Company highly aligned with major U.S. priorities in both infrastructure and electrification
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
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
FISHERS, IN / ACCESSWIRE / March 29, 2022 / 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 fourth quarter and full year ended December 31, 2021. The Company will host a conference call and webcast, today, March 29, 2022, at 4:30 PM ET (details below).
Mark Jensen, Chairman and CEO of American Resources Corporation commented, "Throughout 2021 we further established our pillars of growth and believe the year was marked by tremendous success in transforming our Company to expand our near term and future potential and opportunities. In retrospect and as a point of reference, we began unveiling the patents and technology behind our rare earth 'Capture - Process - Purify' process chain in early 2021. Today, we are only a few months away from being the first in the U.S. to produce isolated and purified critical and REEs and bringing the most environmentally-safe refining solutions to the domestic marketplace. Solidifying our position not only addresses our national supply chain and sustainability challenges of critical and REEs, but also eliminates the need to depend on foreign nations, such as China, for the final stage of refinement for these increasingly important raw materials. As we become the nation's first producer of highly-purified critical and REEs, which we believe is a monumental milestone, we are also steadily increasing our carbon production in one of the strongest markets we have ever seen."
2021 Key Division Highlights
American Rare Earth
- Advanced its innovation by entering into exclusive patent and technology licensing agreements on 16 patents and technologies to establish the foundation of American Rare Earth's "Capture - Process - Purify" process chain and entered into three sponsored research partnerships to further develop and refine the most environmentally friendly methods to capture, process and purify critical and REEs from waste streams and end-of-life products.
- Achieved a high purity (99.5%) of the rare earth magnet metals neodymium (Nd), praseodymium (Pr) and dysprosium (Dy) and battery metals lithium (Li), cobalt (Co), nickel (Ni) and manganese (Mn) from end-of-life permanent magnets and NMC batteries from electric vehicles using its patented chromatography process and technology.
- Advanced its efforts to onshore the final isolation and purification stage of critical and REEs with its site selection of its first two critical and REE isolation and purification facilities; both in Noblesville, IN, and began the build phase of its initial two commercial production trains at its first facility. This facility will be the first facility in the United States capable of producing isolated and high-purity critical and REEs while focusing on the sustainability and circular supply chain.
American Carbon
- Announced plans to restart its Wyoming County, WV mining complex along with receiving preliminary approval from the state of West Virginia for the issuance of $45 million tax-exempt industrial development bonds for advanced carbon and rare earth and critical mineral processing.
- Acquired E4-2 mineral reserves to secure the long-term viability and of its Perry County Resources complex and further reduces its operating costs.
Corporate
- Elevated its shareholder-focused and value-creative culture by pricing the initial public offering of American Acquisition Opportunity Inc. (NADSAQ: AMAOU), a blank check company in which the Company has an indirect investment, and sub-licensed two of its exclusive patents for the production of graphene to Novusterra Inc. for a 50% equity stake in the privately-held company and a portion of future cash flows from the sale of graphene from that entity.
- Strengthened its balance sheet and financial flexibility by eliminating approximately $19 million of debt and payables and added over $30 million of equity capital.
"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. As our carbon production continues to scale and become more consistent, we're confident in showcasing the low-cost and growth attributes of our platform with the investments we've made and with the future investments we're planning at our Wyoming County, West Virginia complex. Over the first several weeks of 2022, once we managed through the Omicron variant, we have seen our rate of production become more consistent and will realize a profitable March month on a $5.25 to $6 million monthly revenue run rate," 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 materials. We will be showcasing our ability to achieve this on a commercial scale this year and will commensurately continue to bolster our upstream and downstream partnerships. "
Expected Near-Term Catalysts
- Continued increase in carbon production to meet backlog and growing market demand.
- 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.
- Broaden its suite of patented IP to efficiently produce critical and REEs using the lowest cost and most environmentally-safe methods.
- Commencement of its first two commercial production trains producing 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, Tuesday, March 29, 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 Fourth Quarter and Full Year 2021 Conference Call, or by the webcast link: here.
Financial Results for Fourth Quarter and Year-End December 31, 2021
For the full year of 2021, American Resources reported a net income loss of $32.4 million or a loss of $0.59 per share for the twelve months ended December 31, 2021, as compared with a net income loss $10.3 million or loss of $0.35 per share for the full year of 2020. The Company earned adjusted earnings before interest, taxes, depreciation, amortization, accretion on asset retirement obligations, non-operating expenses, non-cash impairment and development costs (‘adjusted EBITDA") loss of $4.7 million for the year ended December 31, 2021, as compared with an adjusted EBITDA loss of $2.77 million in 2020.
For the fourth quarter of 2021, American Resources reported a net income loss of $10.4 million, or a loss of $0.17 per share, as compared with a net income loss of $9.1 million, or a loss of $0.24 per share, in the prior year period. The Company earned an adjusted EBITDA of $1.3 million in the fourth quarter of 2021, as compared with an adjusted EBITDA loss of $2.0 million for the fourth quarter of 2020.
Fourth Quarter 2021 Summary
Total revenues were $4.54 million for the fourth quarter of 2021 compared to revenues of $13,875 during the fourth quarter of 2020. General and administrative expenses for the fourth quarter of 2021 were $1.3 million compared to $826,890 in the prior year period. American Resources incurred interest expense of $1.9 million during the fourth quarter of 2021 compared to $1.5 million during the fourth quarter of 2020. Development costs during the quarter were $8.09 million, compared to $5.14 million in the third quarter of 2021.
Full Year 2021 Summary
Full year 2021 revenues were $7.76 million compared to full year 2020 revenues of $1,059,691. The Company recommenced carbon production during 2021 following the COVID-19 induced idle period and has seen a steady sequential production and sales ramp while navigating various supply chain, labor and COVID variant related headwinds. The Company is currently realizing a higher and more consistent production schedule and expects to exit the current March month on a $5.25 - $6 million monthly revenue run rate and better positioned to meet its current 2022 order backlog of approximately $110 million. Development costs during 2021 were $18.1 million compared to $4.0 million during 2020 and better positions the Company to meet its demand while realizing strong pricing.
The Company did not incur any income tax expense in 2021 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 STATEMENTS OF OPERATIONS
| December 31, | ||||||||||||
| 2021 | 2020 | 2019 | ||||||||||
Revenue | ||||||||||||
Coal sales | $ | 7,518,792 | $ | 524,334 | $ | 24,456,831 | ||||||
Processing services income | - | - | 20,876 | |||||||||
Metal recovery and sales | 159,599 | 535,357 | - | |||||||||
Royalty income | 76,915 | - | - | |||||||||
Total revenue | 7,755,306 | 1,059,691 | 24,477,707 | |||||||||
Cost of coal sales and processing | (7,088,951 | ) | (3,749,519 | ) | (26,086,814 | ) | ||||||
Accretion | (1,096,283 | ) | (1,287,496 | ) | (1,482,349 | ) | ||||||
Gain on purchase and disposal of asset, respectively | - | - | 394,484 | |||||||||
Depreciation | (1,980,026 | ) | (2,298,703 | ) | (4,588,136 | ) | ||||||
Amortization of mining rights | (1,246,740 | ) | (1,251,357 | ) | (1,657,673 | ) | ||||||
General and administrative | (3,774,464 | ) | (2,486,799 | ) | (7,659,048 | ) | ||||||
Professional fees | (1,387,430 | ) | (1,076,548 | ) | (6,750,848 | ) | ||||||
Production taxes and royalties | (1,306,150 | ) | (1,357,749 | ) | (4,222,175 | ) | ||||||
Impairment of fixed assets | - | - | (27,688,030 | ) | ||||||||
Development | (18,098,670 | ) | (3,998,885 | ) | (7,236,653 | ) | ||||||
Total expenses from operations | (35,978,714 | ) | (17,507,056 | ) | (86,977,242 | ) | ||||||
Net loss from operations | (28,223,408 | ) | (16,447,365 | ) | (62,499,535 | ) | ||||||
Other income and (expense) | (232,994 | ) | 20,537 | 2,072,862 | ||||||||
Loss on settlement of payable | - | - | (22,660 | ) | ||||||||
Gain on interest forgiven | - | 832,500 | - | |||||||||
Gain on depreciation recapture | - | 1,706,569 | - | |||||||||
Gain on sale of stock | - | 6,820,949 | - | |||||||||
Amortization of debt discount and debt issuance costs | (8,637 | ) | (11,516 | ) | (7,725,076 | ) | ||||||
Interest income | 230,529 | 205,857 | 164,686 | |||||||||
Interest expense | (4,159,813 | ) | (3,383,294 | ) | (2,908,579 | ) | ||||||
Net loss attributable to American Resources Corporation shareholders | $ | (32,394,323 | ) | $ | (10,255,763 | ) | $ | (70,918,302 | ) | |||
Net loss per share - basic and diluted | $ | (0.59 | ) | $ | (0.35 | ) | $ | (2.94 | ) | |||
Weighted average shares outstanding | 55,222,768 | 29,359,993 | 24,094,420 | |||||||||
AMERICAN RESOURCES CORPORATION
CONSOLIDATED BALANCE SHEETS
| December 31, | ||||||||
| 2021 | 2020 | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash | $ | 11,492,702 | $ | 10,617,495 | ||||
Receivables | 3,175,636 | 38,650 | ||||||
Inventory | - | 150,504 | ||||||
Prepaid fees and deposits | 624,605 | 175,000 | ||||||
Receivables - other | - | 234,240 | ||||||
Advances to related party | 5,000 | - | ||||||
Total current assets | 15,297,943 | 11,215,889 | ||||||
Cash - restricted | 1,095,411 | 583,708 | ||||||
Property and equipment, net | 22,903,154 | 22,498,659 | ||||||
Long-term right of use assets, net | 726,194 | - | ||||||
Investment in llc- related party | 2,500,000 | - | ||||||
Notes receivables | 350,000 | 4,117,139 | ||||||
Total assets | $ | 42,872,702 | $ | 38,415,395 | ||||
LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||
Current liabilities | ||||||||
Trade payables | $ | 3,135,566 | $ | 4,288,794 | ||||
Non-trade payables | 1,950,567 | 3,850,781 | ||||||
Accounts payable - related party | 3,932,716 | 679,146 | ||||||
Accrued interest | 1,325,286 | 1,043,519 | ||||||
Due to affiliate | 74,000 | 74,000 | ||||||
Current portion of long term debt | 5,283,647 | 10,997,692 | ||||||
Current portion of convertible debt (net of unamortized discount of $18,106 and $827,573) | 571,618 | - | ||||||
Current portion of lease liabilities, net | 151,806 | |||||||
Total current liabilities | 16,425,206 | 20,933,932 | ||||||
Notes payable (net of issuance costs of $0 and $405,667) | 548,477 | 5,330,752 | ||||||
Convertible note payables (net of unamortized discount of $22,549 and $0) | 8,620,412 | 14,300,907 | ||||||
Remediation liability | 18,951,587 | 17,855,304 | ||||||
Lease liabilities, net | 548,477 | - | ||||||
Total liabilities | 45,108,110 | 58,420,895 | ||||||
Stockholders' deficit | ||||||||
Common stock: $.0001 par value; 230,000,000 shares authorized, 65,084,992 and 42,972,762 shares issued and outstanding | 6,508 | 4,296 | ||||||
Additional paid in capital | 163,441,655 | 113,279,452 | ||||||
Accumulated deficit | (165,683,571 | ) | (133,289,248 | ) | ||||
Total stockholders' deficit | (2,235,408 | ) | (20,005,500 | ) | ||||
Total liabilities and stockholders' deficit | $ | 42,872,702 | $ | 38,415,395 | ||||
Shares Outstanding | 65,084,992 | 40,522,762 | ||||||
AMERICAN RESOURCES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
| 2021 | 2020 | |||||||||||
Cash Flows from Operating activities: | ||||||||||||
Net loss | $ | (32,269,839 | ) | $ | (10,255,762 | ) | (70,918,302 | ) | ||||
Adjustments to reconcile net income loss) to net cash | ||||||||||||
Depreciation expense | 1,980,026 | 1,855,236 | 4,588,136 | |||||||||
Amortization of mining rights | 1,246,740 | 939,672 | 1,657,673 | |||||||||
Accretion expense | 1,096,283 | 1,287,496 | 1,482,349 | |||||||||
Accretion of Right to Use Assets | (11,960 | ) | - | |||||||||
Gain on purchase of assets | (394,484 | ) | ||||||||||
Impairment loss | 27,688,030 | |||||||||||
Amortization of debt discount | (571,559 | ) | - | 7,725,076 | ||||||||
Recovery of advances receivable | (177,686 | ) | ||||||||||
Warrant expense | 2,524,500 | |||||||||||
Warrant modification expense | 2,545,360 | |||||||||||
Option Expense | 1,093,603 | 230,050 | ||||||||||
Net Discount | 206,724 | - | ||||||||||
Discount Amortization Conver | 580,195 | - | ||||||||||
Liabilities reduced due to sale of assets | - | (3,271,974 | ) | |||||||||
Issuance of common shares for services | 10,000 | 18,800 | 1,906,253 | |||||||||
Loan forgiveness - NMTC | 397,030 | - | 377,255 | |||||||||
Issuance of warrants in conjunction with convertible notes | - | 1,223,700 | ||||||||||
Loss on settlement of accounts payable with common shares | - | 642,060 | 22,660 | |||||||||
Return of common shares for property sale | - | (1,840,200 | ) | |||||||||
Change in current assets and liabilities: | ||||||||||||
Accounts receivable | (3,032,230 | ) | 2,386,255 | (1,000,917 | ) | |||||||
Inventory | 150,504 | 365,126 | 351,830 | |||||||||
Prepaid expenses and other current assets | (449,605 | ) | (175,000 | ) | 147,826 | |||||||
Accounts payable | (3,053,442 | ) | (4,301,976 | ) | 1,164,080 | |||||||
Accrued interest | 281,767 | (1,826,244 | ) | 1,643,075 | ||||||||
Funds held for others | (79,662 | ) | ||||||||||
Accounts payable related party- Due to Affliates | 3,253,570 | (97,649 | ) | 243,502 | ||||||||
Cash used in operating activities | (29,092,193 | ) | (13,847,255 | ) | (19,207,106 | ) | ||||||
Cash Flows from Investing activities: | ||||||||||||
Cash received (paid) for PPE, net | (3,068,943 | ) | 417,857 | (327,250 | ) | |||||||
Cash received from acquisitions | 650,000 | |||||||||||
Cash invested in note receivable | (350,000 | ) | - | |||||||||
Investment in LLCs | (2,500,000 | ) | ||||||||||
Cash provided by investing activities | (5,918,943 | ) | 417,857 | 322,750 | ||||||||
Cash Flows from Financing activities: | ||||||||||||
Principal payments on long term debt | (672,424 | ) | (1,103,191 | ) | (2,059,484 | ) | ||||||
Sale of Common Stock for Cash | 29,217,964 | 12,832,475 | 7,767,698 | |||||||||
Cash received from warrant and option conversions | 2,667,928 | |||||||||||
Proceeds from convertible note | 600,000 | 14,411,949 | 599,980 | |||||||||
Convertible Note Conversions | 8,556,084 | - | ||||||||||
Capitalized Interest | 1,677,192 | - | ||||||||||
Issuance of common shares for debt settlement | (5,648,698 | ) | - | |||||||||
Proceeds from long term debt (net of issuance costs $0 and $0) | - | 28,000 | 8,660,527 | |||||||||
Proceeds from related party | (9,861 | ) | ||||||||||
Net (payments) proceeds from factoring agreement | - | (1,807,443 | ) | 1,489,508 | ||||||||
Cash provided by financing activities | 36,398,046 | 24,361,790 | 16,448,368 | |||||||||
Increase (decrease) in cash | 1,386,910 | 10,932,392 | (2,435,988 | ) | ||||||||
Cash, beginning of year | 11,201,203 | 268,811 | 2,704,799 | |||||||||
Cash, end of year | $ | 12,588,113 | $ | 11,201,203 | $ | 268,811 | ||||||
Supplemental Information | ||||||||||||
Cash paid for interest | $ | 708,076 | $ | 327,239 | 557,663 | |||||||
Assumption of net assets and liabilities for asset acquisitions | 6,623,999 | |||||||||||
Shares issues in asset acquisition | 24,400,000 | |||||||||||
Discount on note due to beneficial conversion feature | 7,362,925 | |||||||||||
Conversion of note payable to common stock | 231,661 | |||||||||||
Issuance of shares as part of note payable consideration | 297,831 | |||||||||||
Conversion of preferred series A shares to common shares | 161 | |||||||||||
Conversion of preferred series C shares to common shares | 1 | |||||||||||
Return of shares related to employee settlement | 11 | |||||||||||
Warrant exercise for common shares | 60 | |||||||||||
Reconciliation of Non-GAAP Measures
Reconciliation of Adjusted EBITDA to Amounts Reported Under U.S. GAAP
| For the three months ended Dec. 31, 2021 | For the twelve months ended Dec. 31, 2021 | For the three months ended Dec. 31, 2020 | For the twelve months ended Dec. 31, 2020 | |||||||||||||
Net Income | (10,440,772 | ) | (32,394,323 | ) | (9,097,560 | ) | (10,255,762 | ) | ||||||||
Interest & Other Expenses | 1,898,848 | 4,159,813 | 2,908,579 | 3,383,294 | ||||||||||||
Income Tax Expense | - | - | - | - | ||||||||||||
Accretion Expense | 179,374 | 1,096,283 | 305,636 | 1,287,496 | ||||||||||||
Depreciation | 615,806 | 1,980,026 | 443,467 | 2,298,703 | ||||||||||||
Amortization of Mining Rights | 308,605 | 1,246,740 | 311,685 | 1,251,357 | ||||||||||||
Amortization of Debt Discount & Issuance | - | 8,637 | 2,879 | 11,516 | ||||||||||||
Non-Cash Stock, Warrant & Option Comp. Expense | 614,938 | 1,093,603 | 115,026 | 345,076 | ||||||||||||
Development Costs | 8,088,810 | 18,098,620 | 2,770,552 | 3,998,885 | ||||||||||||
Non-Cash Impairment | - | - | - | - | ||||||||||||
PCR Restructuring Expenses | - | - | 225,269 | 452,743 | ||||||||||||
Total Adjustments | 11,706,381 | 27,683,722 | 7,083,093 | 13,029,070 | ||||||||||||
Adjusted EBITDA | 1,265,609 | (4,710,601 | ) | (2,014,467 | ) | 2,773,308 | ||||||||||
- 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 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
[email protected]
Investor Contact:
JTC Team, LLC
Jenene Thomas
833-475-8247
[email protected]
RedChip Companies Inc.
Todd McKnight
1-800-RED-CHIP (733-2447)
[email protected]
Company Contact:
Mark LaVerghetta
Vice President of Corporate Finance and Communications
317-855-9926 ext. 0
[email protected]
SOURCE: American Resources Corporation