American Resources Corporation Reports Full Year 2023 Financial Results and Provides Business Outlook
- None.
- None.
Insights
The closure of a $150 million tax-exempt bond offering for a lithium refining facility is a significant financial move for American Resources Corporation (AREC). It demonstrates the company's ability to secure funding for capital-intensive projects, which is critical for its growth strategy in the rare earth and critical elements sector. The bond offering, being tax-exempt, suggests a cost-effective approach to financing, likely reducing the interest burden and enhancing the project's overall financial viability.
From an investor's perspective, the successful bond offering may indicate confidence in the company's future prospects, particularly in the burgeoning electric vehicle and renewable energy markets, where demand for lithium and rare earth elements is expected to grow. However, it is important to consider the long-term debt obligations that come with such financing and how they may affect the company's financial flexibility and profitability in the future. This bond offering could be a double-edged sword if the lithium market faces unforeseen headwinds or if the company's technology does not maintain its competitive edge.
The emphasis on American Resources Corporation's patented chromatographic separation and purification process positions the company at the forefront of critical mineral refining technology. This is particularly pertinent as the global supply chain is increasingly seeking to reduce reliance on Chinese-dominated rare earth element production. A domestic supplier with a purportedly more efficient and environmentally safe process could capture significant market share and contribute to supply chain resilience.
However, the market for rare earth elements and high-purity battery materials is highly competitive and sensitive to technological advancements. The company's ability to establish first-of-their-kind partnerships and its strong balance sheet are promising, but the real test will be its execution capability and the market's reception of its refined products. The long-term success of AREC hinges on its ability to maintain technological leadership and secure stable off-take agreements, ensuring consistent revenue streams.
The focus on environmentally safe commercial-scale production of critical minerals is a vital aspect of AREC's operations, aligning with increasing regulatory and consumer demands for sustainable practices. The company's partnerships aimed at recycling rare-earth elements from decommissioned wind turbines and EV motors underscore a commitment to a circular economy. This is not only beneficial from an environmental standpoint but also serves as a hedge against resource scarcity and geopolitical risks associated with raw material sourcing.
However, the environmental impact of mining and refining operations is complex and the promise of a low-cost, environmentally safe process will be scrutinized by stakeholders and regulators. It will be important for AREC to transparently demonstrate its environmental performance and compliance with regulations to maintain its social license to operate and appeal to environmentally conscious investors.
Company successfully executed and closed
The first domestic, commercial producer of separated and high-purity REEs from recycled permanent magnets and high-purity battery elements from both ores and recycled feedstocks
Company's patented chromatographic separation and purification process defining itself as the world-leading critical mineral refining technology
Establishing first-of-their-kind partnerships pioneering full circular solutions for both rare earth elements and critical battery elements
Strong balance sheet provides financial strength and flexibility to execute on its innovation, collaboration and growth plans
Company to host update conference call today at 4:30 PM ET
FISHERS, IN / ACCESSWIRE / March 28, 2024 / American Resources Corporation (NASDAQ:AREC ) ("American Resources" or the "Company"), a next generation and socially responsible supplier of rare earth and critical elements, carbon and advanced carbon materials to the new infrastructure and electrification marketplace, today announced financial results for the full year ended December 31, 2023. The Company will host a conference call and webcast, today, March 28, 2024, at 4:30 PM ET (details below).
Mark Jensen, Chairman and CEO of American Resources Corporation commented, "Over the past year, we continued to see tremendous success in establishing our strategic positioning within the value chain of our addressable markets. Our strategic focus has been to position and prepare our business for growth as separate, standalone companies, and we have been putting the pieces in place to execute on that plan as we have previously discussed, and which is consistent with our Strategic Committee's plan of action to better unlock the value of American Resources. These steps include securing the appropriate growth capital to scale operations while also building word-class teams around each business. Our growth capital for American Carbon is largely supported by the closing of the previously announced tax-exempt bond offering for Wyoming County Coal (WCC), and we believe that complex will be a first class facility producing premium mid vol carbon for the global steel markets. Development of the WCC complex continues to progress and we are confident we will be producing from its first deep mine later this year as we continue to assess longer term options for our carbon platform, such as sales, leases, production and joint venture partnerships. Nonetheless, advancing WCC's development put the entire carbon platform is a much stronger position as one of the last U.S.-based metallurgical carbon growth platforms. Additionally, we very recently closed on a successful
Key Division Highlights
The Company continues to aggressively drive innovative, efficient and solution-based steps to strengthen its position within its respective end-markets while strategically evolving to enhance shareholder value. Recent divisional milestones include:
ReElement Technologies
- Successfully executed and closed a Bond Purchase Agreement with Hilltop Securities Inc. for
$150,000,000 principal amount of Kentucky Industrial Building Revenue Bonds, Series 2024, for the Company's Kentucky Lithium LLC ("KYL") complex which will be used for the development and operation commissioning of the United States' first-of-its-kind critical mineral refining facility. - Established commercial partnership with a major U.S. auto manufacturer showcasing its low cost and environmentally friendly process to fully recycle and refine the high value rare-earth elements within EV motors back to ultra-pure magnet-grade rare-earth oxides, pioneering a sustainable and truly circular life-cycle solution to ensure that the rare earth elements remain within the domestic supply chain to build in America and stay in America.
- Established commercial partnership with EDP Renewables North America ("EDPR NA"), the world's fourth-largest wind energy producer and a top five owner and operator of renewables in North America, to advance sustainable practices in the wind energy sector with an initial focus on the efficient and sustainable recycling of neodymium-based permanent magnets from decommissioned wind turbines into magnet-grade rare earth elements, contributing to the development of a truly circular supply chain for renewable energy equipment and inputs.
- Executed MOU's with two German-based battery recycling platforms ( Duesenfeld GmbH , and Battery Damage Service GmbH ) to source recycled black mass battery material to be refined back to battery-grade lithium products such as lithium carbonate (Li 2 CO 3 ) and/or lithium hydroxide (LiOH) at its Marion, Indiana and Noblesville, Indiana refining facilities.
- Took a controlling interest in the former RCA Thomson manufacturing plant in Marion, Indiana, comprising approximately 425,000 square feet of manufacturing and refining capacity space on a 42-acre campus for ReElement Technologies' critical mineral refining facility, and subsequently closed on
$44.9 million of local incentives from the City of Marion, Indiana to support the buildout of a state-of-the-art, commercial-scale lithium, critical minerals, and rare earth elements refining facility with a primary focus on recycled feedstocks. - Continued to buildout its best-in-class team to drive operational expertise and strategic vision with the appointments of:
- Ben Wrightsman, a well-established leader in the battery sector, as President;
- Shane Tragethon, an operations and strategy expert with a large portion of his career supporting the United States Department of State's foreign assistance objectives and cooperation in Africa, as Vice President of International Strategy;
- Ben Kincaid, a former U.S. Diplomat serving and leading teams in multiple countries in Africa, the Middle East, and South Asia as CEO of ReElement Africa Ltd.;
- Former U.S. Ambassador, Mark Gilbert and former Vice Chairman of UBS Private Wealth Management as an Independent Director;
- Kevin Higgins, a national security expert and former intelligence community senior executive who retired from the Central Intelligence Agency (CIA) after 30 years of distinguished service as an Independent Director; and
- His Excellency Baba Kamara, former Ghanaian National Security Advisor and former Ghanaian Ambassador to Nigeria and current high-level official for Economic Community of West African States (ECOWAS) who will act in his individual capacity as an independent director of ReElement Africa Ltd.
- Achieved ultra-pure (
99.96% ) lithium carbonate (Li 2 CO 3 ) from its exclusively licensed and patented multi-modal chromatography technology from hard-rock, spodumene bearing pegmatite ore. This achievement comes after significant milestones of achieving99.9978% pure Li 2 CO 3 from LFP battery manufacturing scrap at commercial scale; the first-known to achieve this worldwide, and99.986% pure Li 2 CO 3 produced from recycled, end-of-life lithium-ion batteries, as well as achieving groundbreaking success as the first in the United States to produce greater than99.5% pure magnet rare earth elements [dysprosium (Dy), neodymium (Nd) and praseodymium (Pr)] at commercial scale.
American Carbon
- Successfully closed its
$45 million Tax-Exempt Industrial Development Bond offering through the West Virginia Economic Development Authority which will fund the expansion and technological improvements to the existing metallurgical carbon processing facility at its Wyoming County Coal (WCC) complex. This non-dilutive capital positions WCC as its next driver of growth which will support the development of two underground deep mines to produce premium, mid-vol metallurgical carbon, upgrade to the existing processing facility and development of its patented electrolysis technology to process associated waste streams into critical mineral concentrates. - Acquired a
51% ownership interest in a Jamaica-based, diversified mineral asset with a focus on iron ore, titanium and vanadium to further establishes American Carbon's foothold in the steelmaking supply chain.
Corporate
- Recently distribute a majority of the shares it held in Novusterra Inc., via a special dividend, to the underlying shareholders of American Resources in conjunction with the Company's Special Committee's directive to better unlock value.
- Closed the merger between its sponsored, special purpose acquisition vehicle, American Acquisition Opportunity Inc., and Royalty Management Corporation (Nasdaq: RMCO) a next-generation royalty company targeting high value assets, cash flow and royalty streams by identifying undervalued assets while constructively supporting communities. The transaction positions RMCO to capitalize on organic and inorganic growth opportunities within the electrification and energy transition industry, natural resources, intellectual properties and ag-tech investments.
- Converted its wholly owned subsidiary, ReElement Technologies, from a LLC (limited liability company) to a corporation in preparation of its spinoff into a standalone public company under the name ReElement Technologies Corporation with a reserved ticker of RLMT.
"Looking forward to the remainder of 2024, our belief in and the excitement over the opportunities we have in front of us continues to reach an all-time high. Our goal is to successfully spin-off both ReElement Technologies and American Carbon this year with the appropriate value, capital structures and teams to execute as standalone businesses, and we feel confident we will accomplish that goal," continued Mr. Jensen.
"The opportunity for ReElement Technologies continues to manifest at a very rapid pace both domestically and internationally and continue to be bolstered by our tremendous team and growing partnerships. The unique attributes of our technology puts us in a lead position to successfully deploy meaningful critical mineral refining capacity outside of China. It has always been our approach that utilizing the similar, solvent-based separation and purification technologies, as used in China, will be a challenge for most of the developed world and we are starting to see those challenges manifest from an operational, cost and environmental perspective. As such, we believe we stand alone in our ability to produce ultra-pure products at large scale, and in an environmentally-safe and cost competitive process. This has enabled us to advanced our focus on customer qualifications across multiple supply chains, procuring appropriate feedstocks to feed our large-scale projects, securing offtake agreements with both planned magnet, cathode / battery manufacturers and designing and engineering our planned large-scale, commercial facilities. Our rapid execution of this tremendous growth opportunity is evidenced by the technical expertise at our Noblesville, Indiana Commercial Qualification Plant, the acquisition of our Marion, Indiana super-site, the procurement of approximately
Expected Near-Term Catalysts
- Additional ReElement Technologies upstream and downstream partnerships to bolster feedstocks of end-of-life products, manufacturing scrap and ores for critical and REEs and offtake customers of sustainable and domestic sources of high-purity battery and magnet materials.
- Broader international expansion of ReElement Technologies' world-leading critical mineral platform for both critical mineral-based ores and recycling partnerships.
- Continue to scale critical mineral refining capacity at its next two large-scale facilities in Marion, Indiana and Knott County, Kentucky and through co-located facilities with supply chain partners.
- Continue to add best-in-class talent to drive the execution of each division.
- Monetization of American Carbon through its spin-off, increase in carbon production to meet market demand, leases, joint ventures and/or divestitures.
Conference Call Information
American Resources management will host a conference call for investors, analysts and other interested parties today, Thursday, March 28, 2024 at 4:30 PM ET.
Interested participants and investors may access the conference call by dialing 877-407-4019 and referencing American Resources Corporation's Fourth Quarter and Year End 2023 Conference Call, or by the webcast link: here .
Financial Results for the Year-Ending December 31, 2023
For the full year of 2023, American Resources reported a net income loss of
Full Year 2023 Summary
Full year 2023 revenues were
The Company did not incur any income tax expense in 2023 as it was able to utilize its available net operating losses ("NOL") carried forward from prior periods of approximately
AMERICAN RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
| Year Ended December 31, | ||||||||
| 2023 | 2022 | |||||||
Revenue | ||||||||
Coal sales | $ | 16,120,841 | $ | 39,103,995 | ||||
Metal recovery and sales | 66,552 | 48,199 | ||||||
Royalty income | 556,682 | 322,075 | ||||||
Total revenue | 16,744,075 | 39,474,269 | ||||||
Operating expenses (income) | ||||||||
Cost of coal sales and processing | 11,611,886 | 21,687,656 | ||||||
Accretion | 993,165 | 1,344,047 | ||||||
Depreciation | 46,953 | 2,157,763 | ||||||
Amortization of mining rights | 1,240,914 | 1,238,449 | ||||||
General and administrative | 7,013,833 | 4,020,464 | ||||||
Professional fees | 1,340,745 | 1,103,322 | ||||||
Production taxes and royalties | 2,647,655 | 3,785,049 | ||||||
Gain on sale of equipment | (8,475,468 | ) | (4,510,043 | ) | ||||
Development | 11,746,725 | 28,134,883 | ||||||
Total operating expenses | 28,166,408 | 58,961,590 | ||||||
Net loss from operations | (11,422,333 | ) | (19,487,321 | ) | ||||
Other income (expense) | ||||||||
Other income and (expense) | 677,045 | 317,045 | ||||||
Unrealized gain on short-term investments | 499,639 | - | ||||||
Gain on cancelation of debt | - | 3,119,775 | ||||||
Gain on sales of patents | - | 16,000,000 | ||||||
Interest income | 381,324 | 30,982 | ||||||
Interest expense | (1,336,997 | ) | (1,426,153 | ) | ||||
Total other income (expenses) | 221,011 | 18,041,649 | ||||||
Net loss | $ | (11,201,322 | ) | $ | (1,445,672 | ) | ||
Net loss per share - basic | $ | (0.15 | ) | $ | (0.02 | ) | ||
Weighted average shares outstanding - basic | 75,422,390 | 66,777,620 | ||||||
AMERICAN RESOURCES CORPORATION
CONSOLIDATED BALANCE SHEETS
| December 31, | December 31, | |||||||
| 2023 | 2022 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash | $ | 2,494,048 | $ | 10,873,432 | ||||
Accounts receivable | 253,764 | 660,755 | ||||||
Short-term investments | 28,039,497 | - | ||||||
Inventories | 54,000 | 446,690 | ||||||
Prepaid expenses and other current assets | 1,867,651 | 786,576 | ||||||
Total Current Assets | 32,708,960 | 12,767,453 | ||||||
Cash - restricted | 6,798,029 | 2,122,263 | ||||||
Property and Equipment, net | 15,337,004 | 9,113,722 | ||||||
Right-of-use assets, net | 18,276,913 | 13,033,889 | ||||||
Investment in LLC- Related Party | 18,780,000 | 18,780,000 | ||||||
Notes receivables | 99,022 | 99,022 | ||||||
Total Assets | $ | 91,999,928 | $ | 55,916,349 | ||||
Liabilities And Equity | ||||||||
Current liabilities: | ||||||||
Trade payables | $ | 6,709,224 | $ | 4,916,243 | ||||
Non-trade payables | 2,607,942 | 2,524,243 | ||||||
Accounts payable - related party | 2,371,697 | 4,295,232 | ||||||
Accrued interest | 512,558 | 106,886 | ||||||
Other Liabilities | 200,000 | - | ||||||
Current portion of long term debt | 804,656 | 1,917,506 | ||||||
Current portion of convertible debt | - | 9,787,423 | ||||||
Operating lease liabilities | 57,663 | 82,669 | ||||||
Finance lease liabilities | 4,806,822 | 3,803,175 | ||||||
Total current liabilities | 18,070,562 | 27,433,377 | ||||||
Remediation liability | 21,288,799 | 20,295,634 | ||||||
Bond payable, net | 44,152,500 | - | ||||||
Operating lease liabilities, non-current | 495,611 | 547,667 | ||||||
Finance lease liabilities, non-current | 7,514,848 | 7,354,975 | ||||||
Total liabilities | 91,522,320 | 55,631,653 | ||||||
Commitments and contingencies (Note 8) | ||||||||
Stockholders' deficit: | ||||||||
Common stock, | 7,627 | 6,680 | ||||||
Additional paid-in capital | 178,910,546 | 167,517,259 | ||||||
Accumulated deficit | (178,440,565 | ) | (167,239,243 | ) | ||||
Total stockholders' deficit | 477,608 | 284,696 | ||||||
Total liabilities and stockholders' deficit | $ | 91,999,928 | $ | 55,916,349 | ||||
AMERICAN RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Year Ended December 31 | ||||||||
| 2023 | 2022 | |||||||
Cash Flows from Operating activities: | ||||||||
Net loss | $ | (11,201,322 | ) | $ | (1,445,672 | ) | ||
Adjustments to reconcile net income loss) to net cash | ||||||||
Depreciation expense | 46,953 | 2,157,763 | ||||||
Amortization of mining rights | 1,240,914 | 1,238,449 | ||||||
Accretion expense | 993,165 | 1,344,047 | ||||||
Amortization of right-to-use assets | 626,253 | 128,926 | ||||||
Accretion of right-to-use assets | 64,386 | 73,475 | ||||||
Amortization of issuance costs and debt discount | 52,500 | - | ||||||
Option Expense | 1,506,292 | 1,742,145 | ||||||
Gain on sale of equipment | (8,475,468 | ) | (4,510,043 | ) | ||||
Unrealized gain on short-term investments | (499,639 | ) | (9,562 | ) | ||||
Gain on debt forgiveness | - | (3,046,062 | ) | |||||
Issuance of common shares for services | 100,000 | 38,800 | ||||||
Change in current assets and liabilities: | ||||||||
Accounts receivable | 406,991 | 2,514,880 | ||||||
Inventories | 392,690 | (446,690 | ) | |||||
Prepaid expenses and other current assets | (1,081,075 | ) | (161,971 | ) | ||||
Accounts payable | 1,876,680 | 2,428,974 | ||||||
Accrued interest | 406,191 | 363,684 | ||||||
Accounts payable related party | (1,923,535 | ) | 293,516 | |||||
Right of use assets | 752,783 | (165,032 | ) | |||||
Other Liabilities | 200,000 | - | ||||||
Cash provided by operating activities | (14,515,241 | ) | 2,549,189 | |||||
Cash Flows from Investing activities: | ||||||||
Purchases of short-term investments | (51,865,545 | ) | - | |||||
Proceeds from sales and maturities of short-term investments | 24,325,687 | - | ||||||
Cash received (paid) for PPE, net | 964,319 | 16,908,129 | ||||||
Cash invested in note receivable | - | 250,978 | ||||||
Investment in LLCs | - | (18,284,866 | ) | |||||
Cash used in investing activities | (26,575,539 | ) | (1,125,759 | ) | ||||
Cash Flows from Financing activities: | ||||||||
Repayments on long term debt | (1,112,850 | ) | (2,214,603 | ) | ||||
Proceeds from long term debt | - | 2,563,000 | ||||||
Cash used to repurchase shares | - | (93,435 | ) | |||||
Repayments of finance lease liabilities | (5,599,988 | ) | (1,270,810 | ) | ||||
Proceeds from tax exempt bonds, net | 44,100,000 | - | ||||||
Cash provided by (used for) financing activities | 37,387,162 | (1,015,848 | ) | |||||
Increase (decrease) in cash | (3,703,618 | ) | 407,582 | |||||
Cash and cash equivalents, including restricted cash, beginning of period | 12,995,695 | 12,588,113 | ||||||
Cash and cash equivalents, including restricted cash, end of period | $ | 9,292,077 | $ | 12,995,695 | ||||
Reconciliation of Non-GAAP Measures
Reconciliation of Adjusted EBITDA (1) to Amounts Reported Under U.S. GAAP
| For the twelve months ended December 31, 2023 | For the twelve months ended December 31, 2022 | |||||||
Net Income | (11,201,322 | ) | (1,445,672 | ) | ||||
Interest & Other Expenses | 1,336,997 | 1,426,153 | ||||||
Income Tax Expense | - | - | ||||||
Accretion Expense | 993,165 | 1,344,047 | ||||||
Depreciation | 46,953 | 2,157,763 | ||||||
Amortization of Mining Rights | 1,240,914 | 1,238,449 | ||||||
Non-Cash Stock, Warrant & Option Comp. Expense | 1,506,292 | 1,742,145 | ||||||
Total Adjustments | 5,124,321 | 7,908,557 | ||||||
Adjusted EBITDA | (6,077,001 | ) | 6,462,885 | |||||
- Adjusted EBITDA is defined as net income before net interest expense, income tax expense, accretion expense, depreciation, non-cash stock compensation expense, transaction and other professional fees. Adjusted EBITDA is not a measure of financial performance in accordance with GAAP, and we believe items excluded from Adjusted EBITDA are significant to a reader in understanding and assessing our financial condition. Therefore, Adjusted EBITDA should not be considered in isolation, nor as an alternative to net income, income from operations, cash flow from operations or as a measure of our profitability, liquidity, or performance under GAAP. We believe that Adjusted EBITDA presents a useful measure of our ability to incur and service debt based on ongoing operations. Furthermore, similar measures are used by analysts to evaluate our operating performance. Investors should be aware that our presentation of Adjusted EBITDA may not be comparable to similarly titled measures used by others.
About American Resources Corporation
American Resources Corporation is a next-generation, environmentally and socially responsible supplier of high-quality raw materials to the new infrastructure market. The Company is focused on the extraction and processing of metallurgical carbon, an essential ingredient used in steelmaking, critical and rare earth minerals for the electrification market, and reprocessed metal to be recycled. American Resources has a growing portfolio of operations located in the Central Appalachian basin of eastern Kentucky and southern West Virginia where premium quality metallurgical carbon and rare earth mineral deposits are concentrated.
American Resources has established a nimble, low-cost business model centered on growth, which provides a significant opportunity to scale its portfolio of assets to meet the growing global infrastructure and electrification markets while also continuing to acquire operations and significantly reduce their legacy industry risks. Its streamlined and efficient operations are able to maximize margins while reducing costs. For more information visit americanresourcescorp.com or connect with the Company on Facebook , Twitter , and LinkedIn .
About ReElement Technologies LLC
ReElement Technologies LLC is redefining how critical and rare earth elements are both sourced and processed while focusing on the recycling of end-of-life products such as rare earth permanent magnets and lithium-ion batteries, as well as coal-based waste streams and byproducts to create a low-cost and environmentally-safe, circular supply chain. ReElement has developed its innovative and scalable "Capture-Process-Purify" process chain in conjunction with its licensed intellectual property including 16 patents and technologies and sponsored research partnerships with three leading universities to support the domestic supply chain's growing demand for magnet and battery metals. For more information visit reelementtech.com or connect with the Company on Facebook , Twitter , and LinkedIn .
Special Note Regarding Forward-Looking Statements
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, uncertainties, and other important factors that could cause the Company's actual results, performance, or achievements or industry results to differ materially from any future results, performance, or achievements expressed or implied by these forward-looking statements. These statements are subject to a number of risks and uncertainties, many of which are beyond American Resources Corporation's control. The words "believes", "may", "will", "should", "would", "could", "continue", "seeks", "anticipates", "plans", "expects", "intends", "estimates", or similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Any forward-looking statements included in this press release are made only as of the date of this release. The Company does not undertake any obligation to update or supplement any forward-looking statements to reflect subsequent events or circumstances. The Company cannot assure you that the projected results or events will be achieved.
Investor Contact:
JTC Team, LLC
Jenene Thomas
833-475-8247
arec@jtcir.com
RedChip Companies Inc.
Robert Foley
1-800-RED-CHIP (733-2447)
Info@redchip.com
Company Contact:
Mark LaVerghetta
Vice President of Corporate Finance and Communications
317-855-9926 ext. 0
investor@americanresourcescorp.com
SOURCE: American Resources Corporation
View the original press release on accesswire.com
FAQ
What was the purpose of the $150 million tax-exempt bond offering closed by American Resources ?
What distinguishes American Resources in the market for rare earth elements and critical battery elements?
What key partnerships has American Resources established?
What are the highlights of ReElement Technologies' achievements?
What financial results were reported by American Resources for the full year ended December 31, 2023?
