Ramaco Resources, Inc. Q3 FY2026 earnings call

• Met Coal Market & Pricing: Global met coal markets are improving, with Australian Premium Low Vol (PLV) prices up ~23% since early 2026 and U.S. High Vol A prices up ~26%. Fourth-quarter spot prices are up ~9% versus Q3 averages. The company has secured 1.7 million tons of 2027 domestic business at an average price of $139/ton, representing over $65 million in adjusted EBITDA.
• Production Growth & Infrastructure: Ramico is transitioning to a low-volatility (low vol) production focus. New sections at Berwyn and Mabin will add nearly 1 million annualized low vol tons in 2026. The new Maven rail loadout facility, commissioning in early 2027, is expected to reduce trucking costs by roughly $20 million annually. Medium-term capacity aims for ~6 million tons via Elk Creek (2.5M tons) and low vol complexes (3.2M tons), with optionality for another 1.5M tons.
• Critical Minerals Development: The Brook Mine project is fully financed through the pilot plant stage. Third-party carbochlorination testing showed exceptional recoveries (e.g., 97% for scandium/gallium/germanium, 92% for neodymium/praseodymium). Construction of the pilot plant structure is expected to complete in early 2027, with pre-feasibility studies starting in Q1 2027 and pilot completion targeted for H2 2027.
• Commercial Strategy: Three non-binding MOUs signed in August cover Gallium (with Indium Corp and Bedrock Semiconductor) and e-waste sourcing (with RoboLoop). The strategy focuses on becoming a domestic midstream oxide provider, targeting semiconductor and aerospace markets, while exploring secondary feedstocks like e-waste to improve economics.
• Legal Victory: Ramico won a favorable $30 million jury verdict against Chubb Insurance regarding a 2018 silo failure and expects to recoup attorney fees.

The company operates two primary segments: Met Coal and Critical Minerals. The Met Coal segment is the established revenue-producing platform, generating approximately $25 million in Adjusted EBITDA year-to-date despite depressed pricing environments. It accounts for the vast majority of current revenue, with significant forward visibility through secured 2027 domestic contracts. The Critical Minerals segment is currently in the development phase, contributing negligible to no revenue at this stage. Financial performance here is characterized by capital expenditure and operating expenses rather than income, with full-year 2026 CapEx expected to be roughly $25 million to advance the Brook Mine project toward a Final Investment Decision (FID).

• 2026 Cash Costs: Increased from $96–$103 per ton to $101–$103 per ton due to inflationary pressures, specifically diesel prices rising from $2.50 to $5.85 per gallon.
• 2026 Production & Sales: Production guidance lowered by 200,000 tons; sales guidance lowered by 100,000 tons at the midpoint, reflecting discipline in the high-vol market.
• 2026 Capital Expenditures: Increased by roughly $5 million at the midpoint, primarily because the first underground section at Mabin is now expected to come online in 2026 rather than Q1 2027.
• 2027 Outlook: Management does not provide formal numerical guidance but highlights that low vol production will increase by almost 1 million tons annualized. They anticipate strong margin expansion in Q4 2026 and FY 2027, with Q4 2026 adjusted EBITDA expected to exceed the cumulative total of the first three quarters. Formal 2027 guidance is expected in December after the board meeting.

• Cost Inflation: Significant headwinds from rising diesel prices ($3+ per ton impact) and general mine cost inflation, though partially mitigated by long-term vendor agreements.
• Market Volatility: Exposure to global steel demand fluctuations, particularly Chinese steel exports which cap seaborne met coal price upside, and potential delays in Indian blast furnace capacity additions.
• Operational Delays: The critical mineral pilot plant timeline has shifted to H2 2027 due to late installation of fume hoods in the internal lab, potentially delaying bench-scale results needed for pilot design.
• Execution Risk: Dependence on successful ramp-up of new underground sections at Maven and Berwyn, and the timely completion of the Maven rail loadout to realize cost savings.

Q: Goldman Sachs asked about the direction of met coal pricing into 2027 and cost mitigation strategies for freight/diesel. / A: Jason Fanning indicated optimism for 2027, citing a flattening forward curve around $255/ton for PLV. He noted that while export netbacks track indices, freight differentials remain a headwind. Mitigation involves booking fixed freight rates where possible and working with partners who can hedge. Chris Blanchard added that mine-level diesel costs are difficult to mitigate, but they are using long-term agreements for other supplies to offset some inflation.

Q: Texas Capital inquired about the final size of the 2027 domestic book and shipment cadence. / A: Jeremy Sussman clarified that the 1.7 million tons secured so far may grow to nearly 2 million tons with remaining specialty shipments, adding value. Regarding cadence, he explained that excess inventory (~600k tons) will likely be sold down in the first half of 2027, helping working capital, while new low vol production ramps in the second half, balancing the mix.

Q: StoneX asked if Ramico plans to sell directly to China and how CapEx expands post-2027 for critical minerals. / A: Randy Atkins stated Ramico does not sell directly to China but views China's import allocations as positive for other Asian markets by displacing other producers. For critical minerals, he emphasized that the $25 million 2027 CapEx covers only the pilot/pre-FID phase. Refinery financing is a separate, larger project to be structured later, potentially involving government partnerships or dropping the asset into a separate entity.

Q: B. Riley sought clarification on whether the $25 million figure included SG&A and asked about the timing of a potential spin-off/separation. / A: Jeremy Sussman confirmed the $25 million is strictly CapEx for the pilot plant, PFS, and drilling; OPEX/SG&A is separate and expected to continue at similar rates. Randy Atkins addressed separation, stating they would not orphan the business but would time any capital market transaction or spin-off to coincide with robust commercial milestones and defined refinery sizing, likely several years out when revenue recognition begins.

Q: Northland Capital Markets asked about recovery results context and 2027 cost trends excluding diesel. / A: Mike Woloschuk explained that the new flow sheet achieves significantly higher extractions for scandium, gallium, and germanium (up ~20% vs previous flowsheets) and enables higher purity products. Jeremy Sussman noted that while diesel is a major variable, the shift toward more low vol production (which is costlier per ton) is offset by much stronger high vol price realizations, leading to expected margin expansion.