Good day ladies and gentlemen and welcome to the American Resources Corporation’s First Quarter 2023 Conference Call. All lines have been placed on a listen-only mode and the floor will be open for questions and comments following the presentation. [Operator Instructions] Please note this conference is being recorded. At this time, it is my pleasure to turn the floor over to your host Mark LaVerghetta. Sir, the floor is yours.

Thank you and good afternoon everyone. On behalf of American Resources Corporation, I would like to welcome everyone to our first quarter 2023 conference call and business update. Even though we conducted our conference call update just about six weeks ago, we always welcome this opportunity to provide an update on our business and discuss our accomplishments and also discuss how we uniquely positioned within the markets we serve, for our American Carbon, American Metals, and our ReElement Technologies division. That being said, we will provide some incremental update since our last call and then get into a question-and-answers part of the call. Also on the call with me today is Mark Jensen, American Resources’ Chairman and CEO; and Kirk Taylor, our Chief Financial Officer. Now before we kick it off, I'd like to remind everyone of our normal cautionary statement. Certain statements discussed on today’s call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks, uncertainties, and other factors, which could cause actual results to differ materially from the results discussed in the forward-looking statements. When considering forward-looking statements, you should keep in mind the risk factors, uncertainties, and other cautionary statements, which are laid out in our press releases and SEC filings. We also do not undertake any obligation to update or revise any forward-looking statement whether as a result of new information, future events, or otherwise. Lastly, for anyone wanting to ask a question today, I believe you'll need to dial-in by phone to get into the queue. We are going start today with a few comments from Kirk Taylor. Kirk?

Thank you, Mark and thank you everyone for spending a couple minutes here with us this afternoon. First, I'll start with some financial highlights. The first several months of 2023 have continued to showcase our focus and execution, solidifying our strategic positioning within our addressable markets, which we believe position our company for long-term value creation. As Mark just mentioned, we recently just had our year-end earnings call, where I commented on our execution and highlighted our accomplishments on all fronts. Today, I'll focus on some comments pertaining to certain value-creating initiatives that we have had in the works. First, I'll update on our tax net bond offering in Wyoming County, West Virginia. As previously mentioned, we are positioning our Wyoming County coal mining complex as a driver of incremental growth with the federally and state commitment in the form of $4.9 million in new market tax credits as well as a $45 million volume cap allocation from the state of West Virginia for private activity, solid waste disposal facility revenue bonds. These non-dilutive capital sources will fund the expansion and technological improvements to the existing processing facility, the development of two underground deep mines, as well as the new construction of a critical mineral processing facility utilizing our pathogen electrolysis technology to capture certain elements such as lithium and cobalt from our carbon waste streams before the landfill. We believe this will be the first fully-integrated mining and critical element processing facility in the United States, a showcase for everybody to learn from. This issuance was delayed due to the aggressive interest rate policy enacted by the Federal Reserve to combat multi-decade high inflation. With the recent stabilization of interest rates, our advisers feel that the municipal of markets have reopened and again, are receptive to our title project.…

Thanks Kirk. As we frequently state, our ReElement Technologies division represents an incredibly exciting and very strategic opportunity for us. As we continue to strategically position ourselves in the global supply chain for critical minerals, I think it is important to reiterate and emphasize our position within that market. ReElement is an innovative and advanced refining platform for critical minerals. While we believe we are a high-value component within the recycling value chain, we are not solely a recycling platform. However, we do believe our position in the recycling market and the sustainable supply of critical minerals is highly important as we move towards a highly mineral-dependent electrified economy. We also believe our refining methods hold an important position in the global value chain of processing and purifying a variety of feedstocks, including natural ores such as lithium. Additionally, in regards to our strategic positioning, it is worth noting that our innovative and advanced refining technology holds a critically important role for our domestic supply chain of critical minerals and our domestic manufacturing of goods here in the United States. China's global dominance of critical minerals has a lot to do with their ability to refine products, both natural ores and in the recycling process, where they use conventional and environmentally and socially-toxic refining methods. The low environmental and social standards allow China to produce these minerals at a lower capital cost. We believe that deploying these conventional refining methods here in the United States market is going to be very challenging. As we put together and developed our IP, we set out to solve the biggest bottleneck in the supply chain, which we see as economically-competitive refining, which is highly flexible to a variety of feedstocks and very environmentally safe. Our innovative and advanced refining methods using chromatographic separation…

Thanks Mark. First, I'd like to applaud our team for the efforts this quarter and the positioning of our divisions to take advantage of the key markets in which we're focusing on, while also leveraging our processing and refining technologies, the new exciting markets. At no point in history as our business has been better positioned to serve the markets which we operate in and to capitalize on a broad asset base, our talent and our ability to produce, process, and refine raw materials that are in very high demand. Given our execution, we are extremely excited about the opportunities for all of our entities, but also believe that the enterprise value as a whole is currently at a substantial discount relative to the sum of the parts or comparable to peer valuation. I'd like to dive into it briefly on each division here. American Carbon start, currently, carbon markets are still in a very strong position. There's been recently changes within the market and shifts within geographic demands of China and Australia opening back up of relations and which shifts our markets back to India, Turkey, Croatia, and the markets which we've historically serviced as well as the domestic marketplace. We believe that market will remain strong. There's very little capital being invested into the metallurgical space. Supply growth has been decreasing, while at the same point, we've seen a strong demand, including additional steel mills domestically being opened up. We do remain steadfast and focused on monetizing our carbon assets, whether through operating them ourselves, joint vendors, leases, or asset sales. With the primary focus on the operational side being our McCoy Elkhorn complex and our Wyoming County complex. Both McCoy and Wyoming County represent very high-quality metallurgical carbon products that can be operated in a very low…

Thank you. [Operator Instructions] And our first question comes from Heiko Ihle from H.C. Wainwright. Please go ahead.

Hey there. Thanks for taking my questions.

Yes, absolutely. Thanks for joining.

Gladly. Multiples in the green energy space are, for obvious reasons, pretty high right now, obviously, higher than your legacy business. You got the SpinCo coming up. But I mean, how can one move the firm to get more of a clean tech multiple across the board? Or phrased differently, are you concerned with the multiple you'll get in the market for legacy co once the spin-off is completed. Because I mean, overall, it feels like you're doing a good job positioning the company for this, but the overall company thus far hasn't really had all the impact they would have expected to see.

Yes, that's a great question. And I think I touched on that briefly, but maybe didn't make it as clear, just trying to get through the call in a timely manner for all of our listeners. But one, ReElement is in of and we believe that will drive a significant amount of value based on the feedback we've had from large mutual funds that have an interest in investing post-spin-off in the open market of ReElement. I will say from driving value, including the Wyoming County complex, we will not only be just a metallurgical carbon producer there, but we'll be a rare earth concentrator and producer of rare earth elements in a very, very low-cost, fully-integrated process. But also including some of the regions of Africa that we've been working on and I've personally visited and had the opportunity to evaluate and analyze the mines over there, we are in conversations to not only in Africa, but also domestically, expand our mining base as well. Take advantage of the skill set that our team has in terms of heavy media processing, froth flotation, dense media processing to leverage that skill set, not only just in the core industry or the carbon industry, but also across the critical mineral opportunities as well. Some of the individuals Carlos Thompson have decades of experience in the mining sector and there's no reason we shouldn't be exploring that opportunity within the American Resources umbrella, the mining division to capitalize and utilize that skill set that we're being asked to be a part of today. So, I do think that -- I think people are mistaken in terms of what happened post-ReElement spin-off. I believe American Resources proper, the Mining division, has a significant amount of opportunity in front of it and being approached with a significant amount of opportunity to utilize our processing skill set, our technology skill set to drive value at the core business post-ReElement spin-off.

Yes, that makes sense. And then just one more, please. Can you walk us through the quarter-by-quarter of expectations for free cash flow from McCoy Elkhorn, please?

Yes, absolutely. So, the -- we have been looking at where the most value-added component of our business could be. And as you've seen over the last year, we've adjusted and pivoted based on natural disasters and other events to monetize certain assets and focus on cash flow. McCoy is a unique very-- McCoy in Wyoming, what we -- why we're focusing on those two from an operational perspective is, one, they're very low-cost operator and two, they're very high quality. And we're starting to see that shift transition of the geographic distribution of carbon across the world. And as that plays out, we think we're in a very good position to generate substantial cash flow from those divisions, while also monetizing the Deane complex, either continue leasing it or we've been approached by a few different parties on selling it. We believe there's a substantial amount of cash value there that could then be redeployed into other divisions and/or the current division and/or just put on the balance sheet. But that's why we're focusing on those two complexes because of the cost structure and because of the ability to generate cash flow from -- make them a steady, stable business, while we evaluate some of these other opportunities that are being presented to us. They don't need a lot of -- at this point. They don't need CapEx. McCoy is set up. We spent the money there. Carlos, the Head of that division has done an absolutely phenomenal job of lowering cost and reducing environmental liability. I think we just got another $1.3 million release. Debt-wise, we paid off $2 million of a loan that one of our customers gave us to restart that mine. And we also had our $9 million of debt -- long-standing debt on our balance sheet converted, which the investor wanted to. Ultimately, probably wanted to benefit from the ReElement spin-off and the AMAO process that we've done. So, it's a very streamlined low-cost operation now, and we'll be able to take advantage of the current market environment.

Very good. Well, that’s it for me. Thank you very much. I'll get back in queue.

Thanks. Appreciate it.

Thank you. Our next question is from Mark Stone. Please go ahead.

Yes, commenting on the current cash. I see from end of Q4 last year to the end of Q1, it went from over $8.8 million down to under $300,000. So, in light of that, can you comment on the cash projections for Q2, Q3, et cetera? And also how that's impacted by the timing of the ReElement spinoff?

Yes, I mean, the cash balance has nothing to do with the ReElement spinoff, but the cash balance -- the timing of how you file quarterly reports, I think the week after we brought in around $3.5 million of cash, still had about $5 million of inventory of at current market, not production cost, but at current market value. So, from a cash position, it's just the timing of how quarterly reports are filed. But ultimately, it's -- we also have about $2.5 million of equipment that has been contracted to sell. And we'll continue to monetize the equipment from the Perry County complex, I mean, which either to put on the cash balance sheet or continue to grow the business with it. But it's -- we don't need to raise equity capital. That's not the focus of the business. The goal of the ReElement spin-off is to unlock value. We believe that today, the investor base that may want to invest in the mining division, which will -- is currently carbon, but in advanced discussions to expand beyond carbon are different than the investors that want to invest in real and our focus is to unlock that value. We establish the strategic committee to do so. We're pushing that as quickly as we possibly can. We are being advised by a Board and investment bank in the process -- in part of that process. And ultimately, our goal is to get that done for the investors because the Board and the strategic committee believe that will unlock the most amount of value for the investors and the Board. We also believe getting that it will create substantial value. Currently, AMAO trades at around $10 a share. I believe we have approximately American Resources about 1.5 million shares and net back. So, about $15 million in value at current market, and we hope to get that approved through the SEC as quickly as we possibly can, which will create another additional value for the investors. One area that we didn't talk about is also Nova Sierra, which is progressing been awarded the Air Force contract in -- through its partnership with [Indiscernible] Defense also in another process of being awarded another contract, we hopefully very shortly. And then finalizing its audit per the hiring of its new CFO with the goal of filing that S-1 and advancing that process forward as well to unlock additional value for the shareholders. Basically, creating a more--

Can you tell me which side American Metals are going to with the ReElement spin-off?

Yes, that's a good question. The strategic committee and the Board is currently evaluating that. American Metals is in the final stages of procuring its first two shredding lines, one for batteries and one for magnets. Currently, it will be held in the American Resources -- under the American Resources' umbrella. But post the spin-off of ReElement, we'll evaluate that as well and we may end up spinning that division off into its own company as well with the separate team to run that.

Does that need to be addressed in the S-1 filing?

In the -- it would have to be a separate Form 10 filing if we spin it off, but it -- yes. So, right now, as of today, it's being at the American Resources level post the ReElement spin-off.

All right. Thank you.

And there are no further questions at this time.

Excellent. Well, I want I'd like to thank all of you for joining. We appreciate your time. We know you -- we took time out of your day for you to join us and listen to us, and we don't take that lightly. We're excited about what we have in front of us. We're excited about the opportunity for all of our divisions. We -- our focus is on continually driving value as management and the largest shareholders of the company. We're dead set on creating that value across all of our platforms, and we're excited about how the market environment is currently playing out and the -- we have in front of us.

And thank you. This does conclude today's conference. We thank you for your participation. You may disconnect your lines at this time and have a great day.