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Ramaco Resources, Inc. agrees to acquire Ramaco Coal, LLC

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World Coal,


Ramaco Resources, Inc. has announced that it has reached an agreement in principle for its subsidiary, Ramaco Development, LLC, to acquire (the acquisition) 100% of the equity interests of Ramaco Coal, LLC, an entity owned by an investment fund managed by Yorktown Partners, LLC and certain members of the company's management.

The consideration for the acquisition will consist of:
  • An initial payment of US$5 million due at closing.
  • An aggregate deferred purchase price of US$60 million, consisting of:
    • US$20 million, to be paid during the remainder of 2022 in US$5 million rateable quarterly instalments.
    • US$40 million, to be paid during 2023 in US$10 million rateable quarterly instalments.

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, and the company can provide no assurances if or when the closing conditions will be satisfied or whether the acquisition will be consummated at all. Janney Montgomery Scott has served as financial advisor to the Special Committee and has provided an independent fairness opinion with regard to the transaction.

Ramaco Coal primarily consists of land holding and coal royalty producing subsidiaries, including fee ownership of approximately 42 million t 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 US for the foreseeable future.

While the royalty savings alone support the acquisition, Ramaco Coal also owns Ramaco Carbon, LLC, whose assets include:

  • The 500 million t permitted Brook Mine near Sheridan, Wyoming.
  • The adjoining Carbon Advanced Materials research centre.
  • 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 commercialisation of advanced carbon products and materials from coal.

Read the article online at: https://www.worldcoal.com/coal/28022022/ramaco-resources-inc-agrees-to-acquire-ramaco-coal-llc/

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