Ramaco Resources, Inc. (NASDAQ: METC) reported Q1 EPS of $0.17, $0.13 worse than the analyst estimate of $0.30. Revenue for the quarter came in at $57.46 million versus the consensus estimate of $65.53 million.

Randall Atkins, Ramaco Resources' Executive Chairman remarked, "I am extremely proud that we've emerged from the operational challenges of the November silo failure at Elk Creek as an even stronger and more resilient company. We managed to produce our second-best quarter of Adjusted EBITDA ever. This was despite the carryover headwinds which we knew would cause the Elk Creek prep plant to run below capacity in the first quarter. We were also dealing with a massive coal stockpile situation at Elk Creek from the fourth quarter which curtailed full production capacity. The plant at Elk Creek still remains on track to be functioning at full capacity before the end of the second quarter of 2019. This will then mostly alleviate the operational burden and financial impacts we have been dealing with since early November. Since we are well underway, I am also pleased to say that although we still have seven weeks to go, we now expect that the second quarter Adjusted EBITDA will be the highest on record for Ramaco Resources. I also anticipate Ramaco will be generating substantial cash flow throughout the rest of the year."

2019 Outlook

Michael Bauersachs, Ramaco Resources' President and CEO commented, "The operating team at Elk Creek has done a tremendous job in overcoming the challenges of the November silo failure. Our first quarter 2019 cash costs came in at $63 per ton at Elk Creek despite our prep plant and stockpile issues. Our Elk Creek costs are easily in the first quartile of the U.S. metallurgical coal cost curve. Given our ability to control costs this quarter in the face of such challenging operational issues, we are now guiding to an overall lower 2019 cash cost per ton outlook at Elk Creek from $63-$69 per ton to $63-$67 per ton."

"On the pricing front, Ramaco's coal continues to be well received by both legacy and new domestic and international customers alike. For 2019, we now have over 1.7 million tons committed and priced at $113 per ton versus roughly 1.6 million tons committed and priced at $113/ton at the time of our year-end 2018 results. We also have an additional 0.3 million tons committed at index pricing for sale in 2019."

"In terms of our Berwind development deep mine, we continue to anticipate that by mid-2020, we should reach the more prolific Pocahontas #4 low-vol coal seam, with ultimate full annual production of approximately 750,000 tons. Given seam thickness we anticipate future cash mine cost in that seam in the $80 per ton range, with the potential for future logistical cost improvement. As a reminder, in 2019 we still expect to mine approximately 250,000 tons at Berwind in the thinner Pocahontas #3 seam."

Randall Atkins noted that, "As Berwind ramps up production, and Elk Creek continues to produce as expected, we hope to reach a 2.5 million ton annual production rate in 2020, even without any proposed new development activities. This level should increase to approximately 4.5 million tons by 2023 through capital investments in organic growth at our existing properties. Having emerged from the silo failure as a stronger company than before, we will be discussing with the board of directors the possibility of accelerating some new attractive opportunities to increase production, that we had originally planned for development in later years. These include a possible expansion of the Elk Creek preparation plant to add an additional 500,000 tons above the current nameplate capacity, with a corresponding increase in production. We are also exploring putting in a new High Vol A mine at our Knox Creek complex which will mine in the Tiller and Jawbone seams. We expect this new mine to provide the potential for an additional 500,000 ton per annum at full production. We would note that our 2019 capital expenditure guidance of $35-$40 million does not reflect the expenditures for any of these projects. As we proceed in the analysis and approvals for these projects, we will provide further guidance."

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