Ramaco Resources Enters Agreement to Acquire Ramaco Coal
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Ramaco Resources, Inc. has reached an agreement in principle to acquire 100 percent of the equity interests of Ramaco Coal, an entity owned by an investment fund managed by Yorktown Partners and certain members of the company’s management.
The consideration for the acquisition will consist of (i) an initial payment of $5 million due at closing and (ii) an aggregate deferred purchase price of $60 million, consisting of (A) $20 million, to be paid during the remainder of 2022 in $5 million ratable quarterly installments, and (B) $40 million, to be paid during 2023 in $10 million ratable quarterly installments.
The special committee of independent directors of the board of directors of the company negotiated and approved the acquisition, which remains subject to customary closing conditions, including obtaining certain consents.
Ramaco Coal primarily consists of land holding and coal royalty producing subsidiaries, including fee ownership of approximately 42 million tons of metallurgical coal reserves. The vast majority of Ramaco Coal’s holdings are currently leased to the company. Merging the Ramaco Coal land and royalty interests into the company will have a positive financial impact on the company’s central Appalachian coal mining operations. The acquisition will allow the company to avoid ongoing minimum royalty and tonnage royalty expense for the entire life of the acquired reserves, providing significant near and long-term financial benefit and ensuring that the company remains among the lowest cost producers of metallurgical coal in the U.S. for the foreseeable future.
Ramaco Coal also owns Ramaco Carbon, whose assets include: the 500 million ton permitted Brook Mine near Sheridan, Wyoming; the adjoining Carbon Advanced Materials research center and; a wide body of intellectual property (IP) in the field of developing commercial advanced carbon products and materials, using coal as a feedstock. This IP has primarily been developed in multi-year research partnerships with two of the U.S. Department of Energy National Laboratories, The National Energy Technology Laboratory (NETL), and the Oak Ridge National Laboratory. Ramaco Carbon has also been awarded several grants from the U.S. Department of Energy for development of “coal to products,” using innovation to create high value, environmentally friendly uses for America’s most abundant resource.
Also in partnership with NETL, Ramaco Carbon has been engaged in an on-going multi-year mineral analysis and core drilling assessment at the Brook Mine, designed to determine the potential concentrations of rare earth elements (REE) contained in the mine reserves and to study their ultimate commercial potential. While still in the early stages, the assets involved in this acquisition may provide the company access to breakthrough transitional markets, enabling the company to produce coals to be used for higher-value products such as REEs and carbon feedstock for advanced carbon-based products and materials.
Although the company remains committed to being among the lowest cost producers of metallurgical coal, which underlies and drives the rationale for the acquisition, the acquisition may also support the company’s expansion into the manufacture and commercialization of advanced carbon products and materials from coal.
About Ramaco Resources
Ramaco Resources, Inc. is an operator and developer of high-quality, low-cost metallurgical coal in southern West Virginia, southwestern Virginia, and southwestern Pennsylvania. Its executive offices are in Lexington, Kentucky, with operational offices in Charleston, West Virginia. The company has five active mines within two mining complexes at this time.
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