Ramaco Resources, Inc. (METC) FY 2024 MD&A

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion is intended to assist you in understanding our results of operations and our present financial condition and contains forward-looking statements that reflect our future plans, estimates, beliefs and expected performance. The forward-looking statements are dependent upon events, risks and uncertainties that may be outside our control. We caution you that our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences are discussed elsewhere in this Annual Report, particularly in the “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors,” all of which are difficult to predict. In light of these risks, uncertainties and assumptions, the forward-looking events discussed may not occur. We do not undertake any obligation to publicly update any forward-looking statements except as otherwise required by applicable law.

Overview

Our primary source of revenue is the sale of metallurgical coal. We are a pure-play metallurgical coal company with 66 million reserve tons and 1,352 million measured and indicated resource tons of high-quality metallurgical coal. Our plan is to continue development of our existing properties and grow annual production over the next few years to approximately seven million clean tons of metallurgical coal, subject to market conditions, permitting and additional capital deployment in the medium-term. We may make acquisitions of reserves or infrastructure that continue our focus on advantaged geology and lower costs.

The overall outlook of the metallurgical coal business is dependent on a variety of factors such as pricing, regulatory uncertainties, and global economic conditions. Coal consumption and production in the U.S. are driven by several market dynamics and trends including the U.S. and global economies, the U.S. dollar’s strength relative to other currencies and accelerating production cuts. Blast furnace steelmaking is more prevalent outside the U.S. compared to domestic steel production, which creates demand for exports of metallurgical coal, including demand growth in Asia Pacific.

Global metallurgical coal markets softened in 2024 due to constrained economic growth in some regions of the world and continued conflict overseas. The global steel market experienced slower growth, especially in China, resulting in elevated levels of Chinese steel exports. These conditions have led steel companies to both cut back on their own production and to reduce the price they are willing to pay for their metallurgical coal feedstock. For 2025, overall steel demand will likely remain weak in the near term; however, supply cuts may occur for higher cost operations absent a significant upward movement in pricing. Longer term, the Company believes that limited global investment in new coking coal production capacity, the industrialization of emerging economies, expansion of urbanization globally, and an eventual return to economic growth will support coking coal markets overall.

We sold 4.0 million tons of coal during 2024 compared to 3.5 million tons during 2023. North American markets made up 33% of our revenues and export markets, excluding Canada, accounted for 67% of our revenues for

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both 2024 and 2023. Export sales often contain index-based pricing and, therefore, greater volatility in pricing and revenues.

The metallurgical coal markets are volatile in nature; therefore, the Company prioritizes managing its financial position and liquidity, while managing costs and capital expenditures and returning value to its shareholders.

In 2024, our total capital expenditures were $68.8 million, excluding capitalized interest of $1.5 million. In 2023, our capital expenditures were $82.9 million, excluding capitalized interest of $1.1 million. The decrease in capital expenditures was due to the Company’s progress related to strategic growth projects.

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The Company produced 3.7 million tons during 2024 compared to 3.2 million tons during 2023 as a result of the increase in capacity and completed development work. The Company expects full-year production volumes in 2025 between 4.2 and 4.6 million tons with an ability to vary production dependent on market conditions.

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While the Company normally pays cash dividends on a quarterly basis, the Company paid dividends in the fourth quarter of 2024 to both Class A and Class B shareholders in the form of Class B stock. This decision was based on the Company’s goal of returning value to its shareholders while maintaining the Company’s commitment to prioritize liquidity and financial optionality as we move into 2025.

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The Company continues to assess its potential rare earth elements and critical minerals deposit in Wyoming. Analysis performed to date indicates elevated levels of rare earth elements along with significant concentrations of critical minerals gallium and germanium, which were banned for export to the United States by China on December 2, 2024. The Company hopes to complete its techno-economic analysis of the overall commercial aspects of the potential opportunity and begin construction of a pilot processing facility in mid to late 2025. The Company recently received a $6.1 million matching grant from the Wyoming Energy Authority, which will be applied toward development of the pilot plant and related facilities at the Brook Mine.

No revenues have been recognized from the Company’s Wyoming initiatives.

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Results of Operations

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Net income and Adjusted EBITDA were lower in 2024 compared to 2023, despite the increase in sales volume, due to the decrease in metallurgical coal price indices. This occurred due to a variety of macroeconomic factors including the Chinese oversupply of steel during 2024. In addition, net income and Adjusted EBITDA for 2023 benefitted from $15.9 million of pre-tax income for proceeds received from insurance claims related to the 2022 Berwind ignition and 2018 silo failure. Refer to Non-GAAP Financial Measures below for an explanation of the Company’s calculation of Adjusted EBITDA.

Year Ended December 31, 2024 compared to Year Ended December 31, 2023

Our revenue includes sales to customers of Company-produced coal as well as smaller amounts of coal purchased from third parties. We include amounts billed by us for transportation to our customers within revenue and transportation costs incurred within cost of sales.

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For the year ended December 31, 2024, we had revenue of $666.3 million from the sale of 4.0 million tons of coal. During 2023, we sold 3.5 million tons of coal for total revenue of $693.5 million.

Coal sales information is summarized below:

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Revenue. Coal sales revenue for full-year 2024 was $666.3 million, approximately 4% lower than 2023, despite the increase in tons sold, due to the negative impact of pricing. The 15% increase in tons sold occurred in both North America and export markets, with export volumes increasing by 18% and North America volumes increasing by 10%. The volume increase was aided by the Company’s increased capacity for production achieved during late 2023. Revenue per ton sold decreased 17% from $201 per ton for the year ended December 31, 2023 to $167 per ton for year ended December 31, 2024 and was driven by the variability in index-based pricing for export sales. Revenue per ton sold (FOB mine), a non-GAAP measure which excludes transportation revenues and demurrage, decreased 18% from $170 per ton for the year ended December 31, 2023 to $140 per ton for the year ended December 31, 2024. Refer to Non-GAAP Financial Measures later in Item 2 for more information regarding this measure. U.S. metallurgical coal price indices have fallen by roughly 32% on a year-to-date basis driven by the macroeconomic conditions discussed previously. We expect metallurgical coal prices to remain volatile in the near term.

Refer to Note 2—Summary of Significant Accounting Policies—Concentrations and Note 11—Revenues in Item 8, Part II for additional information regarding sales to customers.

Cost of sales. Our cost of sales totaled $533.3 million for full-year 2024, approximately 8% higher than 2023, due to the increase in tons sold discussed above. Cost of sales per ton sold decreased 6% from $143 per ton in 2023 to $134 per ton in 2024. Cash cost per ton sold (FOB mine), a non-GAAP measure which excludes transportation costs, alternative mineral development costs, and idle mine costs, decreased 5% from $110 per ton in 2023 to $105 per ton in 2024. Mine costs for 2024 were impacted negatively by challenging geology and labor constraints in the first quarter of 2024 but improved thereafter due to efficiencies gained from increased production compared to 2023.

Asset retirement obligation accretion. ARO accretion was $1.5 million for 2024 and was nearly flat versus 2023.

Depreciation, depletion, and amortization. Depreciation, depletion, and amortization expense totaled $65.6 million in 2024 compared to $54.3 million in 2023. The increase in 2024 was due to the increases in plant and equipment and production versus 2023. The increase in 2024 also included $1.1 million of additional amortization of capitalized development for the Knox Creek Jawbone mine, which occurred due to the closure of the mine during 2024.

Selling, general and administrative (“SG&A”) expenses. SG&A expenses were $49.3 million for 2024 compared to $48.8 million for 2023. SG&A expenses in 2024 include a $3.9 million benefit accrued for the probable

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recovery of previously incurred attorney fees related to silo failure litigation developments, which is not indicative of future SG&A expenses. This matter offset most of the 2024 increase in stock-based compensation compared to 2023.

Other income (expense), net. Other income, net was $4.4 million in 2024 compared to $18.3 million in 2023. The activity in 2024 was primarily related to the $2.2 million recovery of previously incurred demurrage and other transportation-related matters, a $1.2 million lost coal recovery claim, and an actuarial gain of $0.5 million associated with the Company’s occupational disease benefit obligation. The activity in 2023 was related mostly to insurance proceeds received in 2023 related to the 2022 Berwind ignition event that occurred in 2022 and the silo failure that occurred in 2018. The Company received proceeds of $17.0 million during 2023 and had accrued a recovery asset of $1.1 million in the previous period; thus, a gain of $15.9 million was recognized in 2023. This activity is not indicative of expected future results.

Interest expense, net. Interest expense, net was approximately $6.1 million in 2024 as compared to $8.9 million in 2023. The decrease in net interest expense in 2024 was primarily due to the repayment of debt associated with the previous acquisitions of Ramaco Coal and Maben Coal.

Income tax expense. We recognized income tax expense of $3.7 million and $22.4 million in 2024 and 2023, respectively. The lower amount in 2024 was largely due to the decrease in income before taxes. Refer to Note 13 to the Consolidated Financial Statements included in Item 8 of Part I in this Annual Report on Form 10-K for an explanation of differences versus the statutory rate of 21%.

Year Ended December 31, 2023 compared to Year Ended December 31, 2022

Please see Part I, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our 2023 Annual Report on Form 10-K for a discussion of the results of operations for the year ended December 31, 2023 as compared to the year ended December 31, 2022.

Non-GAAP Financial Measures

Adjusted EBITDA. Adjusted EBITDA is used as a supplemental non-GAAP financial measure by management and external users of our financial statements, such as industry analysts, investors, lenders and rating agencies. We believe Adjusted EBITDA is useful because it allows us to more effectively evaluate our operating performance.

We define Adjusted EBITDA as net income plus net interest expense; stock-based compensation; depreciation, depletion, and amortization expenses; income taxes; accretion of asset retirement obligations; and, when applicable, certain non-operating items (income tax penalties and charitable contributions). A reconciliation of net income to Adjusted EBITDA is included below. Adjusted EBITDA is not intended to serve as a substitute to U.S. GAAP measures of performance and may not be comparable to similarly-titled measures presented by other companies.

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Non-GAAP revenue per ton sold. Non-GAAP revenue per ton sold (FOB mine) is calculated as coal sales revenue less transportation revenues and demurrage, divided by tons sold. We believe revenue per ton (FOB mine) provides useful information to investors as it enables investors to compare revenue per ton we generate against similar measures made by other publicly-traded coal companies and more effectively monitor changes in coal prices from period to period excluding the impact of transportation costs which are beyond our control. The adjustments made to arrive at these measures are significant in understanding and assessing our financial performance. Revenue per ton sold (FOB mine) is not a measure of financial performance in accordance with U.S. GAAP and, therefore, should not be considered as a substitute to revenue under U.S. GAAP.

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Non-GAAP cash cost per ton sold. Non-GAAP cash cost per ton sold (FOB mine) is calculated as cash cost of sales less transportation costs, alternative mineral development costs, and idle and other costs, divided by tons sold. We believe cash cost per ton sold provides useful information to investors as it enables investors to compare our cash cost per ton against similar measures made by other publicly-traded coal companies and more effectively monitor changes in coal cost from period to period excluding the impact of transportation costs which are beyond our control. The adjustments made to arrive at these measures are significant in understanding and assessing our financial performance. Cash cost per ton sold (FOB mine) is not a measure of financial performance in accordance with U.S. GAAP and, therefore, should not be considered as a substitute to cost of sales under U.S. GAAP.

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2025 Sales Commitments

As of December 31, 2024, we had entered into forward sales contracts for approximately 1.5 million tons to North American customers at an average fixed price of $152 per ton, excluding freight, 0.1 million tons to export

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customers at an average fixed price of $145 per ton, excluding freight, and 1.4 million additional tons to export customers priced against various benchmark indices. The Company expects to satisfy approximately 98% of these commitments in 2025 and the remainder in 2026. Sales commitments of another 0.5 million tons were obtained subsequent to December 31, 2024.

The annual contracting season with North American steel producers generally occurs in late-summer through the fall. As stated above, we had entered into forward sales contracts with certain North American customers at an average fixed price of $152 per ton, excluding freight, as of December 31, 2024. This is lower than the average fixed price of $166 per ton, excluding freight, that was obtained during the previous contracting season for North America.

Liquidity and Capital Resources

Our primary source of cash is proceeds from the sale of our coal production to customers. Our primary uses of cash include the cash costs of coal production, capital expenditures, acquisitions, royalty payments, and other operating expenditures.

Cash flow information is as follows:

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Cash flows provided by operating activities during 2024 decreased $48.4 million versus the prior year driven by lower cash earnings. Changes in operating assets and liabilities were favorable on a net basis versus the prior year, which was driven by receivables collections and was largely due to fluctuations in fourth quarter revenues for 2024, 2023, and 2022.

Net cash used for investing activities during 2024 decreased slightly by $1.4 million versus the prior year primarily due to lower capital expenditures of $14.1 million offset partially by $11.2 million of insurance proceeds received in 2023 related to previous investments. The decrease in capital expenditures was due to the Company’s continued progress related to strategic growth projects and, therefore, the need for less growth capital expenditures. The $11.2 million of insurance proceeds received during 2023 related to property, plant, and equipment claims from the 2022 Berwind ignition event and 2018 silo failure.

Net cash used for financing activities was $31.7 million lower in 2024 versus 2023, which was driven by debt-related activities. The Company repaid $38.2 million more acquisition-related financing in 2023 compared to 2024. In addition, the Company issued new senior notes during 2024 resulting in net cash proceeds of $55.2 million and paid off its outstanding revolver borrowings from 2023 in the amount of $42.5 million while continuing to pay down its finance leases and equipment loans. Equity-related activities, in total, were nearly flat year to year despite the Company’s declaration of non-cash dividends to its Class A and Class B shareholders in the fourth quarter of 2024 as discussed earlier. The Company began paying cash dividends on Class B common stock during the third quarter of 2023 shortly after the initial distribution discussed below.

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On June 21, 2023, the Company distributed Class B common stock, a tracking stock, to provide existing holders of the Company’s common stock an opportunity to participate directly in the financial performance of the Company’s CORE assets on a stand-alone basis, separate from the Company’s metallurgical coal operations. CORE assets were acquired initially by the Company as part of the Company’s acquisition of Ramaco Coal in the second quarter of 2022. The financial performance of CORE assets consists of the following non-cost-bearing revenue streams based on the Company’s current expectations:

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Dividends paid on the tracking stock allow the Company to return to Class B common stockholders a portion of the savings from royalties and infrastructure usage fees resulting from the acquisition of Ramaco Coal. In addition, the tracking stock provides an opportunity for Class B common stockholders to participate directly in the potential revenue growth associated with the development of carbon products and rare earth elements. Separate financial statements for CORE have not been included as exhibits to this filing since CORE’s financial performance and dividends will be evaluated based on non-cost-bearing revenue streams, at least initially, and other potential forms of passive income rather than reduced by allocated costs and expenses.

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All cash dividends declared to date for Class B common stock were based on 20% of CORE royalty and infrastructure fees for the previous quarter.

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Refer to Part II, Item 8, Note 16 for information regarding dividends declared subsequent to the date of the financial statements.

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The Company anticipates distributing quarterly dividends at similar per-share amounts in the future; however, it is not known at this time whether the Company will declare additional non-cash and/or stock dividends to Class A and Class B shareholders in future periods. Future declarations of dividends are subject to Board of Directors’ approval and may be adjusted as business needs or market conditions change.

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Restricted cash balances at December 31, 2024 and December 31, 2023 were both $0.8 million and consisted of funds held in escrow for potential future workers’ compensation claims. Restricted cash balances were included in other current assets on the consolidated balance sheets.

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Please see Part I, Item 7, "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our 2023 Annual Report on Form 10-K for a discussion of the Company’s cash flows for the year ended December 31, 2023 as compared to the year ended December 31, 2022.

Indebtedness

At December 31, 2024, we had $92.4 million of outstanding debts, or $88.6 million net of unamortized issuance costs. Our indebtedness was comprised of $92.0 million of senior note debt ($88.1 million net of unamortized discounts and issuance costs) and $0.4 million of various equipment loans. Of these amounts, $0.4 million is contractually due in 2025.

The Company’s outstanding debt decreased slightly by $1.6 million in 2024 as repayments of revolver borrowings, acquisition-related debt, and equipment loans were nearly offset by new senior note debt issued in the fourth quarter of 2024. Revolver borrowings, which are typically used for the management of our normal operating cash position, were repaid in full at December 31, 2024. The Company has also repaid in full all financing related to its previous acquisitions of Ramaco Coal and Maben Coal.

The Company completed a debt offering of $57.5 million, in the aggregate, of the 8.375% Senior Unsecured Notes due 2029 (the “Senior Notes due 2029”). The Company incurred transaction-related fees of $2.3 million and third-party debt issuance costs of $0.8 million (including a small portion not yet funded at December 31, 2024). These notes mature on November 30, 2029, unless redeemed prior to maturity. The Senior Notes due 2029 bear interest at a rate of 8.375% per annum, which is payable quarterly in arrears. The proceeds, net of transaction fees and debt issuance costs, are for general corporate purposes, including funding future investments, making capital expenditures, and funding working capital.

The acquisition of Ramaco Coal helps to reduce royalty expenses associated with the Company’s metallurgical operations in the Appalachian basin and, along with the acquisition of Maben Coal, complement our existing low-volatile portfolio, both of which help achieve the Company’s objective of remaining among the lowest cost producers of metallurgical coal in the U.S. In addition, the acquisition of Ramaco Coal includes potential concentrations of rare earth elements and is being used to support the Company’s possible expansion into the manufacture and commercialization of advanced carbon products and materials from coal, both of which provide additional growth opportunities in the future.

In addition to the debts discussed above, the Company finances the payment of premiums associated with various insurance policies. The Company’s liability at December 31, 2024 was $4.3 million, which must be repaid in 2025.

The Company also has various finance leases for mining equipment, which generally include terms from three to five years. The Company’s total liability for finance leases at December 31, 2024 was $13.7 million, which includes $6.2 million due in 2025 and $7.5 million due thereafter.

Refer to Notes 7 and 8 to the Consolidated Financial Statements included in Item 8 of Part I in this Annual Report on Form 10-K for additional information on indebtedness and leases.

Liquidity

The metallurgical coal markets are volatile in nature; therefore, the Company prioritizes managing its financial position and liquidity, while managing costs and capital expenditures and returning value to its shareholders.

On May 3, 2024, the Company entered into the First Amendment Agreement to the Second Amended and Restated Credit and Security Agreement in order to, among other things, extend the maturity date and increase the size of its existing Revolving Credit Facility. The amended facility has a maturity date of May 3, 2029, and provides an initial aggregate revolving commitment of $200 million as well as an accordion feature to increase the size by an additional $75 million subject to certain terms and conditions, including the lenders’ consent. The amended facility provides the Company with additional flexibility to pursue further growth in production while meeting normal operating

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requirements. The terms of the amended facility also require the Company to maintain certain covenants, including fixed charge coverage ratio and compensating balance requirements. Borrowings under the amended facility may not exceed the borrowing base as determined under the amended formula included in the agreement.

At December 31, 2024, we had $33.0 million of cash and cash equivalents and $104.8 million of remaining availability under our Revolving Credit Facility for future borrowings. Cash and cash equivalents include $7.5 million of compensating balances held in dedicated accounts to assure future credit availability under the revolver. The Company is party to an arrangement that began in 2023 whereby our cash and cash equivalents are placed at various banks in amounts no greater than the $250,000 FDIC-insured limit to help safeguard against potential losses in the financial sector. The Company’s total current assets were $167.6 million and were in excess of total current liabilities by $45.2 million as of the balance sheet date.

The terms of the Revolving Credit Facility include covenants limiting the ability of the Company to incur additional indebtedness, make investments or loans, incur liens, consummate mergers and similar fundamental changes, make restricted payments, and enter into transactions with affiliates. The terms of the facility also require the Company to maintain certain covenants, including fixed charge coverage ratio and compensating balance requirements. A fixed charge coverage ratio of not less than 1.10:1.00, calculated as of the last day of each fiscal quarter, must be maintained by the Company. In addition, the Company must maintain an average daily cash balance of $5.0 million, as determined on a monthly basis, in a dedicated account as well as an additional $1.5 million and $1.0 million in separate dedicated accounts to assure future credit availability. At December 31, 2024, we were in compliance with all debt covenants under the Revolving Credit Facility.

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As stated earlier, our primary use of cash includes capital expenditures for mine development, infrastructure, and equipment as well as ongoing operating expenses. As of the date of this Annual Report, we expect to fund our capital and liquidity requirements for the next twelve months and the reasonably foreseeable future with cash on hand, borrowings under the Revolving Credit Facility, and projected cash flows from operations. Factors that could adversely impact our future liquidity and ability to carry out our capital expenditure program include the following:

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If future cash flows were to become insufficient to meet our liquidity needs or capital requirements, due to changes in macroeconomic conditions or otherwise, we may reduce our expected level of capital expenditures for new mine production and/or fund a portion of our capital expenditures through the issuance of debt or equity securities, new debt arrangements, or from other sources such as asset sales.

On September 1, 2023, the Company filed a shelf registration statement to sell any combination of Class A common stock, Class B common stock, preferred stock, depositary shares, debt securities, warrants, and rights at an aggregate initial offering price of up to $400.0 million, which was declared effective on September 29, 2023. The shelf registration was utilized in part for the issuance of senior note debt in the fourth quarter of 2024 as discussed above.

Working Capital

Accounts receivable were $73.6 million at December 31, 2024, which declined $23.3 million versus December 31, 2023 driven by the $31.8 million decrease in fourth quarter revenues year over year. Inventories were $43.4 million at December 31, 2024, which were $6.2 million higher versus December 31, 2023 driven by increased production. Accounts payable were $48.9 million at December 31, 2024, down slightly from December 31, 2023 due in part to variations in spending.

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Capital Requirements

During 2024 we spent $68.8 million for capital additions, including $13.6 million related to the preparation plant and expansion of our Maben Complex, compared to $82.9 million during 2023. The decrease in 2024 was due largely due to the substantial progress made by the Company in achieving its initiatives to grow production.

We anticipate capital expenditures of approximately $60-70 million in 2025, which includes roughly $20 million of growth capital relating to increasing the per annum production run-rate at the Elk Creek Complex and increasing production at the Berwind mine.

Contractual Obligations

The following table summarizes our significant contractual obligations at December 31, 2024:

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Minimum royalties represent the contractual minimum amounts to be paid monthly, quarterly or annually for the right to access mineral properties and mine certain reserves and resources. The amounts are generally recoupable against future production royalties to be paid.

Refer to the previous discussion of Indebtedness above for additional information regarding the Company’s outstanding debt, insurance financing, and finance leases. Leases payments in the table above include payments for both financing and operating leases.

Take-or-pay obligations represent those liquidated damage obligations as determined by contract volume minimums for transportation of coal at the representative rates of transportation or a portion thereof. Additional take-or-pay commitments are currently in negotiation and are not reflected in the table above.

Asset retirement obligations have been excluded from the table above. Accounting for asset retirement obligations requires a number of estimates, including the amount and timing of payments to satisfy the obligation. The total liability recognized on the Company’s balance sheet for asset retirement obligations was $31.1 million at December 31, 2024. Refer to Critical Accounting Policies and Estimates below as well as Note 5 to the Consolidated Financial Statements included in Item 8 of Part I in this Annual Report on Form 10-K for additional information.

Estimated payments related to worker’s compensation and occupational disease obligations have also been excluded from the table above. Refer to Critical Accounting Policies and Estimates below for additional information related to these obligations. Refer also to Note 6 to the Consolidated Financial Statements included in Item 8 of Part I in this Annual Report on Form 10-K for additional information related to accrued expenses and other liabilities.

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Off-Balance Sheet Arrangements

In the normal course of business, we are a party to certain off-balance sheet arrangements, such as bank letters of credit and performance or surety bonds. Liabilities related to these arrangements are not reflected in consolidated balance sheets, and we do not expect any material adverse effects on our financial condition, results of operations, or

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cash flows to result from these arrangements. We primarily use surety bonds to secure our financial obligations related to reclamation and other matters. Total surety bonds at December 31, 2024, were $32.3 million.

Critical Accounting Policies and Estimates

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the amounts of revenue and expenses reported for the period then ended.

Coal Reserves. Our coal reserves and resources are generally updated on an annual basis. There are numerous uncertainties inherent in estimating quantities and values of coal reserves and resources, including many factors beyond our control. As a result, estimates of coal reserves and resources are by their nature uncertain. Information about our reserves and resources consists of estimates based on engineering, economic, and geological data assembled by third-party qualified persons. Information used to determine recoverable reserves and resources include geological conditions, historical production from the area compared with production from other producing areas, assumed effects of regulations and taxes by governmental agencies, assumptions governing future prices, and future operating costs. Each of these may in fact vary considerably from the assumptions used in estimating reserves and resources. For these reasons, estimates of economically recoverable quantities of coal attributable to a particular group of properties, and classification of these reserves and resources based on risk of recovery and estimates of future net cash flows, may vary substantially. Actual production, revenues, and expenditures with respect to reserves and resources will likely vary from estimates and these variances may be material. Variances could affect our projected future revenues and expenditures, valuation of coal reserves and resources, and amortization and depletion of mine development costs and mineral rights.

Asset Retirement Obligations. We initially recognize as a liability an asset retirement obligation, or ARO, associated with the retirement of a tangible long-lived asset in the period in which it is incurred or a reasonable estimate of fair value can be made, with an associated increase in the carrying amount of the related long-lived asset. The initially recognized asset retirement cost is amortized using the same method and useful life as the long-lived asset to which it relates. Accretion expense is recognized over time as the discounted liability is accreted to its expected settlement value. The liability is reduced as the reclamation work is performed and the related costs are applied.

Estimating the ARO requires management to make estimates and judgments regarding timing and existence of a liability, as well as what constitutes adequate restoration. Inherent in the fair value calculation are numerous assumptions and judgments including the ultimate costs, inflation factors, credit-adjusted discount rates, and the timing of the related cash flows. On at least an annual basis, we review our ARO liabilities and make necessary adjustments for significant increases in disturbed acreage, mining permit changes, significant mine plan revisions, and changes in cost estimates or timing of performance. To the extent future revisions are made to the ARO liability, a corresponding adjustment is made to the related asset.

If our assumptions differ from actual experience, or if changes in the regulatory environment occur, our actual cash expenditures and costs that we incur could be materially different than currently estimated. The inflation per year assumption used in the most recent estimate was approximately 3% based on a weighting of multiple indices.

Occupational Disease (Pneumoconiosis) Obligations. We recognize as a liability to provide for occupational illness (pneumoconiosis) benefits to eligible employees, former employees and dependents as required by the Mine Act. The occupational illness benefit obligation represents the present value of the actuarially computed liabilities for such benefits over the employees’ applicable years of service.

Estimating the future occupational disease (pneumoconiosis) benefits requires management to make estimates and judgments regarding timing and existence of a liability utilizing third-party actuaries to assist in preparing what constitutes adequate liability amounts. Inherent in the calculation are numerous assumptions and judgments including the ultimate costs, mortality factors, credit-adjusted discount rates, and timing of settlement. These estimates are subject to uncertainty due to a variety of factors, including limited Ramaco-specific claim volume, developments regarding medicine and treatment, and future cost trends. As a result, volatility in future estimates may occur and actual costs

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could differ significantly from the estimated amounts. The Company recognized a $0.5 million actuarial gain in the fourth quarter of 2024 due in part to a 0.6% increase in the discount rate assumption.

Impairment of Long-lived Assets. We review our held-and-used long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. Assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of the cash flows of other groups of assets, which is generally at the mine level or at the mining complex level for mines that share infrastructure and/or developed access.

Events and circumstances that may trigger a recoverability assessment include, but are not limited to, a current expectation that a long-lived asset will be disposed of significantly before the end of its previously estimated useful life, a significant adverse change in the extent or manner in which a long-lived asset or asset group is being used or in the physical condition of the asset(s), and an accumulation of costs significantly in excess of the amount originally expected. We generally do not view short-term declines in metallurgical coal prices as a triggering event for conducting impairment tests because of historic price volatility. In addition, a temporary idling of operations at a particular mine or complex may or may not be viewed as a triggering event depending on the remaining life of the mine, the length of time the mine is expected to be idle, and the amount of incremental costs expected to resume operations.

When events or changes in circumstances occur that trigger a recoverability test, the test is performed by comparing projected undiscounted cash flows from the use and eventual disposition of an asset or asset group to its carrying amount. If the projected undiscounted cash flows are less than the carrying amount, an impairment loss is recorded for the excess of the carrying amount over the estimated fair value of the asset or asset group, if any.

We make various assumptions, including assumptions regarding future cash flows in our assessments of long-lived assets for impairment. The assumptions about future cash flows and growth rates are based on the current and long-term business plans related to the long-lived assets.

Income Taxes. We are required to estimate the amount of tax payable or refundable for the current year and the deferred income tax liabilities and assets for future consequences of events that have been reflected in our financial statements or tax returns for each tax paying jurisdiction in which we operate. This process requires management to make judgments regarding the timing and probability of the ultimate tax impact of various agreements and transactions. We initially recognize the effects of a tax position when it is more than 50% likely, based on the technical merits that the position will be sustained upon examination. Our determination of whether or not a tax position has met the recognition threshold depends on the facts, circumstances, and information available at the reporting date.

We provide for deferred income taxes for temporary differences arising from differences between the financial statement and tax basis of assets and liabilities existing at each balance sheet date using enacted tax rates. A valuation allowance may be recorded to reflect the amount of future tax benefits that management believes are not likely to be realized. The assessment takes into account expectations of future taxable income or loss, available tax planning strategies and the reversal of temporary differences. The development of these expectations involves the use of estimates such as production levels, operating profitability, timing of development activities and the cost and timing of reclamation work. If actual outcomes differ from our expectations, we may record an additional valuation allowance through income tax expense in the period such determination is made. The Company had no valuation allowance at December 31, 2024.

Actual income taxes could vary from the estimates and judgments above due to future changes in income tax law, significant changes in the jurisdictions in which we operate, our ability to generate sufficient future taxable income, or unpredicted results from the final determination of each year’s liability by taxing authorities. These changes could have a significant impact on our financial position.

Recent Accounting Pronouncements. See Item 8 of Part II, “Financial Statements and Supplementary Data—Note 2—Summary of Significant Accounting Policies—Recent Accounting Pronouncements.”

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