Q4 2023 Ramaco Resources Inc Earnings Call
Operator: The Bulletproof Executive 2013 Welcome to the Ramaco Resources fourth quarter 2023 results conference call. All participants will be in listen-only mode.
So.
Welcome to the Rubicon resources fourth quarter 2023 results conference call.
All participants will be in listen only mode.
Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad.
Should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
After today's presentation there'll be an opportunity to ask questions.
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Operator: To withdraw your question, please press star then two. Please note, today's event is being recorded. I would now like to turn the conference over to Jeremy Sussman, Chief Financial Officer of Ramaco Resources. Please go ahead, sir.
To withdraw your question. Please press Star then two.
Please note today's event is being recorded.
I would now like to turn the conference over to Jeremy Sussman, Chief Financial Officer of Resources. Please go ahead Sir.
Jeremy Ryan Sussman: Thank you. On behalf of Ramaco Resources, I'd like to welcome all of you to our fourth quarter 2023 earnings call. With me this morning is Randy Atkins, our Chairman and CEO, Chris Blanchard, our Chief Operating Officer, and Jason Fannin, our Chief Commercial Officer. Before we start, I'd like to share our normal cautionary statement.
Thank you.
On behalf of <unk> resources I'd like to welcome all of you to our fourth quarter 2023 earnings call.
With me. This morning is Randy Atkins, our chairman and CEO, Chris Blanchard, our Chief operating officer.
Jason Fannin, our chief commercial officer, before we start I'd like to share our normal cautionary statement.
Jeremy Ryan Sussman: 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 those discussed in the forward-looking statements. Any forward-booking 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-booking statements, whether as a result of new information, future events, or otherwise.
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 <unk> expectations concerning future events.
These statements are subject to risks uncertainties and other factors many of which are outside of <unk> 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.
<unk> 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 <unk> resources Dot com.
Jeremy Ryan Sussman: 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, ramacoresources.com. Lastly, I'd encourage everyone on this call to go to our website and download today's investor presentation. With that said, I will introduce our Chairman and CEO, Randy Atkins. Thanks, Jeremy. Good morning to everyone.
Lastly, I'd encourage everyone on this call to go onto our website and download today's investor presentation with that said, let me introduce our chairman and CEO Randy Atkins.
Thanks, Jeremy good morning to everyone.
Randall W. Atkins: As always, thanks both for your interest and for joining the call. We have a lot of positive developments to unpack, as I spoke last week. I'm going to go ahead and get started.
As always thanks for your interest and for joining the call.
We have a lot of positive developments Genpact. This morning, since we spoke last November.
I discussed then.
Over the past few years, we have tried to differentiate ourselves by aggressively but prudently growing our production and sales profile.
Randall W. Atkins: I discussed then, Over the past few years, we have tried to differentiate ourselves by aggressively but prudently growing our production and sales program. From 2021 through last year, we doubled our production. Our goals over the next few years are to again double our current 3.5 million ton level in METCO and, next, to hopefully add an intriguing and very valuable new line of business with Rare Earth. Looking back over the last few years,
2021 through last year, we doubled our production.
Our goals over the next few years are Joe again double our current $3 5 million ton level and met coal and next to hopefully add an intriguing and very valuable new a lot of business with rare Earths.
Looking back over the last few years.
Randall W. Atkins: We invested almost a quarter of a billion dollars in capital for increased production and activity. That strategic investment and growth paid off for us in the second half of 2020, again letting us be consistent for the last two quarters.
We invested almost a quarter of a billion dollars in capital for increased production and acquisition.
Our strategic investment in growth paid off for us in the second half of 'twenty three again, letting us beat consensus for the last two quarters.
Randall W. Atkins: I will let Jeremy provide the financial metrics. Q4 was the record quarter for us this year, and we printed $182 million in annual EBITDA and also had record free cash, all despite some muted pricing in the overall market. As we looked down the road at our quality slate, we were aiming to essentially double our low vol, mid vol levels to about 50% of overall production, with another 30% being high of all A. Today we are about 40% high vol-A and 30% low vol-B.
I will let Jeremy provided the financial metrics.
For Q4 was a record quarter for us this year.
And we printed $182 million in annual EBITDA and also had record free cash flow all despite some muted pricing and the overall market.
As we look down the road at our quality slate, we are aiming to essentially double our low vol. Mid vol levels to about 50% of overall production with another 30% is high vol. A.
Today, we are about 40% high vol, a and 30% low vol.
Yeah.
Randall W. Atkins: In part, that decision is based on our organic reserve quality, but it's also based on what we perceive may be some future crowding in the high-vol A state. Several peers are slated to bring on as much as 6 million tons of new production in that blend over the 24 to 26 period. On the other hand, we see that low vol production is essentially flat, with a fair amount of anticipated depletion from existing low vol mice.
And part of that decision is based on our organic.
Reserve quality mix, but it's also based on what we perceive maybe some future crowding in the high vol a space.
Several peers are slated to bring on as much as 6 million tons of new production in that blend over the 24 to 26 period.
On the other hand, we see low vol production is essentially flat with a fair amount of anticipated depletion from existing low ball minds.
Randall W. Atkins: Moving forward, we expect spreads may start widening between premium low vol and lower tier high vol coals, and we hope to be able to capture that margin. Turning to our fourth quarter performance, we managed to do well despite not seeing much strength in pricing over the back half of the year. This year's North American domestic settlements, for 24, were down year over year, about $40 a ton from 22.
Moving forward, we expect spreads may start widening between premium low vol, and lower tier high vol, coals, and we hope to be able to capture that margin.
Turning to our fourth quarter performance, we managed to do well, despite saying not much strength in pricing over the back half of the year.
This year's North American domestic settlements for 24 were down year over year about $40 a ton from 'twenty three.
While you estimate met indices rose in the fourth quarter. They also ended twenty-three more than 10% below Q1 levels.
Randall W. Atkins: While US MET indices rose in the fourth quarter, they also ended 23, more than 10% below Q1. Our fourth quarter financial performance was fundamentally due to a sales increase of shipping at a four million ton per annum run rate during the whole second half of 2020. That was a bump of about 33% compared to our 3 million tons per rate in the first half. We were also helped by the completion of the one million ton increase in our processing capacity at our Elk Creek complex. Moving to this year's sales and marketing, we took a balanced approach to our 24 domestic sales exposure and committed only about 1.5 million tons of coal to North American customers. We thought the offered pricing terms were pretty muted and probably at the bottom of the cycle when tenders were being negotiated last fall.
Our fourth quarter financially was fundamentally due to a sales increase of shipping at a 4 million tonne per annum run rate during the whole second half of 'twenty three.
That was a bump of about 33% compared to our 3 million ton parade.
In the first half.
We were also helped by the completion of the 1 million ton increase in our processing capacity at our Elk Creek complex.
Yeah.
Moving to this year's sales and marketing we took a balanced approach to our 24 domestic sales exposure and committed only about one and a half million tons of cold in North American customers.
We thought the offered pricing terms were pretty muted and probably at the bottom of the cycle when tenders were being negotiated last fall.
Randall W. Atkins: Despite that, our average mixed..., fixed domestic sales price of $167 per ton was the highest 24 pricing figure among our publicly traded peers. By shaving back the level of our North American business, we pivoted to an increased export book, which will now be over two-thirds of this year's sales. At the start of December, we had two million tons committed sales for twenty-four. In the past two months, that number has almost doubled to 3.9 million times, which means we are now basically 100% sold out at the low end of our original 24 production.
Despite that our all average mixed fixed domestic sales price of $167 per ton was the highest 24 pricing finger among our publicly traded peers.
I shaving back the level of our North American business, we pivoted to an increased export book, which will now be over two thirds of this year's sales.
At the start of December we had 2 million tons committed sales for 24.
In the past two months that number has almost doubled to $3 9 million tonnes, which means we are now basically 100% sold out and the low end of our original 24 production guidance.
Randall W. Atkins: Fortunately, most of those sales have been in the works for some time, so we were able to move those tons without sacrificing price. We now hope to accelerate that sales growth as we move further into 24. As a result of that material increase in committed sales, as you know, we recently raised our 24 sales and production guidance. Depending upon continued market conditions, we hope to end the year with a sales jump of as much as 40% from 23 levels. To profile our sales to date, interestingly, we have now begun to move significant tons into Asian markets. Two years ago, we didn't really have any Asian customers... Now we will end up the year with north of 30% of our sales going to Asian customers.
Fortunately most of those sales had been in the works for some time, so we were able to move those tons without sacrificing pricing.
We now hope to accelerate that sales growth as we move further into 'twenty four.
As a result of that material increase in committed sales as you know, we recently raised our 24 sales and production guidance.
Dependent upon continued market conditions, we hope to end the year with a sales job.
Much as 40% from 23 levels.
The profile our sales to date interestingly, we have now begun to move significant tons into Asian markets.
Two years ago, we didn't really have any Asian business now we will end up the year with north of 30% of our sales going to Asian customers.
Randall W. Atkins: When all is said and done, about 30% of our overall 24 book will be priced off the Australian index, about 40% off the Atlantic Index, and about 30% will be fixed price. Jason will speak on the relativities of our pricing and also give most of our color on markets, but I'll add a few observations. We now see European markets are somewhat spring-loaded. It has been pushed down so hard over the past year and a half that we feel when it rebounds and many of the mills reopen, we may see somewhat of a pop and perhaps some supply dislocations in the Atlantic market. We have historically done well in Europe, and indeed, we're decent-sized sellers even in Ukraine. When that whole situation eventually resolves itself, there could be an interesting turn.
When all is said and done about 30% of our overall 24 book will be priced off Australia and indexes.
About 40% of Atlantic indexes, and about 30% will be fixed price domestic.
Jason will speak on the relativity of our pricing and also give most of our color on markets, but I'll add a few observations.
We now see European markets are somewhat spring loaded.
It has been pushed down so hard over the past year and a half, but we feel when it rebounds and many of the mills reopen we may see somewhat of a pop and perhaps some supply dislocations in the Atlantic markets.
We have historically done well in Europe, and indeed are decent sized sellers even into Ukraine.
When that whole situation eventually resolved itself there could be an interesting turn.
Randall W. Atkins: In Asia, as I said, we were nowhere in this market two years ago. We are now a major supplier to Indonesia and other non-China markets. Despite the gloom around China, we see the other Asian markets as relatively healthy. We look forward to making further inroads in the region, particularly with our ability to leverage our increasing low volume production. Switching to operations.
In Asia as I said, we were nowhere in this market two years ago. We are now a major supplier to Indonesia, and other non China markets.
Despite the gloom around China, we see the other Asian markets is relatively healthy.
We look forward to making further inroads in the region, particularly with our ability to leverage our increasing low ball production slate.
Switching to operations.
Randall W. Atkins: I want to compliment our operating team first for a great safety record, Lance. I also want to note the great work on developing the two deepbind sections at our low-vol Berwyn plant. Since September, Berwyn has produced at an annualized run rate of 600,000. We are now planning to begin the third section in the next few months and hope to be at a million ton run rate by year. Cash mine costs at Berwyn have currently been under $90 per ton from both the if this trend continues. And as we ultimately take the mind to four sections,
I want to complement our operating team first for a great safety record last year.
I also want to note that the great work on developing the two deep bond sections at our low ball Berwyn mine.
Since September Berwyn has produced at an annualized run rate of 600000 tons.
We are now planning to begin in the third section in the next few months and hope to be at a million ton run rate by year end.
Cash mine costs did berwyn have currently been under $90 per ton from both deep sections.
If this trend continues.
And as we ultimately take the mine to four sections, we expect berwyn to be.
Randall W. Atkins: We expect Berwyn to be among the highest margin and lowest and largest production low vol mine complexes in the country. Moving on to another low vol project. Last month, we purchased a very reasonably priced $3 million existing coal prep plant, which will be relocated to our MAVEN comp. We will spend another $8 million this year to move, relocate, and upgrade cost comparison, and we built a new plant of comparable capacity. The price was estimated at roughly $40 million.
The highest margin and lowest and largest production low vol mine complexes in the country.
Moving on to another low ball project last month, we purchased at very reasonably priced 3 million dollar existing coal prep plant, which will be relocated to our may have been complex.
We will spend another $8 million this year to move relocate an upgrade this plant.
But cost comparison, and we built a new plant of comparable capacity the price was estimated at roughly $40 million.
Randall W. Atkins: This plant, which should be operational by the fourth quarter of twenty-four, will meaningfully reduce both the current overall $40 per ton trucking cost as well as our cash mine. The plant will have an ultimate annualized clean coal capacity of 1.3 million tons, far more than our 350,000 ton current surface and high wall production. We will have the opportunity to add a good deal more deep tons to that complex in the years ahead, as the market may dip. Chris will also make some comments on Maben.
This plant should be operational by the fourth quarter of 'twenty four.
It will meaningfully reduce the current overall $40 per tonne trucking cost as well as our cash mine costs.
The plant will have an ultimate annualized clean coal capacity of one 3 million tons.
Far more than our 350000 ton current surface and high wall production.
We will have the opportunity to add a good deal more deep tons to that complex in the years ahead as the market may dictate.
Chris will also make some comments on may have been in his remarks.
Randall W. Atkins: Looking at our balance sheet, last year we were able to halve the amount of debt on our books, and we started 2024 with about $50 million of term and equipment. Assuming current conditions continue, we look to retire all of that debt this year. And, as I said earlier, we are also rapidly growing. Looking ahead, we are planning today for the notional increase in the amount of both sales and inventory we anticipate over the coming year. Accordingly, we just executed a mandate with KeyBank on behalf of our banking group to both increase and expand the size and term of our existing revolver.
Looking at our balance sheet last year, we were able to have the amount of debt on our books and we started 2024 with about 50 million of term and equipment debt.
Assuming current conditions continue we will look to retire all of that debt this year.
And as I said earlier, we are also rapidly growing.
Looking ahead, we are planning today for the notional increase in the amount of both sales and inventory, we envision over the coming years.
Accordingly, we just executed a mandate with keybank on behalf of our banking syndicate to both increase and expand the size and term of our existing revolver.
Randall W. Atkins: This facility will then have a base borrowing amount of $200 million with an additional $75 million, according to Feature Expansion, as well as a new five-year term. This is an increase from our existing $125 million facility, and we look to finalize all this in Q2. Finally, with respect to our Brookmine Rare Earth Project... We are aggressively working to advance the commercialization of this project. We expect to receive the updated Independent Target Exploration Report from WEAR International within two weeks. When we do, we will publish the report, and I will provide an accompanying shareholder letter to explain its findings as well as the project's critical path and direction. We will also expect to host a separate analyst call to discuss its conclusion and respond to any investor questions.
This facility will then have a base borrowing amount of $200 million with an additional $75 million accordion feature expansion.
As well as a new five year term.
This is an increase from our existing 125 million dollar facility.
And we look to finalize all of this in Q2.
Finally, with respect to our book non rare Earth project.
We are aggressively working to advance the commercialization.
We expect to receive the updated independent target exploration Port report from where international within two weeks. When we do we will publish the report and I will provide an accompanying shareholder letter to explain its findings as well as the province projects critical path and direction.
We will also expect to host a separate analyst call to discuss its conclusion and respond to any investor questions.
Randall W. Atkins: Also, I would be remiss not to note that on the back of our solid Metcol execution this year and the announcement of our REE discovery, we were delighted that our shareholders enjoyed some very impressive results over the past year. In 2023, our market cap increased by over 500. Today, including the value of our MetCB shares, we have a combined market cap of roughly a billion dollars.
Also I would be remiss not to note that on the back of our solid met coal execution. This year and the announcement of our our E. Discovery, we were delighted that our shareholders enjoyed some very impressive results over the past year.
In 2023, our market cap increased by over $500 million today, including the value of our <unk> shares we have a combined market cap of roughly $1 billion.
Randall W. Atkins: This compares to our market value of just over $100 million a few short years ago. Indeed, to start the year, we enjoyed the highest total shareholder return, which includes share price and dividends, of any company in the coal and mining sector. We had a one-year return of roughly 200% and over 1,000% return for the three-year period dating back to 2009.
This compares to our market value of just over 100 million a few short years ago.
Indeed to start the year, we enjoyed the highest total shareholder return, which includes share price and dividends of any company in the coal and mining space.
We had a one year return of roughly 200% and over 8000% return for the three year period dating back to 2020.
Jeremy Ryan Sussman: We are deeply appreciative of our investor support from both long-term as well as new shareholders, and we are working hard to continue to reward that. In summary, this year promises some very positive results for Ramaco. And with that, I will turn the floor over to the rest of our team to discuss finances, operations, and marketing. Jeremy, please start us off with a rundown on finance. Thank you, Randy.
We are deeply appreciative of our investors support from both long time as well as new shareholders and we are working hard to continue to reward that support.
In summary, this year promises some very positive results for Amoco.
And with that I will turn the floor over to the rest of our team to discuss finances operations and markets. So Jeremy Please start us off with a rundown on financial metrics.
Thank you Randy if you noted financially we enjoyed a strong fourth quarter in 2023, which was easily our strongest quarter of the year.
Jeremy Ryan Sussman: As you noted, financially, we enjoyed a strong fourth quarter in 2023, which was easily our strongest quarter of the year. However, while U.S. metallurgical coal indices did rise in the fourth quarter compared to the prior two quarters, the indices were still more than 10% below Q1 levels. Our strong Q4 was frankly due to both solid execution of our growth strategy and tight cost control. Specifically, in each of Q3 and Q4, we shipped at a 4 million ton per annum run rate compared to a 3 million ton per annum run rate in the first half. In Q4, our margins expanded more than 50% versus Q3. Realized pricing was up 10% to $173 per ton on stronger indices.
While U S metallurgical coal indices did rise in the fourth quarter compared to the prior two quarters. The indices, we're still more than 10% below Q1 levels.
Our strong Q4 was frankly due to both solid execution of our growth strategy and tight cost control.
Specifically in each of Q3 and Q4, we shipped at a 4 million tonne per annum run rate compared to a 3 million ton per annum run rate in the first half.
In Q4, our margins expanded more than 50% versus Q3.
Realized pricing was up 10% to $173 per ton on stronger in their industries.
Jeremy Ryan Sussman: More importantly, cash cost per ton fell $7 sequentially on both a stronger absolute and relative contribution from our main Berwyn mine, as Randy noted. In terms of financial metrics, adjusted EBITDA was $58 million in Q4, up almost 30% from Q3. Fourth quarter net income of $30 million was up more than 50% sequentially.
More importantly, cash cost per ton fell $7 sequentially on both a stronger absolute and relative contribution from our main berwyn mind as Randy noted.
In terms of financial metrics adjusted EBITDA was $58 million in Q4 up almost 30% from Q3.
Fourth quarter net income of $30 million was up more than 50% sequentially.
Jeremy Ryan Sussman: Now, I want to make one point on net income and earnings per share. First, for comparative purposes, had we calculated EPS as we had in the past, I would note that Q4 fully diluted EPS would have been 68 cents. That said, since we issued the tracking stock in mid-2023, GAAP accounting rules have frankly complicated our EPS calculations. 2024 will be our first full year with having a dual share class structure. I would note that the Class B dividend amount each quarter will affect the Class A EPS calculation alone; adjusted EBITDA, net income, and all other key items will not be affected.
Now I want to make one point on net income and earnings per share.
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For comparative purposes had we calculated EPS as we had in the past I would note that Q4 fully diluted EPS would have been 68.
That said since we issued the tracking stock in mid 2023, GAAP accounting rules have frankly complicated our EPS calculations.
2024 will be our first full year with having a dual share class structure.
I would note that the class b dividend amount each quarter will affect the class a EPS calculation alone.
<unk> EBITDA net income and all other key items will not be affected.
Jeremy Ryan Sussman: Based on our current outlook, I would expect quarterly 2024 Class A EPS to come in anywhere from 70% to 90% of how EPS would be calculated on a normal single share class estimate. For some guidance, the higher net income is, the greater the percentage of EPS assigned to the Class A shares will likely be. As a reminder, the Class A stock has just under 44 million shares outstanding.
Based on our current outlook I would expect quarterly 2024 class a EPS to come in anywhere from 70% to 90% of how EPS would be calculated on a normal single share class estimate.
For some guidance the higher net income is the greater the percentage of EPS assigned to the class a shares will likely be.
As a reminder, the class a stock has just under 44 million shares outstanding.
Jeremy Ryan Sussman: We are expecting first quarter shipments of 800,000 to 950,000 tons, which is well below the run rate we anticipate for the full year. However, we anticipate building inventory in Q1 ahead of some larger term deals into Asia, which begin in Q2, and also ahead of the Great Lakes, which open in late March. With that said, we anticipate both production and shipments to increase throughout the year with a meaningful uptick in the second half. Specifically, this second half increase will come from the addition of the more than 400,000 ton per annum Ram III surface and highwall mine at Elk Creek and the 300,000 ton per annum third section at the Berwyn mine. Mine costs are also projected to decline each quarter throughout the year as volumes increase sequentially.
We are expecting first quarter shipments of 800000 to 950000 tonnes, which is well below the run rate, we anticipate for the full year.
However, we anticipate building inventory in Q1 ahead of some larger term deals into Asia, which begin in Q2.
And also ahead of the Great Lakes, which opened in late March.
With that said, we anticipate both production and shipments to increase throughout the year with a meaningful uptick in the second half.
Specifically the second half increase will come from the addition of the more than 400000 tonne per annum Ram III surface and Highwall mine at Elk Creek, and the 300000 tonne per annum third section at the Berwyn mine.
<unk> costs are also projected to decline each quarter throughout the year as volumes increased sequentially.
Jeremy Ryan Sussman: For the full year, we are reiterating all key prior 2024 operational guidance, which you can find in our tables. I'll note that at the midpoint of guidance, we anticipate both production and sales up roughly 30% versus 2023, a slight decline in CAHPS costs, and a roughly 30% decline in CAPEX. Moving to the balance sheet, in Q4, we repaid the final $10 million of debt related to the 2022 Ramaco coal acquisition. We ended 2023 with just $48 million of term debt outstanding, excluding the revolver, and $42 million of cash.
For the full year, we are reiterating all key prior 2024 operational guidance, which you can find in our tables.
I'll note that at the midpoint of guidance, we anticipate both production and sales up roughly 30% versus 2023.
Slight decline in cash cost and a roughly 30% decline in capex.
Moving to the balance sheet in Q4, we repaid the final $10 million of debt related to the 2022 <unk> acquisition. We ended 2023 with this $48 million of term debt outstanding excluding the revolver and $42 million of cash.
Jeremy Ryan Sussman: Lastly, we finished 2023 with record year-end liquidity of $91 million compared to $49 million at year-end 2022. As Randy both said and provided specifics, we have just this week reached a preliminary agreement with KeyBank to increase and extend the terms of our revolver. We expect this to be finalized in Q2. I would now like to turn the call over to our Chief Operating Officer, Chris Blanchard. Thank you, Jeremy, and thank you to everyone who joined us this morning. I want to first start by reiterating how pleased and proud we are of the safety performance and environmental stewardship that we achieved in the field in 2023. We had overall the lowest incident rate in our history last year, and we are focused on improving and enhancing that performance as we move forward. Looking back on 2023 operationally, it was a tale of two halves. The first half was constrained at both of our big complexes.
Lastly, we finished 2023 with record year end liquidity of $91 million compared to 49 million at year end 2022.
As Randy both fed and provided specifics we have just this week reached a preliminary agreement with Keybank to increase and extend the terms of our revolver. We expect this to be finalized in Q2.
I would now like to turn the call over to our Chief operating Officer, Chris Blanchard.
Yes.
Thank you Jeremy and thank you to everyone who joined US this morning.
I want to first.
Dark by reiterating how pleased and proud we are of the safety performance and environmental stewardship that we achieved in the field in 2023.
We had over while overall, our lowest incident rate in our history last year, and we are focused on improving and enhancing that performance as we move forward.
Looking back on 2023 operationally it was a tale of two halves.
The first half was constrained at both of our big complex as well.
Christopher L. Blanchard: We had delays in the preparation plant upgrade at Elk Creek, and Burland was completing its development mining to reach the thick Pocahontas Forest following the ignition event of 2022. The second half, however, saw us increase preparation capacity at Elk Creek and begin the monetization of our inventory, which had built up. We also reached the long-talked-about main reserve at the Berwyn Mine and staffed the mine, and quickly reached and exceeded projected production. We also started our surface mine at Maven, which has run better than expected. The sales and marketing team have done an incredible job selling our inventory.
We had delays in the preparation plant upgrade at Elk Creek in Berlin was completing its development mining to reach the thick Pocahontas four teams following the ignition event of 2022.
The second half however saw us increase preparation capacity at Elk Creek and begin the monetization of our inventory, which had built up.
We also reached the long talked about Maine reserve at the Berlin Mine and staff the mine and quickly reached and exceeded projected production levels.
We also started our surface mine at Maison, which is run better than expected.
The sales and marketing team has done an incredible job selling our inventory now.
Christopher L. Blanchard: Now, as we turn into 2024, our operations will ramp up to meet these new elevated sales levels and work to double the size of our production over the next several years, as Randy has described. That work is underway at all three of our main complexes now. At Elk Creek, after a couple of years with flat production, we've moved forward with the Ram No. 3 project.
Now as we turn into 2024, our operations will ramp up to meet these new elevated sales levels and work to double the size of our production over the next several years as Randy has described.
That work is underway at all three of our main complex is now.
At Elk Creek. After a couple of years was flat production, we'd move forward with the Ram number three project.
Christopher L. Blanchard: This will bring in 300,000 to 400,000 annualized additional production from a second surface mine and its accompanying highwall miner operations. This mine had been previously planned for both 2022 and 2023, but due to market conditions, the plant capacities, and availabilities, it was postponed. Already in 24, we have broken ground and now expect our first surface tons in July, with the RAM number three highwall miner following with production beginning in October. The RAM 3 cost structure should match or beat the existing surface mine at Elk Creek, both increasing our overall volumes and also lowering the average Elk Creek cash cost at Berwyn.
This will bring on 300 to 400000 annualized additional production from our second surface mine and its accompanying highwall miner operation.
This mine had been previously planned in both 2022 and 2023, but due to market conditions.
Plant capacities and availability it was postponed.
Already in 'twenty four we have broken ground and now expect our first surface tons in July with the Ram how well Ram number three highwall miner following with production beginning in October.
The Ram three cost structure should match or beat the existing surface mine at Elk Creek, both increasing our overall volumes and also lowering the average Elk Creek cash costs.
At Berlin.
Christopher L. Blanchard: As discussed, both super sections are now in normal operation, and since Q3, they have been hitting targeted production. Our number one section has reached the area where a series of air shafts and a new portal and elevator will be built. Once completed, this ventilation increase will allow the startup of our number three section.
As we discussed both Super sections are now in normal operation in Q3 have been hitting targeted production.
Our number one section has reached the area, where a series of air shafts and a new portal and elevator will be built.
Once completed this ventilation increase will allow the startup of our number three section.
Christopher L. Blanchard: With three sections operating later this year, we expect to be producing at nearly a million clean tons per year rate from the Berwyn mine itself. With the investments Ramaco has made over the past several years at Berlin, in the preparation plant, in belt lines from the mine to the plant, and, of course, in the purchase of the coal reserve. Berlin is finally poised to be among the lowest cost and largest premium low-vol complexes in the United States for many years. Finally, at MAVEN, we are taking steps to grow that operation into a full stand-alone complex with the purchase and relocation of the preparation plant to the MAVEN site. Work has begun on the demolition of the existing plant, and the first deliveries of components have begun this week.
With three sections operating later this year, we expect to be producing at nearly a million clean ton per year rate from the Berwyn mine itself.
With the investments <unk> made over the past several years at Berlin, and the preparation plant and belt lines from the mine to the plant.
Of course, and the purchase of the coal reserves Berlin is finally poised to be among the lowest cost and largest premium low vol conflict complexes in the United States for many years.
Finally at maiden, we are taking steps to grow that operation into a full standalone complex with the purchase and the relocation of the preparation plant to the maintenance site.
Work has begun on demolition of the existing plant and the first deliveries of components have begun this week.
Christopher L. Blanchard: We anticipate the rebuild of the plant to begin in the summer and the plant to be commissioned late this year. The size of the plant, as purchased, will allow us to wash all current surface and hollow minor coal at Maven, as well as any initial underground sections that are contemplated in the future. As Maven grows, the modular plant design will allow us to quickly add upgrade circuits to the plant.
We anticipate the rebuild of the plant to begin in the summer and the plant to be commissioned late this year.
The size of the plant as purchased will allow us to wash all current surface and how we'll monitor coal at may even as well as any initial underground sections that are contemplated in the future.
As may have been grows the modular plant design will allow us to quickly add.
Upgrade circuits to the plant.
Christopher L. Blanchard: Depending on market conditions, we believe that the Maven Complex, if totally greenlighted, could eventually produce between 1.2 to 1.5 million annual clean tons. However, in the near term, getting the initial preparation plan in operation will drive down our transportation costs and save us nearly $40 per clean ton on the raw coal haul bill that we currently bear. Having clean coal at Maven also opens this premium coal for shipment on both of the railroads as well as to river-served customers.
Pending on market conditions, we believe that the maven complex.
Totally greenlighted could eventually produce between one two to $1 5 million annual clean tons.
However, in the near term getting the initial preparation plant in operation will drive down our transportation costs and save us nearly $40 per clean ton on the raw coal haul bill that we currently bear.
The clean coal it made them also opens us premium coal for shipment on both of the railroads as well as the river served customers.
Jason T. Fannin: It is an exciting time for Ramaco operations. Twenty-four in the next couple of years will be eventful as we grow out our existing complexes and continue to look for other opportunistic ways to enhance shareholder value. As we grow, however, our primary focus will remain on safety performance, environmental stewardship, and maintaining strict cost control at all of our existing and new operations. Now, for a more detailed discussion of the markets and the sales book, I would like to turn the call over to our Chief Commercial Officer, Jason Fannin. Thanks, Chris. And good morning, everyone.
It is an exciting time for <unk> operations.
Four and then Cup next couple of years will be eventful as we grow out our existing complexes and continue to look for other opportunistic ways to enhance shareholder value.
As we grow however, our primary focus will remain on remain on safety performance environmental stewardship, and maintaining strict cost control at all of our existing and new operations.
Now for a more detailed discussion of the markets and the sales book I would like to turn the call over to our Chief commercial Officer, Jason fan.
Thanks, Chris and good morning, everyone I will share what we are seeing in the markets and our current and forward sales outlook.
Jason T. Fannin: I will share what we are seeing in the markets and our current and forward sales outlook. Global coking coal markets remain well supported, mainly due to lower supply because of continued underinvestment in the coal space. Economic conditions, steel market fundamentals, and demand outlook continue to vary widely around the globe. However, integrated mills and coke batteries in the US continue to run strong on the back of sustained steel demand and pricing levels. Brazil continues to struggle with low-cost steel imports and wheat coke production.
Global coking coal markets remain well supported mainly due to lower supply because of continued underinvestment in the coal space.
Economic conditions steel market fundamentals and demand outlook continue to vary widely around the globe.
Integrated meals and coke batteries in the U S continue to run strong on the back of sustained steel demand and pricing levels.
Brazil continues to struggle with low cost steel imports and weak coke production.
Jason T. Fannin: Economic conditions in Europe, along with high carbon taxes, are keeping demand from rebounding there. However, many blast furnaces have returned to production to start the year, but at low utilization. One bright spot for you as producers during much of 2023 and continuing into 2024 has been the Pacific market ex-China, where Ramaco is now becoming a player. We saw tremendous year-over-year demand growth in India, new Coke batteries continuing to ramp up in Indonesia, and traditional customers in South Korea and Japan expanding their intakes of U.S. cooking coal as they diversify and de-risk their supply portfolio.
While economic conditions in Europe, along with high carbon taxes are keeping demand rebounding there.
Although many blast furnaces have returned to production to start the year, but at low utilization rates.
One bright spot for U S producers during much of 2023 and continuing into 2024 has been the Pacific market ex China.
Where <unk> is now becoming a player.
We saw tremendous year over year demand growth in India.
New coke batteries, continuing to ramp up in Indonesia.
Traditional customers in South Korea, and Japan, expanding their intakes of U S coking coal.
They diversify and de risk their supply portfolio.
Jason T. Fannin: Since our last call, we have effectively doubled our committed and sold position for 2024. Since December, as Randy said, we added 1.8 million tons of new sales, essentially all to seaborne markets at index-linked prices, which now brings our overall sole position to about 3.9 million, basically 100% of our original lower end sales. Randall also met.
Since our last call we have effectively doubled our committed in pole position for 2024.
Since December as Randy said, we added $1 8 million tons of new sales.
Essentially all to seaborne markets at index linked pricing.
This now brings our overall hold position to about $3 9 million ton basically 100% of our original lower and sales guidance.
As Randy also mentioned during much of 2023 <unk> focused its marketing efforts on the growing Asian markets.
Jason T. Fannin: During much of 2023, Ramaco focused its marketing efforts on the growing Asian market, placing multiple test cargoes of all grades of coking coal, low ball, mid ball, and high ball, to several different, and the culmination of those efforts has resulted in a number of long-term offtake agreements across all ranks of our product portfolio, with shipments beginning in earnest during Q2. At the same time, we have maintained and grown our business Ramaco's broad spectrum of low-ash, low-sulfur fuels. Turning to the current pricing environment, index values have softened since the start of the year. China is treading water even though coal production has been cut back. India has a temporarily subdued market, as elections there have slowed additional new infrastructure projects.
Placing multiple test cargos of all grades of coking coal.
Low ball mid vol and high vol.
Into several different end users the culmination of those efforts has resulted in a number of long term offtake agreements across all ranks of our product portfolio.
With shipments beginning in earnest during Q2.
At the same time, we have maintained and grown our business in North America in the Atlantic Basin with specific long term partners, who place incremental premium pricing value.
<unk> broad spectrum of low ash low sulfur coking coals.
Turning to the current pricing environment index values have softened since we started the year.
China is treading water, even though coal production has been cut back.
India has a temporarily subdued market as elections, there have slowed additional new infrastructure project announcements.
Jason T. Fannin: As of March 7th, the U.S. East Coast Index values were $257 per ton for low vols, $249 per ton for highball A, and $208 per ton for highball B, while Australian premium low vol sat at $304. This dislocation between U.S. and Australian pricing has persisted since late... U.S. cooking coal is continuing to be fundamentally undervalued. During 2022, U.S. low vol averaged a 96% relativity to Australian PLB. U.S. High Vol A averaged a 99% relative ranking.
As at March 7th U S East Coast Index values were $257 per ton for low vol.
$249 per ton for high vol, a and $208 per ton Fob Albi.
While Australian premium low vol sat at $304 per ton.
This dislocation between U S and Australian pricing has persisted since late September.
With U S. Coking coal is continuing to be fundamentally undervalue.
During 2022 U S low vol averaged 96% relativity to Australian P. L B.
U S High vol, a average of 99% relativity.
Jason T. Fannin: Those relativities have dropped substantially, and as of yesterday, 85% and 82%, respectively. The U.S. lowball market is currently much tighter than the indices suggest.
Those relativity have dropped substantially and as of yesterday stood at 85% and 82% respectively.
U S low vol market is currently much tighter than the indices suggest.
Jason T. Fannin: As Randy commented, we see demand continuing to outpace supply in the U.S. low vol and mid vol sectors, where Ramaco is placing its bets and continues to focus on growing production. We see most of the near-term growth in U.S. coke and coal supply in the high vols. Fortunately, we already placed much of our highball production into Long-Term Off-Take Agreements prior to a lot of this additional new high vol production coming to market regarding our sold pricing performance versus the market. Our low and mid vol coals sold into traditional markets have been sold at near parity to the U.S. low vol. Our highball sales to traditional markets are at a modest discount to U.S. prices. Our sales into Asian markets are priced against a basket of Australian indices, along with typical freight differences.
As Randy commented, we see demand continuing to outpace supply in the U S low vol and mid Vol segment.
We're <unk>, placing its bit and continues to focus on growing production.
Much of the near term growth in U S coking coal supply and the high vol space. Fortunately, we already placed much of our high volume production into long term offtake agreements prior to a lot of this additional new high vol, a production coming to market.
Regarding our solid pricing performance versus the markets are low and mid vol. Coal sold introduced into traditional markets have been sold at near parity to the U S low Vol index.
Our high vol sales to traditional markets are at a modest discount to U S indices.
Our sales into Asian markets are priced against the basket of Australian indices, along with typical freight differentials.
Jason T. Fannin: Looking ahead, we hope to place a substantial amount of additional tonnage for the year in line with, or perhaps exceeding, our guidance. With that said, I would now like to return the call to the operator for the Q&A portion. Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad.
Looking ahead, we hope to place a substantial amount of additional tonnage for the year in line with or perhaps exceeding our guidance.
That said I would now like to return the call to the operator for the Q&A portion of the call operator.
Thank you.
I'll now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad.
Operator: If you are using a speakerphone, we ask that you please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Today's first question comes from Lucas Pipes with B Raleigh Securities. Please go ahead. Thank you, Operator. Good morning, everyone.
If youre using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
Today's first question comes from Lucas pipes with B Riley Securities. Please go ahead.
Thank you operator, good morning, everyone.
This is Nick Childs asking a question on behalf of Lucas Ah Congrats on the solid results here.
Nick Giles: This is Nick Giles asking a question on behalf of Lucas. Congratulations on the solid results here. My first question was around volume cadence. First quarter guidance was 800 to 950,000 tons, and I was wondering what would take you to the higher low end of that range, and then you mentioned a five million ton run rate over the second half. Should we think about that as an even split or more weighted to 4Q? Thank you very much. Hey, Nick. It's Jeremy here.
My first question was around volume cadence.
First quarter guidance is 800 to 950000 tons and I was wondering what would take you to the higher low end of that range and then you mentioned that 5 million ton run rate over the second half and should we think about that as an even split or more weighted to <unk>. Thank you very much.
Hey, Nick.
Jeremy here good to good.
Good to hear from you so I mean.
Sitting here at the beginning of March.
We have a lot of variability with rails and.
Jeremy Ryan Sussman: Good to hear from you. Sitting here at the beginning of March, there's always a lot of variability with the rails. As we export more, you're going to end up on larger and larger vessels. Frankly, the difference between the low end and the high end this quarter is mostly on the logistics side, I would say. Obviously, we hope to be at the high end, but history has taught us that while the rails have certainly improved, at the end of the day, there's still some variability in there, hence the range. In terms of the cadence, I'd say volume will ramp up kind of each quarter.
You know as we export more you know youre going to end up on larger and larger vessels. So I mean frankly the difference between the low end and the high end. This quarter is mostly on the logistics side I would say so obviously, we hope to be at the high end, but I think yeah.
History has told us that our while the rails have certainly improved at the end of the day, they're still they're.
There's still some variability in there hence the hence the range in terms of the cadence I mean I'd say.
Yeah.
Volume will ramp up kind of each quarter. So if you kind of thinking about a sales cadence second quarter will probably be around 1 million tons I would say third quarter and fourth quarter is really where you're going to see the big step up in frankly fourth quarter, a little bit higher than.
Jeremy Ryan Sussman: So, you know, if you're kind of thinking about a sales cycle, second quarter will probably be around a million tons. I'd say, you know, third quarter and fourth quarter are really where you're going to see the big step up. And frankly, fourth quarter, a little bit higher than the third quarter, call it, you know, million two, five, a million three and Q4. And, you know, really, I'll let Chris kind of touch on this a little bit, but the big delta is just, you know, as he talked about in his prepared remarks, when you bring the third section on at Burwind and the Ram three mine at Elk Creek together, I mean, Chris, you want to touch on that a little bit?
Then the third quarter call. It you know million two 5 million three in Q4.
So really you know I'll, let Chris kind of touched a little bit upon this but that that the big Delta is just you know.
As he talked about in his prepared remarks, when you bring the third section on at Burlington. The Ram three mine at Elk Creek, I mean, that's almost three quarters of a million tons on an annualized basis, Chris do you want to touch on a little bit.
Yeah. So.
The cadence is.
Obviously ram surface mine, which is the smaller part of that complex will come in and very end of the second quarter beginning of the third quarter and then we will layer in the highwall miner at Elk Creek in the fourth quarter and that that will be the bulk of the production and so that's why you get the step change on the Elk Creek side.
Christopher L. Blanchard: Yeah. Yeah. So, The Cadence is obviously the Ram surface mine, which is the smaller part of that complex.
And then at Berlin on the logo is all based around the timing of our third section, which is ventilation dependent so we'd love to start that earlier, but the reality is it really won't start up until third quarter, and then as we build the workforce and get it to normalized production, you'll see that step change in the fourth quarter, which has us.
Christopher L. Blanchard: We'll come in at the very end of the second quarter and beginning of the third quarter, and then we'll layer in the high wall miner at Elk Creek in the fourth quarter, and that will be the bulk of the production, and so that's why you get the step change on the Elk Creek side. And then at Berwyn on the low volume, it's all based around the timing of our third section, which is ventilation dependent. So we'd love to start that earlier, but the reality is it really won't start up until the third quarter.
Excluding the year at the 5 million ton run rate.
Super helpful.
Thanks, Jeremy and Chris.
Next question was just on quality makes you you provided a nice outlook on a full year basis. I think you mentioned in the great lakes picking up to here in March So how should we think about quality mix here in <unk> and.
Christopher L. Blanchard: And then as we build the workforce and get it to normalize production, you'll see that step change in the fourth quarter, which has us exiting the year at the 5 million ton runway. Very helpful. Thanks, Jeremy and Chris. My next question was just about quality mix. You provided a nice outlook on a full-year basis, and I think you mentioned the Great Lakes picking up here in March. So how should we think about quality mix here in 1Q and maybe how things would progress into the second quarter as well? The Bulletproof Executive 2013, Yeah, Nick, this is Jason.
Maybe how things would progress into the second quarter as well.
Yeah, Nick this is Jason.
As far as Q1 goes they are quality mix will look quite a bit like it did in Q4, certainly as Chris mentioned lots of production ramp coming in the back half of this year, which we'll see certainly more.
More low volumes you mentioned ran three was a smarter part of that up to the smaller part of that uptick in the back half.
Our Q1 production mix and quality mix essentially mirrored Q4 there.
<unk>.
Nick One thing I'd point, you to slide seven where we kind of give the breakdown Randy touched upon it in his prepared remarks.
Jason T. Fannin: You know, as far as q1 goes, you know, their quality mix will look quite a bit like it did in q4. Certainly, as Chris mentioned a lot of the production ramp coming in the back half of this year, we will see certainly more low volumes. You mentioned RAM3 was a smaller part of that uptick, the back half, our Q1 production mix and quality mix that she mirrored Q4 there. You know, Nick, one thing. I'd point you to slide seven, where we kind of give the breakdown. Randy touched upon it in his prepared remarks, but, you know, I think the thing to note there is that the big change is on the low volume side.
But you know I think the the thing to note. There is as you know the.
The big change is on the low vol side. So I mean right now we're at sort of 40% low vol mid fall kind of kind of.
Kind of a mix as we move forward.
You know ultimately that'll take us above you know kind of 50%. So I mean, our mix I'd say in Q1 will.
We will look a little bit different obviously.
Then it will kind of when we exit the year as Berman ramps and ultimately you know.
You get a full year maven and bring on more tonnes there as well.
Got it got it thanks very much if I could maybe just sneak one more in on the market.
Jeremy Ryan Sussman: So, I mean, you know, right now we're at sort of a 40% low vol, mid vol kind of a mix, you know. As we move forward, you know, ultimately, that'll take us above, you know, kind of 50%. So, I mean, our mix, I'd say in Q1 will look a little bit different, you know, obviously as then it will kind of be when we exit the year as Berwyn ramps, and ultimately, you get a full year of Maven and bring on more tons there as well. Got it, got it. Thanks very much. If I could maybe just sneak one more in on the market,
You know I think you touched on the European market and decided lower utilization.
I was wondering if you would expect those operations to ramp up over the course of the year are you seeing any green shoots yet thanks.
Thanks for any additional comments.
Yes sure. Nick This is Jason again, yeah, I mean, as Randy mentioned it seems like that market is kind of spring loaded for a rebound.
I think there are several.
Triggers that are.
It's going to be necessary to cause that they've been so depressed now for the last couple of three years.
<unk>.
Certainly you're really since Covid, and then energy impacts after the Ukraine more began.
Nick Giles: You know, I think you touched on the European market and cited lower utilization. I was wondering if you'd expect those operations to ramp up over the course of the year. Are you seeing any green shoots yet?
We have grown business with certain customers there for the premium products those customers have a very.
I'd say strong outlook for this year as it goes forward to those customers have indeed restarted blast furnaces.
I think some of the capacity hold backs on those furnaces are.
Jason T. Fannin: Thanks for any additional comments. Yes, sir. Nick, this is Jason again. Yeah, I mean, as Randy mentioned, it seems like that market's kind of spring loaded for a rebound. I think there are several triggers that are...
To keep the fuel pricing at a reasonable level for them.
I think one of the big triggers for a rebound there would be some resolution in Ukraine.
If you recall.
Prior to the war they were taking upwards of 4 million tons, a year from the U S that.
Jason T. Fannin: It's going to be necessary to cause that, you know, they've been so depressed now for the last couple, three years, certainly really since COVID and then the energy impacts after the Ukraine war began. We have grown business with certain customers there for premium products. Those customers have a very, It's a strong outlook for this year as it goes forward. Some of those customers have indeed restarted blast furnaces. I think some of the capacity holdbacks on those furnaces are an attempt to keep steel pricing at a reasonable level for them. I think one of the big triggers for a rebound there would be some resolution in Ukraine, to your call. Prior to the war, they were taking upwards of 4 million tons a year from the U.S. So there could be a big jump in demand out of the states if and when that happens.
That could be a big a big jump in demand out of the states, if and when that happens, but certainly there are huge theyre and theyre positive.
Aspects there, it's just a matter of timing.
I'd also say Nick that on a macro of course Europe has been sort of behind the U S. In terms of it's a push.
Receptive perception of when interest rates may start to decline, but I do think if you see the U S decline at some point this year, you'll see Europe, probably follow in his footsteps not too much further after that.
That would be another catalyst towards seeing a little bit more economic activity over there.
Got it got it well.
Really appreciate all the color.
That's again on the quarter and continued best of luck.
Thanks, Nick.
Thank you and ladies and gentlemen, as a reminder, if you'd like to ask a question. Please press Star then one our next question today comes from Nathan Martin with the Benchmark Company. Please go ahead.
Thanks, operator, good morning, guys, maybe sticking with the slide deck real quick I think it's slide six you guys talk about medium term production of possibly 7 million plus tons did.
Jason T. Fannin: But certainly, there are shoots there, and there are positive aspects there; it's just a matter of time. I'd also say, Nick, that on a macro level, Europe has been sort of behind the U.S. in terms of perception of when interest rates will rise. I do think if you see the U.S. decline at some point this year, you'll see you are probably following in its footsteps, not too much further after that would be another chart.
Could you provide a little more color around that it's hard to maybe how much capex that could possibly take or at least how many years you guys foresee it taken to kind of get to that level, which I think Randy you said, it's basically double what you guys did in 2023.
Yes, I think in terms of the cadence, we kind of look at that as probably a three year ramp we pump Elk Creek up to about three and a half million tons, we'd have berwyn, probably I don't want it in a half to 2 million ton level.
Nick Giles: Got it. Got it. Well, I really appreciate all the color.
Nick Giles: Congratulations again on the quarter and continue. Best of luck. Thanks, Nick. Thank you. And ladies and gentlemen, as a reminder, if you'd like to ask a question, please press star then 1. Our next question today comes from Nathan Martin with The Benchmark Company. Please go ahead. Thanks, operator. Good morning, guys. Maybe we can stick with the slide deck real quick. I think it's slide six.
We havent, we Havent Green light has may been yet, but that would bump probably to about a man and a half times give or take and then we'd also have Knox Creek in there with frankly as much as just a little bit under 1 million tons. So actually that adds up to a little bit more than $7 million, but we've got room for a little wiggle room in there I think in <unk>.
Nathan Pierson Martin: You guys talk about medium-term production of possibly 7 million plus tons. Could you provide a little more color around that target, maybe how much CapEx that could possibly take, or at least how many years you guys foresee it taking to kind of get to that level, which I think, Randy, you said it's basically double what you guys did in 2023. Yeah, I think in terms of the cadence, we kind of look at that as probably a three-year ramp. We'd bump Elk Creek up to about three and a half million tons. We'd have Burwin probably in a, to me in turn.
Of the Capex.
We've got to work through it but I would say.
Main capex for this would probably be 'twenty five 'twenty six.
To get to where we are right now in 'twenty four.
Moving even up to sort of a.
Four and a half plus million threshold.
We are really bumping capex only about 13 million Bucks from what we had originally come in at maybe in some of the low the low sixties.
$50 million range.
As we look further out.
We will give you plenty of heads up as to what the numbers will be.
But I would say our cadence would probably ramp for probably two years at about a doubling of that rate.
Randall W. Atkins: We haven't green-lighted Maven yet, but that would bump it probably to about a million-and-a-half tons, give or take. And then we'd also have Knox Creek in there, with frankly as much... So actually, that adds up to a little bit more than $7 million. But we've got room, WiggleRoom, I think in terms of the CAP Act.
And of course that also includes maintenance capex too. So are our growth capex is going to be much less than that.
But when we get to the point of laying all that out with any new guidance on specific projects to take that up we will be happy to provide all the capex numbers around it the growth capex items.
Got it I appreciate it Randy.
Maybe shifting over to the Brookline and the potential rare earth element side of the house.
Jeremy Ryan Sussman: You've got to work through it, but I would say, you know, our main CapEx for this would probably be 25, 26. You know, to get to where we are right now in 24, moving even up to sort of a 4.5 plus million threshold, we're really bumping CapEx. Only about $13 million from what we'd originally come in at, maybe in some of the low $60s, high $50 million range. And as we look further out, you know, we will give you plenty of heads up as to what the numbers will be. But I would say our cadence would probably ramp for probably two years at about a doubling of that rate.
And you mentioned.
The expectation get the Weir report I think over the next two weeks or so what kind of information do you expect from that and then separately do you have.
Still anticipate receiving the report from S. RK I think you said previously by the end of the first half and correct me, if I'm wrong, but I believe that should give us.
The first glimpse into possible economics of the project as well.
Yeah. So great question, so basically to break it down in the Weir report, we're going to we have.
Essentially Ben.
Putting up a tremendous amount like thousands of additional samples would've been tested since our first report so that's what you're given.
Nathan Pierson Martin: And, of course, that also includes maintenance capex, too. So our growth capex is going to be much less. When we get to the point of laying all that out with any new guidance on specific projects to take that up, we will be happy to provide all that and Grow it Healthy. Appreciate it, Randy. Maybe I'll shift over to the Brook mine and the potential rare earth element side of the house. You mentioned the expectation to get the WEIR report, I think, in the next two weeks or so. What kind of information do you expect from that?
The time lag. We've also gone back as we will explain and done some interesting new testing metrics.
It will be focused not only on tonnage, but more importantly on concentrations. So I don't want to frontload that because it's going to be up soon enough.
And in terms of.
S. R. K basically what they were brought in to do which of course to help us determine the economics.
And the way that that cadence will roll is first you have to determine essentially what the chemical.
And matter of allergic and mineral RJ.
Randall W. Atkins: And then separately, do you guys still anticipate receiving the report from SRK, as you said previously, by the end of the first half? And correct me if I'm wrong, but I believe that should give us the first glimpse into the possible economics of the project as well. So, great question.
Our actor of the deposit is before you can really determine how the best processing techniques.
Will be developed and so that's frankly the process that we're in now and again once we come out with a report we will have a full.
Disclosure of everything we're looking at we've just brought on board someone who is kind of now going to functionally run our rare Earth effort. He has got a great deal of experience and background in this area.
Randall W. Atkins: So basically, to break it down, in the WEIR report, we are going to, and we have. Since we've been putting up a tremendous amount, like thousands of additions, samples that have been tested since our first. So that's what you're given. But we've also gone back, as we will explain, and done some interesting new testing metrics that will be focused not only on tonnage but, more importantly, on concentration. So I don't want to front load that because it's going to be out soon enough.
So look forward to having a sort of an analyst call.
You're probably sometime within the next month.
To be able to explain all the all the findings from the Weir report and also to give you sort of a critical path of how we're proceeding forward with commercialization efforts.
Randall W. Atkins: And in terms of SRK, basically, what they were brought in to do was, of course, to help us determine the economics. And the way that that cycle will roll is first you have to determine essentially what the chemical and mineralogic character of the deposit is before you can really determine the best processing technique. And so that's, frankly, the process that we're in now. And again, once we come out with the report, we will have full disclosure of everything we're looking at. We've just brought on board someone who is now going to functionally run our Rare Earth effort who's got a great deal of experience and background in this area. So look forward to having an analyst call here, probably sometime within the next month, to be able to explain all the findings from the WEIR report and also to give you sort of a critical path of how we're proceeding forward with the commercialization. I got it.
Got it very helpful. Maybe just one more on Capex and as it relates to what we're just talking about these reports.
Come out.
Let's say with positive results.
Is there a possibility that capex moves up in 2024 or are we still a little ways off before we look to start spending more material amounts on that project.
Youre talking about on our in our EES or on met coal yeah on our ease at the Brooklyn exactly yeah, what we have spent.
Exceedingly modest amounts.
Sort of in the $3 million to $4 million range on our entire rare Earths project to date. So you can do the math on what kind of return that's generated for us at least from a market value standpoint, so our capex relating to the mine out there really wont begin to kick in.
Nathan Pierson Martin: Very helpful. Maybe just one more on CapEx and as it relates to what we're just talking about. I mean, these reports come out, you know, let's say with positive results.
Until 'twenty five.
And that is premised on the fact that we will come up with what is the appropriate processing technique that we will tie to pursue we've got a lot of testing to do before we come up with that.
Nathan Pierson Martin: Is there a possibility that CapEx moves up in 2024? Are we still, you know, a little ways off before we look to start spending more material amounts on that project? You're talking about REEs or METCO? Yeah, on REEs at the Brookmine, exactly.
Conclusion.
And.
Once we get to that point again, just like we always do with any of our Capex. We will give you plenty of guidance on what that looks like.
Randall W. Atkins: Yeah, well, we have spent, you know, exceedingly modest amounts, sort of in the three to four million dollar range on our entire Rare Earth project to date. So, you can do the math on what kind of return that's generated for us, at least from a market value. So our CapEx relating to the mine out there really won't begin to kick in until 25. And that is premised on the fact that we will come up with what is the appropriate processing technique that we will try to pursue. We've got a lot of testing to do before we come up with that, and, you know, once we get to that point, again, just like we always do with any of our CapEx, we will give you plenty of guidance on what that looks like. But I'm thinking, not much CapEx even in 25. I would look to more CapEx probably being in the outer.
But I'm thinking.
Not much capex, even in 'twenty five.
I would look to more capex, probably being in the outer years.
Got it thanks, Randy I'll leave it there very helpful guys best of luck in 'twenty four.
Thanks, Matt.
Thank you ladies and gentlemen, this concludes our question and answer session I would like to turn the conference back over to Mr. Hawkins and the management team for any closing remarks.
Well as always we appreciate everybody being on the line. This morning, we'll look forward to catching up here in a few months and thanks for your interest thanks, Brian.
Thank you Sir This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.
[music].
Nathan Pierson Martin: Got it. Thanks, Randy. I'll leave it there. Very helpful, guys. Best of luck in 24.
Randall W. Atkins: Thanks, Nate. Thank you. And ladies and gentlemen, this concludes our question and answer session. I'd like to turn the conference back over to Mr. Atkins and the management team for any closing remarks. Great. Well, as always, we appreciate everybody being on the line this morning. We look forward to catching up here in a few months, and thanks for your... Thank you, sir. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.