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American Resources Corporation to draw revenue from Kentucky coal mine with third-party lease agreement

Under the terms of the lease, the company will receive a royalty on the number of tons produced from the mine

American Resources mine
American Resources is primarily focused on the steel and infrastructure markets, and the company said the mine doesn’t fit into its core operating plans

American Resources Corporation (NASDAQ:AREC) has signed a lease agreement on one of its non-core mines with a third-party operator, the company announced Thursday. 

The deal further monetizes the company’s underground thermal coal mine in Perry County, Kentucky. American Resources is primarily focused on the steel and infrastructure markets, and the company said the mine doesn’t fit into its core operating plans. 

Under the terms of the lease, the company will receive a royalty on the number of tons produced from the mine, as well as an environmental exclamation fund royalty that will go toward restoring the land once the mine is closed.

READ: American Resources posts strong net income in 2Q as it transforms into an infrastructure company

"We are very pleased to have entered into this lease with a well-established, high-quality operator that desires to create jobs in eastern Kentucky,” CEO Mark Jensen said in a statement. “This was not a mine that we had in our future mining plans and the agreement provided us a way to create low-risk, low-cost cash flow for our company.”

American Resources acquired the Perry County mine in 2016 from Arch Coal, now Arch Resources. The company has consolidated and operated quality metallurgical carbon assets in the Central Appalachian basin to serve the steelmaking, specialty alloy metals and industrial marketplaces.

“While our focus is on bringing the company's core assets back into production as the market recovers, we will always entertain out-of-the-box solutions to maximize cash flow, given we are one of the largest owners of mining infrastructure in eastern Kentucky,” Jensen said. “We believe this lease further enhances the flexibility of our focused supply base in anticipation of worldwide infrastructure-related demand, as well as creating more efficiencies with our environmental reclamation efforts."

Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com

Follow him on Twitter @andrew_kessel

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