American Resources Corporation (NASDAQ:AREC) has announced that its subsidiary American Carbon Corporation has commissioned its McCoy Elkhorn processing facilities in Pike County, Kentucky for internal processing, third-party processing, and carbon loading businesses.
The company said commissioning of the processing plant will enable additional growth opportunities and enhance margins from existing production.
"We are excited to be in an advantageous position to commence operation at our McCoy Elkhorn processing and loading facilities, which are state-of-the-art facilities located in the heart of the metallurgical coal region of eastern Kentucky,” American Carbon Corporation president Tarlis Thompson said in a statement. “Due to the strong commitment from our team to get these facilities back operating, we are pleased to have the recommissioning of these plants ahead of schedule and under budget.”
READ: American Resources says American Carbon subsidiary expands production at Carnegie 2 metallurgical carbon mine
The company noted that the McCoy Elkhorn processing complex in Pike County, Kentucky has two onsite, state-of-the-art processing facilities - one 500 tons per hour and one 800 tons per hour - as well as a unit train rail loadout on the CSX railway and two extensive refuse impoundments that have significant life and storage capacity.
The McCoy Elkhorn complex is in the heart of the company's existing and potential reserve base, containing both currently operating mines and several permitted mines that can be restarted at a relatively low-cost but contain high production capacity for many years to come.
The company said it is currently producing at its Carnegie 1 and 2 mines and previously announced the planned expansion around its McCoy Elkhorn complex in the coming weeks due to recent investment in structural upgrades to the mines.
Additionally, it said it is also working on commencing production at several regional mines that have a logistical advantage and can be brought into production this year at a relatively low cost.
Given its recent strong production, the company said American Carbon has been shipping production to its customer to fulfill existing orders while also building a stockpile of inventory at its McCoy complex to immediately begin processing.
Third-party processing and loading
Furthermore, in addition to American Carbon's own production, the company said it has been approached by third parties seeking the use of the McCoy Elkhorn complex for their processing and loading needs. It said this additional business will enable it to significantly expand its processing revenue with minimal additional capital expenditures beyond what has already been incurred as part of this startup, thereby further increasing the value of this complex to the company and the surrounding region.
Third-party processing can come in the form of tolling arrangements for both processing carbon as well as loading carbon through its state-of-the-art loadout facilities on either the CSX railway or truck, both present on-site, it added.
“Given the market opportunity and our planned expansion from the McCoy complex, we have been working on the restart of our internal processing capacity at this location,” Thompson added. “Reopening this complex enables us to expand our production capabilities and take advantage of attractive specialty carbon contracts that are available in the market, while also buying and processing third-party carbon for additional revenue growth.”
American Resources has a growing portfolio of assets in the Central Appalachian basin of eastern Kentucky and southern West Virginia, where premium quality metallurgical carbon and rare earth mineral deposits are concentrated.
Contact the author at stephen.gunnion@proactiveinvestors.com