Knife River Corp

Active Aggregate Sites · 71 · 35 · 102 · — · 208

Ready-Mix Plants · 51 · 14 · 70 · — · 135

Asphalt Plants · 18 · 15 · 22 · — · 55

Liquid Asphalt Terminals · — · — · — · 9 · 9

Cement Terminals · 8 · — · — · — · 8

Aggregate sites and reserves

We mine crushed stone and sand and gravel at our active aggregate sites across our segments. The aggregates produced are utilized in general construction and are a major component in the production of ready-mix concrete and asphalt.

Our aggregate sites contain both reserves and resources. Mineral reserves are defined as an estimate of tonnage that, in the opinion of the qualified person, can be economically mined or extracted, which includes diluting

materials and allowances for losses that may occur throughout the process. Mineral reserves are classified into two categories as follows:

Proven — those reserves for which the quantity is computed from dimensions revealed by drill data, together with other direct and measurable observations, such as outcrops, trenches and quarry faces. The grade and quality of those reserves are computed from the results of detailed sampling, and the sampling and measurement data are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well established.

Probable — those reserves for which quantity, grade and quality are computed partly from specific measurements and partly from projections based on reasonable geologic evidence. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation.

Reported proven and probable reserves include only quantities that are owned in fee or under lease and for which all appropriate zoning and permitting have been obtained or are expected to be obtained through permit, contract or legacy status.

Mineral resources are defined as a concentration or occurrence of material of economic interest in such form, grade or quality, and quantity that has a reasonable prospect to be economically extracted. Mineral resources are classified into three categories as follows:

Measured — based on conclusive geological evidence and sampling, meaning that evidence is sufficient to test and confirm geological and grade or quality continuity. After applying modifying factors, measured resources may be converted to either proven or probable reserves.

Indicated — based on adequate geological evidence and sampling, meaning that evidence is sufficient to establish geological and grade or quality continuity with reasonable certainty. After applying modifying factors, indicated resources may be converted to probable reserves.

Inferred — based on limited geological evidence and sampling, meaning that evidence is only sufficient to establish that geological and grade or quality continuity is more likely than not. Upon further studies, inferred resources may be converted to reserves.

Aggregate reserve and resource estimates are calculated based on the best available data. Supporting data includes, but is not limited to, drill holes, geologic testing and other subsurface investigations; and surface feature investigations, such as, mine high walls, aerial photography and topography. Using available data, a final topography map is created with computer software and is used to calculate the volume variance between existing and final topographies. Volumes are then converted to tons using appropriate conversion factors. Property setbacks and other regulatory restrictions and limitations are identified to determine the total area available for mining. We also consider mine plans, economic viability and production history in the aggregate reserve and resource estimates. Our reserve estimates include only salable tonnage and thus exclude waste materials that are generated in the crushing and processing phases of the operation. The reserves are based on estimates of volumes that can be economically extracted and sold to meet current and anticipated market and product applications.

Our reserves and resources are on properties that are permitted, or are expected to be permitted, for mining under current regulatory requirements. The data used to calculate reserve and resource estimates may require revisions in the future to account for changes in customer requirements, regulatory requirements and unknown geological occurrences.

We classify the applicable quantity of a particular deposit as a reserve or resource by reviewing and analyzing, independently, each geological formation, testing results and production processes, along with other modifying factors, to determine an expected yield of recoverable tonnage an area will produce. These results may have an effect on mine plans and the selection of processing equipment. The results are reviewed by the qualified person and presented to the management team.

Management assesses the risks associated with aggregate reserve and resource estimates. These estimates may be affected by variability in the properties of the material, limits of the accuracy of the geotechnical data and operational difficulties in extraction of the computed material. Additionally, management assesses the risks associated in obtaining and maintaining the various land use, mining and environmental permits necessary for the properties to operate as mines. Annual reviews of mining reserves are conducted by the qualified individual and include procedures such as ensuring financial assumptions related to life of mine expenses are based on the most accurate estimates available.

• Knife River Corporation - Northwest Oregon³
• Knife River Corporation - South Texas³
• Knife River Dakota, Inc. Delaware³
• Knife River Hawaii, Inc. Delaware³
• Knife River Marine, Inc. Delaware³
• Knife River Midwest, LLC Delaware³
• Knife River Prestress, Inc. Delaware³
• Kraemer Trucking & Excavating, LLC Delaware³
• LTM, Incorporated Oregon³
• Northern Sand & Gravel, Inc. North Dakota³
• Northstar Materials, Inc. Minnesota³
• Oregon Asphaltic Paving, LLC Oregon³
• Rail to Road, Inc. South Dakota³
• Rogers Northwest, Inc. Oregon³
• Spring Creek Insurance Company Utah³
• Strata Corporation North Dakota³
• Sweetman Const. Co. South Dakota³
• Tigard Sand & Gravel, LLC Oregon³
• WHC, Ltd. Hawaii³

• Supply chain disruptions may adversely affect our operations.
• Our operations could be negatively impacted by import tariffs and/or other government mandates.
• Our business is based in large part on government-funded infrastructure projects and building activities, and any reductions or reallocation of spending or related subsidies in these areas could adversely impact us.
• Economic volatility affects our operations, as well as the demand for our products and services.
• Legal and Regulatory Compliance Risks
• We may be negatively impacted by pending and/or future litigation, claims or investigations.
• Unexpected factors affecting self-insurance claims and reserve estimates could adversely affect us.
• Our operations are subject to environmental laws and regulations that may increase costs, impact or limit business plans, or expose us to environmental liabilities.
• Our operations could be adversely impacted by sever weather events, including as a result of climate change.
• Stakeholder actions and regulatory activity related to sustainability matters, particularly climate change and reducing GHG emissions, could adversely impact our operations, costs of or access to capital and impact or limit business plans.
• Changes in tax law may negatively affect our business.
• Human Capital Risks
• Our operations may be negatively affected if we are unable to obtain, develop and retain key personnel and skilled labor forces.
• Increasing costs associated with health care plans may adversely affect our results of operations.
• Financial and Accounting Risks
• Aggregate resource and reserve calculations are estimates and subject to uncertainty.
• Backlog may not accurately represent future revenue and gross margin.
• We operate in a capital-intensive industry and are subject to capital market and interest rate risks.
• Financial market changes could impact our defined benefit pension plans and obligations.
• Costs related to obligations under MEPPs could have a material negative effect on our results of operations and cash flows.
• We have substantial indebtedness and may incur substantial additional indebtedness, which could adversely affect our business, profitability and its ability to meet obligations.
• Despite our current level of indebtedness, we may be able to incur substantially more debt, which could increase the risks to our financial condition.
• A lowering or withdrawal of the ratings, outlook or watch assigned to Knife River or its debt by rating agencies may increase our future borrowing costs and reduce our access to capital.
• Shareholder Risks
• The trading market for Knife River common stock has existed only a relatively short period, and the market price and trading volume of its common stock may fluctuate significantly.
• If securities or industry analysts do not publish research or publish misleading or unfavorable research about our business, Knife River’s stock price and trading volume could decline.
• Stockholder percentage of ownership in us may be diluted in the future.
• We cannot guarantee the timing, declaration, amount or payment of dividends, if any, on our common stock.
• The Company’s second amended and restated bylaws designates the Court of Chancery of the State of Delaware or, if the Court of Chancery of the State of Delaware does not have jurisdiction, another state court of the State of Delaware, or, if no state court located in the State of Delaware has jurisdiction, the federal court for the District of Delaware, as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by Knife River’s stockholders, which could discourage lawsuits against the Company and its directors and officers.
• Provisions in the Company’s second amended and restated certificate of incorporation and second amended and restated bylaws and Delaware law may prevent or delay an acquisition of Knife River, which could decrease the trading price of Knife River common stock.