Third Quarter 2026 Results - RAMACO RESOURCES INC

Financial Performance:

• Ended Q3 2026 with $375 million in liquidity (up 38% YoY) and a $233 million cash balance.
• Reported $30 million favorable jury verdict in the Q3 quarter regarding the 2018 Elk Creek silo failure, with potential recovery of attorney fees pending.
• Q3 operational costs remain in the top quartile of the U.S. cost curve despite inflationary pressures; diesel prices rose to $5.85/gallon, creating a >$3/ton headwind.
• Increased 2026 cash cost guidance to $101–$103 per ton (from $96–$99) and lowered full-year production/sales guidance by 200k and 100k tons respectively to reflect market discipline.
• Adjusted EBITDA for 2026 is expected to be significantly higher in Q4 than the cumulative total of the first three quarters combined.
• MetCoal segment generated ~$25 million EBITDA year-to-date, roughly covering maintenance capex despite depressed pricing environments.
• Holding ~600,000 tons of excess inventory (approx. $75 million working capital tailwind at current prices) to be sold down into 2027.

Guidance and Future Outlook:

• Expects 2027 adjusted EBITDA from domestic business to be meaningfully higher than 2026, supported by 1.7 million tons of domestic sales at an average of $139/ton.
• Low-vol production is projected to increase by nearly 1 million tons annually by 2027; total low-vol capacity aims to reach 6 million tons by 2028, with potential to expand to 8 million tons including undeveloped reserves.
• Q4 2026 capex guidance is $20 million midpoint, significantly lower than the $27 million average in previous quarters; full-year 2026 capex increased by $5 million due to earlier-than-expected Maven underground commissioning.
• 2027 CapEx for the critical mineral platform (Brook Mine) is capped at $25 million to reach Final Investment Decision (FID) on the refinery; refinery construction financing will be handled separately.
• Full-year 2027 production and cost guidance to be provided in early December following the board meeting.
• Management anticipates a material working capital tailwind in 2027 as inventory levels normalize and lower-cost low-vol production ramps up.

Business Segments and Product Lines:

• MetCoal:
  • 2026 sales book essentially complete with 4.2 million tons secured; 2027 domestic book stands at 1.7 million tons with additional specialty shipments potentially pushing domestic volume to ~2 million tons.
  • Maven complex first underground section expected to come online by year-end 2026, with rail loadout commissioning in Q1 2027 reducing trucking costs by $20/ton.
  • Berwyn complex adding 600k tons of annualized low-vol capacity by year-end; Laurel Fork mine restart expected to add another ~300k tons.
  • Shifting production mix toward low-vol and PLV indices, reducing exposure to over-supplied high-vol A markets.
• Critical Minerals:
  • Brook Mine project advancing with 4,500-acre permitted zone; resource confidence increasing from inferred to indicated status.
  • Carbochlorination testing yielded exceptional recovery rates: 97% for Sc/Ga/Ge, 96% for Y, and 92-97% for Nd/Pr/Dy/Tb.
  • Pilot plant construction underway; building structure completion expected early 2027, with full pilot commissioning targeted for H2 2027.
  • Pre-Feasibility Study (PFS) by Hatch expected to begin Q1 2027 and conclude later in the year.
  • Signed three non-binding MOUs: Indium Corporation (gallium), Bedrock Semiconductor (gallium nitride), and RoboLoop (e-waste recycling feedstock).
  • Exploring secondary feedstock streams from ITAD, smelting, and semiconductor scrap to enhance project economics.

Market and Competitive Landscape:

• MetCoal: Australian PLV prices up 23% YTD; U.S. HVLA up 26% YTD. Spot prices in Q4 are up 9% vs. Q3 average.
• Global steel fundamentals remain firm, with U.S. hot roll coils above $1,300/ton and major domestic steelmakers deferring maintenance or restarting blast furnaces.
• Low-vol supply is structurally tighter than high-vol, creating a premium for Ramico's growing low-vol portfolio.
• India remains a primary demand driver; Office of the Chief Economist forecasts Indian met coal imports rising to 94 million tons in 2027.
• Chinese steel exports (10M+ tons/month) may limit seaborne price upside, but China's 10M ton import allocation could net benefit other producers by absorbing tons otherwise destined for non-China markets.
• Critical Minerals: Lack of domestic midstream refining capability in the U.S. creates a strategic opportunity for Ramico's proposed refinery; demand driven by semiconductor and AI sector growth.

Risks and Challenges:

• Macroeconomic volatility and stock market weakness (Van Neck Rare Earth Index down 55% YoY; peers trading near 52-week lows).
• High inflation on diesel prices ($5.85/gallon) continuing to pressure operational costs.
• Delay in critical mineral pilot plant commissioning (shifted from H1 2027 to H2 2027) due to late arrival of fume hoods for the internal lab.
• Uncertainty in pricing for emerging critical minerals (e.g., Scandium, Germanium) as index transparency evolves; reliance on potential government/private financing for the refinery.
• Potential for limited near-term upside in met coal prices due to high Chinese steel exports.

Management Commentary and Tone:

• Tone is optimistic and contrarian; management views current stock levels as disconnected from long-term value, citing a 40% short interest as a potential catalyst for recovery.
• Emphasizes the stability of the dual-platform model (revenue-generating MetCoal + developmental Critical Minerals) compared to pure-play rare earth peers.
• Leadership expressed confidence in margin expansion for Q4 and 2027, driven by pricing strength and cost discipline.
• Highlighted the strategic necessity of building domestic midstream capacity to serve the U.S. semiconductor and defense supply chains.

Analyst Questions and Answers:

• Pricing 2027: Management expects flat-to-up pricing, citing forward curves showing PLV around $255/ton and improved market fundamentals.
• Cost Mitigation: Diesel costs are largely a macro variable; mitigation efforts include fixed freight deals, hedging, and long-term supplier agreements for non-diesel items.
• 2027 Volume Cadence: Expected to be front-loaded in H1 2027 due to inventory drawdown, followed by low-vol production ramp in H2.
• China Exports: No direct sales to China planned; management views China's import allocation as positive for net export volumes to non-China Asian markets.
• Critical Mineral Spend: 2027 spend capped at $25 million CapEx; OpEx (SG&A) will run similarly to current levels but total burn is controlled until FID.
• Business Separation: No immediate plan to spin off the critical mineral business; waiting for clearer product basket sizing and definitive offtake agreements to structure a capital market transaction.
• Recovery Rates: New flow sheet achieves ~20% higher extraction for key elements (Sc, Ga, Ge) compared to previous flow sheets, enabling higher purity products.

Other Key Points:

• Total 2027 production capacity could reach 8 million tons if high-vol production from Russell County reserves is developed alongside existing low-vol projects.
• Maven rail loadout is a key cost catalyst, projected to save $20 million annually starting Jan 2027.
• Management is actively testing third-party e-waste samples to integrate as feedstock for the critical mineral process.
• The company remains fully financed for the Brook Mine project up to the point of refinery FID without needing immediate external equity.