Ramaco Resources, Inc. Q4 FY2024 earnings call

• Met Coal Performance: Fourth quarter was strongest despite pricing headwinds. Controlled cost and volume, achieved record tons sold, cash costs under $100/ton, and record liquidity. Market headwinds from China steel dumping, but domestic steel HRC pricing increased. Supply side saw 20% drop in US met production since peak in 2024 Q2 due to high-cost producer issues. European customer interest in spot availability increased due to Ukraine and Poland mine events.
• Wyoming Project Updates: Rare earth project test data nearly back, expecting reports in April. Plan to start full-scale mining in July and pilot processing facility construction in fall. Received $6 million grant from Wyoming Energy Authority for pilot plant.
• Operational Milestones: Completed Maven plant construction, reducing net trucking costs by over $20 per clean ton. Month-over-month productivity increases in Q4. Continued development projects at Maven and Berwind complexes, with permits unwinding.

Met Coal: Fourth quarter was the strongest of the year financially and operationally. Q4 adjusted EBITDA was $29 million compared to $24 million in Q3. Q4 net income was $4 million compared to breakeven in Q3. Class A EPS showed a $0.06 gain in Q4 versus a $0.03 loss in Q3. Cash costs declined $6 per ton sequentially and tons sold increased by almost 100,000 tons. Cash margins remained at $33 a ton, down just $2 a ton since Q2 despite a $30 drop in met coal prices. Ramaco's cash margins were almost 50% higher than the next highest public peer in Central Appalachia for Q3 and Q4. Wyoming Operations: Rare earth and critical minerals project is moving forward. Almost all test data is back, expecting Fluor's preliminary technoeconomic analysis and Weir's update in April. Spent $10 million on the project. Received a $6 million matching fund grant recommendation from the Wyoming Energy Authority. Resource size estimated in the range of 1.7 million tons, increased from 1.5 million tons disclosed last year.

• Maintaining 2025 guidance except bumping up book tax rate to 25%-30%. Q1 2025 costs high due to extreme winter weather and flooding, with Q1 tons sold expected 850,000-950,000 and Q2 shipments up over one-third sequentially. Liquidity at year-end was $138 million, up over 50% year on year, with net debt to adjusted EBITDA at 0.5 times on a trailing twelve-month basis.
• Maintaining production, sales, cash cost, and CapEx guidance with a spread due to market uncertainty. If market conditions persist, may come in towards lower end of metrics by trimming higher-cost production.

• Market headwinds such as China dumping steel, leading to lower met coal prices. Mine outages in US and Europe causing supply tightening. Extreme weather in Central Appalachia impacting operations in Q1.
• Uncertainty in rare earth project timelines due to delays in test data, and market uncertainty for met coal affecting profitability.

Q: Nick Chile asked about the reduction in unit costs, potential reversal of cost reductions with price recovery, and capital intensity of growth projects.

A: Chris Blanchard said cost reduction was from moving to thicker horizons, and unit costs related to sales would reverse with price increase. Jeremy Sussman and Randy Atkins discussed growth CapEx, with guidance $60M-$70M, split between Elk Creek and Berwind, and needing market clarity for new capital.

Q: Chris Lefenma asked about capacity coming back online and permanence of supply reductions.

A: Randy Atkins said much capacity may be permanently gone due to mature geology in Central Appalachian Basin, and fresh geology at Ramaco's mines is an advantage.

Q: Nathan Martin asked about Maven prep plant trucking cost savings, completion timeline, and cost per ton guidance.

A: Chris Blanchard explained trucking cost savings from raw to clean, project under consideration not complete this year, and cost savings with rail project. Jeremy Sussman discussed using forward curve for cost per ton guidance.

Q: Nathan Martin also asked about capital spending prioritization, M&A, and rare earth pilot plant CapEx.

A: Randy Atkins said open to opportunistic M&A, modest growth CapEx for Maven and Berwind, and pilot plant CapEx included in $60M-$70M range.