Q2 2024 Ramaco Resources Inc Earnings Call

Good day and welcome to the Ramaco Resources 2nd Quarter 2024 Results Conference Call.

Speaker Change: All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Speaker Change: 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 key patad to withdraw your question please press star than two please note this event is being recorded i would now like to turn the conference over to jeremy sessman chief financial officer please go ahead

Jeremy Sessman: Thank you.

Jeremy Sessman: On behalf of Ramaco Resources, I'd like to welcome all of you to our second quarter 2024 earnings conference call. With me this morning is Randy Atkins, our Chairman and CEO , Chris Blanchard, our EVP for Mine Planning and Development, and Jason Fannin, our Chief Commercial Officer.

Jeremy Sessman: Before we start, I'd like to share our normal cautionary statement.

Unknown Executive: Certain items discussed on today's call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, whether as a result of new information, future events, or otherwise.

Unknown Executive: All 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 statement. 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 statement, whether as a result of new information, future events, or otherwise.

Jeremy Sessman: Certain items discussed on today's call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Jeremy Sessman: These forward-looking statements represent Ramaco's expectations concerning future events.

Jeremy Sessman: 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.

Jeremy Sessman: any forward-looking statement speaks only as of the date on which it is made and accept as required by law ramo does not undertake any obligation to update a revise any forward-looking statements whether as a result of new information future events or otherwise

Unknown Executive: 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 to our website and download today's investor presentation. With that said, let me introduce our Chairman and CEO, Randy Atkins.

Jeremy Sessman: 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.ramicoresources.com.

Jeremy Sessman: Lastly, I'd encourage everyone on this call to go on to our website and download today's investor presentation.

randy acen: with that saids let me introduce our chairman in ceo randy acen

Randall Atkins: Thanks, Jimmy. Good morning to everyone, and thanks for joining the call. As we had hoped, our second quarter results were much better than our first, both in operations and finance. This improvement came in spite of the continued softness in the global coal price. Last quarter we saw U.S. met coal indices drop by 15%, and they're now down 25% since the start of the year. We also made some solid progress this quarter on our REE project in Wyoming, which I will mention later.

Randy Acen: Thanks, Jimmy. Good morning to everyone, and thanks for joining the call.

Randy Acen: As we had hoped, our second quarter results were much better than our first, both on operations and financially.

Speaker Change: This improvement came in spite of the continued softness in the global coal pricing.

Unknown Executive: Last quarter we saw U.S. met coal indices drop by 15%, and they're now down 25% since the start of the year. This was up about 7%. Let me take a moment and walk through our four current production growth projects for this year. All of these remain on track and on budget.

Randy Acen: last quarter we saw u s met coal indices dropped by fifteen percent and they're now down twenty-five percent since into the start of the year

Randy Acen: We also made some solid progress this quarter on our REE project in Wyoming, which I will mention later.

Randall Atkins: Turning first to our METCO operations, importantly, we had record production. This was up about 7% to 900,000 tons in the second quarter. This increase was largely due to a combination of better productivity, geology, and labor availability.

Jeremy Sessman: Turning first to our METCO operations, importantly, we had record production.

Jeremy Sessman: This was up about 7% to 900,000 tons in the second quarter.

Jeremy Sessman: This increase was largely due to a combination of better productivity, geology and labor availability.

Randall Atkins: As a result of the stronger production and more tons, our cash costs declined 8% or by roughly $10 to $108 per ton in the second quarter. Looking forward, both operational and financial results should continue to improve throughout the year as our growth projects come online. In a nutshell, we're expecting to ramp to a year-end run rate in excess of 5 million tons for both production and sales, with costs hopefully at or below the $100 per ton cash cost range. Now, let me take a moment and walk through our four current production growth projects for this year. All of these remain on track and on budget.

Jeremy Sessman: as a result of the stronger production and more tons our cash costs declined eight percent are bar rupoughly ten dollars to one hundred eight dollars per ton in the second quarter

Jeremy Sessman: Looking forward, both operational and financial results should continue to improve throughout the year as our growth projects come online.

Jeremy Sessman: in a nutshell we're expecting to ramp to a year-end run rate in excess of five million tons on both production and sales with costs hopefully at or below one hundred dollar perton cash cost range

Unknown Executive: Combined, they will increase our overall 24 production by roughly 600,000 high-volt tons on an annualized basis. Both of these mines had already begun to ramp up as of this. Importantly, costs of all four of these new mines are anticipated to be roughly $90-$95 per ton on a combined basis. While this won't add to our overall 24 production, it should meaningfully reduce our current trucking costs at Maven by approximately $40 per ton.

Jeremy Sessman: let me take a moment and walk through the four current production growth projects for this year

Jeremy Sessman: All of these remain on track and on budget.

Randall Atkins: Two growth initiatives relate to our high-vol production at Elk Creek and two relate to our low-vol production at Berwyn and Mesa. At Elk Creek, we are adding the Ram III surface highwall mine and a third section at the Stone Coal Alma mine. Combined, they will increase our overall 24 production by roughly 600,000 HVT on an annualized basis. Both of these mines had already begun to ramp up as of this. At Berwyn's Main Mine, we are adding a third section starting in the fourth quarter.

Jeremy Sessman: Two growth initiatives relate to our high vol production at Elk Creek and two relate to our low vol production at Berwyn and Maven.

Jeremy Sessman: At Elk Creek, we are adding the Ram III surface highwall mine and a third section at the Stone Coal Alma mine.

Jeremy Sessman: Combined, they will increase our overall 24 production by roughly 600,000 HVT on an annualized basis.

Jeremy Sessman: Both of these mines had already begun to ramp up as of this June .

Jeremy Sessman: At Berwyn's Main Mine, we are adding a third section starting in the fourth quarter.

Randall Atkins: This should add roughly 300,000 tons of low ball production on an annualized basis. Importantly, costs of all four of these new mines are anticipated to be roughly $90-$95 per ton on a combined basis. Finally, we expect the prep plant at our Maven complex to be fully operational this fall.

Jeremy Sessman: This should add roughly 300,000 tons of low ball production on an annualized basis.

Jeremy Sessman: Importantly, costs of all four of these new four mines are anticipated to be roughly $90-$95 per ton on a combined basis.

Jeremy Sessman: Finally, we expect the prep plant at our Mabin complex to be fully operational this fall.

Randall Atkins: While this won't add to our overall 24 production, it should meaningfully reduce our current trucking costs at Maven by approximately $40 per ton. If you step back and look at the impact of these growth projects, again, we see a lot of operating parallels between this year and last. In 2023, our second half was much stronger than the first, where we essentially went from being a 3 to a 4 million ton per year production company; we remained at this four million ton run rate. Again, we should exit the year at a five million ton run rate on both production and sale.

Jeremy Sessman: While this won't add to our overall 24 production, it should meaningfully reduce our current trucking costs at Maven by approximately $40 per ton.

Unknown Executive: If you step back and look at the impact of these growth projects, again, we see a lot of operating parallels between this year and last, where we essentially went from being a 3 to a 4 million ton per year production company. In the first half of 24, we remained at this four million ton run rate. But we also invested in the growth initiatives I mentioned. However, it's tough to expect strong METCO pricing when the world is awash in cheap steel.

Jeremy Sessman: If you step back and look at the impact of these growth projects, again, we see a lot of operating parallels between this year and last.

Jeremy Sessman: in two thousand and twenty-three our second half was much stronger than the first where we essentially went from being a three to a four million ton per year production company

Jeremy Sessman: In the first half of 24, we remained at this 4 million ton run rate, but we also invested in the growth initiatives I mentioned.

Jeremy Sessman: again

Jeremy Sessman: We should exit the year at a 5 million ton run rate on both production and sales.

Randall Atkins: In turning to the Met Coal Markets, both the U.S. and global Met Coal Indices have continued to fall meaningfully throughout the year. This drop has, of course, negatively impacted our price realizations across the board. The biggest reason was simply muted overall global economic and steel demand. This was coupled with China's slower internal growth, an overproduction of steel, and a corresponding dumping of this steel on the world market.

Jeremy Sessman: In turning to the Met Coal Markets, both the U.S. and global Met Coal Entities have continued to fall meaningfully throughout the year.

Jeremy Sessman: This drop has of course negatively impacted our price realizations across the board.

Jeremy Sessman: The biggest reason was simply muted overall global economic and steel demand.

Jeremy Sessman: This was coupled with China's slower internal growth, an overproduction of steel, and a corresponding dumping of this steel on the world markets.

Randall Atkins: It's tough to expect strong METCO pricing when the world is awash in cheap steel. Unfortunately, we've seen the highest level of Chinese steel exports in a number of years, and this is continuing to hurt both pricing and demand in our traditional European and U.S. markets.

Jeremy Sessman: It's tough to expect strong METCO pricing when the world is awash in cheap steel.

Jeremy Sessman: Unfortunately, we've seen the highest level of Chinese steel exports in a number of years.

Jeremy Sessman: This is continuing to hurt both pricing and demand in our traditional European and U.S. markets.

Randall Atkins: Looking to the second half of the year, we hope these markets will move higher. We have unfortunately recently seen a number of high-profile mine incidents this year. This has impacted global production and should lead to more muted supply in the second half. Also, at this point, both Indian elections and their monsoon season are almost behind.

Jeremy Sessman: Looking to the second half of the year, we hope these markets will move higher. We have unfortunately recently seen a number of high-profile mine incidents this year.

Unknown Executive: This has impacted global production and should lead to more muted supply in the second half.

Jeremy Sessman: Also, at this point, both Indian elections and their monsoon season is almost behind us.

Randall Atkins: Next month, we anticipate Indian demand should accelerate. And lastly, we possibly will start to see some worldwide tariffs and other restrictions placed on Chinese steel exports. Indeed, Chile became the first this morning to impose a steel tariff on China.

Unknown Executive: Next month, we anticipate Indian demand should accelerate. And lastly, we possibly will see the start to see some worldwide tariffs and other restrictions placed on Chinese steel exports.

Jeremy Sessman: Indeed, Chile became the first this morning to impose a steel tariff on China.

Randall Atkins: These types of tariffs could boost our traditional markets, but given the political nature of any curtailments, we will have to wait and see. It's too early to really handicap the 2025 domestic sale. I would like to point out, however, that we enter this year with somewhat of a unique positive sales record. Before we have even engaged in the 2025 domestic tenders, we have already committed 1.25 million tons for next year from primarily multi-year export index Currently, these contracts would have an average net back price of roughly $150 per ton against fixed prices and the current curve index.

Jeremy Sessman: These types of tariffs could boost our traditional markets, but given the political nature of any curtailments, we will have to wait and see.

Jeremy Sessman: And looking ahead, it's too early to really handicap the 2025 domestic sale negotiations.

Unknown Executive: I would like to point out, however, that we enter this year from somewhat of a unique positive sales position.

Unknown Executive: Before we have even engaged in the 2025 domestic tenders, we have already committed 1.25 million tons for next year from primarily multi-year export index link contracts. That puts us in a nice strategic position as we decide how to move forward. And once we get the results this fall, our consultant, Weir International, will update our previous expiration target report.

Jeremy Sessman: Before we have even engaged in the 2025 domestic tenders, we have already committed 1.25 million tons for next year from primarily multi-year export index link contracts.

Jeremy Sessman: Currently, these contracts would have an average net back price of roughly $150 per ton against fixed prices and current curve indexes.

Randall Atkins: That puts us in a nice strategic position as we decide how to move forward. I might add that today we have less than 250,000 tons left to place for calendar 24. Most of this is our higher quality low vol and mid vol blends that we are frankly shepherding to sell in the fourth quarter, hopefully into a healthier pricing environment. Switching gears to our critical minerals, we continue to make strong progress in terms of the development of the Brook Mine in Wyoming.

Unknown Executive: That puts us in a nice strategic position as we decide how to move forward.

Jeremy Sessman: I might add that today we have less than 250,000 tons left to place for calendar 24.

Jeremy Sessman: Most of this is our higher quality low vol and mid vol blends that we are frankly shepherding to sell in the fourth quarter, hopefully into a healthier pricing environment.

Jeremy Sessman: Switching gears to our critical minerals front, we continue to make strong progress in terms of the development of the Brook Mine in Wyoming.

Randall Atkins: You will recall that our project is unique because we are focused on extracting rare earths from unconventional coal and carbon-concentrated deposits, not radioactive hard minerals like others. We're currently advancing the chemical, metallurgical, and mineralogical testing of our cores. And once we get the results this fall, our consultant, Weir International, will update our previous exploration target report. Importantly, we're also on track to complete our techno-economic analysis of the overall commercial aspects of the opportunity later this year.

Jeremy Sessman: You'll recall that our project is unique because we are focused on extracting rare earths from unconventional coal and carbon concentrated deposits, not radioactive hard minerals like others.

Jeremy Sessman: We're currently advancing on the chemical, metallurgical and mineralogical testing of our cores.

Jeremy Sessman: And once we get the results this fall, our consultant, Weir International, will update our previous exploration target report.

Unknown Executive: Importantly, we're also on track to complete our techno-economic analysis of the overall commercial aspects of the opportunity later this year.

Randall Atkins: As we announced yesterday, we will be working with the Flora Corporation on this, with whom we've also worked in the past. As an aside, the development of a rare-earth mine requires a tremendous amount of upfront testing in a number of disciplines, far beyond that of a typical coal mine. In our case, this involves a large amount of core drilling and chemical testing to develop a geospatial mapping of where to locate the highest concentrations of REEs, as well as the best techniques to surgically mine and remove the ores. Indeed, we're now working with NETL on developing some novel AI assessment techniques to improve on our recovery.

Jeremy Sessman: As we announced yesterday, we will be working with the Flora Corporation on this, who we've also worked with in the past.

Unknown Executive: As an aside, the development of a rare-earth mine requires a tremendous amount of upfront testing in a number of disciplines. As I mentioned, we recently brought Fluor Corporation on board as our Senior Technical Advisor to help coordinate the preparation of our techno-economic analysis. We'll, of course, continue to provide granular updates on our rare earth activity as the year progresses. We hold it out in Sheridan, Wyoming, while the real Sheridan Rodeo goes on every night of that week.

Jeremy Sessman: As an aside, the development of a rare-earth mine requires a tremendous amount of up-front testing in a number of disciplines.

Unknown Executive: far beyond that of a typical coal mine.

Unknown Executive: In our case, this involves a large amount of core drilling and chemical testing to develop a geospatial mapping of where best to locate the highest concentrations of REEs.

Unknown Executive: as well as the best techniques to surgically mine and remove the ores.

Unknown Executive: Indeed, we're now working with NETL on developing some novel AI assessment techniques to improve on our recoveries.

Randall Atkins: We're also putting a great deal of effort into determining the optimal processing technique for our slate of heavy and medium magnetic rare earths, as well as critical minerals. As I mentioned, we recently brought Fluor Corporation on board as our Senior Technical Advisor to help coordinate preparing our techno-economic analysis. FLORA will also assist with the design and engineering of our demonstration facility, which we hope to begin construction on by mid-year 2025.

Jeremy Sessman: We're also spending a great deal of effort to determine the optimal processing technique for our slate of heavy and medium magnetic rare earths, as well as critical minerals.

Unknown Executive: As I mentioned, we recently brought the Fluor Corporation on board as our Senior Technical Advisor to help coordinate preparing our techno-economic analysis.

Jeremy Sessman: FLOR will also assist with the design and engineering of our demonstration facility, which we hope to begin construction on by mid-year 2025.

Randall Atkins: We still have an immense amount of testing and planning to complete, but we're optimistic that, starting with our demonstration facility, we'll be in a position to start commercial operations. We'll, of course, continue to provide granular updates on our rare earth activities as the year progresses. Also, one personal highlight for me each year is hosting the Ramaco Research Rodeo in Wyoming, which is what we call the R3. We believe this may be one of the leading research conferences focused on coal-to-products research, rare-earth element exploration, artificial intelligence, and critical minerals. We hold it out in Sheridan, Wyoming, while the real Sheridan Rodeo goes on every night of that week.

Unknown Executive: We still have an immense amount of testing and planning to complete.

Jeremy Sessman: But we're optimistic that starting with our demonstration facility that we'll be in a position to start commercial operation.

Unknown Executive: We'll, of course, continue to provide granular updates on our rare earth activity as the year progresses.

Unknown Executive: Also, one personal highlight for me each year is hosting the Ramaco Research Rodeo in Wyoming, which is what we call the R3.

Unknown Executive: We believe this may be one of the leading research conferences focused on coal-to-products research, rare earth element exploration, artificial intelligence, and critical minerals.

Unknown Executive: We hold it out in Sheridan, Wyoming, while the real Sheridan Rodeo goes on every night of that week.

Randall Atkins: Last month was our fourth annual R3 conference. We hosted it again in partnership with an affiliate of the International Energy Agency in Paris. It brought together several congressional leaders in the energy space, leadership from the Department of Energy, as well as leading scientists from around the world. We even had the FBI speak on counterintelligence in the carbon research space.

Unknown Executive: Last month was our fourth annual R3 conference.

Unknown Executive: We hosted it again, in partnership with an affiliate of the International Energy Agency in Paris. It brought together several congressional leaders in the energy space, leadership from the Department of Energy, as well as leading scientists from around the world. We even had the FBI speak on counterintelligence in the carbon research space. And we'll also continue to advance the commercial development of our

Unknown Executive: We hosted it again in partnership with an affiliate of the International Energy Agency in Paris.

Unknown Executive: It brought together several congressional leaders in the energy space, leadership from the Department of Energy, as well as leading scientists from around the world.

Unknown Executive: We even had the FBI speak on counterintelligence in the carbon research space.

Randall Atkins: Frankly, the R3 gives us an opportunity to keep a leading edge in the newest technologies for the development of coal-based products, as well as rare earths, and we hope to be discussing some new developments on all these fronts later this year. So, in summary, we had a much stronger second quarter both operationally and financially, despite dealing with a much lower pricing environment. We know we can't control the price, but we try to control our production and cash costs.

Unknown Executive: Frankly, the R3 gives us an opportunity to keep a leading edge in the newest technologies and development of coal-based products, as well as rare earths.

Unknown Executive: And we hope to be discussing some new developments on all these fronts later this year.

Speaker Change: So in summary, we had a much stronger second quarter, both operationally and financially, despite dealing with a much lower pricing environment.

Speaker Change: We know we can't control price, but we try to control our production and cash costs.

Randall Atkins: And as the markets continue to remain generally weak, we'll try and continue to operate with a combination of aggression, agility, and prudence. In the second half, we look forward to executing on our twin fronts of growing our met coal production and reducing our mine cost, and we'll also continue to advance the commercial development of our brook. With that, I'd like to turn the floor over to the rest of our team to discuss finances, operations, and markets, and we'll start with Jeremy to give us a rundown on financial management.

Speaker Change: And as the markets continue to remain generally weak, we'll try and continue to operate with a combination of aggression, agility, and prudence.

Speaker Change: In the second half, we'll look forward to executing on our twin fronts of growing our met coal production and reducing our mine costs. And we'll also continue to advance the commercial development of our brook mines.

Speaker Change: With that, I'd like to turn the floor over to the rest of our team to discuss finances, operations, and markets. And we'll start with Jeremy to give us a rundown on financial metrics.

Jeremy Sussman: As you noted, second quarter 2024 results were meaningfully better than first quarter 2024 results, both operationally and financially. This was despite U.S. indices declining roughly 15% sequentially.

Unknown Executive: Thank you, Randy. As you noted, second quarter 2024 results were meaningfully better than the first quarter 2024 results, both operationally and financially.

Speaker Change: This was despite U.S. indices declining roughly 15% sequentially.

Jeremy Sussman: To get into specifics, Q2 adjusted EBITDA was $29 million, compared to $24 million in Q1. The second quarter net income of $5.5 million was more than doubled first quarter levels, which amounted to Class A diluted EPS of $0.08 per share. The primary reason for the increase in both EBITDA and EPS was the $10 per quarter over quarter improvement in cash costs to $108 per ton on the back of stronger production. Second quarter production was a record 901,000 tons, up 7% compared with the first quarter, due to a combination of better productivity, geology, and labor availability.

Speaker Change: To get into specifics, Q2 adjusted EBITDA was $29 million compared to $24 million in Q1.

Unknown Executive: The second quarter net income of $5.5 million was more than doubled first quarter levels, which amounted to Class A diluted EPS of $0.08 per Q2. The primary reason for the increase in both EBITDA and EPS was the $10 per quarter over quarter improvement in cash costs to $108 per ton on the back of stronger production. We also expect sales to increase in Q4 and that it will exit the year above a 5 million ton per annum sales run rate.

Unknown Executive: The second quarter net income of $5.5 million was more than doubled first quarter levels, which amounted to Class A diluted EPS of $0.08 per Q2. The primary reason for the increase in both EBITDA and EPS

Unknown Executive: with the $10 per quarter over quarter improvement in cash costs to $108 per ton on the back of stronger production.

Unknown Executive: Second quarter production was a record 901,000 tons, up 7% compared with the first quarter due to a combination of better productivity, geology, and labor availability.

Jeremy Sussman: Quarterly sales volume of 915,000 tons was down slightly from 929,000 tons in Q1. The decline was due to modest transportation constraints in June, which have largely since been alleviated. The realized price of $143 per ton during Q2 was down 8% from $155 per ton in the first quarter, reflecting both weaker market conditions and lower index prices. I'd point out that our decline in realized pricing was less traumatic than the decline in indices thanks to our strong domestic book of fixed price business.

Unknown Executive: Quarterly sales volume of 915,000 tons was down slightly from 929,000 tons in Q1.

Unknown Executive: The decline was due to modest transportation constraints in June , which have largely since been alleviated.

Unknown Executive: The realized price of $143 per ton during Q2 was down 8% from $155 per ton in the first quarter, reflecting both weaker market conditions and lower index pricing.

Speaker Change: I'd point out that our decline in realized pricing was less traumatic than a decline in indices thanks to our strong domestic book of fixed price business.

Jeremy Sussman: Looking ahead, we anticipate third-quarter shipments of 900,000 to 1.05 million tons. We also expect sales to increase in Q4, and it will exit the year above a 5 million ton per annum sales run rate. As Randy noted, we anticipate adding almost a million tons of annualized production compared to the first half of 2024 run rates before year end. Overall mine costs in the third quarter are expected to remain in the same range as compared to the second quarter.

Unknown Executive: Looking ahead, we anticipate third quarter shipments of 900,000 to 1.05 million tons.

Unknown Executive: We also expect sales will increase in Q4 and that we'll exit the year above a 5 million ton per annum sales run rate.

Unknown Executive: As Randy noted, we anticipate adding almost a million tons of annualized production compared to the first half of 2024 run rates before year end. Due to the additional tonnage coming online, we will expect to exit the year at or below the $100 per ton cash cost range. In the current pricing environment, production and sales guidance is being reduced by 200,000 tons at the midpoint to between 3.8 to 4.2 million tons. I'll make two other brief comments regarding 2024 guidance. The Board also declared a quarterly Class B cash dividend of $0.2246 per share, which, of course, is driven mostly by our sales volume and to a lesser extent by our realized price.

Unknown Executive: As Randy noted, we anticipate adding almost a million tons of annualized production compared to the first half of 2024 run rates before year end.

Unknown Executive: Overall mine costs in the third quarter are expected to remain in the same range as compared to the second quarter.

Jeremy Sussman: Due to the additional tonnage coming online, we will expect to exit the year at or below the $100 per ton cash cost range. We are maintaining all full year 2024 guidance with the exception of production and sales. In the current pricing environment, production and sales guidance is being reduced by 200,000 tons at the midpoint to between 3.8 to 4.2 million tons and 4.0 to 4.4 million tons, respectively. Specifically, we are proactively reducing higher-cost production at each of our complexes with the exception of Mavis. Importantly, this move should have minimal impact on overall earnings in the current pricing environment. I'll make two other brief comments regarding 2024 guidance.

Unknown Executive: Due to the additional tonnage coming online, we will expect to exit the year at or below the $100 per ton cash cost range.

Unknown Executive: We are maintaining all full year 2024 guidance with the exception of production and sales.

Unknown Executive: In the current pricing environment, production and sales guidance is being reduced by 200,000 tons at the midpoint to between 3.8 to 4.2 million tons and 4.0 to 4.4 million tons, respectively.

Unknown Executive: Specifically, we are proactively reducing higher cost production at each of our complexes with the exception of Maven.

Unknown Executive: Importantly, this move should have minimal impact to overall earnings in the current pricing environment.

Unknown Executive: I'll make two other brief comments regarding 2024 guidance.

Jeremy Sussman: First, you may notice that our committed tonnage level fell off a couple hundred thousand tons compared to our Q1 earnings release. This is due to proactively working with our customers and agreeing to defer some business into early 2025. Second, in the current environment, our book tax rate will likely be towards the high end of the 20 to 25 percent range, though our cash taxes should be minimal.

Unknown Executive: First, you may notice that our committed tonnage level fell off a couple hundred thousand tons compared to our Q1 earnings release.

Unknown Executive: this is due to proactively working with our customers and agreeing to defer some business early two thousand and twenty-five

Unknown Executive: Second, in the current environment, our book tax rate will likely be towards the high end of the 20 to 25 percent range, though our cash taxes should be minimal.

Jeremy Sussman: Moving to the balance sheet, our liquidity on June 30th of $71 million was up 14% year-on-year. Furthermore, in July, we paid off the remaining $7 million in acquisition debt related to the $30 million purchase of Maven Coal, LLC. We've now retired all $75 million of acquisition debt since 2022 related to both our Mabin and Ramaco coal acquisitions. I'm proud to say that, as of today, the only remaining material term debt is the $35 million 9% unsecured notes due in 2026 and any amounts drawn on the revolver that are used for working capital purposes.

Unknown Executive: Moving to the balance sheet, our liquidity on June 30th of $71 million was up 14% year-on-year.

Unknown Executive: Furthermore, in July , we paid off the remaining $7 million in acquisition debt related to the $30 million purchase of Maven Coal, LLC.

Unknown Executive: We've now retired all $75 million of acquisition debt since 2022 related to both our MABEN and Ramaco coal acquisitions.

Unknown Executive: I'm proud to say that, as of today, the only remaining material term debt is the $35 million, 9% unsecured notes due in 2026, and any amounts drawn on the revolver that are used for working capital purposes.

Jeremy Sussman: As of Q2, our net debt to trailing 12-month EBITDA was less than 0.4 times, which illustrates our continued commitment to maintaining a conservative balance. In addition, the Board has maintained our quarterly Class A Common Stock Cash Dividend of $0.1375 per share for the third quarter of 2024. The Board also declared a quarterly Class B cash dividend of $0.2246 per share, which of course is driven mostly by our sales volume and to a lesser extent by our realized price. With that said, I would now like to turn the call over to our EVP for Mine Planning and Development, Chris Blanchard.

Unknown Executive: As of Q2, our net debt to trailing 12-month EBITDA was less than 0.4 times, which illustrates our continued commitment to maintaining a conservative balance sheet.

Unknown Executive: In addition, the Board has maintained our quarterly Class A Common Stock Cash Dividend of $0.1375 per share for the third quarter of 2024.

Unknown Executive: 2nd quarter 2024 Results Conference Call All participants will be in ill listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Unknown Executive: the board also declared the quarterly class b cash dividend of zero point two two four six per share which of course is driven mostly by our sales volume and to a lesser extent our realized price

Unknown Executive: 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. To withdraw your question, please press star then two. Please note, this event is being recorded.

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

Christopher Blanchard: Thank you, Jeremy, and to everyone who joined us this morning. As Randy summarized, we had a significant turnaround in operations during the second quarter. The bulk of the improvement was at our underground operations, which frankly have lagged our expectations the last several months. Overall, we saw improvements of slightly over 5% in clean tons per foot quarter over quarter underground as our Eagle Mine and one of our stone coal sections managed to mine through some lower coal conditions and return to more normalized mining conditions.

Unknown Executive: Thank you, Jeremy, and to everyone who joined us this morning. The combination of all of these positive factors culminated in overall June cash costs below the $100 per ton threshold for the first time in 2024. We're particularly excited about Ram 3 as it projects to have better geology and a lower ratio than our Ram 1 surface model. The more immediate fundamental benefit is the raw coal transportation cost reduction before the burden of hauling this coal to our Berlin facilities for washing and shipping.

Unknown Executive: Thank you, Jeremy, and to everyone who joined us this morning.

Unknown Executive: As Randy summarized, we had a significant turnaround in the operations during the second quarter.

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

Unknown Executive: The bulk of the improvement was at our underground operations, which frankly have lagged our expectations the last several months.

Randall Atkins: On behalf of Ramaco Resources, I'd like to welcome all of you to our 2nd quarter 2024 earnings conference call. With me this morning is Randy Atkins, our chairman and CEO, Chris Blanchard, our EVP for Mind Planning and Development, and Jason Fannin, our Chief Commercial Officer.

Unknown Executive: Overall, we saw improvements of slightly over 5% in clean tons per foot quarter over quarter underground as our Eagle Mine and one of our stone coal sections managed to mine through some lower coal conditions and return to more normalized mining conditions.

Christopher Blanchard: We've also seen modest improvements in the labor market in the southern West Virginia area. This allowed us to start the third section of our stone coal mine late in the quarter and also helped to fill a number of vacancies at all of the other mines. This hiring and stabilization of the workforce directly led to achieving 80 more production shifts during the second quarter compared to the first. The combination of all of these positive factors culminated in overall June cash costs below the $100 per ton threshold for the first time in 2024. Regarding the labor market, it remains very tight.

Randall Atkins: 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 Security's 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.

Unknown Executive: We've also seen modest improvements in the labor market in the southern West Virginia area. This allowed us to start the third section of our stone coal mine late in the quarter and also helped to fill a number of vacancies at all of the other mines.

Randall Atkins: Any forward-looking statement speaks only as of the date on which it is made, and accepted is required by law. Ramaco does not undertake any obligation to update or revise any forward-looking statements, whether it is a result of new information, future events, or otherwise.

Unknown Executive: This hiring and stabilization of the workforce directly led to achieving 80 more production shifts during the second quarter compared to the first.

Unknown Executive: The combination of all of these positive factors culminated in overall June cash costs below the $100 per ton threshold for the first time in 2024.

Speaker Change: Regarding the labor market, it remains very tight. There are insufficient experienced coal miners available in southern West Virginia and southwest Virginia to fill all the open positions of both our mines and those of our competitors.

Christopher Blanchard: There are insufficient experienced coal miners available in southern West Virginia and southwest Virginia to fill all the open positions at both our mines and those of our competitors. Although the turnover rates have moderated throughout the year, they are above the levels we want and higher than our historical average. Hiring, training, and retaining highly skilled miners remains challenging and is a daily focus of the operation. Moving into the third quarter following the traditional vacation period around the 4th of July, the June momentum has continued.

Jeremy Sussman: I'd like to remind you that you can find a reconciliation of the non-GAF financial measures that we plan to discuss today in our press release, which can be viewed on our website www.ramacoresources.com.

Speaker Change: Although the turnover rates have moderated throughout the year, they are above the levels we want and higher than our historical averages.

Jeremy Sussman: Lastly, I'd encourage everyone on this call to go on to our website and download today's investor presentation.

Unknown Executive: Hiring, training, and retaining highly skilled miners remains challenging and is a daily focus of the operations.

Randall Atkins: With that said, let me introduce our chairman and CEO Randy Atkins. Thanks, Jeremy. Good morning to everyone, and thanks for joining the call. As we had hoped, our second quarter results were much better than our first, both on operations and financially. This improvement came in spite of the continued softness in the global coal pricing. Last quarter, we saw U.S, met coal indices drop by 15 percent, and they're now down 25 percent since the start of the year.

Unknown Executive: Moving into the third quarter, following the traditional vacation period around the 4th of July , the June momentum has continued.

Christopher Blanchard: While there are obviously fewer available shifts to work in July due to the idle periods, we have seen continued modest improvements in average coal heights and feet per shift and the other operational metrics for the legacy mines and plants to start the third quarter. We're guiding flattish costs in quarter three versus quarter two due to the vacation period and the ramp-up period at our stone coal three surface mine. I'm sorry. Our Ram 3 surface mine and the third section at our stone coal mine. Three of our four discussed growth and optimization projects made strides in the second quarter and are now ahead of schedule.

Unknown Executive: While there are obviously less available shifts to work in July due to the idle periods, we have seen continued modest improvements in average coal heights and feet per shift and the other operational metrics for the legacy mines and plants to start the third quarter.

Unknown Executive: We're guiding the flattish costs in Q3 vs. Q2 due to the vacation period and the ramp-up period at our Ram 3 surface mine and the third section at our stone coal mine.

Randall Atkins: We also made some solid progress this quarter on our RE project in Wyoming, which I will mention later. Turning first to our met coal operations, importantly, we had record production. This was up about 7 percent to 900,000 tons in the second quarter, and this increase was largely due to a combination of better productivity, geology, and labor availability. As a result of the stronger production and more tons, our cash costs declined 8 percent, or by roughly $10 to $108 per ton in the second quarter.

Unknown Executive: Three of our four discussed growth and optimization projects made strides in the second quarter and are now ahead of schedule.

Christopher Blanchard: At Elk Creek, the third section at Stone Coal started in May ahead of projections and is ramping according to our expectations. We expect this section to be fully staffed by the end of the summer and, due to its projected geology, to have lower cash costs compared to the other operating sections at Elk Creek. This section should add an additional 300,000 annual clean tons at what we expect will be a cost below $100 a ton. Similarly, a Ram 3 surface mine started in June. More importantly, though, we have been able to start the Ram No.

Unknown Executive: At Elk Creek, the third section at Stone Coal started in May ahead of projections and is ramping according to our expectations.

Unknown Executive: We expect this section to be fully staffed by the end of the summer and due to its projected geology to have advantage cash costs compared to the other operating sections at Elk Creek.

Unknown Executive: This section should add an additional 300,000 annual clean tons at what we expect will be cost below $100 a ton.

Randall Atkins: Looking forward, both operational and financial results should continue to improve throughout the year, as our growth projects come online. In a nutshell, we're expecting to ramp to a year-end run rate in excess of 5 million tons on both production and sales, with costs hopefully at or below the $100 per ton cash cost range.

Unknown Executive: Similarly, a Ram 3 surface mine started in June .

Christopher Blanchard: 3 highwall miner spread almost two months earlier than we projected with the first coal cut in the last week. We're particularly excited about Ram 3 as it projects to have better geology and lower ratio than our Ram 1 surface model. Once the hollow miner spread is fully operational, the production rate from the combined surface mine will be approximately 350,000 clean tons per year, with produced coal costs at or near $90 per ton. Finally, the labor market for highly qualified surface miners has not been as challenging as on the underground side.

Unknown Executive: More importantly though, we have been able to start the RAM number 3 highwall miner spread almost two months earlier than we projected with the first coal cut in the last week.

Unknown Executive: We're particularly excited about Ram III as it projects to have better geology and lower ratio than our Ram No. 1 surface mine.

Randall Atkins: Let me take a moment and walk through our four current production growth projects for this year. All of these remain on track and on budget. Two growth initiatives relate to our high-volve production at Elk Creek and two relate to our low-volve production at Burwin and Maven. At Elk Creek, we are adding the Ram 3 surface high-volve mine and a third section at the Stone Coal Alma mine. Combined, they will increase our overall 24 production by roughly 600,000 high-volve tons on an annualized basis.

Unknown Executive: Once the hollow miner spread is fully operational, the production rate from the combined surface mine will be approximately 350,000 clean tons per year with produced coal cost at or near of $90 per ton.

Unknown Executive: Finally, the labor market for highly qualified surface miners has not been as challenging as on the underground side, so the ramp-up period for this mine will be much shorter and the cash costs will be normalized before the end of the third quarter.

Christopher Blanchard: So the ramp-up period for this mine will be much shorter, and the cash costs will be normalized before the end of the third quarter. On the Lobo side, the construction of the new Maven plant is well underway. All geotechnical work and foundations were completed during the second quarter, and the first few pieces of steel were set in the last days of June as well.

Randall Atkins: Both of these mines had already begun to ramp up as of this June. At Burwin's main mine, we are adding a third section starting in the fourth quarter. This should add roughly 300,000 tons of low-volve production on an annualized basis. Importantly, costs at all four of these new four mines are anticipated to be roughly $90 to $95 per ton on a combined basis. Finally, we expect a prep plant at our Maven complex to be fully operational this fall.

Unknown Executive: to

Speaker Change: On the Lobol side, the construction of the new Maven plant is well underway. All geotechnical work and foundations were completed during the second quarter.

Unknown Executive: The first few pieces of steel were set in the last days of June as well. Plant re-erection is in full swing. We are now projecting completion of the plant early in the fourth quarter of the year rather than in the last days of the year with the attendant cost savings that I'll further discuss.

Christopher Blanchard: Plant re-erection is in full swing. We are now projecting completion of the plant early in the fourth quarter of the year rather than in the last days of the year, with the attendant cost savings that I'll further discuss. In the intermediate term, at Maven, having the plant on site will open up the possibilities of additional underground low-vol production in our high quality Sewell, Beckley, Fire Creek, and Pocahontas reserves at Ma

Speaker Change: In the intermediate term at Maven, having the plant on site will open up the possibilities of additional underground low vol production in our high quality Sewell, Beckley, Fire Creek, and Pocahontas reserves at Maven.

Randall Atkins: While this won't add to our overall 24 production, it should meaningfully reduce our current trucking costs at Maven by approximately $40 per ton. If you step back and look at the impact of these growth projects, again, we see a lot of operating parallels between this year and last. In 2023, our second half was much stronger than the first, where we essentially went from being a 3 to a 4 million ton per year production company.

Christopher Blanchard: The more immediate fundamental benefit is the raw coal transportation cost reduction. Our Maven Surface Mine and the Highwall Miner are currently amongst Ramaco's lowest cash costs of production before the burden of hauling this coal to our Berlin facilities for washing and shipping. Dependent on the actual recoveries that we see for the mine, the raw coal transport costs can make up 30 to 40% of their total cash costs and up to or exceeding $40 per clean ton of their final produced costs.

Unknown Executive: The more immediate, fundamental benefit is the raw coal transportation cost reduction.

Unknown Executive: Our Maven Surface Mine and the Highwell Miner is currently amongst Ramaco's lowest cash costs of production, before the burden of hauling this coal to our Berlin facilities for washing and shipment.

Speaker Change: Dependent on the actual recoveries that we see for the mine, the raw coal transport costs can make up 30-40% of their total cash costs and up to or exceeding $40 per clean ton of their final produced costs.

Randall Atkins: In the first half of 24, we remained at this 4 million ton run rate, but we also invested in the growth initiatives I mentioned. Again, we should exit the year at a 5 million ton run rate on both production and sales.

Unknown Executive: As the start-up date of the Maven plant has become closer and more certain, we will start stockpiling coal. Ventilation and infrastructure work is underway underground and on the surface in advance of starting the third operating super section. This work will continue throughout the third quarter with an anticipated startup and ramp period for this section in the fourth quarter. All options at these sections are on the table, including redeploying equipment and manpower to other mines which have better geology if we do not see continued improvement.

Christopher Blanchard: As the start-up date of the Maven plant becomes closer and becomes more certain, we will start stockpiling coal on the Maidman property and not transporting it to Berlin so that we can claw some of these trucking savings back, even on tons produced prior to the plant's completion. Our final expansion project is at the Berland P4 mine. Ventilation and infrastructure work is underway underground and on the surface in advance of starting the third operating super section.

Unknown Executive: As the start-up date of the Maven plant has become closer and becomes more certain, we will start stockpiling coal.

Unknown Executive: on the Maidman property and not transporting it to Burwin so that we can claw some of these trucking savings back, even on tons produced prior to the plant's completion.

Randall Atkins: In turning to the Met coal markets, both the US and global Met coal indices have continued to fall meaningfully throughout the year. This drop has, of course, negatively impacted our price realizations across the board. The biggest reason was simply muted overall global economic and steel demand. This was coupled with China's slower internal growth and overproduction of steel and a corresponding dumping of this steel in the world markets. It's tough to expect strong Met coal pricing when the world is a wash and cheap steel.

Unknown Executive: Our final expansion project is at the Berland P4 mine.

Unknown Executive: ventilation and infrastructure work is underway underground and on the surface and advance of starting the third operating supersection

Christopher Blanchard: This work will continue throughout the third quarter with an anticipated start-up and ramp period for this section in the fourth quarter. Our projections have this section providing approximately 300,000 clean tons per year of low-cost, low volume coal. The start-up of this section and the incremental raw coal to be processed will coincide with the completion of the Maven plant and elimination of a similar volume of coal being trucked into the Berwyn complex.

Unknown Executive: This work will continue throughout the third quarter with an anticipated start-up and ramp period for this section in the fourth quarter.

Unknown Executive: Our projections have this section providing approximately 300,000 clean tons per year of low-cost, low-vol coal.

Unknown Executive: The start-up of this section and the incremental raw coal to be processed will coincide with the completion of the Maven plant and an elimination of a similar volume of coal being trucked into the Berwyn complex.

Randall Atkins: Unfortunately, we've seen the highest level of Chinese steel exports in a number of years. This is continuing to hurt both pricing and demand in our traditional European and US markets. Looking to the second half of the year, we hope these markets will move higher. We have unfortunately recently seen a number of high-profile mine incidents this year.

Christopher Blanchard: Additionally, during 2025, we expect to further ramp up the Berwyn mine to its ultimate capacity of four operating supersections. Finally, while our overall cash costs have declined significantly, we are extremely focused on a couple of mines and a couple of sections where the cash costs remain elevated and are not currently compatible with market conditions. All options at these sections are on the table, including redeploying equipment and manpower to other mines which have better geology if we do not see continued improvement.

Unknown Executive: Additionally, during 2025, we

Unknown Executive: expect to further ramp the Berwyn mine to its ultimate capacity of four operating super sections.

Unknown Executive: Finally, while our overall cash costs have declined significantly, we are extremely focused on a couple of mines and a couple of sections where the cash costs remain elevated and are not currently compatible with market conditions.

Randall Atkins: This has impacted global production and should lead to more muted supply in the second half Also at this point both Indian elections and their monsoon season is almost behind us Next month we anticipate Indian demand should accelerate and lastly we possibly will see the start to see some worldwide tariffs and other restrictions placed on Chinese steel exports indeed chilly Secondly became the first this morning to impose a steel tariff on China These types of tariffs could boost our traditional markets but given the political nature of any curtailments we will have to wait and see And looking ahead it's too early to really handicap the 2025 domestic sale negotiations I would like to point out however that we enter this year from somewhat of a unique positive sales position Before we have even engaged in the 2025 domestic tenders we have already committed 1.25 million tons for next year from primarily multi-year export index link contracts Currently these contracts would have an average net back price of roughly $150 per ton against fixed prices and current curve indexes That puts us in a nice strategic position as we decide how to move forward I might add that today we have less than 250,000 tons left to place for calendar 24 Most of this is our higher quality low-vall and mid-vall blends that we are frankly shepherding to sell in the fourth quarter hopefully into a healthier pricing environment Switching gears to our critical minerals front we continue to make strong progress in terms of the development of the Brook mine and Wyoming You recall that our project is unique because we are focused on extracting rare errors from unconventional coal and carbon concentrated deposits not radioactive hard minerals like others We are currently advancing on the chemical, metallurgical and mineralogical testing of our cores And once we get the results this fall our consultant we are in a national will update our previous expiration target report Importantly we are also on track to complete our technoeconomic analysis of the overall commercial aspects of the opportunity later this year As we announced yesterday we will be working with the fluor corporation on this who we have also worked with in the past As an aside the development of a rare earth mine requires a tremendous amount of upfront testing in a number of disciplines far beyond that of a typical coal mine In our case this involves a large amount of core drilling and chemical testing to develop a geospatial mapping of where best to locate the highest concentrations of our ease as well as the best techniques to surgically mine and remove the ores Indeed we are now working with NETL on developing some novel AI assessment techniques to improve on our recovery We're also spending a great deal of effort to determine the optimal processing technique for our slate of heavy and medium magnetic errors as well as critical minerals. As I mentioned, we recently brought the Fluor Corporation on board as our Senior Technical Advisor to help coordinate preparing our Techno-Economic Analysis. Fluor will also assist with the design and engineering of our demonstration facility, which we hope to begin construction on by mid-year 2025.

Unknown Executive: All options at these sections are on the table, including redeploying equipment and manpower to other mines which have better geology if we do not see continued improvement.

Christopher Blanchard: As always, we will be aggressively agile at the operations level to respond to the financial and market conditions as they exist. For some additional discussion and detail on the markets and sales position, I'd now like to turn the call over to our Chief Commercial Officer, Jason Fannin.

Unknown Executive: As always, we will be aggressively agile at the operations level to respond to the financial and market conditions as they exist.

Jason Fannin: For some additional discussion in detail on the markets and sales position, I'd now like to turn the call over to our Chief Commercial Officer, Jason Fannin. Jason?

Unknown Executive: Thanks Chris, and good morning everyone. I will share what we are seeing in the markets in our current and forward sales outlook. In the Pacific, we are likely to see a seasonal rebound in demand from India and China in the back half of the year. The outlook for Indian steel production growth continues to look very favorable, and we anticipate long-term seaborne coking coal demand to increase materially as a result. There tend to be no upside surprises when it comes to supply, and we view the long-term supply versus demand backdrop as bullish when we were fully uncommitted for the next year at this point in time.

Jason Fannin: Thanks, Chris. And good morning, everyone.

Unknown Executive: Thanks Chris, and good morning everyone. I will share what we are seeing in the markets and our current and forward sales outlook.

Unknown Executive: Although global coking coal markets have weakened from a pricing standpoint, volumes are still well supported.

Jason Fannin: I will share what we are seeing in the markets and our current and forward sales outlook. Although global coking coal markets have weakened from a pricing standpoint, volumes are still well supported. Let me start with an overall global macro recap of the various markets where we sell. We are continuing to see the usual robust inquiries from the Pacific Basin for U.S. cocaine.

Speaker Change: Let me start with an overall global macro recap of the various markets where we sell.

Unknown Executive: We are continuing to see the usual robust inquiries from the Pacific Basin for U.S. coking coals.

Jason Fannin: Atlantic Demand remains muted, though we are now starting to see positive momentum for spot deliveries in the region. Integrated mills and cook batteries in the U.S. continue to run strong despite a decline in finished steel prices. We think this is due to their continued positive profit margins, as well as cost advantages for blast furnaces relative to electric arc furnaces. These cost advantages are likely to grow over time as increased power demand and higher electricity prices heat into EAF profitability.

Unknown Executive: Atlantic demand remains muted, though we are now starting to see positive momentum for spot deliveries in the region.

Unknown Executive: Integrated mills and coke batteries in the U.S. continue to run strong despite a decline in finished steel prices.

Speaker Change: We think this is due to their continued positive profit margins, as well as cost advantages for blast furnaces relative to electric arc furnaces.

Speaker Change: These cost advantages are likely to grow over time as increased power demand and higher electricity prices heat into EAF profitability.

Jason Fannin: We therefore believe demand for U.S. coke and coal is likely to remain strong for the foreseeable future. We also continue to expect a moderate rebound in Europe in the back half of 24 and more so in 2025. Western Europe is clearly a mature market, continuing with carbon pricing and the relentless pursuit of decarbonization.

Unknown Executive: We therefore believe demand for U.S. coke and coal is likely to remain strong for the foreseeable future.

Speaker Change: We also continue to expect a moderate rebound in Europe in the back half of 2024 and more so in 2025.

Unknown Executive: Western Europe is clearly a mature market, contending with carbon pricing and the relentless pursuit of decarbonization.

Jason Fannin: Despite this, we are intrigued by the situation in Eastern Europe with a potential post-war rebuild scenario and resulting increase in raw materials demand. In this situation, Brazil also looks promising, as steel import tariffs will provide the impetus for higher steel production and follow on increases in coking coal demand in the coming months. In the Pacific, we are likely to see a seasonal rebound in demand from India and China in the back half of the year.

Unknown Executive: Despite this, we are intrigued by the situation in Eastern Europe with a potential post-war rebuild scenario and result in an increase in raw materials demand.

Unknown Executive: The situation in Brazil also looks promising, as steel import tariffs will provide the impetus for higher steel production.

Unknown Executive: and follow on increases in coking coal demand in the coming months.

Unknown Executive: In the Pacific, we are likely to see a seasonal rebound in demand from India and China in the back half of the year.

Jason Fannin: The outlook for Indian steel production growth continues to look very favorable, and we anticipate long-term seaborne coking coal demand to increase materially as a result. However, we were reminded how fragile supply chains really are with the recent fires at Grosvenor and Longview. There tend to be no upside surprises when it comes to supply, and we view the long-term supply versus demand backdrop as bullish.

Unknown Executive: The outlook for Indian steel production growth continues to look very favorable, and we anticipate long-term seaborne coking coal demand to increase materially as a result.

Unknown Executive: From a supply standpoint, we were reminded how fragile supply chains really are with the recent fires at Grosvenor and Longview.

Unknown Executive: There tend to be no upside surprises when it comes to supply, and we view the long-term supply versus demand backdrop as bullish.

Jason Fannin: As Randy mentioned, we have a small open position remaining for 2024, amounting to around only 250,000 tons. Given the near-term weak pricing environment, we will opportunistically time and place these unsold volumes in the market to align with the expected seasonal price correction. Looking ahead to 2025, as we begin the 2025 domestic sales negotiation.

Unknown Executive: As Randy mentioned, we have a small open position remaining for 2024, amounting to around only 250,000 tons.

Unknown Executive: Given the near-term weak pricing environment, we will opportunistically time and place these unsold volumes in the market to align with the expected seasonal price correction.

Unknown Executive: Looking ahead to 2025 as we begin the 2025 Domestic Sales Negotiations.

Jason Fannin: Our already committed volume of 1.25 million tons puts us in a unique sales position compared to previous years, when we were fully uncommitted for the next year at this point in time. Ramaco's sales book is now well positioned, with specific long-term partners who place an incremental premium on Ramaco's position as one of the largest producers of low-ash, low-sulfur cooking coals in the U.S. across all grades, low vol, mid vol, and high vol.

Unknown Executive: Our already committed volume of 1.25 million tons puts us in a unique sales position compared to previous years When we were fully uncommitted for the next year at this point in time

Unknown Executive: Ramaco's sales book is now well-positioned with specific long-term partners who place incremental premium on Ramaco's position as one of the largest producers of low-ash, low-sulfur cooking coals in the U.S. across all grades, low vol, mid vol, and high vol.

Jason Fannin: As production in the U.S. coking coal industry has increased in recent years, a lot of the incremental and new volumes have been on the higher end in terms of ash content and, perhaps more importantly, sulfur content. Turning to the current pricing environment, metallurgical index values have continued to soften as seasonal influences impact markets at this time of year. There has also been a deterioration in steelmaker profit margins as global steel prices have fallen, mostly due to increased exports of Chinese steel.

Unknown Executive: As production in the U.S. coking coal industry has increased in recent years, a lot of the incremental and new volumes have been on the higher end in terms of ash content, and perhaps more importantly, sulfur content.

Unknown Executive: Turning to the current pricing environment, metallurgical index values have continued to soften as seasonal influences impact markets at this time of year.

Randall Atkins: We still have an immense amount of testing and planning to complete, but we're optimistic that starting with our demonstration facility that will be in a position to start commercial operation. We'll, of course, continue to provide granular updates on our rare earth activity as the year progresses.

Unknown Executive: There has also been a deterioration in steel maker profit margins as global steel prices have fallen, mostly due to increased exports of Chinese steel.

Jason Fannin: Meanwhile, metallurgical coal demand remains robust from an annual global seaborne volume standard. Import demand from India and China continue to grow on an annual basis. Indian first half imports increased 17% year over year, while China's seaborne imports increased 22% year over year.

Unknown Executive: Meanwhile, metallurgical coal demand remains robust from an annual global seaborne volume standpoint.

Unknown Executive: Import demand from India and China continue to grow on an annual basis. Indian first half imports increased 17% year over year.

Randall Atkins: Also, one personal highlight for me each year is hosting the Ramaco Research Radio in Wyoming, which is what we call the R3. We believe this may be one of the leading research conferences focused on cold-a-products research, rare earth element exploration, artificial intelligence, and critical minerals. We hold it out and shared in Wyoming while the real shared in rodeo goes on every night of that week.

Unknown Executive: While China's seaborne imports increased 22% year over year.

Jason Fannin: Prices have fallen, however, due to Asian end-users' inability to profitably pay higher prices for raw material feedstocks like cocaine. As of August 6th, the U.S. East Coast Index values were $208 per ton for low vols, $203 per ton for highball A, and $181 per ton for highball B. All Australian premium lowball sits at about $215 per ton.

Unknown Executive: Prices have fallen, however, due to Asian end-users' inability to profitably pay higher prices for raw material feedstocks like coke and coal.

Speaker Change: As of August 6th, the U.S. East Coast Index values were $208 per ton for low vol.

Speaker Change: $203 per ton for highball A and $181 per ton for highball B.

Randall Atkins: Last month was our fourth annual R3 conference. We hosted it again in partnership with an Affiliate of the International Energy Agency in Paris. It brought together several congressional leaders in the energy space, leadership from the Department of Energy, as well as leading scientists from around the world. We even had the FBI speak on counterintelligence in the carbon research space. Frankly, the R3 gives us an opportunity to keep it leading edge in the newest technologies in development of cold-based products, as well as rare earths. And we hope to be discussing some new developments on all these fronts later this year.

Speaker Change: All Australian premium lowball sits at about $215 per ton.

Jason Fannin: As prices in Asia have declined, U.S. relativities compared to Australian premium low vol have rebounded back to historical averages, suggesting we are nearing a near-term price fall for U.S. coking coal. We also believe current U.S. index pricing netbacks are below fully loaded costs for many marginal U.S. coke and coal operations today. Clearly, that situation cannot continue.

Unknown Executive: As prices in Asia have declined, U.S. relativities compared to Australian premium low vol have rebounded back to historical averages. Production growth in these less desirable quality buckets ensures sustained future demand for Ramaco's higher quality, low ash, and low sulfur highball from Elk. Looking ahead, we are very comfortable with our current order book and forward production expectations.

Unknown Executive: As prices in Asia have declined, U.S. relativities compared to Australian premium low vol have rebounded back to historical averages.

Unknown Executive: This suggests we are nearing a near-term price floor for U.S. coking coals.

Unknown Executive: We also believe current U.S. index pricing netbacks are below fully loaded costs for many marginal U.S. coke and coal operations today.

Jason Fannin: The U.S. low vol market is currently much tighter than index pricing has suggested. We see demand continuing to outpace supply in the U.S. low vol and mid vol segments, where Ramaco is positioned for continued growth. As we continue to ramp production at Burwindon and Maybrook, in the high-vol segment, as mentioned earlier, most of the incremental growth from our peers in the US has been either higher ash or higher sulfur or both.

Unknown Executive: Clearly, that situation cannot continue.

Unknown Executive: The U.S. low vol market is currently much tighter than index pricing is suggesting.

Unknown Executive: We see demand continuing to outpace supply in the U.S. low vol and mid vol segments, where Ramaco is positioned for continued growth, as we continue to ramp production at Burwind and at Maven.

Randall Atkins: So in summary, we had a much stronger second quarter, both operationally and financially, despite dealing with a much lower pricing environment. We know we can't control price, but we try to control our production and cash costs. And if the markets continue to remain generally weak, we'll try and continue to operate with a combination of aggression, agility, and prudence. In the second half, we'll look forward to executing on our twin fronts of growing our met coal production and reducing our mine costs, and we'll also continue to advance the commercial development of our brick mines.

Unknown Executive: In the high vol segment, as mentioned earlier, most of the incremental growth from our peers in the U.S. has been either higher ash or higher sulfur or both.

Jason Fannin: Production growth in these less desirable quality buckets ensures sustained future demand for Ramaco's higher quality, low-ash, and low-sulfur highball from Elkhart. Looking ahead, we are very comfortable with our current order book and forward production expectations. We will be very selective where we place our few remaining 2024 volumes in order to achieve the highest netbacks possible. We look forward to the coming domestic contract negotiations, as well as the opportunities in 2025 to be selective in placing incremental volumes to those customers who see value in our low ash and low sulfur supply. I'd now like to return the call to the operator for the Q&A portion of the call.

Unknown Executive: Production growth in these less desirable quality buckets ensures sustained future demand for Ramaco's higher quality low-ash and low-sulfur highball from Elk Creek.

Unknown Executive: Looking ahead, we are very comfortable with our current order book and forward production expectations.

Unknown Executive: We will be very selective where we place our few remaining 2024 volumes in order to achieve the highest netbacks possible.

Unknown Executive: We look forward to the coming domestic contract negotiations, as well as the opportunities in 2025 to be selective in placing incremental volumes to those customers who see value in our low-ash and low-sulfur supply.

Jeremy Sussman: So with that, I'd like to turn the floor over to the rest of our team to discuss finance as operations on markets, and we'll start with Jeremy to give us a rundown on financial metrics. Thank you, Randy. As you noted, second quarter, two thousand and twenty-four results were meaningfully better than the first quarter, twenty-four results, both operationally and financially. This was despite US indices declining roughly 15 percent sequentially. To get into specifics, Q2 adjusted EBITDA was $29 million compared to $24 million in Q1.

Speaker Change: I'd now like to return the call to the operator for the Q&A portion of the call. Operator?

Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. The first question comes from Nathan Martin with Benchmark Company. Please go ahead.

Speaker Change: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys.

Speaker Change: If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.

Jeremy Sussman: The second quarter net income of $5.5 million was more than double first quarter levels, which amounted to class a deluded EPS of $0.8 super-Q2. The primary reason for the increase in both EBITDA and EPS with the $10 per quarter over quarter improvement in cash costs to $108 per tonne on the back of stronger products. 2nd quarter production was a record 901,000 tons, up 7% compared with the first quarter due to a combination of better productivity, geology and labor availability.

Speaker Change: The first question comes from Nathan Martin with Benchmark Company. Please go ahead.

Nathan Martin: Thanks, operator. Good morning, guys. Congratulations on the progress during the quarter, especially on the cost side. Thank you, man.

Speaker Change: Thanks, operator. Good morning, guys. Congrats on the progress during the quarter, especially on the cost side.

Nathan Martin: I mean, first, maybe just, That's something I noticed in the presentation, slide 9, where you guys break out your kind of production outlook. In the medium-term production outlook, it looks like maybe an improvement, regarding your expectation for low-vol production versus last quarter. Can we get additional details on that update?

Ben: Thank you, Ben.

Speaker Change: First, maybe just something I noticed in the presentation, slide nine, where you guys break out your kind of production outlook. In the medium term production outlook, it looks like maybe an improvement.

Jeremy Sussman: Quarterly sales volume of 915,000 tons was down slightly from 929,000 tons in Q1. The decline was due to modest transportation constraints in June which have largely since been alleviated. The realized price of $143 per ton during Q2 was down 8% from $155 per ton in the first quarter reflecting both weaker market conditions and lower index pricing. I'd point out that our decline in realized pricing was less traumatic than the decline in indices thanks to our strong domestic book of fixed price business.

Speaker Change: regarding your expectation for low vol production versus last quarter. Can we get an additional details on that update?

Jeremy Sussman: Yeah, Nate, it's Jeremy. I'll start and then maybe turn it to Chris.

Jeremy Sussman: Yeah, Nate, it's Jeremy. I'll start and then maybe turn it to Chris.

Jeremy Sussman: Yeah, Nate, it's Jeremy. I'll start and then maybe turn it to Chris.

Nate: I think, as Jason noted, obviously, in the

Nate: Current environment, you know, we we think low ball is extremely tight. So what we've done is we've effectively

Chris: I'll put the Maven Underground expansion into our kind of official medium-term outlook. So, you know, at the end of the day, in addition to what we're producing now, you know, that's over a million tons of underground production, which effectively takes us to...

Jeremy Sussman: Looking ahead, we anticipate 3rd quarter shipments of 900,000 to 1.05 million tons. We also expect sales will increase in Q4 and it will exit the year above a 5 million ton per annum sales run rate. As Randy noted, we anticipate adding almost a million tons of annualized production compared to the first half of 2024 run rates before year end. Overall, mine costs in the third quarter are expected to remain in the same range as compared to the second quarter.

Jeremy Sussman: So, you know, I think, as Jason noted, obviously, you know, in the current environment, we think low vol is extremely tight. So what we've done is we've effectively put the Maven Underground expansion into our, into our kind of official medium-term outlook. So, you know, at the end of the day, in addition to what we're producing now, that's over a million tons of underground production, which effectively takes us to more than 50-50 in terms of low vol, mid vol versus high vol. And also that

Jeremy Sussman: So, you know, I think, as Jason noted, obviously, you know, in the current environment, we think low vol is extremely tight. So what we've done is we've effectively put the Maven Underground expansion into our, into our kind of official medium-term outlook. So, you know, at the end of the day, in addition to what we're producing now, that's over a million tons of underground production, which effectively takes us to more than 50-50 in terms of low vol, mid vol versus high vol. And also that

Speaker Change: You know, more than 50-50 in terms of low ball, mid ball versus high ball. And also that includes the fourth section of Berwyn. Correct. That we would be putting on, yes.

Jeremy Sussman: And also, that includes the fourth section of the Burwin credit that we would be putting on.

Jeremy Sussman: When, when would that remind you guys that maybe an underground expansion will likely get moving forward, I guess?

unknown: When, when would that remind me guys that maybe an underground expansion will likely get moving forward? I guess, yeah, we

Speaker Change: When would that, remind me guys, that Maven Underground expansion likely get moving forward, I guess? Yeah, we've got the optionality to frankly start that next year. I mean, the main gating issue for that was the prep plant. And of course, we moved forward sort of opportunistically.

Jeremy Sussman: We've got the optionality to, frankly, start that next year. I mean, the main gating issue for that was the prep plant. And, of course, we moved forward sort of opportunistically last summer, or this summer, with the purchase of a.., of a sort of idled prep plant that we moved up to Mabin and have installed it and frankly as I mentioned it will hopefully start operations sometime late fall, so that's really what gated us and then of course we'll look at our budgeting for next year and move accordingly but we can certainly start putting in sort of section by section, it will ultimately probably be a four section mile.

Jeremy Sussman: Due to the additional tonnage coming online, we will expect to exit the year at or below the $100 per ton cash cost range. We are maintaining all full year 2024 guidance with the exception of production and sales. In the current pricing environment, production and sales guidance is being reduced by 200,000 tons at the midpoint to between 3.8 to 4.2 million tons and 4.0 to 4.4 million tons respectively. Specifically, we are proactively reducing higher cost production at each of our complexes with the exception of Maven.

Speaker Change: last summer, or this summer, with the purchase of a

Speaker Change: of a sort of idled prep plant that we moved up to Mabin and have installed it. And frankly, as I mentioned, it will hopefully start operations sometime late fall.

Jeremy Sussman: Importantly, this move should have minimal impact to overall earnings in the current pricing environment. I'll make two other brief comments regarding 2024 guidance. First, you may notice that our committed tonnage level fell off a couple hundred thousand tons compared to our Q1 earnings release. This is due to proactively working with our customers and agreeing to defer some business into early 2025. Second, in the current environment, our book tax rate will likely be towards the high end of the 20 to 25 percent range, though our cash taxes should be minimal.

Speaker Change: That's really what gated us, and then of course we'll look at our budgeting for next year and move accordingly, but we can certainly start putting in sort of section by section. It'll ultimately probably be a four-section mine.

Jeremy Sussman: So, ultimately, it may be as much as a million and a half tons, but obviously, market conditions will dictate that.

Speaker Change: So ultimately, it may be as much as a million and a half tons, but obviously market conditions will dictate that.

Jeremy Sussman: Thanks, guys. And maybe just stick with the Maven prep plan for a second. There's something else I noticed. You guys broke out in your cash flow statement kind of a separate line item for that prep plan expense. And then I also saw a footnote in your CapEx guidance that said it excludes $3 million for the purchase of that prep plan. So I just want to make sure how we should think about an all-in CapEx number for the four years for 24. Thank you.

Speaker Change: Got it, okay. Thanks guys, and maybe just.

Speaker Change: Sticking with the Maven Prep Clinic for a second, there's something else I noticed.

Speaker Change: You guys broke out in your cash flow statement kind of a separate line item for that prep plant expense and then I also saw footnotes

Jeremy Sussman: Moving to the balance sheet, our liquidity on June 30th of $71 million was up 14 percent year on year. Furthermore, in July, we paid off the remaining $7 million in acquisition debt related to the $30 million purchase of Maven coal LLC. We've now retired all $75 million of acquisition debt since 2022 related to both our Maven and Ramico coal acquisitions. I'm proud to say that as of today, the only remaining material term debt is the $35 million, 9 percent unsecured notes due in 2026, and any amount drawn on the revolver that are used for working capital purposes. As of Q2, our net debt to trailing 12-month EBITDA was less than 0.4 times, which illustrates our continued commitment to maintaining a conservative balance.

Speaker Change: And your CapEx guidance, it says it excludes $3 million for the purchase of that prep plant. So I just want to make sure how we should think about, you know, all in CapEx number for the four years of 24.

Jeremy Sussman: Yeah, hey Nate, it's Jeremy. So very good question. So we We we did break that out so that you all could kind of for transparency. See what we're spending on Maven Three million dollars within the cash flow statement is for the purchase price. So when you look at our full year guidance of 53 to 63 million it effectively excludes that that three million dollars for the purchase price But it includes the the rest of the spend on on Maven a little bit more than half of which has already taken place So if you kind of think about our full year capex outlook You know call it at the 60 million dollar range excluding the 3 million or so for the purchase price About 40 million of that is maintenance about sort of 20 million of that is growth So obviously, you know when you look at the first half spend of call it 40 less the 3 million so 37 million You know frankly that implies a lot lower spend in the second half and the reality is that's because when you look at our three or four major growth projects this year The vast majority of that spend has already taken place So I do think that's something you know You guys can look forward to in the second half of the year, especially in the fourth quarter

Jeremy Sussman: yes hey pain ated it's jeremy so very good question so we we did break that out so that joel can kind of for transparency see what we're spending on maybe and

Speaker Change: $3 million within the cash flow statement is for the purchase price, so when you look at our full year guidance of $53 to $63 million, it effectively excludes that $3 million for the purchase price, but it includes...

Speaker Change: The rest of the spend on MABE and a little bit more than half of which has already taken place.

Jeremy Sussman: Chief. In addition, the board has maintained our quarterly class A common stock cash dividend of 0.1375 per share for the third quarter of 2024. The board also declared the quarterly class B cash dividend of 0.2246 per share, which of course is driven mostly by our sales volume and to a lesser extent our realize price.

Speaker Change: If you kind of think about our full year CapEx outlook.

Speaker Change: Call it at the $60 million range, excluding the $3 million or so for the purchase price.

Speaker Change: About $40 million of that is maintenance, about $20 million of that is growth.

Speaker Change: When you look at the first half spend of, I'll call it 40, less the 3 million, so 37 million, frankly that implies a lot lower spend in the second half, and the reality is that's because when you look at our 3 or 4 major growth projects this year,

Christopher Blanchard: With that said, I would now like to turn the call over to our EVP for mind planning and development, Chris Blanchard. Thank you, Jeremy, and to everyone who joined us this morning. As Randy summarized, we had a significant turnaround in the operations during the second quarter. The bulk of the improvement was at our underground operations, which frankly have lagged our expectations the last several months. Overall, we saw improvements of slightly over 5 percent in clean tons per foot quarter over quarter underground as our eagle mine and one of our stone coal sections managed to mine through some lower coal conditions and returned to more normalized mining conditions.

Speaker Change: The vast majority of that spend has already taken place, so I do think that's something you guys can look forward to in the second half of the year, especially in the fourth quarter.

unknown: Yeah, okay. Perfect, Jeremy.

Jeremy Sussman: Okay, perfect, Jeremy. That helps. And I saw that mentioned in your release, too, that hopefully things come back down a little bit in the fourth quarter. I guess, speaking with CapEx, but shifting over to Brookline, I saw the release, I guess, two days ago, bringing on a couple of new partners. What kind of context do you guys expect to be involved in the design and build of that refining and processing plant that you're going to be doing for? Will all that spending be your responsibility? I think you mentioned the target start is the middle of next year. How long could that possibly take to build?

Speaker Change: Okay, perfect, Jeremy, that helps. I saw that mentioned in your release, too, that hopefully things come back down a little bit in the fourth quarter. I guess, speaking with CapEx, but shifting over to the Brookline,

unknown: That helps. And I saw that mentioned in your release, too, that hopefully things come back down a little bit in the fourth quarter. I guess, speaking with CapEx, but shifting over to Brookline,

Speaker Change: You know, obviously saw the release, I guess, two days ago, bringing on a couple new partners.

Speaker Change: What kind of CAPEX do you guys expect to be involved in the design and build of that refining and processing plant that you're going to be doing on the floor? Will all that spending be your responsibility?

Christopher Blanchard: We've also seen modest improvements in the labor market in the southern West Virginia area. This allowed us to start the third section of our stone coal mine laid in the quarter and also helped to fill a number of vacancies at all of the other mines. This hiring and stabilization of the workforce directly led to achieving 80 more production shifts during the second quarter compared to the first. The combination of all of these positive factors culminated in overall June cash costs below the $100 per ton threshold for the first time in 2024.

Speaker Change: I think you mentioned the target start is the middle of next year. You know, how long could that possibly take to build as well?

Randall Atkins: Yeah, I mean, our spend, frankly, out at the Berk Mine has been really, very modest. I think we've spent since inception just a couple of million bucks out there to really get everything moved into position. And as far as the design build, you know, we're, as I said, going through testing and, you know, essentially trying to get the various variables nailed down which will inform essentially how we would design the processing facility to deal with the specific minerals involved and their chemistry.

Speaker Change: Yeah, I mean, our spend, frankly, out at the Berk Mine has been really very modest. I think we've spent since inception just a couple million bucks out there to really get everything moved into position.

Christopher Blanchard: Regarding the labor market, it remains very tight. There are insufficient experienced coal miners available in southern West Virginia and southwest Virginia to fill all the open positions to both our mines and those of our competitors. Although the turnover rates have moderated throughout the year, they are above the levels we want and higher than our historical averages. Hiring, training, and retaining highly skilled miners remains challenging and is a daily focus of the operations.

Speaker Change: variables nailed down which will inform essentially how we would design the processing facility to deal with the specific minerals involved in their chemistry.

Randall Atkins: I think in terms of, you know, a spend for the planning and the design of that, I would think of it in terms of several hundred thousand dollars. That's about where we're going to be. And in terms of what the cost for the overall demonstration facility will be, I really don't want to get over our skis now in terms of giving you a number. We'll certainly provide it as soon as we've got, you know, the design metrics around it so we can give you really an informed concept.

Speaker Change: I think in terms of, you know, a spend for the planning, for the design of that, I would think of it in terms of several hundred thousand dollars.

Speaker Change: That's about where we're going to be. And in terms of what the cost for the overall demonstration facility will be, I really don't want to get over our skis now in terms of giving you a number. We'll certainly provide it as soon as we've got it.

Christopher Blanchard: Moving into the third quarter, following the traditional vacation period around the 4th of July, the June momentum has continued. Are there obviously less available shifts to work in July due to the idle periods? We have seen continued modest improvements in average coal heights and feet for shift and the other operational metrics for the legacy mines and plants to start the third quarter. We're guiding the flatish costs in quarter three versus quarter two due to the vacation period and the ramp up period at our stone coal three surface mine.

Speaker Change: You know, the design metrics around it so we can give you really an informed...

Randall Atkins: But remember, the demonstration facility is kind of like an advanced pilot. You know, it's not a pure pilot plan in the sense that we intend to start selling product from the demonstration. So this will be a revenue-producing plant as soon as we open it. And we'll expect to probably start doing construction, certainly site work on that, sometime around the middle part of next year once the weather permits out in Wyoming.

Speaker Change: But remember, the demonstration facility is kind of like an advanced pilot. It's not a pure pilot plant in the sense that we intend to, frankly, start selling products from the demonstration facility.

Speaker Change: So this will be a revenue-producing plant as soon as we open it. And we'll expect to probably start doing construction, certainly site work on that, sometime around the middle part of next year once the weather permits out in Wyoming. And in terms of the timing, you know,

Christopher Blanchard: I'm sorry, our ram three surface mine and the third section at our stone coal mine. Three of our four discussed growth and optimization projects made strides in the second quarter and are now ahead of schedule. At Elk Creek, the third section at stone coal started in May ahead of projections and is ramping according to our expectations. We expect this section to be fully staffed by the end of the summer and due to its projected geology to have advantage cash costs compared to the other operating sections that Elk Creek. This section should add additional 300,000 annual clean tons and what we expect will be cost for way $100.

Randall Atkins: And in terms of the timing, you know, I don't know, probably earmarked nine months to a year of normal construction, assuming no weather-related issues out there, and that's kind of the time frame. So it's probably a 25 start and a 26 completion.

Speaker Change: Probably earmarked nine months to a year of normal construction, assuming no weather-related issues out there, and that's kind of the time frame. So it's probably a 25 start and a 26 completion.

Nathan Martin: Very helpful, Randy. Thanks for those thoughts. Then, maybe just one more.

unknown: Very helpful, Randy. Thanks for those thoughts. Then maybe just one more.

Nathan Martin: I appreciate you guys don't really want to talk specifics on the domestic contracting season for 2025, as we're still early on there. But any initial thoughts, at least directionally, on what you think maybe demand for Metcol could look like for domestic steel producers next year versus this year? And I also noticed that, Jeremy, maybe this is what you referenced in your prepared remarks, that your domestic tonnage committed in price for 2024 has crept down again to, I think, 1.3 million tons now. With some of that, what was getting deferred into 2025?

Christopher Blanchard: Corseton. Similarly, our Ram 3 surface mine started in June. More importantly, though, we have been able to start the Ram number 3, Howell Minor, spread almost two months earlier than we projected with first cold cut in the last week. We're particularly excited about Ram 3 as it projects have better geology and well-or-racio than our Ram number 1 surface mine. Once the Howell Minor spread is fully operational, the production rate from the combined surface mine will be approximately 350,000 clean tones per year with produced cold cost at or near $90 per ton.

Speaker Change: I appreciate you guys don't really want to talk specifics on the domestic contract and season for 25 as we're still.

Speaker Change: early on there, but...

Speaker Change: Any initial thoughts, at least directionally, on what you think maybe demand for Metcoal could look like for domestic steel producers next year versus this year? And I also noticed that...

unknown: Jeremy, maybe this is what you referenced in your prepared remarks, that your domestic tonnage committed in price for 24 has crept down again to, I think, 1.3 million tons now. With some of that, what was getting deferred into 25?

Randall Atkins: Yeah Nate, this is Randy.

unknown: Yeah.

unknown: Nate, this is Randy. I'm going to just tee up one brief comment and then turn it over to Jason. But, you know, the demand side, we haven't really seen a real fall off on the demand.

Randall Atkins: I'm going to just make one brief comment and then turn it over to Jason. But, you know, the demand side, we haven't really seen a real fall in demand. You know, the U.S. steel producers are still enjoying pretty good margins despite the fact that, you know, prices are down. So the demand side has not really been the problem.

Christopher Blanchard: Finally, the labor market for highly qualified surface miners has not been as challenging as on the underground side. So the ramp up period for this mine will be much shorter and the cash cost will be normalized before the end of the third quarter.

Speaker Change: You know, the U.S. steel producers are still enjoying pretty good margins, despite the fact that, you know, prices are down.

Randall Atkins: The problem has been, as I mentioned in my remarks, that we've really seen this sort of flood of Chinese steel hitting virtually every market. And, you know, that has impacted steel companies' ability to, frankly, raise their prices. And when you've got, you know, low steel prices, you're going to have, unfortunately, low coking coal prices. So that's – it's really more of a peculiar supply-derived situation based on the, you know, Chinese peculiarities, if you call them that. But, Jason, pick it up and refine it on that comment. Sure. Yeah, thanks, Randy. And, yeah, Nate.

Speaker Change: So, the demand side has not really been the problem. The problem has been, as I mentioned in my remarks, that we've really seen this sort of flood of Chinese steel hitting virtually every market, and, you know, that has impacted, you know, steel companies' ability to, frankly, raise their prices.

Christopher Blanchard: On the low of all side, the construction of the new Maven plant as well underway, algae of technical work and foundations were completed during the second quarter. The first few pieces of steel were set in the last days of June as well. Plant reirection is in full swing. We are now projecting completion of the plant early in the fourth quarter of the year rather than in the last days of the year with the attendant cost savings that I'll further discuss.

Speaker Change: And when you've got, you know, low steel prices, you're going to have, unfortunately, low coking coal prices. So that's, it's really more of a, it's really more of a peculiar supply-derived situation based on the, you know, the Chinese.

Christopher Blanchard: In the intermediate term at Maven, having the plant on site will open up the possibilities of additional underground low-vol production in our high-quality, soil, faculty, fire creek and Pocahontas reserves at Maven. The more immediate fundamental benefit is the raw cold transportation cost reduction. Our Maven surface mine and the Iowa mine is currently amongst Ramacos lowest cash costs of production before the burden of hauling this coal to our burlin facilities for washing and shipment.

Jason: Peculiarities if you call it that but Jason pick it up and refine on that comment. Sure. Thanks Randy and Nate

Jason Fannin: Yeah, obviously, we're in ongoing discussions with some customers now, so we won't get into specifics. But yeah, I mean, as Randy mentioned, certainly, you know, hot rolled spot prices are down globally. But still, in the US, they're still the highest in the world, and the margins here are still, you know, outsized compared to our Seabourn customers. Service centers, obviously, at low inventory points at a low point in the market, which would seem odd.

Speaker Change: Yeah, obviously, we're in ongoing discussions with some customers now, so we won't get into specifics.

unknown: Yeah, I mean, as Randy mentioned, certainly, you know, hot rolled spot prices are down globally. Still in the US, they're still the highest in the world, the margins here are still, you know, outsized compared to

Speaker Change: our Seabourn customers, service centers obviously at low inventory points, at a low point in the market, which would seem odd.

Christopher Blanchard: Depending on the actual recoveries that we see for the mine, the raw cold transport costs can make up 30 to 40 percent of their total cash costs and up to or exceeding $40 per clean ton of their final produced costs. At the start of date of the Maven plant has become closer and becomes more certain we will start stockpiling coal on the Maven property and not transporting it to burlin so that we can claw some of these trucking savings back even on tons produced prior to the plant's completion.

Jason Fannin: You know, as they come back in, those spot steel prices are going to move back up. And frankly, you know, Randy referenced the Flood of Chinese Steel Exports, which we probably haven't seen this level in almost 10 years. But you know, protectionism is working, it's working here, it's working in other areas, and they could probably see more of that. But I think one key aspect, you know, in terms of you asking about cooking coal demand here in North America next year versus this year, you're not seeing anybody slow down, you know, even given where hot rolls are.

Speaker Change: You know, as they come back in, those spot steel prices are going to move back up.

unknown: And frankly, you know, Randy referenced the...

Speaker Change: The flood of Chinese steel exports, which we probably haven't seen this level in almost 10 years. But you know, protectionism is working, it's working here, it's working in other areas, and they could probably see more of that. But I think one key aspect, you know, in terms of you, you know, you asked about cooking coal demand.

Speaker Change: Here in North America, an Extra Versus.

Speaker Change: you know, this year, you're not seeing anybody slow down.

Christopher Blanchard: Our final expansion project is at the Burland P4 mine. Ventilation and infrastructure work is underway underground and on the surface in advance of starting the third operating supersection. This work will continue throughout the third quarter with an anticipated start-up and ramp period for the section in the fourth quarter. Our projections have this section providing approximately 300,000 clean tons per year of low cost low-vol cold. The start-up of this section and the incremental raw cold will be processed will coincide with the completion of the volume of cold main truck into the burlin complex.

Jason Fannin: And I think that says a lot. And then, you know, in terms of the tonnage you mentioned there that Jeremy had commented on earlier, we had one North American customer that had an extended force majeure status. And rather than lose those volumes, we worked with them and deferred some into 2025, which worked out for the best for both of us and our customers, which is that committed change.

Speaker Change: You know, even given where Hot Rolls is at, and I think that says a lot.

unknown: And then.

Speaker Change: In terms of the tonnage you mentioned there that Jeremy had commented on earlier, we had one North American customer that has an extended force majeure status.

Speaker Change: And rather than lose those volumes, we worked with them and deferred some into 2025, which worked out for the best for both of us, us and our customer, which is that committed change you see there.

Unknown Executive: Very, very helpful guys. I appreciate all the comments and the time, and best of luck in the second half.

unknown: Very, very helpful guys. I appreciate all the comments and the time, and best of luck in the second half.

unknown: Yeah, very, very helpful guys. I appreciate all the comments and the time and best of luck in the second half.

Lucas Pipes: The next question is from Lucas Pipes with B. Riley Securities. Please go ahead.

Dave: Thanks Dave.

Christopher Blanchard: Additionally, during 2025, we expect to further ramp the burlin mine to its ultimate capacity of four operating supercars, for sections. Finally, while our overall cash costs have declined significantly, we are extremely focused on a couple of mines and a couple of sections where the cash costs remain elevated and are not currently compatible with market conditions. All options that these sections are on the table, including redeploying equipment and manpower to other mines which have better geology if we do not see continued improvement.

unknown: The next question is from Lucas Pipes with B. Riley Securities. Please go ahead.

Lucas Pipes: Thank you very much, Operator. Good morning, everyone.

Speaker Change: Thank you very much, Operator. Good morning, everyone.

Speaker Change: Good job on the cost side.

Lucas Pipes: Good job on the cost side. And I wanted to ask about the cadence for the second half, if you could maybe provide a little bit of color for Q3 and Q4. Q3: I always remember that kind of minor vacations can have an impact.

Speaker Change: I wanted to ask on the cadence for the second half, if you could maybe provide a little bit of color for Q3 and Q4.

Speaker Change: Q3, I always remember kind of minor vacations can have an impact. So I wondered if you could maybe speak to that. And Chris, you mentioned in your prepared remarks that some minds have an unacceptable level on the cost side today.

Lucas Pipes: So I wondered if you could maybe speak to that. And Chris, you mentioned in your prepared remarks that some lines have an unacceptable level on the cost side today. What sort of tonnage are we talking about? Is that another 200,000 tons? Is it more?

Jason Fannin: We will be aggressively agile at the operations level to respond to the financial and market conditions as they exist. For some additional discussion and detail on the markets and sales position, I'd now like to turn the call over to our chief commercial officer Jason Fannin. Jason, thanks Chris and good morning everyone. I will share what we are seeing in the markets and our current and forward sales outlook. Although global cooking cold markets have weakened from a pricing standpoint, volumes are still well supported.

Speaker Change: What sort of tonnage are we talking about? Is that another 200,000 tons? Is it more? And how quickly could you redeploy manpower, equipment, etc., if you decided to move things around? Thank you very much.

Christopher Blanchard: And how quickly could you redeploy manpower, equipment, et cetera, if you decided to move things around? Thank you very much.

Unknown Executive: All right, look, I'll try and tackle the first one first on the cadence of the cost. And right now, in the second half, we're sort of expecting cash costs to be roughly the same in Q3 versus Q4, as we still have Ram 3 and Stone Coal 3 in the ramp process. Low 100s perhaps, but then Q4 pushing to 100 or a little bit below as those mines are fully operational, and we also get the MAVEN cost savings. Coal mining can change day-to-day, so we are monitoring them extremely closely, and we have

Christopher Blanchard: All right, Lucas, I'll try and tackle the first one first on the cadence of the cost. And right now, in the second half, we're sort of expecting cash costs to be roughly the same in Q3 versus Q4, as we still have Ram 3 and Stone Coal 3 in the ramp process. So, the low 100s perhaps, but then Q4 pushing to 100 or a little bit below as those mines are fully operational, and we also get the MAVEN cost savings.

Unknown Executive: All right, look, I'll try and tackle the first one first a little bit on the cadence of the cost and right now

Jason Fannin: Let me start with an overall global macro recap of the very small areas markets where we sell. We are continuing to see the usual robust inquiries from the Pacific base and for U.S, cooking coals. Atlantic demand remains muted, though we are now starting to see positive momentum for spot deliveries in the region. Integrated meals and cook batteries in the U.S, continue to run strong despite a decline in finished deal prices. We think this is due to their continued positive profit margins as well as cost advantages for blast furnaces relative to electric arc furnaces.

Unknown Executive: In the second half, we're sort of expecting cash costs to be roughly the same in Q3 versus Q4, as we still have Ram 3 and Stone Coal 3 in the ramp process.

Unknown Executive: So.

Unknown Executive: Low 100s perhaps, but then Q4 pushing to 100 or a little bit below as those mines are fully operational and we also get the MAVEN cost savings.

Christopher Blanchard: So at the low end of the guidance, we could see it move down significantly on the cost side, but that's sort of where we're guiding to on the cost. And then as far as the number of tons that are sort of unacceptable, it's probably in the 200,000 to 300,000 annual ton range, and those could be redeployed relatively quickly, within the third quarter, I would say. So, I mean, we'll continue to monitor it.

Jason Fannin: These cost advantages are likely to grow over time as increased power demand and higher electricity prices heat into E.A.F, profitability. We therefore believe demand for U.S, cooking cold is likely to remain strong for the foreseeable future.

Unknown Executive: So at the low end of the guidance, we could see it move down significantly on the cost side, but that's sort of where we're guiding to on the costs.

Speaker Change: And then as far as the number of tons that are sort of unacceptable, it's probably in the 200,000 to 300,000 annual ton range.

Jason Fannin: We also continue to expect a moderate rebound in Europe in the back half of 24 and more so in 2025. Western Europe is clearly a mature market continuing with carbon pricing and the relentless pursuit of decarbonization. By this we are intrigued by the situation in Eastern Europe with a potential post-war rebuild scenario and resultant increase in raw materials demand. The situation Brazil also looks promising as steel import tariffs will provide the impetus for higher steel production and follow on increases in cooking cold demand in the coming months.

Unknown Executive: And those could be redeployed.

Speaker Change: Relatively quickly, within the third quarter, I would say.

Christopher Blanchard: We have had some improvement, and that's what we saw in June costs and continuing into July. Coal mining can change day to day, so we are monitoring them extremely closely, and we have places that we can move to to get our costs continuing to move lower as they need to.

Unknown Executive: We'll continue to monitor. We have had some improvement and that's what we saw in June costs and continuing into July .

Unknown Executive: Coal mining can change day to day, so we are monitoring them extremely closely and we have a couple of, you know, places that we can move to to get our costs continuing to move lower as they need to.

Jason Fannin: In the Pacific we are likely to see a seasonal rebound in demand from Indian China in the back half of the year. The outlook for Indian steel production growth continues to look very favorable and we anticipate long-term seaborn cooking cold demand to increase materially as a result.

Christopher Blanchard: That's very helpful. Chris, if you kind of expanded this across the industry, how many tons would you say are in that bucket in the US, and maybe have a global view as well?

Speaker Change: That's very helpful. Chris, if you kind of expand this across the industry, how many tons would you say are in that bucket in the U.S. and maybe have a global view as well?

Jason Fannin: From a supply standpoint we were reminded how fragile supply chains really are with the recent fires at Grossner and Longview. There tend to be no upside surprises when it comes to supply and we view the long-term supply versus demand backdrop as bullish. As Randy mentioned we have a small open position remaining for 2024 and amounting to around only 250,000 times. Given the near-term weak pricing environment we will opportunistically time and place these unsold volumes in the market to align with the expected seasonal price correction.

Christopher Blanchard: I would guess in the U.S. If you exclude the big longwall operators, it's probably 25% of the remaining production is in that questionable and unsustainable range at these prices. Globally, that's probably a little out of my ski tip to opine on that, but maybe Jeremy or Jason has an opinion.

unknown: If you exclude the big longwall operators, it's probably 25% of the remaining production is in that questionable and unsustainable range at these prices. Globally, it's probably a little out of my ski tips to opine on that, but maybe Jeremy or Jason has an opinion.

Speaker Change: I would guess in the U.S. it's...

Speaker Change: You know, if you exclude the big longwall operators, it's probably 25% of the remaining production is in that.

Speaker Change: You know, questionable and unsustainable range at these prices globally, that's probably a little out of my ski tips to opine on that, but maybe Jeremy or Jason has an opinion.

Jason Fannin: I mean, my quick comment on the global side, Lucas and Jason is, you can always kind of look at the, you know, the forward cost curve and see where that starts to trail off at. And I think that that tends to suggest where most folks think the, you know, that marginal time lies. I don't know where it sits, actually, 26, 27 at this point since we're kind of focused on 25 right now, but I think that's always a good indicator, and, you know, obviously folks that are above that are on the edge there.

Jason Fannin: I mean, my quick comment on the global side, Lucas and Jason is, you can always kind of look at the, you know, the forward cost curve and see where that starts to trail off at. And I think that that tends to suggest where most folks think the, you know, that marginal time lies. I don't know where it sits, actually, 26, 27 at this point since we're kind of focused on 25 right now, but I think that's always a good indicator, and, you know, obviously folks that are above that are on the edge there.

Lucas: I mean, my quick comment on the global side, Lucas is Jason is, I mean, you can always kind of look at the, you know, the forward cost curve and see where that starts to trail off at. And I think that that tends to suggest where most folks think the, you know, that marginal time lays.

Jason Fannin: Looking ahead to 2025 as we begin the 2025 domestic sales negotiations. Our already committed volume at 1.25 million tons puts us in a unique sales position compared to previous years when we were fully uncommitted for the next year at this point in time. Ramaco's sales book is now well-positioned with specific long-term partners who place incremental premium on Ramaco's position as one of the largest producers of low ash, low sulfur cooking coals in the U.S, across all grades, low-ball, mid-ball, and high-ball.

Jason Fannin: I don't know where it sits, actually, 26, 27 at this point, since we're kind of focused on 25 right now. But I think that's always a good indicator. And, you know, obviously folks that are above that are on the edge there.

Randall Atkins: And I think, you know, the good and the bad news. As we see some of these producers have to contract, needless to say, that opens up some opportunities for us on the labor side because, you know, where we operate down in the southern Appalachian area, it's always a tight labor market. And to the extent that we see sort of breaks in the action from some of our peers, we are delighted to pick up new people and deploy them because we've got situations where, frankly, our production has been impacted and hindered by an inability to obtain full labor. So it's kind of a double-edged sword.

Jason Fannin: And I think, you know,

Speaker Change: The good and the bad news, you know, is we see some of these producers have to contract.

Jason Fannin: As production in the U.S, cooking coal industry has increased in recent years, a lot of the incremental and new volumes have been on the higher end in terms of ash content and perhaps more importantly sulfur content.

Jason Fannin: Needless to say, that opens up some opportunities for us on the labor side, because where we operate down in the southern Appalachian area is always a tight labor market, and to the extent that we see sort of breaks in the action from some of our peers.

Jason Fannin: Turning to the current pricing environment, Mellurgical Index values have continued to soften as seasonal influences impact markets at this time of year. There has also been a deterioration still make a profit margins as global steel prices have fallen, mostly due to increased exports of Chinese steel. Meanwhile, Mellurgical coal demand remains robust from an annual global seaborn volume standpoint. Import demand from India and China continue to grow on an annual basis. Indian first half imports increased 17% year-over-year, while China's seaborn imports increased 22% year-over-year. Prices have fallen, however, due to Asian end users' inability to profitably pay higher prices for raw material feedstocks like cooking coal.

Speaker Change: We are delighted to pick up new people and deploy them because we've got situations where, frankly, our production has been impacted and hindered by inability to obtain full labor. So, it's kind of a double-edged sword.

Lucas Pipes: That's very helpful. Thank you for all that perspective.

Speaker Change: That's very helpful. Thank you for all that perspective.

Randy: That's very helpful. Thank you for all that perspective. Randy, in terms of the demonstration processing facility, what product are you currently targeting out of that facility? We would appreciate your thoughts on that. Thank you. Sure. So, as you probably recall from our earlier disclosures on sort of the overall You know, as we start a demonstration facility, we'll probably deal with a concentrate which will probably have most, if not all, of those kind of combined in one concentrate.

Lucas Pipes: Randy, in terms of the demonstration processing facility, what product are you currently targeting out of that facility? I would appreciate your thoughts on that. Thank you.

Randy: Randy, in terms of the demonstration processing facility, what product are you currently targeting out of that facility? Would appreciate your thoughts on that. Thank you. Sure. So, as you probably recall from our earlier disclosures on...

Randy: And then as we, you know, go further up the food chain, if you will, in terms of processing, then we'll, you know, separate those out, which is obviously the farther you go up the food chain, the higher the value you receive for being able to sell separated refined elements. Demonstrate a concentrate and then what's a what's a

Randall Atkins: Sure. As you probably recall from our earlier disclosures on sort of the overall product blend of our various REEs and critical minerals, we've got, call it eight rare earths, which are the sort of heavy and medium rare earths, magnetic rare earths, and then we've got two very valuable critical minerals, which aren't really categorized as rare earths, germanium and gallium.

Jason Fannin: As of August 6th, the U.S. East Coast Index values were $208 per ton for low-volve. $203 per ton for high-ball A and $181 per ton for high-ball B, while Australian premium low-volve sits at about $215 per ton. As prices in Asia have declined, U.S, real activities compared to Australian premium low-volve have rebounded back to historical averages.

Randy: sort of the overall.

Randy: product blend of our various REEs and critical minerals. We've got, you know, call it eight

Randy: rare earths, which are the sort of heavy and medium rare earths, magnetic rare earths.

Randy: And then we've got two very valuable critical minerals, which aren't really categorized as rare earths, germanium and gallium.

Randall Atkins: And so those would be the end products that we would ultimately be aiming to, frankly, create oxides for, which would be able to be separated and sold on an individual basis. You know, as we start a demonstration facility, we'll probably deal with a concentrate that will probably have most, if not all, of those kind of combined in one concentrate. And then as we, you know, go further up the food chain, if you will, in terms of processing, then we'll, you know, separate those out, which is obviously the farther you go up the food chain, the higher the value you receive for being able to sell separated refined elements.

Jason Fannin: To suggest we are nearing a near-term price for U.S. Coaching Coals. We also believe U.S, current U.S, index pricing netbacks are below fully loaded costs for many marginal U.S. Coaching Coal operations today.

Randy: And so those would be the end products that we would ultimately be aiming to, frankly, create oxides for, which would be able to be separated and sold on an individual basis.

Jason Fannin: Clearly, that situation cannot continue. U.S, low-volve market is currently much tighter than index pricing is suggesting. We see demand continuing to outpace supply in the U.S, low-vol and mid-volve segments, where Ramico is positioned for continued growth, as we continue to ramp production at Burwin, then it may. And the high-ball segment, as mentioned earlier, most of the incremental growth from our peers in the U.S, has been either higher ash or higher sulfur or both. Production growth in these less desirable quality buckets ensures sustained future demand for Ramico's higher quality low-ash and low-sulfur high-ball from health care.

Randy: You know, as we start a demonstration facility, we'll probably deal with a concentrate, which will have probably...

Randy: Most if not all of those kind of

Randy: Combined in one concentrate, and then as we, you know, go further up the food chain, if you will, in terms of processing.

Randy: Then we'll, you know, separate those out, which is obviously the farther you go up the food chain, the higher the value you receive for being able to sell separated, refined elements.

Randall Atkins: That's helpful. So, kind of the first step here would be to... Demonstrate a Concentrate, and then what is it? Where's the market for that concentrate today, either in terms of location or price for Bucket? Is there a benchmark?

Randy: That's helpful. So kind of first step here would be to demonstrate a concentrate and then what's a...

Jason Fannin: Looking ahead, we are very comfortable with our current order book and forward production expectations. We will be very selective where we place our fewer remaining 2024 volumes in order to achieve the highest netbacks possible. We look forward to the coming domestic contract negotiations, as well as the opportunities in 2025 to be selective in placing incremental volumes to those customers who see value in our low-ash and low-sulfur supply.

Speaker Change: Where's the market for that concentrate today, either in terms of location or...

Randall Atkins: Yeah, I would say, you know, the prices, of course, in the rare earth business in general are a sort of opaque basket because there's such a dominance by China in the pricing and production processes. And frankly, China engineers both in a manner to try to mute and or eliminate any other production outside of China. So you can't necessarily always believe, you know, the prices that you would perhaps get off of normal benchmarks.

Randy: or price for a bucket? Is there a benchmark?

Lucas Pipes: Yeah, I would.

Randy: Yeah, I would say, you know, the prices, of course, in the rare earth business in general are a

Randy: sort of opaque.

Unknown Executive: I now like to return the call to the operator for the Q&A portion of the call. Operator? We will now begin the question in the answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speaker phone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster.

Randy: basket because there's such a dominance by China in the pricing and production process. And frankly, China engineers both in a manner to try to

Randy: mute and or eliminate any other production outside of China. So you can't necessarily always believe you know, the prices that you perhaps would get off of normal benchmarks. But, you know, the

Randall Atkins: But, you know, the the. The easy way, if you want to start thinking about it as an analyst, would be to simply take the breakout prices of each individual element and apply that to sort of a basket concentrate, which we, I think, provided you with some slides on in some of our earlier presentations on the rare earths, which give you a notion of what percentage of each one of these we have in our overall mix, at least as far as our last expiration target is concerned. Yeah, you can see that on slide 13. Okay.

Randy: The easy way, if you want to start thinking about it as an analyst, would be to simply take the breakout prices of each individual element and apply that to sort of a basket concentrate, which we, I think, provided you with some slides on in some of our earlier presentations on the rare earths, which gives you a notion of...

Randy: The easy way, if you want to start thinking about it as an analyst, would be to simply take the breakout prices of each individual element and apply that into sort of a basket concentrate, which we, I think, provided you some...

Nathan Martin: The first question comes from Nathan Martin with Benchmark Company. Please go ahead. Thanks operator. Good morning guys. Congrats on the progress during the quarter, especially on the call side. Thank you, man. I mean, first maybe just something I noticed in the presentation slide nine where you guys break out your kind of production outlook on the medium term production outlook. It looks like maybe an improvement regarding your expectations of low vault production versus last quarter.

Randy: slides on in some of our earlier presentations on the rare earths, which gives you a notion of

Randy: What percentage of each one of these we have in our overall mix, at least as far as our last expiration target is concerned? Yeah, you can see that on slide 13. I might add that those numbers will probably change around when we do our further update this fall.

Randall Atkins: And I might add that those numbers will probably change when we do our further update this fall because we've got pretty significant amounts of additional data that will be going into this new revision. So I kind of expect those numbers to move around. And, of course, we hope they'll move in a positive direction, but we won't comment on that until we actually get all the data collected.

Speaker Change: Pretty significant amounts of additional data that will be going into this new revision. So, you know, kind of expect for those numbers to move around. And, of course, we hope they'll move in a positive direction, but we won't comment on that until we actually get all the data collected.

Nathan Martin: Can we get a addition more details on that update? Yeah, Nate. It's Jeremy. I'll start and then maybe turn it to Chris. So, you know, I think as, you know, as Jason noted, obviously, you know, in the current environment, you know, we think low vault is extremely tight. So what we've done is we've effectively put the maven underground expansion into our into our kind of official medium term outlook. So, you know, at the end of the day, in addition to what we're producing now, you know, that's over a million tons of of underground production, which effectively takes us to, you know, more than 50, 50 in terms of low vault, mid vault versus high vault.

unknown: Thank you, Randy. Thank you, everyone, for your comments, and best of luck.

Lucas Pipes: Thank you, Randy. Thank you, everyone, for your comments, and best of luck.

unknown: Thank you, Randy. Thank you, everyone, for your comments, and best of luck.

Randy: Thanks, Lucas.

Nathan Martin: And also that includes the fourth section of or when correct that we would be putting on. Yes. When would that remind you guys that maybe an underground expansion likely get moving forward, I guess? Yeah, we've got the optionality to frankly start that next year. I mean, the main gating issue for that was the prep plant. And of course, we move forward sort of opportunistically last summer, or this summer, with the purchase of a sort of idled prep plant that we moved up to maven and installed it.

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

Speaker Change: Again, I'd just like to thank everybody for being on the call today, and we'll look forward to catching up with everybody in several months. Take care and have a great day.

Speaker Change: The conference is now concluded. Thank you for attending today's presentation. You may disconnect.

Nathan Martin: And frankly, as I mentioned, it'll hopefully start operations sometime late fall. So that's really what gated us. And then of course, we'll look at our budgeting for next year and move accordingly. But we can certainly start putting in sort of section by section. It'll ultimately probably be a four section. So ultimately, maybe as much as a million and a half tons, but obviously market conditions will dictate that. Okay. Thanks guys. And maybe just sticking with the maven prep plant for a second, just something else I noticed.

Nathan Martin: Just just broke out in your cash flow statement, kind of a separate line item for that prep plant expense. And then I also saw footnotes in your capex guidance and said it excludes $3 million dollars for the purchase of that prep plant. So I just want to make sure how we should think about all end capex number for four years for 24. Yeah. Hey, Nate. It's Jeremy. So very good question. So we did break that out so that you all could kind of, for transparency, see what we're spending on maven.

Nathan Martin: $3 million dollars within the cash flow statement is for the purchase price. So when you look at our full year guidance of 53 to 63 million, it effectively excludes that $3 million dollars for the purchase price. But it includes the rest of the spend on maven a little bit more than half of which has already taken place. So if you kind of think about our full year capex outlook, you know, call it at the $60 million range, excluding the $3 million or so for the purchase price.

Nathan Martin: About 40 million of that is maintenance about sort of 20 million of that is growth. So obviously, you know, when you look at the first half spend of call it 40 less the $3 million, so $37 million. You know, frankly, that implies a lot lower spend in the second half and the reality is that's because when you look at our three or four major growth projects this year, the vast majority of that spend has already taken place.

Nathan Martin: So I do think that's something, you know, you guys can look forward to in the second half of the year, especially in the fourth quarter. Yeah, okay, perfect Jeremy, that helps and I saw that mentioned your release to hopefully things come back down a little bit in the fourth quarter.

Nathan Martin: I guess speaking with CapEx, but shifting over to the Brook Mine, you know, obviously saw the release, I guess two days ago, bringing on a couple new partners. You know, what kind of CapEx you guys expected to be involved kind of in design and build about refining and processing plant that you're going to be doing with floor. You know, will all that spending be your responsibility?

Nathan Martin: I think you mentioned the target started in the middle of next year, you know, how long could that possibly take the build as well? Yeah, I mean, our spend, frankly, out at the Brook Mine has been really very modest. I think we've spent since inception just a couple of million bucks out there to really get everything moved into position. And as far as the design build, you know, we're, as I said, we're going through testing and, you know, essentially trying to get the various variables nailed down which will inform essentially how we would design the processing facility to deal with the specific minerals involved in their chemistry. I think in terms of, you know, a spend for the planning for the design of that, I would think of it in terms of several hundred thousand dollars. That's about where we're going to be.

Jeremy Sussman: And in terms of what the cost for the overall demonstration facility will be, I really don't want to get over our skis now. In terms of giving you a number, we'll certainly provide it as soon as we've got, you know, the design metrics around it so we can give you really an informed concept. But remember, the demonstration facility is kind of like an advanced pilot. You know, it's not a pure pilot plant in the sense that we intend to, frankly, start selling products from the demonstration facility.

Jeremy Sussman: So with this will be a revenue-producing plant as soon as we open it. And we'll expect to probably start doing construction, certainly site work on that sometime around the middle part of next year once the weather permits out the Wyoming. And in terms of the timing, you know, I probably earmarked nine months to a year of normal construction assuming no weather-related issues out there. And that's kind of the time frame.

Jeremy Sussman: So it's probably a 25 start and a 26 completion.

Nathan Martin: Very helpful, Randy. Thanks for this thought.

Nathan Martin: Maybe just one more. I appreciate you guys don't really not call specifics on a domestic contract and season for 25 as we're still early on there. But any initial thoughts, at least directionally on what you think may be demand for met coal could look like from domestic steel producers next year versus this year. And I also noticed that Jeremy, maybe this is what you referenced in your prepared remarks that your domestic tonnage committed in price for 24 has crept down again.

Nathan Martin: I think 1.3 million tons now with some of that. What was getting deferred into 25. Yeah, Nate, this is Randy. I'm going to just tee up one brief comment and then turn it over to Jason. But, you know, the demand side, we haven't really seen a real fall off on the demand. You know, the US steel producers are still enjoying pretty good margins despite the fact that the prices are down. So the demand side has not really been the problem.

Nathan Martin: The problem has been, as I mentioned in my remarks, that we've really seen this sort of flood of Chinese steel hitting virtually every market. And, you know, that has impacted, you know, steel companies' ability to frankly raise their prices. And when you've got, you know, low steel prices, you're going to have unfortunately low-coking coal prices. So that's, it's really more about peculiar supply derived situation based on the Chinese peculiarities, if you call it that.

Nathan Martin: But Jason, pick it up and we're found on that comment. Sure. Thanks, Randy. Yeah, Nate. Yeah, obviously we're we're in ongoing discussions with some customers now so we won't get this specific, but yeah, I mean as Randy mentioned, certainly, you know, hot-rolled spot prices are down globally, still in the US, there's still the highest in the world, the margins here, still, you know, outsize compared to our seaborn customers, service centers obviously low inventory points, at a low point in the market, which would seem odd, you know, as they come back in those spots, steel prices are going to move back up, and frankly, you know, you know, Randy reference the flood of Chinese steel exports, which we probably haven't seen this level in almost 10 years, but you know, protectionism is working, it's working here, it's working in other areas, and I think you probably see more of that, but I think one key aspect, you know, in terms of, you know, you asked about cooking cold demand, here in North America, next year versus, you know, this year, you're not seeing anybody slow down, you know, even given where hot-rolled that, and I think that says a lot, and then, you know, in terms of the, you know, the tonnage you mentioned there that Jeremy had counted on earlier, but we had one North American customer that has an extended forced majority status, and rather than lose those volumes, we work with them and deferred some into 2025, which worked out, you know, for the best for both of us and our customer, which is that committed change, you see there.

Nathan Martin: Yeah, very, very helpful guys, I appreciate all the comments at the time and best of luck in second wrap. Thanks, Dave.

Lucas Pipes: The next question is from Lucas Pipes with V-Riley Securities. Please go ahead. Thank you very much, Operator. Good morning, everyone.

Christopher Blanchard: Good job on the cost side, and I wanted to ask on the cadence for the second half of you, could maybe provide a little bit of color for Q3 and Q4. Q3, I always remember kind of minor vacations can have an impact, so I wondered if you could maybe speak to that. And Chris, you mentioned and you're prepared for marks that some minds have an unacceptable level on the cost side today.

Christopher Blanchard: What sort of tonnage are we talking about is that another 200,000 tons is it more in how quickly would you could you redeploy manpower equipment etc if you decided to move things around? Thank you very much. All right, I'll tackle the first one first a little bit on the cadence of the cost and right now in the second half we're sort of expecting cash costs to be roughly the same in Q3 versus Q4 as we still have RAM 3 and Stone Cold 3 in the RAM process.

Christopher Blanchard: So low 100s perhaps but then Q4 pushing to 100 or a little bit below as those minds are fully operational and we also get the maven cost savings. So at the low end of the guidance we could see it move down significantly on the cost side but that's sort of where we're guiding to on the cost. House. And then as far as the number of tons that are sort of unacceptable, it's probably in the 200, 300,000 annual ton range.

Christopher Blanchard: And those could be redeployed relatively quickly within the third quarter, I would say. So I mean, we'll continue to monitor. We have had some improvement and that's what we saw in June costs and continuing into July, but coal mining can change day to day. So we are monitoring extremely closely and we have a couple of places that we can move to to get our costs continuing to move lower as they need to.

Christopher Blanchard: That's very helpful. Chris, if you kind of expand this across the industry, how many I would guess in the US, it's, you know, if you exclude the big long wall operators, it's probably 25% of the remaining production is in that questionable and unsustainable range at these prices globally. That's probably a little out of my ski tips to apply on that, but maybe Jeremy or Jason has an opinion. I mean, my quick comment on the global side, Lucas, is Jason is, I mean, you can always kind of look at the forward cost curve and see where that starts to trail off at.

Christopher Blanchard: And I think that tends to suggest where, or most folks think the, you know, that marginal ton lays. I don't know where it's actually 26, 27 at this point since we're kind of focused on 25 right now, but I guess always a good indicator, obviously folks that are above that are on the edge there. And I think, you know, the good and the bad news is we see some of these producers have to contract needless to say that opens up some opportunities for us on the labor side because, you know, where we operate down in the southern Appalachian area is always a tight labor market.

Christopher Blanchard: And to the extent that we see sort of breaks in the action from some of our peers, we are delighted to pick up new people and deploy them because we've got situations where, frankly, our production has been impacted and hindered by an ability to obtain full labor. So it's kind of a double edged sword. That's very helpful.

Lucas Pipes: Thank you for all that perspective.

Randall Atkins: Randy, in terms of the demonstration processing facility, what product are you currently targeting out of that facility? We would appreciate your thoughts on that. Thank you. Sure. So as you probably recall from our earlier disclosures on sort of the overall product blend of our various REs and critical minerals, we've got, you know, call it eight rare earths, which are the sort of heavy and medium rare earth, magnetic rare earths. And then we've got two very valuable critical minerals which aren't really categorized as rare earth, germanium and gallium.

Randall Atkins: And so those would be the in products that we would ultimately be aiming to, frankly, create oxides for which would be able to be separated and sold on an individual basis. You know, as we start a demonstration facility, we'll probably deal with a concentrate, which will have probably most of not all of those kind of combined in one concentrate. And then as we, you know, go further up the food chain, if you will, in terms of processing, then we'll, you know, separate those out, which is obviously the farther you go up the food chain, the higher the value you receive for being able to sell separated refined elements.

Randall Atkins: That's helpful. So kind of first step here would be to demonstrate a concentrate and then what's the market for that concentrate today either in terms of the patient or price for bucket? Is there a benchmark? Yeah, I would say, you know, the prices of course in the rare earth business in general are a sort of opaque basket because there's such dominance by China in the pricing and production process and frankly China engineers both in a manner to try to mute and or eliminate any other production outside of China.

Randall Atkins: Yeah, so you can't necessarily always believe, you know, the prices that you perhaps would get off of normal benchmarks. But, you know, the easy way if you want to start thinking about it as an analyst would be to simply take the breakout prices of each individual element and apply that into sort of a basket concentrate which we I think provided you some slides on in some of our earlier presentations on the rare earth which gives you a notion of sort of what percentage of each one of these we have in our overall mix at least as far as our last exploration target is concerned.

Randall Atkins: Yeah, you can fit on slide. Okay, and I might add that, you know, those numbers will probably change around when we do our further update this fall because we've got pretty significant amounts of additional data that will be going into this new revision. So, you know, kind of expect for those numbers to move around and of course we hope they're moving in a positive direction, but we won't comment on that until we actually get all the data collected. Thank you, Randy. Thank you everyone for your comments and best of luck. Thanks, Lucas.

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Randall Atkins: I would like to turn the conference back over to Randall Atkins, Chairman and CEO. Again, I'd just like to thank everybody for being on the call today and we'll look forward to catching up with everybody in several months.

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