Greetings. And welcome to the American Resources Corporation Third Quarter 2024 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. At this time, I would like to turn the call over to Mark LaVerghetta, Executive Vice President. Please go ahead, Mark.

Thank you. Good afternoon, everyone. On behalf of American Resources Corporation, I'd like to welcome everyone to our third quarter of 2024 conference call and business update. We always welcome these opportunities to provide an update on our business and discuss our accomplishments we've made over the past several months and how we're uniquely positioned within the markets that we serve for our American Infrastructure, American Metals and ReElement Technologies divisions. On the call today, along with myself, is Mark Jensen, our Chairman and CEO, and Tom Sauve, our President. 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 subjects to risks, uncertainties, and other factors, which could cause actual results to differ materially from the results discussed in the forward-looking statement. 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 on today's call, I believe you'll need to dial in by phone to get into the queue. With that, we're going to slightly modify the cadence of today's call. Mark Jensen will deliver a prepared letter to our shareholders that will also be released shortly this afternoon. Then we'll get into question and answers. So with that, I'd like to now turn the call over to Mark Jensen, our Chairman and CEO.

Thanks, Mark. And I want to thank you all for joining. The plan for the call, as Mark mentioned, is going to be a slightly different approach to – and with the focus of providing an update on the current progress of the transformation of our business, as well as the history of where we started. When it comes to the energy transition, we are confident we are ahead of the curve. We recently wrote a shareholder letter titled, Building the Only Rare Earth and Critical Mineral Refining Platform from the Depths of the Metallurgical Carbon Business, which we define as a true energy transition. First, I want to extend my heartfelt thanks to all our shareholders and our team members. Recently, I reconnected with a mentor, friend, and someone I consider family – a person of great wisdom who has overcome immense challenges and always emerged stronger. He shared many insights, but one stood out: the importance of expressing empathy and acknowledging the struggles of our shareholders in challenging markets. This resonates deeply with me and our team. We understand the frustration and pain that can come with declining stock prices. We recognize that people invest in our company for its potential, and it is our responsibility to deliver. Our focus as a team has been to stay committed, work harder, push ourselves, and dig deeper to drive business success, which we believe will ultimately be reflected in market value. While some of these efforts may not be visible externally and cannot be shared on a daily basis, I want to assure you that we are fully committed and confident in our trajectory. We feel the same urgency for our execution and we're dedicated to achieving the fundamental value that our shareholders deserve. Our team is ready to go…

[Operator Instructions]. Our first question is from Kyle Gallagher with Merrill Lynch.

Just wanted to kind of circle back in a previous conference call on the ReElement side. I'd asked you about some rare earth sales. And you said you had one customer that was willing to take everything that you could produce, but you didn't want to go down that path. I'm just kind of curious if you could give a color as to why and give some thoughts or some commentary on what you see like the ramp in revenue or ReElement looking like – I know you got the facility in Noblesville where you're next to the kids' gymnasium that's producing some stuff, can you kind of give some color on how that's going and how that process is ramping and from a sales perspective there? Because, to my mind from the stock, that's kind of the real sizzle in the story.

One, we have been building a diversified customer base at ReElement, both for our lithium products and battery materials, as well as our rare earth oxides. We do have some exciting news coming out over the next few weeks about partners and some pretty substantial companies that we're working with within the space on magnet manufacturing, as well as some battery materials customers. Noblesville was built to get our products qualified with customers. And so, we produce today lithium carbonate on a daily basis, and we produce rare earth oxides on a daily basis. And then we ship those products to customers to be qualified. The battery market – getting qualified for lithium carbonate takes about a year. And so, we've been through that process. We're currently producing product for one of our customers out of there right now. In the quarter, I think we booked about $150,000 in revenue from ReElement. Relatively small. It's a relatively small facility with pretty low cost. But we've been proven with that – we've been proven – we've had visitors in that facility on a weekly basis over the last six months, including next week. We have a number of substantial partners coming through, including members of the US government on the defense side. But the scale of our revenue growth – we will continue out of the Noblesville facility, but most importantly, it comes out of our Marion facility. Marion was a complete rehab building that we acquired about over a year ago. And we finished that renovations, we're installing all the electrical in there now, 113,000 square feet has received temporary occupancy. And we are starting to move equipment up to Marion with the goal of scaling up our Marion prep reprocessing to feed the Noblesville facility until we get processing up in Marion. But we are making substantial progress on that. There's a couple customers coming in that we're negotiating with right now that could enable us to scale substantially faster just given their timelines of meeting product. But if you look at the market, we're focused on making sure we spend our money in the appropriate way versus just getting ahead of our skis. And thankfully, the demand we're seeing from very large customers, because we're one of the few players that can actually produce magnet and battery grade materials today, is substantial. And we'll start to showcase that large revenue growth in 2025 as we continue to scale up over the next few months.

Do you feel like you're at capacity as far as what you can produce in Noblesville right now, and that really to get any sort of meaningful scale, it's going to have to move to Marion?

We're going to have to move pre-processing to Marion. From a chromatographic separation, which is really the heart of what we do, from separation purification, we have the ability to expand, really, honestly, even a 7,000 square foot facility, we can produce a lot of product on the separation purification step. It's really the pre-processing that we're moving to Marion to start. And that'll enable us to grow. And that can happen pretty quickly. We had to get over the electrical and water installed, which we've done. So getting that pre-processing step moved to Marion will enable us to continue to grow production as we get full scale production up in Marion.

Do you have all of the columns and the production trains in Marion ready to go, so when that preprocessing – or excuse me, I'm getting them confused, but in Noblesville, so when you get the preprocessing done in Marion, it's ready to rock and roll, so to say?

Yeah. We have columns for both rare earths oxides and lithium carbonate in Noblesville that we can continue to push volumes through. The good thing about our technology is that the separation and purification component is really not the most expensive component of our process. And scaling that is – building that out is pretty easy in the relative nature of – and solvent extraction, that's the hardest part and the most expensive part for us. That's actually one of the lowest cost components of our process. But as we continue to build out pre-processing in Marion, we can put a lot more volume through our columns in Noblesville as we build out columns for Noblesville as well. If you look at it, we haven't spent – we're very conscious of how we spend money because we're not going to dilute shareholders. We've said it for over a year now, or probably two, three years now. And so, we are working with two large investment banks. HilltopSecurities who we've worked with in the past, we publicly shared, and then a bulge bracket bank that we are doing a bond offering for our Marion facility. That's launching very quickly. They're doing a phenomenal job with the goal of closing that expeditiously. And our team has already been scoping equipment that we can order very, very quickly. None of the items in our process are long-lead, where if you look at solvent or trying to buy stuff from Chinese manufacturers, that takes forever. Our products are made here in America and our equipment's made here in America, so we can scale very, very quickly as we close this bond offering, let alone the convertible debt round that we've just closed part of it.

So if I'm understanding you correctly, forgive me, I may need another cup of coffee here, but I just want to make sure I understand you correctly. What you're saying effectively is that, right now, one of the main bottlenecks is pre-processing. So the existing columns and production trains that you have in Noblesville could handle more throughput. It's just you don't have the pre-processing capacity right now to max out the throughput that you currently have online. Am I kind of reading that correctly?

Yep. And we can expand. Adding additional columns, we can continue to add to as well, but that's a weekly thing, not a year thing.

My last question is just, can you help us understand – and I think as a shareholder base, and especially if you delve into any of the online forums, right, that can be an interesting space to go to. But can you maybe do some myth busting here on, like, what would be some of your partner's main objections to having their name disclosed for being in like a pilot program or some sort of joint venture with you. Maybe if you just shine a little light on that, I think that would help quite a bit.

I would say, so the auto OEM we work with is – you can imagine it's quite volatile in the auto space through union negotiations as well as adjustments in volume production of the auto industry in general. They have not let anybody use their name in the last couple of years that I know of. And so, it's more of just them wanting to focus on their business and not be out there having third parties mention their name as they're trying to also navigate the volatility in the marketplace. We have some nice partners that we should be rolling out here in the next couple weeks that we've signed partnerships with, that we will be able to disclose here shortly. If you look at this industry, it's quite volatile right now. And a lot of people – I'm not saying our partners, but a lot of people in the industry got way ahead of their skis and tried to build something that wasn't proven yet where we are doing quite the opposite. We're actually proving and scaling our technology on a daily basis. And a lot of people are always trying to attract government money. We're not overly inclined to do that. We think it would slow us down. And so, there's wanting to pretend they can do the whole thing in their own way when they can. I think you'll see that come out and you're starting to see it already in the public domain, but then on the private domain, you're going to see that as well. So we work with a lot of groups behind the scenes right now. And powered by ReElement, we'll continue to work with a lot of groups to help. Other players in the industry, but also enable us to generate revenues where they CapEx our equipment. There's a lot of movement within the space right now and a lot of volatility in the space right now, which – and from the OEM's perspective, they just – they don't want to be out there in front of it.

Our next question is from Michael Alicastro [ph] with Paradigm Investors.

Couple of them actually. If you mentioned this already, I apologize, but do you have a target date for spinning off [indiscernible], and will it be public from the beginning?

For spinning off ReElement or spinning off American Infrastructure?

Well, American Re, I thought, was what you'd be spinning off, but American Infrastructure is also changing the name.

So American Resources is the holding company. We're spinning off ReElement Technologies.

ReElement is what I was thinking of today.

Yeah. So Re-element is – the record date is, I believe it's December 30th – December 31st and then the record date is February 15th. That was in the press release this morning and so that has been determined. Obviously, the goal is to be in a liquid security.

So you plan on being public from day one?

We intend to. We're working through the audits and all that good stuff as we speak. We switched auditors, so we had to re-audit all of our subs.

Going forward, American Re will be the holding company. Revenue will be generated by the other companies under its umbrella as far as coal goes. It's still in the coal business.

It still owns roughly 80% of American Infrastructure, which is our coal business. The goal is to spin that off and set the platform. American Resources owns a division of each of these entities post-distribution, but the goal is for American Infrastructure to continue to expand within the commodity marketplace and within the critical mineral space from more on the mining side and investment side into feedstock partners that can feed into Re-Element. And we have a team member that will drop down as CEO of American Resources when I go to be CEO of Re-Element Technologies and I'll stay as chairman of American Resources.

And last question then. For 2025, do you see ReElement starting to accelerate, maybe even have a hockey stick look to it when it comes to revenue?

We do. That's the beauty of – if you look at our technology at ReElement, if we were going to build a greenfield facility, over half of our CapEx would be in the building. Thankfully, we have a fully renovated building with all the infrastructure in place now. So now it's just about ordering equipment, which our team's working on a daily basis. The ability to drive value – I think we're the only player in the space that can produce heavy rare earth oxides today in the United States, let alone be able to do that in concert with producing battery materials in the same facility. There's nobody else that can do that. I don't think there's anybody in China that does that. So we're super excited about getting this equipment into Marion now that it's renovated and ready to go. And our team – the Marion team's actually been training in our Noblesville facility. So we do believe this could be a substantial growth. Obviously, it's about getting the equipment, getting the equipment installed and ramping up production as aggressively as we possibly can. And we're confident that in 2025 we're going to see – it'll be probably the middle of the later 2025 as we get Marion fully producing, let alone the initial pre-processing that we're doing there as early as this year that we can continue to expand production, but getting Marion fully producing will generate a substantial revenue.

Our next question is from Steve Segal with KBB Asset Management.

I was just wondering, you probably kind of answered this already, but is there anything that would be stopping getting Marion going more as far as the financing or the feedstock? And also, if everything goes according to plan, do you think you'll be generating the potential revenue or good revenue like sometime in the third quarter next year?

We feel extremely good about it. One, the feedstock has been building dramatically. Our sales teams are doing a great job for sourcing feedstock partners. And so, now it's just about getting the equipment and getting it installed, especially now that we've got some initial closings on the convertible debt round, as well as the bond offering that we're doing that really lights the fire under the production. You need equipment to be able to produce product. And our equipment's about a third of the cost of a traditional [indiscernible] and extraction facility, but it still costs money. And so, we want to use non-dilutive financing to do that, which is what we're doing. And now, it's about getting all that equipment installed and continually ramping up production between the two facilities and then moving all that production to Marion, which will show substantial growth. And third quarter of next year is – I feel highly confident in that.

And also, just curious how you feel about – I know you see a lot of power deals for the hyperscalers to use clean energy, Amazon using nuclear, all this stuff. Do you think eventually you can play that card to get more business into ReElement because your process does not involve burning the environment as much as the chemicals does?

[indiscernible] is not good for the economy, right? You still have some companies trying to raise money and become hydro-net recyclers in the US.

Yeah, hydromet uses a lot of chemical. It's not very cost effective. It's not versatile and the recovery rates of the materials are quite low. We're recovering greater than 95% of the material that goes into our facilities. The nice thing about our technology is it's chemical light, which makes it environmentally sensitive, which also makes it cost effective. People care about those things, but really people care about cost. And when it comes down to it, we've got to produce an affordable product that people can actually buy. But no hydromet hydromet facility in the United States. And honestly, I would say throughout the world can compete against our cost structure. Now we got to get our facilities built. That's the focus. And that will drive production. Now the demand side of what we're seeing is, one, it gets processed in ReElement facilities or it gets processed in China or Korea. And as you start to see this domestic supply chain, and we think the new administration coming in is going to be laser focused on national security supply chain, that's a great thing for us, and it's a great thing for our country. So we're extremely excited about the evolution of this marketplace and what we can bring to the table in terms of producing rare earths, as well as critical minerals for the military, but also for our commercial customers that need a product that they can afford.

It's Mark LaVerghetta. Just to add to that too, and Mark mentioned it in some of the prepared comments on the letter when we talk about the challenges around traditional solvent or hydro-based refining, that'll continue to manifest and those challenges will manifest over the next five years. And really, what you and the rest of our shareholder base, it's important to continue to reiterate and understand is the powered by Re-Element solution that we have is, other participants, meaning other processors, other refiners, other recyclers, other miners in the market that can extract, can aggregate material, but don't have that final stage separation purification for finding. We can efficiently be deployed into their flow sheets to basically achieve their objectives, achieve their goals to produce high quality, high purity products for the downstream manufacturing here as it continues to develop in North America.

Our next question is from Michael Samuels with Berthel Fisher.

Just two quick questions. When do you foresee the Novusterra and the American Carbon going public? First part of next year? I know originally you were looking at the end of this year, but I was just curious on that.

The Novusterra has got the first S-1 approved. I met with the team yesterday on that. They're eminently within the next few weeks, is what I've been told is getting ready to try to get the next S-1 approved. The focus was initially to get it listed. Now the focus is to get it listed on to a national exchange. One, they've had great success with their military-based partners and think there's a lot of growth potential on that business line, and I would agree. So they've been working on the selling shareholder S-1 with a underwriter to list it onto a national exchange. That's taken a little bit of extra time due to that process versus just doing a self-directed under listing. One, the SEC just approved their selling shareholder S-1, which enables it to qualify for the NASDAQ or the New York. And now working on the new issuance one will enable it to – with the underwriter will enable it to set the valuation for the senior exchange listing. And that just took a little bit extra time, but we're confident in what they're doing and where they're going and their process. And obviously, as I wish, I wish everything would go faster.

Same with American Carbon?

American Carbon, yes. So American Carbon, we distributed a part of it. We're actually talking to a few underwriters. We've been approached by a couple of different SPACs. I think we're leaning away from the SPAC route. Just honestly, it's kind of a broken market right now. And so, working with an underwriter, we actually had a couple of investors that proposed offerings to us. And so, we're evaluating those as we speak. We also had to re-audit all of our subs. So we are pursuing litigation against our previous auditor because it's cost us money to re-audit all the subsidiaries as well as obviously our holding company, which we've done. But it's slowed us down substantially. We had an approved Form 10 – or one comment away from the approved Form 10 for listing American Carbon, which is now American Infrastructure before our auditor got disbarred because they took on like 300 clients without telling us, which is frustrating. And so, we are, one, we're pursuing damages for that, but then two, it's slowed the process down because we had to re-audit all of these subs that we were spinning out again, which is frustrating. And thanks to the hard work of our financial team, we're getting that done. But, yeah, the goal is in the early part of next year to get that done. And we're still being approached by people with obviously – the Trump administration doesn't hurt the fact that we are a metallurgical carbon producer in the United States. And now we've had interest from investors and potential acquirers. Again, we'll see where those go.

The second question is I didn't hear anything today about Africa. Are we still pursuing Africa?

Yeah, absolutely. We had – a sovereign wealth fund from one of the African nations was in our facilities last week, was presenting at Purdue University last week. Ben Kincaid leading up the charge. We also have an individual in Africa that is looking to join the team that'll be in our facilities next week. We bring a very, very valuable technology to Africa. We're the only players that can deploy technology locally. China won't do it. That gives the United States an ability to compete head to head, is that we're bringing something to the table versus just throwing money at problems, which is what China does. We are able to bring a technology to enable local refining and creating jobs in a middle class within Africa. So we are absolutely 100% focused on that. We have some investors that are looking at the ReElement Africa division in our facilities here in the next couple of weeks as well.

Our next question is from Mark Stone, private investor.

What portion of the ReElement distribution is going to be retained by American Resources, if any, after the special dividend?

Yeah, the target amount is 19%. So, every investor will get their proportional share of percentage ownership and what they own in American Resources in ReElement. But American Resources is targeted to retain 19% of ReElement.

All right, that answers that. Regarding the American Infrastructure and Novusterra, major exchange listings, do you meet the minimum share price requirements for such a listing?

Yeah, you'd have to get listed, so we do.

And what would that share price be? Because it looks a little bit dicey. Relative to the number of shares that are distributed in the value of American Resources, it seems kind of difficult to see how that's going to work.

Which company are you referring to?

Well, both Novusterra and perhaps also American Infrastructure, given the number of shares of Novusterra that were distributed as well…

Yeah, there's roughly 16 million shares approximately, I'm estimating – I don't have it in front of me – of Novusterra outstanding. It would have to be a minimum, to list on any senior exchange, it would have to be a minimum of $4 a share, American Infrastructure. Similarly, we may do a reverse stock split of American Infrastructure, not American Resources, but American Infrastructure with the goal of having it have a higher stock price, which will open up to more institutional investors as well. And we're targeting that with the investor base as we speak. American Resources does not reflect fundamental value of our subsidiaries. It just doesn't. We just closed on initial tranche of capital with ReElement at $150 million valuation, which is almost 2x current market price of American Resources. We think our stock is being held down by algorithms and hedge funds. We've reported one of them to the SEC. We believe they're looking into it, as we speak. We think there's a lot of gamesmanship taking place with these algorithms as we speak across the entire market environment. Now, we'll leave that to the hands of the regulators to do what they're doing, and I think they'll do a great job at that. But we don't believe American Resources is being fundamentally valued and that's why we're unlocking it by distributing to the underlying subsidiaries.

So just to make sure I got this right, are you looking at a potential reverse split fire or sort of at-listing on the American Infrastructure, but not needing reverse split on the Novusterra? That's correct. That's what we're looking at. Yep, that's correct. We want them to have a higher stock price, which will open it up to more institutional investors. Right now, algorithms are gaming stocks below $3 because institutions don't invest in companies below $3. Now we think we are confident in our transition and growth of American Resources that we'll get to a fundamental value and ultimately anybody that's short the stock will eventually have to cover.

Our next question is from Steve Martin, private investor.

I'm wondering if you intend or does American Resources intend to keep 90% of every one of your spinoffs?

It won't be exactly 19% of every one of the spin-offs, but it still holds Novusterra shares. It'll hold roughly 19% of ReElement. We haven't determined the appropriate amount yet of American Infrastructure. We will be distributing it to you. We haven't determined how much.

So there will be an announcement whenever you spin off any one of them, how many shares you will retain.

That's correct.

Each one of your spinoffs, they will be part of your royalty stream, each one of them?

No, not necessarily. American Resources has always had a royalty owed back to it. It owns the assets of the mining divisions, of the underlying subsidiaries of American Infrastructure. And so, that's different in terms of how it collects royalties down the road as mining commences. But that's been in place since day one. ReElement Technologies will not owe royalties back to American resources nor does Novusterra or any of the other divisions.

So how will American Resources make any money then?

Yeah, it'll make money from the royalty streams from American Infrastructure as well as it'll own equity interests in these different divisions. Plus our board has been working with – the individual that we're dropping down as a CEO, he has a strategic business plan in place on the commodity markets on the future growth of the business focusing on critical minerals and rare earth elements, but more on the mining side of it and partnering with on the commodity trading component of the business.

So do you see American Resources looking for any other companies, any other opportunities, or is this going to be what you spin off?

Nope, always looking for other opportunities. Always looking for attractive ways to create value for our shareholders.

So at this point, I wonder once you get them all spun off, the ReElement would seem to be the spin-off that's going to see most of the stock appreciation. Would that not be what you think?

I think ReElement is a unicorn. I've never been involved in a business that I've seen has greater potential than what ReElement has. We do something that nobody else in the world can do, and or at a cost point that we can do it at. From refining both critical minerals and rare earth oxides, especially doing being able to process heavy rares, as well as looking at the HPA market, copper market, the network that we're building and the partnerships that we're building at ReElement will unlock substantial value. And yeah, I do believe that ReElement is probably the most valuable component of our business, but that doesn't degrade the value of the other divisions either. I think they have tremendous value and opportunity as they get positioned and as they continue to execute upon their business plans.

So is there any estimate of a time when American Resources itself is going to be cash flow positive or even make some money?

We think when the mining businesses start up, the royalties that are owed to it and that have always been in place there, we think we'll make it a cash flow positive operation. One, the cost of them – the overhead of American resources, once ReElement is spun off, as well as American Infrastructure is spun off, it basically has no overhead. So it will use the cash flow that it gets to buy back stock and to make new investments.

And all of that depends on getting the mining business up and running.

As well as the business model that the new CEO is putting in place and the direction that he's taking it. And he's got some really nice relationships on the commodity side.

And then one last question. When do you think the mining business is going to get going?

We think pretty soon. They're negotiating with customers as we speak and working through a few last issues, but they are progressing on that. And we think it's eminently. I talked to our CEO of the division and our contractor at McCoy is ready to get going as we speak. And they're trying to button up the last few items.

So do you think the mining business going forward is going to be a profitable business?

I do.

It seems like – at this point in time, is it profitable to be in it?

So the structures we have in place, especially at Lane McCoy is we get paid top line revenue. So our costs – he takes over most of our labor costs as he starts commencing mining, and then we get paid top line revenue, royalty streams from him. So we have a very, very low cost structure. And I will say that I think the met market for metallurgical carbon is pretty decent right now, especially on the Wyoming County side, which is a mid-ball product. And I think you'll see strength in that. I think you're going to start to see quite a bit of an investment in domestic infrastructure as well as in the international market with China stimulating in a heavy way that I think there's – I think you're going to see some strength going into the mining market and to the met coal prices. I think we're in a good spot.

There are no further questions at this time. I'd like to hand the floor back over to Mark Jensen for any closing comments.

I want to thank everyone for joining today. Management is laser focused as we have been on making sure that we get this value unlocked, that we protect shareholder value, that we drive the business forward. I want to thank our team for the hard work and the dedication they're putting forth in terms of all of our divisions of making sure that we're positioned to capitalize on the markets as they continue to develop and continue to find their way. We are well suited to be able to accomplish that. We have a strong team in place. We have a lot of opportunity in front of us and we're thankful for the opportunity we have to take this business to the next level. And we thank all you for your support and look forward to talking to you in the future.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.