Ramaco Resources, Inc. (METC) Earnings

Management highlights

**Critical Minerals Developments** - Released the long-awaited Hatch Conceptual Study for the Brookmine project, shifting strategy to adopt the proven commercial carbochlorination processing method, which enables extraction of >90% of targeted critical minerals and turns the company into a potential large-scale refinery operator. - The Brookmine project is scalable: the study evaluated two plant feed levels of 1.8 million tons and 3.5 million tons of feedstock per year, with estimated project NPV of $3.4 billion to $8 billion and average adjusted EBITDA of $600 million to $1.3 billion, up substantially from 2025 estimates, not including upside from e-waste co-processing. - Pilot plant construction is on track to be completed by the end of 2026, with full operations starting in 2027. The company's internal analytical lab is now operational, and infill drilling is ongoing to upgrade resource confidence from inferred to indicated to support the 2027 pre-feasibility study. - Offtake outreach is active: over 30 NDAs have been executed with potential counterparties, and discussions are ongoing for all projected products, including with U.S. government agencies for strategic supply chain needs. **Metallurgical Coal Strategy and Operations** - Approved a $25 million capital investment for the first two underground sections at the Maven low volatile coal complex, adding 600,000 tons of annual production at full capacity by the end of 2027, with total annual production from Maven reaching 1 million tons and optionality to add a further 600,000 tons. - The company is growing low volatile production at Berwyn as well, targeting a combined 3 million tons of annual low volatile production from Maven and Berwyn, for a total of over 6 million tons of total annual production (up from ~4 million tons currently), reaching 50% low volatile in the overall production mix. - Safety performance improved significantly year-over-year, with a 54% reduction in the total reportable incident rate, driven by lower workforce turnover during the market downturn. - Proactively idled one high volatile section at Elk Creek to reallocate labor and equipment to higher-margin low volatile operations, reducing capital maintenance spending. **Balance Sheet and Capital Allocation** - Repurchased more than 8% of outstanding Class A shares (≈5 million shares) for $66 million in 2026, reflecting management's view that the stock is undervalued. - Ended Q2 2026 with over $400 million in liquidity after share buybacks, plus 1 million tons of coal inventory, providing optionality to invest in both coal and critical minerals development.

Guidance

- Full year 2026 total coal production guidance is revised downward to 3.6 to 3.9 million tons, from the prior range of 3.7 to 4.1 million tons. - Full year 2026 coal sales guidance is revised downward to 4.0 to 4.3 million tons, from the prior range of 4.1 to 4.5 million tons. - Full year 2026 cash cost per ton sold guidance is maintained at a midpoint of $97.5, within the range of $96 to $99 per ton, adjusted from the prior range of $95 to $100 per ton. - Full year 2026 capital expenditure guidance is increased to $92 to $97 million, from the prior range of $85 to $90 million, reflecting accelerated spending on the Maven underground low volatile project approved by the board. - Third quarter 2026 coal shipments are expected to be between 950,000 to 1.1 million tons, with cash costs expected to trend toward the higher end of the full year range due to continued elevated diesel prices from Middle East tensions. - Upcoming key milestones for the Brookmine project: an e-waste co-processing report in fall 2026, an FK1300 compliant technical report summary by the end of 2026, and a full pre-feasibility study in spring 2027.

Segment performance

1. Critical Minerals Segment: The Brookmine project completed the Hatch Conceptual Study for the carbochlorination processing method, positioning it to move from upstream feedstock development to a potential large-scale midstream refinery. It is estimated that 75% of the segment's projected revenue will come from semiconductor industry critical minerals, including gallium, germanium, high purity alumina (HPA) and high purity silica (HPS), with the remaining 25% from rare earth elements and scandium. No revenue was generated in Q2 2026, as the project remains in pre-development. 2. Metallurgical Coal Segment: In Q2 2026, the segment reported realized coal prices of $116 per ton (down 6% year-over-year), cash cost per ton sold of $99 (fourth consecutive quarter sub-$100), cash margins of $17 per ton (down from $20 year-over-year), and adjusted EBITDA of $6 million (down from $9 million year-over-year). High volatile metallurgical coal accounts for ~75% of current production, while low volatile metallurgical coal contributes ~25% of current production, with plans to grow low volatile's contribution to 50% of total annual production in the medium term. Low volatile coal achieves roughly double the cash margins of the company's overall Q2 average margins.

Risks & headwinds

- Ongoing oversupply in the U.S. high volatile metallurgical coal market is weighing on pricing and margins, forcing production cuts at higher-cost operations. - Diesel prices are highly volatile, with a 33% quarterly increase in Q2 2026 and renewed price increases driven by Middle East geopolitical tensions adding approximately $3 per ton to production costs in 2026. - Large, customized power transformers required for the Brookmine refinery have long lead times of 2-4 years due to limited manufacturing capacity and competition from AI data center and renewable energy projects, which has extended the Brookmine project timeline. - Third-party laboratory testing remains a bottleneck for accelerating metallurgical testing of the Brookmine deposit, slowing optimization of the carbochlorination process. - The Brookmine project requires large capital expenditures that are still more than two years away, and financing arrangements are not yet finalized, with project economics dependent on successful offtake contracting and engineering optimization.

Analyst Q&A

• Q: When can we expect meaningful MOU offtake announcements for Brookmine, how do customers view the project timeline, and what is the impact of upcoming Chinese rare earth export control expiration? /

  A: Management expects to announce additional MOUs by the end of 2026. Customers understand the project requires time to develop, given China’s 30-year head start in critical mineral supply chains, and are motivated to secure long-term domestic supplies. The Chinese government has already demonstrated willingness to use critical minerals as a geopolitical weapon, so even without an imminent export ban, private customers are actively seeking alternative non-Chinese supply. A final investment decision is not expected until after the 2027 pre-feasibility study is completed, with more detailed discussions likely by next summer.

• Q: How will the 75% revenue shift to semiconductor-linked critical minerals at Brookmine happen, and is this a technical outcome or a strategic choice? /

  A: This shift is primarily a result of the new carbochlorination flow sheet, which unlocks value from the deposit’s unique geology that was not captured by previous processing methods. Carbochlorination delivers much higher extraction rates for gallium, germanium and other semiconductor-grade minerals hosted in the deposit’s kaolinite clay, while also producing marketable HPA and HPS as byproducts. The flow sheet uses proven commercial technology already used in the titanium industry, and the expanded product basket makes the project economically viable.

• Q: What are the potential benefits of co-processing e-waste at Brookmine, and how material is this upside? /

  A: The process can accept e-waste residue left after precious metal extraction, which is high in gallium and germanium, and requires minimal process modifications. Even small amounts of e-waste in the feed blend can significantly boost production of high-value minerals and improve project financials. Management will publish an interim study on e-waste economics by the end of 2026, confirming that the upside is expected to be material for NPV, IRR, margins and cash flows.

• Q: With the stock trading below recent buyback prices, will the company continue repurchasing shares, and how does this balance with capital needs for existing and new projects? /

  A: The board approved a $100 million share buyback program, and the company has spent roughly two-thirds of the authorization to date, retaining remaining dry powder for further opportunistic repurchases. Management balances buybacks with the $25 million capital spend for the Maven low volatile expansion, prioritizing balance sheet returns alongside long-term investment in growth assets, with the strong $400 million+ liquidity position supporting both strategies.

• Q: Will Brookmine definitive offtake agreements require pilot plant sampling first, or can they be signed before samples are available? /

  A: MOUs can be signed in the coming weeks and months, well before pilot plant samples are produced, which is standard practice for the critical minerals sector. All agreements will include contingencies for successful quality testing from the pilot plant, and management expects to progress significant offtake and financing arrangements well in advance of commercial production to de-risk the project.