Release Date: November 14, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• American Resources Corp (NASDAQ:AREC) is making significant progress in its Real Technologies division, focusing on rare earth and critical mineral refining, which positions it ahead in the energy transition market.
• The company has successfully remediated over 7,000 acres of land and secured more than $20 million in environmental bond releases, showcasing its commitment to environmental stewardship.
• AREC is developing a versatile multi-mineral, multi-feedstock platform technology capable of separating and purifying high-value critical minerals at a competitive cost.
• The company is expanding its customer base for its rare earth and battery materials, with significant partnerships expected to be announced soon.
• AREC is strategically positioning its subsidiaries, such as Real Technologies and American Infrastructure, for potential spin-offs to unlock shareholder value.

Negative Points

• The company acknowledges the frustration of shareholders due to the declining stock price and has not always met its goals due to various factors.
• AREC's current market value does not reflect the fundamental value of its subsidiaries, which is a concern for management and shareholders.
• The company faces challenges in scaling up its production facilities, particularly in moving preprocessing to the Marion facility to increase throughput.
• AREC has had to re-audit its subsidiaries due to issues with a previous auditor, which has delayed some of its strategic plans.
• The company is navigating a volatile market environment, particularly in the auto industry, which affects its ability to disclose partnerships and secure consistent revenue streams.

Q & A Highlights

• Warning! GuruFocus has detected 9 Warning Signs with AREC.

Q: Can you provide an update on the progress and revenue expectations for Real Technologies, particularly regarding the Noblesville and Marion facilities? A: Mark Jensen, CEO, explained that Real Technologies is building a diversified customer base for lithium products and rare earth oxides. The Noblesville facility is currently producing lithium carbonate and rare earth oxides for customer qualification, with about $150,000 in revenue booked this quarter. The Marion facility is being prepared for scaling up production, with equipment installation underway. Significant revenue growth is expected in 2025 as production scales up.

Q: Are there any bottlenecks in production at the Noblesville facility, and how will the Marion facility address these? A: Jensen noted that the main bottleneck is preprocessing capacity, which will be moved to the Marion facility. The separation and purification processes at Noblesville can handle more throughput, and expanding these processes is relatively easy and cost-effective. The Marion facility will enable increased production capacity.

Q: What are the reasons for not disclosing the names of partners involved in pilot programs or joint ventures? A: Jensen mentioned that some partners, particularly in the auto industry, prefer not to have their names disclosed due to market volatility and internal business focus. However, new partnerships are expected to be announced soon. The industry is volatile, and many companies are cautious about public disclosures.

Q: What is the timeline for spinning off Real Technologies and American Infrastructure, and will they be public from the start? A: Jensen stated that Real Technologies is set to spin off with a record date of December 31 and a distribution date of February 15. The goal is for it to be a liquid security from day one. American Infrastructure is also planned to be spun off, with ongoing audits and preparations for public listing.

Q: How does American Resources plan to generate revenue post-spin-offs, and what is the strategy for future growth? A: Jensen explained that American Resources will retain equity interests in the spun-off entities and receive royalty streams from American Infrastructure. The company is also exploring new business opportunities in the commodity markets and critical minerals space, with a focus on mining and commodity trading.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.