Ramaco Resources, Inc. Price & Performance (METC)

I'd also like to remind you that you can find a reconciliation of the non GAAP financial measures to we plan to discuss today in our press release which can be viewed on our website, www.ramichoresources.com, Lastly, I'd encourage everyone on this call to go on to our website and download today's investor presentation. With that said, let me introduce our Chairman and CEO, Randy Atkins. Good morning and thank you for joining the call. On the met coal side of our business, the fourth quarter was clearly our strongest quarter of the year. Both financially and operationally. This was despite continued market headwinds on pricing. Controlled what we could control, which were costs and volume. We also achieved three milestones for the quarter. We had record tons sold We exited the year with cash cost well under $100 a ton. And we ended with record levels of liquidity. All in all, we had a very strong quarter. As a result of this solid performance, especially on cash mine costs, the fourth quarter margins remained at $33 a ton. This was down just $2 a ton since the second quarter, and despite an almost $30 drop at met coal prices between the second to the fourth quarters, Based on the results from all of our publicly traded peers in Central Appalachia, Ramaco's cash margins were almost 50% higher than the next highest public peer for both the third and fourth quarters.

For that, I complement both our mine operations and sales teams. The year long negative pricing environment, of course, stretched into the fourth quarter. China continued dumping its overproduction of steel to all world markets. This has hurt prices. Steel companies have cut back their own production and reduced the price they can pay for Metcalfe's feedstock. But while the overall steel demand remains weak, there are reasons to hope that the met prices may hopefully increase in the second half of the year. Indeed, we've already seen a bump in the domestic steel HRC pricing from less than $700 per ton in Q3 to $940 per ton today. Looking at the supply side, I'm not sure the investing public understands how much carnage the drop in pricing has done to met coal production in The U. S. Over the past year. And is still doing. We believe that by the end of this year, as much as $6 domestic tons of met production will have come out of The U. S. Market since its peak in Q2 of 'twenty four. If you take 16,000,000 tons out of an overall U. S. Met coal production That 20% drop in supply is going to eventually impact the market.

The main reason for the production drop at higher cost producers is simply the crushing negative cash This has already caused a number of recent bankruptcies, In addition, that experienced ignition events that caused those mines to remain offline and in one case to declare bankruptcy as well. Also in January, we began to notice an increase in inbound European customer interest. For spot availability. We believe this was primarily due to an increase in demand from a result of the closure of the country's only domestic coal mine. And also in Poland, a large mine had an ignition event about the same time. The aggregate impact of all these factors is created a noticeable tightening of supply in The U. S. Going forward, we expect to see more domestic idling of high vol production destined for Asian markets. Current netbacks are cash negative for high cost operations. Several producers in this spot probably can't renew all of their annual Asian contract business which would typically begin next month. Absent a large increase in pricing, we expect another round of high vol supply cuts over the next few months.

I would also note that Australian producers in terms of volume shipped from Queensland are off to their worst start of the year going back for several years. The cyclone last week will not help. On the demand side, everyone is watching Our own analysis is that tariffs might produce roughly 2,000,000 to 3,000,000 tons of potential increase in domestic coal demand. This happens when tariffs limit steel imports and domestic blast furnaces then ramp up production to fill the gap. You are starting to see that already in the run up in domestic HRC pricing. I'd also like to touch on our balance sheet. We have recently been maintaining record amounts of liquidity It was about $140,000,000 at the year end. We regard keeping this high level of dry powder as both defensive as well as offensive. A tricky market environment, it's prudent to have liquidity to meet whatever conditions might arise. Also want to position ourselves to execute on opportunities that might present themselves during market distress. One item I want to emphasize is that the despite the current market gloom, we remain positive over the medium and longer term When we can finally see some stronger market clarity, we are ready to add roughly 2,000,000 tons of lowball production in relatively short order.

Specifically, we would proceed with both the 1,500,000 ton deep mine and also continue mining into the number three and number four sections at our Maven Complex would add another 500,000 tons. These low vol additions would allow us to increase overall production roughly 6,500,000 to 7,000,000 ton level. Within a twenty four to thirty six month period once we start. This would also shift our overall production slate to a majority of low vol production which we feel gives us a strong quality posture for the future. Now switching gears to our Wyoming operations, I'm pleased to report that our rare earth and critical minerals project is moving forward an accelerated clip. [indiscernible] have been delayed for months in receiving third party chemistry and metallurgic test results. Almost all of that test data is now back. Expect later in April to release both floors preliminary techno economic analysis as well as an update from Weir on geology grade and concentration. When these reports are released, this will provide not only granular technical information on the development, but also the economics and CapEx estimates. I would note that to date, considering the outsized potential impact on us, we have spent a relatively modest $10,000,000 directly on this project.

Upon release of these reports, we will have a great deal more to say and may indeed hold a special call on this as we did last year. To give you a sense of how we feel about the data, that's coming in, we have decided to begin full scale mining in July to provide the rare earth material for a pilot processing facility will start construction on this fall. We are of course mindful of the U. S. Government's interest in rapidly creating a domestic supply of critical minerals.

I can disclose that we are in ongoing discussions with several arms of the federal government regarding our development. On the Wyoming front, we are pleased to have received a $6,000,000 matching fund grant recommendation from the Wyoming Energy Authority which is to be applied towards building our pilot plant. While we wait to disclose all the technical data with the release of the floor and the weir reports, I will provide some preliminary results today. The overall size of the resource is now estimated in the range of 1,700,000 tons.

This increased from the 1,500,000 size we disclosed last year and now includes results from all rare earths and critical minerals we will be focusing on. We will continue additional coring and As you remember, to date, we have only tested about a third of the site predominantly shallow depths. We will now core at deeper levels which frankly in many instances have shown higher concentrations of rarer than its shallower formations. Any way you look at it, given both the size of the unconventional deposit and the fact that it is found in softer non radioactive material, makes this a generationally unique development.

As we view the project today, we will concentrate our commercial efforts specifically on about seven rare earths in critical minerals. These comprise about 30% of the material discovered to date that are estimated to generate over 95% of the revenue. On the rarer side, we will focus on the heavy and medium magnetic oxides of neodymium, Presidentium, dysprosium and ytterbium. Which are all showing extremely strong rates of recovery. The critical mineral side, as discussed in December, Fluor informed us that the Brook Mine may be the only primary source mine in the world for gallium, germanium and scandium. Indeed, scandium may be one of the strongest revenue components of the product mix.

As you know, gallium and germanium were banned by China from export to The United States last year. One last point which should bear some emphasis though, We will approach this project with the same conservative conservative business discipline that has characterized all of our investment decisions. This is a new and complex business It is one with a far different macro competitive overlay than coal. Indeed here, the Chinese have a monopoly on the space and want to make it commercially difficult for anyone else to even get a foothold. But with that said, the Brook Mine would be the first new rare earth mine in The United States in over seventy years. There is clearly a need for this strategic product. But as I said, we will approach the investment in financing of what could be a transformative business in a measured fashion and ensure that it delivers a strong return to our shareholders.

So to wrap up my remarks, while the world met coal markets still remain weak, we're cautiously optimistic that our price levels are near bottom.

By late summer, hope they begin to move higher throughout the back half. I'm also again incredibly proud of the Ramaco team for being able to improve our operational sales and financial metrics throughout 2024. And to end by emphasizing again this culminated in the fourth quarter being our strongest of the year despite being the period with the weakest pricing. Looking forward to 2025 improving as the year moves along, And lastly, on the rare earth front, I will leave it to be further updated next month. [indiscernible] With that, I'll turn the floor over to the rest of our team to discuss finances, operations and markets So Jeremy, please start with a rundown on finance. Thank you, Randy. You noted, fourth quarter twenty twenty four operational results were the strongest of the year despite metallurgical coal entities being the weakest. One testament to all of the hard work of our mine employees is that cash margins have declined [indiscernible] while met coal indices have fallen $30 per ton. To get into specifics, Q4 adjusted EBITDA was $29,000,000 compared to $24,000,000 in Q3. Q4 net income of $4,000,000 compared to to breakeven in Q3. Class A EPS showed a $0.06 gain in Q4 versus a $0.03 loss in Q3.

The primary reasons for the increase in both Q4 EBITDA and EPS were the $6 per ton sequential decline in our quarterly cash costs and the almost 100,000 ton increase in tons sold. On the cost front, we exited 2024 in the mid-90s per ton range was the best among our publicly traded peers.

We've always said that one of the pillars of Ramaco going back to our preproduction days was to operate in the first quartile of The U. S. Cost curve. Indeed, that is where we now stand. On the tons sold front, we exited the year at a 4,500,000 ton per annum run rate for the highest level in company history despite challenging market conditions. [indiscernible] Looking forward, we're maintaining all of our 2025 guidance other than bumping up our tax rate to 25% to 30% we'd expect to pay minimal cash taxes in the current environment. In terms of our guidance, we're maintaining a meaningful spread between the low and high ends of production, sales cash cost and CapEx guidance This is in large part due to current market uncertainty. [indiscernible] To give you a little more color, if weak market conditions were to persist throughout the year, we'd likely come in towards the lower end of all four of these metrics of production sales, cash costs and CapEx, trimming back on some higher cost production. At the same time, hope that market conditions improve, especially in the second half of the year given all of the potential supply curtailments that Randy discussed.

Looking specifically at Q1 of twenty twenty five, all of us in Central Appalachia encountered two very challenging weather events.

First, we experienced freezing temperatures for two weeks in January, and then saw historic flooding in February. As a result, cost per ton sold are anticipated to come in towards the high end of the full year guidance range in Q1. When coupled with the normal typical inventory build ahead of the Great Lakes opening in the spring, Q1 tons sold are anticipated to be $850,000 to 950,000 with Q2 shipments up by more than one third sequentially. [indiscernible] Moving to the balance sheet, our liquidity at year end of $138,000,000 was up more than 50% year on year, This was by far the highest year end liquidity in company history. We also had nothing drawn on our revolver at year end. At the same time, our overall credit metrics remained quite strong with net debt to adjusted EBITDA of just 0.5 times on the trailing twelve month basis. The bottom line is that despite challenging market conditions, our cash margins remained relatively unchanged for the past few quarters despite the meaningful decline in pricing. At the same time, we ended the year with record liquidity and minimal net debt to EBITDA. I'd now like to turn the call over to our EVP for Mine Planning and Development, Chris Blanchard to discuss operations.

Thanks, Jeremy. Thank you to everyone who joined us this morning. As we've discussed, it's nice to be able to talk about positive performance at the operations even if the underlying market wasn't as strong as we would all prefer. The fourth quarter operational performance and the improvement seen throughout the full year was the result of both the diligent efforts of the entire team and commitment to the development and growth plans we put in place late in the preceding year. 2024 was always projected to be a transitional year as we completed development mining in some of our older and thinner reserves at our legacy mines and transitioned into new areas with favorable geology throughout the year.

Among the most significant milestone was the completion of the which ended the need to transport raw coal to our Berwyn Complex and reduced net trucking costs by over $20 per clean ton. Work continues at Maven completing final construction and optimization projects at the plant itself but we are now processing on a regular schedule and working through the raw coal inventories we had stockpiled at the complex. Company wide, while individual mines production levels fluctuate normally as their conditions ebb and flow, we saw month over month increases in overall productivities throughout the fourth quarter. Some of this was attributable to easing employee turnover rates, as the overall coal markets have cooled from what was an extremely tight labor market in the Central Appalachian region. Continuing into 2025, the labor market is still tighter than its historical average and the reductions in the industry and the [indiscernible] tightening has not yet translated into an abundance of skilled coal miners available. Pricing continues to languish in its current range However, on our growth plan, we are still continuing to advance several development projects so that we are positioned to The biggest group of projects relate to the Maven Complex.

This will involve the development of the underground reserves, which will ultimately ramp complex up to 1,500,000 clean tons per year.

At Maven, the permits are being advanced and work related to opening these underground mine continues. We believe that these mines can be brought online and ramped with within twelve to fifteen months when they are green lighted. Much of the lead time then will be the procurement of the underground mining equipment. Also, at our Berwyn complex, several capital projects continue related to new ventilation shafts and the new portal area in the heart of Ramaco's fee coal position at this mine.

These safety related and cost saving projects will continue. This will allow the Berlin mine to have the proper ventilation, safety and logistical infrastructure to operate at its full planned capacity of four super sections when market conditions allow. We expect the first of the three new airships to be online late in the second quarter of twenty twenty five after receiving the final federal permit needed for the approval of this work. Indeed, across all of our operations, we have started to see some of the permit backlog unwind and our minor permit revisions and additions to again be approved in a time later manner. Turning briefly to 2025. As Jeremy mentioned, in Q1, the extreme winter snow and freeze events followed by historic flooding did impact operations and shipping. [indiscernible] West Virginia, the impacts to McDowell, Logan and Wyoming Counties where we operate were devastating. Aside the impact on actual mining operations, the damage to homes of the families of our employees was heartbreaking. We continue to work with some of the most stricken for relocation and recovery of recovery of their homes. Also throughout the region, we continue to work with charitable organizations and local groups supporting the recovery however we can.

More directly at the mining complexes, the biggest impact of this weather was hundreds of collective employee shifts missed during January and February. We also had some additional downtime and costs associated with [indiscernible] primarily from unusual accumulations of water in the seals or inactive areas of our underground coal mines. As well as some slowing of surface and plant operations. Fortunately, as we enter March, all of these conditions have abated in We continue to watch the markets and hope for price improvement. In the meantime, we remain disciplined in operational performance and costs to focus on those areas we do have some level of control over. We're positioned to be nimble to adjust as necessary to the economics of the market. To discuss all these factors driving the market right now, would like to turn the call over to our Chief Commercial Officer, Jason Fannon.

Thanks, Chris, and good morning, everyone. Today, I'll share our views on coking coal and steel markets as well as our sales outlook. Global coking coal markets have continued to weaken from a pricing standpoint, with average cooking coal index prices down approximately 6% since the start of Q1. If current index levels remain flat through the March, Q1 index averages will also be down 6% versus Q4's. As of March 10, The U. S. East Coast index values were $182.5 per ton per low ball, $179.5 per ton for high vol A and $166.5 per ton for High Vol B. Published U. S. East Coast price indices have drifted lower over the last two weeks. We believe these levels are not at all reflective the supply side tightness in Central And Northern App due to recent bankruptcies, mine idlings operational cutbacks and the extreme weather experienced in much of the Central Appalachia coalfields during January and February. The Australian premium low vol index currently sits at $181 per ton. A level last seen briefly in September and before that not since mid-twenty twenty one during the China ban on Australian coal import. The second tier low vol coking coal index is priced at $142.5 per ton and has significantly underperformed relative to premium grades.

As a result, many Australian producers in Queensland and the broader region are experiencing severe margin compression. We believe the majority of mines in Queensland are operating at breakeven cash costs or worse. We're also witnessing profitability issues in The U. S. Producers with an inability to control higher costs are struggling. We have already seen a fair deal of idlings, bankruptcies, layoffs and associated supply rationalization because of the continued poor pricing environment. Over the next few quarters, the dominant theme for smaller and less well capitalized producers will likely be weak profitability and continued supply cuts. Investors will have an increased focus on liquidity management across the industry.

This will be especially impactful for those smaller and or private producers who are more heavily exposed to seaborne markets and perhaps are overlooked by public markets and industry reporting agencies. If these weak market conditions continue, we believe the next phase will be more significant supply cuts. Which may lead to a rebalancing of market dynamics. This will present many opportunities for Aramco to capture market share establish additional long term customer relationships and continue to grow our sales book. The weakness in cooking coal prices is primarily a reflection of poor profit at steel mills worldwide. Rather than oversupply of met coal. Queensland for instance has seen its lowest shipping volumes in over a decade start the year. Yet prices continue to decline. According to IMSA data, quarterly production of coking coal in The U. S. Has declined successively since Q2 of twenty twenty four. This underscores the broader struggles of the global steel industry which remains in a prolonged downturn. The key factor in this dynamic is the surge in Chinese steel exports, which continues to pressure global steel mill profits. Since early twenty twenty two, annual Chinese steel exports have been 104,000,000 tons on average peaking at an annualized rate of nearly 150,000,000 tons in October.

A huge increase which has impacted steel pricing on a global scale. So far this year, Chinese domestic demand has failed to rise enough to down steel exports from these astronomically high levels. We therefore continue to look for green shoots in the Chinese economy as it relates to potential steel consumption growth in their domestic market.

Fortunately, many leading indicators have rebounded This suggests the cycle is turning up again although it will likely take some time for excess steel exports to decline meaningfully. In the Atlantic Basin, Ramaco's turn volumes and demand while at the same time The U. S. Steel market is staging a prolific rebound in response to the Trump tariffs. With integrated blast furnace production currently holding a cost advantage over arc furnace operations, We may see domestic producers ramp up blast furnace output in response to rising steel prices. This would likely result in higher domestic coking coal consumption which provides a natural hedge against weak pricing in the seaborne market. The potential for increased domestic demand later in the year aligns well with our sales So far, we have committed 3,500,000 tons for sale during 2025. We have booked 1,600,000 tons to North American customers at an average fixed price of $152 per ton. And 1,900,000 tons to the seaborne market at mostly index linked pricing. Most of our uncommitted volumes are associated with production in the back half of the year as we are largely sold out in the first half. This leaves us with the flexibility to take advantage of evolving market dynamics and layer in additional sales opportunities with pricing arrangements we view as favorable from a risk versus reward standpoint.

Turning to an overview of Ramaco's various seaborne markets, [indiscernible] recent mine outages in The U. S. And in Europe have caused a tightening in U. S. Supply markets as buyers seek supplemental met volumes. This trend began before the various major mine outage [indiscernible] as well as prior to the extreme weather in Central after in January and February. And continues today. The broader European steel market began 2025 on an upbeat tone with rising steel prices as potential safeguard measures threatened to cut off cheap competition from import. While the European steel industry remains fragile due to slowing economic growth, we see indications that policymakers may shift away from long standing fiscal conservatism We toward expansionary pro growth strategies. This would create a much needed tailwind for investment and spur downstream steel consumption. South American markets continue to be stable with modest demand growth expected as steel safeguard measures provide support for increased pig iron Ramaco's term contract order book in South America continues to perform well and we have seen increased spot tenders from a few buyers particularly on the low volatile side. Looking ahead, we expect Indian coking coal demand to strengthen later in 2025. Supported by the addition of 11,500,000 tons of new blast furnace capacity.

Over the past two years, cooking coal demand has lagged behind India's overall steel consumption. Largely due to increased seaborne metcoke imports. However, with the implementation of Metcoke import as late last year, we anticipate coking coal consumption will better align with blast furnace iron production trends going forward. Additionally, we are closely monitoring potential Indian steel import safeguard measures, which if implemented could enhance domestic steel mill profitability and support higher cooking coal prices.

In terms of our market strategy in the Pacific Basin, we continue to engage and supply a core group of customers in Asia. This is a group with whom we've fostered long term relationships even as the price environment in the Pacific has become challenging for many U. S. Suppliers. As market headwinds persist, we are adopting a cautious systematic approach to our remaining uncommitted volumes. We plan to allocate these volumes to the highest return sales opportunities while continuing to supply our long term customer base. All with a focus strategically on future growth. With that said, I would now like to return the call to the operator for the Q and A portion of the call.

Operator?

Thank you, sir. We will now be conducting the question and answer session. Our first question comes from Nick Jarls from B. Riley Securities. Please go ahead.

Thank you, operator. Good morning, everyone. Guys, congratulations on the lower cash costs and the successful additions of production at Elk Creek in 2024 My first question if if I saw correctly, you have some seaborne volumes fixed at $111 per ton. And so I was hoping you could add some color around where you see netbacks today for your various qualities I think you mentioned that current Atlantic indices aren't fully reflective. So where do you see the highest return opportunities in the current market? Thank you very much.

Nick, on the 111 there that those are index linked prices that we settled out for January and February. Large portion of that were from a couple of our Asian high vol contracts that have since rolled off. That's the impact you're seeing there in that fixed price number.

To your question on where we see the highest returns in the current seaborne market, certainly as in the Atlantic, when you factor out the freight differential to the Pacific, And then frankly, the near parity now with the Pacific indices versus the Atlantic indices There's a differential there.

In terms of current netbacks, just broadly speaking, where indices are at today, think our high vol you're in the 125 per net ton range back at the mine. With low vol up I'd say $3 to $5 above that.

Yes, it's Jeremy here. If I I could just add a couple of things to that. So on just on the 111 number, I'd say about 40% to 45% of what was shipped in January and February on the export market was was to Asia. That's about double sort of our normal Asian cadence. So I'd say it's a little bit wonky from that perspective. But regardless of sort of the netbacks and whatnot, I mean, I think the key is our cash margins are, call it, dollars 33 a ton. That's down $2 a ton since the second quarter and certainly about 50% or so more than 50% higher than I think the next highest in Central Appalachia when you kind of average Q3 and Q4 and frankly competing with the Alabama long, long margins. So all in all, again, kudos to Jason, Chris and their teams for keeping our margins very strong on a relative basis. Jeremy, Chris, I appreciate all that additional detail and for the clarification. Maybe just on the gross side, in your guidance, you've you've noted that you could respond to higher prices some of the growth projects you have at your disposal. And could you remind us of the capital intensity of each of those and what would you ultimately need to see to move forward And then is any of this potential growth CapEx included in your current guidance of $60,000,000 to $70,000,000 Sure, Eric.

A few questions there, Nick. So I guess first, from the standpoint of our total capital, our guidance is about $60,000,000 to $70,000,000 I'd say our normal sort of maintenance CapEx is around $9 to $10 a ton. So embedded in that is about $20,000,000 of growth capital. I'd say it's split pretty evenly between Elk Creek and Berwind. I mean there's a a few million in addition, but at Elk really, it's basically increasing infrastructure for the most part to make sure that we can get to 3,000,000 tons on sustainable basis. And at Burrow and Chris discussed, a number of the projects that basically allow us to mine full out ultimately in the third and fourth sections. So I guess what I would say is if market conditions remain weak, there's probably some room in our CapEx to come down. At the same time, as Randy sort of detailed in his remarks, there's a lot of carnage out there. And certainly, we do think that the market is poised to move higher in the second half of the year.

Yes, I'll make one other comment. So I mean, basically, in this kind of sideways market, in terms of committing new capital to growth, we basically, as I said, want to see some clarity. Whether that's one or two quarters of stabilized pricing or hopefully even increased pricing remains to be seen. But the the nice thing about where we're teed up at Mayman, of course, we already have a prep plant in place. We've got probably for the deep portion about a $30,000,000 spend which would be graduated over a period of time. That's not one year spend, that's probably more like a two year spend.

And at Berwind, we're essentially just continuing through an existing mine to add more sections. So that's that's a relatively modest spend, I would say, in the beginning about the $10,000,000 range and that's once again not a one year spend, that's probably a two year spend. So our cap requirements for these additions are in relative terms pretty darn modest. I can't think of too many people who can add 2,000,000 tons for essentially $40,000,000 in CapEx. So that's how I'd look at it.

Randy, thanks again for all the additional detail. Good to hear you have that optionality. Maybe just one last one on the rare earth side. I mean, this is seemingly a project of tremendous scale So what kind of order of magnitude should we be anticipating as far as development CapEx and is there a CapEx level you'd be able to point us to that's required for the construction of the pilot plant later this year.

Sure.

So the way that I teed it up, I think both in our earnings release as well as in my Ramaco, we will have a pretty granular description of not only the technical aspects of the deposit the grades, the recovery rates, but also of course the economics and the CapEx which are inclusive in the floor techno economic report. That's been hung up bluntly because there's such a overwhelming demand for people doing testing of various rare earth projects at the labs that do the chemistry and metallurgic analysis for those are quite backed up and we've been having delays in getting the test results back. We've got those results back and Fluor is telling us by the middle of the latter part of next month they will have completed the report. And so instead of front running that report by kind of drip and dragging out CapEx numbers and pilot plant numbers, we'll let the report speak for itself. And as I said, once we put that out there, we'll be even happy to have a sort of a separate rare earth call, which we've done before to go into far more detail than we would on this call, certainly today or certainly even on a normal earnings call where we're talking about our Met operations as well.

Fair enough, Brandy. Well, guys, I appreciate all the color. Nice work and continued best of luck.

Thanks Nick.

Our next question comes from Chris Lefemma of Jefferies. Please go ahead. Thanks, operator. Hi, guys. Thanks for taking my questions.

Just want to ask first around the the reduction in unit costs. I mean that's been an impressive performance there. And obviously, it's helped offset some of the weakness in prices. But I'm wondering to what extent, let's assume that met coal prices begin to really recover in the next year. Does some of the cost reductions that you've realized so far begin to reverse? That's my first question.

So largely the that's Chris. I'm sorry, this is Chris. But largely the cost reduction has been driven by the move from more challenging geology in some of our older mines into thicker horizons where the clean tons per foot is higher and it drives down the unit cost. Obviously, we've seen a little bit of benefit, I guess, by the lower sales price in our royalty costs and other sales related So that would reverse as the prices go back up. But absent a spike in pricing, we wouldn't expect to see major labor increases, which is what sort of drove a lot of it in 2022, 2023. So I think structurally, the lower cost should be in place with just the normal moves around sales related.

And Chris, this is Randy. I'd add, as you heard from our remarks, we were seeing a lot of supply reductions out there.

So in the space, not only vis a vis labor, but some of the other types of equipment, steel related and other.

We're seeing a softening somewhat in the market. So we would not expect that trend to reverse given the amount of supply coming out of the market unless there's really, as Chris said, a real spike because if we're just going to see somewhere around 15,000,000 to 20,000,000 tons come out of the Central App And Northern App markets. That's going to create a large hole for not only suppliers, but also the labor markets.

And does that capacity come back online in a better market or is some of this capacity you think permanently gone?

I think, Chris, a lot of that capacity may be gone. On a permanent basis. The one thing, of course, a lot of people don't appreciate as much is really the depletion that's in the Central Appalachian Basin. It's a mature basin and a lot of these mines particularly for a lot of the larger legacy producers, are in mines that are very mature. And they are coming not the end of their useful life, they're certainly coming to a point where the geology is declining. That's why we've got relatively new mines sort of fresh geology and thicker seams, which is obviously an advantage to us from a cost perspective. Thanks, Chris. Appreciate you getting on the call.

Our next question comes from Nathan Martin of The Benchmark Company. Please go ahead. Thanks, operator. Good morning, guys.

Congrats on the fourth quarter results and the continued cost per ton progress. And maybe just kind of starting there and more clarification question. You mentioned the commissioning of the Maven prep plant in the fourth quarter reduces trucking costs by roughly $20 a ton at that complex. However, I know you guys had previously talked about a number around $40 a ton. Is there more savings potentially there? Or is that just maybe a clean versus raw ton comparison? Just wanted to get clarification.

Yes. So good question. This is Chris again. The trucking cost on a raw basis was converted back to clean was about $40 a ton. So we're avoiding that. However, until we build the railroad out directly on-site, we're now trucking our clean coal, which has approximately the same unit cost of $20 per ton, when we build our load out and rail the railcars directly at Maven, then that additional $20 will come out as well.

And Chris, when do you expect that to be complete? [indiscernible] I guess, I would say, under consideration. We're going ahead with engineering work and some of the design work on that. But probably not this calendar year.

Okay. But is it right to assume then that would potentially improve those costs even more? Yes, absolutely. As soon as that project is put in place, we'd expect just on the top side of $20 cost savings.

Okay, perfect. Thanks for clarifying that. And then maybe just sticking with the cost per ton, you guys just talked about some of the variable costs associated with price. What price range are you assuming in your full year cost per ton guidance range?

We're just hey Nate, it's Jeremy. We're just generally using the forward curve for planning purposes.

Okay. Thanks, Jeremy. And then maybe finally, you guys have touched on this a bit, but I wanted to ask how would you rank or prioritize your capital spending today? Obviously liquidity position is strong, you've got the dividend policy in place. But we continue to see this prolonged weakness in the market. You mentioned there could be some opportunities for M and A because of that. You're also continuing down the path of the rare earth process at the Brook Mine. So how do you see balancing growth whether it's internal or external shareholder returns and then protecting your business during this downturn?

Sure. This is Randy. Think to your question about M and A, as I've said before, not too fond of the M, but we're happy to look at the A. So in this kind of a down or distressed market, we will try to be opportunistic if we see situations where particularly reserve plays or perhaps infrastructure plays that might become available at at opportunistic prices, we'll take a look at that. That's something you can't really plan You kind of hope for, but you certainly don't expect. As far as our normal cadence for growth CapEx, I think we've explained that. Got a very modest growth CapEx laid out for '25 obviously, reflecting the market.

We're not ready to push start button on some of these projects at Mabon and Burwin until we see a little bit more clarity. As far as what's going on in Wyoming, we have been as frankly surprised at how modest our spend has been. Been to take this project to where it is for about $10,000,000 I think is has been a very well used amount of our capital to advance a project that has transformative potential. But as we move forward right now, we we've gotten a recommendation from the Wyoming Energy Authority for $6,000,000 which is certainly appreciated. That will be focused on the prep plant or the pilot plant rather We don't have too much additional drilling that we have to do, we'll probably continue to drill throughout the years because this is such a prolifically large site. That to really prove it up is going to take a good deal of time. Somebody remarked to me, it's almost like you've got a Permian Basin of rare earth. So you've got a lot of work to do geologically scope it out.

As far as the pilot plant and the the future commercial plant, those will be dictated in some instance by the the nature of the process we will ultimately use chemically and metallurgically to actually refine the rare earths and the critical minerals. We're going through that testing now Obviously, the pilot plant is designed to refine that testing. And come up with a solution that will be optimized as we move forward. So So we don't have too much capital that we've allocated to that And on the mining, the same thing. We've already started doing some of the mine mobilization there now. We'll start really moving some dirt around probably in June and July timeframe. And then we'll start construction on-site for the pilot plant sometime, I would say, late summer early fall. We're going to basically bifurcate the pilot process because we're going to have some of it designed and tested off-site in a test facility at one of our chemical testing third party laboratories and then we'll take that process essentially move it to the Wyoming site and that's what will start to occur this fall.

Very helpful, Randy. I guess just one thought there too. Is that pilot plant CapEx included in the current $60,000,000 to $70,000,000 CapEx range for this year? Yes, yes, it is.

Okay.

Perfect. All right, guys. Very, very helpful. Appreciate the time.

And honestly, we did not include originally the $6,000,000 that we've now been recommended to receive an award from Wyoming. So that's an extra bit of wind in our sails, so to speak.

Got it.

Appreciate it.

Thanks, Nate.

Ladies and gentlemen, this concludes our question and answer session. I would now like to turn the conference back over to the Chairman and CEO, Randall Atkins. For closing remarks.

Well, I'd like to thank everyone for being on the call today. We will certainly look forward to our next earnings call and then also hopefully to in the interim have a call with you all related to our rare earth project. So once again, thanks very much.

Thank you.

The conference has now concluded. Thank you for attending today's presentation. And we now disconnect your lines.