Allegiance Coal Limited update on the commencement of production at the New Elk Mine and its production and sales plans for H2 2022. Coal production commenced in the Blue Seam at the New Elk Mine on 21 May 2021, with the first production unit. Commencement was delayed by three weeks against the Company's target start date due to delays in obtaining approvals to mine operational plans from Mine Safety and Health Administration, a US Federal Government department tasked with regulating the safety of mining operations in the US (MSHA). The delay was due primarily to the impact of COVID on MSHA with the closure its office in Colorado coupled with key staff away on leave. There were no material issues in relation to any of the Mine's operational plans. The delay did however mean that the Mine could commence production in the knowledge that its first coal sales had been agreed, which they were not three weeks ago. The forward sale of four Blue Seam cargoes solved a potential timing problem that the Company was facing with the planned closure of the Black Warrior River for one month from 23 June to 24 July 2021, during which the Company was planning to move both Blue Seam coal by rail, and Pratt Seam coal by barge (on the Black Warrior River), to Convent Marine Terminal for blending and sale. The Blue Seam sales allowed the Company to delay the Blue Pratt Seam blending strategy to align with the accelerated commencement of the second production unit in the Blue Seam, presently planned for early August 2021. Coal Sales The Company has been in discussion with a local cement company for supply of a low volume of coal to generate heat in the cement plant's kiln. The cement company has previously used Blue Seam coal, acquiring the remnant coal stockpiled at the Mine following the Mine's closure in July 2012. While this is not the Company's main sales and marketing strategy, the prospect of a fixed price, long term supply contract for small tonnages, does offer a hedge against price volatility on the seaborne market. It also offers a market for any Mine production which is less desirable for the coking coal market, as well as the opportunity to wash a middling product for supply to the cement plant. A trial sample is being supplied to the cement plant from the initial Blue Seam production which may lead to a long term supply contract. The trade is to reputable customers with coal sold FOB (free-on-board), at the coal terminal in the Port of Guaymas, northwest Mexico, inside the Baja Peninsula and on the Pacific coastline. The port offered a shorter sailing time for the Asian buyers of a US HV coking coal which is typically supplied from the US east coast. Pricing for these initial trial cargoes was at fixed price levels providing a margin above FOB cash costs for New Elk. The Company is working towards index linked pricing once sampling (including from these trial shipments) have been completed by the potential steel mill customer base. In that regard, M Resources is in discussion with a European steel mill for a trial cargo of 10,000 to 20,000 metric tonnes of Blue Seam for delivery late August 2021, and has secured multiple requests for drum samples from steel mills globally including the large blue chip European, Asian and Latin American mills. Samples will be supplied to the steel mills over the coming months from Mine production. The timing of these samples is good in that the steel mills typically plan procurement for their 2022 production in the last quarter of a calendar year.