Third Quarter 2026 Results - RAMACO RESOURCES INC

Explicit Guidance:

• Full-Year 2026 Costs: Increased cash cost guidance from $96–$99/ton to $101–$103/ton due to diesel inflation.
• Full-Year 2026 Production: Lowered midpoint by 200,000 tons; Sales: Lowered midpoint by 100,000 tons to reflect high-volume market discipline.
• Full-Year 2026 CapEx: Increased by roughly $5 million (midpoint) to accelerate the first underground section at Mabin to 2026 start-up.
• 2027 CapEx (Critical Minerals): Expected spend on the Brook Mine pilot plant and pre-FID engineering capped at ~$25 million.
• 2026 Adjusted EBITDA: Q4 2026 expected to exceed the cumulative total of the first three quarters combined.

Business-Segment Outlook:

• MetCoal Production & Capacity:
  • Berwyn: Third and fourth sections expected to be in production between now and 2028; target annualized 1.5 million tons of low-vol coal.
  • Mabin: First underground section coming online end-2026; second section targeted for Summer 2027; remaining third and fourth sections targeted for 2028–2029; potential annualized capacity of 1.7 million tons.
  • Total Portfolio: Medium-term target of ~6 million tons total production (2.5M Elk Creek + 3.2M low-vol); option to add 1.5 million tons high-vol from Russell County (Knox Creek), pushing total capacity to ~8 million tons.
  • Maven Rail Loadout: Expected to commission in early Q1 2027, reducing trucking costs by ~$20 million/year.
• MetCoal Sales & Pricing:
  • 2027 Volume: Secured 1.7 million tons at ~$139/ton; potential to reach <2 million tons total with specialty shipments.
  • Inventory De-risking: Excess inventory of ~600,000 tons to be normalized by mid-2027, providing a ~$75 million working capital tailwind.
  • Pricing Trends: Australian PLV up 23% YTD; US HVAL up 26% YTD; Q4 spot prices up 9% vs Q3 average.
• Critical Minerals:
  • Brook Mine Pilot Plant: Construction expected complete early 2027; final completion and bench-scale testing to be achieved in H2 2027.
  • Feasibility Study: Hatch pre-feasibility study (PFS) to commence Q1 2027 and complete late 2027.
  • Recovery Rates: Validated carbochlorination results showing 97% recovery for scandium/gallium/germanium; 92% for Nd/Pr; 96% for Y; 97% for Dy/Tb.
  • Refinery Strategy: Capital requirements to be optimized based on market fit; Final Investment Decision (FID) expected late 2027 contingent on financing (potentially via separate entity drop-down).

Market and Competitive Outlook:

• Coal Market Structure: Low-vol supply is structurally tighter than high-vol; steelmakers in India rely on low-vol for stronger coke blends.
• Demand Drivers: India forecast to import 94 million tons in 2027 (up from 90M); US domestic steel fundamentals remain strong with hot roll coil prices >$1,300/ton.
• China Factor: China's plan to import 10M tons of US coal expected to absorb supply from other producers, indirectly benefiting Ramico via non-China Asian markets; Ramico not targeting direct sales to China in 2027.
• Pricing Dynamics: HVAL holding >$180 since September; forward curve for PLV flattening at ~$255; pricing floor considered firmer than Q3.
• Competitive Position: Shift in portfolio from high-vol to low-vol to capture premium margins in India and domestic markets.

Macro / Industry Outlook:

• Diesel Costs: Current price $5.85/gal vs $2.50 at start of 2026; estimated $3–$4/ton cost headwind for 2026.
• FX/Trade: No direct mention of FX impact, but freight and bunker costs remain key macro variables; mitigation via fixed-differential deals and hedging.
• Regulatory/Supply Chain: Shift toward domestic midstream capability due to lack of US refining/separation capacity.

Strategic Initiatives:

• Capacity Additions:
  • Berwyn/Mabin Expansion: Targeting ~1 million annualized low-vol tons added in 2026 alone; total ~6M–8M tons medium-term capacity.
  • Laurel Forkbine: Restart expected to contribute to 1 million+ tons of low-vol annual capacity by end-2026/early-2027.
• M&A/JV: No M&A mentioned; Offtake MOUs signed with Indium Corp, Bedrock Semiconductor (Gallium), and RoboLoop (e-waste); moving toward definitive agreements.
• Secondary Feedstocks: Sourcing ITAD, smelting scrap, and semiconductor scrap to blend with ore and improve project economics.
• Legal Settlement: Secured $30 million jury verdict against Chubb Insurance (2018 Elk Creek incident); attorney fees expected to be recouped.

Risks and Headwinds to Outlook:

• Commodity Price Volatility: Continued uncertainty in global coal prices; Chinese steel exports capping seaborne price upside.
• Cost Inflation: Persistent diesel prices and mine inflationary pressures (rock dust, roof bolts) if not offset by efficiency.
• Project Execution: Pilot plant commissioning delayed from mid-2027 to H2 2027 due to late fume hood installation; potential delays in PFS or refinery financing.
• Market Mix: Reliance on low-vol pricing assumptions; potential for high-vol market oversupply if global demand slows.
• Financing: Refinery construction depends on external capital market transactions or government funding; no revenue recognition from critical minerals for several years.

Management Tone on the Future:

• Confidence: High confidence in the "inflection point" for 2027, citing dual-platform stability (cash-generative coal + development minerals).
• Contrarian View: Belief that current stock market levels do not reflect long-term value; anticipates stock appreciation as positive news absorbs.
• Hedges: Guidance excludes formal 2027 volume/pricing targets pending board review in December; FID timing for refinery is flexible based on financing.
• Strategic Shift: Transitioning from "building inventory" to "monetizing inventory" to fund growth; emphasis on cost control despite macro headwinds.

Miscellaneous:

• Liquidity: Ended Q3 2026 with $375 million liquidity ($233 million cash), up 38% YoY.
• Share Structure: ~17 million shares shorted (40% of free float).
• Dividends/Buybacks: No formal guidance provided for dividends or buybacks in this transcript.
• Tax Rate: No specific forward tax rate guidance mentioned.