end of the period divided by the last twelve months' Adjusted EBITDA as defined above. We believe that leverage ratio is a useful measure to management and investors to evaluate and monitor our indebtedness relative to our ability to generate income to service such debt and in understanding trends in our overall financial condition. Leverage ratio may not be calculated the same for us as for other companies and is not a substitute for, and should not be used in conjunction with, GAAP financial ratios.

Introduction

The following discussion and analysis presents management's view of our business, financial condition and overall performance. Our discussion and analysis consists of the following subjects:

• Executive Overview
• Results of Operations
• Liquidity and Capital Resources
• Off-Balance Sheet Transactions
• Related Party Transactions
• Summary of Critical Accounting Estimates
• Recent Accounting Standards

Executive Overview

We are a diversified natural resource company engaged principally in the business of owning, managing and leasing a diversified portfolio of mineral properties in the United States, including interests in coal and other natural resources and own a non-controlling 49% interest in Sisecam Wyoming, a trona ore mining and soda ash production business. Our common units trade on the New York Stock Exchange under the symbol "NRP." Our business is organized into two operating segments:

**Mineral Rights—**consists of approximately 13 million acres of mineral interests and other subsurface rights across the United States. If combined in a single tract, our ownership would cover roughly 20,000 square miles. Our ownership provides critical inputs for the manufacturing of steel, electricity and basic building materials, as well as opportunities for carbon sequestration and renewable energy. We are working to strategically redefine our business as a key player in the transitional energy economy in the years to come.

**Soda Ash—**consists of our 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. Sisecam Wyoming mines the trona and processes it into soda ash that is sold both domestically and internationally into the glass and chemicals industries.

Corporate and Financing includes functional corporate departments that do not earn revenues. Costs incurred by these departments include interest and financing, corporate headquarters and overhead, centralized treasury, legal and accounting and other corporate-level activity not specifically allocated to a segment.

Our financial results by segment for the nine months ended September 30, 2024 are as follows:

(In thousands)

(1) See "Results of Operations" below for reconciliations to the most comparable GAAP financial measures.

Current Results/Market Commentary

Financial Results and Quarterly Distributions

We generated $182.3 million of operating cash flow and $184.3 million of free cash flow during the nine months ended September 30, 2024, and ended the quarter with $76.2 million of liquidity consisting of $30.9 million of cash and cash equivalents and $45.3 million of available borrowing capacity under our Opco Credit Facility. As of September 30, 2024 our leverage ratio was 0.8 x.

In the first quarter of 2024, holders of our warrants to purchase common units (the "warrants") exercised a total of 1,219,665 warrants with a strike price of $34.00. We settled these warrants on a net basis with a total of $55.7 million in cash and 198,767 common units. In the second quarter of 2024, holders of our warrants exercised the remaining 320,335 warrants with a strike price of $34.00. We settled these warrants on a net basis with $10.0 million in cash and 89,059 common units. Following these transactions, of the originally issued 4.0 million warrants, after giving effect to these settlements and all prior settlements, no warrants remain outstanding.

In May 2024, we executed a negotiated transaction with holders of our Class A Preferred Units ("preferred units") pursuant to which we repurchased an aggregate of 40,000 preferred units for $40.0 million in cash. In September 2024, we redeemed the remaining 31,666 preferred units for $31.7 million in cash. Of the originally issued 250,000 preferred units, after giving effect to these redemptions and all prior redemptions, no preferred units remain outstanding.

In 2024, we exercised our option under the Opco Credit Facility to increase the total aggregate commitment under the Opco Credit Facility twice, initially by $30.0 million from $155.0 million to $185.0 million and subsequently by $15.0 million from $185.0 million to $200.0 million. These increases in the total aggregate commitment were made pursuant to an accordion feature of the Opco Credit Facility. In October 2024, we entered into the Seventh Amendment to the Opco Credit Facility which extended the maturity from August 2027 to October 2029. The Seventh Amendment also removed reference to the preferred units and warrants, which are no longer outstanding, and includes modifications to Opco's ability to declare and make certain restricted payments.

In February 2024, we paid a cash distribution of $0.75 per common unit of NRP with respect to the fourth quarter of 2023 as well as a $2.15 million cash distribution on the preferred units with respect to the fourth quarter of 2023. We paid a special cash distribution of $2.44 per common unit of NRP in March 2024 to help cover unitholder tax liabilities associated with owning NRP's common units in 2023. In May 2024, we paid a cash distribution of $0.75 per common unit of NRP with respect to the first quarter of 2024 as well as a $2.15 million cash distribution on the preferred units with respect to the first quarter of 2024. In August 2024, we paid a cash distribution of $0.75 per common unit of NRP with respect to the second quarter of 2024 as well as a $0.95 million cash distribution on the preferred units with respect to the second quarter of 2024. Future distributions on our common units will be determined on a quarterly basis by the Board of Directors. The Board of Directors considers numerous factors each quarter in determining cash distributions, including profitability, cash flow, debt service obligations, market conditions and outlook, estimated unitholder income tax liability and the level of cash reserves that the Board of Directors determines is necessary for future operating and capital needs.

Mineral Rights Business Segment

Revenues and other income during the nine months ended September 30, 2024 decreased $33.1 million, or 15%, as compared to the prior year period. Cash provided by operating activities and free cash flow during the nine months ended September 30, 2024 decreased by $10.2 million and $10.1 million, respectively, as compared to the prior year period. These decreases were primarily due to lower metallurgical coal sales prices as well as lower thermal coal sales prices and volumes as compared to the prior year period.

Metallurgical coal prices continued to decline during the third quarter of 2024 primarily driven by muted steel demand resulting from sluggish construction activity in China as well as weak manufacturing demand globally. We expect pricing to remain relatively soft for both metallurgical and thermal coal as muted global steel demand impacts metallurgical coal, and mild weather, low natural gas prices, and high inventory levels impact thermal coal. However, continued price support above historical norms is expected due to limited access to capital for operators, qualified labor shortages, and input cost inflation.

We continue to explore carbon neutral revenue opportunities across our ownership footprint. While the timing and likelihood of additional cash flows from these activities is uncertain, we believe our large ownership throughout the United States provides additional opportunities to create value in this regard with minimal capital investment by us. Our carbon neutral revenue opportunities include the sequestration of carbon dioxide underground and in standing forests, lithium production, and the generation of electricity using geothermal, solar, and wind energy.

Soda Ash Business Segment

Revenues and other income during the nine months ended September 30, 2024 decreased $41.4 million, or 71%, as compared to the prior year period primarily due to significantly lower sales prices driven by increased global production capacity, primarily from China, and weaker demand for flat glass due to a slowdown in global construction activity and weakness in demand for automobiles. Cash provided by operating activities and free cash flow during the nine months ended September 30, 2024 decreased $37.9 million as compared to the prior year period as the decline in revenues and other income resulted in lower cash distributions received from Sisecam Wyoming in the nine months ended September 30, 2024.

We believe it will take several years for the world to absorb the additional soda ash supply recently introduced into the market and allow prices to rise back to historically normal equilibrium levels. The timing of this absorption will be highly dependent on China, which currently produces and consumes approximately 50% of global soda ash.

Results of Operations

Third Quarter of 2024 and 2023 Compared

Revenues and Other Income

The following table includes our revenues and other income by operating segment:

The changes in revenues and other income are discussed for each of the operating segments below:

Mineral Rights

The following table presents coal sales volumes, coal royalty revenue per ton and coal royalty revenues by major coal producing region, the significant categories of other revenues and other income:

(In thousands, except per ton data)

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Coal Royalty Revenues

Approximately 75% of coal royalty revenues and approximately 55% of coal royalty sales volumes were derived from metallurgical coal during the three months ended September 30, 2024. Total coal royalty revenues decreased $17.9 million as compared to the prior year quarter primarily due to lower metallurgical coal sales prices as well as lower thermal coal sales prices and volumes during the three months ended September 30, 2024, as compared to the prior year quarter.

Transportation and Processing Services Revenues

Transportation and processing services revenues decreased $2.8 million primarily due to a temporary relocation of certain production off of NRP's coal reserves. The fee per ton associated with the transportation and processing of the non-NRP coal is less than the fee per ton associated with the transportation and processing of NRP coal.

Soda Ash

Revenues and other income related to our Soda Ash segment decreased $4.3 million as compared to the prior year quarter primarily due to significantly lower sales prices driven by increased global production capacity, primarily from China, and weaker demand for flat glass due to a slowdown in global construction activity and weakness in demand for automobiles.

Operating Expenses

The following table presents the significant categories of our consolidated operating expenses:

(In thousands)

Total operating expenses decreased $1.1 million as compared to the prior year quarter primarily due to a decrease in operating and maintenance expenses during the three months ended September 30, 2024 as compared to the prior year quarter. The decrease in operating and maintenance expenses was primarily due to lower overriding royalty expense from an agreement with Western Pocahontas Properties Limited Partnership ("WPPLP") in the third quarter of 2024 as compared to the third quarter of 2023. This overriding royalty expense is fully offset by coal royalty revenue we receive from this property.

Interest Expense, Net

Interest expense, net increased $0.4 million primarily due to higher borrowings outstanding on the Opco Credit Facility during the three months ended September 30, 2024 as compared to the prior year period.

Adjusted EBITDA (Non-GAAP Financial Measure)

The following table reconciles net income (loss) (the most comparable GAAP financial measure) to Adjusted EBITDA by business segment:

Net income decreased $25.3 million as compared to the prior year quarter primarily due to the decrease in revenues and other income as discussed above. Adjusted EBITDA decreased $37.1 million as compared to the prior year quarter primarily due to a $20.2 million decrease in Adjusted EBITDA within our Mineral Rights segment driven by the lower revenues and other income as discussed above in addition to a $16.7 million decrease in Adjusted EBITDA within our Soda Ash segment driven by a lower distribution received from Sisecam Wyoming in the third quarter of 2024.

Distributable Cash Flow ("DCF") and Free Cash Flow ("FCF") (Non-GAAP Financial Measures)

The following table presents the three major categories of the statement of cash flows by business segment:

The following table reconciles net cash provided by (used in) operating activities (the most comparable GAAP financial measure) by business segment to DCF and FCF:

Operating cash flow, DCF and FCF decreased $24.8 million, $25.6 million and $24.7 million, respectively, as compared to the prior year quarter. The discussion by segment is as follows:

• Mineral Rights Segment
• Operating cash flow, DCF and FCF decreased $7.3 million, $8.1 million and $7.3 million, respectively, primarily due to lower metallurgical coal sales prices as well as lower thermal coal sales prices and volumes as compared to the prior year quarter.
• Soda Ash Segment
• Operating cash flow, DCF and FCF decreased $16.7 million as compared to the prior year quarter primarily due to a lower distribution received from Sisecam Wyoming in the third quarter of 2024.
• Corporate and Financing
• Operating cash flow, DCF and FCF decreased $0.8 million as compared to the prior year quarter primarily due to higher cash paid for interest resulting from higher borrowings outstanding on the Opco Credit Facility during the three months ended September 30, 2024.

First Nine Months of 2024 and 2023 Compared

Revenues and Other Income

The following table includes our revenues and other income by operating segment:

The changes in revenues and other income are discussed for each of the operating segments below:

Mineral Rights

The following table presents coal sales volumes, coal royalty revenue per ton and coal royalty revenues by major coal producing region, the significant categories of other revenues and other income:

(In thousands, except per ton data)

25

Coal Royalty Revenues

Approximately 75% of coal royalty revenues and approximately 55% of coal royalty sales volumes were derived from metallurgical coal during the nine months ended September 30, 2024. Total coal royalty revenues decreased $37.4 million as compared to the prior year period primarily due to lower metallurgical coal sales prices as well as lower thermal coal sales prices and volumes during the nine months ended September 30, 2024, as compared to the prior year period.

Other Revenues

Other revenues increased $4.0 million primarily driven by higher oil and gas royalty and other revenues as compared to the prior year period.

Gain on Asset Sales and Disposals

Gain on asset sales and disposals increased $3.9 million during the nine months ended September 30, 2024 as compared to the prior year period as a result of a coal property condemnation in the second quarter of 2024.

Soda Ash

Revenues and other income related to our Soda Ash segment decreased $41.4 million as compared to the prior year period primarily due to significantly lower sales prices driven by increased global production capacity, primarily from China, and weaker demand for flat glass due to a slowdown in global construction activity and weakness in demand for automobiles.

Operating Expenses

The following table presents the significant categories of our consolidated operating expenses:

(In thousands)

Total operating expenses decreased $3.8 million as compared to the prior year period primarily due to a decrease in operating and maintenance expenses during the nine months ended September 30, 2024 as compared to the prior year period. The decrease in operating and maintenance expenses was primarily due to lower overriding royalty expense from an agreement with WPPLP in the first nine months of 2024 as compared to the first nine months of 2023. This overriding royalty expense is fully offset by coal royalty revenue we receive from this property.

Interest Expense, Net

Interest expense, net increased $1.8 million primarily due to higher borrowings outstanding on the Opco Credit Facility during the nine months ended September 30, 2024 as compared to the prior year period.

Adjusted EBITDA (Non-GAAP Financial Measure)

The following table reconciles net income (loss) (the most comparable GAAP financial measure) to Adjusted EBITDA by business segment:

Net income decreased $72.6 million as compared to the prior year period primarily due to the decrease in revenues and other income as discussed above. Adjusted EBITDA decreased $67.1 million as compared to the prior year period primarily due to an $28.2 million decrease in Adjusted EBITDA within our Mineral Rights segment primarily as a result of lower revenues and other income and a $37.9 million decrease in Adjusted EBITDA within our Soda Ash segment primarily due to lower distributions received from Sisecam Wyoming in the first nine months of 2024.

Distributable Cash Flow ("DCF") and Free Cash Flow ("FCF") (Non-GAAP Financial Measures)

The following table presents the three major categories of the statement of cash flows by business segment:

The following table reconciles net cash provided by (used in) operating activities (the most comparable GAAP financial measure) by business segment to DCF and FCF:

Operating cash flow, DCF and FCF decreased $50.9 million, $46.9 million and $50.8 million, respectively. The discussion by segment is as follows:

• Mineral Rights Segment
• Operating cash flow, DCF and FCF decreased $10.2 million, $6.2 million and $10.1 million, respectively, primarily due to lower metallurgical coal sales prices as well as lower thermal coal sales prices and volumes during the first nine months of 2024 as compared to the prior year period. The decrease in DCF was partially offset by cash received related to a coal property condemnation in the second quarter of 2024.
• Soda Ash Segment
• Operating cash flow, DCF and FCF decreased $37.9 million as compared to the prior year period primarily due to lower distributions received from Sisecam Wyoming in the first nine months of 2024.
• Corporate and Financing Segment
• Operating cash flow, DCF and FCF decreased $2.8 million as compared to the prior year quarter primarily due to higher cash paid for interest resulting from higher borrowings outstanding on the Opco Credit Facility during the nine months ended September 30, 2024.

Liquidity and Capital Resources

Current Liquidity

As of September 30, 2024, we had total liquidity of $76.2 million, consisting of $30.9 million of cash and cash equivalents and $45.3 million of borrowing capacity under our Opco Credit Facility. We have debt service obligations, including approximately $14 million of principal repayments on Opco’s senior notes, throughout the remainder of 2024. The following table calculates our leverage ratio as of September 30, 2024:

(In thousands)

Cash Flows

Cash flows provided by operating activities decreased $50.9 million, from $233.2 million in the nine months ended September 30, 2023 to $182.3 million in the nine months ended September 30, 2024, primarily due to decreased cash flow within our Mineral Rights and Soda Ash segments, all discussed above.

Cash flows provided by investing activities increased $4.0, million from $2.8 million in the nine months ended September 30, 2023 to $6.8 million in the nine months ended September 30, 2024, primarily due to a coal condemnation payment received in the second quarter of 2024.

Cash used in financing activities decreased $86.5 million, from $256.7 million used in the nine months ended September 30, 2023 to $170.2 million used in the nine months ended September 30, 2024 due to the following:

• $106.7 million of decreased cash used for the redemption of preferred units in 2024 as compared to 2023;
• $65.4 million of decreased debt repayments in 2024 as compared to 2023; and
• $13.5 million decreased distributions to preferred unitholders in 2024 as compared to 2023.

These decreases in cash flow used were partially offset by the following:

• $62.2 million of decreased borrowings on the Opco Credit Facility in 2024 as compared to 2023;
• $32.1 million of increased cash used for the warrant settlements in 2024 as compared to 2023;
• $2.9 million of increased cash used for other items, net in 2024 as compared to 2023; and
• $1.9 million of increased distributions to common unitholders and the general partner in 2024 as compared to 2023.

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Capital Resources and Obligations

Debt, Net

We had the following debt outstanding as of September 30, 2024 and December 31, 2023:

(In thousands)

We have been and continue to be in compliance with the terms of the financial covenants contained in our debt agreements. For additional information regarding our debt and the agreements governing our debt, including the covenants contained therein, see Note 9. Debt, Net to the Consolidated Financial Statements included elsewhere in this Quarterly Report on Form 10-Q.

Off-Balance Sheet Transactions

We do not have any off-balance sheet arrangements with unconsolidated entities or related parties and accordingly, there are no off-balance sheet risks to our liquidity and capital resources from unconsolidated entities.

Related Party Transactions

The information required set forth under Note 11. Related Party Transactions to the Consolidated Financial Statements is incorporated herein by reference.

Summary of Critical Accounting Estimates

The preparation of Consolidated Financial Statements in conformity with generally accepted accounting principles in the United States of America requires management to make certain estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and the accompanying notes. There have been no significant changes to our critical accounting estimates from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

Recent Accounting Standards

In November 2023, the FASB issued ASU No. 2023-07—Segment Reporting (Topic 280)—Improvements to Reportable Segment Disclosures ("ASU 2023-07"). The amendments in ASU 2023-07 improve reportable segment disclosure requirements, primarily through enhanced disclosures about segment expenses. The guidance is effective for annual periods beginning after December 15, 2023 and quarterly periods beginning after December 15, 2024 and will be adopted retrospectively to all prior periods presented in the financial statements. We do not expect the adoption of ASU 2023-07 to have a material effect on our Consolidated Financial Statements.

We are exposed to market risk, which includes adverse changes in commodity prices and interest rates as discussed below:

Commodity Price Risk

Our revenues, operating results, financial condition and ability to borrow funds or obtain additional capital depend substantially on prevailing commodity prices. Historically, coal prices have been volatile, with prices fluctuating widely, and are likely to continue to be volatile. Depressed prices in the future would have a negative impact on our future financial results. In particular, substantially lower prices would significantly reduce revenues and could potentially trigger an impairment of our coal properties or a violation of certain financial debt covenants. Because substantially all our reserves are coal, changes in coal prices have a more significant impact on our financial results.

We are dependent upon the effective marketing of the coal mined by our lessees. Our lessees sell the coal under various long-term and short-term contracts as well as on the spot market. Current conditions in the coal industry may make it difficult for our lessees to extend existing contracts or enter into supply contracts with terms of one year or more. Our lessees' failure to negotiate long-term contracts could adversely affect the stability and profitability of our lessees' operations and adversely affect our future financial results. If more coal is sold on the spot market, coal royalty revenues may become more volatile due to fluctuations in spot coal prices.

The market price of soda ash and energy costs directly affects the profitability of Sisecam Wyoming's operations. If the market price for soda ash declines, Sisecam Wyoming's sales revenues will decrease. Historically, the global market and, to a lesser extent, the domestic market for soda ash have been volatile and are likely to remain volatile in the future.

Interest Rate Risk

Our exposure to changes in interest rates results from our borrowings under the Opco Credit Facility, which is subject to variably interest rates based upon SOFR. At September 30, 2024, we had $154.7 million in borrowings outstanding under the Opco Credit Facility. If interest rates were to increase by 1%, annual interest expense would increase approximately $1.5 million, assuming the same principal amount remained outstanding during the year.

Evaluation of Disclosure Controls and Procedures

NRP carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. This evaluation was performed under the supervision and with the participation of NRP management, including the Chief Executive Officer and Chief Financial Officer of the general partner of the general partner of NRP. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that these disclosure controls and procedures are effective in providing reasonable assurance that (a) the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and (b) such information is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in the Partnership’s Internal Control Over Financial Reporting

There were no material changes in the Partnership’s internal control over financial reporting during the first nine months of 2024 that materially affected, or were reasonably likely to materially affect, the Partnership’s internal control over financial reporting.

During the period covered by this report, there were no material changes from the risk factors previously disclosed in Natural Resource Partners L.P.’s Annual Report on Form 10-K for the year ended December 31, 2023.