American Resources Corporation ($AREC)

Okay. We are ready to get started, and welcome and thank you for joining us for our virtual Investor CEO Connect segment. And today, we are live. So my name is Jenene Thomas. I am CEO of JTCIR and I will be the moderator for today's event. We are very pleased to host American Resources Corporation, and the focus for today's event will be a shareholder and business update. And joining us this morning live are Mark Jensen, CEO Chief Executive Officer; and Mark LaVerghetta, Executive Vice President of American Resources. Welcome, gentlemen.

Thanks for having the phone.

Jenene, good to see you.

Always a pleasure. It's been a while, so we're happy to have you back. So for our audience, for today's CEO Connect segment, the American Resources leadership team will begin with a comprehensive corporate and shareholder update, including recent development and key strategic initiatives. And following their remarks, we will move into a moderated Q&A and open the floor to questions from our audience. So before we get started, I just want to remind our audience that American Resources is publicly listed on NASDAQ and trades under the ticker AREC. And during today's discussion, the company will be making forward-looking statements. And I encourage everyone to view the company's website at americanresourcescorp.com or the SEC's website for their latest filings and information. All right. Mark Jensen, we're going to dive right in. I will turn it to you to kick things off.

Excellent. Thanks, Jenene, and I appreciate it. And good morning, everyone, and thank you for joining us today for taking your time and continued engagement with American Resources. Today is an important one. as it reflects not just where we are today, but the transformation that we have laid out and what we have executed on over the past several years to position the company for long-term growth within 1 of the most critical supply chains globally. As you may know, American Resources historically was rooted in the metallurgical coal industry, of which we built through a series of acquired assets mostly out of bankruptcies where we had to clean up a lot of legacy liabilities and angry industry participants from the bankruptcies, which we acquired the assets. We applaud the fact that we cleaned up over 7,000 acres of land and cleaned up over $20 million of legacy environmental liabilities from these bankrupt assets that we acquired. Over the past several years, we're thankful for the successes we have had and also the direction we have taken to drive the direction of the entity to high-value applications and solutions for our shareholders, for our stakeholders and for our country. The direction has resulted in a significant deconsolidation across our platform and operations, corporate structure and balance sheet for American Resources to evolve into a comprehensive solution platform from around commodity sourcing and trading within the rare than critical minerals supply. This transformation has been foundational. We have simplified our structure, separated legacy business lines and aligned our business around clear objectives to play a central role in addressing the growing imbalance between supply and demand for critical minerals across the United States Allied Nations in a globally cost competitive commodity driven. What I'd like to emphasize is the need for cost competitiveness, the ability to not only source material, but also process that material in a globally competitive environment, not for next year, but over the next few decades. Today, the imbalance is no longer theoretical. The matter of economic security national defense and industrial competitiveness. The ability to source, process and refine and deliver critical minerals domestically is rapidly becoming one of the most important strategic priorities for governments and industries alike. We believe American Resources is uniquely positioned to help catalyze the supply chain development. The team at American Resources has acquired, developed and run mining operations over the last 20 years, in a very competitive and challenging industry, one that had to compete globally, otherwise, you did not have. The experience we believe, puts us at a completely different level to those entering the space that lack the cost-driven philosophy, and we believe we also believe we are well suited to globally expand into the feedstock aggregation and development marketplace in the critical mineral sector. We didn't jump into this industry chasing money or hype, we enter the space because we build a solution that works today, works tomorrow and over the next few decades. Our focus is to make sure the rarest and critical minerals that -- our focus is to make sure that rare and critical minerals are no longer rare and no longer critical. We will do that because of our capabilities and the technology we have that make them abundantly available in the United States as well as globally through domestic and for deployment of technology as well as development of aggregation of feedstocks. Through our platform and our refining partnership with ReElement Technologies, we are able to connect upstream resource development with downstream demand by leveraging high-performance multi-element separation and purification platform that is capable of processing diverse feedstock into ultra-pure critical minerals globally and abroad. Also enables us at American resources to focus on the feedstock aggregation and leverage our balance sheet and utilize our strength of balance sheet to move forward on evaluating opportunities globally that can eat into the domestic supply chain. This capability allows us to operate as a true conduit within the ecosystem, aggregating and conditioning materials for both conventional and unconventional sources, including both recycled inputs and aligning growing demand across the defense, technology and electrification markets. At the same time, American Resources was significantly strengthened financial position. While we have not filed our 10-K, we expect it to reflect a materially improved balance sheet, including over $75 million in cash and unrestricted short-term investments with minimal debt. Equally important, the consolidation of both our legacy cooperations and ReElement will allow us to present a cleaner, more focused financial profile, one that better reflects our current business and strategic direction. The deconsolidation of our businesses also enables the businesses to drive in the direction of their Board and their governance structures as well as recruit the necessary team members to expand each of the businesses independently. We look forward -- looking forward, our strategy remains centered on a clear set of priorities. We are expanding global feedstock sourcing to support refining demand through ReElement's platform. We are advancing processing and conditioning capabilities for both our unconventional and conventional materials. Also through Electrified Materials, our fully owned subsidiary, we are building leading recycling and preprocessing platforms for critical mineral and metal inputs, including meets, batteries and defense materials. We are also focused on aligning these upstream and midstream capabilities with rapidly evolving domestic and allied manufacturing base. while maintaining a disciplined low-cost operating model that prioritizes capital efficiency and margin expansion. From a capital allocation perspective, we will continue to take a disciplined approach to developing and monetizing shareholder value, whether through incubation and growth of strategic assets or through distribution and potential share repurchases when appropriate. We are evaluating multiple opportunities to deploy our capital into strategically attractive opportunities. Those opportunities will include feedstock aggregation that can feed into the ReElement Technologies platform to be delivered to domestic customers, including opportunities we're evaluating in Africa, in Southeast Asia and throughout the world that we can help develop and help feed into the chain. Ultimately, our objective is to build a scalable, capital-efficient platform that plays a meaningful role in securing critical mineral supply chains while delivering long-term value to our shareholders. Today, we will walk through this transformation in more detail, provide additional context on our priorities to outline the key we are focused as we continue to scale. With that, let's get started. We'll open it up to you Jenene.

Excellent. All right. So we are going to open up to Q&A. So if you do have a question for the team, you can click the Q&A button at the bottom of your screen, type in your question, and we will get to as many as time allows. So it seems like we have quite a bit of time, so we'll get started.

Mark, while the audience is typing in their question, I'll just start off to get things rolling, okay?

Sounds great.

All right. Perfect. So over the past several years, American Resources has undergone a significant transformation. We've had you on this platform for more than 5 years. We've seen it. I've seen it with my own eyes. Can you walk us how through the decantation because I'm sorry. I'm having a little bit of an issue. So deconsolidation of legacy cooperations and ReElement has reshaped the company's financial profile and strategic focus going forward. Sorry for getting so tongue-tied.

Yes. No, I appreciate that. There's been an objective we set out over the last couple of years. So this is not a new development. We wanted to deconsolidate this business based on the developments we had. If you look back 10 years ago, we didn't build -- we didn't develop the ReElement platform chasing the rare space. We actually built it for a very specific reason. We acquired 10 or 8 companies, 5 amount of bankruptcy and the only liability we assumed is the environmental. And so we developed this technology to clean up those environmental liabilities and create a monetizable value versus dumping acid in rivers, which is what the legacy industry does, we wanted to develop new innovations and new technology to treat that environmental liability differently. And thankfully, that led to the development of ReElement, which ultimately ReElement came significantly bigger than the parent. So what our focus, what we set out 3 years ago was, was to set the direction of the deconsolidation of spinning off the coal business, spinning off ReElement to be separate businesses with separate corporate governance to run independently and we're accomplishing that. We're thankful where we're at today. We have separate teams. The teams are realigning to be laser-focused within their operational objective. And we're focused on now growing those businesses to execute upon the broad mission. What that enables American Resources to do is to be extremely well positioned to utilize our skill sets, which is acquiring assets, understanding mining operations, understanding feedstock aggregation and commodities to be the most efficient player. We don't -- we're not a mine to magnet story like everybody else in the world. We think that's a fallacy. Mine to magnet means you're tied to one mine. And if that mine produces low-quality product and is low margin, you're not going to be successful. And we see that in the industry today. What we're focused on at American Resources taking stakes and investing in the best-in-class assets, Ione Clay, and other assets can be developed that have these high-value critical minerals that are low cost and diversified for our customer base to see then ultimately monetize those streams and in partnership with ReElement through the refining platform to be turned into materials that can be used today. And we're excited about what we've been able to accomplish and the efforts of a small team, not everything is always done perfectly, but we work really hard to accomplish that. We don't sit back and try to hit the easy button. The easy button leads to high cost and ultimately failure. And what we focus on is doing it the right way and fighting the tough fight, 1 for our shareholders and 2 for our country. So we're thankful that the deconsolidation is taking place.

One thing to add, Jenene to, I mean, we've set out on a multi-quarter, multiyear restructuring operation or mandate that we've put in a couple of years ago. We've executed upon that plan. And during that, we've been able to commercialize and leverage a multimineral multi-feedstock refining platform, which has really enabled us to look through a very unique lens matching supply and demand. These markets, 2 things. These markets have by design been made very opaque by actually producing high purity elements for technology industries, defense industries, et cetera, has enabled us to identify multiple feedstock sources and match that with downstream customers. So that puts us in a really unique position. And then secondly, this is one of the most dynamic industries that I think we've ever seen, been around for the dot-com era. I mean this industry is moving exceptionally fast from a national security, economic security mandate, given geopolitics, given the reindustrialization of the United States of America, our trade partners, et cetera, and the positioning that the current administration and the past administrations are taking, where it's not a choice, it's a need for our nation. But we don't tie ourselves to solely government or government subsidies and handout because of what Mark said in his opening statement, we viewed the world through a very unique lens of matching clarity of supply and demand, production of high-purity product, scalability, innovation and lastly, cost competitiveness.

All right. We'll start with the questions from our audience. When can we expect a firm time line for the ReElement IPO, the company has previously provided estimated dates that were later delayed, what specifically is causing the repeated pushbacks.

Yes. I mean I think it's -- timing of an IPO is obviously quite important. We've had multiple stack offers that are of extremely attractive values for ReElement. We have a phenomenal private equity investor ReElement that has funded providing capital to fully build out the Marion facilities along with our internal capital that we have. And so what we want to focus on is getting Marion up and running. Marion up and running is the most critical aspect, not only for our business but also for our country given the capacities and the magnitude of materials that we can produce out of Marion with 4 different production lines, we need to get those production lines up and running. But while at the same point, we are working on a process for ReElement. We've had offers to acquire the business. We've had offers to merge with facts. We have numerous investment banks that are interested in that, something we look to evaluate, and we're pushing forward on it though. We have -- the audits are being complete for ReElement. We have -- we've engaged our auditor. They're doing a good job with that. And so preparing all the necessary steps to do it right. This is, I would say, a once in a lifetime opportunity that what we've created at ReElement and what we spun out of American Resources and we want to make sure that it's executed in the proper way, but we still are pushing forward on that on a daily basis and evaluating the landscape. I mean, right now, it's choppy market, choppy market conditions. And at the end of the day, what we're really focused on is generating cash flow and getting the business scaled up and getting the Marion production running here this summer.

One thing to add to -- I've said this numerous times publicly to our investor base. ReElement is a really unique asset. It's been a private equity story. We knew that. We've taken some, I would say, unconventional steps distributed to our underlying shareholders at the end of '24. But we knew it was a private ad story. We knew we were early in the supply chain. We knew we had to be early in the supply chain. We were standing up innovative technology. So the IPO process, whether it's an IPO process, a direct list, despec other M&A opportunities, we evaluate that on a daily basis. But -- and I get a lot of questions from shareholders always starting with when, when, when are you going to IPO or when we're going to have this. And we've always said this is a -- this is an exercise of value creation and value discovery, not an exercise of speed. And ReElement being private right now has bode very well for all of our investors. American Resources being a stakeholder and a shareholder in ReElement as well. We've raised private equity capital at an attractive valuation, given what Mark just said about the standup of Marion, our 4 production lines, you can go back to our previous press releases on an update of the scale-up of Marion, it will be stage gated sequential on multiple production lines, germanium, 2 MREC lines, hard product line to go back to our press release. As we continue to stand those up and the market continues to see that we are doing this, doing it in large scale, doing it cost effectively. The value should translate for ReElement and than subsequently American resources as well. So we feel really good about where we're positioned from creating value, and we're going to take the appropriate steps to deliver that value. to our American Resources shareholders, and we believe the distribution and dividend that we've provided our shareholders to participate that over the next several months or years is going to be really attractive and could be historic.

Yes. And then I would also add that part of that timing is honestly it's predicated by the corporate governance of ReElement, no different than American infrastructure, which has merged with Wilcox, they have separate governance, they have separate boards. They will make that decision. And that's part of why we spun them off and so that the Board of those independent companies can make run and corporate governance and make the correct decisions by the shareholders for those entities?

Okay. Our next question -- and Mark, I'm going to ask the questions that you may have already answered, but we did -- I did see kind of an uptick in the audience like as you were speaking. So some people may have missed something. So I just wanted to give everyone a chance to hear everything. My next question, why is the company delayed filing its annual results? And when do you expect the filing to be completed?

Yes. So we switched auditors for this 10-K. They're doing a phenomenal job, extremely detailed. And so there's no issues. I don't think with any of the preformations, any of the numbers or anything to that extent. I think they're working through the final deconsolidation of determining which states everything else on that front given the separate corporate governance and all that, we -- I know our CFO and finance team is working with our auditors on a daily basis. I think we're both -- it's a matter of time. And when you switch auditors, they have to go back and do their work and the group that we brought in is doing a phenomenal job at that. But we hope to get an update on that shortly and very shortly. It's a desire, but we'll update the shareholders on that. I know they're close, just takes a lot of time when you switch auditors. And then on top of that, working through deconsolidation of these entities, it's a lot of moving parts, but it's good for the long term.

Great. Right. What differentiates you and ReElement from other players in the rare earth space, particularly when it comes to cost structure, scalability and an environmental footprint.

Yes. I mean I'll address it from American Resources as well as separately relevant. But one, I think as I stated earlier, we didn't enter into the rare space business school, right? There's a lot of -- I mean how many mine to magnets stories have been heard about in the last few weeks or months or years and/or prior during the last administration, the battery space, there is millions of people that jumped into the space and dove into it. We entered the space because we had something extremely unique. We had a technology that reshapes the landscape and enables global competitiveness. That's what's unique about why we entered this space. We built the technology to clean up environmental liabilities 10 years ago or over 10 years ago now today when we spin on this journey. So what makes us unique is, one, American Resource as a team that has acquired assets evaluated thousands of assets, chose best-in-class that could be operated cost competitively and fit the need of the market. Now we did that in the coal industry. We acquired at nameplate assets that could be cleaned up. There were diamonds in rough. In the critical mineral space, what American Resource focused on is partnering with best-in-class on both recycled as well as on virgin ore and understanding what makes a mine viable. And we have great partners in Africa. We've identified a few different sources there. We have great partners in Southeast Asia. We've identified some really good sources there. We hope to deploy our capital to those projects. We get those projects operating in the most cost competitive way. Understanding landscape. Understanding that, today, you can compete, right? Prices are really high. We don't think prices are going to stay high, though. We think prices are going to come down. We hope they come down. It's good for the country, that's good for the industry. And we -- because of our unique technology and our unique skill sets of evaluating operations, we believe we will help drive costs lower and enable the industry to be more competitive. And then on the ReElement perspective, we -- it's a new technology. It's a new -- it's an innovation that makes the industry better. We can deploy rapidly overseas, we can build modular scalable facilities. We're not making one bet based on one feedstock. Solvent extraction is not flexible. It's not very cost effective in the long term, and it's very hard to maintain. You see it. You see it all throughout the world. What we've built is a platform technology that can be deployed towards multiple feedstocks, multiple product outputs that can compete on the global cost curve. And right now, at ReElement, we're brute-force expanding, expanding as fast as we possibly can to feed the needs of the current market, so we're producing this year for the defense industrial base as well as for our commercial partners while then focused on optimizing cost structure and continually driving down costs so that we could help drive down prices in the global marketplace and ultimately go head-to-head against the gorilla in the space, which we all know who it is, the country that operates today, we want to compete with them, not just by providing products that they provide, but by providing products that they provide at the same cost structure or better.

Okay. Our next question, when will the Marion plant be fully operational.

Yes. That's a great question. Fully operational. That's a -- that's a loaded question. We have -- so Phase 1 is 4 production lines. The goal is to have all 4 of those production lines up and running this year with the first production starting in July, August time frame. We're on track to do that. The team is doing a phenomenal job of ReElement. The leadership team there and the Board is driving the company to make sure we don't go slow. We get pushed daily from our customer base to make sure we scale and we grow as fast as we possibly can. Now fully operational, though, Phase II, Phase III, Phase I, first 4 production lines are more rare, it's critical mineral centric. I would say probably the next production line we're evaluating is on the battery space given the partnership with Electrified Materials, our wholly owned subsidiary, which is also, as we publicly disclosed is going through its own separate capital raise and govern it setting up its own governance team. It's extremely well positioned to do really well in the battery space for production of lithium carbonate from LFP batteries, we're one of the few players that can go all the way through a circular economy. So fully operational, I don't think I can give an answer to that because we don't know where we stop. Our goal is to continue to expand. Our Phase 1 uses about 160,000 square feet of our 400,000 square foot facility. We also have the ability to expand that is a 42-acre campus. So the Board at ReElement will make that decision. But when we fully continue to scale. We also have other partnerships we're developing in the United States as well as globally of deploying our technology to other sites to compete and the Board at ReElement will dictate when we bring those online.

What is American Resources' current ownership share of ReElement.

Yes. It's approximately 17% right now based on the financing that we closed on with TEP.

Okay. Do you think that your technology with ReElement is being appreciated by the Rare Earth world and will be able to replace the old processing process quickly.

Appreciated by the legacy industry, no, no, it's not appreciated. The legacy industry doesn't want us to survive. When Marion comes online, we're going to show case a better way of doing things. I think from the mining side, yes, very much so. We have a number of really strong mining partners that can -- that American Resource is looking at investing in as it's mandating charter from the Board. but the industry doesn't want ReElement to win. They don't want ReElement to be successful because they show cases of lower cost, better way of doing things. That's the unfortunate nature when you're innovating and you're developing technology that leapfrogs the legacy technology, the legacy producers will do everything they can, they altered any way they can to try to distract the market from their own inadequacies versus focusing on how to get better. We're focused on how to get better every day. and keeping our heads down blinders on driving in the direction of producing product for our customers.

Next question, if possible, please talk about the cash versus debt position at American Resources.

Yes. minimal debt, about $75 million of cash on the books to date or as of December 30. Obviously, that will be in the 10-K when it's filed but a very, very strong cash and short-term investments, nonrestricted short-term investments, I should say, just because obviously deploying our capital to earn the highest interest rate we can. But it's a really strong balance sheet. And we're -- the Board of American Resources and the team at American Resources is evaluating multiple opportunities to deploy that capital within the critical minerals space on feedstock aggregation as well as commodity trading.

Okay. Can you confirm that the Mitsubishi partnership is currently moving from the elevation phase into commercial site selection for re elements, refining technology. And will this involve a joint venture model that accelerates the ReElement spin-offs valuation?

Yes. I mean I think Mitsubishi Materials is a phenomenal partner for ReElement. The teams are working daily or weekly on that. I can't give continue time lines on it, but it's moving forward aggressively and they have been phenomenal partners to date. Our team are ReElement has been over there multiple times. They've been over to our facilities multiple times, which enabled the joint venture to be set up and the relationship to be set up towards that today. Just doing that due diligence that's required in such a large partnership like this one, but we're thankful for having them as partners at ReElement and where that's going. I can't give concrete time lines on it, but we'll update shareholders as we do.

Yes. I think one thing to add there, too, Jenene, is as you look at the overall platform, and again, this is more specific to ReElement, but given the attributes of what we can do to separate purify and refine high-purity rare and critical elements. We become very -- we want to be very collaborative and it showcases the value from an economic trade perspective between nations, we obviously have a really good partnership with POSCO International out of South Korea. And now Mitsubishi Materials out of Japan, we're -- it underlines and showcases the value of the platform and how we can collaborate to bring value to the domestic and allied markets.

Next question, have they used the $5 million feedstock credit line from Old National Bank? What is the actual purpose of that credit line?

Yes. I mean the $5 million credit line is exactly for that to evaluate feedstock versus commodity -- trading of commodities. We're evaluating multiple opportunities in the Southeast Asia over the next 60 days evaluating opportunities there for American resources that we can deploy our capital to the credit line as well. Given the strength of our balance sheet, putting credit lines and partnerships in place is really important as we continue to scale as you understand commodities and the opportunity to acquire these feedstocks with partners that then we can monetize through the ReElement partnership, it's important to set up these agreements now as we continue to grow them. And given the strength of our balance sheet, was an opportunity time to set that up. I don't think we've deployed any of it yet where we have offers out there for a couple of different feedstocks that could be deployed off the credit line or off the cash on the balance sheet.

I think what is important to touch upon too from the investor base here, like I mentioned earlier, a very dynamic marketplace. And then having the commodity backgrounds, the lens that we look through the world through matching supply and demand the attributes of the refining platform, every ReElement enables us to be very versatile across the periodic table of rare earth and critical minerals. For example, a lot of people, as Mark stated, focused on this mine to magnet, 2 magnet elements that are very prominent in front of magnets are neodymium, praseodymium, and we view them as higher volume, lower value. And accordingly, a lot of people set up the their production around a mine, a specific feedstock to focus on specific elements where we're -- the unique thing about us is we're very versatile. We ran lithium carbonate for battery when lithium was higher. We validated that through the cathode market, validated production flow sheets, magnet material we've done as well, put us in a really good position to win export controls, trade wars, tariffs, et cetera, started to occur over the past year, 18 months. we got a lot of inbound asking, can you do things like yttrium, gadolinium, germanium, things that are a very high urgency for the manufacturing base the technology and defense manufacturing base specifically. And quite frankly, at the time when we were approached, the answer was we haven't done a lot of work on those, but we believe we can, let us start doing the work. And that's been done over the past year, let's just say. And now we continue to work through, again, validating operational protocols and flow sheets, getting long-term contracts from the manufacturing base as it continues to get stood up here and grows. So it's working congruently with the manufacturing base and the market or intermediaries. A lot of times, the products that we make don't go to OEMs, they go to other material manufacturers that then go into other products. So piecing that all together for a lot of different elements and a lot of different specifications is complex. We've been able to be -- we've been afforded the opportunity to be able to do that over the past few years.

Next question, as you build out capacity, how are you thinking about strategic partnerships or offtake agreements? And are you seeing increasing demand from OEMs, battery manufacturers or defense-related customers.

Yes to all of the above. Great question though. So from American Resources position, we are targeting feedstocks that meet the needs of the industry today where we see the most important opportunities. So where American Resources, I'll be in Malaysia evaluating [indiscernible] clay mines as well as in other regions of Southeast Asia that have really attractive feedstock potential, meaning they have a lot of yttrium, gadolinium, summarium, dysprosium, terbium which are products that ReElement can produce today. So those are -- and those are necessarily needed within the supply chain. So American Resources looking at deploying capital to take a, call it almost a governance stake in the feedstocks and the opportunities to get these feedstocks into the ecosystem. And then speaking for ReElement as a member of the team, the focus of the Board of ReElement is around building key production lines to meet the needs today. So first production line coming online as germanium and gallium, second production line is for Magna recycling, third production line and fourth production line are for mixture of carbonate, which are from Iona clays as well as from secondary lines such as [indiscernible] cobalt recycling as well as thermal heat barriers, solitarium, gadolinium and other products, zirconium that come out of those products. So we're building those key production lines based on the market needs today. And then we can either expand those production lines or build additional production lines for other products such as fifth production line we're evaluating would be with the impermanent from LFP batteries because there's the abundance of them, and we're one of the few players in the industry that can do it cost effectively, very cost effectively today. And Electrified Materials are wholly own subsidiary is doing a great job of aggregating end-of-life batteries that is stockpiling on its lease at the 135-acre property that is controlled by Electrified Materials today. So we're building those out based on market demand, based on need, as I said, brute force expanding and both companies based on their separate governance structures are focused on those directions to meet the needs of the industry today. Germanium and gallium are extremely important, really focused on developing other feedstock relationships, American Resources evaluating deploying capital to a couple of different projects that can help unlock further feedstock that is desperately needed right now for the customer base. But the -- from the ReElement side of it is where ultimately the customers get signed because that's where the final products are produced and those conversations are going extremely well. A number of contracts signed and ReElement will disclose that when it feels comfortable.

Okay. With increasing government focus on restoring critical mineral supply chains, how are you positioned to benefit from the federal programs, grants or policy incentives such as the Defense Production Act or IRA-related initiatives.

Yes. One thing I'd like to do is applaud the current administration. I never -- we had public interactions with them. We have worked with them as publicly disclosed. But they're focused on solving this problem for our country. And they're drinking from a fire hose. And so we applaud their efforts. We can't speak to specific capital to date. ReElement and the Board of ReElement will make the decision when it applies for and how it moves forward on capital strategy. Thankfully, the company is in a strong financial position today. and as well as American Resources is in a strong financial position today. But the -- we do applaud the efforts of the government to get ahead of this problem that we have with the nation given China took these technologies from our country 30 years ago, and they're focused on -- laser focused on bringing it back now, and we appreciate that.

I think one thing that's unique to -- just to touch upon Mark's comments, and we do interact regularly with the Gov they are working extremely hard to address a lot of these challenges. From American Resources and ReElement standpoint, we've been able to advance a platform that opens up the aperture opens up the pressure point, the choke point in the supply chain through refining and then with American Resources, separate business lines, separate company, separate mandate is looking at feedstock aggregations. Multimineral multi-feedstock refining platform means multiminerals and multi-feedstock. They come from a variety of sources, unconventional recycled and mind. And a lot of things that are mind here, we don't have elements abundantly inherent within our borders. So this is all hands on deck approach and how we collaborate. From our collective standpoint, we want to be good partners with the government, whether that's using -- and we're very sensitive to this. We're all taxpayers here. What's the best use of taxpayer capital. I think what's unique about us is what Mark started this, we want to be cost competitive, meaning we don't need to spend taxpayer money. And that's a unique position for our entire platform. I think we've put together and we view the supply chain through the refining lens that we have and being able to sequence all of this stuff very cost competitively. And our focus is being good partners for the government to help address some of these challenges. But we're not coming hat in hand saying, "You need to subsidize us. You don't need to spend hard earned taxpayer money to stand us up and make it work. Can the government catalyze businesses and entities? Absolutely. I think you've seen that, and we applaud the government for being able to do that. But I think that's one of the unique things about our platform as well is that we're not dependent on the taxpayer to stand this up, bails out and make it sustainable.

We build businesses, separate to these businesses so they have their own financial structure. They have their own corporate governance. They have their own ability to drive forward in a low-cost manner. And that's -- we think that's important for the long-term survivability of our businesses and ability to thrive in any market environment.

Our next question, will EMCO compete with Mitsubishi to supply feedstock and how can they both exist in this space.

Yes, that's a good question. I mean so and actually a really good question. So part of why we also separated all of our businesses, right? You eat what you kill. That's our philosophy as a company. Nothing is handed to us. Nothing has been handed to us to date. When we started these businesses when became entrepreneurs ourselves. We did it with our own capital. We didn't come for money. So you had to eat what you killed and the businesses are set up to do that as well. So EMCO will -- I mean, ReElement doesn't own EMCO, that's totally separate businesses. And the reason for that is ReElement will partner with all feedstock providers to it. That's what the Board mandated -- the -- so the businesses -- so EMCO has to compete and provide a cost-effective solution where they both can make money. So it's a good business relationship. No different than if Mitsubishi can provide product to ReElement, that's awesome. That's what we want. That's the relationship. There's no shortage of how much ReElement can process. We can build production lines very quickly, especially with Marion coming online. Then it's all the infrastructure is there, which is about half of your CapEx, adding production lines 10% of the overall cost of the facility and depending on the size of that, obviously, I'm giving broad-based statements. But the ability to add these different production lines to scale production, volume matters in the commodity world. And so having that additional volume just makes us better. And so the -- I don't think ReElement is going to turn down material -- definitely will turn down materials from Mitsubishi Materials as a phenomenal relationship in the U.S. as well as in Japan. But then also, it will just -- ReElement would be grateful to continue to expand based on feedstock aggregation and having more feedstock coming in the door.

Yes, I think what I'd add, recycling is very localized, very fragmented and logistics matter. Having modular scalable refining enables us to co-locate. So it makes a lot of sense to partner with a company like Mitsubishi to help them fulfill their mission and mandate and goals. EMCO has its own mandate and goals. And there is some overlap, yet there's a lot of synergies as well. You could say, "Oh, there's rare earth elements in an EV", but you don't put an EV into our chromatography columns. It has to be broken up, broken down, battery, magnet material and coming out of a wide variety of applications power tools, defense technologies, hard disk drives, et cetera, all over the place. And we see recycled feedstocks in so many different forms. It's why it's not a focus of ReElement at its foundation, ReElement is separation purification, American Resources has its mandate around preprocessing and aggregation and supply of feedstock and matching it with demand. Some unconventional, some recycled, obviously, EMCO focusing on recycled, but there is more than enough material to aggregate, pre-process and refine for -- and a lot of synergies to be had between this great partnership we have with them.

And I'd say EMCO was doing a phenomenal job. Chris [indiscernible] came on board as the CEO and working with our partnership with Black Eon. They're just -- they're out there running their use. It's an aggregation name and then setting up the right long-term partnerships. And given we have a full circular solution, it positions hence really well to thrive on aggregating end of byproducts and cost effectively getting them into the supply chain.

All right. We have time for a few more questions before closing remarks here, guys. And we're action packed here with the question. So what can you share about ReElement/American resources, relationships and success in bridging the critical metals gap ranging from wars in the Middle East and Ukraine as well as AI data centers.

Yes. What I'll say is war in Ukraine, war in Iran, data centers, technology, electrification, all need critical minerals. From defense applications to commercial applications, we're in a growth industry. Now what we're excited about is the Board for American Resources has mandated the focus on aggregation of the feedstock, investing in the feedstocks of best-in-class feedstock, both recycled and [indiscernible]. Now why is it able to do that really, really well is because it has a relationship. It has a commercial relationship with ReElement. ReElement can refine all those materials from antimony to germanium, to gallium to the -- all these different products from the Magna materials to the battery applications, ReElement can refine those. And so it gives a broad breadth of a broad reach that American Resources can target best-in-class feedstocks and invest investment-class feedstock to supply the industry in the base. And that relationship puts American resources in a really strong spot because it has that full life cycle relationship in place that it can make sure these products get all the way through to final product.

Okay. Can you provide any granularity or any current government grants or funding mechanisms that you're applying for? If you can't go into those details, can you confirm if you are or are continuing to explore additional funding opportunities through the government.

I mean you can read what the government is doing, they're doing -- they're out there. They're working hard. They're putting out different programs through DOE or Department of War. We want to continue to collaborate with them. We want to continue to work with them. We think they're doing great things. And we'll evaluate the opportunities they present and we'll apply for a certain month. I won't get into detail into which ones or what we're working through. But we appreciate what they're doing and how they're doing it. We actually love -- as a taxpayer, you have to love their approach. They're not just giving away money. They're looking at investing money to make sure that taxpayers are done right. And we appreciate that. We think that's a smart move. I think it's good for our country. We think it's good as taxpayers. And we'll evaluate the opportunity they present. Do we take government capital, we'll see. We -- but we want that strong relationship and collaboration because we know that they're working really hard and they're grinding away daily at all hours and as are we.

Okay. Next question is aside from the market's perception of the late 10-K. Are there any other negative impacts that the company shareholders can expect?

I mean yes, the auditors are working really hard. They want to get it filed, too. And -- but what we're excited about is the strength of the balance sheet. We have a really low cost overhead at American Resources today. And we have a really, really strong cash balance sheet that liquid balance sheet that we can deploy that capital for the right opportunities. We're looking for the most accretive opportunities for our shareholders based on the Board's direction. We had a shareholder vote yesterday. Marc LaBerge joined our Board, which we're excited about. Courtenay, Josh and Gerardine are still on the Board and they're setting the direction for American Resource on where to deploy that capital in the most accretive way for our shareholders, but also doing right by our country. We feel that's really important.

You recently updated on x of the strong flow of expired lithium batteries and Electrified Materials material storage. Is there an update on the level of expansion that Electrified materials has completed capacity-wise and if there's any additional milestones, it is targeting over time.

Yes. I mean given props to Chris, this leadership at Electrified materials, I mean he's drinking from a fire hose, but he's sitting after it. He's doing an awesome job, [ Black Ion ] on the team, awesome partners. We're getting batteries small throughout the world that we're stockpiling today. We have all the permits to do that. So we're excited about that. We'll start processing those lithium prices are super strong right now. In our eyes, I guess the industry probably doesn't think so. But at $25 a kilogram or $24 a kilogram, that's a really attractive price for the market. We don't think it goes much higher. Margins for EMCO and margins for ReElement at those prices are really attractive. There's no limits to the capacity. I mean Chris and team are out there trying to put together as many deals as they can to get as much feedstock in the door as we possibly can and setting up really good structures to do that. I mean there's -- on LFP people get paid tipping fees. EMCO is getting paid tipping fees now. And that's important. We shipped if everybody is getting paid to take these batteries just because we can monetize them profitably, it doesn't mean we should take them for free. So now we've taken for free, and now we're also getting paid to take them, and then we can turn them into real value. That's the uniqueness of having the relationships and the structure that we created. It enables us to surcharge the overall supply chain and keep costs low.

Yes. One thing to add, too, when you look at, you've seen failures in the battery recycling space. some recently actually. From Electrified Materials perspective, the use of capital, use of proceeds is super accretive because we don't have to develop a lot of times when the recycling. Recycling usually starts with collection and aggregation. The unique thing about how we built Electrified Materials is we started and we've unlocked closed loop refining solutions, leveraging what ReElement brings to the game allows us to acquire and aggregate end-of-life off-markespec recycled inputs that we can cost-effectively bring back the manufacturing high-purity grade. So a lot of stuff like behind the scenes, Electrified Materials have been benefiting from just stuff falling when it's lap. And now we're at a point in time where we can get more aggressive in the supply chain grow that capacity, continue to build it behind the scenes create what we think is attractive value, put it in a public vehicle is our goal for our investors, we think it would be at an attractive valuation, especially considering comparison to peer valuations and letting it grow because we don't have to develop in R&D for refining or close the loop. We get to leverage our massive industrial and asset base that we've put together over the past decade. So the use of capital that we spend for EMCO is highly accretive because we're putting it to the preprocessing side of end-of-life for cycled inputs that can feed into and support re elements and American Resources aggregation of feedstock platform that could then refine it, close the loop, keep these things here domestically as our supply [indiscernible].

Okay. I think we have time one more question. What do you think will be the concrete opportunity for American Resources' share price to drive sustainable gains?

One, I mean its ownership I think when -- I mean, based on the offers we've had to take ReElement public, which we're not ready yet. That will be a summer thing. We will provide -- we think that drives tremendous value to American Resources. But most importantly, deploying its capital to opportunistic opportunities. When we started announcing some of these relationships like we have -- just today, American Resources sourced tungsten that it can not only trade but also ReElement could refine through the relationship they have. That unions a really needed product right now. We can solve that. When we're confident in American Resources, we can source that through our relationships and through some of our previous announcements we've made already. Some of the Ionis we're looking at, I'll be visiting a 6 mine complex that we look to build a concentration plant with partners. We're super excited about that. We think [indiscernible], especially in Southeast Asia are the most attractive feedstock for the rare space. American Resources is putting a huge emphasis on that and hence I'll be traveling over there. I want to put eyes on it, make sure it's done right, make sure it's done from a compliance perspective, correct? But that's -- we do think that will drive tremendous value. I think EMCO is going to drive tremendous value. We're beating up financing there right now. The business is doing really well. Chris has just been a phenomenal hire we are looking at still recruiting a CEO for American Resources. I would step up the Executive Chairman. That is the goal of the business looking for a commodity-driven partner, and we're excited about that. We're excited about the board we have and help that they're putting forth on that as well. But I think that -- I think execution of the plan when we said we're going to do, we said we're going to spend these businesses out and deconsolidate them. We've done that. We said we're going to position the company for long-term growth, the balance sheet. We've accomplished that. Now it's executing upon the strategy and continue to build out the team at American Resources to be able to drive this commodity-driven platform. But finding somebody that is laser-focused on cost is us, it's hard. I mean it's -- the Board is helping accomplish that right now, and we're excited for the efforts of the Board and the team.

Yes. I mean I think, again, forward-looking statements here, but we sit in a pretty good position. We're excited about it. We're excited about it. as operators, shareholders and for all of our shareholders. I think when you look at going back to what I previously said, too, is this is an exercise of value discovery and creation, leveraging what ReElement does very uniquely in the supply chain. Mark just said it, some of the offers that we're seeing currently to raise capital, to IPO, to de-SPAC, things like that are very attractive. So if you look at it from that way, we don't think that the stake that American Resources owns isn't even being reflected in the current share price. And then in that case, you're getting Electrified Materials for free or you could look at it vice versa that you're getting ReElement for free because American resources being valued somewhere close to where we think Electrified Materials is going to be valued in a public market. Again, forward-looking statement disclosures, et cetera, but that all has to come down to our execution and we're comfortable where we sit there. And then from that aspect, we have a lot of good optionality around capital deployment, distribution of value back to our shareholders in the form of special dividends, share repurchase things like that. And if we continue to execute and stand up, Marion, again, for Reelement, primary focus right now, that's just going to translate into more value for ReElement, more value for American resources, et cetera, which benefits all of our shareholders. So we're excited.

Yes. And when the Board of ReElement makes that decision to take it public or liquidate the company sell the business? I don't think they're going to do that, but there's been offers. Like I said -- like Mark said, we don't think American resource has is for defined plan of growth. Now it performs very -- it holds a position in ReElement. We don't think American based on the offers we received, it's multiples above our current stock price just based on relent 1 of the core business itself.

Great. Anything further before we close? We have 30 seconds.

Yes. Real quick, I'll close that with one, thank you all for joining. We don't take your time lightly. We appreciate it. We're thankful for the hard work of our auditors. We're excited to get this thing filed when they get it filed. Hopefully, they're very shortly. Appreciate the teams of all the different divisions. The corporate governance we set up to segregate these businesses to drive in their own direction to build their own leadership team is really, really important. From a business perspective culture is everything. We're excited about the culture we built at American Resources as I'll say it again, we define ourselves as mediator Sometimes what we've had to buy legacy assets with all legacy assets, clean them up, and we had to find a lot of mantles while doing that. And we don't turn away from that. You don't solve problems unless you can put those to bed and we're doing that and super excited about the relationships we've had with our partners with the industry. We're excited for the industry to thrive. We're probably one of the few players that want everybody in the industry to thrive, right, because we bring something unique to the space. But we wish the best of everybody, but we're super thankful at American Resources, we're positioned. We're thankful for the leadership team we have at ReElement and where they're driving the business. and the opportunities that we have in front of us. This has probably been the most exciting time in my career, and I'm really thankful for the hard work and the team that we've been able to put in place in all these different divisions and where we're going in the future.

Excellent. Well, gentlemen, thank you so much, and this does conclude our Virtual Investors Live CEO Connect segment Mark Jay, Mark , so happy to have you on our platform again. It was great to see you guys. I'd also like to thank our audience for your participation and great questions as always. And as a reminder, American Resources trades on NASDAQ under the ticker AREC. And if you like what you saw today, I encourage you to visit americanresourcescorp.com further information on the company to sign up to follow the company to receive their alerts as well as follow their social channels to stay current on the latest information and you can also visit virtualinvestorco.com for a replay of today's event as well as our latest segments and events calendar. We do have a closing bell segment today at 4. So if you guys are available tune in, to have you join us, and I want to wish everyone a great rest of your day.

Thank you, Jenene.