American Resources(AREC) - 2024 Q4 - Annual Report

Coal Production and Operations - American Resources Corporation has not mined or sold coal into thermal coal markets since mid-2019, with all mining operations currently idled due to adverse market conditions[20]. - In 2023, the Carnegie 1 Mine produced approximately 67,000 tons of coal, selling at an average price of $180 per ton[27]. - The Carnegie 2 Mine produced approximately 13,000 tons in 2023, with an average selling price of$237 per ton[28]. - The Wayland Surface Mine has an estimated capacity to produce up to approximately 15,000 tons per month of coal but has been idle since 2022[38]. - Deane Mining LLC operates one active underground mine (Access Energy) and one active surface mine (Razorblade Surface), with a total estimated coal production capacity of approximately 28,000 tons per month[47][48]. - Access Energy has not produced any coal since its acquisition, focusing instead on metallurgical and industrial markets[47]. - Razorblade Surface began production in mid-2018, with an estimated capacity of 8,000 tons per month, but has also seen nominal coal extraction[48]. - Coal sales for the company were primarily from the Carnegie 1 and 2 mines in 2023, with no meaningful sales from coal production in 2024[82]. Coal Deposits and Mining Permits - As of December 31, 2024, approximate coal deposits owned are 0 tons and leased are 11,108,724 tons, with minimum annual lease payments of $20,000[25]. - Knott County Coal holds 22 idled mining permits, with approximate coal deposits owned at 0 tons and leased at 3,207,000 tons[37]. - Wyoming County Coal LLC holds approximately 5,668,000 tons of coal deposits, with no current production and two idled underground mining permits[55]. - ERC Mining Indiana Corporation holds 4,383,298 tons of coal deposits in reclamation, with no current plans to mine the property[76][77]. Preparation Plants and Processing Capacity - The Bevins 1 Preparation Plant has a processing capacity of 800 tons per hour and can store approximately 100,000 tons of clean coal[30]. - The Bevins 2 Preparation Plant has a processing capacity of 500 tons per hour and can store approximately 45,000 tons of clean coal[31]. - The Supreme Energy Preparation Plant has a processing capacity of 400 tons per hour and is currently idled, requiring significant capital to bring back into operation[40]. - The Mill Creek Preparation Plant has an 800 ton-per-hour capacity, but currently utilizes less than 10$95,000, while the Knott County Coal property was approximately $286,000[33][42]. - In June 2023, Wyoming County Coal closed on an Industrial Development Bond for$45 million to finance permit and infrastructure development, with $32.5 million already expended by December 31, 2024[60]. - The company retains exposure for the first$10,000 per accident for workers' compensation liabilities, which could significantly impact operating costs[112]. - The complexity and evolving nature of mining regulations may delay the commencement or expansion of operations, affecting cash flow[99]. - The company is subject to stringent health and safety standards under the Mine Act and MINER Act, which may increase compliance costs[110]. - The company incurs costs related to blasting activities, including pre-blast surveys and monitoring, which may impact operational costs[136]. Environmental Regulations and Impact - Compliance with environmental laws and regulations may lead to increased capital, operating, and compliance costs, potentially adversely affecting operations[89]. - Changes in applicable laws regarding energy production and emissions could make coal a less attractive energy source, adversely affecting demand[92]. - The Clean Air Act and related state laws impose emission control requirements that could materially affect coal mining operations and financial results[114]. - The EPA's Clean Power Plan (CPP) aims to cut carbon emissions from existing power plants, which could adversely impact coal demand if upheld[120]. - Several states have adopted measures requiring GHG emissions reductions, which may lead to increased operational costs for coal mining companies[121]. - The uncertainty surrounding GHG regulations may inhibit utilities from investing in new coal-fired plants, potentially reducing coal demand and revenues[122]. - The Resource Conservation and Recovery Act (RCRA) establishes standards for hazardous waste management, which could significantly increase coal mining costs if exemptions are reclassified[131]. - The EPA's regulation of coal ash as solid waste may increase operational costs for customers, potentially reducing coal demand[132]. - The Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) imposes cleanup requirements for hazardous substance releases, which could significantly impact the company's financial results[134]. - The company is subject to the Endangered Species Act (ESA) and the Bald and Golden Eagle Protection Act, which may delay or prohibit mining permits due to compliance requirements[135]. - Compliance with the National Environmental Policy Act (NEPA) can be time-consuming and may impose mitigation measures affecting coal production from federal lands[137]. - Recent guidance from the Council on Environmental Quality may lead to additional delays and costs in NEPA evaluations due to increased scrutiny on greenhouse gas emissions[138]. - The company must comply with various federal, state, and local environmental laws, which can result in operational delays and additional costs[139]. Workforce and Company Structure - The company employs approximately 23 direct employees and is continually evaluating the optimal mix of company employees and contract labor[140]. - The company qualifies as a smaller reporting company and is not required to provide certain market risk disclosures[217].