Ramaco Resources, Inc. Q2 FY2024 earnings call

• Randy Atkins noted that second quarter results were better operationally and financially despite global coal pricing softness. Met coal production was a record 901,000 tons, up 7% due to better productivity, geology, and labor availability. Cash costs decreased 8% to $108 per ton. - Progress on growth projects: At Elk Creek, adding the Ram 3 surface highwall mine and a third section at the Stonecoal Alma mine, ramping up as of June. At Berwind's Main mine, adding a third section starting in Q4. Maben complex prep plant expected to be fully operational in fall, reducing trucking costs by ~$40 per ton. - Underground operations improved, with clean tons per foot up over 5% quarter-over-quarter. Labor market improved in Southern West Virginia, allowing start of third section at Stonecoal mine. - Progress on Brook Mine's rare earth project: Advancing chemical, metallurgical, and mineralogical testing of cores, working with Fluor Corporation on technoeconomic analysis, aiming to complete by year-end, with demonstration facility construction expected to begin mid-2025.

In the second quarter of 2024, Ramaco Resources' met coal operations saw record production. Second quarter met coal production was 901,000 tons, a 7% increase compared to the first quarter. Cash costs for met coal declined 8% to $108 per ton due to stronger production. The focus is on met coal operations, with no specific revenue contribution percentage provided.

• Maintained full-year 2024 guidance except for production and sales, which are reduced by 200,000 tons at midpoint to 3.8-4.2 million tons for production and 4.0-4.4 million tons for sales. - Anticipate third quarter shipments 900,000-1.05 million tons, sales to increase in Q4, exit year above 5 million tons per annum sales run rate. - Cash costs expected to be at or below $100 per ton by year-end. - Committed tonnage deferred some business into early 2025. - Book tax rate likely in high end of 20% - 25% range, cash taxes minimal.

• Global coal pricing softness, with US met coal indices down 25% since start of year. - Chinese steel overproduction and exports impacting pricing and demand in traditional markets. - Mine incidents affecting global supply. - Indian elections and monsoon season potentially impacting demand. - Potential tariffs on Chinese steel exports. - Tight labor market in Southern West Virginia and Southwest Virginia affecting operations.

Q: Nathan Martin asked about the update on low-vol production improvement and if it includes the fourth section of Berwind.

A: Jeremy Sussman said low-vol is tight, Maben underground expansion is in the medium-term outlook, and the fourth section of Berwind is an option to start next year.

Q: Nathan Martin inquired about Maben prep plant CapEx.

A: Jeremy Sussman explained that $3 million is for the purchase price, full-year CapEx guidance excludes this, with most spend already completed.

Q: Lucas Pipes asked about the cadence for Q3 and Q4 and tons in unacceptable cost range.

A: Chris Blanchard said Q3 and Q4 cash costs expected to be similar, low 100s, pushing to below 100 in Q4 with Maben cost savings; ~200,000-300,000 tons in unacceptable range, redeployable quickly.

Q: Lucas Pipes asked about the product targeted from the Brook Mine demonstration facility.

A: Randy Atkins said the facility will target a concentrate of rare earths and critical minerals like germanium and gallium, with plans to separate into individual elements as processing advances.