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American Resources Corporation Reports Fourth Quarter and Full Year 2021 Financial Results and Provides Business Outlook

·18 min read

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

  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, 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
matt@precisionpr.co

Investor Contact:
JTC Team, LLC
Jenene Thomas
833-475-8247
arec@jtcir.com

RedChip Companies Inc.
Todd McKnight
1-800-RED-CHIP (733-2447)
Info@redchip.com

Company Contact:

Mark LaVerghetta
Vice President of Corporate Finance and Communications
317-855-9926 ext. 0
investor@americanresourcescorp.com

SOURCE: American Resources Corporation



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