Ramaco Resources Inc-b Aktie

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.

Good day, and welcome to the Ramaco Resources Second 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 second 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 the newest member of our Executive Committee, 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 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. I want to first thank everyone for being with us this morning. We had an exceptionally busy quarter. I'll begin with the very recent, very positive events surrounding our Brook Mine critical mineral and rare earth business in Wyoming. The release of the summary of Fluor's preliminary economic analysis and an historic ribbon cutting at the Brook Mine in July have both garnered a great deal of attention. These two events reinforce the concept that Ramaco has now embarked on transitioning to become a dual platform company unlike any in the United States. Our operations now embrace production of not only met coal, but also rare earths and critical minerals and their refinement ultimately to oxides. This transition has also resulted in a fundamental reset in our share price as the market has begun to view us in this new light.

The Brook Mine is unique, both as a geologic mineral proposition, but also unique in our country's larger strategic quest to claim back, frankly, its own security. We hope and believe that this mine will produce a large and vital domestic supply of rare earth and critical minerals in the face of dominance by a [indiscernible] foreign nation state. Specifically, the Brook's distinctive geology facilitates not only a lower-cost REE production, but also a lower cost ultimate processing and refinement.

The rare earth mine also combines with our met coal profile to create a unique growth story, combining two vital forms of now critical minerals. We will soon explore expanding our rare earth mine production profile to enlarge the annual production rate to a multiple of its currently permitted 2.5 million tons per annum. We will similarly look to expand the oxide processing capacity to a larger level as well. At the same time, we will be exploring and developing the remaining roughly 11,000 acres or 2/3 of our reserve base to determine both the size and geological character of this massive deposit.

Weir has now defined the TREO base at 1.7 million tons on the roughly 4,500 permitted acres. We expect this new exploration will substantially expand the known size of our reserve. As to the mine groundbreaking ceremony 2 weeks ago, I want to thank again all of the dignitaries for taking part in the opening of the country's first new rare earth mine in more than 70 years. The group was led by Secretary of Energy, Chris Wright, the entire Wyoming U.S. Congressional delegation, as well as Wyoming's Governor, Mark Gordon. As I shared at the ceremony, with both the deposit size of over 1.7 million tons of rare earth oxide, and importantly with the only domestic slate of five of the seven recently banned rare earths from China, this mine has the potential to become an important bulwark to the supply chain challenge posed by China. This will be America's mine. Its production, refinement and sales will be on American soil.

I will not dwell on the background of our critical mineral business other than to say we have been working on developing the Brook Mine since 2012, and with a particular focus on rare earths now for almost 6 years. The mine is fully permitted. We began full-scale mine operations this June. We expect to begin pilot plant operations to take our ore to oxide this fall. And we will use our pilot operations to optimize the processing techniques for roughly about 9 months, which will then assist in the design engineering for our full commercial oxide facility. We hope to transition to construction of the full commercial facility by late next year. And dependent upon some potential acceleration on timing, we would expect to be in commercial oxide production and sales by 2028 or hopefully sooner.

Over the past 6 years plus, we have continued work on this unique opportunity with a combination of assistance from NETL as well as other third parties such as Weir and Fluor. In early June, I had the honor to personally meet with Secretary, Wright in Washington to brief him on the project. Given the critical importance of the mine to national security, he encouraged us to explore how the government and in particular, the Department of Energy could assist in accelerating and expanding both the timing as well as the production rate of the mine. Since the Brook Mine is the first and largest new mine and processing facility in the U.S., the federal government is now engaging with several agencies to assist Ramaco in moving this project forward.

To this end, for 3 days this week at the regional NETL headquarters in Oregon, we held an all-hands meeting of Ramaco's entire rare earth team with more than 20 Department of Energy personnel. These scientists and technicians were from NETL as well as the Lawrence Livermore Lab and Idaho National Lab. Mike Woloschuk, who is there with me for the entire time, will be speaking along that in a moment.

The DOE's objective for the Brook Mine is to provide the full capacity of the National Lab's comprehensive testing and research capabilities to accelerate our entire mining and process development process. This is somewhat unprecedented. The DOE will provide their wide-ranging resources to essentially become Ramaco's partner in all testing and critical path development of the exploration, processing, refinement and ultimate production of materials and metals at the Brook Mine. There will be more to discuss on that collaboration as we proceed further in the months ahead.

We are also now involved with the administration's National Energy Dominance Council on a variety of fronts. This council acts as the White House's coordinating arm to advance critical mineral development across multiple federal cabinet offices and agencies. We're now engaged with the council to advance discussions between Ramaco and several federal agencies, including the Department of Energy, of course, the Department of Defense, the Department of Interior and the National Security Agency. Again, as those engagement proceeds, we will disclose specifics in due course.

We are also now beginning to receive inquiries and meet with potential rare earth and critical mineral customers. We expect samples of various elements and oxides to be available for customer trials as we advance the pilot process. Jason Fannin will be speaking a bit later on the marketing and sales process that we are beginning to conduct.

We are also broadening our bench of rare earth personnel and are actively hiring individuals with experience in both rare earth geology and processing. These operations will be conducted under the direction of Mike Woloschuk, our EVP of Critical Minerals, who, as many of you know, recently joined us after serving as the Global Head of Fluor's Critical Mineral Operations. In sum, we are rapidly taking steps to develop our REEs into a commercial business. We are also being provided strong encouragement and support from the Trump administration in this regard.

During the pilot phase, we expect to better define the size of the capital investment as we optimize the processing flow sheet in advance further. Fluor has, of course, provided a preliminary CapEx estimate subject to a broad contingency. That figure will be refined as we proceed through the design, engineering and procurement phase. As I said earlier, we will be studying how we can enlarge both the scope of the mining production level as well as processing capacity to achieve a much larger scale to the project to meet an obvious U.S. demand.

We ultimately expect that investment capital for the new business will come from a variety of sources. This will include, of course, the internal use of Ramaco's own financial and balance sheet capabilities, but it may also include potential governmental and private customer assistance in various forms, including possible direct investment, long-term procurement, advanced payments and other contractual arrangements.

As with any project of this size and scope, we will proceed with funding that is backed by conventional third-party purchase and throughput commitments. We will not disclose any discussions involving potential investments or financings at this time.

Turning to our met coal business. The past quarter again underscored how quickly the landscape can shift. Met coal benchmark prices dropped roughly 25% year-on-year this past quarter. After bottoming in early June, the Chinese domestic coking coal prices staged somewhat of a textbook V-shaped recovery, driven less by headline production bans and more by a combination of deliberate softening in demand -- pardon me, in supply as well as targeted safety and environmental checks that slowed output. Even with the sharp pullback we saw this week, prices are still materially above the June, July lows. Beijing's clear signal seems to be that it intends to rein in chronic domestic oversupply, which we hope lends some durability to the recent gains.

The other moving parts of the met coal pricing equation are lining up in a similar fashion. Indian steelmakers remain solidly profitable, underpinning steady raw material demand. Australian exports out of Queensland have yet to fully normalize after weather and operational setbacks earlier in the year. U.S. met coal producers have reduced production as pricing realizations are, in many cases, now below mine costs. Taken together, we see a healthier balance developing in the second half, albeit not yet a straight line.

Against that backdrop, we continue to focus on what we can control, and that is driving down mine costs and lifting productivity. Chris and Jeremy will speak to those points in a moment. This quarter also marks our second consecutive production record. Our mine cost dropped again this quarter by $5 to $103 from $108 in the second quarter of '24, and we expect to drive them further down in the back half of the year. Nevertheless, the weak spot export pricing still outpaces our efficiency and mine cost gains. As a result, we are trimming full year sales guidance slightly simply to be prudent. To be clear, the adjustment is purely price driven. We will not place tonnage into an oversupplied spot market at negative margins.

In short, in the met space, even while price volatility remains, we are cautiously optimistic that pricing will improve as we move through the back half of the year. This is going to be through a combination of firmer Chinese fundamentals, a resilient Indian demand and constrained or even declining Australian and U.S. supply.

So to wrap up on a highly positive note, the bottom line is that we are rapidly moving forward with the multiyear process of transitioning Ramaco into becoming the only U.S. dual platform in both rare earths as well as the metallurgic coal space. We have a very unique business model and a unique and highly promising growth trajectory in both business lines. I feel strongly we will serve both our shareholders and our nation well as the years evolve.

So with that, I'd like to turn the floor back over to the rest of our team to discuss finances, operations and markets. But first, I would like Mike Woloschuk, who leads our Critical Minerals business, to share some further thoughts on rare earths. So Mike, if you would continue.

Thank you, Randy. I first want to say how exciting it is for me to be part of the Ramaco team. As Randy mentioned, I previously held the role of Global Head of Critical Minerals for Fluor, where I was involved in numerous rare earth and critical minerals development projects across the world. I've personally been working on the Brook Mine project since Q4 last year and decided to join Ramaco because I believe this project is the most promising rare earth project in North America.

The Brook Mine project is unique across the landscape of rare earth projects, and this company is committed to advancing the Brook Mine into production. The advantages and opportunities associated with the Brook Mine development, first, the mine is already permitted, and we commenced mining in June. So that significantly reduces the development time line of the project. Secondly, the Brook Mine deposit contains high-value critical minerals co-mingled in coal. And unlike the hard rock deposits, this ore is soft and simplifying the front end of the processing plant. It does not contain meaningful levels of radioactivity, which are typically associated with rare earths found in hard rock deposits. And thirdly, the high-value critical minerals and lower value of low-value rare earths means that the basket value of this project is boosted for the ore quality, if you will, compared to peer projects.

As reported in the disclosed summary of the Fluor PEA, our recoveries are also comparatively high. So our recovered value in dollars per ton of TREO is more than 20x compared to traditional light rare earth centric mines. Fourth, this project has excellent access to infrastructure with the I-90 and the main rail line intersecting the property. Again, this reduces the capital investment and development time line for the project. And lastly, since the critical minerals are co-mingled in coal and because we intend to sell thermal coal, which is not mineralized, we expect that this will offset the mining costs of these critical minerals.

Looking ahead, my main focus is working to accelerate the time line to reach commercial production. As Randy intended, we plan to rapidly construct our pilot facility so that we can begin pilot operations this fall to take our ore to oxide product. This will allow potential customers to test our products for quality control. Whether it be the Department of Defense or a defense contractor or any other potential customer, any agreed-upon long-term offtake will be subject to meeting certainly quality specifications. So we view the acceleration of the pilot plant as the crucial next step on the path to commercialization.

Additionally, this month, we are commencing the next phase of the commercial plant design as the flow sheet remains on the critical path. Ultimately, as noted in our earnings release, we remain on track for commercial oxide production in 2027, which has been pulled forward from the 2028 for the summary PEA. All this week, as Randy mentioned, the Ramaco technical team has been in meetings with the Department of Energy Labs. These meetings were attended by National Energy Technology Lab, Oak Ridge National Lab, the Idaho National Lab and Lawrence Livermore National Lab. Each of these labs brings technical expertise to this project from geological definition that will help us better define the other 2/3 of this deposit, which is yet to be explored to flow sheet improvement ideas and to battery quality specifications that are going to help us to detail our flow sheet.

The comment made by several Department of Energy employees that were attending these meetings was that everyone in the DOE lab wants to be working on this project. So we have existing agreements in place to immediately continue work, and we have 70 tons of ore at the Brook Mine site that are in super sacks ready to ship to these labs, and we expect that will happen next week.

With that said, I would like to turn the call over now to our Chief Commercial Officer, Jason Fannin.

Thanks, Mike, and good morning, everyone. Today, I'll share our views on the coking coal and steel markets as well as our sales outlook and wrap up with a discussion of marketing initiatives on the rare earths and critical minerals front. Global coking coal markets continue to weaken from a pricing standpoint during Q2 with last quarter's index averages down approximately 8% since the start of Q1 and down 5% quarter-over-quarter.

To start Q3, during July, we saw Chinese coking coal prices surge 38%, with futures hitting a 7-month high as safety and environmental inspections across important mining regions, forced mine and wash plant outages, tightening inland inventories. While we've seen sharp price swings on Chinese exchanges this week, the broader signal from Beijing is unambiguous. Policymakers are intent on addressing persistent oversupply. Their posture should provide underlying support for prices and increase the likelihood that recent gains will have some staying power.

At the end of July, the Australian Premium Low Vol Index was $183.20 per ton, up from the low of $166 in late March and from $172 in mid-July. U.S. East Coast index values were $174 per ton for Low Vol, $156.50 per ton for High-Vol A, and $147.50 per ton for High-Vol B. SGX forward pricing also moved higher in late July with Q3 and Q4 PLV now priced at $185 and $193, respectively. While we treat forward markets with healthy skepticism, Chinese policy pivots like those in 2016 and 2020, have historically marked turning points, which have resulted in sustained recoveries. While risks remain, the worst may be behind us.

As we enter the third quarter, we remain optimistic about improving fundamental market conditions, supported by rising finished steel prices in China and India and iron ore prices holding below $100 per ton amid growing supply. These trends should bolster steel mill profitability and support increased met coal pricing. That said, persistent strength in Chinese steel exports and unresolved overcapacity concerns continue to pose risks. It remains unclear how policymakers will address these structural challenges, leaving some uncertainty on the horizon.

In Europe, we remain cautiously optimistic about the outlook for improved market conditions. Existing safeguard quotas and phased rollout of the EU's carbon border adjustment mechanism are expected to provide a progressively firmer floor against low-cost steel imports. Germany's proposed EUR 500 billion off-budget fund alongside continued European Commission-backed stimulus efforts should help provide infrastructure machinery demand as monetary conditions ease and ECB rate cuts take hold. As a result, we expect EU apparent steel consumption to bottom early next year and rebound by 3% to 4% in 2026, helping to restore steel mill margins and support Atlantic Basin metallurgical coal demand. In the near term, however, conditions remain difficult and further capacity rationalization across the European steel sector appears likely.

In the U.S. and Canada, our domestic end users continue to take shipments at a steady pace, in line with our expectations and contractual commitments. Notably, finished steel prices in the U.S. remain the highest globally, nearly double prevailing Asian seaborne levels, and we expect our domestic partners will continue to enjoy significantly higher steel prices going forward. Building on this favorable backdrop, we are now in the domestic negotiating season with several buyers issuing RFPs. While we won't discuss specifics today, our focus remains on enhancing the value of our sales portfolio, and we are actively engaged in that effort.

Turning to our 2025 sales book. At the start of the third quarter, we had secured commitments for 3.9 million tons. North American buyers account for 1.6 million tons at an average fixed price of $152 per ton, and first half seaborne shipments of 1.3 million tons achieved an average fixed price of $109 per ton. In total, our fixed price book for 2025 stands at 2.9 million tons at a blended price of $133 per ton with an additional 1 million export tons under index-linked arrangements for delivery throughout the back half of the year.

The majority of our few remaining uncommitted tons align with planned Q4 production, providing us the flexibility to strategically layer in additional sales at favorable pricing. Given ongoing market headwinds, we are optimizing our production plan to minimize lower-margin spot sales and prioritize the highest return opportunities. This disciplined approach allows us to protect margins, capitalize on the most optimal sales and maintain reliable supply for our long-term customers.

Turning now to our rare earth and critical minerals operation. We're accelerating development of our Brook Mine deposit in Sheridan, Wyoming. We've completed end-to-end supply chain mapping for our highest value materials and are actively collaborating with major U.S. buyers, including defense suppliers to align on operating time lines, product and volume projections, qualification protocols and downstream applications. This proactive engagement ensures we meet stringent demand criteria while positioning us as a reliable domestic supplier in this strategic sector, laying the groundwork for future offtake agreements as we continue to fast track the build-out of our pilot processing plant and the later scale-up of our commercial facility.

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

Thanks, Jason. And as always, thank you to everyone joining us this morning. Although we had another strong operational quarter, this was, of course, coupled with the continued decline in the metallurgical coal indices and led to a slight compression in our operating margins that Jeremy will describe in more detail. That said, I'm extremely proud of the operations team for having first half 2025 cash cost per ton sold that came in just over $100 per ton. This puts us squarely in the first quartile of the U.S. cash cost curve.

During the second quarter, we temporarily idled the single section Eagle mine where coal thicknesses and processing recovery made the mine marginal in these market conditions. The mine remains open and is being held in care and maintenance and can be restarted virtually immediately when market conditions warrant. On an even more positive note, our Berwind mine's two sections have now returned to full productivity, helped by the completion of a new air shaft in mid-May. We have seen the cost from this complex decline to their historically lower levels.

The combination of the changes at Elk Creek on volume and the improvement in productivity at Berwind allowed us to close the quarter with June costs coming in, in the low $90 per ton range for the month on an overall company basis. We expect to continue to operate at these steady-state cost levels throughout the balance of '25, although I would remind everyone that the third and fourth quarters do have the traditional holiday shutdown periods.

The bulk of our major met capital projects were completed during the second quarter, and we expect capital expenditures in the East to decline to essentially maintenance levels for the second half of the year. We are, of course, looking at further ways to optimize our production portfolio and we'll take any opportunities to exercise further volume and cost discipline. We simply won't deploy the human or financial capital to force additional tons into weaker markets.

Pivoting to the West and the critical mineral operations, we activated the Brook Mine in June in advance of our mine opening ceremonies on July 11. Our initial mining area encountered extremely favorable conditions as far as coal thicknesses, mining ratio and importantly, confirmed the softness and friability of the rock and coal seams and the relative mining advantage we will have for this project. I'm happy to report that the mine opening and the initial mining stage were brought in under budget, ahead of schedule and most importantly, without any injuries or environmental or regulatory issues. As was released earlier this week, the Brook Mine has just received its 5-year renewal of its mining permit, and we are excited to move forward with the next stages of this project.

During our initial mining this summer, we successfully mined enough co-mingled rare earth critical minerals and coal ore to support our bench and pilot testing for the next 12 months in addition to the 70 tons that will ship next week to the national labs. As Mike mentioned, as we move into the pilot stages of testing, we will start these bulk tests and optimizations off-site initially at third-party labs in advance of the completion of our own lab and pilot testing facilities on site at Brook.

With the backdrop of our continued solid operational results in the East and all the potential that our critical mineral business holds, I'd now like to turn the call over to Jeremy for a deeper dive into the financials for the quarter.

Thank you, Chris. As noted, second quarter 2025 operational results were again solid with cash cost per ton sold of $103, which continues to put Ramaco in the first quartile of the U.S. cash cost curve. Cash cost per ton sold would have been $101 excluding the now idled Eagle mine. Even with higher costs at Eagle, both Q2 and year-to-date cash costs at Elk Creek are in the low 90s per ton range, making it among the lowest cost high-vol complexes in the country. In addition, for the second straight quarter, we achieved a record level of quarterly production. This led to Q2 tons sold of $1.1 million versus $900,000 in Q1.

Unfortunately, metallurgical coal price indices have continued to decline. U.S. indices fell another 5% in Q2 versus Q1 and more than 20% year-over-year. This caused a year-on-year decline in earnings despite the operating achievements. To get into specifics, Q2 adjusted EBITDA was $9 million compared to $10 million in Q1. Q2's net loss of $14 million compared to Q1's net loss of $9 million. Class A EPS showed a $0.29 loss in Q2 versus a $0.19 loss in Q1. While none of our primary peers have yet reported Q2 results, we suspect that our $20 per ton cash margins this quarter 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 then.

Looking forward, we're making a few tweaks to our 2025 operational guidance given current market conditions. Specifically, we're optimizing our overall production and sales. We're reducing selective production to limit potential lower-priced spot sales, especially into Asia. At current prices, this should provide a net benefit to free cash flow. As a result, full year 2025 production is now anticipated to come in at the low end of the previous 3.9 million to 4.3 million ton range. Full year 2025 sales are now anticipated to come in at the low end of the previous 4.1 million to 4.5 million ton range.

Now moving to our balance sheet. Our liquidity of more than $87 million on June 30 was up over 22% year-on-year. At the same time, our overall credit metrics remain strong with net debt to adjusted EBITDA of a little over 1x on a trailing 12-month basis. Earlier this month or last month, we announced the redemption of the $35 million 2026 senior notes at 9% as well as the issuance of $57 million of 2030 senior notes at 8.25% plus a potential $8 million shoe. This increase in liquidity is, of course, not reflected in our June 30 cash figures. However, as of July 31, our liquidity stood at $105 million.

Now turning to our rare earth elements and the critical minerals business. I'm very pleased with the results of the recently released summary preliminary economic analysis from Fluor. The results of the summary PEA outlined a pretax net present value using an 8% discount rate of $1.2 billion with an IRR of 38% with a total initial capital cost estimate of $473 million before contingency. The summary PEA shows steady-state EBITDA of $143 million by 2029 and more than $130 million of EBITDA by 2028.

Now given the multiples on rare earth names, needless to say, we're incredibly excited about the potential of this business. Given the combination of the summary PEA results, coupled with the tenor of our discussion with both the U.S. government and potential private industry customers, we are doing what we can to accelerate the pilot plant development. As such, we're increasing 2025 SG&A guidance from $36 million to $40 million to $39 million to $43 million. Bottom line is that despite the challenging market conditions, our metallurgical coal operations remain firmly in the first quartile of the U.S. cost curve. When coupled with our liquidity levels and strong balance sheet, Ramaco is well positioned to both withstand any continued near-term coal market weakness while also continuing to accelerate the development of our rare earth and critical minerals business.

With that said, I'd now like to turn the call back to the operator for any questions from those on the line.

[Operator Instructions] Our first question comes from Nathan Martin with the Benchmark Company.

Maybe just starting on the met coal side in the East. I fully appreciate leaving the higher cost production in the ground at these prices. But I was wondering if we could get a little more color on any anticipated impact on quality mix. Also it would be helpful to kind of get your thoughts on expected mix between domestic and export sales in 3Q, 4Q, just given the much more favorable fixed domestic price.

Thanks, Nate. This is Jason. Yes, I mean, as far as any quality impacts, obviously, we take that under heavy consideration when we're looking at any of these changes that we made. So we expect absolutely none to the portfolio we have today. I think in the back half, your question there on the sales mix. We're roughly 2/3 seaborne, 1/3 domestic, relatively similar to the mix there in Q1, Q2.

Yes, Nate, we're a little bit more domestic in Q2 than Q1, but overall in that kind of 1/3 on average, maybe we'll be a little closer to 35%, but somewhere in that range.

Okay. Appreciate it, guys. And then just with the 2.5% production tax credit you mentioned in your release for met coal starting on January 1. Could you put any estimates around what you think your savings could be there?

Yes. No, we're certainly excited for that inclusion in the big beautiful bill. And I'd say, Nate, obviously, we're still kind of working through the dynamics. But I'd say in that kind of $15 million a year range on EBITDA is our best estimate, obviously, plus or minus a little bit.

Perfect. That's helpful, Jeremy. And then shifting over to the West on the Brook Mine. There's a report out yesterday, I think, to describe the recent meeting of White House officials with the sampling of rare earth companies and tech giants in attendance. I'm not sure if Ramaco was part of that meeting, but I think the takeaway was that the administration could be looking to expand its price support for domestic critical mineral and rare earth production. So it'd just be great to get your thoughts there and whether or not Ramaco has been having these kind of conversations with the administration around the possibilities of providing a price floor for any of the critical minerals you guys expect to produce.

Sure. Nate, this is Randy. So I think, first off, we're not going to comment on any specific discussions we're having with the government, although we are having discussions, as I outlined in my remarks. I do think the general approach that the government is using, obviously, the MP Materials deal is somewhat of a template is an important one. I've argued that because of the fact that you've got a nation state that's trying to essentially eliminate any other production of rare earths around the world. Unfortunately, you probably got to have the government step in to help support private industry in that respect. And that's in a variety of means.

Obviously, the market is not a free market because the Chinese manipulate both pricing and production. So you have to establish some degree of a level playing field. That probably comes in a number of ways, many of which, of course, we touched on with the MP deal. I've advocated for some time that we probably need a national critical mineral strategic reserve sort of like we have a national petroleum reserve. That's something that obviously the government is aware of and I think is perhaps considering.

And I think as far as encouraging and accelerating production in the U.S., forms of throughput agreements and price supports are obviously important factors there because, once again, you've got the Chinese trying to undercut any pricing to eliminate future production from anybody but themselves. So we're encouraged by the direction that the government is taking, and we expect to continue our sort of alignment with the government and continue those discussions.

Appreciate those thoughts, Randy. And then maybe just shifting to the PEA. As I'm sure you're aware, I think one of the areas of focus many investors have had related to the price deck assumptions there. I believe you said you guys relied on some industry long-term forecast amongst other things. But clearly, these things can and will vary widely. So I guess more specifically, it would be great to get your thoughts around scandium as that seems to represent the largest portion of your forecast revenue. How did you guys arrive at that price? How comfortable are you with your assumption there? And then additionally, the 65 million ton per year of estimated sales, at least based on my understanding, likely exceeds the current U.S. demand for that product. So how would you potentially kind of balance the supply with demand to keep the price at the level that remains economic for production, as you alluded to?

Sure. Good question. So I'm going to let Mike handle the first part, and then I'll let Jeremy also speak to the price deck we use. So Mike, do you want to go in and touch on that as far as scandium and the general pricing approach that we took?

Yes. Thanks, Randy. We had this conversation, in fact, in Albany with the national labs this week. And the conversation is that the demand for scandium would be higher if there was a Western source of scandium. And right now, scandium is sourced mainly from China, and that limits its adoption into places where we feel long term that there is going to be supply. We had reports from EY. They conducted a study a few years ago that is suggesting scandium demand is growing -- potentially grow to 450 tons a year by 2030 and possibly over 1,000 tons a year. So we have several sources, government sources and marketing studies conducted that would suggest if we can produce scandium in the U.S., there will be a market for it.

I guess what I'd add, Nate, too, in terms of the price decks really across the board. So first of all, this is 3 years out. So this is not pricing as of today. Second of all, these are Western pricing. Obviously, at the time, going back to the NdPr pricing we were using, it was significantly higher than spot. And then, of course, MP signed an offtake deal pretty close to what was being used in the price deck. Third is we've looked at sort of where prices have been historically. And certainly, there have been periods where scandium has been significantly higher than the price that we use, and that's certainly true for all of the MVPs.

And then last but not least, as Randy said, we've had incomings from customers. So again, we're not going to share the specifics of that, but we certainly have a good feel of what they're willing to pay over the -- for a long-term secured domestic supply.

Yes. And just anecdotally, to kind of add to what Jeremy just said, we had a major defense contractor that we've been in discussions with and their comment to us was, look, if you could have a guaranteed secured domestic supply of a specific type of rare earth, the market would be 6x what it is today. Again, that's one customer, but I think it's a major customer. And is certainly indicative of the fact that all the market right now is pretty much completely skewed by the Chinese trying to manipulate pricing to make sure nobody does get into the market.

You've got -- I think Asian Metals is the main index that most people kind of look at. That's published out of Singapore. It's -- the publishing is owned by two state-owned Chinese companies that are controlled by the [ Communist ] party over there. So I'm not sure that their prices are necessarily accurate. But again, into a larger comment that this is the kind of business that you're dealing with right now, which is why I think to a certain extent that the government's involvement is going to be positive.

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

I think Nate asked it well, but I wanted to follow up. Can you just talk us through what you see as the most important growth drivers in the scandium market? Or maybe said differently, Mike, if I heard you correctly, there could be demand created if there was a Western source. And so I just wanted to make sure I understand kind of all of the end market exposure there as admittedly, I'm less familiar.

Sure. I think the obvious end user for scandium is the airline industry. And some estimates suggest that Boeing and Airbus alone could use up to 100 tons a year, 150 tons a year. Scandium, aluminum alloys are lighter weight, and they certainly benefit aircraft. The NPV of an airplane is quite high when you use these alloys. And again, they haven't been using them because of the supply constraints. I think there's other applications in the automotive industry in things like heat exchangers. So adoption in several places, alloys that need lighter. So I would say the aerospace is the dominant industry that we would target, but there's certainly -- the automotive industry is the next one.

And I guess just on that, I'm just trying to put the pieces together here in the sense that prices were lower, and it appears like there were no supply constraints in the global market, but I guess it might have to do with the source of that supply. So what do you think have been the key constraints? Is it really that just the airlines want to use a Western source? I'm just trying to match the two.

Yes, that's what we're hearing. Long-term certainty of supply is -- that's not a Chinese supply source. And so they haven't been using the scandium alloys because of fear that at some point, it could be cut off.

Okay. Understood. And one last one on the coal side. One for Jason. Jason, the revenue per ton came in flat to higher quarter-over-quarter. So want to commend you for that in this tough market. But curious to hear how you would describe realizations into Asia today. I mean, where are netbacks shaking out if you tried to move a spot vessel? Understand you only have so many uncommitted tons, but I would appreciate your perspective.

Yes. Thanks, Nick. Yes, certainly, obviously, in Jeremy's comments, we pointed out that we're -- some of the reductions we've made in guidance do point to the fact that we'll stay out of the spot market in Asia, obviously, for that reason, in particular, versus the Atlantic pricing. Obviously, there's freight impacts. and then just a more saturated market there for many different reasons. As to pricing today, it's certainly, I would say, sub-$100 back to the mines, and that goes to Randy's point earlier, too, that the folks that are still required to participate in that or having to move tons there are most definitely underwater on their cash costs.

Yes. I mean the thing I guess I'd add is we are more than 95% committed at the midpoint of production guidance. So candidly, we're not really in the spot market right now. It's not to say that a long-term good customer isn't looking for a hold here or there at close to the index without much discount. We'll do those types of deals. But again, we've made the decision to reduce selective production because, as Randy said, we're just not going to sell at a loss right now.

Operator, we'll turn it back to you.

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

We again thank everyone for joining us this morning. We look forward to catching up with you after the next quarter. It should be an interesting quarter for us as well. Take care.

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