20 NASDAQ:PNRL ASX:PNL KEY RISKS (cont.) Environment The operations and proposed activities of the
Company are subject to State and Federal laws in the United States, regulations and permits concerning the environment. If such laws are breached or modified, the Company could be required to cease its operations and/or incur significant
liabilities including penalties, due to past or future activities.As with most mining operations, the Company’s activities are expected to have an impact on the environment. It is the Company’s intention to conduct its activities to an
appropriate standard of environmental obligation, including in compliance in all material respects with relevant environmental laws. Nevertheless, there are certain risks inherent in the Company’s activities which could subject the Company to
extensive liability. The Company intends to produce both higher sulfur and low sulfur coal. Significant increases in the price of emissions allowances could reduce the competitiveness of higher sulfur coal compared to low sulfur coal and
possibly natural gas at power plants not equipped to reduce sulfur dioxide emissions.The cost and complexity in complying with the applicable environmental laws and regulations may affect the viability of potential developments of the
Company's projects, and consequently the value of those projects, and the value of the Company's assets. CompetitionThe mineral resource industry is competitive in all of its phases. The Company competes with other companies, including major
coal mining companies. Some of these companies have greater financial and other resources than the Company and, as a result, may be in a better position to compete for sales contracts, the recruitment and retention of qualified employees,
coal leases and new business opportunities. If the Company cannot compete effectively with these other companies, it may have a material adverse effect on the Company’s performance.The Company competes with numerous other coal producers in
various regions of the United States for domestic and international sales. The Company also expects to compete in international markets against coal producers in other countries. International demand for U.S. coal exports also affects coal
demand in the United States. This competition affects coal prices and could adversely affect the Company's to retain or attract coal customers. Increased competition from the Illinois Basin, the threat of increased production from competing
mines and natural gas price declines with large basis differentials have all historically contributed to soft market conditions. In the past, high demand for coal and attractive pricing brought new investors to the coal industry, leading to
the development of new mines and added production capacity. Subsequent overcapacity in the industry has contributed, and may in the future contribute, to lower coal prices.Potential changes to international trade agreements, trade
concessions, foreign currency fluctuations or other political and economic arrangements may benefit coal producers operating in countries other than the United States. The Company cannot assure you that it will be able to compete on the basis
of price or other factors with companies that in the future may benefit from favorable foreign trade policies or other arrangements. Coal is sold internationally in U.S. dollars and, as a result, general economic conditions in foreign markets
and changes in foreign currency exchange rates may provide international competitors with a competitive advantage. If our competitors’ currencies decline against the U.S. dollar or against our overseas customers’ local currencies, those
competitors may be able to offer lower prices for coal to customers. Furthermore, if the currencies of our overseas customers, if any, were to significantly decline in value in comparison to the U.S. dollar, those customers may seek decreased
prices for the coal the Company sells to them. Consequently, currency fluctuations could adversely affect the competitiveness of our coal in international markets, which could have a material adverse effect on our business, financial
condition, results of operations and cash flows.The most important factors on which the Company expects to compete are delivered price (i.e., the cost of coal delivered to the customer, including transportation costs, which are generally paid
by our customers either directly or indirectly), coal quality characteristics, contract flexibility (e.g., volume optionality and multiple supply sources) and reliability of supply. Some competitors may have, among other things, larger
financial and operating resources, lower per ton cost of production, or relationships with specific transportation providers. The competition among coal producers may impact our ability to retain or attract customers and could adversely
impact our revenues and cash available for distribution. In addition, declining prices from an oversupply of coal in the market could reduce our revenues and cash available for distribution.Foreign Operations and Government Regulation
RisksThe Company’s projects are located in the USA and, as such, the operations are exposed to various levels of political, economic and other risks and uncertainties. Changes in mining or investment policies or shifts in political attitude
in the USA, changes to US legislation or government policies that affect coal mining, processing, development and mineral exploration activities, income tax laws, royalty regulations, government subsidies and environmental issues, may
adversely affect the operations or profitability of the Company. Operations may be affected in varying degrees by government regulations with respect to, but not limited to, increasingly stringent standards for carbon dioxide pollution,
restrictions on production, price controls, export controls, currency remittance, income taxes, expropriation of property, foreign investment, maintenance of claims, environmental legislation, land use, land claims of local people, water use
and mine safety.The mining, processing and development activities of the projects are subject to various laws in the USA governing prospecting, development, production, taxes, labour standards and occupational health, mine safety, toxic
substances, land use, water use, indigenous land claims, and other matters.Furthermore, no assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner which
could limit or curtail production or development or adversely impact the Group’s mineral properties. Amendments to current laws and regulations governing operations and activities of mining, including those aimed at reducing greenhouse gas
emissions, or more stringent implementation thereof, could have a substantial adverse impact on the Company. Failure to comply strictly with applicable laws, regulations and local practices relating to mineral rights applications and tenure,
could result in loss, reduction or challenging of its interests. Due to the extensive regulatory requirements, violation of laws, regulations and permits may occur at our operations from time to time and may result in significant costs to us
to correct the violations, as well as substantial civil or criminal penalties and limitations or shutdowns of the Company's operations.