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1. Company Snapshot

1.a. Company Description

American Resources Corporation engages in the extraction, processing, transportation, distribution, and sale of metallurgical coal to the steel industries.The company supplies raw materials; and sells coal used in pulverized coal injections.It has a portfolio of operations located in the Pike, Knott, and Letcher Counties in Kentucky; and Wyoming County, West Virginia.


American Resources Corporation was founded in 2006 and is headquartered in Fishers, Indiana.

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1.b. Last Insights on AREC

American Resources Corporation's recent performance was driven by several key factors. The company's subsidiary, ReElement Technologies, has made significant strides in expanding its rare earth element purification capacity, with the commissioning of a state-of-the-art preparative scale sequential simulated moving bed (SSMB) production unit. This advancement enables the company to refine critical minerals more efficiently and effectively. ReElement's modular, multi-feedstock refining platform remains the only U.S.-based scalable solution economically separating and purifying both heavy and light rare earth elements. The company has successfully expanded its production capacity, with Phase 2 doubling daily production of high-purity light and heavy rare earth oxides. Phase 3, scheduled for completion by May/June, will further increase production capacity by approximately 3x over Phase 2, focusing on magnet-grade rare earths. Additionally, American Resources has unveiled a groundbreaking mobile modular rare earth leaching solution, enabling the extraction of rare earth concentrates from coal and other mine waste. This innovative approach has the potential to unlock billions of tons of untapped potential for producing concentrates of rare earth, critical minerals, and other valuable metals. The company's commitment to advancing innovation and operational excellence is evident in its dedication to pushing the limits of engineering and operational excellence. With its scalable, highly efficient, and versatile refinery platform, ReElement is well-positioned to deliver both light and heavy magnet-grade rare earth oxides, battery materials, and other strategic defense minerals, including antimony, faster and more efficiently than traditional methods. Furthermore, the recent Executive Order on critical minerals has accelerated commercial tailwinds and growth opportunities for heavy rare earth and defense minerals. American Resources is strategically positioned to support the domestic critical mineral supply chain, with its innovative solutions both upstream and downstream of the refining process. The company's recent participation in various conferences, including the Virtual Investor Closing Bell Series and the Centri Capital Conference, has provided a platform for Mark Jensen, CEO of American Resources, to discuss ReElement's expanded REE production, its heavy rare earth refining capabilities, and the recent Executive Order on critical minerals. Overall, American Resources Corporation's recent performance has been driven by its subsidiary ReElement Technologies' advancements in rare earth element purification capacity, expansion of production capacity, and innovative leaching solution. The company's commitment to innovation and operational excellence, combined with its strategic positioning in the domestic critical mineral supply chain, positions it for continued growth and success.

1.c. Company Highlights

2. Transcript Summary

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3. NewsRoom

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HPE shares slide on drop in server revenue despite earnings beat

Dec -04

Source: proactiveinvestors.com

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Meta stock surges after Zuckerberg plans deep cuts to metaverse efforts

Dec -04

Source: proactiveinvestors.com

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S&P holds steady amid hints of December rate cut, Meta jumps on metaverse rollback

Dec -04

Source: proactiveinvestors.com

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American Resources secures $5M credit facility from Old National Bank

Dec -03

Source: proactiveinvestors.com

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AREC's ReElement Partners SAGINT on Tokenized Mineral Traceability

Dec -03

Source: zacks.com

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American Resources Corporation Secures $5 Million Credit Facility with Old National Bank to Procure Rare Earth and Critical Mineral Feedstocks

Dec -03

Source: accessnewswire.com

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American Resources Corporation and ReElement Technologies Announce December Conference and Event Schedule

Dec -02

Source: accessnewswire.com

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AREC and ERI Join Forces to Strengthen U.S. Rare-Earth Supply Chain

Dec -01

Source: zacks.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (4.91%)

6. Segments

Coal

Expected Growth: 4.65%

American Resources Corporation's 4.65% growth in coal segment is driven by increasing demand from Asian markets, particularly China and India, coupled with rising global steel production. Additionally, the company's focus on metallurgical coal, used in steel manufacturing, has contributed to its growth. Furthermore, the company's efforts to improve operational efficiency and reduce costs have also supported its growth momentum.

Royalty

Expected Growth: 9.08%

The 9.08% growth in royalty from American Resources Corporation is driven by increasing demand for metallurgical products, strategic partnerships, and expansion into high-growth markets. Additionally, the company's focus on sustainable and responsible mining practices has led to improved operational efficiency and cost savings, contributing to the robust growth.

Metal Recovery and Sales

Expected Growth: 8.9%

American Resources Corporation's 8.9% growth in Metal Recovery and Sales is driven by increasing demand for rare earth elements, strategic partnerships with major automotive and technology companies, and successful implementation of its proprietary chromatographic separation technology, resulting in higher yields and lower costs.

7. Detailed Products

Carbon

American Resources Corporation is a leading producer of high-quality carbon products, including metallurgical coke, coal, and other carbon-based materials.

Metallurgical Coke

A type of coke used in blast furnaces to produce iron and steel.

Specialty Coal

A type of coal used in various industrial applications, including the production of silicon metals and ferroalloys.

Rare Earth Elements

A group of 17 elements with unique properties used in various high-tech applications.

Recycling Technologies

American Resources Corporation offers innovative recycling technologies for the recovery of valuable materials from waste streams.

Energy Technologies

The company is developing innovative energy technologies, including carbon capture and utilization, and advanced energy storage systems.

8. American Resources Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for American Resources Corporation is moderate, as there are some alternative products available in the market, but they are not highly attractive to customers.

Bargaining Power Of Customers

The bargaining power of customers for American Resources Corporation is low, as the company has a diverse customer base and no single customer has a significant impact on the business.

Bargaining Power Of Suppliers

The bargaining power of suppliers for American Resources Corporation is moderate, as the company relies on a few key suppliers for raw materials, but has some flexibility to switch to alternative suppliers if needed.

Threat Of New Entrants

The threat of new entrants for American Resources Corporation is high, as the industry has low barriers to entry and new companies can easily enter the market.

Intensity Of Rivalry

The intensity of rivalry for American Resources Corporation is high, as the industry is highly competitive and companies are constantly competing for market share.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 99.55%
Debt Cost 3.95%
Equity Weight 0.45%
Equity Cost 5.99%
WACC 3.96%
Leverage 22257.30%

11. Quality Control: American Resources Corporation passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Growth: 5.6

Quality: 7.7

Yield: 9.0

Momentum: 6.5

Volatility: 8.0

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SunCoke Energy

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Quality: 4.8

Yield: 9.0

Momentum: 4.0

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Value: 7.9

Growth: 3.3

Quality: 6.3

Yield: 5.0

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Ramaco Resources

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Quality: 3.2

Yield: 5.0

Momentum: 10.0

Volatility: 1.0

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American Resources

A-Score: 4.2/10

Value: 8.0

Growth: 3.2

Quality: 4.1

Yield: 0.0

Momentum: 10.0

Volatility: 0.0

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Hallador Energy

A-Score: 3.8/10

Value: 5.5

Growth: 1.4

Quality: 3.5

Yield: 0.0

Momentum: 10.0

Volatility: 2.7

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

3.0$

Current Price

3$

Potential

-0.00%

Expected Cash-Flows