American Resources (NASDAQ:AREC) saw its stock fall about 2% after media reports indicated the Pentagon is re-evaluating an $80 million conditional loan commitment to ReElement Technologies Corp., a firm in which American Resources holds an affiliated minority stake.
The Office of Strategic Capital within the Pentagon initially announced the arrangement with ReElement as part of a larger $1.4 billion critical-minerals program that also named Vulcan Elements Inc. as a participant. Sources cited in reporting said officials charged with vetting ReElement have questioned the company’s capacity to scale its proprietary technology and have expressed doubts about its long-term revenue forecasts.
Those reviewing the transaction have not canceled the agreement, and the financing could still proceed. When the Pentagon unveiled the package, it emphasized that ReElement would need to pass further due diligence before any funds were released. To date, the Pentagon has not disbursed money under the arrangement.
The $1.4 billion initiative was framed as part of an effort by the Trump administration to spur domestic production of rare earth elements, materials that are used across a range of products from household appliances to defense systems. The Pentagon’s involvement has drawn scrutiny because of the strategic importance of such minerals.
The reported pause on the loan prompted public pushback from political figures. Peter Navarro, serving as a senior counselor for trade and manufacturing in the White House, criticized the approach taken by the Pentagon’s Office of Strategic Capital. Navarro said: "The due diligence cops within OSC with a private equity background have no experience how to manage a crisis at warp speed. Their over-burdensome due diligence disproportionately penalizes small innovative emerging companies."
Defending the review team, Pentagon spokesman Sean Parnell praised those managing the agreements, describing them as "the finest private equity dealmakers in the world, professionals whose unmatched expertise and qualifications stand second to none."
For investors watching American Resources and other firms linked to critical-minerals projects, the immediate market move reflected uncertainty tied to a conditional financing arrangement that remains under review. The agreement's potential outcomes hinge on the ongoing due diligence and subsequent decisions by the Pentagon's Office of Strategic Capital.
Sectors impacted: critical-minerals, defense contracting, manufacturing, and public markets.