Ramaco Resources, Inc. (METC) Earnings

Management highlights

- Capital Allocation and Shareholder Return * Year-to-date 2026, Ramaco has repurchased 2.6 million shares of Class A common stock at an average price of $14.50 per share, representing ~5% of outstanding shares, for a total repurchase value of $37 million. * The company ended Q1 with $490 million in total liquidity (up 310% year-over-year), with $63 million of remaining capacity under the existing $100 million share repurchase authorization. * Management views the current share price as substantially undervalued, as it reflects almost no market value for the company's rare earth and critical mineral assets, so the company will continue opportunistic repurchases. - Operational Update: Met Coal * Q1 2026 cash costs remained under $100 per ton for the third consecutive quarter, achieving this cost discipline without cutting miner wages or benefits despite elevated input costs. * The Laurel Fork low-vol mine was restarted in April 2026 as a staging ground for hiring to support the Berwind mine expansion, and a third production section will be added at Berwind mine in summer 2026. At full buildout, these low-vol projects will add 100 thousand to 200 thousand tons of low-vol production in 2026, and an additional 0.5 million tons in 2027. * Construction of the new unit train rail loadout at the Maben low-vol complex is underway, with full completion expected by the end of 2026; it will eliminate all trucking costs and save ~$20 per ton, unlocking the option to develop the 1.5-million-ton Maben deep low-vol mine as market conditions improve. The first Maben cargo is scheduled for seaborne shipment in Q2 2026. * Production at the high-vol Elk Creek complex has been moderated to avoid adding excess tonnage to a weak pricing market, with further production cuts possible if market conditions do not improve. * Year-to-date 2026 safety performance is 250% improved compared to the same period in 2025, on track for the company's long-term target of zero incidents. - Operational Update: Critical Minerals * The revised conceptual study for the patent-pending Carbochlorination processing technique, conducted by Hatch, is on track for completion in late June 2026, with a technical geological summary report from Weir to follow. A full detailed preliminary feasibility study remains on track for completion in late 2026. * Engineering deliverables for the Carbochlorination flow sheet were completed in Q1, with identified opportunities to increase chlorine recycling that will be included in the final study. Internal projections expect this processing method to deliver materially higher incremental revenue and free cash flow compared to the prior solvent extraction method analyzed by Fluor in 2025. * The company completed 33 new drill holes (9.3 thousand feet of core) at Brook Mine in Q1, bringing total drilling since program start to 174 holes and 35 thousand feet of core. Four drill rigs remain on-site with drilling expected to continue through year-end. * Construction of the pilot plant building at Brook Mine is on track for completion in late summer 2026, with interior equipment installation starting in fall 2026 and full pilot operations launching in 2027. The coal storage facility at the site is expected to be fully completed by the end of May 2026. * The company has fitted out an internal geometallurgical laboratory at its Wyoming ICAM facility to reduce reliance on overcapacity external third-party labs, with internal testing ramping up in early Q2 2026 to speed up turnaround times. * Offtake discussions and non-dilutive third-party financing efforts are actively progressing with domestic and international counterparties, with announcements expected once transactions are finalized. - Corporate Reorganization * Ramaco has implemented a new holding company structure with three separate operating entities to unlock shareholder value by separating distinct assets with different capital market and operating profiles: 1. *Ramaco Royalty*: Holds all mineral reserves, infrastructure, intellectual property, and income-producing assets (including both coal and critical mineral reserves, prep plants, rail loadouts, and Brook Mine pre-development infrastructure). 2. *Ramaco Critical Mineral Resources*: Holds all production and sales operations for Brook Mine rare earths, critical minerals, and byproduct thermal coal, mirroring the structure of Ramaco's eastern met coal business. 3. *Ramaco Refining*: Holds the Carbochlorination separation facilities that will process Brook Mine feedstock into finished rare earth and critical mineral products. * The reorganization will be fully completed in the second half of 2026, and provides future optionality for separate valuation of the distinct business lines.

Guidance

- All core 2026 full-year operational guidance for production, tons sold, and cash costs is reaffirmed with no changes from prior guidance. - Q2 2026 shipments are guided to between 900 thousand and 1 million tons, up from Q1 levels as weather-related logistics disruptions are resolved, and the Great Lakes business returns to full operation. - Q2 2026 cash costs are expected to come in at the higher end of the full-year guidance range, driven by elevated diesel fuel prices stemming from the Iranian conflict, which are projected to add $4 per ton to mining costs compared to early 2026 levels. Management expects fuel prices to subside in the second half of 2026.

Segment performance

1. **Metallurgical (Met) Coal Segment**: Q1 2026 production saw modest year-over-year declines amid disciplined production management in a weak pricing environment. Cash costs came in at $98 per ton, placing Ramaco in the first quartile of the U.S. Central Appalachian met coal cash cost curve. Q1 cash margins were $16 per ton, down $24 per ton year-over-year, driven by a lower realized price of $114 per ton (down from $138 per ton in Q1 2025). Adjusted EBITDA for the quarter was negative $1.8 million, compared to positive $10 million in the year-ago period. 90% of planned 2026 annual production (at the guidance midpoint) is already committed, with 1.1 million tons of domestic sales committed at an average fixed price of $138 per ton, and 2.4 million tons of export sales split between 1 million tons at an average fixed price of $107 per ton and 1.4 million tons on index-linked pricing. As of quarter-end, 650 thousand tons of annual index-linked volume had already been shipped. Revenue contribution: ~55% of Q1 export tonnage went to Asia, with only ~15% of overall Q1 volume linked to premium low-vol (PLV) indices, while 25% of Q1 sales were domestic high-vol coal with pricing down 8.5% year-over-year. 2. **Critical Minerals (Brook Mine) Segment**: No commercial revenue generated in Q1 2026, as the segment remains in pre-commercial development. All activity is focused on engineering, permitting, and construction of pilot and pre-development assets, with all costs currently capitalized or expensed as development expenditure. Thermal coal is a byproduct of planned Brook Mine critical mineral mining, which is expected to offset mining costs once commercial operations begin.

Risks & headwinds

- The conflict in Iran has driven a sharp increase in diesel prices, from ~$2.50 per gallon at the end of 2025 to a peak of $5.45 per gallon in Q1 2026, adding $1.50 per ton to Q1 2026 coal production costs, and adding $4 per ton to ongoing mining costs at current price levels; higher fuel costs also increase third-party transportation costs for raw and clean coal. - Raw tungsten prices have increased 350% in 2026 due to Chinese export controls, doubling the cost of mining bits and tools for underground operations; the company is working with suppliers to mitigate these increases. - Global met coal pricing (especially U.S. high-vol met coal) remains at unsustainably weak levels, pressuring near-term margins and cash flow. - Domestic and international third-party testing labs remain capacity-constrained amid broad industry activity in critical minerals, creating potential delays for testing and development work; the company's new internal lab is expected to alleviate this bottleneck. - Brook Mine commercial development is dependent on securing offtake agreements and third-party non-dilutive financing, which have not yet been finalized.

Analyst Q&A

• Q: Analysts asked how restarting idled low-vol operations will impact full-year cost trends, noting concerns that these could be higher-cost assets. /

  A: Management explained that the restarted Laurel Fork mine is only a temporary staging operation to hire and train workers for the upcoming Berwind mine expansion, producing only a small volume of coal from April through August 2026, and will add just ~$1 per ton to overall low-vol segment costs. Berwind, which will be fully ramped after ventilation upgrades are complete in August 2026, is one of the company's lowest-cost operations, so it will not negatively impact long-term cost structure.

• Q: An analyst asked about the most sought-after critical mineral products from Brook Mine that are leading offtake discussions, and what M&A opportunities the company is pursuing given its strong balance sheet and industry distress. /

  A: Management said the most active near-term interest has centered on gallium and scandium, and the company was pleased with the level of interest in scandium, which has drawn past criticism of Ramaco's project portfolio. For M&A, Ramaco prefers acquiring assets over large transformative mergers, and the current market has become more target-rich with distressed assets available at opportunistic prices; the company is actively evaluating potential acquisitions that fit its strategy, particularly for low-cost met coal reserves, similar to its prior purchase of reserves from Coronado.

• Q: An analyst asked for clarification on the strategic rationale for Ramaco's new three-entity corporate reorganization, specifically why refining is split from critical mineral mining. /

  A: Management explained that the reorganization is designed to unlock shareholder value by separating distinct businesses with very different operating profiles, capital requirements, and market valuation multiples, which are currently discounted in the current combined conglomerate structure. Splitting mining from refining allows separate financing options for the high-capital refining business, creates clearer standalone assets that can be valued separately by the market, and positions Ramaco Royalty as a unique royalty vehicle owning both coal and critical mineral reserves and the company's valuable Carbochlorination intellectual property.

• Q: An analyst asked what the breakdown of 2026 CapEx is between sustaining coal CapEx, growth coal CapEx, and critical mineral CapEx, and how much additional low-vol capacity can be added given current plans. /

  A: Management said 2026 total CapEx is split roughly into $45 million in sustaining/maintenance CapEx for coal operations, ~$20 million in growth CapEx for low-vol coal projects (Berwind third section and Maben rail loadout), with the remainder allocated to Brook Mine critical mineral development. The Maben complex already has approved permits for a 1.5-million-ton low-vol deep mine expansion, and management will make a final investment decision once market pricing signals are clear enough to confirm strong demand after ramp-up.