Ramaco Resources, Inc. Q3 FY2024 earnings call

Key Points

• The third quarter was the strongest operational quarter of the year, focusing on cost control and volume growth. Mine costs declined over 25% year-to-date.
• Elk Creek complex high vol additions were fully in production as of September, adding roughly 600,000 annualized tons. The Maben prep plant was commissioned on time and on budget in October, reducing trucking stock costs by ~$40 per ton. The Berwind mine's third section will add ~300,000 annualized low vol production before year-end.
• Rare earth and critical minerals business is progressing, with an array of experienced groups involved in testing, mine planning, and processing design. Working with Fluor, an initial techno-economic report is in advanced stages, expected to be presented to the Board in early December. Planning for a processing demonstration facility commencement in mid to late 2025.

The main segment is metallurgical coal. In the third quarter, Ramaco achieved record production of 972,000 tons, up 35% from Q3 2023, and record sales of 1.02 million tons, the first time exceeding 1 million tons in a quarter. Cash costs declined from $118 per ton in Q1 to $102 per ton in Q3, with a goal to be below $100 per ton in Q4. Mine costs have decreased by over 25% year-to-date, contributing to maintaining operating margins despite a 13% decline in the Australian benchmark price.

Forward-Looking Statements

• 2024 production and sales guidance reduced by 200,000 tons to 3.7-3.9 million tons and 3.9-4.1 million tons respectively.
• Cash cost guidance midpoint reduced to $106-$109 per ton sold, anticipating year-end run rate below $100 per ton.
• 2025 sales commitments at 2.7 million tons, with 1.6 million tons sold mostly to North American customers at an average fixed price of $152 per ton and 1.1 million tons to overseas customers.

Risks Discussed

• Decline in met coal prices due to Chinese steel overproduction and exports, leading to world steel companies cutting production and reducing met coal prices.
• Uncertainty in pricing improvement; absent meaningful immediate pricing improvement, production may continue to fall further in Q4.
• Dependence on external factors like tariffs in world markets and Chinese government fiscal stimulus measures for potential pricing improvement, which are not quick fixes.

Q: Discussion on variable costs, cost per ton, and confidence in sub-$100 run rate into next year A: Randy Atkins stated short answer is yes, with strong oncoming production in Berwind mine, Maben prep plant operational, and ability to exercise cost discipline.

Q: Volume expectations for 2025, supply situation in Central App, domestic pricing for 2025 A: Jeremy Sussman mentioned looking at Slide 15 for production trends. Chris Blanchard anecdotally noted ~10%-25% of Central App production is in distress. Jason Fannin said domestic pricing negotiations ongoing, with specialty coals volumes and price expected to bump up the average.