Kentucky Miner Ramaco Resources Files for IPO

(Financial Times, January 30) – Coal at Christmas is typically a bad omen. Private-equity backed Ramaco Resources has nonetheless handed investors one final stocking filler.

The Kentucky-based owner of four coal mines with no operating history fired the starting gun on an initial public offering this week, filing paperwork with US securities regulators in what would be the first US coal flotation in more than a year.

The filing is a milestone after a tumultuous year for the industry, when the largest private sector coal producer — Peabody Energy — hamstrung by high debt levels and mounting losses, filed for bankruptcy protection. Dozens of coal companies have filed for similar protection since 2012.

But the industry’s prospects have rebounded as China moved to curtail domestic coal output, bolstering the commodity. Ramaco cited global prices that have recovered to $200 per metric ton from $81 in January. An index of US coal and petroleum export prices maintained by the Department of Labor has also climbed more than 15 per cent this year.

Ramaco warned potential investors about the volatility of coal prices, noting a “substantial or extended decline . . . could adversely affect our business”.

If Ramaco successfully completes a flotation, it would mark the first coal IPO since June 2015 when CNX Coal Resources went public. CNX, which was formed by Consol Energy to develop the group’s thermal coal operations in Pennsylvania, was forced to downsize its IPO amid lacklustre demand as coal prices languished last year. Shares have climbed 23 per cent since.

Ramaco, backed by Yorktown Energy Partners and Energy Capital Partners, said it would use proceeds from the IPO to fund investments in its four mines in Pennsylvania, Virginia and West Virginia.

Energy Capital Partners was established in 2005 by Doug Kimmelman, a 22-year Goldman Sachs veteran who started in the firm’s pipeline and utilities group in 1983.

Ramaco management said its goal was to have the projects fully developed by 2022. The filing, which did not name any underwriters, listed a $100m place holder for the sum the group planned to raise. That figure is likely to change as the investment banks begin marketing the company.

Ramaco plans to list on the Nasdaq under the ticker symbol “METC”.