On November 14, Discovery Capital Management, based in Connecticut, announced a substantial investment in Ramaco Resources, increasing its holdings by 4.18 million shares. This move elevates Discovery’s total ownership in the coal mining company to 5.53 million shares, with an overall market value of approximately $182.21 million—a notable rise of about $164.67 million from the previous reporting period.
The updated SEC filing highlights Discovery Capital’s strategic commitment to Ramaco Resources, which now constitutes about 10% of the fund’s total reportable U.S. equity assets under management (AUM), marking it as the fund’s largest position. Following Ramaco, other significant investments include IREN valued at $157.95 million, ORBS at $131.61 million, GDLC at $101.19 million, and AMX at $98.31 million.
As of recent trading sessions, shares of Ramaco Resources (NASDAQ: METC) were valued at $18.00, offering a remarkable 78% return over the past year, significantly overshadowing the S&P 500’s 16% growth during the same timeframe. The company is a prominent producer of metallurgical coal, with crucial assets in West Virginia, Virginia, and Pennsylvania, and serves both domestic and international steel producers.
Despite the rise in holdings and share price, Ramaco reported a challenging third quarter, with revenue plummeting by 28% year over year to $121 million, attributed to declining prices in the coal market. Nonetheless, the company managed to reduce cash costs to $97 per ton, achieving an adjusted EBITDA of $8.4 million during this turbulent period. Ramaco’s liquidity has also reached a record high of $272 million, including over $77 million in net cash, underscoring the strength of its balance sheet amid market volatility.
What sets Ramaco apart from typical coal investments is its strategic expansion into rare earth and critical minerals, particularly through its Brook Mine project in Wyoming. This initiative is receiving federal interest and early-stage infrastructure investment, offering a unique growth angle that traditional coal-focused companies do not have.
Overall, Discovery Capital Management’s increasing investment in Ramaco Resources reflects a calculated approach to capitalize on market cycles, despite some short-term struggles in the coal sector. The dual-platform model that combines coal production with the potential for rare earth minerals presents a compelling opportunity for future growth, setting Ramaco apart in a competitive landscape.
