Ramaco Resources, Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Rare Earth Transition: Rapid progress since July groundbreaking, with a pilot plant under construction, a pre-feasibility study awarded to Hatch, a drilling program ongoing at the Brook Mine to expand resources, and a strategic terminal announced at the Brook Mine.
• Met Coal: Met markets remain challenged by Chinese steel oversupply. Production has been trimmed due to weak pricing, but strong liquidity allows a disciplined approach. Q3 financial results were similar to Q2 despite price declines.
• Operational Updates: The pilot plant in Wyoming is expected to start initial operations in mid-2026, with analytical lab equipment ordered. Drilling at the Brook Mine is ongoing to increase resource size, and metallurgical coal sales negotiations with North American steel mills are in progress.

Segment Performance

• Met Coal: Q3 adjusted EBITDA was $8.4 million compared to $9 million in Q2. Net loss in Q3 was $13 million vs. $14 million in Q2. Cash margins were $23 per ton in Q3. Full year 2025 production is now estimated at 3.7-3.9 million tons (down from 3.9 million previously), and sales at 3.8-4.1 million tons (down from 4.1 million previously). DD&A, tax rate, and idle expenses were revised.
• Rare Earths/Critical Minerals: The Brook Mine has significant rare earth deposits. Projected EBITDA from the rare earth platform in 2028 is over $500 million, with an NPV over $5 billion. A pilot plant is under construction, and a strategic critical minerals terminal was announced at the Brook Mine, providing fee-based terminal services and domestic supply chain resilience.

Guidance

• Met Coal: Adjusted full year 2025 production and sales guidance, with revisions to DD&A, tax rate, and idle expenses.
• Rare Earths: Projected EBITDA and NPV for the Brook Mine in 2028, with the pilot plant expected to start operations in mid-2026. The strategic terminal adds value with controlled marketing and visibility into the market.

Risks

• Market Risks: Chinese export restrictions and oversupply impact met coal prices. Need for long-term offtake contracts for the commercial rare earth plant due to market decoupling from China.
• Execution Risks: Uncertainties in pilot plant testing, engineering, and construction timelines. Need for reliable offtake agreements to proceed with the full commercial rare earth facility.

Question and Answer

Q: View on deals with U.S. allies and support for domestic industry A: Short-term agreements, need for domestic supply, government supportive but U.S. needs to ramp up domestic critical mineral supply.

Q: Extracting rare earth from coal A: Process involves solubilizing minerals from coal shales, flow sheet risk was extracting minerals, now focusing on downstream purification.

Q: Modularity of processing facilities and ramp-up A: Pilot plant design well underway, Zeton involved, Hatch and in-house expertise aiding ramp-up, 6-month operation to validate product quality.

Q: Unique aspects of Brook Mine vs other PRB assets A: Geological anomalies with high concentrations of critical minerals, volcanic activity contribution, potential for large resource beyond permitted area.

Q: Strategic Critical Minerals Terminal economics A: Relatively small CapEx, provides controlled marketing and visibility, acts as regional hub.

Q: Confidence in pilot plant timeline A: Off-site testing at Zeton facility, detailed engineering package, Hatch expertise, in-house knowledge aiding validation.

Q: Permitting timeline for Brook Mine A: Already meeting with federal and state groups, extensive permitted area with 30-year mine plan, ongoing drilling and mine planning.

Q: Opportunistic acquisitions in met coal space A: Looking for accretive assets, opportunistically acquiring reserves and infrastructure, recent acquisition of surface property near Brook Mine