Last Update 14 Dec 25

METC: Future Upside Will Be Driven By Wyoming Rare Earths Project

Analysts have lifted their price target on Ramaco Resources to a range centered in the mid 50 dollar per share area, up from the mid 40 dollar per share area, citing new Outperform and Buy initiations that highlight the upside from the Brook Mine's rare earths and critical minerals potential alongside the company's low cost metallurgical coal platform.

Analyst Commentary

Street research has turned increasingly constructive on Ramaco Resources, with multiple new initiations and target increases reflecting both the established metallurgical coal franchise and the emerging optionality from the Brook Mine rare earths and critical minerals project.

Bullish Takeaways

Bullish analysts highlight the upside from Brook Mine, arguing that the scale and grade of its heavy rare earths and critical minerals could support robust project economics and materially expand Ramaco's long term earnings power.
The current suite of price targets in the mid 40 to low 60 dollar range is framed as still conservative relative to potential net asset value if Brook Mine is successfully developed and domestic rare earth pricing remains supportive.
Ramaco's existing metallurgical coal operations are viewed as low cost and scalable, giving the company a cash generating base business that can help fund growth and reduce financing risk around the critical minerals buildout.
Some bullish analysts see the stock as an attractive entry point, contending that the market is applying a steep discount rate to Brook Mine, which could compress as permitting milestones, offtake visibility, and construction decisions provide greater execution certainty.

Bearish Takeaways

More cautious analysts point to execution risk around scaling Brook Mine, noting that capital intensity, permitting timelines, and potential cost overruns could delay or dilute the anticipated uplift to valuation.
There is concern that heavy reliance on favorable U.S. policy for domestic critical minerals and rare earths creates headline risk if incentives or regulatory support weaken, which could pressure long term project returns.
Ramaco's earnings base remains heavily tied to metallurgical coal, leaving the company exposed to commodity price volatility and cyclical steel demand while investors wait for the critical minerals contribution to materialize.
Some bearish analysts caution that high profile target hikes may be pulling forward optimism, raising the bar for future project updates and increasing the risk of share price setbacks if development milestones slip or initial economics are revised.

What's in the News

The board approved the creation of a Strategic Critical Minerals Terminal at the Brook Mine in Wyoming, aiming to build a national stockpile and tolling hub for rare earths and critical minerals while positioning Ramaco as a vertically integrated U.S. producer. (Key Developments)
Goldman Sachs & Co. LLC was engaged as exclusive structuring agent for the Brook Mine Strategic Critical Minerals Terminal initiative, supporting design and financing of the stockpile and related services. (Key Developments)
The board raised projected annual rare earth and critical mineral oxide output to approximately 3,400 tons, a 174 percent increase from prior plans, tied to an expansion of coal production from 2 million to 5 million tons per year. (Key Developments)
Initial mobilization began for a pilot processing plant and lab near the Brook Mine, backed by a Wyoming Energy Authority grant, to validate the economic and technical feasibility of producing high purity individual rare earth oxides as a bridge to commercial processing. (Key Developments)
Ramaco gained membership in the Defense Industrial Base Consortium, expanding access to defense sector partnerships and funding related to rare earths and other strategic materials. (Key Developments)

Valuation Changes

Fair Value Estimate: Unchanged at approximately 39.14 dollars per share, indicating no revision to the base intrinsic value assessment.
Discount Rate: Risen slightly from about 8.36 percent to 8.43 percent, reflecting a modest uptick in perceived risk or required return.
Revenue Growth: Effectively unchanged at roughly 15.78 percent, suggesting stable expectations for top line expansion.
Net Profit Margin: Stable at around 6.09 percent, with no material adjustment to long term profitability assumptions.
Future P/E: Increased slightly from about 72.7x to 73.8x, implying a modestly higher multiple applied to forward earnings expectations.

Expansion into rare earth mining, supported by federal collaboration, diversifies revenue beyond coal and aligns with national supply chain priorities.
Leading cost efficiency in metallurgical coal strengthens resilience, margins, and future growth amid stable global steel demand and industry consolidation.
Heavy reliance on uncertain government support and volatile commodity markets heightens financial and operational risks, threatening both diversification efforts and long-term earnings stability.

Catalysts

About Ramaco Resources

Engages in the development, operation, and sale of metallurgical coal.What are the underlying business or industry changes driving this perspective?

Ramaco's advancement of the Brook Mine into America's first new rare earth mine in over 70 years-bolstered by extensive federal government collaboration and potential policy support amid rising U.S. demand for domestic critical minerals-positions the company to unlock new, high-margin revenue streams beyond metallurgical coal, with initial commercial oxide production targeted as soon as 2027.
The persistent global need for steel, driven by ongoing infrastructure growth in emerging markets and the lack of short-term substitutes for metallurgical coal in steelmaking, supports Ramaco's expectation of durable demand, stabilizing coal volumes and pricing, and underpinning future revenue and EBITDA growth in its core business.
The company's cost leadership-operating in the first quartile of the U.S. met coal cost curve and ongoing investment in mining efficiency-enhances net margins and cash generation potential, enabling Ramaco to withstand weak market periods and capitalize robustly when prices recover.
Federal policy shifts prioritizing domestic supply chain resilience and national security for critical minerals, as evidenced by multi-agency U.S. government engagement and discussions around price supports/offtake agreements, could further accelerate Ramaco's rare earth scale-up and de-risk future revenue streams.
Industry consolidation and environmental restrictions on new metallurgical coal supply favor established low-cost producers like Ramaco, supporting pricing power and reducing competitive threats, thereby enhancing long-term earnings visibility and potential valuation upside.

Ramaco Resources Earnings and Revenue Growth

Ramaco Resources Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Ramaco Resources's revenue will grow by 11.9% annually over the next 3 years.
Analysts assume that profit margins will increase from -3.2% today to 15.3% in 3 years time.
Analysts expect earnings to reach $134.6 million (and earnings per share of $0.83) by about August 2028, up from $-19.9 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 15.0x on those 2028 earnings, up from -69.1x today. This future PE is lower than the current PE for the US Metals and Mining industry at 21.2x.
Analysts expect the number of shares outstanding to grow by 4.73% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.49%, as per the Simply Wall St company report.

Ramaco Resources Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The company's rare earth and critical minerals business is heavily reliant on future government support, price supports, or industrial procurement agreements, which are subject to policy risk and uncertainty; if these do not materialize as expected or are delayed, projected revenue growth and diversification may fall short, impacting long-term earnings and share price.
The assumptions for rare earth pricing and demand-particularly for high-value materials like scandium-are based on expected future U.S. demand growth and willingness of Western customers to pay premium prices for domestic supply; if global adoption, customer demand, or price realization do not meet projections (especially given near-term demand below projected supply and Chinese pricing manipulation), revenue and margins from the rare earth platform could be materially lower than forecasted.
Despite strong cost control, Ramaco remains primarily exposed to the volatile economics of metallurgical coal, which faces ongoing long-term risks from global decarbonization efforts, alternative steelmaking methods (like electric arc furnaces), regulatory constraints, and ESG-driven capital allocation, all of which could structurally weaken coal demand, depress volumes, compress net margins, and ultimately reduce earnings power.
The company's major capital investments into rare earth development require substantial up-front and ongoing funding, potentially straining the balance sheet and increasing financial risk if cash flows from met coal operations decline or if rare earth commercialization timelines and cost estimates are not met, jeopardizing future profitability and liquidity.
The market for specialized critical minerals such as scandium remains thin and highly sensitive to both technological adoption and geopolitical considerations; any inability to secure large, long-term take-or-pay contracts or to reliably forecast customer needs could result in overcapacity, weak pricing, and persistently low utilization of the new mining and processing assets, creating negative drag on overall earnings growth.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $21.667 for Ramaco Resources based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $27.0, and the most bearish reporting a price target of just $14.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $877.8 million, earnings will come to $134.6 million, and it would be trading on a PE ratio of 15.0x, assuming you use a discount rate of 7.5%.
Given the current share price of $20.85, the analyst price target of $21.67 is 3.8% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

METC: Brook Mine Ramp-Up Will Strengthen US Rare Earth Supply Chain