American Resources Corporation (NASDAQ:AREC) revealed that it has started initial production ahead of schedule at its greenfield Carnegie 2 metallurgical carbon operation in Pike County, Kentucky.
The Fishers, Indiana-based supplier of raw materials to the rapidly growing global infrastructure market said after the mine’s initial production, it will increase the output at Carnegie 2 over the next several months to maximize production, revenue, and cash flow.
In a statement, American Resources CEO Mark Jensen said: “We are proud of our team, led by Tarlis Thompson, to get the Carnegie 2 mine into production ahead of schedule and within budget. Supply chain issues and inflationary pressures continue to present challenges for many industries, however, our extensive asset base and the efforts of our team have enabled us to utilize internal resources to get this mine into a great position to produce.”
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He added: “Our McCoy Elkhorn complex will be an area of growth for our business given the quality of the carbon and the ability to bring on a meaningful amount of incremental new mine production, or expand our existing mines, to feed the global growth in the steel industry. Our focus is to bring a low-cost, low-risk, and high-quality supply of metallurgical carbon to the market as we believe there are a substantial number of high-cost, end-of-life mines that will decline over the next five years.”
Jensen noted that the company is in “a great position to feed the global demand from these new opportunities yet maintain a low environmental impact” thanks to its continued land reclamation efforts to further reduce the overall cost for the business.
According to the company, the Carnegie 2 mine is a new operation that has “20+ years of low-cost, safe mining” due to no old works and good mining conditions. It produces high-volume metallurgical carbon from the same carbon seam as the company’s Carnegie 1 mine. The mine plan utilizes a room and pillar mining system, and Joy 14CM15 continuous miners with shuttle cars. The mine is set up to run one working section until such time it can expand to two working sections accessed from one mining portal to optimize the mine’s efficiency and asset base.
The company explained that high volume metallurgical carbon is not burned for energy use. Instead, specific characteristics allow it to be blended with iron to make new steel. This specific quality of carbon is in high demand in the current market environment given many producers in the US are producing from older mines that are expensive to operate and coming to end-of-life, noted the company.
American Resources is focused on productive mine plans and operations that are built to be low cost and range from 20 to 40+ years of mine life. After initial development production and based on current index pricing, Carnegie 2 is expected to add around $25 to $35 million in additional annual revenue to the company with attractive margins, it said.
The company is focused on the extraction and processing of metallurgical carbon, a key ingredient in steelmaking, rare earth minerals for the electrification market, and reprocessed metal to be recycled. 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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