Delaware

		13-2656671
~~Delaware~~		~~13-2656671~~
(State or Other Jurisdiction		(I.R.S. Employer
of Incorporation or Organization)		~~(I.R.S. Employer~~ Identification No.)

~~258 Elm Street~~

~~New Canaan, Connecticut 06840~~3 Summit Park Drive, Suite 700

Independence, Ohio 44131

(Address of Principal Executive Offices) (Zip Code)

~~(203)966-8880~~(800) 255-7263

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ~~(1) ☐~~☒ No ~~(2) ☒~~☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2 of the Exchange ~~Act (Check one):~~Act.


Large accelerated filer	☐	☐	Accelerated filer		☐

Non-accelerated filer	☒	~~☒ (Do not check if a smaller reporting company)~~	Smaller reporting company		☐

			Emerging growth company	☐	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). Yes ☐ No ☒

Number of shares of Common Stock outstanding, par value $1$0.01 per share, as of ~~May 24,~~November 12, 2018: ~~1,343,714~~131,186,462

~~Unimin~~

Covia Holdings Corporation and Subsidiaries

Quarterly Report on Form10-Q

For the Quarter Ended ~~March 31,~~September 30, 2018

Table of Contents

				Page
Part I – Financial Information		~~Page~~

Item 1 – Financial Statements (Unaudited)

~~Part I~~-~~Financial Information~~Condensed Consolidated Statements of Income (Loss)				3

~~Item 1 - Financial~~Condensed Consolidated Statements ~~(Unaudited~~)of Comprehensive Income (Loss)				4

Condensed Consolidated Balance Sheets			3	5

Condensed Consolidated Statements of ~~Income~~Equity			4
	6
~~Condensed Consolidated Statements of Comprehensive Income~~			5

~~Condensed Consolidated Statements of Changes in Shareholders’ Equity~~			6

Condensed Consolidated Statements of Cash Flows			7

Notes to Condensed Consolidated Financial Statements			8


Item 2 -– Management’s Discussion and Analysis of Financial Condition and Results of Operations			25
	35

Item 3 -– Quantitative and Qualitative Disclosures about Market Risk			35
	53

Item 4 -– Controls and Procedures			36
	54
~~Part II - Other Information~~			37

Part II – Other Information	54

Item 1 -– Legal Proceedings			37
	54

Item 1A -– Risk Factors			37
	55

Item 2 -– Unregistered Sales of Equity Securities and Use of Proceeds			37
	55

Item 3 -– Defaults upon Senior Securities			37
	55

Item 4 -– Mine Safety Disclosures			37
	55

Item 5 -– Other Information			37
	56

Item 6 -– Exhibits			37
	56

Exhibit Index			38
	57

Signatures	58
		39

~~Unimin~~2

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

Covia Holdings Corporation and Subsidiaries

Condensed Consolidated ~~Balance Sheets~~Statements of Income (Loss)

~~(In thousands, except per share data)~~(Unaudited)

   March 31,
2018 December 31,
2017
Assets

Current assets

Cash and cash equivalents
   $ 284,274 $ 308,059
Accounts receivable, net of allowance for doubtful accounts
   274,542 242,784
Inventories, net
   110,212 104,815
Other receivables
   28,217 28,662
Prepaid expenses and other current assets
   19,112 17,312


Total current assets
   716,357 701,632
Property, plant and equipment, net
   1,256,192 1,230,640
Intangible assets, net
   26,483 27,161
Goodwill
   53,512 53,512
Deferred tax assets, net
   9,019 7,441
Other assets
   2,730 2,416


Total assets
   $ 2,064,293 $ 2,022,802


Liabilities and Shareholders’ Equity

Current liabilities

Accounts payable
   $ 87,954 $ 106,492
Current portion of long-term debt
   49,742 50,045
Accrued expenses
   77,129 76,429


Total current liabilities
   214,825 232,966
Long-term debt
   366,942 366,967
Employee benefit obligations
   99,079 97,798
Deferred tax liabilities, net
   72,219 70,262
Othernon-current liabilities
   30,437 29,494


Totalnon-current liabilities
   568,677 564,521


Commitments and contingencies (Note 12)

Shareholders’ Equity

Common Stock: $1 par value, 2,000,000 authorized shares

Shares outstanding: 1,776,666 at March 31, 2018 and December 31, 2017, respectively
   1,777 1,777
Additionalpaid-in capital
   43,941 43,941
Accumulated other comprehensive loss, net
   (118,294 ) (128,228 )
Treasury Stock, 432,952 shares at March 31, 2018 and December 31, 2017, respectively
   (610,632 ) (610,632 )
Retained earnings
   1,963,999 1,918,457


Total shareholders’ equity
   1,280,791 1,225,315


Total liabilities and shareholders’ equity
   $ 2,064,293 $ 2,022,802

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
	(in thousands, except per share amounts)						(in thousands, except per share amounts)
Revenues	$	523,368		$	347,808		$	1,401,607		$	959,199
Cost of goods sold (excluding depreciation, depletion,
and amortization shown separately)		405,602			244,694			1,021,232			694,110

Operating expenses
Selling, general and administrative expenses		43,164			24,210			99,765			66,255
Depreciation, depletion and amortization expense		68,584			24,639			132,459			72,197
Goodwill and other asset impairments		265,343			-			277,643			-
Restructuring charges		14,750			-			14,750			-
Other operating expense (income), net		(974	)		(6	)		(330	)		1,830
Operating income (loss) from continuing operations		(273,101	)		54,271			(143,912	)		124,807

Interest expense, net		23,530			5,104			35,325			12,634
Other non-operating expense, net		9,043			1,374			56,159			4,449
Income (loss) from continuing operations before provision (benefit) for income taxes		(305,674	)		47,793			(235,396	)		107,724

Provision (benefit) for income taxes		(16,848	)		20,090			(524	)		36,460
Net income (loss) from continuing operations		(288,826	)		27,703			(234,872	)		71,264
Less: Net income (loss) from continuing operations attributable to the non-controlling interest		(32	)		-			74			-
Net income (loss) from continuing operations attributable to Covia Holdings Corporation		(288,794	)		27,703			(234,946	)		71,264

Income from discontinued operations, net of tax		-			2,441			12,587			12,521

Net income (loss) attributable to Covia Holdings Corporation	$	(288,794	)	$	30,144		$	(222,359	)	$	83,785

Continuing operations earnings (loss) per share
Basic	$	(2.20	)	$	0.23		$	(1.90	)	$	0.60
Diluted		(2.20	)		0.23			(1.90	)		0.60

Earnings (loss) per share
Basic		(2.20	)		0.25			(1.80	)		0.70
Diluted	$	(2.20	)	$	0.25		$	(1.80	)	$	0.70

Weighted average number of shares outstanding
Basic		131,154			119,645			123,604			119,645
Diluted		131,154			119,645			123,604			119,645

The accompanying notes are an integral part of these condensed consolidated financial statements.

~~Unimin~~

Covia Holdings Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Loss)

~~(In thousands, except per share data)~~(Unaudited)

   Three Months Ended March 31,
   2018 2017
Revenue
   $ 414,607 $ 323,184
Cost of goods sold (excluding depreciation, depletion and amortization)
   288,565 243,232
Operating expenses:

Selling, general and administrative expenses
   29,224 24,325
Depreciation, depletion and amortization expense
   29,409 26,552
Other operating expense (income), net
   (40 ) 1,016


Income from operations
   67,449 28,059


Interest expense, net
   5,191 5,355
Other expense, net
   5,300 —


Total other expenses, net
   10,491 5,355


Income before provision for income taxes
   56,958 22,704
Income tax provision
   11,416 5,866


Net income
   $ 45,542 $ 16,838


Net income per share:

Basic and diluted
   $ 33.89 $ 12.53
Weighted average shares outstanding:

Basic and diluted
   1,344 1,344

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
	(in thousands)						(in thousands)
Net income (loss) from continuing operations	$	(288,826	)	$	27,703		$	(234,872	)	$	71,264
Income from discontinued operations, net of tax		-			2,441			12,587			12,521
Net income (loss) before other comprehensive income (loss)		(288,826	)		30,144			(222,285	)		83,785
Other comprehensive income (loss), before tax
Foreign currency translation adjustments		5,195			(863	)		5,529			13,436
Employee benefit obligations		2,958			1,333			11,279			4,320
Amortization and change in fair value of derivative instruments		1,180			-			1,180			-
Total other comprehensive income, before tax		9,333			470			17,988			17,756
Provision for income taxes related to items of other comprehensive income		950			400			3,093			1,296
Comprehensive income (loss), net of tax		(280,443	)		30,214			(207,390	)		100,245
Comprehensive income (loss) attributable to the non-controlling interest		(32	)		-			74			-
Comprehensive income (loss) attributable to Covia Holdings Corporation	$	(280,411	)	$	30,214		$	(207,464	)	$	100,245

The accompanying notes are an integral part of these condensed consolidated financial statements.

~~Unimin~~

Covia Holdings Corporation and Subsidiaries

Condensed Consolidated ~~Statements of Comprehensive Income~~Balance Sheets

~~(In thousands, except per share data)~~(Unaudited)

   Three Months Ended
March 31,
   2018    2017
Net income
   $ 45,542    $ 16,838
Other comprehensive income:

Foreign currency translation adjustments
   8,840    10,154
Employee benefit obligations
   1,564    1,494




Total other comprehensive income, before tax
   10,404    11,648
Provision for income taxes related to items of other comprehensive income
   470    448
Total other comprehensive income, net of tax
   9,934    11,200




Comprehensive income
   $ 55,476    $ 28,038

	September 30, 2018			December 31, 2017
	(in thousands)
Assets
Current assets
Cash and cash equivalents	$	155,407		$	308,059
Accounts receivable, net of allowance for doubtful accounts of $5,031 and $3,682
at September 30, 2018 and December 31, 2017, respectively		320,299			219,719
Inventories, net		167,731			79,959
Other receivables		31,373			27,963
Prepaid expenses and other current assets		23,988			16,322
Current assets of discontinued operations		-			66,906
Total current assets		698,798			718,928

Property, plant and equipment, net		2,772,264			1,136,104
Deferred tax assets, net		12,170			7,441
Goodwill		135,763			53,512
Intangibles, net		159,512			25,596
Other non-current assets		25,733			2,416
Non-current assets of discontinued operations		-			96,101
Total assets	$	3,804,240		$	2,040,098

Liabilities and Equity
Current liabilities
Current portion of long-term debt	$	20,126		$	50,045
Accounts payable		133,937			101,983
Accrued expenses		104,147			88,208
Current liabilities of discontinued operations		-			10,027
Total current liabilities		258,210			250,263

Long-term debt		1,612,412			366,967
Employee benefit obligations		97,136			97,798
Deferred tax liabilities, net		252,240			62,614
Other non-current liabilities		98,841			29,057
Non-current liabilities of discontinued operations		-			8,084
Total liabilities		2,318,839			814,783

Commitments and contingent liabilities (Note 16)
Equity
Preferred stock: $0.01 par value, 15,000 authorized shares at September 30, 2018
Shares outstanding: 0 at September 30, 2018 and December 31, 2017		-			-
Common stock: $0.01 par value, 750,000 and 178,000 authorized shares
at September 30, 2018 and December 31, 2017, respectively
Shares issued: 158,195 at September 30, 2018 and December 31, 2017
Shares outstanding: 131,171 and 119,645 at September 30, 2018 and
December 31, 2017, respectively		1,777			1,777
Additional paid-in capital		385,513			43,941
Retained earnings		1,696,098			1,918,457
Accumulated other comprehensive loss		(113,333	)		(128,228	)
Total equity attributable to Covia Holdings Corporation before treasury stock		1,970,055			1,835,947
Less: Treasury stock at cost
Shares in treasury: 27,024 and 38,550 at September 30, 2018
and December 31, 2017, respectively		(485,181	)		(610,632	)
Total equity attributable to Covia Holdings Corporation		1,484,874			1,225,315
Non-controlling interest		527			-
Total equity		1,485,401			1,225,315
Total liabilities and equity	$	3,804,240		$	2,040,098

The accompanying notes are an integral part of these condensed consolidated financial statements.

~~Unimin~~

Covia Holdings Corporation and Subsidiaries

Condensed Consolidated Statements of ~~Changes in Shareholders’~~ Equity

~~(In thousands, except per share data)~~(Unaudited)

   Common Stock    Additional
Paid-In
Capital    Accumulated
Other
Comprehensive
Loss, net Retained
Earnings

Treasury Shares
Total
Shareholders’
Equity
   Shares    Amount          Shares    Amount
Balance at December 31, 2016
   1,343,714    $ 1,777    $ 43,941    $ (118,499 ) $ 1,753,831    432,952    $ (610,632 ) $ 1,070,418
Net income
   —      —      —      —   16,838    —      —   16,838
Other comprehensive income
   —      —      —      11,200 —      —      —   11,200












Balance at March 31, 2017
   1,343,714    $ 1,777    $ 43,941    $ (107,299 ) $ 1,770,669    432,952    $ (610,632 ) $ 1,098,456












Balance at December 31, 2017
   1,343,714    $ 1,777    $ 43,941    $ (128,228 ) $ 1,918,457    432,952    $ (610,632 ) $ 1,225,315












Net income
   —      —      —      —   45,542    —      —   45,542
Other comprehensive income
   —      —      —      9,934 —      —      —   9,934












Balance at March 31, 2018
   1,343,714    $ 1,777    $ 43,941    $ (118,294 ) $ 1,963,999    432,952    $ (610,632 ) $ 1,280,791

~~Unimin Corporation and Subsidiaries~~

~~Condensed Consolidated Statements of Cash Flows~~

~~(In thousands, except per share data)~~

	Equity attributable to Covia Holdings Corporation
						Additional						Accumulated Other												Non-
	Common		Common			Paid-in			Retained			Comprehensive			Treasury			Treasury						Controlling
	Stock		Stock Shares			Capital			Earnings			Loss			Stock			Stock Shares			Subtotal			Interest		Total
	(in thousands)
Balances at December 31, 2016	$	1,777		119,645		$	43,941		$	1,753,831		$	(118,499	)	$	(610,632	)		38,550		$	1,070,418		$	-	$	1,070,418
Net income		-		-			-			83,785			-			-			-			83,785			-		83,785
Other comprehensive income		-		-			-			-			16,460			-			-			16,460			-		16,460
Balances at September 30, 2017	$	1,777		119,645		$	43,941		$	1,837,616		$	(102,039	)	$	(610,632	)		38,550		$	1,170,663		$	-	$	1,170,663

Balances at December 31, 2017	$	1,777		119,645		$	43,941		$	1,918,457		$	(128,228	)	$	(610,632	)		38,550		$	1,225,315		$	-	$	1,225,315
Net loss		-		-			-			(222,359	)		-			-			-			(222,359	)		74		(222,285	)
Other comprehensive income		-		-			-			-			14,895			-			-			14,895			-		14,895
Distribution of HPQ Co. to Sibelco		-		(15,097	)		-			-			-			(162,109	)		15,097			(162,109	)		-		(162,109	)
Cash Redemption		-		(18,528	)		-			-			-			(520,377	)		18,528			(520,377	)		-		(520,377	)
Consideration transferred for share-based awards		-		-			40,414			-			-			-			-			40,414			-		40,414
Issuance of Covia common stock to Fairmount Santrol Holdings Inc. stockholders		-		45,044			296,221			-			-			807,026			(45,044	)		1,103,247			-		1,103,247
Share-based awards exercised or distributed		-		107			(910	)		-			-			911			(107	)		1			-		1
Stock compensation expense		-		-			5,847			-			-			-			-			5,847			-		5,847
Transactions with non-controlling interest		-		-			-			-			-			-			-			-			453		453
Balances at September 30, 2018	$	1,777		131,171		$	385,513		$	1,696,098		$	(113,333	)	$	(485,181	)		27,024		$	1,484,874		$	527	$	1,485,401

   Three Months Ended March 31,
   2018 2017
Cash flows from operating activities:

Net income
   $ 45,542 $ 16,838
Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation, depletion and amortization
   29,409 26,552
Deferred income taxes
   579 570
Other, net
   (1,424 ) (117 )
Changes in operating assets and liabilities:

Accounts receivable
   (30,490 ) (21,369 )
Inventories
   (4,607 ) 2,748
Prepaid expenses and other assets
   (281 ) 5,330
Accounts payable
   (13,323 ) (10,564 )
Accrued expenses
   (3,264 ) (4,248 )


Net cash provided by operating activities
   22,141 15,740


Cash flows from investing activities:

Capital expenditures
   (46,253 ) (11,674 )
Proceeds from sale of property, plant and equipment
   334 186
Other, net
   (52 ) 33


Net cash used in investing activities
   (45,971 ) (11,455 )


Cash flows from financing activities:

Borrowings under debt
   —   49,815
Principal payments on debt
   (328 ) (185 )
Dividends paid
   —   (50,000 )


Net cash used in financing activities
   (328 ) (370 )


Effect of exchange rate changes on cash and cash equivalents
   373 688
Net increase (decrease) in cash and cash equivalents
   (23,785 ) 4,603
Cash and cash equivalents at beginning of period
   308,059 183,361


Cash and cash equivalents at end of period
   $ 284,274 $ 187,964


Supplementary disclosure of cash flow information:

Cash paid during the period for:

Interest
   $ 5,119 $ 5,195
Income taxes
   $ 4,791 $ 4,394
Non-cash Items:

Decrease in accounts payable and accrued liabilities included in capital expenditures
   $ (593 ) $ (356 )

The accompanying notes are an integral part of these condensed consolidated financial statements.

~~Unimin~~

Covia Holdings Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(Unaudited)

Nine Months Ended September 30,

2018

2017

(in thousands)

Net income (loss) attributable to Covia Holdings Corporation

$
(222,359
)

$
83,785

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation, depletion, and amortization

138,460

81,019

Prepayment penalties on Senior Notes

2,213

-

Goodwill and other asset impairments

277,643

-

Restructuring charges, net of cash paid

14,327

-

Inventory write-downs

6,744

-

Gain on disposal of fixed assets

(90
)

-

Change in fair value of interest rate swaps, net

(2,658
)

-

Deferred income tax provision (benefit)

(9,234
)

6,172

Stock compensation expense

5,847

-

Net income from non-controlling interest

74

-

Other, net

(3,226
)

188

Change in operating assets and liabilities, net of business combination effect:

Accounts receivable

53,533

(57,193
)
Inventories

10,511

9,333

Prepaid expenses and other assets

(806
)

790

Accounts payable

(32,628
)

(1,037
)
Accrued expenses

(48,091
)

3,438

Net cash provided by operating activities

190,260

126,495

Cash flows from investing activities

Proceeds from sale of fixed assets

862

413

Capital expenditures

(188,424
)

(51,107
)
Cash of HPQ Co. distributed

(31,000
)

-

Payments to Fairmount Santrol Holdings Inc. shareholders, net of cash acquired

(64,697
)

-

Other investing activities

-

33

Net cash used in investing activities

(283,259
)

(50,661
)

Cash flows from financing activities

Proceeds from borrowings on Term Loan

1,650,000

49,815

Payments on Term Loan

(4,125
)

-

Prepayment on Unimin Term Loans

(314,642
)

(221
)
Prepayment on Senior Notes

(100,000
)

-

Prepayment on Fairmount Santrol Holdings Inc. term loan

(695,625
)

-

Fees for Term Loan and Senior Notes prepayment

(36,733
)

-

Payments on capital leases and other long-term debt

(35,574
)

-

Fees for Revolver

(4,500
)

-

Cash Redemption payment

(520,377
)

-

Proceeds from share-based awards exercised or distributed

1

-

Tax payments for withholdings on share-based awards exercised or distributed

(289
)

-

Dividends paid

-

(50,000
)
Net cash used in financing activities

(61,864
)

(406
)

Effect of foreign currency exchange rate changes

2,211

872

Increase (decrease) in cash and cash equivalents

(152,652
)

76,300

Cash and cash equivalents:

Beginning of period

308,059

183,361

End of period

$
155,407

$
259,661

Supplemental disclosure of cash flow information:

Interest paid, net of capitalized interest

$
(41,590
)

$
(11,890
)
Income taxes paid

(10,790
)

(22,768
)
Non-cash investing activities:

Decrease in accounts payable for additions to property, plant, and equipment

$
(22,075
)

$
(3,063
)

The accompanying notes are an integral part of these condensed consolidated financial statements.

Covia Holdings Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

(Unaudited)

~~1. Business and Summary of Significant Accounting Policies~~

1.	Business and Summary of Significant Accounting Policies

Nature of Operations

Covia Holdings Corporation, including its consolidated subsidiaries (collectively, the “Company” or “Covia”) is a leading provider of minerals and material solutions for the Industrial and Energy markets. The Company’s Industrial segment provides diversified mineral solutions to the glass, ceramics, coatings, polymers, construction, water filtration, sports and recreation markets. The Company offers its Energy customers a selection of proppant solutions, additives, and coated products to enhance well productivity and to address both surface and down-hole challenges in all well environments. Covia offers a broad array of high-quality products, including high-purity silica sand, nepheline syenite, feldspar, clay, kaolin, lime, resin systems and coated materials, delivered through its comprehensive distribution network.

Merger of Unimin Corporation and ~~Subsidiaries~~Fairmount Santrol Holdings Inc.

On June 1, 2018 (the “Merger Date”), Unimin Corporation (“Unimin” or) completed its previously announced transaction (the “Merger”) with Fairmount Santrol Holdings Inc. (“Fairmount Santrol”). Upon closing of the ~~“Company”~~Merger, Fairmount Santrol was merged into a wholly-owned subsidiary of Unimin and ceased to exist as a separate corporate entity. Unimin changed its name and began operating as Covia. Fairmount Santrol common stock was delisted from the New York Stock Exchange (“NYSE”) ~~is domiciled~~prior to the market opening on June 1, 2018 and Covia commenced trading under the ticker symbol “CVIA” as of that date. Fairmount Santrol stockholders in the ~~United States~~aggregate (including holders of certain Fairmount Santrol equity awards) received $170,000 in cash consideration and approximately 35% of the common stock of Covia. Approximately 65% of Covia common stock is owned by SCR-Sibelco NV (“Sibelco”), previously the parent company of Unimin. See Note 2 for further discussion of the Merger.

In connection with the Merger, the Company completed a debt refinancing transaction, with Barclays Bank PLC as administrative agent, by entering into a $1,650,000 senior secured term loan (“Term Loan”) and a $200,000 revolving credit facility (“Revolver”). The proceeds of the Term Loan were used to repay the indebtedness of Unimin and Fairmount Santrol and to fund the cash consideration and expenses related to the Merger. See Note 7 for further discussion of the refinancing transaction and terms of such indebtedness.

As a condition to the Merger, Unimin contributed assets of its Electronics segment to Sibelco North America, ~~and is~~Inc. (“HPQ Co.”), a newly-formed wholly owned subsidiary of~~SCR-Sibelco~~ ~~NV (“Sibelco” or “Parent”), headquartered~~ Unimin, in ~~Antwerp, Belgium.~~exchange for all of the stock of HPQ Co. and the assumption by HPQ Co. of certain liabilities. Unimin distributed 100% of the stock of HPQ Co. to Sibelco in exchange for 170 shares (or 15,097 shares subsequent to the stock split) of Unimin common stock held by Sibelco. See Note 3 for a discussion of HPQ Co. which is presented as discontinued operations in these condensed consolidated financial statements.

Costs and expenses incurred related to the Merger are recorded in Other non-operating expense, net in the accompanying Condensed Consolidated Statements of Income and include legal, accounting, valuation and financial advisory services, integration and other costs totaling $5,600 and $49,823 for the three and nine months ended September 30, 2018, respectively. As of September 30, 2018, accrued Merger related costs and expenses of $4,816 are included in Accrued expenses in the accompanying Condensed Consolidated Balance Sheet. The Company is an application-focused minerals company providing materials solutions to its customers drawing from a diversified product portfolio with over 28 million tons of productive capacity. Unimin produces a wide range of specialized silica sand, feldspar, nepheline syenite, calcium carbonate, clay, kaolin, lime and limestone products for usedid not incur Merger-related expenses in the ~~energy, industrial and electronics end markets in North America and around the world. Its 31 mining facilities with reserves~~three and nine ~~processing facilities span~~months ended September 30, 2017.

Unimin was determined to be the ~~United States, Mexico~~acquirer for accounting purposes, and ~~Canada.~~the historical financial statements and the historical amounts included in the notes to the financial statements relate to Unimin. The Condensed Consolidated Statements of Income for the three and nine months ended September 30, 2018 include the results of Fairmount Santrol from the Merger Date. The Condensed Consolidated Balance Sheet at September 30, 2018 reflects Covia; however, the Condensed Consolidated Balance Sheet at December 31, 2017 reflects Unimin only. The presentation of information for periods prior to the Merger Date are not fully comparable to the presentation of information for periods presented after the Merger Date because the results of operations for Fairmount Santrol are not included in such information prior to the Merger Date.

Covia Holdings Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

(Unaudited)

Reclassifications

Certain reclassifications of prior period presentations have been made to conform to the current period presentation.

Basis of Presentation

The unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form10-Q and Article 10 of RegulationS-X. Accordingly, they do not include all of the information and notes required by GAAP for complete financial statements. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments (which are of a normal, recurring nature) and disclosures necessary for a fair statement of the financial position, results of operations, comprehensive income, and cash flows of the reported interim periods. The ~~condensed consolidated balance sheet~~Condensed Consolidated Balance Sheet as of December 31, 2017 was derived from audited financial statements, but does not include all disclosures required by GAAP. Interim results are not necessarily indicative of the results to be expected for the full year or any other interim period. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements and ~~the~~ notes thereto as and for each of the three years in the period ended December 31, 2017, which are included in Unimin’s Amendment No. 2 to Form S-4 Registration Statement as filed with the ~~Company’s registration statement~~Securities and Exchange Commission (“SEC”) on ~~FormS-4~~ ~~(fileNo. 333-224228)~~April 23, 2018 (the “Form S-4”), and ~~the~~ information included elsewhere in this Quarterly Report on Form~~10-Q.~~ 10-Q (this “Report”).

On June 1, 2018, the Company effected an 89:1 stock split with respect to its shares of common stock. Unless otherwise noted, impacted amounts and share information included in the financial statements and notes thereto have been retroactively adjusted for the stock split as if such stock split occurred on the first day of the first period presented. Certain amounts in the notes to the financial statements may be slightly different than previously reported due to rounding of fractional shares as a result of the stock split.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The more significant areas requiring the use of management estimates and assumptions relate to: ~~reclamation~~business combination purchase price allocation, and ~~closure~~the useful life of definite-lived intangible assets; asset retirement obligations; estimates of allowance for doubtful accounts; estimates of fair value for reporting units and asset impairments (including impairments of goodwill and other long-lived assets); ~~write-downs~~adjustments of ~~inventory~~inventories to net realizable value; post-employment, post-retirement and other employee benefit liabilities; valuation allowances for deferred tax assets; and reserves for contingencies and litigation. The Company based its estimates on historical experience and on various other assumptions that are believed to be reasonable under the ~~circumstances.~~circumstances, including the use of valuation experts. Accordingly, actual results may differ significantly from these estimates under different assumptions or conditions.

Cash and Cash Equivalents

Cash and cash equivalents are comprised of cash as well as liquid investments with original maturities of three months or less.

The Company’s cash and cash equivalents are held on deposit ~~in accounts that are shared with the Parent at financial institutions. The cash~~ and ~~cash equivalents~~ are available to the Company on demand without restriction, prior notice, or penalty.

~~Fair Value Measurements~~Revenue Recognition

~~A fair value measurement~~The Company derives its revenues by mining, manufacturing, and processing minerals that its customers purchase for various uses. Revenues are measured by the amount of consideration the Company expects to receive in exchange for transferring its product. The consideration the Company expects to receive is ~~determined~~ based on the assumptions that a market participant would use in pricing an asset or liability. A three-tiered hierarchy draws distinctions between market participant assumptions. The three-tiered hierarchy ranks the qualityvolumes and ~~reliability~~price of the ~~information used to determine fair values. Financial assets~~product per ton as defined in the underlying contract. The price per ton is based on the market value for similar products plus costs associated with transportation and ~~liabilities at fair value are classified~~transloading, as applicable. Depending on the contract, this may also be net of discounts and ~~disclosed in one of the following three categories:~~

~~Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.~~

~~Level 2: Inputs other than quoted prices that are observable~~rebates. The transaction price is not adjusted for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.effects of a

~~Level 3: Unobservable inputs that reflect the reporting entity’s own assumptions.~~9

~~Unimin~~Covia Holdings Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

(Unaudited)

~~A financial instrument’s categorization~~significant financing component, as the time period between transfer of control of the goods and expected payment is one year or less. Sales, value-added, and other similar taxes collected are excluded from revenue.

On January 1, 2018, the Company adopted ASU No. 2014-09 – Revenue from Contracts with Customers (Topic 606). The adoption did not require a cumulative adjustment to opening retained earnings and did not have a material impact on revenues for the nine months ended September 30, 2018. Revenues are recognized as each performance obligation within the ~~valuation hierarchy~~contract is ~~based upon~~satisfied; this occurs with the ~~lowest level~~transfer of input that is significant to the fair value measurement. The Company’s financial instruments include cash and cash equivalents, accounts receivable, accounts payable and other current liabilities and debt. At March 31, 2018 and December 31, 2017, fair value of financial instruments approximated their book value except for debt. The fair value of debt is included in Note 7.

~~Revenue Recognition~~

~~The Company derives its revenue by mining and processing minerals that its customers purchase for various uses. The Company’s sales are primarily a function~~control of the ~~price per ton and the number of tons sold. The price per ton reflects the cost of production, the cost of transportation to the~~ Company’s ~~distribution terminals or customer site, and the cost of transloading the~~ product ~~from railcars to trucks,~~in accordance with delivery methods as ~~applicable. These costs are all included~~defined in the ~~Company’s cost ofgoods sold.~~

~~Revenue is recognized when the selling price is fixed or determinable, collectability is reasonably assured, and title and risk~~underlying contract. Transfer of ~~loss have transferred~~control to ~~the customer. This~~customers generally occurs when products leave the Company’s ~~distribution terminal~~facilities or inat other predetermined control transfer points. The Company has elected to continue to account for shipping and handling activities that occur after control of the ~~case~~related good transfers, as a cost of ~~direct shipments, when products leave the Company’s production facility.~~fulfillment instead of a separate performance obligation. Transportation costs to move product from athe Company’s production ~~facility~~facilities to aits distribution ~~terminal~~terminals are borne by the Company and capitalized into ~~the cost of~~ inventory. These costs are included in ~~the~~ cost of goods sold as the ~~product~~products are sold. The Company’s contracts may include one or multiple distinct performance obligations. Revenues are assigned to each performance obligation based on its relative standalone selling price, which is ~~sold.~~generally the contractually-stated price.

The Company’s products may be sold with rebates, discounts, take-or-pay provisions, or other features which are accounted for as variable consideration. Rebates and discounts are not material and have not been separately disclosed. Contracts that contain take-or-pay provisions obligate customers to pay shortfall payments if the required volumes, as defined in the contracts, are not purchased. Shortfall payments are recognized as revenues when the likelihood of the customer purchasing the minimum volume becomes remote, subject to renegotiation of the contract and collectability. At September 30, 2018 and December 31, 2017, the Company had no accounts receivable related to shortfall payments.

The Company disaggregates revenues by major source consistent with its segment reporting. See Note 18 for further detail.

Accounts ~~Receivables~~Receivable

~~Trade accounts receivables~~Accounts receivable as presented in the consolidated balance sheets are ~~stated~~related to the Company’s contracts and are recorded when the right to consideration becomes likely at the amount management expects to ~~collect and~~collect. Accounts receivable do not bear ~~interest. Accounts receivable~~interest if paid when contractually due, and payments are ~~net~~generally due within thirty to forty-five days of ~~allowance for doubtful accounts~~invoicing. The Company typically does not record contract assets, as the transfer of ~~$3.7 million as~~control of ~~both March 31, 2018 and December 31, 2017.~~its products results in an unconditional right to receive consideration.

Allowance for Doubtful Accounts

The collectability of all outstanding receivables is reviewed and evaluated by management. This review includes consideration for the risk profile of the receivables, customer credit quality and certain indicators such as the aging ofpast-due amounts and general economic conditions. If it is determined that a receivable balance will not likely be recovered, an allowance for such outstanding receivable balance is established.

Concentration of Credit Risk

At ~~March 31,~~September 30, 2018, the Company had two customers whose accounts receivable balances exceeded 10% of total accounts receivable. Approximately 13% and 10% of the accounts receivable balance at September 30, 2018 was from these two customers, respectively. At December 31, 2017, the Company had one customer whose accounts receivable balance exceeded 10% of total accounts receivable. Approximately ~~11% and~~ 13% of the Company’s accounts receivable ~~balances~~balance at ~~March 31, 2018 and~~ December 31, 2017 ~~respectively, were~~was from this customer.

Asset Retirement Obligation

The Company estimates the future cost of dismantling, restoring, and reclaiming operating excavation sites and related facilities in accordance with federal, state, and local regulatory requirements. The Company records the initial estimated present value of these costs as an asset retirement obligation and increases the carrying amount of the related asset by a corresponding amount. The related asset is classified as property, plant, and equipment and

Covia Holdings Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

(Unaudited)

amortized over its useful life. The Company adjusts the related asset and liability for changes resulting from the passage of time and revisions to either the timing or amount of the original present value estimate. Cost estimates are escalated for inflation, then discounted at the credit adjusted risk free rate. If the asset retirement obligation is settled for more or less than the carrying amount of the liability, a loss or gain will be recognized ~~respectively.~~in the period the obligation is settled. As of ~~March 31,~~September 30, 2018 and December 31, 2017, the Company had asset retirement obligations of ~~$13.4 million~~$28,992 and ~~$12.9 million,~~$12,472, respectively. The Company recognized ~~$0.5 million and $0.2 million in~~ accretion expense ~~for~~of $789 and $1,055 in the ~~quarters~~three months ended ~~March 31,~~September 30, 2018 and 2017, respectively, ~~within other~~and $1,808 and $1,431 in the nine months ended September 30, 2018 and 2017, respectively. These amounts are included in Other operating expense (income), net in the ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~income, which~~Income. Other than those asset retirement obligations that were assumed and recorded in connection with the ~~only~~Merger and accretion expense, there were no changes in the liability during these interim periods.

~~Unimin Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(in thousands, except per share data)~~

~~(Unaudited)~~

~~Segment Reporting~~

The Company ~~organizes its business into three reportable segments: Energy, Electronics and Industrial. The reportable segments are consistent with how management views~~is still evaluating the ~~markets served by~~fair value of the ~~Company and the financial information reviewed by the chief operating decision maker in deciding how to allocate resources and assess performance.~~

The Company measures the profitability of its operating segments’ performance based on segment gross profit, which does not include any selling, general, and administrative costs, corporate costs and depreciation, depletion and amortization.

~~Earnings Per Share~~

~~Basic earnings per share is computed by dividing income available to common shareholders by the weighted average number of common shares outstanding for the period.~~

~~Diluted earnings per share is also computed by dividing income available to common shareholders by the weighted average number of diluted common shares outstanding. Potential common shares~~asset retirement obligation assumed in the diluted earnings per share calculation are excluded to the extent that they would be anti-dilutive. The Company had no stock options, warrants, convertible securities or other potentially dilutive financial instruments outstanding during the three months ended March 31, 2018 or 2017, and therefore there is no difference in the number of common shares outstanding for basic or diluted earnings per share.Merger.

~~Accumulated Other Comprehensive Income (Loss)~~

Accumulated other comprehensive income (loss) is a separate line within Shareholders’ Equity that reports the Company’s cumulative income (loss) that has not been reported as part of net income (loss). Items that are included in this line are the income (loss) from foreign currency translation, actuarial gains (losses) and prior service cost related to pension and other post-employment liabilities. The components of accumulated other comprehensive income (loss) at March 31, 2018 and December 31, 2017 were as follows:

   March 31, 2018
   Gross    Tax Effect    Net Amount
Foreign currency translation adjustments
   $ (45,731 )    $ —      $ (45,731 )
Amounts related to employee benefit obligations
   (99,253 )    26,690    (72,563 )






   $ (144,984 )    $ 26,690    $ (118,294 )

   December 31, 2017
   Gross    Tax Effect    Net Amount
Foreign currency translation adjustments
   $ (54,571 )    $ —      $ (54,571 )
Amounts related to employee benefit obligations
   (100,817 )    27,160    (73,657 )






   $ (155,388 )    $ 27,160    $ (128,228 )

~~The following table presents the changes in accumulated other comprehensive income (loss) by component for the three months ended March 31, 2018:~~

   Three Months Ended March 31, 2018
   Foreign
currency
translation
adjustments    Amounts
related
to employee
benefit
obligations    Total
Beginning balance
   $ (54,571 )    $ (73,657 )    $ (128,228 )
Other comprehensive income (loss) before reclassifications
   8,840    —      8,840
Amounts reclassified from accumulated other comprehensive income (loss)
   —      1,094    1,094






Ending balance
   $ (45,731 )    $ (72,563 )    $ (118,294 )

~~Unimin Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(in thousands, except per share data)~~

~~(Unaudited)~~

2. Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In ~~February 2018,~~May 2014, the Financial Accounting Standards Board ~~(the “FASB”~~(“FASB”) issued Accounting Standards Update (“ASU”)~~No. 2018-02—~~~~Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income~~. The FASB is providing ongoing guidance on certain accounting and tax effects of the legislation in the Tax Cuts and Jobs Act (the “Tax Act”), which was enacted in December 2017. Specifically, the ASU allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from this legislation and eliminates said stranded tax effects. The ASU is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years with early adoption permitted. The Company has elected to early adopt this ASU. See Note 8 for further information.

~~In May 2014, the FASB issued ASU~~No. 2014-09– Revenue from Contracts with Customers (Topic 606) (“ASU2014-09”). ~~The standard is a comprehensive new~~ASU 2014-09 supersedes the revenue recognition ~~model that requires~~requirements in Topic 605 – Revenue Recognition and clarifies the principles for recognizing revenue ~~to be~~and creates common revenue recognition guidance between GAAP and International Financial Reporting Standards. Revenues are recognized ~~in a manner to depict the transfer~~when customers obtain control of promised goods or services ~~to a customer~~and at an amount that reflects the consideration expected to be received in exchange for ~~those~~such goods or services. In addition, ASU 2014-09 requires disclosure of the nature, amount, timing, and uncertainty of revenues and cash flows arising from contracts with customers.

On January 1, 2018, the Company adopted ASU2014-09 for all contracts which were not completed as of January 1, 2018 using the modified retrospective ~~approach for all contracts as of January 1, 2018.~~transition method. The adoption did not require a cumulative adjustment to opening retained earnings and did not have a material impact on revenues for the ~~quarter~~nine months ended September 30, 2018.

In March ~~31, 2018.~~

~~Substantially~~2016, the FASB issued ASU No. 2016-09 – Compensation – Stock Compensation (Topic 718) (“ASU 2016-09”), which simplifies the accounting treatment for excess tax benefits and deficiencies, forfeitures, and cash flow considerations related to share-based payment transactions. ASU 2016-09 requires all tax effects of ~~our revenue is recognized at apoint-in-time~~share-based payments to be recorded through the income statement, windfall tax benefits to be recorded when ~~control~~the benefit arises, and excess tax benefits-related cash flows to be reported as operating activities in the statement of ~~goods transfers~~cash flows. Regarding withholding requirements, ASU 2016-09 allows entities to withhold an amount up to the ~~customer. Control transfer typically occurs~~employees’ maximum individual tax rates without classifying the award as a liability. Such withholdings are to be recorded as financing activities in the statement of cash flows. ASU 2016-09 also permits entities to make an accounting policy election for the impact of forfeitures on expense recognition, either recognized when ~~goods~~forfeitures are ~~shipped from our facilities~~estimated or ~~at other predetermined control transfer points (for instance, destination terms). We have~~when forfeitures occur. On January 1, 2018, the Company adopted ASU 2016-09, and elected to ~~continue to account for shipping~~recognize forfeitures when they occur. The adoption did not have a material impact on the Company’s consolidated financial statements and ~~handling activities that occur after control of the related good transfers as a fulfillment activity instead of a separate performance obligation.~~

We recognize revenue as the amount of consideration that we expect to receive in exchange for transferring promised goods or services to customers. We do not adjust the transaction price for the effects of a significant financing component, as the time period between control transfer of goods and services and expected payment is one year or less. At the time of sale, we estimate provisions for different forms of variable consideration using either the most likely amount method (volume rebates and discounts) or expected value method~~(take-or-pay~~ penalties and cost reduction sharing) based on historical experience, current conditions and contractual obligations, as applicable. Sales, value-added and other similar taxes that we collect are excluded from revenue.

~~Our disaggregation of revenue by major source is consistent with our segment reporting and can be found at Note 13.~~disclosures.

In October 2016, the FASB issued ASUNo. ~~2016-16—~~2016-16 – Income Taxes (Topic 740)— – Intra-Entity Transfers of Assets other than Inventory (“ASU2016-16”). ASU2016-16 requires an entity to recognize the income tax consequences of an intra-entity transfer of assets other than inventory when the transfer occurs. ASU2016-16 also eliminates the exception for an intra-entity transfer of an asset other than inventory. On January 1, 2018, wethe Company adopted ASU2016-16 using the modified retrospective transition method. The ~~Company~~adoption did not ~~record~~require a cumulative ~~effect~~ adjustment to opening retained earnings ~~for initially applying~~and did not have a material impact on the ~~new guidance as no material differences were identified.~~consolidated financial statements.

In March 2017, the FASB issued ASUNo. ~~2017-07—~~~~Compensation—~~2017-07 – Compensation – Retirement Benefits (Topic 715)— – Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost(“ (“ASU 2017-07”). ~~ASU2017-07~~ASU 2017-07 requires that an employer report the service cost component in the same line item in the income statement as other compensation costs arising from services rendered by the pertinent employees during the period as well as appropriately described relevant line items. ~~The update~~ASU 2017-07 also disallows capitalization of the other components of net

Covia Holdings Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

(Unaudited)

periodic benefit costs and requires those costs to be presented in the income statement separately from the service cost component and outside of a subtotal of income from operations. ~~The update~~ASU 2017-07 is effective for ~~fiscal years~~annual reporting periods beginning after December 15, 2017, including interim periods within those annual periods, ~~for public business entities.~~with early adoption permitted. Companies are required to retrospectively apply the requirement for a separate presentation in the income statement of service costs and other components of net benefit cost and prospectively adopt the requirement to limit the capitalization of benefit costs to the service component. Application of a practical expedient is allowed permitting an employer to use the amounts disclosed in its pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements. ~~We implemented the update on~~The Company adopted ASU 2017-07 as of January 1, 2018 and utilized the practical expedient to estimate the impact on the

~~Unimin Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(in thousands, except per share data)~~

~~(Unaudited)~~

prior comparative period information presented in the interim and annual financial statements. ~~We previously~~Previously, the Company capitalized all net periodic benefit costs incurred for plant personnel in inventory and recorded the majority of net periodic benefit costs incurred by corporate personnel and retirees into selling, general, and administrative expenses. After the adoption, the Company records all components of net periodic benefit costs, aside from service costs, as a component of Other non-operating expense, net in the Condensed Consolidated Statements of Income. The following is a reconciliation of the effect of the reclassification of the net benefit cost in the Company’s ~~condensed consolidated statements~~Condensed Consolidated Statements of ~~income~~Income for the three and nine months ended ~~March 31,~~September 30, 2017:

   As Previously
Reported    Adjustments    As Revised
Cost of goods sold (excluding depreciation, depletion and amortization)
   $ 235,312    $ (1,080 )    $ 243,232
Selling, general and administrative expenses
   24,925    (600 )    24,325
Interest expense, net
   3,675    1,680    5,355

	Three Months Ended September 30, 2017							Nine Months Ended September 30, 2017
	As Reported		Adjustments			As Revised		As Reported		Adjustments			As Revised
Cost of goods sold (excluding depreciation, depletion,
and amortization shown separately)	$	245,779	$	(1,085	)	$	244,694	$	697,366	$	(3,256	)	$	694,110
Selling, general and administrative expenses		24,813		(603	)		24,210		68,063		(1,808	)		66,255
Other non-operating expense, net	$	3,416	$	1,688		$	5,104	$	7,570	$	5,064		$	12,634

In August 2017, the FASB issued ASU No. 2017-12 – Derivatives and Hedging (Topic 815) – Targeted Improvements to Accounting for Hedging Activities (“ASU 2017-12”). ASU 2017-12 expands and refines hedge accounting for both nonfinancial and financial risk components and aligns the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. Subject matters addressed include risk component hedging, accounting for the hedged item in fair value hedges of interest rate risk, recognition and presentation of the effects of hedging instruments, amounts excluded from the assessment of hedge effectiveness, and effectiveness testing. All transition requirements and elections should be applied to existing hedging relationships as of the date of adoption and reflected as of the beginning of the fiscal year of adoption. On August 1, 2018, the Company entered into hedge accounting for its interest rate swaps and elected to early adopt ASU 2017-12 at the date of designation. The adoption did not result in a cumulative effect adjustment in the Condensed Consolidated Balance Sheets. See Note 10 for further detail.

Recently Issued Accounting Pronouncements

In February 2016, the FASB issued ASUNo. ~~2016-02—~~2016-02 – Leases (Topic 842) (“(“ASU2016-02”), which ~~supersedes the previous leases standard, ASC 840—~~~~Leases~~~~. The amendments in ASU2016-02~~ requires lessees to ~~apply a dual approach, classifying~~recognize assets and liabilities on their consolidated balance sheet related to the rights and obligations created by most leases, ~~as either finance or operating leases based~~while continuing to recognize expense on ~~the principle~~their consolidated statements of ~~whether or not~~income over the lease ~~is effectively a financed purchase by~~term. ASU 2016-02 also requires disclosures designed to give financial statement users information regarding the ~~lessee. This classification will determine whether lease expense~~amount, timing, and uncertainty of cash flows arising from leases. ASU 2016-02 is ~~recognized based on an effective interest method or on a straight-line basis over the term of the lease, respectively. A lessee is also required to record aright-of-use~~ asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. The amendments in ASU~~2016-02~~ ~~are~~ effective for ~~public business entities for~~ fiscal years and related interim periods beginning after December 15, 2018, ~~including interim periods within those fiscal years~~ with early adoption ~~permitted.~~permitted, and mandates a modified retrospective transition approach for leases that exist or are entered into after the beginning of the earliest comparative period in the consolidated financial statements. The FASB issued ASU-2018-11 – Leases (Topic 842) which provides a practical expedient that allows companies to use an optional transition method. Under the optional transition method, a cumulative adjustment to retained earnings during the period of adoption is recorded and prior periods would not require restatement. The Company will elect this practical expedient. The Company believes the adoption will likely have a material impact on its consolidated financial statements for the recognition of certain operating leases as right-of-use assets and lease liabilities and the Company is in the process of ~~quantifying~~analyzing its lease portfolio and business processes to comply with adoption.

In June 2016, the ~~impact of~~FASB issued ASU No. 2016-13 – Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”). ASU 2016-13 replaces the new standard on its consolidated financial statements. The new guidance is expected to require the recognition of lease assets and lease liabilities for leases currently classified as operating leases under ASC 840, for which the Company has future minimum lease commitments as of December 31, 2017 of $302,290.incurred loss impairment methodology in current GAAP with a methodology

~~3. Inventories~~12

~~At March 31, 2018 and December 31, 2017, inventories consisted of the following:~~

   March 31,
2018    December 31,
2017
Raw materials
   $ 19,495    $ 19,892
Work-in-process
   2,801    2,146
Finished goods
   52,808    49,153
Spare parts
   35,108    33,624




Inventories, net
   $ 110,212    $ 104,815

~~4. Property, Plant and Equipment~~

~~At March 31, 2018 and December 31, 2017, property, plant and equipment consisted of the following:~~

   March 31,
2018    December 31,
2017
Land and improvements
   $ 188,327    $ 173,523
Mineral rights properties
   276,217    269,249
Machinery and equipment
   1,297,443    1,235,814
Buildings and improvements
   448,936    423,230
Railroad equipment
   151,991    147,345

~~Unimin~~Covia Holdings Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

(Unaudited)

   March 31,
2018    December 31,
2017
Furniture, fixtures and other
   4,615    3,987
Assets under construction
   187,155    237,042




   2,554,684    2,490,190
Less: Accumulated depletion and depreciation
   (1,298,492 )    (1,259,550 )




Property, plant and equipment, net
   $ 1,256,192    $ 1,230,640

~~5. Accrued Expenses~~that reflects expected credit losses and ~~Other Current Liabilities~~requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. Additionally, ASU 2016-13 requires a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected through the use of an allowance of expected credit losses. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, and requires a modified retrospective approach. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements and disclosures.

AtIn March ~~31,~~2018, the FASB issued ASU No. 2018-05 – Income Taxes (Topic 740) – Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118 (“ASU 2018-05”). ASU 2018-05 provides guidance regarding the recording of tax impacts where uncertainty exists, in the period of adoption of the Tax Cuts and Jobs Act (the “Tax Act”), which allowed companies to reflect provisional amounts for those specific income tax effects of the Tax Act for which the accounting under ASC Topic 740 is incomplete but for which a reasonable estimate could be determined. During the nine months ended September 30, 2018, the Company has not recognized any material changes to the provisional amounts recorded in the 2017 Consolidated Financial Statements included in the Form S-4, in connection with the Tax Act. The accounting for the tax effect of the Tax Act will be finalized in the fourth quarter of 2018 as the Company completes its federal and state tax returns and incorporates any additional guidance that may be issued by U.S. tax authorities.

In June 2018, the FASB issued ASU No. 2018-07 – Compensation – Stock Compensation (Topic 718) – Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). ASU 2018-07 expands the scope of ASC 718 to include share-based payment transactions for acquiring goods and services from nonemployees. Additionally, ASU 2018-07 specifies that ASC 718 applies to all share-based payments in which a grantor acquires goods or services to be used or consumed in the grantor’s own operations by issuing share-based payment awards. Further, ASU 2018-07 clarifies that ASC 718 does not apply to share-based payments used to provide financing to the issuer or awards granted in conjunction with a contract accounted for under ASC 606. ASU 2018-07 is effective for fiscal years beginning after December 15, 2018 and ~~December 31, 2017, accrued expenses~~interim periods within that fiscal year, with early adoption permitted. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements and ~~other current liabilities consisted~~disclosures.

In June 2018, the FASB issued ASU No. 2018-09 – Codification Improvements which affects a wide variety of Topics including amendments to various Topics. The transition and effective date of the ~~following:~~guidance is based on the facts and circumstances of each amendment. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements and disclosures.

   March 31,
2018    December 31,
2017
Accrued bonus & other benefits
   $ 9,626    $ 15,662
Accrued transaction costs
   11,567    13,030
Accrued interest
   4,252    6,035
Accrued insurance
   8,831    9,887
Current tax liabilities
   9,256    2,270
All other accrued liabilities
   33,597    29,545




Total accrued expenses and other current liabilities
   $ 77,129    $ 76,429

~~6. Goodwill~~In August 2018, the FASB issued ASU No. 2018-13 – Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). ASU 2018-13 removes and ~~Intangible Assets~~

~~The Company’s goodwill balance was $53.5 million at March 31, 2018 and December 31, 2017.~~

~~Goodwill represents the excess~~modifies existing disclosure requirements on fair value measurement, namely regarding transfers between levels of ~~purchase price over~~ the fair value hierarchy and the valuation processes for Level 3 fair value measurements. Additionally, ASU 2018-13 adds further disclosure requirements for Level 3 fair value measurements, specifically changes in unrealized gains and losses and other quantitative information. ASU 2018-13 is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2019, with early adoption permitted. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements and disclosures.

In August 2018, the FASB issued ASU No. 2018-14 – Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20): Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans (“ASU 2018-14”). The amendments in ASU 2018-14 remove various disclosures that no longer are considered cost-beneficial, namely amounts in accumulated other comprehensive income expected to be recognized as components of net ~~assets acquired~~periodic benefit cost over the next fiscal year. Further, ASU 2018-14 requires disclosure or clarification of the reasons for significant gains or losses related to changes in ~~business combinations.~~

The Company evaluates goodwill on an annual basis at October 31, or more frequently if management believes indicators of impairment exist. The goodwill balance as of March 31, 2018 and December 31, 2017 relates solely to the ~~Company’s Industrial reporting unit, which is also the Industrial reportable segment.~~

~~The following table summarizes the activity in intangible assets, net~~benefit obligation for the ~~three months ended March 31, 2018 and year ended December 31, 2017:~~

   March 31,
2018    December 31,
2017
Beginning balance
   $ 55,328    $ 55,328
Assets acquired
   —      —




Ending Balance
   55,328    55,328




Accumulated amortization, beginning balance
   (28,167 )    (25,222 )
Amortization for the period
   (678 )    (2,945 )




Accumulated amortization, ending balance
   (28,845 )    (28,167 )




Intangible Assets, net
   $ 26,483    $ 27,161

~~Intangible assets, net includes acquired supply contracts in the Company’s Industrial segment of $21.3 million and $22.0 million as of March 31, 2018 and December 31, 2017, respectively,~~period, as well as ~~$5.1 million~~projected and ~~$5.2 million~~accumulated benefit obligations in excess of ~~acquired stream mitigation rights as of March 31, 2018~~plan assets. ASU 2018-14 is effective for fiscal years ending after December 15, 2020 and ~~December 31, 2017, respectively. Amortization expense~~should be applied on a retrospective basis, with early adoption permitted. The Company is ~~recognized in Depreciation, depletion and amortization expense~~ in the ~~Condensed Consolidated Statements~~process of ~~Income.~~

evaluating the impact of this new guidance on its consolidated financial statements and disclosures.

~~Unimin~~Covia Holdings Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

(Unaudited)

~~7. Long-Term Debt~~In August 2018, the FASB issued ASU No. 2018-15 – Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). The amendments in ASU 2018-15 align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software and hosting arrangements that include an internal-use software license. ASU 2018-15 requires an entity in a hosting arrangement that is a service contract to follow the guidance in Subtopic 350-40 to determine which implementation costs to capitalize as an asset related to the service contract and which costs to expense. ASU 2018-15 also requires the entity to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement, which includes reasonably certain renewals. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. ASU 2018-15 should can be applied either retrospectively or prospectively to all implementation costs incurred after its adoption. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements and disclosures.

In October 2018, the FASB issued ASU No. 2018-16 – Derivatives and Hedging (Topic 815): Inclusion of the Secured Overnight Financing Rate (SOFR) Overnight Index Swap (OIS) Rate as a Benchmark Interest Rate for Hedge Accounting (“ASU 2018-16”). The amendments in ASU 2018-16 allow the OIS rate based on SOFR as a U.S. benchmark interest rate and are an attempt to help facilitate the LIBOR to SOFR transition, as well as provide sufficient lead time for entities to prepare for changes to interest rate risk hedging strategies for both risk management and hedge accounting purposes. Since the Company early-adopted ASU 2017-12, ASU 2018-16 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. ASU 2018-16 should be applied on a prospective basis for qualifying new or re-designated hedging relationships entered into on or after the date of adoption. As previously noted, the Company early-adopted ASU 2017-12 and will apply the new guidance of ASU 2018-16 in the event the Company enters into new hedging relationships on or after December 15, 2018.

In November 2018, the FASB issued ASU No. 2018-18 – Collaborative Arrangements (Topic 808) — Clarifying the Interaction between Topic 808 and Topic 606 (“ASU 2018-18”). The amendments in ASU 2018-18 provide guidance on whether certain transactions between collaborative arrangement participants should be accounted for revenue under ASC 606. ASU 2018-18 specifically addresses when the participant is a customer in the context of a unit of account, adds unit-of-account guidance in ASC 808 to align with guidance with ASC 606, and precludes presenting the collaborative arrangement transaction together with revenue recognized under ASC 606 if the collaborative arrangement participant is not a customer. ASU 2018-18 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted and should be applied retrospectively. The Company is in the process of evaluating the impact of this new guidance on its consolidated financial statements and disclosures.

2.	Merger and Preliminary Purchase Price Accounting

As previously noted, on June 1, 2018, Fairmount Santrol was merged into a subsidiary of Unimin, after which Fairmount Santrol ceased to exist as a separate corporate entity. Refer to Note 1 for additional information related to the Merger.

The Merger Date fair value of consideration transferred was $1,313,660, which consisted of share-based awards, cash, and Covia common stock. The consideration transferred to Fairmount Santrol’s stockholders included cash of $170,000. The cash consideration for the Merger was funded through borrowings on a senior-secured term loan, as well as cash on Unimin’s balance sheet. See Note 7 for additional information.

Fairmount Santrol operating results are included in the consolidated financial statements since the Merger Date. The Merger qualifies as a business combination and is accounted for using the acquisition method of accounting. In accordance with the acquisition method of accounting, the allocation of consideration transferred is preliminary and subject to adjustment until the Company completes its analysis, but not to exceed the measurement period, which is up to one year from the Merger Date.

Covia Holdings Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

(Unaudited)

The preliminary estimates of fair values of the assets acquired and liabilities assumed was based on information available as of the Merger Date and the Company continues to evaluate the underlying inputs and assumptions used in its valuation models. During the third quarter of 2018, the Company refined certain underlying inputs and assumption in its valuation models. The following table summarizes the preliminary purchase price accounting of the acquired assets and liabilities assumed as of June 1, 2018, including measurement period adjustments.

	June 1, 2018					June 1, 2018
	(as previously reported)		Adjustments			(as adjusted)
Cash and cash equivalents	$	105,303	$	-		$	105,303
Inventories, net		107,393		612			108,005
Accounts receivable		159,373		-			159,373
Property, plant, and equipment, net		1,485,785		152,075			1,637,860
Intangible assets, net		148,830		(22	)		148,808
Prepaid expenses and other assets		9,563		-			9,563
Other non-current assets		19,836		(5,773	)		14,063
Total identifiable assets acquired		2,036,083		146,892			2,182,975
Debt		738,661		10,061			748,722
Other current liabilities		162,885		2,722			165,607
Deferred tax liability		163,730		28,899			192,629
Other long-term liabilities		75,529		(3,245	)		72,284
Total liabilities assumed		1,140,805		38,437			1,179,242
Net identifiable assets acquired		895,278		108,455			1,003,733
Non-controlling interest		453		-			453
Goodwill		418,835		(108,455	)		310,380
Total consideration transferred	$	1,313,660	$	-		$	1,313,660

In addition to the changes in the balances noted above, the Company recorded an adjustment to increase Depreciation, depletion, and amortization expense of $2,680 during the three months ended September 30, 2018 as a result of the adjustment to property, plant, and equipment.

The fair values were based on management’s analysis, including preliminary work performed by third-party valuation specialists. A number of significant assumptions and estimates were involved in the application of valuation methods, including sales volumes and prices, royalty rates, production costs, tax rates, capital spending, discount rates, and working capital changes. Cash flow forecasts were generally based on Fairmount Santrol’s pre-Merger forecasts. Valuation methodologies used for the identifiable net assets acquired make use of Level 1, Level 2, and Level 3 inputs including quoted prices in active markets and discounted cash flows using current interest rates.

Accounts receivable, other current liabilities, non-current assets and other long-term liabilities, excluding asset retirement obligations included in other long-term liabilities, were valued at the existing carrying values as they represented the estimated fair value of those items at the Merger Date based on management’s judgement and estimates. The adjustment to Other current liabilities includes the true-up of a pre-acquisition contingency.

Raw material inventory was valued using the cost approach. The fair value of work-in-process inventory and finished goods inventory is a function of the estimated selling price less the sum of any cost to complete, costs of disposal, holding costs and a reasonable profit allowance.

The fair value of non-depletable land was determined using the market approach which arrives at an indication of value by comparing the land being valued to land recently acquired in arm’s-length transactions or land listings for similar uses. Building and site improvements were valued using the cost approach in which the value is established based on the cost of reproducing or replacing the asset, less depreciation from physical deterioration, functional obsolescence and economic obsolescence, if applicable. Personal property assets with an active and identifiable secondary market, such as mobile equipment were valued using the market approach. Other personal property assets such as machinery and equipment, furniture and fixtures, leasehold improvements, laboratory equipment and

Covia Holdings Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

(Unaudited)

computer software, were valued using the cost approach which is based on replacement or reproduction costs of the assets less depreciation from physical deterioration, functional obsolescence and economic obsolescence, if applicable. The fair value of the mineral reserves, which is included in property, plant, and equipment, net, were valued using the income approach which is predicated upon the value of the future cash flows that an asset will generate over its economic life.

The fair value of the customer relationship intangible assets was determined using the With and Without Method which is an income approach and considers the time needed to rebuild the customer base. The fair value of the railcar leasehold interest was determined using the discounted cash flow method (“DCF Method”) which is an income approach. The fair value of the trade names and technology intangible assets was determined using the Relief from Royalty Method which is an income approach and is based on a search of comparable third party licensing agreements and discussion with management regarding the significance of the trade names and technology and the profitability of the associated revenue streams.

The fair value of the acquired intangible assets and the related estimated useful lives at the Merger Date were the following:

	Approximate		Estimated
	Fair Value		Useful Life
Customer relationships	$	73,000	6 years
Railcar leasehold interests		42,500	1-15 years
Trade names		17,000	1 year
Technology		16,000	12 years
Other		308	95 years
Total approximate fair value	$	148,808

Goodwill is calculated as the excess of the purchase price over the fair value of net identifiable assets acquired. Goodwill represents the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. Goodwill of $82,251 and $228,129 allocated to the Industrial and Energy reporting units respectively, is attributable to the earnings potential of Fairmount Santrol’s product and plant portfolio, anticipated synergies, the assembled workforce of Fairmount Santrol, and other benefits that the Company believes will result from the Merger. During the third quarter it was determined the goodwill allocated to the Energy reporting unit was impaired and it was written off in its entirety. Refer to Note 19 for additional information. None of the goodwill is expected to be deductible for income tax purposes.

The carrying value of the debt approximated the fair value of the debt at June 1, 2018.

The deferred tax liability primarily relates to the tax effect of fair value adjustments of the assets and liabilities acquired, including mineral reserves, property, plant and equipment and intangible assets. The Company will update its estimate of the deferred tax liability based on changes to its provisional valuation of the related assets and liabilities.

Asset retirement obligations are included in other long-term liabilities in the table of preliminary estimates of fair values noted above. The related asset is included in property, plant, and equipment, net in the table of preliminary estimates of fair values noted above. The asset retirement obligations assumed and related assets acquired in connection with the Merger were adjusted at September 30, 2018 to reflect revised estimates of the future cost of dismantling, restoring, and reclaiming of certain sites and related facilities as of the Merger Date. The Company expects to record additional adjustments to asset retirement obligations and related assets in the fourth quarter of 2018.

The Company assumed the outstanding stock-based equity awards (the “Award(s)”) of Fairmount Santrol at the Merger Date. Each outstanding Award of Fairmount Santrol was converted to a Covia award with similar terms and conditions at the exchange ratio of 5:1. The Company recorded $40,414 of Merger consideration for the value of Awards earned prior to the Merger Date. The remaining value represents post-Merger compensation expense of

Covia Holdings Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

(Unaudited)

$10,416, which will be recognized over the remaining vesting period of the Awards. In addition, at June 1, 2018, the Company recorded $2,400 of expense for Awards whose vesting was accelerated upon a change in control and certain other terms pursuant to the Merger agreement and therefore considered a Merger related expense and recorded in Other non-operating expense, net in the accompanying Condensed Consolidated Statements of Income. Refer to Note 12 for additional information.

The Company has not separately disclosed the revenue and earnings of Fairmount Santrol from the Merger Date through September 30, 2018. Due to the integration of Fairmount Santrol’s operations and customer contracts into the Covia supply chain network and customer contracts, it is impracticable to provide a reasonable estimate of these revenue and earnings.

Pro Forma Condensed Combined Financial Information (Unaudited)

The following unaudited pro forma condensed combined financial information presents the Company’s combined results as if the Merger had occurred on January 1, 2017. The unaudited pro forma financial information was prepared to give effect to events that are (i) directly attributable to the Merger; (ii) factually supportable; and (iii) expected to have a continuing impact on the Company’s results. All material intercompany transactions during the periods presented have been eliminated. These pro forma results include adjustments for interest expense that would have been incurred to finance the transaction and reflect purchase accounting adjustments for additional depreciation, depletion and amortization on acquired property, plant and equipment and intangible assets. The pro forma results exclude Merger related transaction costs and expenses that were incurred in conjunction with the Merger in the three and nine months ended September 30, 2018 and September 30, 2017.

	Three Months Ended September 30,					Nine Months Ended September 30,
	2018			2017		2018			2017
Revenues	$	523,368		$	627,858	$	1,878,939		$	1,645,058
Net income		(276,194	)		47,609		(151,474	)		55,948
Earnings per share – basic	$	(2.11	)	$	0.40	$	(1.23	)	$	0.47
Earnings per share – diluted		(2.11	)		0.40		(1.23	)		0.47

The unaudited pro-forma condensed combined financial information is presented for information purposes only and is not intended to represent or to be indicative of the combined results of operations or financial position that would have been reported had the Merger been completed as of the date and for the period presented, and should not be taken as representative of the Company’s consolidated results of operations or financial condition following the Merger. In addition, the unaudited pro-forma condensed combined financial information is not intended to project the future financial position or results of operations of Covia.

3.	Discontinued Operations – Disposition of Unimin’s Electronics Segment

On May 31, 2018, prior to, and as a condition to the closing of the Merger, Unimin transferred assets and liabilities of its global high purity quartz business, HPQ Co., to Sibelco in exchange for 170 shares (or 15,097 shares subsequent to the stock split) of Unimin common stock held by Sibelco.

The transaction was between entities under common control and therefore the Unimin common stock received from Sibelco was recorded at the carrying value of the net assets transferred at May 31, 2018, in the amount of $162,109, in Treasury stock within Equity. The transfer of HPQ Co. to Sibelco was a tax-free transaction.

The disposition of HPQ Co. qualified as discontinued operations, as it represented a significant strategic shift of the Company’s operations and financial results. In addition, the operations and cash flows of HPQ Co. could be distinguished, operationally and for financial reporting purposes, from the rest of the Company.

The historical balance sheet and statements of operations of the HPQ Co. business have been presented as discontinued operations in the condensed consolidated financial statements for periods prior to the Merger. Discontinued operations include the results of HPQ Co., except for certain allocated corporate overhead costs and

Covia Holdings Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

(Unaudited)

certain costs associated with transition services provided by the Company to HPQ Co. These previously allocated costs remain part of continuing operations.

The carrying amounts of the major classes of assets and liabilities of the Company’s discontinued operations as of December 31, 2017 were as follows:

	December 31, 2017
Accounts receivable, net	$	23,065
Inventories, net		24,856
Other receivables		17,995
Prepaid expenses and other current assets		990
Current assets of discontinued operations		66,906
Property, plant, and equipment, net		94,536
Intangibles, net		1,565
Total assets of discontinued operations	$	163,007

Accounts payable	$	4,510
Accrued expenses and other current liabilities		5,517
Current liabilities of discontinued operations		10,027
Deferred tax liabilities, net		7,648
Other noncurrent liabilities		436
Total liabilities of discontinued operations	$	18,111

Included in Other receivables is $17,296 for cash generated from July 1, 2017 through December 31, 2017 due from Covia to HPQ Co. This amount was included in Accrued expenses on Covia’s Condensed Consolidated Balance Sheets at December 31, 2017 and paid out on the Merger Date.

The operating results of the Company’s discontinued operations up to the Merger Date are as follows:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2018		2017			2018			2017
Major line items constituting income from discontinued operations
Revenues	$	-	$	38,682		$	74,015		$	111,165
Cost of goods sold (excluding depreciation, depletion,
and amortization shown separately)		-		27,946			46,442			75,604
Selling, general and administrative expenses		-		3,500			8,762			10,500
Depreciation, depletion and amortization expense		-		3,105			4,072			8,821
Other operating income		-		(78	)		(69	)		(112	)
Income from discontinued operations before provision for income taxes		-		4,209			14,808			16,352
Provision for income taxes		-		1,768			2,221			3,831
Income from discontinued operations, net of tax	$	-	$	2,441		$	12,587		$	12,521

The significant operating and investing cash and noncash items of the discontinued operations included in the Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2018 and 2017 were as follows:

	Nine Months Ended September 30,
	2018		2017
Depreciation, depletion and amortization expense	$	4,072	$	8,821
Capital expenditures	$	3,549	$	435

Covia Holdings Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

(Unaudited)

4.	Stockholders’ Equity

Prior to the consummation of the Merger, Unimin redeemed 170 shares (or 15,097 shares subsequent to the stock split) of common stock from Sibelco in connection with the disposition of HPQ Co. Additionally, Unimin redeemed 208 shares (or 18,528 shares subsequent to the stock split) of common stock from Sibelco in exchange for a payment of $520,377 to Sibelco (the “Cash Redemption”). The Cash Redemption was financed with the proceeds of the $1,650,000 term loan (see Note 7) and cash on hand. Unimin effected an 89:1 stock split of its common stock and amended and restated its certificate of incorporation. This increased its authorized capital stock to 750,000 shares of common stock and 15,000 shares of preferred stock and decreased its par value per share from $1.00 to $0.01.

As a result of the Merger, Fairmount Santrol stockholders received 45,044 shares of Covia common stock, which were issued out of Covia treasury stock.

5.	Inventories, net

At ~~March~~September 30, 2018 and December 31, 2017, inventories consisted of the following:

	September 30, 2018		December 31, 2017
Raw materials	$	27,559	$	16,393
Work-in-process		23,897		1,738
Finished goods		78,368		35,905
Spare parts		37,907		25,923
Inventories, net	$	167,731	$	79,959

As a result of the Merger, the Company recorded approximately $38,409 of fair value adjustments in inventory, which included approximately $7,593 of spare parts. Of this amount, approximately $5,526 and $24,720 was recorded in cost of goods sold, based on inventory turnover, during the three and four months ended September 30, 2018, respectively.

In the third quarter of 2018, the Company recorded the write-down of inventories at four idled facilities in the amount of $6,744. The expense is recorded in Cost of goods sold in the Condensed Consolidated Statements of Income (Loss). All of the idled facilities are within the Energy segment.

6.	Property, Plant, and Equipment, net

At September 30, 2018 and December 31, 2017, property, plant, and equipment consisted of the following:

	September 30, 2018			December 31, 2017
Land and improvements	$	210,380		$	151,374
Mineral rights properties		1,315,276			266,627
Machinery and equipment		1,403,457			1,045,811
Buildings and improvements		506,504			341,218
Railroad equipment		154,244			147,345
Furniture, fixtures, and other		4,381			3,657
Assets under construction		345,272			234,988
		3,939,514			2,191,020
Accumulated depletion and depreciation		(1,167,250	)		(1,054,916	)
Property, plant, and equipment, net	$	2,772,264		$	1,136,104

In June 2018, the Company wrote down $12,300 of assets under construction related to a facility expansion that was terminated. The write-down reflects the cost of assets that could not be used or transferred to other facilities. This amount is included in Goodwill and other asset impairments on the Condensed Consolidated Statements of Income for the nine months ended September 30, 2018.

Covia Holdings Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

(Unaudited)

The Company is required to evaluate the recoverability of the carrying amount of its long-lived asset groups whenever events or changes in circumstances indicate that the carrying amount of the asset groups may not be recoverable. Based on the adverse business conditions, the decline in the Company’s share price and the idling of certain assets within the Energy segment, the Company performed an evaluation of all asset groups. The undiscounted cash flows to be generated from the use and eventual disposition of the asset groups were compared to the carrying value of the asset groups and it was determined the carrying amount of Covia’s asset groups were recoverable at September 30, 2018.

Additionally, due to the idling of certain facilities in the Energy segment, the Company has ceased to use certain long-lived assets. The Company recorded an expense of $37,214 to adjust the carrying amount of these long-lived assets to their salvage value, if any, at September 30, 2018. This expense is recorded in Goodwill and other asset impairments on the Condensed Consolidated Statements of Income (Loss).

7.	Long-Term Debt

At September 30, 2018 and December 31, 2017, long-term debt consisted of the following:

   March 31,
2018    December 31,
2017
Senior Notes
   $ 100,000    $ 100,000
Term Loans
   314,641    314,641
Other borrowings
   2,043    2,371




Total interest-bearing loans and borrowings
   $ 416,684    $ 417,012
Less total current portion of long-term debt
   49,742    50,045




Total long-term debt
   $ 366,942    $ 366,967

	September 30, 2018			December 31, 2017
Term Loan	$	1,645,875		$	-
Series D Notes		-			100,000
Unimin Term Loans		-			314,641
Industrial Revenue Bond		10,000			-
Capital leases, net		7,554			-
Other borrowings		1,916			2,371
Deferred financing costs, net		(32,807	)		-
		1,632,538			417,012
Less: current portion		(20,126	)		(50,045	)
Long-term debt including leases	$	1,612,412		$	366,967

~~The Company does not have any debt issuance costs.~~

~~Credit Facility~~Term Loan

On ~~September 16, 2013,~~the Merger Date, the Company entered into ~~an $80.0 million~~the $1,650,000 Term Loan to repay the outstanding debt of each of Fairmount Santrol and Unimin and to pay the cash consideration and transaction costs related to the Merger. The Term Loan was issued at par with a maturity date of June 1, 2025. The Term Loan requires quarterly principal payments of $4,125 and quarterly interest payments beginning September 30, 2018 through March 31, 2025 with the balance payable at the maturity date. Interest accrues at the rate of the three-month LIBOR plus 325 to 400 basis points depending on Total Net Leverage (as hereinafter defined) with a LIBOR floor of 1.0% or the Base Rate (hereinafter defined). Total Net Leverage is defined as total debt net of up to $150,000 of non-restricted cash, divided by EBITDA. The Term Loan is secured by a first priority lien in substantially all of the assets of Covia. The Company has the option to prepay the Term Loan without premium or penalty other than customary breakage costs with respect to LIBOR borrowings. Should the Company choose to refinance the Term Loan, it would be subject to a 1.00% premium if refinanced at a lower interest rate within nine months of the Merger Date. There are no financial covenants governing the Term Loan.

In addition, the Company is permitted to add one or more incremental term loan facilities and/or increase the commitments under a new five-year revolving credit facility ~~which~~(the “Revolver”), discussed below, in an aggregate principal amount up to the sum of (x) $250,000, plus (y) an amount of incremental facilities so that, after giving effect to any such incremental facility, on a pro-forma basis, the Total Net Leverage would ~~have expired~~not exceed 2.75:1.0 plus (z) an amount equal to all voluntary prepayments of the Term Loan. In addition to incremental term loan facilities and Revolver increases, this incremental credit capacity will be allowed to be utilized in the form of (a) senior unsecured notes or loans, subject to a pro-forma Total Net Leverage ratio of up to 3.75:1.0, (b) senior secured notes or loans that are secured by the collateral on a junior basis, subject to a pro forma Total Net Leverage of up to

Covia Holdings Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

(Unaudited)

3.25:1.0, or (c) senior secured notes that are secured by the collateral on a pari passu basis, subject to a pro forma Total Net Leverage of up to 2.75:1.0.

At September ~~2017.~~ 30, 2018, the Term Loan had an interest rate of 6.1%.

Revolver

On the Merger Date, the Company entered into the Revolver to replace the existing Silfin credit facility (hereinafter defined). The Revolver was subject to a 50 basis point financing fee paid at closing and has a borrowing capacity of up to $200,000. The Revolver requires only quarterly interest payments at a rate derived from LIBOR plus 300 to 375 basis points depending on the Total Net Leverage or from a Base Rate (selected at the option of the Company). The Base Rate is the highest of (i) Barclays’s prime rate, (ii) the U.S. federal funds effective rate plus one half of 1.0%, and (iii) the LIBOR rate for a one month period plus 1.0%. While interest is payable in quarterly installments, any outstanding principal balance is payable on June 1, 2023. In addition to interest charged on the Revolver, the Company is also obligated to pay certain fees, quarterly in arrears, including letter of credit fees and unused facility fees. The Revolver includes financial covenants requiring a 4.5:1.0 maximum Total Net Leverage ratio decreasing to 4.0:1.0 at December 31, 2018 and is primarily secured by a first priority lien on substantially all of the assets of Covia. As of September 30, 2018, the Company was in compliance with all covenants in accordance with the Revolver.

At September 30, 2018, there was $200,000 of aggregate capacity on the Revolver with $11,879 committed to outstanding letters of credit, leaving net availability at $188,121. At September 30, 2018, the Revolver had an interest rate of 5.8%. There were no borrowings under the Revolver at September 30, 2018.

Silfin Credit Facility

In July 2016, ~~the Company cancelled this credit facility and replaced it with~~Unimin entered into a credit facility ~~(“Silfin credit facility”)~~ with Silfin NV (“Silfin”), a wholly-owned subsidiary of ~~Sibelco. Unimin can~~Sibelco, and had the ability to draw upon an overdraft facility up to ~~$20.0 million. As~~$20,000. Upon closing of ~~March 31, 2018~~the Merger, the Silfin credit facility was cancelled and replaced with the Revolver, as previously described. At December 31, 2017, there were no borrowings outstanding under the Silfin credit facility.

Senior Notes

On December 16, 2009, Unimin issued ~~$100.0 million principal amount of 4.92% Senior Notes, Series C (the “Series C Notes”), and $100.0 million~~$100,000 principal amount of 5.48% Senior Notes, Series D (the “Series D Notes” ~~and, together with the Series C Notes, the “Senior Notes”~~). ~~The Series C Notes matured on December 16, 2016 and were fully repaid upon maturity.~~ Interest on the Series D Notes iswas payable ~~semiannually on June 16 and December 16 of each year.~~semiannually. The Series D Notes were scheduled to mature on December 16, 2019 unless prepaid earlier. The note purchase agreement governing the Series D Notes ~~contains~~contained an interest coverage ratio covenant of not less than 3.00:11.0 and a consolidated debt to consolidated EBITDA ratio covenant of not greater than 3.25:1.1.0. Unimin ~~may, at its~~had the option ~~prepay at any time all, or from time~~ to ~~time any part of,~~prepay the Series D Notes, in an amount not less than ~~$5 million~~$5,000 principal amount of Series D Notes, at 100% of the principal amount of Series D Notes being prepaid, plus the Make-Whole Amount. The Make-Whole Amount iswas the excess of ~~(1)~~(i) the discounted value of all future principal and interest payments on the Series D Notes being prepaid, ~~(discounted~~discounted from their scheduled payment dates to the date of prepayment in accordance with accepted financial practice at a discount rate of 0.50% over the ~~yield to maturity~~yield-to-maturity of a U.S. Treasury security with a maturity equal to the remaining average life of the Series D Notes (based on the remaining scheduled payments on such Series D Notes) over ~~(2)~~(ii) the principal amount being prepaid (provided that the Make-Whole Amount may in no event be less than zero). Upon closing of the Merger, the Series D Notes were repaid with the proceeds of the Term Loan.

~~Term Loans~~

~~On July 25, 2014,~~As a result of the debt transactions on the Merger Date, the Company ~~entered into~~recognized a ~~loan with Silfin for $300.0 million (“Term Loan”). In March~~loss on debt modification of ~~2016,~~$1,147 in the second quarter of 2018, which is included in Interest expense, net. The Series D Notes were subject to a prepayment penalty of $4,021, of which the Company ~~repaid $35.0 million~~recognized $2,213 in Other non-operating expense, net in the second quarter of ~~this amount.~~2018. The remaining ~~balance will mature in~~amount of $1,809 was capitalized as deferred financing fees.

Unimin Term Loans

At September 30, 2017, Unimin had two outstanding term loans (collectively the “Unimin Term Loans”). The Unimin Term Loans each had a maturity date of July 2019 and ~~bears~~ a fixed rate of 4.09%.

Covia Holdings Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

(Unaudited)

On February 1, 2017, ~~the Company~~Unimin entered into an additional term loan with Silfin for ~~$49.6 million.~~$49,600. The loan ~~bears~~had a floating annual interest rate of6-month LIBOR USD plus a margin of 127 basis points and was initially payable on February 1, 2018. On February 1, 2018, ~~the Company~~Unimin amended the term of the loan to mature on August 1, 2018. This loan had a rate of 2.73% at December 31, 2017.

Upon closing of the Merger, the Unimin Term Loans were repaid with the proceeds from the Term Loan.

Other Borrowings

Other borrowings at ~~March~~September 30, 2018 and December 31, ~~2018~~2017 was comprised of a promissory note with anthree unrelated third ~~party~~parties that ~~the Company~~Unimin entered into on January 17, 2011.

Two of these unrelated parties had interest rates of 1.0% and 4.11% at September 30, 2018 and December 31, 2017. The promissory note’s third unrelated party does not require any interest payments.

A subsidiary of the Company has a 2,000 Canadian dollar overdraft facility with the Bank of Montreal. The Company has guaranteed the obligations of the subsidiary under the facility. As of September 30, 2018 and December 31, 2017, there were no borrowings outstanding under the overdraft facility. The rates of the overdraft facility were 4.7% and 4.2% at September 30, 2018 and December 31, 2017, respectively.

~~Unimin~~At September 30, 2018 and December 31, 2017, the Company had $1,900 of outstanding letters of credit not backed by a credit facility.

Industrial Revenue Bond

As part of the Merger, the Company assumed Fairmount Santrol’s outstanding $10,000 Industrial Revenue Bond related to the construction of a mining facility in Wisconsin. The bond bears interest, which is payable monthly at a variable rate. The rate was 1.59% at September 30, 2018. The bond matures on September 1, 2027 and is collateralized by a letter of credit of $10,000.

8.	Accrued Expenses

At September 30, 2018 and December 31, 2017, accrued expenses consisted of the following:

	September 30, 2018		December 31, 2017
Accrued bonus & other benefits	$	34,137	$	20,427
Accrued Merger related costs		4,816		13,030
Accrued restructuring charges		14,327		-
Accrued insurance		6,482		8,218
Accrued property taxes		7,936		1,773
Accrual for HPQ Co.		-		17,296
Other accrued expenses		36,449		27,464
Accrued expenses	$	104,147	$	88,208

As of December 31, 2017, the Company owed HPQ Co. $17,296 for cash generated by HPQ Co. from July 1, 2017 through December 31, 2017.

Covia Holdings Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

(Unaudited)

9.	Earnings per Share

~~Unimin Canada Limited,~~The table below shows the computation of basic and diluted earnings per share for the three and nine months ended September 30, 2018 and 2017, respectively:

	Three Months Ended September 30,					Nine Months Ended September 30,
	2018			2017		2018			2017
Numerators:
Net income (loss) from continuing operations attributable to Covia Holdings Corporation	$	(288,794	)	$	27,703	$	(234,946	)	$	71,264
Income from discontinued operations, net of tax		-			2,441		12,587			12,521
Net income (loss) attributable to Covia Holdings Corporation	$	(288,794	)	$	30,144	$	(222,359	)	$	83,785
Denominator:
Basic weighted average shares outstanding		131,154			119,645		123,604			119,645
Dilutive effect of employee stock options and RSUs		-			-		-			-
Diluted weighted average shares outstanding		131,154			119,645		123,604			119,645

Continuing operations earnings (loss) per common share – basic	$	(2.20	)	$	0.23	$	(1.90	)	$	0.60
Continuing operations earnings (loss) per common share – diluted		(2.20	)		0.23		(1.90	)		0.60

Discontinued operations earnings per common share – basic		-			0.02		0.10			0.10
Discontinued operations earnings per common share – diluted		-			0.02		0.10			0.10

Earnings (loss) per common share – basic		(2.20	)		0.25		(1.80	)		0.70
Earnings (loss) per common share – diluted	$	(2.20	)	$	0.25	$	(1.80	)	$	0.70

As noted in Note 4, the Company effected an 89:1 stock split in May 2018. The stock split is reflected in the calculations of basic and diluted weighted average shares outstanding for all periods presented.

Potentially dilutive shares of 2,215 and 996 were excluded from the calculation of diluted weighted average shares outstanding and diluted earnings per share in the three and nine months ended September 30, 2018, respectively, because the Company was in a ~~subsidiary~~loss position in those periods.

10.	Derivative Instruments

As previously noted, the Company adopted ASU 2017-12 in the third quarter of 2018. ASU 2017-12 requires an entity to present the earnings effect of the hedging instrument in the same income statement line item in which the earnings effect of the hedged item is reported. Additionally, ASU 2017-12 eliminates the measurement and reporting of hedge ineffectiveness and, for cash flow hedges, requires the entire change in fair value of the instrument to be included in the assessment of hedge effectiveness and recorded in other comprehensive income. Further, the ASU also requires tabular disclosure related to the effect on the income statement of cash flow hedges.

Due to its variable-rate indebtedness, the Company ~~has~~is exposed to fluctuations in interest rates. The Company enters into interest rate swap agreements as a ~~2.0 million Canadian dollar overdraft facility~~means to partially hedge its variable interest rate risk. The derivative instruments are reported at fair value in other non-current assets and other long-term liabilities. Changes in the fair value of derivatives are recorded each period in other comprehensive income. For derivatives not designated as hedges, the gain or loss is recognized in current earnings. No components of the Company’s hedging instruments were excluded from the assessment of hedge effectiveness.

Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional value. The gain or loss on the interest rate swap is recorded in accumulated other comprehensive income and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings. On June 1, 2018, the Company entered into two interest rate swap agreements as a means to partially hedge its variable interest rate risk on the Term Loan. An additional interest rate swap held by Fairmount Santrol was assumed in conjunction with the ~~Bank~~Merger. The Company did not have such variable rate

Covia Holdings Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

(Unaudited)

debt instruments at December 31, 2017 and was not engaged in an interest rate swap agreement. The following table summarizes the Company’s interest rate swap agreements at September 30, 2018:

Interest Rate Swap Agreements	Maturity Date	Rate	Notional Value		Debt Instrument Hedged	Percentage of Term Loan Outstanding
September 30, 2018
Designated as cash flow hedge	June 1, 2023	2.81%	$	100,000	Term Loan	6%
Designated as cash flow hedge	June 1, 2025	2.87%		200,000	Term Loan	12%
Designated as cash flow hedge	September 5, 2019	2.92%		210,000	Term Loan	13%
			$	510,000		31%

At the Merger Date, Covia’s interest rate swaps qualified, but were not designated for hedge accounting. Changes in the fair value of ~~Montreal.~~ the interest rate swaps were included in interest expense in the related period. On August 1, 2018, the Company began to account for its interest rate swaps under hedge accounting, which are now designated as cash flow hedges. Amounts reported in accumulated other comprehensive income related to interest rate swaps will be reclassified to interest expense as interest payments are made on the Term Loan. The Company expects $1,461 to be reclassified from accumulated other comprehensive income into interest expense within the next twelve months.

The following table summarizes the fair values and the respective classification in the Condensed Consolidated Balance Sheets as of September 30, 2018. The net amount of derivative assets and liabilities can be reconciled to the tabular disclosure of fair value in Note 11:

		Assets (Liabilities)
Interest Rate Swap Agreements	Balance Sheet Classification	September 30, 2018
Designated as cash flow hedges	Other non-current assets	$	3,806
Designated as cash flow hedges	Other non-current liabilities		(410	)
		$	3,396

The tables below presents the effect of cash flow hedge accounting on accumulated other comprehensive income as of September 30, 2018:

	Amount of Gain (Loss) Recognized in OCI
	Three Months Ended September 30,				Nine Months Ended September 30,
Derivatives in Hedging Relationships	2018		2017		2018		2017
Designated as Cash Flow Hedges
Interest rate swap agreements	$	440	$	-	$	440	$	-

	Location of Loss	Amount of Loss Reclassified from Accumulated Other Comprehensive Income
Derivatives in	Recognized on	Three Months Ended September 30,				Nine Months Ended September 30,
Hedging Relationships	Derivative	2018		2017		2018		2017
Designated as Cash
Flow Hedges
Interest rate swap agreements	Interest expense	$	470	$	-	$	470	$	-

The table below presents the effect of the Company’s derivative financial instruments on the Condensed Consolidated Statements of Income in the three and nine months ended September 30, 2018 and 2017:

Covia Holdings Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

(Unaudited)

	Location of Loss on Derivative
	Interest expense, net				Interest expense, net
	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Total Interest Expense presented in the Statements of
Income in which the effects of cash flow hedges are recorded	$	23,530	$	5,104	$	35,325	$	12,634
Effects of cash flow hedging:
Loss on ASC 815-20 Hedging Relationships
Interest rate swap agreements
Amount of loss reclassified
from accumulated other comprehensive
income	$	470	$	-	$	470	$	-

As previously noted, the Company did not begin to use hedge accounting until the third quarter of ~~March 31,~~2018. The table below presents the effect of the Company’s derivative financial instruments that were not designated as hedging instruments in the three and nine months ended September 30, 2018 and 2017:

Derivatives Not Designated
as ASC 815-20 Cash Flow	Location of Gain Recognized	Three Months Ended September 30,				Nine Months Ended September 30,
Hedging Relationships	in Income on Derivative	2018		2017		2018		2017
Interest rate swap agreements	Interest expense, net	$	1,141	$	-	$	2,658	$	-

11.Fair Value Measurements

Financial instruments held by the Company include cash equivalents, accounts receivable, accounts payable, long-term debt (including the current portion thereof) and interest rate swaps. Fair value is defined as the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date. In determining fair value, the Company utilizes certain assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and/or the risks inherent in the inputs to the valuation technique.

Based on the examination of the inputs used in the valuation techniques, the Company is required to provide the following information according to the fair value hierarchy. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities at fair value will be classified and disclosed in one of the following three categories:


Level 1	Quoted market prices in active markets for identical assets or liabilities
Level 2	Observable market based inputs or unobservable inputs that are corroborated by market data
Level 3	Unobservable inputs that are not corroborated by market data

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Covia Holdings Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

(Unaudited)

The carrying value of cash equivalents, accounts receivable, and accounts payable are considered to be representative of their fair values because of their short maturities. The carrying value of the Company’s long-term debt (including the current portion thereof) is recognized at amortized cost. The fair value of the Term Loan differs from amortized cost and is valued at prices obtained from a readily-available source for trading non-public debt, which represent quoted prices for identical or similar assets in markets that are not active, and therefore is considered Level 2. The following table presents the fair value as of September 30, 2018 and December 31, 2017, ~~there were no borrowings outstanding under~~respectively, for the ~~overdraft facility.~~Company’s long-term debt:

~~At March 31,~~

	Quoted Prices		Other
	in Active		Observable		Unobservable
	Markets		Inputs		Inputs
Long-Term Debt Fair Value Measurements	(Level 1)		(Level 2)		(Level 3)		Total
September 30, 2018
Term Loan	$	-	$	1,530,664	$	-	$	1,530,664
Industrial Revenue Bond		-		10,000		-		10,000
	$	-	$	1,540,664	$	-	$	1,540,664

December 31, 2017
Unimin Term Loans	$	-	$	272,000	$	-	$	272,000
Series D Notes		-		104,000		-		104,000
	$	-	$	376,000	$	-	$	376,000

The following table presents the amounts carried at fair value as of September 30, 2018 and December 31, 2017 ~~Unimin had $1.9 million~~for the Company’s other financial instruments. Fair value of ~~outstanding letters~~interest rate swap agreements is based on the present value of ~~credit.~~the expected future cash flows, considering the risks involved, and using discount rates appropriate for the maturity date. These are determined using Level 2 inputs. Refer to Note 10 for additional information.

~~Fair Value~~

Quoted Prices

Other

in Active

Observable

Unobservable

Markets

Inputs

Inputs

Recurring Fair Value Measurements

(Level 1)

(Level 2)

(Level 3)

Total

September 30, 2018

Interest rate swap agreements

$
-

$
3,396

$
-

$
3,396

$
-

$
3,396

$
-

$
3,396

Covia Holdings Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

(Unaudited)

12.	Stock-Based Compensation

Stock based compensation includes restricted stock units (“RSUs”) and nonqualified stock options (“Options” and, together with the RSUs, the “Awards”). These Awards are governed by various plans: the FMSA Holdings Inc. Long Term Incentive Compensation Plan (the “2006 Plan”), the FMSA Holdings, Inc. Stock Option Plan (the “2010 Plan”), the FMSA Holdings Inc. Amended and Restated 2014 Long Term Incentive Plan (the “2014 Plan”), and the 2018 Omnibus Plan (the “2018 Plan”). Options may be exercised, in whole or in part, at any time after becoming exercisable, but not later than the date the Option expires, which is typically ten years from the original grant date. All Options granted under the 2006 Plan and 2010 Plan were fully vested as of ~~Debt~~the Merger Date. In addition, the Merger agreement called for the accelerated vesting of all Awards if the holder is terminated without Cause or if the holder terminates employment for Good Reason during the Award Protection Period (as such terms are defined in the related agreements), which is 12 months from the Merger Date.

The fair values of the RSUs and Options were estimated at the Merger Date. The fair value of the ~~Company’s borrowings under~~RSUs was determined to be the ~~Senior Notes and Term Loan was approximately $104 million and $269 million~~opening share price of Covia stock at ~~March 31, 2018, respectively.~~the Merger Date. The fair value of Options was estimated at the ~~Company’s borrowings under~~Merger date using the ~~Senior Notes~~Black Scholes-Merton option pricing model.

Subsequent to the Merger Date and ~~Term Loan was approximately $104 million and $272 million~~through September 30, 2018, pursuant to the 2018 Plan, the Company issued 168 RSUs at ~~December 31, 2017, respectively. The~~an average grant date fair value of $18.56. The Company did not grant any Options to purchase shares of common stock through September 30, 2018.

				Weighted					Weighted
				Average Exercise		Restricted			Average Price at
	Options			Price, Options		Stock Units			RSU Issue Date
Outstanding at December 31, 2017		-		$	-		-		$	-
Assumed through acquisition		2,537			33.85		665			28.09
Granted		-			-		168			18.56
Exercised or distributed		(1	)		10.20		(58	)		25.97
Forfeited		(8	)		44.69		(5	)		28.00
Expired		(9	)		56.83		-			-
Outstanding at September 30, 2018		2,519		$	33.75		770		$	26.17

The Company recorded stock compensation expense of $2,654 in the ~~Company’s debt due within one year approximates~~three months ended September 30, 2018 and $3,447 in the ~~book value~~nine months ended September 30, 2018. Stock compensation expense is included in selling, general, and administrative expenses on the Condensed Consolidated Statements of Income (Loss) and in additional paid-in capital on the Condensed Consolidated Balance Sheets.

The Company recorded stock compensation expense of $2,400 in the second quarter of 2018 due to ~~the short maturity~~accelerated vesting of Awards because of the ~~instruments.~~Merger. This amount is included in other non-operating expense, net on the Condensed Consolidated Statements of Income (Loss) and in additional paid-in capital on the Condensed Consolidated Balance Sheets. Refer to Note 2 for additional information.

13.	8. Income Taxes

The Company computes and applies to ordinary income an estimated annual effective tax rate on a quarterly basis based on current and forecasted business levels and activities, including the mix of domestic and foreign results and enacted tax laws. The estimated annual effective tax rate is updated quarterly based on actual results and updated operating forecasts. Ordinary income refers to income ~~(loss)~~from continuing operations before income tax expense excluding significant, unusual, or infrequently occurring items. The tax effect of an unusual or infrequently occurring item is recorded in the interim period in which it occurs as a discrete item of tax.

For the ~~three~~nine months ended ~~March 31,~~September 30, 2018, the Company recorded a tax ~~expense~~benefit of ~~$11.4 million~~$524 on ~~income~~a loss before income taxes of ~~$57.0 million~~$235,396 resulting in an effective tax rate of ~~20.0%~~0.2%, compared to a tax expense of ~~$5.9 million~~$36,460 on income before income taxes of ~~$22.7 million~~$107,724 resulting in an effective tax rate of ~~25.8%~~33.8% for the same period of 2017. The ~~decrease~~ Company’s comparatively lower effective tax rate for the nine months ended September 30, 2018 is primarily

Covia Holdings Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

(Unaudited)

attributable to the non-deductibility of the impairment of goodwill. Excluding the impact of the impairment of goodwill, the effective tax rate for the nine months ended September 30, 2018 is primarily attributable to the decrease in the corporate income tax rate to 21% resulting from the Tax Cut and Jobs Act (“Tax Act”) passed by the United States Government in December 2017. The decrease was partially offset by the reduced impact of the U.S. depletion deduction applied against forecasted results in 2018 as compared to 2017.7.2%. The effective rate differs from the U.S. federal statutory rate due primarily to ~~depletion.~~

~~The~~the goodwill impairment, depletion, the impact of foreign taxes, and the foreign provisions of the Tax Act subjects U.S. taxpayers to the base erosion minimum tax (“BEAT”), a potential limitation on U.S. interest deduction (“163(j)”), a potential tax deduction for foreign derived intangible income (“FDII”), and a current tax on its global intangible~~low-taxed~~ ~~income (“GILTI”). The Company estimates that the effect from the BEAT, 163(j), FDII and GILTI on its estimated annual effective tax rate will not be significant.~~Act.

For the ~~three~~nine months ended ~~March 31,~~September 30, 2018, the Company remains provisional for legislative changes of the Tax ~~Act, most notably for theone-time~~ transition tax on unremitted foreign earnings of $2.9 million. These estimates remain provisional as certain items may differ, potentially materially, due to further refinement of the calculations, changes in interpretations and assumptions made, and further guidance that may become available.Act. The SEC has provided up to aone-year measurement period, ending December 22, 2018, for the Company to finalize the accounting for the impacts of the Tax Act. During the ~~quarter~~nine months ended ~~March 31,~~September 30, 2018, there were no adjustments made to ~~the~~ previous estimates ~~associated with the impact of~~related to the Tax Act.

~~9. Common Stock~~

The ~~various components of capital and the changes therein for the three months ended March 31, 2018 and 2017 are presented~~Company is in the ~~Condensed Consolidated Statements~~process of ~~Changes in Shareholders’ Equity.~~

~~The authorized share capital comprised 2,000,000 shares~~completing its estimates, which will be finalized during the fourth quarter of ~~common stock with a par value of $1 per share. Common stock issued was 1,776,666 at March 31, 2018 and December 31, 2017.~~2018.

The Company declared a $50.0 million dividend in 2016, which was paid February 1, 2017. The dividend was accrued for in Accrued expenses and other current liabilities in the Consolidated Balance Sheet at December 31, 2016.

~~Currency Translation Adjustment~~

Currency translation adjustments includes all foreign exchange differences arising from the translation of the functional currency financial statements of foreign subsidiaries of the Company to the reporting currency.

~~Unimin Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(in thousands, except per share data)~~

~~(Unaudited)~~

~~Treasury Shares~~

~~Treasury shares comprise the cost of the Company’s shares repurchased from Sibelco.~~

~~At March 31, 2018 and December 31, 2017, the Company held 432,952 shares of its own common stock.~~

~~10. Pension and other Post Employment~~

14.	Pension and Other Post-Employment Benefits

The Company maintains retirement, post-retirement medical and long-term benefit plans in several countries.

In the ~~United States,~~U.S., the Company sponsors ~~a defined benefit plan,~~ the Unimin Corporation Pension Plan, ~~(hourly~~a defined benefit plan for hourly and ~~salaried)~~salaried employees (the “Pension Plan”) and ~~a nonqualified supplemental benefit plan~~the Unimin Corporation Pension Restoration Plan (a non-qualified supplemental benefit plan) (the “Restoration Plan”). The Pension Plan was closed to new entrants effective January 1, 2008, and union employee participation in the Pension Plan at the last three unionized locations participating in the Pension Plan was closed to new entrants effective November 1, 2017. Until the Restoration Plan was amended to exclude new entrants on August 15, 2017, all salaried participants eligible for the Pension Plan were also eligible for the Restoration Plan.

In Canada, the Company sponsors three defined benefit retirement plans. Two of the retirement plans are for hourly employees and one is for salaried employees. ~~The~~Salaried employees were eligible to participate in a plan ~~for salaried employees consisted~~consisting of a defined benefit portion that has been closed to new entrants since January 1, 2008 and a defined contribution portion for employees hired after January 1, ~~2018 participate in the defined contribution portion of the plan.~~2018. In addition, there are two post-retirement medical ~~plans.~~plans in Canada.

In Mexico, the Company sponsors four retirement plans, two of which ~~two~~ are seniority premium plans as defined by Mexican ~~Labour Law.~~labor law. The remaining plans are defined benefit plans with a minimum benefit equal to severance payment by unjustified dismissal according to Mexican ~~Labour Law.~~labor law.

As part of the Merger, the Company assumed the two defined benefit pension plans of Fairmount Santrol, the Wedron pension plan and the Troy Grove pension plan. These plans cover union employees at certain facilities and provide benefits based upon years of service or a combination of employee earnings and length of service. Benefits under the Wedron plan were frozen effective December 31, 2012. Benefits under the Troy Grove plan were frozen effective December 31, 2016.

The Pension Plan, Restoration Plan, ~~and~~ the pension plans in Canada and Mexico, and the Wedron and Troy Grove pension plans are collectively referred to as the ~~Pension~~“Pension Plans.” The ~~post retirement~~post-retirement medical plans in the United States and Canada are collectively referred to as the ~~Postretirement~~“Postretirement Medical Plans.”

In June 2018, the Company recorded a curtailment gain of $5,193 in connection with the transfer of HPQ Co. to Sibelco. The ~~following table summarizes~~gain was recognized in Accumulated other comprehensive loss in the ~~components~~Condensed Consolidated Balance Sheet. In the third quarter of ~~net periodic benefit costs for~~2018, the ~~three months ended March 31, 2018 and 2017:~~Company recognized a loss on settlement of $2,566 related to lump sum payments from the Pension Plans.

   Pension Plans
   March 31,
2018    March 31,
2017
Components of Net Periodic Benefit Cost

Service cost
   $ 2,202    $ 2,020
Interest cost
   2,333    2,398
Expected return on plan assets
   (2,680 )    (2,494 )
Amortization of prior service cost
   138    138
Amortization of net actuarial loss
   1,304    1,211
Recognized settlement loss
   —      80




Net periodic benefit cost
   $ 3,297    $ 3,353
   Postretirement Medical Plans
   March 31,
2018    March 31,
2017
Components of Net Periodic Benefit Cost

Service cost
   $ 266    $ 246
Interest cost
   211    218
Amortization of net actuarial loss
   122    145




Net periodic benefit cost
   $ 599    $ 609

The Company contributed $2.0 million and $1.0 million for the plans for the three months ended March 31, 2018 and 2017, respectively. Contributions into the plans for the year ended December 31, 2018 are expected to be $12.9 million.

~~Unimin~~Covia Holdings Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

(Unaudited)

~~11. Related Party Transactions~~The following tables summarize the components of net periodic benefit costs for the three and nine months ended September 30, 2018 and 2017 as follows:

~~Identity~~

Pension Plans

Three Months Ended September 30,

Nine Months Ended September 30,

2018

2017

2018

2017

Components of net periodic benefit cost

Service cost

$
1,355

$
2,020

$
5,747

$
6,060

Interest cost

2,487

2,398

7,188

7,194

Expected return on plan assets

(2,712
)

(2,494
)

(8,147
)

(7,482
)
Amortization of prior service cost

136

138

410

414

Amortization of net actuarial loss

1,053

1,211

3,658

3,633

Recognized settlement loss

3,005

80

3,005

240

Net periodic benefit cost

$
5,324

$
3,353

$
11,861

$
10,059

Post-Retirement Medical Plans

Three Months Ended September 30,

Nine Months Ended September 30,

2018

2017

2018

2017

Components of net periodic benefit cost

Service cost

$
266

$
246

$
798

$
738

Interest cost

209

218

627

654

Amortization of net actuarial loss

122

145

366

435

Net periodic benefit cost

$
597

$
609

$
1,791

$
1,827

The Company contributed $11,227 and $6,561 to the Pension Plans for the nine months ended September 30, 2018 and 2017, respectively. Contributions into the Pension Plans for the year ended December 31, 2018 are expected to be $12,932. Included in the 2018 net periodic benefit costs is a settlement loss of ~~Related Parties~~$2,566, which stemmed from lump sum distributions as a result of recent employee departures in the nine months ended September 30, 2018.

As a result of the lump sum distributions, the Company re-measured its obligations under the plans and the discount rate was increased from 3.50% to 4.15%. There were no other changes to the assumptions used to calculate the obligation at December 31, 2017.

15.	Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss is a separate line within the Condensed Consolidated Statements of Equity that reports the Company’s cumulative income (loss) that has not been reported as part of net income (loss). Items that are included in this line are the income (loss) from foreign currency translation, actuarial gains (losses) and prior service cost related to pension and other post-employment liabilities and unrealized gains on interest rate hedges. The components of accumulated other comprehensive loss attributable to Covia Holdings Corporation at September 30, 2018 and December 31, 2017 were as follows:

	September 30, 2018
	Gross			Tax Effect			Net Amount
Foreign currency translation adjustments	$	(49,042	)	$	-		$	(49,042	)
Amounts related to employee benefit obligations		(89,538	)		24,337			(65,201	)
Unrealized gain (loss) on interest rate hedges		1,180			(270	)		910
	$	(137,400	)	$	24,067		$	(113,333	)

	December 31, 2017
	Gross			Tax Effect		Net Amount
Foreign currency translation adjustments	$	(54,571	)	$	-	$	(54,571	)
Amounts related to employee benefit obligations		(100,817	)		27,160		(73,657	)
	$	(155,388	)	$	27,160	$	(128,228	)

Covia Holdings Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

(Unaudited)

The following table presents the changes in accumulated other comprehensive loss by component for the nine months ended September 30, 2018:

	Nine Months Ended September 30, 2018
	Foreign			Amounts related			Unrealized
	currency			to employee			gain (loss)
	translation			benefit			on interest
	adjustments			obligations			rate hedges		Total
Beginning balance	$	(54,571	)	$	(73,657	)	$	-	$	(128,228	)
Other comprehensive income
before reclassifications		5,529			5,975			440		11,944
Amounts reclassified from accumulated
other comprehensive loss		-			2,481			470		2,951
Ending balance	$	(49,042	)	$	(65,201	)	$	910	$	(113,333	)

16.	Commitments and Contingent Liabilities

Leases

The Company leases railway equipment, operating equipment, mineral properties, and buildings under a number of operating lease arrangements. The Company is obligated to pay minimum annual lease payments under certain non-cancelable operating lease agreements which have original terms that extend to 2030. Agreements for office facilities and office equipment leases are generally renewed or replaced by similar leases upon expiration.

Total operating lease rental expense included in the Condensed Consolidated Statements of Income was $29,748 and $12,796 for the three months ended September 30, 2018 and 2017, respectively, and $62,973 and $37,250 for the nine months ended September 30, 2018 and 2017, respectively.

Contingencies

The Company is involved in various legal proceedings, including as a defendant in a number of lawsuits. Although the outcomes of these proceedings and lawsuits cannot be predicted with certainty, management does not believe that any of the pending legal proceedings and lawsuits are reasonably likely to have a material adverse effect on the Company’s financial position, results of operations or cash flows. In addition, management believes that the Company’s substantial level of insurance coverage will mitigate these claims.

The Company has been named as a defendant in various product liability lawsuits alleging silica exposure causing silicosis. During the nine months ended September 30, 2018, eight plaintiffs’ claims against the Company were dismissed. As of September 30, 2018, there were 81 active silica-related products liability lawsuits pending in which the Company is a defendant. Although the outcomes of these lawsuits cannot be predicted with certainty, management does not believe that these matters are reasonably likely to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

Fairmount Santrol, now known as Bison Merger Sub I, LLC, has been named as a defendant in several lawsuits in which alleged stockholders claim Fairmount Santrol and its directors violated securities laws in connection with the Merger. Fairmount Santrol and its directors believe these allegations lack merit. Although the outcomes of these lawsuits cannot be predicted with certainty, management does not believe that these matters are reasonably likely to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

The Company is a defendant in a lawsuit seeking declaratory judgment that the Merger constitutes an event of default under certain operating lease agreements. Although the outcome of this lawsuit cannot be predicted with certainty, management does not believe that this matter is reasonably likely to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

Covia Holdings Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

(Unaudited)

Royalties

The Company has entered into numerous mineral rights agreements, in which payments under the agreements are expensed as incurred. Certain agreements require annual or quarterly payments based upon annual tons mined or the average selling price of tons sold. Total royalty expense associated with these agreements was $1,548 and $989 for the three months ended September 30, 2018 and 2017, respectively, and $3,728 and $2,455 for the nine months ended September 30, 2018 and 2017, respectively.

17.	Transactions with Related Parties

The Company sells minerals to Sibelco and certain of its subsidiaries (“related ~~parties.~~parties”). Sales to related parties amounted to ~~$1.6 million~~$2,076 and ~~$1.9 million~~$1,803 in the three months ended ~~March 31,~~September 30, 2018 and 2017, respectively, and $4,778 and $7,922 in the nine months ended September 30, 2018 and 2017, respectively. At ~~March 31,~~September 30, 2018 and December 31, 2017, the Company had accounts receivable from related parties of ~~$1.0 million~~$815 and ~~$2.9 million,~~$2,878, respectively. These amounts are included in Accounts receivable, net in the accompanying Condensed Consolidated Balance Sheets.

The Company purchases minerals from certain of its related parties. Purchases from related parties amounted to ~~$2.2 million~~$196 and ~~$2.4 million~~$2,231 in the three months ended ~~March 31,~~September 30, 2018 and 2017, respectively, and $5,367 and $9,606 in the nine months ended September 30, 2018 and 2017, respectively. At ~~March 31,~~September 30, 2018 and December 31, 2017, the Company had accounts payable to related parties of ~~$4.2 million~~$544 and ~~$7.7 million,~~$7,692, respectively. These amounts are included in Accounts payable in the accompanying Condensed Consolidated Balance Sheets.

~~The Parent provides~~Prior to the Merger, Sibelco provided certain services on behalf of ~~the Company,~~Unimin, such as finance, treasury, legal, marketing, information technology, and other infrastructure support. The cost for information technology ~~has been~~was allocated to ~~the Company~~Unimin on a direct usage basis. The costs for the remainder of the services ~~are~~were allocated to ~~the Company~~Unimin based on tons sold, ~~revenue,~~revenues, gross margin, and other financial measures for Unimin compared to the same financial measures of ~~the Parent.~~Sibelco. The financial information presented in these consolidated financial statements may not reflect the combined financial position, operating results and cash flows of Unimin had it not been a consolidated subsidiary of ~~the Parent.~~Sibelco. Actual costs that would have been incurred if Unimin had been a stand-alone company would depend on multiple factors, including organizational structure and strategic decisions made in various areas, including information technology and infrastructure. ~~Both Unimin and~~Effective on the Merger Date, Sibelco ~~consider~~no longer provides such services to the ~~basis on which~~Company. Prior to the ~~expenses have been allocated to be a reasonable reflection of the utilization of services provided to or the benefits received by the Company~~Merger, during ~~the periods presented. During~~ the three months ended ~~March 31, 2018 and~~September 30, 2017, ~~the Company did not incur material costs~~Unimin incurred $338 for management and administrative services from Sibelco. In the ~~Parent.~~five months ended May 31, 2018 and nine months ended September 30, 2017, Unimin incurred $2,445 and $1,667, respectively, for management and administrative services from Sibelco. These costs are reflected in ~~Selling,~~selling, general and administrative expenses in the accompanying Condensed Consolidated Statements of Income.

~~The~~Additionally, the Company ~~has several term loans outstanding with Silfin,~~is compensated for providing transitional services, such as accounting, human resources, information technology, mine planning, and geological services, to HPQ Co. and is recorded as a ~~wholly-owned subsidiary~~reduction of ~~Sibelco. During~~cost in selling, general, and administrative expenses. Compensation for these transitional services was $287 and $392 for the three and nine months ended ~~March 31, 2018~~September 30, 2018. Amounts are included in Selling, general, and ~~2017,~~administrative expenses on the ~~Company incurred $1.9 million and $2.5 million, respectively, of interest expense for these term loans with Silfin. These costs are reflected in Interest expense, net in the accompanying~~ Condensed Consolidated Statements of ~~Income.~~

~~Guarantees~~

~~Unimin has a guarantee with Bank of America for a Silfin revolving credit line. The maximum amount of the guarantee is limited to $25 million.~~

~~12. Commitments~~Income and ~~Contingencies~~

~~Leases~~

The Company leases railway equipment, operating equipment, mineral properties and buildings under a number of operating lease agreements. The Company is obligated to pay minimum annual lease payments under certain~~non-cancelable~~ operating lease agreements which have original terms that extend to 2024. Agreements for office facilities and office equipment leases are generally renewed or replaced by similar leases upon expiration.

~~Total operating lease rental expense included~~in Other receivables in the Condensed Consolidated ~~Statement of Income for the three months ended March 31, 2018 and 2017 was $15.8 million and $12.5 million, respectively.~~Balance Sheets at September 30, 2018.

~~Contingencies~~

The Company is a defendant in a number of lawsuits filed in several jurisdictions. Although the outcomes of these lawsuits cannot be predicted with certainty, in the opinion of management, it is not reasonably possible that the ultimate resolution of these matters will have a material adverse effect on the Company’s financial position or results of operations that exceeds the accrual amounts. In addition, management believes that the Company’s substantial level of insurance coverage will mitigate these claims.

~~The Company has been named as a defendant in various product liability claims alleging silica exposure causing silicosis. During the three months ended March 31,~~On June 1, 2018, the Company ~~was dismissed from 3 claims. As~~entered into an agreement with Sibelco whereby Sibelco is providing sales and marketing support for certain products supporting the Performance Coatings and Polymer Solutions markets in North America and Mexico, for which the Company pays a 5% commission of ~~March 31,~~revenue, and in the rest of the world, for which the Company pays a 10% commission of revenue. Sibelco also assists with sales and marketing efforts for certain products in the ceramics and sanitary ware industries outside of North America and Mexico for which the Company pays a 5% commission of revenue. In addition, the Company provides sales and marketing support for certain products used in ceramics in North America and Mexico for which the Company earns a 10% commission of revenue. For the three and nine months ended September 30, 2018, ~~there were 134 active silica-related products liability claims pending~~the Company recorded commission expense of $329 and $1,073 in

Selling, general and administration expenses.

~~Unimin~~Covia Holdings Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

(Unaudited)

~~which~~Prior to the Merger Date, the Company ~~is a defendant. Although~~had the ~~outcomes of these claims cannot be predicted~~Unimin Term Loans outstanding with ~~certainty, based on information currently available, management cannot reasonably estimate a loss at this time and it is not probable that~~Silfin. During the ~~ultimate resolution of these matters will have a material adverse effect on the Company’s financial position or results of operations.~~

~~Royalty~~

The Company has entered into numerous mineral rights agreements, in which payments under the agreements are expensed as incurred. Certain agreements require annual payments based upon annual tons mined and others are a combination thereof. Total royalty expense associated with these agreements was $0.9 million and $0.7 million for the threenine months ended ~~March 31,~~September 30, 2018 and 2017, ~~respectively.~~the Company incurred $3,181 and $9,100, respectively, of interest expense for the Unimin Term Loans. These costs are reflected in interest expense, net in the accompanying Condensed Consolidated Statements of Income. Upon closing of the Merger, the Unimin Term Loans were repaid with the proceeds of the Term Loan.

18.	~~13.~~ Segment Reporting

The Company organizes its business into ~~three~~two reportable ~~segments:~~segments, Energy ~~Electronics~~ and Industrial. The reportable segments are consistent with how management views the markets served by the Company and the financial information reviewed by the chief operating decision maker in deciding how to allocate resources and assess performance.

The ~~reportable segments’~~chief operating decision maker primarily evaluates an operating segment’s performance ~~is primarily evaluated~~ based on segment gross profit, which does not include any selling, general, and administrative costs or corporate ~~costs~~costs.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Revenues
Energy	$	324,606		$	185,693		$	858,813		$	473,299
Industrial		198,762			162,115			542,794			485,900
Total revenues		523,368			347,808			1,401,607			959,199

Segment gross profit
Energy		60,961			55,940			227,744			122,004
Industrial		56,805			47,174			152,631			143,085
Total segment gross profit		117,766			103,114			380,375			265,089

Operating expenses excluded from segment gross profit
Selling, general, and administrative		43,164			24,210			99,765			66,255
Depreciation, depletion, and amortization		68,584			24,639			132,459			72,197
Goodwill and other asset impairments		265,343			-			277,643			-
Restructuring charges		14,750			-			14,750			-
Other operating expense (income), net		(974	)		(6	)		(330	)		1,830
Interest expense, net		23,530			5,104			35,325			12,634
Other non-operating expense, net		9,043			1,374			56,159			4,449
Income (loss) from continuing operations before provision (benefit) for income taxes	$	(305,674	)	$	47,793		$	(235,396	)	$	107,724

On May 31, 2018, Unimin transferred certain assets, which consisted of HPQ Co., representing its Electronics segment, to Sibelco. The disposition of the Electronics segment qualifies as discontinued operations and, ~~depreciation, depletion and amortization. The selling, general and administrative costs and corporate costs are separately stated below.~~

Intherefore, the ~~Energy reportable~~Electronics segment the Company serves the oil and gas recovery industry providing primarily fracturing sand, or “frac sand” which is pumped down oil and natural gas wells to prop open rock fissures and increase the flow rate of natural gas and oilinformation has been excluded from the wells. Unimin’s Energy segment is a leading global supplier of sand-based proppants, with more than 13 million tons of low cost raw frac sand capacity and 350,000 tons of annual coated resin sand capacity (both active and idle). Unimin’s Energy segment offers the oil and gas industry a comprehensive portfolio of raw frac sand, resin coated sands, well cementing additives, gravel packing media and drilling mud additives that meet or exceed API standards.above table.

The Industrial reportable segment consists of numerous products and materials that are used in a variety of applications, including container glass, flat glass, fiberglass, construction, ceramics, fillers and extenders, paints and plastics, recreation products and filtration products.

~~The Electronics reportable segment primarily serves the global high purity fused quartz industry for applications which include semiconductors, solar energy, specialty lighting and fiber optics.~~

~~Unimin Corporation and Subsidiaries~~

~~Notes to Condensed Consolidated Financial Statements~~

~~(in thousands, except per share data)~~

~~(Unaudited)~~

   Three Months Ended March 31,
   2018    2017
Revenue:

Energy
   $ 207,461    $ 130,223
Industrial
   162,360    157,089
Electronics
   44,786    35,872




Total Revenue
   $ 414,607    $ 323,184
Segment Gross Profit:

Energy
   $ 65,495    $ 25,448
Industrial
   44,007    43,539
Electronics
   16,540    10,965




Total Gross Profit
   $ 126,042    $ 79,952
Operating expenses excluded from segment gross profit

Selling, general and administrative
   $ 29,224    $ 24,325
Depreciation, depletion and amortization
   29,409    26,552
Other operating expenses, net
   (40 )    1,016
Interest expense, net
   5,191    5,355
Other expense, net
   5,300    —
Income tax provision
   11,416    5,866




Net income
   $ 45,542    $ 16,838

Asset information, including capital expenditures and depreciation, depletion, and amortization, by segment is not included in reports used by management in its monitoring of performance and, therefore, is not reported by segment. ~~The Industrial reporting unit has Goodwill~~

In the nine months ended September 30, 2018 and 2017, one customer exceeded 10% of ~~$53.5 million.~~

~~The Company’s largest~~revenues. This customer ~~Halliburton Energy Services,~~ accounted for ~~12%~~14% and 13% of ~~consolidated revenue for~~revenues in the ~~three~~nine months ended ~~March 31,~~September 30, 2018 and 2017, respectively.

~~14. Proposed Merger with Fairmount Santrol~~

~~On December 11, 2017, the Company entered into a merger agreement with Fairmount Santrol Holdings Inc. (“Fairmount Santrol”) and certain other parties with respect~~ Revenues attributed to ~~the proposed combination~~this customer are part of the ~~businesses~~Company’s Energy segment.

19.	Goodwill and Intangible Assets

The Company’s goodwill balance was $135,763 and $53,512 at September 30, 2018 and December 31, 2017, respectively.

The Company evaluates goodwill at the reporting unit level on an annual basis on October 31 and also on an interim basis when indicators of ~~Unimin and Fairmount Santrol. The merger agreement provides that, upon~~impairment exist. Market conditions within the satisfaction or waiver of the conditions contained in the agreement, a direct wholly owned subsidiary of Unimin will be merged with and into Fairmount Santrol, with Fairmount Santrol surviving such merger and becoming a direct wholly owned subsidiary of Unimin (the “Merger”). Immediately following the Merger, Fairmount Santrol will be merged with and into Bison Merger Sub I, LLC (“Merger Sub LLC”), a wholly owned subsidiary of Unimin, after which Fairmount Santrol will cease to exist as a separate corporate entity. Merger Sub LLC will continue as the surviving entity in the second merger as a direct wholly owned subsidiary of Unimin. In accordance with the terms of the Merger agreement, Fairmount Santrol stockholders in the aggregate (including holders of certain Fairmount Santrol equity awards) will receive $170,000 in cash and approximately 35% of the common stock of Unimin, with Sibelco owning the remaining approximately 65%. The Merger is subject to, among other things, approval by Fairmount Santrol’s stockholders, listing of Unimin’s common stock on the New York Stock Exchange (“NYSE”), and certain regulatory approvals. Upon completion of the Merger, Fairmount Santrol would delist and no longer trade on the NYSE. The transaction is expected to close in~~mid-2018,~~ ~~subject to satisfaction of the closing conditions.~~

Company’s Energy reporting unit

~~Unimin~~Covia Holdings Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

(Unaudited)

~~In addition, prior~~combined with the decline in the Company’s share price triggered a test for goodwill impairment as of September 30, 2018. The test was performed at the reporting unit level using a combination of the discounted cash flow methodology using a peer-based, risk-adjusted weighted average cost of capital and the market multiples approach. The Company believes the use of these methodologies is the most reliable indicator of the fair values of the reporting units. Upon completion of the test, the entire amount of goodwill in the Energy reporting unit was determined to be impaired and ~~as a condition~~an impairment charge in the amount of $228,129 was recorded at September 30, 2018. The goodwill attributed to the ~~consummation~~Industrial reporting unit was determined to not be impaired.

Changes in the carrying amount of intangible assets are as follows:

	September 30, 2018			December 31, 2017
Beginning balance	$	52,196		$	55,328
Less: HPQ Co. assets		-			(3,132	)
Assets acquired		148,808			-
Ending balance		201,004			52,196
Accumulated amortization, beginning balance		(26,600	)		(25,222	)
Less: HPQ Co. accumulated amortization		-			1,567
Amortization for the period		(14,892	)		(2,945	)
Accumulated amortization, ending balance		(41,492	)		(26,600	)
Intangible assets, net	$	159,512		$	25,596

Intangible assets, net includes acquired supply agreements, acquired stream mitigation rights, customer relationships, railcar leasehold interests, trade names and acquired technology. Refer also to Note 2, which includes a discussion of the ~~Merger, Unimin will contribute certain of its~~intangible assets ~~to Sibilco North America, Inc. (“HPQ Co.”), a newly-formed wholly owned subsidiary of Unimin,~~acquired in exchange for all of the stock of HPQ Co. and the assumption by HPQ Co. of certain liabilities related to such business. Unimin will then distribute 100% of the stock of HPQ Co. to Sibelco in exchange for certain shares of Unimin common stock held by Sibelco. In connection with the consummation of the Merger, Unimin expects to redeem shares of Unimin common stock currently held by Sibelco in exchange for an amount in cash equal to approximately $660 million plus interest accruing at 5.0% per annum for the period from June 30, 2017 through the closing of the Merger less $170 million. In addition, in connection with the Merger, Unimin has received a debt commitment from certain lenders with respect to a $1.65 billion term loan and a $200 million revolving credit facility. The proceeds of such term loan would be used to repay certain indebtedness of Unimin and Fairmount Santrol and to pay the cash consideration and transaction expenses related to the Merger. The financing under the debt commitment is subject to customary conditions for such financings.

Upon the closing of the Merger, the combined company will own more than 50 processing and coating facilities throughout North America with approximately 1.4 billion tons of proven and probable mineral reserves and will operate 94 terminals across the United States and Canada. For the three months ended March 31, 2018, the combined company would have had pro forma revenue of approximately $688 million.

~~The Merger agreement contains certain termination rights and each party may be required to pay the other a termination fee of $52 million upon the occurrence of certain events.~~

~~In the three months ended March 31, 2018, the Company incurred $5.3 million of expenses associated with~~ the Merger, which are ~~recorded~~included in ~~Other~~the balance of Intangibles, net at September 30, 2018.

Amortization expense ~~net~~is recognized in Depreciation, depletion and amortization expense in the Condensed Consolidated Statements of Income. The intangible assets had a weighted average amortization period of 7 years and 10 years at September 30, 2018 and December 31, 2017, respectively. Amortization expense was $10,481 and $14,892 for the three and nine months ended September 30, 2018 respectively and $693 and $2,062 for the three and nine months ended September 30, 2017 respectively.

~~Other than~~The estimated amortization expense related to intangible assets for the five succeeding years is as ~~mentioned above, there were no additional subsequent events or transactions~~follows:

	Amortization
2018	$	10,499
2019		31,502
2020		23,347
2021		21,975
2022		21,274
Thereafter		50,915
Total	$	159,512

20.	Restructuring Charges

On September 26, 2018, the Company idled operations at four facilities serving the Energy segment in response to market conditions. The Company’s activities to idle the facilities have largely been completed at September 30, 2018 and all significant restructuring charges have been recorded. The Company did not allocate the restructuring costs to the Energy segment.

Additionally, in connection with the Merger, the Company initiated restructuring activities to achieve cost synergies from its combined operations. The Company did not allocate these Merger-related restructuring costs to either of its business segments.

Covia Holdings Corporation and Subsidiaries

Notes to Condensed Consolidated Financial Statements

(in thousands, except per share data)

(Unaudited)

The following table presents a summary of restructuring charges for the three and nine months ended September 30, 2018.

	Merger-related		Idled facilities		Total
Restructuring charges
Severance and relocation costs	$	11,762	$	893	$	12,655
Contract termination costs		-		2,095		2,095
Total restructuring charges	$	11,762	$	2,988	$	14,750

The following table presents the Company’s restructuring reserve activity during 2018:

	Merger-related		Idled facilities			Total
Restructuring charges in Accrued expenses
Balances at June 30, 2018	$	-	$	-		$	-
Charges		11,762		2,988			14,750
Cash payments		-		(423	)		(423	)
Balances at September 30, 2018	$	11,762	$	2,565		$	14,327

21.	Subsequent Event

On November 6, 2018, the Company announced plans to idle its two mining operations in Voca, Texas. These capacity reductions will allow the Company to lower its fixed plant costs and consolidate volumes into its lower cost operations. The Company anticipates that ~~would impact~~it will record restructuring charges related to the ~~consolidated financial statements~~idled facilities in the fourth quarter of 2018 and ~~require additional recognition or disclosure.~~

has estimated these charges to be approximately $2,000.

~~FORWARD-LOOKING STATEMENTS~~

~~This Report contains~~

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Statement Concerning Forward-Looking Statements for Purposes of the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995

The Private Securities Litigation Reform Act of 1995 (“Act”) provides a safe harbor for forward-looking statements to encourage companies to provide prospective information, so long as those statements are identified as forward-looking and are accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those discussed in the statements. We wish to take advantage of the “safe harbor” provisions of the Act.

Certain statements in this Report are ~~subject~~forward-looking statements within the meaning of the Act, and such statements are intended to ~~risks and uncertainties.~~qualify for the protection of the safe harbor provided by the Act. All statements other than statements of historical fact included in this Report are forward-looking ~~statements. Forward-looking~~ statements, ~~give our current expectations~~ and ~~projections relating~~such statements are subject to ~~our financial condition, results of operations, plans, objectives, future performance~~risks and ~~business.~~uncertainties. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. ~~These~~Forward-looking statements ~~may include~~give our current expectations and projections as to future performance, occurrences and trends, including statements expressing optimism or pessimism about future results or events. The words ~~such as~~ “anticipate,” “estimate,” “expect,” “objective,” “goal,” “project,” “intend,” “plan,” ~~“intend,~~“believe,” ~~“believe,~~“assume,” “may,” “will,” “should,” “may,” “can have,” ~~“likely”~~“likely,” “target,” “forecast,” “guide,” “guidance,” “outlook,” and ~~other~~similar words ~~and terms of similar meaning in connection with any discussion of the timing~~ or ~~nature of future operating or financial performance or other events. For example,~~expressions identify forward-looking statements. Similarly, all statements we make relating to our ~~estimated~~strategies, plans, goals, objectives and ~~projected~~targets as well as our estimates and projections of results, sales, earnings, costs, expenditures, cash flows, growth rates, initiatives, and ~~financial results, our plans and objectives for future operations, growth~~the outcomes or ~~initiatives, strategies or the expected outcome or impact~~impacts of pending or threatened litigation or regulatory actions are also forward-looking statements. ~~All forward-looking~~

Forward-looking statements are ~~subject~~based upon a number of assumptions and factors concerning future conditions that may ultimately prove to ~~risks~~be inaccurate and ~~uncertainties that may~~could cause actual results to differ materially from those ~~that we expected, including:~~

in the forward-looking statements. Forward-looking statements, whether made herein or in our other reports and releases, are subject to risks and uncertainties and they are not guarantees of future performance. Actual results may differ materially from those discussed in forward-looking statements, thus negatively affecting our business, financial condition, results of operations or liquidity, as a result of various factors, including, but not limited to:

fluctuations in demand ~~fluctuates~~ for the ~~minerals Unimin produces, which could adversely affect Unimin’s results~~products we produce;

supply of ~~operations;~~the products we sell exceeds demand;

our ability to compete with smaller, regional, or local producers that may be located closer to key customers than our facilities;

~~Unimin’s business~~

our ability to appropriately react to potential fluctuations in demand for and ~~financial performance depend in part on the level~~supply of ~~activity~~our products;

demand for our products in the oil and gas industries;

~~Unimin’s operations are subject to~~ the seasonal and/or cyclical nature of ~~its~~our customers’ ~~businesses, which could adversely affect Unimin’s results of operations;~~businesses;

a lack of dependable or available transportation services or ~~infrastructure could have a material adverse effect on Unimin’s business;~~infrastructure;

~~Unimin is dependent~~disruptions in the rail industry, as we depend on rail transportation ~~to transport its products;~~

~~Unimin depends on trucking~~ to transport a significant portion of ~~its products, particularly in areas of increasing demand for its products, and~~ our products;

a shortage of available truck drivers and difficulty in truck driver recruitment and retention, ~~may have~~as we depend on trucking to transport a ~~materially adverse effect on Unimin’s business;~~significant portion of our products;

~~Unimin is~~we are subject to the risks of owning and operating the Winchester & Western ~~railroad;~~railroad which include risks associated with transporting hazardous material, derailments and other risks customary to rail roads;

increasing logistics and transportation costs could reduce ~~Unimin’s~~our revenues by causing ~~its~~our customers to reduce production or by impairing ~~its~~our ability to deliver products to ~~its~~our customers;

a geographic ~~shifts~~shift in demand ~~could negatively affect Unimin’s~~for products originating from one or more of our sites that is located near our existing customers may result in lost business;

~~Unimin’s business could be adversely affected by~~ strikes or work stoppages by our employees or by the railroad workers, truckers and port ~~workers;~~workers upon which we depend;

~~Unimin’s~~our operations are dependent on ~~its~~our rights and ability to mine ~~its~~our properties and on ~~having renewed~~renewing or ~~received~~receiving the required permits and approvals from governmental authorities and other third ~~parties;~~parties, so an inability to secure, or the loss of, those rights, permits and approvals may adversely impact our ability to mine or otherwise operate at those sites;

changes in product mix ~~can~~could have an adverse effect on ~~Unimin’s~~our gross margins and could cause ~~Unimin’s~~our results of operations to fluctuate;

~~Unimin~~we may be adversely affected by decreased, or shifts in, demand for frac sand or the development of ~~either effective~~ alternative proppants or new processes to replace hydraulic fracturing;

a large percentage of ~~Unimin’s~~our sales are subject to fluctuations in market pricing;

~~Unimin~~we may not be able to complete capital expansion projects, the actual costs of any capacity expansion may exceed estimated costs, the actual operating costs for the new capacity may be higher than anticipated, and ~~Unimin~~we may not be able to secure demand for the incremental production ~~capacity. In addition, actual operating costs for the new capacity may be higher than anticipated;~~capacity;

~~Unimin relies upon~~we rely on trade secrets, contractual restrictions and patents to protect ~~its~~our proprietary ~~rights. Failure to protect Unimin’s intellectual property~~ rights ~~may undermine its competitive position,~~ and protecting ~~Unimin’s~~our rights or defending against third-party allegations of infringement may be ~~costly;~~

~~Unimin’s future performance will depend on its ability~~costly and the failure to ~~succeed in~~protect our intellectual property rights may undermine our competitive ~~industries and on its ability to appropriately react to potential fluctuations in demand for and supply of its products;~~position;

certain of ~~Unimin’s~~our products may be susceptible to displacement by alternative products;

if ~~Unimin’s~~our customers delay or fail to pay a significant amount of their outstanding receivables, it could have a material adverse effect on ~~Unimin’s~~our business, results of operations and financial condition;

a large portion of ~~Unimin’s~~our sales is generated by a limited number of customers, and the loss of, or a significant reduction in purchases by, ~~Unimin’s~~our largest customers could adversely affect ~~its~~our operations;

certain of ~~Unimin’s~~our contracts contain fixed and percentage volume requirements, and reductions in the volumes required or defaults by our customers under such contracts could have a material adverse effect on our business, results of operations, and financial condition;

certain of our contracts contain provisions requiring ~~Unimin~~us to deliver minimum amounts of minerals or purchase minimum amounts of services, and noncompliance with these contractual obligations may result in penalties or termination of the agreement;

~~Unimin’s~~our operations are subject to operating risks that are often beyond ~~its~~our control and could adversely affect production levels and costs, and such risks may not be covered by insurance;

a significant portion of ~~Unimin’s volume is~~our volumes are generated from ~~its~~our Utica, Kasota, ~~and~~ Tunnel City, and Wedron Silica production facilities, a significant portion of ~~Unimin’s energy~~our Energy sales are generated at terminals located in various shale plays, and any adverse developments at any of these production facilities and terminals or in the industries they serve could have a material adverse effect on ~~Unimin’s~~our business, financial condition and results of operations;

the manufacture of ~~Unimin’s~~our products is dependent on the availability of raw materials and feedstocks;

reduced access to, the lack of or an inability to obtain access to water may ~~adversely affect Unimin’s~~have a material adverse effect on our operations or the operations of ~~Unimin’s~~our customers;

title to ~~Unimin’s~~our mineral properties and water rights, and royalties related to ~~Unimin’s~~our production, may be disputed;

~~Unimin does~~we do not own the land on which the majority of ~~its~~our terminal facilities are located, and in some cases ~~does~~do not own the related terminal assets and ~~relies~~rely on long term leases or access agreements with third parties, including customers, which could disrupt ~~Unimin’s~~our operations;

if ~~Unimin~~we cannot successfully complete acquisitions or integrate acquired businesses, ~~its~~our growth may be limited and ~~its~~our financial condition may be adversely affected;

inaccuracies in ~~Unimin’s~~our estimates of mineral reserves could result in lower than expected sales and higher than expected costs;

mine closures entail substantial costs, and if ~~Unimin closes~~we close one or more of ~~its~~our mines sooner than anticipated, ~~Unimin’s~~our results of operations may be adversely affected;

~~Unimin’s~~our production processes consume large amounts of natural gas and electricity, and any increase in the price or a significant interruption in the supply of ~~these~~natural gas or electricity, or any other significant increase in raw material costs could have a material adverse effect on ~~Unimin’s~~our business, financial condition or results of operations;

increases in the price of diesel fuel may ~~adversely affect Unimin’s~~have a material adverse effect on our results of operations;

~~Unimin is~~we are exposed to fluctuations in the prices for phenol, which is the primary component of the resins ~~Unimin buys;~~we buy;

a shortage of skilled labor together with rising labor costs in the mining industry may further increase operating costs, which could adversely affect ~~Unimin’s~~our results of operations;

~~Unimin’s~~our business may suffer if ~~it loses,~~we lose, or isare unable to attract and retain, key personnel;

~~Unimin’s~~our profitability could be negatively affected if ~~it fails~~we fail to maintain satisfactory labor relations;

failure to maintain effective quality control systems at ~~Unimin’s~~our mining, processing and production facilities and terminals could have a material adverse effect on ~~Unimin’s~~our business, financial condition, and results of operations;

severe weather conditions could have a material adverse ~~impact~~effect on ~~Unimin’s~~our business;

~~Unimin’s sales and profitability fluctuate on a seasonal basis and are affected by a variety of other factors;~~

~~Unimin~~we may be subject to interruptions or failures in ~~its~~our information technology systems, and cyber incidents could occur and result in information theft, data corruption, operational disruption and/or financial loss;

~~Unimin believes~~we believe that there is a ~~significant~~ risk that ~~the combined company~~we will be considered a “United States Real Property Holding Corporation” for U.S. federal income tax purposes;

adverse developments in general market, business, economic, labor, regulatory, and political conditions may have a material adverse effect on our business;

~~Unimin’s~~

our international operations expose itus to risks inherent in doing business abroad;

any failure to maintain adequate internal controls could impact the trading price of our common stock;

a terrorist attack or armed conflict could harm ~~Unimin’s~~our business;

~~Unimin~~we may incur substantial product liability exposure due to the use or misuse of ~~its~~our products, and ~~its~~our product liability insurance may be insufficient to cover claims against ~~Unimin;~~us;

~~failure to maintain effective quality control systems at its mining facilities and terminals could have a material adverse effect on Unimin’s business, financial conditions and operations;~~

the increasing cost of employee healthcare may have an adverse effect on ~~Unimin’s~~our profitability;

~~Unimin~~we and ~~its~~our customers are subject to extensive environmental and health and safety regulations that impose, and will continue to impose, significant costs and liabilities, and future regulations, or more stringent enforcement of existing regulations, could increase those costs and liabilities, which could adversely affect ~~Unimin’s~~our results of operations;

~~Unimin is~~we are subject to the Federal Mine Safety and Health Act of 1977 and the Occupational Safety and Health Act of 1970, both of which impose stringent health and safety standards on numerous aspects of ~~its~~our operations;

silica-related legislation, health issues and litigation could have a material adverse effect on ~~Unimin’s~~our business, reputation, or results of operations;

federal, state and local legislative and regulatory initiatives relating to hydraulic fracturing and the potential for related litigation could result in increased costs and additional operating restrictions or delays for ~~Unimin’s~~our customers, which could cause a decline in the demand for ~~its~~our sand-based proppants and negatively impact ~~its~~our business, financial condition, and results of operations;

~~Unimin~~we and ~~its~~our customers are subject to other extensive regulations, including licensing, plant and wildlife protection and reclamation regulations, that impose, and will continue to impose, significant costs and liabilities. In addition, future regulations, or more stringent enforcement of existing regulations, could increase those costs and liabilities, which could adversely affect ~~Unimin’s~~our results of operations;

~~Unimin’s~~our inability to acquire, maintain or renew financial assurances related to the reclamation and restoration of mining property could have a material adverse effect on ~~its~~our business, financial condition and results of operations;

any change to applicable laws and regulations, including those relating to environmental and climate change, taxes, price controls, and regulatory approvals could impact our operations;

~~following the Merger, the~~

our substantial indebtedness and pension obligations ~~of Unimin~~ after giving effect to the Merger ~~(the “combined company”)~~ could adversely affect ~~its~~our financial flexibility and competitive position;

the agreements governing ~~the combined company’s~~our indebtedness ~~will~~ contain covenants and ~~substantial~~ restrictions that may restrict ~~the combined company’s~~our business and financing activities; and

~~the combined company~~we may need to incur substantial additional debt in the future in order to maintain or increase ~~its~~our production levels and to otherwise pursue ~~its~~our business ~~plan. The combined company~~plan, and we may not be able to borrow funds successfully or, if itwe can, this debt may impair ~~its~~our ability to operate ~~its~~our business.

In addition, risks related to the ~~pending business combination (the “Merger”) between Unimin~~Merger and ~~Fairmount Santrol Holdings Inc. ( “Fairmount Santrol”) and the Agreement and Plan of~~ Merger ~~dated as of December 11, 2017, among Unimin, Fairmount Santrol, and the other parties thereto (the “Merger Agreement”)~~agreement that could cause actual results to differ materially from our forward-looking statements ~~made regarding~~include, but are not limited to:

our ability to integrate successfully the ~~Merger include:~~

risks that the Merger may not close or may not close on the terms or timing anticipated, including the inability to complete the Merger due to the failure to obtain Fairmount Santrol stockholder approval or governmental or regulatory clearances, the failure to satisfy other conditions to the closing of the Merger and the termination of the Merger Agreement for any other reason;

~~the occurrence of any event, change or other circumstances that could give rise to the termination of the Merger Agreement;~~

~~the ability~~businesses of Unimin and Fairmount Santrol ~~to integrate their businesses successfully~~ and to achieve anticipated synergies and the anticipated cost, timing and complexity of integration efforts;

~~the~~our future financial performance, anticipated liquidity and capital expenditures ~~of the combined company~~ and other risks related to the ~~operation of the combined company,~~operations, including macro-economic conditions, indebtedness, continued availability of capital and financing and rating agency actions, managing expenses, operational losses, failure or breach of security systems, future prospects and business and management strategies for the management, expansion and growth of ~~the combined company’s~~our operations;

~~potential~~ litigation relating to the Merger;

~~appraisal rights of Fairmount Santrol stockholders;~~

success in retaining or recruiting, or changes required in, ~~the combined company’s~~our officers, key employees or directors following the Merger;

disruption from the Merger and related integration activities making it difficult to maintain business and operational relationships;

disruption caused by changes in the corporate headquarters and other office facilities of both Unimin and Fairmount Santrol;

potential business uncertainty, including changes to existing business relationships, ~~during the period before the closing of~~due to the Merger that could affect ~~Fairmount Santrol’s and/or Unimin’s~~our financial performance;

potential adverse reactions or changes to business relationships resulting from negative publicity relating to the ~~announcement or closing of the~~ Merger;

the potential inability to obtain consents from counterparties in connection with the Merger, any allegations by counterparties that the Merger constituted a change of control under applicable documentation, and the potential termination or alteration of existing contracts or relationships;

~~certain restrictions during the period before the closing of the Merger that may impact Fairmount Santrol’s or Unimin’s ability to pursue certain business opportunities or strategic transactions;~~

transaction fees and costs incurred and to be incurred in connection with the Merger and the integration ~~of the combined company;~~activities;

~~the~~our actual results of operations and financial condition ~~of the combined company following the Merger~~at September 30, 2018 as compared to the unaudited pro forma combined financial information included in the ~~Registration Statement~~Form S-4 and the Current Report on Form~~S-4~~ 8-K related to the Merger;

~~interests of certain of the directors and executive officers of Fairmount Santrol in the Merger that are different from, or in addition to, those of Fairmount Santrol stockholders generally;~~

the tax treatment of the ~~Mergers;~~Merger;

~~the fairness opinion of Fairmount Santrol’s financial advisor;~~

potential branding or rebranding initiatives ~~that may be launched~~ following the Merger, their costs and support among ~~the combined company’s~~our customers; and

~~the effect of “no shop” provisions contained in the Merger Agreement on potential alternative acquirers;~~

uncertainty as to the trading market and long-term value of ~~the combined company~~our common ~~stock;~~stock.

~~adverse developments in general market, business, economic, labor, regulatory~~Forward-looking statements are and ~~political conditions;~~

~~the impact of any catastrophic~~will be based upon our then-current views and assumptions regarding future events ~~including, but not limited to, cyber-breaches, acts of war or terrorism or natural disasters,~~and operating performance, and are applicable only as ~~well as management’s response to any~~ of the ~~aforementioned factors; and~~

dates of such statements. Although we believe the ~~impact of any change to applicable laws and regulations affecting operations, including those relating to environmental and climate change, taxes, price controls and regulatory approvals.~~

~~We derive many of our~~expectations expressed in forward-looking statements ~~from our knowledge of our operations, our asset base, and our operating forecasts, which~~ are based on reasonable assumptions within the bounds of our knowledge, forward-looking statements, by their nature, involve risks, uncertainties and other factors, many ~~detailed assumptions. While we believe that~~of these factors are beyond our ~~assumptions are reasonable, we caution that it is very difficult to predict the impact~~control, and any one or a combination of ~~known~~which could materially affect our business, financial condition, results of operations or liquidity.

Additional important assumptions, factors, and ~~it is impossible for us to anticipate all factors that could affect our actual results. Important factors~~risks concerning future conditions that could cause actual results to differ materially from our expectations, or cautionary statements, are disclosed under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Report and in ~~Unimin’s Registration Statement~~the Form S-4, and may be discussed from time to time in our other filings with the SEC, including Quarterly Reports on Form~~S-4~~ ~~related to the Merger.~~ 10-Q and Current Reports on Form 8-K. All written and oral forward-looking statements attributable to us, or to persons acting on our behalf, are expressly qualified in their entirety by these cautionary statements as well as other cautionary statements that are made from time to time in our other SEC filings and public communications. You should evaluate all forward-looking statements made in this Report in the context of these risks and uncertainties.

We caution you ~~that the~~not to place undue reliance on forward-looking statements. The important factors referenced above may not contain all of the factors that are important to you. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. ~~The forward-looking~~Forward-looking statements ~~included in this Report~~ are made only as of the date ~~hereof.~~they are made. We undertake no obligation to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

You are advised, however, to consult any further disclosures we make on related subjects in our public announcements and SEC filings.

~~ITEM 2.~~ ~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

The ~~following~~financial information, discussion and analysis ~~of financial condition and results of operations of Unimin Corporation (“Unimin” or the “Company”)~~that follow should be read ~~together~~in conjunction with ~~the~~our condensed consolidated financial statements ~~of Unimin~~ and the related notes ~~thereto and other financial information appearing elsewhere~~included in this Report as well as the ~~consolidated~~ financial ~~statements, the accompanying notes~~ and ~~the related management discussion and analysis of financial condition and results of operations for the year ended December 31, 2017 contained~~other information included in the ~~Company’s Registration Statement on~~ Form S-4~~S-4.~~. The following discussion contains forward-looking statements that involve risks, uncertainties and assumptions. See the section entitled “Cautionary Statement Regarding Forward-Looking Statements.” Unimin’s actual results could differ materially from those contained in the Company’s forward-looking statements as a result of many factors, including those discussed in the section entitled “Risk Factors” in our Registration Statement on Form~~S-4~~ ~~related to Merger. The following discussion contains certainnon-GAAP~~ ~~financial measures, including EBITDA and Adjusted EBITDA. See “—Key Metrics Used to Evaluate Unimin’s Business” for a reconciliation of net income (loss) to EBITDA and Adjusted EBITDA.~~

Overview

~~Unimin is~~We are an application-focused minerals company providing materials solutions to ~~its~~ customers drawing from a diversified product ~~portfolio with 28 million tons of annual production capacity. Unimin produces~~portfolio. We produce a wide range of specialized silica sand, feldspar, nepheline syenite, calcium carbonate, clay, kaolin, lime, and limestone products for use in the energy and industrial ~~end~~ markets in North America and around the world. ~~Its 31~~We have 43 sand mining facilities with reserves (including one facility currently under construction) and nine processing facilities (including one inactive facility) span the United States, Mexico and Canada and have access to more than 475over 50 million tons of annual sand processing capacity and significant proven and probable mineral reserves ~~(as defined by~~that serve both the ~~SEC). Unimin’s frac sand~~industrial and energy markets. We also have 13 coating facilities providing in excess of two million tons of annual coating capacity. Our mining and coating facilities span North America and also include operations in China and Denmark. The U.S., Mexico, and Canadian operations are among the largest, most flexible, and cost-efficient facilities in the industry ~~and Unimin’s industrial assets are located in~~with close proximity to ~~key industrial customers. Unimin’s parent company,SCR-Sibelco~~ NV (“Sibelco”), is a 145 year old family-owned global leader in the production of industrial minerals with operations in over 40 countries. This heritage brings a strong history and expertise in operational excellence,our customer collaboration and application development that is coupled with a global perspective and market understanding, sustainability and durable, returns-oriented investing. During the three months ended March 31, 2018, Unimin sold 6.0 million tons of minerals and had revenue of $414.6 million, net income of $45.5 million and Adjusted EBITDA of $96.9 million.base.

~~Unimin’s~~Our operations are organized into ~~three~~two segments based on the primary ~~industries served—an~~end markets we serve – Energy ~~segment, an Industrial segment,~~ and ~~an Electronics segment.~~

~~How Unimin Generates Sales~~

Unimin derives its sales by mining and processing silica sand products and other minerals that its customers purchase for use in a wide variety of applications. Unimin’s sales are primarily a function of the price per ton paid by the customer and the number of tons sold to the customer. The price invoiced reflects the cost of production, the cost of transportation to the Company’s distribution terminals or customer site and the cost of transloading the product from railcars to trucks, as applicable.

~~Energy Segment~~

Unimin’s Energy segment represented 50% and 40% of the Company’s revenues for the three months ended March 31, 2018 and 2017, respectively. Unimin’s Energy segment is a leading global supplier of sand-based proppants, with more than 13 million tons of low cost raw frac sand capacity and 350,000 tons of annual coated resin sand capacity (both active and idle). Unimin’sIndustrial. Our Energy segment offers the oil and gas industry a comprehensive portfolio of raw frac sand, ~~resin coated sands, well cementing~~value-added proppants, well-cementing additives, ~~gravel packing~~gravel-packing media and drilling mud additives that meet or exceed ~~API standards.~~

~~Industrial Segment~~

~~Unimin’s~~the standards of the American Petroleum Institute (“API”). Our products serve hydraulic fracturing operations throughout the U.S., Canada, Argentina, Mexico, China, and northern Europe. Our Industrial segment ~~represented 39%~~provides raw,

value-added, and ~~49% of Unimin’s revenue for the three months ended March 31, 2018 and 2017, respectively. With more than 1,400 customers across all of its end markets, the Industrial segment’s~~custom-blended products ~~are sold~~ to ~~customers in~~ the glass, construction, ceramics, foundry, coatings, polymers, sports and recreation, filtration and various other ~~industries.~~

industries all over the world. We believe our segments are complementary. Our ability to sell to a wide range of customers across multiple end markets allows us to maximize the recovery of our reserve base within our mining operations and to reduce the cyclicality of our earnings.

~~Electronics Segment~~

~~Unimin’s Electronics segment represented 11%~~We are capable of ~~Unimin’s revenue for~~Class I railroad deliveries to each of North America’s major oil and gas producing basins and also have the ~~three months ended March 31, 2018~~flexibility to ship our product via barge, marine terminals and ~~2017. Unimin’s Electronics segment products consist~~trucks to reach our customers as needed. We operate an integrated logistics platform with over 70 proppant distribution terminals and a fleet of ~~high purity quartz sands~~approximately 17,000 railcars considering car returns that took place throughout the year and ~~other minerals used primarily~~subleases and excluding customer cars in the ~~fused quartz markets for the production~~railcar fleet. Seven of ~~semiconductor and solar crucibles, quartz solids, lamp-tubing and fiber optic cables.~~

~~Key Costs of Unimin’s Business~~

~~The principal costs involved in operating Unimin’s business are: logistics costs associated with transporting products from Unimin’s~~our production facilities ~~to its terminals; labor costs; maintenance~~ and ~~repair~~over 15 terminals located in regional basins are capable of shipping and receiving unit trains, respectively, which reduces freight costs ~~at Unimin’s production facilities; raw material costs; energy costs; stripping costs;~~ and corporate operating costs. Unimin owns or leases most of its sand and other mineral reserves. Unimin believes that the combination of owned and leased reserves helps it maintain a very competitive cost position.

~~Corporate Operating Costs~~

~~In addition, Unimin incurs corporate operating costs including costs~~improves cycle times for the sales and marketing, information technology, finance, human resources, legal and environmental, research and development, health and safety functions of Unimin. Unimin’s selling, general and administrative costs represented approximately 7% and 8% of Unimin’s revenue during the three months ended March 31, 2018 and 2017, respectively.our railcar fleet.

Merger with Fairmount Santrol

~~On December 11, 2017, Sibelco, Unimin, Bison Merger Sub, Inc., a Delaware corporation~~As disclosed in Notes 1 and ~~a direct wholly owned subsidiary~~2 of ~~Unimin (“Merger Sub”), Bison Merger Sub I, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of Unimin (“Merger Sub LLC”), and~~the unaudited condensed consolidated financial statements included in this Report, on June 1, 2018, Fairmount Santrol ~~entered~~was merged into the Merger Agreement in connection with the proposed combination of the businesses of Unimin and Fairmount Santrol (the “Merger Agreement”). The Merger Agreement provides that, upon the satisfaction or waiver of the conditions to the Merger, Merger Sub will be merged with and into Fairmount Santrol, with Fairmount Santrol surviving the Merger as a ~~direct~~ wholly owned subsidiary of Unimin. ~~Immediately following the Merger,~~ Fairmount Santrol ~~(as the surviving company in the Merger) will be merged with and into Merger Sub LLC after which Fairmount Santrol will cease~~ceased to exist as a separate corporate ~~entity. Merger Sub LLC will continue as~~entity, its shares ceased trading, and was delisted from the ~~surviving~~NYSE. The combined entity ~~in this merger~~ as a ~~direct wholly owned subsidiary~~result of ~~Unimin and will succeed to and assume all the rights, privileges, immunities, properties, powers and franchises of Fairmount Santrol.~~

~~Subject to the terms and conditions set forth in~~ the Merger ~~Agreement,~~began operating and trading as Covia. Fairmount Santrol stockholders will have the right to receive, with respect to each share of Fairmount Santrol common stock they hold at the effective time (other than (1) shares owned by Fairmount Santrol or any wholly owned subsidiary of Fairmount Santrol (or held in the treasury of Fairmount Santrol), (2) shares owned by Sibelco or any of its subsidiaries and (3) shares held by any Fairmount Santrol stockholder who is entitled to appraisal rights and has properly exercised and perfected (and not effectively withdrawn or lost) such stockholder’s demand for appraisal rights under the General Corporation Law of the State of Delaware the Merger Consideration (as defined in the Merger Agreement), consisting of the Stock Consideration (as defined in the Merger Agreement), the Cash Consideration (as defined in the Merger Agreement) and cash paid in lieu of fractional shares, if any, without interest. Upon the closing of the Merger, Sibelco will own, directly or indirectly, approximately 65% of the issued and outstanding shares of the combined company common stock and holders of Fairmount Santrol common stock immediately prior to the effective time of the Merger will hold in the aggregate ~~including~~(including holders of certain Fairmount Santrol equity ~~awards,~~awards) received $170 million in cash consideration and approximately 35% of our common stock, with Sibelco owning the ~~issued and outstanding~~remaining 65%.

In connection with the Merger, we redeemed shares of ~~combined company~~Unimin common ~~stock.~~stock from Sibelco in exchange for an amount in cash equal to approximately (i) $660 million plus interest accruing at 5.0% per annum for the period from September 30, 2017 through June 1, 2018 less (ii) the $170 million in cash paid to Fairmount Santrol stockholders.

~~Upon~~In the ~~closing~~three and nine months ended September 30, 2018, we incurred $5.6 million and $49.8 million of Merger-related expenses, respectively. In the three and nine months ended September 30, 2017, we did not incur any Merger-related expenses.

Discontinued Operations

As disclosed in Note 1 of the Merger, the combined company will own more than 50 processing and coating facilities throughout North America with approximately 1.4 billion tons of proven and probable mineral reserves and will operate 94 terminals across the United States and Canada. For the three months ended Marchunaudited condensed consolidated financial statements included in this Report, on May 31, 2018, ~~the combined company would have had pro forma revenue of approximately $688 million. The proposed Merger is also expected to result in synergies of approximately $150 million.~~

Upon the closing of the Merger, the combined company will need to incur additional expenses, including, but not limited to, transaction-related expenses, expenses to integrate the operations of Unimin and Fairmount Santrol and additional legal, accounting and other expenses in connection with being a public company. The combined company will be subject to reporting, disclosure control and other obligations under the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act and the rules and regulations of the SEC and the NYSE.

~~The HPQ Carveout~~

~~Pursuant to the Merger Agreement, Sibelco will retain the global high purity quartz business, which consists of Unimin’s Electronics segment (the “HPQ Carveout”). Prior~~prior to, and as a condition to the closing of the Merger, Unimin ~~will contribute~~contributed certain ofassets, comprising its ~~assets to Sibilco North America, Inc., a newly created wholly owned subsidiary of Unimin (“HPQ Co”),~~global high purity quartz business in exchange for all of the stock of HPQ CoCo. and the assumption by HPQ CoCo. of certain ~~liabilities related to the business being transferred, in accordance with the Business Contribution Agreement to be dated on or prior to the closing date of the Merger, among Sibelco,~~liabilities. Unimin ~~and HPQ Co. (the “Contribution Agreement”). Unimin will then distribute~~distributed 100% of the stock of HPQ CoCo. to Sibelco in exchange for certain shares of Unimin common stock held by ~~Sibelco (the “HPQ Redemption”). The~~Sibelco. HPQ ~~Carveout will also include certain personnel and assets historically~~Co. is presented as discontinued operations in the unaudited condensed consolidated financial statements.

As part of ~~Unimin that support coatings and polymers sales and research activities together with certain related intellectual property.~~

~~Prior to~~ the ~~effective time~~disposition of ~~the~~ HPQ ~~Carveout, Unimin, Sibelco~~Co., Covia and HPQ ~~Co will enter~~Co. entered into ~~the Tax Matters Agreement~~an agreement detailing tax-related matters governing their respective rights, responsibilities, and obligations relating to tax liabilities, the filing of tax returns, the control of tax contests, and other tax matters (the “Tax Matters Agreement”). Under the Tax Matters Agreement, ~~the combined company~~Covia and HPQ CoCo. (and their affiliates) ~~will be~~are responsible for income taxes required to be reported on their respective separate and group tax returns; however, HPQ ~~Co will be~~Co. is responsible for any unpaid income taxes ~~(as of the date of the HPQ Redemption)~~ attributable to the HPQ Co. business prior to ~~the date~~May 31, 2018, as well as any unpaid non-income taxes as of ~~the HPQ Carveout. HPQ Co will be responsible for any unpaidnon-income~~ ~~taxes (as of the date of the HPQ Redemption)~~May 31, 2018 attributable to the HPQ Co. business (whether arising prior to ~~the HPQ Carveout~~May 31, 2018 or not) ~~and the combined company will be~~. Covia is responsible for all othernon-income taxes. Covia and HPQ ~~Co and the combined company~~Co. will equally bear any transfer taxes imposed ~~on the HPQ Carveout.~~in this transaction. Rights to refunds in respect of taxes will be allocated in the same manner as the responsibility for tax liabilities.

~~The Cash Redemption~~Recent Trends and Outlook

Energy proppant trends

Demand for proppant is predominantly influenced by the level of drilling and completions activity by oil and natural gas exploration and production companies, which, in turn, depends largely on the current and anticipated profitability of developing oil and natural gas reserves. Drilling and completions activity has increased in 2018 as a

result of rising oil prices. Recent West Texas Intermediate benchmark pricing is over $60 per barrel as of early November 2018 as compared with $50 per barrel in early 2017.

In ~~connection with~~response to the ~~closing~~improved returns generated by these increases in hydrocarbon prices, oil and natural gas exploration and production companies have increased their capital spending on drilling and completion activities since early 2017, and the demand for oilfield activities has increased. According to GE Baker Hughes North American Rig Count, the number of the Merger, Unimin expects to redeem shares of Unimin common stock currently held by Sibelco in exchange for an amount in cash equal to approximately (1) $660 million plus interest accruing at 5.0% per annum for the period from June 30, 2017 through the closing of the Merger less (2) $170 million, which will be paid to Fairmount Santrol stockholders as considerationactive total land drilling rigs in the ~~Merger.~~U.S. has increased from a low of 634 rigs as reported on January 13, 2017 to 1,046 active drilling rigs as reported on October 26, 2018. The increased drilling activity combined with growing sand intensities per well over the last two years has resulted in significant increase in demand for sand-based proppants.

Despite the growth in demand, energy supply dynamics have also shifted significantly with increased capacity additions, particularly in the Permian basin. This increased capacity is a result of customers’ demands for a lower cost and finer grade proppant to suit well designs. As a result, supply for proppants, especially in the Permian basin, has started to outpace demand growth in the second half of 2018 and is expected to continue into 2019. This dynamic has impacted customer demand for Northern White sands and correspondingly the market price of these products during the third quarter.

In response to changing market demands, we have idled mining operations at Shakopee, Minnesota; Brewer, Missouri; and Wexford, Michigan, and our Cutler, Missouri resin coating facility in the third quarter of 2018, adding to the previously idled mining operation at Hager Bay, Wisconsin. In November 2018, we also announced plans to idle our two mining operations in Voca, Texas. In total, we have reduced Energy capacity by 4.9 million tons through these measures allowing us to lower fixed plant costs and consolidate volumes into lower cost operations.

While we have idled certain of Northern White sand and Voca, Texas facilities, we have also commissioned two new facilities in the Permian basin in the third quarter 2018 and a two million ton facility in Oklahoma in the fourth quarter 2018.

Industrial end market trends

Our Industrial segment’s products are sold to customers in the glass, construction, ceramics, foundry, coatings, polymers, sports and recreation, filtration and various other industries. Our sales in these industries correlate strongly with overall economic activity levels as reflected in the gross domestic product, unemployment levels, vehicle production and growth in the housing market. Overall activity within our industrial segment remains strong with certain sectors providing above-average growth due to consumer, regulatory and/or manufacturing trends.

Key Metrics Used to Evaluate ~~Unimin’s~~Our Business

~~Unimin’s~~Our management uses a variety of financial and operational metrics to analyze ~~Unimin’s~~Covia’s performance across ~~its~~the Energy ~~Industrial,~~ and ~~Electronics~~Industrial segments. The determination of segments is based on the primary industries ~~Unimin serves, its~~we serve, the management structure and the financial information that is reviewed by ~~Unimin’s~~our chief operating decision maker in deciding how to allocate resources and assess performance. ~~Unimin evaluates the~~We evaluate our performance of these segments based on their volumes sold, average selling price, segment gross profit, and associated per ton metrics. Additionally, Unimin considers a number of factors in evaluating the performance of the business as a whole, including total volumes sold, average selling price, segment gross profit,operating cash flows, associated per ton metrics earnings before interest, taxes, depreciation and amortization (“EBITDA”) and Adjusted ~~EBITDA. Unimin views~~EBITDA, as defined in the Non-GAAP Financial Measures section below. We view these metrics as important factors in evaluating ~~its~~ profitability and ~~reviews~~review these measurements frequently to analyze trends and make decisions.

Segment Gross Profit

~~Unimin’s management uses segment~~Segment gross profit is a key metric we uses to evaluate ~~the~~our operating performance ~~of Unimin’s~~and to determine resource allocation between segments. Segment gross profit is defined as segment revenue less segment cost of sales, not including depreciation, depletion and amortization expenses and does not include any selling, general, and administrative costs or corporate costs. As a result of the Merger, inventories were written up to fair value under U.S. generally accepted accounting principles (“GAAP”) with certain amounts expensed through cost of sales thereby reducing gross profit. Additionally, for the three month period ended September 30, 2018, we booked charges to the Energy segment for the impairment of inventories located at recently idled facilities.

~~EBITDA and Adjusted EBITDA~~Non-GAAP Financial Measures

EBITDA and Adjusted EBITDA are supplementalnon-GAAP financial measures that are used by management and certain external users of ~~Unimin’s~~our financial statements in evaluating ~~its~~our operating performance. ~~Unimin defines~~

We define EBITDA as net income before interest expense, income tax expense (benefit) ~~and~~, depreciation, depletion and amortization. Adjusted EBITDA is defined as EBITDA beforenon-cash ~~impairment of assets~~ stock-based compensation and certain~~non-operational~~ other income ~~and~~or expenses, including restructuring ~~charges.~~charges, impairments and Merger-related expenses.

~~Unimin’s management believes~~We believe EBITDA and Adjusted EBITDA are useful because they allow ~~Unimin~~ management to more effectively evaluate ~~its~~our normalized operations from period to period as well as provide an indication of cash flow generation from operations before investing or financing activities. Accordingly, EBITDA and Adjusted EBITDA do not take into consideration ~~Unimin’s~~our financing methods, capital structure or capital expenditure needs. As previously noted, Adjusted EBITDA excludes certainnon-operational income and/or costs, the removal of which improves comparability of operating results across reporting periods. However, EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered as alternatives to, or more meaningful than, net income as determined in accordance with ~~U.S.~~ GAAP as indicators of ~~Unimin’s~~our operating performance. Certain items excluded from EBITDA and Adjusted EBITDA are significant components in understanding and assessing a company’s financial performance, such as a company’s cost of capital and tax structure, as well as the historic costs of depreciable assets, none of which are components of EBITDA or Adjusted EBITDA.

Additionally, Adjusted EBITDA is not intended to be a measure of free cash flow for management’s discretionary use, as it does not consider certain cash requirements such as interest payments, tax payments and debt service requirements. Adjusted EBITDA contains certain other limitations, including the failure to reflect ~~Unimin’s~~our cash expenditures, cash requirements for working capital needs and cash costs to replace assets being depreciated and amortized, and excludes certainnon-operational charges. ~~Management compensates~~We compensate for these limitations by relying primarily on ~~Unimin’s U.S.~~our GAAP results ~~(and IFRS results)~~ and by using Adjusted EBITDA only as a supplement. Non-GAAP financial information should not be considered in isolation or viewed as a substitute for measures of performance as defined by GAAP.

Although ~~Unimin attempts~~we attempt to determine EBITDA and Adjusted EBITDA in a manner that is consistent with other companies in its industry, ~~Unimin’s~~our computation of EBITDA and Adjusted EBITDA may not be comparable to other similarly titled measures of other companies due to potential inconsistencies in the methods of calculation. ~~Unimin believes~~We believe that EBITDA and Adjusted EBITDA are widely followed measures of operating performance.

The following table sets forth a reconciliation of net income, ~~(loss),~~ the most directly comparable ~~U.S.~~ GAAP financial measure, to EBITDA and Adjusted EBITDA:

   Three Months Ended
March 31,
   2018    2017
   (in thousands)
Reconciliation of net income to EBITDA and Adjusted EBITDA

Net income
   $ 45,542    $ 16,838
Interest expense, net
   5,191    5,355
Income tax provision
   11,416    5,866
Depreciation, depletion, and amortization expense
   29,409    26,552




EBITDA
   91,558    54,611
Transaction and other related costs⁽¹⁾
   5,300    —




Adjusted EBITDA
   96,858    54,611
HPQ EBITDA⁽²⁾
   (12,540 )    (7,465 )




Adjusted EBITDA excluding HPQ
   $ 84,318    $ 47,146

	Three Months Ended September 30,					Nine Months Ended September 30,
	2018			2017		2018			2017
	(in thousands)					(in thousands)
Reconciliation of EBITDA and Adjusted EBITDA

Net income (loss) from continuing operations attributable to Covia	$	(288,794	)	$	27,703	$	(234,946	)	$	71,264
Interest expense, net		23,530			5,104		35,325			12,634
Provision (benefit) for income taxes		(16,848	)		20,090		(524	)		36,460
Depreciation, depletion, and amortization expense		68,584			24,639		132,459			72,197
EBITDA		(213,528	)		77,536		(67,686	)		192,555

Non-cash stock compensation expense⁽¹⁾		2,654			-		3,447			-
Goodwill and other asset impairments⁽²⁾		265,343			-		277,643			-
Restructuring charges⁽³⁾		24,061			-		24,061			-
Costs and expenses related to the Merger⁽⁴⁾		5,600			-		49,823			-
Adjusted EBITDA	$	84,130		$	77,536	$	287,288		$	192,555

(1)

~~(1)~~

Represents the non-cash expense for stock-based awards issued to our employees and outside directors. Stock compensation expense related to the accelerated awards as a result of the Merger is included in Merger related costs and expenses. Stock compensation expenses are reported in Selling, general and administrative (“SG&A”) expenses.

(2)

Represents ~~costs incurred in connection~~expenses associated with the ~~proposed combination~~impairment of goodwill in the Energy segment and the impairment of assets from recently idled facilities for the three and nine months ended September 30, 2018. Also includes charges from a terminated project for the nine months ended September 30, 2018 due to post-Merger synergies and capital optimization.

(3)

Represents expenses associated with restructuring activities as a result of the ~~businesses~~merger and idled plant facilities, including, inventory impairments, pension and severance expenses, in addition to other liabilities recognized. The inventory impairment charges of ~~Unimin~~$6.7 million are recorded in cost of goods sold. The pension related expenses of $2.6 million are recorded in Other non-operating expenses.

(4)	Costs and expenses related to the Merger with Fairmount ~~Santrol.~~

~~(2)~~

~~Represents EBITDA of Unimin’s global high purity quartz business, which consists~~Santrol include legal, accounting, financial advisory services, severance, debt extinguishment, and other expenses. Additionally, it includes stock compensation expense related to accelerated awards as a result of the Unimin’s Electronics segment, that will be transferred to Sibelco prior to the closing of the business combination of Unimin and Fairmont Santrol in exchange for certain shares of Unimin common stock held by Sibelco.Merger.

Results of Operations

~~The following~~

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
	(in thousands)				(in thousands)
Operating Data
Energy
Total tons sold		4,497		3,081		11,747		8,362
Revenues	$	324,606	$	185,693	$	858,813	$	473,299
Segment gross profit	$	60,961	$	55,940	$	227,744	$	122,004
Industrial
Total tons sold		3,680		3,101		9,997		9,188
Revenues	$	198,762	$	162,115	$	542,794	$	485,900
Segment gross profit	$	56,805	$	47,174	$	152,631	$	143,085

Financial results for the three month period ended September 30, 2018 include the results of the combined Company subsequent to the Merger on June 1, 2018. Covia’s nine months ended September 30, 2018 reported financial results include legacy Unimin and legacy Fairmount Santrol for the nine months and four months ended September 30, 2018, respectively. Covia’s reported financial results for the three and nine months ended September 30, 2017 only include legacy Unimin. Covia’s financial results, and the table ~~presents~~above, exclude HPQ Co. (legacy Unimin’s Electronics segment), which was distributed to Sibelco at the close of the Merger and is reported as discontinued operations in the condensed consolidated financial statements ~~of income~~for 2018 and ~~certain operating data for each of the periods indicated. The results of operations by segment are discussed in further detail below as part of a discussion of the consolidated overview.~~2017.

   Three Months Ended March 31,
(in thousands, except per ton data)
Statements of Income Data    2018    2017
Revenue
   $ 414,607    $ 323,184
Cost of goods sold (excluding depreciation, depletion and amortization)
   288,565    243,232
Selling, general and administrative expenses
   29,224    24,325
Depreciation, depletion and amortization expense
   29,409    26,552
Other operating expense, net
   (40 )    1,016




Income from operations
   67,449    28,059




Interest expense, net
   5,191    5,355
Other expense, net
   5,300    —




Total other expenses, net
   10,491    5,355




Income before provision for income taxes
   56,958    22,704
Income tax provision
   11,416    5,866




Net income
   $ 45,542    $ 16,838




Operating Data

Energy

Total tons sold
   2,976    2,462
Revenue
   $ 207,461    $ 130,223
Aggregate selling price per ton
   69.71    52.89
Segment gross profit
   65,495    25,448
Industrial

Total tons sold
   2,971    2,968
Revenue
   $ 162,360    $ 157,089
Aggregate selling price per ton
   54.65    52.93
Segment gross profit
   44,007    43,539
Electronics

Total tons sold
   27    26
Revenue
   $ 44,786    $ 35,872
Aggregate selling price per ton
   1,658.74    1,379.69
Segment gross profit
   16,540    10,965

Three Months Ended ~~March 31,~~September 30, 2018 Compared to Three Months Ended ~~March 31,~~September 30, 2017

~~Revenue~~Revenues

~~Revenue was $414.6~~Revenues were $523.4 million for the three months ended ~~March 31,~~September 30, 2018 compared to ~~$323.2~~revenues of $347.8 million for the three months ended ~~March 31,~~September 30, 2017, an increase of ~~$91.4~~$175.6 million, or ~~28%~~50%. ~~This increase was primarily~~With the inclusion of legacy Fairmount Santrol revenues for the three months ended September 30, 2017 of $280.1 million, revenues for the three months ended September 30, 2018 decreased $104.5 million, or 17%. Our revenues decreased year over year due to ~~an increase in~~lower volumes ~~and average selling price in Unimin’s Energy segment.~~partially offset by improved pricing over the prior year period.

~~Revenue~~Revenues in the Energy segment ~~was $207.5~~were $324.6 million for the three months ended ~~March 31,~~September 30, 2018 compared to ~~$130.2~~$185.7 million for the three months ended ~~March 31,~~September 30, 2017, an increase of ~~$77.3~~$138.9 million, or ~~59%~~75%. With the inclusion of legacy Fairmount Santrol Energy revenues for the three months ended September 30, 2017 of $249.8 million, Energy revenues decreased $110.9 million, or 25%. Energy revenues decreased primarily due to lower proppant sand volumes partially offset by improved pricing. Volumes sold into the Energy segment were 4.5 million tons in the three months ended September 30, 2018 compared to 3.1 million tons in the three months ended September 30, 2017, an increase of 1.4 million tons, or 45%. For the three months ended September 30, 2017, legacy Fairmount Santrol Energy volumes were 2.8 million tons.

Revenues in the Industrial segment were $198.8 million for the three months ended September 30, 2018 compared to $162.1 million for the three months ended September 30, 2017, an increase of $36.7 million, or 23%. With the inclusion of legacy Fairmount Santrol Industrial revenues for the three months ended September 30, 2017 of $30.3 million, Industrial revenues increased $6.4 million, or 3%. Industrial revenues increased due to the annual price increase implemented at the beginning of 2018. Volumes sold into the Industrial segment were 3.7 million tons in the three months ended September 30, 2018, compared to 3.1 million tons for the three months ended September 30,

2017, an increase of 0.6 million tons, or 19%. For the three months ended September 30, 2017, legacy Fairmount Santrol Industrial volumes were 0.6 million tons.

Segment Gross Profit

Total segment gross profit was $117.8 million for the three months ended September 30, 2018 compared to segment gross profit of $103.1 million for the three months ended September 30, 2017, an increase of $14.7 million, or 14%. With the inclusion of legacy Fairmount Santrol segment gross profit for the three months ended September 30, 2017 of $94.2 million, total Company segment gross profit decreased $79.5 million, or 40%. Total segment gross profit for the three months ended September 30, 2018 includes $5.5 million of expense related to the $30.2 million write-up of legacy Fairmount Santrol’s inventories to fair value under GAAP, $6.7 million in inventory write-offs at recently idled facilities and $6.3 million from our in-basin facilities due to start-up activities and lower fixed cost leverage associated with scaling production. The remaining segment gross profit decrease year-over-year was primarily due to the decline in volumes sold in the Energy segment.

Energy segment gross profit was $61.0 million for the three months ended September 30, 2018 compared to $55.9 million for the three months ended September 30, 2017, an increase of $5.1 million, or 9%. With the inclusion of legacy Fairmount Santrol Energy segment gross profit for the three months ended September 30, 2017 of $80.5 million, Energy segment gross profit decreased $75.4 million, or 55%. Energy segment gross profit for the three months ended September 30, 2018 includes $4.1 million of expense related to the write-up of legacy Fairmount Santrol’s inventories to fair value under GAAP, $6.7 million in inventory write-offs at recently idled facilities and $6.3 million for the combined loss from our in-basin facilities due to start-up activities and lower fixed cost leverage associated with scaling production. The remaining Energy segment gross profit decrease year-over-year was primarily due to the decline in volumes sold.

Industrial segment gross profit was $56.8 million for the three months ended September 30, 2018 compared to $47.2 million for the three months ended September 30, 2017, an increase of $9.6 million, or 20%. With the inclusion of legacy Fairmount Santrol Industrial segment gross profit for the three months ended September 30, 2017 of $13.7 million, Industrial segment gross profit decreased $4.1 million, or 7%. Industrial segment gross profit includes $1.4 million of expense related to the write-up of legacy Fairmount Santrol’s inventories to fair value under GAAP. The remaining Industrial segment gross profit decrease year-over-year was primarily due to higher production and energy costs in the U.S. and Mexico coupled with greater foreign exchange impact on the Mexican-related revenues.

Selling, General and Administrative Expenses

Selling, general and administrative expenses (“SG&A”) increased $19.0 million, or 79%, to $43.2 million for the three months ended September 30, 2018 compared to $24.2 million for the three months ended September 30, 2017. SG&A for the three months ended September 30, 2018 included $2.7 million of stock compensation expense. Legacy Fairmount Santrol SG&A for the three months ended September 30, 2017 was $31.1 million, which included $1.3 million in Merger-related expenses and $2.4 million in stock compensation expense. With the inclusion of legacy Fairmount Santrol SG&A but excluding the impact of stock compensation and merger-related expenses in each of the comparable periods, SG&A decreased $11.2 million, or 21% primarily due to lower variable compensation.

Depreciation, Depletion and Amortization

Depreciation, depletion and amortization increased $44.0 million, or 179%, to $68.6 million for the three months ended September 30, 2018 compared to $24.6 million in the three months ended September 30, 2017. The higher expense was due to more assets placed in service largely due to the commissioning of both West Texas mining facilities and the write-up to fair value of the legacy Fairmount Santrol property, plant, and equipment and intangibles under GAAP.

Other Operating Expense (Income), net

Other operating expense (income), net decreased $1.0 million to income of $1.0 million for the three months ended September 30, 2018 compared to $6 thousand in the three months ended September 30, 2017. Other operating expense for the three months ended September 30, 2018 included government incentives for facility relocations. The remaining decrease in other operating expense was related to foreign currency fluctuations.

Goodwill and Other Asset Impairments

The Company incurred goodwill and other asset impairments of $265.3 million in the three months ended September 30, 2018. Goodwill and other asset impairments included non-cash charges for the impairment of assets from recently idled facilities and the impairment of goodwill in the Energy reporting unit due to the current business conditions and the Company’s recent decline in stock price. There were no impairments in the three months ended September 30, 2017.

Restructuring Charges

The Company incurred restructuring charges of $14.8 million in the three months ended September 30, 2018. Restructuring charges included expenses associated with restructuring activities as a result of the merger and idled plant facilities, including, severance, relocation and contract terminations. There were no restructuring charges in the three months ended September 30, 2017.

Operating Income (Loss) from Continuing Operations

Operating income (loss) from continuing operations decreased approximately $327.4 million to a loss of $273.1 million for the three months ended September 30, 2018 compared to income of $54.3 million for the three months ended September 30, 2017. The change in operating income from continuing operations for the three months ended September 30, 2018 was largely due to the lower profitability in the Energy segment, Energy segment goodwill and asset impairments of $265.3 million and restructuring charges of $14.8 million.

Interest Expense, net

Interest expense increased $18.4 million to $23.5 million for the three months ended September 30, 2018 compared to $5.1 million for the three months ended September 30, 2017. The increase in expense for the three months ended September 30, 2018 is primarily due to the increased debt that the Company incurred to finance the Merger.

Other Non-Operating Expense, net

Other non-operating expense, net increased $7.6 million to $9.0 million in the three months ended September 30, 2018 compared to $1.4 million in the three months ended September 30, 2017. The increase is due to legal, accounting, and other expenses incurred in connection with the Merger and pension charges related to settlements.

Provision (Benefit) for Income Taxes

The provision for income taxes decreased $36.9 million to a tax benefit of $16.8 million for the three months ended September 30, 2018 compared to tax expense of $20.1 million for the three months ended September 30, 2017. Income before income taxes decreased $353.5 million to a loss of $305.7 million for the three months ended September 30, 2018 compared to income of $47.8 million for the three months ended September 30, 2017. The decrease in tax expense recorded during the third quarter of 2018 was primarily related to the decrease in income before income taxes offset by the non-deductibility of the goodwill impairment. The effective tax rate was 5.5% and 42.0% for the three months ended September 30, 2018 and 2017, respectively. The decrease in the effective tax rate is primarily attributable to the non-deductibility of the goodwill impairment. The effective rate differs from the U.S. federal statutory rate primarily due to the goodwill impairment, depletion, the impact of foreign taxes, and the foreign provisions of the Tax Act.

For the three months ended September 30, 2018, the Company remains provisional for legislative changes of the Tax Act. The SEC has provided up to a one-year measurement period, ending December 22, 2018, for the Company

to finalize the accounting for the impacts of the Tax Act. During the three months ended September 30, 2018, there were no adjustments made to previous estimates related to the Tax Act. We are currently in the process of completing our estimates, which will be finalized during the fourth quarter of 2018.

The provision for income taxes for interim periods is determined using an estimate of our annual effective tax rate, adjusted for discrete items that are taken into account in the relevant period. Each quarter, we update our estimate of the annual effective tax rate. If our estimated effective tax rate changes, we make a cumulative adjustment.

Net Income (Loss) Attributable to Covia

Net income attributable to Covia decreased $318.9 million to a loss of $288.8 million for the three months ended September 30, 2018 compared to $30.1 million for the three months ended September 30, 2017 which includes $2.4 million from discontinued operations. The remaining change in net income attributable to Covia is due to the factors previously noted.

Adjusted EBITDA

Adjusted EBITDA increased $6.6 million to $84.1 million for the three months ended September 30, 2018 compared to $77.5 million for the three months ended September 30, 2017. Adjusted EBITDA for the three months ended September 30, 2018 excludes the impact of $297.6 million in expenses consisting of $2.7 million of non-cash stock compensation expense, $265.3 million of Goodwill and other asset impairments, $24.1 million in restructuring charges from the recently-idled mining operations, and $5.6 million in Merger-related expenses. Adjusted EBITDA for the three months ended September 30, 2018 includes $11.8 million of additional expense consisting of $5.5 million of additional expense included in cost of goods sold related to the write-up of legacy Fairmount Santrol’s inventories to fair value and $6.3 million for the combined loss from our in-basin facilities due to start-up costs and lower fixed cost leverage associated with scaling production. The change in Adjusted EBITDA is largely due to lower volumes which resulted in lower gross profit for the reasons previously noted above.

Nine Months Ended September 30, 2018 Compared to Nine Months Ended September 30, 2017

Revenues

Revenues were $1.4 billion for the nine months ended September 30, 2018 compared to revenues of $959.2 million for the nine months ended September 30, 2017, an increase of $442.4 million, or 46%. With the inclusion of legacy Fairmount Santrol revenues of $477.3 million for the five month period ended May 31, 2018 and $685.9 million for the nine months ended September 30, 2017, total Company revenues increased $233.9 million, or 14%. The increase in revenues year over year was due to higher Energy volumes and improved pricing.

Revenues in the Energy segment were $858.8 million for the nine months ended September 30, 2018 compared to $473.3 million for the nine months ended September 30, 2017. With the inclusion of legacy Fairmount Santrol Energy revenues of $421.5 million for the five month period ended May 31, 2018 and $589.6 million for the nine months ended September 30, 2017, Energy segment revenues increased $217.4 million, or 20%. The increase in Energy segment ~~revenue~~revenues was primarily due to growth in demand for ~~frac~~proppant sand in the first half of 2018 as well as increased prices. ~~Total volumes~~Volumes sold ininto the Energy segment were ~~3.0~~11.7 million tons in the ~~three~~nine months ended ~~March 31,~~September 30, 2018 compared to ~~2.5~~8.4 million tons in the ~~three~~nine months ended ~~March 31,~~September 30, 2017, an increase of ~~0.5~~3.3 million tons, or ~~20%~~39%. ~~In addition,~~Legacy Fairmount Santrol Energy volumes were 4.6 million tons for the ~~average selling prices~~five month period ended May 31, 2018 and 7.5 million tons for ~~all proppants during~~ the ~~three~~nine months ended ~~March 31, 2018 increased as compared to the equivalent period in the prior year by approximately 32% due to higher oil prices and corresponding increases in frac sand demand.~~September 30, 2018.

Revenue in the Industrial segment was $162.3 million for the three months ended March 31, 2018 compared to $157.1 million for the three months ended March 31, 2017, an increase of $5.2 million, or 3%. Volumes soldRevenues in the Industrial segment were ~~3.0~~$542.8 million for the ~~three~~nine months ended ~~March~~September 30, 2018 compared to $485.9 million for the nine months ended September 30, 2017, an increase of $56.9 million, or 12%. With the inclusion of legacy Fairmount Santrol Industrial revenues of $55.8 million for the five month period ended May 31, 2018 and $96.3 million for the ~~three~~nine months ended ~~March 31, 2017.~~September 30, 2017, Industrial revenues increased $16.4 million, or 3%. The revenue increase in the Industrial segment was driven by an annual price increase implemented at the beginning of 2018. Volumes sold into the Industrial segment increased 9% to 10.0 million tons in ~~average selling price during~~ the ~~three~~nine months ended ~~March~~September 30, 2018 compared to 9.2 million tons in the nine months ended September 30, 2017. Legacy

Fairmount Santrol Industrial volumes were 1.0 million tons for the five month period ended May 31, 2018 ~~which~~and 1.9 million tons for the nine months ended September 30, 2017.

Segment Gross Profit

Total segment gross profit was due to changes in Unimin’s product mix as well as price increases. Revenue in Unimin’s Industrial segment is driven by macroeconomic factors, including housing starts, light vehicle sales, residential repair and construction activity, consumer trends and industrial activity. To the extent that these demand drivers remain stable, Unimin expects that demand for its industrial minerals sold in its Industrial segment will remain relatively stable.

~~Revenue in the Electronics segment was $44.8~~$380.4 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2018 compared to ~~$35.9~~segment gross profit of $265.1 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2017, an increase of ~~$8.9~~$115.3 million, or ~~25%~~43%. ~~Volumes sold in~~With the ~~Electronics~~inclusion of legacy Fairmount segment ~~were 27,000 tons in~~gross profit of $158.1 million for the ~~three~~five months ended ~~March~~May 31, 2018 and ~~were 26,000 tons in the three months ended March 31, 2017. Revenue in the Electronics segment grew as a result of increased sales for both semiconductor products and solar grade products.~~

~~Cost of Goods Sold (excluding depreciation, depletion and amortization)~~

~~Cost of goods sold (excluding depreciation, depletion and amortization) was $288.6~~$200.0 million for the ~~three~~nine months ended ~~March 31, 2018 compared to $243.2 million for the three months ended March 31,~~September 30, 2017, ~~an increase of $45.4~~segment gross profit increased $73.4 million, or 19%. The increase was mainly a result of increased production-related costs primarily due to the increase in the number of tons sold. Cost of goods sold was also impacted by higher leasing costs in the three months ended March 31, 2018 compared to the equivalent period in the prior year as Unimin leased more mobile equipment and rail car leases. As a percentage of revenue, cost of goods sold decreased to 70% for the three months ended March 31, 2018 compared to 75% for the three months ended March 31, 2017 due to the increase in average selling prices.

Unimin incurred $134.7 million and $95.2 million of transportation and related costs for the three months ended March 31, 2018 and 2017, respectively. Transportation and related costs increased period over period due to the higher volumes sold through Unimin’s terminals principally for the Energy segment and an increase in freight rates. As a percentage of revenue, transportation and related costs were 33% and 29% for the three months ended March 31, 2018 and 2017, respectively.

Unimin incurred $48.0 and $47.6 million of operating labor costs for the three months ended March 31, 2018 and 2017, respectively. As a percentage of revenue, operating labor costs were 12% for the three months ended March 31, 2018 compared to 15% for the three months ended March 31, 2017.

Unimin incurred $26.6 million and $23.2 million of electricity and drying fuel (principally natural gas) costs for the three months ended March 31, 2018 and 2017, respectively. The increase in electricity and drying fuel costs for the three months ended March 31, 2018 compared to the three months ended March 31, 2017 was caused by increased sales volumes in the Energy segment as well as higher costs in U.S. and Mexico. As a percentage of revenue, electricity and drying fuel costs represented 6% and 7% for the three months ended March 31, 2018 and 2017, respectively.

Unimin incurred $18.4 million and $23.3 million of raw material additive costs for the three months ended March 31, 2018 and 2017, respectively. The decrease in raw material additive costs was due to a general decrease in material costs for the Electronics segment. As a percentage of revenue, raw material additive costs represented 4% and 7% for the three months ended March 31, 2018 and 2017, respectively.

~~Segment Gross Profit~~

Gross profit was $126.0 million for the three months ended March 31, 2018 compared to $80.0 million for the three months ended March 31, 2017, an increase of $46.0 million. The increase in gross profit was primarily16%, due to the increase in volumes sold and higher average selling prices in ~~the Energy segment.~~

~~Segment gross profit~~2018 relative to 2017 in the Energy segment. Total segment ~~was $65.5~~gross profit for the nine months ended September 30, 2018 includes $44.0 million of additional expense consisting of $24.7 million of expense related to the $30.2 million write-up of legacy Fairmount Santrol’s inventories to fair value under GAAP, $6.7 million in inventory write-offs at recently idled facilities, and $13.3 million for the ~~three~~combined loss from our in-basin facilities due to start-up costs and lower fixed cost leverage associated with scaling production.

Energy segment gross profit was $227.7 million for the nine months ended ~~March 31,~~September 30, 2018 compared to ~~$25.5~~$122.0 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2017, an increase of ~~$40.0 million. The increase was~~$105.7 million, or 87%. With the inclusion of legacy Fairmount Santrol Energy segment gross profit of $136.7 million for the five months ended May 31, 2018 and $158.2 million for the nine months ended September 30, 2017, Energy segment gross profit increased $84.2 million, or 30%, due ~~primarily~~ to ~~increased~~higher selling prices and ~~volumes, which were partially offset by increased freight rates and terminal costs.~~

~~Segment~~volume. Total Energy segment gross profit for the nine months ended September 30, 2018 includes $41.4 million of additional expense consisting of $22.1 million of expense related to the $30.2 million write-up of legacy Fairmount Santrol’s inventories to fair value under GAAP, $6.7 million in ~~the Industrial segment was $44.0~~inventory write-offs at recently idled facilities, and $13.3 million for the ~~three~~combined loss from our in-basin facilities due to start-up costs and lower fixed cost leverage associated with scaling production.

Industrial segment gross profit was $152.6 million for the nine months ended ~~March 31,~~September 30, 2018 compared to ~~$43.5~~$143.1 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2017, an increase of ~~$0.5 million.~~$9.5 million, or 7%. With the inclusion of legacy Fairmount Santrol Industrial segment gross profit of $21.4 million for the five months ended May 31, 2018 and $41.8 million for the nine months ended September 30, 2017, Industrial segment gross profit decreased $10.9 million, or 6%. Total Industrial segment gross profit for the nine months ended September 30, 2018 includes $2.6 million of expense related to the $30.2 million write-up of legacy Fairmount Santrol’s inventories to fair value under GAAP. The ~~increase~~remaining decline was due ~~primarily~~ to ~~increased selling prices which were mostly offset~~relatively flat volumes augmented by ~~increased~~higher production and energy costs in the U.S. and Mexico, ~~higher production costs and an increase in freight rates.~~coupled with greater foreign currency impact on Mexico sales.

Segment gross profit in the Electronics segment was $16.5 million for the three months ended March 31, 2018 compared to $11.0 million for the three months ended March 31, 2017, an increase of $5.5 million. The increase was primarily driven by a shift in product mix and increased volumes sold.

Selling, General and Administrative Expenses

~~Selling, general and administrative expenses (“~~SG~~&A”) were $29.2~~&A increased $33.5 million, or 51%, to $99.8 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2018 compared to ~~$24.3~~$66.3 million for the ~~three~~nine months ended ~~March 31, 2017, an increase of $4.9 million, or 20%.The increase in~~September 30, 2017. SG&A ~~during~~for the ~~three~~nine months ended ~~March~~September 30, 2018 includes stock compensation expense of $3.4 million. Legacy Fairmount Santrol SG&A for the five months ended May 31, 2018 ~~compared to~~was $44.2 million and included $8.5 million in stock compensation expenses. For the ~~three~~nine months ended ~~March 31,~~September 30, 2017, legacy Fairmount Santrol SG&A was $79.4 million which included $7.6 million of stock compensation expenses and $1.5 million in merger-related expenses. With the inclusion of legacy Fairmount Santrol SG&A but excluding the impact of stock compensation and merger-related expenses in each of the comparable periods, SG&A decreased over the prior year primarily ~~the result of higher compensation related expense of $2 million, higher outside service and travel related costs of $1 million and increased insurance expense of $1 million.~~due to lower variable compensation.

Depreciation, Depletion and Amortization

Depreciation, depletion and amortization ~~was $29.4~~increased $60.3 million to $132.5 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2018, compared to ~~$26.5~~$72.2 million in the nine months ended September 30, 2017. The increase in expense was due to more assets placed in service, largely due to the start-up of the West Texas mining facilities, as well as the commissioning of our Utica expansion and the write-up to fair value of the legacy Fairmount Santrol property, plant, and equipment and intangibles under GAAP.

Goodwill and Other Asset Impairments

The Company incurred goodwill and other asset impairments of $277.6 million in the nine months ended September 30, 2018. Goodwill and other asset impairments included non-cash charges for the ~~three~~impairment of assets from recently idled facilities and the impairment of goodwill in the Energy reporting unit due to the current business conditions and the company’s recent decline in stock price. For the nine months ended ~~March 31, 2017, an increase~~September 30, 2018 goodwill and other asset impairments also includes the impairment of ~~$2.9 million or 11%. The increase is principally~~assets from recently idled facilities and charges from a terminated project for the due to post-Merger synergies and capital optimization. There were no impairments in the~~start-up~~ nine months ended September 30, 2017.

Restructuring Charges

The Company incurred restructuring charges of ~~an additional production facility at~~$14.8 million in the ~~Company’s Utica, Illinois facility.~~nine months ended September 30, 2018. Restructuring charges included expenses associated with restructuring activities as a result of the merger and idled plant facilities, including, severance, relocation and contract terminations. There were no restructuring charges in the nine months ended September 30, 2017.

Other Operating Expense (Income), ~~Net~~net

Other operating expense (income), net ~~was income~~decreased $2.1 million to a loss of ~~$40 thousand for the three months ended March 31, 2018 and expense of $1.0~~$0.3 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2018 compared to $1.8 million in the nine months ended September 30, 2017. Other operating expense for the nine months ended September 30, 2018 included government incentives for facility relocations. The ~~change~~remaining decrease in other operating expense was ~~primarily driven by~~related to foreign currency variances.

Operating Income (Loss) from Continuing Operations

Operating income (loss) from continuing operations decreased $268.7 million to a ~~favorable impact~~loss of ~~foreign exchange.~~

~~Income from Operations~~

~~Income from operations was $67.4~~$143.9 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2018 ~~an increase of $39.3 million~~ compared to ~~$28.1~~income of $124.8 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2017. The decrease in operating income from continuing operations was largely due to the higher profitability in the Energy segment which was offset by the goodwill and other asset impairments of $277.6 million and restructuring charges of $14.8 million.

Interest Expense, net

Interest expense increased $22.7 million, or 180%, to $35.3 million for the nine months ended September 30, 2018 compared to $12.6 million for the nine months ended September 30, 2017. The increase in expense for the nine months ended September 30, 2018 is primarily due to the increased debt that the Company incurred to finance the Merger.

Other Non-Operating Expense, net

Other non-operating expense, net increased $51.8 million to $56.2 million in the nine months ended September 30, 2018 compared to $4.4 million in the nine months ended September 30, 2017. The increase is due to legal, accounting, financial advisory services, severance, accelerated stock awards, debt extinguishment and other expenses incurred in connection with the ~~increased margins in our Energy~~Merger and ~~Electronics segment, partially offset by increased selling, general and administration expenses.~~pension charges related to settlements.

~~Interest Expense, net~~Provision (Benefit) for Income Taxes

~~Interest expense, net was $5.2~~The provision for income taxes decreased $37.0 million to a tax benefit of $0.5 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2018 ~~and $5.3~~compared to tax expense of $36.5 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2017.

~~Other Expense, net~~

~~Other expense, net was $5.3~~ Income before income taxes decreased $343.1 million to a loss of $235.4 million for the ~~three~~nine months ended ~~March 31, 2018. Other expense, net~~September 30, 2018 compared to income of $107.7 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2017. The decrease in tax expense recorded during 2018 ~~consists of the costs that Unimin has incurred~~was primarily related to the ~~proposed combination~~decrease in income before taxes offset by the non-deductibility of the ~~businesses of Unimin~~goodwill impairment. The effective tax rate was 0.2% and ~~Fairmount Santrol.~~

~~Income Tax Provision~~

~~The income tax provision was $11.4 million~~33.8% for the ~~three~~nine months ended ~~March 31,~~September 30, 2018 compared to $5.9 million for the three months ended March 31, 2017. The increase was due to increased profit before income taxes. The tax rate for the three months ended March 31, 2018 was 20.0% compared to 25.8% for the three months ended March 31, 2017.and 2017, respectively. The decrease in the effective tax rate is primarily attributable to the ~~result~~non-deductibility of the goodwill impairment. The effective rate differs from the U.S. federal statutory rate

primarily due to the goodwill impairment, depletion, the impact of foreign taxes, and the foreign provisions of the Tax ~~Cuts and Jobs~~ Act.

For the nine months ended September 30, 2018, the Company remains provisional for legislative changes of the Tax Act. The SEC has provided up to a one-year measurement period, ending December 22, 2018, for the Company to finalize the accounting for the impacts of the Tax Act. During the nine months ended September 30, 2018, there were no adjustments made to previous estimates related to the Tax Act. We are currently in the process of completing our estimates, which will be finalized during the fourth quarter of 2018.

Net Income (Loss) Attributable to Covia

Net income ~~increased $28.7~~attributable to Covia decreased $306.2 million, or 365%, to ~~net income~~a loss of ~~$45.5~~$222.4 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2018 compared to ~~$16.8~~$83.8 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2017 due to the factors ~~noted above.~~

previously noted.

Adjusted EBITDA

Adjusted EBITDA increased $94.7 million to $287.3 million for the nine months ended September 30, 2018 compared to $192.6 million for the nine months ended September 30, 2017. Adjusted EBITDA for the nine months ended September 30, 2018 excludes the impact $355.0 million of expenses consisting of $3.4 million of non-cash stock compensation expense, $277.6 million of Goodwill and other asset impairments, restructuring charges of $24.1 million as a result of the Merger and idled plant facilities, and $49.8 million in Merger-related expenses. Adjusted EBITDA for the nine months ended September 30, 2018 includes additional expense of $38.0 million consisting of $24.7 million of expense included in cost of goods sold, which is related to the $30.2 million write-up of legacy Fairmount Santrol’s inventories to fair value under GAAP and $13.3 million for the combined loss from our in-basin facilities due to start-up costs and lower fixed cost leverage associated with scaling production. The change in Adjusted EBITDA is largely due to increased gross profit for the reasons previously noted.

Liquidity and Capital Resources

~~Historic~~Overview

~~Unimin’s~~Our liquidity ~~has historically been~~is principally used to service ~~Unimin’s~~our debt, ~~pay dividends to shareholders,~~ meet ~~Unimin’s~~our working capital needs, and invest in both maintenance and organic growth capital expenditures. Historically, ~~Unimin has~~we have met ~~its~~our liquidity and capital investment needs with funds generated from operations and the issuance of debt, ~~and borrowing of funds from Sibelco. As of March 31, 2018, Unimin had outstanding long-term debt of $366.9 million and cashon-hand~~ ~~of $284.3 million.~~if necessary.

On December 16, 2009, Unimin issued $100.0 million principal amount of 4.92% Senior Notes, Series C (the “Series C Notes”), and $100.0 million principal amount of 5.48% Senior Notes, Series D (the “Series D Notes”). The Series C Notes matured on December 16, 2016 and were fully repaid upon maturity. Interest on the Series D Notes is payable semiannually on June 16 and December 16 of each year. The Series D Notes mature on December 16, 2019 unless prepaid earlier. The note purchase agreement governing the Series D Notes contains customary affirmative and negative covenants, including an interest coverage ratio of not less than 3.00:1 and a consolidated debt to consolidated EBITDA ratio of not greater than 3.25:1. Unimin may, at its option, at any time, prepay the Series D Notes at 100% of their principal amount, plus a make-whole amount. Unimin expects to redeem the Series D Notes upon the closing of the Merger.

In July 2014, Unimin entered into a loan agreement with Silfin NV (“Silfin”), a wholly-owned subsidiary of Sibelco, providing for a term loan in the amount of $300 million and a fixed interest rate of 4.09%. In March 2016, Unimin repaid $35 million of the loan. The remaining balance of the loan will mature in July 2019, unless the agreement is terminated earlier. In July 2016, Unimin entered into a credit facility with Silfin, pursuant to which Unimin can draw upon an overdraft facility of up to $20 million. As of March 31, 2018, there were no borrowings outstanding under this overdraft facility with Silfin. On February 1, 2017, the CompanyMerger Date, we entered into an ~~additional loan~~agreement with ~~Silfin for $49.6 million. The loan bears~~ a ~~floating annual interest rate~~group of~~6-month~~ ~~LIBOR USD plus a margin of 127 basis points~~ banks, financial institutions, and ~~was initially payable on February 1, 2018. On February 1, 2018, the Company amended the term of the loan to mature on August 1, 2018. Unimin’s agreements~~other entities with ~~Silfin are expected to be terminated and repaid in connection with the closing of the Merger.~~

Unimin Canada Limited, a subsidiary of the Company, has a 2 million Canadian dollar overdraft facility with the Bank of Montreal. As of March 31, 2018, there were no borrowings outstanding under the overdraft facility and there were $1.9 million of outstanding letters of credit which reduce the amount available under the overdraft facility. Unimin has guaranteed the obligations of Unimin Canada Limited under this facility.

~~Post-Merger~~

~~In connection with the execution of the Merger Agreement, Unimin has received a debt commitment letter from~~ Barclays Bank PLC, ~~BNP Paribas~~serving as administrative agent, and Barclays Bank PLC and BNP Paribas Securities Corp., ~~pursuant to which the lenders have committed to provide a senior secured term loan in the amount of $1.65 billion~~serving as joint lead arrangers and a senior secured revolving credit facility in the amount of $200 million. The combined company expects to enter into a credit agreement with these lenders reflecting the term loan and the revolving credit facility on the closing date of the Merger.

~~Pursuant to the debt commitment letter,~~joint bookrunners, for the $1.65 billion ~~senior secured term loan facility would mature~~Term Loan and the $200 million Revolver. The Term Loan matures seven years after the ~~closing date~~Merger Date and ~~would amortize~~amortizes in equal quarterly installments in an amount equal to 1% per year beginning with the first full fiscal quarter after the ~~closing date,~~Merger Date, with the balance due at maturity. Loans under the ~~term loan~~Term Loan would be prepaid with, subject to various exceptions, (a) 100% of the net cash proceeds of allnon-ordinary course asset sales or dispositions and insurance proceeds, (b) 100% of the net cash proceeds of issuances of indebtedness and (c) 50% of annual excess cash flow (with stepdowns to 25% and 0% based on total net leverage ratio levels). Voluntary prepayments of the ~~term loan~~Term Loan will be permitted at any time without premium or penalty other than (a) customary “breakage” costs with respect to LIBOR borrowings and (b) a 1.00% call protection premium applicable to certain “repricing transactions” occurring on or prior to the date that is 12nine months after the ~~closing date of the facilities.~~Merger Date.

~~Pursuant to the debt commitment letter, the $200 million senior secured revolving credit facility would mature~~The Revolver matures five years after the ~~closing date.~~Merger Date. Voluntary reductions of the unused portion of the ~~revolving credit facility commitment~~Revolver will be allowed at any time. The ~~revolving credit facility will include~~Revolver includes a total net leverage ratio covenant, ~~to be~~ tested on a quarterly basis, of no more than 4.50:1.00, to step down to 4.00:1.00 at the fiscal quarter ended December 31, 2018.

Interest on ~~both facilities would accrue~~the Term Loan and Revolver accrues at a per annum rate of either (at ~~the option of the combined company) (1)~~our option) (a) LIBOR plus a spread or ~~(2)~~(b) the alternate base rate plus a spread. LIBOR refers to the London Inter-bank Offered Rate and, in general, is the average of the interest rates estimated by each of the leading banks in London that it would be charged were it to borrow from other banks. With respect to the term loan facility, LIBOR will never be less than 1.00%. ��The ~~alternate base rate, as defined in the debt commitment letter, is the highest of (i) Barclays’s prime rate, (ii) the US federal funds effective rate plus~~¹⁄₂ ~~of 1.00% and (iii) the LIBOR rate for a one month period plus 1.00%. The debt commitment letter provides that the~~ spread will vary depending on the ~~combined company’s~~Company’s total net

leverage ratio ~~(the~~[the ratio of debt (less up to $150 million of cash) to EBITDA for the most recent four fiscal quarter ~~period)~~period], as follows:

Total Net Leverage Ratio    Applicable
Margin
for
LIBOR
Loans Applicable
Margin
for
ABR
Loans
Greater than or equal to 3.5x
   4.75 % 3.75 %
Greater than or equal to 3.0x and less than 3.5x
   4.50 % 3.50 %
Greater than or equal to 2.5x and less than 3.0x
   4.25 % 3.25 %
Greater than or equal to 2.0x and less than 2.50x
   4.00 % 3.00 %
Less than 2.0x
   3.75 % 2.75 %

	Term Loan		Revolver
Leverage Ratio	Applicable Margin for Eurodollar Loans	Applicable Margin for ABR Loans	Applicable Margin for Eurodollar Loans	Applicable Margin for ABR Loans
Greater than or equal to 2.50x	4.00%	3.00%	3.75%	2.75%
Greater than or equal to 2.0x and less than 2.50x	3.75%	2.75%	3.50%	2.50%
Greater than or equal to 1.50x and less than 2.0x	3.50%	2.50%	3.25%	2.25%
Less than 1.50x	3.25%	2.25%	3.00%	2.00%

The ~~debt commitment letter~~credit agreement provides that the interest rate spreads set forth in the table above will each be reduced by 0.25% if ~~the~~our corporate credit ratings ~~in respect of the combined company~~ issued in connection with the initial syndication of the ~~senior secured term loan~~Term Loan and ~~the senior secured revolving credit facility~~Revolver areBB- (with a stable or better outlook) or higher and Ba3 (with a stable or better outlook) or higher from S&P and Moody’s, respectively. As of the date hereof, S&P and Moody’s have announced that ~~the~~our ratings of the combined company ~~will be~~are at or above such levels.

The ~~term loan~~Term Loan and ~~the revolving credit facility would be~~Revolver are guaranteed by all of ~~the combined company’s~~our wholly owned material restricted subsidiaries (including Bison Merger Sub, LLC, as successor to Fairmount Santrol, and all of the wholly owned material restricted subsidiaries of Fairmount Santrol), subject to certain exceptions. In addition, subject to various exceptions, the ~~facilities would be~~Term Loan and Revolver are secured by substantially all of the assets of the ~~combined company~~Company and each other guarantor, including, but not limited to (a) a perfected first-priority pledge of all of the capital stock held by the ~~combined company~~Company or any other guarantor of each existing or subsequently acquired or organized wholly owned restricted subsidiary ~~of the combined company~~ (no more than 65% of the voting stock of any foreign subsidiary) and (b) perfected first-priority security interests in substantially all of the tangible and intangible assets of the ~~combined company~~Company and each guarantor.

The ~~facilities will~~Term Loan and Revolver contain customary representations and warranties, affirmative covenants, negative covenants and events of default. Negative covenants ~~will~~ include, among others, limitations on debt, liens, asset sales, mergers, consolidations and fundamental changes, dividends and repurchases of equity securities, repayments or redemptions of subordinated debt, investments, transactions with affiliates, restrictions on granting liens to secure obligations, restrictions on subsidiary distributions, changes in the conduct of the business, amendments and waivers in organizational documents and junior debt instruments and changes in the fiscal year.

In addition, the ~~debt commitment letter provides that the documentation for the term loan and revolving~~ credit ~~facility will permit the combined company~~agreement permits us to add one or more incremental term loan facilities and/or increase the commitments under the ~~revolving credit facility~~Revolver in an aggregate principal amount up to the sum of (x) $250 million, plus (y) an amount of incremental facilities so that, after giving effect to any such incremental facility, on a pro forma basis, the total net leverage ratio would not exceed 2.75:1.00, plus (z) an amount equal to all voluntary prepayments of the ~~term loan.~~Term Loan. In addition to incremental term loan facilities and ~~revolving credit facility~~Revolver increases, this incremental credit capacity ~~will~~can be allowed to be utilized in the form of (a) senior unsecured notes or loans, subject to a pro forma total net leverage ratio of up to 3.75:1.00, (b) senior secured notes or loans that are secured by the collateral on a junior basis, subject to a pro forma total net leverage ratio of up to 3.25:1.00, or (c) senior secured notes that are secured by the collateral on a pari passu basis, subject to a pro forma total net leverage ratio of up to 2.75:1.00.

Obligations to fund under the commitment letter are subject to certain conditions, including the closing of the Merger, the accuracy of certain representations and warranties, the absence of a material adverse effect on Fairmount Santrol, the repayment of certain debt of Unimin and Fairmount Santrol, receipt of audited and unaudited financial statements and certain pro forma information, delivery of a solvency certificate by Unimin’s chief financial officer, payment of all fees required to be paid on the closing date of the facilities and execution of requisite credit facility and collateral documentation and closing documentation.

The proceeds of the ~~term loan will be~~Term Loan were used to primarily repay certain debt of legacy Fairmount Santrol ~~(which amount is $732,592,376 as of April 10, 2018), to repay certain debt of~~and legacy Unimin, ~~(which amount is $420,928,588 as of April 10, 2018 and will include~~which included additional debt ~~to be~~ incurred to fund the ~~redemption of certain Unimin shares held by Sibelco for $490 million (plus interest))~~Cash Redemption and to pay $170 million to Fairmount Santrol stockholders as part of the ~~Merger Consideration~~Merger.

See Note 7 in the condensed consolidated financial statements included in this Report for further detail.

As of September 30, 2018, we had outstanding term loan borrowings of $1.65 billion and ~~transaction costs for the Merger.~~cash on hand of $155.4 million. In addition, our Revolver can provide additional liquidity, if needed. As of September 30, 2018, we had $200.0 million of availability under our Revolver with $11.9 million committed to letters of credit, leaving net availability at $188.1 million.

~~Unimin’s~~Our operations are ~~capital intensive~~capital-intensive and ~~future~~short term capital expenditures related to certain strategic projects are expected to be substantial. As of ~~March 31, 2018, Unimin believes~~the date of this Report, we believe that ~~its cashon-hand,~~ ~~cash generated from operations and financing arrangements~~our liquidity will be sufficient to meet ~~its post-Merger~~ cash

obligations, including working capital requirements, anticipated capital expenditures, and scheduled debt service over the next 12 months.

Working Capital

Working capital is the amount by which current assets exceed current liabilities ~~excluding cash~~ and ~~cash equivalents and the current portion~~represents a measure of ~~long-term debt. Unimin’s~~liquidity. Covia’s working capital was ~~$267.0 million and $210.6~~$440.6 million at ~~March 31,~~September 30, 2018 and $468.7 million at December 31, ~~2017, respectively.~~2017. The ~~increase~~decrease in working capital is ~~principally the result of an increase in Accounts receivable, net~~primarily due to the ~~increased sales volumes during~~Merger and the ~~quarter. Unimin expects its working capital to grow as it continues to grow its business.~~assets of Fairmount Santrol.

Cash Flow Analysis

Unimin’s cash flows depend on many factors, including general economic conditions, demand for Unimin’s products in the end markets it serves, interest rates and many other factors beyond its control. A summary of Unimin’s operating, investing and financing activities (in thousands) is shown in the following table:

   Three Months Ended March 31,
   2018    2017
   (in thousands)
Net cash provided by (used in):

Operating activities
   $ 22,141    $ 15,740
Investing activities
   (45,971 )    (11,455 )
Financing activities
   (328 )    (370 )

Net Cash Provided by Operating Activities

~~Net cash provided by operating~~Operating activities consist primarily of net income adjusted fornon-cash items, including depreciation, depletion, and amortization, ~~asset impairments~~ and the effect of changes in working capital.

Net cash provided by operating activities was ~~$22.1~~$190.3 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2018 compared with ~~$15.7~~$126.5 million provided in the ~~three~~nine months ended ~~March 31,~~September 30, 2017. This ~~$6.4~~$63.8 million ~~increase~~variance was primarily the result of ~~the improved operating results~~a $306.1 million decrease in ~~the three months ended March 31, 2018 which was~~net income, partially offset by ana $57.4 million increase in depreciation, depletion, and amortization expense (largely due to purchase accounting adjustments), a $277.6 million non-cash impairment of goodwill and other assets, non-cash restructuring charges of $14.3 million, and $6.7 million in other net decreases to reconcile net income to net cash provided by operating activities. Additionally, changes in working capital ~~during the three months ended March 31, 2018. The increase~~resulted in ~~working capital was driven by the increase in accounts receivable, net~~a source of ~~$30.5 million and a decrease in accounts payable~~cash of $13.3 million due to the timing of payments. The increase in accounts receivable, net is a result of the increased sales in the three months ended March 31, 2018 compared to the three months ended March 31, 2017.$27.2 million.

Net Cash Used in Investing Activities

~~Net cash used in investing~~Investing activities ~~consists~~consist primarily of capital expenditures for growth and maintenance. Capital expenditures ~~for growth~~ generally are ~~related to the expansion~~for expansions of production or terminal ~~capacities. Capital~~facilities, land and reserve acquisition or maintenance related expenditures ~~for maintenance~~which are generally are ~~related to the~~for asset replacement ~~of assets~~ and health, safety, and quality improvements.

Net cash used in investing activities was ~~$46.0~~$283.3 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2018 compared to ~~$11.5~~$50.7 million ~~of net cash~~ used ~~in investing activities~~ for the ~~three~~nine months ended ~~March 31,~~September 30, 2017. The ~~$34.5~~$232.6 million ~~increase~~variance was primarily related to the ~~result~~increase in capital expenditures of ~~higher capital expenditures.~~$188.4 million as well as Merger-related cash flows, such as the $31.0 million transferred to HPQ Co., and $64.7 million in net payments to Fairmount Santrol stockholders.

Capital expenditures of ~~$46.3~~$188.4 million ~~for~~in the ~~three~~nine months ended ~~March 31,~~September 30, 2018 were primarily focused on ~~(1) a~~construction of new ~~facility~~facilities in West Texas, ~~(2)~~ completion of ~~several~~the expansion ~~projects at~~of the ~~Company’s~~ Utica, Illinois, and Oregon facilities, ~~to support growth in the energy business~~ and ~~(3)~~ expanding capacity at ~~Unimin’s~~the Canoitas facility in Mexico.

Capital expenditures ~~of $11.7~~were $51.1 million in the ~~three~~nine months ended ~~March 31,~~September 30, 2017 and were primarily focused on ~~(1) completion of Unimin’s~~a new enterprise resource planning (“ERP”) system and ~~(2)~~ a tailings system ~~at Unimin’s facility at~~in Kasota, Minnesota.

~~Unimin’s~~For the fourth quarter of 2018, we expect capital expenditures ~~during 2018 are expected~~ to be ~~approximately $200~~in a range of $50 million ~~including a new facility~~to $55 million. This primarily includes maintenance capital expenditures and greenfield mine projects in West Texas and ~~modernization at Unimin’s facilities in Nephton, Canada.~~Oklahoma.

Net Cash Used in Financing Activities

Financing activities consist primarily of borrowings under our Term Loan and repayments of debt of Unimin and Fairmount Santrol, in addition to the Cash Redemption payment, as a result of the Merger.

Net cash used in financing activities ~~consist primarily of borrowings and repayments under Unimin’s debt agreements.~~

~~Net cash used by financing activities~~ was ~~$0.3~~$61.9 million in the ~~three~~nine months ended ~~March 31,~~September 30, 2018 compared to $0.4 million used in the ~~three~~nine months ended ~~March 31,~~September 30, 2017. The $61.5 million variance is due to borrowing the $1.65 billion Term Loan, partially offset by $1.11 billion in payments on Unimin and Fairmount Santrol debts, a $520.4 million Cash Redemption payment, and $41.2 million in Merger related debt refinancing fees.

Seasonality

~~Unimin’s~~Our business is affected to some extent by seasonal fluctuations in weather that impact ~~Unimin’s~~our production levels and ~~its~~our customers’ business needs. For example, ~~Unimin’s~~our Energy segment sales levels are lower in the first and fourth quarters due to lower market demand as adverse weather tends to slow oil and gas operations to varying degrees depending on the severity of the weather. In addition, ~~Unimin’s~~our inability to mine and process sand year-round at ~~several~~certain of ~~Unimin’s~~our surface mines results in a seasonalbuild-up of inventory as ~~Unimin excavates excess~~we mine sand to build a stockpile that will feed ~~Unimin’s~~our drying facilities during the winter months. Additionally, in the second and third quarters, ~~Unimin sells~~we sell more sand to ~~its~~our customers in ~~its~~our Industrial segment’s end markets due to the seasonal rise in demand driven by more favorable weather conditions.

Inflation

~~Unimin conducts~~We conduct the majority of ~~its~~our business operations in the ~~United States,~~U.S., Canada, and Mexico. During the ~~three~~nine months ended ~~March 31,~~September 30, 2018, certain inflationary pressures in Mexico impacted costs during the period relative to the ~~three~~nine months ended ~~March 31,~~September 30, 2017.

Off-Balance Sheet Arrangements

~~Unimin has~~We have no undisclosedoff-balance sheet arrangements that have or are likely to have a current or future material ~~effect~~impact on ~~its~~our financial condition, ~~changes in financial condition, revenues, expenses,~~ results of operations, liquidity, capital expenditures, or capital resources.

Contractual Obligations

As of ~~March 31,~~September 30, 2018, we have contractual obligations for long-term debt, capital leases, operating leases, purchase obligations, terminal operating costs, leasehold interest payments, earnout payments, and other long-term liabilities. Substantially all of the operating lease obligations are for railcars.

~~In the three months ended March 31, 2018, there~~There have been no significant changes outside the ordinary course of business to our “Contractual Obligations” table in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of ~~our Registration Statement on~~the Form S-4.

Environmental Matters

~~Unimin is~~We are subject to various federal, state and local laws and regulations governing, among other things, hazardous materials, air and water emissions, environmental contamination and reclamation and the protection of the environment and natural resources. ~~Unimin has~~We have made, and ~~expects~~expect to make in the future, expenditures to comply with such laws and regulations, but cannot predict the full amount of such future expenditures. ~~Unimin~~We may also incur fines and penalties from time to time associated with noncompliance with such laws and regulations.

As of ~~March 31,~~September 30, 2018 and December 31, 2017, ~~Unimin~~we had ~~$13.4~~$29.0 million and ~~$12.9~~$12.5 million, respectively, accrued for Asset Retirement Obligations, which include future reclamation ~~costs, respectively.~~costs. The increase is primarily related to purchase accounting adjustments recorded for the quarter ended September 30, 2018 to increase the Asset Retirement Obligations for the Company’s acquired mines. There were no other significant ~~charges~~changes with respect to environmental liabilities or future reclamation costs.

Critical Accounting Policies and Estimates

Our unaudited condensed consolidated financial statements have been prepared in conformity with GAAP, which requires management to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of our financial statements and the reported amounts of revenues and expenses during the reporting period. While we do not believe that the reported amounts would be materially different, application of these policies involves the exercise of judgment and the use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on experience and on various other assumptions that are believed to be reasonable under the

circumstances. All of our significant accounting policies, including certain critical accounting policies and estimates, are disclosed in ~~Unimin’s Registration Statement on~~the FormS-4.

~~Recently Issued~~Recent Accounting Pronouncements

Refer to ~~note 2 – Recent Accounting Pronouncements –~~Note 1 of ~~the notes to Unimin’s~~our unaudited condensed consolidated financial statements included in this Report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

~~ITEM 3.~~

~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

Interest Rate ~~Risk~~Swaps

~~Unimin has not historically been subject~~Due to ~~significant~~our variable-rate indebtedness, we are exposed to fluctuations in interest rates. We use fixed interest rate ~~risk. Unimin believes~~swaps to manage this exposure. These derivative instruments are reported at fair value in other non-current assets and other long-term liabilities. Changes in the fair value of derivatives are recorded each period in other comprehensive income. For derivatives not designated as hedges, the gain or loss is recognized in current earnings. No components of our hedging instruments were excluded from the assessment of hedge effectiveness. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for making fixed-rate payments over the life of the agreements without exchange of the underlying notional value. The gain or loss on the interest rate swap is recorded in accumulated other comprehensive income and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings.

We do not use derivative financial instruments for trading or speculative purposes. By their nature, all such instruments involve risk, including the possibility that a loss may occur from the ~~effect, if any,~~failure of ~~reasonably possible near term~~another party to perform according to the terms of a contract (credit risk) or the possibility that future changes in market price may make a financial instrument less valuable or more onerous (market risk). As is customary for these types of instruments, we do not require collateral or other security from other parties to these instruments. In management’s opinion, there is no significant risk of loss in the event of nonperformance of the counterparties to these financial instruments.

We formally designate and document instruments at inception that qualify for hedge accounting of underlying exposures in accordance with GAAP. We assess, both at inception and for each reporting period, whether the financial instruments used in hedging transactions are effective in offsetting changes in cash flows of the related underlying exposure.

As of September 30, 2018, the fair value of the interest rate swaps was $3.4 million.

A hypothetical increase or decrease in interest rates by 1.0% on ~~its financial position, results of operations and cash flows~~variable rate debt would ~~not be material. Unimin does not currently hedge its~~have had an approximate $5.5 million impact on our interest ~~rate exposure.~~expense in the nine months ended September 30, 2018.

~~Following the Merger, the term loan and revolving credit facility will incur interest based on interest rates and accordingly could be subject to material interest rate risk.~~

Credit Risk

Credit risk is defined as the risk that a third party will not fulfill its contractual obligations and, therefore, generate losses for ~~Unimin. Unimin is~~Covia. We are subject to risks of loss resulting from nonpayment or nonperformance by ~~its~~our customers. ~~For~~In the ~~three~~nine months ended ~~March 31,~~September 30, 2018 ~~Halliburton Energy Services, Unimin’s top~~and 2017, one customer exceeded 10% of revenues. This customer accounted for ~~approximately 12%~~14% and 13% of ~~Unimin’s sales.~~our revenues in the nine months ended September 30, 2018 and 2017, respectively. At September 30, 2018, we had two customers whose accounts receivable balances exceeded 10% of total receivables. Approximately ~~11%~~13% and 10% of ~~Unimin’s~~our accounts receivable balance at ~~March~~September 30, 2018, respectively, was from these two customers. At December 31, ~~2018~~2017, we had one customer whose accounts receivable balance exceeded 10% of total receivables. Approximately 13% of our accounts receivable balance at December 31, 2017, respectively, was ~~outstanding~~ from this customer. ~~Unimin examines~~We examine the creditworthiness of third-party customers to whom ~~it extends~~we extend credit and ~~manages its~~manage our exposure to credit risk through credit analysis, credit approval, credit limits and monitoring procedures, and for certain transactions, ~~Unimin~~we may request letters of credit, prepayments or guarantees, although collateral is generally not required. Credit risk is also mitigated by contracting with multiple counterparties and limiting exposure to individual counterparties to clearly defined limits based upon the risk of counterparty default.

Despite examining ~~its~~our customers’ credit worthiness, ~~Unimin~~we may still experience delays or failures in customer payments. Some of ~~Unimin’s~~our customers have reported experiencing financial difficulties. With respect to customers that may file for bankruptcy protection, ~~Unimin~~we may not be able to collect sums owed to itus by these customers and also may be required to refundpre-petition amounts paid to ~~Unimin~~us during the preference period (typically 90 days) prior to the bankruptcy filing.

Foreign Currency Risk

~~Unimin is~~We are subject to market risk related to foreign currency exchange rate fluctuations. Revenues from international operations represented ~~14%~~11% and 18% of ~~Unimin’s revenue in~~our revenues for the ~~three~~nine months ended ~~March 31,~~September 30, 2018 and 2017, respectively. A portion of ~~Unimin’s~~our business is transacted in currencies other than the functional currency, including the Canadian dollar and ~~the~~ Mexican peso. ~~Unimin’s~~Our foreign currency exchange risk is somewhat mitigated by ~~Unimin’s~~our ability to offset a portion of thesenon-U.S. dollar-denominated revenues with operating expenses that are paid in the same currencies. To date, foreign currency fluctuations have not had a material impact on ~~Unimin’s income (loss)~~results from operations.

ITEM 4. CONTROLS AND PROCEDURES

~~ITEM 4.~~

~~CONTROLS AND PROCEDURES~~

~~Evaluation~~Disclosure of ~~Disclosure~~ Controls and Procedures

We maintain disclosure controls and procedures, as that term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (“Exchange Act”). In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Our management, under the supervision and with the participation of our ~~Principal~~Chief Executive Officer (“CEO”) (principal executive officer) and ~~our Principal~~Chief Financial Officer (“CFO”) (principal financial officer), has evaluated the effectiveness of our disclosure controls and procedures ~~(as defined in Rules13a-15(e)~~ ~~and15d-15(e)~~ ~~under~~as of the ~~Exchange Act~~end of ~~1934, as amended).~~the period covered by this report. Based on ~~such~~that evaluation, our ~~Principal Executive Officer~~CEO and ~~our Principal Financial Officer~~CFO have each concluded that ~~our~~such disclosure controls and procedures were effective as of ~~March 31, 2018.~~the end of the period covered by this report.

~~Changes in~~ Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as that term is defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act. There have been no changes in our internal control over financial reporting ~~for~~during the quarter ended ~~March 31,~~September 30, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

On June 1, 2018, Unimin and Fairmount Santrol merged to form Covia. Refer to Note 1 and Note 2 of the Condensed Consolidated Financial Statements for the three and nine months ended September 30, 2018 included elsewhere in this Report. We are currently in the process of integrating internal controls and procedures of the predecessor entities into internal controls over financial reporting. As provided under the Sarbanes-Oxley Act of 2002 and the applicable rules and regulations of the SEC, we will assess the effectiveness of our internal control over financial reporting for the fiscal year ended December 31, 2019.

PART II -– OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

~~ITEM 1.~~

~~LEGAL PROCEEDINGS~~

~~Unimin~~Product Liability Matters

We and/or ~~its~~our predecessors have been named as a defendant, usually among many defendants, in numerous ~~product~~products liability lawsuits ~~alleging damages caused by silica exposure, mostly~~ brought by or on behalf of current or former employees of ~~their customers.~~our customers alleging damages caused by silica exposure. As of ~~March 31,~~September 30, 2018, ~~there~~we were ~~134~~subject to approximately 81 active ~~silica-related products liability claims pending in which Unimin is a defendant.~~silica exposure cases. Many of the claims pending against ~~Unimin~~us arise out of the alleged use of ~~its~~our silica products in foundries or as an abrasive blast media and have been filed in the states of Ohio and Mississippi, although cases have been brought in many other jurisdictions over the years. In accordance with ~~Unimin’s~~our insurance obligations, these claims are being defended by ~~Unimin’s~~our subsidiaries’ insurance carriers, subject to ~~Unimin’s~~our payment of a percentage of the defense costs. Based on information

currently available, management cannot reasonably estimate a loss at this time. Although the outcomes of these ~~claims~~lawsuits cannot be predicted with certainty, ~~in Unimin’s view, none of these cases,~~management does not believe that the pending lawsuits, individually or in the aggregate, are ~~probable~~reasonably likely to have a material adverse effect on ~~Unimin’s business,~~the Company’s financial position, results of operations or cash flows.

Stockholder Matters

Beginning on April 24, 2018, alleged stockholders of Fairmount Santrol filed class actions against Fairmount Santrol and its directors in the United States District Courts for the Northern District of Ohio and for the District of Delaware. The lawsuits generally alleged that Fairmount Santrol and its directors violated the federal securities laws by issuing allegedly misleading disclosures in connection with the Merger. The lawsuits sought, among other things, to enjoin the special meeting at which stockholders of Fairmount Santrol were scheduled to vote on, among other items, a proposal to adopt the Merger agreement.

On May 14, 2018, counsel for the plaintiffs and counsel for the defendants entered into a memorandum of understanding that, among other things, provided for the dissemination of additional information to Fairmount Santrol stockholders and for dismissal with prejudice of the lawsuits. On May 15, 2018, Fairmount Santrol disseminated the supplemental disclosures to Fairmount Santrol stockholders through a Current Report on Form 8-K. Also on May 15, 2018, the plaintiffs withdrew their pending motions for a preliminary injunction. On May 25, 2018, at a special meeting of the stockholders of Fairmount Santrol, the holders of the majority of the outstanding shares of Fairmount Santrol voted to approve the Merger, among other things. On June 1, 2018, the Merger was effected pursuant to the Merger agreement. On November 9, 2018, the parties executed a stipulation of settlement and the plaintiffs filed a motion with the Court, seeking preliminary approval of the proposed settlement. Although the outcome of this lawsuit cannot be predicted with certainty, management does not believe that this pending lawsuit is reasonably likely to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

Other Matters

We are involved in other legal actions and claims arising in the ordinary course of business. We currently believe that each such action and claim will be resolved without a material effect on our financial condition, ~~and~~ results of ~~operations.~~operations, or liquidity. However, litigation involves an element of uncertainty. Future developments could cause these actions or claims to have a material effect on our financial condition, results of operations, and liquidity.

ITEM 1A. RISK FACTORS

~~ITEM 1A.~~

~~RISK FACTORS~~

In addition to other information set forth in this Report, you should carefully consider the risk factors discussed under the caption “Risk Factors” in ~~our Registration Statement on~~the FormS-4. There have been no material changes to the risk factors previously ~~reported.~~disclosed in the Form S-4.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

~~ITEM 2.~~

~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

~~ITEM 3.~~

~~DEFAULTS UPON SENIOR SECURITIES~~

None.

ITEM 4. MINE SAFETY DISCLOSURES

~~ITEM 4.~~

~~MINE SAFETY DISCLOSURES~~

Our safety program establishes a system for promoting a safety culture that encourages incident prevention and continually strives to improve our safety and health performance. Our safety program includes as its domain all established safety and health specific programs and initiatives for the Company’s material compliance with all local, state and federal legislation, standards, and regulations as they apply to a safe and healthy employee, stakeholder, and work environment.

Our safety program has the ultimate goal of the identification, elimination or control of all risks to personnel, stakeholders, and facilities, that can be controlled and directly managed, and those it does not control or directly manage, but can expect to have an influence upon.

The operation of our U.S. based mines is subject to regulation by the Federal Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and Health Act of 1977 (the “Mine Act”). MSHA inspects our mines on a regular basis and issues various citations and orders when it believes a violation has occurred under the Mine Act. Following passage of The Mine Improvement and New Emergency Response Act of 2006, MSHA significantly increased the numbers of citations and orders charged against mining operations. The dollar penalties assessed for citations issued has also increased in recent years.

~~Unimin~~Covia Holdings Corporation is required to report certain mine safety violations or other regulatory matters required by Section 1503(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of RegulationS-K, and that required information is included inExhibit 95.1 and is incorporated by reference into this Report.

ITEM 5. OTHER INFORMATION

~~ITEM 5.~~

~~OTHER INFORMATION~~

None.

ITEM 6. EXHIBITS

~~ITEM 6.~~

~~EXHIBITS~~

The Exhibits to this Report are listed in the Exhibit Index.

~~UNIMIN~~COVIA HOLDINGS CORPORATION

EXHIBIT INDEX

The following ~~Exhibits~~documents are ~~filed with~~the exhibits to this ~~Quarterly Report on~~ Form~~10-Q~~ ~~or are incorporated by~~ 10-Q. For convenient reference, each exhibit is listed according to ~~a prior filing in accordance with Rule12b-32~~ ~~under~~ the ~~Securities and Exchange Act~~Exhibit Table of ~~1934. All Exhibits not so designated are incorporated by reference to a prior filing as indicated.~~Item 601 of Regulation S-K.

(x) Filed herewith


Exhibit No.		Description

31.1(x)		Certification of Chief Executive Officer pursuant to ~~Rule~~Rules 13a-14(a) or15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the ~~Principal Executive Officer.~~Sarbanes-Oxley Act of 2002.

31.2(x)		Certification of Chief Financial Officer pursuant to ~~Rule~~Rules 13a-14(a) or15d-14(a) under the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the ~~Principal Financial Officer.~~Sarbanes-Oxley Act of 2002.

32.1(x)		~~Statement Required by~~Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, byas adopted pursuant to Section 906 of the ~~Principal Executive Officer.~~Sarbanes-Oxley Act of 2002.

32.2(x)		~~Statement Required by~~Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, byas adopted pursuant to Section 906 of the ~~Principal Financial Officer.~~Sarbanes-Oxley Act of 2002.

95.1(x)		Mine Safety Disclosure Exhibit

101.INS(x)		XBRL Instance Document

101.SCH(x)		XBRL Taxonomy Extension Schema Document

101.CAL(x)		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF(x)		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB(x)		XBRL Taxonomy Extension Label Linkbase Document

101.PRE(x)		XBRL Taxonomy Extension Presentation Linkbase Document

~~(x)~~

~~Filed herewith~~

SIGNATURES

~~SIGNATURES~~

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Covia Holdings Corporation


~~Unimin Corporation (Registrant)~~

By:		/s/ Andrew D. Eich
		Andrew D. Eich
		~~Senior~~ Executive Vice President and Chief ~~Commercial~~Financial Officer
		(Principal Financial Officer and Duly Authorized Officer)

Date:	November 14, 2018

~~Date: May 24, 2018~~