American Resources Corporation 2024 10-K Review\n\nAmerican Resources Corporation (ARC) is a publicly traded company (NASDAQ: AREC) whose origins began in natural gas fueling but shifted dramatically when its shareholders exchanged shares for coal interests in 2017. Today, ARC encompasses three segments: the idled coal-mining operations under American Infrastructure Corporation (AIC), the development of rare earth and battery critical elements purification under ReElement Technologies, and metal recovery and recycling under Electrified Materials Corporation (EMC). This review highlights the most important aspects of ARC’s 2024 Annual Report (Form 10-K), assesses its financial performance, and provides an investment score based on risk-return potential.\n\n---\n\n## 1. Business Overview\n\n### 1.1 American Infrastructure (Coal Division)\n- History: Acquired Quest Energy in 2017 and renamed it American Infrastructure in 2024.

• Assets: Seven coal-mining and processing subsidiaries: McCoy Elkhorn, Knott County Coal, Deane Mining, Wyoming County Coal (WCC), Perry County Resources, and ERC Mining Indiana.
• Operations: Historically mined metallurgical (met) coal for steel and pulverized coal injection (PCI).
• Current Status: All coal production idled since 2023 due to poor thermal coal markets and strategic shift to met coal — no production or sales in 2024.
• Infrastructure: Several coal preparation plants (Bevins #1 & #2, Mill Creek, Davidson Branch) and rail loadouts. Some idled facilities can restart with routine maintenance.

1.2 ReElement Technologies (Rare Earth & Lithium)\n- Focus: Purification and monetization of rare earth elements (REE) and critical battery materials from existing deposits and end-of-life magnets/batteries.

• 2024 Developments: Closed a $150 million industrial bond issue to build a 15,000 MT/year lithium refinery in Kentucky. Early construction and permitting underway.
• Accounting: ReElement convertible notes and LRR financing for land, offices, and processing facilities recognized on balance sheet; equity method previously for Novusterra (now deconsolidated).

1.3 Electrified Materials Corporation (Metal Recycling)\n- Focus: Aggregation, recovery, and sale of recovered steel and other metals.

• Status: Facilities leased from related parties; operations transitioning from pre-revenue trials to commercial scale.

---\n\n## 2. 2024 Financial Highlights\n\n### 2.1 Income Statement Review\n\n	Metric	2024	2023	Change
Total Revenue	$383 K	$13.23 M	-97%
Cost of Sales & Processing	$2.53 M	$8.99 M	-72%
Operating Expenses	$33.47 M	$49.61 M	-33%
Net Loss	$(40.2) M	$(38.7) M	-4%

• Revenue Collapse: Coal sales all but disappeared in 2024, down from $12.6 M to a de minimis $15 K. Metal recovery contributed nearly $109 K.
• Operating Expense Breakdown:
• General & Administrative: $21.02 M (2023: $10.67 M), reflecting higher corporate costs, development of ReElement, and stock-based compensation.
• Depreciation & Amortization: $4.28 M (2023: $3.55 M), including mine asset amortization.
• Development Costs: $2.15 M (2023: $11.31 M), lower primarily due to project staging.
• Accretion (ARO): $0.99 M (2023: $1.02 M).
• Net Loss: Marginally deeper at $(40.2) M vs. $(38.7) M in 2023.

2.2 Balance Sheet & Liquidity\n\n| Metric | 12/31/24 | 12/31/23 | % Change |

|---|---|---|---| | Total Assets | $205.0 M | $64.7 M | +217% | | Current Assets | $11.3 M | $37.8 M | -70% | | Restricted Cash & Investments | $164.6 M | $33.4 M | +393% | | Total Liabilities | $286.9 M | $109.7 M | +162% | | Total Debt & PEO | $222.6 M | $52.9 M | +321% | | Net Equity (Deficit) | $(81.9) M | $(45.0) M | -82% |

Warren.AI 💰 4.5 / 10

• Key Drivers of Asset Increase: $152.4 M restricted cash for AIC bonds; $19.4 M ROU assets for ReElement land leases.
• Debt Surge:
• $150 M non-recourse industrial bonds to finance ReElement024.
• $45 M 2023 tax-exempt bonds for WCC facility.
• $193.4 M bond payable (face value) less issuance costs.
• Working Capital: Deficit of $(73.5) M at 12/31/24.
• Cash: $0.6 M on hand; $155.4 M including restricted bond funds.

2.3 Cash Flows\n- Operating: $(22.2) M used (2023: $(20.1) M) as coal remains idled and corporate costs elevated.

• Investing: $0.06 M provided in 2024 (2023: $(1.35) M) mainly from equipment sales.
• Financing: $146.7 M provided in 2024 (2023: $45.8 M), net of bond issuances and debt repayments.

---\n\n## 3. Liquidity & Capital Needs\n ARC’s ability to continue as a going concern is in question. Cash burn remains high, and 2025 debt maturities, development costs, and corporate overhead will pressure liquidity. Key sources of funding: ongoing bond facilities (ReElement), potential equity issuances, convertible notes, and partner contributions. Failure to secure additional capital or operational cash flow would impair project completion, bond maintenance, and Alvarez’s financial condition.

---\n\n## 4. Major Commitments & Contingencies\n

• Asset Retirement Obligations: $22.3 M accrual for mine closure and reclamation ($21.3 M in 2023).
• Legal: $14.3 M accrued for litigation judgments/lease disputes.
• Permitting & Regulatory: Ongoing SMCRA, CWA, CAA, and environmental compliance costs.
• Lease Obligations: $22.9 M ROU liability for operating and finance leases (2023: $0 for finance leases).
• Convertible Notes: $2.1 M of related-party notes from LRR at 13.5% default rate, maturing through 2027.

---\n\n## 5. Risk Factors & Market Dynamics\n1. Coal Price & Demand Volatility: Met coal pricing depends on steel demand, global trade, and supply dynamics. Thermal coal remains depressed.

2. Regulatory & Environmental: Stringent federal/state regulations (SMCRA, CWA, CAA, RCRA, CERCLA, NEPA, climate change initiatives) raise prudential and compliance costs.
3. Reclamation & Bonding: Self-bonding restrictions may drive collateral requirements in the surety market.
4. Liquidity Risk: High debt service, negative working capital, dependence on bonds and external capital to fund operations and development.
5. Project Execution: ReElement lithium refinery and EMI facility execution risk—including cost overruns, permitting delays, technical scale-up.
6. Legal & Litigation: Ongoing lease disputes, environmental suits, regulatory enforcement could trigger material liabilities.

---\n\n## 6. Strategic Outlook & Catalysts\n- ReElement Lithium Refinery: Successful ramp to 15,000 MT/year of battery-grade lithium hydroxide/carbonate could unlock substantial cash flow.

• Rare Earth Processing: Commercialization of REE purification with U.S.-based supply chain could capture high margins and government incentives.
• Metal Recycling: Scaling EMC’s operations to capture steel scrap resale and industrial metals value.
• Asset Monetization: Potential sale or spin-off of idled AIC mines or JV partnerships to unlock coal assets value.
• Equity Raise & Partnerships: Required to reduce leverage and fund capex for ReElement and EMC.

---\n\n## 7. Net Loss & Key Metrics\n- 2024 Net Loss: $(40.2) M vs. $(38.7) M in 2023.

• Revenue: $0.4 M in 2024 vs. $13.2 M in 2023.
• Gross Loss Margin: $(2.14) M (2024) vs. $4.25 M (2023).
• Cash Burn (OpEx): $22.2 M in 2024.

---\n\n## 8. Investment Score: 4.5/10
Rationale:

• Pros: Rare earths & lithium assets prized by EV/clean-energy markets, significant U.S. bond financing, initial capex partially funded.
• Cons: High leverage, negative working capital, zero coal throughput, recurring net losses, execution and regulatory risks, further dilution likely.

---\n\nConclusion: ARC stands at a pivotal transition from a legacy coal miner to a multi-modal resource developer. The fortunes hinge on the execution risk of the ReElement lithium plant and REE separation processes, EMC’s metal recycling scale-up, and the company’s ability to navigate complex bond repayments and regulatory regimes. Serious investors should weigh high project-development risk and deep ongoing cash burn against upside exposures in critical minerals and electrification supply chains.

For further updates, track ARC’s bond financing, rare earth pilot results, and the first-year production data from the new lithium facility.