- Company prepared to rapidly emerge as leading infrastructure company solely focused on mining metallurgical carbon used in the steelmaking process
- Company well-positioned to be a long-term supplier of raw material to the global infrastructure market while bringing a more efficient and modernized business model to the industry
- Strategic steps taken to transform Company into infrastructure company producing pure metallurgical carbon, while enhancing environmental, social and governance (ESG) profile
- Company expects multiple value driving milestones over the course of 2020
FISHERS, IN / ACCESSWIRE / June 18, 2020 / American Resources Corporation (NASDAQ:AREC) ("American Resources" or the "Company"), a supplier of raw materials to the rapidly growing global infrastructure marketplace with a primary focus on the extraction, processing, transportation and distribution of metallurgical carbon to the steel and specialty metals industries, today reported its first quarter of 2020 financial results.
Mark Jensen, Chairman and CEO of American Resources Corporation commented, "The first three months of 2020 continued to be very productive in the transformation of the Company in becoming an infrastructure company and pure producer of metallurgical carbon. We continued to advance our efforts and position the company to be a stable, long-term supplier of metallurgical carbon to the worldwide steel markets to support growing global infrastructure demand, while bringing a more efficient and modernized business model to the industry."
First Quarter 2020 Key Highlights
- January 2020: Advanced the Company's Environmental Social Governance (ESG) position by establishing a partnership with Land Betterment Corporation, an environmental solutions company focused on fostering a positive impact through upcycling former coal mining sites to create sustainable community development and job creation.
- February 2020: Completed the restructuring of Perry County Resources (PCR), the Company's fifth carbon processing and logistics complex which was acquired in September 2019. The Company implemented its Strategic Plan of Action to bring its next-generation operating model and philosophy to eliminate overburdensome, legacy costs and streamline its operations to allow the complex to operate more efficiently.
- March 2020: Divested certain non-core assets at Perry County Resources to lower the complex's holding costs and to monetize assets that are not in the Company's 5-10 year operating plan.
Mr. Jensen continued, "Looking forward to the remainder of 2020 and into the coming years, we remain quite optimistic on global infrastructure demand and believe governments around the world will continue to look to increase infrastructure projects as a way to stimulate economic activity as we recover from the COVID-19 pandemic. We feel we are currently in a great position to fulfill a portion of that demand growth given the efforts and achievements we have made at our PCR and McCoy Elkhorn complexes to effectively be one of the lowest cost producers of metallurgical carbon in the industry. Additionally, and as we execute on this transformational phase of our growth, so does our equally important ability to provide stable long-term employment to a region in need."
"Lastly, we believe our ESG efforts will further distinguish American Resources as industry revolutionaries and the partnerships we have made will accelerate our goals to permanently shut down and remediate irrational thermal coal operation throughout our region and find creative ways to contribute to the advancement of social and environmental issues facing this region."
Financial Results for First Quarter 2020
For the first quarter of 2020, American Resources reported a net loss from operations of $4.26 million, or a loss of $0.12 per share, as compared with a net loss from operations of $9.89 million, or a loss of $0.48 per share, in the prior-year period. The Company earned adjusted EBITDA loss of $713,008 in the first quarter of 2020, as compared with adjusted EBITDA loss of $3.82 million for the first quarter of 2019.
Fourth Quarter 2019 Summary
Total revenues were $524,334 for the first quarter of 2020. Cost of sales (includes mining, transportation, royalty and processing costs,) for the first quarter of 2020 were $1.86 million, or 353 percent of total revenues, compared to $6.64 million, or 95 percent of total revenue in the same period of 2019.
General and administrative expenses for the first quarter of 2020 were $842,925, or 160 percent of total revenue, compared to $1.37 million during the first quarter of 2019. Depreciation for the first quarter of 2020 was $915,052, or 174 percent of total revenue. American Resources incurred interest expense of $500,640 during the first quarter of 2020 compared to $324,854 during the first quarter of 2019. Development costs during the quarter were $128,159, compared to $1.32 million in the fourth quarter of 2019.
The Company did not incur any income tax expense in the first quarter of 2020 as it was able to utilize its available net operating losses ("NOL") carried forward from prior periods of approximately $13,746,391 as of December 31, 2019.
Operational Results
The Company produced and sold 6,568 short tons of coal in the first quarter of 2020, compared to 73,633 short tons in the fourth of 2019 and 99,338 short tons in the first quarter of 2019.
The exhibit below summarizes some of the key sales, production and financial metrics:
|
|
Three month ended | Three month ended | ||||||||||
|
|
March 31, | December 31, | March 31, | |||||||||
|
|
2020 | 2019 | 2019 | |||||||||
|
Sales Volume (a)
|
||||||||||||
|
Tons Sold
|
6,568 | 73,633 | 99,338 | |||||||||
|
|
||||||||||||
|
Company Production (a)
|
||||||||||||
|
McCoy Elkhorn Coal
|
6,568 | 28,351 | 38,276 | |||||||||
|
Perry County Resources
|
- | 45,282 | - | |||||||||
|
Deane Mining
|
- | - | 61,062 | |||||||||
|
Total
|
6,568 | 73,633 | 99,338 | |||||||||
|
|
||||||||||||
|
Company Financial Metrics(b)
|
||||||||||||
|
Revenue per Ton
|
79.83 | 85.48 | 70.41 | |||||||||
|
Cash Cost per Ton Sold (c)
|
282.46 | 147.10 | 66.88 | |||||||||
|
Cash Margin per Ton (c)
|
(202.63 | ) | (61.62 | ) | 3.53 | |||||||
|
|
||||||||||||
|
Development Costs
|
$ | 128,159 | $ | 1,324,063 | 1,600,117 | |||||||
|
|
||||||||||||
|
|
||||||||||||
Notes:
(a) In short tons
(b) Excludes transportation
(c) Cash cost per ton is based on reported cost of sales and includes items such as production taxes, royalties, labor, fuel, and other similar production and sales cost items, and may be adjusted for other items that, pursuant to GAAP, are classified in the Statement of Operations as costs other than cost of sales, but relate directly to the cost incurred to produce coal. Our cash cost of sales per short ton is calculated as cash cost of sales divided by short tons sold, and our cash margin per ton is calculated by subtracting cash cost per ton from revenue per ton. Cash cost of sales per short ton and average cash margin per ton are non-GAAP financial measure which are calculated in conformity with U.S. GAAP and should be considered supplemental to, and not as a substitute or superior to financial measures calculated in conformity with GAAP. We believe cash cost of sales per ton and average cash margin per ton are useful measurse of performance as it aides some investors and analysts in comparing us against other companies. Cash cost of sales per ton and margin per ton may not be comparable to similarly titled measures used by other companies.
AMERICAN RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
|
|
For the three months ended | For the three months ended | ||||||
|
|
March 31,
2020
|
March 31,
2019
|
||||||
|
|
||||||||
|
Coal Sales
|
$ | 524,334 | $ | 6,994,276 | ||||
|
|
||||||||
|
Total Revenue
|
524,334 | 6,994,276 | ||||||
|
|
||||||||
|
Cost of Coal Sales and Processing
|
(1,855,187 | ) | (6,644,087 | ) | ||||
|
Accretion Expense
|
(370,587 | ) | (321,701 | ) | ||||
|
Depreciation
|
(915,052 | ) | (816,916 | ) | ||||
|
Amortization of Mining Rights
|
(313,224 | ) | (536,791 | ) | ||||
|
General and Administrative
|
(842,925 | ) | (1,372,588 | ) | ||||
|
Professional Fees
|
(194,046 | ) | (4,333,896 | ) | ||||
|
Production Taxes and Royalties
|
(160,230 | ) | (1,259,586 | ) | ||||
|
Development Costs
|
(128,159 | ) | (1,600,117 | ) | ||||
|
|
||||||||
|
Total Operating expenses
|
(4,779,410 | ) | (16,885,682 | ) | ||||
|
|
||||||||
|
Net Loss from Operations
|
(4,255,076 | ) | (9,891,406 | ) | ||||
|
|
||||||||
|
Other Income and (expense)
|
||||||||
|
Loss on payable settlement
|
- | (22,660 | ) | |||||
|
Other Income
|
1,412,005 | 266,425 | ||||||
|
Amortization of debt discount and debt issuance costs
|
- | (134,296 | ) | |||||
|
Interest Income
|
82,343 | 41,171 | ||||||
|
Interest expense
|
(500,640 | ) | (324,854 | ) | ||||
|
Total Other income (expense)
|
993,708 | (174,214 | ) | |||||
|
|
||||||||
|
Net loss attributable to American Resources Corp. Shareholders
|
$ | (3,261,368 | ) | $ | (10,065,620 | ) | ||
|
|
||||||||
|
Net loss per common share - basic and diluted
|
$ | (0.12 | ) | $ | (0.48 | ) | ||
|
|
||||||||
|
Weighted average common shares outstanding- basic and diluted
|
27,267,197 | 20,798,065 | ||||||
AMERICAN RESOURCES CORPORATION
CONSOLIDATED BALANCE SHEETS
UNAUDITED
|
|
March 31,
2020
|
December 31,
2019
|
||||||||
|
|
||||||||||
| ASSETS | ||||||||||
|
|
||||||||||
|
CURRENT ASSETS
|
||||||||||
|
Cash
|
$ | 43,745 | $ | 3,324 | ||||||
|
Accounts Receivable
|
37,400 | 2,424,905 | ||||||||
|
Inventory
|
150,504 | 515,630 | ||||||||
|
Prepaid fees
|
175,000 | - | ||||||||
|
Accounts Receivable - Other
|
234,240 | 234,240 | ||||||||
|
Total Current Assets
|
640,889 | 3,178,099 | ||||||||
|
|
||||||||||
|
OTHER ASSETS
|
||||||||||
|
Cash - restricted
|
415,487 | 265,487 | ||||||||
|
Processing and rail facility
|
12,554,715 | 12,723,163 | ||||||||
|
Underground equipment
|
8,550,626 | 8,294,188 | ||||||||
|
Surface equipment
|
3,136,906 | 3,224,896 | ||||||||
|
Acquired mining rights
|
669,860 | 669,860 | ||||||||
|
Coal refuse storage
|
12,171,271 | 12,171,271 | ||||||||
|
Less Accumulated Depreciation
|
(11,981,983 | ) | (11,162,622 | ) | ||||||
|
Land
|
1,748,169 | 1,748,169 | ||||||||
|
Note Receivable
|
4,117,139 | 4,117,139 | ||||||||
|
Total Other Assets
|
31,382,190 | 32,051,551 | ||||||||
|
|
||||||||||
|
TOTAL ASSETS
|
$ | 32,023,079 | $ | 35,229,650 | ||||||
|
|
||||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||||
|
|
||||||||||
|
CURRENT LIABILITIES
|
||||||||||
|
Accounts payable
|
$ | 11,763,906 | $ | 11,044,479 | ||||||
|
Accounts payable - related party
|
803,602 | 718,156 | ||||||||
|
Accrued interest
|
2,363,380 | 2,869,763 | ||||||||
|
Due to affiliate
|
132,639 | 132,000 | ||||||||
|
Current portion of long term-debt (net of unamortized discount of $- and $-)
|
17,944,572 | 20,494,589 | ||||||||
|
Convertible note payables - short term
|
- | 7,419,612 | ||||||||
|
Current portion of reclamation liability
|
2,327,169 | 2,327,169 | ||||||||
|
Total Current Liabilities
|
35,335,268 | 45,006,407 | ||||||||
|
|
||||||||||
|
OTHER LIABILITIES
|
||||||||||
|
Long-term portion of note payable (net of issuance costs of $425,820 and $428,699)
|
5,415,271 | 5,415,271 | ||||||||
|
Convertible note payables - long term
|
9,164,011 | - | ||||||||
|
Reclamation liability
|
17,521,976 | 17,512,613 | ||||||||
|
Total Other Liabilities
|
32,101,258 | 22,927,884 | ||||||||
|
|
||||||||||
|
Total Liabilities
|
67,436,526 | 67,934,291 | ||||||||
|
|
||||||||||
|
STOCKHOLDERS' EQUITY (DEFICIT)
|
||||||||||
|
AREC - Class A Common stock: $.0001 par value; 230,000,000 shares authorized, 27,410,512 and 27,410,512 shares issued and outstanding
|
2,740 | 2,740 | ||||||||
|
AREC - Series A Preferred stock: $.0001 par value; 5,000,000 shares authorized, 0 and 0 shares issued and outstanding
|
- | - | ||||||||
|
AREC - Series C Preferred stock: $.0001 par value; 20,000,000 shares authorized, 0 and 0 shares issued and outstanding
|
- | - | ||||||||
|
Additional paid-in capital
|
90,993,691 | 90,326,104 | ||||||||
|
Accumulated deficit
|
(126,409,878 | ) | (123,033,485 | ) | ||||||
|
Total Stockholders' Equity (Deficit)
|
(35,413,447 | ) | (32,704,641 | ) | ||||||
|
|
||||||||||
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
|
$ | 32,023,079 | $ | 35,229,650 | ||||||
AMERICAN RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
|
|
For the three months ended | For the three months ended | ||||||
|
|
March 31,
2020
|
March 31,
2019
|
||||||
|
|
||||||||
|
Cash Flows from Operating activities:
|
||||||||
|
Net loss
|
$ | (3,261,368 | ) | $ | (10,065,620 | ) | ||
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
||||||||
|
Depreciation
|
915,052 | 816,916 | ||||||
|
Amortization of mining rights
|
313,224 | 536,791 | ||||||
|
Accretion expense
|
370,587 | 321,701 | ||||||
|
Reduction of ARO liability due to sale of assets
|
(312,338 | ) | - | |||||
|
Warrant expense
|
115,025 | 2,385,000 | ||||||
|
Issuance of common shares for services
|
- | 1,672,200 | ||||||
|
Stock compensation expense
|
- | 68,693 | ||||||
|
Amortization of issuance costs and debt discount
|
- | 134,296 | ||||||
|
Recovery of previously impaired receivable
|
- | (50,806 | ) | |||||
|
Change in current assets and liabilities:
|
||||||||
|
|
||||||||
|
Accounts receivable
|
2,387,505 | 792,381 | ||||||
|
Prepaid expenses and other assets
|
(175,000 | ) | (335,174 | ) | ||||
|
Inventory
|
365,126 | (574,254 | ) | |||||
|
Funds held for others
|
- | 60,202 | ||||||
|
Accounts payable
|
555,516 | (1,804,045 | ) | |||||
|
Accounts payable - related party
|
85,446 | 104,467 | ||||||
|
Accrued interest
|
(506,383 | ) | 193,826 | |||||
|
Cash provided by (used in) operating activities
|
852,392 | (5,743,426 | ) | |||||
|
|
||||||||
|
Cash Flows from Investing activities:
|
||||||||
|
|
||||||||
|
Cash paid for PPE, net
|
(408,915 | ) | (721,444 | ) | ||||
|
Cash provided by (used in) investing activities
|
(408,915 | ) | (721,444 | ) | ||||
|
|
||||||||
|
Cash Flows from Financing activities:
|
||||||||
|
|
||||||||
|
Principal payments on long term debt
|
(72,255 | ) | (1,373,024 | ) | ||||
|
Proceeds from long term debt
|
28,000 | 2,000,000 | ||||||
|
Payments on factoring agreement, net
|
(1,807,443 | ) | (649,258 | ) | ||||
|
Proceeds from convertible note
|
1,598,642 | - | ||||||
|
Proceeds from sale of common stock, net
|
- | 4,254,000 | ||||||
|
Cash provided by financing activities
|
(253,056 | ) | 4,231,718 | |||||
|
|
||||||||
|
Increase (decrease) in cash and restricted cash
|
190,421 | (2,233,152 | ) | |||||
|
|
||||||||
|
Cash and restricted cash, beginning of period
|
268,811 | 2,704,799 | ||||||
|
|
||||||||
|
Cash and restricted cash, end of period
|
$ | 459,232 | $ | 471,647 | ||||
|
|
||||||||
|
Supplemental Information
|
||||||||
|
Non-cash investing and financing activities
|
||||||||
|
|
||||||||
|
Shares issued in asset acquisition
|
$ | - | $ | 24,400,000 | ||||
|
Assumption of net assets and liabilities for asset acquisitions
|
$ | - | $ | 6,623,999 | ||||
|
Discount on note due to beneficial conversion feature
|
$ | - | $ | 7,362,925 | ||||
|
Conversion of trade payable to common shares
|
$ | - | $ | 231,661 | ||||
|
Issuance of shares as part of note payable consideration
|
$ | - | $ | 297,831 | ||||
|
Warrant exercise for common shares
|
$ | - | $ | 60 | ||||
|
Return of shares related to employee settlement
|
$ | - | $ | 11 | ||||
|
Conversion of Preferred Series A Shares to common shares
|
$ | - | $ | 161 | ||||
|
Conversion of Preferred Series C Shares to common shares
|
$ | - | $ | 1 | ||||
|
|
||||||||
|
Cash paid for interest
|
$ | 165,728 | $ | 557,663 | ||||
|
Cash paid for income taxes
|
$ | - | $ | - | ||||
Reconciliation of Non-GAAP Measures
Reconciliation of Adjusted EBITDA to Amounts Reported Under U.S. GAAP
|
|
For the three months ended March 31, 2020 | For the three months ended March 31, 2019 | ||||||
|
Net Income
|
(3,261,368 | ) | (10,065,620 | ) | ||||
|
|
||||||||
|
Interest & Other Expenses
|
500,640 | 324,854 | ||||||
|
Income Tax Expense
|
- | - | ||||||
|
Accretion Expense
|
370,587 | 321,701 | ||||||
|
Depreciation
|
915,052 | 816,916 | ||||||
|
Amortization of Mining Rights
|
313,224 | 536,791 | ||||||
|
Amortization of Dedt Discount & Issuance
|
- | 134,296 | ||||||
|
Non-Cash Stock Options
|
- | 49,161 | ||||||
|
Non-Cash Warrant Expense
|
115,025 | 2,385,000 | ||||||
|
Non-Cash Share Comp. Expense
|
- | 68,693 | ||||||
|
Development Costs
|
128,159 | 1,600,117 | ||||||
|
PCR Restructuring Expenses
|
205,673 | - | ||||||
|
|
||||||||
|
Total Adjustments
|
2,548,360 | 6,237,529 | ||||||
|
|
||||||||
|
Adjusted EBITDA
|
(713,008 | ) | (3,828,091 | ) | ||||
- 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, and development costs. 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 supplier of high-quality raw materials to the rapidly growing global infrastructure market. The Company is focused on the extraction and processing of metallurgical carbon, an essential ingredient used in steelmaking. 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 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 market 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
[email protected]
Investor Contact:
JTC Team, LLC
Jenene Thomas
833-475-8247
[email protected]
Company Contact:
Mark LaVerghetta
317-855-9926 ext. 0
Vice President of Corporate Finance and Communications
[email protected]
SOURCE: American Resources Corporation