Executive Summary / Key Takeaways

• Ramaco Resources is undergoing a transformative shift, evolving from a high-quality, low-cost metallurgical coal producer into a dual-platform entity with significant potential in rare earth elements (REE) and critical minerals (CM) at its Brook Mine.
• Despite challenging metallurgical coal markets driven by Chinese steel oversupply, Ramaco has demonstrated exceptional operational efficiency, achieving cash costs below $100 per ton and maintaining strong cash margins relative to peers.
• The Brook Mine project, poised to become the first new U.S. rare earth mine in over 70 years, is strategically positioned to address national supply shortfalls, with projections of over $500 million in EBITDA and a $5 billion NPV in its first year of commercial oxide production (estimated 2028).
• Ramaco's unique technological approach to extracting REEs and CMs from coal-based feedstock, coupled with its focus on high-value heavy magnetic rare earths and critical minerals like scandium, gallium, and germanium, provides a significant competitive advantage against Chinese dominance.
• The company maintains a robust liquidity position and a disciplined capital allocation strategy, prioritizing the accelerated development of its critical minerals platform while opportunistically managing its metallurgical coal production.

A Strategic Evolution: From Coal to Critical Minerals

Ramaco Resources, Inc. has embarked on a compelling strategic evolution, transforming from a focused metallurgical coal producer into a dual-platform company with a burgeoning presence in the critical minerals sector. Formed in October 2016, Ramaco initially established itself as an operator and developer of high-quality, low-cost metallurgical coal in southern West Virginia and southwestern Virginia. Its early portfolio, including Elk Creek, Berwind, Knox Creek, and Maben, was chosen for its distinct geologic and logistical advantages, serving North American blast furnace steel mills and international consumers. This foundational period saw the company deploy over $0.5 billion in capital on greenfield development, demonstrating a disciplined approach to building projects from inception.

A pivotal moment arrived in June 2025 with the initiation of the Brook Mine rare earth element and critical mineral operations near Sheridan, Wyoming. This marked a strategic pivot, organizing operations into two distinct reportable segments: Metallurgical Coal and Rare Earths and Critical Minerals. This move is not merely an expansion but a fundamental reorientation, aiming to leverage a unique geological discovery into a vertically integrated domestic supply chain for strategically vital materials.

Technological Edge: Unconventional Extraction for Critical Supply

Ramaco's core technological differentiation lies in its unconventional approach to rare earth and critical mineral extraction at the Brook Mine. Unlike traditional hard rock deposits, the Brook Mine's REEs and CMs are found commingled within coal and adjacent strata, specifically in clays and shales. This presents several tangible benefits:

• Ease of Mining and Processing: Coal is a softer material, making it significantly easier to mine and process compared to hard rock minerals. This translates to potentially lower operational costs and a more efficient extraction process.
• Non-Radioactive Feedstock: Crucially, the coal-based feedstock at Brook Mine exhibits little to no radioactive character. This eliminates the complex and costly challenges associated with managing radioactive tailings, a common issue in many hard rock rare earth operations, simplifying both mining and processing.
• Unique Mineral Basket: The Brook Mine is believed to be the only primary source mine globally for germanium, gallium, and scandium. These, along with heavy magnetic rare earths like neodymium, praseodymium, dysprosium, and terbium, are anticipated to generate over 95% of the project's revenue and cash flow. These specific elements are of acute national strategic importance, with China having imposed export bans on many of them to the United States.

Ramaco's R&D initiatives, in collaboration with Fluor Corporation (FLR) and Hatch Ltd., are focused on optimizing the hydrometallurgical flow sheet for efficient recovery and refinement. Initial independent testing by Hazen Research and Fluor indicates primary and secondary recovery rates above 80% for rare earths, which are considered strong at this conceptual stage. The company is also exploring novel and unconventional processing techniques with the Department of Energy's National Labs, aiming for further refinement and optimization. The pilot plant, currently under construction and expected to begin initial operations in 2026, will be critical for real-time testing and informing the design of the full-scale commercial processing facility. This pilot operation is designed to de-risk the complex execution and ensure optimal capital and operational cost control for the commercial plant.

The "so what" for investors is profound: this technological differentiation provides Ramaco with a unique competitive moat. By offering a non-radioactive, domestically sourced, and strategically vital basket of REEs and CMs, Ramaco is positioned to command a premium for its products and establish long-term, secure supply relationships, directly addressing a critical national security and economic resilience imperative.

Competitive Positioning: A Dual-Front Strategy

Ramaco operates within two distinct, yet increasingly interconnected, competitive landscapes: metallurgical coal and rare earth elements.

In the metallurgical coal sector, Ramaco distinguishes itself as one of the lowest-cost domestic producers. Its cash costs have consistently fallen, reaching $97 per ton in Q3 2025, placing it firmly in the first quartile of the U.S. cash cost curve. This cost leadership is a significant advantage, particularly in a market plagued by Chinese steel oversupply, which has depressed global prices. While larger competitors like Arch Coal (ARCH) and Peabody Energy (BTU) boast greater scale and diversified portfolios, Ramaco's focused asset base in Central Appalachia, characterized by newer mines and thicker seams, allows for operational agility and superior unit economics. Its broad spectrum of low ash and low sulfur coking coals across all grades is unique in the industry, providing a competitive edge, especially when customers seek to blend down less favorable coal characteristics. This product quality and cost efficiency enable Ramaco to maintain stronger cash margins (e.g., $34 per ton in Q2 and Q3 2024) compared to many peers, even amidst declining market prices.

The rare earth elements and critical minerals sector presents a vastly different competitive dynamic, dominated by China. China accounts for the significant majority of global REE and CM production and manufacturing, often benefiting from less stringent environmental regulations and lower labor costs. This has historically allowed Chinese producers to engage in predatory pricing, making it challenging for new entrants. However, geopolitical tensions and China's recent export restrictions on key critical minerals have created a "clear decoupling of Western price realizations" from Chinese prices. A premium is now emerging for reliable Western supply lines. For example, the U.S. Department of War's recent purchase of scandium at over $6.2 million per ton highlights this shift, being 67% higher than previous estimates and more than five times greater than Chinese manipulated index prices.

Ramaco's Brook Mine, with its unique geological anomalies and the ability to extract REEs and CMs from coal, positions it as a disruptive force. The company is not seeking a joint venture partner, viewing this as a "Ramaco venture" to be financed internally or through non-dilutive federal support. This contrasts with the consolidated Chinese industry, such as the China Rare Earth Group Co. Ltd, which has enhanced pricing power. Ramaco's strategy to build a vertically integrated, mine-mouth platform, including a potential "Strategic Critical Minerals Terminal" for fee-based services, aims to create a resilient domestic supply chain, directly challenging China's monopoly and offering a secure alternative to Western consumers.

Financial Performance and Liquidity: Fueling the Transformation

Ramaco's financial performance in recent periods reflects the challenging metallurgical coal market, yet underscores its operational resilience and strategic capital management. For the nine months ended September 30, 2025, revenue from the Metallurgical Coal segment decreased to $408.61 million from $495.40 million in the same period of 2024, primarily due to a significant decline in metallurgical coal price indices (down 19%). This pricing pressure led to a decrease in Segment Adjusted EBITDA for Metallurgical Coal to $51.36 million from $85.86 million year-over-year. Despite these headwinds, the company's cash cost per ton sold FOB mine improved to $100 for the nine months ended September 30, 2025, from $109 in the prior year, demonstrating effective cost control.

Consolidated results for the nine months ended September 30, 2025, show a net loss of $36.74 million compared to net income of $7.33 million in the prior year. Adjusted EBITDA for the same period was $27.16 million, down from $76.60 million. The Rare Earths and Critical Minerals segment, being in development, has not generated revenue but incurred increasing Segment Adjusted EBITDA losses, reflecting the investment in the Brook Mine project (e.g., $(12.40) million for the nine months ended September 30, 2025, compared to $(3.62) million in 2024).

Crucially, Ramaco maintains a robust liquidity position, ending Q3 2025 with a record $272 million in liquidity and a net cash position of $77 million. This was significantly bolstered by a $200 million common stock placement in August 2025, specifically aimed at accelerating the Brook Mine project.

The company has also actively managed its debt, redeeming $34.5 million in 2026 senior notes and issuing $65 million of 2030 senior notes at a lower interest rate (8.25%).

This strong balance sheet and ample liquidity provide the financial flexibility to withstand market volatility in metallurgical coal and fund the ambitious development of its critical minerals platform.

Outlook and Guidance: A Dual Growth Trajectory

Ramaco's forward-looking guidance reflects a strategic balance between optimizing its metallurgical coal operations in a challenging market and aggressively developing its critical minerals business. For the full year 2025, metallurgical coal production is anticipated to be between 3.7 million and 3.9 million tons, with sales projected at 3.8 million to 4.1 million tons. This represents a modest reduction from prior guidance, a deliberate choice to prioritize value over volume and avoid selling into an oversaturated spot market at a loss. Management expects cash costs to remain competitive, with the Q3 2025 cash cost per ton of $97 underscoring its first-quartile position. Capital expenditures for met coal growth will be minimal, with the focus shifting to the Brook Mine.

The outlook for the Rare Earths and Critical Minerals segment is transformative. The company plans to expand the Brook Mine's base size to approximately 5 million tons of coal, yielding over 3,400 tons per year of annual oxide production, with potential to further scale to 8 million tons of coal and 5,000 tons of oxide production. This platform is projected to generate over $500 million in EBITDA and an NPV exceeding $5 billion in its first year of commercial oxide production, estimated in 2028, based on a total initial capital cost of $1.1 billion. The timeline includes initial pilot plant operations in 2026, with engineering and procurement for the commercial oxide facility commencing in spring 2026, and site work/initial construction in late 2026 or early 2027. The revenue generated from selling the non-mineralized thermal coal from the Brook Mine will strategically offset the rare earth mining costs, ensuring an extremely low-cost basis for critical minerals.

Risks and Challenges

While Ramaco's strategic direction offers significant upside, investors should be mindful of several key risks. The metallurgical coal market remains volatile, heavily influenced by global economic conditions and Chinese steel export policies, which can depress prices and impact profitability. The Rare Earths and Critical Minerals project, while promising, carries inherent execution risk associated with new development, including potential cost overruns and delays in establishing commercial-scale production. The company's lack of established rare earth reserves (currently inferred resources) means there is no certainty that the Brook Mine will successfully transition into a commercially viable operation. Furthermore, the global REE market is dominated by China, which could employ anti-competitive tactics.

Internally, Ramaco has acknowledged a material weakness in its internal control over financial reporting, related to an insufficiency of qualified personnel and documentation. While a remediation plan is underway, its full effectiveness over a sustained period is yet to be demonstrated. The company also faces an unresolved SEC comment regarding its disclosures on the Brook Mine's Preliminary Economic Assessment, which could impact future reporting.

Conclusion

Ramaco Resources stands at a pivotal juncture, strategically transforming from a resilient metallurgical coal producer into a pioneering force in domestic critical minerals. Despite persistent headwinds in the metallurgical coal market, the company's unwavering commitment to cost control and operational efficiency has enabled it to maintain strong financial health and liquidity. The Brook Mine represents a generational opportunity, leveraging a unique geological endowment and innovative extraction technology to address a critical national supply shortfall in rare earth elements and critical minerals.

The investment thesis hinges on Ramaco's ability to execute its ambitious dual-platform strategy, particularly the successful commercialization of the Brook Mine. With a clear technological roadmap, a disciplined capital allocation approach, and a strong management team, Ramaco is well-positioned to capitalize on the growing demand for secure, domestically sourced critical minerals. While risks associated with market volatility and project execution remain, the potential for significant value creation from its rare earth platform, coupled with its robust metallurgical coal business, presents a compelling long-term investment narrative.