Release Date: May 12, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Ramaco Resources Inc (METC, Financial) achieved the highest cash margins per ton and the highest realized sales price among its publicly traded peer group in Q1 2025.
- The company set a quarterly production record with 1 million tons produced, annualizing to 4 million tons, despite challenging weather conditions.
- Ramaco Resources Inc (METC) maintained cash costs per ton sold under $100 for the second consecutive quarter, placing it in the first quartile of the US coal met producers' cost curve.
- The company is poised to expand production by an additional 2 million tons when market conditions improve, with plans for a deep mine expansion and new mining sections.
- Ramaco Resources Inc (METC) is advancing its Brook Mine Rare Earth Project, with plans to become a major critical minerals producer, leveraging a significant domestic rare earth deposit.
Negative Points
- The company experienced a decline in earnings due to falling US and Australian met coal prices, despite strong operational performance.
- Ramaco Resources Inc (METC) reduced its 2025 production and sales guidance due to weak market conditions, opting not to force tons into the spot market.
- The company faced production setbacks due to extreme weather conditions, losing approximately 150,000 tons of production in Q1 2025.
- Q1 2025 adjusted EBITDA decreased to $10 million from $29 million in Q4 2024, with a net loss of $9 million compared to a net income of $4 million in the previous quarter.
- The company anticipates continued weak market conditions, with Q2 2025 sales projected to be similar to Q1 levels, impacting cash market costs.
Q & A Highlights
Q: Can you provide insights into the expected improvement in sales and costs for the second half of the year, given the Q2 guidance of 900,000 tons?
A: Jeremy Sussman, CFO: Our Q2 sales guidance of 850,000 to 950,000 tons implies a pickup in the second half. We expect the market to improve, allowing us to increase sales, potentially reaching around 1 million tons in Q3 and Q4. We are not forcing tons into a challenging market but are prepared to capitalize on improvements.
Q: Could the Brook Mine be included in the FAST-41 projects list, and what benefits might that bring?
A: Randall Atkins, CEO: The Brook Mine was not included in the FAST-41 list as it already has a permit. However, we are in discussions with the National Energy Dominance Council for potential federal assistance, which could include financing or procurement support, especially as we are poised to begin production.
Q: Is there a desire to bring in a strategic or operating partner for the Brook Mine project?
A: Randall Atkins, CEO: We are not seeking joint venture partners. Ramaco intends to finance the project independently, potentially with non-dilutive federal support. Our current partners, like Fluor, are development partners, and we plan to proceed as a Ramaco venture.
Q: What is the breakdown of the reduced CapEx guidance, and how does it affect the Brook Mine?
A: Jeremy Sussman, CFO: We reduced CapEx from $60-$70 million to $55-$60 million, deferring the fourth section of the Berwind mine. Maintenance CapEx is about $10 per ton, with $15 million for growth, including $5 million for the Brook Mine. Most growth CapEx is front-loaded in the year.
Q: How does the recent executive order declaring met coal a potential critical mineral impact Ramaco?
A: Randall Atkins, CEO: While federal funding for met coal isn't expected soon, the order could aid in permitting, especially for projects involving BLM land. It acknowledges met coal as critical, which may influence future federal coal policy and support.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
