Page 179 - Martin Marietta - 2024 Proxy Statement

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Aggregates mineral reserves and mineral interests are components within the property, plant 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 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 objective
of the sampling. The Company’s objectives are to ensure that the underlying deposit meets aggregate specifications and that 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
aggregate's use and standard to the aggregates industry. The number, depth and spacing 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.
The quality of reserves within a deposit can vary. Construction contracts,for the infrastructure market in particular, include
specifications related to the aggregates material properties. If a limiting characteristic 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 impact on the Company’s ability to serve certain customers or the Company’s
profitability. In addition, other factors can arise that influence the Company’s ability to develop reserves, including geological
occurrences, mining practices, environmental requirements and zoning ordinances.
Locations underlain with sand and gravel are typically drilled using auger or sonic methods, whereby a corkscrew or hollow‐stem
tooling bringsup material from below the ground, which is then sampled. Deposits in these locations are typically limited in
thickness. Additionally, the deposit's quality and sand‐to‐gravel ratio can vary both horizontally and vertically. The extent and type
of drilling is determined by the characteristics and the continuity of the deposit.

In determining the amount of reserves, evaluations are completed by or under the supervision of qualified person(s) using industry
best practices and internal controls defined by the Company. The designations the Company uses for reserve categories, and those
recognized by the aggregate industry are summarized as follows:
Mineral Reserves – Mineral reserves are an estimate of tonnage and grade or quality that, in the opinion of a qualified
person, can be the basis of an economically viable project. More specifically, it is the economically mineable part of a
mineral [deposit], which includes diluting materials and allowances for losses that may occur when the material is mined
or extracted. Reserves are categorized as Proven and Probable and represent net tons after consideration of applicable
losses incurred during mining and plant processing.
Proven Reserves – Proven reserves are the portion of a mineral deposit for which quantity and quality are estimated on
the basis of conclusive evidence from closely spaced drilling and sampling.
Probable Reserves – Probable reserves are estimated on the basis of less geologic evidence but are considered adequate
for determining the quantity and quality.
The Company’s proven and probable reserves reflect reasonable economic and operating constraints and also include reserves at
the Company’s inactive and undeveloped sites, including some sites where permitting and zoning applications will not be filed until
warranted by expected future growth. The Company has historically been successful in obtaining and maintaining appropriate
zoning and permitting (see Environmental Regulation and Litigation section). The Company bases estimates on the information
known at the time of determination and regularly reevaluates reserves whenever new information indicates a material change in
reserves at one of the Company’s sites.

2023 Annual Report ♦ Page 77