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American Resources Reports First Quarter 2022 Financial Results and Provides Business Outlook

  • Company reports adjusted EBITDA for the 1Q 2022 of $5.8 million
  • On track be the first in the U.S. to produce isolated and purified critical and rare earth elements (REEs) and bring the most environmentally-safe refining solutions to the domestic marketplace
  • Significant increase in carbon demand and price realization being seen as Company scales operations and on track this March to realize operating profit
  • Current specialty and metallurgical carbon backlog represents approximately $110 million
  • Company highly aligned with major U.S. priorities in both infrastructure and electrification
  • 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

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 first quarter of 2022 and provided a corporate update. The Company will host a conference call and webcast, today, May 16, 2022, at 4:30 PM ET (details below).

Mark Jensen, Chairman and CEO of American Resources Corporation commented, "The first three months of 2022 showcased the steady progression of our carbon business. As we've recently discussed, the majority of our carbon sales during the first quarter occurred in the March month as we realized a more consistent run rate of production with additional operating sections now online at our producing mines. Today, we continue to see the fruits of our investments and continue to drive carbon production growth forward at our current operations. We continue to see constrained supply throughout the industry and as a result, are benefitting from a strong pricing environment. Additionally, our American Rare Earth subsidiary is closing in on a major milestone, not just for our Company, but for our country and domestic supply chain as a whole. We remain on track to having our final stage rare earth and critical mineral isolation and purification facility operating in the coming weeks. Being the first domestic, commercial supplier of isolated and purified critical and rare earth minerals, while addressing the sustainability of those materials is something that we are very proud of and believe differentiates us."

First Quarter 2022 Key Highlights

American Rare Earth

  • Established and entered into a strategic partnership with the venture capital investment arm of The Heritage Group, HG Ventures LLC ("Heritage") to expedite the path of being the United States' first and lowest cost producer of domestically-sourced and sustainable, purified critical and rare earth elements to support the rapid demand growth of battery and magnet metals.
  • Partnered with IN3, a leading applied research institute and collaborative organization, to help expand its industry relationships and further secure inroads to promote American Rare Earth's commercial production of critical and rare earth elements such as lithium, cobalt, nickel, neodymium, praseodymium and dysprosium at its production facilities.

American Carbon

  • Acquired the operating rights to a PCI carbon surface mine operation to further expand the production of their McCoy Elkhorn Complex in Pike County, Kentucky.
  • Added to its fleet of equipment at its Carnegie #1 mine to double its production of high-quality metallurgical carbon.
  • Expanded its sales commitments for a portion of its specialty carbon stoker products for the second quarter of 2022 by approximately 15,000 tons at a record average price realization in the mid $200 per ton.

"Looking forward to the remainder of 2022, our excitement over the opportunities we have in front of us continues to reach an all-time high. Our current specialty and metallurgical carbon backlog represents approximately $110 million and our carbon production continues to scale and become more consistent. Our first-class set of assets is beginning to showcase our low-cost and growth attributes with the investments we've made and with the future investments we're planning at our Wyoming County, West Virginia complex. Additionally with the recent leasing of our Deane Mining complex, we are monetizing our non-core asset base with a low cost, high margin cash flow stream and allows us to further leverage the strong carbon market," continued Mr. Jensen.

"The opportunity for American Rare Earth continues to manifest at a very rapid pace and continues to be bolstered by our tremendous team and partnerships. We wholeheartedly believe that the greatest impact we can make to our domestic supply of critical and REEs is to provide the most efficient and environmentally-safe solutions for the final stage of separation and purification while providing a sustainable and circular supply of critical materials. The imminent commencement of our first purification facility marks a tremendous milestone and one that we're confident will usher us to very exciting places."

Expected Near-Term Catalysts

  • Closing of $45 million West Virginia tax-exempt industrial development bonds for Company's Wyoming County advanced carbon and rare earth processing facility.
  • Additional American Rare Earth upstream and downstream partnerships to bolster feedstocks of end-of-life products for critical and REEs and offtake customers of recycled, sustainable and domestic sources of high-purity battery and magnet metals.
  • Imminent commencement of its critical and rare earth purification facility and being the first domestic, commercial producer of isolated and high-purity battery and magnet metals.

Conference Call Information

American Resources management will host a conference call for investors, analysts and other interested parties today, Monday, May 16, 2022 at 4:30 PM ET.

Interested participants and investors may access the conference call by dialing (888) 437-3179 and referencing American Resources Corporation's First Quarter 2022 Conference Call, or by the webcast link here.

Financial Results for First Quarter 2022

For the first quarter of 2022, American Resources reported a net income loss of $2.75 million, or a loss of $0.04 per share for the three months ended March 31, 2022, as compared with a net income loss of $6.4 million, or $0.14 per share in the prior-year period. The Company earned adjusted earnings before interest, taxes, depreciation, amortization, equity-based compensation, warrant expense and development and restructuring costs ("Adjusted EBITDA") of a $5.8 million in the first quarter of 2022, as compared with an Adjusted EBITDA loss of $2.8 million for the first quarter of 2021.

First Quarter 2022 Summary

Total revenues were $9.08 million for the first quarter of 2022 compared to revenues of $0.01 million during the first quarter of 2021. General and administrative expenses for the first quarter of 2022 were $1.0 million compared to $1.1 million in the prior year period. American Resources incurred interest expense of $393,696 during the first quarter of 2022 compared to $491,113 during the first quarter of 2021. Development costs during the quarter were $6.8 million, compared to $8.1 million in the fourth quarter of 2021.

AMERICAN RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED

  
For the three
months ended
  
For the three
months ended
 
  
March 31,
2022
  
March 31,
2021
 
       
Coal Sales
 $9,031,259  $3,274 
Metal recovery and sales
  37,226   - 
Royalty Income
  12,137   7,372 
         
Total Revenue
  9,080,622   10,646 
         
Cost of Coal Sales and Processing
  (2,890,858)  (800,515)
Accretion Expense
  (267,622)  (305,636)
Depreciation
  (626,042)  (393,530)
Amortization of Mining Rights
  (303,394)  (311,685)
General and Administrative
  (1,020,814)  (1,081,447)
Professional Fees
  (350,938)  (710,032)
Production Taxes and Royalties
  (819,477)  (568,182)
Development Costs
  (6,784,188)  (1,811,951)
         
Total Operating expenses
  (13,063,333)  (5,982,978)
         
Net Loss from Operations
  (3,983,711)  (5,972,332)
         
Other Income and (expense)
        
Other Income
  82,156   35,296 
Gain on cancelation of debt
  1,521,304     
Amortization of debt discount and debt issuance costs
  -   (2,879)
Interest Income
  10,045   41,171 
Interest expense
  (383,696)  (491,113)
Total Other income (expense)
  1,229,809   (417,525)
         
Net Loss
  (2,752,902)  (6,389,857)
         
Less: Net Loss attributable to Non controlling interest
  7,884   - 
         
Net loss attributable to American Resources Corp. Shareholders
 $(2,745,018) $(6,389,857)
         
Net loss per common share - basic and diluted
 $(0.04) $(0.14)
         
Weighted average common shares outstanding- basic and diluted
  65,253,533   46,917,910 

AMERICAN RESOURCES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED

 
 
March 31,
2022
  
December 31,
2021
 
ASSETS 
CURRENT ASSETS
      
Cash
 $5,217,204  $11,492,702 
Accounts Receivable
  2,856,324   3,175,636 
Inventory
  1,236,065   - 
Prepaid fees
  1,576,015   624,605 
Total Current Assets
  10,885,608   15,292,943 
         
OTHER ASSETS
        
Cash - restricted
  1,086,593   1,095,411 
Property and equipment, net
  22,698,618   22,903,154 
Long-term right of use assets, net
  704,627   726,194 
Investment in LLC - Related Party
  2,500,000   2,500,000 
Note Receivable
  685,000   350,000 
Total Other Assets
  27,674,838   27,574,759 
         
TOTAL ASSETS
 $38,560,446  $42,872,702 
         
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) 
         
CURRENT LIABILITIES
        
Trade payable
 $3,013,987  $3,245,566 
Non-Trade Payables
  1,788,280   1,950,567 
Accounts payable - related party
  3,241,109   3,932,716 
Accrued interest
  1,001,457   1,325,286 
Due to affiliate, net
  69,000   69,000 
Current portion of long term-debt
  3,736,719   5,283,647 
Convertible note payables (net of unamortized discount of $0 and $18,106)
  8,912,097   571,618 
Current portion of lease liabilities, net
  80,858   151,806 
Total Current Liabilities
  21,843,507   16,530,206 
         
OTHER LIABILITIES
        
Notes payable
  534,543   548,477 
Convertible note payables (net of unamortized discount of $0 and $22,549)
  -   8,620,412 
Remediation liability
  19,219,209   18,951,587 
Lease liabilities, net
  614,708   562,428 
Total Other Liabilities
  20,368,460   28,682,904 
         
Total Liabilities
  42,211,967   45,213,110 
         
STOCKHOLDERS' DEFICIT
        
Common stock: $.0001 par value; 230,000,000 shares authorized, 66,156,417 and 65,084,992 shares issued and outstanding
  6,616   6,508 
Additional paid-in capital
  164,888,336   163,441,655 
Accumulated deficit
  (168,538,589)  (165,793,571)
Total American Resources Corporation Shareholders' Equity
  (3,643,637)    
Non Controlling Interesting
  (7,884)    
Total Stockholders' Equity (Deficit)
  (3,651,521)  (2,345,408)
         
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
 $38,560,446  $42,872,702 

AMERICAN RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED

 
 
For the three
months ended
  
For the three
months ended
 
 
 
March 31,
2022
  
March 31,
2021
 
Cash Flows from Operating activities:
      
Net loss
 $(2,752,902) $(6,389,857)
Adjustments to reconcile net loss to net cash used in operating activities:
        
Gain on forgiveness of debt
  (1,521,304)  - 
Depreciation
  626,042   393,530 
Amortization of mining rights
  303,394   311,685 
Accretion expense
  267,622   305,636 
Accretion of right of use assets
  2,899   - 
Warrant expense
  199,843   115,025 
Issuance of common share options for compensation
  -   147,000 
Amortization of beneficial conversion feature
  -   590,464 
Issuance of common shares for services
  -   188,000 
Change in current assets and liabilities:
        
         
Accounts receivable
  319,312   35,376 
Prepaid expenses and other assets
  (951,410)  (66,668)
Inventory
  (1,236,065)  - 
Accounts payable
  (393,866)  (1,613,643 
Accounts payable related party
  (691,607)  33,726 
Accrued interest
  94,435   (796,248)
Cash provided by (used in) operating activities
  (5,733,607)  (6,745,974 
         
Cash Flows from Investing activities:
        
         
Cash paid for PPE, net
  (724,900)  (565,000)
Capitalized interest
  267,875   - 
Cash invested in notes receivable
  (335,000)    
Investment in LLC
  -   (2,275,000)
Cash provided by (used in) investing activities
  (792,025)  (2,840,000)
         
Cash Flows from Financing activities:
        
         
Principal payments on long term debt
  (39,559)  (62,294)
Issuance of common shares for debt and payable conversion
  -   1,997,514 
Proceeds from convertible note
  -   1,620,000 
Proceeds from warrant conversions
  280,875   2,055,723 
Proceeds from sale of common stock, net
  -   1,105,001 
Cash provided by financing activities
  241,316   6,715,944 
         
Increase (decrease) in cash and restricted cash
  (6,284,316)  (2,870,030)
         
Cash and restricted cash, beginning of period
  12,588,113   11,201,203 
         
Cash and restricted cash, end of period
 $6,303,797  $8,331,173 
         
Supplemental Information
        
Non-cash investing and financing activities
        
         
Conversion of debt to common shares
 $1,006,726  $1,997,514 
Discount on note due to beneficial conversion feature
 $-  $715,740 
         
Cash paid for interest
 $3,726  $42,426 

Reconciliation of Non-GAAP Measures
Reconciliation of Adjusted EBITDA to Amounts Reported Under U.S. GAAP

 
 For the three months ended March 31, 2022  For the three months ended March 31, 2021 
Net Income
  (2,752,902)  (6,389,857)
         
Interest & Other Expenses
  383,696   491,113 
Income Tax Expense
  -   - 
Accretion Expense
  267,622   305,636 
Depreciation
  646,042   393,530 
Amortization of Mining Rights
  303,394   311,685 
Amortization of Debt Discount & Issuance
  -   2,879 
Non-Cash Stock, Warrant & Option Comp. Expense
  199,843   262,025 
Development Costs
  6,784,188   1,811,951 
PCR Restructuring Expenses
  -   - 
         
Total Adjustments
  8,584,785   3,578,819 
         
Adjusted EBITDA
  5,831,883   (2,811,038)

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.

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.

PR Contact
Precision Public Relations
Matt Sheldon
917-280-7329
matt@precisionpr.co

Investor Contact:
JTC Team, LLC
Jenene Thomas
833-475-8247
arec@jtcir.com

RedChip Companies Inc.
Todd McKnight
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

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