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

16 May 2022
  • 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
This email address is being protected from spambots. You need JavaScript enabled to view it.

Investor Contact:
JTC Team, LLC
Jenene Thomas
833-475-8247
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RedChip Companies Inc.
Todd McKnight
1-800-RED-CHIP (733-2447)
This email address is being protected from spambots. You need JavaScript enabled to view it.

Company Contact:
Mark LaVerghetta
Vice President of Corporate Finance and Communications
317-855-9926 ext. 0
This email address is being protected from spambots. You need JavaScript enabled to view it.

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