METC

ANALYST NOTE: METC (Ramaco Resources, Inc.) Date: 2026-06-13 Analyst: StoryStocks-Native Equity Analyst

1. Structural Readiness

Current State: Forming

• Current Price: $13.99
• Aggressive Entry (Pre-Breakout): $15.46
• Conservative Entry: None (Breakout not yet confirmed)
• Breakout Level: $57.80 (Resistance to clear for confirmation)
• Extension: None (Price is not currently extended above the breakout level; it is in the accumulation phase).
• Volatility Context: Current ATR is 8.2% (Extreme). This places the stock in the highest historical volatility bucket, indicating significant price noise and a higher probability of severe drawdowns if the setup fails.

2. Thesis Layer

Thesis Status: TACTICAL / Setup-Led Macro Context: There is NO named secular thesis attached to this name as of 2026-06-13. The setup is driven by technical structure and immediate business fundamentals rather than a broad, named macro narrative (e.g., "Green Energy Transition" or "AI Infrastructure"). Judgment Criteria: The investment case must be judged strictly on the quality of the forming coil structure, the strength of the management's execution on production targets, and the visibility of the backlog. Do not invent a macro thesis to justify the position; the conviction must rest on the setup quality and the specific evidence of demand visibility provided in the recent filings.

3. Business Fundamentals

Company Overview: Ramaco Resources, Inc. is a U.S.-based producer of high-quality metallurgical (coking) coal. The company operates a portfolio of development properties including Elk Creek, Berwind, Knox Creek, and Maben. Business Model: Revenue is generated through the sale of metallurgical coal to domestic blast furnace steel mills and international consumers. The company utilizes a mix of fixed-price contracts and index-linked pricing mechanisms. Key Evidence (As of 2026-06-13):

• Production & Capacity: As of the Q1 2026 earnings call (2026-05-12), the company has secured commitments for 3.5 million tons, representing 90% of planned annual production at the midpoint. Management expects to satisfy 88% of these commitments in 2026 and 12% in 2027 (Source: E1, E13).
• Pricing & Contracts: Domestic customers account for 1.1 million tons at an average fixed price of $138/ton. Export commitments total 2.4 million tons, split between 1 million tons at $107/ton (fixed) and 1.4 million tons on index-linked pricing (Source: E5, E6).
• Financial Performance: In Q1 2026, the company sold 892,000 tons generating $121.6 million in revenue. In 2025, total sales were 3.8 million tons with $536.6 million in revenue (Source: E11, E17).
• Reserves & Resources: The company maintains 85 million reserve tons and 1,337 million measured and indicated resource tons of high-quality metallurgical coal (Source: E9).
• Future Guidance: Management plans to grow annual production to possibly seven million clean tons annually, subject to market conditions and permitting (Source: E15, E21).
• Operational Updates: A preliminary feasibility study for a new flow sheet process is on track for completion in late 2026, expected to generate material increases in incremental revenue and free cash flow (Source: E3, E4).

4. Archetype and Conviction

Archetype: Cyclical Recovery Rationale: The company fits the "Cyclical Recovery" archetype due to its exposure to the global steel cycle, the recovery in domestic and export demand, and the strategic positioning of its low-cost assets. The evidence suggests a transition from a development phase to a high-utilization production phase, supported by a backlog of commitments. Valuation & Financials: The financial spine indicates a forward consensus EPS of -0.60778 for FY1 and 0.15222 for FY2 (Source: E27). This suggests the company is currently in a loss-making phase (likely due to capital deployment or one-time costs) but is projected to turn profitable in the subsequent year as production scales. Conviction Stack:

• Thesis Strength: Low (No named macro thesis; purely tactical).
• Evidence Quality: High. The backlog visibility (90% of planned production secured) and specific pricing data ($138 fixed domestic, $107 fixed export) provide strong near-term revenue visibility.
• Structural Quality: Moderate. The setup is "Forming," which is a positive signal but incomplete. The Extreme ATR (8.2%) is a significant negative structural factor, indicating high volatility and risk of false breakouts or deep pullbacks.
• Setup Readiness: Partial. The 69% historical breakout rate for forming coils is a favorable statistic, but the price ($13.99) is far below the breakout level ($57.80), requiring a massive move to confirm the setup.
• Rerating Potential: High, contingent on the successful execution of the new flow sheet process and the realization of the 7 million ton production target.

5. Invalidations, Strengtheners, and Gaps

Invalidation Triggers:

• Fundamental: A significant reduction in the 3.5 million ton commitment backlog or a failure to meet the Q2 2026 guidance of 900k–1M tons would undermine the revenue visibility.
• Operational: Delays in the Hatch preliminary feasibility study beyond late 2026 or negative results from the new flow sheet process.

Strengtheners:

• Technical: A sustained close above $57.80 would confirm the breakout, shifting the setup to "Confirmed-Active."
• Fundamental: Confirmation of the "material increase" in free cash flow from the new flow sheet process or an upward revision of the 2026 production guidance.
• Market: A sustained rise in global steel prices or a confirmed supply imbalance as management expects (Source: E7).

Evidence Gaps:

• Cost Structure: While revenue visibility is high, specific details on the *cost per ton* for the new flow sheet process are not yet quantified in the provided evidence, only the expectation of "material increase" in revenue/FCF.
• Capital Requirements: The plan to grow to 7 million tons is "subject to... additional capital deployment," but the specific capex requirements and funding sources for this expansion are not detailed in the current evidence block.
• Customer Concentration: While 3 customers accounted for 34% of 2025 revenue, the specific concentration risk for the 2026 commitments is not explicitly broken down beyond the aggregate tonnage.

PRIVATE ANALYST CALL

Judgment: Speculative Confidence: medium Key evidence: 90% of planned annual production secured in commitments; Q1 2026 revenue of $121.6M on 892k tons sold; management guidance for 7M ton annual capacity. Key risks: Extreme ATR of 8.2% indicating severe volatility; price is far from breakout level ($13.99 vs $57.80); forward EPS remains negative for FY1. Sizing hint: Position size must be reduced significantly to account for the extreme volatility bucket and the unconfirmed nature of the forming coil. Expected path: Management executes on the 3.5M ton backlog and completes the feasibility study in late 2026, potentially driving a re-rating if the new flow sheet proves viable. Expected horizon: 12 to 18 months for the structural setup to resolve or for the feasibility study to provide a catalyst. Failure mode to watch: A daily close below $13.15, which would invalidate the forming coil structure and signal a breakdown in the current support base.