American Resources Corporation (AREC) Earnings Call Transcript & Summary

We are here today with Mark Jensen, CEO of American Resources Corporation. American Resources is one of the nation's fastest-growing ESG-focused producers and processors of infrastructure and critical resource materials needed to build our Nation's 21st Century infrastructure. Mark, always a pleasure to see you here.

Yes. Likewise. Thanks for having us on.

My pleasure. Could you start by giving us an overview of American Resources Corporation and its primary business segments?

Absolutely. So American Resources Corporation, a company that the management team founded in 2015. We are focused on 3 core aspects. One is our Mining division, which is producing infrastructure-related products from -- for the steel industry. We have a ReElement Technologies, which is really probably one of the most exciting aspects of our business, which is a critical mineral refinery. We're the only producers of rare earth elements and battery materials such as lithium at battery and magnet grade as well as our American Metals division, which preprocesses metal and recycle steel, and recycles those critical mineral elements.

Mark, that recent earnings report highlighted several milestones, including the successful execution of a $150 million tax-exempt bond offering for your Kentucky lithium refining facility. Can you tell us more about this achievement and what it means for your company?

Yes. Super exciting development for our business. Ultimately, what we're focused on is building out our critical mineral refining capability. So what we're really excited about is in not County, Kentucky, coal country, we're repurposing a prior coal processing plant to be a lithium processing plant. So obviously, removing the infrastructure that's there but utilizing most of that infrastructure, and more importantly, tapping into the heart and the strength of that region, which is its people, its workforce. So turning coal country into battery manufacturing specialists, and we're super excited about bringing this nondilutive capital to expand our company.

And that coal country is a part of our country that really needs some attention. So congratulations on that, Mark. American Resources, Mark, it's been positioning itself, as you said, within the rare earth and critical elements market. Now, how has your patented chromatographic separation and purification process contributed to your success?

It's been a game changer. So we are the only producer in the United States that can refine lithium, cobalt, nickel and rare earth elements to magnet or battery grade. Nobody else can do this. We're scaling it commercially. We have a 400,000 square foot facility in Marion, Indiana that we're developing our rare earth oxide production plant at. We're operating out of Noblesville, Indiana. But when it comes to rare earth elements, those are desperately needed for our military, for our Department of Defense as well as our commercial applications, and we can provide those products to basically be able to break away from China and the monopoly that they control over our military and national defense systems.

Mark, ReElement Technologies has entered into several partnerships, including with major U.S. auto manufacturers and EDP Renewables North America. How did these partnerships support your vision of a sustainable and circular supply chain for critical minerals? Yes.

I mean, EDP is a great partner, our OEM, our automotive manufacturer [ out of the choice ] is a phenomenal partner as well. What they were looking for is the ability to create the true sustainable circular economy. And so we can take their end-of-life magnets, they have rare earth elements, and then we can bring those back to new magnet grade materials. So producing those rare earth oxides, and they're really the feedstock that enables us to scale our business rapidly, and we're also the supply chain partner to them to ensure that they have products in the future that don't have to come from China.

You recently announced a joint development agreement to commercialize a lithium deposit in Nigeria. What can you tell us about that project?

Yes. I at in Kaduna State, I've been to the mine. It is by far one of the largest mines I've ever seen my life. In my 20-year mining career, commodity career, I've never seen anything as fast as that. Our partners are very, very talented people that understand the local operating environment, and the ability to source that type of feedstock will enable us to well over quadruple the current capacity of the United States lithium market, as well as be able to unlock the potential of the African community, one of the fastest-growing populations in the world. We can put them to work. We can enable them to be successful to create a manufacturing society within Africa within the continent to unlock the human potential there.

Looking ahead, Mark, to the remainder of 2024 and beyond, what are some of the key catalysts and growth drivers that investors should get excited about?

Yes. Our country today is desperately needing the ability to produce rare earth oxides from ores, which is from the mining community as well as from the recycled community, we do that. We're excited to continue to scale that. Marion, Indiana, the facility we have used to be the largest [ TV ] manufacturer in the world closed down because that business went to Asia. We're bringing it back. We're bringing it back to the heartland of America to unlock the ability to create jobs, but also to make us sustainable in the United States to not have to rely on China for our military defense systems. We believe that's an absolute game changer, the ability to drive revenue growth rapidly and use nondilutive accretive capital, such as tax-exempt bonds and industrial revenue bonds to be able to do that. We're super excited about where we're going at that front.

All right. Let us go now with the essential value proposition, Mark. Why should investors take an interest in American Resources right now?

Yes. We're led by a team that is 100% aligned with our investors. We're not going to dilute those investors. We're going to use a really attractive capital base to be able to do that. But most importantly, the products that we need have huge growth drivers. If you look at the electrified economy, you look at energy storage markets and the ability for our military, which are now required to buy U.S.-based products. We're the only ones in the country that can do it. Ultimately, our growth potential is significant. We've been -- we proven we've been able to tap into those nondilutive capital with $150 million in Kentucky. We're also doing that same thing in Marion, Indiana. So we're not out there raising equity capital. We're protecting our equity capital. And we're driving that growth, utilizing those nondilutive capital strategies to bring shareholder value to our investors.

Mark, thanks for the update. Always great to hear it. Thank you.

Absolutely. Thank you, guys.