Good day, ladies and gentlemen, and welcome to Ramaco Resources, Inc. Fourth Quarter 2024 Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one. To withdraw your question, please press star then two. Please note that this event is being recorded. I would now like to turn the conference over to the Chief Financial Officer, Jeremy Sussman. Please go ahead, sir.

Thank you. On behalf of Ramaco Resources, Inc., I would like to welcome all of you to our fourth quarter 2024 earnings conference call. With me this morning is Randy Atkins, our Chairman and CEO, Chris Blanchard, our EVP for mine planning and development, and Jason Fannin, our Chief Commercial Officer. Before we start, I would like to share our normal cautionary statement. Certain items discussed on today's call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent Ramaco's expectations concerning future events. These statements are subject to risks, uncertainties, and other factors, many of which are outside of Ramaco's control, which could cause actual results to differ materially from the results discussed in the forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made, except as required by law, Ramaco does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. I would also like to remind you that you can find a reconciliation of the non-GAAP financial measures that we plan to discuss today in our press release, which can be viewed on our website, www.ramacoresources.com. Lastly, I would encourage everyone on this call to go onto our website and download today's investor presentation. With that said, let me introduce our Chairman and CEO, Randy Atkins.

Good morning, and thank you for joining the call. On the met coal side of our business, the fourth quarter was clearly our strongest quarter of the year, both financially and operationally. This was despite continued market headwinds on pricing. We controlled what we could control, which were cost and volume. We also achieved three milestones for the quarter. We had record tons sold, we exited the year with cash costs well under $100 a ton, and we ended with record levels of liquidity. All in all, we had a very strong quarter. As a result of this solid performance, especially on cash mine cost, the fourth quarter margins remained at $33 a ton. This was down just $2 a ton since the second quarter, and despite an almost $30 drop in met coal prices between the second to the fourth quarters. Based on the results from all of our publicly traded peers in Central Appalachia, Ramaco's cash margins were almost 50% higher than the next highest public peer for both the third and fourth quarters. For that, I complement both our mine operations and sales teams. The year-long negative pricing environment, of course, stretched into the fourth quarter. China continued dumping its overproduction of steel to all world markets. This has hurt prices. Steel companies have cut back their own production and reduced the price they can pay for met coal feedstock. But while the overall steel demand remains weak, there are reasons to hope that the met prices may hopefully increase in the second half of the year. Indeed, we have already seen a bump in the domestic steel HRC pricing from less than $700 per ton in Q3 to $940 per ton today. Looking at the supply side, I am not sure the investing in the US…

Thank you, Randy. As you noted, fourth quarter 2024 operational results were the strongest of the year despite metallurgical coal indices being the weakest. One testament to all of the hard work of our mine employees is that cash margins have declined only $2 since Q2 while met coal indices have fallen $30 per ton. To get into specifics, Q4 adjusted EBITDA was $29 million compared to $24 million in Q3. Q4 net income of $4 million compared to breakeven in Q3. Class A EPS showed a $0.06 gain in Q4 versus a $0.03 loss in Q3. The primary reasons for the increase in both Q4 EBITDA and EPS were the $6 per ton sequential decline in our quarterly cash costs and the almost 100,000-ton increase in tons sold. On the cost front, we exited 2024 in the mid-nineties per ton range, which was the best among our publicly traded peers. We have always said that one of the pillars of Ramaco, going back to our preproduction days, was to operate in the first quartile of the US cost curve. Indeed, that is where we now stand. On the tons sold front, we exited the year at a 4.5 million ton per annum run rate for the highest level in company history despite challenging market conditions. Looking forward, we are maintaining all of our 2025 guidance other than bumping up our book tax rate to 25% to 30%. We would expect to pay minimal cash taxes in the current environment. In terms of our guidance, we are maintaining a meaningful spread between the low and high ends of production, sales, cash cost, and CapEx guidance. This is in large part due to current market uncertainty. To give you a little more color, if weak market conditions were to persist throughout…

Thanks, Jeremy. Thank you to everyone who joined us this morning. As we have discussed, it is nice to be able to talk about positive performance at the operations even if the underlying market was not as strong as we would all prefer. The fourth quarter operational performance and the improvement seen throughout the full year was the result of both the diligent efforts of the entire team and commitment to the development and growth plans we put in place late in the preceding year. 2024 was always projected to be a transitional year as we completed development mining in some of our older and thinner reserves at our legacy mines and transitioned into new areas with favorable geology throughout the year. Among the most significant milestones was the completion of the construction of our Maven plant, which ended the need to transport raw coal to our Berlin complex and reduced net trucking costs by over $20 per clean ton. Work continues at Maven completing final construction and optimization projects at the plant itself, but we are now processing on a regular schedule and working through the raw coal inventories we had stockpiled at the complex. Company-wide, while individual mines' production levels fluctuate normally as their conditions ebb and flow, we saw month-over-month increases in overall productivities throughout the fourth quarter. Some of this was attributable to easing employee turnover rates, as the overall coal markets have cooled from what was an extremely tight labor market in the Central Appalachian region. Continuing into 2025, the labor market is still tighter than its historical average and the reductions in the industry and the belt-tightening have not yet translated into an abundance of skilled coal miners available. Pricing continues to languish in its current range, however, on our growth plan, we are…

Thanks, Chris, and good morning, everyone. Today, I will share our views on coking coal and steel markets as well as our sales outlook. Global coking coal markets have continued to weaken from a pricing standpoint, with average coking coal index prices down approximately 6% since the start of Q1. If current index levels remain flat through the end of March, Q1 index averages will also be down 6% versus Q4's. As of March 10th, the U.S. East Coast Index values were $182.50 per ton for low vol, $179.50 per ton for high vol A, and $166.50 per ton for high vol B. Published U.S. East Coast price indices have drifted lower over the last two weeks. We believe these levels are not at all reflective of the supply side tightness in Central and Northern App due to recent bankruptcies, mine idlings, operational cutbacks, and the extreme weather experienced in much of the Central Appalachian coalfields during January and February. The Australian premium low vol index currently sits at $181 per ton, a level last seen briefly in September and before that not since mid-2021 during the China ban on Australian coal import. The second-tier low vol coking coal index is priced at $142.50 per ton and has significantly underperformed relative to premium grades. As a result, many Australian producers in Queensland and the broader region are experiencing severe margin compression. We believe the majority of mines in Queensland are operating at breakeven cash costs or worse. We are also witnessing profitability issues in the U.S. Producers with an inability to control higher costs are struggling. We have already seen a fair deal of idlings, bankruptcies, layoffs, and associated supply rationalization because of the continued poor pricing environment. Over the next few quarters, the dominant theme for smaller and less…

Thank you, sir. We will now be conducting the question and answer session. If you would like to ask a question, please press star and then one. If you are using speakerphone, please pick up the handset before pressing the keys. If at any time your question has been addressed and you wish to withdraw your question, please press star and then two. Our first question comes from Nick Chile from B. Riley Securities. Please go ahead.

Thank you, operator. Good morning, everyone. Guys, congratulations on the lower cash costs and the successful additions of production at Elk Creek in 2024. My first question, if I saw correctly, you have some seaborne volumes fixed at $111 per ton. And so I was hoping you could add some color around where you see netbacks today for your various qualities. I think you mentioned that current Atlantic indices are not fully reflective. So where do you see the highest return opportunities in the current market? Thank you very much.

Nick, on the $111 there, those are index-linked prices that have settled out for January and February. A large portion of that was from a couple of our Asian high vol contracts since rolled off. That is the impact you are seeing there in that fixed price number. To your question on where we see the highest returns in the current seaborne market, certainly as in the Atlantic, you know, we factor out the freight differential to the Pacific and then frankly, the near parity now with the Pacific indices versus the Atlantic indices, there is a differential there. In terms of current netbacks, just broadly speaking, where indices are at today, I think our high vol, you are in the $125 per net ton range back at the mine, with low vol up, I would say, $3 to $5 above that.

It is Jeremy here. If I could just add a couple of things to that. So on just on the $111 number, I would say about 40% to 45% of what was shipped in January and February on the export market was to Asia. That is about double sort of our normal Asian cadence. So I would say it is a little bit wonky from that perspective. But, you know, regardless of sort of the netbacks and whatnot, I mean, I think the key is, you know, our cash margins are, you know, call it $33 a ton. That is down $2 a ton since the second quarter. And you know, certainly, about 50% or so more than 50% higher than, I think, the next highest in Central Appalachia when you kind of average Q3 and Q4 and you know, frankly, competing with the Alabama long long margins. So, you know, all in all, again, kudos to Jason, Chris, and their teams for, you know, keeping our margins, you know, very strong on a relative basis.

Jeremy, Chris, I appreciate all that additional detail and for the clarification. Maybe just on the growth side in your guidance, you have noted that you could respond to higher prices with some of the growth projects you have at your disposal. And could you remind us of the capital intensity of each of those and what would you ultimately need to see to move forward? And then is any of this potential growth CapEx included in your current guidance of $60 million to $70 million?

Sure. A few questions there, Nick. So I guess first, from the standpoint of our total capital, our guidance is about $60 million to $70 million. I would say our normal sort of maintenance CapEx is around $9 to $10 a ton. So sort of embedded in that is about $20 million of growth capital. I would say it is split, you know, pretty evenly between Elk Creek and Berwind. I mean, there is a few million in addition, but you know, at Elk, really, it is basically increasing the infrastructure for the most part to make sure that we can get to 3 million tons on a sustainable basis. You know, and as Berwind and Chris discussed, you know, a number of the projects that basically allow us to, you know, mine full out ultimately in the third and fourth sections. So I guess what I would say is, you know, if market conditions, you know, remain weak, there is probably some room in our CapEx to come down. At the same time, you know, as Randy sort of detailed in his remarks, there is a lot of carnage out there. And, certainly, we do think that, you know, the market is poised to move higher in the second half of the year.

Yes. I will make one other comment. So I mean, basically, in this kind of a sideways market, in terms of committing new capital to growth, we basically, as I said, want to see some clarity, whether that is one or two quarters of stabilized pricing or hopefully even increased pricing. Remains to be seen. But the nice thing about where we are teed up at Maven, of course, we already have a prep plant in place. We have got probably for the deep portion about $30 million spend, which would be graduated over a period of time. That is not a one-year spend. That is probably more like a two-year spend. And at Berwind, we are essentially just continuing through an existing mine to add more sections. So that is a relatively modest spend, I would say in the beginning about the $10 million range. And that is once again not a one-year spend, that is probably a two-year spend. So our cap requirements for these additions are in relative terms pretty darn modest. I cannot think of too many people who can add 2 million tons for essentially $40 million in CapEx. So that is how I would look at it.

Randy, thanks again for all the additional detail. Good to hear you have that optionality. Maybe just one last one on the rare earth side. I mean, you did this is seemingly a project of tremendous scale. So what kind of order of magnitude should we be anticipating as far as developing CapEx and is there a CapEx level you would be able to point us to that is required for the construction of the pilot plant later this year?

Sure. So the way that I teed it up, I think, both in our earnings release as well as in my remarks, we will have a pretty granular description of, you know, not only the technical aspects of the deposit, the grades, the recovery rates, but also, of course, economics and the CapEx, which are inclusive in the Fluor techno-economic report. That has been hung up bluntly because there is such an overwhelming demand for people doing testing of various rare earth projects at the labs that do the chemistry and metallurgic analysis for those are quite backed up, and we have been having delays in getting the test results back. We have got those results back. And Fluor is telling us by the middle or latter part of next month, they will have completed the report. And so, you know, instead of front-running that report by kind of drip and dragging out, you know, CapEx numbers and pilot plant numbers, we will let the report speak for itself. And as I said, once we put that out there, we will be even happy to have a sort of a separate rare earth call, which we have done before to go into far more detail than we would on this call certainly today or certainly even on a normal earnings call where we are talking about our met operations as well.

Fair enough, Randy. Well, guys, I appreciate all the color. Nice work, and continued best of luck.

Thanks, Nick.

Our next question comes from Chris Lefenma of Jefferies. Please go ahead.

Thanks, operator. Hi, guys. Thanks for taking my questions. Just want to ask first around the reduction in unit costs. I mean that has been an impressive performance there. And obviously, it has helped offset some of the weakness in prices. But I am wondering to what extent let's assume that met coal prices begin to really recover in the next year. Does some of the cost reductions that you have realized so far begin to reverse? That is my first question.

So largely the that is Chris. Oh, I am sorry. This is Chris. But largely the cost reduction has been driven by the move from more challenging geology in some of our older mines into thicker horizons where clean tons per foot is higher and it drives down the unit cost. Obviously, we have seen a little bit of benefit, I guess, by the lower sales price in our royalty costs and other sales-related that would reverse as the prices go back up. But absent a spike in pricing, we would not expect to see major labor increases, which is what sort of drove a lot of it in 2022, 2023. So I think structurally, the lower cost should be in place with just the normal moves around sales-related.

And Chris, this is Randy. I would add as you heard from our remarks, we were seeing a lot of supply reductions out there. So in the space, not only vis a vis labor, but some of the other types of equipment, steel-related and other. We are seeing a softening somewhat in the market. So we would not expect that trend to reverse given the amount of supply coming out of the market unless there is really as Chris said, a real spike because we are just going to see somewhere around 15 to 20 million tons come out of the Central App at Northern App markets, that is going to create a large hole for not only suppliers but also the labor markets.

And does that capacity come back online in a better market, or is some of this capacity, you think, permanently gone?

I think, Chris, a lot of that capacity may be gone. On a permanent basis. The one thing, of course, a lot of people do not appreciate as much is really the depletion that is in the Central Appalachian Basin. It is a mature basin. A lot of these mines particularly for a lot of the larger legacy producers, are in mines that are very mature. And they are coming not to the end of their useful life. They are certainly coming to a point where the geology is declining. That is why, you know, we have got relatively new mines sort of fresh geology and thicker seams, which is obviously an advantage to us from a cost perspective.

That is very helpful. I appreciate that. Good luck.

Thanks, Chris. Appreciate you getting on the call.

Our next question comes from Nathan Martin of The Benchmark Company. Please go ahead.

Thanks, operator. Good morning, guys. Congrats on the fourth quarter results and the continued cost per ton progress. And maybe just kind of starting there and more of a clarification question. You know, you mentioned the commissioning of the Maven prep plant fourth quarter, you know, reduces trucking costs by roughly $20 a ton at that complex. However, I know you guys had previously talked about a number around $40 a ton is there more savings potentially there, or is that just maybe a clean versus raw ton comparison? Just wanted to get clarification.

Yeah. So good question. This is Chris again. The trucking cost on a raw basis was converted back to clean was about $40 a ton. So we are avoiding that. However, until we build the railroad out directly on-site, we are now trucking our clean coal, which has approximately the same unit cost of $20 per ton, when we build our loadout and rail whether the rail cars directly at Maven, then that additional $20 will come out as well.

And Chris, when do you expect that to be complete?

Well, that is we are the project is I guess I would say under consideration. We are going ahead with engineering work and some of the design work on that. But probably not this calendar year.

Okay. But is it right to assume then that would potentially improve those costs even more?

Yes. Absolutely. As soon as that project is put in place, we would expect just on the top side a $20 cost savings.

Okay. Perfect. Thanks for clarifying that. And then maybe just sticking with the cost per ton. You guys just talked about some of the variable costs associated with price. You know, what price range are you assuming in your full-year cost per ton guidance range?

We are just hey, Nate. It is Jeremy. We are just generally using the forward curve for planning purposes.

Okay. Thanks, Jeremy. And then maybe finally, you know, you guys have touched on this a bit, but I wanted to ask you know, how would you rank or prioritize your capital spending today? Obviously, liquidity position is strong. You have got the dividend policy in place. But, you know, we continue to see this prolonged weakness in the market. Mentioned there could be some opportunities for M&A because of that. You know, you are also continuing down the path of the rare earth process at the Brookline. So you know, how do you see balancing growth whether it is internal or external, you know, shareholder returns and then, you know, protecting your business during this downturn?

Sure. This is Randy. Think to your question about M&A, as I have said before, we are not too fond of the M, but we are happy to look at the A. So, you know, in this kind of a down or distressed market, we will try to be opportunistic if we see situations where particularly reserve plays or perhaps infrastructure plays that might become available at opportunistic prices, we will take a look at that. That is something you cannot really plan. You kind of hope for, but you certainly do not expect. As far as our normal cadence for growth CapEx, I think we have explained that. We have got a very modest growth CapEx laid out for 2025. Obviously, reflecting the market. We are not ready to push the start button on some of these projects at Maven and Berwind until we see a little bit more clarity. As far as what is going on in Wyoming, we have been frankly, surprised at how modest our spend has been, you know, to take this project to where it is for about $10 million I think has been a very well-used amount of our capital to advance that project that has transformative potential. But as we move forward right now, we have gotten a recommendation from the Wyoming Energy Authority for $6 million which is certainly appreciated. That will be focused on the prep plant or the pilot plant or rather. We do not have too much, you know, additional drilling that we have to do. We will probably continue to drill throughout the years because this is such a prolifically large site. To really prove it up is going to take, you know, a good deal of time. Somebody remarked to me, it is almost like you…

Very helpful, Randy. I guess just one thought there too. Is that pilot plant CapEx included in the current $60 million to $70 million CapEx range for this year?

Yes. Yes. It is.

Okay. Perfect. Alright, guys. Very, very helpful. Appreciate the time. And with and, honestly, we did not include originally the $6 million that we have now been recommended to receive an award from Wyoming. So that is an extra bit of wind in our sails, so to speak.

Got it. Appreciate it.

Thanks, Nate.

Ladies and gentlemen, this concludes our question and answer session. I would now like to turn the conference back over to the Chairman and CEO, Randall Atkins, for closing remarks.

Well, I would like to thank everyone for being on the call today. We will certainly look forward to our next earnings call and then also hopefully to in the interim, have a call with you all related to our rare earth project. So once again, thanks very much.

Thank you. The conference has now concluded. Thank you for attending today's presentation. And we now disconnect your lines.