American Resources Corporation (NASDAQ:AREC) said it has secured two new credit facilities giving it the ability to draw up to US$10 million initially.
Chief financial officer Kirk Taylor said the new funding arrangement was “testament to the strength of our company's financial position and balance sheet”.
The socially responsible Central Appalachia coal supplier said both facilities can be increased as production and the revenue base expands.
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For the inventory facility, American Resources is able to draw 80% of the inventory value at a cost of 2% for up to every 120 days outstanding.
For the accounts receivable facility, it is able to draw 90% of the accounts receivable value at an equivalent 8% annual percentage rate.
It is some of the lowest cost of capital finance the business has managed to secure since formation five years ago, investors were told.
“The attractiveness of these credit facilities is that they will result in no equity dilution to our shareholders, they are a low-cost form of capital, provide the company with additional flexibility as it ramps its production growth, and only incurs interest when, and if, we draw against them at our option,” said CFO Taylor.
“Being able to secure these credit financing facilities opens up additional opportunities to expand our production base at a time when we are seeing the increased demand for our infrastructure-related products and with steel prices on the rise. Adding this type of flexibility into our unique, innovative and low-cost operating model will allow us to maximize the return to our shareholders while also enabling us to further our mission of creating additional, sustainable and quality jobs in the communities in which we operate," he added.
Contact the author at ian.lyall@proactiveinvestors.com