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American Resources Corp making acquisitions to bolster its metallurgical coal

  • Produces and sells metallurgical coal, which is used for steel making
  • One of the biggest coal producers in eastern Kentucky
  • Currently owns a variety of complexes where metallurgical coal can be processed and transported, mostly by rail

What American Resources does:

() has spent the past several years consolidating assets to build out its metallurgical carbon platform. It is staffed by a team of former private equity executives and consultants with a sentimental attachment to Appalachia and its coal, who are keen to stage a turnaround in how business is done there.

The company distinguishes itself from struggling rivals – many of whom have plunged into bankruptcy – by their low-cost, efficient operations.

A quest for new ways to improve the intricate work of supplying various grades of coal to steel producers has been on the to-do-list for American Resources’ management since its founding partners made their first investment in the industry in eastern Kentucky back in 2006.

American Resources operates five complexes located primarily within Pike, Perry, Knott and Letcher Counties in Kentucky and Wyoming County in West Virginia. The company’s primary focus is on supplying steel mills and electric arc furnaces with metallurgical Carbon, PCI and specialty alloy metals along with metal products.

The company has gobbled up a number of struggling coal operations across Central Appalachia. Its takeovers include McCoy Elkhorn Coal, Dean Mining LLC, ICG Knott County, Wyoming County Coal, Empire Kentucky Land, the PointRock Mine and Perry County Resources. 

American Resources management has a proven record of restructuring high-cost businesses in short order while maximizing the core value of their operations. By running operations with low or no legacy costs, works to maximize margins for its investors while being able to scale its operations to meet the growth of the global infrastructure market.

After stripping out about $15 million in costs from the Perry County Resource complex in the first step of a restructuring, American Resources’ team laid out a detailed plan to boost its performance and profitability and ensure it thrives.

How is it doing:

It’s been an active 2021 thus far for American Resources. In February, the company signed exclusive licenses for rare earth mineral processing and graphene patents from Ohio University, expanding its patent and technology base to be used for rare earth element (REE) and critical mineral separation as well as the future production of graphene and advanced carbon products.  

American Resources said its technology also has the ability to provide a clean and viable solution for fly ash reprocessing and mitigate potential long-term environmental issues for existing and former coal-fired power plants.

Previously, the company inked exclusive technology license agreements with Penn State University’s Department of Energy and Mineral Engineering to implement Penn State’s intellectual property and technologies that separate and extract pre-concentrate critical and rare earth minerals from carbon-based resources.

American Resources noted that the licensed technologies and efforts will be incorporated in the company’s process chain, in order to enable a low-cost extraction, processing and purification of rare earth oxides while hopefully improving its environmental and commercial applications.

In a related development, the company announced that it has engaged ex-Eli Lilly executive William Smith III to design and build its rare earth and critical mineral purification facilities. It said the facilities will utilize ligand assisted displacement (LAD) chromatography technology, which was recently licensed in partnership with Hasler Ventures and Purdue University.

Earlier in the year, American Resources said it had acquired additional production equipment to expand its base of carbon production and efficiencies at Perry County Resources, as well as providing it with the opportunity to potentially bring other complexes online in the future.

The company noted that it was able to acquire the fleet of equipment at what it believes to be “a fraction of its marketable value,” as it was able to act quickly due to the strength of its balance sheet.  

On the financial front, American Resources said in January it secured two new credit facilities, giving it the ability to draw up to US$10 million initially, which it said can be increased as the company’s production and revenue base expands.

What the broker says:

Roth Capital initiated coverage on American Resources recently with a ‘Buy’ rating and a $7.50 per share target price, calling the company a “growing metallurgical coal producer with a rare earths kicker”.

“The company’s three…

Read More: American Resources Corp making acquisitions to bolster its metallurgical coal

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