Sienna Resources

American Resources Reports First Quarter 2024 Financial Results and Provides Business Outlook

21 May 2024
  • Company successfully executed and closed $150 million tax exempt bond offering for the Company's Kentucky Lithium refining facility
  • 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
  • Company to host update conference call today at 4:30 PM ET

FISHERS, IN / ACCESSWIRE / May 21, 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 first quarter of 2024. The Company will host a conference call and webcast, today, May 21, 2024, at 4:30 PM ET (details below).

Mark Jensen, Chairman and CEO of American Resources Corporation commented, "While it's only been seven weeks from our last update, we continued to see tremendous success and momentum in establishing our strategic positioning within our addressable markets. Our strategic focus continues to be on positioning and preparing our businesses 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 $150 million tax-exempt bond offering to fund the development of our Kentucky Lithium refining facility which will position ReElement at the U.S.'s largest and most efficient producer of battery-grade lithium. It is becoming more evident that ReElement Technologies continues to separate itself as the most efficient critical mineral refining platform in the world. The critical and rare earth elements we refine today are imperative to operate our modern-day technology including electric vehicles, clean energy and defense applications. Our ability to produce a variety of ultra-pure, critical mineral products in a low-cost and environmentally safe commercial scale has put us in a unique position across several supply chains. As we continue to aggressively advance our platform technology and collaborate with partners, it is becoming more evident that we are the most efficient solution for the deployment of sustainable critical mineral refining outside of China. We continue to quietly position American Metals as an aggregator and processor of recycled feedstocks to feed into ReElement. American Metals is in a unique position to leverage ReElements advanced refining capabilities to handle the preprocessing step of end-of-life or off-spec batteries and magnets which also will enhance ReElements long-term margin profile. Lastly, as we continue to execute on our strategic plan, American Resource will continue to evolve by leveraging the unique capabilities and positioning of our current operating companies to diversify into other critical mineral and infrastructure resources to support energy transition and national security interests, similar to American Carbon's recent acquisition of a 51% interest in an iron ore and titanium resource deposit."

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 separated and purified lithium from feedstocks derived from lithium brine sources and has expanded its Powered by ReElement service offering to include integration into direct lithium extraction flow sheets.
  • Announced that it has been accepted as a member of the Defense Industrial Base Consortium to help address defense supply chain issues.
  • Announced a strategic partnership with LVC Global Holdings focused on redefining critical mineral and rare earth element refining and recycling practices across the Emerging & Frontier Markets, particularly in Sub-Saharan Africa.
  • Announced that its university research partner, Purdue University, has expanded the Company's exclusive use of the patents for licensed ligand assisted displacement ("LAD") chromatography and knowhow for all feedstocks to now include rare earth ores.
  • Established its collaborative platform branded Powered by ReElement to focus on inline partnerships with other critical and rare earth mineral processors, recyclers or refiners that need to optimize certain components or the entire separation and purification process within their solvent-based and/or hydrometallurgical process.
  • Received its initial certificate of occupancy for its Marion, Indiana Advanced Technology Center supersite which will be a first mover in reducing the chokehold that China has on the refining of critical and rare earth elements.
  • 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 (Li2CO3) and/or lithium hydroxide (LiOH) at its Marion, Indiana and Noblesville, Indiana refining facilities.

American Carbon

  • Announced updated results of its rare earth element deposits at its Wyoming County Coal project in West Virginia with over 550 ppm as verified from an independent third-party laboratory. The ongoing project development is being funded by the Company's previously announced $45 million tax exempt bond.
  • Through its continued focus on proper environmental stewardship and cost structure reduction through reclamation and remediation of former mining operations, the Company has further reduced its environmental bonding liability by over an additional $1.05 million. With these recent approvals, it will bring the total number of acres of prior impacted coal mining operations from acquired assets that the Company has reclaimed or released to over 9,000 acres from previously acquired impacted lands and stranded mining permits.
  • 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

  • Engaged GBQ Partners LLC as the Company's new independent registered public accounting firm.
  • Announced that its Board of Directors has declared a special dividend of shares of its wholly owned subsidiary, American Carbon Corporation, and established the record date and distribution date of May 27, 2024 and June 11, 2024, respectively.
  • Recently distributed 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.

"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 advance 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 in Marion, Indiana and Knott County, Kentucky. 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 super-site, the procurement of approximately $45 million in tax incentives from the municipality of Marion, and the successful execution of a bond purchase agreement for $150 million of Kentucky Industrial Building Revenue Bonds for our first-of-its-kind Kentucky Lithium refinery, to name a few. Additionally, our international growth plans are substantial, especially with unlocking the value of certain African regions, to support a massive shift in global trade and manufacturing. ReElement sits in a very opportunistic position at the intersection of energy transition and national security and we remain steadfast on executing in a calculated and expedited manner to build substantial value for our Company, shareholders and stakeholders alike."

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, Tuesday, May 21, 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 First Quarter 2024 Conference Call, or by the webcast link: here.

Financial Results for First Quarter 2024

For the first quarter of 2024, American Resources reported a net income loss of $6.23 million or a loss of $0.03 per share, as compared with a net income loss $3.1 million or loss of $0.04 per share in the prior year period. The Company earned an adjusted earnings before interest, taxes, depreciation, amortization, accretion on asset retirement obligations, non-operating expenses and non-cash impairment loss (‘adjusted EBITDA") of $4.84 million for the first quarter of 2024, as compared with an adjusted EBITDA loss of $1.59 million for the first quarter of 2023.

First Quarter 2024 Summary

Total revenues were $94,019, compared to total revenues of $8.87 million during the first quarter of 2023. General and administrative expenses for the first quarter of 2024 were $2.06 million compared to $1.32 million in the prior year period. American Resources incurred interest expense of $249,455 during the first quarter of 2024 compared to $575,964 during the first quarter of 2023. Development costs during the quarter were $2.4 million compared to $5.6 million during the first quarter of 2023 and better positions the Company within the markets in which it serves.

The Company did not incur any income tax expense in the first quarter of 2024 as it was able to utilize its available net operating losses ("NOL") carried forward from prior periods of approximately $25.7 million as of December 31, 2023.

AMERICAN RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED

 
 
For the three months
ended March 31,
 
 
 2024  2023 
Revenue
      
Coal sales
 $-  $8,723,185 
Metal recovery and sales
  29,352   20,609 
Royalty income
  64,667   124,662 
Total revenue
  94,019   8,868,456 
 
        
Operating expenses (income)
        
Cost of coal sales and processing
  1,266,928   2,705,820 
Accretion
  248,291   248,291 
Depreciation
  22,086   13,336 
Amortization of mining rights
  307,801   305,859 
General and administrative
  2,062,021   1,321,468 
Professional fees
  390,196   293,255 
Production taxes and royalties
  121,767   981,636 
Development
  2,397,140   5,633,908 
Gain on sale of equipment
  (458,000)  - 
Total operating expenses
  6,358,230   11,503,573 
 
        
Net loss from operations
  (6,264,211)  (2,635,117)
 
        
Other income (expense)
        
Other income and (expense)
  251,639   93,000 
Interest income
  36,095   17,212 
Interest expense
  (249,455)  (575,964)
Total other income (expenses)
  38,279   (465,752)
 
        
Net loss
 $(6,225,932) $(3,100,869)
Less: Non-controlling interest
  -   - 
Net loss attributable to AREC shareholders
  (6,225,932)  (3,100,869)
 
        
Net loss per share - basic and diluted
 $(0.03) $(0.04)
 
        
Weighted average shares outstanding - basic and diluted
  76,886,957   72,953,104 

AMERICAN RESOURCES CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEET

 
 March 31,  December 31, 
 
 2024  2023 
 
 (unaudited)    
Assets
      
Current assets:
      
Cash and cash equivalents
 $2,168,557  $2,666,638 
Inventories
  129,991   54,000 
Prepaid expenses and other current assets
  2,521,646   1,867,651 
Total current assets
  4,820,194   4,588,289 
 
        
Restricted cash
  177,643,892   34,664,936 
Property and equipment, net
  11,202,362   15,337,004 
Right-of-use assets, net
  18,108,411   18,276,913 
Investment in LLCs- related parties
  4,220,000   18,780,000 
Notes receivable, net
  99,022   99,022 
Total assets
 $216,093,881  $91,746,164 
Liabilities And Equity
        
Current liabilities:
        
Trade payables
 $4,389,695  $6,709,224 
Non-trade payables
  2,755,451   2,607,942 
Accounts payable - related party
  2,305,604   2,371,697 
Accrued interest
  146,101   512,558 
Other current liabilities
  -   200,000 
Notes payable
  792,184   804,656 
Operating lease liabilities
  59,691   57,663 
Finance lease liabilities
  5,510,004   4,806,822 
Total current liabilities
  15,958,730   18,070,562 
 
        
Remediation liability
  21,537,089   21,288,799 
Bonds payable, net
  192,430,933   44,152,500 
Operating lease liabilities, non-current
  480,004   495,611 
Finance lease liabilities, non-current
  5,488,120   7,514,848 
Total liabilities
  235,894,876   91,522,320 
 
        
Commitments and contingencies (Note 9)
        
 
        
Stockholders' equity:
        
Common stock, $0.0001 par value; 230,000,000 shares authorized,
77,296,990 and 76,247,370 shares issued and outstanding at March 31, 2024
and December 31, 2023, respectively
  7,732   7,627 
Additional paid-in capital
  165,111,534   178,910,546 
Accumulated deficit
  (184,920,261)  (178,694,329)
Total stockholders' equity
  (19,800,995)  223,844 
Total liabilities and stockholders' equity
 $216,093,881  $91,746,164 

AMERICAN RESOURCES CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

 
 
For the three months
ended March 31,
 
 
 2024  2023 
Cash Flows from Operating activities:
      
Net loss
 $(6,225,932) $(3,100,869)
Adjustments to reconcile net income (loss) to net cash used in operating activities
        
Depreciation expense
  32,496   13,336 
Amortization of mining rights
  304,970   305,859 
Accretion expense
  248,290   248,291 
Amortization of right-to-use assets
  168,502   - 
Accretion of right-to-use assets
  242,817   107,895 
 
        
Amortization of issuance costs and debt discount
  41,572   - 
Noncash stock-based compensation expense
  560,393   376,573 
Issuance of common shares for services
  43,800   - 
 
        
Change in current assets and liabilities:
        
Accounts receivable
  -   (1,034,174)
Inventories
  (75,991)  (2,512,821)
Prepaid expenses and other current assets
  (653,995)  (10,500)
Accounts payable
  (2,172,024)  (450,185)
Accrued interest
  (366,457)  3,819 
Accounts payable related party
  (66,093)  (1,290,188)
Operating lease assets and liabilities, net
  (13,579)  - 
Other liabilities
  (200,000)  - 
Cash used in operating activities
  (8,131,227)  (7,342,964)
 
        
Cash Flows from Investing activities:
        
Purchase of property and equipment
  (264,939)  (508,930)
Cash received (paid) for PPE, net
  4,062,115   - 
Investment in LLCs
  -   1,476,273 
Cash (used in) provided by investing activities
  (3,797,176)  967,343 
 
        
Cash Flows from Financing activities:
        
Repayments on notes payable
  (12,472)  (1,077,778)
Repayments of finance lease liabilities
  (1,566,363)  (1,116,969)
Proceeds from the exercise of stock option
  156,900   - 
Proceeds from tax exempt bonds, net
  148,236,861   - 
Cash provided by (used in) financing activities
  146,817,926   (2,194,747)
 
        
Increase (decrease) in cash
  142,480,875   (8,570,368)
Cash and cash equivalents, including restricted cash, beginning of period
  37,331,574   10,990,829 
Cash and cash equivalents, including restricted cash, end of period
 $179,812,449  $2,420,461 
 
        
SUPPLEMENTAL CASH FLOW INFORMATION
        
Cashless exercise of warrants
 $87  $- 
Dividend-in-kind of Novustera, Inc. common stock to shareholders
 $14,560,000  $- 

Reconciliation of Non-GAAP Measures
Reconciliation of Adjusted EBITDA(1) to Amounts Reported Under U.S. GAAP

 
 For the three months ended March 31, 2024  For the three months ended March 31, 2023 
Net Income
  (6,225,932)  (3,100,869)
 
        
Interest & Other Expenses
  249,455   575,964 
Income Tax Expense
  -   - 
Accretion Expense
  248,291   248,291 
Depreciation
  22,086   13,336 
Amortization of Mining Rights
  305,859   305,859 
Non-Cash Stock, Warrant & Option Comp. Expense
  560,393   367,573 
 
        
Total Adjustments
  1,386,084   1,511,023 
 
        
Adjusted EBITDA
  (4,839,848)  (1,589,846)

(1) 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
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RedChip Companies Inc.
Robert Foley
1-800-RED-CHIP (733-2447)
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Company Contact:
Mark LaVerghetta
Vice President of Corporate Finance and Communications
317-855-9926 ext. 0
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