January 4, 2019 - American Resources Corporation (OTC PINK: AREC), a supplier of raw materials to the rapidly growing global infrastructure marketplace with a primary focus is on the extraction, processing, transportation and selling of metallurgical coal to the steel industry, is pleased to announce it has entered into a multi-year coal sale agreement with a global buyer of high-quality metallurgical coal. Under the agreement, American Resources will lengthen and expand its current agreement with this customer to supply at least 50,000 tons per month of metallurgical coal (or coking coal), used in the process of creating coke necessary for steel making, over the next two years beginning in March 2019.
American Resources will produce, process, and load the coking coal for transport by rail at its McCoy Elkhorn Coal subsidiary located in Pike County, Kentucky. The expanded offtake agreement with this customer will have an annual fixed price and will generate revenue of over $58 million annually for American Resources, with a total contract value of over $111 million over the two-year term. The contract will reprice in the second year based on market prices and certain pricing collars and also have an option to expand tonnages. The customer has also provided a capital investment to finish the Carnegie 1 mine rehabilitation and expansion, as well as production at the company's PointRock mine.
"We're very excited about this expanded partnership," stated Mark Jensen, Chief Executive Officer at American Resources Corporation. " Having these type of relationships allow us to have our coal broadly distributed to a diverse end-user base and enables us to execute on our growth objectives with a certain level of visibility. We are actively working to increase the coal production at our Mine #15, Carnegie 1, and PointRock mines to satisfy this order and other sales opportunities for our metallurgical business, in addition to completing development of our Carnegie 2 mine to initiate production there as well."
The current contracted tonnages under this agreement represent approximately 30% of McCoy Elkhorn Coal's metallurgical coal production capabilities based on forecasted capex over the next year.
American Resources Corporation continues to focus on its growth objective by efficiently leveraging its large number of core mining permits and through identifying strategic, supplemental acquisitions. The company is committed to being one of the lowest cost operators in CAPP and throughout all its coal mining, processing, and transportation operations.
About American Resources Corporation
American Resources Corporation is a supplier of raw materials to the rapidly growing global infrastructure marketplace. The company's primary focus is on the extraction, processing, transportation and selling of metallurgical coal and pulverized coal injection (PCI) to the steel industry. The company operations are based in the Central Appalachian basin of eastern Kentucky and southern West Virginia where premium quality metallurgical products are located.
The company's business model is based on running a streamlined and efficient operation to economically extract and deliver resources to meet its customers' demands. By running operations with low or no legacy costs, American Resources Corporation works to maximize margins for its investors while being able to scale its operations to meet the growth of the global infrastructure market.