Ramaco Resources, Inc. Stock

Good afternoon, and welcome to the Ramaco Resources Third Quarter 2026 Results Conference Call. [Operator Instructions] Please note, this event is being recorded.

I would now like to turn the conference over to Jeremy Sussman, Chief Financial Officer. Please go ahead.

Thank you. On behalf of Ramaco Resources, I'd like to welcome all of you to our third quarter 2026 earnings conference call. With me this afternoon are Randy Atkins, our Chairman and CEO; Mike Woloschuk, our EVP of Critical Mineral Operations; Orin Atkins, our SVP of Critical Mineral Sales; Chris Blanchard, our EVP for Mine Planning and Development; and Jason Fannin, our Chief Commercial Officer of Met Coal.

Before we start, I'd 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, and 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'd 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'd encourage everyone on this call to go on to our website and download today's investor presentation.

With that said, let me introduce our Chairman and CEO, Randy Atkins.

Thanks, Jeremy, and thanks to everyone for joining us this afternoon. As we survey the current wreckage in the stock and capital markets over the past several weeks, we're taking some contrarian comfort in where we are headed. Despite a rocky '26 so far, I feel very positive about the direction of both of our business platforms moving forward.

Unfortunately, as we are aware, the past year has not been kind to rare earth element and critical mineral stocks. To put this in context, the VanEck Rare Earth Index is down about 55% from its peak a year ago. Virtually all critical mineral companies are now trading within $1 or $2 of their 52-week lows. In the case of our direct non-longwall U.S. public met coal peers, average earnings are down about 50% year-over-year. Most critical mineral stocks candidly have no earnings, so there's really no point of comparison.

To step back and take some perspective, we feel that the current stock market levels are not reflective of the long-term value. With about 17 million shares of our stock shorted or about 40% of our free float, I suspect that when the market starts to absorb some good news from us that it will not take long for the stock to reflect that. Indeed, in this environment, having dual platform operations provides us some stability that many rare earth critical mineral companies do not enjoy. We have one established revenue-producing platform in growth mode now, while the other is in development.

We also believe that our legacy coal business is nearing some market inflection points. While Jason will discuss this in more detail, simply put, global coal markets are improving and so are our '27 sales and pricing. Indeed, we now have about 1.7 million tons of '27 domestic business priced at an average of $139 a ton. That represents more than $65 million of '27 adjusted EBITDA in our met coal segment alone. Also this volume is up more than 30% versus '26. When our new sales are combined with 1.1 million tons of '27 carryover export commitments, these 2.8 million tons of sales for '27 would account for a meaningful portion of our anticipated production.

Currently, Australian PLV prices are up about 23% since the beginning of '26. The strongest increase in the U.S. has been in high-vol pricing, high-vol A pricing, which is up about 26%. Indeed, fourth quarter spot prices are now up about 9% versus the third quarter average.

To try and take advantage of this pricing swing, Ramaco's low-vol production is set to grow meaningfully next year. In some cases, we've moved CapEx around this year by reducing higher cost high-vol production to fund more profitable low-vol production. Also next year's CapEx cash burn is expected to decline both meaningfully and quickly. We will likely have a material working capital tailwind at our backs as we convert coal to cash in '27 from unwinding a large inventory position we held in order to sell into a stronger market.

On the financial side, we have managed to maintain good cost control despite macro external pressures this quarter. This has all been supported by our strong balance sheet and liquidity. We are also fortunate that pricing has moved up meaningfully more than costs. All this sets the stage for stronger margin expansion in both the fourth quarter of '26 and the full year of '27. Indeed, as we have said, we expect the fourth quarter alone this year to print a higher adjusted EBITDA than the cumulative total of the first 3 quarters of the year.

On our coal production growth, we expect the new third section at Berwind and the first underground section at Maben to be in production before year-end. This will add about 600,000 tons of annualized low-vol. When you include the restart of our Laurel Fork Mine, we will have added almost 1 million annualized low-vol tons this year alone. All this has been achieved with low-vol caps spending -- CapEx spending of roughly $30 million in '26. The new Maben rail loadout should then reduce trucking costs at that complex by roughly $20 million per ton starting in January. As a result, we expect some significant operating cost reduction to kick in next year.

I also wanted to provide a bit of a road map as we transition to a majority of low-vol production over the medium-term. Assuming market conditions hold, we will complete the third and fourth sections at Berwind between now and 2028. That complex will then produce almost 1.5 million tons annually of low-vol.

Similarly, at Maben, in addition to our current 250,000 tons of surface production, we expect to move into the first 2 deep mine sections in '27 and complete the remaining third and fourth underground sections in '28 and '29. At that point, Maben will be capable of producing roughly 1.7 million tons of low-vol each year. This would then provide us the option to have a medium-term portfolio of almost 6 million tons of total production. You get there by combining 2.5 million tons at Elk Creek with 3.2 million tons of low-vol.

Additionally, we have the optionality to add 1.5 million tons of high-vol A coal from our undeveloped Russell County reserves at the Knox Creek complex. This would ultimately push up our totals to roughly 8 million tons of production capacity.

Lastly, we recently signed 200,000 tons of Q4 business at favorable margins with domestic steel mills, in large measure due to our strong balance sheet. The steel buyers have looked to reduce counterparty credit risk from less well-capitalized companies that had struggled to deliver on their previous commitments for the balance of this year.

Now to shift gears to our critical mineral platform, we continue to move forward on the testing and development of both our upstream geology and our separation and extraction facility, which Mike will discuss. We have also worked on derisking the carbochlorination processing and have also introduced testing with third-party e-waste samples to enhance our concentrations and ultimate oxide output.

As we continue to define the Brook Mine reserve base, we are positioning ourselves as an upstream and ultimately midstream oxide producer provider, with roughly 3 quarters of our anticipated revenue tied to critical minerals focused on the semiconductor space. When you think about the proposed IPO offerings of AI companies like Anthropic and OpenAI, it is interesting to consider that critical minerals such as ours will basically underpin their operations. But candidly, what we in the country currently lack is any domestic midstream capability to refine and separate rare earth feedstock. This is indeed our next step.

We are currently fully financed to advance the Brook Mine project through all stages of development up to the construction of the refinery. Our CapEx spend to complete the pilot plant and related steps up to the final investment decision on refinery construction is expected to be roughly $25 million next year. As we move forward, we expect to optimize the size of the refinery to fit the market and capital requirements.

As Mike will discuss in more detail, we've also received exceptional recovery results from third-party carbochlorination testing. Average recoveries were 97% for combined scandium, gallium, and germanium, 92% for neodymium and praseodymium, 96% for yttrium, and 97% for dysprosium and terbium. These results continue to validate the process route selected in the Hatch conceptual study released last quarter.

Construction of the critical mineral pilot plant continues across the street from where I am now speaking. The building structure is expected to be completed in early '27, and Hatch and Zeton are continuing to advance engineering and fabrication of the processing modules. We expect the prefeasibility study by Hatch to begin in the first quarter of '27 and be completed later next year. As bench-scale metallurgic results become available, including from new e-waste samples, we anticipate completion of the pilot plant in the second half of 2027.

We remain in discussions regarding potential domestic and international critical mineral offtake transactions, as well as project financings for the refinery involving both public and private sectors. Orin will provide more color on our marketing here in a moment.

And I want to end by noting that after a lengthy 8 year legal battle, we finally received and won a favorable $30 million jury verdict against Chubb Insurance this quarter. This verdict relates to the 2018 Elk Creek coal storage silo failure. Additionally, Ramaco expects to recoup attorney's fees from 2018 forward in an amount to be determined by the court.

With that, I'll turn the floor over to the rest of our team to discuss finances, operations and markets. First, I'd like to turn the floor back to Jeremy.

Thank you, Randy. I'll start by discussing our strong liquidity and cash position. We ended the third quarter with $375 million of liquidity, which was an increase of 38% year-on-year. Our cash balance was a solid $233 million.

Importantly, as I look ahead, given improving coal markets, our strategy of building inventory on a low-cost basis throughout the year looks like a solid decision. As of September 30, we had excess inventory of roughly 600,000 tons, which could translate into a roughly $75 million working capital tailwind over the coming quarters at current prices. As Chris will detail, we're now selling down this inventory at much more attractive prices than earlier this year and should largely be back to normalized inventory levels before mid-year 2027.

In terms of third quarter operational performance, costs remain in the first quartile of the U.S. cost curve despite a rise in mine costs due to inflationary pressures such as higher diesel prices. As a result of this pressure, we're increasing 2026 cash cost guidance from $96 to $99 per ton to $101 to $103 per ton. Current diesel prices are $5.85 per gallon compared with $2.50 per gallon to start the year, which represents more than a $3 per ton headwind.

We've also tweaked full year 2026 production and sales guidance with production guidance lowered by 200,000 tons at the midpoint and sales guidance lowered by 100,000 tons at the midpoint, reflective of continued discipline in the high-vol market.

We are increasing our full year capital expenditure guidance by roughly $5 million at the midpoint. This is based on the first underground section at Maben now expected to come online this year rather than our previous expectation of the first quarter of 2027. This will, of course, lower our anticipated Maben CapEx by a similar amount in 2027. Even with the new guidance, the midpoint reflects a roughly $20 million spend in Q4 compared with an average spend of $27 million in the first 3 quarters of the year.

Looking ahead to 2027, the company is at an important inflection point in its evolution. As Randy noted in his remarks, first, low-vol production is anticipated to be up by almost 1 million tons on an annualized basis compared to the start of this year. Second, we've locked in substantially more domestic EBITDA in 2027 compared to 2026. And lastly, we do not anticipate needing more than 20 -- needing to spend more than $25 million in CapEx at our Brook Mine in 2027 before reaching a final investment decision on construction of the critical mineral refinery.

Randy noted, we are continuing to derisk the flow sheet and refinery engineering as we move forward on future financing options. In summary, we are financially well positioned to move forward in multiple directions as we see improving met markets while also making strong progress in our emerging critical mineral business.

With that summary, I would now like to turn the call over to our EVP of Mine Planning and Development, Chris Blanchard.

Thanks, Jeremy, and good afternoon to everybody joining us today. While Randy hit some of the high points on the operations side already, I'll just add a little color on some of our various projects and our existing coal operations.

Starting first at our Maben complex, the Norfolk Southern batch-weigh load-out project is continuing. We now anticipate commissioning early in the first quarter of 2027, which, as Randy mentioned, will reduce operating costs by over $20 per ton once it comes on.

Concurrently, just last week, we have removed the first development face-up coal from our new underground mine at the Maben complex. Work is being completed on the mine surface installations, and I expect to have the first underground coal production in December. While this production will not be meaningful for 2026 total volumes, being ahead of schedule on this first section will allow us to be closer to full pace as we enter the new year.

We look forward to customer trials of this premium low ash, low sulfur, low-vol coal, and are positioning the mine to add its second section as early as the summer of 2027, subject, of course, to market conditions.

Parallel with the underground development at Maben, we are designing a preparation plant upgrade to allow the second and third underground coal mines to be started in 2028 and beyond. While the plant upgrade is not expected to be launched during 2027, we will have all the engineering work done in advance so that this project can be fast-tracked as soon as we are comfortable with the market for the Maben coals.

At Berwind, also on the low-vol side, all necessary shaft work for our ventilation projects has been completed, and installation of the new mine fan at our Indian Creek portal is currently underway. Underground work to support the fan relocation and the additional shafts has also been completed. In December, following the underground ventilation change, we will begin to bring on the #3 production unit and have 4 full sections operating as we enter 2027, which includes the section still operating at our Laurel Fork Mine. As Randy mentioned, this will put ultimate annual production from this complex well over 1 million tons of low-vol coal.

Finally, at Elk Creek, we have successfully moderated production to be in better balance with a still oversupplied high-vol market. In October, our MP #1 underground mine completed mining in our controlled reserves. This production has not been replaced, and with this, plus the idling of a section at our Stonecoal mine earlier in the year, coupled with the improving pricing environment, we have begun to successfully monetize the raw coal inventory built during the beginning of the year when the high-vol pricing was much, much weaker.

We expect to be down to normal working inventories of raw coal shortly after the start of the 2027 calendar year. Strategically, though, we have 2 sections which could be reactivated quickly at Elk Creek if we see the market need and the proper price support for our low sulfur high-vol coals.

With that operational overview on the met side of the business, I'd like to hand the call over to our Chief Commercial Officer, Jason Fannin, to discuss the markets.

Thanks, Chris. Today, I will review our Q3 sales results and 2026 sales position, discuss our 2027 domestic settlements to date, share our views on the met coal market, and highlight our low-vol growth strategy at Berwind and Maben.

As we enter the final quarter of 2026, I want to highlight the stronger sales mix that Ramaco has built throughout the year. We have added incremental domestic tons in 2026, with significantly more for 2027, and increased our volumes linked to the U.S. low-vol and PLV indices. Together, these changes reduce our exposure to the U.S. high-vol indices at a time when Australian pricing continues to outpace them.

We are effectively sold out for 2026. As of the end of Q3, we had secured commitments for 4.2 million tons, slightly over our sales guidance range of 4 million to 4.1 million tons, which anticipates that some committed Q4 sales could slide into January, as often occurs.

For 2027, we have largely concluded our domestic settlements, although a few of our specialty customers will finalize later in Q4, as usual. As Randy mentioned, to date, we have secured 1.7 million tons of North American business at an average price of approximately $139 per ton, growing our domestic volume by nearly 1/3 year-over-year. That outcome reflects firm domestic steel fundamentals, with U.S. hot-rolled coil prices above $1,300 per short ton, and one major domestic steel maker deferring a planned 2027 blast furnace reline into 2028.

Another has just returned its largest blast furnace to service after a substantial investment. A larger fixed price domestic book gives us meaningful revenue visibility for 2027, while keeping our export tons positioned for further market upside.

Turning to the market, pricing strengthened in the third quarter. Australian PLV averaged about $248 per ton, up roughly $10 from Q2, peaked near $285 in September, and is about $262 today. High-vol A averaged about $171 per ton in Q3, up $13 from Q2, and is at $190 today. High-vol B is at $174, a level last seen 2 years ago, and U.S. low-vol is at $210 per ton.

The weakness in high-vol prices that we saw through the first half appears to be behind us. Idlings, closures, years of limited investment, and improved price discipline have put a floor under pricing. High-vol A has held above $180 since the start of September and remains at $190 today, and its relativity to PLV has improved to just over 72%.

China is sending mixed signals. Shanxi safety inspections tightened supply, and PLV volumes delivered into China rose about 15% quarter-over-quarter. But the weak domestic demand continues to push Chinese steel into export markets. Finished steel exports have topped 10 million tons for 5 consecutive months, capping global steel prices and how far seaborne met coal prices can rise.

Looking further out, India remains a primary engine of coking coal demand growth. Australia's Office of the Chief Economist forecasts Indian met coal imports rising from about 90 million tons this year to 94 million tons in 2027, as Indian mills continue to add blast furnace capacity.

Taken together, we believe the floor under met coal pricing is firmer than it was a quarter ago, although Chinese steel exports may limit near-term upside. That is why we are focused on growing our low-vol production. Low-vol supply is structurally tighter than high-vol, and it is that quality that steel makers in India and other growth markets rely on for stronger coke blends.

As Maben ramps up alongside Berwind, we are building a larger, more consistent low-vol offering that reaches customers our high-vol tons alone cannot. Over time, that shifts more of our portfolio toward the higher value end of the quality spectrum.

So to wrap up the Met Coal side, our '26 book is essentially complete. Our 2027 domestic book is in place at both higher volumes and attractive fixed pricing, and our growing low-vol platform at Berwind and Maben broadens our reach into the market's premium segments. Our focus remains on enhancing the value of our sales portfolio, both in product mix and market positioning.

With that, I'll turn the call over to our EVP for Critical Mineral Operations, Mike Woloschuk, for updates on the continuing progress of our Brook Mine project in Wyoming.

Thanks, Jason. Our key focus areas in Q3 on the upstream geology side have been to continue the infill drilling program, and on the midstream side, to advance construction of both the internal laboratory facilities and the pilot plant.

Drilling continues in a targeted area within the 4,500-acre permitted zone. Geological modeling, supported by independent third-party experts, showed good continuity of kaolinite. Critical minerals hosted in kaolinite represent about 3 quarters of the project revenue, so this finding is favorable for drill spacing requirements as we increase the resource confidence level from inferred to indicated.

Last quarter, we anticipated commissioning the internal chemical and metallurgical testing laboratory in Q3. However, we are awaiting installation of 2 fume hoods, which will now push commissioning into this month. To support the increased on-site activities in geology, analytical lab work, and metallurgical testing, we completed 2 additional hires in Q3. Last quarter, we onboarded our Director of Analytical Laboratory, and in Q3, we added a Vice President of Geology and a Senior Director of Metallurgy.

As in Q3, we obtained the full results from the series of carbochlorination tests conducted at a third-party laboratory, and as Randy stated, the results confirmed exceptional extraction across the board for our key REEs and other critical minerals.

The Hatch team has been focused on advancing the pilot plant design. Process definition studies to determine the key pilot plant equipment selections were completed. Zeton commenced process plant module design for the front end of the flow sheet. These skid-mounted modules will be released in stages as we progressively collect bench-scale results to support the designs. We received 2 e-waste samples that were assayed by independent labs, and we're going to continue to source additional samples for assaying, and these samples will be prioritized for our carbochlorination testing.

Over the next 6 months, we plan to complete the drilling necessary to lift the resource to indicated and complete significant bench-scale metallurgical testing across the flow sheet. The results will support downstream pilot plant module designs and the prefeasibility study. These tests are planned to incorporate e-waste into the feed, and we will report the results as those milestones are achieved. We anticipate more visibility into the pilot plant execution schedule as the engineering, procurement and fabrication schedules are developed by Zeton.

I would now like to hand over the call to our Senior Vice President of Critical Mineral Sales, Orin Atkins.

Thanks, Mike. Good afternoon. Last quarter, we introduced our critical mineral marketing effort and said we expected additional MoUs to follow the release of the Hatch study. I'm pleased to report that in August, we executed 3 nonbinding MoUs and that our commercial pipeline continues to grow and mature across every product in the Brook basket. Two of the 3 MoUs cover gallium, sitting at different points in the same supply chain.

First is with Indium Corporation, a long-established global supplier of specialty materials to the semiconductor and electronics industries. As Indium currently serves hundreds of downstream customers, this gives us a channel into a broad base of end users to secure offtake for bulk tonnage of gallium.

The second is with Bedrock Semiconductor, a U.S. company developing native gallium nitride substrates and GaN devices for data centers, telecom, radar and satellite systems and electric vehicles. Bedrock represents a direct pull from a device maker that wants a domestic source of high-purity gallium. Together, these agreements validate demand at both the refining and the device level.

The third MoU is on the supply side with roboLoop, which uses AI-driven robotics to disassemble e-waste more cost-efficiently. It focuses on isolating gallium-rich streams that were previously uneconomic to recover. This gives us a low-cost option to supplement our Brook ore feed over time.

These MoUs, along with our REalloys MoU announced in the second quarter, represent a path to definitive agreements through technical qualification, pricing and achievement of the project's development milestones. We are in ongoing discussions with these parties and others to solidify these agreements.

Beyond the announced agreements, we continue to advance commercial discussions for every material in the Brook basket. On rare earths, our MREC contains a valuable mix of both light and heavy rare earths, including the magnetic critical elements. We are working in parallel with our technical team and the lab development program to identify the best separation solution for this product mix and to pair it with the right offtake partner.

Alongside our REalloys MoU, we continue to engage with separators both domestically and in allied nations, with the goal of capturing value across the full basket of elements. In scandium, we are taking a 2-track approach. We continue offtake discussions into the solid oxide fuel cell market, where demand for a stable domestic supply continues to grow. In parallel, we are advancing an alloy development initiative to standardize scandium in new aluminum and titanium alloys for aerospace, space, defense and transportation applications, which we believe can open significant new demand channels for Brook Scandium.

In high-purity alumina and high-purity silica, the carbochlorination flow sheet gives us flexibility, as we have the option to increase or decrease HPA and HPS volumes to suit downstream demand. We are in discussion with various counterparties across the battery, semiconductor and specialty ceramics markets to place these materials and to grow our supply as those markets continue to expand.

Lastly, the Hatch study identified the ability to blend e-waste and other secondary feedstocks with our ore, and we view these secondary streams as a sweetener that can improve project economics and production yields of the Brook basket.

This quarter, we initiated outreach for secondary feedstocks across 4 general source areas. One, from IT asset disposition or ITAD firms and other recycling companies. Two, from off-streams of smelting, refining and other downstream recycling facilities. Three, from semiconductor scrap and wafer manufacturing facilities. And four, from circular arrangements with waste and spent materials with offtake counterparties.

We are in various stages of testing and sourcing samples. As samples arrive at our Wyoming laboratory, we will evaluate each stream for technical compatibility and economic value in parallel with the lab and pilot plant development Mike spoke to.

Looking ahead, our focus over the coming quarters is converting MoUs into definitive agreements, advancing separation validation, alloy development and offtake solutions for each of the Brook basket materials, and evaluating secondary feedstock streams to further enhance project economics. We will report progress against those milestones each quarter.

With that, thank you, and I'll pass it to the operator to open up the line for questions.

[Operator Instructions] Our first question comes from Brian Lee of Goldman Sachs.

Maybe just wanted to start on the met coal pricing environment. I know you're not ready to give us kind of the '27 view quite yet. But just given the strength in the market of late and your comments around near-term maybe stability, could you at least kind of frame of reference direction of travel here, puts and takes on pricing for that part of your business into 2027? It sounds like you might be comfortable assuming more of a flattish environment given some of the comments around somewhat improving markets in the press release, but just I didn't want to read too much into that. Maybe any sense of where we should be expecting pricing heading into next year?

Yes, Brian, I don't think we're expecting a flattish environment, but I'm happy to have Jason respond to your question.

Yes, Brian, this is Jason. Yes. I mean, certainly, we've seen prices up Q3. I think our export netbacks have tracked those. We've seen them come up further, what roughly on average, the basket of the U.S. indices is up about 9% quarter-over-quarter from where we sit today versus Q3. So I'd expect a similar uptick in Q4, taken with the fact that we're still seeing these impacts from diesel pricing and bunkering on the freight market. So we won't pick up that entirety of the gain.

But yes, as Randy mentioned, going into '27, I mean, we feel good about the projection of the market. And you look at the forward curve, it's flattening out at a pretty high level. I think I last looked at it yesterday, we're right around $255 for PLV, fairly healthy number, certainly more healthy than we've seen up to the back half of this year. So yes, certainly, we have reasons, we think, to be optimistic as far as next year's pricing goes.

Fair enough. That's helpful. And then since you mentioned the cost, you've been pretty specific that a lot of it has to do with diesel cost here. Is there any cost mitigation efforts you're able to implement? Or is there any kind of ability to offset some of those cost inflation measures, especially on the freight side? Or is this something where we're just going to consistently be kind of watching the macro and clearly what's happening out in the Middle East to get a sense of when you might get some cost relief?

Yes. I'll take it on this. Yes, Brian, I'll start out just a little bit on the sales side and then hand off to Chris on the ops side. But yes, I mean, the sales end, we're seeing most of the impact back to our bottom line, of course, on the vessel freights, on the freight differentials going to Pacific. The best way we can mitigate that, of course, is be smart in the deals we're doing. As the year winds down, of course, there's less and less spot availability out there. I'd say for some of the deals we've done most recently, we've taken a view on a fixed differential or a fixed freight, and that's worked out okay for us. Just being smart about the freight we're booking essentially right now and not booking until we have to. And then working with partners that have the ability to hedge those as well.

Then on the -- sort of at the mine level costs, pretty difficult to deal with the diesel, but we're continuing to work with all our vendors and suppliers to mitigate costs on everything else that we buy, roof bolts, rock dust supply type items through longer-term agreements or committing to one vendor for favorable pricing. And that's helped this year to mitigate some of the rise of diesel, but obviously, not all of it.

Yes. Makes sense. Last one for me, and I'll pass it on. The delay in the pilot plant from first half '27 to second half '27, I know you kind of talked to it a little bit. Can you elaborate a little bit on what's driving that? And also, do you expect that would have any impact on customer engagements and the potential to convert more offtakes?

Yes. It's Mike. Let me take that one. It's due to the late start of our internal lab. So I mentioned the fume hoods were late to come for the carbo chlorination. We need to get those installed. That -- those bench scale results are to generate design criteria for the pilot plant. So as we -- that's what shifted out from kind of middle of the year into the second half. We don't anticipate any delays at this stage of offtakes. So those discussions are happening. We do feel like we can probably get some samples, at least for partial basket at bench scale, where we have larger quantities that we can start some of those quality analysis with offtakers even from bench scale data. So we don't see anything that's going to be an issue for us.

Our next question comes from Matthew Key of Texas Capital.

You mentioned that you're still working on some specialty shipments in the domestic market. Could that have a material impact on increasing domestic volume under contract? Or is the 1.7 million pretty much what we should expect in regards to the domestic book as we look out to next year?

Yes. No, I mean, I think what you'll see is this is usually an additional couple of hundred thousand tons, and it's among our highest priced business. So I mean, this will probably take us just short of 2 million tons, somewhere in that range, and it will add a few dollars to our average realizations. And maybe just a follow-up to one of the previous questions. I mean, I think when you look at the fact that high-vol A pricing is up about 26% year-to-date, as Randy noted in his remarks, coupled with incremental domestic volumes at higher prices, I think what you'll see for '27, again, we're not giving formal guidance, but a very different environment on realized prices than what you're seeing right now. Go ahead, Jason.

Got it. That's super helpful. And I just wanted to touch on expected shipment cadence in '27, just given the moving parts around the incremental low-vol production that was brought online, should we expect a weighted maybe more into the second half of '27 as we model out shipments? Or would the incremental low-vol production be pretty much available for sale like immediately at the start of the year?

Yes. It's a good question, Matt. So I'd say it's something we're refining as we speak. So as we said, we've got about in excess of, call it, 600,000 tons of inventory above normal. So obviously, as Chris said in his remarks, we've got the ability to ship that pretty early in the year. I think I'd probably spread that out for a few quarters, at least into kind of mid-year. So yes, I think you'll see a shift from inventory in the first half, which will certainly help with working capital and cash. And then in the back half of the year, obviously, some of the low-vol production will be fully up and running. And so that will probably offset any inventory decline. So I think right now, I'd probably model a little bit heavier in the second half than the first half, but nothing dramatically different, again, given kind of the inventory situation.

Our next question comes from Nathan Martin of StoneX.

I want to think about 2027 as well. I guess, can you guys talk about the potential for additional exports to China in '27 and even '28 if the country follows through with its plan to import roughly 10 million tons of U.S. coal per year?

We're not Chinese sellers, sorry. No, we have not sold tons directly to China nor is that on our wavelength for next year. We do sell some coal tons into Asia, but not into China. And I do think if the planned 10 million ton sort of allocation, if you will, that China has, I guess, agreed to take, that will probably sop up some tons that would otherwise be going from some of our other producers, which we think will actually, on a net basis, help us into some other Asian markets, non-China. So we view it as positive, but not as positive from us directly shipping into China ourselves.

Perfect. That commentary is what I was after. I appreciate that. The other question I had, maybe for Jason. How should we think about the mix for fourth quarter sales between domestic, export? Maybe any commentary on quality as well.

Yes. Sure, Nate. Yes, roughly speaking, I think Q4 is going to look a lot like Q3 in terms of the domestic seaborne split, frankly, and also in terms of the index exposures, I think in Q3, we're roughly, call it, 35% domestic and about 40% going to Asia. I'd say the rough numbers, you have the same exposure to PLV there as well as the tons going to Asia, that percentage. So on a ton-for-ton basis, I think fairly similar to Q3. And of course, we're seeing the indices today up versus Q3. So yes, should those hold, we should see a like increase as well in those netbacks.

Appreciate that, Jason. And then maybe just one question on the rare earth side. I guess you guys made the comment that at this point, you're expecting to spend a maximum of $25 million or so on the Brook Mine project in 2027. How do you see that CapEx expanding post 2027? I think you still expect to make the decision to move ahead with the commercial facility before year-end next year. Any further comments would be helpful.

Yes. I mean we view the refinery as a separate project financing, obviously, from the pilot phase, which once we put together a package for that, which as we've discussed before on a number of occasions, could come from a mosaic of a bunch of different sourcing, either governmental or nongovernmental, including potential for us to sort of drop down our critical minerals into a separate entity and do some capital market transactions around that. So we got at least a year to worry about that particular issue.

I think the main takeaway we wanted to give is that in terms of where we are viewing our '27 spend, we're not only fully capitalized to do so, but it's a relatively modest sum, certainly in comparison to the refinery. And we're fully capable of getting everything to the point with a bow around it to a time position of sometime next year, and we'll certainly keep the market well informed as we move forward in our financing plans.

Our next question comes from Nick Giles of B. Riley.

You started to hit on some of it there, but I just wanted to ask about total spending in the rare earth business. It's helpful to see you break it out between segments. CapEx is below $10 million year-to-date, but SG&A has been creeping higher. You mentioned some new hires. So should we continue to expect that to increase? Or is there any ability to reduce that spend ahead of FID? Just any more comments on how investors should think about total spending for this business would be great.

Yes. I think the way to think about it, Nick, is pretty much what we've telegraphed here that we've got a $25 million bogey, which takes us pretty much to the end of the point where we would make a decision as to proceeding and obviously, what the financing parameters of that would look like. And that will include, of course, any personnel that we'll be adding between now and then. And candidly, Mike can certainly correct me. But I mean, I think most of the personnel is going to be around lab technicians and things of that -- folks of that nature, which are not high-spend ticket groups of hires. But Mike, please give some more color, if you'd like.

Yes. I think I highlighted some of the leadership that we needed across the disciplines to run these programs. But as Randy said, we'll have some -- we'll be adding some bodies, technicians in the analytical lab and the metallurgical lab. And that's -- once the pilot plant gets up and running towards the latter part of next year, obviously, some operators and that spend will probably be recognized mostly in 2028.

Yes. I think the one takeaway that I'd like to make sure everybody understands, we're kind of in a bit of a unique position because from an upstream standpoint, we are all dressed up and ready to go. I mean we've opened the pit. If we had a refinery down the street, which would be in a position to take our feedstock, we would be selling and mining that today. Instead, we've opened the pit and we've mined enough for our pilot operations as we continue to use that up, we'll mine more. But the real problem that the U.S. faces is that there is no midstream capability here. And so therefore, we are perhaps like others, having to design and build our own capacity for midstream operations, which will put us in a rather unique spot once we're there. But until we get there, we are pretty much self-contained and fully financed, so.

Got it. That's helpful. I guess just trying to better understand that $25 million. Is that just the CapEx? Or I'm just -- I'm looking at SG&A year-to-date, and that's run rating near $25 million. So I assume that would repeat in 2027. And then if you add on the additional CapEx, that implies something higher. So can you just help me better understand what that $25 million refers to?

Yes. So the $25 million is just the CapEx next year, Nick. We'll again kind of go through the detail, but that's obviously the pilot plant, the PFS and some further drilling. Those are kind of the main 3 items. And yes, the OpEx, I would say, will probably continue at similar rates. And then that basically gets us to a point on the final investment decision.

I think the other point I would sort of make on the chart that you pointed out, and yes, we did kind of break out in our earnings release for the first time kind of the key spend between the met coal business and the rare earth business. If you look, even in a really depressed pricing environment, I mean, the met coal business has generated about $25 million of EBITDA year-to-date. That's almost exactly in line with maintenance CapEx. So in an environment where highball is trading into the second quartile of the cost curve for a good portion of the year, we're still basically breaking even on the core business. And I think that's important to remember because obviously, that means anything we spend above and beyond that is fully within our control.

Got it. No, Jeremy, that's super helpful. I really appreciate the clarification. Then Randy, I think you alluded to a separation just earlier. I just wanted to ask about that. Can you just talk about your appetite to separate the rare earths business, what the logical timing is? I mean the -- as you mentioned, the equity has been pulled down with the Critical Minerals group, which has made isolating the met coal business more difficult. So I'm just wondering if this volatility increases your desire to do that sooner or later. I appreciate the comments.

Yes. I think as you view a dropdown of a separate operation, we certainly wouldn't orphan it from the mothership, so to speak. And I think in terms of any capital market transactions, you obviously want to time that to coincide with a fairly robust book of business, whether or not you're producing actual revenue, because we obviously we use the capital market raise for purposes of building a refinery. So we're still several years out from revenue recognition from the critical mineral side.

But I think in terms of separating the businesses now, we will be guided by some further steps as we refine actually what the sizing and sort of portfolio basket will look like as we get a little bit further down the road from our testing and pilot work, because we've got some optionality. We designed this thing in the Hatch report, as you saw, with sort of 2 different metrics in terms of size. We were kind of nudged into the higher sizing with some potential interest from certain quarters, and we certainly don't have to go to that route. We can go to a lower size and production slate to get started and then bolt on as we go.

So I think all of those kind of questions will answer themselves as we get a little bit further out on the diving board. And I think in terms of a capital market transactions, we want to have as many of these items nailed down before we go and start any type of a float of a separate entity.

Our next question comes from Jeff Grampp of Northland Capital Markets.

I was curious to dive into the topic of the recovery results you provided on the critical minerals business, pretty strong across the board. I'm curious just for some additional context there. Can you give us a sense of how those recoveries compare to any prior tests or what you've kind of assumed in any economic or technical reports?

Yes. I think if you look at flow sheet options in just about any rare earths or critical minerals flow sheet, the rare earths themselves, you can get high extractions generally with almost all the flow sheets. Getting high extractions of scandium, gallium, germanium, that's a bigger challenge. Those critical minerals being hosted with the kaolinites and this flow sheet achieves significantly higher extractions of those than we had in previous flow sheets. So we were in the 70 range, if you will, for scandium, slightly below that. And so this is 20% increase in recovery in some of these elements.

And I think the other thing to note, we're confident that this also gives us an opportunity to produce some higher purity final products because of the volatile chlorides versus trying to get higher purity from the old flow sheet. So that's going to be proven by test work, but we are quite excited by the results that we have obtained through a suite of tests so far.

Great. I appreciate those details. For my follow-up on the cost side of things on the met coal business, the guide looks like it's kind of implying Q4 cash cost should maybe be similar-ish to Q3. How are you guys seeing that trending into '27, given the -- both the mix in production shifting as well as the rail load out facility. I understand you can't predict diesel prices. So maybe if we throw that variable out and just kind of focus on things you guys can control, just trying to get a sense of where we should think about '27 trending.

Yes, I'll start, and Chris can add any color. So yes, I mean, I'll throw diesel out in a second, but unfortunately, it's tough to ignore. So I mean, obviously, diesel is just under $6 right now. It averaged a little under $5 in Q3. So we are certainly factoring that into the Q4 numbers, which I agree with at the midpoint of your numbers. Remember, you also have 2 weeks of vacation in Q4, where obviously the workers get paid, so that's almost always one of your higher-cost quarters as a result of that.

But look, as you head into next year, I mean -- I think, again, diesel has cost us $3 to $4 a ton this year compared to where it was to begin the year. So that is a big variable, and I would certainly factor that in. At the same time, I think it is Slide 20 -- sorry, Slide 19 in our deck, I would point you to where you can see our mix changing for next year. Obviously, we're not guiding to volume, but you can see next year we are assuming about the same amount of low-vol production as high-vol A. That is about 35%, 36% up from less than 25% in 2026. So that's a good thing. Now that probably is about a $1 or so a ton on a cost headwind, but when you think about the fact that high-vol prices are up double digits compared to low-vol, that's another factor in our favor in terms of actual margin expansion.

So long-winded way of kind of giving you some of the puts and takes, Jeff. And as Randy noted in his remarks, we will come out with formal guidance for '27 in about a month after our board meeting.

Our next question comes from Alex Fuhrman of Lucid Capital Markets.

Congratulations on some of the progress you guys have made on the critical mineral side and starting to identify customers and MoUs. Help me understand the time line here. At what point in the process as you get closer to completing your PFS, at what point will some of these conversations with customers start to focus on price? And how much of the ultimate investment decision is going to depend on some of the prices that you realize, especially for some of the more obscure minerals like scandium and germanium?

So I'm going to let Orin give a little bit more complete answer, but let me talk a little bit about the capital market issues that you've raised. I think clearly, having customer acceptance of our product at the various levels and will be -- and pricing will be a significant input to how both we and the market view the modeling of the refinery project. So I think that's a pretty obvious statement.

I think in terms of defining the individual variables which would go into a contract, that will vary. Some of that may even be involved, particularly if it involves any government discussions, some of that is tied to also procurement issues. So there may be some tying, if you will, of those type of situations.

But I think in terms of third-party independent commercial offtake, we are actively in discussion with some of our potential larger users, particularly on some of our name minerals. And I would say, at this point, when you're pricing a product that won't be put in somebody's hands for a couple of years, you're not going to go into a fixed price arrangement for obvious reasons, particularly given the volatility in the critical mineral and rare earth space.

But I do think that as sort of the general market indexes begin to get some greater degree of transparency, and frankly, institutional acceptance that we'll be more comfortable than probably pricing off various types of index situations as we view the future. And Orin, [ please ] pick up on that and elaborate any way you want.

Yes, sure. I would just say just on the contractual front, I mean, we're in various stages of those conversations now of shifting from a nonbinding MoU to a more binding agreement and reviewing language and what that needs to look like and can provide guidance as we move forward.

And then on the pricing side, I mean, as Randy alluded to, it kind of depends on the material. Some materials in our basket have more visibility into a Western index or some of them have a price floor that's already associated with them. Others maybe have a more limited transparency, but that is starting to evolve, and you're starting to see more index shops such as S&P and others step into it to provide more transparency into these minerals that are evolving. So we're keeping our options open and getting into those details now.

This concludes the question-and-answer session. I would like to turn the conference back over to Mr. Randall Atkins, Chairman and CEO, for any closing remarks.

Well, again, I thank everyone for joining us today. As Jeremy indicated, we'll probably be providing some further information will be early next month after our Board meeting in December. And then, of course, our next time with you will be after the new year when we report our year-end results. So thanks again to everybody for joining the call.

This concludes today's conference call. You may disconnect your lines. Thank you for participating, and have a pleasant day.

Good day, everyone, and welcome to the Ramaco Resources Second Quarter 2026 Results Conference Call. [Operator Instructions] Please also note today's event is being recorded. At this time, I would like to turn the floor over to Jeremy Sussman, Chief Financial Officer. Please go ahead.

Thank you. On behalf of Ramaco Resources, I'd like to welcome all of you to our second quarter 2026 earnings conference call. With me this morning is Randy Atkins, our Chairman and CEO; Mike Woloschuk, our EVP of Critical Mineral Operations; Oren Atkins, our SVP of Critical Mineral Sales; Chris Blanchard, our EVP for Mine Planning and Development; and Jason Fannin, our Chief Commercial Officer of met coal.

Before we start, I'd 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, and 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'd 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'd 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.

Thanks, Jeremy, and thanks for everyone joining us this morning. We have a lot to discuss. First, turning to our critical mineral front, as you know, we released last week the long-awaited Hatch conceptual study, along with the shareholder letter, both of which are on our website. The overall Brook Mine project is transformative, both for Ramaco and for the country. It also represents the reality of developing, building and financing a major supply chain response to the chokehold on critical minerals that the Chinese have over the West.

At Ramaco, we have been at this now for about six years. We believe we are more than halfway there before commercial production. The reality is that it will take several years for the U.S. to balance the playing field with the Chinese, who have been at it for more than three decades. As you know, we changed direction last fall to test the carbochlorination method to apply to our coal-based feedstock. We've now arrived at a method to processing raw ore. This moves us from being just an upstream feedstock provider to also a potential large-scale midstream refiner.

The refinery is clearly the most expensive and largest project we have considered, but it also represents a unique long-term potential profit center and at a transformative scale. We are conservative in our fundamental approach to our commodity businesses, be they critical minerals or met coal. We will approach this project in the same way.

In brief, now that we know both the "how to process" and also "what oxides," metals and MRECs we can potentially produce, going forward we will work to improve the refining techniques to make them financially stronger. We'll also focus to optimize both the refinery construction cost and the construction timing. On financing, we want to make sure that the subject is properly framed. The major capital disbursements for the refinery are still more than two years away, and we are approaching that runway deliberately to finance the project in as attractive as possible a manner for our shareholders.

As we've said before, we have been in discussions with the government. Government financing support has been pending the completion of the independent third-party diligence. Also, procurement offtake counterparties, including relevant federal agencies, were also perfectly reasonably awaiting the Hatch study before advancing. With that Hatch report now in hand, we are positioned to move these discussions forward with both offtake and commercial financing counterparties. Basically, the door opened last week for us to now concretely pursue these discussions to some point of conclusion.

I'm not going to repeat all of the metrics which we discussed in last week's letter, other than to highlight just a few of the milestones. We had Hatch look at the Brook project at two different levels of plant feed. One was at 1.8 million, and separately we had it at an elevated 3.5 million tons of feedstock. The higher case was in part motivated by supplying a larger level of feedstock production for domestic government supply chain needs. The project is and always has been very scalable in both directions.

Our mine out here was originally permitted at 8 million tons of coal production, which we later scaled back to 2 million tons before it became a rare earth project. As I will touch on, we have generations of available feedstock in our deposit, so we can always increase production. If economics or timing so dictate, we can always also lower the tons mined and oxide produced to get started and then add more production later.

So depending upon future demand and financing availability, we could increase or decrease production accordingly. The initial size of the facility will be dictated on Ramaco's efforts to de-risk the project, including offtake agreements and, of course, financing. If there is one hallmark about this company, it is that we call an audible at the line almost every day. Internal modeling for the Brook Mine using the capital and operating cost information from Hatch on the two alternative feedstocks showed a potential NPV of between roughly $3.4 billion to $8 billion and an average adjusted EBITDA of between $600 million to $1.3 billion. Both these figures are up substantially compared to Fluor's 2025 studies. And these figures, I would note, also do not reflect any potential uplift from inclusion of e-waste in the feedstock.

As Hatch noted, the timeline and capital costs have been pushed out and increased compared to last year's Fluor report. So has the profitability. We will of course work to tighten and reduce timing and cost as we progress on the testing, optimization and engineering fronts. One pushback from last year's Fluor report was that we were overreliant on scandium production. Both Hatch's and our own analysis now show that roughly 75% of our potential revenue will be tied to key critical minerals whose main demand driver is the semiconductor industry.

Our growth trajectory would then also be tied to several key markets, be they from data centers to AI. Indeed, at the projected levels of expected production, the Brook Mine could provide a multiple of all of the nation's demand for the strategic critical element gallium and its related products used in these industries. In terms of independent report milestones, we expect to publish a report on e-waste this fall and its use, followed by a new S-K 1300 compliant technical report summary by the end of the year. This will reflect the Hatch flow sheet and the benchmark scale test work now underway. That year-end filing will be followed by a full pre-feasibility study in the spring of 2027, which marks the next formal step in the de-risking of the project.

As we always remind ourselves, fundamentally the Brook Mine project starts as a unique upstream geological opportunity. As we've said before, it's been called the nation's largest unconventional rare earth and critical mineral deposit. Even at the current permit levels, on roughly only one-third of the mine's total acreage, we should be able to operate the mine for generations. We are also working with independent testing labs to identify commercial levels of other critical minerals and rare earth elements within the deposit that we have not disclosed to date. If independent assays and tests confirm commercial size of deposits, we will include that in our future product mix.

To date, we have internally discovered more than 50 such minerals and REEs in our deposit. And as Mike Woloschuk will discuss, construction on our pilot plant building remains on schedule for completion later this year, with full-scale operations expected to commence in '27. We will start moving various lab operations into the new facility this fall to accelerate our testing capability and timing.

Now, I'd like to turn to our legacy metallurgical business. As you've already heard from some of our other public coal peers, we have continued to see market weakness across most U.S. coal qualities, but especially in the high-vol coals. Too much domestic production is chasing a limited export market at the moment. By contrast, the low-vol coals have shown continued relative strength. Reflecting this market reality, in June our Board approved capital for the $25 million development for the first two underground sections at our Maben complex.

Capital will be deployed over the next 12 months, split evenly between this year and 2027. We anticipate by the end of '27 this two-section deep expansion at Maben is going to add about 600,000 tons of production at full capacity. These will be tons which can achieve cash margins roughly double the company's overall second quarter margins. Combined with our existing surface production at Maben, this will also translate into 1 million tons of annualized production by '27. We have the future potential to add two additional deep sections at Maben. This would increase our low-vol capacity by another 600,000 tons for a total of roughly 1.5 million tons of low-vol production from the Maben complex.

And to complete our overall low-vol growth plans, we would combine Maben with our previously announced growth at Berwind. This includes adding 300,000 tons in '27 at the Berwind number three section. This would then take the three Berwind sections to 900,000 tons of annual production, with the optionality to add a fourth section for another 300,000 tons. When these four sections are added to Berwind's Laurel Fork mine, this creates another complex with a 1.5 million ton production slate. Berwind would then mirror the same future level of production as Maben.

We would have a combined 3 million tons of annual low-vol production from both complexes. When added to the more than 3 million tons at Elk Creek and Knox Creek, this provides a balanced medium-term portfolio of over 6 million tons of total production up from our current level of roughly 4 million tons. Our investor slide shows this strategic objective of increasing low-vol to 50%, up from about 25% today. I would also like to commend our metallurgical operations team. Second quarter mine cost at $99 a ton represented the fourth consecutive quarter of sub-$100 cash costs. This was achieved despite diesel prices increasing quarterly by roughly 33% in the second quarter.

Our costs remain in the first quartile of U.S. met coal cost curves. I'm going to finish with a mention of some of our balance sheet metrics. On our shareholder return and capital allocation strategy, we bought back a significant amount of stock for the first time this year. We have now repurchased more than 8% of our Class A shares for about $66 million. This reflects what we regard as a prudent use of liquidity, given what we perceive as a current undervaluation of our stock price.

We also ended the quarter with record levels of over $400 million of liquidity after these share buybacks. Because we are so liquid, we additionally have the ability to now be holding about $100 million of stockpiled coal inventory as of June 30 to sell at a better pricing as market conditions improve. In summary, this has been a quarter with a number of positive moving pieces for us as we begin to roll out some transformative growth opportunities, both in our coal and critical mineral platforms.

With that, I'd now like to turn the floor back to the rest of our team to discuss finances, operations and markets. And first I'm going to have Mike Woloschuk, who leads our critical mineral efforts, to provide some updates on our progress there.

Thanks, Randy. We had a busy quarter with the main focus working with Hatch to complete the carbochlorination study. The results of this study demonstrate the exceptional potential for the Brook Mine project. I first want to start by outlining why we have adopted a carbochlorination flow sheet for the Brook deposit. Brook Mine hosts rare earths and other high-value critical minerals such as gallium, scandium and germanium. Some of these high-value critical minerals are hosted in carbonaceous kaolinite clays. Extraction of these critical minerals requires alteration of the kaolinite mineral structure.

In the carbochlorination process, this alteration also generates additional revenue by converting small amounts of the volatile aluminum and silica chlorides into high purity alumina and high purity silica. The balance of these chlorides is used to regenerate most of the chlorine needed for the process, minimizing makeup chlorine quantities. The flow sheet is designed so that mineralized Brook coal feeds the carbochlorination process as both the source of critical minerals and the reducing agent.

In other words, the coal is simultaneously plant feed and reagent. Non-rare earth critical minerals generate about 75% of the revenues from this flow sheet. This is directly related to the unconventional geology of this deposit, and why TREO grades alone are not a relevant measure of asset quality. Furthermore, we can ramp up production of HPA and HPS as the market demands, with only incremental capital to increase conversion of those chlorides to oxides. We do not have to increase the feed to the plant.

Carbochlorination has been demonstrated commercially for more than 70 years. This process is not novel. We are adapting proven technology to this feed material because it fits with the geometallurgical response of the Brook Mine. Initial tests generated average extractions of over 90% for all targeted critical minerals and these were verified by third-party independent testing. Subsequent testing achieved even better extractions, but third-party laboratories continue to be a timing bottleneck.

To significantly increase test volumes and reduce turnaround times, we have been building out our own analytical and metallurgical testing facility at site. Our analytical lab is now operational and we anticipate internal carbochlorination testing will commence this quarter. The internal test work will aim to optimize separation of the carbochlorination metal chlorides and the results will underpin the next phase of study and the pilot plant design. We have appointed an experienced laboratory manager to build out the team and lead the laboratory operations.

As Randy mentioned, we are evaluating additional upside not included in the study results. We have identified trade-off studies focused on capital and operating cost improvements, and integration of e-waste to boost yields of the targeted critical minerals. And this was identified as an opportunity in the Hatch study. The thermodynamic behavior of gallium and germanium chlorides under planned operating conditions is well established. Both species are volatile and report efficiently to the off-gas, where they are captured in equipment already specified in the flow sheet.

Co-processing a controlled e-waste fraction therefore requires no new reaction chemistry. Early estimates suggest small amounts of e-waste in the feed blend will significantly boost gallium and germanium production with minimal modification to the process. The Hatch team is now into initial design of the carbochlorination pilot plant, and they will be delivering a package to Zeton for detailed design this quarter. At the pilot plant site, excavation work, pilings and some of the foundations were completed in the quarter. In this quarter, we anticipate finalizing the balance of the deep foundations and the slab-on-grade foundation work.

Building steel that will house the pilot and research equipment is anticipated to be completed in Q4. In Q2, we increased the number of drill rigs on site. At the end of the quarter, we've drilled 56 holes this year and have updated our infill drilling program to target a portion of the 4,500-acre permitted area to increase resource confidence level from inferred to indicated to support the pre-feasibility study. We've expanded our in-house geology logging and sampling capabilities and anticipate being able to conduct in-house assays on drill core this quarter.

Non-Hatch scope being managed by WSP advanced several key technical activities, including development of the mine footprint, identifying a location for the tailings storage facility and a review of the borehole locations, material properties and geotechnical studies to support TSF site selection.

I would now like to hand over the call to Oren Atkins, our SVP of Sales for Critical Minerals.

Thank you, Mike, and good morning. I'll provide a commercial update on our Brook Mine where our critical minerals commercial strategy continues to advance on a number of fronts. Alongside the technical work supporting the just released Hatch conceptual study, we have built out a dedicated internal marketing and sales team for the Brook Mine materials, further supported by an experienced team of industry consultants and lobbyists.

With at least 20 different high-value basket materials facing into a myriad of industry supply chains, outreach and visibility has been a high priority. To that end, the team has executed over 30 NDAs related to potential offtake and technical engagement and is in offtake discussions with counterparties for every material to be produced at the Brook facility.

With established relationships across the downstream supply chains, we expect commercial advancement to run parallel to our technical development read a Hatch report, with additional MOUs to be announced in the near future. It's also relevant to highlight that the Brook Mine critical mineral deposit was discovered in partnership with the U.S. government. Ramaco continues to build and enhance relationships with various departments of government to support their strategic initiatives to onshore Western critical mineral supply chains.

A number of our materials have defense applications which have been subject to export restrictions, so we are in regular communication with the Department of War to align ourselves with their supply chains and needs. As Mike mentioned, the carbochlorination process is projected to extract higher yields of high purity gallium, germanium and silica products. We're excited about the fact that the key demand drivers for our products are in the semiconductor, technology and defense industries.

Demand is high for these products, as Brook may be the world's first gallium primary source mine developed at a time where it has been three years since China has exported gallium to North America. We are in active discussions with potential off-takers, ranging from large gallium purification and distribution companies to wafer, power device and RF manufacturers. The carbochlorination process also creates valuable HPA and HPS from what was previously gangue material. While HPA has multiple applications across substrate, semiconductor, ceramics, demand is growing most rapidly for use in batteries.

Ramaco is in contact with technology and battery firms, both domestically and abroad, to place offtake of this material. High purity silica similarly faces into semiconductor and battery sectors, providing crossover of multiple value materials to potential off-take customers. In scandium, demand continues to grow for solid oxide fuel cells, and Brook is well positioned to provide domestic feedstocks into this growing industry. We are in discussion with a large firm in this field for both offtake and a circular arrangement of recycling spent fuel cell materials.

Scandium also improves the strength-to-weight characteristics of metal alloys, and Brook's stable domestic supply could unlock the development of new alloys for defense, space, aerospace and auto applications. Ramaco has retained an industry consultant with years of experience developing scandium alloys, which has greatly accelerated our integration into these supply chains. And we are currently in discussion with two material developers working to standardize new aluminum and titanium alloys with identified end-use applications.

On rare earths, our MREC has a combination of both light and heavy rare earths, making it a unique, valuable product in the marketplace. We are under NDA and in discussion with a number of separation companies, both domestically and abroad in allied nations, and our primary focus is to ensure the technical fit of these facilities to separate each of our rare earth oxides or each of our rare earths into saleable oxides. We announced an MOU with RE Alloys for offtake and separation of MREC and are in discussion with a number of other firms to secure similar separation and offtake agreements.

Lastly, I want to highlight that e-waste was identified as an opportunity in the Hatch conceptual study as the carbochlorination facility provides us with flexibility to integrate a number of these mineral-rich materials into our feedstock ore to boost critical mineral yields and production. We are in active discussions with not only e-waste providers to supply materials, but also offtake customers to create a circular arrangement of recycling spent materials or manufacturing waste.

Two groups have already sent materials to our Brook facility for testing, so we are actively looking to advance the technical and economic feasibility of incorporating recycled materials into our carbochlorination facility. Now that the technical and economic information from the Hatch report has been made public, we anticipate things to accelerate regarding various supply agreements in the near future.

With that, thank you for your time and I will pass along to Chris to speak to our operations.

Thanks, Oren. I'd like to briefly move back to the East and discuss results for the metallurgical coal side of the business. First and foremost, I'm pleased to report and share that operational safety and compliance performance remained strong in the second quarter and much improved from our 2025 results. Quantitatively, we have had 58% fewer incidents in 2026 through the comparable period in 2025, and this is translated into a 54% reduction in our total reportable incident rate year-to-date.

Mine turnover of personnel is also reduced substantially during this prolonged market weakness. Fewer vacancies and a more stable workforce has certainly contributed to better results on our safety metrics. On an operations front, we continue to maintain reasonably acceptable cash costs under $100 company-wide. This is despite the headwinds of stubbornly high fuel costs, which are one of our largest single direct costs, plus the added pass-throughs related to transportation and logistics.

After entering the year at approximately $2.50 per gallon for diesel fuel, we averaged $4.64 per gallon in the second quarter with a peak at $5.71. Fortunately, we saw a pullback in late June and early July. Unfortunately, however, the restarted tension in the Middle East has now pushed current pricing of diesel to $4.71 at the beginning of this week and actually above the second quarter's average pricing.

At our usage and production mix and levels, we see more than a $1 increase in our produced coal costs per dollar of diesel fuel. The impact of diesel fuel alone in the second quarter compared to the start of 2026 levels was approximately $3 per ton produced. Although we are pleased with the cash cost performance, we know it certainly would have been stronger absent some of these external factors. Our Elk Creek complex led to sub-$100 strong cash cost and productivity performance. The main Berwind mine also performed at or slightly better than our forecast during the second quarter on produced tons and cash costs.

As Randy mentioned, we have layered in additional low-vol production from our Laurel Fork Pocahontas No. 3 mine, which feeds into the Berwind prep plant. The majority of ramp-up and restart costs are behind us and while the Laurel Fork mine performance has not yet matched the productivities of the Berwind mine, it does continue to improve month-over-month. As a reminder, Laurel Fork production is a bridge for labor and capital equipment until the third section of the Berwind mine is ready to be deployed. It does give us future optionality for additional low-volatile flex production if we wish to continue its operation.

Regarding the Berwind mine ramp-up, construction activities for the ventilation projects continued throughout the second quarter. The intake shaft has been completely excavated and the concrete liner is 46% constructed and poured. Once the liner is complete, the new mine fan will be installed and mine ventilation adjusted and optimized for the third section. The shaft excavation ran approximately three weeks behind schedule, but we still anticipate the third section at Berwind being operational very early in the fourth quarter this year. At our Maben operations, we have a significant amount of activity underway now to grow our low-vol portfolio where we see much better supply-side dynamics and perhaps even some shortages of the best quality low-vol coals.

We discussed in our last call that the Maben batch-weigh loadout project has moved forward and that work continues. We still maintain a scheduled fourth quarter startup for the rail loadout at Maben. The immediate impact of that will be roughly $20 per clean ton in transportation cost reduction for the Maben produced coal. And on a total company cash cost basis, the Maben loadout savings will lower overall cash costs by almost $2 per ton across the currently producing mines. We are accelerating capital originally planned for 2027 into 2026 to take advantage of the soon-to-be-activated Maben loadout and the superior quality low-vol reserves we hold at this complex.

Field work has begun on the surface excavations and the installation for electrical infrastructure for our first mine, which is in the Beckley seam. This low sulfur, low ash, high CSR coal should complement our operating Sewell seam surface mine and highwall miner. All the necessary mining equipment for the first section has been procured or has been transferred from idle operations. We are forecasting first production in early '27 with the potential for some incremental tons late this year. The second underground low-vol section is expected to come online in the second half of '27.

By the end of '27 we will have the potential to be producing over 1.1 million tons of incremental low-vol coal on an annualized basis above current levels. This is the combination of the third section at Berwind, two sections at Maben and the potential continuation of the Laurel Fork mine. Offsetting this growth in low-vol, we continue to see challenges on the oversupplied high-vol side. We have proactively idled one of our three Stonecoal sections at Elk Creek. We're using the labor and the idle equipment to enhance our workforce and to lower overall maintenance capital spending throughout the company.

We forecast overall high-vol production decline year-on-year, but that the growth in low-vol will offset this, plus favorably rebalance our production portfolio in a positive direction. Over the next few months we should begin to see some clarity with regard to 2027 domestic pricing and may further adjust high-vol production accordingly.

I'd like to now turn the call over to our Chief Commercial Officer, Jason Fannin, for discussion of the markets and their dynamics.

Thanks, Chris, and good morning, everyone. Today, I'll discuss our Q2 sales results, provide an update on our 2026 met coal sales position and market outlook, and then spend a few minutes on the commercial strategy behind our low-vol growth plans. Starting with our second quarter results, our realized prices increased $2 per ton versus Q1 on the back of higher volumes of both domestic and PLV-linked shipments. Looking ahead to pricing in the third quarter, PLV-linked tons should represent about 22% of overall volumes versus roughly 15% in both Q1 and Q2.

Turning to our overall 2026 sales position, at the start of the third quarter, we had secured commitments for 3.8 million tons, or about 97% of our production at the top end of revised guidance.

Our fixed-price book for 2026 stands at 2.5 million tons at a blended price of $121 per ton. We have an additional 1.3 million export tons under index-linked arrangements for delivery in the back half of the year.

Moving to our seaborne metallurgical coal market outlook, pricing in both the Pacific and Atlantic basins was roughly flat on average in Q2 versus Q1, although PLV gave back some of its value in July. However, to start Q3, we have seen the U.S. indices largely maintain their pricing levels, increasing in relativity against PLV. On the supply-demand side, global prime hard coking coal supply continues to decline. Australian exports remain well below historical levels amid limited capital investment, high royalty burdens and ongoing production interruptions.

The safety-driven mine suspensions in China's Shaanxi province earlier in Q2 also removed meaningful coking coal supply from the Pacific market, much of it in low ash, low sulfur, high CSR qualities that are difficult to substitute. Taken together, we believe supply-side dynamics provide a reasonably firm floor near current PLV levels. This brings me to the commercial dimension of the low-vol strategy and Maben development plans that both Randy and Chris have already outlined.

Since early Q2 2025, U.S. low-vol pricing has maintained a persistent and often substantial premium to U.S. high-vol indices. And from a marketing standpoint, Maben volumes have already successfully trialed into the domestic market this year, and we plan to continue to expand our trial volumes into additional North American mills during 2027. Similarly, interest from Asian steel producers in securing premium U.S. low-vol supply is strong. Our first seaborne trial cargo of Maben is scheduled to arrive in India later this week and will undergo industrial consumption later this month and into September.

We are also in discussions to supply trial cargo of Maben into Northeast Asia during Q4. To wrap up the met coal side, we are now at the beginning of the domestic negotiating season. While we won't discuss specifics around those today, our focus remains on enhancing the value of our sales portfolio.

With that, I'll now turn the call over to our Chief Financial Officer, Jeremy Sussman, for review and discussion of our financial metrics.

Thank you, Jason. I'll start with our balance sheet and echo what Randy said. Since the beginning of this year, our strong liquidity position has allowed us to opportunistically repurchase $66 million worth of shares. This has effectively reduced our outstanding shares by roughly 8% or by almost 5 million shares to now less than 52 million shares outstanding. We still have remaining repurchase authorization. As Randy noted, we will continue to look at opportunistic share repurchases as a prudent use of capital dependent upon circumstances.

I would note that we ended Q2 with one of the strongest balance sheets in the public met coal space with over $400 million in liquidity despite the large amount of share repurchases.

In addition, as of June 30th, we had roughly 1 million tons of coal sitting in inventory, which will provide us with a meaningful working capital tailwind should markets improve throughout the year as we anticipate. As we look ahead, this strong balance sheet and cash position allows us the optionality to invest in both our coal and rare earth elements business at the same time. In terms of second quarter operational performance, mine cost results were again extremely solid in this challenging market with cash cost per ton sold of $99. This figure is especially impressive considering the impact of higher diesel costs.

Second quarter cash margins of $17 per ton fell from $20 per ton in the same period of 2025. This was due to lower realized prices of $116 per ton, which fell 6% compared to $123 per ton in Q2 of 2025. As Jason discussed, U.S. high-vol markets remain weak. Despite Australian benchmark pricing improving more than $50 per ton year-on-year in Q2, U.S. high-vol indices declined roughly $10 per ton during that same timeframe. Frankly, we view this trend as unsustainable, given the level of losses we are seeing among higher-cost producers.

Our Q2 production levels fell modestly from the same period as last year as we continue to exercise discipline on production of higher-cost operations in the face of challenging market conditions. As an example, we proactively idled one section at our high-vol Stonecoal mine at our Elk Creek complex. In terms of financial results, Q2 adjusted EBITDA was $6 million compared to $9 million in Q2 of 2025.

Class A EPS showed a $0.26 loss in Q2 versus a $0.29 loss in the same period of last year. Looking forward, we are providing a number of guidance updates related to our strategic shift to grow low-vol metallurgical coal production to roughly 50% of our overall slate.

Based on continued weakness in current market conditions, full-year 2026 production guidance is now 3.6 to 3.9 million tons, down from 3.7 to 4.1 million tons. Full-year 2026 sales guidance is being reduced accordingly to 4.0 to 4.3 million tons, down from 4.1 to 4.5 million tons. Despite lower production, we are maintaining the midpoint of our full-year 2026 cash cost per ton sold guidance at $96 to $99 per ton versus $95 to $100 per ton previously. We now expect full-year 2026 capital expenditures to be $92 to $97 million versus $85 to $90 million previously. The $7 million increase reflects spending this year on the Maben underground low-vol growth project that was recently approved by the Board.

We are slightly adjusting other non-operational full-year 2026 guidance, which can be found in our detailed guidance tables. For the third quarter of 2026, we anticipate coal shipments of between 950,000 to 1.1 million tons with the ability to increase this figure depending upon market conditions. We also expect third quarter cash costs to trend towards the higher end of the full-year range on the back of continued elevated diesel costs related to the Iranian conflict.

In summary, we are financially well positioned to move forward in multiple directions as we navigate the continued challenging met coal markets and strongly advance our emerging critical minerals business.

With that, I would like to now turn the call back to the operator for the question-and-answer session of this call.

[Operator Instructions] And our first question today comes from Brian Lee from Goldman Sachs. Please go ahead with your question.

This is Tyler Bissett on for Brian. Super helpful commentary on the met coal market, and looks like met coal pricing in the U.S. has declined a bit so far in 3Q, but has remained relatively stable. So curious how you're thinking about your realized price in the back half here. Is it fair to assume limited upside to your realized prices until that broader shift towards the low-vol market materializes?

Yes, hi, Tyler. This is Jason. I'd say that's correct. As I mentioned, we've got about 1.3 million tons index-linked across a broad spectrum of indices in the back half, and, of course, the remainder of our committed tons being domestic at a fixed price. But, yes, I think that's a correct statement. They are, given where they're at today, until we see some movement upwards, at least in the U.S. indices, they are relatively flattish.

Tyler, it's Jeremy. One thing I might add, you know, our guidance tables are as of June 30. Since then we've been able to layer in some incremental domestic tonnage, both, as you know, steel capacity utilization is running pretty high right now at multi-year highs, and at the same time we've seen a couple of suppliers fall down. So I do think that will help offset some of the weakness in the indices that we're seeing.

And also appreciate all the color on the offtake discussions. Can you provide any more details on when we can expect to see some more meaningful MOU offtake announcements? Also curious how early customer feedback has been regarding the new timeline and flow sheet. And what needs to happen to turn these MOU agreements to more finalized and binding agreements, especially in relation to making a potential FID at some point. And just lastly, how concerned are customers regarding the upcoming expiration of the China rare earth export control suspension in November?

Oren, you want to start on that, and then I'll add some remarks?

Yes, sure, to chop down some of those questions regarding sort of timing and MOUs. We expect to announce some of these as we progress towards the end of the year. So those would be with this year. As far as, you know, customers' response to our timing, I think everybody, ourselves included, would love to have all of these minerals on the market yesterday. But it is also understood that if you're building a large-scale refinery and working timelines to catch up China's 30 years ahead of us, that these things will take time. So the market is pretty understanding and they want to secure long-term domestic supplies.

Regarding your question with the concerns around the Chinese export ban. I think it's pretty well established that, you know, export ban or no, that China has kind of showed their hand on their willingness to use rare earths as a geopolitical weapon. And for anybody that has a manufacturing process that needs stability, that they are not going to be a chosen partner. So outside of even discussions of stability supported by public arrangements, private companies are realizing that they need to step into that kind of stability as well and to look for domestic supplies.

And I think also, I'll chime in on your question about the investment decision. So we are away from, far away from that point, I mean I think the typical engineering, critical path would tell you after the PFS study that would provide most of the engineering and final cost numbers that would put it on the table as to what it would look like from the standpoint of just CaPex, presumably OpEx as well. You know, as Oren touched on, obviously we're going to be lining up a number, hopefully lining up a number of procurement arrangements between now and then.

And then I think, you know, depending upon how this thing looks from potential cash flow potential, we'll probably have different options we can consider, be they governmental or private in terms of the financing approach. As I said, with 75% margins at this point, without really, putting in any layering for enhancement from e-waste or other types of opportunities financially, at least on paper, it stands up as a pretty strong project. What you have to do between now and then is actually put some reality behind that, which comes from the standpoint of primarily procurement and optimization of all the engineering and construction costs. So that's -- I'd say if we were talking probably next summer, that would be a point that I think we would have a little bit more intelligent dialogue.

Our next question comes from Matthew Key from Texas Capital. Please go ahead with your question.

I had a kind of a follow-up on the offtake -- kind of the offtake discussions. One of the major changes from the Hatch report was the addition of high purity alumina and silica to the product mix. I was wondering if you anticipate any challenges in securing offtake agreements for HPA or HPS, just given the size of the production, or should it be pretty similar to what you're going through with MREC and the other rare earth elements?

I'll let Oren start, and then Mike can comment.

Yes. In short, I mean, this is a product that has demand across a number of sectors, so it is not dissimilar to the marketing efforts that we're making for our other products. And so, no, we do not expect it to be different in our discussions with offtake counterparties for HPA or HPS.

Mike, you want to touch on anything further?

Yes, look, I think the beauty of this flow sheet for this style of deposit is we have the ability to turn it up or down without changing what goes through the plant. You know, we're only producing about 5% of, as final products, HPA and HPS, and we're regenerating chlorine from the rest of it. So the aluminum chloride, we have the ability to produce more, or we can use it to recycle chlorine. So that gives us quite a bit of flexibility.

Got it. No, that's very helpful. And just to wrap up, I wanted to ask about the upside potential for e-waste. Could you maybe just help me understand the potential benefit there from a financial or operational impact?

So I'll let Mike start on the operations side and maybe Jeremy touch a little bit on the financial side. So go ahead, Mike.

Yes, I would say that e-waste recyclers are typically targeting precious metals and then they're left with a material that, you know, they're less interested in because it's more difficult to process. That's really the material we're targeting. High gallium, high germanium e-waste, we've done some analysis internally. Only small amounts of this material can make a significant difference in terms of the financials. So as Oren said, we're sourcing these materials so we can do some testing, assaying on it, better understand the quantities that are out there, what's the metallurgical response through our flow sheet, and then we hope to include this in future studies.

Jeremy, go ahead.

Yes, very good question. So I mean what I would say is we can't really give specifics at this point until we're a little bit further along the process, but we believe it will be very meaningful in terms of everything from NPV, IRR, payback, cash flows, margins, et cetera, to the point where we plan on certainly having an interim study out with e-waste economics certainly before the end of the year. We wouldn't do that if we didn't think it was material.

Our next question comes from Alex Fuhrman from Lucid Capital Markets. Please go ahead with your question.

I had some questions on the updated report that you put out last week, curious about what seems like a pretty significant shift in end markets now, about 75% of projected revenue from the Brook Mine is going to be tied to semiconductors and high-end chip making. Can you talk a little bit about how that came to be? Is that simply the result of the updated chlorinization process and just simply being able to better extract some of those metals like gallium and germanium? Is there a little bit of maybe a strategic shift in aligning with some of those high-end growth verticals that those minerals are going to be serving?

Yes. I think what we learned as the project was developing and we were doing more geological, mineralogical analysis, metallurgical testing was we have a kaolinite clay that could potentially generate revenue in this flow sheet that we weren't capitalizing on the previous flow sheet. So as you alluded to, we're getting better recoveries with this flow sheet and when we're able to produce an expanded suite of products that are meaningful. So, we view this flow sheet as the right fit for this deposit because of its geology and mineralogy. And as mentioned, it's a proven technology in the titanium industry currently, but back in the 70s and 80s, there was pilot testing done on aluminum-type ores, and it was successful technically. But of course, they were targeting a one-commodity product, aluminum, which was lower price. With our basket and the increased materials that we can produce, that's why it makes a difference economically for us.

Our next question comes from Jeff Grampp from Northland Capital Markets.

I was curious with respect to the timing of Brook, I think you guys hit on a couple of different times that you think the initial expectations for I think 2031 could prove a little conservative. I was hoping you guys could maybe elaborate on what some of the kind of early identified levers could be to accelerate some of that timing.

Mike, go ahead.

Yes, sure. I suppose what's changed from last year at this time is, the large power transformers have a long delivery time from two to four years. And we've got independent opinions on that from more than one engineering firm. And the reason for that is these things are highly customized, manufacturing capacity currently limited, and competition with AI data centers, renewable energy products. What that looks like in a year from now, perhaps it gets better, and I think that could be an opportunity. But that's the main driver of what's caused the schedule to push out is supply chain related to large power transformers.

Got it, understood. Thanks for that detail. For my follow-up, you guys have noted being active on the buyback front so far this year, stocks kind of below levels that you guys have executed at. Is that a relatively safe conclusion that we should expect you to continue to be active on the buyback and just in general, how comfortable are you guys leaning into that considering kind of capital spending needs of the existing business and Brook over the next couple of years?

We kind of consider our spend in a pretty holistic fashion. The Board approved a $100 million buyback. We've spent about two-thirds of that. We remain with the optionality in dry powder to do more buybacks should we so choose. And of course, we've also announced that we wanted to layer in a little more of the more low-vol production, given where we saw the market. So that's about a $25 million spend. So I think we'll try to balance them as we go forward to see what works.

Obviously, deploying capital for balance sheet purposes gives you one kind of payback, so to speak, and putting funding behind longer-term assets provides a runway for earnings capability out into the future. So we want to kind of try to balance both considerations and obviously not tip our hands beyond what we've said already about production.

Our next question comes from Nick Giles from B. Riley. Please go ahead with your question.

I was just hoping to follow up on that last question and maybe zoom out. Ramaco's undergone an internal reorganization, but was curious for your latest thoughts on a potential separation of the rare earths business. I mean, when could something like this make sense? And how should investors think about the ultimate equity check that will contribute to the Brook Mine on a fully developed basis?

I think, the way I would look at it, you've really asked two questions. One is the reorg. So, we've already telegraphed that we're kind of aligning ourselves so that we'll have different silos. One's obviously a met silo, one's potentially a critical mineral silo, which frankly might break down into two pieces. One would be refining and one would be mining and marketing, kind of mirroring again what we've got in the East. And the other silo would be sort of our royalty interests, which would include obviously the reserve assets in the East, the Brook Mine reserves out here and infrastructure assets.

So that's kind of how we're aligning ourselves in terms of pulling the trigger on any of that, just as a normal capital market transaction sketch, you would probably want to execute on those when you have a little bit more risk mitigation to each silo, and obviously some revenue hopefully behind each one of those particular numbers. So that's kind of a gauzy answer to a question of when, but it's a fairly straightforward one in the sense that you know you don't want to separate things until they're ready to stand on their own.

In terms of equity checks, I think it's going to be a question of how we actually break this financing down, which we've got, quite a ways to walk before we decide which direction makes the most sense. There are some opportunities to do things which don't require equity checks. Those are more sort of sovereign-oriented type financings. And there are things which would require equity checks, but how that equity comes in, be it in the form of procurement arrangements, perhaps with advance payments, other types of supplier arrangements, co-ventures, et cetera. We're a little ahead of ourselves on that one right now, at least on the private side.

No, I appreciate all that, Randy. Maybe just one of those items I think you're suggesting is obviously offtake. And so, in terms of definitive offtake agreements, do you think that those will require some sort of sampling from the pilot plant, or could we see something definitive before we kind of get those initial samples?

Yes, I mean, look, I think in terms of offtake, I mean, we're having discussions as we speak. I mean, we will have MOUs out in the near term, and that is well before. And when I say near term, certainly over the coming weeks and months. So obviously that's well before samples from the pilot plant. You've seen many deals in the critical mineral space, based on some process that may or may not be successful multiple years out. And these deals are subject to obviously quality parameters, successful testing, et cetera.

So, between now and, the time that the pilot plant is producing samples, we are confident that we'll be able to do significant work, whether it be offtake, financing, et cetera, areas that we can de-risk this. And, of course, it will be subject to quality testing from the pilot plant, but that's just part of the normal course of business.

I understood. Thanks for that, Jeremy. And maybe just one more if I could. Just on your kind of low-vol output more broadly, obviously it's going to be growing here in the coming quarters. Just what's your appetite to reserve some of that low-vol production or incremental low-vol production for the domestic markets versus preserving some for export?

Yes, hey, this is Jason. Good question. As Chris mentioned in his remarks, it's Maben reserve, given both its geography and its geology, is a higher CSR type southern West Virginia low-vol that we've already seen travel extremely successfully into the domestic market here this year. I suspect there'll be strong demand for it for '27 as we get further along in discussions with the customers there. But certainly on the export side, it's got value as well. As I mentioned, we've got a trial that will be starting soon in India.

There's a trial quantity that's been requested for Northeast Asia in Q4, and we've seen excellent CSR testing results on the coal as well, but on the export side, it's also an offset against our already existing NS platform on demurrage costs, on blending up qualities, things of that nature.

So it's got a lot of positive aspects to it as it comes into our book. But I suspect, in a nutshell, it's going to play in both markets very well. And it just depends on where that final value lands, as we get further into discussions on next year and further along in discussions on additional trial cargoes overseas.

[Operator Instructions] Our next question comes from Nathan Martin from The Benchmark Company.

Just following up on that domestic question, Jeremy, I think you mentioned adding some domestic tonnage for this year since quarter end. Should we expect that to be at similar pricing to the 138 you guys have now for your current commitments? And then how many domestic tons do you expect to ship in the back half of the year versus what you guys ship in the first?

Hey, Nate, this is Jason. Yes, on the pricing side there, it's largely in line with what we already booked there. We're just rolling additional tons on to some existing contracts there with existing customers for this year. Again, as Jeremy mentioned, just to pick up some slack from some of these other operations that have either fallen away or continue to struggle. So in the back-end, it'll be incrementally up, to be a higher proportion, as Jeremy mentioned earlier also, of our sales in the back half, tonnage-wise?

Yes, so on that front, I mean, based on the 1.1 million tons in the guidance tables, it would have been about pro rata, I'll call it about 550,000 domestic tons shipped in the first half of the year, pretty evenly split Q1 and Q2. But as we said, we've been able to layer on some additional tons, so, it'll be up, 100,000 plus, give or take. And obviously we'll update the guidance tables next quarter.

All right. Very helpful, guys. Appreciate that. And then coming to the cost side of the met coal business, Chris, I think you said that diesel expense or higher diesel expense added roughly $3 a ton versus your original expectation, maybe. First, just to confirm that, and then you also mentioned with the rail loadout expected to open at Maben, I think in the fourth quarter, that should reduce overall operations cost per ton by about $2 versus current operations. Again, confirm those are correct. And then just as we think about how that could apply to 2027, again, you guys have done a good job offsetting those diesel costs this year, maintaining full-year cost per ton guidance. Is it reasonable to assume then in '27, cost per ton should come down? Just kind of doing the math maybe to the mid-90s.

Want to address the first part, I'll go through the second part about 2027. Chris?

Yes, yes. So I was trying to figure which part of that question to tackle first, but your math is, your verification on the math is about right. So, so far this year through seven months the increased cost of diesel fuel both as a direct purchase and as the, sort of diesel fuel escalators on trucking and rails has increased our costs by about $3 a clean ton from where we would have been had diesel stayed flat year-on-year. So we're roughly $1, a little over $1 all in per dollar of diesel fuel cost increase or decline. So, as we see the rack price go up or down, you can do the math on what that impact is. And then, you might have to do a little bit of rounding on the Maben loadout, but essentially if you've got a little over 300,000 tons of annual production currently at Maben and you're saving $20 a ton on that in our total 4.1 book of sales, there's a little rounding there but that's how you get to a weighted average reduction of it's a little less than $2 that rounds up to $2 a ton.

Yes, so to tackle '27, it's a good question. I don't think we're ready to give formal guidance at this point but I guess the way I think about it is, if you normalize diesel we're running about in the mid-90s right now. When the rail loadout at Maben comes online, you're right, that basically saves another buck or two a ton company-wide. But obviously we're layering in low-vol tons next year, which I would say cost-wise are slightly above kind of our current costs. But as Randy noted, from a margin perspective, if we were selling spot today from those incremental tons, it'd be about double what we're getting. So, obviously some puts and takes next year, but I mean, I think, at least conceptually you're thinking about the view conceptually, correct?

And with that, ladies and gentlemen, we'll be concluding today's question-and-answer session. I'd like to turn the conference call back over to Chairman and CEO.

Well, again, I appreciate everybody being on the call today, and we will look forward to updating people as we move forward. Thanks very much.

And with that, we'll conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.

Good day, and welcome to the Ramaco Resources First Quarter 2026 Results Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Jeremy Sussman, Chief Financial Officer. Please go ahead.

Thank you. On behalf of Ramaco Resources, I'd like to welcome all of you to our first quarter 2026 earnings conference call.

With me this morning is Randy Atkins, our Chairman and CEO; Chris Blanchard, our EVP for Mine Planning and Development; Jason Fannin, our Chief Commercial Officer; and Mike Woloschuk, our EVP of Critical Mineral Operations.

Before we start, I'd 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, and 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'd 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'd encourage everyone on this call to go on to our website and download today's investor presentation.

With that said, let me introduce our Chairman and CEO, Randy Atkins.

Thanks, Jeremy, and thanks to everyone for joining us this morning. I'm going to lead off with our shareholder return and capital allocation strategy because since the start of the year, we bought back a significant amount of stock, and that has been for the first time.

As we said in our release, thus far this year, we've repurchased about 2.6 million shares of our Class A common stock at an average price of about $14.50 per share, and that represents about 5% of our stock. Our stock currently continues to trade below levels of last year when we issued equity either directly in a stock issuance last summer or indirectly through our convertible notes last fall.

We're also now generally trading on a forward basis in line with our met coal peers based on consensus estimates. As a dual platform company, we're currently seeing very little value in our stock price that reflects our rare earth or other critical mineral assets.

So given that backdrop, we're going to continue to explore whether buying shares represents a prudent investment of our current cash capital. As of today, we've got about $63 million of additional buying power under the original $100 million authorization, which the Board provided last year.

We also ended the first quarter with about $490 million in liquidity, which was up about 310% year-over-year. Our balance sheet is giving us lots of options to simultaneously consider continued share repurchases, advancing efforts at our Brook Mine, our growth efforts for our low-vol coals.

And turning to the met coal business. We continued strong cost control in the same challenging market price conditions we've now endured for the past year. Our miss for this quarter has all been top line. This was the third consecutive quarter of cash costs, which were under $100 per ton. In the face of the rising diesel prices this year, we've managed to accomplish this cost discipline without cutting wages or benefits to our miners, which we regard as the most significant.

I would note that on our mine cost, the conflict with Iran has had a related impact, of course, on oil pricing and has escalated the cost of all of our fuel products. We've seen rack pricing increase to as high as $5.45 a gallon across our operations, which is up from about $2.50 at the end of last year.

Based on our historical purchases and usage of diesel and gasoline, on an annualized basis Ramaco realizes about $1.5 per ton of cost increase for each dollar per gallon of diesel fuel increase. This impacts not only direct mine cost, but indirectly through third-party transportation costs for both our raw and clean coal.

While we're expecting fuel prices to ultimately subside sometime in the second half, at current levels the impact on our mining cost is approximately $4 per ton when compared to earlier this year in '26. And despite our continued solid operational performance, coal markets remain challenged, both in general and especially on pricing, once again especially on high-vol side. While high-vol prices rose modestly in the first quarter of '26, we still view current indices as unsustainably weak.

One important point that I would like to note, however, is regarding future pricing. We are finally beginning to see some long anticipated drops in production, both domestically and overseas. We are witnessing everything from bankruptcies, production cutbacks, distressed sale of processes. And in all these cases, they involve both large public and private producers.

By our estimates, almost 2 million tons came out of the domestic market in '25. This year, we expect an additional roughly 3 million tons or more to follow. At some inflection point, these production cutbacks will create a supply imbalance, which will begin to impact pricing, we hope.

Our growth plans relating to coal are all about the low-vol markets. Last quarter, we restarted our Laurel Fork Mine, and we'll be adding an additional third section to our Berwind Mine this summer. At full production, these projects are expected to add about 100,000 to 200,000 tons of low-vol in '26 and about 0.5 million tons of production additionally in '27.

Our new rail loadout is under construction at our low-vol Maben complex and is expected to be complete later this year. When it opens, we expect to save about $20 per ton on trucking costs. And the loadout, of course, gives us more options when we consider whether and when to start our Maben 1.5 million ton low-vol deep mine project as market conditions dictate.

We've also been a bit quiet for the past few months on our rare earth element and critical minerals front. However, we have not been idle. I expect that in the second half, we will reflect and announce a number of milestones.

We have principally been waiting on receipt of the revised conceptual study from Hatch, which we expect in late June as well as the technical geological report summary coming from Weir, which will follow.

Both of these analyses are based on our new patent-pending carbochlorination processing technique. As we noted last quarter, our internal projections continue to estimate that this new flow sheet process should generate a material increase in incremental revenue and free cash flow. This is compared, of course, to our previously published projections by Fluor about a year ago using a different solvent extraction processing technique.

With new independent analysis for the carbochlorination flow sheet coming in focus, we've ramped up efforts regarding potential offtake transactions and nondilutive third-party financings. I will not get into specifics today, but we will make specific disclosures when those transactions are hopefully complete. But advanced discussions are continuing with both domestic and overseas groups, and these include both public and private counterparties.

Of further note, the subsequent more detailed preliminary feasibility study, also being prepared by Hatch, remains on track to be completed in late '26.

Today, in Wyoming, our building structure to house the pilot plant seems to be able to be completed this summer and the fabricated interior equipment will start installation this fall with full pilot operations starting in '27, all as previously announced.

Last quarter, I also mentioned that we were exploring some reorganization options for Ramaco's overall corporate structure as we move further into our dual platform. This effort is largely in response to anticipating the start-up of our critical mineral operations.

We have now taken a number of concrete legal and accounting steps to move this forward, and have formed separate corporate entities within a holding company structure currently under the parent, Ramaco Resources.

One new company will be called Ramaco Royalty. This will house all our mineral reserve, infrastructure, intellectual property rights and other related income-producing assets. This will include our fee-owned reserves of both metallurgical and thermal coals as well as our rare earth and critical minerals.

Similarly, this entity will own our infrastructure assets in the East, such as our prep plants and rail loadouts. And in the West, it will own our pre-feed infrastructure related to the Brook Mine processing facility. It will also include any possible rail infrastructure as well as the critical mineral and storage facility we have been working on with Goldman Sachs. To our knowledge, this will be a unique collection of income-producing assets, especially those relating to rare earths, which will provide us some optionality in the future.

The second company will be Ramaco Critical Mineral Resources. This will house the production and sales operation of our Western Brook Mine rare earth critical minerals and thermal coal mining. Think of this as mirroring the same form of our existing met coal development production and sales operation in the East, except it will be exclusively focused on our Western critical minerals.

The third company will be Ramaco Refining. This will hold the carbochlorination separation facilities, which will be constructed to process the Brook Mine critical mineral feedstocks into oxides and MREC.

This reorganization is being taken to both ultimately enhance shareholder value and better reflect the different and distinct forms of assets and operations that we both currently have and are developing for the future. Each of these operations have different operating, financial and capital market profiles, even though for the time being, they will all operate under the holding company structure of our parent Ramaco Resources.

Hopefully, this structure will provide more operational and financial flexibility as we develop different and separate production, processing and sales businesses in both the met coal as well as the critical mineral space. We expect to have the pieces in place for this reorganization in the second half of the year, and we'll also talk about it further at that point.

So with that, I'd like to turn the floor back over to the rest of the team to discuss finances and operations and markets. But first, I'll ask Mike Woloschuk, who heads our Critical Mineral efforts, to provide some updates on our rare earth progress.

So Mike?

Thank you, Randy. In Q1, we continued advancing the conceptual study for the carbochlorination flow sheet with Hatch. Key engineering deliverables have been completed and issued in the quarter. The mineralized Brook Mine coal, used as a key reagent in this process, is estimated to be a significant contribution to rare earth element production as the enriched coal seams are targeted for this duty.

We identified opportunities to increase chlorine recycling, and we have identified other opportunities that will be included in the final study report anticipated for late June.

While we are continuing third-party metallurgical testing, we placed key analytical and equipment orders to fit out our internal geometallurgical laboratory at the iCAM facility. This will enable a higher volume of test work and assay results to be delivered with faster turnaround times compared to the external labs. We anticipate internal geometallurgical testing to ramp up in early Q2 to support the next phases of this project.

Also in Q1, we completed drilling of 33 holes with over 9,300 feet of core. These drill programs include 27 infill drill holes and 6 water monitoring holes. We currently have 4 drill rigs on site, and we anticipate drilling to continue to year-end. In total, we now have drilled 174 holes and 35,000 feet of core since our program started.

Pilot plant building construction activities included completion of the foundation systems to support the forest lab with the overall building expected to be complete late summer and early fall. Our coal storage facility construction is included the completion of the foundation, the stem walls and lateral reinforce tension members. The overall structure is expected to be completed this month.

Overall, we remain extremely excited about the Brook Mine opportunity with the carbochlorination flow sheet. We will, of course, be in a position to discuss more about that once we have receipt of the Hatch and we have reports expected shortly.

Our overall time line remains the same as we have previously disclosed. In the second half of this year, we look forward to making meaningful progress on both completing the pilot plant build-out along with the pre-feasibility study.

I would like to now turn the call over to our Chief Financial Officer, Jeremy Sussman.

Thank you, Mike. Starting with the balance sheet. I'm pleased to note that our record year-end 2025 liquidity allowed us to opportunistically repurchase $37 million worth of shares since the beginning of this year. This effectively reduces our shares outstanding by 2.5 million shares.

As Randy noted, as long as we believe that our stock remains substantially undervalued, we will continue to look to opportunistically repurchase shares to our advantage. We ended Q1 with one of the strongest balance sheets in the space with almost $500 million in liquidity.

In terms of first quarter performance, as Chris will discuss, operational results were again solid with cash cost per ton sold at $98. All of our primary peers have now reported Q1 results. I'm proud to note that our cash cost of $98 per ton continue to be in the first quartile of the U.S. cash cost curve among our Central Appalachian met coal peers. This figure is especially impressive considering the dual impact of higher diesel costs, coupled with the weather-related transportation issues that negatively impacted our overall sales figures by more than 50,000 tons in the first quarter.

Q1 cash margins of $16 per ton fell from $24 per ton in the same period of 2025. This was due to lower realized prices of $114 per ton compared to $122 per ton in Q1 of '25. As Jason will discuss, domestic high-vol markets remain weak. Despite Australian benchmark pricing improving $50 per ton year-on-year in Q1 of 2026, U.S. high-vol indices declined to $20 per ton during that same time frame. Frankly, we view this trend as unsustainable given the level of losses we are seeing among higher cost producers.

Our Q1 production fell modestly from the same period as last year as we continue to exercise production discipline in the face of challenging market conditions.

In terms of our financial results, Q1 adjusted EBITDA was negative $1.8 million compared to $10 million in Q1 of 2025. Class A EPS showed a $0.30 loss in Q1 versus a $0.19 loss in the same period of last year. Looking forward, we are reiterating all key 2026 operational guidance, including production tons sold and cash costs.

In terms of second quarter 2026 guidance, we anticipate higher shipments between 900,000 and 1 million tons. We expect cash costs towards the higher end of the full year range for the second quarter on the back of elevated fuel costs due to the Iranian conflict.

As we look ahead, our strong balance sheet and first quartile cash cost position provide us with meaningful optionality to both invest in our coal and rare earth elements business while also allowing us to continue to opportunistically repurchase shares. In addition, as of March 31, we had over 1 million tons sitting in the inventory, which will provide us with a meaningful working capital tailwind should markets improve throughout the year as we anticipate.

With that said, I'd now like to turn the call back to Chris Blanchard, our EVP for Mine Planning and Development.

Thanks, Jeremy. Before jumping into some of our operational metrics and progress over the last few months, I wanted to recognize our coal miners for their significant improvements in safety and compliance in 2026, compared to the same period last year.

While we still have much work to do towards an ultimate goal of 0 incidents, 2026 year-to-date performance has improved by 250% compared to the same period in 2025 and is back on a trajectory of continuous improvement that we have had for most of our history. In these challenging market conditions, it does remind us that a safe mine is a productive mine and productive mines tend to be lower cost as well.

Turning to those performance metrics. We have been able to maintain acceptable cash costs at our operation despite headwinds on our operating supply costs. Specifically, the run-up in the cost of diesel fuel driven by the Iranian conflict has impacted first quarter costs negatively by approximately $1.50 per ton sold compared to where we otherwise would have been. While fuel prices have pulled back from peak levels, they do remain elevated compared to the beginning of the year, and we continue to monitor this closely.

Also on the supply side, raw tungsten pricing is up by approximately 350% in 2026 on Chinese export controls. This has led to nearly a 100% increase in the cost of our mining bits and tools, which particularly impacts our underground mines. We're continuing to work with our key suppliers to mitigate these cost increases and others whenever possible.

Given the poor coal pricing environment on the high-vol side of the business, we have moderated production from our Elk Creek complex to both manage fiscal inventory and to not produce additional tons into a marginal market, continuing to monitor the market conditions and may make further reductions throughout the year if they are warranted. However, at our low-vol operations, we continue to work to add new low-cost production and lower our existing operating costs there.

At the Berwind Complex, the first of 2 new air shafts is nearing completion into our Berwind P4 mine. The second shaft will be excavated immediately following the first, and we expect both shafts online and in operation by late August. This ventilation upgrade will then allow us to ramp the Berwind Mine with another full super section and push this mine's production up to 900,000 to 1 million clean tons annually.

While this ventilation work is still ongoing, during April, we brought online our idled Laurel Fork low-vol mine. The ramp-up of this single section mine is continuing and is on budget currently.

Switching to our Maben low-vol complex, we have initiated the Norfolk Southern rail loadout project. All major materials are procured and excavation for the loadout belts is already underway. We expect the unit train loadout to be fully operational in the fourth quarter of 2026, fully eliminating all trucking logistics costs from our Maben Mine and lowering projected cash costs in the railcar to the same low levels as the rest of Ramaco's mines. This should also allow the Maben product to move more easily into the domestic metallurgical coal markets as we contract for 2027.

Finally, work continues at Maben on permitting and initial development work for the future underground mines planned for this complex.

Moving forward, we are continuing to focus on those items which we have some ability to control, namely volume and costs. We're positioning ourselves to quickly capitalize on market improvements or shortfalls by other producers.

For a discussion of the coal and critical mineral markets, I would now like to shift the call to Jason Fannin, Chief Commercial Officer.

Thanks, Chris, and good morning, everyone. Today, I'll discuss our Q1 sales results, provide an update on our 2026 met coal sales position and market outlook, and lastly, cover our Brook Mine critical minerals marketing efforts and progress.

Regarding the seaborne metallurgical coal markets, I first want to address Q1 indices and pricing dynamics. Our realized pricing in Q1 was marginally lower quarter-over-quarter, despite benchmark indices broadly moving higher. The explanation is straightforward and it comes down to 2 things: which geographies and indices our book was sold into and against, and the set of nonrecurring operational headwinds.

On the index side, although the PLV headline number rose 17% in Q1, the relevant benchmarks for the majority of our export tonnage increased only about 6% quarter-over-quarter. These were sales against the U.S. high-vol indices, which today are about 35% lower than the PLV index and remain heavily deviated from their historical relativities to PLV. Another 25% of our Q1 sales were domestic shipments of high volatile coal with pricing, of course, down year-over-year, about 8.5%.

Furthermore, 55% of our Q1 exports went to Asia, which is the highest proportion in company history. Unfortunately, PLV-linked business represent only about 15% of our overall Q1 volumes because of large PLV-linked shipment representing another 6% of overall Q1 volume slipped into early Q2 due to weather-related logistics backlogs. Increased shipments against PLV linked contracts in Q2 should benefit export realizations versus Q1.

On the operational side, severe weather disruptions to both CSX and Norfolk Southern rail networks in January and February impacted our ability to make timely planned coal deliveries, particularly some higher-priced domestic specialty orders, which slipped into Q2. Also for Q2, we expect increased overall shipment volumes with our Great Lakes business now fully flowing and the normalization of the rail and weather-related disruptions that impacted Q1 execution.

On pricing for Q2, we expect to move about 70% to 75% of committed volumes to the seaborne market with about 25% of export tons priced off the PLV index, another 25% on a fixed pricing basis and the remaining seaborne volumes roughly evenly split and priced against the U.S. low-vol and the U.S. high-vol indices respectively.

Turning to our overall 2026 sales position. We have now secured commitments for a total of 3.5 million tons, which represents about 90% of our planned annual production at the midpoint. Domestic customers account for 1.1 million tons at an average fixed price of $138 per ton. Export commitments totaled 2.4 million tons, comprised of 1 million tons at an average fixed price of $107 per ton and 1.4 million tons on index-linked pricing mechanisms.

As of the end of Q1, we had shipped about 650,000 tons of our annual index-based business and had about 1.75 million tons remaining to price.

As we look ahead to the second half of 2026, we are optimistic about an improved market environment for met coal. On the demand side, protectionist policies in the U.S. and Europe have lifted steel prices and increased hot metal output, while India's 2026 crude steel production is projected to increase 8% to 9% year-over-year.

Furthermore, in one of the most constructive developments for seaborne coking coal demand in some time, China steel exports have fallen nearly 10% through April on a year-over-year basis. If that moderation proves durable, it will lend considerable support to global steel prices and blast furnace mill margins.

On the supply side, we expect high-vol coking coal production to continue to contract throughout the year, which should narrow the widest period between U.S. high-vol indices and Australian indices. Randy and Jeremy have already pointed to a number of Appalachian and Australian producers who have either gone into bankruptcy, curtailed productions or placed themselves for sale.

As the year plays out, this expected supply contraction will have an impact. Specifically, regarding Australia, we believe current PLV levels are not only sustainable, but have further upside as the year goes on. This is set against the backdrop of limited capital investment, high royalty taxes and continued production issues and interruptions alongside strengthening global steel markets.

Moving to our Brook Mine. We continue to advance our critical minerals marketing program with increasing momentum. Our expanded marketing team is actively engaging potential customers and partners in the U.S. and overseas across the full Brook Mine product portfolio. We hope to announce various counterparty MOU transactions this coming quarter.

As we generate additional lab scale and pilot scale material in 2027, we expect these MOU frameworks to evolve toward formal commercial agreements.

And with that, I'll turn it back over to the operator for the Q&A portion of the call. Operator?

[Operator Instructions] Our first question comes from Brian Lee of Goldman Sachs.

This is Tyler Bisset on for Brian. Appreciate all the color on the impact from the higher cost on the coal side. And so as you think out for the rest of the year, presumably you are bringing back online some higher cost operations. So how do you think about your cost trends in the back half of the year? Can you just kind of walk us through some of the puts and takes there?

Chris, why don't you handle that? But Brian, I mean, I think effectively, what we're bringing back online at the Berwind Mine is not necessarily what I would describe as a high-cost operation. It's actually one of our better cost products.

So -- but Chris, why don't you go into a little bit more granularity?

Yes. So obviously, last year, we did idle the Laurel Fork mine, which is the one that we've restarted in April. But it is only being restarted until the ventilation work I was describing is completed at the Berwind mine.

We're using it as a staging ground to hire the workforce that will then be transferred over to Berwind so that we don't have to experience the same ramp-up in production and hiring at Berwind that we normally would if we waited until September to start that section. So we would have that normal incremental while you've got the lower production ramp-up at Berwind. We're just choosing to take that in advance. And it's a relatively small amount of tons that Laurel Fork will produce over April through August.

So don't view that as impacting the cost, probably more than $1 overall on the low-vol side of the business. And then ultimately, when Berwind starts, that mine has historically been one of our lowest cost producers in the portfolio.

Awesome. Super helpful. And then on the sales commitments, I know these represent about 90% of your production midpoint of guidance, but it's just 80% of the midpoint of your sales guidance. So I guess what gives you confidence that you can book these incremental volumes to meet your sales guidance for the year? I guess what are -- again, what are some of the puts and takes here through the balance of the year?

Sure. Jason, do you want to take that?

Yes, sure. Yes. So Tyler, this is Jason. Yes, certainly, we're seeing demand start to pick up already here. And I think it's -- a lot of that's just on the back of the various geographies still markets improving. Certainly, Europe, we've seen some changes, more incremental demand there. And then we're quite confident here in what we're seeing, not coming out of China as far as the demand we're starting to see into the Pacific.

Particularly we talked about the Maben loadout firing up. We've actually got our first cargo of Maben going seaborne this quarter into the Pacific, against PLV. So I think both the high-vol and the low-vol sides there, again, we're being prudent with the high vol, but we're seeing demand start to pick up. We just got to be smart about the pricing.

The next question comes from Jeff Grampp of the Northland Capital Markets.

I was curious as it relates to potential offtake agreements or MOUs at Brook, I know you guys can't get into too much today, but curious if there's any particular products that are gaining more interest versus others that you think are more actionable in the near term.

Yes. Of course, as I said earlier, I don't want to tempt fate and get into too much specifics. But I mean, I would say that the products in general that a number of our potential customers are focused on are gallium and scandium. So we were actually relatively pleased by the interest that we've gotten on scandium since that's been a subject of some criticism of our portfolio in the past.

Got it. Appreciate that. And for my follow-up, given the strong balance sheet that you guys have here, I'm wondering your thoughts on M&A, and maybe even bifurcating that in terms of potential on the met coal side, given some of the kind of near-term distress and if there's anything on the critical mineral side that might be interesting.

Sure. So as I've kind of quipped before on M&A, we're not too fond to the M, but we're happy to look at the A. And we've opportunistically, as part of, frankly, our DNA, done acquisitions, particularly of reserves that we felt were able to be opportunistically acquired.

We bought a large portfolio from Coronado here several months ago. We've done other purchases of similar note over the years. I think it's becoming a more target-rich environment, if you will call it that, and we are certainly out there looking. Again, if we see anything that seems to make sense, we'll pull the trigger, again, assuming we can get it at an opportunistic price and the market conditions today would seem to dictate that there may be a few things that you could pick up on an advantaged basis.

The next question comes from Davis Sunderland of Baird.

Maybe 2 for me. First, I know earlier this year, you guys talked a bit about some backlogs at the National Labs and some of the other third-party testing sites. I just wondered if these have improved, worsened, stay the same? Or any other thoughts you could provide on outlook for this for the balance of the year? And then I have one follow-up.

Sure. Well, I'm going to let Mike go into granular detail, but one rather important thing is that we're now starting to onboard testing to our own facilities out of our research facility in Wyoming. So I'm hopeful that if we get certainly more space out there, we will then be able to do a lot of the -- at least initial testing work ourselves out in Wyoming. Of course, once we get the pilot facility up and at them, then we'll be doing a great deal of testing.

But as far as third-party groups, Mike, why don't you comment on that?

Yes. Look, it still persisted as a challenge. I think there's a lot of activity happening in critical minerals domestically and the labs are full. So we identified this a couple of quarters ago, and therefore, fitting out our own labs. So we expect to be doing our own testing, and I think that will alleviate some of the challenges that the entire industry is facing with regards to lab capacity.

Super helpful. Maybe my second one, and again I fully acknowledge that more details are later to come this year. But maybe for you, Randy, just wondering if you could talk a bit more about the strategy or the rationale maybe to break things down in this reorganization the way that you did, maybe why you're doing it by assets versus by product? Or just any other thoughts on this specific methodology would be helpful.

Sure. You bet. So I mean, as we started down this process of really having sort of a dual platform with 2 different critical minerals, and coal is now a critical mineral as well, of course, but the rare earths and their adjacent critical minerals obviously are viewed in an entirely different light than the coal business. And needless to say, if you go back and look at publicly traded companies in the rare earth space, they traded at a slightly different multiple than coal companies.

So I think ultimately, at some point, it would make sense to be able to unlock the value that we have in our various assets so that they could be ultimately separately valued in the marketplace as opposed to being in sort of more of a conglomerate structure.

Growing up, I looked at a lot of conglomerates, and I remember they were very complicated, of course, for analysts to be able to follow because they're completely different businesses in many cases. Even though all of our business are somewhat mining related, certainly, the processing aspects of the rare earth business are completely different than anything associated with the coal industry.

And the other thing, which is pretty unique, of course, is we, unlike a lot of other companies, have a pretty substantial amount of reserve assets, both in the coal as well as in the rare earth space. I mean, we've got a huge reserve base out in Wyoming. And there are, frankly, not very many entities out there that will be able to show sort of an income stream coming from unique assets like the coal and rare earth combined.

So we think at some point, although we trade now in sort of our B stock in similar fashion, we expect at some point to probably be able to sort of drop down many of the infrastructure assets that we've got in both the East and the West into this platform, and it could be a very compelling royalty play. So that's kind of the thinking certainly on that particular aspect of it.

The refinery business, very different business, of course, trades at different multiples. It's more of a commoditized business. Certainly from a CapEx standpoint, that will be the highest ticket of all of our development efforts. We won't have the numbers nailed down until we publish something independently from Hatch later next month. But you can assume that a rare earth processing facility is a high-ticket capital expenditure.

And then, of course, the mining and sales aspects that we'll do out West will again be very similar in concept and conduct to what we do out East. So I think we'll have an interesting blend of different entities. We don't have any specific plans at this point, other than getting everything sort of set up and put into separate categories and separate entities.

But that then provides us the optionality to decide later on what is the most advantaged way to recognize value for our shareholders, because I think we've got a number of different assets that I think could provide some really compelling value for our shareholders as we move forward.

The next question comes from Carlos De Alba of Morgan Stanley.

I just wanted, if you could maybe drill down a little bit more on the rationale to separate the -- in the restructuring that you're doing to separate the Ramaco Refining business for the Brook Mine critical mineral feedstocks and the Ramaco Critical Minerals, given that presumably they are fairly integrated operations.

Yes. So great question, Carlos. I'll try to take a stab at that in addressing the last -- the comment. But again, the refining aspect of critical minerals, as you well know, is an entirely different breed of cat than the sort of processing aspect that relates to the coal business.

So I think kind of including and wrapping the refining together with the mining and sales conceivably is mixing 2 different type of operations, which again, could trade at different types of multiples if they were freestanding operations.

So I think providing a platform for rare earth sales and mining is going to be one platform that I think will be pretty clean to understand. And I think then the refining business sort of segregated into a separate entity provides us some different ways to look at both financing that, but also operating it. So I think it gives us some options that we're now seriously pursuing on a number of different fronts, which I can't really get into.

Okay. We'll wait for further details down the road. And then maybe another one is relating to thermal coal mining within the Brook Mine. This is a very important byproduct that will help the economics of the project. Can you give us any update on customer discussions and offtakes or MOUs for that thermal coal volume?

Yes. We are now -- and of course, we're happy to have Jason touch on that as well. We are discussing right now with a number of utility groups potential offtakes. We're even exploring longer term some possible avenues for being able to make on-site use of the thermal coal in some manners, which I won't get into right now, but that could be interesting.

But I think as it relates to the actual mining, we don't really want to engage in full-scale mining right now, even though we would be able presumably to move a thermal product, because what we don't want to do is have large stockpiles of critical mineral feedstock, which we won't be able to effectively process until we have actually, of course, a commercial facility. So we're setting ourselves up to be able to have their thermal coal moved in sequence and in sync with our critical mineral processing and mining operations.

And as you well point out, needless to say, our economics out there are interesting because what would typically be waste in a critical mineral operation, in our case, the byproduct, of course, is coal, and we're able to sell that at economics even based on current thermal prices, which would, in essence, pretty much pay for all the mining for all the products, inclusive of the critical minerals.

The next question comes from Nathan Martin of the Benchmark Company.

Really just a clarification question to start. You guys previously called the expected midyear report from Hatch a preliminary economic analysis, now seem to be referring to it as a revised conceptual study. Maybe no difference, but just wanted to make sure, is there any anticipated change in the data we should expect from that report?

The sort of the short and long answer is that there you can expect no change in what the data that will be developed in the report. It will have the same sort of commercial and technical feasibility that was developed when the Fluor report was put out last year under the solvent extraction technique.

The change in nomenclature is candidly from a compliance standpoint to keep in regulatory formality with the SK-1300, which the SEC has suggested that the way that these studies be described should be done as a conceptual study as opposed to the prior nomenclature, which was called PEA.

Okay. Got it, Randy, appreciate that. Maybe, Jason, a question for you. You gave us a lot of good detail, I think, around your expected sales throughout the rest of the year. I might have missed this, but again, you guys mentioned the lower netback realizations on export sales into Asia in the first quarter caused by the elevated freight rates. What portion of your remaining sales do you expect to be sold on a CFR basis and could possibly impact freight rates as well if they remain higher?

Yes, Nate, this is Jason. Thanks. So we actually typically sell very little on CFR basis, but where we saw the impact was going to the Pacific was on recognized freight differentials there versus the Australian shipments. So that certainly did -- we had several good pricing mechanisms in Q1 set up in advance of the uranium conflict. And once we start to see the impacts of that, it was baked into the overall mechanism. That's where we saw the hit.

And then certainly, again, given the fact that we had one large shipment slip out of the very end of the quarter there was disappointing, impacted us as well there. And typically, also Q1 is our -- usually our lower domestic outcome, sales in terms of total volume out the door. So all those things kind of came together there and that impact on that pricing.

Okay. And then you mentioned domestic, Jason. I did see domestic tonnage remained at 1.1 million tons, but I think pricing was down about $4 versus the last quarter. Anything specific you could talk about that drove that change? And then do you expect any additional domestic sales thus far with a little bit of open tonnage still out there?

Yes, sure. So on your first question on the pricing change, so nothing's changed there in terms of the customers, the structures, all that sort of thing. We're marking some certain fees differently than we had before, just to get better apples-to-apples pricing comparisons within our book. And that's the entirety of that change on that overall price on the domestic side.

And then yes, on the pickup in the domestic, we have seen a couple of points of interest, as you can suspect on the high-vol side, just given from operations that have either already shut down or curtailing or in the process of shutting down. So obviously, we view that as a positive sign.

Elk Creek has an excellent reputation in the domestic market, and we typically have one of the first phone calls when folks need high-vol, and we're seeing that already. So we see that as very positive certainly for the second half.

Our next question comes from Soundarya Iyer of B. Riley Securities.

This is actually [ Nick ] on from B. Riley. First question was just -- sorry if I missed this in the prepared remarks, but I wanted to ask if you could just provide a breakdown of CapEx or break out the Met Coal CapEx between sustaining and growth. And then on the growth side, what's baked in today? And what other levers do you have to ultimately increase low-vol exposure and just what that capital intensity looks like?

Jeremy, please take that.

Nick, so when we think of our CapEx guidance for the year, it's pretty close to 50-50 in terms of, I'll call it, maintenance on the coal front and then growth on both the coal and the rare earth and critical minerals front. So I'd use about $10 to $11 a ton on the coal side. So let's call it about $45 million of maintenance capital and then another $20 million or so for our low-vol growth this year, which is obviously the third section at Berwind, and then the rail loadout at Maben with, of course, the remaining for rare earths.

On the growth side, I think as you noted, our focus on the coal front is really on the low-vol side. So that's ultimately taking the Berwind Mine up to 4 sections. And should we -- again, should we choose, go -- that would -- we can go underground at the Maben Complex, which would add up to another 1.5 million tons.

All of this is market dependent. We are starting to see some positive signs ahead. And certainly, as we move throughout the year and start budgeting for '27, these are obviously things we'll take a hard look at.

And I think just to sort of add a code to what Jeremy said, Jason mentioned, we've got one of our Maben shipments that's now going seaborne this quarter, which we think is important because to the extent we can establish the Maben brand overseas, that will be an important market for volumes on low-vol that are going to be much higher than we've historically experienced. So we view that very positively.

And we are certainly in a liquidity position, of course, to initiate the Maben deep expansion just as soon as we think we've got sufficient clarity on market signals that give us comfort that once we put it in, we're going to have a strong market once we start actual full commercial production.

Got it. Maybe just one more clarifying one. I think I heard 15% was PLV linked of met shipments this quarter. Where could that go in 2Q? And then where should we expect that to settle when Berwind kind of ramps up later this year?

Jason, do you want to take that?

Yes, sure. So yes, Nick, this is Jason. Q2, right now, we're projecting on basis what's committed, about 25% of exports basis PLV. I think that's maybe just slightly over 20% of overall volumes, still with obviously a few tons out there still to place in Q2, which will look at that market.

In the back half, what I can say a few things. One, we inked a term high-vol deal very, very late in Q1 that just started against PLV that will flow through the entire year. So we'll see the impact more of that in Q2 and in the back half. Randy and I both mentioned, the Maben trial here we've got this quarter. We're hopeful that that leads to more business on that front. And then also, we're currently in negotiations, I can say, with one large firm customer on PLV linked business to add additional cargoes in the second half.

So based on where we sit here today, I would expect it to increase. It's just hard to put a number on that right now.

Got it. No, that's very helpful, Jason. I appreciate it. Just one more, if I could. Just when we think about the carbochlorination process, as you build IP around this, I mean, is the patent protection ultimately around something chemistry related? Or is it the application to coal-hosted material? Just trying to get a sense for what you would ultimately protect against, and just as some of your peers are exploring processing as well.

Sure, Nick. So I'll let Mike go into somewhat more detail, but suffice to say that our IP projections are both designed to be broad and all-encompassing. So it would include all of the areas that you just articulated and anything that we can regard as trade secrets, we will be projecting, because I think what we're going to have is a pretty unique process, which may ultimately be able to be utilized, certainly not only with respect to our coals, but other coals and other coal-related products. So it -- we get it perfected. It's a pretty good mousetrap.

And that's why, once again, when I commented that we're going to have some very interesting things that we think are going to be sort of downloaded into our Ramaco Royalty entity, that includes royalties and potential IP income that would flow from those, which I think over time could be a very impactful bit of income to us.

Mike, do you want to go into a little more comment there on the IP side as it relates to more of the specifics on the processes in themselves?

Yes. I would just add that you touched on a couple of things. Rare earths and critical minerals in coal and carbonaceous clays, definitely, we want to lock this technology up. The IP is also around the extraction and purification around some of those critical minerals.

So the beauty of this deposit is we aren't purchasing a reagent. We have it there and it's mineralized. So if you have to purchase coal as a reagent or carbon for this reaction, we're producing it at a fraction of the cost, and we're generating a significant amount of our critical minerals from the coal itself. So that's what the IP is around.

This concludes our question-and-answer session. I would like to turn the conference back over to Randall Atkins, Chairman and CEO, for any closing remarks.

Sure. Well, first of all, of course, I want to thank everybody for joining us today. As we commented earlier, we expect probably by the end of next month, certainly maybe just slipping into July, maybe for the Weir report, but we'll certainly receive something from both Hatch and Weir, which we regard as a pretty significant milestone.

At that point, we are considering probably coming back into the market to have a separate report, which will be both disclosed in written form, and we probably will consider also having somewhat of a separate and unique call, which we'll certainly be able to entertain questions from both analysts and shareholders on. So we would expect that to happen sometime probably in July would be my expectation, but this would be before our Q2 earnings call, which we would expect to probably happen in early August.

So with that, I thank everybody again for being on the call today, and we will look forward to our next catch-up. Thank you very much.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day, and welcome to the Ramaco Resources Fourth Quarter 2025 Results Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to Jeremy Sussman, Chief Financial Officer. Please go ahead.

Thank you. On behalf of Ramaco Resources, I'd like to welcome all of you to our Fourth Quarter 2025 Earnings Conference Call. With me this morning is Randy Atkins, our Chairman and CEO; Chris Blanchard, our EVP for Mine Planning and Development; Jason Fannin, our Chief Commercial Officer; and Mike Woloschuk, our EVP of Critical Mineral Operations.

Before we start, I'd 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, and 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'd 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'd encourage everyone on this call to go on to our website and download today's investor presentation.

With that said, let me introduce our Chairman and CEO, Randy Atkins.

Thank you, Jeremy. First, I want to thank everybody for being with us this morning. We had another extremely busy quarter on our critical mineral front out West and indeed the best quarter in years on our met coal operations.

Given the great job our coal ops team did in maintaining cost control in '25, I'm going to start on that front. This quarter, we achieved the lowest cost we've seen since the fourth quarter of '21. At our Elk Creek complex, cost averaged just $80 a ton. Quarterly costs and margins were the strongest of all our Central App peers.

We're also proud that in this difficult market environment, we have not cut wages or benefits for our mine workers. We believe Ramaco is a best-in-class employer, and we continue to attract the top mining talent in our industry.

Reflecting our strong workforce, productivity in the fourth quarter was also the strongest we've had last year. Quarterly cash margins of $24 a ton were tied with our first quarter margins as the strongest of '25. This is despite a 17% decline in high-vol met coal indices during that period.

As we look to where we're headed in '26, we are initiating our annual met coal guidance, which was published in our release. We are now poised to grow total sales for the sixth year in a row while lowering overall cash cost for the third year in a row.

We cannot control pricing, of course, but we are proud to compare our cost against any non-long-haul peer in our space. As a result, if benchmark prices hold at current levels or even improve, we expect strong overall earnings growth in '26 versus '25.

On met coal sales, we've now committed to roughly 80% of our '26 production at the midpoint of guidance. Jason will go into the specifics on our sales metrics, but we achieved both strong domestic and export pricing.

On overall met coal markets, we've begun to see some clarity on what we hope is going to be a meaningful rebound this year in index pricing. The potential triggers are both supply constraints in Australia and some stronger Indian demand after a slow buildup.

Australian premium low-vol indexes have increased to roughly $240 per ton and by more than $40 a ton from the fourth quarter. Average low-vol and high-vol indices are also up almost 10% today compared to the fourth quarter.

As a result of all this market clarity, we are now either accelerating or initiating some of our low-vol growth projects at our Berwind and Maben complexes, and moving them from '27 into '26, which we had previously deferred. These projects are expected to add about 0.5 million tons of production in '27 and between 100,000 to 200,000 tons of additional production in '26. They will also add about $20 million in growth CapEx this year and have very strong paybacks.

On high-vol markets, we are currently seeing a crowded field of new projects from several of our peers. They're all fiercely competing for Asian export business and have created lots of pricing pressure with current high-vol index prices lagging well below historic relativities.

We, however, have been able to secure recent high-vol sales into Asia at meaningful premiums because of our low vol -- pardon me, low sulfur character of our coals. It's our expectation, given market conditions, that published U.S. index pricing will eventually adjust.

Now I'd like to move to our rare earth and critical mineral business. We're excited about the new proprietary technology breakthrough from our internal team who has developed something called carbochlorination for purposes of separation and extraction from coal.

Recall that we recently brought on board, 2 of the most senior members of Fluor's critical mineral team that had spearheaded the work on our original preliminary economic assessment or PEA. We have referred in our earnings release to some of the details of this novel form of flowsheet. This carbochlorination process provides a fundamental derisking of a previous complicated and costly separation and extraction process in a number of respects.

It reduces the overall capital and operating costs. It improves overall product recoveries and yields. It will ultimately increase our cash flow. It creates a higher-value product slate. It uses a proven technique, which has already been deployed in the titanium industry. And from a marketing perspective, it reduces the project's reliance on scandium as the main product driver, although we still feel scandium is an important future use for our rare earths.

We are now working with our independent consultant Hatch to validate these estimates and expect to publish a revised PEA with third-party economics by the middle of the year. Despite being a coal company, we have a good deal of technology focus in our DNA. We have been exploring, as many of you know, new uses of carbon in coal and indeed rare earths for over a decade, both on our own and with the Department of Energy's National Labs.

We currently have an impressive basket of intellectual property, which includes over 70 patents pending applications, exclusive license agreements and trademarks. Indeed, we have now already filed robust patent and trade secret protections around this novel flowsheet process and related technologies. We believe this will ensure that Ramaco and our Brook Mine will be the only unconventional source of rare earths and critical minerals that will be able to use this novel proprietary process.

As I said, our internal analysis shows that this flowsheet results in increased cash flow and a reduction in both capital investment and operating costs. These preliminary figures compare very favorably to the already strong original economics that were in both Fluor's original PEA last July as well as the upsized development case from my last shareholder letter in September.

The new flowsheet also shows markedly increased separation recoveries and yields and a higher overall value product slate. Specifically, it changes the proportions of individual production levels of the overall basket of products.

We now anticipate that the largest percentage of production will come from the combination of high-purity gallium, high-purity alumina as well as high-purity quartz. These all target the semiconductor industries and are very high-value products.

As mentioned, we also anticipate that this approach will reduce the overall percentage of scandium production. We continue to think that scandium use will prove to be a very important developing market.

However, the current appetite for high-purity gallium and its related alumina and quartz in the semiconductor industry is both proven and rapidly expanding. We hope the Brook Mine will be an important and meaningful resource for this critical industry.

Finally, another important benefit to the new product slate is that the flowsheet route will allow us to forgo the costly solvent extraction process. We now expect to sell our rare earth production as a mixed rare earth carbonate or what's called MREC to third-party metals and magnet processors at strong pricing.

MREC will now be a smaller percentage of our overall production. And this will also now eliminate the significant CapEx expenditure and the ongoing operating reagent expense associated with the former solvent extraction technique.

New flowsheet modifications will modestly increase the time line for completion of our preliminary feasibility study from Hatch. However, on a project that could well exceed $1 billion in capital investment, we would prefer to get it right before we build.

We are continuing construction of our pilot plant testing facility in Wyoming, which should be complete this summer. We will begin moving our internal chemical and metallurgic testing operations into that building when it opens. We will defer construction of the internal processing infrastructure at the pilot until we finalize the flowsheet testing from Hatch.

As we've said, the internal equipment is being designed and optimized at the Zeton, Inc. fabrication operations in Ontario. We now expect full pilot operations to start in 2027.

On our downstream critical minerals front, the Trump administration recently announced an initiative to establish international price floors for critical minerals. We remain confident that the U.S. government is committed to ensuring the development of a robust domestic supply chain and we will take further steps in this area.

We also continue to pursue procurement, funding and development opportunities with both governmental and strategic stakeholders. We expect the new direction and information we've just announced today with this new flowsheet approach will inform a good deal of these discussions as we progress.

We were also recently gratified to see the administration's discussion about the creation of a domestic rare earth stockpile program called Project Vault. This program dovetails with our previously announced critical mineral stockpiling terminal at the Brook Mine, which we are pursuing with Goldman Sachs. There should be more information on that in the near future.

We are also now exploring some reorganization options for Ramaco's overall corporate structure as we move further into our dual platform operations. We hope to announce more clarity on that in the coming months.

We expect to set up separate corporate entities within a holding company structure to better reflect the different forms of assets and operations that we both now have and are developing for the future. We hope this structure will provide more operational and financial flexibility as we develop 2 different and separate businesses in the met coal and separately in the rare earth critical minerals space. All of this, of course, will be designed to enhance shareholder value. Again, we will provide more color about that as we roll it out.

Lastly, I would note that our balance sheet is now in the strongest position that has been in our history. This is despite some challenging recent years in the met coal markets.

As you know, we raised roughly $1 billion in capital in the second half of 2025. We also ended the fourth quarter with record liquidity above $520 million, up more than 275% year-over-year. We expect this additional funding will allow us to more rapidly move forward with our transition to a dual platform critical minerals company.

Now I would first like Mike Woloschuk, who leads our critical mineral business, to share some further thoughts and details on our rare earth progress. I'll then turn the floor back to our team to discuss finances, coal operations and markets. Mike?

Thank you, Randy. As you highlighted, we have some exciting updates to report on flowsheet development. We completed an expanded suite of testing of Brook Mine composite samples at multiple external metallurgical facilities. These include chemical and mineralogical analysis, ore physical properties, chemical mineral extraction and purification testing.

This expanded test program also included initial testing of the carbochlorination flowsheet. Commercial carbochlorination is a high-temperature industrial process using carbon source, such as coal, and chlorine to convert metal oxides into volatile metal chlorides and water-soluble chlorides. This is the dominant technology used for nearly all titanium manufacturing today. And from our test work completed to date, including the mineralogical analysis and metallurgical response of the critical minerals, initial testing of carbochlorination indicates the Brook Mine responds favorably to our proprietary process.

In this flowsheet, the valuable volatilized critical minerals from the Brook Mine include gallium, germanium, aluminum and silica. Initial tests show virtually all of the gallium was volatilized, and this is a significant recovery bump from the previous flowsheet.

We also achieved high extraction of aluminum chloride, a portion of which can be recovered to produce high-purity alumina. Germanium and silica are also volatilized under our intended operating conditions. These volatile vapor phase chlorides will be condensed, separated and purified from the crude chloride mixture.

This flowsheet allows us to produce higher purity gallium, which is sold at a premium. We will also generate additional revenue from the HPA and high-purity quartz, both high-value products used for semiconductor, renewable energy and other advanced applications.

Our carbonaceous plays contain abundant amounts of kaolinite, which is the source for high-purity alumina and high-purity quartz. Effectively, we are now able to generate revenue from GaN, something no hard rock rare earth project is able to do.

Scandium and the suite of the rare earth elements are converted to chlorides in the residue. They remain in the solids after the reaction and similar to table salt, they will dissolve in water, which is a much better option than leaching in large amounts of caustics and acids.

We intend to selectively remove scandium and produce scandium oxide and simplify the balance of the rare earth portion of the flowsheet to produce mixed rare earth carbonate or the MREC product, as Randy mentioned.

Separation of rare earths into oxides is both technically complex and capital intensive. Production of MREC is a flowsheet simplification that will reduce the capital and operating costs associated with rare earth solvent extraction, separation and finishing.

The 2 main reagents in carbochlorination are carbon and chlorine. So a coal deposit has all the carbon we need and it is not a reagent we have to purchase. Most of the chlorine is recycled by decomposition of nonrevenue-generating mineral chlorides, simplifying the bulk reagent logistics associated with the hydrometallurgical flowsheet option.

Our focus going forward is to complete more test work to determine optimum conditions for the carbochlorination reactor and downstream testing on solubilizing the rare earth chloride residues to selectively extract scandium and produce the MREC. We will also conduct separation and purification testing on the crude chloride circuits to define the flowsheet necessary to achieve the various gallium purities.

The testing plan for high-purity alumina and high-purity quartz is analogous to gallium. Ramaco filed provisional patents on the carbochlorination process to recover rare earths and other critical minerals from coal and carbonaceous clay deposits. And we feel this is a significant competitive advantage over other flowsheets being considered for critical mineral hosted coal deposits.

In parallel to the test work program, we have engaged a specialist consultant with experience in alumina carbochlorination to generate a thermodynamic simulation of the carbochlorination circuit and to provide design inputs for the updated preliminary economic analysis. We are engaging Hatch to complete a PEA, and this is anticipated to be completed midyear, followed by a pre-feasibility study by year-end.

With the flowsheet pivot, we paused the detailed design of the downstream pilot plant modules at Zeton until we generate a new basic engineering package for carbochlorination. This is anticipated in Q3 2026.

However, we anticipate Zeton's continued involvement since they have experienced piloting similar unit operations. We also anticipate conducting on-site testing, both at the existing iCAM Research Center as well as the new pilot plant building now under construction. We expect the pilot shell to be complete later this summer.

Switching to an update on geology. We completed the fall drill program, which included both infill and step-out drill holes. We are nearing completion of an initial fence drill program, which will inform drill density necessary to increase geological confidence to support selective mining.

We have additional fence programs planned and are increasing the number of drill rigs to complete this program this summer. We hope to have sufficient geological data from our drill programs to move to reserve status from inferred up to indicated rather by year-end, in line with the completion of the Hatch pre-feasibility study.

As mentioned, we are building our internal laboratory to conduct internal assay and metallurgical testing to mitigate lengthy external lab turnaround times. We have 2 ICPMS machines, and we have equipment at site already that will be used for the carbochlorination reaction. We anticipate hiring technical and analytical staff to ramp up in-house geometallurgical testing.

I would now like to turn the call over to our Chief Financial Officer, Jeremy Sussman.

Thank you, Mike. Starting with the balance sheet. I'm pleased to note that we had record liquidity of $521 million at the end of the year. This is the strongest level of liquidity that we've ever had. Liquidity was up over 275% compared to the same period of 2024, and we ended the quarter with a net debt position of $11 million.

I want to touch upon the extraordinary financial transformation to our balance sheet that we achieved in the second half of 2025. First, in July and August, we raised $65 million in unsecured notes. Second, in August, we raised $200 million in new equity through an underwriting by Morgan Stanley and Goldman Sachs.

Third, in November, working again with Goldman Sachs, Morgan Stanley and a larger underwriting syndicate, we raised $345 million in 6-year unsecured convertible notes with a 0% coupon. Then in December, we increased our revolving credit facility led by KeyBanc to $500 million, inclusive of $150 million accordion feature.

In terms of fourth quarter performance, as Randy noted, operational results were again extremely solid with cash cost per ton sold of $92. This continues to put Ramaco in the first quartile of the U.S. cash cost curve.

Q4 also represented the company's strongest quarter in terms of cash cost per ton sold in 4 years. Fourth quarter cash margins of $24 per ton equaled those of the first quarter as the strongest of 2025 despite the U.S. high-vol metallurgical coal indices having fallen 17% during that time.

Our Q4 production fell modestly from Q3 to 892,000 tons, which was the result of the typical Thanksgiving and Christmas miner vacations, as well as our continued focus on value over volume. We'd rather leave production in the ground versus selling it at a loss into the spot market.

Thankfully, our strong balance sheet, including our record liquidity position, allows us this flexibility. Should markets continue to improve, 2026 can provide a very meaningful working capital tailwind on the inventory front, especially in the back half of this year.

While metallurgical coal price indices declined throughout Q4, they're now up meaningfully from the bottom. Unfortunately, however, U.S. high-vol indices fell another 4% in Q4 versus Q3. But despite the continued fall in index pricing, we managed to print Q4 financial results that exceeded Q3 financial results as cash costs fell $5 per ton sequentially, compared to realized pricing that fell just $4 per ton sequentially.

To get into specifics, Q4 adjusted EBITDA was $9 million compared to $8 million in Q3. Class A EPS showed a $0.22 loss in Q4 versus a $0.25 loss in Q3. I would note that these fourth quarter results exclude a onetime nonrecurring expense incurred in connection with the structuring of a strategic critical minerals terminal at our Brook Mine.

All of our primary peers have either reported Q4 results or preannounced results. I'm proud to note that our cash costs of $92 per ton and cash margins of $24 per ton were easily the best-in-class among our Central Appalachian met coal peers in Q4.

Looking forward, we're initiating 2026 guidance. Full year 2026 production is now anticipated to come in at 3.7 million to 4.1 million tons, an increase at the midpoint versus 3.8 million tons in 2025. Full year 2026 sales are anticipated to come in at 4.1 million to 4.5 million tons, an increase versus 3.8 million tons in 2025.

Our guidance tables lay out a number of other 2026 expectations such as CapEx, SG&A, DD&A, interest income, tax rate and idle costs. While you can find the specifics in our earnings release, I want to touch on 2 areas. First, we anticipate net interest income in 2026 versus net interest expense in 2025 as a result of our large cash balance.

Second, we anticipate CapEx of $85 million to $90 million, up from $64 million in 2025. This includes spending on maintenance capital on our metallurgical coal mines of roughly $10 to $11 per ton, approximately $20 million of growth capital at the Berwind and Maben complexes, and roughly $20 million for our rare earth elements and critical minerals business.

We anticipate first quarter of 2026 shipments to be 800,000 to 950,000 tons due to normal seasonality with the Great Lakes, which were, of course, closed for most of the first quarter. We expect cash costs towards the high end of the annual range for Q1 on the back of lower ratable shipments.

As I look ahead, I'm incredibly optimistic about 2026. First, we have by far the best balance sheet and liquidity in our history. Second, our cash costs and margins are among the best in Central Appalachia. Third, coal markets appear to be improving in large part due to pricing having reached unsustainable levels from a cost curve perspective in the second half of 2025. Lastly, we're making meaningful progress on our rare earth elements and critical minerals path towards commercialization.

I would now like to turn the call over to Chris Blanchard, our EVP for Mine Planning and Development.

Thanks, Jeremy, and also to everyone who joined us today. It's always preferable to share our operational results when we have been successful in controlling those things like costs and volumes, which are in our control.

Across all of Ramaco's operating complexes, I want to give recognition to all of our miners and support staff who focused on the fundamentals all year to help us drive down costs across the board and to complete the year with our best quarterly performance since 2021. These successes are continuing as we begin '26.

Productivity levels remain high relative to our internal forecasts, particularly at our flagship Elk Creek complex. However, while the mines continue to operate at budgeted levels or above, logistics bottlenecks with both of our railroad partners as a result of the extreme temperatures and snow in late January did cause delayed shipments in January and so far in February. These were primarily due to the difficulties in moving and unloading coal to the peers and ports, and the subsequent backlog of loaded trains with insufficient empty cars cycling back to all producers for several weeks.

While we built clean inventory due to these events, no production had to be curtailed. However, the impact of the interruption in rail equipment cycling cascaded and continues to be worked through.

As Randy mentioned, the high-vol markets remain oversupplied and ultra-competitive. Fortunately, our Elk Creek product has some quality advantages over some of the incremental high-vol producers who tend to be of a lower metallurgical rank and have higher sulfur contents.

To take further advantage of that, we are transitioning a portion of Elk Creek's production into even lower sulfur areas of our reserve to better meet our customers' needs.

As mentioned earlier, we've also kept our wages and benefit packages for our workforce constant even in the declining market over the last couple of years, and we are taking opportunities to strengthen our workforce with some of the most talented miners available in Southern West Virginia and Virginia.

On the low-vol side of the company, we're seeing meaningful improvement in market dynamics and limited excess supply of high-quality, low-volatile coals. Accordingly, our Board of Directors has approved pulling forward approximately $20 million of planned growth capital from 2027 into 2026 at our Berwind and at our Maben complexes.

First, we will begin to ramp low-volatile coal production at Berwind mine approximately one year ahead of schedule. The timing of the full build-out will be dictated by the completion of 2 additional air shafts into the coal mine. Work has been ongoing on these projects since late 2025 and will be completed during this summer.

Once the ventilation system is in place, a full section will be added to the mine at an annual expected production rate of 350,000 tons per year. While the Berwind mine will not be running at this full rate until the third quarter, we will bring on some interim low-vol production during the second quarter at our Laurel Fork mine, utilizing the same equipment capital and workforce. Combined, we project an additional 150,000 approximate clean tons of production during '26.

Secondly, at the Maben complex, we are now moving forward with the construction of the flood load batch weigh loadout system at our Maben processing plant. Once operational, this will allow us to ship our premium Maben product to our domestic and international customers without adding approximately $20 per ton of additional logistics trucking cost, which have negatively impacted this operation.

We believe that having the fully operational loadout will potentially allow us more opportunities to purchase and ship other high-quality low-vol coal that would be advantaged by loading at Maben.

Work has commenced on the loadout project already, and we are projecting it being operational and loading its first train in the middle of the fourth quarter of '26. The completion of the loadout will make the development of the underground portion of the Maben property much more advantaged, and we will continue to evaluate the full bowl -- build-out of the underground mines at Maben at that time and let the market conditions guide the timing of that investment and expansion.

Finally, to briefly turn to some of the mine and construction updates in Wyoming at the Brook Mine. During the fourth quarter, we expanded the Brook Mine pit to excavate additional thermal coal for an upcoming trial with a regional customer. During this mining, we also segregated several hundred additional tons of rare earth element and critical mineral ore from 2 different enriched strata zones for continued optimization testing.

Construction has also begun on the ore storage facility on the Brook Mine itself, which will function as a staging area for mine products prior to being sent to outside labs and ultimately to our own on-site pilot facility, which Mike mentioned is also starting foundation work and will be under roof later this summer.

Detailed design engineering is also underway for all of the electrical transmission to site and the substation to power our future commercial processing facilities.

In closing, with the security and liquidity from all the transformational financial transactions that were consummated during the second half of '26, we find ourselves with the flexibility to modify our operational portfolio to quickly take advantage of the strengthening low-vol met markets, while also continuing the development of the Brook Mine at full speed as well.

To discuss both the coal and the critical market -- critical minerals markets in detail, I'd like to now turn the call over to our Chief Commercial Officer, Jason Fannin.

Thanks, Chris, and good morning, everyone. Today, I'll share our views on the steel and coking coal markets, provide an update on our 2026 met coal sales position and then discuss the progression of our marketing strategy at Brook following our recent flow sheet breakthrough.

We continue to see global steel markets increasingly shaped by policy rather than supply-demand dynamics. China exported a record amount of steel in 2025, even as domestic crude steel production declined. That divergence between export growth and domestic contraction is unlikely to persist.

Export licensing measures and rising political pressure suggests that Chinese steel exports could decline meaningfully this year, which would lend considerable support to global steel prices and in turn, provide uplift to coking coal prices.

European steel production appears to be stabilizing and prices are already reacting to tighter import controls, rising nearly 20% since early Q4 2025. One of the world's largest steelmakers has predicted a year-over-year increase in European steel production of approximately 6 million to 8 million tons, reflecting improved mill margins amid a more constructive policy backdrop.

North America, trade enforcement continues to support domestic pricing. U.S. steel prices remain among the highest globally with spot pricing nearing $1,000 per ton for the first time since mid-2023. India remains the primary coking coal demand growth engine. Blast furnace production increased 17% year-over-year in 2025 and blast furnace steelmaking capacity continues to expand aggressively.

Discussions between U.S. and Indian officials regarding increased U.S. met coal imports could lead to a potential removal of the import tax on U.S. met coal into India, which in turn could increase U.S. imports above 2025's 9.5 million tons.

Seaborne metallurgical coal markets began 2026 with an already tight Australian premium coking coal supply, further exacerbated by extreme weather events, with Australian premium low-vol pricing sitting just below $240 per ton today, up nearly 20% from Q4. U.S. East Coast indices are approximately $196 per ton for low-vol, $159 for high-vol A and $149 for high-vol B.

This volatility underscores how thin the spot market truly is. Seaborne hard coking coal supply is roughly 180 million tons annually, with less than 5% of that typically available on spot. That structural thinness magnifies short-term supply disruptions.

That said, the development of significant long-wall high-vol production capacity in the U.S. has intensified competition in both domestic and export markets. As a result, U.S. high-vol pricing continues to stubbornly lag historical relativities to Australian PLV.

We, therefore, continue to focus our growth efforts on our low-vol portfolio, where the supply-demand balance remains tighter and pricing durability appears stronger. The new railroad out at Maben, once operational, will materially improve logistics economics and provide access to additional customers for this premium Central App low-volatile coal.

Turning to our 2026 sales position. We have secured commitments for 3.1 million tons. North American customers account for 1.1 million tons at an average fixed price of $142 per ton. In addition, 2 million export tons are committed at index-linked pricing.

Turning to our Brook Mine progress. Our carbochlorination-based flowsheet should substantially strengthen and derisk our product mix and revenue basket. We are now placing greater weight on high-purity gallium, high-purity alumina and high-purity quartz, with a modestly reduced emphasis on scandium applications, although scandium does remain an important part of the Brook Mine portfolio.

High purity gallium metal, if achieved at scale, positions Ramaco directly within the strategic semiconductor material supply chain. In parallel, we now intend to market our magnetic rare earths, which represent a smaller portion of our overall revenue basket, primarily as a mixed rare earth carbonate or MREC.

These flowsheet enhancements, combined with our elevated gallium focus, materially expand our addressable market. We are in active dialogue with several companies and a wide variety of potential customers regarding potential offtake and partnership structures.

As we advance pilot operations and generate lab scale and pilot scale material, we expect these discussions to evolve into formal commercial frameworks. Finally, we continue coordinated engagement with defense primes and governmental stakeholders. The broader policy backdrop, including potential domestic stockpile initiatives and price support mechanisms, reinforces the strategic relevance of the Brook Mine, as well as the strategic critical minerals terminal, which we announced last year.

For the terminal, our location with a dry climate and a site adjacent to both the Class 1 railroad mainline and the major interstate highway puts Ramaco in a unique position to serve the U.S.' stockpiling needs. To conclude, these are exciting times for the company.

On met coal, we entered 2026 with a strong and largely committed sales book, improving low-vol pricing dynamics and a disciplined growth strategy focused squarely on higher-return segments. We believe our cost position, product quality and logistics flexibility leave us well positioned as markets rebalanced.

On critical minerals, our flowsheet direction represents a meaningful step forward. It should enhance product quality, lower capital intensity and sharpen our commercial focus toward high-purity gallium and strategic MREC partnerships.

With that, I'll turn it back to the operator for the Q&A portion of the call. Operator?

[Operator Instructions] Our first question comes from Ben Kallo with Baird.

Thanks for all the detailed information. A lot to go through. Maybe first, so you had a lot of changes at Brook Mine and the process and technology. I'm just -- I guess my question is, how did you guys decide to go this route? I know that you guys have been working at this for a long time. And so from the outside, it looks a little abrupt, but I'm sure that this is a thoughtful process. So just if you could explain that.

And then the second question, just sort of following up on that is, as you make these changes, I know you've been in discussions with for offtake agreements and with the government. And does that change the timing of any of that?

I'll let Mike take the first part of that question.

Yes, sure. We had anticipated that this might be a flowsheet option some time ago, but hadn't completed the necessary test work to understand the magnitude. Granted there's some delays in completion of a PFS with this flowsheet change, the expected impacts on the economics are significant.

So we were, I guess, delighted to see that almost all of the gallium went to -- gallium chloride, which is the ability to produce a higher purity gallium product, comes at a significant premium. So we feel like for a long mine life project such as the Brook Mine with potentially a 100-year mine life that this is a material improvement to the economics. Yes, last flowsheet, no issues with it. But again, the step change in improvements justified the change in our view.

Yes. And I think, Ben, to the second part of your question, we have kept our discussions in relative real-time in terms of different procurement and finance options. And honestly, the pivot to probably a more gallium-centric product slate is an improvement and enhances our discussions candidly because in a number of respects, first of all, we sort of derisked the process.

The carbochlorination is, of course, a proven technique that's been used with titanium. So it's not as if this is a novel first-time approach given the fact that we've got a novel feedstock to start with.

But secondly, of course, as been noted before, we think scandium is going to be a very important part of the whole kaleidoscope of different types of rare earth usage moving forward. It's mainly going to be used for lightweighting and obviously for some electronic storage. But it's a market that is a bit more in the future that's evolving.

The gallium market for semiconductors is not only apparent today, but it's growing rapidly given sort of the electrification of the entire economy and of course, the AI business. So we are finding a high level of receptivity, both with strategics as well as with the government in terms of a pivot toward more gallium and perhaps a lesser emphasis on scandium. So I hope that kind of generally addresses your question.

Our next question comes from Douglas Ormond with Discovery Capital.

I'm just making sure I caught that in the initial comments. It sounds like the engineering enhancements would lead to materially increased value relative to the September shareholder letter, which had the $5 billion NPV and not just the floor PEA, when we think about a launching off point for what the new flowsheet will provide. Are we thinking about that correctly?

Mike?

Yes. I think we're looking at the increased production, obviously, from the new product suite, the potential higher purity and what that translates into in terms of throughput, that's a conversation we're going to have.

But the basket price, if you will, has materially increased because of these products. We've been -- our internal estimates, we've been, I would say, conservative in terms of what we're looking at for purity for both high-purity alumina and high-purity quartz. We've taken 4N type purities in our projections. But if you look at gallium at 6N, it comes at 3x the price of 4N. And similarly with high-purity quartz, if you produce a 5N versus a 4N, it's 3x the price.

So these are the things that we want to test going forward. The ability to produce those products, understand what the recoveries are, there's a whole lot of upside here, and we already see a significant increase on basket price.

Our next question comes from Carlos De Alba from Morgan Stanley.

Just I wanted to maybe get a clarification on the new flowsheet, because I think I just heard that this is not a novel approach, that has been used in titanium. But if that is the case, then would you mind please explain just for our benefit, what is the fundamental technology breakthrough then that you have achieved with this processing?

And then what is the level of confidence on the new approach? Can you maybe talk about the independent laboratories that have done initial testing on this new flowsheet method? And you can share the names and if there is any documentation that you will share with the market.

Sure. I think it comes back to geology. And because this deposit has gallium, germanium, also the mineralogy. So we've published that the clays are aluminosilicate clays. This carbochlorination process basically breaks those clays and allows us the ability to produce those products. So high-purity quartz, high-purity alumina.

And I think, obviously, the rare earths stay in the residue. So you'll find that there's been publications about carbochlorination in rare earths. And you've mentioned the titanium industry. This hasn't been done before in the way that we are viewing the flowsheet. So we have some IP around it. We talked about patent pending applications, exactly how we're doing it, the operating conditions, the temperatures, the residence times, how we separate these products is proprietary.

I would say, that it's -- we were even surprised by the results. We've been public in our disclosure about the labs that we've been using, ElementUSA. We've engaged a consultant, Kingston Process Metallurgy, who has carbochlorination experience in the alumina industry. So we're working with them on the simulations.

I'm very confident about this. The other benefit is we've significantly derisked the bulk reagent requirements for Hydromet. So we aren't importing large train loads of reagents in this process. The fact that we're a coal deposit, the reagent is right there for us to take.

And chlorine is simply regenerated in this flowsheet as they do in the titanium industry. So most of the chlorine that we require will be recycled. We will be more, I suppose, our operating costs, which were 70% of the processing cost for reagents previously, will now be -- we'll see electricity consumption go up, but that's certainly more favorable having operating costs tied to electricity in a place like Wyoming.

And may I just follow-up on the gallium aspect of the new flowsheet. I understand that -- how -- do you have any information that you can share on the economics and the cost advantage that maybe this new approach will have relative, for example, of extracting gallium from red mud refining operations? Our understanding from other companies more on the aluminum supply chain is that it's not very profitable for them to extract the gallium. So yes, I wonder if you have any color that you can share with us.

Yes, you nailed it. I think that's been one of the challenges of extracting gallium from other sources, the red muds, residues from zinc projects. Gallium is volatile as a chloride. And so that's why this process works. We -- as I mentioned, we saw almost all of the gallium go into the off-gas, which will then be condensed as a crude product and separated from the other chlorides.

So what that translates into is a double-digit increase in gallium recovery and then compounded by the ability to produce higher purity products. This flowsheet is probably the only one that's going to be a primary producer of gallium that can really compete with the purities required for semiconductor industry. So we're excited by that.

Our next question comes from Brian Lee with Goldman Sachs.

I guess maybe following up on the prior line of questioning. The REE basket, I think it's the price you're outlining on Slide 12 went up to $500 and change from your prior view of $300 and change. I know maybe it's too premature to give us all the nitty-gritty specifics, but can you give us a sense of what's embedded in there?

I think previously, you had been talking about scandium roughly 60% of the value of Brook Mine deposit, assuming $37.50 per kg pricing. You're saying there's a modest decline in that. Can you kind of give us a sense of what's changing in terms of mix of scandium on the value of the deposit and then price, if any change there? And then where kind of gallium sits in the context of the new flowsheet versus the prior views?

Yes. I'm glad you noticed that. That basket value, if you will, had some assumptions that we would be able to capture 5% of the high-purity alumina market at a 4N purity, and that didn't include any high-purity quartz in that analysis.

So we think there's even upside with those numbers when we start putting high-purity quartz in the equation and higher purity products. So I think truly that number could get better from what we've published. But we want to finish the PEA in order to get confirmation on the numbers and particularly on the costs, which we've mentioned is going to be midyear.

To give you an idea of the basket, but we anticipate that gallium depending on -- and we're working with our internal marketing team, could challenge scandium in terms of equivalent production. But we anticipate scandium is going to be somewhere perhaps less than $40. We did see a double-digit increase in scandium recovery as well, right?

So it still maintains a significant portion of the revenue, but gallium is going to grow probably into the 30s. And the HPA and HPQ is something that's going to be a significant contributor to this project as well. So -- and the final point on that, of course, HPA and HPQ don't translate into the TREO grades at all. So that's why we want to be talking about basket price.

Brian, to your point, that the dollar per ton figure is up more than 50% previous to what we had previously disclosed. So kind of going back to, I think, an earlier question, I mean, the bottom line is our internal projections certainly show material increases in incremental revenue and free cash flow versus what we've previously disclosed. And obviously, now that's what we're working with a third-party to validate.

Okay. No, that's helpful color. I appreciate that, guys. And then maybe just a question on timing. I appreciate that the change in the flowsheet pushes out a little bit of the timing in terms of the pilot and the demonstration facilities. It seems like it's about a year delayed.

How should we think about that in the context of how you're budgeting for timing of Brook Mine ultimately coming online? I think most people had, including ourselves, sort of a 2028 start-up time frame for that deposit coming online. Is that still valid? Or should we be thinking it's a year behind schedule like the pilot?

Yes. Look, I mean, that's obviously -- we're projecting a few quarters of delay because of this change. So that does push out the overall project schedule similarly. So that's kind of what we're anticipating is the overall schedule will push out as well. So yes.

Our next question comes from Alex Fuhrman with Lucid Capital Markets.

Congratulations on all of the progress you made last year. I wanted to ask about the revised flowsheet and the decision to sell rare earth as a mixed product now. Curious kind of where you see that product going. Heavy rare earth separation capacity today is virtually nonexistent in North America. Do you anticipate that there will be some separation capacity in the future by the time that you have your MREC product to sell? Or actually, are there maybe applications for mixed rare earth products?

Alex, this is Jason. I'll speak to that. Yes, I'd say taking one step back, a lot will depend on what the TREO is on that MREC. And of course, that will depend somewhat as this flowsheet further develops. And the other separation processes that Mike and his team are working on.

Yes, I mean, as you mentioned in the States, most of the separators are pilot scale or developing. There are obviously some, I'd say, in allied countries overseas. We're in contact with nearly all these folks now. And certainly in the last several weeks, we've seen a big emphasis from the government here in the U.S. on that part of the supply chain.

They recognize the same as we do and you do that it's a potential bottleneck today. I think given the time line that Mike just described and how quickly we see this developing and as well as the conversations we've had with some of those parties, I think we feel confident that the capacity will be there when we're going to need it.

Our next question comes from Matthew Key with Texas Capital.

Staying on Brook, I just was wondering if you wanted to do the rare earth separation down the road, could you eventually pursue that there? And like -- or are the economics just not there to kind of justify the incremental process and versus just doing a mixed rare earth carbonate?

Sure. I think you're on to that. I mean with the additional revenue generators for this project, the rare earth side of it becomes less. So we're looking at 15% of the overall project revenue basket with rare earths. So it doesn't make sense to pursue a complicated -- and it's technically challenging to separate all of these rare earths into products and build the solvent extraction plant to do so.

We're better off selling the product to someone else and the change in flowsheet is really what's driving that strategy. We're trying to simplify the back end where it's a smaller portion of our overall revenue, reducing the CapEx and potentially the schedule and operating costs associated with it, so.

Got it. That's helpful. And I guess I'll ask one on the met side, too. You mentioned that the rail load out could facilitate the eventual development of deep mining at Maben. How soon could a project come online once you make that go-forward decision? And in terms of capital investment of a project like that, could you maybe provide a ballpark in terms of just getting that across the finish line once you make that go ahead?

So the deep mines are largely permitted already at the Maben complex. So once we decide to move forward, it's mostly relatively small construction lead time and acquiring equipment. So somewhere between 6 and 8 months lead time from deciding to move forward on the underground to actually having first production. So it certainly could be a '27 event if the market supported that.

And I think the way I would frame it for you is each underground section of equipment plus the development is between face-ups and facilities and equipment is probably about $12 million to $15 million. So in our long-term, medium-term plans, we project Maben as being about 1.5 million tons per year. So to add an extra 1 million tons is probably in $60 million to $70 million total CapEx development.

But that's rolled out over...

Over an extended period of the build-out.

Yes.

Our next question comes from Jeff Grampp with Northland Capital Markets.

I was curious with this -- with the change in the flowsheet and some of the timing being pushed back a bit, can you touch on your ability to qualify product for customers in the near term here? Or is that something that would really ramp up more significantly once the pilot plant is online?

Sure. I think the objective of the pilot plant was exactly that to produce a sufficient quantity for product testing. But we are looking at ways to produce sufficient volumes, particularly for HPA and HPQ at bench scale because we may be able to do that. That's something that we're anticipating that we might be able to do some product testing on 2 of those before even piloting.

Got it. Okay, great. And for my follow-up on the met coal side, it seems like there's potentially some upside to coal sales this year. I know you guys aren't guiding to that yet. But given the positive commentary you guys have on the macro, what might you guys need to see to feel good about pushing some more product out into the market?

Well, I'll let Jason provide the granular detail, Jeff. But the reality is we've got some unpriced index tons out there right now. So if we see upward market movement, we're going to be able to ride that wave.

But Jason, go ahead and pick up on the other.

Sure. Okay. Yes. On the low-vol side here in the States, obviously, we're seeing that already, and that's why we're advancing bringing these tons forward both at Berwind and then bringing the load out forward there at Maben. Obviously, it's still lagging. The PLV, the U.S. low-vol is by more than the freight differential.

I think you'll see that gap close as the year goes forward here. Obviously, high-vol is tough. Q4 was tough. One Southern App producer came up to full production on a new project and one Northern App producer brought a project back online fully in Q4. So a lot of competition we saw in Q4.

Here in the States, we're already seeing supply side changes. We've got a neighbor there at Elk Creek that come April will fully wind down. Some of that's due to the export market they face. Some of that's due to -- we've all faced lower domestic pricing this year versus last year.

And we've seen some smaller neighbors there in Central App as well that have either wound down or winding down now too. So I think you'll see those relativities on the high-vol start to creep back up closer to historical relativities, which will -- to Randy's comment, obviously, the biggest part of our met portfolio is Elk Creek, is high-vol. So those moves up, have a big impact on us as we go forward here.

And Jeff, I'd just add, we mentioned in the release the ability to sell almost 5 million tons. Just to be clear, that's without any incremental CapEx. We've built up a fair amount of inventory on the back of our kind of disciplined approach to sales last year. So just to be clear, that's -- I want to make sure that everyone is aware that's not with any incremental CapEx.

Our next question comes from Nick Giles with B. Riley Securities.

This is Soundarya on behalf of Nick Giles from B. Riley. I just wanted to check on the -- like with the solvent extraction coming out of the flowsheet, directionally how CapEx might trend relative to that prior $1.1 billion estimate? Even if it's just an order of magnitude, how much reduction can we see?

Look, I think we want to get the numbers from the PEA to look at what the CapEx is. It's hard to compare exactly these 2 flowsheets. For sure, we pull out some CapEx on the back end. We also shrink some of the purification because the crude product separation is a small part of the circuit. Carbochlorination is really where the CapEx is going to be.

So I would say that we still want to do those numbers and crunch those numbers and Hatch is going to give us what that looks like at the completion of the PEA.

Got it. And then just one more follow-up. So now that the policy environment around critical minerals is quite favorable, how are you guys thinking about going behind DPA Title III or DOE loan programs as a part of financing? And has there been any conversations around this?

Well, I think as we've said before, we are in conversation with various government groups. I'm not going to get into specifics about which programs that we're pursuing. But again, the fact that we're now somewhat pivoting to a slate of products, which I think the government is acutely interested in, which is the gallium for semiconductors I think will provide a little bit of wind in our sail in terms of those conversations.

Our next question comes from Nathan Martin with The Benchmark Company.

Maybe sticking with the coal side now. You gave some 1Q guidance there. Does that incorporate the impacts from the Arctic weather Chris mentioned earlier? And then how should we think about the cadence of shipments in 2Q through 4Q as the weather warms up and you guys catch up there?

Nick, this is Jason. I'll take that one. Yes, the Q1 numbers that Jeremy gave earlier do, in fact, take into account the slowdown we saw there in shipments in late January, early February. We've seen that improve greatly here over the last few weeks, but we're still working through the backlog there on the shipment side.

As far as cadence goes, obviously with the lake starting back up, getting out of the winter season, Q2, we're looking at about 1 million tons, Q3, Q4, about 1 million, 2 million ton each.

Okay. Great, Jason. Appreciate that color. Maybe also while I have you, talk about the relativities between premium low-vol and high-vol. Should we expect, I guess, the first quarter coking coal realizations to be pressured given that wide discount we've seen most of the quarter so far? And then maybe any thoughts on what the percentage versus benchmark could ultimately look like for the year?

Yes. I'd say on the second one -- to your second question there, that's a tough one. I've been doing this almost 30 years, and I'm always wrong. So I hate to even wager a guess. I do think it will improve from where we're at Q4. And I'm seeing some supply side discipline in this quarter on spot that's out there.

I think we'll see that improve again. There -- our neighbor, I mentioned earlier, that's 2 million tons a year coming offline. And we've seen some other smaller ones come offline around us in Appalachia.

I think the higher cost guys just can't compete are going to go away. And I think the lower-cost guys that are left will have that discipline. It will start to shrink that relativity. But I think it will take some time for the markets to rebalance around the incremental high-vol that's coming out of the U.S. now.

Okay. Got it. That's fair. And then maybe just one more, if I could. The domestic tonnage of 1.1 million tons, obviously priced above the public guidance of the peers you guys mentioned. Can we maybe get some color on the quality mix of those tons? And then a little bit lower both on an absolute and percentage basis compared to what you guys have done in the last few years. So maybe a little information around that shift if there is some.

Yes. One thing I'd point out around the last couple of years is there were some carryover volumes, I'd say, '23 to '24, '24 to '25 that was in that tonnage number. On a deal-to-deal basis, I'd say we're less than 10% down on contracted tons from year-to-year in that number, given that carryover in previous years.

And on the mix, obviously as Chris and Randy both mentioned, our lower sulfur side, there's a limited amount of -- on the domestic, obviously, foundry business. We support both those plants pretty heavily. So with that lower overall number, there's a little bit more of an impact from those sales.

Yes, Nate, mix will be similar. It's about, call it, 15-plus percent low-vol and the rest high-vol domestically. One of the reasons we're moving forward with the rail load out at Maben is that's a very, very good domestic potential, but it's logistically challenged right now. So we think that will play nicely into the mix next year.

This concludes our question-and-answer session. I would like to turn the call back over to Randall Atkins, Chairman and CEO, for any closing remarks.

Great. Well, I just want to thank everyone for being on the line today, and we look forward to catching up here in the next quarter. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good day, and welcome to the Ramaco Resources Third Quarter 2025 Results Conference Call.

[Operator Instructions]

Please note this event is being recorded. I would now like to turn the conference over to Jeremy Sussman, Chief Financial Officer. Please go ahead.

Thank you. On behalf of Ramaco Resources, I'd like to welcome all of you to our third quarter 2025 earnings conference call. With me this morning is Randy Atkins, our Chairman and CEO; Chris Blanchard, our EVP for Mine Planning and Development, and Mike Woloschuk, our EVP for Critical Mineral Operations. Before we start, I'd 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 statements speaks only as of the date on which it is made, and 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'd 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 at www.ramacoresources.com. Lastly, I'd encourage everyone on this call to go on to our website and download today's investor presentation. With that said, let me introduce our Chairman and CEO, Randy Atkins.

Thanks, Jimmy. First, I want to thank everyone for being with us this morning. Again, we've got a lot to unpack today. We had another exceptionally busy quarter on the rare earth front and somewhat of a continuation of last quarter's results on met coal. Since our rare earth transition has grabbed most of the attention, we will start there. Both myself and later, Mike Woloschuk, our Head of Critical Minerals are going to go through a number of updates on various developments since our last call. After our July groundbreaking with Secretary of Energy right, we have moved to rapidly capitalize on this momentum to derisk our future execution as we move forward on this unique corporate transformation.

Here is a short breakdown of where we are headed as we build out this vertically integrated and Mountain mouth critical minerals platform. First, of course, we start with our large deposits. That is what frankly provides us all the optionality. We believe we will have the largest upstream production platform in the U.S. for heavy magnetic rare earth as well as the 3 critical minerals we possess, which are gallium, germanium, and scandium. On the midstream front, following an optimization at our pilot plant, which is now under construction, we intend to build a large commercial oxide separation and processing facility. It will be large enough to have refining capacity for not only our own coal-based feedstock but also to hopefully process third-party feedstock should that be an attractive accretive proposition.

This is the concept of developing somewhat of a regional or perhaps even national processing hub. We intend to try and keep optionality on the size of the plant, dependent, of course, on market dynamics as we get further along. And lastly, on our downstream operations, we just announced that we intend to establish a national strategic stockpile and terminal for rare and critical minerals at our brick mine. We're calling it the strategic Critical Minerals terminal. We plan to develop this in collaboration with a leading commodity structuring and financial adviser who will be announcing shortly. We feel that being a significant or even dominant factor in each component of the RARA supply chain will position Ramaco as the most comprehensive vertically integrated upstream, midstream and downstream producer of critical minerals in the United States. In terms of advancing this platform, as you know, in August, we raised $200 million in a common stock placement. We now have a record level of liquidity, and of course, will require even more as we move forward.

In September, we announced plans to increase the base size of the Brook mine by 2.5x to a level of approximately 5 million tons. We would provide increased feedstock for a greater level of annual oxide production of more than 3,400 tons per year. I'd also point out that depending on ultimate market demand, we have the operational and technical capacity subject to normal approvals to again upsize this production level to an even higher level of at least 8 million tons of annual coal production. That would then produce by our estimate, roughly 5,000 tons of oxide production. As detailed in my shareholder letter in September, we're currently estimating that at the 5 million-ton coal base production level, that in the first year of commercial oxide production, which we now estimated in 2028, our rare earth platform could generate more than $500 million of EBITDA and it could also have a projected NPV of more than $5 billion. These are, of course, projections but show the magnitude of the project. I'll note that these estimates though, were arrived at deploying the same price deck that was used in the summary of Fluor's preliminary economic analysis report in July.

And candidly, they were prepared and reviewed by the same person who is Mike Woloschuk, who, of course, has now joined us along with another senior member from Fluor. Obviously, as we move forward with design, engineering and optimization, we will refine these numbers along with current market prices and other figures. Since July, given market conditions, we have seen Western offtake deals for substantially higher prices than what was the case in the Fluor report. There is now a clear decoupling of Western price realizations, which were in the past, tied to Chinese published prices. There is going to be a premium for reliable Western supply lines. This is becoming more apparent by the day and is caused by Chinese export restrictions. As you have read, it now appears Trump and President may have kicked the can down for a year on enforcement of China's new REE restrictions. But the overhang of Chinese control is not going away. Like it or not, we are in a full long-term mineral war with China. This is especially true for Scandium, where the Department of Wars Defense Logistics Agency recently signed an offtake to purchase Scandium at more than $6.2 million a ton. That pricing is 2/3 higher than the $3.7 million level used in both the Fluor report and my shareholder letter.

There are similar upward adjustments across the board for several of the other oxides we will produce. But to focus on scandium for a moment, although Mike will also discuss in more detail later. It is a particular interest given our large future production level. It is called the forgotten rare earth. The U.S. is 100% import reliant on scandium. We have no stockpile, no recycling capability nor current production capacity. It is used in lightweighting autos and plans, solid oxide fuel cells, semiconductors, 6G wireless for drones -- satellite communications and other defense capabilities. Global production is very scarce with a small global market of frankly under 50 million tons per annum. We will produce almost 180 million tons per annum, and it's estimated that scandium alloys in the auto sector alone would require over 1,000 tons per annum which is frankly not currently available.

In line with that, from recent discussions with potential scandium oxide offtakers, we expect almost price insensitive demand to exceed the Brook mines projected annual production. The mineral, as I said, is critical to lightweighting of cars and planes as well as technologies used in a variety of military applications. It is just simply not available for these types of uses to make long-term planning for a mineral, which is now under complete Chinese control. Its demand growth is exceptionally strong and as I said, there has been no ability outside of China to develop any meaningful reliable Western supply. We will be well positioned to provide that meaningful supply in Scandi. Looking forward, in order to support the expansion of our rare earth operations, we plan to actively engage with federal and state officials to expand the existing approved Brook mine permit. It now covers roughly 4,500 acres, and we expect to expand it to ultimately include most of our nearly 6,000 acres of control.

Since our groundbreaking in July, we've now mined about 125,000 tons of coal and material, which frankly provides us with enough ore feedstock to operate the pilot plant for a considerable period. We expect to intermittently mine additional coal once we start the pilot operations as well as mine for possible sale of coal to third-party local utility customers. Chris Blanchard will speak more on our mining in a moment. As far as our midstream operations, our commercial oxide processing facility will be engineered and designed to have the optionality to increase its capacity to accommodate production of higher levels of oxide. As I said, we are doing this not only to accommodate our own increased capacity, but also for the possibility that we might want to do some form of third-party merchant processing. But before advancing to a full-scale commercial plan, we will, of course, work to de-risk this complex execution by the design, testing and optimization of various separation and refining processes at our pilot plant, which, as I said, is now under construction outside Sheraton. Our goal is to appropriately size, design and execute on the plant development, focusing on controlling both capital cost as well as future operational expenses of the plan. We broke ground on the pilot last week and expect to begin initial operations in 2016. Mike will be discussing this further in much detail.

In the interim, to accelerate the pilot process, the plant components are currently being designed, engineered and tested on a shakedown basis at a facility in Canada owned by a company called Zeton. Zeton is the world's largest pilot plant design and fabrication company. Most of this testing will also be coordinated with Hatch Ltd, which is also Canadian and then preparing our feasibility analysis. Our commercial processing plant will focus on refining a number of rare earths and critical minerals, including, of course, our heavy magnetic rares, like turbine and dysprosium, and critical minerals like Galan, Scandium and Germanium. All of these have been banned by China from export to the U.S. In some cases, we will be the sole U.S. producer of these oxides. And in many, we will also be the largest or dominant producer in the country. We are now taking steps to accelerate the engineering and planning for the commercial oxide facility. We hope to begin the engineering and procurement work on this plant next spring. Our goal is to initiate site work and initial construction on the facility in late '26 or early '27. This would, of course, be subject to normal issues of availability and timing of equipment and related purchasing.

Our record liquidity levels, however, should help us be in a position to prepurchase some of this equipment to help expedite the process and fast track it as best we can. We appreciate the execution risk associated with any new development. Indeed, the DNA of our whole operations since this company was founded, is to build projects from scratch, on budget and on time. I'd point out that since Ramaco was formed, we have deployed in excess of $0.5 billion in capital on greenfield development projects. We have already hired both in-house and externally and exceedingly talented and experienced group of professionals to help guide our execution in this area. We will be hiring many more as we move forward. And we will continue to refine the project size and design as I said, to bring the project in with the greatest levels of cost control we can develop both on the CapEx spend as well as on the future operating costs. Given the importance of this project, frankly, to our country, we will have a lot of help. We will continue to work with our long-time partners at the Department of Energy's National Labs to deploy some very novel science and technology to achieve, hopefully some important technical results. And of course, as we have always said, we will only move forward with actual construction of the full commercial facility once we have a sufficient level of long-term offtake contracts in place. And on that front, we are very encouraged with the procurement discussions that we continue to have.

I would point out that since the Chinese embargo and export controls were announced, there has been a market decoupling away from China. As we get feedback from counterparties, there will probably not be a future point where any customer in the West is going to feel comfortable with China as a reliable long-term supplier. This has direct implications for us, both in terms of customer demand as well as long-term pricing. Going forward, the historic prices quoted from China will now be dramatically different than prices from a reliable Western supplier, which is what we intend to be. Also, as I mentioned last week, we announced that our Board had approved creating the U.S.'s first and currently only strategic critical mineral terminal and stockpile at the Brook mine.

For Ramaco, this operation will create a fee-based terminal services business. This is going to leverage not only our own production, but our existing logistical and infrastructure advantages of being located on our own vertically integrated Brook Mine site. We anticipate no commodity price exposure on the terminal and will receive predictable revenue streams. For our customers, the terminal will provide a secure, auditable storage of strategic rare earths without capital outlay or operational burden. The terminal will have a rapid deployment capability and provide domestic supply chain resilience. Our strategic adviser will assist in the development and execution of offtake agreements with both private and public customers as well as on the development of the financial contracting and operational implementation of the terminal. We will be speaking more about this as our plans progress.

Now I'd like to move to our metallurgic coal business. The overall met markets still remain challenged. The reason is the same as we have highlighted basically all year. China continues to flood cheap steel into world markets with the impact of depressing both prices and production worldwide. Jeremy is going to discuss markets in more detail in a moment. As we have talked about on previous calls, we made what seems like a very logical decision to refuse to sell tons at a loss into an oversaturated market. We're fortunate that we now have the strongest liquidity position we have ever had, which allows us the flexibility to take this posture. As a result, we are again modestly trimming production guidance despite the fact that our mines continue to produce extremely well and with solid lower mine costs. It is about as straightforward as the fact that we intend to match our production with demand.

And to be clear, this guidance reduction is solely caused by weak pricing conditions in export spot markets. It's not because of high mine cost. Indeed, we are one of the only U.S. met coal producers with cash costs now below $100 per ton with our third quarter cash cost coming in at about $97 a ton. I'd point out that starting in Q4, our costs are currently even below that figure. We are now, of course, also currently in discussion with North American steel mills for the annual 2026 domestic contracts. We'll talk about that more in a moment, but the negotiations are still taking place with, frankly, reality checks on both sides. No producer should have to sell to steel companies at loss-making prices. We are certainly not going to. We will talk about those negotiations more, frankly, when they are complete. And consistent with what we have already said, until markets begin to improve, we will keep future growth CapEx at our met mines at minimal levels.

We intend instead to focus on the rapid commercialization of our rare earth elements and critical minerals business. Yet, we're always going to keep an eye out on opportunistic low-cost asset acquisitions in the met space as they might present themselves. Our view is to try and position Ramaco's met business for longer-term growth on an advantaged financial basis when the situation might present itself. So I'm going to wrap up on a very positive note. The bottom line is that we are in the best liquidity position we have ever been in as a company. And we're now moving rapidly along a multiyear path to transition Ramaco into becoming the only U.S. dual critical mineral platform in both rare earths and met coal. The task ahead is large, but we intend to rise to the occasion. We are going to approach the transition with the same sense of capital, financial and operational discipline that we have shown to date.

And as we move forward, I strongly feel we will serve both our shareholders and our nations well for the years to come. And with that, I'd like to turn the floor back to the rest of our team to discuss finances, operations and markets. And first, I would like Mike Woloschuk, who leads our critical mineral business, to share some further thoughts on our rare earth business. Mike?

Thank you, Randy. There has been a ramp-up in third quarter activities, and I would like to highlight some of them. Firstly, we hired Martin Van Wick as Senior Vice President of Critical Minerals Processing. Martin joined us from Fluor Australia, where he was the global subject matter expert for rare earths. He has over 20 years of experience in mineral processing, hydrometallurgy and rare earth element flow sheet development. He holds a Master of Chemical Engineering and a post-graduate certificate in corrosion engineering from Curtain University in Perth, Australia as well as a Bachelor of Metallurgical Engineering from the University of Pretoria in South Africa. We anticipate his relocation to the U.S. with his family in early 2026.

On September 4, we awarded the Brook Mine pre-feasibility study to Hatch. As Randy mentioned, Hatch has a world-class expertise in rare earths and critical minerals, hydrometallurgical flow sheet development. Hatch's scope includes the development and management of the metallurgical test work programs to support the pre-feasibility study as well as process flow sheet optimization and pilot plant design. The final PFS report is scheduled to be completed in April. We also awarded the metallurgical test work programs to 2 commercial laboratories, Element USA and SGS Lakefield.

Both of these labs are known to Ramaco and they come with extensive experience developing rare earths and critical minerals, hydrometallurgical flow sheets. We are executing test work in parallel to accelerate the optimization of the flow sheet. We also completed umbrella agreements and task statements for the U.S. Department of Energy National Labs to execute test work scope there when they return from the U.S. from the government shutdown. Also, in late September, we published an updated SK 1300 compliant technical report which included an inferred resource estimate for the currently permitted area. The results of this report suggests potential opportunity to increase the cutoff grade and increased throughput to achieve higher critical mineral production compared to the previous phase.

We commenced a drilling program at the Brook Mine that is currently in progress. to complete infill drilling in the permitted zone aiming to increase geological confidence necessary to support selective mining. We are also completing step-out drill holes to evaluate the extension of high-grade trends southward and to grow the size of the total resource beyond the currently permitted area. As Randy mentioned, we awarded the detailed engineering, procurement and construction package for the pilot plant to Zeton, a recognized global specialist and leader in the design fabrication and construction of pilot and demonstration plants. The pilot plant will be built on skids and shipped to our pilot facility in Wyoming. We completed architectural and engineering designs for the book mine pilot plant and laboratory facility, which Chris will get into a bit more detail soon. This complex will be constructed on Ramaco's property directly across the interstate from Ramaco's existing ICAM facility.

A high voltage electrical power the geotechnical work and foundations were completed, and we've placed orders for analytical equipment that will be put into the laboratory facility for our own on-site analytical lab. Ramaco has fielded queries in the media related to the grade of the deposit. And I'd like to talk a little bit about that. Unlike other commodities such as gold and copper, which report equivalent grades to account for byproduct credits, the rare earth industry does not account for this in reporting parts per million total rare earth oxide and it does not have a neodymium or perceodemium equivalent grade concept. As a result, deposits with high-grade critical minerals such as the Brook mine must be compared on an equivalent basis, which is referred to in the industry as a basket price. If you compare the Brook mine basket price on an ND PR equivalent grade, we are more than 10x higher than the industry trend for our parts per million TREO. And that's a reflection of the high-value components that we have in our deposits.

Furthermore, typically higher parts per million TREO deposits are dominated by low-value lanthanum plus serium. Many of the highest-grade deposits are about 70% to more than 80% lanthanum plus serium which are costly to basically remove from those flow sheets. With that said, I would like to now turn the call over to our Chief Financial Officer, Jeremy Sussman.

Thank you, Mike. Starting with the balance sheet, I'm pleased to note that we had record liquidity of $272 million at the end of Q3. This is the strongest level of liquidity that we've ever had. Liquidity was up over 237% compared to the same period of 2024. We ended the quarter with a net cash position of $77 million. During the third quarter, we issued $200 million of common stock underwritten by Morgan Stanley and Goldman Sachs. In addition, we announced the redemption of the $34.5 million 2026 senior notes at 9% the issuance of $65 million of 2030 senior notes at 8.25%. As noted, focusing on our core met coal business, our third quarter 2025 operational results were again solid, with cash cost per ton of $97. This continues to put Ramaco in the first quartile of the U.S. cash cost curve.

Cash cost per ton sold fell $6 from the second quarter on stronger overall productivity. As we head into Q4, our mine costs continue to have dropped throughout October. We would note that November and December are holiday months, which will have some impact on costs. Our Q3 production fell modestly from the second quarter to 945,000 tons. This was the result of both the typical July 4 minor vacation as well as our continued focus on value over volume. As Randy noted, we would rather leave production in the ground versus selling it at a loss into the spot market. Thankfully, our strong balance sheet, including our record liquidity position allows us this flexibility. Overall tons sold fell to roughly $900,000 in Q3 from roughly 1.1 million tons in Q2 and this was largely due to the fact that some shipments originally scheduled for July ended up shipping in the back end of June, coupled with our disciplined approach to spot sales. Unfortunately, metallurgical coal spot price indices have continued to decline U.S. indices fell another 6% in Q3 versus Q2 and almost 20% year-over-year. This caused a year-on-year decline in earnings despite strong operational achievements.

Despite the continued fall in index pricing, we managed to print Q3 financial results that were similar to Q2 financial results. To get into some specifics, Q3 adjusted EBITDA was $8.4 million compared to $9 million in Q2. Q3 net loss of $13 million compared to Q2's net loss of $14 million. Class A EPS showed a $0.25 loss in Q3 versus a $0.29 loss in Q2. While none of our primary peers have yet reported Q3 results, we suspect that our $23 per ton cash margins in Q3 will be among the highest of our peer group. As a reminder, our Q1 cash margins of $24 per ton were the highest among our peer group. Since then, our cash margins have declined just $1 per ton. This is despite an almost $20 per tonne fall in U.S. coal indices from Q1 to Q3. And Again, this is a strong testament to execution from both our operations and sales teams.

Looking forward, we are making a few small adjustments to our 2025 operational guidance given current market conditions. Specifically, we're optimizing our overall production and sales. We're reducing selective higher cost production to limit any need to move tons at potentially lower price spot sales, especially into Asia. Current prices, this should provide a net benefit to free cash flow. As a result of the idling of our Laurel Fork mine at the Berwind complex, full year 2025 production is now anticipated to come in at 3.7 million to 3.9 million tons versus 3.9 million tons previously. Full year 2025 sales are now anticipated to come in at 3.8 million to 4.1 million tonnes versus 4.1 million tons previously. We're generally maintaining the midpoint of all other guidance other than lowering DD&A from $71 million to $76 million to $70 million to $72 million, lowering the estimated tax rate by 5% to 20% to 25% slightly increasing idle expenses from $1 million to $2 million to $2 million to $2.5 million. Please note that our SG&A guidance now includes stock comp to guide apples-to-apples to the income statement figures.

Now turning to our rare earth elements and Critical Minerals business. I'd encourage you all to read Randy's September shareholder letter, which is on our website, which goes through the recently announced upside of the Brook mine. Specifically, the economics show a pretax NPV using an 8% discount rate of $5.1 billion and an IRR of more than 150% with a total initial capital cost of $1.1 billion. At full year, almost steady state production by 2028, we show achieving more than $500 million of EBITDA from the Brook Mine. Given the multiples on the rare earth names, needless to say, we're incredibly excited about the potential of this new business line. With Jason Traveling, I'll briefly touch on markets for metallurgical coal and REEs. First, on the metallurgical coal side, markets continue to be plagued by continued oversupply of Chinese steel exports. This dynamic has negatively impacted steel production in virtually all of our traditional markets.

While China's anti-evolution rhetoric regarding supply side reform has been encouraging, we have not yet seen a meaningful decline in Chinese steel exports. One positive dynamic that we've seen in the market is that supply in each of the main markets of Chinese domestic met coal, seaborne U.S. met coal production has all been under pressure. This is due to the fact that price indices are currently trading into the third quartile of the global cost curve and much of the supply is underwater at these price levels. we've even begun to see Tier 1 Australian producers idle some supply due to challenging market conditions. Now as the calendar shifts to 2026, we anticipate further supply rationalization. At this point, we don't see any meaningful upward trend in pricing. Speaking of 2026, we're currently in negotiations for the sale of Miller coal in 2026 to North American Steel Group, which is ongoing.

As Randy said, we will provide an update on such sales once this process is complete. The rare earths and critical minerals markets clearly have been dominated by recent political headlines coming out of the United States and China. As you know, earlier this month, China again put further restrictions on exports of its rare elements. These additional restrictions further underscore the need for a reliable domestic REE industry especially for the heavy REEs in critical minerals such as gallium, germanium and scandium. Collectively, these very elements comprise more than 90% of the anticipated revenue of the Brook Mine. These elements have also been banned for export to the U.S. from China, and there's virtually no production in the United States today of any of these REEs in critical minerals. To that end, what we've seen over the past quarter is truly a bifurcated market between Chinese and Western pricing. As Randy said, perhaps the best example of Scandium. There's currently no reliable Western index for Scandium.

That said, the U.S. Department of Bar recently signed a deal with Rio Tinto to purchase their Scandium byproduct for $6.25 million a ton. This price is 67% higher than the $3.75 million price that was used in both the summary of the Fluor PDA and in Randy's shareholder letter and it's more than 5x greater than the Chinese manipulated index prices. Overall, we believe political tensions will only lead to this bifurcation between Chinese and Western REE markets increasing. We've met with a number of potential customers since our Q2 call. While we will certainly let the market know when we have definitive offtake agreements in place, I'm encouraged by the wide range of inbound calls that we have received from industry-leading companies and sectors ranging from aerospace and defense to automotive, just to name a couple. I'd now like to turn the call back to Chris Blanchard, our EVP for Mine Planning and Development.

Thank you, Jeremy, and good morning to everybody who is with us today. Following some of Mike's earlier comments, I'll start with some of the ongoing work on the ground at the Brook Complex since our last call. At our pilot plant location, the geotechnical drilling commenced and was completed during the month of September and the subsequent engineering report to allow our foundation design was completed just in the last weeks. In parallel with this, we have also obtained all local zoning permits to begin construction and cite the pilot plant. We broke ground on the facility last week, as Randy mentioned, and we expect to get the actual foundation work begun in November.

We expect to have the building under roof early in 2026 to receive delivery of the first pilot plant modules from Zeton. As Mike mentioned, in this facility, we will also house our own analytical testing laboratory. [indiscernible] among those components will be 2 ICP-MS machines which have been ordered and will accelerate the testing of our ore for rare earth elements and critical minerals. At the Brook Mine itself, as Randy mentioned, we moved a large amount of cold rock and ore during the initial months of operation. To be more granular on some of this, we mined and isolated approximately 300 tons of high-grade REE critical mineral ore for further bench testing and pilot testing, both on-site and off-site. All of this material was located in one band of strata between our [indiscernible] team and our Monarch team. We have already sent bulk samples approximately kilograms each to the national labs as well as third-party commercial labs for continued flow sheet optimization and testing.

To put the amount of stockpiled high-grade ore in perspective, we anticipate our pilot plant once on site and operational to process approximately 3 tons per day of ore. With what we have already accumulated, we have approximately 20 weeks of continuous operation available to process at full pilot plant capacity. Nevertheless, we are active in the mine this month and expect to ship and sell our first thermal coal from the Brook Mine in the coming weeks for a test from at a local utility. Assuming that the testing is satisfactory, we expect we may enter into a time agreement to commercially sell thermal coal separate from our rare earth ore. While we are active in the pit for the collecting the coal for the test burn, we will also be separating new critical mineral ore from the next stratigraphically lower horizon from the partings in the Monarch seam floor.

We expect this to be similarly high concentration from all of our initial drilling and testing. This mark or zone will likely allow us to gather enough additional ore to support our pilot plant through its first full year of operation. The mine continues to remain an active status to allow us to obtain additional samples for testing as needed and also to advance the larger project. Longer term, we have already engaged with Sheridan's regional power supplier to begin the upgrade process for the high-voltage transmission lines in the area to support the high-voltage power needs of the full commercial processing plant at Brook. Now moving to the East and to the metallurgical operations. The third quarter was operationally successful. We saw progressively better and lower cash cost each month following the July holiday month, culminating in company-wide cash costs of $86 per ton for the month of September. As we've been mentioned, early in September, we made the difficult decision to idle production at our Local World Fork mine, which is located at the Berlin Complex.

Unfortunately, given the current and near-term sentiment of the market, financially, it did not make sense to continue to operate the mine as our holding costs were in line with our net operating costs. The impact of the removal of the relatively higher oral for cost did contribute a couple of dollars to the lowering of the overall company cash cost in September. And of course, we would expect that to continue. We're keeping the mind on a hot-idle status and are maintaining the mining infrastructure until such time as the market fundamentals have improved enough to bring back these incremental tons. Despite the fact that we are now operating 3 underground sections less than we originally budgeted to be operating in 2025, September productivity levels exceeded budgeted levels enough to almost match the full original budget for produced tons. I would remind everyone that the fourth quarter does have 2 months with the traditional shutdown vacation weeks. So while we expect productivity and production to continue at its current levels, the impact of these 2 vacation months will temper the cash cost performance level seen in September and that we expect to continue or be better in October.

Operationally, as we complete our budgets for '26 and the years beyond, we are positioning all of our complexes to be able to quickly pivot as the market improves. However, little material capital for met coal growth is planned to be deployed in 2026. In line with that, we are also working with all of our vendors and suppliers to reduce costs anywhere we can. Similarly, we are working with our lessors to get relief on royalty rates or strategically move our sections where we can from higher third-party royalty areas to our own coal. Simply put, as we close out '25 and head into 2026, on the metallurgical side of the business, we will put ourselves in the best position we can and control the things we can control, that is volume and operating costs. We will continue to maintain our position as one of the lowest cost domestic producers and be ready to reinitiate our growth targets as soon as it is responsible to do so. With that said, I would now like to turn the call back over to the operator for any questions from those on the line. Operator?

[Operator Instructions]

Our first question comes from Ben Kallo with Baird.

Thank you for all the detail. Just a big picture, lots of talks about deals with the United States and our allies could you maybe kind of give your viewpoint on that? And then how that impacts any kind of support that you get to the United States government for your development? And then I have a follow-up, too.

Well, I think in the political arena, when the U.S. starts making deals with foreign countries that obviously has macro political implications as far as the supply implications. I think it remains to be seen specifically what type of supply that those countries will be supplying to the U.S. So I think the jury is still out. I'll let Mike maybe comment on that because he's probably much more familiar with some of the operational aspects of some of the countries over there.

As far as it has to do with the U.S. and what it will do or not do with trying to support its own domestic industry over here. I think the government is moving forward on various fronts to try to be as supportive as they can, as we've seen over the last several months. But Mike, please go ahead and comment on that.

Yes. Look, my view on this is that these are short-term agreements. Until the U.S. ramps up domestic supply of these critical minerals. There's a need perhaps to close window in the short term. But I think given the application of what these critical minerals are used for, that there will be domestic supply in the U.S., and this is really a short-term solution.

My follow-up is just about extracting are from coal. Can you talk about what you've done and what you still need to be done to derisk that process and that it's been done elsewhere? Or just give us some thoughts around that.

Sure. I think some of the industry thinks we're extracting coal from rare from fly ash, we're not doing that. We spent a good part of a calendar year testing various processes and metallurgical flow sheets to achieve one main objective, and that is to solubilize all of the high-value critical minerals. So we are -- our process plant is basically taking the plays and the shales that are intermingled with coal, and we're extracting the rare earths from those.

Once soluble, the flow sheet is less risk in terms of purification and separation because there's technologies out there and examples and commercial applications that do that. So my view is that the high-risk part of this flow sheet was proving that we can extract the minerals which we've done. So currently, in the pre-feasibility study. We're spending more time on that downstream purification, looking at options, for instance, do we look -- do we use precipitation, ion exchange. We're concentrating our rare earths and critical minerals for further downstream processing and optimization. So like in every project as we advance through the engineering studies, where we're looking for more engineering design definition and optimization.

Yes. I'll make one other comment, which is what that we've said before, but probably merits saying again, so coal is essentially an unconventional source of rare earth. It's unconventional on a number of capacities, one of which, of course, is most rare are found in hard mineral. So coal is much easier to mine. It's a much softer material to process as well. And of course, from a processing and mining standpoint, it is not radioactive. So most of the other hard rock minerals have radioactive tailings, which has to be dealt with, both in terms of the mining the waste side of that after the mine has been done as well as, obviously, through the processing. So coal is a much more benign feedstock to work with.

Our next question comes from Colin Rusch with Oppenheimer.

Could you talk about how modular your plans are for the processing facilities and how we could think about some of this capacity coming online? Is it possible that you could start ramping some of this capacity a little bit earlier as you ramp up certain segments of the facility?

Yes. Look, we are -- and I think we've announced the acceleration. What I spoke about today is we're conducting test work programs in parallel. So we have 2 commercial labs working on this flow sheet optimization as well as the U.S. government labs when they get back to work, we intend to have testing being conducted at 3 facilities. I think in terms of ramp-up, we've talked about that. We have some optionality with ramp up, whether that's staging to meet the demand.

But I think in terms of of what we need to achieve first is confirmation of the flow sheet, early engagement with technology providers, and we are having some of those conversations now to make sure that they advance the engineering with us and identification of long lead items, which Hatch is working on now so that we can place equipment orders early. I think the fact that we're permitted gives us some advantage because we can get into this site to do some early site works versus projects that are still waiting for permits. So all of those factors are going to help us ramp up more quickly.

And then just given some of the substantial value that is coming from the facility or coming from the site through Scandium, can you talk about how much are those conversations are any sort of issues around pricing, either higher or lower that you see potentially impacting some of these estimates as some of the incremental capacity comes online. I think some folks may get a little concerned that you start impacting some of broader market prices, but that may not be the case. Just want to get a sense of how substantial those conversations are and some of the impact around some of the stats

Sure. We're not going to get too far Yes, we're not going to get too far under the weeds in terms of discussions about negotiations that are taking place in real time. I will say that we are having discussions with both domestic and international customers as it relates to Scandium, we've not gotten to price specifics at this point. But as I mentioned, the last, frankly, major price marker was the one that the U.S. government established with their deal with Rio here a couple of weeks ago. And in terms of negotiations, we obviously don't negotiate in public like anyone else does. And once we get to a point where we have actually agreement on any points, then obviously, that will be disclosed.

Our next question comes from Matthew Key with Texas Capital.

Staying on kind of the rare earth side. We've seen some other coal companies hit at the potential for rare earth development in the PRB. Could you maybe share some color on why you view growth as unique compared to other PRB assets? And kind of what's the major differentiator there in your view?

Sure. I'll give you basically what we have been told by NETL which did a national assessment of rare earth sites, frankly, all over the country and specifically in the Powder River Basin. So in the Powder River Basin, of course, there are areas where there is REE concentrations. The unique thing about the Brookside is that we are, frankly, on the far western edge almost the edge itself of the Powder River Basin to our West is where there was a great deal of volcanic activity, millions of years ago, which we benefited by having that volcanic ash rain down on our site.

And we also had similarly a lot of deposits of rare earth that frankly were co-mingled with the alluvial seas, and they permeated up through the crust on to our site. The comment that was made to us by NETL was that you might go just a few miles from where we are, and we have a -- we probably have about a 7 or 8-mile site and you might not find anything. Indeed, when we've mined, you can go and find high concentrations and then go probably 10 to 15 feet away and you don't hit any. So we can't really comment on what somebody else's site might or might not have, but we have been led to believe that we have a particularly unique site with some geological anomalies that might not be repeatable elsewhere.

Got it. That's super helpful context. And staying on Brook, I was curious in regards to the strategic Critical Minerals terminal, is that expected to add a material amount of CapEx to the overall project? Or should it be relatively small?

It should be relatively small. And certainly, the overall context, the big spend, of course, is going to be on our commercial oxide plant. But I think it does add a very unique dimension because it allows us to control some of the downstream, we will sort of be a unique site there where we can act as sort of certainly, as I said, either regional or a national hub to stockpile rare earth for whether they are public or private uses and it gives us some price visibility on what we're doing and also allows us to put our own feedstock and oxides into the stockpile to be able to have some form of controlled marketing as well as some finance opportunities.

Our next question comes from Nick Giles with B. Riley Securities.

My first question, I just wanted to follow up. I better understand the rationale behind the strategic critical minerals terminal, what kind of economics will be third-party received? And I guess my question is, why not sell directly to customers with a smaller footprint for potentially more attractive economics?

I'm not sure I understood your second question. But I mean the first question, what a customers received, basically, we will be able to have sort of a clearing house, think of it more in the context like a regional petroleum hub where you can basically market from that site to third parties in a controlled manner, which provides some optionality both for other producers as well as for ourselves. And in terms of the overall economics, I think it will be a net benefit. It's obviously not going to be a heavy CapEx requirement for us, but it does provide us some visibility into the market that we might not otherwise have.

My second question was, you announced the pilot plant boxes facility every day and -- or the groundbreaking at least. And it's hard just to be operational by mid-26 and then you expect to operate it for a 6-month period I believe that's fairly accelerated relative to other pilot facilities across the space. So my question is what ultimately gives you the confidence that you'll be able to fine-tune and validate the processing techniques on this time line?

We get into -- I'll let Mike get into some of the technical aspects. But as I said earlier, what we're trying to do is kind of fast track it by first of all, while we're actually constructing a facility to build the pilot plant in, we are going to have that basic engineering design and testing done off-site at a spot that's already got all of the equipment infrastructure and testing facilities to do that in real time for a period of months, maybe as long as 6 months before we even have to get our own site positioned to basically have all that material moved into it. So we'll accelerate that from that standpoint. That's the Zeton arrangement. But Mike, go ahead and touch on some other aspects here.

Yes. I think it's worth mentioning. I mean we've been designing the pilot plant now for a couple of months. So although we've just announced where we're at, there's been -- Hatch has been involved with us putting together a basic engineering package. So we've got the mass balances the flow sheet to excise the equipment. We've handed over a detailed engineering package to Zeton. So this is well underway. We know what equipment the sizing where we're going to source them Chris mentioned, we came to a 3 tonne per day or throughput to the pilot plant.

We picked Zeton because this is their wheelhouse. design and build these plants. They have technical skills in-house that can fabricate vessels if they need to be custom designed for instance. So we're not sending things to third parties to get fabricated I think the other thing to mention is Zeton was involved with them more than 20 years ago on a very complicated pilot plant also. In terms of your answering your question about ramp-up. Frankly, we've got Hatch who's got several subject matter experts in rare earths in the Americas. We brought Martin on board which coming from Fluor, we -- there were similar unit operations with separation purification. So we have some knowledge in-house about what we're going to do with the design to help us get ramped up.

The 6-month operation period is really to generate product that's going to be quality spec for our off-takers but that pilot plant is going to be an asset that we're going to continue to run for years ahead as needed and testing and continually optimizing like other facilities when they have pilot plants on site, it's really an asset for the company long term.

I'd just like to add, I think we are doing a lot of stuff behind the scenes that we're not exactly announcing on a daily basis. We have been at this now for about, I guess, going on our seventh year. So the amount of behind-the-scenes work is a lot more substantial than I think might meet the eye.

Our next question comes from Nathan Martin with Benchmark.

Thanks, operator. A lot of information discussed already. I guess maybe at a high level, what do you guys need to see from the pilot plant process, customer conversations, et cetera, to make you feel comfortable enough to move forward with full commercialization? And do you still expect to make that decision by the end of next year, possibly?

Sure. I'll make a comment on the high level probably from a financial and strategic standpoint. I'll let Mike comment from a high level on the technical side. So obviously, as a normal development project, particularly in a new business line. We're going to want to see confirmation of customer acceptance of our product, appropriate pricing for our product and appropriate contracts, hopefully, on a long-term basis to establish the underlying credit it to do normal forms of finance. This is not going to be an inexpensive project. We know that. It's a critically important project, not only course for Ramaco, but frankly, we feel for the country.

And so we will take all deliberate steps. We are not gunslingers. We are not promoters in the sense that we're trying to get out in front of markets that aren't there. But I think we will be deploying the same sort of careful discipline that we have used in our met coal business to ensure that we've got a market for the product that we will build. And we will finance it conservatively, and we will try to make sure that operates efficiently and at low cost. So Mike, I'll let you pick up from there.

Sure. I think the purpose of piloting is twofold. It's prudent for us to provide confidence that we have a flow sheet that works, and we can produce product on spec for our off-takers. There's plenty of projects, commercial plants that are built without piloting. But given we have an unconventional deposit, it provides people with confidence that technically our flow sheet works and that we can achieve the product spec. So that's really what I'm aiming to achieve is on the technical validation, and that's why we're piloting.

I appreciate those comments, guys. And then maybe just one question on the met coal side of the house, updated full year sales guidance looks like it assumes about 900,000 to 1.2 million tons shipped in the fourth quarter. It looks like 3.9 million tons committed, I believe. So where do you think you ultimately kind of end up within that range? What could be some puts and takes there?

Nate, so I mean I think as Randy said and Chris said as well, the mines are running great. But obviously, we've continued to sort of rationalize production because we're just not going to sell at a loss into the spot market. So certainly, we've got inventory on the ground and the ability to hit the high end of the range, but kind of similar to Q3, where you saw us obviously come in a little bit more towards the lower end of the range on shipments. We will monitor the market and sort of see where things shake out. So I would say probably the vast majority of the range is just candidly market driven.

Yes. I'd say that, one of the things we always find in the fourth quarter is that at least for the last couple of years, a lot of the domestic steel guys have frankly, underbought as they go into their original contract procurement and you get to the fourth quarter and they need to play catch up. This is perhaps particularly true in a year where there is a supply rationalization. So as you well know, we've seen a number of suppliers in the market cut back or frankly, go under. So I think it's going to be interesting how the fourth quarter plays out.

Our next question comes from Alex Furman with Lucid Capital Markets.

You have a really diverse portfolio of critical metals at the Brook Mine. Is the pilot prototype that you're building in Ontario, is that designed to process the entire range of minerals that you have? Or is it possible that you're going to need some additional partnerships to process some of the less common metals? Would love to get some more color on that.

Yes. We aren't anticipating any partners. I think there has been some conversations recently about -- is there -- is there an opportunity to pull something else out of this mix. You're right. It's a very unique basket. There's been interest in itrium, potential samarium and others gadolinium has been mentioned. So I think the beauty of a pilot plant is there is some flexibility in being able to test other things. So we are designing with that in mind that we have flexibility with the pilot plant that if we want to bolt something on to test or to validate that we have the opportunity to do that.

Our next question comes from Jeff Graham with Northland Capital Markets.

I wanted to talk on the permitting side of things. Can you guys give us a sense of the time line to get the remainder of the mine permitted to handle the increased throughput plans you guys have talked about?

We will be -- we are already meeting with some of the federal groups on permitting. We've had ongoing dialogue, of course, at the state level. We just received our next 5-year renewal on our original mine permit, which frankly lets us continue to do everything we want to do without further amendment what we're developing right now, and I'll maybe let Chris speak just a little bit to it, but we are developing our mine plans as it relates to the balance of our acre site.

Of course, the original mine plans only covered about 1/3 of that or less. And once those plans are developed, then we will proceed probably on somewhat of a combination of both a federal and state expanded permitting. So Chris, you might want to just talk a little bit about your mine planning.

Yes, just to add a little bit of color to what Randy said. We already have the permitted areas a huge area. It's about a 30-year mine plan at the base rate. So we have the ability to deploy 2 or 3 fleets for the size that we ultimately choose to mine a book within the permitted area. So that will require minor modifications to the permit as far as the staging of the line but not actually having to have the entire property permitted on day 1. So we've got a lot of runway in front of us. We are drilling all the testing wells that are required for water outside that permit area and quite frankly, to go deeper as well. But with the amount of area that we have at Brook, that's not even a start-up concern on the initial mine permit.

Yes. I mean the one thing I'd point out, just given the frankly, massive size of the deposit, depending upon the sort of velocity of our mining. We've got, on one end, probably north of 150 year mine life. If we want to accelerate the mining, obviously, that number goes down, depending on how quickly we intend to mine on an annualized basis, but we have more than enough to say grace over at the moment. And the interesting a permitting standpoint, I would add also one other aspect. We have only, frankly, tested, as I've said before, on a sort of conventional Powder River surface mine program where we have core drilled down to about 150, 200 feet.

We have discovered or, frankly, NETL helped us discover that we have deposits that frankly are much deeper. We have done some cores now that have found, frankly, much higher concentrations down in about the 500 to 600-foot levels in some of our areas of the site. So in addition to what we've got, at the surface. We've also got potentially a very large sort of untapped and unexplored area in a much more subterranean area, which might lend itself to a different kind of mining. We've talked about before the notion that we could do some form of in-situ injection well mining for some of the deep stuff which will probably encompass another type of permitting exercise. But it just shows how big this deposit really is.

That's really interesting. Just a quick follow-up. Randy, you mentioned being on a lookout for some opportunistic bolt-on acquisitions. Can you just shed a little light on what kind of opportunities you guys are looking for and how you characterize the overall attractiveness of the acquisition market?

Yes. I mean when we get asked about M&A opportunities, I always quip, we're not particularly interested in the IM, but we'll take a look at the A. So we have kind of had a program of the past of picking up somewhat opportunistically assets, be they reserves or infrastructure in the coal space that are accretive to us and that we're able to pick up on an advantage basis based on perhaps market distress that others might have.

And frankly, we've -- we're looking at some of those now. We've also made a small acquisition out, frankly, the Brook Mine area where we bought about 1,200 acres of surface property on top of what we already own, which is going to provide us a lot of optionality for some of the planning for where we might want to cite some of the industrial areas out there. So we're always on the lookout, but we're kind of a rather opportunistic buyer.

This concludes our question-and-answer session. I would like to turn the conference back over to Randall Atkins, Chairman and CEO.

Well, I'd just like to thank everybody for being on the line today. I realize this was a little bit longer than our normal quarterly call. But as we move forward, we're basically giving a undown on 2 separate operations, both of which are very important. So we appreciate you bearing with us. And we'll certainly look forward to keeping everybody apprised as we move forward, and we'll look forward to our next call after the end of the year. Take care.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.