American Resources Corporation (NASDAQ:AREC) has unveiled a strategic partnership between its wholly-owned subsidiary, American Rare Earth LLC, and The Heritage Group’s venture capital investment arm HG Ventures LLC.
Following a Membership Purchase Interest agreement, Heritage will receive a 7.5% ownership stake in American Rare Earth with American Resources retaining ownership of 92.5% of the equity interest. Heritage has been granted an option to buy up to $50 million of American Rare Earth's equity interest at a $300 million, pre-money valuation, said the company.
HG Ventures invests and partners up with innovative, high-growth companies that support a sustainable future in materials, infrastructure, and environmental solutions. In this case, it will be expediting the path for American Rare Earth becoming the first and lowest-cost producer of domestically-sourced, purified and sustainable battery and magnet metals in the US.
In a statement, American Resources CEO Mark Jensen said: "As we continue to execute on our vision of redefining how critical and rare earth elements are sourced, processed, and purified by focusing on a sustainable and circular supply chain, we’ve been very selective with our prospective partners. We are thrilled to be partnering with Heritage given their unique position, expertise, network and a shared vision on how we can collaboratively bring impactful solutions to the domestic supply of battery and magnet metals.”
“As we are hitting key metrics to bring our technologies into commercial production in 2022, bringing in a partner that can help expedite commercial success is a game changer for the scalable growth of our rare earth and battery metals division,” he added.
The Heritage Group brings nearly a century of experience, and relationships in the transportation infrastructure, materials, environmental services, specialty chemical industries to American Rare Earth. It has over 30 companies with 170 worldwide locations and some 5,000 employees.
"We look forward to partnering with American Rare Earth to expand production of rare earth elements and critical metals by recycling electric motors, batteries and other e-waste, which will help address US supply chain and sustainability challenges," said Jonathan Schalliol, a director at HG Ventures. "As demand for batteries and smart electronics soars, this partnership aims to help drive growth in the US raw materials market."
American Rare Earths' first purification facility is likely to be operational in the first half of 2022.
Heritage and American Rare Earth have entered into a collaboration agreement which includes but is not limited to:
- Collaboration to accelerate the growth and commercialization of American Rare Earth's feedstock supply and to provide Heritage with additional products and services to market;
- Enhance the sourcing of feedstocks, such as end-of-life permanent magnets and batteries or battery materials, for American Rare Earth's processing and purification business;
- Further the buildout of American Rare Earth's downstream sales partners for the sale of critical and rare earth metals to government and industry partners for the production of new products and applications;
- Leverage Heritage and its affiliates' personnel, expertise, and equipment such as R&D and lab equipment to possibly assist American Rare Earth in the further development of its business; and
- Provide Heritage and its affiliates the ability to market American Rare Earth’s technologies and patents.
American Resources has a growing portfolio of operations in the Central Appalachian basin of eastern Kentucky and southwest Virginia where premium quality metallurgical carbon and rare earth mineral deposits are concentrated.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
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