American Resources Corporation

Greetings and welcome to the American Resources Corporation second quarter 2024 conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If you require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce you to your host, Mark Lavaretti, Lavaretta, Executive Vice President. Thank you, Mark. You may begin.

Thanks, Alicia. And good afternoon, everyone. On behalf of American Resources Corporation, I'd like to welcome everyone to our second quarter of 2024 conference call and business update. We always welcome this opportunity to provide an update on our businesses and discuss our accomplishments we've made over the past several months and how we're uniquely positioned within the markets that we serve, for American Infrastructure, American Metals, and Re-Element Technologies divisions. Also on the call with me today is Mark Jensen, our Chairman and CEO, and Kirk Taylor, our Chief Financial Officer. We'll provide some prepared remarks, and then we'll get into the Q&A part of the call. But before we kick it off, I'd like to remind everyone of our normal cautionary statement. Certain statements discussed on today's call could constitute forward-looking statements within the meaning of the Private Security 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 statement. 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, for anyone wanting to ask a question today, I believe you have to dial in by phone to get into queue. First, on the prepared remarks, and before we get into that, I'd like to recognize our Chief Financial Officer, Kirk Taylor, again, as we continue to work through our recent changes and upgrades in our new PCAOB, Registered Public Accountants. As we continue to execute on our strategic plan of action of unbundling certain assets from a the American Resources Holding Company. We're conducting current and past audits on each of our entities to prepare them as standalone companies, as we've discussed in the past. We'd also like to thank our new PCAOB registered public accountants at GBQ Partners for their hard work, timeliness, and professionalism in enabling us to execute on their plan and meet our deadlines without having to take any further extensions. We strive to be transparent as possible. with how we are positioning American resources in each of our subsidiaries and the milestones that we are achieving. Looking back, it's been remarkable how far we've come and how fast we've done it since we first announced our re-element technology divisions only about three and a half years ago. And we try to recap our accomplishments on a quarterly basis. And we find ourselves selectively choosing which milestones to highlight. Our milestones are supported and driven by our substantial platform of assets, our groundbreaking intellectual property and technology and our best in class team. Rielemann has positioned itself as a world leader in deploying efficient, low cost and environmentally safe critical mineral refining capacity outside of China. We have positioned ourselves at the forefront in providing real critical mineral refining and sustainable solutions to the world and to diversify away from a single source monopolistic economy, which is afforded by China. Our application of chromatographic separation technology to the industry enables us to produce high-purity critical mineral products at high throughput and at a competitive, if not lower, cost in China. As much of the world is moving to develop a more diversified critical mineral supply chain, we are leading in providing efficient refining solutions to bridge upstream production and recycling to downstream manufacturing in a collaborative way. While a more diversified and resilient supply chain is still very much developing around the world, as demand for critical minerals is increasing in a big way, to meet the needs of our energy transition, national security, and more advanced consumer technology applications, ReELEMENT has put the pillars in place in leading the world in a more diversified supply of ultra-pure, manufacturing-grade critical mineral products. Our approach to the market includes operating and scaling our own facilities including our Noblesville Commercial Qualification Facility, our Kentucky Lithium Complex, and our Marion Advanced Technology Center, as well as our asset light powered by re-element offering. Our ability to produce ultra-pure critical mineral products solves probably the most complex part of the supply chain's challenges and is bolstered by our great team, our extensive asset base, and our breakthrough technologies. And that really is the value proposition of re-element technologies. But we believe our current stock price does not properly reflect the value of re-element or the sum of all of American resources parts. We are confident in our platform of assets and the path that they are on to create significant shareholder value. From a corporate standpoint, our goal is to continue to execute on our strategic directive and continue to spin off the majority of both American Infrastructure Corporation re-element technologies corporation and standalone companies and execute on the dspac merger between american metals and aitr that we've previously announced with that i'd like to turn the call over to our chairman and ceo mark jensen mark thanks mark i appreciate it and thank you all for joining today uh we'll go through this pretty quickly here but um really

excited about the position of where each one of our asset bases and each one of our divisions are currently positioned and where they're going here in the future. As we've stated several times, we're extremely well positioned within the divisions to create value for our shareholders and ultimately unlocking that value through the separation of these divisions so the management teams and the shareholders can drive value from the respective divisions. Over the course of the last six months, we've been putting the puzzle pieces together to capitalize on the opportunities and the momentum across each of these divisions with the respective management teams. And I can say today, we are in a position to unlock that value and drive value for the shareholders while also reducing the risk profile of each one of those divisions. It's important to understand and to reiterate, as we continue to undergo a growth from a consolidator and restructure of carbon operations, to focusing on monetizing and deploying that asset base for growth and for cash flow, as well as developing a technology and innovation hub that is truly revolutionary in terms of how critical minerals and rare earth elements are refined today outside of China, that cost structure that is lower than China's. The stock price today does not reflect what we believe the value of the company is. And ultimately, we also understand that it's probably confusing in the public market today of how to value our company because of the three different divisions as they have grown and as we have positioned those business lines to be standalone entities. We look to unlock that this year. So our goal is for American infrastructure and re-element technologies to be separate companies by the end of this year. And our team, our financial team, our audit team is putting the puzzle pieces in place to enable that to happen, as well as American Metals to be its own standalone company through the SPAC merger, which valued, through a fairness opinion, at $170 million valuation. Our focus is on preparing and positioning these business for growth, building out the management teams to drive these businesses forward, and to unlock that value and provide a clear, concise message to the market of what each one of these divisions can accomplish. Recently, we have distributed approximately 25% of American infrastructure with the goal of either merging the entity into an existing public company or getting it spun off through a Form 10 merger, a Form 10 dividend to our investor base so that American infrastructure can focus on its own growth division of the business. Similarly, Realment Technologies. Our goal ultimately is for this to be a standalone entity. Realment Technologies is having a phenomenal start this year and beginning of the second half of this year, where it's positioning itself as a premier refining technology company to the critical and rare earth element space. And we'll talk a little bit further about that here shortly. And then ultimately, the D-SPAC merger with American Metals and AITR. There's a lot going on behind the scenes in American Metals, which we'll touch on a little bit of that today. in terms of its positioning around the pre-processing and recycling of critical minerals, as well as ferrous metals and other highly important electrified metals. Let me dive a little bit here into the American Carbon business line. As we've discussed, our core divisions of this business are focused on either signing leases or bringing these operations into production in the near term. Our McCoy Elkhorn complex, we have signed a lease with an operator, and our goal is to restart the mines this year. hopefully here very shortly in the near term. This is positioned as one of the lowest cost metallurgical carbon, high-volume metallurgical carbon assets in the country. The efforts we put forth to reduce holding costs through reclamation, as well as positioning and setting up these mines to bring in a top-tier operator, which we have done, to unlock this value will drive cash flow to the bottom line of American infrastructure through a royalty-based structure, focusing purely on cash flow and reduction of capex required from us as well as operational risk. Our Wyoming County complex is probably one of the most exciting complexes, and having done a tremendous amount of development offsite to bring that equipment onsite to unlock this mine here in the near term. This is a mid-vol metallurgical carbon operation. It's one of the few, if not the only, greenfield mid-vol mines in the country that can be deployed in low capex model. We are also in negotiations with a multinational customer that has expressed interest in buying 80,000 tons a month at a very attractive price from both the McCoy and Wyoming County complexes. They'll be in town to our offices here this week to further those discussions with the hopes of putting that deal and getting that deal put in place along with some other opportunities we are working on to drive near-term revenue growth for our Wyoming County division as well as our McCoy complex. By blending these two products together, you're creating a the premier met carbon quality of product for the steel mills across not only our country, but also the world. Furthermore, at the American infrastructure division, we have our rare earth element component of the business. The Wyoming County complex has had third party verified characterization of rare earth elements of over 500 parts, 550 parts per million. From unconventional resources, this is by far and above the highest rare earth concentrate that we have seen from any carbon-based feedstock in the country. There's been other players within our industry that have announced it closer to the 400 level, but 550 parts per million tied in on the back end of an existing mining complex going into production here in the near term is the most economical resource we've seen from this and being a byproduct, we'll be able to generate cash flow because we're not developing it solely for that. We're developing it to produce mid-vol met carbon to the steel industry and generating value from the rare earth elements as a byproduct off the back end of that processing plant. We hope to have some very positive announcements coming out of Wyoming County and McCoy Elkhorn here shortly. We're also entertaining leases for our Perry County complex, as well as our Dean complex once we get through with the litigation we are pursuing against our former lessons. Let me dive here into Realment Technologies. Realment Technologies, we started off many years ago focused on the ability to produce rare earth elements from carbon-based materials. And then when we secured the technologies from Purdue University, we've expanded that footprint substantially to the highest value denominator within the industry. And now focusing on rare earth ores from end of life magnets, rare earth oxides from end of life magnets, rare earth oxides from rare earth ores, as well as battery ores, lithium spodumene, cobalt, nickel from end of life batteries, as well as from the ore based resources. What we have proven is that we can go head to head against China and produce rare earth oxides and battery grade materials at a lower cost structure than they can in the competitive environment over the long term. And we're going to continue to develop that technology and continue to optimize that technology to stay ahead of that curve. We've also proven the efficacy on concentrated brines. Lithium brines from DLE, we can take their flow sheets and simplify them dramatically. And we're working with a couple members within the industry to help them achieve that, to make DLE economic. What I'm super excited about is the direction that the business is going. We are running a hybrid model at Re-Element. Our hybrid model is driven by the fact of building out our core facilities, our Marion facility, which has the ability to produce rare earth oxides as well as battery materials, as well as our Kentucky lithium facility that will process lithium spodumene for lithium carbonate to the battery materials. From there, those are the ability to drive cash flows for our investors, but also demonstrate our technology to the world at highly commercial scale. Over the course of the last few years, we've been operating our Noblesville facility to get our products qualified with various customer bases. On the lithium side, it takes about a year, and we're through that with a number of parties. On the rare earth oxide department, we've also been shipping out our oxides to our customers, which we are now either signing contracts with, have signed contracts with, or negotiating with. From there, further than that, is developing our powered by re-element division. Powered by re-element is effectively refining as a service. where we provide our technology and our team locally at other company sites to reduce their CapEx, reduce their OpEx, supplement their flow sheet, or replace their flow sheet. The amount of interest we're having in this division is substantial. What's exciting about it is it's asset light. By asset light, meaning our customers will CapEx the facility and pay us a services fee on top of that to deploy our technology for them. which enables us to grow rapidly and become the technology of choice across the critical inner airspace on the separation and purification step, the most complex step within this industry as a whole, and typically the most expensive step within this industry. We simplify that and we deploy it and ultimately replace those flow sheets permanently for the future. Our Noblesville facility continues to operate on a daily basis, producing lithium carbonate from LFP batteries. We are doubling the size of that facility and capacity of that facility here very shortly, if not tripling it, based on some minor investments that we can make. And that's the exciting aspect of our technology, either increasing our production trains or expanding our production trains at very low capex expansion points to increase our production significantly. Our varying facility, we are at the point now where we're scoping equipment, ordering equipment, deploying assets to the facility to be able to start production here in the future, starting off initially for rare earth oxides. Our Kentucky lithium site, we actually have our crews on site. They're delivering equipment this weekend to start the teardown of the former coal mining complex and start laying the foundation for our Kentucky lithium refinery. We're excited about the infrastructure that we're able to utilize there and the current attributes that that site offers to us and the team that we have in place to be able to handle this facility. Our feedstock focus today is pretty broad. We are the only player in the space that can produce both heavy rare earths as well as light rare earths in a refined basis, and we're going to stay ahead of that curve and be the largest producer of those in the United States from our Marion facility. Being able to process natural ores from hard rock lithium to rare earth ores from all over the world and be able to deploy those here in the local environment. Internationally, we have signed our MOU with Jupiter Project, probably the largest lithium mine in the world, and they are currently in the development phase of that project with the goal of bringing that project on next year. Also in discussions all throughout Europe, having numerous discussions on both the rare earth and lithium side, as well as South America, Canada, Japan, and Australia. Our team is working on deployment of our technologies into joint ventures through Powered by Re-Element or through our existing facilities. but the sole focus is to get the facilities generating cash flows and deploying our technology quickly this year. The opportunity to provide low cost and environmentally safe critical and rare earth element refining around the world in a collaborative manner to meet the needs of the energy storage markets are abundant. The market is looking to us and more and more to provide solutions. Stranded capital both on the strategic and finance side is looking for ways to unlock their capital, and that comes down to the bottleneck within the world, which is refining. And we are highly confident that our technology and our suite of technologies will enable that to happen here in the near term. Realment's value proposition is unique. Our goal is to build into a multi-billion dollar business, and we believe we are well positioned within our assets and our team to be able to do that in a low capex, low opex manner. American Metals. as we have announced, is doing pre-processing for re-element. It does the dirty work of re-element in a safe, secure way. It helps break down end-of-life motors, power tools. It helps break down batteries. It helps establish the partnerships within the battery recycling space and partnerships. We have currently signed the definitive agreements with the SPAC merger, AI Transportation Acquisition Corp, AITR, that will enable us to execute upon the separation of this division and grow this division. Prior and after the signing of the definitive agreements, we have been in numerous joint venture relationships throughout not only the U.S., but also the world, including Europe, as well as in India, and looking to execute upon those joint venture agreements here in the near term, which we hope to be able to share with you. The value of our individual divisions, we believe, is substantially undervalued. At American Metals, with a fairness opinion that was brought to us, of $170 million would value the company at over five times the current market cap. We are currently pursuing growth, and the capital we're pursuing at ReElement would value the company at over five times the current market cap, and we have numerous patriotic capital funds. that have stepped up stating their desire to invest in the company and to invest in this round of capital that we're pursuing. American infrastructure has equipment that we've acquired that has a replacement value of over $270 million from coal processing plants to underground equipment to surface equipment. The royalty model that we're deploying there is us to generate substantial cash flow and put the focus of our operating team on our Wyoming County division, which has a significantly attractive market to operate into today with the price of mid-vol coal versus our extraction costs. We believe that the current market does not reflect the value of our divisions and ultimately our focus is on getting these separated so we can unlock that value for all of our shareholders. We remain very confident in our positioning of all of our assets and the long-term value they provide to our shareholders. We remain hyper-focused on unlocking that value and working behind the scenes to get all those puzzle pieces put in place, including the re-audit of our numbers due to the replacement of our auditor, as well as the positioning within the regulatory agencies to get these businesses separated. The evolution of our company and the transition of our technology-centric business and approach is well underway and better positions all of our American resources divisions for growth. We have ample liquidity and we do not foresee us needing to issue equity at the AREC level to raise capital. We will pursue subsidiary-based financing that is being offered to us today should we need additional capital to unlock this value. We also continue to explore and work through the capital raise, which we mentioned at re-element, and are working with numerous patriotic capital funds that understand the importance of our Department of Defense as well as our Department of Energy to source critical minerals produced locally in the US. And as the only refining company in the country that can refine both rare earth elements as well as battery materials, we are very well suited to protect and build our national security supply chain.

I thank you all for joining today.

I'm highly confident in our ability to execute upon our business plan and excited about the progress we've made over the last few weeks, the last few months to position these assets and to drive cash flow here in the near term to unlock the revenue potential of all of our assets. We look forward to communicating with you in the near future and being transparent about the objectives of the business as well as the execution upon the business. With that, I'd like to turn it back over to the moderator for some Q&A.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants 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. Our first question comes from the line of Jesse Solbason with E.F. Hutton. Please proceed with your question.

Hi, everyone. A lot going on, but very interesting story here. I just wanted to focus in on the re-element piece of the business here. Firstly, in the press release, you mentioned demonstrating the purification of rare earth ores at 99.5% or magnet grade. Can you explain how this grade for rare earth ores is different from something and maybe refining lithium to be battery grade? And secondly, can you elaborate on this demonstration conducted and was it at a commercial scale? And if not, what was the scale demonstrated and what is the timeline to build this out and prove out this technology at a commercial scale? Thanks.

Yeah, thanks, Jesse. I appreciate that. So what we've seen within our technology, and I'll work my way backwards on that, and hopefully if I miss a point, please jump in and correct me. or re-ask the question again, but the uniqueness of our technology and what we've seen so far is we've scaled it up well over 1,000x from lab scale, that was originally developed out of Purdue University and obviously then further developed by us, was that the efficacy of our technology is better at higher volumes, and that's due to the surface area interface of our resins that we utilize. So we've demonstrated at commercial scale, we've been through the qualification process on the battery side, The quality that we produce on the magnet side for rare earth oxide is at 99.5% purity, which is really what the battery guys need as well, is 99.5, targeting on specific impurities. But what we produced for our customer was they sent us a sample. So we weren't out there procuring the ores. They asked if we could process their ores, and they wanted a sample sent back to them. So it was a lab-scale process. that they asked us to perform, and that's just the volume of material they gave us. And they were very pleased with the results that we gave them back at greater than 99.5% for both the light rare earths as well as the heavy rare earths, which is really part of the major problem you have within our country is there is no heavy rare earth production, and we can obviously solve that for them. But we've delivered that customer. That was specifically for a customer that wanted us to process their ores. The attractiveness of our technology and the CapEx side of our business is the rarest ores is actually lower CapEx than even the rarest Magneside, which is still a low CapEx model. So we're excited about the results and excited about the position of that. On the battery side, 99.5 is what most people produce. And 99.9 is a very easy product for our team to produce from a lithium carbonate perspective. No, we will produce what the customer wants. If they want a 99.5, we'll produce them a 99.5. Did I address all your questions there?

Yes. Essentially, it sounds like the production was based on their sample. And just in terms of scaling, there isn't really a timeline there. It sounds like you guys are ready to go once maybe the partnerships are in place in order to build the facilities needed. Is that fair to say?

So we're starting. I was actually just at our facility today giving a lithium spodumene customer a tour of our facility, but we are currently identifying the equipment with the goal of in the next 30, 60 days to pull the trigger on the first equipment that will be going into the Marion facility specifically for rare earth oxide production. We have end-of-life magnet feedstock arrangements with large Detroit automotives. with a number of wind turbine companies, such as VDP Renewables, as well as power tool companies that we recycle those rare earth oxides from that were magnet. And so we're not necessarily waiting on them. We're moving forward as we speak to procure that equipment and get producing. The margins on rare earth oxides for us is extremely attractive right now in the market. And so we're moving as aggressively as we possibly can.

Great.

Great. Yeah. Um, just, just one quick follow up just on the technology itself. And this is more of a bigger picture thing. Um, and we talked a lot about recycling and refining there, but you know, there is a big push to potentially start working with, you know, Brian's lithium. Is your technology as applicable there as it is to, um, you know, the recycling side of the business we see today? Absolutely.

Um, so we've, we've actually worked with, uh, um, two DLE companies today that direct lithium extraction companies for the brines. And we significantly simplified their flow sheet. We reduced, we took six steps out of their flow sheet to get to battery grade materials by doing so. And that's really where Powered by Re-Element comes in, right? That's going to be, the DLE side will be pretty much specifically a Powered by Re-Element piece of business for us where they use our separation purification equipment in their facilities We charge them a service for that, and we lower their cost of production dramatically. It takes out all that precipitation and all the water extraction side of what they're trying to do.

Right. Cool. Great. Well, thanks for the details here. I will let you guys take some of the questions, but I appreciate you taking the time today. Thanks again. Excellent. Great questions. I appreciate it.

Thank you. Our next question comes from the line of Heiko with HC Rainwhite. Please proceed with your question.

Hey there, thanks for taking my questions. I assume you can hear me okay?

Yeah, I can hear from you.

Awesome, perfect. Hey, that fairness opinion you talked about earlier that, you know, 6x the value, can you give us some of the input factors used to derive that value and also maybe just a little bit more color on the fairness opinion, please?

I wish I actually could. It was not a fairness opinion that we paid for, so that was a fairness opinion that the SPAC itself put together. We obviously gave them a full data room access of the business and the opportunities and the partnerships we have in place under the American Metals business line, and they conducted that fairness opinion without any involvement from us, which ultimately is what you're supposed to do. So we don't have a lot of the details around it. We've just seen the language that will be included in the S-4, which we hope to get filed here once we get the quarterly numbers for American metals completed here shortly. If we get access to it, obviously we'll put that out in an AK if we can.

Yeah, I think you should, because I think it will make you look pretty good if the numbers you're talking about, you know, come in the way they are and if the input factors make sense.

Cool. Yeah, I will work with our lawyers. If we can, we will. I assume in the S4 that there will be language around that, but that's a lawyer question, which I'm not.

Yeah, I'm not one of those either. Fair enough. So in all these spinoffs and all the corporate M&A that's rhetoric, you know, the vestitures and everything that's going on with the company, Can you walk us through item by item how much cash has actually been brought in the door and how much more you're trying or you're assuming you're going to be getting call it between now and the end of the year?

Yeah, I will do my best. So at Re-Element, we have credit facilities which we've been operating on. We've received some revenues from customers such as our Japanese partner. But the re-element division, what we are talking to the patriotic capital funds about is between a $10 to $20 million raise of which a soft circle, most of that already, at a significant premium to the current market. The uniqueness of the re-element model today combined with taxes and bonds and or debt financing as well as customer prepays, that could be the last amount of capital we need to raise at the re-element level. with the focus of the business turning too powered by re-elements. And so that puts us in a really attractive spot, along with the tax-exempt bonds we have for Kentucky, which we hope to unlock here shortly through the development of that facility, as well as the opportunity to bring that production line online. As well as we are pursuing a tax-exempt bond for our Marion facility, which is probably one of the most attractive opportunities I've ever seen, given we already have all the infrastructure and spent all the money doing that. to build that facility out and have it ready for prime time today. The American Carbon Division, we obviously are developing our complex, and it will be a state-of-the-art complex within our Wyoming County Division. We are negotiating with a customer to date that wants to come to the table with a very big order and prepay for all of that revenue as well. So hopefully here in the near term we can provide some updates on that if it comes to fruition or not. But then also credit facilities we've had on the equipment leasing side and the ability to draw additional capital based on that. We have a significant asset base that's relatively unlevered at the American infrastructure side of the business that we could continue to expand that business. But the uniqueness of the business is with where Wyoming's getting close to just finishing the face-up and all the equipment's being delivered there from an infrastructure perspective, Um, there's not a lot of additional capital that needs to be spent on American infrastructure at all. Uh, the McCoy complex is already set up. So it's not a, it becomes from a, one of the few mining companies in the met carbon space. That's really not a mining company other than our focusing on our Wyoming division, which is the focus of the business is a CapEx light model going forward, just generating cash flow streams by leasing out the core assets that we focused on developing over time. American Metals has been traditionally a revenue driver on relatively small scale from the reclamation side of the mining properties where we've cleaned up and reclaimed over $30 million of liability that we acquired through the eight acquisitions we've made over the last eight years. And then we are merging with the SPAC. We'll see how much capital stays in trust, but we also have credit facilities available for American Metals should we want to grow faster than the SPAC capital in itself. And the SPAC capital doesn't stay in trust. or how much of a state is in trust. We're figuring that out as we speak. But the business doesn't need a substantial amount of capital today outside of what we just discussed right there. We have a low overhead. We don't have a significant capital need. The main focus is just getting equipment into our Marion facility as we speak and getting the Wyoming County division running. Does that answer your question, Heiko?

Maybe I lost it. That's pretty comprehensive. I appreciate it. Thank you very much. Awesome. Thank you.

Thank you. Our next question comes from the line of Bobby Genovese with BG Capital Group. Please proceed with your question.

Thank you, Mark. Thanks for the time today. Just to follow up on Michael's train of thought, If you added up, and I'm glad you've got your accountant on the line as well, if you added up the value of the equipment, the value of what you believe American element, fairness of opinion is, and the rest of the properties minus the debt, could you give the shareholders on this call a rough idea of what that asset base is that would be in the next audited financials. And then we would be able to take that number, put it in today's share price and figure out with 80 million shares that the equipment alone should be valuing this company at $1.50 plus. With the fairness of opinion from American element, It should be a multiple of that going forward. But I'd just like to hear your accountant sort of, you must have those ballpark numbers and the research you've had done on the company when you anticipate that being updated as well. And thank you.

I'll take a quick stab at it. If Kirk wants to interrupt me, he can. And I appreciate the question, Bobby. So if you look at our equipment, One, they don't show up in our gap financials and happy to give anybody a tour of any of our operations down in Kentucky and West Virginia to see the infrastructure and the equipment that we possess. But how we acquire these assets, they don't show up on our balance sheet because we bought them mostly through 363 bankruptcy sales. So we bought the assets and we bought them timely. We bought them in 2016 when nobody else wanted to. But the replacement value of these assets would be roughly around $300 million, let alone the new equipment we've acquired and have put in place for our Wyoming County division. Now, we have about 50, 55 million county, or about a little less than 52 million, 53 million, counting the tax exempt bond, which we have substantial cash under still, as well as, which we're completing the Wyoming County complex, as well as about $8 million of equipment leases that is going down substantially over time. So take that from the roughly $300 million of replacement value, $170 million is the fairness opinion under American Metals. And then, as I stated, on the re-element side, a minimum of $150 million valuation is what we're working with patriotic capital funds as the initial value, which we believe is substantially higher than that based on comps. That would put it at roughly $600 million minus the $50 million. Based on $80 million shares outstanding, I'm not saying that should be the stock price, I'm saying those are the numbers that we believe the assets are worth and that's the focus of unlocking that value in the public domain and separating these businesses so they're some more clearly easy to understand business line for everybody to invest in. But we do believe based on those values that we're substantially undervalued and we're not just sitting here saying that, we're putting action into work, putting forth the effort to create the action to unlock that value and realize that value. which we believe would still undervalue our re-element division based on the growth profile that we have within the marketplace. Thank you. Does that help you? Is that clear enough or do you need more clarification?

No, I think that's it. I'm just, like I'm sure the rest of the shareholders, a little shocked with the asset base alone of the company where the stock is trading. And, you know, I think with the next, research report comes out or the clarity and the next sets of financials come out to show, this thing is actually substantially undervalued. But we'll wait till that point. But thank you.

Yeah, absolutely. And I think also, I mean, if you look at the Realment side, we didn't expect to generate revenues from Powered by Realment this year. Yet we're bidding on two projects already and have a third in the works that could generate a couple million dollars in revenue just on the upfront component of it, based on the demand that the market needs. And really, honestly, the downturn in lithium prices is a huge opportunity for us because everybody's realizing that our technology is what unlocks that. So signing the lease with our mining customer to get them into production, Working on this project, which could be substantial revenue on Wyoming, as well as the revenue generation that's kicking in on the re-element side through Powered by Re-Element, as well as building out the facilities to generate our own internal revenues beyond Powered by Re-Element is substantial. And I think that's where we're focused on keeping our head down to drive this value for our investors and keep costs extremely low so that falls to the bottom line.

Thank you. Our next question comes from the line of Kyle Gallagher with Merrill Lynch. Please proceed with your question.

Hey, Mark. Good to talk to you again. Just wanted to kind of continue down that path of revenues on the rare earth side. You had mentioned, I think in the call, you had said you were through the qualification process with some of your customers. and entering into contracts for purchases, it sounds like. Is part of you expanding the Noblesville location to be able to fill orders and start realizing revenue? Or is Noblesville simply a qualification that really won't be revenue generating and it's going to be kind of all run through Marion?

Yeah, good question, Kyle, and I appreciate it. So, correct. The reason why we're expanding Noblesville is the sheer amount of volume of material that we're getting asked to test and also because we're getting POs from our customers that they want us to deliver product on. So we're expanding that to be able to deliver that product faster to expand our revenue base. Now, I wouldn't look at Noblesville as the focus for revenue generation for ourselves. the big return on capital we get is in our Marion facility. But if you look at a CapEx of a lithium refinery or a rare earth refinery, most of it's in the separation purification step, but ultimately for us, a majority of that's in the building and infrastructure because our separation purification step is very low CapEx. And so our goal, the attractiveness of Marion today is we have all of our natural gas finally installed, we have our water We have our utilities installed, which could be a really long lead time item for most. But we've got renovated this building. We're finishing the roof here in the next few weeks, but that doesn't hold us back from ordering equipment from this section that we're moving into. That's where the revenues really kick in. If you look at the rare earth oxide line, we're looking at building this out at a 2,000 metric ton a year rare earth oxide line with a payback period post start of commencement of operation in about two years. Today, based on average price, I would put it at about $160 million in revenue. And the only producer in the country that produces dysprosium as well as terbium from these products, which is in strong demand, let alone the neodymium and presididinium that we produce from both ores as well as magnet material. That's where the revenue is really going to come from. But more importantly, I would also say powered by re-elements. Most people are realizing that hydromet doesn't work. And the change in chemistry of the batteries, as well as magnets and everything else, is creating a huge problem within the industry. And so a lot of people were scoping out building a hydromet plant. Now they realize they can't do that because chemistries are changing. And now they're coming to us to help them design that process in a partnership way and to truly optimize everybody's flow sheets and make it simpler and better. And with that, we get near-term revenue generation for re-element in a very low

low risk way for us low capex model for us and we we look forward to talking a lot more about power by realm over the next few months yeah are you able to give um any sort of color or information kind of on you know kind of general size of some of the purchase orders like i i mean is it is it a scenario where they just say hey we'll we'll pay uh you know x per per ton you know up to you know, 1,000 tons or whatever the number is, how are generally those structured? And is there anything you can kind of give us more detail on what those look like, generally speaking?

Yeah, I mean, if you look at it, they're traditionally index-based. So we would like to live on the indexes today. We ultimately think the indexes are at a low point. I think lithium will drop below 10 here shortly. But I think it'll pop back up to that $25 number going into the end of next year. On the rare earth oxide level today, you're sitting at, for neodymium, prothidinium, you're about $50 a kilogram. For dysprosium, you're about $250 a kilogram. Blended average price based on the weight of the elements that we produce, we'd put it at about $65 to $70 a kilogram. So that's where our, maybe slightly upwards of that. That's where the, from the Marion initial production, combined with Noblesville, put us at that $160 million number, roughly. The off-takes we have, we have the USA Rare Earth off-take, we have partnerships with three or four other smaller ones, and then we have, that could be very big ones, and then we have a very large mall-side national company that was the one that sent us the ore-based sample that they wanted to process for one of their OEM customers. And then we have a few more on the ore side that we're working with. those are all coming into fruition right now and developing as we build out the facility. But we typically would like to stay on the indexes. We don't want to go into fixed price contracts. We think it's with the low cost of our production, we think we're best suited to maximize margin for our customers by living on the index pricing.

Great. And then just lastly, I just want to make sure I heard you correctly. Were you saying that you expect to start having Marion up and running and product going out the door in 2024?

Not Marion in 2024. We're starting to buy equipment for Marion now. We just got the facility rebuilt and renovated. Noblesville will, but then powered by Realment, we also believe we'll be starting to generate revenue in 2024, which is really the core focus of the business going forward. It's just coming together a little bit faster than we thought on the powered by re-element side. Marion will take a little bit of time to build out, but we'll start doing pre-processing in Marion and then build into full processing. The pre-processing could feed Noblesville in the meantime, but we're building it up pretty quickly, and we'll get with the operational team and provide guidance on that once we get a little bit more clarity on it, on the timeframe for Marion.

Great. Thanks a lot, Mark. I'll jump back in queue.

Excellent. Thank you.

Thank you. Our next question comes from the line of Mark Sloan as a private investor. Please proceed with your question.

Thank you. How does the American Metals SPAC deal go through to American Resources shareholders?

Yes. American Metals is 100% owned by American Resources today. Once we get a little bit further down with the Once we get a little bit further down the path on the S4, getting through effectiveness, we will distribute a portion of those shares to our underlying investors, which they will own, which will be a separate standalone public company. But the majority of that is currently, or all of it is currently held by American Resources today.

What percentage are you expecting to be distributed to the shareholders?

I'm not exactly sure yet. I don't have to meet with the board on that. I don't think the board has dictated the amount of the percentage that's going to be distributed to date yet. But obviously, it'll be, you'll either have, we'll either hold the value in American Resources or it'll be distributed. But once we get, once the board makes that determination of how much we're going to distribute, that'll be communicated through public press release as well as an 8K.

How much of the total value of the SPAC is actually going to American resources. So forget about the distribution. So how much is going to American resources versus how much is going to the other side of the SPAC deal?

So they valued American metals at 170 million. It ultimately depends on how much capital stays in trust. The sponsor will get a piece of the equity and then if the full 62 million stays in trust, then it'd be $170 million plus $62 million plus the sponsor shares. So roughly a $240, $250 million all-in value, roughly estimating. But American Resources alone, that $170 million value.

$170 to American Resources, assuming that value.

That is the value that they have proposed to us and was in the definitive agreements.

Okay, so one other separate question. In resources, yes, since there was a notice filed last week about a delay.

Yeah, it was filed today.

Our audit chair was traveling, unfortunately, out of the country, and we needed him to sign that. Our internal management team does not sign off on the quarterly reports. You need your audit chair to do that, and he was unfortunately traveling overseas, so he was unable to do that, so we had to file the NT. All right, thank you. All right.

All right, thank you for answering my questions. Excellent. Thank you.

Thank you. Our next question comes from the line of Keith Goodman with Maxim Group. Please proceed with your question.

Hi, guys. Most of my questions are answered. I just had a question about the patriotic capital, as you called it, or I guess the potential of raising some money from patriotic capital funds, I think is the way you described it. What is that capital going to be used for? That's directly for re-elements?

Yeah, that's a private, so we're not raising, as we stated publicly, we're not diluting our investors at the American resources level. We would be doing subsidiary-based financings for the division if we pursue capital. We have had a number of patriotic capital funds express interest in a structure that would value the business substantially higher than where it's at today. And we are working through that with them as we speak. But a patriotic capital fund is a And there's three or four of them that have approached us that we've known in the industry that are trying to develop the national security supply chain and investing along that path. And so that capital will go directly into re-element. The attractiveness of it is some of that will go into the Marion facility to buy equipment in the near term, but most of it will be just working capital that sits on the balance sheet at the cushion of capital on the balance sheet of re-element. As we pursue the spin off and get the company in its own separate public company, but there's the good thing about the business today, and other than ordering equipment. There's not a huge need for capital to be on the level of expanding the existing facilities.

So right now you're doing testing. Thanks for that. So right now you're doing testing on In Noblesville and you're shipping at some point, you're going to ship, you're obviously not charging for the testing that you're doing there, but if I'm not mistaken, you said you have a purchase order. That's changing. Okay. So, so you have a, so you have purchase order or purchase orders, I think he indicated, I'm not sure, but that you're producing in Noblesville, obviously it's a small facility. The goal is to get Marion up and running so you can produce larger volumes and charge for delivery of that, or you're gonna pivot and everything's gonna become powered by re-element? Yeah, we're still building out. You're gonna produce some and you're gonna do powered by re-element.

That's correct, so it's a hybrid. So when we initially developed the model and we moved towards a powered by re-element business offering, which we believe has huge merit, and I could walk through that briefly here again, We initially said we're going to build our commercial facilities in Marion and Kentucky, and that will be the ability to showcase the low cost, low capex scalability of our technology in a commercial environment to generate substantial revenues and cash flow to our investors. But more importantly from there is if we build additional production lines, we'll either do it with joint venture partners, we'll do it through Powered by ReElement, or our customers will capex the additional production lines in Marion. And so our model is not to constantly go out, at reELEMENT our model is not, and any of our business lines for that matter, is not to constantly go out and raise capital to incur the CapEx risk. Our model is to deploy the uniquenesses of our technologies and let other people CapEx it because they need what we offer. And I will say that the interest level we're getting on that front from big multinational corporations to smaller players that are building out their flow sheets is substantial. So today, historically, we have never charged for testing. We are now charging for testing. We are now in a position of strength and, more importantly, a position of collaboration with our partners and customers that we will start testing. If they want us to test and develop flow sheets for them, we will charge for that. And we're excited about the revenue potential of that, of monetizing our lab and monetizing our Noblesville facility in a very, very attractive way to be cash flow positive and not incur that OpEx cost ourselves going forward. unless it's a very unique circumstance. But also the ability to utilize powered by re-element as a way of supplementing and reducing people's capex on facilities they've already announced. And most people today, most hydromet facilities for lithium spodumene as well as recycled materials, hydromet doesn't make any sense right now. One, you can't recover all the materials, and two, it's really expensive to build and it's not flexible or versatile. Our technology is. And it's low CapEx, low OpEx. So we can step in and deploy our technology in their facilities, replace components of their flow sheet, and make it more viable for them to be successful. So truly developing a collaborative environment to utilize our technology to unlock the national supply chain, but also the global supply chain. There's no reason our technology shouldn't be the refining technology within everybody's facilities. And through Powered by Realiment, we can make that happen.

And you have indications from partners and customers that they're sort of on board with that?

Yes.

Yeah, and I would call them partners. I think that's the exciting thing about it is it's not, we're helping, people want to do business with us because we can save them money. And people will do business with us because we can either save them or make them more money and get permits from what we're trying to accomplish where other technologies are pretty hard to do so. We're chemical light. But the interest level we've had since we've announced Powered by Re-Element is amazing. And I will say the team, Chris Moorman on our team, Shane Tragathon, Jeff Peterson, Eding, have done an absolutely phenomenal job of getting back to these partners that need a solution and working with them on developing the flow sheets to deploy our technology in their facilities.

Does it matter which political party gets into office in November? No.

No, not really. This is commercial. We qualify for 45X. In this round of applications, we did apply for 48C. If Trump wins, he's probably going to kill the IRA. It doesn't really matter. We don't put that in our models. I think it's a kiss of death to build a business based on subsidies, so we don't do that. We don't need it from a cost structure perspective. We try to stay out of politics the best we can. and build a commercial enterprise that survives any administration. And I will say that no matter who wins, we need a strong national security supply chain. We don't have one at all today. From zirconium to niobium to rare earth elements to battery materials, we need to unlock this supply chain and make sure we have the materials here to defend our nation. And I think both parties recognize the importance of that.

So this isn't just about electric vehicles and demand being less. This is for Department of Defense equipment as well?

Yep, and energy storage. I would say energy storage, given we are probably the only player in the space that can recycle LFP batteries profitably, which is what predominantly energy storages are provided by. We destroyed our energy grid in this country. We created Um, huge variability, huge swings, which create high pricing pressure for utility customers, which is the individuals and taxpayers. Uh, we need to build out the one way we can balance the disruption we created within the grid is energy storage. You can actually use it as peaking non peaking, um, cut the tops off the spikes in the energy prices. Um, so the growth of energy of energy storage, I think is going to be robust and that's LSP, which is really the heart of our battery recycling technology. given we're one of the few, if not the only players in the space that can recycle an LLP battery very, very profitably, even in today's environment.

Okay. Thank you. That's all for me. Appreciate it. Excellent. Thank you.

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

Hi, Mark. Thanks for taking the call. You've explained re-element a lot. I have one other question about it. Should we think of re-element as like an asset light? It would be your employees and you're just going out to different sites all around the world and licensing re-element chemical processes. and getting some type of return on that? Will there be upfront fees and royalties for what's produced, do you think?

Yeah, thanks. I mean, I will say, if you asked me two years ago when we first developed, and not first developed, but when we started commercializing re-elements technology, we initially set broad ambitions of being the largest refinery in the world of rare earth elements and critical minerals. Not to say we don't end up there, but it's more through the power by re-element component of it. There's no reason for us to go replicate other people's flow sheets when we can supplement them. And in that process, we reduce our CapEx requirement, and we reduce the need to hire thousands and thousands of people. If people are already building the front-end processing from lithium spodumene or from Ferrarith ores or Rarith oxides, we can help supplement their flow sheet, deploy our technology, and charge a service fee, not necessarily a license fee, but a service fee to operate our technology within their flow sheets. That's really the focus of the business. Now, in the near term, the focus is getting our Kentucky lithium site up and running, which is very economic in today's market still, where most lithium processing are getting hurt by current pricing. We still have a very good cost structure and a lot of room given our processing costs. as well as on the rare earth oxide side in our Marion facility. Very, very high margins still at today's pricing. So it is a hybrid model. Our focus is on building these facilities out, making money, letting people come in and see them operate, and then deploy our technology in their facilities thereafter. But it's becoming more of an asset-light business over time.

All right. And then just a curious question. The Kentucky facility... that you have the bond on and Marion, will they be kind of competing for the same material eventually or they'll be different? Won't be.

Nope. So Kentucky is focused on lithium spodumene, which we have a number of partners, supply partnerships on that from all throughout the world. And then our Marion facility is focused on rare earth ores, rare earth magnets as feedstock, as well as recycled battery materials. So they both will produce lithium carbonate, but they're from different feedstocks. And the uniqueness is the contribution of assets, which we're doing an appraisal on our Kentucky infrastructure as we speak, that is being contributed to this project. It's substantial and enables this project to move a lot quicker from an empowerment, from piping, from infrastructure, from rail loadout, and all that stuff that we're able to utilize from our Kentucky site to get that project up and running in a low-cost way without re-spending that money again.

Got you. And then the magnets will be in Marion then, right?

Yep. Rare earth oxides from end-of-life magnets as well as from rare earth ores is in Marion. Okay, great. Thank you very much.

Excellent. Thank you, Steve.

Thank you. There are no further questions at this time. I'd like to turn the floor back over to Mark for closing comments.

Excellent. Well, one, I want to thank you all for joining today. I understand we have a lot of moving parts within the business. We hope to continue to streamline and clarify the objectives of the business, of unlocking value through the separation of the divisions. Ultimately, we are very thankful for the efforts of our team and for our external partners as well that have helped us position the assets to where they're at today to unlock this value, start to drive near-term revenue generation, as well as build the future of the businesses by creating business models that make a ton of sense in any economic environment, regardless if we hit a recession or don't hit a recession. We are very well suited to continue to grow the business and generate value for our shareholders. Please follow us over the next few months. We have a lot going on. We look to continue to provide transparency and communication to the investor base to help showcase what we're doing in positioning and growth of where the business is going. But I thank you all for joining today.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.