Ramaco targets 3.9M–4.3M tons production in 2025 while launching Brook Mine critical minerals project
May 12, 2025 5:36 PM ET
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Earnings Call Insights: Ramaco Resources, Inc. (METC) Q1 2025
Management View- Chairman and CEO Randy Atkins discussed operational resilience amid ongoing declines in U.S. and Australian met coal prices, stating, "Despite the macro gloom on the overall market, we have continued to perform strongly on the operational front." Atkins highlighted that the company delivered the "highest cash margins per ton and the highest realized sales price among our publicly traded peer group this quarter, all of whom have already reported Q1 results." Mine production reached a quarterly record of 1 million tons, and cash cost per ton sold remained under $100 for the second consecutive quarter, placing Ramaco in the first quartile of U.S. met coal producers.
- Atkins announced a reduction in 2025 production and sales guidance due to weak market conditions but emphasized, "we are not going to force tons into the spot market just for the sake of producing more coal in a weak market without a real return." He noted the company's ability to scale production if conditions improve, with potential to "exit the year above $5 million per annum run rate" and outlined longer-term plans to reach "approximately 6.5 million to 7 million ton level" within 24–36 months, requiring about $100 million in growth CapEx.
- On the critical minerals front, Atkins revealed the addition of Mike Woloschuk as Executive Vice President to oversee the Brook Mine rare earth project, describing it as "a major domestic rare earth deposit of both exceptional size and quality." Atkins said, "We are now ready to grow Ramaco into being both a critical mineral producer as well as a met coal company."
- CFO Jeremy Sussman stated, "Q1 adjusted EBITDA was $10 million compared to $29 million in Q4. Q1’s net loss of $9 million compared to Q4 net income of $4 million. Class A EPS showed a $0.19 loss in Q1 versus a $0.06 gain in Q4." Sussman emphasized cost control: "cash cost of sales coming in at $98 in Q1, which was the second straight quarter of sub-$100 per ton costs."
- Chris Blanchard, EVP, reported that adverse weather led to a production shortfall of approximately 150,000 clean tons but noted operational improvements at Elk Creek and ongoing expansion efforts at Berwind and Maben.
- Jason Fannin, Chief Commercial Officer, outlined sales commitments for 3.7 million tons, with 1.6 million tons to North American buyers at $152 per ton and seaborne shipments at $111 per ton. Fannin described a flexible sales approach amid market headwinds and ongoing efforts to secure offtake agreements for the Brook Mine critical minerals output.
Outlook- Sussman reported, "2025 cost per ton sold guidance is lowered to $96 to $102, down from the prior expectation of $97 to $103." CapEx guidance is reduced to $55 million to $65 million. Full year 2025 production guidance is now "between 3.9 million to 4.3 million tons versus prior expectations of 4.2 million to 4.6 million tons." Sales guidance is revised to "between 4.1 million and 4.5 million tons versus prior expectations of 4.4 million to 4.8 million tons."
- Sussman expects "tons sold in the second quarter of 2025 are projected to close to Q1 levels at between 850,000 and 950,000 tons."
- Management maintained flexibility to increase production if market conditions improve, with optionality to accelerate growth projects.
Financial Results- Q1 adjusted EBITDA was $10 million. Net loss was $9 million. Class A EPS was a ($0.19) loss. Cash cost per ton sold was $98. Quarterly production reached 1 million tons.
- Sussman highlighted that "liquidity of $118 million on March 31 was up almost 25% year-on-year" and net debt to adjusted EBITDA stood at less than 0.7x.
- CapEx guidance for 2025 was trimmed to $55 million to $65 million, with most net CapEx occurring in the first half of the year.
Q&A- Nick Giles, B. Riley Securities, asked about sales mix and cost improvements for the second half of the year. Sussman responded that Q2 sales guidance of 850,000 to 950,000 tons "does imply a pickup in the back half of the year," with potential to increase shipments if the market improves.
- Giles inquired about federal support for the Brook Mine. Atkins explained that the project was not included in the FAST-41 permitting list because "we already have a permit." He added, "Federal government is certainly trying to do their best to be helpful to us" as the project advances.
- Giles asked about strategic partnerships for the rare earth project. Atkins clarified, "We are not seeking a joint venture partner, nor are we reaching out to any third-parties to join us. We view this project as one that Ramaco is going to be able to finance on their own."
- Nathan Martin, The Benchmark Company, queried about CapEx reductions. Sussman said, "We did remove the fourth section of the Berwind mine from our CapEx guidance. So, effectively, that growth has been deferred in the current market environment."
- Martin probed about realized price per ton in Q2. Sussman replied, "domestically will help a little bit, but certainly it’s tough to overcome the indices kind of are what they are."
- Martin asked about the potential benefits of met coal’s designation as a critical mineral. Atkins responded, "I think the permitting side is meaningful, particularly to the extent that there are potential projects involving BLM land."
- Giles followed up on delays in rare earth project testing. Atkins attributed delays to "testing backlog" and stated the preliminary economic analysis would be released by the end of June, containing CapEx and project economics.
- Giles also asked about saleable coal production from the Brook Mine. Atkins confirmed, "the other 2 million tons a year will basically be good old fashioned Powder River Basin thermal coal, which we will indeed sell into the thermal utility markets."
Sentiment Analysis- Analysts maintained a neutral tone, focusing on guidance reductions, cost structure, and rare earth project developments, with questions targeting clarity on strategic direction and execution.
- Management preserved a confident and pragmatic tone, emphasizing cost discipline and operational flexibility. Atkins highlighted, "we are not going to force tons into the spot market just for the sake of producing more coal in a weak market without a real return."
- Compared to the previous quarter, analyst sentiment shifted from cautious optimism on price recovery to more probing on downside protections and rare earth project timing. Management’s tone remained steady, but guidance language grew more conservative.
Quarter-over-Quarter Comparison- Guidance for 2025 production and sales was reduced from the prior quarter’s call, reflecting sustained weak market conditions. Cost per ton sold guidance was also lowered. CapEx guidance was trimmed, and certain growth projects (notably Berwind’s fourth section) were deferred.
- Analysts in Q1 focused more on downside risk management, timeline for rare earth project milestones, and the rationale behind capital allocation changes, compared with Q4’s greater emphasis on cost progress and potential market recovery.
- Management’s confidence in cost control and operational execution was consistent, but tone regarding market recovery and growth was more measured. Strategic focus shifted more visibly toward the Brook Mine rare earth project and maintaining flexibility.
Risks and Concerns- Management cited continued macro headwinds from declining met coal prices, unpredictable steel market dynamics, and challenging weather conditions that impacted production.
- Delays in rare earth project test results were attributed to laboratory backlogs; timing of preliminary economic analysis remains a key milestone.
- Litigation-related SG&A expenses increased due to an ongoing lawsuit, with trial anticipated in the summer.
- Analysts raised concerns about the potential for further market softness, the impact of deferred growth projects, and the uncertain pace of rare earth project commercialization.
Final Takeaway
Ramaco Resources emphasized the strength of its operational execution and cost leadership despite a challenging pricing environment, reducing 2025 production and CapEx guidance to preserve value. The company is advancing its Brook Mine rare earth project with new leadership and expects to release key economic data in June. Management remains focused on disciplined capital deployment, operational flexibility, and leveraging both met coal and critical minerals assets for future growth.
Read the full Earnings Call Transcript |
