Page 182 - Martin Marietta - 2023 Proxy Statement

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

from the date of acquisition. Any adjustments to assets acquired or liabilities assumed beyond the measurement period are
recorded through earnings.

Property, Plant and Equipment
Net property, plant and equipment (excluding the amount allocated to assets held for sale) represented 42% of total assets at
December 31, 2022. Accordingly, accounting for these assets represents a critical accounting policy. Useful lives of the assets
can vary depending on factors, including production levels, geographic location, portability and maintenance practices.
Additionally, climate and inclement weather can reduce the useful life of an asset. Historically, the Company has not recognized
significant losses on the disposal or retirement offixed assets.
Aggregates mineral reserves and mineral interests are components within the plant, property and equipment balance on the
consolidated balance sheets. The Company evaluates aggregates reserves, including those used in the cement manufacturing
process, in several ways, depending on the geology at a particular location and whether the location is a greensite, an
acquisition or an existing operation. Greensites require an extensive drilling program before any significant investment is made
in terms of time, site development or efforts to obtain appropriate zoning and permitting (see Environmental Regulation and
Litigation section). The depth of overburden and the quality and quantity of the aggregates reserves are significant factors in
determining whether to pursue opening the site. Further, the estimated average selling price for products in a market is also a
significant factor in concluding that reserves are economically mineable. If the Company’s analysis based on these factors is
satisfactory, the total aggregates reserves available are calculated and a determination is made whether to open the location.
Reserve evaluation at existing locations is typically performed to evaluate purchasing adjoining properties, for quality control,
calculating overburden volumes and for mine planning. Reserve evaluation of acquisitions may require a higher degree of
sampling to locate any problem areas that may exist and to verify the total reserves.
Well‐ordered subsurface sampling of the underlying deposit is basic to determining reserves at any location. This subsurface
sampling usually involves one or more types of drilling, determined by the nature of the material to be sampled and the
particular objective of the sampling. The Company’s objectives are to ensure that the underlying deposit meets aggregates
specifications and the total reserves on site are sufficient for mining and economically recoverable. Locations underlain with
hard rock deposits, such as granite and limestone, are drilled using the diamond core method, which provides the most useful
and accurate samples of the deposit. Selected core samples are tested for soundness, abrasion resistance and other physical
properties relevant to the aggregates industry and depend on the aggregates use. The number and depth of the holes are
determined by the size of the site and the complexity of the site‐specific geology. Some geological factors that may affect the
number and depth of holes include faults, folds, chemical irregularities, clay pockets, thickness offormations and weathering.
A typical spacing of core holes on the area to be tested is one hole for every four acres, but wider spacing may be justified if
the deposit is homogeneous.
Despite previous drilling and sampling, once accessed, the quality of reserves within a deposit can vary. Construction contracts,
for the infrastructure market in particular, include specifications related to the aggregates material. If a flaw in the deposit is
discovered, the aggregates material may not meet the required specifications. Although it is possible that the aggregates
material can still be used for non‐specification uses, this can have an adverse effect on the Company’s ability to serve certain
customers or on the Company’s profitability. In addition, other issues can arise that limit the Company’s ability to access
reserves in a particular quarry, including geological occurrences, blasting practices and zoning issues.
Locations underlain with sand and gravel are typically drilled using the auger method, whereby a six‐inch corkscrew brings up
material from below the ground which is then sampled. Deposits in these locations are typically limited in thickness.
Additionally, the quality and sand‐to‐gravel ratio of the deposit can vary both horizontally and vertically. Hole spacing at these
locations is approximately one hole for every acre to ensure a representative sampling.
The geologist conducting the reserve evaluation makes the decision as to the number of holes and the spacing in accordance
with standards and procedures established by the Company. Further, the anticipated heterogeneity of the deposit, based on
U.S. geological maps, also dictates the number of holes drilled.
The generally accepted reserve categories for the aggregates industry and the designations the Company uses for reserve
categories are summarized as follows:
Proven Reserves – These reserves are designated using closely spaced drill data as described above and a
determination by a professional geologist that the deposit is relatively homogeneous based on the drilling results and
exploration data provided in U.S. geologic maps, the U.S. Department of Agriculture soil maps, aerial photographs
and/or electromagnetic, seismic or other surveys conducted by independent geotechnical engineering firms. The

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