Release Date: May 21, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- American Resources Corp (AREC, Financial) successfully responded to the sudden suspension of their previous accounting firm, BF Borders, by quickly engaging a new qualified PCAOB registered public accountant, GBQ Partners.
- The company is making significant progress in its Element Technologies division, positioning itself as a leader in low-cost, environmentally safe critical mineral refining outside of China.
- AREC is on track to spin off its American Carbon Corporation and RE Element Technology Corporation into standalone companies by the end of the year, which is expected to unlock significant shareholder value.
- The company has secured substantial tax-exempt bond financing for its projects, including $45 million for the Wyoming County coal project and $150 million for the Kentucky Lithium facility.
- AREC's RE Element Technologies division is gaining traction with significant partnerships and customer validations, including a recent acceptance into the Defense Industrial Base Consortium, which opens up opportunities for defense contracts.
Negative Points
- The sudden suspension of the previous accounting firm caused disruptions and required quick adjustments, highlighting potential vulnerabilities in AREC's financial oversight.
- There are concerns about the liquidity of the spun-off entities, as seen with the NovaStar stock dividend, which has not yet been publicly traded, causing uncertainty among shareholders.
- The company is still in litigation over non-payment issues related to the Deane complex, which could impact financial stability and investor confidence.
- AREC's American Carbon division has not generated revenue in the last quarter, and its future production is contingent on the successful spin-off and ramp-up of operations.
- The company faces challenges in navigating new regulations and permits, particularly in Wyoming, which could delay project timelines and increase costs.
Q & A Highlights
Q: At the Wyoming County coal project, how much of the $45 million tax-exempt bond has been spent?
A: Approximately $20 million has been spent so far on buying equipment, developing the property, and securing additional components to expand the prep plant. There is still quite a bit of liquidity remaining for the project. - Mark Jensen, CEO
Q: How should we expect the spending of the remaining $25 million?
A: The remaining funds will be spent over the next few months to finish the development and put the mine into production. The focus is on growing production as soon as possible while working through some regulatory nuances. - Mark Jensen, CEO
Q: What are the cash costs for the Element Technologies and American Carbon spin-offs?
A: The costs are expected to be relatively low, around $0.25 million, including legal expenses, consultants, and audit work. The team is experienced and aims to minimize expenses while ensuring compliance. - Mark Jensen, CEO
Q: Can you comment on the trading status of the NovaStar stock that was dividend out?
A: NovaStar is currently a private company, but it has filed an S-1 and is responding to comments with the goal of listing publicly. The separate management team is working through this process. - Mark Jensen, CEO
Q: Will American Carbon and RE Element be treated similarly to NovaStar regarding public listing?
A: The intent is for both American Carbon and RE Element to be publicly listed. The team is working on audits and engaging with different exchanges to facilitate this. - Mark Jensen, CEO
Q: How soon can we expect meaningful production from the Marion facility?
A: Operations at Marion are expected to start within the calendar year. The team is also expanding production capacity at the Noblesville facility to meet demand. - Mark Jensen, CEO
Q: How does your technology compare to other companies claiming to process lithium, cobalt, etc.?
A: Many companies do not actually refine to battery or magnet grade. Our technology is proven, and we invite customers to see our facility and watch us produce product, which builds credibility. - Mark Jensen, CEO
Q: What does the acceptance into the Defense Industrial Base Consortium mean for RE Element Technologies?
A: It allows us to bid on contracts for supplying critical materials to the national security supply chain, providing visibility and opportunities to showcase our capabilities. - Mark Jensen, CEO
Q: How do you handle different feedstocks like mine waste, ores, and black mass?
A: Each feedstock has different concentrations and percentages. We design processes to make each feedstock profitable, leveraging our technology to refine and concentrate materials efficiently. - Mark Jensen, CEO
Q: Will American Carbon start production post spin-off?
A: Yes, the focus is on ramping up production post spin-off. The team is currently reducing costs and developing the most valuable assets to prepare for this. - Mark Jensen, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
