Ramaco Resources, Inc.

Good day, and welcome to Ramico Resources' third quarter of 2024 results conference call. All participants will be in a listen-only mode for the duration of the call. And should you need any assistance today, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your telephone keypad. And to withdraw a question, please press star, then two. Also, please be aware that today's call is being recorded. I would now like to turn the call over to Jeremy Sussman, Chief Financial Officer. Please go ahead, sir.

Thank you. On behalf of Ramico Resources, I'd like to welcome all of you to our third quarter 2024 earnings conference call. With me this morning is Randy Atkins, our Chairman and CEO, Chris Blanchard, our EVP for Mine Planning and Development, and Jason Fanning, our Chief Commercial Officer. Before we start, I'd like to share our normal cautionary statement. Certain items discussed on today's call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent Ramico's expectations concerning future events. These statements are subject to risks, uncertainties, and other factors, many of which are outside of Ramico's control, which could cause actual results to differ materially from the results discussed in the forward-looking statements. Any forward-looking statement speaks only as of the date on which it is made and except as required by law, Ramico does not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. I'd also like to remind you that you can find a reconciliation of the non-GAAP financial measures that we plan to discuss today in our press release, which can be viewed on our website, www.ramicoresources.com. Lastly, I'd encourage everyone on this call to go onto our website and download today's investor presentation. With that said, let me introduce our chairman and CEO, Randy Atkins.

Thanks, Jeremy. Good morning to everyone, and thanks for joining the call. The third quarter was easily our strongest operational quarter this year. In a nutshell, we continue to focus on controlling what we can, and that is cash costs and volume growth. What we can't control is pricing. Despite a 13 percent decline in the Australian benchmark price this quarter, we seem to be the only public metallurgic coal group to have maintained essentially the same operating margins for both the second and third quarters. One large reason is that throughout this year, our mine costs have declined by over 25 percent. We went from a March high of $120 to a September low of only $93 per ton. Quarterly, these costs have dropped from 118 per ton in the first quarter to 102 tons this quarter. And we hope to actually improve on that in Q4. In addition to excellent cost control, we also had improved mine productivity as well as both record production and sales. Indeed, this was the first quarter in the company's history where we booked more than a million tons of quarterly sales. Unfortunately, the bigger story behind both Ramico and the entire met coal industry's results this quarter is the drop in met coal prices throughout 24. The decline is, of course, a direct result of China's overproduction of steel, which it has then exported or dumped into world markets. This has then resulted in world steel companies both cutting back on their own production and then reducing the price they're willing to pay for their met coal speed stocks. As a result, this quarter alone, we saw a $15 per ton sequential decline in U.S. met coal indices. Both the U.S. low vol and high vol indices fell by roughly 7% this quarter on average, and by roughly 32% since the start of the year. When we step back and assess it with our strong beat on cost, Price decline was the sole reason for our quarterly drop in EBITDA. As I mentioned earlier, our cash margins for the past two quarters have remained at $34 per ton, or about 25%, even in the face of declining prices. These margins have also remained well above most of our larger central Appalachian peers. Looking ahead, our operational results should continue to improve in the fourth quarter. We are projecting more growth, again, in both production and sales. This fourth quarter increase should provide a year-end run rate in excess of 5 million tons on sales, with normalized cash costs below $100 a ton. Importantly, in addition to our strong cost control, all of our main 2024 growth initiatives remained both on track and on budget. Here's a quick rundown. First, the high wall additions at our Elk Creek complex were fully in production as of September and should ultimately add roughly 600,000 tons on an annualized basis. These were in the RAM number three surface and high wall mine, as well as the third section at the Stone Coal Alma mine. All growth capex for these two mines is now behind us. Second, the prep plant at our Maven low wall complex was commissioned both on time and on budget in October. This will reduce our current crutching stock costs by approximately $40 per ton. Again, the vast majority of the growth capex associated with the Maven plant is also behind us. Third, before year-end, we will add the third section at the main Berwyn mine with roughly 300,000 additional annualized tons of low-vol production. The current challenging environment in the coal space, we are now experiencing a surge of incoming job applications to staff this new section, and next year we anticipate adding a fourth section, depending upon, of course, market conditions. I would also point out that the Berwyn mine has demonstrated it is among the lowest-cost low-ball mines in the country. Across the whole mine complex, we are now averaging mine costs in the $90 to $95 per ton range. And as I just noted, one silver lining to the continued decline in met coal pricing is that higher cost U.S. coal production is beginning to come offline and rationalize. MSHA data suggests that the third quarter U.S. met coal production fell by more than 8% sequentially. This would equate to a 6 million ton annual decline. And, of course, we went in the opposite direction in group production. Anecdotally, we have also heard about a number of recent mine or section closures in just the past few weeks. From our perspective, absent some meaningful immediate pricing improvement, we anticipate production will continue to fall further in the fourth quarter. These dislocations may create more opportunities for us as we move forward. We hope to position ourselves accordingly. Turning to the demand side, it's possible that there may be some future macro steps to temper the onslaught of cheap Chinese steel exports. There is currently serious discussion of tariffs in many world markets. Over time, they may boost steel and met coal pricing in our traditional markets. Similarly, we may see the Chinese government adopt more aggressive fiscal stimulus measures. Again, this might have a similar potential to improve pricing. None of this, however, is a quick fix. Turning to our sales book, I'm pleased at how our 2025 domestic and international contracting has progressed. Total sales commitments for next year are now up to 2.7 million tons. Of this, 1.6 million tons were sold mostly to North American customers at average fixed prices of approximately $152 per ton. Given the 30 percent drop this year on benchmark price levels, these fixed prices are only off 10 percent from last year. We have also not announced yet our 2025 reduction guidance, but our current level of sales puts us comfortably down the field at this point in time. And Jason will go into more detail on the sales front and his remarks in a moment. Our rare earth and critical minerals business continues to be a major unique opportunity for us. I'm pleased with the substantial progress our team continues to make. We are fortunate to now have assembled an array of experience groups involved in our rare earth testing, mine planning, and processing design. And on that front, working with Fluor, we are now in the advanced stages of completing our initial techno-economic report. We expect Florida to present their preliminary results to our Board in early December, and then we will communicate the same to our shareholders. We also have substantial additional ongoing testing that we expect to receive results on later in December, and we'll update our reporting after that as well. We continue to plan toward commencement of construction on a processing demonstration facility in mid to late 2025. We are also already in discussions with potential rare earth customers for offtake agreements for our first production. So I want to close by again pointing out that we expect to exit the year on a very strong note, even in the face of challenging pricing. We expect record sales and production, as well as cost reduction in the fourth quarter from where we were in this quarter. As we look ahead into 2025, We are also well positioned on our future coal sales and look forward to hopefully some stronger seasonal pricing as we start the year. In summary, we continue to transition into becoming an even larger low-cost met coal producer with an exciting future potential as also a critical mineral producer. So, with that, I'll turn the floor over to the rest of our team to discuss finances, operations, and markets. So, Jeremy, please start with a rundown on our financial metrics.

Thank you, Randy. As you noted, third quarter 2024 operational results were meaningfully better than second quarter operational results, which were also meaningfully better than our first quarter. However, U.S. metallurgical coal indices have fallen throughout the year, thus negatively impacting financial results. To get into specifics, Q3 adjusted EBITDA was $24 million compared to $29 million in Q2. Third quarter net income of break-even compared to second quarter net income of $6 million. Q3 net income was negatively impacted by approximately $1 million due to the closure of the Knox Creek Jawbone Mine. Class A EPS showed a 3-cent loss compared to an 8-cent gain in Q2. Closure of Jawbone negatively impacted Q3 Class A EPS by 3 cents. Primary reason for the decrease in both Q3 EBITDA and EPS was simply the $7 per ton sequential decline in realized price per ton due to the continued meaningful fall in U.S. index prices. Specifically, Q3 realized price per ton came in at $136 versus $143 per ton in Q2. From a margin perspective, the price decline was mostly offset by continued cost improvements. Q3 cash costs improved to $102 per ton versus $108 per ton in Q2 and $118 per ton in Q1. As we've consistently guided, our cash costs would decline as low-cost production ramped up. This was indeed the case at Elk Creek with our Ramp 3 mine and the third section at our Stone Coal Alma mine hitting full capacity in August and September. This translated to average cash costs in the mid-90s per ton range for those two months. Our solid cost control led to cash margins per ton of $34 in Q3, which was flattest versus Q2, despite realized coal prices falling $7 per ton sequentially. Q3 non-GAAP cash margin per ton was 25% versus 24% in Q2. Q3 saw record production of 972,000 tons, up 35% from Q3 of 2023. We enjoyed record sales of 1.02 million tons, which was the first time we eclipsed the 1 million ton figure in company history for a single quarter. In October, we elected to close the Knox Creek Jawbone Mine due to challenging market conditions. Frankly, Jawbone was nearing the end of mine life anyway and was our only loss-making mine. Due to these difficult market conditions, 2024 production and sales guidance is being reduced by 200,000 tons at the midpoint, 3.7 to 3.9 million tons and 3.9 million, 4.1 million tons respectively. But on a positive note, midpoint of full year 2024 cash cost guidance is also being reduced. Guidance is now $106 to $109 per ton sold versus the prior $105 to $111 per ton range. In line with this updated cash cost guidance, Overall mine costs on a normalized basis are anticipated to exit the year below the $100 per ton range. After adjusting for two weeks of vacation in the fourth quarter, we anticipate cash costs to be similar in both Q3 and Q4. I'd also note that the high end of 2024 sales guidance remains at a roughly 5 million ton per annum exit run rate. The year winds down. We're refining a number of other areas in our full year 2024 guidance. which can be found in our tables. We increased the 2024 CapEx guidance to 61 to 65 million from 53 to 63 million. This is largely due to the timing of the Maven Prep Plant, which was commissioned a bit earlier than we had anticipated. Thus, we're essentially pulling forward from 2025 CapEx. We're also increasing DD&A guidance from 62 to 68 million previously to 65 to 69 million. as well as interest expense guidance from 4 to 5 million previously to 5.5 to 6.5 million today. Last but not least, we are decreasing cash SG&A guidance by $4 million at the midpoint from 38 to 42 million to 34 to 38 million, which is in line with our cost-tightening approach to spending in the current challenging environment. Moving to the balance sheet, our liquidity on September 30th of $81 million was up almost $10 million from June 30th. This is despite having made the final $7 million payment of debt related to the Maven acquisitions in Q3. We have now required all $75 million of acquisition debt since 2022 related to our Maven and Ramico Coal acquisitions. As of today, the only remaining material term debt is the $35 million 9% unsecured notes due in 2026 and any amounts drawn on the revolving line of credit that are used for working capital purposes. As of Q3, our net debt to trailing 12-month EBITDA was 0.4 times, which illustrates our continued commitment to maintaining a conservative balance sheet. I'd now like to turn the call over to our EVP for Mine Planning and Development, Chris Blanchard, to discuss operations.

Thanks, Jeremy, and thank you to all of you who joined us this morning. As discussed, we continued the strong finish to the second quarter and carried that momentum into and throughout the third quarter. The biggest catalyst in the ramp up of produced tons and subsequent cost reduction was at our flagship Elk Creek complex. Along with the startup of the additional surface mine and underground section, we saw some of our legacy mines complete mining through some of the challenging geology we experienced in the early months of 2024. Also, at our Michael Palatin mine, which had been dealing with an acute labor shortage due to the tightness of the labor market, it has been fully staffed and production levels have exceeded our targets throughout the quarter. Finally, we brought on the new section at Stone Coal with high clean tons per foot, higher production, as well as the RAM number three surface mine. Both mines provide lower inherent production costs and increased total volume. This has driven down operating costs at Elk Creek to levels that we have not seen since late 2022. With all of our production growth behind us at Elk Creek, we should be running at or above a 3 million ton per year production rate for the foreseeable future. At the Berwyn complex, we continue to grow the base production at the Berwyn Pocahontas No. 4 mine. Hiring efforts are ongoing to fill all vacancies at this mine, as well as beginning the staffing of our number three section, which is scheduled to begin producing late in the fourth quarter. The current environment in the coal fields should help on the hiring. We are working closely with the state of Virginia on the environmental side on permits required to begin raise boring our exhaust, intake, and elevator shafts located centrally in the Berlin mine reserve. Once the first of these shafts are completed, anticipated in the first half of 2025, we will complete the ramp up of the Berlin mine with a fourth supersection and push mine production above one million tons per annum. At that time, we'll brought the Berlin complex to its full production levels of approximately a million and a half tons per year of premium lowball coal. At the Maven complex, our operating surface and hollow mine continue operating at above budgeted levels for the entire third quarter. Knowing that construction of the preparation plant was ahead of schedule, midway through the quarter, we ceased trucking our raw coal to the Berlin complex for washing and began stockpiling production on site. This translated into immediate cost savings on this production for over half of the third quarter. Turning specifically to Maven processing, I am pleased to share that during October, we completed all major construction and commissioning, and on November 1st, we started the plant and processed our first tons of clean coal on site. The project was completed on budget, delivered a month early, and most importantly, accident-free. We expect to be fully staffed at the plant and processing on a normal schedule as we enter 2025 and shipping only clean coal from the property going forward. As a reminder, the raw coal trucking costs averaged $40 per clean ton, and at times when hollow minor recovery was lower, could reach $50 per ton. That cost is behind us, and we project to work through the accumulated raw coal inventory at Mabin by the end of February 2025. Looking forward at Mabin, we are completing the budgeting and forecasting process for the eventual underground expansion at Mabin. Market conditions and the economics of these projects versus other growth opportunities will dictate when these tons come on, but eventually we project annual production of a million and a half clean tons from Maven as well. We continue to focus on cost containment and reductions which we can implement at any of the operations. Collaborating with our key suppliers and vendors, we've managed to secure meaningful unit cost reductions on most of our consumable supplies at our surface and our underground mines. Where we truck coal, we are working with our trucking partners to similarly reduce the trucking costs for our products. As the coal indices continued their swoon throughout the year, unfortunately, we did have to close our jawbone mine early based on these market conditions. Difficult geology coupled with logistics costs made the mine unprofitable and unsustainable any longer. We were able to transfer almost all of the workforce to mines within the Berlin complex, so we turned this event into a positive productivity change, as well as seeing an overall decline in cash costs at Ramico with the removal of the jawbone tons. We anticipate that the full recovery and closure of this mine will be completed before year-end 2024. As we enter the fourth quarter, we know we can only control our production and, to an extent, our costs. Our momentum continues on those fronts with a record month of production in October. Regarding the markets and those sales, I'd like to now turn the call over to our Chief Commercial Officer, Jason Fannin.

Thanks, Chris, and good morning, everyone. Today I'll share our views on cooking coal and steel markets, as well as our current and forward sales outlook. Global cooking coal markets have continued to weaken. From a pricing standpoint, index averages were down approximately 7% in Q3. Prices rebounded materially at the end of September due to optimism around Chinese stimulus measures, but this momentum faded in October. Chinese authorities now appear willing to support their economy, including the real estate sector, which is a significant driver of their steel demand. But we'll have to wait and see what and how these stimulus measures play out in the real economy. Contractual volumes and spot demand in the seaborne market continue to be well supported. This is mostly due to robust demand growth in the Pacific. Chinese and Indian imports in particular have seen import growth of 23 percent and 6 percent year-over-year so far this year. Looking ahead, we're anticipating more demand growth from India in 2025. Pig iron production in India is only up 3% this year, whereas we believe the long-term growth rate will likely be double that in the 6-plus percent range through 2030. As India continues to develop incremental blast furnace capacity, demand for cooking coal imports is likely to grow substantially. The restocking season in India has been disappointing, likely due to below-trend steel production, along with sufficient current cooking coal inventory. However, we're anticipating a pickup in Indian demand and buying next year. In 2025 alone, we see an incremental 16 to 17 million tons of additional hot metal production in India from new blast furnaces. This amounts to over 10 million tons of incremental new cooking coal consumption. We are continuing to look at new opportunities in India and are actively engaging current customers regarding next year's supply contracts, as well as new customers for test shipments and qualification purposes. Chinese metallurgical coal demand growth of 23% year to date has been somewhat surprising given their 5% drop in pig iron production. We are closely monitoring the Chinese steel overcapacity issue in the face of lackluster demand, domestic steel demand. Hopefully, the stimulus measures will increase domestic steel consumption enough to absorb some of the excess supply. In turn, this could lead to less steel exports in 2025. Hopefully, this would generate higher finished steel prices globally. and improved profit margins throughout the supply chain. In Europe, overall metallurgical coal imports are down 11 percent year-to-date. Spot demand has been tepid in the face of poor economic and manufacturing output. With that said, our smaller specialty cooking coal customers in Europe have continued regular spot intakes. Despite these manufacturing industrial headwinds in Europe this year, we continue to fulfill our term supply agreements with European customers as contracted and scheduled. Our term European customers have also expressed interest in continuing term deals for 2025. South American markets have been mostly stable with modest demand growth here today. We expect demand from Brazil to gradually improve as recently implemented steel tariffs should provide support for increased pig iron production in 2025. Shifting to North American markets, Steel utilization continues to hum along, although recently experiencing a slight decline, which is normal for this time of year. North American steel prices remain the highest in the world due to the protected nature of the sector in terms of import restrictions. Demand for coking coal appears to remain supportive based on industry-wide 2025 contracted volumes. While we still have a handful of domestic contract negotiations outstanding, we are pleased to report today that we have booked roughly 1.6 million tons to mostly North American customers, at an average fixed price of $152 per ton, and another 1.1 million tons to overseas customers, bringing our total sold volume for 2025 to 2.7 million tons. As we're exiting the year at around the 5 million ton per annum sales rate, we've increased our year-over-year domestic sales volumes as our total production grows, and we've similarly increased our marketing efforts in the growing Asian markets. We continue to see robust interest from end users in Asia for spot trials to new customers and to continue our current term offtake agreements. Likewise, we remain in a position to opportunistically sell incremental volumes when we view pricing arrangements as favorable compared to prevailing market levels and alternative markets. Turning to the current pricing environment, as of November 4th, the U.S. East Coast index values were $190 per ton for low vol, $185 per ton for high vol A, and $173 per ton for Hyval B, while Australian premium lowball sits at $203 per ton. As prices in Asia have declined, U.S. relativities compared to Australian premium lowball have rebounded back to historical averages. This continues to suggest we are at or near the price floor for U.S. coking coals. With a lack of supply growth out of Australia, combined with the demand growth we continue to witness, Pacific markets can no longer treat the U.S. as a swing supplier. Prices must rebound if Pacific end users are to continue enjoying the supply diversity the U.S. brings to their cooking coal blends. Production volumes in the U.S. have already declined due to unfavorable prices. As Randy mentioned, overall industry Q3 U.S. MET production was down 8%, bringing overall growth back to flat on the year. We believe U.S. MET production will continue to fall from here, at least until the price environment improves. In terms of market segmentation, U.S. lowball production is down 4% year-to-date. This segment is currently much tighter than index pricing is suggesting, and we see demand continuing to outpace supply. Fortunately, we are positioned for growth in the lowball segment as Maven and Berwyn continue to grow production. In the highball segment, U.S. production remains up 3% year-to-date, despite lower pricing. Most of the incremental growth from our domestic peers has been high ash and high sulfur. This ensures sustained demand for Ramico's supply of low ash and low sulfur highball from Elk Creek, which is used by customers to blend down less favorable coal characteristics. Our broad spectrum of low ash and low sulfur coking coals across all grades is somewhat unique in the industry and represents a competitive advantage. This is especially true in lower-priced environments like the one we're in now. Ramico's customers recognize the value in our position is one of the largest producers of low ash and low sulfur coking coals in the United States. With that said, I would now like to return the call to the operator for the Q&A portion of the call. Operator?

We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. And to withdraw a question, please press star then two. At this time, we will take our first question, which will come from Nathan Martin with the Benchmark Company.

Jason, I appreciate your market comments there. Obviously, a lot of discussion during earnings season around the current weakness in steel markets, especially on the highball side. It seems like price realizations are reflecting maybe some higher than normal discounts. You just talked about maybe some of the advantages your products have. Maybe just a few more additional thoughts there, or even a representative net back calculation would also be really helpful. Thanks.

Yes, sir, Nate. Thanks for the question. Yeah, I mean, doing quick math on where the current indices are at and pulling out, say, a typical rail and port cost. You're probably around a 130 net back, you know, flat to the highball indices average currently, I'd say, in that range. And, yeah, as I mentioned, Ramco is really unique in terms of all our products are low sulfur. And particularly in the highball space, that plays a big part in Elk Creek's pricing. So certainly we see folks taking business at levels like you mentioned. Fortunately for us, our products demand, you know, I'd say a stronger relativity just based on those attributes, particularly when we saw, which is going back in history a little bit, when the Russian coal was pulled out of Europe and became available only to very select markets. That coal was very low sulfur as well. We've stepped in, actually, a lot of the newer business we've had last year and this year has been folks replacing that type of coal.

Okay, got it. That's helpful. Maybe any additional color you can provide on the variable costs? I mean, you mentioned

rail costs um i'm sure there's also some sales price related costs too on that calculation is there a sensitivity there yeah certainly you know those will will ebb and flow basis the indices um they're very i'd say prompt um in terms of uh which indices they reference so you know the market's up um they'll trend up slightly with it almost at the same time and the same thing when it's when it's uh moving downwards so They track pretty closely with where the market's at, essentially.

Okay, thanks. Nate, of course, also, I would point out, obviously, our sales and marketing costs are rather a quick pass-through as well. So, obviously, in the declining market, we're going to be experiencing lower costs there.

Exactly, Randy. I appreciate that. And maybe along those lines, I mean, I can appreciate you guys are probably still going through the budgeting process for next year, but given, you know, the meaningful improvements you continue to make on the cost per ton front, you know, including, you know, some of that lower cost production coming to line and obviously reduced trucking costs associated with maybe a prep plant ramping up, you know, do you feel pretty confident in your ability to maintain that expected sub $100 cost per ton year-end run rate, you know, into next year?

Short answer is yes. I think, you know, we've got, you know, a strong slate of oncoming production next year that we've already kind of got baked in, which is, you know, the growth in our Berwyn mine into the third and then perhaps hopefully the fourth section. Depending upon market conditions, we've got Maven, which we, of course, have a prep plant that's now operational. We can take a look at perhaps expanding there into deep production. which ultimately would be as much as another million tons. And then we've got our eye on a couple of additional projects. So I think in terms of 25 costs, I think we're going to, you know, the good news is in a down market, you try to exercise as much discipline as possible to go back and really sweat out all the areas of potential cost savings that you can from normal operations. And I think we've done a, An outstanding job on the operational front of doing that. Obviously, dropping our cost from a high of 120 down to 93 is a huge drop percentage-wise. I'd hold that up against anybody else in our space. I don't know that we're going to continue to drop at that same rate, but we will certainly continue to try to squeeze everything out that we can.

Great. Appreciate those thoughts. And then maybe just one last kind of taking a step back here to the fourth quarter. I see you guys tightened up your full year shipment guidance range. What does it take to kind of get you to the low end or the high end of that updated guidance? Is it mainly logistics? Is it demand? It would be great to get some thoughts there.

Yeah. Hey, Nate. It's Jeremy. So, yeah, obviously the implied range is about a million to obviously a million and a quarter, which is that kind of five million ton exit rate. You know, I'd say the high end of guidance assumes nothing really slips into 2025 in terms of carryover tonnage that we continue to reduce inventory. You know, the low end assumes, you know, a reasonable amount of slippage into next year. Obviously, demand isn't great right now, but, you know, we'll just have to see how the cards shake out. But that's kind of the reason for the range.

All right, Jeremy. Thank you. I'll leave it there, guys. Very helpful. Appreciate the time, and best of luck in the fourth quarter.

Thanks, Nate. Thanks, Nate. And our next question here will come from Lucas Pipes with B-Rally Securities. Please go ahead.

Thank you very much, Operator. Good morning, everyone. My first question is on the volume side for 2025. Jeremy, you just mentioned there the kind of exit rate, Q4 expectations. How should we think about 2025 off of that base? Thank you very much.

Yeah, obviously. Hey, Lucas, appreciate the question. So, you know, we've got a kind of budget meeting coming up with the board in a couple of weeks. And then, of course, the early December board meeting where we'll certainly release guidance in line with historical practice. But, you know, I kind of point you to, I think it's slide – slide 15, where, you know, you can effectively see that for each of the last, you know, five quarters, you know, we've effectively increased our production guidance, or excuse me, our actual production every quarter. So, I mean, we're certainly excited to exit the year at, you know, hopefully a 5 million ton per annum sales run rate at the high end of the range. We'll see where market conditions lie and get back to you guys kind of in line with the normal cadence you know, within a month or so.

Yeah, and Lucas, this is Randy, and I think you can also do some pretty easy math from, you know, points we made, such as the Berwyn third section, you know, will be running at a 300,000 run rate. We've got the fourth section we can also start. We've got Mabin that will be, you know, obviously at full tilt with the possibility of adding, you know, some deep tonnage, which would probably not happen until later in the year. But, you know, we have additional tons that we'll be able to start bringing on throughout the year. But I want to get ahead again, as Jeremy said, of what the board slates for what we want to look at for 2025 production. But those are some low-hanging fruit.

I appreciate the call. Thank you. And in the context of the job loan idling, I wondered if you could maybe speak to the broader supply situation in Central App. in the current market environment, how many mines or percentage of supplies lost making, how quickly might they respond to that price signal? Thank you very much.

Yeah. Chris, why don't you go ahead and take a first stab at that?

Yeah, so just, you know, anecdotally down in the coal fields, Lucas, we've heard of a number of mines shutting down that probably similar to job owner, perhaps even worse, that just can't be sustained in this market, particularly with as tight as labor has been throughout really 23 and 24. So we've heard a number of these come off. There are, you know, a number of processes that are running, you know, right now for looking for sales for operations that are distressed. So if I was going to handicap, I would guess, you know, probably 115% is on the chopping block right now, and there's probably a little bit more than that where, you know, our competitors where the plan is that hope things get better. So maybe that same amount that's treading water and hoping for better days. So, you know, as much as 20%, 25% of the total production is probably, you know, code orange or code red.

Chris, thank you very much for the color. I'll try to squeeze one last one in. On the domestic pricing for next year, I believe specialty coals were still outstanding. Could you speak on what additional volumes you're looking to put under fixed price for 2025, and how should we think about the weighted average once all the dust has settled? Thank you very much.

Thanks, Lucas. This is Jason. Obviously, we've got a few negotiations ongoing at this moment, so we can't get into too much detail there. Certainly, given the nature of the product, it will bump up that current average number of 152, as Randy mentioned in his remarks. Likewise, given we're talking about more than one customer here, the volumes could fluctuate somewhat, too. I know that's not a hard and fast answer, but that's probably the best one I can give with a lot of it up in the air currently.

No, I appreciate that. Good news, Lucas, is two things. One, the number will go up and the price will go up.

Very helpful. Gentlemen, I appreciate all the color, and I wish you continued best of luck. Thanks, Lucas.

And this concludes our question and answer session. I'd like to turn the conference back over to Randall Atkins for any closing remarks.

Great. Well, thanks again for everybody for being on the call, and we look forward to catching up on our next call, which will be next year. Thanks again.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines.