American Resources Corporation (NASDAQ:AREC) CEO Mark Jensen said that the company was “extremely excited” about the future of the metallurgical coal company as the demand for infrastructure increases around the world.
"We are extremely excited about how our platform is set up to perform in 2020 and beyond,” Jensen told shareholders in a statement Monday.
“Overall, the market for our products remains very promising as the world's need for carbon, steel and infrastructure continues to be healthy, and our platform remains in a unique position of bringing a robust pipeline of growth to the market and to our investors."
The CEO’s statements came as the Indiana-based company released its third-quarter results that saw the company execute a new, strategically important acquisition of a fifth operating complex. Perry County Resources is a new carbon processing and logistics hub in the Central Appalachian basin that broadens American Resources’ footprint in the metallurgical carbon market.
The company produced and sold 25,969 short tons of coal during the quarter.
Jensen acknowledged that the third quarter of 2019 proved to be a challenging quarter for the metallurgical coal industry, with a number of market participants liquidating assets through the bankruptcy process in the face of the seasonal steel slowdown.
That said, the company executed both organic opportunities as well as opportunities to further consolidate quality metallurgical carbon assets, according to Jensen.
Coal production healthy
American Resources further developed some of its existing mines around the McCoy Elkhorn complex, including commencing the final development stage to bring the Carnegie 2 mine into production.
Jensen said that the company was very active in the bankruptcy processes of assets within its operating region to acquire Perry. “The addition of Perry County to our portfolio of assets is already proving to be a valuable asset as we are executing on our restructuring plan while serving the existing customer base,” the CEO said in a statement.
The miner made the decision to take some production offline during the quarter to make new capital investments on the assets, resulting in a lower revenue total and higher losses for the period.
Jensen said that the decision was made at an “opportune time” and put the miner in a better position in terms of volume and quality metrics.
American Resources posted revenue of $1.8 million and a loss of $7.1 million or $0.30 per share on the quarter.
Tighter supply outlook
“Over the past five months, we have seen a meaningful amount of US carbon supply come offline given market participants idling assets plus several participants entering into bankruptcy. Our unique business model has allowed us to be opportunistic during this time and strengthen our position in the market,” Jensen said.
The CEO said he expects markets to get stronger in 2020 on a tighter supply outlook.
American Resources expects its 2020 production forecast to be in the range of 2.0 to 2.2 million tons.
“We feel that we are in as good of a position as we have ever been to deliver attractive growth to our customers, employees and shareholders, and we maintain a sanguine outlook on carbon and steel markets given infrastructure development world-wide."
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