American Resources Corporation

Greetings. Welcome to the American Resources Corporation's fourth quarter 2022 conference call. At this time, all participants are in listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note that this conference is being recorded. At this time, I'll now turn the conference over to Mark LaVarghetta, Vice President, Corporate Finance and Communications. Mark, you may begin.

Thanks, Rob. Good afternoon. On behalf of American Resources Corporation, I'd like to welcome everyone to our fourth quarter and full year 2022 conference call and business update. We always welcome this opportunity to provide an update on our business and discuss our accomplishments since our last update, and also discuss how we uniquely position within the markets we serve for our American Carbon, American Metals, and our Re-Element Technologies Division. Also on the call today is Mark Jensen, American Resources Chairman and CEO, Kirk Taylor, our Chief Financial Officer, and Tom Salve, our President. Before we kick it off, I'd like to remind everyone of our normal cautionary statement. Certain statements discussed in today's call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from the results discussed in the forward-looking statements. 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, we will be holding a question and answer session today following our prepared remarks, and for anyone Wanting to ask a question, you'll need to dial in by phone to get into the queue. We're going to begin today with a few comments from our Chief Financial Officer, Kirk Taylor.

Thank you, Mark. And thank you everyone for your interest and your time this afternoon. The fourth quarter of 2022 and the beginning of 2023 have continued to showcase our focus and execution that positions our company for long-term value creation. When looking at our recent execution, it is important to take a step back and highlight some of our accomplishments on all fronts. From a corporate standpoint, during 2022, our board established a special committee to evaluate strategic opportunities to best unlock value of the company. And out of that committee, we had announced a share repurchase program, which our team began to execute upon a repurchased $86,450 shares as of December 31st, 2022. Additionally, we purchased back 7.5% outstanding interest of our re-element technologies division, making it, again, a wholly owned subsidiary of American Resources. We believe this will contribute meaningful value to our shareholders, and we subsequently announced our plan to spin off re-element into its own public company. In conjunction with reELEMNT's planned spinoff, we filed a Form 10 information statement with the SEC this past January for 2023. I would refer you or anyone interested in reading more about that to go to SEC.gov and search under reELEMNT. We've also sold the exclusive rights of our carbon nanostructure and graphene patents to Novastera, showcasing our focus and ability to monetize value of our broad asset base. Lastly, during January of 2023, our last and largest convertible debt holder converted all of its debt into common stock, which reduced our debt by over $9 million and further strengthens our balance sheet and exemplifies strong confidence in our business planning and execution, as well as believing in our value as a company. While we will dive into our business pillars in more detail throughout this call, it is worth noting a couple achievements that we've gone through during 2022. For re-element technologies, we've achieved groundbreaking success in commercializing our revolutionary critical mineral refining technologies by producing greater than 99.5% pure rare earth elements and critical battery elements in a commercial scale. We're the first to accomplish this domestically. Our rapid execution in advancing re-element technologies is a worldwide leader and critical mineral refining is worth reflecting upon. In October of 2020, we unveiled our critical and rare earth element division for the first time. November 2021, we successfully permitted our first refining, commercial scale refining facility, which took under two months of permitting process. This is a clear and unique differentiator of our leading technology and how environmentally safe it is. In April of 2022, we announced the advancement of our intellectual property with a filing of multimodal chromatography patent for critical mineral separation and purification. In August of 2022, we announced our commercial scale success in rare earth element refining, separation, and purification from recycled material. And then just in January of 2023, we announced again our commercial scale success in lithium refining, from recycled battery material. We believe we have uniquely positioned Re-Element as it plans to be a standalone public company. Over this brief timeline, we have also secured an initial independent working capital facility at the Re-Element level. We've added key talent to bolster our best-in-class team and entered into our first long-term collaborative partnerships to help secure our domestic supply chain for critical minerals including sales MOUs with the only two domestic magnet manufacturing companies in existence. 2022 marked a record year for us. We realized nearly $40 million of revenue, which increased more than 400% over 2021. This again showcases our valuable carbon assets as we opportunistically acquire and restructure them. While mining is not completely linear, our carbon platform is uniquely positioned to be a meaningful contributor to much-needed supply growth of metallurgical and specialty carbon products from our region where a lot of mines are becoming exhausted and closing down. We remain focused on monetizing our platform with assets for our shareholders. We will also discuss the options and actions we are taking with our controls to do just that. Our unique platform of assets is in a great position to deliver what we believe is an attractive return and value to our shareholders, including our mining assets, our re-element technologies division, as well as our American metals division, which we are in the process of strategically positioning within the electrification economy. Over the past year, we've been able to eliminate approximately $12 million of debt and payables and invested approximately $28 million of expense development costs position both our American Carbon and Realment Technologies platforms for strong growth in high demand markets. As of December 31st, 2022, our traditional debt balance totaled approximately $1.9 million in total, of which $300,000 is equipment financing and $1.6 million in the form of mine development loan from one of our top customers. As of December 31st, 2022, our convertible note balance totaled approximately $9.7 million. As mentioned previously, on January 31st, 2023, the entire convertible note was converted into common equity, which is reflected in the current shares outstanding of just over 78.2 Class A common shares. Cash on hand at the end of 2022 is approximately $8.9 million. And lastly, as part of our ongoing risk management process, all of our excess cash above FDIC limits are held in a top two U.S. domiciled bank. I'd now like to turn our call over to Mark LaBregada for some additional comments on our re-element technologies division. Mark?

Thanks, Kurt. As we frequently state, our re-element technologies division represents an incredibly exciting and very strategic opportunity for us. As we continue to strategically position ourselves in the global supply chain for critical minerals, I think it is important to reiterate and emphasize our position within that market. ReElement is an innovative and advanced refining platform for critical minerals. While we believe we are a meaningful part of the recycling value chain, we are not solely a recycling platform. We do believe our position in the recycling market and the sustainable supply of critical minerals is highly important as we move towards a highly mineral dependent electrified economy. However, we also believe our refining methods hold an important position in the global value chain of processing and purifying natural ores such as lithium. Additionally, and in regards to our strategic positioning, It is worth noting that our innovative and advanced refining technology holds a critically important role for our domestic supply chain of critical minerals and our domestic manufacturing of goods. China's global dominance of critical minerals has a lot to do with their ability to refine, both natural ores and in recycling, where they use conventional, environmentally and socially toxic refining methods. Their low environmental and social standards allow them to produce these minerals at a lower capital cost. We believe that deploying these conventional and toxic refining methods in the United States market will be very, very challenging. As we put together and developed our intellectual property, we set out to solve the biggest bottleneck in the supply chain, which we see as economically competitive refining. which is highly flexible to a variety of feedstocks and very environmentally safe. Our innovative and advanced refining methods using chromatographic separation and purification displaces the toxic conventional methods used in China and we believe is an important linchpin in making the United States competitive within the electrified economy. Kirk just highlighted the expeditious timeline of some of our milestones. I'd like to reiterate some of the significance of our milestones in producing ultra-high pure rare earth and critical battery elements in a commercial scale. First, we are the first domestic commercial producer of these separated and purified rare earth and critical battery elements. Our technology has showcased that we, meaning the United States, can migrate away from and no longer need to depend on foreign adversaries to refine these minerals necessary to advance high-tech green energy, including electric vehicles and wind, as well as defense applications. Our innovative chromatography technology is a clear differentiator in the market for several reasons, which specifically addresses the refining bottleneck within the supply chain. Our refining technology's modular structure and design enable it to scale congruently and efficiently with the needs of the markets. Meaning we do not have to lay out a huge CapEx investment and wait for the market to adapt or catch up. And it can be deployed either using a larger aggregation hub model, or we can co-locate customized refining capacities for certain supply chain partners, allowing them to reduce logistics and control a portion of their critical mineral supply. Our refining technology is very flexible to the type of feedstocks and materials that we choose to refine. meaning we can handle end-of-life recycling, manufacturing waste, scrap and non-spec, as well as virgin ores. Similar to the MOU we signed earlier this year to refine spodumene into high lithium carbonate or lithium hydroxide, which is needed in the production of a variety of lithium ion batteries. We believe the opportunity to provide low-cost and environmentally safe lithium refining around the world in a collaborative manner to meet the needs of the energy storage market are abundant. Additionally, and specific to the battery materials market, our technology can efficiently adapt to different and evolving battery chemistries. An important distinction for our technology is that we can economically recycle lithium iron phosphate, or LFP, end of life or manufacturing scrap. In fact, we're the only ones that we know of that can effectively do this economically. From our perspective, and everyone can do their own research, it seems that the battery market is moving more towards a more broadly adopted LFP battery chemistry. As such, we feel we hold a significant value add position with our ability to economically refine and recycle material as battery chemistries evolve within the energy storage space, as well as define our value add and competitive advantage beyond just the production of black mass or black sand within the battery recycling market, while not having to try to make conventional high-cost refining methods similar to those used in China work here domestically. Given our competitive and value-added refining capabilities, we are confident that we will continue to develop additional collaborative partnerships throughout the supply chain. We've had early success in developing partnerships such as the ones we've established with our magnet partners, USA Rare Earth Magnets and Advanced Magnetic Lab in establishing the first complete domestic lifecycle for rare earth magnet manufacturing in the United States. And we continue to have good success with several other pilot programs where we are fostering collaborative opportunities that we are really excited about developing into long-term partnerships. These partnerships cover both rare earth element and critical battery minerals. from a variety of feedstocks. Ultimately, our innovative and high-performance refining technology is not a science experiment and well beyond lab scale. The technology has been around for over a century and is utilized in commercial large-scale operations in industries such as pharmaceutical manufacturing and sugar purification all around the world. Our research partners and us have adapted this technology to be applied to critical mineral refining in a way that we believe can undercut China's cost structure. With high throughput and able to produce ultra pure mineral and mineral compounds. We're confident as we continue to showcase our competitive distinction and collaborative value, re-element technology will garner significant value for our shareholders. I'd now like to turn the call over to Mark Jensen for some additional comments.

Mark.

Thanks, Mark.

First, I'd like to thank our team for the hard work and efforts they put in to position our business going into 2023 and also prepare our business to be more resilient across all of our platforms. As we mentioned earlier, 2022 revenue of $39.5 million increased more than 400% year over year as we accelerated our carbon production. While achieving this record sales for us, our re-element technology division and commercializing our leading critical element, we accomplished this while also our re-element technology division commercialized our world leading critical mineral refining technology. Having the team in place to be able to accomplish the growth of the carbon industry while also developing and building out and commercializing re-element is a key factor for our business and our focus going forward. The majority of our revenue is generated from our McQuay Alcorn complex. This was offset by the idling of our Perry County resources complex, which we'll discuss later. At no point in our history has our business been better positioned to serve the markets we operate in and to capitalize on the broad asset base and our talent and our ability to produce, process, and refine raw materials that are in very high demand across all of our platforms. Given our execution, we are extremely excited about the opportunities for both entities we have in front of us, but also believe that the enterprise value as a whole is currently a substantial discount relative to some of the parts or comparable to peer evaluations. Let's dive into each division here. So American Carbon, our mining division, we have spent a significant amount of time in the fourth quarter, but also in the first quarter, evaluating what generates the most return for our investors. And we've set up a strategic plan to not only be able to execute upon this plan, but also to evaluate the opportunities to monetize certain assets. Over the course of the last three months, Tarlis Thompson has done a phenomenal job of stepping up and running this division in assistance with Joel Stanley, setting up a plan for this business to make money and generate substantial value for our investors, focusing on the highest value assets that we have while also not chasing golden deuces out there. And I think the strategy that they put in front of us, which we can talk about here, is important for us. The carbon side of this division needs to focus on making money and driving fundamental value in the lowest risk possible scenario for our investors. From our perspective, the outlook for met carbon looks extremely strong, with China coming back online following their zero COVID-related shutdowns. And you're starting to see the world open back up and including the U S market with two new blast furnaces opening up in the last few months. Now this will take time for it to trickle through, but met carbon prices are still a very, very attractive levels. And we're starting to see the transportation logistics bottlenecks hit, but also open back up, which will drive revenue and drive value. The supply for high quality met carbon remains constrained. There's not a lot of new investment going into the space. A lot of the existing mines within the space are old legacy mines that are producing higher cost structures. We have made substantial investment into our complexes to position them for one, low cost production, but two, long-term production, including some investments we made in the fourth quarter, which resulted in substantial downtime of expanding the mines and positioning the mines. And then also in the first quarter, setting up the mines for the long-term growth, including adding the second section at Carnegie II, which we can talk about here going forward as well. We remain steadfast on monetizing our carbon assets. Now, that could be through joint ventures, that could be through sales, and or just monetizing the growth and cash flow from the operations versus focusing on aggressive growth. Um, we, we believe that we have opportunities for substantial growth by monetizing existing assets and relocating assets. Our Perry County resources complex we idled for most of the second half of 2022. This is a large complex that is, was hit hard by the floods and the region. Um, and the workforce in that area is, has been somewhat limited. Now I think that's opening back up pretty substantially. That being said, our focus for Perry County. At the current moment in time is not to put that back into production. We are focusing, we have substantial amount of assets over there. We have substantial amount of value over there. And we believe the value of our assets would result in about $40 million in value to our business. The equipment, the infrastructure that we put into it, and the ability to relocate that equipment and infrastructure to other mines. Now, we also are evaluating offers on the complex to potentially sell it. We believe that the cash today would be very accretive to the business if somebody would offer a value that is commensurate with what we're willing to sell it for. That being said, a substantial amount of these assets, we believe, would be very accretive to our Wyoming County complex, and relocating these assets to Wyoming County to maximize and de-risk the Wyoming County and expedite the production of Wyoming County in an extremely accretive way. Wyoming County is a mid-vol complex with also a very, very high-quality high-vol A mine in the same complex with a processing plant and rail loadout facility on site. As we pursue our tax-exempt bond and waiting for the markets to stabilize within the bond industry, we believe we can advance this project forward faster, better, and stronger by utilizing existing assets that we have by relocating them in a very accretive way by bringing over $40 million of value there. The net value we believe post-reclamation, if we go to that at Perry County, would be approximately $35 million of value to our business based on our opinions. Upon evaluating several opportunities, we're not sitting on our hands. We made the decision to deploy certain assets also to our McCoy Elkhorn complex and support the embedded organic growth there. McCoy Elkhorn as a complex is an extremely high value complex. We put the value of our carbon business on McCoy and Wyoming County. We've invested into expanding the McCoy complex by adding a second section at Carnegie too. These three sections we have running at the Carnegie mines are one accretive and very high margin complexes for us now that we've went through the development, spent the development over the last six months, and positioned these mines for growth and the ability to add another section at our Carnegie 1 mine, as well as looking at our Carnegie 3 mine down the road without having to spend substantial capex. Our focus, as I said earlier, is about generating cash, and we're positioned to do that going forward. The mines and the production capacity and the production run rates that our men have hit would enable us to hit that growth and to be profitable going forward based on the production we're currently achieving right now. One thing we've realized on our carbon complex, we need to control our own destiny. We have relied upon in the fourth quarter and the first quarter, we relied upon one of our customers processing plants and it struggled. They had trouble moving product and they had trouble getting product through their processing plants. So we made the decision, our team on the ground made the decision to bring our state of the art processing plant back online. At the time when we started the mine, there was no need to do that. And what we realized we needed to going forward. Now we control our own destiny. We have the ability to diversify our customer base, and we have the ability to monetize and maximize the margins within our product by now operating our processing capacity, which is a state-of-the-art plant with long life impoundments. And we're showcasing that now. The processing plant's up and running. We're able to start monetizing the inventories on the ground. and setting ourselves up for a record second quarter. As I stated earlier, we will continually evaluate all of our mining complex. Our deemed mining complex has started production. The team over there is running, they're hitting stride, they're set up for growth, and we're excited that they've been able to get that mine into production, which would ultimately generate cash flow streams for the business in itself. We'll look at monetizing other assets we have as well. including the Perry County complex, if somebody is willing to pay the commensurate value for it. But we believe with the Wyoming County complex going online, those assets and that value would have to be commensurate with that $35 to $40 million in value that we believe will generate by bringing that to the Wyoming County complex. To help facilitate the start of the processing plant, we also stockpiled over $6 million worth of met carbon over at our McCoy-Oakland complex. That is revenue and cash flow that we'll be able to realize here in the next few weeks, actually, now that the processing plant's up and running and it's hitting its stride and doing well. The sequential decline in top-line revenue growth in the fourth quarter of 2022 was partially due to us beginning to stockpile production and giving our plans to restart our own processing plant, as well as expand our mines to position them for future cash flow. At the end of the day, certain mines need to be run at scale. Thankfully, our Carnegie mines are smaller. They don't need huge production. And they're able to run very efficiently. Now with two sections, the margins and the margin expansion we get from doing that will be showcased here very shortly. And we're already starting to realize the benefit of that internally. McCoy Alcorn continues to be our biggest contributor and our growth engine for American Carbon. Now that we have two operating sections at Carnegie 2, we're looking at adding a second operating section at Carnegie 1. And then looking at our other minds that can be brought online with minimal capex given, we already have our processing plant up and running and the ability to produce specialty products for the fair, the specialty stoker market, specialty carbon market. Um, but evaluating our Carnegie three mine mine 17 mine 15 a as well as surface mines we have in the region that won't take a lot of capex to get up and running and further expand the revenue base. Our platform is unique given the significant mining infrastructure that we own and ultimately adds a lot of value. And the quality of the carbon that we produce and have access to, the restructuring efforts and the investments that we made to streamline, clean up environmental liabilities left behind by the legacy companies and position this business as a high margin, high growth asset is exactly where we're at today. And we're starting to see the production coming out of the Carnegie mines, which are two very high quality mines that are very mineable. to showcase the revenue growth that we can achieve from exceeding revenue that we did last year in a pretty meaningful way. Additionally, we remain focused on progressing our Wyoming County complex over the next year. As recently communicated, we continue to work through the process for the $45 million taxes that bond through the state of West Virginia that has preliminary been approved for. The credit markets are seeing some stabilization following a very aggressive interest rate policy from the Federal Reserve. as well as the allocation commitment to totaling 4.9 million of the federal new market tax credits. Now with the interest rate stability, we've also seen on stability within the banking environment. And so right now our, our team that's working on the taxes and bond is doing a phenomenal job of navigating the current market environment. And we're also advancing the project forward and relocating assets there, which is just further reducing the risk, not only for us and our investors, but also for our tax exempt bond investors. By offsetting the costs that would be required out of the new capital coming in with existing equipment and infrastructure that we already possess within our business, we can de-risk this and expedite the production to bring these mines on very quickly and at nice margins right off the bat. And we're excited about the developments and the progress we're making and the planning that we're making at that complex to get that complex online. with the issuance of two non-dilutive capital sources we're excited to showcase how we position the complex to be a first of its kind advanced carbon and rare earth processing facility by combining premium mid-ball met carbon production with unique rare earth capture process technology utilizing electrolysis on side to treat your water and your and your your waste material coming off your plant and then further capturing it and monetizing byproducts that are coming off of that is the first of its kind and a unique structure, a low-cost structure, by utilizing the processing capacity to generate the rare earth elements. It's not a standalone rare earth element recycling facility or processing facility. It's a fully integrated coal processing facility capturing your water streams coming off there. We're excited to showcase that in the next year as we get this complex further advanced. Lastly, we'll also explore leasing opportunities of our other idle assets. And similar to our structure we've done with our Dean Mining Complex, which they've started production recently. We'll continue to explore opportunities to monetize additional assets and support the existing production that we have in our existing team that's running our minds to be the most profitable and the most accretive to our investor base. I want to expand a little bit on the re-element technologies division that Mark just made. We've never been involved with an entity that is as exciting or has a higher ceiling than re-element does. Looking at it, where you see a lot of the companies within the battery recycling space, there's nobody that's fully integrated from the battery to the magnets. Our technology, developed out of Purdue University, sponsored by Eli Lilly through decades of research and investment, is revolutionary. One, we can process lithium ores at dollars per kilogram, very efficiently, very effectively, localized processing. as well as the ability to co-locate at existing battery manufacturing sites to help offset their costs, make it truly a more circular economy and a more efficient and optimized economy. Our technology can do that where HydroMet cannot. HydroMet is hundreds of millions of dollars investment, years and months of planning, where our technology takes months of permitting and months fractions of the dollars to invest, which gives us the opportunity to grab market share and showcase it. We've had numerous calls with parties, new battery manufacturing plants popping up throughout the United States, and we're excited to continue to advance those discussions forward to contracts for our investors. We're also continually entering into additional pilot and partnership programs with some very exciting companies out there, that provide different feedstocks, anything from end-of-life magnets to different chemistries of batteries, as well as the lithium ores. Currently, today, the opportunity is very attractive for us to continue to expand this division and partner with some of our existing partners, such as USA Rare Earth, which is standing up one of the largest magnet manufacturing facilities in the United States, and we're excited to see their growth, as well as AML, the magnet manufacturer in Florida, which is doing a phenomenal job of commercializing their technology and expanding their technology. With regards to the natural occurring lithium refining, we believe our technology is game changer. We can process at the local level. We can cut out the logistics costs. We can cut out the need for transporting lithium spodumene, which is a 94% rock material halfway across the country to be processed using heavy chemicals and solvent extraction. We can process it locally. And given that unique technology has enabled us to enter into numerous partnerships and MOUs and conversations within the African environment, one of the most resource-rich nations, accessing the ports where we're currently in discussions of building refining facilities on the west coast of Africa, as well as on the east coast of Africa, to be able to access the lithium reserves and the current lithium production that is being exported in raw form, bringing that value step to the African community, bringing in partners within the African community that are on a world stage in terms of their knowledge as well as their experience. Opportunities like this further exemplify the unique attributes of the re-element refining platform in terms of its feedstock and chemistries and ability to grow. Ability to be efficiently deployed due to modular design and environmental sensitivity is something that has not existed in this industry and something we're bringing to this industry. We're thankful for the team that we've been able to put in place every element and the team that we continue to expand upon. We brought Bob Gallion on as a board member and Bob's team in itself are first class. He was the number two employee at CATL, the chief technology officer. He helped build that business from the ground up and he's helping us do the same. He's extremely valuable and the people that he's working with and his team that he works with are phenomenal. And we're excited to have them on board and we're excited to further expand the that talent pool, which we'll be talking about here in the next few months, next few weeks. We're seeing numerous opportunities in the recycling space beyond what we've announced with our magnet partners. And we're seeing those opportunities for both magnets and batteries in localized regions. We've also commenced several pilot programs to recycle these critical minerals from feedstocks, such as consumer power tools, wind turbines, black mass producers, battery manufacturers, as well as industrial battery sources on energy storage platforms. which is predominantly LSD chemistries, which is very challenging to recycle using traditional legacy technologies, very cost-effectively to recycle utilizing our technology. In terms of recycling, I think it's worth reiterating how we strategically position our value-added partners in addressing our sustainability needs. Our flexibility in refining technology does not require massive capex. It does not require a hub and spoke model. We can recycle at the local level. We can recycle at the source. We're not transporting dangerous battery materials across highways. We can recycle it locally, reducing the risk profile, not only for us, but also for our customers and the community. The innovative and economic process that we utilize has a payback period of less than three years and often on projects less than two years, which is unheard of in the battery recycling space. In regards to the re-element spinoff, you'll see that we filed a Form 10. We're working with the SEC through the review process of that. We're excited about the progress that we're making. This business deserves to be its own public company. It doesn't fit within the platform of a mining operation on the coal side to a green energy recycling platform using the most environmentally sensitive technologies. We have the teams in place to be able to manage that process and operate these businesses post spinoff so that they can both be very successful businesses in their own right. I'd like to give a shout out and recognize our re-element team for the groundbreaking steps they've achieved. Being able to produce 99.99% purity products is a game changer. That is ultimately what has separated us from our peers, but also being able to do that cost effectively. We believe we put together a team that is not only entrepreneurial, but also has the history of success in operating big industrial facilities. And we'll be able to drive this business forward very profitably and very efficiently for our investors. We'll continue to add top talent, interviewing top talent daily from within the industry as well as outside the industry, and bringing them in from a technical perspective, which we believe will have the world's best chromatography experts and team behind our Rialto division. Whether it's with university partners at Purdue, as well as engineering teams and longstanding success developing the technology and operating, such as Eli Lilly and Dr. Yi Ding that's joined our team internally, as well as our chief commercial officer who's joined us recently and has done a phenomenal job, Chris Mormon. Our technical advisors, as I referenced, Bob Gallion, as well as a few others, which we'll announce here shortly, will continue to position Rielement as a global refining leader and the entity that will deliver significant value to our shareholders, as well as a goal to build Rielement into a multibillion-dollar business by executing upon the need for recycling, not only in batteries, but also in magnets. Thank you. back to recycling and what was mentioned earlier in this call is probably a good segment to our american metals division and i'll keep this relatively short american metals has predominantly been a ferris metal recycler for us as we reclaimed legacy mining operations that were no longer viable in the current market environment as we've continued to expand our business and to keep re-element as a pure play refining division We are in the process of developing American metals into a world-class shredding operation. The ability to not only shred end of life batteries very efficiently and safely and working with the leading industry partner to help ensure that we are the standard for battery shredding in a safe way to reduce the combustible events that take place in the battery shredding, as well as being able to shred magnets and shred the products that magnets come with it. We've developed a process to efficiently and effectively recycle rare earth magnets in a cost effective way, extract the magnets out of what they come in, which would be a motor or a rotor or a wind turbine, and extract them very cost effectively to be recycled back to high purity magnet grade materials today. The ability to do that within American Metals will enable us to keep Re-Element as a pure play refiner, which would not compete against our other customer bases that provide us end of life products already today. but also enable us to capitalize on the ability to take both not only magnets and batteries from our partners that want us to recycle these materials to get them back into the circular economy. As such, we believe American Metals is a great platform to leverage re-element's refining capacity, be able to produce products that we can then deliver to re-element to be able to efficiently and effectively expand our revenue base. In closing, we remain very confident in the position of all of our assets and the long-term value they provide to our investors. We remain hyper-focused on unlocking value and have already communicated our initial strategic steps to do so. We have ample liquidity and do not foresee us needing to issue equity to raise cash, especially some of the sources of non-dilutive capital we have. We also feel very good about the current production levels at the mines themselves. From Carnegie I to Carnegie II, We believe based on the roughly 30,000 run rate of tons of production would put us at a highly profitable state month over month going into the second quarter and for the rest of the year and for the next 10 to 15 years for that matter. Just to reiterate, as the largest shareholders of American Resources, our management team is committed to maximizing the value for all of our shareholders. And we believe continued execution and splitting the re-element divisions are the early steps in doing so. We believe we're well positioned to capitalize on opportunities as they come to us to monetize assets and bring assets online in cost-effective ways as we continue to expand the McCoy Complex, which ultimately will generate the cash flow to continue to support the business as a whole in its entirety in a very profitable way, as well as our Wyoming County Complex, which is probably one of the most attractive, virgin opportunities in the market today. I thank you all for your time and look forward to the balance of this year as we continue to showcase the execution of where the businesses are positioned today and the opportunity that we have in front of us. And now I'd like to turn it over to the moderator for some Q&A.

Thank you. We'll now be conducting the question and answer session. If you'd like to ask a question today, please press star 1 from your telephone keypad, and the confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants that are using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Thank you. And our first question is from the line of Heiko Ehl with HC Wainwright. Please proceed with your questions.

Hey there. Thanks for taking my questions.

Yeah, thanks for joining.

Of course. At McCoy Elkhorn, are you guys facing any issues with either supply of materials, any sort of supply chain issues, or with labor, or is everything going swimmingly?

Yeah, I'll actually say we're starting to see a lot of stabilization in that environment today. I mean, from a labor market perspective, McCoy is a – they're effectively two new minds. So they're pretty good places to work, pretty attractive places to work. Supplies were starting to, I mean, there's less suppliers out there than there were five years ago, but you're seeing stabilization within the supply market. I would say even in the fourth quarter of last year, there was probably, people were starting to return somewhat to normal, but there was still a lot of challenges then. I will say now, we really don't see much of that anymore.

Fair enough. Okay. So fair to say progress can be felt even in the last two months?

Yeah, I mean, I would say the biggest issue we had was, for us to expand our revenue, was the processing capacity. I mean, we had, we predominantly sold to one customer, and he's a great customer, great, great colleague. But the processing plant that we were having it processed at was struggling. I mean, it was running at less than a third capacity. Um, so we made the investment to bring our own, we, we have a state of the art processing plan. It is, we just, at the time when we started the mines, it was easier just to ship to our customer. He was processing it. Um, now we, we had to make the decision to drive revenue growth and margins to bring our own processing plan online, which we did about two weeks ago. So that was probably the biggest limiting factor was, was the processing capacity in the region. And thankfully, we own and possess not only the newest, but also the largest processing capacity in that region. I think there's going to be some pretty significant growth for our business, not only the existing production that we have coming out of the mines right now, which is good. They're doing a really good job, actually, but also third-party business that we could bring in because of our processing capacity. That was probably in the fourth and a little bit in the first quarter here. The production in the first quarter was was great, uh, the processing capacity was, was slow. And now with our own processing plant coming online, it's going to be, uh, we're, we're pretty excited about where we're positioned at right now and the cash flows that the business throw off.

Got it. Perfect. And then just one quick one, uh, you spend a decent amount of time talking about the partnerships, both in your press release and earlier on this call. How wide of a net should we expect you to see when it comes to partnerships? I guess what I'm saying is, are there any end uses or markets that you're mostly against, or are you just anything that comes that may be beneficial?

On the re-element side, is that what you're referring to? Yeah. Yeah. No, we're worldwide. I mean, obviously, we're going to be a little bit sensitive about certain areas of the world where we've got to protect our IP, but we've signed an MOU with a Japanese recycler. We are working, obviously, pretty aggressively and very aggressively in the African nations and feel really good about the resource-rich nation of that. Obviously, domestically throughout, we're in numerous discussions. Hopefully, here shortly, here are some additional co-location opportunities. We're designing with another battery manufacturer right now an inline recycling process for them of how our technology can sit at their battery manufacturing plant to recycle their waste material. Nobody else in the industry can do that. You can't put a hydromet facility next to a battery manufacturing plant in a matter of six months. It would take you years and they don't want it next to, they wouldn't want a hydropower facility next to their battery manufacturing plant. We can do that. So those are, those are the conversations we're having, but even our, some of our, a couple of our board members have been over in Australia talking to other lithium producers over there about our technology displacing their current processing capacity because it's lower cost. So we're, we're not, we're not just focused on the United States market by any means. We believe that If we can replace solvent extraction throughout the world and position our technology as the solution for that, that's our focus today. And I would say from, you look at our team, you look at Bob's experience, I think we're going to be successful at that.

That's helpful. Thank you all. Thank you.

Our next question is from the line of Mike Nehauser with Roth Capital Partners. Please proceed with your questions.

Hi. Thanks for taking my call. I'm taking my questions, that is. Very helpful answer from the last analyst. So if I can understand what you said earlier in your narrative, you know, the fourth quarter, you know, there was investment in the expansion facilities, and that was related to the processing, I'm assuming, and the reason for stockpiling the $6 million worth of ore. Is that somehow related and we're transitioning out of that phase with at the end of the first quarter with increased processing capacity? Is that close?

Yeah. I mean, that, that, and I mean, that, and that just, that did trickle into the first quarter as well. We needed, I mean, our customer was still running their, their plant, but it just wasn't running efficiently. which slowed some of our production internally as well. So stockpiling the ore, slowing the production because we didn't have our own processing capacity up and running. And then, I mean, during the Christmas holidays, we also expanded. We started the development of expanding the Carnegie 2 mine, which during that period of time is relatively slow. Now, I'll say today where we sit, the mines, all three sections are operating. The prep plant's operating. And they're hitting production levels, which would be commensurate with that that 28,000 to 30,000 tons a month, which we think we can expand upon, which would put us at a very profitable state as a business going forward. Now, we are also expanding currently our customer base as well, just diversifying a little bit with that additional production coming online, and we think we'll be able to – we're in conversations with – the good thing is you're seeing a lot of blast furnaces open up right now, so there's quite a bit of demand right now, and even with the logistics, which are relatively tight right now, we're starting to see that open up. So it's still all met coal, correct? Yep, everything's met coal. I mean, that's really where our business is focusing on the Carnegie Mines right now just because that's what generates cash flow for the business. That's what will put cash in the bottom line going forward and focusing on the high margin met coal versus exploring lower margin products.

And you mentioned that Dean was starting production. Can you give some idea of the scale of that through the fourth or first quarters?

Yeah, so they just started up recently doing some development mining. The attractiveness of what the team brought in over there, they brought a high wall miner in. High wall miner is a very, very efficient form of mining, very low cost form of mining. They're targeting right around that start off phase, around 30,000 tons a month is what we're being told, which would translate into right around a couple hundred thousand dollars in revenue to us, cash flow to us a month. And they're looking at some pretty significant expansion opportunities around there. But they're hitting what they said they were going to do. I mean, they've been delayed a little bit, but it's not unexpected, not unexpected, I guess, in this industry when you're starting up a new mine. But thankfully, they're in production today, and they're hitting their stride.

Got it. And as far as, like, with Perry, you know, you mentioned that trying to get the right price for it and taking – some of the equipment and moving it or transitioning it over to Wyoming County in West Virginia. If you take that away from Perry, is that going to cannibalize or degrade the value of that asset as you would present it to a potential purchaser?

I mean, we're looking at maximizing the value for our investors. We believe Wyoming County is one of the most attractive opportunities we have in front of us today. High margin, looking at generating cash. I mean, we could talk very frank. Coal businesses sometimes aren't. We want to look at maximizing the value of our coal business today, maximizing the revenue and the cash flow generation from our coal business today. We believe the value of our assets redeployed to Wyoming County would be roughly $40 million. The cost to reclaim the complex would be roughly $5 million. That would be a net realization of value to our investors of roughly $35 million if we deploy it to Wyoming County. If there's an investor that would like to buy it, they can come in around those values and pay us cash for it. We are open to that. We are open to monetizing it in the most accretive way for our investors. But those assets and that equipment, and there's other assets and equipment we can bring to Wyoming County as well, But today our focus, it needs to be run as a three-section mine. If that was all our focus and all we were focused on doing is just running Perry County, we could put three sections in there and we can make money. There's a lot of people that want to do that. And we've had offers on the complex. They're not in a position, those offers weren't quite as high. Some of them were close, actually quite close to the replacement value of redeploying those assets to our Wyoming County division, but they weren't there yet. And so ultimately right now it's, we're looking at the cost-benefit analysis and we're looking at what's the most accretive aspect for our investors. And if that means redeploying our equipment and infrastructure and assets to Wyoming County, we'll do that. But what we're not going to do is sit on our hands and wait for somebody to come and match that value. They either need to move quickly or we're going to redeploy the assets and maximize the value today.

Well, I would never accuse you of sitting on your hands. That's for sure. With regards to Wyoming County, I think the bond is $45 million today. With that, if that's correct, will that balance the construction budget? And, of course, you'll benefit by moving equipment over, but there's also inflation. So at the end of the day, are you going to need to raise equity, or do you think you're going to be able to, you know, with the cash flow and equipment and all these things together, not need to go to the markets?

No. I mean, I will say that, I mean, the $45 million is – built in quite a bit of contingency. Also, the ability for near-term revenue growth, revenue generation during the development phases of that. We actually think we could be in revenue very quickly there, even during the phase of development and offset those costs. I actually believe that, I mean, $45 million would be extremely well capitalized, especially with there's a lot of infrastructure we're already setting aside, rebuilding, and ready to deliver over to the complex. What we're doing by doing that is we're offsetting, we're de-risking it for ourselves and the tax and bond investors by doing those moves already. We've already started investing into that equipment. We've already started investing in the infrastructure. Now, if we redeploy the infrastructure over from Wyoming, it's going to be an extremely de-risked deal for both us and our taxes and bond investors. And that's a good thing. Higher likelihood for success and monetizing the asset, getting the assets online for the long term.

Got it. And as far as that goes, it seems like it's going to be a real sexy project, if you can say that, about a carbon producer. But what's your sense about closing that bond building and being able to move into production? Is that a 24 production are you looking at?

No, I mean, I think it can be, I'm going to be, I'm going to caveat this. I don't control the bond markets. Um, I mean, I never, we had how many banks just failed what a month ago? Not even. Um, so there's people like to sometimes hold me to timeframes on certain things outside my control, but this one is, uh, when the bond markets are fully open and when we, and I think our advisors Hilltop are doing a phenomenal job. I mean, world-class team over there. fully understand this environment. Um, there we're navigating and we want to make sure we put a good deal in place with good investors. And, and, but right now it's an extremely attractive mind to bring online. I mean, our customers are beating down the door. We have off takes that are very interested in that. There's, there's numerous off takes we can go to, uh, select some of the legacy mining companies around the region also have expressed interest in desire for that product. Um, so it's, we want to, we want to get it online quickly. But we're also want to make sure we do navigate the current market environment. And I think what we're seeing now is, I mean, even with unemployment rate climbing today, I think the interest rate environment is probably stabilizing, which is a good thing. That's the most important thing to get a tax bond done. Over the last five months, it would have been nearly impossible just because that's what killed those banks, right? With rising interest rates and pricing deals below it. So we're, but I think we're starting to see a pretty good environment for it.

Once markets stabilize, sorry for interrupting, Mark. Apologize. Once they stabilize, pretty much closure would be imminent at that point, I'm wondering. And then how long to build and start seeing some benefit from Washington County or Wyoming County?

Yeah, I mean, we're going to mobilize quickly. We've already narrowed it down on the development team that's going to be up there. Our current operating team, led by Carlos Thompson, have been to the site numerous times, already doing the engineering planning phases of it. Um, I think it'll be, it would be months, not, not years, not quarters before we start moving dirt there. It'll be days. I think before we we'll, we'll, we'll probably start moving dirt there here in the near term anyways, even before it closes.

But as far as production goes, uh, I don't know.

Yeah, we can start generating revenue in three months. I mean, there's some work we got to put cap, which is the taxes and bond will fund. We're bringing infrastructure over for the processing plant from other plants we already have that are idled and not being used. But within months, we can start generating some revenue. That would be development revenue, though. But within six months, and building in a little bit of cushion for myself, we can be producing at a pretty steady state.

But I'm a little ignorant here, totally. Aren't you going to have to build a plant, or is there an existing plant that you're – you're working on?

Yeah, Wyoming County is a really attractive complex. The way that we developed it and the way that it's set up and the way that our plan has been developed is there's two deep mines that would build directly into the processing plant that already is on site. Now, we are going to upgrade that plant using a lot of the infrastructure we already have and equipment we already have at various projects. So that'll be the focus is developing the deep mines and upgrading the plant simultaneously. There's a rail loadout on site as well that accesses the NS uh norfolk southern rail so it's uh what what's why we we paid over 26 million dollars for this complex when we bought it a number of years ago the reason we bought it is one it's fully permitted two it has the existing plan on site that can be upgraded quickly got the two deep mines within a strata that is very similar to what we already mine in kentucky at the carnegie mines and so it's a it's a relatively straightforward development plan and a low-risk development plan given what's already on site there today.

Excellent. Thank you for that tutorial on that. I appreciate that. You have a lot going on, and Wyoming County doesn't get a lot of press except for the bond in the last couple years. So thank you for your patience. Moving on to re-element. I'm really quite interested in the spodumene and your ability to co-locate It seems that there's dozens of lithium companies out there, resource companies that each have their own kind of like black box or bag of tricks to be able to concentrate the lithium to ship. And I just want you to tell me if I got this right, but it sounds like you're talking to lots of people. There's really an opportunity. But I'm wondering, you know, it's sometimes disruptive technologies have a tough time penetrating until it's seen that it really is lower cost. And I'm just wondering if you have the flexibility to be able to dominate that space in terms of, you know, the really the difficulty that lithium, you know, companies are having to be able to produce a concentrate. And the reason for the long question is I'm just, I don't want to overstate that but it just seems like you're in an excellent position in a market where if this ev thing is going to work out you know lithium is going to be you know kind of one of those critical items that it really rises to the top and being uh scarce and um and so how do you see you fitting in from an industry level as being the go-to um technology to be able to uh for the initial extraction of of lithium and production of spodumene?

Yeah, that's a good question, and that is really why our technology is able to be showcased in a very efficient way. One, our energy use and our chemical use versus the alternative is a fraction of solvent extraction. We're not using a series of mixtures and settlers, hundreds of them at times, even thousands of them at times. We're using columns. And we're not using high pressure or high heat within those columns either. So it's a very efficient form of processing. The cost structure matters, right? Everything matters. But what a lot of people don't realize is logistics matter. So when you're dealing with commodities, if you're transporting a raw commodity halfway across the world to be refined, there's a huge cost to that. Lithium spodumene is typically a 6% lithium ore. Meaning you're transporting 94% rock halfway across the world to be purified to a 99.99% purity. Most people can't get to that high. We can. But more importantly, we can localize that. So why Africa has been such a huge opportunity is there is hundreds of thousands of tons of lithium spodumene that is transported from African nations to China today to be purified. We've already been testing that material in our facility, and we've already been processing it to showcase what it can do, one, at small scale. But what we've proven is that our technology works as it scales up even better, and that's because of surface area interface, basically the surface area with the resins. So the bigger the columns, the more resin you have, the more surface area you have, which lowers our cost structure. But the ability to localize that and the ability to do it timely, meaning we can build a plant and deploy it in three to six months. The agreements that we're putting in place throughout different African nations right now, predominantly at ports, because then we can process multiple products from multiple mines, that's a big deal. And there's a lot of volume of material that can be processed and can be processed very quickly. So I do think that the localization, not only at the spodumene side, but also on the battery manufacturing side of the battery industry is a big deal. If you can offset that transportation cost, take things off the highways that you're transporting back and forth multiple times, you're saving everybody money in the equation. And we've been working with a number of the OEM partners showcasing our technology. And that takes time. I mean, everybody wants us to sign an offtake immediately. And so do we. We also want to select our partners and they want to select us and make sure that they feel comfortable with it. Now we are in Third, fourth, fifth, sixth, eighth meeting with certain parties that have seen the technology and including the one that we're co-locating a design facility for them as we speak right now for their facility. So it's a big opportunity. Now, I would say the African opportunities from a revenue perspective are huge. These are big mines that are mechanized mines. These aren't children labor. There's a misconception of how things are mined over there and really not fair to some of the attractive opportunities that are over there. Um, but these are, these are big revenue opportunities. Uh, I mean, the one, the first one we're working on is a pilot program. It's an exploration phase permit of 8 million tons of lithium spodumene, uh, targeting to produce their initial production is 35,000 metric tons of spodumene a year under the exploration plan. That's a, that's a big opportunity, a big potential for us and could be substantial revenue. right off the bat, and we could build on that pretty quickly. We're working aggressively on that. We've been working on it for almost eight months now, and it's coming to fruition pretty quickly, we hope.

Great. That's just super. You know, the transportation you laid out is undeniable, a huge cost savings. But I guess as I've learned about your technology, it is so effective in producing high cost high purity material that has the side benefit of being flexible for different types of material that you process. The original part of my question was that each one of these lithium mines has a unique ore, and my sense is that your chromatography process isn't distracted by the nuances of the ore. in terms of you just have to get it into the right, you know, the right condition and then just, you know, present it to your columns with the, you know, with the technology. And so it just seems like it could be a universally a very, you know, something that would be considered by every company going in as opposed to feeling like they need to develop something proprietary that would take years and cost. You hit on a good point.

So what's unique about not only – so our patents are great, and our trade secrets are better. But what also we possess is the ability to run simulation software that we can plug in based on our ICPS machines that we own, that we can plug in the data that will run the virtual simulations to tell us our mass balance calculations, which means we can process any ores, any chemistries. Because of that software, we can move very quickly. We don't have to spend weeks or months in labs running analysis to dial in or solve an extraction call of tanks and change our emulsion chemicals and ratios. We don't have to do that. All we need to do is run it through our mass balance calculations based on what our body's coming in to run those simulations virtually. That software we control that was put together through 40 years of research by Dr. Wang and Dr. Yiding on our team now is an absolute game changer for us, not only for the lithium bodies, but also the magnet materials. And that is what's unique about the flexibility of our technology. And then the purity. I mean, purity matters. Purity is, I mean, the impurities within a battery are oftentimes what causes a combustion event, which causes fires with a battery. When I first met Bob, that's one thing that he's like, you need to make sure you can bring high purity. And we showcased it to him. He joined our technical advisory board and then just recently agreed to join our board because he felt comfortable with the efficacy of our technology and the proof in our technology of how it works. He watched the, he watched the facility run and he's like, that's, that's gold. That's a game changer. And, uh, and we're, I mean, I'm obviously super thankful to have him on our team because he's a rock star. I mean, he's probably the most respected or one of the most respected guys in the battery industry to have him on our team. I can't, I mean, it's hard, hard to express our gratitude towards that, but, but he believes in the technology and that's important.

Does the co-location that you're seeing, that opportunity, does that reduce the need to be able to build this other facility in Indianapolis that you've kind of got online? And what's the timing for that?

Yeah. We have not announced our second facility. We did say it's going to be in Indiana. The bid has been approved for that facility. Now we're waiting on documents. We've already started renovating it. But no, so the co-location opportunities would not in this place. We still need a bigger facility. We've way outgrown our existing facility already. So we need our larger scale facility. But also the partnership opportunities for people to co-locate at our facility. The facility we selected is 42 acres. It's a huge site. And so the ability to bring in partners alongside of us, either magnet producers, battery producers, cam producers, we're in conversations with them because we'll have a lot of excess capacity at that site. And it'll be our large-scale internal site, but also then from there, it'll be all about collocation.

Got it. I apologize. I just realized how long I've been on this call. I've enjoyed your answers. As far as like the magnitude of the purification of a particular metal, does lithium look like it's going to be several magnitudes more than what the other metals that you are involved with as far as market size and acceptance and demand? Is lithium the big one?

Yeah. I mean, so lithium ores and lithium ores is the largest opportunity we have in front of us right now just because we have some opportunities that are really large. That being said, I think there's some cobalt operations that just shut down because of the market environment today because prices went up and prices went back down. we can actually help make those projects profitable. And so that's – I think the opportunity to explore the other ores and the other materials is good. On batteries, you're going to produce more nickel and cobalt than you will lithium. Mark, are you talking about cobalt mines there?

Yeah.

Okay.

And I do apologize for keeping this long. Last question. Do you think we're going to start to see meaningful revenues on the – from re-element on the rare earths and the battery metals this year?

I think by the end of the year. I mean, we are already making money on the metal side of the business and part of our breakdown recycling process. I know USA Rare Earth and AML are actually both doing really well on the magnet side. They're getting really close, and that will unlock some pretty significant revenue for us. From everything I'm hearing, they will be up and running this year, which I know AML will. I think USA Rear is going to be a lot bigger producer. They're being led by a world-class team. Then on the battery side, I think some of these projects we're working on could move really quickly. By the end of the year, I think we could be generating pretty substantial revenue, but things outside of our control. We wait on our partners for some of those things. Now, that being said, they're advancing quickly, though, and we feel good about those time frames.

Thank you. Our next question comes from the line of Steve Siegel with KBB Asset Management. Please proceed with your question.

Hey, Mark. Congratulations on all the benchmarks you've already accomplished with the re-element, especially. Most of my questions I was going to ask have been asked and answered already, so I was just wondering if you can talk a little bit about Novastera. Yeah, absolutely.

So we sold, Novastera is a, Novastera actually ties into the Wyoming County Complex as well. It's part of what, that'll be the initial pre-stock, pre-feed stock processing for that. But we ended up selling the exclusive rights to those patents to Novastera for equity in Novastera. As you can see, what we've said, we set out earlier, or end of last year, with the ability to align the interests of all of our team members, but also put people dedicatedly focused in that. And so Novastera was restructured. We brought in a new management team. Part of our team moved over there. And now they have a dedicated focus on operational controls. Now what's really exciting about Novastera is we did a sub-license with Kenai Defense. Kenai Defense already got the first contract with one of the military divisions. And now we're They've been approved for the second one as well. So Novastera in itself, knock on wood, here very shortly will be a profitable entity, which is really attractive based on those partnerships that it signed and the agreements it has with the DOD related parties through Kenai Defense. But ultimately then the technology development and the commercialization of it internally through Novastera will be tying into the electrolysis technology. The goal, the new team, the new CFO, Josh Brimball, who's A phenomenal guy has come on board. He's getting the audits back in line. He wanted to recreate them so that they're his work and he feels comfortable with them. Not that there was anything wrong with the prior, but he's that kind of dedicated guy that wants to button up perfectly. And then the company will refile SS1 to go through that public process. And it'll be a lot easier of a process than it was before because they won't have to raise the full $16 million the way that they're structuring it. They can do a much smaller deal and the company doesn't need that kind of money. We feel really good about it. It's progressing nicely. The team's in place. They're focused on it. They're dedicated on it. They're hitting the milestones.

And where would that be located, do you think? Would that be located in the Wyoming area? Yeah.

Yeah, I think Wyoming. It'll also be throughout Kentucky. And then I'm not on the board of Novus there anymore, but from my conversations with them, I believe it'll end up being a technology that's licensed out to third parties as well. and the ability to license that out to monetize it. Because it's a really unique technology processing waste material that otherwise would end up as a pollutant in the earth if they can process it before it goes there to be utilized.

And that's for the fly ash, right?

For the ash? Predominantly starting off with carbon waste material. Okay. Tying in from the coal that's sitting on the ground post-processing and fine particulates that couldn't be recovered. is the optimal feedstock for this, which is ultimately using electrolysis where you can also recover the critical inter-earth elements that are present within those feedstocks as well as a free byproduct out of it.

Right. Okay. Great. Thank you. Excellent.

Thank you, Steve. Appreciate you. Our next question is from the line of Kyle Gallagher with Merrill Lynch. Please assume for your questions.

Hey, Mark. First off, man, thank you for your patience with all of the questions. This is a great call, very informative, and it's not lost on all of us the time that you guys are sacrificing here, so thank you on that.

Thank you, guys. We appreciate you guys taking the time.

Absolutely. I'm wondering if you could just kind of broadly speak to, like, the length of your guys' patent portfolio, you know, kind of specifically on the rare – the re-element side centered around the chromatography, and then the electrolysis side. I'm just trying to understand what type of a runway you have as far as patent protection is concerned.

I'll walk through those at a relatively high level, but I'll dive into it a little bit. On the Purdue technologies, the chromatographic separation, for batch processing of magnets has about 19 years to 20 years worth of life left on it. So it was originally filed as a provisional patent, and then it was filed thereafter. So these are relatively new patents. And then the battery patent, we actually worked with Purdue on modifying that patent to run continuous multimodal chromatography. That was filed as a provisional, and we actually just filed a few months ago the actual process patent, so that'll have roughly 20 years worth of life on it. Our electrolysis technologies were filed through Ohio University, developed by Dr. Boddy, who's on our board. She's a genius, one of the most talented, hardest-working ladies I've ever met in my life, beyond my wife.

Aren't you delightfully honest?

I got to give her props. She puts up with me.

Smart man.

Those patents, roughly, there's about five patents, including the patents we sold to Novastera, have roughly about 15 years worth of life on them. So we have a pretty long runway on all of our patent portfolio. Now, we're also working on about three additional patents around our process chain for various materials and hopefully get at least one or two of those filed here within the next six months.

Got it. And then just last thing for me, I'm kind of trying to read between the lines here a little bit and just in listening to the call, but I hope maybe you can kind of just speak to it. Do you think it's a fair characterization? I'm trying to look at your guys' business, specifically on the re-element side, and think, you know, I understand on a high level you guys have positioned the re-element business at what you feel is the bottleneck in the process, you know, as far as the purification and recycling of these rare earth elements, as you guys are ramping that business up, what do you see the bottlenecks to ramping that business? Is it more on the securing feedstock side, offtake agreements, or is it just simply the process of, hey, these companies you know, there's plenty of feedstock, there's plenty of offtake, it's just more working through the process with those companies, to your point, for them to see you, see the technology, and make sure that you're the right partner. Could you maybe just provide a little bit of clarity on kind of that portion of the business?

Yeah, I'm going to work my way from the end of your question backwards. Offtake-wise, people... There's been a lot of offtake signs in the industry through people that had prior relationships at those firms. But what people don't realize is those firms aren't actually up and running. So most battery manufacturers that have announced production in the United States are anticipating running by 2025, 2026. So they're not actually supplying material yet. That being said, offtakes we don't believe are going to be a problem. One, domestically, everybody's searching for IRA-compliant materials. our process enables IRA compliant material. There's nobody that refines rare earth elements in the country other than us. And then on the battery side, you have our competitors like Lifecycle or Ascend. Ascend has a unique technology where they can produce CAM material. That's also going to a customer and trying to tell them to take a new product that changes how they do things today. We produce isolated, highly purified elements back to the to effectively better than the virgin ore. That gives us the ability to have a lot more flexibility and our customers to have a lot more flexibility. So we do not anticipate based on our conversations and based on the feedback of having issues with optics. I think we could sell everything in this industry 10 times over, which is a great problem to have, especially the purities that we produce at. Now, as we work with the battery manufacturers, showcasing our technology on a co-location aspect there's definitely I mean we're bringing a new technology not a new technology an existing technology to a new application that is that we they have to they want to see it they want to they want to come through our facilities which they've a lot of them have visited our facilities and they feel very good about what they see but but they still want to see it and they want to and they want to they want it to be showcased and so that's what we've been doing over the last six months we've had On a weekly basis, we've had battery manufacturers to partners coming through our facility, learning about our technology and getting up to speed on it. I mean, the technology, as I said, is not new. It's been used in the sugar industry, which is a very low margin industry for years. Insulin, Eli Lilly produces insulin using chromatographic separation. That's how it was actually through Dr. Wang. She worked with Eli Lilly for generations. That's how we met Bill Smith, who had 35 years at Lilly running chromatography facilities and building them to them. Now he's on our team as our director of engineering, which is, I mean, We're standing on the shoulders of giants with regards to our technology. The feedstock, yeah, the feedstock is probably the, I will say on the refining side, batteries are starting to come to end of life. On the ores, we're starting to see a tremendous amount of progress there, which we're going to some very resource rich nations that we can talk about here shortly, hopefully, which we're progressing very nicely. Magnet size, we're working with one of the largest windmill manufacturers in the world that is now delivering us magnets. And we have another call with them in the next week to discuss the amount of magnets they're supplying through there, working with the wind farms and stuff of that nature. But the feedstocks are still building. It's on the rarest side. It's an education telling people quit throwing them away because we can recycle them. And then two, we've developed an innovative way to break them down. I can recycle a hard drive cost effectively now, which are small magnets. But our process that we developed internally to be able to process those magnets really cost-effectively is a game changer. Actually, the idea came by Jay Campbell, who works for us, alongside Jeff Peterson, who's just a very smart guy thinking logically on how to do this. But developing those feedstocks comes into developing innovative ways to be able to process those feedstocks and cost-effectively process those feedstocks. So I would say feedstocks is probably – Across the industry as a whole, it's probably the biggest bottleneck. But once you get to the black mass, then there's nobody else that's doing what we're doing, the ability to process and refine locally. In the United States, that does not exist. Everybody else is trying to build hydromet. I don't think it's going to be able to operate profitably, and I think they're going to have a tremendously difficult time trying to keep it in compliance post-operating, let alone the energy and chemical costs associated with it.

I can jump in here, too, and add some color, Kyle. As regards to feedstock, yeah, it's probably the biggest bottleneck, especially on the recycling side. As more batteries become closer to end of life or get to end of life, obviously with the adoption of EV and other technologies, those supply sources will grow. But the flexibility of our technology allows us to navigate through those bottlenecks of feedstock supply, and that's why we've not pivoted, but looked at natural occurring sources of lithium in spodumene ore that comes from the African continent because they today are producing lithium spodumene. They're exporting it to China in a raw form to be processed. Getting our hands on those type of feedstocks today is key for us. Currently, there's a lot of lithium projects being explored and developed in the United States, and there's also need for permit reform. I think everybody can understand that here. But to get a mine up and running here in the United States takes somewhere between 10 and 15 years, just given all the regulatory constraints that we have here in the United States. And those are good from an environmental standpoint and labor standpoint and everything like that. And that's why our technology, the flexibility of our technology, fits really well within and solves those constraints in the supply chain because we can navigate it, we can co-locate abroad where we can add value of producing purified resources, as well as growing congruently with the market on the recycling side where we don't have to make massive capex bets, hope that the supplies, those feedstock supplies pick up, or if there's a big chasm there between deploying that capacity and not having to feed stocks to feed it, which we think will probably cause a problem in the recycling space as other refining methods attempt to be deployed, if that makes sense.

Yeah, thanks a lot, guys. Appreciate it. And it's been really fun to watch the development of the company here and bringing these new technologies online. So thanks again, guys.

Thank you.

We appreciate your time. Thank you. Our final question is from the line of Derek Stone, a private investor. Please proceed with your questions.

Concerning the V elements, can you tell us, for the SEC filing, is there any more input required from American Resources? or any kind of additional feedback that might be required and what that means for the timing of the spinoff.

Yep. So we filed the initial forms and the SEC came back with some very big questions, just pretty standard questions, just understanding how the management team would work and stuff to that nature. We have responded to those questions, but we are also waiting to – we've – you have those answers and ready to refile it, but the filing would have went stale without our fourth quarter numbers in there. So we needed to wait for our audit. So we intend to within the next week to refile that again. We think it could happen pretty quickly from there. Their questions were relatively standard. I can't go into too much detail, but nothing, nothing that would prevent this from happening. But it was just a, We're working through that process. We needed to get the 10-K filed, and now that we've got that filed, we can refile the amended Form 10 to push that through to fruition.

I can add some additional comments, Derek, as well. I mean, as we work through that SEC comment process, like Mark said, there was nothing catastrophic in those questions or comments, and we continue to work. And it's hard to comment on the timing of that process. But I will say that what we're focused on from spinning out the re-element technology is creating value for our shareholders. This is not an exercise of speed. This is an exercise of value. We feel really good about where the re-element division stands as far as the spin-out goes as well. We want to make sure that we do right for all of our shareholders and extracting the commensurate value, which we think is worth. And Mark said, we, you know, our, our intention is to build re element into a multi-billion dollar company. We think we have the team and we think we have a line of sight to do that. And we want that to be represented in the value of the spin out. Just not, we just don't want to spin it out for the sake of speed. We want to spin it out for the sake of extracting value for all of our shareholders.

So could there be another round of questions from the SEC when you refile?

Hard to say. We can't. Absolutely. That's definitely a possibility, but we'll have to wait and see.

And there's not going to be a situation where you then have to wait for a 10-Q for the first quarter and refile again? Is it just a 10-K for once a year that will cause that?

it's it's hard to speak on the timing of it yeah yeah yeah it's hard i mean i i wish we could give you a lot of clarity on that um if if the 10q would need to be refiled if there's a so by the time that it would come out again would the numbers go stale potentially um we hope to move quickly but we and obviously we believe it's in the best interest of the investors to do it we will move it as quickly as we possibly can but The FCC is going to do what it does, and we appreciate the fact of what they do. I mean, they're out there protecting all of us. So they will run their process. We will respond as expeditiously as we can to answer their questions, should they have any additional questions, and push this process forward as quickly as we possibly can.

All right. Thank you.

Thank you. Thank you. I'm going to turn the floor back to Mark Labargetta for any closing remarks.

Oh, yeah. As far as our team at Re-Element and American Resources, we thank everybody for the time they spent on this conference call, as well as being valued shareholders. We don't take it lightly. As the largest shareholder group of American Resources, we are here to build long-term value for our shareholders, and that's what we plan to do. So, Again, thanks, everybody, for the time today and for your interest, and we look forward to keeping you updated in future progression and future updates.

Thank you. This will conclude today's conference. We may disconnect your lines at this time. Thank you for your participation.