Third Quarter 2026 Results - RAMACO RESOURCES INC

Financial Performance:

• Ended Q3 2026 with $375 million in liquidity (up 38% YoY) and a cash balance of $233 million.
• Managed costs despite inflationary pressure (diesel rose from $2.50 to $5.85/gallon), with 2026 cash costs raised to $101–$103/ton from $96–$99/ton.
• Recognized a $30 million jury verdict against Chubb Insurance regarding a 2018 silo failure; attorney fees to be determined.
• Full-year 2026 adjusted EBITDA expected to be lower in Q1–Q3, with Q4 expected to exceed the cumulative total of the first three quarters.
• Met coal segment generated ~$25 million in YTD EBITDA, nearly covering maintenance CapEx despite depressed pricing in H1.
• Met coal inventory excess of ~600,000 tons (worth ~$75 million at current prices) provides a working capital tailwind as it sells into higher-priced markets.

Guidance and Future Outlook:

• 2027 production guidance increased with anticipated ~1 million tons/year of additional low-vol production capacity.
• 2027 domestic sales book stands at 1.7 million tons at an average price of $139/ton; total domestic volumes expected to approach 2.0 million tons including specialty shipments.
• 2027 CapEx for the Brook Mine critical mineral project capped at $25 million, covering pilot plant and PFS work leading to a Final Investment Decision (FID).
• Full-year 2027 sales guidance not formally issued yet; Q4 sales mix expected to mirror Q3 (approx. 35% domestic, 40% Asia).
• Formal 2027 financial guidance expected after the December board meeting.
• Maven rail loadout expected to reduce trucking costs by ~$20/ton starting January 2027.

Business Segments and Product Lines:

• MetCoal: Successfully pivoting from high-vol to low-vol production; Berwyn Section 3 and Mabin Section 1 expected online by year-end, adding ~600k tons annualized low-vol. Mabin and Berwyn aim for ~3.2 million tons low-vol capacity by 2028–2029. Elk Creek high-vol production moderated to balance supply.
• Critical Minerals: Carbochlorination testing shows exceptional recovery rates (97% for Sc/Ga/Ge, 92% for Nd/Pr, 96% for Y, 97% for Dy/Tb). Pilot plant construction underway; commissioning delayed to H2 2027 due to lab fume hood installation.
• Offtake & Partnerships: Signed three non-binding MOUs: Indium Corp and Bedrock Semiconductor for Gallium; RoboLoop for e-waste feedstock. Continued discussions for Rare Earths, Scandium, Alumina, and Silica.
• Logistics: Norfolk Southern batchway loadout commissioning expected Q1 2027; Burland ventilation upgrades complete, with Section 3 coming online in December.

Market and Competitive Landscape:

• Met coal prices strengthening: Australian PLV up 23% YTD; US HVAL up 26% YTD; Q4 spot prices up 9% vs Q3 average.
• Low-vol supply structurally tighter than high-vol; focus on serving premium segments in India and growth markets.
• China's demand signals mixed; increased exports to non-China Asian markets expected as China absorbs ~10M tons of imports.
• Stock market sentiment remains weak (critical mineral stocks down ~55% from peaks), but management views current prices as non-reflective of long-term value.
• Short interest remains high (~40% of free float), creating potential for multiple expansion on positive news.

Risks and Challenges:

• Cost Inflation: Diesel prices remain a significant headwind ($3–4/ton impact); mitigation limited to vendor negotiations and hedging freight.
• Market Dynamics: China's steel exports cap global price upside; high-vol market remains oversupplied.
• Project Delays: Critical mineral pilot plant commissioning delayed to H2 2027; however, management does not expect this to hinder customer engagement.
• Capital Constraints: Refinery construction financing is a separate project; the company must raise capital for midstream capabilities in the absence of US domestic refineries.
• Operational Risks: High-vol price discipline requires continued inventory management and selective production idling.

Management Commentary and Tone:

• Management expressed a "contrarian comfort" and strong confidence in the dual-platform strategy (cash-generating coal + high-growth critical minerals).
• Tone was optimistic regarding 2027 market inflection points, emphasizing margin expansion and cost control despite macro headwinds.
• Emphasized the strategic necessity of building domestic midstream refining capability to capture value.
• Confident in the 2026 earnings trajectory, noting Q4 EBITDA outperformance.

Analyst Questions and Answers:

• Pricing Outlook: Jason Fanning expects 2027 pricing to be higher than current levels, with PLV forward curves flattening at healthy levels (~$255); not a flatline environment.
• 2027 Domestic Volume: Confirmation that total 2027 domestic sales will likely exceed 2 million tons (1.7m base + ~200k specialty), improving realized prices.
• Shipment Cadence: Inventory drawdown expected in H1 2027, transitioning to new low-vol production ramp-up in H2 2027.
• CapEx Clarification: Jeremy Sussman clarified the $25M 2027 figure is CapEx only (pilot, PFS, drilling); OpEx remains separate but manageable.
• Business Separation: No immediate plan to spin off the critical mineral business; any separation will wait until the project basket is defined and a robust book of business is secured.
• Recovery Results: Mike Wolachuk noted the new flow sheet offers ~20% higher recovery on scandium, gallium, and germanium compared to previous methods, with potential for higher purity products.

Other Key Points:

• Ramico views the current stock market decline as an opportunity, citing its strong balance sheet and dual-revenue model as a stabilizer against volatility.
• The company has "fully financed" development up to the FID for the refinery, with a focus on optimizing the refinery size to match capital requirements.
• The company is actively sourcing secondary feedstocks (e-waste) from ITAD firms, smelting scrap, and semiconductor facilities to improve project economics.
• A total of 200,000 tons of Q4 business was signed at favorable margins with domestic steel mills to mitigate counterparty credit risk.