FISHERS, IN / ACCESSWIRE / October 29, 2018 / American Resources Corporation (OTCQB: AREC), a diversified energy company focused on the extraction, processing, transportation and selling of coal, is pleased to announce it has entered into an agreement to acquire all the assets of Synergy Coal, LLC located in Wyoming County, West Virginia. The acquisition includes all coal mining permits (including the associated reclamation bonds), governmental approvals, a coal processing facility, a rail loadout, over one thousand acres of mineral and surface ownership, and all other assets owned by Synergy Coal. American Resources will pay approximately $16 million to acquire the assets from the seller in a substantially all-stock transaction at $9.00 per share, and these assets will be transferred, owned, and operated by a newly-formed, wholly-owned subsidiary of American Resources Corporation called "Wyoming County Coal LLC." This acquisition provides American Resources several immediate and long-term benefits to the company:
- Access to Premium Metallurgical Coal
The coal qualities are well-known mid-volatile metallurgical coal that frequently commands the highest price and premium over other metallurgical coals.
- Establishment of a Fourth Operating "Hub"
The complex represents the company's fourth coal operating complex in the Central Appalachian coal region, and its first operating complex located in the coal-rich state of West Virginia.
- Fully Permitted Mining, Logistical and Processing Capabilities
The complex has fully-permitted, established infrastructure for coal mining, processing, and transportation that allows the profitable sale of coal mined in this area.
- Rail Transportation Diversification
Prior to this transaction, all of American Resources Corporation's rail loadouts were serviced by CSX Transportation; Wyoming County Coal would be the company's first rail loadout located on the Norfolk Southern Railway, a Class I railroad that serves many customers and ports that utilize coal. Having this diversification of rail providers allows for enhanced customer access and expanded customer reach for the company.
- Expansion Capabilities
Along with existing permitted coal deposits acquired herein; there are significant additional expansion opportunities in adjacent mineral areas that can be unlocked.
- Third Party Processing Potential
Similar to existing American Resources processing and loading facilities, once upgrades to the coal preparation plant and loadout are complete, the processing and rail loading infrastructure will have excess capacity to process and/or load third-party coal from other coal producers, increasing the facility's efficiencies and lowering overall operating costs at the complex.
Consistent with its plan to raise additional equity in the near term for future growth, the company plans to begin development and expansion of the hub over the next 18 months with a goal of ramping up production from the complex starting in 2020. Initial production will target the mid-vol metallurgical coal found within the Eagle, Gilbert and Lower War Eagle coal seams, with an estimated coal deposit of over of 21 million tons and expandable with additional core drilling and analysis. All future production will be processed and loaded to either truck or rail on-site. There is currently a 350 ton-per-hour coal preparation plant on-site that the Company intends to upgrade to increase the efficiency and production capabilities of the operation. There is also a loadout facility that has direct access on the Norfolk Southern Railway that will be upgraded to handle additional volumes and greater efficiency. Additionally, the complex has ample coal storage capacity in excess of 170,000 tons and a fully permitted refuse impoundment.
With the newly acquired assets located in the center of a highly sought after, high-quality coking coal deposit, American Resources Corporation feels the acquired assets fit strategically into the company's low-cost, hub and spoke operating structure, providing an opportunity for substantial future expansion of revenues and potential for the company. The company sees ample opportunity to expand their geological coal deposits around the complex in the future, while also exploring opportunities to offer third-party coal processing to other local operators without the processing or transportation infrastructure. The company is currently finalizing a budget for capital required to bring the mines into production and rehabilitate the processing and rail loading infrastructure.
"We feel that this is a milestone acquisition for the future of American Resources Corporation", stated Mark Jensen, CEO of American Resources Corporation. "This not only expands our operational footprint into the state of West Virginia while further diversifying and enhancing our coal qualities, but it also validates our growth platform and value of our public company. The Company looks to invest substantially back into the complex with future capital raises and operational cash flow for our future revenue growth. Our goal is to build out this complex to produce over 2.0 million tons of production annually once fully developed, representing about 1/3 of our overall estimated yearly production target within the next five years."
American Resources Corporation 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 is committed to being one of the lowest cost operators in CAPP and throughout all its coal mining, processing, and transportation operations.
About American Resources Corporation
American Resources Corporation is a diversified energy company focused on the extraction, processing, transportation and selling of specialty coal qualities serving the metallurgical, industrial, pulverized coal injection (PCI), and premium thermal coal markets. The company is primarily focused on the Central Appalachian coal basin of eastern Kentucky and West Virginia.
The company's business model is to capitalize on the changing coal markets to redefine how to create efficient coal mining operations to thrive and prosper in an industry that has less scale and production. By adjusting its operations to fit the market, American Resources Corporation is flexible and dynamic to adjust rapidly to expanding and contracting coal markets.
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Special Note Regarding Forward-Looking Statements
This press release contains forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties, and other important factors that could cause the Company's actual results, performance, or achievements or industry results to differ materially from any future results, performance, or achievements expressed or implied by these forward-looking statements. These statements are subject to a number of risks and uncertainties, many of which are beyond the control of the Company. The words "believes", "may", "will", "should", "would", "could", "continue", "seeks", "anticipates", "plans", "expects", "intends", "estimates", or similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. Any forward-looking statements included in this press release are made only as of the date of this release. The Company does not undertake any obligation to update or supplement any forward-looking statements to reflect subsequent events or circumstances. The Company cannot assure you that the projected results or events will be achieved.
SOURCE: American Resources Corporation
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