Disclaimer

Forward Looking Statements:

The information in this presentation includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities

Exchange Act of 1934, as amended (the "Exchange Act"). All statements, other than statements of historical fact included in this presentation, regarding our strategy, future operations, financial position, estimated revenue and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this presentation, the words "could," "believe," "anticipate,"

"intend," "estimate," "expect," "project" and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management's current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. When considering forward-looking statements, you should keep in mind the risk factors and other cautionary statements described under the heading "Risk Factors" included in Ramaco's Annual Report on Form 10-K.

Forward-looking statements may include statements about:

  • risks related to the impact of the novel coronavirus ("COVID-19") global pandemic, such as the scope and duration of the outbreak, the health and safety of our employees, government actions and restrictive measures implemented in response, delays and cancellations of customer sales, supply chain disruptions and other impacts to the business, or our ability to execute our business continuity plans;

  • anticipated production levels, costs, sales volumes and revenue;

  • timing and ability to complete major capital projects;

  • economic conditions in the metallurgical coal and steel industries generally, including any near-term or long-term downturn in these industries as a result of the COVID-19 global pandemic and related actions;

  • expected costs to develop planned and future mining operations, including the costs to construct necessary processing, refuse disposal and transport facilities;

  • estimated quantities or quality of our metallurgical coal reserves;

  • our ability to obtain additional financing on favorable terms, if required, to complete the acquisition of additional metallurgical coal reserves as currently contemplated or to fund the operations and growth of our business;

  • maintenance, operating or other expenses or changes in the timing thereof;

  • the financial condition and liquidity of our customers;

  • competition in coal markets;

  • the price of metallurgical coal or thermal coal;

  • compliance with stringent domestic and foreign laws and regulations, including environmental, climate change and health and safety regulations, and permitting requirements, as well as changes in the regulatory environment, the adoption of new or revised laws, regulations and permitting requirements;

  • potential legal proceedings and regulatory inquiries against us;

  • the impact of weather and natural disasters on demand, production and transportation;

  • purchases by major customers and our ability to renew sales contracts;

  • credit and performance risks associated with customers, suppliers, contract miners, co-shippers and traders, banks and other financial counterparties;

  • geologic, equipment, permitting, site access and operational risks and new technologies related to mining;

  • transportation availability, performance and costs;

  • availability, timing of delivery and costs of key supplies, capital equipment or commodities such as diesel fuel, steel, explosives and tires;

  • timely review and approval of permits, permit renewals, extensions and amendments by regulatory authorities;

  • our ability to comply with certain debt covenants;

  • tax payments to be paid for the current fiscal year; and

  • our expectations relating to dividend payments and our ability to make such payments.

We caution you that these forward-looking statements are subject to a number of risks, uncertainties and assumptions, which are difficult to predict and many of which are beyond our control, incident to the development, production, gathering and sale of coal. Moreover, we operate in a very competitive and rapidly changing environment and additional risks may arise from time to time. It is not possible for our management to predict all of the risks associated with our business, including those described under the heading "Risk Factors" included in Ramaco's Annual Report on Form 10-K, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Although we believe that our plans, intentions and expectations reflected in or suggested by the forward-looking statements we make in this presentation are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved or occur, and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as a prediction of actual results.

All forward-looking statements, expressed or implied, included in this presentation are expressly qualified in their entirety by this cautionary statement. This cautionary statement should also be considered in connection with any subsequent written or oral forward-looking statements that we or persons acting on our behalf may issue. Except as otherwise required by applicable law, we disclaim any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date of this presentation.

Key Investment Highlights

Ramaco overview

Ramaco is a low-cost, "pure play" metallurgical coal company. We sell almost no coal to power plants, which are a source of greenhouse gas emissions. Instead, we are a key supplier to the North American and international steel industry.

We have a strong pipeline of production growth to ~5 million tons. We have minimal AROs and legacy liabilities, as well as a net cash position. Recently, we both initiated and then doubled our base dividend.

(NASDAQ: METC) (NASDAQ: METCL)

We produced record net income and Adjusted EBITDA in 2021 and expect an even stronger 2022. 1Q22 net income and Adjusted EBITDA were both up more than 100% compared to our previous quarterly records.

At a glance

Market summary

  • As a "pure play" metallurgical coal company, our product is a key component in the production of primary steel, which is crucial to infrastructure development.

  • Based on the midpoint of 2022 production and cost guidance, we have already committed ~75% of our sales, which on these booked sales alone translates to $235 million of net income, >$5.00 of EPS and $330 million of Adjusted EBITDA*.

  • Growth of >475% from 0.55 million tons produced in 2017 to 3.25 million tons in 2022 (based on the midpoint of guidance). Almost all our production is high-quality metallurgical coal.

  • We have minimal AROs and legacy liabilities, as well as a net cash position, record quarter-end liquidity, and strong free cash flow generation. 1Q22 Adjusted EBITDA was a record at $64 million, as was 1Q22 net income of $41 million, versus just $20 million in 1Q22 capital expenditures.

  • Current metallurgical coal pricing sits at near-record levels, with U.S. high-vol A at $475 per metric ton FOB port, up >175% YoY. Our most recent export sale translates to cash margins of roughly $275 per short ton FOB mine.

Share price (05/10/22):

$14.12

Ticker symbol:

METC (common stock)

METCL (9% Sr. Notes due 2026)

Market capitalization:

$624 million

Net cash (03/31/22):

AROs + Legacy Liabilities (03/31/22):

$19 million $25 million

Implied enterprise value:

$605 million

Dividend Yield (05/10/22):

3.2%

(*) Mine level, before corporate expenses, using index pricing as of May 9, 2022 for the portion of future export sales.

Investment highlights

Ramaco has built a low-cost met coal platform, with minimal AROs and legacy liabilities, a net cash position, a meaningful dividend, and one of the strongest growth pipelines in the industry. We generated record 2021 net income and already topped that figure in the first quarter of 2022 alone.

1

Portfolio of high-quality assets, with long-term growth

  • Large, high-quality met coal reserve base. We intend to more than double production from under 2 million tons per year in 2020-21 to at least 4 million tons in 2023, including 3.25 million tons this year, with a medium-term goal of ~5 million tons per year of production.

2

Strong commitment to ESG principles

  • Environmental, Social, and Governance (ESG) principles are core to our strategy. We produce no meaningful amount of thermal coal, which is used in electricity generation. Substantially all our coal last year was ultimately used to produce primary steel, which is a crucial component of the 2021 bipartisan Infrastructure Bill, including the large-scale production of energy transition products like windmills and modern electric vehicles.

3

Low-cost U.S. met coal producer

  • 2021 cash costs per ton sold of $66 at our flagship Elk Creek complex. This is in the first quartile of the cost curve of domestic met coal producers. Advantaged geology yields higher clean-tons-per-foot, as well as greater productivity at Elk Creek than most peers. While 2022 costs will be up across the industry due to inflationary pressures, Ramaco is committed to maintaining its position on the cost curve over the long-term.

4

Positioned to serve both domestic and export markets

  • Well-positioned to transact into both domestic and export markets. Diversified existing customer base, having sold into North America, South America, Europe, Asia, and Africa on a regular basis.

  • Advantaged infrastructure and geographic flexibility.

5

Clean balance sheet with strong free cash flow generation

  • Our balance sheet provides us with greater flexibility and lower risk relative to our peers. As of March 31, 2022, Ramaco had $19 million of net cash, $24 million of AROs, and no significant pension and post-retirement obligations. In 2021, the Company raised the first unsecured bond in the U.S. publicly traded coal space in over 4 years. Ramaco had record quarter-end liquidity of $111 million in 1Q22. This was up $50 million from year-end 2021 liquidity.

6

7

Record 2021 results, with an even stronger 2022 ahead

  • 2021 Adjusted EBITDA was a record at $79 million, as was 2021 net income of $40 million, versus just $29 million in capital expenditures*. In addition, we have already generated more net income in 1Q22 than all of 2021.

  • Based on the midpoint of 2022 production and cost guidance, we have already committed ~75% of our sales, which alone translates to $235 million of net income, or more than $5.00 of EPS and $330 million of Adjusted EBITDA**.

Highly experienced team

  • Highly experienced management team and Board of Directors with a long history of acquiring, developing, financing, building, and operating coal assets.

8

Attractive valuation, with dividend recently initiated

  • Current trading levels offer a compelling opportunity to invest in a premier met coal producer with a long-term runway for production and earnings growth. Recently, we both initiated and then doubled our quarterly base dividend, which is trading at a 3.2% yield as of May 10.

(*) Excludes roughly $30 million purchase price of Amonate.

(**) Mine level, before corporate expenses, using index pricing as of May 9, 2022 for the portion of future export sales.

This is an excerpt of the original content. To continue reading it, access the original document here.

Attachments

  • Original Link
  • Original Document
  • Permalink

Disclaimer

Ramaco Resources Inc. published this content on 12 May 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 12 May 2022 04:38:06 UTC.