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American Resources Says its Leased Thermal Coal Mine in Kentucky Has Begun Production

 

 

By Angela Harmantas

November 18, 2020 - American Resources Corporation (NASDAQ:AREC) announced Tuesday that construction began on its leased thermal coal operation in Perry County, Kentucky.

A third-party operator started carbon production under a long-term mine plan that will generate steady cash flow to American Resources of $1 per ton of carbon sold from the mine.

An additional $0.50 per ton of carbon sold will generate proceeds to set aside for final environmental remediation, the Fishers, Indiana-based company said in a statement.

"We are extremely pleased that our lease partner was successful in getting this mine into production,” said Thomas Sauve, CEO of American Resources in a statement.

“Their team put significant effort into hitting their time frames which has now resulted in substantial new job creation in the area, positive cash flows from the permit to American Resources and an environmental reclamation fund to ensure that post mining, the environmental remediation will be completed properly and on time.”

American Resources leased the mine to the third party in July of this year after determining that the asset, which it acquired through its purchase of Knott County Coal, did not fit into the company’s core operating plans to focus on the steel and infrastructure markets.

The group has not charged any upfront or minimum royalty payments as part of the lease agreement to ensure that the operator could maximize its chance to get the mine into production successfully.

The lease structure is a better fit for the current markets and focuses on generating stable long-term cash flows for the company while also creating jobs in eastern Kentucky, a region that “greatly needs them,” American Resources told shareholders.

The infrastructure company has a portfolio of assets in the Central Appalachian basin of Kentucky and southern West Virginia.