AMERICAN RESOURCES CORP Management’s Discussion and Analysis of Financial

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This Form 10-Q and other reports filed by Registrant from time to time with the
Securities and Exchange Commission (collectively the “Filings”) contain or may
contain forward looking statements and information that are based upon beliefs
of, and information currently available to, Registrant’s management as well as
estimates and assumptions made by Registrant’s management. When used in the
filings the words “anticipate”, “believe”, “estimate”, “expect”, “future”,
“intend”, “plan” or the negative of these terms and similar expressions as they
relate to Registrant or Registrant’s management identify forward looking
statements. Such statements reflect the current view of Registrant with respect
to future events and are subject to risks, uncertainties, assumptions and other
factors relating to Registrant’s industry, Registrant’s operations and results
of operations and any businesses that may be acquired by Registrant. Should one
or more of these risks or uncertainties materialize, or should the underlying
assumptions prove incorrect, actual results may differ significantly from those
anticipated, believed, estimated, expected, intended or planned.

Although Registrant believes that the expectations reflected in the
forward-looking statements are reasonable, Registrant cannot guarantee future
results, levels of activity, performance or achievements. Except as required by
applicable law, including the securities laws of the United States, Registrant
does not intend to update any of the forward-looking statements to conform these
statements to actual results.



Overview


When we formed our Company, our focus was to (i) construct and/or purchase and
manage a chain of combined gasoline, diesel and natural gas (NG) fueling and
service stations (initially, in the Miami, FL area); (ii) construct conversion
factories to convert NG to liquefied natural gas (LNG) and compressed natural
gas (CNG); and (iii) construct conversion factories to retrofit vehicles
currently using gasoline or diesel fuel to also run on NG in the United States
and also to build a convenience store to serve our customers in each of our
locations.

On January 5, 2017, American Resources Corporation (ARC) executed a Share
Exchange Agreement between the Company and Quest Energy Inc. (“Quest Energy”), a
private Company incorporated in the State of Indiana on May 2015 with offices at
12115 Visionary Way, Fishers, IN 46038, and due to the fulfillment of various
conditions precedent to closing of the transaction, the control of the Company
was transferred to the Quest Energy shareholders on February 7, 2017. This
transaction resulted in Quest Energy becoming a wholly-owned subsidiary of ARC.
Through Quest Energy, ARC was able to acquire coal mining and coal processing
operations, substantially all located in eastern Kentucky and western West
Virginia
. On November 25, 2020, Quest Energy changed its name to American Carbon
Corp.
(American Carbon)

American Carbon currently has seven coal mining and processing operating
subsidiaries: McCoy Elkhorn Coal LLC (doing business as McCoy Elkhorn Coal
Company
) (McCoy Elkhorn), Knott County Coal LLC (Knott County Coal), Deane
Mining, LLC
(Deane Mining) and Wyoming County Coal LLC (Wyoming County), Quest
Processing LLC
(Quest Processing), Perry County Resources (Perry County) located
in eastern Kentucky and western West Virginia within the Central Appalachian
coal basin, and ERC Mining Indiana Corporation (ERC) located in southwest
Indiana within the Illinois coal basin. The coal deposits under control by the
Company are generally comprise of metallurgical coal (used for steel making),
pulverized coal injections (used in the steel making process) and high-BTU, low
sulfur, low moisture bituminous coal used for a variety of uses within several
industries, including industrial customers and specialty products. Since
mid-2019, we have not mined or sold coal which is sold into the thermal coal
markets. All production and future investment will be for the mining of
metallurgical coal used in the steel and specialty markets.




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Efforts to diversify revenue streams have led to the establishment of additional
subsidiaries; American Metals LLC (AM) which is focused on the recovery and sale
of recovered metal and steel and American Rare Earth LLC (ARE) which is focused
on the aggregation and monetization of critical and rare earth element deposits.

We have not classified, and as a result, do not have any “proven” or “probable”
reserves as defined in United States Securities and Exchange Commission Industry
Guide 7, and as a result, our Company and its business activities are deemed to
be in the exploration stage until mineral deposits are defined on our
properties.




McCoy Elkhorn Coal LLC



General:


Located primarily within Pike County, Kentucky, McCoy Elkhorn is currently
comprised of two mines (Mine #15 and the Carnegie 1 Mine) in “hot idle” status,
and one mine in development (Carnegie 2 Mine), two coal preparation facilities
(Bevins #1 and Bevins #2), and other mines in various stages of development or
reclamation. McCoy Elkhorn sells its coal to a variety of customers, both
domestically and internationally, primarily to the steel making industry as a
high-vol “B” coal or blended coal. The coal controlled at McCoy Elkhorn (along
with our other subsidiaries) has not been classified as either “proven” or
“probable” as defined in the United States Securities and Exchange Commission
Industry Guide 7, and as a result, do not have any “proven” or “probable”
reserves under such definition and are classified as an “Exploration Stage”
pursuant to Industry Guide 7.



Mines:


Mine #15 is an underground mine in the Millard (also known as Glamorgan) coal
seam and located near Meta, Kentucky. Mine #15 is mined via room-and-pillar
mining methods using continuous miners, and the coal is belted directly from the
stockpile to McCoy Elkhorn’s coal preparation facility. Mine #15 is currently a
“Company run” mine, whereby the Company manages the workforce at the mine. The
coal from Mine #15 is stockpiled at the mine site and belted directly to the
Company’s nearby coal preparation facilities. Production at Mine #15
re-commenced under Quest Energy’s ownership in September 2016.

The Carnegie 1 Mine is an underground mine in the Alma and Upper Alma coal seams
and located near Kimper, Kentucky. In 2011, coal production from the Carnegie
Mine
in the Alma coal seam commenced and then subsequently the mine was idled.
Production at the Carnegie Mine was reinitiated in early 2017 under Quest
Energy’s ownership and is currently being mined via room-and-pillar mining
methods utilizing a continuous miner. The coal is stockpiled on-site and trucked
approximately 7 miles to McCoy Elkhorn’s preparation facilities. The Carnegie
Mine
is currently operated as a modified contractor mine, whereby McCoy Elkhorn
provides the mining infrastructure and equipment for the operations and pays the
contractor a fixed per-ton fee for managing the workforce, procuring the
supplies, and maintaining the equipment and infrastructure in proper working
order.




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Beginning in January 2020 through the report date, Mine #15 and Carnegie 1 mines
were idled due to the adverse market effects Covid-19 global pandemic. On
October 8, 2021, the Carnegie 1 mining operations recommenced.

Processing & Transportation:

The Bevins #1 Preparation Plant is an 800 ton-per hour coal preparation facility
located near Meta, Kentucky, across the road from Mine #15. Bevins #1 has raw
coal stockpile storage of approximately 25,000 tons and clean coal stockpile
storage of 100,000 tons of coal. The Bevins #1 facility has a fine coal circuit
and a stoker circuit that allows for enhance coal recovery and various coal
sizing options depending on the needs of the customer. The Company acquired the
Bevins Preparation Plants as idled facilities,…

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