American Resources Stock Surged 60% on Wednesday After Announcing New Rare Earth Subsidiary

The company focuses on exploring strategic options to increase the value of Rare Earth assets securing the existing shareholders’ stake.

American Rare Earth LLC, a newly introduced subsidiary of American Resources Corp. (AREC) comes up with the goal of organizing and developing AREC’s portfolio of rare earth mineral sites.

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The shares of American Resources moved up by 60% on Wednesday followed by the announcement of American Rare Earth. AREC jumped almost 202% to an intraday high of $4.93, which was its highest trading price recorded since February 2019. The trading volume rose to 87.5 million shares, as compared to the full-day average of about 53,000 shares. The stock closed in at $2.60 by the end of yesterday’s trading session with a market capitalization of $68.25 million.

American Resources’ new subsidiary will focus on strengthening the company’s assets through high-quality, low-cost, and environmentally-sensitive rare earth mineral sites within its portfolio of assets and beyond. The company has designed a strategic approach to maximize the wealth of shareholders and explore rare mineral sites.

American Resources has already identified its first 10 rare earth mineral sites in eastern Kentucky. One of the sites is currently being engineered to recover rare earth elements after the evaluation was completed to begin the work at the site.

The CEO of American Resources said:

“The need for rare earth elements is a growing economic theme given the growing global demand from industries such as technology, automotive, aerospace and renewable energy.

The increasing demand for rare earth minerals has made the company come up with the solution of improving production through its new subsidiary. Currently, China is leading the market with approximately 80% of the global supply and that is one of the reasons why American Resources is focused to revive rare earth resource independence across the U.S.

The development project of rare earth is set to create 15 permanent job opportunities and estimates to create around 120 new jobs in the upcoming five years.

American Resources Prices Registered Direct Offering

Followed by the launch of a new subsidiary, the company also announced that it has signed a securities purchase agreement with institutional investors for the issuance of 5.2 million common stock shares at a per share price of $2.50, totaling almost $13 million in gross proceeds via this registered direct offering.

The company expects the offering to close on October 9, 2020, based on customary closing conditions. The exclusive placement agent for the public offering is Kingswood Capital Markets, a division of Benchmark Investments, Inc.

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