Spruce Point Capital Management has placed a short bet on Alpha Metallurgical Resources, questioning the coal mining company’s financial statements and reckoning the business is facing “significant financial stress.” The short seller put a 40% to 60% downside target on the stock.

In a 105-slide short report Tuesday, Spruce Point said that it had found staggering evidence of misstated production, revenues, and expenses, up to $690 million of “hidden” debt obligations, overstated cash, and recent cash shortfalls, inflated inventories, and shrinking economic reserves at Alpha.

Alpha’s CEO and Chairman David Stetson accused Spruce Point of being “fueled by an inadequate understanding of coal mining and our reporting requirements.”

“We have worked hard to earn a strong reputation for ethical operations and transparent reporting, and these principles remain critically important to all of us at Alpha,” Stetson said in a statement.

Management also received a show of support from Lead Independent Director Michael Quillen.

“On behalf of the entire board, we stand in support of the exceptional management team running Alpha Metallurgical Resources,” he said. “It’s our view that Alpha remains well-positioned for long-term success and the board continues to have great confidence in our strategic direction.”

Formerly known as Contura Energy, the company operates 20 mines and eight coal preparation and load-out facilities in Virginia and West Virginia, and has a market value of $2.7 billion.

Spruce Point argued that while the recent rise in coal prices has helped Alpha, this will likely reverse as more supply comes to market and the Ukraine War shortage premium subsidies, exposing the company’s “high cost and levered” operations.

The short seller alleged that Alpha only sold roughly $200 million worth of coal to Brazil in 2020 and 2021, compared to company statements of $368 million. It also accused Alpha of using aggressive tax refunds to drive cash flow.

Alpha “trades at an unjust premium for what we believe are lower quality coal operations and assets,” said Spruce Point, which said the stock could plunge to $60.58.

Shares closed up 2.8% in New York after initially falling as much as 4%.