American Resources Corporation (NASDAQ:AREC) announced that it has signed a carbon offtake agreement along with a non-dilutive financial commitment of $2.5 million with a long-standing customer and premier supplier of metallurgical carbon to the global steel and alloy metal marketplace, Integrity Coal Sales, to start its Carnegie 2 mine.
The company said this incremental production will enable it to benefit from the current strength in the high volume metallurgical carbon market, aligning the risk and return for both Integrity and American Resources.
"Integrity Coal Sales has been a strong customer and partner of ours for a number of years, and we are focused on working together for everyone's success,” CEO Mark Jensen said in a statement. “Together, we're developing long term opportunities to expand low-cost metallurgical carbon production to feed global steel demand for the infrastructure market.”
High volume metallurgical carbon is not burned for energy use, American Resources explained. Instead, specific characteristics allow it to be blended with iron to make new steel. This quality of product is in high demand in the current market environment given many of the producers in the US are producing from old mines that are expensive to operate and coming to end-of-life.
American Resources said it is focused on mine plans and operations that are built to be low cost once ramped ranging from 20-40+ years while also making them safer and more productive operations. Post-initial production ramp Carnegie 2 is anticipating adding $25-$35 million in additional yearly revenue to the company's top line with attractive margins, it added.
“Finalizing the development of the Carnegie 2 mine coupled with the very strong market for high volume metallurgical carbon in the international markets provides a very attractive return on capital for our shareholders,” Jensen continued. “This will further expand our production out of the McCoy Elkhorn complex while we are also expanding our Carnegie 1 mine production capabilities”.
The company said it continues to focus on running efficient and streamlined operations, being a new-aged supplier of raw materials to the infrastructure and electrification marketplace in the most sustainable of ways, while also helping the world achieve its goals of carbon neutrality.
By operating with low or no legacy costs and having one of the largest and most innovative growth pipelines in the industry, it said it works to maximize value for its investors by positioning its large asset base to best fit a new-aged economy while being able to scale its operations to meet the growth of the markets it serves.
American Resources is a next-generation, environmentally and socially responsible supplier of high-quality raw materials to the new infrastructure market. It has a growing portfolio of operations located 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