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 second quarter of 2022 and provided a corporate update. The Company will host a conference call and webcast, today, August 15, 2022, at 4:30 PM ET (details below).
Mark Jensen, Chairman and CEO of American Resources Corporation commented, "The second quarter of 2022 continued to showcase the steady progression of our carbon business resulting in 78% quarter-over-quarter revenue growth. Today, we continue to see the fruits of our investments and have our carbon platform in position to drive continued carbon production growth forward. We continue to see constrained supply throughout the industry and as a result, we find ourselves as one of the few sources of needed supply growth. Additionally, our newly rebranded ReElement Technologies ("ReElement") division recently achieved a major milestone of being the first domestic, commercial producer of isolated and high-purity rare-earth elements. While we are confident in our team, process and technology, our results from our first commercial runs exceeded our expectations by achieving greater than 99.5% pure neodymium, dysprosium and praseodymium. We fully believe our chromatography technology will reset the standard of how critical and rare earth elements are separated and purified around the world as well as providing the most efficient recycling solution for these critical raw materials. This is not only a huge accomplishment for our Company, but for our country and domestic supply chain as well. American Carbon and ReElement's unique positioning are a clear differentiator for our Company and we believe also provides a unique investment opportunity for our shareholders."
Second Quarter 2022 Key Highlights
ReElement Technologies
American Carbon
Corporate
"Looking forward to the remainder of 2022 and beyond, the excitement over the opportunities we have in front of us continues to reach new levels. Now that we have achieved unprecedented success with our patented, chromatographic separation and purification technology for rare-earth elements from recycled permanent magnets, we're confident that attractive opportunities will continue to manifest for ReElement Technologies. We believe we offer current and future partners a very unique value in not only being the only commercial producer of premium, high-purity critical and rare-earth elements, but our products are also sustainable. By first establishing recycling solutions that are flexible, scalable, low cost and environmentally safe, we are bringing the circular economy for these elements online. Furthermore, with the upcoming commencement of our battery element production train, we are providing a complete recycling solution for all of the critical and rare earth elements in the EV powertrain for both motors and batteries. This is a clear distinction of ours that is probably being overlooked, and our lower cost structure enables us to be creative with partners," continued Mr. Jensen.
Mr. Jensen concluded, "Our specialty and metallurgical carbon platform continued to ramp throughout the second quarter of 2022 which was reflected in our 77% quarter-over-quarter increase in carbon sales. Our asset base, reserves, permits and extensive restructuring have put us in a unique position to capitalize in these strong markets and provide supply growth to our customer base. We believe these results showcase the early stages of a significant inflection point in our carbon business that our platform has been set up to deliver. Our team continues to put forth significant effort to grow production in this challenging supply chain environment and we're confident our mine plans and overall platform allows us to do so."
Expected Near-Term Catalysts
Conference Call Information
American Resources management will host a conference call for investors, analysts and other interested parties today, Monday, August 15, 2022 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 Second Quarter 2022 Conference Call, or by the webcast link here.
Financial Results for Second Quarter 2022
For the second quarter of 2022, American Resources reported a net income loss of $2.44 million, or a loss of $0.04 per share for the three months ended June 30, 2022, as compared with a net income loss of $6.65 million, or $0.13 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 $11.5 million in the second quarter of 2022, as compared with an Adjusted EBITDA loss of $537,078 for the second quarter of 2021.
Second Quarter 2022 Summary
Total revenues were $16.2 million for the second quarter of 2022 compared to revenues of $393,210 during the second quarter of 2021. General and administrative expenses for the second quarter of 2022 were $903,045 compared to $593,621 in the prior year period. American Resources incurred interest expense of $260,807 during the second quarter of 2022 compared to $$674,829 during the second quarter of 2021. Development costs during the quarter were $11.5 million largely attributed to the Company's new Carnegie 2 metallurgical mine, compared to $6.8 million in the first quarter of 2022.
The Company did not incur any income tax expense in in the second quarter of 2022 as it was able to utilize its available net operating losses ("NOL") carried forward from prior periods of approximately $24.2 million as of December 31, 2021.
AMERICAN RESOURCES CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
UNAUDITED
For the three months ended June 30, 2022 | For the three months ended June 30, 2021 | For the six months ended June 30, 2022 | For the six months ended June 30, 2021 | |||||||||||||
Coal Sales | $ | 15,969,787 | $ | 339,314 | $ | 25,001,047 | $ | 342,588 | ||||||||
Metal Aggregating, Processing and Sales | 3,292 | 27,875 | 40,519 | 27,875 | ||||||||||||
Royalty Income | 226,125 | 26,021 | 238,262 | 33,394 | ||||||||||||
Total Revenue | 16,199,204 | 393,210 | 25,279,828 | 403,857 | ||||||||||||
Cost of Coal Sales and Processing | (5,569,133 | ) | (944,327 | ) | (8,459,992 | ) | (1,744,842 | ) | ||||||||
Accretion Expense | (363,820 | ) | (305,636 | ) | (631,442 | ) | (611,273 | ) | ||||||||
Depreciation | (630,341 | ) | (475,014 | ) | (1,256,383 | ) | (868,544 | ) | ||||||||
Amortization of Mining Rights | (311,685 | ) | (311,685 | ) | (615,079 | ) | (623,370 | ) | ||||||||
General and Administrative | (903,046 | ) | (593,621 | ) | (1,923,861 | ) | (1,675,068 | ) | ||||||||
Professional Fees | (235,487 | ) | (193,951 | ) | (586,425 | ) | (903,984 | ) | ||||||||
Production Taxes and Royalties | (786,008 | ) | (99,475 | ) | (1,605,485 | ) | (667,658 | ) | ||||||||
Development Costs | (11,532,406 | ) | (3,055,603 | ) | (18,316,594 | ) | (4,867,554 | ) | ||||||||
Total Operating Expenses | (20,331,926 | ) | (5,979,312 | ) | (33,395,261 | ) | (11,962,293 | ) | ||||||||
Net Loss from Operations | (4,132,722 | ) | (5,586,102 | ) | (8,115,433 | ) | (11,558,436 | ) | ||||||||
Other Income (loss) | 76,000 | (446,884 | ) | 158,156 | (411,588 | ) | ||||||||||
Unrealized loss on trading securities | (7,602 | ) | - | (7,602 | ) | - | ||||||||||
Gain on cancelation of debt | 1,891,848 | - | 3,413,152 | - | ||||||||||||
Amortization of debt discount and issuance costs | - | (2,579 | ) | - | (5,458 | ) | ||||||||||
Interest Income | 3,282 | 60,220 | 13,327 | 101,392 | ||||||||||||
Interest expense | (274,640 | ) | (674,829 | ) | (658,336 | ) | (1,165,942 | ) | ||||||||
Total Other income (expense) | 1,688,888 | 1,064,072 | ) | 2,918,697 | (1,481,596 | ) | ||||||||||
Net Income (Loss) | $ | (2,443,834 | ) | $ | (6,650,174 | ) | $ | (5,196,736 | ) | $ | (13,040,032 | ) | ||||
Less: Non-Controlling interest | 12,666 | - | 20,550 | - | ||||||||||||
Net loss attributable to American Resources Corporation shareholders | (2,431,168 | ) | - | (5,176,186 | ) | - | ||||||||||
Net loss per common share - basic and diluted | $ | (.04 | ) | $ | (.13 | ) | $ | (.08 | ) | $ | (.26 | ) | ||||
Weighted average common shares outstanding | 66,377,788 | 52,133,268 | 65,846,220 | 49,539,996 | ||||||||||||
AMERICAN RESOURCES CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEETS
UNAUDITED
June 30, 2022 | December 31, 2021 | |||||||
| ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash | $ | 3,807,783 | $ | 11,492,702 | ||||
Accounts Receivable | 5,354,770 | 3,175,636 | ||||||
Prepaid fees | 816,053 | 624,605 | ||||||
Total Current Assets | 9,978,606 | 15,292,943 | ||||||
LONG-TERM ASSETS | ||||||||
Cash - restricted | 1,086,971 | 1,095,411 | ||||||
Property and Equipment, Net | 22,883,868 | 22,903,154 | ||||||
Right of use assets, net | 1,799,769 | 726,194 | ||||||
Investment in LLC - Related Party | 3,242,398 | 2,500,000 | ||||||
Note Receivable | 685,000 | 350,000 | ||||||
Total Long-Term Assets | 27,698,006 | 27,574,759 | ||||||
TOTAL ASSETS | $ | 37,676,612 | $ | 42,872,702 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable | $ | 2,982,208 | $ | 3,245,566 | ||||
Non-Trade payables | 1,984,399 | 1,950,567 | ||||||
Accounts payable - related party | 3,940,317 | 3,932,716 | ||||||
Accrued interest | 38,194 | 1,325,286 | ||||||
Due to affiliate | 69,000 | 69,000 | ||||||
Current portion of debt | 410,417 | 5,283,647 | ||||||
Current portion of convertible debt, (net of unamortized discount of $0 and $40,655) | - | 571,618 | ||||||
Current portion of operating lease liabilities, net | 85,218 | 151,806 | ||||||
Current portion of finance lease liabilities, net | 341,771 | - | ||||||
Total Current Liabilities | 9,851,524 | 16,530,206 | ||||||
LONG-TERM LIABILITIES | ||||||||
Notes payable | 2,500,000 | 548,477 | ||||||
Convertible note payables | 9,192,731 | 8,620,412 | ||||||
Reclamation liability | 19,583,029 | 18,951,587 | ||||||
Operating lease liabilities, net | 591,127 | 562,428 | ||||||
Finance lease liabilities, net | 655,468 | - | ||||||
Total Long-Term Liabilities | 32,522,355 | 28,682,904 | ||||||
Total Liabilities | 42,373,879 | 45,213,110 | ||||||
STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
AREC - Class A Common stock: $.0001 par value; 230,000,000 shares authorized, 66,613,085 and 65,084,992 shares issued and outstanding | 6,661 | 6,508 | ||||||
Additional paid-in capital | 166,286,379 | 163,441,655 | ||||||
Accumulated deficit | (170,969,757 | ) | (165,793,571 | ) | ||||
Total American Resources Corporation Stockholders' Equity (Deficit) | (4,676,717 | ) | (2,345,408 | ) | ||||
Non controlling interest | (20,550 | ) | - | |||||
Total stockholders' deficit | (4,697,267 | ) | (2,345,408 | ) | ||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ | 37,676,612 | $ | 42,872,702 | ||||
AMERICAN RESOURCES CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
UNAUDITED
For the six months ended | For the six months ended | |||||||
June 30, 2022 | June 30, 2021 | |||||||
Cash Flows from Operating activities: | ||||||||
Net loss | $ | (5,196,736 | ) | $ | 13,040,032 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Gain on debt forgiveness | (3,413,152 | ) | - | |||||
Depreciation expense | 1,256,383 | 868,544 | ||||||
Amortization of mining rights | 615,079 | 623,370 | ||||||
Accretion expense | 631,442 | 611,273 | ||||||
Amortization expense of right to use assets | (15,021 | ) | - | |||||
Amortization of issuance costs and debt discount | - | 3,560,019 | ||||||
Options expense | 389,867 | 230,050 | ||||||
Warrant expense | 673,455 | - | ||||||
Issuance of common shares for service | - | 10,000 | ||||||
Change in current assets and liabilities: | ||||||||
Accounts receivable | (2,179,134 | ) | (103,673 | ) | ||||
Inventory | - | (488,376 | ) | |||||
Prepaid expenses and other assets | (191,448 | ) | (93,333 | ) | ||||
Accounts payable | (229,526 | ) | (2,246,713 | ) | ||||
Accrued interest | (299,700 | ) | (711,104 | ) | ||||
Accounts payable - related party | 7,601 | 334,167 | ||||||
Net cash (used in)/generated from operations | (7,950,890 | ) | (10,445,808 | ) | ||||
Cash Flows from Investing activities: | ||||||||
Cash used in investments in LLCs | (742,398 | ) | (2,250,000 | ) | ||||
Cash invested in note receivable | (335,000 | ) | - | |||||
Cash received (paid) for PPE, net | 147,824 | (676,601 | ) | |||||
Net cash (used in)/generated from investing activities | (929,574 | ) | (2,926,601 | ) | ||||
Cash Flows from Financing activities: | ||||||||
Principal payments on finance lease | (99,204 | ) | - | |||||
Principal payments on debt | (1,276,691 | ) | (787,849 | ) | ||||
Proceeds from convertible note | - | 600,000 | ||||||
Proceeds from the sale of common stock, net | - | 29,218,000 | ||||||
Proceeds from debt | 2,563,000 | - | ||||||
Proceeds from warrant conversions | - | 2,269,428 | ||||||
Net cash (used in)/generated from financing activities | 1,187,105 | 31,299,579 | ||||||
Increase(decrease) in cash and restricted cash | (7,693,359 | ) | 17,927,170 | |||||
Cash and restricted cash, beginning of period | 12,588,113 | 11,201,203 | ||||||
Cash and restricted cash, end of period | $ | 4,894,754 | $ | 29,128,373 | ||||
Supplemental Information | ||||||||
Cash paid for interest | $ | 64,094 | $ | 42,426 | ||||
Conversion of debt and interest to common shares | $ | 1,822,210 | $ | 10,757,260 | ||||
Acquisition of right of use assets for lease obligations | $ | 1,117,219 | $ | - | ||||
Reconciliation of Non-GAAP Measures
Reconciliation of Adjusted EBITDA to Amounts Reported Under U.S. GAAP
| For the three months ended June 30, 2022 | For the three months ended June 30, 2021 | |||||||
Net Income | (2,443,834 | ) | (6,650,174 | ) | ||||
Interest & Other Expenses | 260,807 | 674,829 | ||||||
Income Tax Expense | - | - | ||||||
Accretion Expense | 363,820 | 305,636 | ||||||
Depreciation | 630,341 | 475,014 | ||||||
Amortization of Mining Rights | 311,685 | 311,685 | ||||||
Amortization of Debt Discount & Issuance | - | - | ||||||
Non-Cash Stock, Warrant & Option Comp. Expense | 863,479 | 262,025 | ||||||
Development Costs | 11,532,406 | 3,055,603 | ||||||
PCR Restructuring Expenses | - | 1,028,304 | ||||||
Total Adjustments | 13,962,538 | 6,113,096 | ||||||
Adjusted EBITDA | 11,518,704 | (537,078 | ) | |||||
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. American Rare Earth 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.
PR Contact
Precision Public Relations
Matt Sheldon
917-280-7329
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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)
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Company Contact:
Mark LaVerghetta
Vice President of Corporate Finance and Communications
317-855-9926 ext. 0
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| Last Trade: | US$0.90 |
| Daily Change: | -0.14 -13.34 |
| Daily Volume: | 484,954 |
| Market Cap: | US$69.780M |
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