American Resources Corp Q1 FY2023 earnings call

Management Statement and Operational Highlights

• Tax Net Bond Offering: Wyoming County coal mining complex has $4.9 million in new market tax credits and $45 million volume cap allocation for bonds, with progress due to interest rate stabilization.
• ReElement Spin-off: Filed initial and amended Form 10 registration statements with SEC; amended filing under review.
• AMAO: Filed amended Form S-4 related to merger with Royalty Management Corporation, under SEC review.
• Financial Highlights: $9.8 million convertible note converted into common shares, traditional debt balance ~$839,000, cash on hand ~$2.4 million as of March 31, 2023.
• Divisions Update: American Carbon focused on ramping production and monetizing assets; ReElement on refining technology development and pilot programs; American Metals as a platform for ReElement feedstock.

Segment Performance

• American Carbon: Carbon markets remain strong. McCoy Elkhorn and Deane complexes are generating cash flows. Perry County complex is being monetized. Current focus is on ramping production at Carnegie 1 and 2 mine and positioning Wyoming County as a growth pillar. Wyoming County complex is set to be a fully-integrated met carbon complex with critical element processing, and there's progress on a $45 million bond offering.
• ReElement Technologies: As a world-leading refining technology platform, it has filed initial and amended Form 10 registration statements for spin-off. Its chromatography-based refining technology is a differentiator, offering flexibility to handle various feedstocks, including end-of-life batteries and natural ores. It's involved in multiple pilot programs and has international refining partnership opportunities.
• American Metals: Positioned as a platform to leverage ReElement's refining capacity by processing high-value battery materials and rare earth elements from end-of-life motors and tools, with plans to evaluate spin-off post-ReElement spin-off

Guidance

• Anticipate approval of ReElement Technologies spin-off and AMAO merger as SEC review progresses.
• Focus on unlocking value through strategic steps like monetizing assets (Perry County complex) and redeploying cash into divisions.
• Expect substantial cash flow from low-cost, high-quality complexes like McCoy Elkhorn and leverage non-dilutive capital sources to avoid equity issuance.

Risks

• Forward-looking statements subject to risks, uncertainties, and factors causing actual results to differ from projections, as outlined in press releases and SEC filings.
• Timing uncertainties in SEC review of ReElement spin-off and AMAO merger filings.
• Impact of aggressive Federal Reserve interest rate policy on bond offerings and market receptiveness.

Question and Answer

Q: Can you walk through quarter-by-quarter expectations for free cash flow from McCoy Elkhorn?

A: McCoy Elkhorn is a low-cost, high-quality operation. It's positioned to generate substantial cash flow due to low cost structure, reduced environmental liability, and ability to take advantage of current market. We've paid off debt and it's a streamlined operation ready for current market conditions.

Q: Comment on cash projections for Q2, Q3, etc., and impact of ReElement spin-off on cash?

A: Cash balance timing is based on quarterly report filing. It's not related to ReElement spin-off. We have equipment contracted to sell and focus on monetizing assets. ReElement spin-off goal is to unlock value, and we have other initiatives like Nova Sierra progressing to unlock value. American Metals is under evaluation for potential spin-off post-ReElement spin-off