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American Resources bolsters balance sheet and growth prospects by divesting idle assets near Phelps, Kentucky

The company extinguishes $2 million note linked to the original asset purchase and receives back 2 million shares of its Class A common stock

American Resources Corporation - American Resources bolsters balance sheet and growth prospects by divesting idle assets in Kentucky
With operations in eastern Kentucky and West Virginia, the company extracts, processes, and sells metallurgical carbon to the steel industry

American Resources Corporation (NASDAQ:AREC) has announced the divestiture of certain surface and mineral acres located near Phelps, Kentucky to boost the company’s balance sheet and position it for high-octane growth.

In a statement on Wednesday, the company said that it acquired the assets in February 2019, prior to the acquisition of other assets considered to be “more core” to the company's “near and intermediate growth” blueprint.

“This strategic divestiture of these idle assets and environmental liabilities outside of the company's five-year business plan significantly reduces liabilities, holding costs and shares outstanding,” American Resources said.

READ: American Resources enters into initial closing of $13.39M credit facility for debt refinancing

Consideration for the assets being sold is the extinguishment of the entire $2,000,000 note associated with the original asset purchase and American Resources receiving back 2,000,000 shares of its Class A common stock. Additionally, American Resources will be removing over $2.6 million of associated reclamation liabilities (asset retirement obligations) from its balance sheet.

In a positive, the reduction of liabilities and holding costs will enable American Resources to enhance the flexibility of its focused supply base in anticipation of worldwide infrastructure-related demand. Given the current dynamics in the market over the next six to twelve months, American Resources said it remains focused on “driving its organic growth business model” along with other strategic, “attractively priced opportunities” to maximize return to shareholders and strengthen the company.

American Resources Corporation CEO Mark Jensen said the company was “very pleased” with the outcome of the divestiture of “this idle and non-core property.”

“Having the additional flexibility and resources as a result of this strategic divestiture will enable us to better focus on maximizing opportunities for accretive grown and cash flows in the near-term, while continuing to work with our industry partners on opportunities that have a longer-term horizon," he added.

American Resources said it continues to focus on its growth objective by efficiently leveraging its large number of core mining permits and through identifying strategic, supplemental acquisitions. 

The company said it is committed to being one of the lowest-cost operators in the Central Appalachian basin and throughout all its carbon mining, processing, and transportation operations.

With operations in eastern Kentucky and West Virginia, the Indiana-based company extracts, processes, and sells metallurgical carbon to the steel industry.

Contact the author Uttara Choudhury at [email protected]

Follow her on Twitter: @UttaraProactive

Quick facts: American Resources Corporation

Price: 1.35 USD

NASDAQ:AREC
Market: NASDAQ
Market Cap: $35.42 m
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