-$1.65
$7.76
bear -$1.65
base $0.40
bull $7.76
margin of safety $0.25
market price* $7.83
Business condition attached to the margin of safety
At least two consecutive quarters of positive cash from operations before working-capital swings, after deducting stock compensation and the roughly $45-50 million a year of non-growth capital spending, showing the coal business covers its own costs at prevailing prices.
Ramaco Resources mines high-quality metallurgical coal, the type used to make steel, from complexes in southern West Virginia and southwestern Virginia (Elk Creek, Berwind, Knox Creek and Maben). In 2025 it sold 3.8 million tons and booked $536.6 million of revenue. About 63% of revenue came from export customers in Europe, South America, Asia and Africa and 37% from North American steel and coke producers. Three customers accounted for 34% of 2025 revenue. It also owns the Brook Mine rare-earth project near Sheridan, Wyoming, which is still in development and has no revenue. Per-share values below cover both the Class A and Class B shares, about 66.2 million shares at the end of 2025. How we measure earnings. We start with cash from operations, remove swings in working capital, subtract stock-based compensation as a real cost, and subtract the capital spending needed just to keep mines running (spending that grows capacity is excluded in years when revenue rose). On that basis the business earned roughly $12.9 million in 2018, $4.8 million in 2019, a loss of $20.1 million in 2020, $52.0 million in 2021, $100.6 million in 2022, $80.4 million in 2023, $10.5 million in 2024 and a loss of $56.3 million in 2025. We use the middle value of those eight years, about $11.7 million a year (about $0.18 a share on today's share count), because they span a full coal cycle: the 2020 trough, the 2021-2023 boom and the 2024-2025 downturn. Looking only at 2021 onward and leaving out the boom years of 2022 and 2023, whose pricing has since reversed, gives about $10.5 million, so the two views agree. What has happened recently. Revenue per ton at the mine fell from $140 in 2024 to $120 in 2025, while cash cost per ton fell only from $105 to $98. Revenue dropped 19% to $536.6 million, the company lost $51.4 million, and cash from operations fell from $112.7 million to $2.0 million, with a $43.8 million build in coal inventory absorbing cash. In the first half of 2026 the trend has not improved: revenue was $266.4 million against $287.6 million a year earlier, the net loss was $33.7 million, and operating cash flow was negative $22.4 million against positive $21.8 million. For 2026 the company had contracted 1.1 million tons with North American customers at an average fixed price of $142 per ton, below the $152 obtained the year before. Owner earnings fell from $10.5 million in 2024 to negative $56.3 million in 2025, so we do not assume any improvement in 2026. Balance sheet. In 2025 the company raised $189 million of new equity and $398.5 million of debt, including $345 million of 0% convertible notes due 2031 (conversion price about $32.74 a share). Cash was $440.3 million at the end of 2025 and $282.5 million at June 30, 2026. Debt was $467.5 million at year-end, with almost none due in 2026. Because cash flow already reflects interest paid, we do not subtract debt from value, and the cash on hand is not added. We treat leverage as a risk in the bear case and did not model the convertible notes turning into shares. Growth we did and did not credit. The coal reserves total 85 million clean tons at the end of 2025 (66 million a year earlier, the increase mostly from Maben resources being reclassified as reserves). At the current 3.8 million tons a year that is about 22 years of mining, and that limit ends every case. We credited no volume or price growth. We left out the Brook Mine rare-earth project entirely: it has no production, no sales contract and no established reserves, and the company itself says there is no assurance it will become a commercial mine. The company plans about $85-90 million of capital spending in 2026, including about $40 million of growth spending on Wyoming and low-volatile coal output; that growth spending is not credited with any return. Bear case, about -$1.65 a share. Prices stay near 2025 levels, with fixed North American pricing already $10 per ton lower for 2026. Owner earnings are about negative $60 million in 2026, negative $40 million in 2027 and negative $20 million in 2028, as the company cuts costs, and then reach break-even with no value after that. On this measure the business would owe more than it is worth, by roughly $1.65 a share, and heavy customer concentration and the $467.5 million of debt add to the risk. Base case, about $0.40 a share. Owner earnings are negative $60 million in 2026 and negative $30 million in 2027, break even in 2028, and then return to the $11.7 million full-cycle middle value for the rest of the roughly 22 years of reserves, after which nothing is assumed. The near-term losses are the drag that leaves so little value. Bull case, about $7.76 a share. Losses shrink to negative $50 million in 2026 and negative $10 million in 2027. From 2028 owner earnings return to about $52 million a year, the middle value of the last five years (2021-2025), and continue through 2050, on the view that reserves keep being replaced as they were in 2025, when proven reserves rose to 85 million tons. This case depends on results the business has achieved before but at pricing that has since reversed, which is why we treat it as the upside rather than the expectation. What could make this wrong. If steel-grade coal prices improve or costs fall faster than we assume, the value is higher. If the Brook Mine reaches production, that is upside we have not counted. If losses continue past 2027, the value is lower. There is no earlier analysis of this company to compare against. We did not review the July 2026 amendment to the annual report, and the first-half 2026 figures above come from the second-quarter filing, where the full working-capital breakdown was not available to us. Margin-of-safety price. Given a negative outcome in the bear case, a business that is currently losing cash and a cyclical, price-driven business, the margin-of-safety price is about $0.25 a share, and it applies only once the coal business shows it can cover its own costs (see trigger).