HALLADOR ENERGY CO

Board of Directors and Stockholders

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of Hallador Energy Company (a Colorado corporation) and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations, cash flows and stockholders’ equity for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in the 2013Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated March 17, 2025 expressed an unqualified opinion.

Change in accounting principle

As discussed in Notes 1 and 20 to the consolidated financial statements, the Company has adopted new accounting guidance in 2024 related to the disclosure of segment information in accordance with ASU 2023-07,Segment Reporting (Topic 280). The adoption was retrospectively applied to 2023.

Basis for opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical audit matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing a separate opinion on the critical audit matters or on the accounts or disclosures to which they relate.

Asset retirement obligations

As of December 31, 2024, the Company’s asset retirement obligations totaled $16.9 million. As described further in Note 1 to the consolidated financial statements, the Company’s asset retirement obligations are associated with retirement of long-lived assets and recognized at fair value at the time the obligations are incurred. The Company reviews its asset retirement obligations at least annually and makes necessary adjustments for revisions of inputs and

assumptions utilized in the calculations. The calculation of asset retirement obligations requires significant management judgment due to the inherent complexity in estimating the amount and timing of future reclamation activities. We identified the accounting for the asset retirement obligations as a critical audit matter.

The principal consideration for our determination that the accounting for the asset retirement obligations is a critical audit matter is that management utilized significant judgment in determining the amount of asset retirement obligations. In particular, the obligations’ value is estimated based upon a discounted cash flow technique and includes inputs and assumptions related to uncertain future reclamation costs and the timing of reclamation activities. Accordingly, auditing management’s assumptions involved a high degree of subjectivity due to the uncertainty of management’s significant judgments.

Our audit procedures related to the accounting for asset retirement obligations included the following, among others:

Impairment of coal properties

As described further in Notes 1 and 19 to the consolidated financial statements, long-lived assets are evaluated for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable. When performing the impairment assessments, the Company projects undiscounted cash flows at the asset group level. If the asset group is determined not to be recoverable, the Company, with the assistance of third-party valuation specialists, performs an analysis of the fair value of the asset group and recognizes an impairment loss when the fair value of the asset group is less than the carrying value. As of December 31, 2024, the Company recorded asset impairment charges of $215.1 million associated with its coal properties. The identification of impairment indicators and the calculation of the amount of impairment requires significant management judgment. We identified the long-lived asset impairment assessment of coal properties as a critical audit matter.

The principal consideration for our determination that the long-lived asset impairment assessment of coal properties is a critical audit matter is due to the uncertainties and significant management judgment when estimating the fair value of the coal properties. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s forecasted future revenues and cash flows and evaluation of the reasonableness of the valuation model used. In addition, the audit effort involved the use of professionals with specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.

Our audit procedures related to the long-lived asset impairment assessment of coal properties included the following, among others:

/s/GRANT THORNTON LLP

We have served as the Company’s auditor since 2022.

Tulsa, Oklahoma

March 17, 2025

PART I - FINANCIAL INFORMATION