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American Resources Corp Reports Substantial Increase in Net Income for Q3 2023

  • Net income rose to $3.48 million in Q3 2023, a 165% increase from the previous year.

  • Letters of intent for the sale of American Carbon assets represent approximately $300 million in value.

  • AREC is expanding its critical mineral refining capacity and has secured non-dilutive capital for growth.

  • The company has made significant advancements in producing ultra-pure rare earth oxides and lithium carbonate.

On November 14, 2023, American Resources Corp (NASDAQ:AREC) released its 8-K filing, announcing a significant year-over-year increase in net income for the third quarter of 2023. The company reported a net income of $3.48 million, or $0.05 per share, compared to a net loss of $5.27 million, or a loss of $0.08 per share, in the same period last year. This marks a 165% increase in net income, reflecting the company's successful execution of its strategic plan and monetization of its carbon platform.

Financial Performance and Strategic Developments

AREC's adjusted EBITDA for the third quarter stood at $4.75 million, a significant improvement from an adjusted EBITDA loss of $3.44 million in the third quarter of 2022. Total revenues, however, were $5.83 million for the quarter, a decrease from $9.51 million in the prior year's quarter. The company attributed this to its strategic shift and focus on its carbon and critical mineral platforms.

General and administrative expenses increased to $1.3 million from $734,500 year-over-year, while interest expenses slightly decreased. Development costs for the quarter were $1.33 million, down from $2.67 million in the previous quarter. AREC also utilized its net operating losses carried forward to offset income tax expenses.

Advancements in Critical Mineral Refining

AREC's ReElement Technologies division has made groundbreaking achievements in the production of ultra-pure lithium carbonate and rare earth oxides, positioning the company as a leader in critical mineral refining technology. The company has secured initial approval for up to $150 million of Tax-Exempt Industrial Revenue Bonds to fund a large-scale lithium refinery and has closed a $44.9 million incentive package for a critical mineral refining facility in Indiana.

On the carbon front, AREC has entered into a letter of intent to sell its carbon mining assets for approximately $280 million. The company has also successfully closed a $45 million Tax-Exempt Industrial Development Bond offering to fund expansion at its Wyoming County Coal complex.

Mark Jensen, Chairman and CEO of American Resources Corporation, stated, "We continue to receive interest in our carbon assets while we assess the multiple offers from various parties, that we have announced, surrounding the divestiture of certain assets of our American Carbon platform and are working through that process to maximize shareholder value with the goal of closing in the near term."

AREC's strategic moves, including the monetization of its carbon platform and the expansion of its critical mineral refining capabilities, are expected to create long-term shareholder value and position the company as a key player in the electrification and infrastructure markets.

Outlook and Conference Call

Looking ahead, AREC remains focused on monetizing its carbon platform and leveraging its ReElement Technologies to support the domestic supply chain. The company hosted a conference call on November 14, 2023, to discuss these results and provide further insights into its business outlook.

For more detailed information on American Resources Corp's financial results and strategic initiatives, investors and interested parties can access the full earnings report and the conference call recording.

As American Resources Corp (NASDAQ:AREC) continues to navigate the evolving landscape of the infrastructure and electrification markets, its latest financial results and strategic advancements underscore the company's commitment to growth and innovation. With a focus on monetizing assets and expanding its critical mineral refining capabilities, AREC is poised to meet the demands of a resource-conscious future.

Explore the complete 8-K earnings release (here) from American Resources Corp for further details.

This article first appeared on GuruFocus.