USA Rare Earth Stock

Good day, and welcome to the USA Rare Earth's Third Quarter 2026 Conference Call. [Operator Instructions]. After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to J.B. Lowe, Vice President and Head of Investor Relations. Please go ahead.

Thank you, Betsy. Good afternoon, and welcome to USA Rare Earth's 2026 Third Quarter Earnings Conference Call. With me today are Thras Moraitis, Chief Executive Officer; and Rob Steele, Chief Financial Officer.

Following Thras and Rob's prepared remarks, we will open the lines for Q&A. I would like to remind participants that today's discussion may contain forward-looking statements. Please refer to the press release and our SEC filings for a discussion of risk factors.

Listeners who do not have a copy of the press release or associated presentation may access these documents by visiting the Investor Relations section of the company's website.

With that, I'll turn the call over to Thras.

Thank you, J.B., and good afternoon, everyone. I'm delighted to be hosting my first call as CEO of USA. Rare Earth, especially at such an important and defining moment for the company. I take on this role with a strong foundation already in place. Barbara Humpton and the team have built a high-quality platform of assets, capabilities and expertise spanning the rare earth value chain. I have also been greatly impressed by the dedication of our people, their passionate belief in the importance to society of what we are building at USA. Rare Earth and the strength of our culture.

Courage and pioneering spirit, personal responsibility, agility and entrepreneurial drive are amongst the shared values that define our organization. These qualities enable us to move with speed and conviction while navigating the complex geopolitical and operational challenges that characterize today's environment. My priority now is to build on this foundation and work alongside my team to optimize the development of an integrated globally competitive rare earth supply chain from mine to magnet and beyond. Before turning to my perspective on the markets, my 4 priorities and our unique market position, let me walk you through the highlights of the quarter.

Revenues to date are $14.5 million and for the quarter were $3 million, lower quarter-on-quarter as we faced raw material shortages, particularly of dysprosium oxide and Samarium metal. Nevertheless, we ended the quarter with $1.2 billion in cash on the balance sheet, a robust reserve of capital that we can use to fund our business going forward. At the same time, several important accomplishments during the quarter and the weeks thereafter demonstrate the continued momentum of the business.

We successfully completed the highly strategic merger with Serra Verde, marking a significant milestone in our growth strategy and in the advancement of our competitive position. Equally importantly, we commenced commercial scale shipments of MREC from Serra Verde in October with sales in November at a time when our benchmark non-Chinese prices are at record highs. We made our first sale of magnets from Stillwater while advancing magnet qualification with several customers. We produced commercial-grade oxide samples at Wheat Ridge, including NdPr, dysprosium and notably yttrium, making us one of the only players outside of Asia with the capability to supply yttrium from mine through separation to metal. At LCM, we have surpassed our full year 2025 production by August and are on track to increase volumes by nearly 90% in 2026 despite industry-wide raw material constraints.

At Round Top, we advanced our resource definition and upgrade drilling campaign with promising results from the first of several thousand assays. Furthermore, we are seeing strong demand for Round Top's heavy rare earth products and have already executed several nonbinding MOUs covering a significant portion of Round Top's anticipated oxide production.

Importantly, Round Top has the potential to become the only significant heavy rare earth producer in the United States. This underscores both the strategic significance of the asset and customers' expectation that the supply of these critical heavy rare earths will remain constrained for the foreseeable future.

Taken together, these results provide an important measure of the progress we are making, but they are also part of a much broader story about the opportunity ahead for USA Rare Earth and how we intend to position the company to capture it. Over more than 40 years of building and operating globally integrated materials companies, I have seen similar patterns emerge. When I entered the rare earth sector in 2020, the industry outside China was fragmented and severely underinvested in, reflecting historically modest demand and China's dominance in supply and pricing.

As demand surged from emerging technologies and China simultaneously tightened export controls, the industry outside China found itself unable to respond. Since then, investment has increasingly targeted the highest quality assets, while consolidation largely driven by USA Rare Earth has gathered pace. As in other industries facing sudden demand shocks, a few large integrated players will emerge with the assets, the capabilities and capital to build alternative value chains.

Given USA Rare Earth's platform, I firmly believe we are the best positioned to play a central role in shaping and accelerating that evolution, helping customers secure the rare earth products on which the technologies of the coming decades will depend. Our overarching goal is to build the integrated supply chain that will enable us to transform rare earth resources into advanced materials and ultimately, into high-value solutions for our end customers.

The case for a non-Chinese supply chain has been well articulated. So I want to connect it directly to the strategic decisions we are making. Our view that heavy rare earths would become increasingly scarce drove our decision to invest in Serra Verde and bring it into production and now to advance the development of our Round Top project. It also informed our pending investment in Carester, which is constructing a heavy rare earth separation facility in France that is expected to commence operations in early 2027, becoming the first commercial scale producer of dysprosium and terbium oxides outside Asia.

In addition, leveraging the technology developed in our Wheat Ridge demonstration plant in Colorado, we will start building our own separation capacity in the United States in 2027. Now moving down the value chain. Converting oxides into metals and alloys for magnets and other uses requires specialized know-how and significant furnace and strip casting capacity, which are now also in critical short supply outside of China, particularly for the conversion of dysprosium and Samarium.

That is why the acquisition of LCM, a leading producer of these alloys outside Asia for almost 30 years, was a strategically important move. We are leveraging the LCM team's expertise to develop equivalent facilities in the U.S. to support our magnet ambitions. And our planned French metal facility is being designed to process oxide from Carester and supply specialized metals and alloys to France's substantial aerospace and defense sectors. Our magnet facility in Stillwater, Oklahoma is already producing and selling magnets and progressing the qualification of magnets with several customers in the aerospace, mobility, robotics and defense sectors.

The acute shortage of critical metals and oxides, especially dysprosium oxide, Samarium cobalt metal and yttrium oxide, while impacting all industry players, reinforces the very rationale for USA Rare Earth's existence, securing the long-term supply of these vital materials. Our customers are looking for a secure, reliable and responsible alternative to China and delivering on that need requires an integrated approach.

The industry outside China is still developing and innovation continues at pace. So we must integrate and advance every component of the value chain. That is how we will build a competitive, sustainable business capable of delivering traceable critical materials and products to our customers while generating long-term value for our shareholders.

As CEO, I have 4 clear priorities: integration, execution, delivering for our customers and disciplined capital stewardship. My first priority is to integrate and streamline our operations. We have organized the company into 3 business units: upstream, encompassing mining, processing and separation; midstream covering metals, alloys and powders and downstream, focusing on magnets and derivative products. I believe in creating entrepreneurial business units, led by exceptional leaders where decisions are made as close as possible to the source of information. We are building an elite leadership team with experience from across the entire value chain and our key markets.

Following the Serra Verde merger, we have made substantial progress in bringing together our organization, systems, controls and commercial coordination across the U.S., U.K., Brazil and France. This integration is now nearing completion. My second priority is execution. Now that we have all the components of a multinational supply chain in place, our focus must be on flawless execution at every stage of the value chain. We are making significant progress.

In upstream, the first phase of Serra Verde's debottlenecking and expansion program was completed on time and within budget. Contrary to speculation from some quarters, production has ramped up meaningfully with volumes, recoveries and product quality all improving at pace. Delivery of MREC to our offtake partner commenced in October with sales recorded in November. Once Stage 1 is fully ramped up in 2027, we are targeting an annual production rate of approximately 4,000 tonnes of rare earth oxides.

Stage 2, which will increase average production capacity to approximately 6,400 tonnes per annum is already 40% complete with more than 75% of the capital committed and with commissioning planned for the third quarter of 2027. At Round Top, our resource upgrade drilling program is nearing completion. Results from the first 1,200 of more than 5,500 assays are consistent with historical data, confirming a heavy rare earth distribution of 72%. WSP is leading resource definition and engineering development and will serve as the qualified person for our technical and SK1300 reports expected in the third quarter of '27.

Fluor is undertaking the engineering design of the processing flow sheet. We are developing the Round Top project in accordance with best-in-class standards and procedures, supported by leading engineering partners. For our consolidated separation plant, which is being designed to process recycled swarf from our magnet production and mixed rare earth carbonate primarily from Serra Verde, will soon be -- we will soon be ordering long lead items and are in the process of securing a site in the U.S.

We expect construction to commence in early 2027. At Carester's Caremag facility, which we believe will be the largest heavy rare earth separation plant outside Asia, construction is nearing completion with production expected to begin early next year. Caremag has the potential to significantly accelerate our heavy rare earth separation capabilities, while Carester's proven expertise, proprietary technology and intellectual property provide a critical foundation for the development of our own facilities while materially reducing execution risk. In midstream, building on LCM's record year in production, we plan to expand our U.K. production capabilities across NdPr metals and alloys, Samarium cobalt and yttrium metal.

The pace of expansion will be aligned with feedstock availability and clear visibility on market demand. In France, we have filled -- we have filed the environmental dossier for our LCM Europe facility. In downstream, Line 1A at Stillwater is complete with annual production capacity of 600 tonnes of NdFeB magnets. Installation of Line B, which will double capacity is now underway and is expected to be commissioned in quarter 1 of next year.

In September, we broke ground on our magnet facility in Blacksburg, South Carolina. Together with the full build-out of Stillwater, once online, Blacksburg is expected to bring our total U.S. magnet capacity to approximately 10,000 tonnes per annum. My third priority is to translate the capacity we are building across our supply chain into high-quality products that customers value and hence, into revenue.

This quarter marks a watershed moment for USA Rare Earth in that respect. In addition to the significant progress at Serra Verde, September saw us deliver another important achievement, our first commercial magnet sales from production at Stillwater, sintered NDFE block magnets to a high-performance material manufacturer. We also expect to sell finished magnet prototypes to multiple customers by the year-end. We have signed letters of intent and MOUs covering approximately 2,500 tonnes of magnets and secured purchase orders across the industrial, mobility, aerospace and defense sectors.

Magnet qualification is a rigorous process that takes time and requires deep technical partnerships with customers. We are engaged with several customers on this basis. The assets and capabilities we have built across the value chain give us a broad range of opportunities for growth. My fourth priority is to ensure that the capital entrusted to us by our shareholders and governments is allocated with discipline to advance our strategic objectives and maximize returns.

Capital discipline, a focus on returns and demand clarity will guide the pace, the sequencing and scale of our investments, including Serra Verde's Phase 2 expansion, our U.S. separation capacity, Round Top, our metal and alloys facility in the U.K. and France, our magnet operations and selective inorganic opportunities that could strengthen our value chain. As the industry outside China evolves, this portfolio gives us the optionality and flexibility to help shape its development while adapting our investment priorities to changing market conditions and optimizing return on invested capital.

Before I hand over to Rob, I would like to make a few points that I believe are particularly important in a market characterized by rumors, uncertainty and volatility. We believe we are exceptionally well positioned in this market, primarily because of our exposure to heavy rare earths and exposure that is unique outside Asia. While light rare earths are and will be readily available, the same cannot be said for heavy rare earths.

This is the reason China is actively restricting access to these very materials. And by our assessment, will continue to consume its heavy rare earths for its rapidly growing domestic requirements. This structural imbalance has driven dysprosium and terbium prices to record levels, a development that, in our view, is not yet fully appreciated by the market. And these prices are reaching those levels precisely as we are beginning to deliver.

That is what makes Serra Verde so strategically important. It gives us access to a meaningful source of heavy rare earth production at a time when supply is critically constrained. Serra Verde is the only producer of heavy rare earths of meaningful scale outside Asia. Our Round Top development, once operational, could further cement our competitive position as a heavy rare earth producer. There are many players in this market making significant promises about what they intend to deliver. The difference is that Serra Verde is already producing at commercial scale, shipping product and has completed its first sales. We are now doing everything we can to ramp up production and serve the critical industries that depend on these materials.

With that, let me hand over to Rob.

Thank you, Thras. Today, I'll cover the following topics. First, I will take you through our third quarter results and balance sheet, followed by our outlook for Serra Verde sales volume for the fourth quarter. Finally, I will outline our key operational targets for calendar year 2027.

Turning to our third quarter results. Revenue for the quarter, which represents sales to third parties was $3 million and included our first revenue from NdFeB magnet sales. As Thras noted, the decrease from the second quarter reflects industry-wide raw material shortages caused by China's export restrictions, most notably in heavy rare earths and Samarium metal.

This limited what LCM and Stillwater could produce and sell. Cost of goods sold increased this quarter as we have now moved into production at Serra Verde and into sales at Stillwater, which required us to begin expensing non-inventorable costs that had previously been capitalized. Similar to the second quarter, gross margins were also impacted by higher raw material input costs tied to the supply challenges facing the entire industry, which are most acute in heavy rare earths and Samarium metal. We are actively engaging with alternative supply sources ahead of our anticipated access to feedstock from Carester, and we expect gross margin to improve as utilization increases at Stillwater and LCM and as LCM's legacy contracts are repriced over the first half of 2027.

Operating expenses were approximately $121 million. SG&A increased quarter-over-quarter on higher headcount and M&A and legal expenses, which were approximately $60 million higher than in Q2 and R&D increased with our Round Top drilling program and the addition of Serra Verde. We reported net income attributable to USA Rare Earth of $12 million, driven by a noncash gain of $137 million based on the fair value of our warrant and earn-out liabilities.

On a diluted basis, net loss per share was $0.02. Excluding the fair value gain and other adjustments, adjusted net loss was $126 million or $0.44 per share. Turning to the balance sheet. We ended the quarter with $1.2 billion in cash, cash equivalents and restricted cash. The decrease from the second quarter primarily reflects $190 million of net cash paid for Serra Verde, $148 million of operating cash used, including M&A transaction-related costs and $106 million of capital expenditures and equipment deposits. The Serra Verde purchase price and transaction-related costs are onetime in nature.

Turning to the fourth quarter outlook and key operational targets for 2027. As Thras mentioned, we started shipping products from Serra Verde to the SPV in October and made our first sales earlier this month. In the fourth quarter, we expect to sell at least 325 tons of TREO from Serra Verde. As you can see on Slide 9, Serra Verde's basket value at the floor prices we receive has averaged around $43 a kilogram quarter-to-date.

However, the actual basket price for the products we have been selling is around $97 per kilogram quarter-to-date, more than double the basket floor price. This has been entirely driven by the record prices for dysprosium and terbium outside of China. As a reminder, we are currently selling MREC and are only monetizing the 4 elements that go into NdFeB magnets at this time. And this $97 per kilogram basket price represents our share of the upside above the floor prices less separation costs.

It is the ability to separate the Serra Verde MREC into individual oxides through our planned facilities that will allow us to benefit from the other valuable rare earth elements such as yttrium. Now to our targets. Going forward, we intend to provide clear and measurable targets for each of our 3 business units. You can see the targets on Slide 10 of our earnings presentation in chronological order, our key operational targets are: first, as we announced today, we have completed our initial sales of block magnets to a high-performance materials manufacturer. In parallel, our first magnet finishing line has been installed, and we expect to sell finished magnet prototypes to multiple customers by year-end.

Second, in Q1 of 2027, we expect to install our second magnet finishing line, which will broaden our specialized product offering. Third, we anticipate filing an S-K 1300 report on Serra Verde as part of our 10-K filing in Q1 2027. Fourth, in Q2, we expect to commission Magnet Line 1B, adding an incremental 600 tons of NdFeB magnets, bringing the Stillwater capacity to 1,200 tons per annum.

Fifth, in Q2, we expect Stage 1 ramp-up at Serra Verde to be complete, reaching a steady-state run rate of 4,000 tons of TREO per month. Sixth, at LCM, we expect to install new Samarium metal furnaces in Q3 2027, raising our expected capacity for Samarium metal by around 30%. Seventh, in Q3 2027, we anticipate completing an S-K 1300 report for Round Top, which will provide higher certainty CapEx estimates and project economics.

And lastly, eighth, at Serra Verde, we expect to reach our Stage 2 steady-state production run rate of around 6,400 tons per annum of TREO y the end of 2027. With that, I will hand it back to Thras for some closing remarks.

Thanks, Rob. The targets Rob has outlined give you a strong sense of the continued progress we are planning for 2027. We also intend to hold an investor conference in early 2027, providing an opportunity to give investors a more comprehensive view of our strategy, operational progress and longer-term ambitions. Building an entirely new industry from scratch is an ambitious and complex undertaking, but it is essential that we succeed for the future of our economies and the continued advancement of technology. USA Rare Earth is well advanced on this journey.

Our ambition is to continue moving forward with pace while maintaining capital discipline and the responsibility required to become the world's leading rare earth enterprise. With that, I would like to open the call to your questions.

[Operator Instructions] The next question comes from Jeff Grampp with Northland Capital Markets.

I want to start on the magnet side of the business and congrats on the first commercial sales there. Just hoping to get a little more detail on any kind of volume comments or how you guys are expecting into that customer or maybe some other customers in aggregate that are kind of ramping volumes here into year-end and for '27.

Yes. So we're currently in prototype sales, which means we are proving the fact that we can sell magnets to our customers, but prototype cells are low volumes.

Got it. Okay. Thanks Rob. And shifting to Round Top. It looks like -- I mean you guys were targeting like a PFS and DFS maybe earlier in the year. It looks like the S-K1300 is coming a bit later. Just hoping to get a little more clarity on the time line there. It seems like demand is really good for that, reaching FID there and getting that project online, but just hoping to get an update on expected timing of that ahead.

Yes. So the report -- the first report you're talking about, we are still on track to submit to the Department of Commerce by year-end. And our S-K 1300 timing, as Thras mentioned, reflects more detailed work to enhance the economics of the outcome

If I can just add some color to that, Rob. My experience in building these projects is that the projects that are most successful are the ones that have the most engineering done by the time you do FID. And so we've done some additional drilling that we hadn't anticipated doing in the beginning because we wanted to make sure that we understood the ore body better. As I mentioned earlier, that drilling has reinforced our comfort in what we knew about the ore body. So it's been pretty much in line with historical drilling and assaying. So that was hugely positive.

And we're going to commence the detailed engineering early next year. And I'm hoping that we will have the detailed engineering fairly advanced, maybe to 50% to 60% before we do FID so that we can reduce all of the risks associated with building a project of this nature. So we are seeking to be ready to reach FID in the second half of next year.

The next question comes from Suji Desilva with ROTH Capital.

Congratulations on the progress. Can you talk about the length of the cycle from a magnet customer design win to what you're doing now, the prototyping for revenue to production sales? Like just give us a sense of the average length of the phases there so we can understand the pipeline, how it will convert.

Yes. I mean there is no average length. It really depends on the ultimate customer and the ultimate mix of the different types of products that they're trying to purchase from us. It can be anywhere from 6 to 9 months on the low end to as much as 2 years.

Okay. That's helpful, Rob. And then also with the shortages affecting LCM, the global shortages, can you just detail the specific steps you're taking to try to alleviate the component shortages that you're facing for LCM?

Yes, sure. So there are a number of different shortages. So let's sort of try to tackle them one by one. Dysprosium oxide is in extreme short supply. You can't get it out of China very easily at all. And so we are building up our reserves where we can find them. It's literally a hand-to-mouth situation on dysprosium oxide. And so we're picking up small tonnes here and there until we, of course, are able to separate the Serra Verde product in our own facilities.

Samarium metal, we have Samarium oxide. So we have access to Samarium oxide. It's really converting that into metal, which is where the bottleneck is in this case. And that will require us to install new capacity and furnace capacity. And so we -- those furnaces are on order. We have 2 furnaces on order. They will increase our capacity by around 30%, and we expect those to be delivered around the middle of next year. So it's -- the answer is different depending on which of the metals you're looking at.

The next question comes from Neal Dingmann with William Blair.

My question is around Serra Verde and Carester. And I guess what I'm trying to understand, will Carester have -- as Serra Verde come on and Thras you talked about and Rob you talked about the volumes, come on with Serra Verde. Will Carester be able to initially then handle most of that processing? Or could you tell me or walk me through as Serra Verde starts ramping, where and how that will be processed?

Yes. So the Serra Verde product, first of all, in its first phase, as you know, is committed to the offtake agreement with a special purpose vehicle. So in the first instance, that product is acquired and paid for by the special purpose vehicle. And then will be distributed to separators from that point. Of course, we are obviously a very credible receiver of that product, and so we'll be receiving that product in good time when our own separation plant is up and available.

The Carester plant is primarily a heavy rare earth separation plant. And so the product will require the removal of the lanthanum and cerium and the separation of NdPr before it can make its way to Carester. So that has to be done as a first step. Now obviously, we expect to do that by early '28 when our plant is up and running, and we'll do that in the U.S. and then we'll send the SEG+H or the heavy component to Carester. If there's a way to do that somewhere else before that, that, of course, will accelerate that process of separation.

Perfect. Perfect. And then my second question, just on the Department of Commerce awards you have. Do you -- I guess 2 questions on that. One, do you think that the new sort of changing political landscape that will have any bearing on when that award? And then could you remind me any stipulation on things that you might have to do to start receiving those awards?

Yes. So that's a great question, and we'll take it in a couple of parts. I think, first of all, all the funds for the DFC loan that go into the SPV or back our agreement with the DOC have already been appropriated. Two, I think it's important to understand that critical minerals have been a bipartisan topic. Our deal with Serra Verde and the DFC started during the Biden administration, for example. And then as we look about -- look at our ability and interest in the milestones going forward, I think it's important to note that we are not spending CapEx as quickly as the equity raise milestone assumed, and we have not submitted a reimbursement request to the DOC.

Second, as Thras mentioned, we are being very judicious with our investment in capacity, and we are aligning raw material supply with returns. Third, we have more capital available than our CapEx plan for the next plus or minus 12 months. So should we decide not to raise according to our equity milestone, we would, of course, have a discussion with the DOC with whom we have a constructive relationship.

The next question comes from Derek Soderberg with Cantor Fitzgerald.

I wanted to start with Serra Verde, Slide 9. Can you talk about the $97 per kilogram basket that excludes separation costs? What sort of costs come out after that point? It sounds like that's your share. And then is there any way you can give us an unadjusted basket value? I'm just kind of trying to compare the basket value versus what you guys have kind of talked about back in April.

Sorry. Yes. So the $97 is basically what we receive. That's the net. And that's after the subtraction of an imputed separation cost and also the share that the SPV gets above the floor price. So it's a net number. If you look at it on an NdPr equivalent basis, then we are much closer to $340 per kilo. So that's the comparative to products -- other products in the market that I would look at.

Got it. Okay. That's helpful. And so it sounds like prices maybe are even more favorable than when you guys have gone through kind of the deal deck, and I think you guys have projected $550 million to $650 million EBITDA run rate exiting '27. Has pricing been improved since then? And can you comment at all on how maybe that $550 million to $650 million has changed at all?

Yes. So I think what we're doing here, Derek, is really focusing on the milestones we've laid out over the next year and the production ramp associated with that. So first of all, I would focus on that and we were getting to run rate 4,000 tonnes per annum, which is in Q2 2027 and 6,400 steady state by the end of -- year-end 2027. And so you can kind of look at that in the context of the basket prices that we've provided so far. And I think you can make your own assumptions about the direction of the indices that are used to inform the basket prices. So that's how I would tackle that question.

[Operator Instructions] The next question comes from Laurence Alexander with Jefferies.

Different time zone. On the magnet side of the business, the downstream, can you talk a little bit about how your ASPs and your profit per ton or your ASP spread over the inputs should evolve as you go from the prototyping to the fully ramped product mix? And then separately, I appreciate there's some give and take in terms of the timing of which stage that the investment depending on the market signals currently.

But do you have a longer-term preference on having the upstream and the downstream roughly balanced? Or do you want like 20% more upstream than downstream to allow for any kind of outages or disruptions and to be selling into the market? Or would you prefer to have the downstream be larger than the upstream channel? Can you just give us a sense for the overall direction of how you want the mix to evolve?

Yes, sure. So on the first question, in terms of the ultimate price, if you were to try to attempt to look at it from a single price, it's going to depend upon how our magnets are being qualified over time and how we're standing up initial and repeat orders of magnets and supply and offtake agreements. And look, it's still too early to tell exactly what that's going to look like, but the prices that we're seeing right now are very encouraging.

Yes. Laurence, I'll take on the second question. So our first priority is to build an integrated value chain. And that is because that's what's required for us to deliver the elements from the ground into the end customer products and solutions that we want to build. So we'll focus on doing that. But at the same time, of course, we will do that with an eye on delivering returns. And all of those pieces of the value chain have the ability to deliver returns above our cost of capital.

But having done that, we are then in a position to then maximize the allocation of capital and the returns. And more often than not, it's the upstream part that delivers the higher returns. And having Round Top and Serra Verde gives us significant optionality to apply capital to the higher returning element of the value chain, and that's how we would see it over time.

This concludes our question-and-answer session and concludes our conference call today. Thank you for attending today's presentation. You may now disconnect.

Good afternoon. and welcome to the USA Rare Earth Second Quarter 2026 Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to J.B. Lowe, Vice President and Head of Investor Relations. Please go ahead.

Thank you, Gary. Good afternoon, and welcome to USA Rare Earth's 2026 Second Quarter Earnings Conference Call. With me today are Barbara Humpton, Chief Executive Officer; and Rob Steele, Chief Financial Officer. Following Barbara and Rob's updates across our business and quarterly results, we will open the lines for Q&A.

I would like to remind participants that today's discussion may contain forward-looking statements. Please refer to the press release and our SEC filings for a discussion of risk factors. Listeners do not have a copy of the press release or associated presentation may access these documents by visiting the Investor Relations section of the company's website. With that, I'll turn the call over to Barbara.

Thank you, J.B. Let me start with the progress made this quarter as a company and the vision we have going forward. USA Rare Earth is building the global leader in rare earths. Every link from the rock in the ground to the finished [ magnet ] and beyond across 3 continents. These materials sit inside the motors, service. semiconductors, aircraft, robotics, medical devices and defense systems, a modern economy runs on. For generation, the capability to produce them has been consolidated almost entirely into 1 country. We're putting it back into allied hands, and we're doing it now.

This ranks among the most vital industrial projects underway today, and I want to be clear about our ambition. We intend to lead it. For decades, price governed this industry because availability was assumed, availability or lack thereof is what covers the rare earth industry now. Once the company understands what an interruption will do to its production line, its commitments and its business model, availability drives every decision that follows.

The consequence of being wrong is existential. The Chinese government's recent export restrictions on Western companies, including USA Rare Earth crystallized that risk. For us, they reinforce why this company exists. For the rest of the industry, they are a wake-up call. More and more companies have now concluded that single-source dependency on a strategic competitor, one that has become a [ geo ] strategic adversary is a risk they can no longer tolerate. That conclusion is driving companies to rebuild their supply chains around long-term, reliable and trustworthy sources. And a 2-tier market is emerging, a China tier and a new non-China tier.

The 2 price differently, contract differently and behave differently. We're building USA Rare Earth to anchor the non-China tier and to be its partner of choice. Outside of China, heavy rare earths used in magnets are scarcer today than at any point in recent memory, and pricing reflects this reality. Western prices for dysprosium oxide, for example, are up over [ 90% ] in 2026 alone as measured by Benchmark Minerals intelligence, reaching nearly $2,000 per kilogram in August, over 9x the price of the product in China.

This same tightness runs across other rare earths and critical minerals, such as lutetium, gallium, Gadolinium, [ hafnium ] and zirconium and Yttrium. Western prices for Yttrium oxide which has only started to be tracked within the last year since essentially does not exist outside in the West, has risen or 60% since March and is over 200x the price in China. Scarcity is the defining condition of this industry today. Availability is the lens I would ask you to apply to our strategy, which is to supply these scarce materials responsibly at scale. Scaling requires capabilities that are themselves significant barriers to entry as very few companies outside of China can do this work because it's largely a lot art in the West. That is what makes the integrated value chain we are building so valuable.

A mine without processing is a stranded asset. Processing without metal and alloy making capability is a science project. A magnet manufacturing facility without a secure heavy rare earth feedstock in [indiscernible] and tolling any of these steps through an adversary is [indiscernible]. That is why we have to link this chain together and why we moved so urgently to build capability at each link. This quarter is when that architecture snapped together. In the second quarter, we announced 3 significant events.

First, our intent to acquire Cerro Verde, which will give the only scaled operating source of both light and heavy magnetic rare earth outside Asia. Second, we announced our investment in [indiscernible] bringing world-class heavy rare earth processing capability and intellectual property into the platform. And third, we selected [ Blacksburg ], South Carolina, for our second U.S. magnet and metals facility, where we've already broken ground and ordered long lead time equipment.

Underpinning all of this was our signing definitive documentation with the Department of Commerce, following an exceptionally rigorous diligence process that included site visits, multiple RFPs and coordination across numerous agencies. Beyond the capital already appropriated to reimburse us for our expenses, we view these agreements as a validation of our asset base, our business model and our growth plans, and they significantly derisk our path to full scale production. Even as we assemble these pieces, we advanced our capabilities at each link in our platform.

At Cerro Verde, the optimization and growth project, which aims to increase efficiency and production capacity is in the process of recommissioning. The project is developing as expected toward the restart of commercial production and ramp-up at the mine and processing operation [ on time ] and within budget. In April, we announced our first commercial production of Yttrium metal at LCM, 1 of very new producers outside China of a metal essential to high-temperature aerospace applications and high-performance semiconductors.

In May, we announced grants from the Texas Semiconductor Innovation Fund and the U.S. Department of Energy to advance our platform, providing further external validation that our platform is essential national infrastructure. In June, we commissioned our hydrometallurgical facility in Wheat Ridge, Colorado and just last month in July, we produced our first commercial grade dysprosium and [ NDPRoxide ] samples from our own recycled magnet manufacturing scarf, One of the few western producers able to execute this technically demanding process outside Asia.

Lastly, just last week, we closed on the acquisition of TMRC which consolidates our ownership interest in Round Top and allows for streamlined operations, governance and decision-making. The new paradigm is evident in the commercial pool we are seeing. An underappreciated feature of this market is that only half of rare demand comes from permanent magnets. The other half is demand for the elements themselves, in cattle phosphorus, polishing compounds, et cetera.

Nowhere is this more evident than in the work we are advancing at Round Top. We've already engaged over 30 potential customers, many of the large multinationals on offtake for the nonmagnetic oxides and other products Round Top will produce. We're working closely with several of them on a joint development agreements and other avenues of innovation. [indiscernible] deep engagement extends to our midstream and downstream businesses. More and more customers are no longer asking whether they need a non-China supply but are now asking how quickly we can deliver on.

Many are sourcing outside China for the first time in decades, if not ever, and are still learning where these capabilities exist. So we engineer alongside them. In some cases, we've been working with customer engineering teams for 6 months or more on specifications, tolerances and qualification protocols. We see this customer intimacy as a competitive differentiator. These are often multi-decade decisions for our clients, designing our material into platforms that will exist for years, and the length of our sales cycle respects the commitment this represents.

So let me close with where we're going. On August 28, there will be a shareholder vote to approve the acquisition of Cerro Verde. Upon closing, we'll have mining, processing, metal and alloy making and magnet manufacturing spanning 3 continents. Our work from here is to [ move ] material through every link at scale to convert qualification into contracts and to become the supplier of the West builds around. My proudest accomplishment is that we've built a company that attracts the most capable people in our industry.

Over the past year, world-class experts have chosen to join us. entire organizations chose to join us, too. The teams at LCM, [ Terrestr ] and Cerro Verde each had a choice about their future and each chose this platform. In an industry where capabilities outside China are limited, this may be our most durable advantage. It is also why I have such confidence in this next chapter. This is the last quarterly call I will host as CEO as [indiscernible] takes over on October 1.

The Board of Directors has had a bold vision for this company, and I'm proud to have been part of it. [indiscernible] shares this vision for scaling and expanding our platform. I could not be more confident handing him the baton, and I intend to run part straight through the handoff. There's a great deal to accomplish between now and October 1. It's been a privilege to help build and lead this company. I'm proud of what the team has accomplished, and I'm even more excited about what it will accomplish next. With that, let me hand it to Rob.

Thank you, Barbara. Before I begin, I'd like to say on behalf of the more than 325 employees of USA Rare Earth. Thank you for your vision, your leadership and your belief in what we could accomplish together. Since you joined us last October, that conviction has helped transform our ambition into reality. As you described, we are helping to define a new industry paradigm, building an integrated rare earth platform outside of China takes capital, technical debt, government relationships and the ability to execute multiple complex work streams at [indiscernible] . What matters is relentless commitment character and operational excellence. The steps Barbara described are evidence of all 3. We said what we would do, and then we went out and did it and more.

This past year also demonstrated that our team can get things done at extraordinary speed, which is essential given the critical nature of our mission. We will continue to move at pace, and we will not sacrifice our values to do it. Turning to our Q2 results. Revenues for the quarter, which represents sales to third parties were approximately $6 million derived from our metal and alloy making business at LCM. Gross margins were impacted by higher raw material input costs, which are associated with the supply challenges that the entire industry is facing. This issue is most acute in heavy rare earths, and we are actively engaging with alternative supply sources ahead of our anticipated access to feedstock from Cerro Verde and Krister. As a result, our position in the supply-constrained market conditions provides the opportunity to establish appropriate non-China pricing.

And because of what we've been building here at USA Rare Earth, we have considerable market insight. Therefore, we believe there is an opportunity for positive momentum in pricing to develop going forward. Operating expenses in the quarter were approximately $45 million, including higher M&A legal and consulting costs related to our highly strategic global transactions. This was partially offset by lower R&D costs compared to the first quarter as our magnet business moved into production in the second quarter and associated costs are now reflected in inventory rather than R&D.

We reported a net loss attributable to common stockholders of $10.3 million or $0.05 per share. This includes a noncash fair value adjustment of approximately $22.4 million related to our warrant and earn-out liabilities. Excluding this, our adjusted net loss was $33.5 million or $0.15 per share. Turning to the balance sheet. We ended the quarter with approximately $1.5 billion in cash and cash equivalents. This positions us the flexibility in the near term to execute and accelerate our mine to magnet strategy as we pursue both organic and inorganic growth.

Capital expenditures for the quarter were $66 million. During the quarter, we signed definitive agreements with the Department of Commerce, 1 of the 2026 targets we laid out in our Q1 earnings release. This financing is a milestone-based CapEx reimbursement program meaning we are reimbursed only after we achieve specific milestones. In our view, this protects the U.S. taxpayer and aligns private capital with government investment.

We expect to apply for our first reimbursement distribution in the coming months. At the same time, we continue to build out our platform in line with the long-term schedule we laid out in January to all stakeholders, with Round Top targeting commercial operations in late 2028 and 10,000 tons of both metal and alloy and magnet manufacturing capacity in the United States by 2029.

Now to operations. This quarter at Round Top, we began the resource upgrade drilling program, drilling over 10,000 feet of additional core across the 3-rig campaign. -- early assay results are in line with our expectations for resource grade and confirm heavy rare distribution above 70%. The definitive feasibility study remains on track for year-end completion and publication of the [ SK 1300 ] in early 2027. At our Wheat Ridge R&D headquarters, the hydrometallurgical facility is now offering all 3 demonstration circuits, the Round Top flow sheet, third-party [ MREC ] separation and [indiscernible] recycling. Data from these circuits will feed both our definitive feasibility study for Round Top and the design and engineering of our consolidated separation plan.

Wheat Ridge is also where we plan to do forward-looking materials work using quantum computing, AI and digital twins to help develop new processing capabilities. We are doing this in partnership with the Colorado School of Mines, the Department of Energy as well as to enhance our own proprietary capabilities. In metal and alloy making, third-party demand for LCM specialized capabilities remain strong from both magnet manufacturers and specialty alloy customers.

However, as I mentioned, raw material shortages have impacted the entire industry, including LCM. Our supply chain team is working to secure feedstock ahead of our access to both [ Karrister ] and Cerro Verde.

In [ Magnus ], our Stillwater team now stands at 140 people, and we are targeting 200 by year-end, a measure of how quickly this facility is scaling. Commercially, the pipeline continues to build. We are an active commercial dialogue with over 100 potential customers with many in negotiation and more than 20 already in qualification discussions. To date, we have secured MOUs and LOIs covering 2,500 metric tons with large multinationals across the aerospace and defense, industrial automation, industrial motors and automotive sectors.

We have also received production purchase orders from customers in the industrial motion control sector and the aerospace and defense sector. We have received additional prototype purchase orders for finished parts from customers across aerospace and defense industrial automation and industrial motor sectors and have received semifinished block purchase orders from accounts across these same industries.

With production purchase orders already in hand, we expect these efforts to translate into our first magnet sales by the end of the year. On the technology side, our R&D team is developing new grades and formulations driven directly by customer requirements, including [ brain ] boundary diffusion or GBD and heavy rare earth free formulations can be suitable for a portion of the Magna market.

These R&D efforts can help lower our cost base. In addition, developing new products within the customer specification puts our engineers alongside theirs, which shortens qualification and positions us to be the designer of choice. That is what turns the purchase order into a multiyear relationship, and it is the most durable form of customer intimacy that we can build.

On quality, Stillwater is ISO 9001 supplied today, and we are working toward the more demanding AS9100, the quality management standard for aviation Space and Defense Industries in 2027.

Finally, on integration, a great deal of work this quarter went into integrating systems, controls, reporting, supply chain and commercial coordination across LCM and our U.S. operations and preparing for Cerro Verde. We have no time to waste and are focused on building this platform to reliably deliver to our customers and to our nation partners. With that, operator, we are now ready to open the lines for Q&A.

[Operator Instructions] The first question is from Neal Dingmann with William Blair.

Barbara, congratulations and Thras as well. [indiscernible] done a great job. Rob, maybe my first question is something you just said on the PPOs. I think did you say run 2,500 metric tons already. And so -- is the plan to continue to even build upon that? And I'd love to hear, are these long-term arrangements, like what type of orders are we talking in [indiscernible] perhaps?

Yes. I mean that is 2,500 tons of annual demand. And we are looking at expanding that currently well beyond that. So the additional customers that we talked about, the more than 100 that are in the [ line ] and the other 20 that we talked about that are near-term qualification are going to build that demand further. And our supply agreements are going to range from single purchase orders to annual agreements. And then over time, as we've talked about, we will enter into selectively into offtake agreements based upon the economics of the transactions.

Great. And then just a follow-up. I couldn't help to notice you mentioned about the positive momentum in pricing. Could you just talk, again, what you mean exactly, maybe color on that, how quickly that will be seen sort of running through the system?

Yes. So we've already gone out with higher prices on our products, and we expect that, that will be seen in the upcoming quarters.

Next question is from George Gianarikas with Canaccord Genuity.

Barbara's [ been a pleasure ] working with you. Maybe to focus on Cerro Verde, an acquisition expected to close pretty soon. Can you just sort of outline for us the remaining regulatory approvals or closing conditions that are out there, particularly in Brazil? And maybe a second part to that, [ surveying deliver ] about $600 million in annualized EBITDA by the end of '27. What are the key operational bottlenecks as you understand them before you've closed it that maybe present risk or opportunity by the end of the year?

Yes, sure. So the Cerro Verde transaction is in the process of being closed, the shareholder vote, which is the last remaining hurdle is on August 28, and we'll be closing the transaction shortly after that, there are no more regulatory hurdles with regard to that transaction. In terms of where Cerro Verde is headed, what we've talked about is the business scaling to 6,400 metric tons of Trio by the end of capacity, that's run rate capacity by the end of 2027. And as we close the transaction at the end of the month, we'll be providing more insights on the business going forward.

And just as a follow-up question. I just want to hit a little bit on -- you talked about, Rob, in terms of the heavy supply [ bottlenecks ]. What are you seeing exactly? When does that start to come to fruition? Any additional color would be very helpful.

Yes. I mean, I think taking a step back, the raw material shortages I think, highlight and legitimize the whole reason why we're creating this global supply chain outside of China. As you know, Cerro Verde is a heavy -- it does have [ life ], but it's a heavy rare earth mine and will be the largest heavy rare earth mine in production outside of China.

Similarly, Round Top is focused on only heavy rare earth and won't light rare earths. So I think the key point there is that we are solving this problem. In the short run, as we've seen, pricing has increased and product is more scarce in the non-China market. But as we said, we are making plans with additional suppliers to be able to access the product in the near term.

Next question is from Jeff Grampp with Northland Capital Markets.

I was curious on the hydromet facility that you guys are ramping up here. You've had a couple of positive updates lately on those early efforts. But just wondering how we should expect kind of communication of various milestones on those different flow sheets over the coming months and quarters?

Yes. Look, we're going to be coming out with relevant milestone updates as we progress throughout the year, and there'll be several more along the way. that will be relevant. We still are on track to complete our DLS by year-end and publish our SK 130 going into early next year. So we feel very, very good about what we are. But as we've done in the past, we will be announcing milestones as we hit them.

Got it. Okay. And for my follow-up, I know the labor pool has been kind of a point of focus for you guys given kind of the lack of Western expertise in the sector over the past years and decades, just wondering if you an update there, any tightness in any areas? Have you guys generally been able to secure the labor needed to ramp at the pace that you guys are targeting?

Yes. Let me jump in on this one, Jeff. I think 1 of the things that we have been most proud of is the depth of the talent that already exists at the Board level and executive management and on down through the company when I joined last we're talking about tens of employees. Now we're talking about hundreds of employees. With the acquisition of the Cerro Verde Group, truly, we have a very robust team with deep expertise. Now yes, building the expertise in metal making, magnet making, as we've discovered, what we've had to do is partner with others. And you may have seen, just last week, there was a mining roundtable at the Department of State.

The President attended, so did the Executive Chairman of our Board, like Blitzer. And a big topic there was talent development, and we've been working with the very institutions that are engaged now with the U.S. government, providing new programs for building talent. What we found is that folks are driven by this mission and where people have transferable skills. Those who come from the ceramics industry in automotive, finding that their capability translates really well into Magnet making.

Of course, all of the functional experts that we need to manage the business. They're delighted to come join a really capable team like this. So I think the future is bright. And I know that, as I say, I'm very proud that USA Rare Earth is leading the pack in attracting the best and brightest into this industry.

Next question is from Subhasish Chandra with StoneX.

Rob, you mentioned magnet sales for magnet sales by year end. Just curious how you might characterize your qualification period among your various customers. And is there a pace that you think is reasonable to qualify based on the kind of magnets they want and the pace at which you book revenues?

Yes. I mean, look, we're in the process of qualification with several parties, and you see that in our prototype POs. In addition, we have production POs already in hand. Qualification period really varies depending on the customer and the application. And so -- and what the finishing requirements are for the specific magnet. So it's hard to say what the exact period is for any 1 industry or any 1 customer because they can vary within the same industry, and they can vary even with the same customer, if they're looking at 2 different types of products. Having said all that, based upon where we are with qualification in our purchase orders, we do expect we'll be in sales by the end of the year.

Okay. And then Cerro Verde that -- the SPV arrangement? Is that retained upon close or do you integrate that and sort of replace SPV?

so the SPV is not a company that is owned by USA Rare Earth. It is a special purpose vehicle that's been stood up by the U.S. government, in particular to the Department of War and third-party financiers to be able to execute offtake for Cerro Verde going forward. So that entity is -- sits outside of USA Road and we'll continue to sit outside USAordh upon the closing of our acquisition of Cerro Verde. So it's independent.

The next question is Suji Desilva with Roth Capital.

Bart, that Rob just background on the airports. Just for the Stillwater revenue-generating capacity in 27, just can you give us a framework for how that ramp up here from '26 when you start recognizing revenue there?

Yes. So what we said on capacity, we'll have 600 metric tons of run rate capacity at Stillwater by year-end. And then we're standing up the next 600 metric tons in Q1 of next year. So we'll have 1,200 metric tons early on in the year. We haven't really provided any more guidance with exactly how that ramps from there. But that is our near-term plans for standing up our capability and remain on track to do it.

Okay. All right. And then maybe just as a follow-up. Can you talk about how -- what the plan is for Stillwater versus Blacksburg in terms of would those be in sequence? Or in parallel starting point just to understand how you plan to use the 2 together.

Yes, yes. So the Stillwater facility is already standing up equipment, and that will ultimately be 3,600 metric tons of magnet making and 5,000 metric tons of metal making capacity Blacksburg, which has just broken ground. So that facility has not been built yet will not be essentially operational until early 2028. And so the shell won't even be completed until the end of 2027. So that will be sequenced later than Stillwater, but both facilities are expected to be their full capacity by the end of 2029 at Blackbird, we'll have 5,000 metric tons of metal making and 6,400 metric tons of Magna making at that facility.

[Operator Instructions] The next question is from Derek Soderberg with Cantor Fitzgerald.

I wanted to start with just the MOUs and some of the demand that you guys have been talking about. I think you've said 12 MOUs. So still water is progressing. It's commissioned I was just curious if any of those MOUs have been converted to definitive binding offtake agreements or anything like that? And then I've got a follow-up.

Yes. I mean we have converted several into production purchase orders. And so those are converting from prototype to purchase orders going forward.

what any could you quantify any of that by chance?

Yes. We're not quantifying it at this point in time. But as we move forward, we'll be providing more information as the facility ramps up.

Got it. Got it. And as my follow-up, -- it seems like the recycling technology that you're working on in Wheat Ridge seems to be progressing. I was curious if you can maybe share what portion of the feedstock do you guys expect to come from sort of that recycling versus kind of newly mined? Any detail on that would be great.

Yes. So swarf generally been will represent 20% to 30% of our finished magnets. So in theory, if we're producing 10,000 metric tons and all of those magnets are finished, then we might generate a couple of thousand metric tons of more per year. That's worth can be taken and then recycled back into essentially raw material oxides that can be turned into metal and then back into magnets. So it could end up being as much as 20% to 30% of our supply going forward.

This concludes our question-and-answer session. I would like to turn the conference back over to Barbara Humpton, for any closing remarks.

Thank you so much. No closing remarks from me today. I appreciate everybody joining us and looking forward to the future.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Okay. Welcome back to the first day of our Natural Resource Conference. My name is Bill Peterson, U.S. metals and mining analyst. And we're really pleased to have USA Rare Earth come back. They actually joined the conference last year, but a lot has changed since that time frame. And Rob Steele, the CFO, who's going to walk us through a couple of slides here. I want to keep it interactive. I've definitely got a lot of questions, and there's so much going on in the space. So I have no doubt we'll use all 30 minutes wisely. So Rob, maybe over to you to introduce the company and where the company fits in the rare earth and magnet value chain.

Great. Thanks a lot, Bill. Great to be here today. USA Rare Earth's mission is to secure, reshore and grow the rare earth industry for the United States and our allies. We started really on our current journey about 14 months ago when we destacked and raised our initial slug of capital. And over the last 15 months, we've raised approximately $2 billion of equity capital and made 5 strategic transactions along the way. Our most recent transaction is the acquisition of Serra Verde, which we expect to close sometime this summer for $2.8 billion.

Our goal is to lead at every step of the value chain. And that would be if you look at upstream, that's mining and processing and separation; midstream, that's metal making and strip casting; and downstream, that's magnet making. If you start with our capabilities on the mining side, we are making the acquisition of Serra Verde which is a light and heavy rare earth mine. It is only 1 of 3 producing mines outside of China and the only 1 of the 3 that produces heavy rare earths. It's also unique because it's fully financed by the DFC and the Department of War into full production and has 100% offtake with an SPV that is backed by the U.S. government and Goldman Sachs. And that SPV will purchase 100% of the offtake of their Phase 1 Pela Ema mine.

In addition to that, in downstream, we own the deposit called Round Top. And Round Top is purely a heavy rare earth deposit that we are currently developing. We expect to be through our definitive feasibility study by year-end and publish our S-K 1300 early next year. That asset will produce a range of products on the heavy side, dysprosium, terbium, gadolinium, but also gallium, yttrium, hafnium and zirconium, all of which go for prices well in excess of $200 a kilogram. So it is an extremely viable and economic mine. We will not produce lights or any products that are sub-economic at that facility.

Alongside with these 2 developing mines and deposits, we are producing separation and processing capability. One of our lines will be at Round Top to exclusively process Round Top. In addition to that, we are creating what we call our third-party MREC line, that's mixed rare earth carbonate line, which is really designed to process ionic clays. And that facility will be used to process Serra Verde and other ionic clays. In addition, alongside that line, we will have a recycling line that is capable of processing our swarf from our magnet making. So about, call it, 15% to 25% of our feedstock going forward will actually be our own recycled product.

At the midstream, we acquired LCM last fall. LCM was the only commercial scale metal and alloy maker outside of Asia, and we're rapidly scaling that facility in the U.K. and bringing that capability to the United States and into Europe. In the United States, we'll be expanding their capability to 10,000 metric tons of strip cast equivalent. And we'll be expanding their capability in Europe with our French project. We'll be scaling approximately 3,750 metric tons per annum of strip cast there, and that's part of our announced French project in working with the French government.

On the magnet side, we are standing up 10,000 metric tons on the back of our metal making capability in the United States and those facilities will be at Stillwater, Oklahoma, which will produce approximately 3,600 metric tons of magnets and Blacksburg, South Carolina that will produce approximately 6,400 metric tons of magnets. And as you see at every step, this is a value chain. So each of these steps in the value chain not only will be vertically integrated, but will also have elements of each business that will sell to third parties. So at the mine, we'll be selling different products like gadolinium or gallium or yttrium into the market. At metal, we already service third-party customers. More than half our business is with third parties right now. And then, of course, magnets will be 100% of the third-party business. So that's what we mean when we say value chain. All of our business are intended to be economic and stand-alone.

I think the last point I would make before we get into Q&A is that we have unmatched U.S. and allied government support. So we are backed by the Department of Commerce. We completed our $1.6 billion DFA here recently in the last month or so. We're also backed by the Development Finance Corp. at Serra Verde fully financed in production. We have a $19.3 million grant from the Department of Commerce -- or sorry, Department of Energy. We have $14.2 million of funds from the Texas CHIPS Act is what we call it. We have significant support from the French government. They're a partner investing in Carester currently, and they also have expressed interest in supporting our development in the south of France. And then we also have offtake agreements and price floors via the SPV. So significant funding and significant support going forward.

And I'll just pause there, and we can jump into questions.

Yes. Thanks, Rob. Maybe I want to talk with some news -- a couple of news items that came out in the last few days. One is around China and export restrictions, which these restrictions actually started last year, but now your company has actually been named as well as another U.S.-based rare earth company. What do you think are the key implications, I guess, both for you directly, but also indirectly? What is it signaling?

It proves the case. So the first question we normally get from investors is, do you think China is just going to reduce restrictions and we're going to go back to 2010? And our point is that we believe that there is going to be and there needs to be a bifurcated market going forward, given the fact that China dominates well in excess of 90% of the market, in fact, up to 99% of certain rare earths going forward. Rare earths contribute to about $10 trillion of our economy. And we can't have that be in the control of a third-party actor such as China. And this only proves the point that we need to stand up this capability outside of China.

Yes. And I guess the other piece of news was from this morning where another peer that had been involved kind of more in the midstream and a little bit of upstream is now moving into the downstream space with magnets. Maybe you can take a high-level view, what does this mean for the U.S. magnet projects? There's been so many announcements. And how should investors consider the viability of all these projects as well as the competitive landscape over the next several years?

Well, first off, in the transaction you're talking about is Energy Fuels acquisition of VAC, and we think this is a great transaction for them. In terms of magnet making capacity in the United States, we believe and U.S. government believes that demand in the United States for rare earth magnets is approximately 50,000 metric tons, plus or minus. In Europe, it's somewhere between 40,000 and 50,000 metric tons as well. The expectation is that this market is going to more than double over the next 10 years. What you have right now is USA Rare Earth, we've announced 10,000 metric tons by 2029, '30 that will be standing up. MP Materials has announced 10,000 metric tons and VAC has announced their initial phases of their facility, which is 2,000 to 3,000 metric tons. And then there's another group, Noveon at 2,000 and Vulcan, which is trying to stand up a facility.

All told, if all 5 of these facilities get up and running, there might be somewhere between 30,000 to 50,000 metric tons of magnet serving a 100,000 metric ton market over time. So we think there's more than enough room for all these facilities to come online. And it's also important to understand that there's a broad range of industries that are served by the magnet industry, everything from aerospace and defense to automotive, to industrial, to windmills to all kinds of different things. Think of magnets as complex parts. Some companies will be better at producing block. Some companies will be better at producing small complex parts with advanced coatings. So there's going to be a range of opportunities for each of these companies to play a different role in the industry.

We'll get to your magnet business in a minute, but maybe to stick on the market environment. How should we frame the ex-China market? You kind of gave some idea of how large it can be from a metric ton point of view. But I guess what's structurally the areas of growth, especially in Western markets, what markets matter most for the Western players? And how should we think about future data or emerging demand, whether it be humanoid robots, drones or other applications?

Yes. So as I mentioned, 50,000 metric tons in U.S. 40,000 to 50,000 metric tons in Europe. It's about 30,000 to 50,00 metric tons in Asia as well, non-China Asia. So you've got some very, very large markets. If you were to do a breakdown of the industry, about somewhere between -- and this is going to add up to like 120%, just so you know because it's a bit murky. 30% to 40% are industrial motors, 30% to 40% are mobility. That's automobiles, EVs, heavy equipment and heavy equipment, this is where as a high overlaps a little bit with industrial. Then you've got about 10% of the industry is aerospace and defense. You've got windmills at 7% to 9%. You've got health care at somewhere between 10% to 15%. And that's roughly what the industry looks like today.

Over time, you have massive growth of certain industries. So when we think about things -- we talk about humanized as robots, but just look at industrial automation. Industrial automation is supposed to grow 45-fold. That's a lot of industrial robots. Those are industrial motors. And so those motors would fall in the industrial category. So that is just massive growth in that category. Then you have data centers. Each data center will go through 20,000 to 40,000 drives a month. Each of those drives will have a magnet in it. Each of those drives will also have cooling, which involves motors, which involves magnets. So you think about a lot of magnets coming in and out of the data center market. And then there's humanoid robots. If you listen to what Elon Musk says, he says there's going to be 1 billion of these things. Well, take it with a grain of salt and let's say there's 100 million of these things. That's a lot of metric tons of magnets going forward.

And then we haven't even touched about aerospace and defense, which is sort of the obvious one. Look at Ukraine uses approximately 4 million drones a year for their limited war. I guess it's limited war. It's a real war, but it's in a limited zone in the Ukraine. The United States only has plans for 100,000 or 200,000 right now, but clearly needs to stand that up and they're aggressively doing that. So if the U.S. is going to produce millions and millions and millions of drones, that means we need millions and millions and millions of magnets going forward. So a lot of opportunities for growth. We're working with all aspects of the industry right now. So we are working with drone companies. We are working with semiconductor companies. We are working with industrial motor companies, and we're working with mobility companies and heavy equipment companies. So we're working everywhere right now.

Before diving into your business, I want to talk a little bit about policy support, and this slide summarizes some of the various jurisdictions. But -- and you clearly benefited as this slide points out. But how do you see further policy support evolving in the U.S. as well as Western allies? And I guess we're also aware that there's bipartisan House Select Committee on China has introduced a bill for additional magnet metal and production tax credits. How important is this legislation? And what can it mean for USA Rare Earth specifically?

I mean I think all the support is really important for an industry that is not only completely dominated by China, but is also heavily subsidized by China and also uses industrial practices, which are far from adequate in the Western world. So when you have a significant price advantage and control advantage with an actor that will use this as political leverage, it's going to be really important that we similarly have some available tools to help us stand up this capability outside of China.

I mean there's talk not only of the legislation on tax credits, the Project Vault, which is going to allow companies like ours to sell metal or potentially magnets into the Vault or rare earth oxides and rare earths into the Vault. There's talk of consortiums forming with Western nations for not only price support, but market prices and/or different types of mechanisms to be able to support and/or invest in the market going forward. One of our best partners right now is France. They're one of the most forward-leaning alongside Japan with investing in the rare earth industry right now. And we're hearing talk of other governments beginning to come online as well to be able to support their industries, which are also dependent on rare earths and rare earth magnets.

And coming to your strategy, maybe starting with the upstream, first with Round Top. So you have the PFS expected to be published around the end of the third quarter, and I think DFS soon after. What are the gating items that can move the PFS and DFS time lines? How is [indiscernible] progressing? And what is the -- how should we think about the potential of the project?

Yes. So just to correct that a little bit, our plan is currently to finish the DFS by year-end and publish our S-K 1300 next year. So that's our target plan. We do have an interim step internally that we'll be working through in Q3. The key there is really working through our flow sheet with our hydromet facility and gathering the data necessary to support our DFS going forward and proving that we can make various forms of oxides using our separation process. And so as you think about standing up, what you should be expecting from us is to be -- us to be able to talk about some of these progress throughout the year, which is what we're going to be doing going forward.

And then in Serra Verde, which you point out is a producing mine, pretty rich and heavies. You spoke to the rationale, but I guess there has been some news about the Brazilian government maybe taking action. I don't know, how would you respond? And how do you see this project evolving longer term?

Yes. So Serra Verde is currently owned by a holding company that sits outside of Brazil. That holding company is currently owned 2/3 by American private equity funds and 1/3 by a British basically family office, that's a private equity fund backed by Sir Mick Davis. So Serra Verde is already foreign owned even before this transaction is taking place. Because this entity is owned outside of Brazil, there's actually no transaction happening in Brazil. So there's no change of control. What that means structurally is that the Brazilian government technically does not have jurisdiction over the mechanics of the transaction because there is no change of control. I would also say that Brazil does not have a history of nationalizing any assets in any industry at all, even those that it views to be important such as mining. Moreover, in the mining industry, in particular, there are several mines that are already foreign owned such as ours. Anglo American owns several mines in Brazil right now. What we see is that in Brazil, there are elections going on right now going into the fall, and this is basically a result of the election process.

Yes. Maybe touch on the midstream and some of your slides kind of point out with the acquisition of LCM, you've taken a stake in Carester. How do these fit in the portfolio? And I guess, how would you characterize your expertise across separation, refining, strip casting and metallization today?

I mean expertise is the key thing. These are industries that almost disappeared entirely outside of China. I mean it's literally -- we sort of have the last company standing in the industry right now. And what's important is basically as best you can, getting the capacity and the capability, the intellectual property and the knowledge base of what is here and making sure you have access to best of the best. And so we are standing up our own processing capability with super highly qualified people here in the United States. But we also recognize it's important to support our processing capability, our metal processing and magnet potential in the south of France. That's why we invested in Carester to be able to help there. But that deal also gives us access to their intellectual property is one of the very few processors outside of China and probably the best known heavy rare earth processor outside of China is Frederic Carencotte.

I guess can you speak to maybe a little bit more detail on the synergies there, right? You have Carester in France and maybe that flow sheet could be replicated somewhere else, but also your ability to handle the various kinds of feedstock. You mentioned MREC, for example. Feedstock is so important and needs to be pretty fine-tuned as far as I understand.

And that's why this is really cool with Carester and their capability and our capability. So the lines we're standing up in separation in the United States are bespoke lines, meaning the separation line for Round Top is really designed for Round Top. So it's going to be optimized for that, which means it will be the lowest cost of separation for Round Top. Similarly, our third-party MREC line, which will process ionic clays is being optimized for Latin American ionic clay deposits. So it's going to be really, really good at that. Similarly, our [ swarf ] facility is designed for that.

Carester alternatively has taken a different which is pretty awesome. Their approach has been, hey, let's work with a broad range of feedstock providers and mines, have them -- help them process their ore into an intermediate product that's somewhat similar, so a similar product across different mines that we, in turn, at Carester can process into the finished product. What's key there is because France has limitations on radionucleides, it does have to be radionucleide-free, whereas our third-party MREC line does not. But it is a really interesting way of processing. And so you can imagine that we have access to that capability in the south of France. And as you think about growth in the space, which is substantial. So there's going to have to be a lot more processing capability, separation capabilities stood up. We have access to the Carester technology to be able to assist with anything we're doing globally.

Great. Maybe moving a little bit further downstream to the magnet business. I guess, maybe first off, you can set the stage, how is the Stillwater plant progressing, I guess, in terms of Phase 1a?

Yes, it's early. So we just commissioned Phase 1a here this spring, and we're currently in the process of specking commercial-grade magnets for our customers. The process of signing up a customer is multifold. The first thing we do is provide them with lab samples, which they in turn test. And once we get through initial testing, then we start producing the grade that they're looking for, and we have the capability to produce on a commercial grade line. And then from there, they test and we rework the product until we get into the order. So we're in that phase of producing more advanced formulas at commercial scale and working with our potential customers to get to a product that we can ultimately sell under a purchase order or a supply agreement.

Can you -- I guess, can you speak a little bit more granularity on what type of customers you're working with today and how that should evolve? I mean, I think last year, it was more like, I don't know, electric tools and small-scale things. Now maybe EVs and we've mentioned earlier about the market...

Yes. A little bit more electric tools. I mean the way we think about -- you have to think about your customers over time in the context also of your magnet grades. So what you start with are the simplest magnet grades using heavies and then you work your way up the chain. And there's over 40 general grades of magnet types. The customers that we're working is -- we are working with power tool customers, but we're also working with drone companies. We're working with automotive parts companies. We're working with aerospace and defense companies of different types. We're working with energy companies. Most of our products are going to go into motors right now. So there are a lot of products that go into motors or different types of actuators going forward.

And I guess, how should we think about the evolution beyond Phase 1a and to reach your ultimate -- I guess, I don't know if an ultimate goal, but the...

Yes. So we're going to be scaling Stillwater to 3,600 metric tons. Line 1b, which is our next 600, getting us to 1,200 metric tons will come online in Q1 of next year. And then really, the acceleration of our lines really happens when we start scaling up Blacksburg, which is going to be in the first quarter of 2028. That's when that facility starts having equipment installed and we start going through our commissioning process in the second half of '28.

In terms of, I guess, downstream of that, you could think of actuator companies. Obviously, you've been pretty acquisitive. Would there be appetite to even go further downstream into the actuator or other data motor side or...

Yes. I mean there's -- people talk about it. I think it's too soon right now. I think we really need to -- for me, I would focus on making sure we can do the basics here, which is let's get some magnet customers, let's get up and running there. But going forward, you can easily see how we would get into the more complex builds for our customers going forward or work with somebody more closely that's doing that, and we can bring that capability back to the United States.

Yes. We've been -- again, we hosted the team last year, and things have dramatically changed in terms of what you've acquired and what's yet to come. So it feels like there's a lot on the plate. How should investors think about the execution in terms of what's in your control, what's not? What should be -- is there things we should be worried about that just not obvious?

Yes. I mean I think it's -- there's -- I mean, things that aren't under control or how other elements of the industry could stood up, how governments react, those types of things. Right now, in that regard, everything has been extremely straightforward and positive. I mean, I think, frankly, there are always the unknowns like you worry about like what extraneous could happen that we should be worried about. I would tell you that most of our focus right now is mostly on execution. So I mean that's where the worry is, let's execute.

Yes. And I guess how do you bridge -- is this hiring the right people? How is that...

It's hiring the right people, which is extremely important for a company like ours. So the screening process is really critical because this is hard work, and we expect a lot of our people. Our people are awesome. They work really, really hard, and they're extremely driven. If you were to see our team in Wheat Ridge, Colorado at our lab that's developing the mine, it looks more like a Silicon Valley software shop than it does an industrial facility because these people are working 24/7 in our labs. So certainly having the right people is critical. And it's the right thing to have the right people on our factory floor. It's also the reason why we have 2 facilities -- we diversified our facilities across Stillwater and Blacksburg to make sure we had access to the right talent going forward and didn't oversaturate any given market.

Yes. And maybe kind of moving on to sources of cash. So the $2.7 billion committed and proposed, can you remind us how much of that actually has been committed thus far? And what is yet to be, I guess, inked? And what are the key milestones to secure the additional financing?

Yes. I mean, so of this, $1.6 billion, $565 million, $19.3 million, $14.2 million have all been committed. The offtake has been committed. The Carester investment has still not been finalized yet, but that's going to happen here in the next few weeks. The French incentives have not been committed yet. Those are under intent. So they intend to help us out. And there's also other things we're doing right now that could augment this.

I want to stop and see if there's any questions before moving on. Any questions? Okay. Maybe in terms of uses of cash, how should we think about the CapEx profile for this year and over the next few years?

Yes. I mean so -- I mean, the CapEx profile for the business we've talked about, it's about all of our projects from the start of this year, so excluding everything we spent so far this year, it's going to be about $4 billion going into 2030. Our sources of cash right now are -- you think about those sources, we've got about $1.75 billion of cash on our balance sheet. We've got all these different funding sources going forward. We have Serra Verde, which is going to be throwing off significant cash as it ramps into its capacity, which not only gives you cash flow, but you think about debt capacity of a flywheel business that's selling into a government-backed SPV, there's significant leverage. So we have a number of different options in front of us. And obviously, we have our common stock. And as you've seen, we've raised $2 billion in equity so far and have been judicious and smart in how we do that, and we would expect to be going forward.

How does acquisitions at this -- I mean, you mentioned actuators, but I mean, is your portfolio pretty well set at this point? It's about execution? Or is there other parts of the portfolio you would think about augmenting?

Yes. I mean -- so I think for us, as you've seen, what's really important to us is acquiring capacity. It's acquiring operations in the space. It's acquiring the right people and also intellectual access to intellectual property. We believe all of these things are extremely important. We also believe that those things are resident in other companies and other opportunities that are out there. Now we can have access to them through supply agreements, investments, JVs, partnerships and acquisitions. And we're looking at all of the above because we really believe there's additional opportunities to augment what we're doing.

I guess as we wrap up, you mentioned that Round Top is one milestone. What are the additional milestones that investors should be looking out for, for the balance of this year as well as next year?

Yes. I mean the first thing is capability. Look for us announcing additional capability. And that capability could be things we're doing and progress we're making at Round Top. It could be progress we're making with metal making capability. Recently, we announced the ability to make yttrium metal. We're the only company outside of China that can make yttrium metal. It's things like that. It's capacity, standing up additional capacity as we come online. At magnets, it's going to be additional capabilities like additional magnet grades, additional types of technologies that we are currently working on that we hope to be able to announce. And then ultimately, across the value chain, it's customers. So look to customer announcements along the way to the extent that our customers will allow us to. Now some of our customers who source from China currently are reticent to let us announce their names, but there are some that aren't, and you'll be seeing those as we go forward.

Well, Rob, 30 minutes is up, I really appreciate you sharing your insights, and we look forward to following the progress. Thank you.

Thank you.

Good afternoon, and welcome to the USA Rare Earth First Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to J.B. Lowe, Vice President and Head of Investor Relations. Please go ahead.

Thank you, Gary. Good afternoon, and welcome to USA Rare Earth's 2026 First Quarter Earnings Conference Call. With me today are Barbara Humpton, Chief Executive Officer; and Rob Steele, Chief Financial Officer. Following Barbara and Rob's updates across our business and quarterly results, we will open the lines for Q&A.

I would like to remind participants that today's discussion may contain forward-looking statements. Please refer to the press release and our SEC filings for discussion of risk factors. Listeners who do not have a copy of the press release or associated presentation may access these documents by visiting the Investor Relations section of the company's website.

With that, I will turn the call over to Barbara.

Thank you, J.B. USA Rare Earth is at a defining moment. Our mission remains clear, to be the global champion in rare earths and the partner of choice for the advanced materials that underpin Western national security and technological innovation. The initial months of 2026 were defined by our transformational and strategic actions. By announcing 3 critical transactions, Serra Verde, Carester and the consolidation of TMRC, we are successfully closing the loop on our global mine to magnet value chain. Upon completion of these transactions, USA Rare Earth will operate a fully integrated industrial platform that spans 3 continents, and we believe will secure the critical materials essential for Allied technological leadership.

Our agreement to acquire 100% of the Serra Verde Group is a watershed moment for the Western rare earth industry. This transaction secures a one-of-a-kind operating asset, the Pela Ema mine in Brazil, which is currently the only scaled producer of all 4 magnetic rare earths outside of Asia. Serra Verde's 100% 15-year offtake agreement with a U.S. government financed SPV that includes price floors for not only NdPr, but for the first time, dysprosium and terbium is a watershed moment. This will provide transparent, reliable price signals previously absent in the market.

Additionally, this transaction is expected to accelerate our path to positive cash flow generation, effectively providing an immediate upstream bridge to our domestic Round Top Project. We also believe this acquisition strengthens our U.S. and allied government relationships and provides multiple embedded growth opportunities, including a potential Phase 2 doubling of Pela Ema's production capacity. The transaction adds significant leadership depth through the appointment of Sir Mick Davis and Thras Moraitis to our Board, with Mr. Moraitis also serving as President of the combined company.

Next, our planned strategic investment in Carester, amplifies our global leadership in heavy rare earth processing, including from recycled sources. We believe our partnership will provide us with contractual and equity relationships across the allied supply chain. In addition, it will grant us access to world-class engineering capabilities and IP that we can apply to the development of our own facilities. Finally, by consolidating 100% economic ownership of the Round Top Project, we will streamline our operations, governance and decision-making to fully capture the high-margin growth of one of North America's most unique heavy rare earth deposits. Together, we believe these 3 moves will transform USA Rare Earth from a development stage project into the world's most comprehensive integrated rare earth platform, and we're building this platform from a strong financial position.

In January, we announced a letter of intent with the Department of Commerce to provide $1.6 billion in funding. We're currently in the final stages of completing definitive documentation and expect this process to be finalized this month. This support following an intense due diligence effort represents a validation of our asset base, business model and growth plans and will significantly derisk our path to full-scale production. We also successfully closed a $1.5 billion PIPE. This capital, augmented by the anticipated funding from the Department of Commerce provides the ability for us to accelerate our build-out, not only in the United States but across 3 continents.

Beyond our strategic acquisitions and investments, we also made great strides in the development of our operations as we build the partner of choice in rare earth elements, oxides, metals, and magnets. The sense of urgency we're seeing from industrial partners and customers has increased dramatically in recent quarters and is present across each of our businesses. The growing interest in our capabilities includes deep engagement with blue-chip OEMs, Tier 1 defense contractors and pioneers in the data center, aerospace and physical AI infrastructure sectors. For many of our potential partners, the need for a secure and reliable supply chain for rare earths and critical minerals has moved from an aspiration to a strategic imperative. We're moving with speed to meet this need, and we hit the ground running in the first quarter with several major achievements.

In March, we commissioned Phase 1a at our Stillwater magnet manufacturing plant. This transition from developer to operational manufacturer will allow us to initiate customer-ready production of sintered NdFeB magnets in the second quarter, followed by fulfilling sales to customers in the second half of 2026. Our commercial momentum is clear with frequent on-site visits from leaders in the semiconductor, industrial motor, heavy equipment and aerospace sectors. We're seeing strong interest from potential customers in qualifying and purchasing non-China NdFeB magnets. In several cases, we're seeing demand for safety stocks of semi-finished block magnets that can be finished into final shapes as needed.

In our midstream operations, we're scaling metal, alloy and strip cast capacity to meet our own internal manufacturing demand and increased interest from a broader set of potential customers. Here, too, we're seeing inquiries for both real-time needs and safety stock. Complementing this growth, we have advanced our plans for less common metals in Lacq, France. Co-located with Carester's Caremag facility, this hub will establish a comprehensive European supply chain for rare earth processing and metal production, further strengthening our globally integrated mine to magnet platform. This heightened level of interest for specialized light and heavy rare earth metals underscores the unique technical capabilities we possess at LCM.

Beyond our capabilities in magnetic metals and alloys, we're receiving an increasing number of inquiries for more specialized products, including gallium and gadolinium. And just last month, we completed our first commercial Yttrium metal pour, which places us among a limited number of producers outside of China for a metal essential to high-temperature aerospace components such as turbine blades. Executing this vision requires the A team. We recently expanded our leadership team with the appointments of Valerie Ford Jacob as Chief Legal Officer; Gregory Bowman as Chief Global Policy Officer and Head of External Affairs; J.B. Lowe as Vice President and Head of Investor Relations; and Chaitan Kansal, CK as Chief Commercial Officer.

Upon the closing of the Serra Verde Group transaction, the addition of Thras Moraitis as President will further strengthen our executive leadership team. We've also added vital expertise to our Board with Thras, Sir Mick Davis, and GlobalFoundries executive chairman, Dr. Thomas Caulfield, whose experience in scaling complex industrial platforms is essential to our global speed.

Now let me hand it off to Rob Steele to cover our financial performance.

Thanks, Barbara. Now turning to our Q1 results. Revenues for the quarter were approximately $6 million derived from our metal making business at LCM. We are actively expanding our operations at LCM to meet the growing demand for metals and alloys and expect revenue to increase at LCM throughout 2026. Gross profit was slightly positive, and we expect gross margins at LCM to improve as utilization at the U.K. facility increases throughout the year. Operating expenses in the quarter were approximately $37 million.

When adjusted for M&A-related expenses and stock-based comp, our ongoing operating expenses were approximately $25 million. We reported a net loss attributable to common stockholders of $67 million or a loss per share of $0.34. This includes a noncash fair value adjustment of $43.6 million related to our warrant and earn-out liabilities. Excluding this, our adjusted net loss was $24.1 million or an adjusted net loss per share of $0.12, which we believe is a more accurate reflection of our core operating performance.

Moving to our balance sheet. We are in a very strong financial position, ending the quarter with approximately $1.75 billion in cash, which includes proceeds from the $1.5 billion PIPE that closed in January. Our strong cash position has provided us the flexibility and liquidity to execute and accelerate our mine to magnet strategy, which our recently announced investments and activities demonstrate. As we keep advancing, we will continue to actively and prudently manage the capital intensity required to build out a world-class integrated value chain. Capital expenditures for the quarter were approximately $40 million, largely related to the build-out of our magnet manufacturing capacity and ramp-up at LCM, U.K. As Barbara mentioned, we are currently in the final stages of completing definitive documentation for our LOI with the Department of Commerce and expect this process to be finalized this month.

Moving to an update on our operations. At our Wheat Ridge R&D headquarters, our hydrometallurgical facility is currently commissioning solvent extraction circuits for the 3 demonstrations, the Round Top flow sheet, third-party MREC separation and magnet swarf recycling. All 3 demonstrations are expected to be up and running within the next several weeks. We have also commenced vat leaching at Round Top, which will supply feedstock to the hydromet facility. At Round Top, we are moving forward with our definitive feasibility study, which we expect to be completed year-end and published in Q1 2027. We have already put in new infrastructure and have initiated drilling on our water lease. Key process data is currently being validated by Fluor and additional processing inputs critical to the PFS will be completed within the next month.

We are also in the process of awarding our civil geotechnical drilling contract for all mining infrastructure, including the heap leach pad sites at Round Top. And in addition to the demonstration work at Round Top and at Wheat Ridge, we will soon commence a 3-rig drilling campaign to drill over 15,000 feet of core for resource upgrading and geotechnical pit design. At Stillwater, we are ramping magnet capacity to reach a run rate of 600 metric tons per annum by year-end. After commissioning Phase 1a in March, we have started to produce commercial magnets that can be used for customer qualification. As Barbara mentioned, much of the near-term demand we see in magnets is from customers looking to build safety or insurance stock of semi-finished block magnets, which we are currently producing at Stillwater.

In addition, our finishing equipment is already on site and should be up and running at the beginning of Q3. In midstream, we expect LCM to reach 3,000 metric tons per annum of metal making and strip cast capacity by Q4. As Barbara mentioned, beyond our growing internal metal and alloy needs, we are seeing heightened third-party demand for the unique technical capabilities we possess at LCM from both NdFeB and samarium-cobalt manufacturers and specialty rare earth and critical metal and alloy customers. We are proud of how much we've accomplished this year so far and look forward to closing all of our transactions. While we will not be providing financial guidance at this time, we do look forward to our first Investor Day, which we are planning for Q3 2026 after we close the Serra Verde transaction.

Operator, we are now ready to open the lines for Q&A.

[Operator Instructions] The first question is from Derek Soderberg with Cantor Fitzgerald.

I wanted to start with the Serra Verde acquisition. In the 8-K, it looks like the valuation currently is $3.64 billion. That might be higher than previous targets. But it says there's potentially a 25% increase should your share price perform. Can you just remind us what the mechanics of the equity portion of the consideration is? Is there a cap on the share issuance? And how should we sort of model the ultimate dilution if the stock performs well here?

Yes. I mean the way the deal is structured is $300 million of cash and just under 127 million shares of common stock.

Got it. That's helpful. And then as my follow-up, sort of a 2-part question on the CHIPS funding. It looks like the agreement was supposed to be signed last month. Barbara, you talked about some intense due diligence. Can you maybe just expand on what might have caused the slight delay? And then I'm curious if anything has changed regarding the milestones the government is requiring to unlock the various tranches of the capital?

Okay. Great. Yes, Derek, thanks. Happy to address this. First of all, let me say I am so thrilled to be working with the Department of Commerce because imagine since January, when we first announced the letter of intent, we've had significant announcements on our side. And I will tell you that our -- the professionals at the Department of Commerce, first of all, abided by all guidelines in terms of how they treated us through this. They were an investor and recognize the fact that we have a growing business we needed to attend to.

And when we shared with them our intent to, for instance, acquire Serra Verde, it caused them to have to go back through and review and validate decisions they had already made. I'm happy to say that every move we've made has actually strengthened our deal, but there was great work to be done on the commerce side. So we are in the final stages. We look forward to closing the transaction very shortly, and we'll be back to you with news. Rob, anything you would add to answer along the lines?

No, that's -- I think that really covers it. We're in the final stages of the documentation, and we'll be sharing more when we complete it.

Yes. Grateful to those patriots who are busy helping us get this launched.

The next question is from Neal Dingmann with William Blair.

Nice details. My question is just on feedstock. You talked about ramping up. I know you continue to be right on schedule for 1A, the 600, I think by the end of this year, and then ramping to the 1,200. Do you already have that feedstock? Is that -- will that be coming partly from Carester? Or could you just talk about where you're going to be sourcing that?

Yes. I mean, look, we already have the feedstock to commence operation in the initial phases here. And we have a lot of opportunities as we ramp production going forward, including from Carester, where we already have plans and an agreement with them to recycle our swarf that we produce from the Stillwater magnet making facility. And as you know, they have essentially in Europe, unmatched heavy rare earth processing capability. But there's also a lot of other sources that we can obtain feedstock, including through Serra Verde and hopefully, the SPV associated with that. So we feel very good about the position we're in and our ability to scale our feedstock with our operation.

Perfect. And then just secondly, I really like the Carester deal, the strategic partnership and everything announced there. Could you talk about just timing behind as far as -- I don't know if you...

We lost you, Neal.

Yes. Unfortunately, Neal's line disconnected right now. So we're going to move to -- [Operator Instructions] The next question is from Suji Desilva with ROTH Capital.

So Barbara, you highlighted the customers and wanting safety stock. I'm just curious if you could kind of give us some sense, maybe quantify qualitatively how drastic the situation is relative to where the customers would like to be and if that could soak up the first several quarters or years even of your demand just to get customers in a comfortable position?

Yes. I think this is a really critical thing for us to be sharing with all of you about our sales strategy in magnets. We recognize that the situation is dire. Should China choose to withhold materials at any time, it's critical for manufacturers in the U.S. and with our allies to be able to get access to materials. So our strategy is not to devote our manufacturing lines to a small number of offtakers. Instead, we're focused in on reaching a broad set of stakeholders across many sectors of the economy. And already, we're beginning to hear pronouncements from, for instance, auto OEMs who are directing their suppliers to maintain up to a 1-year supply of permanent magnets and/or metals.

So we know the demand is out there. We are being approached by aerospace and defense customers who have a January 1, 2027 deadline for being able to source materials from -- sources outside of China. And really, the key thing here is, let me go back to magnets. When we deal with magnets, the process, the sales process is, first, identify potential demand. Let's call that the top of the funnel. Then there's an on-site validation process. We're entertaining many, many potential customers with on-site visits. Third is to actually get a production line up and running, check, completed that during Q1. Now we're capable of producing the prototype material that customers need in order to do their own independent validation of the quality of our magnets. That process is going on right now. That ultimately leads to purchase orders, and we expect those to start flowing in the second half of the year.

Now what's interesting is metals are similar, but -- so we've had a lot of success with customers visiting less common metals, having an opportunity to get prototype material, including that very coveted Yttrium metal. So we look for that to get exciting. The thing I've been most surprised by is that here we are doing our pilot drilling and the early demonstration work, our pilot plant, et cetera, for Round Topo and already, we have customers lining up to establish supply agreements for the oxides that we'll be producing from that deposit. I am very bullish on the demand signal being strong. And the only question we have to our team is how fast can we move.

That's very helpful color. And then maybe for Rob, there were some filings after the close of registrations. Can you talk about which of those are additional shares versus existing shares, new shares planned? Any color there would be helpful.

Sorry, on the registration statements?

Correct. No, I mean those are new shares versus existing shareholders registering.

Yes. I mean it's a combination of shares that are being registered right now. So as part of our merger process, of course, we're going through a proxy where we're registering the shares that we're acquiring, and we're maintaining the registration statements for the securities that we issued associated with the PIPE. And so there's multiple shares that we're registering right now.

[Operator Instructions] Our next question is from Neal Dingmann with William Blair.

Sorry about that. I'm not sure what happened. For you Rob, just my question was -- the second question I had was just on Carester love the strategic partnership there. Any details you could give as far as timing, volumes, kind of all that good stuff, how quickly we might continue to see that ramp up?

Yes. So I mean, timing of the close is coming up. So we're still working on final definitive documentation there. But their facility starts ramping near the end of this year is when they come online, and they'll scale over the course of 2027. And they're going to be sourcing and servicing in Europe. And some of that material will ultimately flow back into us as well as into -- ultimately into Japan.

Do you know what percent, Rob, yet is for you all? Or is that too early to tell?

I mean it's in our agreement. So we have a fixed amount, but it's based upon scaling. And so at this point, it's a little bit too early to tell.

Yes. I want to pause on Neal's question because you'll see plenty in the press today about the fact that processing is the weak link in the chain. And so what I think investors really should focus in on is that our ability to bring processing from the world leaders outside of China, have that intellectual property available to the team at USA Rare Earth gives us the ability to work with, not only our own deposits, but deposits anywhere. The third-party MREC line that we're standing up as part of our deal with the Department of Commerce says we can take material from other deposits and actually produce oxides that, again, flow through this value chain. We're not aiming for an integrated supply chain. What we're doing is scaling every link in the chain, recognizing there are multiple offtakers for not only the raw minerals, the oxides as well, ultimately the metals and then the magnets.

This concludes our question-and-answer session. I would like to turn the conference back over to Barbara Humpton for any closing remarks.

Great. Thank you so much. And I want to thank everybody for joining us today. Let me come back to the question that Suji asked about customers because there's a real distinction here about the strategy we're taking at USA Rare Earth. We know we're creating the platform that will be the leader within the global rare earth industry. As we get started with this flywheel, we're seeking to serve as many customers as possible, supplying safety stock, knowing that this is the high-margin play. This is going to be generating shareholder value as we address those areas of the economy that are most critical.

Now we're playing out this strategy now. You've seen how fast we've been moving. And I just want to call everybody's attention to the things that are still ahead of us this year. We are on the brink of signing that definitive agreement with the Department of Commerce. We're getting ready to commission the hydrometallurgical demonstration facility in Colorado, and you can look for news this quarter. We're going to be working on this definitive feasibility study for Round Top throughout the year, but look for details as we accomplish significant milestones toward that end.

In Stillwater, we're building out the capacity and reaching the 600 metric ton per annum run rate that we're striving for. And then we're scaling out metal making. We'll be providing news to you, the shareholders, as we go because we want you to have insight as we build out this global leader. Thanks for joining us today.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, and welcome to the USA Rare Earth acquisition of Serra Verde Group Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to J.B. Lowe, Vice President and Head of Investor Relations for USA Rare Earth. Please go ahead.

Thank you, Betsy. Good morning and good afternoon, everyone, and thank you for joining today's call on USA Rare Earth's transformative acquisition of Serra Verde Group.

With me today are Barbara Humpton, Chief Executive Officer; Thras Moraitis, CEO of Serra Verde Group and the incoming President of USA Rare Earth; and Rob Steele, Chief Financial Officer.

On today's call, Barbara will begin with an overview of the transaction and its strategic rationale; Thras will then provide commentary on Serra Verde's assets and its unique place in the rare earth ecosystem; finally, Rob will wrap up the call with a summary of the financial details of the transaction. And we will then open the call for questions.

I would like to remind participants that today's discussion may contain forward-looking statements. Please refer to the press release and our SEC filings for a discussion of risk factors. Listeners who do not have a copy of the press release or associated presentation may access these documents by visiting the Investor Relations section of the company's website.

With that, I will turn the call over to Barbara.

Thank you, J.B., and good morning to everyone joining us today. I'm so excited to speak to you about what is truly a transformational moment for USA Rare Earth. This morning, we announced that USA Rare Earth has entered into a definitive agreement to acquire 100% of Serra Verde Group, owner of an integrated rare earth mine and processing facility in Goias, Brazil. Critically, Serra Verde is the only scaled producer of all 4 magnetic rare earths in the Western world. It's also the only mine in the world that has price floors for each of neodymium, praseodymium, dysprosium, and terbium, through a 15-year 100% offtake with a special purpose vehicle capitalized by the U.S. government and private capital.

The transaction implies a total equity value of approximately $2.8 billion, consisting of $300 million in cash and the remainder in USA Rare Earth stock. We expect the transaction to close in the third quarter of 2026, subject to customary closing conditions and regulatory approvals.

Rob will go through the financial highlights in a moment, but first, let's put the transaction into some context. As many of you know, the rare earth industry has been dominated by 1 country for decades. Today, approximately 70% of rare earth mining and over 90% of rare earth processing, metal making and permanent magnet production is controlled by China. And critically, this control is even more pronounced in heavy rare earth, where China holds 99% of the world's processing capacity. The already urgent need to develop a western supply of heavy rare earth took on greater importance in April of 2025 when the Chinese government imposed strict export controls that further limited supply to the United States and our allies. Almost overnight, the need for a credible scaled non-Asian supply chain moved from a policy aspiration to a strategic imperative.

Serra Verde is quite simply a one-of-a-kind asset and in our view, is one of the single most strategic assets that can help break our reliance on that single source. At Phase 1 nameplate capacity, expected to be achieved by the end of 2027, Serra Verde is projected to produce approximately 6,400 metric tons of total rare earth oxides per year.

To give a sense of the sheer scale of that contribution, Serra Verde is expected to represent over 50% of some of the most critical heavy rare earth of the non-China capacity by the end of 2027, meaning a greater production rate than all other producing mines outside of China today. We believe there's no comparable operating asset available anywhere else in the world.

Thras will detail how crucial Serra Verde's assets and operating expertise are in the global rare earth market. But first, I want to emphasize that this transaction is also a crowning piece of the strategic vision that was set in motion 1 year ago, a vision that was born from necessity and forged in action. April 2025 was a watershed moment. When the global rare earth market was hit with Chinese export restrictions, the world faced a stark reality.

The supply chains powering our future were no longer secure. Over the last 12 months, we have moved with systematic precision to develop a fully integrated mine to magnet platform that now spans 3 continents and is supported by the Department of Commerce, Department of Energy, the Developmental Finance Corporation as well as other government agencies and the government of France. We did not build this alone. We sought out the best-in-class assets and leaders of the rare earth value chain, who possess the uncommon combination of technical excellence and the grid to thrive in an industry long dominated by China.

In metal and alloy making, this is Grant Smith and the team at Less Common Metals. LCM is 1 of the few rare earth metal and alloy producers of scale outside of Asia, and we were happy to welcome them to the USA Rare Earth family in the fall.

In processing and separation, we have partnered with Frederic Carencotte and the team at Carester, through our recently announced joint investment with InfraVia and the French government, we're ensuring that when the Carester facility comes online later this year, it will lead the Western world in heavy rare earth separation.

And today, we secure the upstream anchor and the ideal bridge to the development of our own Round Top project. At the Pela Ema mine, Thras and his team at Serra Verde have spent 16 years meticulously developing a world-class asset that is simply unrivaled in the West.

By bringing Serra Verde into our fold, USA Rare Earth is now the global champion in rare earth. No other company outside of Asia can match the breadth, the depth or the strategic resilience of the integrated value chain that we're building.

Let me walk through the key strategic pillars of this transformational acquisition. First, we're securing one of industry's most strategic assets with unparalleled offtake security. Serra Verde is the only scaled producer of all 4 magnetic rare earths outside of China and the only mine with long-term offtake agreements with price floors on not only light, but also heavy rare earth.

Second, it delivers and accelerates a transformative financial profile for USA Rare Earth. This transaction enhances our financial trajectory with projected annualized run rate EBITDA of $550 million to $650 million by the end of 2027 when we deliver oxides to the SPV.

Third, our global platform will be backed by a robust balance sheet with pro forma liquidity of approximately $3.2 billion.

Fourth, this transaction unites best-in-class integrated global capabilities.

USA Rare Earth will possess end-to-end expertise spanning mining, processing, separation, metalization and magnet making. The scale and breadth of our mine-to-magnet platform will be unmatched in the Western world and will be fortified by broad-based strategic support and partnerships with both the U.S. and French governments.

Now finally, we're strengthening our leadership team with unrivaled expertise. We're adding world-renowned mining, metals and resource titans: Sir Mick Davis, and Thras Moraitis to our Board of Directors. Sir Mick and Thras need no introduction as they were the architects who built Xstrata into a globe-spanning resource giant. We're thrilled that Thras is also joining USA Rare Earth as President.

The addition of Sir Mick, Thras and the rest of the Serra Verde team will help ensure that we have the institutional knowledge and operational excellence required to lead this industry. They bring a proven track record and know-how in upstream development, which will be additive as we develop our own highly strategic heavy rare earth and critical mineral project at Round Top.

With that, I'm delighted to hand it over to Thras to tell you more about how he views the evolving rare earth industry landscape and how the special Serra Verde asset fits into our global strategy. Thras?

Thank you, Barbara. I'm generally thrilled to be here today because what we're announcing is not just a corporate transaction, it's the creation of a rare earth powerhouse with the scale, the assets and the strategic positioning to become the defining Western player in one of the most critical industries of our time. To understand why we're so confident in this endeavor, it helps to look at what we've done before.

When Mick Davis, the then CEO of Xstrata and I, along with the Xstrata team, embarked on our journey in the early 2000s, we held a conviction that was deeply contrarian that China's industrialization would generate a multi-decade surge in metals demand, but the mining industry was wholly unprepared to meet. That conviction gave us the courage to pursue a decade-long strategy of acquisitions and organic growth that ultimately built Xstrata into one of the world's great mining companies, culminating in its landmark $90 billion combination with Glencore in 2014. We were right then, and we are equally confident we are right now.

Our thesis for rare earth is built on the same rigorous forward-looking analysis. The structural demand drivers are powerful and accelerating, burgeoning demand from electric vehicles, robotics and physical AI, defense and aerospace, semiconductor and medical applications, to name a few.

Critically, our analysis identified that it would be the heavy rare earths: dysprosium, terbium and yttrium that would face the most acute supply constraints. China controls virtually all global mining and processing of these elements. That concentration of supply in a single jurisdiction is not just a commercial risk, it is a geopolitical vulnerability that governments and corporations around the world are now urgently working to address.

Compounding this demand search was a supply side in structural disarray. Outside Asia, the rare earth industry was chronically underinvested, fragmented and critically incomplete. Missing entire links in the supply chain needed to bring product from mine-to-market. And it was obvious to us that left unaddressed, the sector had no realistic prospect of meeting the surging needs of the technology set to define the future.

In 1992, Deng Xiaoping made a statement that proved remarkably prescient. The Middle East has oil, China has rare earths. China has spent the past 3 decades methodically building dominance over every link in the rare earth supply chain from mining and processing to metals, alloys and magnets. When China severely restricted rare earth exports last year, it was not a surprise to us. It was the confirmation of the risk that had been identified and planned for since 2021. The trade war has dramatically accelerated the urgency felt by Western governments and industries to secure alternative reliable supply chains.

Serra Verde was built precisely for this moment. When we set out to find the right asset, our criteria were exacting, a deposit-rich in heavy rare earths amenable to low-cost, low-impact extraction, a large long-life resource with meaningful expansion potential, proximity to power, logistics and other infrastructure, a stable mature mining jurisdiction with predictable regulation and the ability to operate to best-in-class sustainability standards.

Pela Ema, Serra Verde's operation in the state of Goias in Brazil meets every one of these criteria. It is a large ionic clay deposit with over 20 years of mine life. The extraction process is straightforward. Near-surface clay requires no drilling, no blasting, no crushing or milling and users only benign reagents in the ionic exchange process. The site benefits from clean hydroelectric power, biofuels for mobile equipment, excellent logistics infrastructure and a skilled local workforce in the nearby town of Minacu. It is not located in an environmentally or socially sensitive area. A critical advantage for permitting community relations and long-term social license.

Following rigorous due diligence, Vision Blue and The Energy & Minerals Group, 2 of the most respected natural resource investors in the world, committed $150 million alongside existing investor, Denham Capital at the end of 2022. Mick Davis became the Chairman and I became CEO, continuing a partnership of over 30 years.

Our strategic imperatives were to be a first mover in building a scale rare earth producer outside Asia, especially vital heavy rare earths, be the most responsible producer of rare earth elements in the world and play a central role in the development of new integrated rare earth supply chains.

We moved quickly and decisively. Our COO, Ricardo Grossi, built a highly capable passionate team in Brazil. We completed construction of the processing plant, secured all required permits and licenses and commenced commercial production in early 2024. Total equity capital invested exceeded $700 million by then.

Throughout this period, we have maintained an exceptional safety record over 3 years without a lost time injury and strong trust-based relationship with local communities and regulators. Best-in-class sustainability is not an aspiration for us. It's a non-negotiable operating standard.

Our first-mover advantage as the only scaled producer of all 4 magnetic rare earths outside Asia has not gone unnoticed. In 2024, Serra Verde was formally adopted as a strategic project by the Mineral Security Partnership, a coalition of 14 nations committed to diversifying critical mineral supply chains. This recognition translated directly into a $565 million financing facility from the U.S. International Development Finance Corporation to fund our expansion and carry us through to positive cash flow.

We then secured a landmark 15-year offtake agreement for our Phase 1 production with floor prices across all 4 magnetic rare earths, from an SPV backed by U.S. government parties and private capital. This is transformational. Floor prices directly address the single greatest obstacle to upstream rare earth investment, the absence of transparent, reliable price signals.

Floor prices neutralized the impact of volatile and many would argue, deliberately suppressed Chinese benchmark prices that have long deterred long-term capital commitment to the sector. We have significantly progressed our optimization and expansion activities. First phase ramp-up commences in quarter 3 this year towards a run rate of around 4,000 tonnes per annum of total rare earth oxides by year-end, while the second phase will be completed by the middle of 2027, with a total run rate of 6,400 tonnes per annum of total rare earth oxides by the end of '27. At the same time, we are investing in increasing the quality, and hence the value of our products.

Further growth options are being evaluated with the potential to double Run-of-Mine production. Serra Verde is already the most strategically significant producer of heavy rare earths outside China. The growth pipeline ahead of us makes the investment case even more compelling.

Today's announcement is the culmination of a deliberate strategic process to build an integrated mine to magnet rare earth business. Over the last years, we have evaluated numerous downstream opportunities and several potential partners in our quest to be part of an integrated mine-to-magnet platform.

In our assessment, Barbara and her team are building such a platform with the best-in-class at each link in the supply chain. We want to be part of the most competitive platform, and we could not be more excited to join the team here at USA Rare Earth.

This combination is generally transformational for our company, for our industry and for Western supply chain security. We've spent 5 years building the foundation. We have the right assets, the right team, the right financial backing, and now with this combination, the right partner to complete the value chain. This is the beginning of our next chapter, and we can't wait to get to work.

Now I'd hand over to Barbara.

Thank you, Thras. As I outlined and as Thras so eloquently put it, this transaction goes well beyond simply buying a world-class... [Technical Difficulty]

It appears we lost connection with our speakers. Please hold while we reconnect. Ladies and gentlemen, thank you for your patience. We've reconnected with our speakers.

Let me pick this up where Thras handed it off to me. I just want to say thank you, Thras. And as Thras has so eloquently put it, this transaction goes well beyond simply buying a world-class operating asset. It's the product of a deliberate strategy to construct the world's premier rare earth platform. Between the operating capabilities and expertise that we have assembled across all of the links in the value chain, combined with the strategic vision of our leadership team, we're building the global champion here at USA Rare Earth. And we will be one of the driving forces that help to guide the evolution of this industry in the decades to come.

Now I'm going to hand it over to Rob to discuss how the transaction will transform, accelerate and improve our financial profile in both the near and the long term. Rob?

Thank you, Barbara. As you mentioned, this transaction is not only a crucial piece of our global value chain and strategic vision, but provides substantial enhancement and near-term certainty to USA Rare Earth's financial profile.

First, on the transaction structure. Under the terms of the definitive agreement, USA Rare Earth will acquire 100% of the Serra Verde Group for a total consideration of $300 million in cash and 126.849 million shares of newly issued USA Rare Earth common stock. At our closing share price of $19.95 as of April 17, this implies an equity value for Serra Verde of approximately $2.8 billion.

Upon closing, which we expect in the third quarter of 2026, subject to customary closing conditions and regulatory approvals, existing USA Rare Earth shareholders will own approximately 66% of the combined company with Serra Verde's legacy shareholders, including Vision Blue Resources, owning approximately 34%.

A primary objective of this combination was to establish a financial foundation with diverse sources of capital to fund our growth through the end of the decade. Pro forma for the transaction and our pending non-binding LOI with the Department of Commerce, the combined company will benefit from a robust liquidity position of approximately $3.2 billion.

Serra Verde specifically enters our portfolio, fully funded through to positive cash flow backed by a dedicated $565 million financing package from the DFC. In addition, Serra Verde arrives with 100% offtake agreement with a special purpose vehicle capitalized by the U.S. government and private capital. This agreement includes vital contractual price floors for all 4 light and heavy magnetic rare earths of $110 per kilogram for NdPr, $575 per kilogram for dysprosium, and $2,050 per kilogram for terbium. This is the first such agreement of its kind in the industry and represents the only contractual price floors of any kind for heavy rare earths.

Beyond these price floors, we retained 70% of the shared upside when index prices exceed these levels allowing us to capture significant market premiums, while being insulated from dumping or predatory pricing tactics.

Now moving to the earnings profile of the acquisition and of the combined company. Serra Verde is not only a transformational asset that dramatically accelerates our path to profitability, we have modeled the asset's near-term contribution under 2 distinct scenarios based on product delivery to the special purpose vehicle. If we deliver mixed rare earth carbonate under the offtake agreement, Serra Verde is expected to generate between $300 million and $400 million in annualized run rate EBITDA by the end of 2027.

By utilizing our integrated separation capabilities to produce oxides, including through our partnership with Carester and our own plant facilities, we expect Serra Verde can achieve a significantly higher annualized run rate EBITDA of $550 million to $650 million by the end of 2027. This oxide scenario is based on a Phase 1 life of mine production and an illustrative average total rare earth oxide basket price of approximately $190 per kilogram.

Looking toward the end of the decade, our value chain consisting of our upstream production at Serra Verde and Round Top, our midstream processing separation and metal-making and our downstream magnet making results in a high-margin cash-generating powerhouse. By the end of 2030, the combined company is expected to generate approximately $1.8 billion in annualized EBITDA with approximately 80% free cash flow conversion.

In summary, this acquisition is both a strategic fit and a financial accelerator that enhances our scale and capability to lead the Western rare earth market for decades.

With that, I will hand the call back to the operator for Q&A.

Thank you, Rob. Pardon me, Betsy, let me just -- I just want to say a few words of wrapping. Before we open it up for questions, let's just reiterate what today means.

This transaction positions USA Rare Earth as the global leader in rare earth. We're building the most comprehensive, integrated and strategically positioned rare earth platform outside of Asia. We have the assets, the technology, the government partnerships, the financial visibility, and now with this combination, the operational depth and the leadership team to deliver on that ambition. No other company in the West will have the robust capabilities and platforms that we are assembling. The world needs what we're building, and we're moving with purpose and urgency to deliver it.

And now, Betsy, we are ready for questions.

[Operator Instructions] The first question today comes from Neal Dingmann with William Blair.

Barbara, congratulations for you and the team, quite an accomplishment. My first question, just on separation and processing around this, specifically, Serra Verde continues to ramp, and you all talked about through Phase 2, which certainly seems great to get up to 6,400metric tons. Could you talk about will Carester handle most of this? Or could you talk about just how the separation and processing of all that ramping material will be handled?

Yes, happy to address this. And as we pointed out, this is the pinch point in the whole supply chain right now. And thankfully, we now have optionality. So Pela Ema mine has been producing MREC. There is on-site separation capability beginning there. The mine itself has provided MREC not only to us, we have actually -- our team and Wheat Ridge has taken sample amounts of that material and has proven our ability to successfully celebrate those magnetic elements that are so desired by the industry. And I believe that Serra Verde has also worked with other potential processors. It's important for us to be supporting the expansion of the processing link in the chain.

I'll share with you that when USA Rare Earth made a visit, one of the first due diligence visits, Carester came along as a partner. And was part of the -- I'll say, the expertise base that helped us understand the true value of the asset. So yes, I expect that Carester can play an important role. I look forward to having our own team at Wheat Ridge actively engaged. But then likewise, I think for us, it's up to us to manage the optionality.

Anything you would add to Neal's question.

No, I would say that there are a number of companies building these separation facilities in the U.S. and elsewhere. And so we believe our product will be processed through these facilities. Naturally, the preference would be for us to process through our own facility, and that's obviously one of the strategic targets that we have for the combined entity.

Yes. So stay tuned, more work to be done.

Awesome. And then, one more if I could just follow up on the second question on that 15, which I think is very a positive 15-year offtake agreement. Well, I know that Serra Verde previously had secured the $565 million financing with the U.S. IDFC. Was there any -- did Serra Verde previously have any offtake agreement in place? Was this something that just came in with part of this deal? Maybe talk a bit because I think this is so strategic, I would love to hear more kind of how this came to be.

Yes. Historically, we've been supplying our product to China largely because of the lack of separation capability outside of China, as you can appreciate. But as we became more and more involved with the U.S. government initially through the mineral strategy partnership and also then subsequently through the DFC funding, it became clear that our product would find its way into the U.S. market at some point. Our Chinese contracts in any case were due to expire by the end of this year. So that's no longer an issue for us.

And so then we set about negotiating these offtake agreements with the SPV that the government has financed together with some private parties. And one of the primary objectives of the negotiation, apart from the long-term offtake agreement, was really to secure these floor prices.

And the reason is, as I mentioned earlier in my introduction, as you can appreciate, the traditional benchmark price that has been used by customers over the last couple of decades is the Chinese benchmark price. And I think we all know that, that's not necessarily representative of the market outside of China nor of the cost of actually building new plants. And so, it was not possible using the Chinese reference price to incentivize new production upstream.

And therefore, the offtake agreement that we've agreed is designed explicitly to address this particular issue. Firstly, by setting floor prices, which would incentivize new investments. So it's not really just about us. It's about the industry as a whole.

And secondly, a long-term offtake arrangement, which gives you the stability to be able to invest in confidence. So that was the backdrop to the offtake agreement.

The next question comes from George Gianarikas with Canaccord Genuity.

Congratulations. So maybe to dig in a little bit into the numbers. You've accounted for, I think, 164 tons of Dy, 29 tons of Tb and 1,534 tons of yttrium. So I'm wondering if you can sort of give us an anticipated mix of NdPr as well in terms of full separation by the end of 2027, just for our models?

Yes. NdPr represents about 20% to 22% of the overall production basket. It's around 1,700 to 1,800 tons of separated NdPr.

And maybe just strategically, can you maybe expand upon how you expect this asset to complement Round Top?

Yes. I mean, it complements Round Top in a number of ways. First and foremost, it provides an immediate source of lights and heavies into our production, particularly as we think about processing oxides. Two, it dramatically accelerates our EBITDA and cash flow by bringing that in several years as well. So if you think about those 2 characteristics, it basically allows us to feed our metal and alloy making and our magnet making through the SPV, and it brings in cash flows and financial security to USA Rare Earths.

Maybe just a follow-up to that. Will the magnet and metal making facilities have to buy directly from the SPV? What are the mechanics of that relationship?

Yes. So the SPV is currently being stood up, and it's going to ultimately be selling -- as you can imagine, there's significant demand for this product because it will be the only large-scale non-China production of lights and heavies when it comes online. So there's significant demand for it. The SPV will be selling to the most capable players in the United States and in Europe. And given our capabilities, producing -- standing up the largest production of metal and alloy making and one of the largest metal making or magnet making capabilities, we expect and we should be one of the largest off-takers from the SPV.

But can I just interject? I mean, here's one of the key things that everybody should understand. We are going to be a major supplier to all the other players in the industry. We understand that. It's a huge responsibility, but it's our intent, and we've said this right from the beginning, to be the partner of choice, helping the whole industry scale.

The next question comes from Suji Desilva with ROTH Capital.

Congrats on the transaction here. You talked in the press release about some milestones for the further access to liquidity. Can you talk about -- can you clarify what some of those are down the road that we should be watching for?

And you're talking about the Department of Commerce agreement, Suji. Am I correct?

Correct. Yes.

Yes. So the milestones are, as we've talked about in the past, which are the natural ramp-up of our capabilities across the magnet making, metal making and for the mine itself. And so for the mine, which is Round Top, it's things like getting through our definitive feasibility study and beginning in things like down the road, beginning our production. For magnet making, it's things like getting into Phase 1 of our commissioning, which we've already accomplished and achieving initial commercial success. And then for metal making, similarly, it's beginning to stand up our capability in the United States. So it's all things like that. And the spending related to that, that ultimately ties into the DOC funding.

Okay. That's helpful. And then perhaps for Thras, maybe your past experience with Xstrata, copper, nickel, can you contrast that opportunity versus this one, the challenges and maybe even what's even more exciting about this opportunity?

Yes, I think that they are obviously very different industries in terms of scale. And -- but I think this is a very, very different industry with unique challenges. It's obviously a much smaller industry. It's an industry that's been underappreciated for decades until there was this recognition that the Chinese had a stranglehold and these were very critical materials for future-facing technologies.

And as a result, most of the operations were subscale. They were underinvested in. And the major players don't play in this industry because they couldn't find a way to build scale.

And so, it really was an industry that was sorely lacking in a combination of capital capability and also a coordination along the value chain. So quite different in that sense. And this is, herein lies the opportunity, I think, for us, which is by bringing to bear all of those things that I've mentioned, we have the opportunity to build something that is -- that becomes a platform that's mature, that's stable, that is self-sustaining and starts to look more like these mature industries that you mentioned earlier.

The next question comes from Derek Soderberg with Cantor Fitzgerald.

My understanding is that you guys were required to do an additional fund round of funding, equity funding. I think it was $600 million as part of the U.S. government arrangement. Does the Serra Verde deal alleviate that need?

No, it does not. We'll still be required to raise additional capital as part of our DOC transaction.

Yes. I'll remind everybody what the -- think about this as the combination of 2 massive component parts, each with its own standing business case. And so our goal here is to continue to scale across all these operations. This is a strategic story as well as a story of execution. And the plans we put forward for the Department of Commerce deal have a very clear set of milestones. Serra Verde has a very clear set of milestones. And it's going to be exciting for investors to follow along with us as we accomplish our major objectives in the coming quarters.

Got it. That's helpful. And on the 80% free cash flow conversion rate, I think you said by 2030, how does that compare to industry benchmarks for other producers? Do you guys have to initiate some cost reductions? Can you talk about how do you sort of get there and how that might compare to others in the industry?

Yes. So I think the important point to note is, by the time we get to 2030, all of our major CapEx spend will have been completed for over 12 months. And essentially, we'll be doing maintenance CapEx at all of our facilities. Because we're only at maintenance CapEx and because these are extremely high-margin businesses. So for example, Serra Verde is well north of 75% EBITDA margin, there is a significant free cash flow conversion. So the key is, once you get these things up and running, they produce very strong margins.

[Operator Instructions] The next question comes from Subash Chandra with Benchmark Company.

Congratulations. So the first question is, considering the EBITDA uplift on integrating the separations through Carester and maybe mineralization through LCM, how much product are you assuming running through your integrated operations?

Yes. So right now, as you think about production of MREC, obviously, 100% of that product will be sold to the SPV. As we stand up our oxide production, then 100% of our separation capability into oxide will be run through our company or through assets that we have joint ventures in or control into the SPV. And then because we're going to be a significant producer of metal and alloy going forward, our expectation is it will be a substantial portion of the SPVs offtake.

This gives me a good opportunity, though, to highlight a feature of what we're building here. If you look at upstream, mining and processing, midstream metal making and downstream magnet making, what you'll see is that this isn't a simple verticalized supply chain. Every link in this chain has the potential to serve multiple markets, customers has -- every single link has its own business case and can thrive on its own 2 feet.

And so look for the mining assets that we have, for instance, to be feeding the energy industry in addition to magnet making. But the beauty of this is that because we have these assets under management, we're able to forecast and predict demand across this chain, and we can make sure that our leaders in each case are scaling with confidence. The #1 thing that needs to happen in this marketplace is to rapidly scale. And so this -- the attractive investment opportunity here, the confidence we have, the support we have through the price floors, all of that is supporting the growing marketplace outside of China and allows us to break that stranglehold. So here's our opportunity.

Right. Yes. Just judging from the slides, it doesn't look like there's any yttrium value in the $190 per kg blended. Is that a correct assumption? And if you were to be able to monetize yttrium, would that be a substantial uplift?

Yes. So, yttrium is a part of the uplift associated with the $550 million to $650 million. That is in the basket of $190 a kilogram.

This concludes our question-and-answer session. I would like to turn the conference back over to Barbara Humpton, for any closing remarks.

I want to thank everyone for joining us today. This has been a really exciting day for us at USA Rare Earth. And Thras welcome to you and the Serra Verde team to our platform, and let's go make it all happen. Bye all.

Thanks, everybody.

Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, and welcome to the USA Rare Earth Strategic Investment in Carester Conference Call. [Operator Instructions]. Please note this event is being recorded. I would now like to turn the conference over to J.B. Lowe, Vice President, Head of Investor Relations with USA Rare Earth. Please go ahead.

Good morning and good afternoon, and thank you for joining today's call on USA Rare Earth's Strategic Investment in Carester. With me today are Barbara Humpton, Chief Executive Officer; and Rob Steele, Chief Financial Officer.

Following the press release that was issued earlier today, Barbara will begin with some prepared remarks on the company's strategic investment in Carester, Europe's leading heavy rare earth and recycled magnet processing technology company. We will then open the call for questions. I would like to remind participants that today's discussion may contain forward-looking statements.

Please refer to the press release and our SEC filings for a discussion of risk factors. It is also important to note that the information provided today is subject to definitive documentation. Listeners who do not have a copy of the press release or associated presentation may access these documents by visiting the Investor Relations section of the company's website. With that, I will turn the call over to Barbara.

Thank you, J.B., and good morning, everyone. Today, we're announcing a significant milestone in the execution of our mine to magnet strategy. USA Rare Earth has agreed to acquire a 12.5% equity stake in Carester, a one-of-a-kind heavy rare earth and recycled magnet processing company that is considered one of the leading rare earth processing technology companies in the world. We're making this investment alongside InfraVia, the French critical minerals infrastructure fund seeded by the French government, which is also taking a 12.5% stake.

I want to underscore that this is an investment that allows us to take an active role in Carester, and it's an important step in the long-term growth and value creation potential of USA Rare Earth.

Contemporaneously with the equity investment, we have entered into 3 strategic agreements with Carester, a 15-year supply agreement, a 15-year offtake agreement and a technology and services framework, which includes an IP licensing arrangement.

These agreements will provide USA Rare Earth with direct access to rare earth oxides, including dysprosium and terbium heavy rare earth and position us for long-term engineering support, collaboration and technology licensing.

This is not just about USA Rare Earth buying a stake in Carester. It is that USA Rare Earth is securing strategic capabilities, market access and allied supply chain positioning that accelerate our long-term vision of becoming a multinational integrated mine to magnet leader. Let me explain why this investment matters and what it means for our global value chain. Carester was founded in 2019 by Frederic Carencotte, a 20-year veteran of Solvay's rare earth operations in France and China.

Frederic and his team at Carester are among the most experienced and highly regarded experts in the world in rare earth separation and oxide production, with particular industry renowned in heavy rare earth and recycled oxides. It's often said that when you want to produce a magnet, there are just a few phone calls you need to make to get it done.

Frederic and the Carester team is one of those calls. With a long-standing reputation as a trusted partner and high-quality producer, Carester has earned customers across Europe, Japan, Australia, Brazil, Malaysia and North America.

The company holds proprietary separation and recycling technology, including 4 patented innovations and its Parex+ simulation software. Carester employs 41 people with over 250 years of combined rare earth industrial and scientific experience. Carester's well-respected patented rare earth separation process is modular and is designed to treat all types of ore. It's patent portfolio extends across pyrometallurgical, hydrometallurgical and solvent extraction processes.

And this portfolio enables full circularity of rare earth with long-loop magnet recycling capability and technology with an ability to digest all types of magnets to be recycled from 100% swarf to 100% end of life. Through its subsidiary, Caremag, Carester is currently standing up Europe's first large-scale, low-carbon rare earth recycling and refining facility in Lacq, France, which is expected to commence operations in the third quarter of 2026 and achieve run rate in the first quarter of 2027.

This facility is designed to process 7,000 tons per year of rare earth and recycled magnets. At run rate, this facility will produce 800 tons per year of NdPr oxide, 500 tons of dysprosium oxide and 100 tons of terbium oxide, which represents approximately 15% of current world production of these critical heavy rare earths.

This capability is crucial as dysprosium and terbium generally represent 20% of global rare earth volume, but over 90% of the value. And critically, China today processes nearly 100% of these heavy rare earths. Carester has already secured EUR 216 million in backing from the French government and strategic partners, including the Japan French rare earth, an entity backed by the Japanese government.

I also want to underscore something that is fundamental to our conviction in this deal. There's a long-term relationship between the founders of our subsidiary, Less Common Metals and the founders of Carester. This is a partnership built on decades of professional trust and shared expertise in rare earth processing.

Now why does this matter for USA Rare Earth and for Less Common Metals? First, this investment will provide key supply of rare earth oxides to USA Rare Earth and LCM's French project in Lacq, France. Under the 15-year offtake agreement, USA Rare Earth will have the right to purchase up to 50% of the heavy rare earth oxides produced from our contributed feedstock, including dysprosium and terbium, and those oxides flow directly into LCM's metal and alloy production.

Second, our co-investment with InfraVia and the French government provides further support to USA Rare Earth's broader efforts in Europe. The French government has expressed an interest in providing loan guarantees and CapEx reimbursement for LCM's planned metal-making facility in Lacq. They are interested in investing in LCM Europe and supporting a potential USA Rare Earth magnet making facility in the south of France.

Our equity participation alongside a French government seeded fund positions us for those opportunities. Third, the supply agreement creates a processing pathway for Round Top. Under the 15-year supply agreement, Carester will process any excess heavy rare earth concentrate from Round Top or from any other deposit to which USA Rare Earth may have access at the Caremag facility.

This will give us a European separation option that does not depend on any Chinese processing. Fourth, the technology and services framework agreement provides for engineering support, collaboration and technology licensing. Carester's proprietary technology in nitrate route separation, long loop recycling and radioactivity removal is applicable to Round Top's development and to our broader processing capabilities.

USA Rare Earth will own all newly developed IP coming out of our cooperation. Put simply, we believe that this partnership will allow us to secure strategic capabilities, market access and allied value chain positioning that accelerate our long-term vision of becoming a multinational integrated mine to magnet leader. Let me step back and frame what this means at a strategic level. When we talk about building an integrated rare earth value chain from mine to magnet and beyond, we believe this investment will strengthen every link.

Round Top provides mining and concentrate. Carester and Caremag complement our U.S. operations, providing European separation and oxide production, including the heavy rare earths that are most critical to defense and advanced technology applications.

LCM converts oxides into metals, alloys and strip cast. Stillwater manufactures finished NdFeB magnets. With this transaction, we will have contractual and equity relationships across all 4 links with Allied Nation partners in the United States, the United Kingdom and France. No other company in the Western world can say that today.

A few notes on the investment structure. We're announcing today on the basis of a signed term sheet, which is subject to definitive documentation and other conditions. The ancillary agreements, supply, offtake and the technology framework are all in agreed form. We expect to finalize the definitive investment agreement with related documentation in approximately 1 month. In conclusion, we are incredibly excited about the opportunity this partnership provides.

USA Rare Earth's investment in Carester is a strategic step to connect U.S. rare earth resources with a key industry bottleneck, European processing, recycling and downstream manufacturing capacity. We believe that this will accelerate the development of a secure, sustainable and allied mine to magnet value chain.

We have an incredibly exciting future, and there is more to come. This investment is just one step ahead on our journey. Thank you for your participation today. And with that, Drew, we're ready to open the call for questions.

[Operator Instructions]. The first question comes from George Gianarikas with Canaccord Genuity.

Maybe to start, can you possibly disclose the dollar amount or the euro amount of the investment you're making?

Yes. Let me draw in Rob Steele here.

George, yes, so the amount of our investment is EUR 40 million alongside a EUR 40 million investment from InfraVia into the company. We will both hold equity investments in Carester.

And maybe as a follow-up, how do the processing technologies and capabilities of the acquisition complement what you already have in place at Round Top?

Thank you. Yes. And I want everyone to be aware that we are progressing well at Round Top, looking forward to this accelerated mine plan yielding in the near term. And it is our intent to actually have processing facilities at Round Top with additional processing facilities being established in the United States.

But listeners may not be aware at just how critical this bottleneck is. While there are deposits around the world and while there are ultimately magnet makers around the world, these 2 links in the chain, the critical processing, especially of heavy rare earths and metal making were the most fragile links in this value chain. Our acquisition of Less Common Metals in October was the first transformative acquisition, ensuring that we would have that capability within our value chain and would be able to serve other downstream magnet makers.

This, in addition to LCM's capability, ensures that we secure that other fragile link, the processing. The know-how of Frederic and the Carester team is really derived from a much earlier center of excellence in the south of France. This know-how, of course, has been not used for decades now. And here is our opportunity to strengthen that, accelerate and expand what Carester is doing, what Carester and Caremag are doing, strengthen that link in the chain and then ensure that deposits all around the world have access to this technology so that we're able to supply heavy rare earth, light rare earths and other critical minerals where they are most needed.

The next question comes from Neal Dingmann with William Blair.

Barbara, is there -- I'm just trying to figure out now on the sort of volume potential sort of right out of the gate. Have you talked about -- I'm just trying to look through this and based on your prepared remarks, how quickly this could scale up? I know Carester is still not a huge company like Solvay and some others out there. So I'm just wondering, I guess, kind of what they're able to handle again, if Round Top comes out, do you sort of hit the ground running there and you're able to produce a large quantity. Is there any limit to volumes? Or maybe could you just talk about the potential volumes and how this might ramp over time?

Neal, it's Rob, yes.

Neal, it's Rob Steele. So they have the ability to process 7,000 metric tons of feedstock, which will ultimately result in about 800 tons per annum of NdPr, 500 tons of dysprosium and 100 tons of terbium. And as we said, if you look at things in the terms of dysprosium, that's about 15% of the world's capacity. What's really great about Carester is it will augment our own processing capability that we're developing at Round Top as well.

So in essence, we'll have 2 different places where we can process our rare earth concentrates and carbonates and provides us an ability to process in Europe as well as we supply LCM.

Perfect, that sort of led me to my second question. That's kind of what I was going to ask -- now based with having them as a partner, is that going to change what you'll target on sort of the heavy oxides that you'll be processing at Round Top because now you have them as a partner of this sort? Or maybe, I guess, asked another way, is this going to change sort of what the processing plans are at Round Top not noted.

No, our processing plans remain identical. Think of this as flexibility, and it gives us the ability to source feedstock from other areas and process in Europe. So as we scale LCM, we're going to need multiple sources. So it's a fantastic way to do this and create a large ecosystem in the south of France with these partners.

Yes, I agree very compelling.

And Neal, if I just want to build on this for a minute because we've been wanting to share with people the power of the platform we're creating. One reason it's been difficult to scale outside of China is because there are many, many fragmented pieces in the value chain.

By creating this platform, USA Rare Earth is bringing together partners who clearly have a need. There are processors in search of feedstock. There are metal makers in search of oxides. And by bringing this value chain together, we have that assurance of supply as well as offtake. This allows us to scale across the entire value chain more rapidly. And it gives, as Rob has described, this optionality so that we can match deposits to processors and accelerate the materials into the midstream and downstream links of the chain.

The next question comes from Subash Chandra with Benchmark Company.

I think the Carester facility was -- had a Stellantis offtake. Can you sort of talk to how much excess capacity there is for you if that Stellantis offtake still exists or if it's even relevant to this?

Yes. I mean the Carester facility, as I mentioned, is a large-scale facility, and they do have multiple partners already but there's more than sufficient capacity to get the kind of output that we need to support LCM going forward. So we feel very, very good about their capability.

Okay. Got you. And does this feed into the conditions for the U.S. government funding?

Does our investment feed into the U.S. government funding. The investment is not part of that funding, but the overall ecosystem that we're building does support the U.S. government funding.

Got you. So it does fulfill some of the conditions or one of the conditions or whatever of the government funding.

No, I want to be clear. It does not have anything to do with any of the gates or milestones associated with the government funding. It actually sits outside of that, but is really important in supporting the ecosystem that's critical to the U.S. government funding.

[Operator Instructions]. The next question comes from Derek Soderberg with Cantor Fitzgerald.

Did I hear you guys potentially planning on building out a magnet production facility in France. I was wondering if you could provide any details on that or any concrete plans for that? Any further details would be helpful.

Yes. I mean this partnership really provides the platform for us to be able to consider that. And we are really at the initial planning stages, but that is something we are looking closely at going forward as we build out this ecosystem.

Got it. And then are there specific purity levels for the dysprosium and terbium oxides under the offtake agreement? Anything you can share on that? Can you sort of ensure that they meet the requirements for some of your magnet production -- is that the case?

Yes. Yes, they do. Yes. So what's important is they meet the spec for metal and alloy making. That's the key. And our team at LCM has evaluated the specs and agree that they meet the specs for production going forward. And understand, LCM and Carester have had a long historical relationship and LCM was part of the way in which Carester has developed their specs over time.

This concludes our question-and-answer session. I would like to turn the conference back over to Barbara Humpton for any closing remarks.

Thank you, Drew. And everyone, thank you so much for joining us this morning. We're excited about this investment, what it means to the value chain, but stay tuned. There's more to come. We'll talk to you soon.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

Good morning, and welcome to the USA Rare Earth Investor Update Conference Call. [Operator Instructions] Please also note, today's event is being recorded.

And at this time, I'd like to turn the floor over to Lionel McBee, Head of Investor Relations. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining us today to discuss USA Rare Earth's transformative proposed collaboration with the U.S. government and concurrent private capital raise.

Before we get started, I would like to draw your attention to the disclaimers on Slides 2 and 3, which note that we may make forward-looking statements on this call and that we undertake no obligation to update those statements in the future.

On the call with me today are USA Rare Earth CEO, Barbara Humpton; and CFO, Rob Steele. They will provide an overview of our business and the rationale behind the government's intended commitment as well as some detail on our PIPE transaction. Following today's prepared remarks, we will open the call for Q&A.

I would also like to highlight the slides from this morning's presentation are available for download on the Investors section of our website at usare.com. We are excited about this opportunity and look forward to sharing more information with you.

And with that, I will hand the call over to Barbara. Barbara?

Thank you, Lionel, and I appreciate everyone joining us on such short notice this morning.

Before we move into the details of today's exciting announcement, let me take a moment to provide context. I joined USA Rare Earth last fall because I believe in the mission. Our team is working every day to ensure that customers across critical industries, defense, health care, energy and ultimately, every aspect of our economy that depends on high-technology components can access the critical minerals needed to create those items. Rare earth oxides, metals, alloys and permanent magnets are essential parts of semiconductors and the technology needed to manufacture them, radar systems, missile and fighter jet guidance systems and lightweight precision aerospace components among many other applications. We absolutely need a secure domestic supply chain for these items, and USA Rare Earth is moving at pace to make this vision a reality.

As part of that effort, USA Rare Earth is excited to announce today a transformative proposed collaboration with the U.S. government. This is a watershed moment in our work to secure and grow a resilient and independent rare earth value chain based in this country. Under the letter of intent we have signed, the government would provide a total of $1.6 billion in incentives and loans, a clear validation of our model. We have long said that meeting the urgent call to reshore the rare earth and critical minerals industry will require a multiplayer solution, and this establishes our company as one of the leaders.

Since USA Rare Earth went public in March of 2025, we've moved quickly to complete what we call the mine to magnet value chain platform, creating a differentiated position in the segments with the highest pricing power. In September, we announced the acquisition of Less Common Metals, the only proven ex-China producer of both light and heavy rare earth metals and alloys at scale. We closed that deal in November, and we are already expanding this operation to the benefit of the U.S. and our allies. Just last week, with the support of the French government, we announced plans to build a plant in Lacq, France with 3,750 metric tons of annual production capacity.

Metal making links the processing and separation capabilities that we're developing in Wheat Ridge, Colorado with our magnet-making facility in Stillwater, Oklahoma. And to make metal, we need to mine raw material. We'll do that at Round Top in Sierra Blanca, Texas, the richest deposit of heavy rare earths known in North America. We originally planned to bring Round Top online in 2030, but based on positive early results of our solvent extraction piloting, we are now implementing an accelerated mine plan that anticipates the start of commercial production in late 2028.

The Round Top deposit contains 15 of the 17 rare earth elements with high concentrations of dysprosium and terbium, two of the most important heavy rare earths and ones that are virtually unavailable from domestic sources today. The deposit is also enriched with gallium, hafnium and zirconium, which are critical to semiconductor manufacturing. The government's participation will support our efforts to scale up across the value chain with urgency so that we can meet significant customer demand for decades to come.

Let me now hand it over to Rob, who will provide more details along with our preliminary 2025 results.

Thank you, Barbara, and good morning, everyone. We are proud to work alongside the government to strengthen U.S. infrastructure, rebuild our domestic heavy rare earth industry and reduce our reliance on China. The proposed $1.6 billion of CHIPS Act incentives and debt and the $1.5 billion raised in our significantly oversubscribed PIPE transaction, combined with our current cash position and proposed support from the French government provides us with access to a potential $3.5 billion in capital to accelerate our mine to magnet value chain. Our sector is rapidly evolving with significant demand, and USA Rare Earth is well positioned to capture the benefits of that growth.

The proposed $1.6 billion from the government includes two parts: $277 million in proposed federal incentives and a proposed $1.3 billion senior secured loan. In exchange for the incentives and loan, the government will receive 16.1 million shares of USAR common stock and 17.6 million warrants, aligning our incentives and enabling taxpayers to participate in the substantial value we expect to create at USA Rare Earth. Disbursements under the proposed federal incentives and loan are planned consistent with our operational milestones and funding needs.

We're excited about this transaction because it accelerates the speed at which we can reach commercial scale. Our plans now include reaching 10,000 metric tons of annual magnet making capacity by June 2030, 27,500 metric tons of annual metal making capacity by December 2027, of which 10,000 is domestic, 8,000 metric tons annually of third-party MREC and rare earth oxide processing capacity by 2030 and the ability to recycle our own swarf as our magnet production grows. This is a dramatic acceleration that will support key U.S. industries, including semiconductors, aerospace and defense and the broader industrial base.

With this growth, we see a path to gross profit breakeven in 2027, EBITDA breakeven in 2028 and cash flow breakeven in 2029 and then targeting for 2030 $2.6 billion in revenue, $1.2 billion in EBITDA and $900 million in free cash flow, a compelling return profile for all of our investors.

Now I would like to provide an update on what we achieved in the fourth quarter and subsequent to year-end. At Round Top, we finalized the flow sheet with successful bench and pilot scale testing. We remain on track to complete the accelerated mine plan in the second half of this year and begin commercial operations at Round Top in late 2028, two years earlier than previously planned. Our Stillwater, Oklahoma magnet making facility remains on track to begin commissioning this quarter. As Barbara said, we also strengthened our platform with the acquisition of Less Common Metals, which closed in November and its relationships and supply agreements with Solvay and Arnold Magnetic Technologies. Lastly, subsequent to quarter end, we announced plans for a new metal and alloy plant in Lacq, France, co-located with Carester's oxide and recycling facility as well as the selection of Fluor and WSP as EPCM partners for the build-out and commercialization of Round Top.

Turning to our financials. For the year ending December 31, 2025, we anticipate both operating expenses and an operating loss in the range of $56 million to $62 million and capital expenditures in the range of $37 million to $43 million. We also anticipate ending the year with more than $350 million of cash and cash equivalents.

Now I'll turn it back to Barbara for closing comments.

Thank you, Rob. We're delivering a fully integrated rare earth value chain from mine to magnet built around U.S. priorities. Through this landmark proposed collaboration with the U.S. government and our private capital raise, we're advancing national and industrial security objectives across semiconductors, defense, aerospace and advanced manufacturing while establishing a first-of-its-kind commercial scale rare earth supply chain outside of China.

All of us at USA Rare Earth look forward to working with the government and our institutional investor partners to build this company into a national asset that secures, reshores and grows the rare earth magnet value chain for the benefit of the United States and our allies.

And with that, we'd be happy to take your questions. Operator, let's open the line for Q&A.

[Operator Instructions] Our first question today comes from Neal Dingmann from William Blair.

Congratulations on the funding, job well done. My first question is just, I think, on the magnet production in Stillwater. You all have nicely increased now the capacity at the production at the facility now. I think you all are saying now 10,000 tonnes per annum. Can you give an idea of now maybe how you see that scaling up?

And then secondly, Rob, I just want to make sure I heard you correct that the oxide needed for magnet production there will come from Solvay until the Round Top mine is producing. Is that correct?

Sure. It would be good. Let's go to page -- there's a presentation along with us, Page 10. And it gives you a sense for how the production will ramp. But you can see on the right-hand side of this slide that we'll be ramping by 2029. We'll be about 50% there in terms of nameplate capacity by 2028. So, about 5,000 tons by 2028.

And in terms of the oxides that we'll be using, it depends on the timing. In '26, '27 and partially through '28, the oxides we will need will come from third parties. So, Solvay will be a supplier, and it will also include other mine sources. So there are three producing mines outside of China currently, and we will utilize those relationships and are putting in place supply agreements to be able to fulfill our capacity until then as well as other processors and recycled sources.

We will also have the ability to process our own swarf and that capability will be coming online in 2027 that we'll be doing ourselves. In the meantime, we're already putting in place agreements with others to recycle our swarf and receive oxides from them in the meantime.

Great. And then just a second one, if I could, on the Stillwater facility as well. You all reiterated the first quarter of commissioning at the facility. And I'm just wondering, was just recently at like a Noveon plant, and I noticed that their plant, they do a lot of the operation cutting, all these things that -- for the specific magnets. Is that what Stillwater will be producing sort of out of the gate? Or what maybe type of magnets Rob to give you a better idea of how to think about that?

Yes. So, we're on track to commission here in Q1 of 2026. And we're putting in place the capability, which will be installed throughout 2026 to be able to finish magnets. So we'd be producing block. That's what the nameplate capacity is based upon, block magnets, but those will be further cut and shaped into finished magnets for the majority of our customers.

So, the block initially for this year and then the finish potentially starting next year?

We'll be producing finished magnets this year. Yes. We'll have the capability to do that.

And our next question comes from Suji Desilva from ROTH Capital.

Barbara, Rob, congratulations on this very exciting announcement. Just first on the Fed funding, the $277 million, I guess. Can you talk about the timing of receiving that? And then any contingencies that are involved there?

Yes. So, both the $277 million direct funding award and the $1.3 billion loan are intended to be disbursed based upon milestones that naturally result from our business plan. And those will be disbursed for the most part between '26, '27 and '28. There's a little bit of a tail piece going into '29. But you can think of all that funding being disbursed assuming we hit the milestones within the Trump administration.

Yes. Let me add to this, Suji, because this is actually a really cool feature of the way this is set up. In the past, perhaps the government might have given large funding grants to various players with the funds arriving upfront. In this case, the intent of our colleagues at the Department of Commerce was to make sure that taxpayers, the public sector would always be following the investments of the private sector. This is why our pipe was so important to have the funds to progress our plan. And then as we achieve milestones, taxpayer support continues to build, but the American taxpayer is never overcommitted on this plan. They're never the ones leading and out in front. Really important aspect to make sure that the plan is protected at all stages of the game.

Very helpful. And then second, I'm just -- I've been asked this question by investors throughout the last year. Have you assessed the full capital requirement to bring Round Top as a functioning as a mine? I know it's probably early in that, but any sizing there would be helpful and if you're funded to that today or with this deal.

Yes. So, if you go to Page 11 of the presentation, what this is, it gives you a sense of the total funding of all of our projects combined, which is currently modeled to be around $4.1 billion. And you can see that the combination of the pipe and our cash today and other resources, along with the government funding essentially gets us almost all the way there. And then the remaining capital, because the returns are so strong, we believe we can raise the remaining capital from attractive sources. And you should assume that's equity capital, but that can come from strategic investments as well as institutional investors.

One quick housekeeping question. Have you picked the site yet for the domestic metal versus LCM U.K.? Or is that to be done?

Yes. I mean we're intending to build capacity at Stillwater to be able to make metal.

Our next question comes from George Gianarikas from Canaccord Genuity.

Congratulations. I'd like to start maybe just to ask about offtake agreements. I'm curious as to whether part of the negotiation with the government was future offtake either for magnets or for oxide.

Yes. I mean this is one of the features of this transaction, in part because of what we have at Round Top. And so there are no price floors. There are no offtake agreements associated with this. And that's really because the minerals that we have are, frankly, in dramatic undersupply outside of China and are absolutely required for things like semiconductors, aerospace and defense and of course, the metals and magnets that we need.

In addition, if you look at the actual minerals themselves, think dysprosium, think terbium, think yttrium, these are all things that actually are not produced in any large quantities outside of China. For example, dysprosium, the market -- world market for dysprosium is somewhere around 2,000 metric tons per year. Very little of that was produced from mine sources and stayed outside of China last year in the tens of tons.

So, if you think about expensive, expensive minerals like dysprosium, $900 a kilogram, terbium $3,500 a kilogram, hafnium $1,500 a kilogram, and you realize they're not available and you look at the economics of the model, I think it's easy to recognize that we don't mean price floors and the fact that there's so much demand outside of China for these metals and our magnets, you also don't need offtake agreements to support the business model.

Maybe I've asked you guys this question many, many times, but just in terms of the race for human capital to enable a U.S. rare earth magnetic supply chain, do you feel like you have the people in place to ramp to 10,000 of magnet capacity to build this mining and processing facility that you hope to at Round Top?

Yes. George, I'm happy to jump in on this because truly getting access to talent is key to the success of the industry overall. There's been a lot of concern that, hey, it's been 30 years since the U.S. has been a leader with these kinds of technologies. And what we've discovered is, first of all, the current team at USA Rare Earth is made up of experts from many fields and backgrounds, but they all share this commitment to the mission. They all come and they're bringing their expertise. These are the kind of people who can see around corners because they've stood up industrial operations before. They've long been involved in mining operations. They have deep expertise in processing. So, we are very happy to have a strong existing team, and we know it has to grow.

What I'm hopeful about is that this announcement, again, raises the profile and makes people aware of the opportunities in this space. I'm looking forward to fielding lots of calls from people who want to be involved in this important mission.

And then I guess one final comment I'll make to you is that this is one reason why selecting top-tier players in the field is so important to augment our own capabilities. The selection of Fluor, WSP last week, we just announced it. That gives us that jump start. We're getting them involved right now as we go through our accelerated mine plan with the anticipation that their involvement in planning will actually accelerate the work we'll do in construction. So that kind of teamwork is going to be key to our plan going forward.

I'd be remiss if I didn't also mention our metal making experts in LCM. So, in Cheshire, England, we have the team from LCM who have put together training materials, and they'll be able to host prospective metal makers, whether that's from France or from Stillwater, Oklahoma to come and learn the craft and then be able to bring that skill back to our expansion locations. The people plan that goes along with our overarching business plan is robust, and I'm pleased to say that we are moving very well in the directions we'd all like to see.

[Operator Instructions] Our next question comes from Subhasish Chandra from Benchmark.

Of course, congratulations. I hopped on a couple of minutes late, so I apologize if this was asked before. But first question is, in the EBITDA guidance, is it possible to break that out by segment?

Yes. We're not going to be providing that at this point in time, Subash. But I would say that as the mine scales and you look at where we are kind of in 2030, I would say it's sort of allocated a little bit more toward the mine. If you divide by 3, it's a little bit heavily weighted toward the mine, the magnet, a little bit less so on the metal making.

Okay. Yes, I understand it's early. But no, that's helpful. And Rob, I guess the second one is -- or Barbara, on the -- any update on the customer commitments for the magnets in terms of just tonnage?

Yes. So, the magnet facility is currently in the process of being commissioned. I think as we've talked about, we have tens of thousands of tonnes of demand and are putting in place supply agreements and POs. We have not announced actual tonnage of those POs, mainly because our customers don't want to be identified, but that's information we'll be providing through the course of this year as our business continues to build and the line is up and running.

Okay. We'll wait on that. And then finally, of the rare earth output, how much of that do you think you would internally need to meet your 10,000 tonnes?

Yes. I mean it depends on the actual commodity and what the ultimate recipes are. But in terms of commodities like dysprosium, something on the order of 50% to, call it, 80% depending upon -- like I said, depending upon your recipes.

And our next question comes from Derek Soderberg from Cantor Fitzgerald.

Just on the PIPE and government funding, what's the fully diluted share count at this point, assuming full warrant exercise?

Yes. So, the way in which the math works, you can kind of derive it. So the government's conditions for entering into the DFA and the loan are receiving approximately 10% of the fully diluted shares outstanding PIPE in warrants. And that amount is 17.6 million warrants. And so that gives you a sense of the pre-pipe, and that's fully diluted. That includes things like the earn-outs and all of our stock ownership that's outstanding right now. Then you layer in the warrants, you layer in the shares that are being given as a condition. Those are 16.1 million. And then you layer in the PIPE at 70 million, and that will give you the count.

Got it. And then as my follow-up, can you just talk about the supply chain for magnet equipment, mining equipment? How are lead times for that sort of equipment? How do you guys feel about that supply chain? Any risk there?

Yes, I'll jump in here. So this is the amazing thing about the work that's been done over the past couple of months with the CHIPS team. In developing our plan, of course, we went through rigorous due diligence with our government colleagues. And as you'd expect, they wanted to make sure that we have access to everything that we need. By putting this plan together, identifying the long lead items, then contacting our suppliers, assuring that we will be able to receive supply.

I'll give you one just quick anecdote. A supplier in Japan who received some assemblies to go into equipment from China has obviously made the commitment to instead in-house, bring those assemblies in-house so that we will have an assured ex-China supply chain for the equipment we'll be using as well. So we feel confident in the plan as it's laid out, our ability to address the aggressive schedule we put forward achievable because we have alignment through the full supply chain.

And our next question comes from Ben Kallo from Baird.

Congrats, Barbara, and Congrats, Rob. Just want to talk about offtake agreements. You touched on a bit before, but how do you think about offtake agreements from first, the mine and timing of that as 2028 is a couple of years away or do you expect it before?

And then on the magnet offtake agreements, the MP deal had guaranteed on the magnet pricing. Could you just talk about the difference in the investment here and the more flexibility from that front on pricing for the magnets with no guarantee? And then any change in commercial either pricing or orders since the talk about $110 NdPr price floor?

Yes. I'll start this, and I know Rob will have things he wants to add. We spoke a little earlier about the fact that the mine contains these high-priced, very rare minerals that are essential to multiple industries. And therefore, today, if you were -- people have asked us about the market for these things. And what we point out is there's no true market. What's going on is it's basically element by element, deal-by-deal negotiations. And so we believe lots of pricing -- pricing power, I'll call it, in this part of the market.

It's early to actually identify offtake agreements and make commitments for that long term. We feel that it's going to be important to give ourselves the maximum flexibility as we go. However, at this stage of the game, when analyzing the deposit and thinking about mining, you go and do the economic analysis. This is where something like including hafnium in our flow sheet was a game changer because of the demand, both in industries like semiconductors, but also in the energy sector, hafnium will be obviously very accretive to the overall plan for the mine.

Now offtake agreements when it comes to -- I'll talk a minute about the magnets themselves. When you get to that ultimate end item that's serving key industries, it's tempting to think about, oh, should we find, I'll call it, a foundational cornerstone offtaker who would commit to a long-term offtake. We think that's possible. We're seeing other people do that, but we feel our responsibility because of how rare these capabilities are, our responsibility is first, to approach the model as a safety stock, making sure that we're providing customers with a resilience capability. They may still fulfill large orders with other providers, but they may come to us for the safety stock. And by the way, in pursuing business models this way, yes, it's more complex. You have to have more equipment to satisfy a wider variety of customers. That's exactly the way we're designing our operation. But we also know that this is going to be higher-margin business. And quite frankly, for national and economic security, this is a smarter way for us to move.

So in the near term, the one more thing I'll share with you is that we have been keeping supply agreements or potential MOUs, master supply agreements and purchase orders confidential. Many of our early customers are going to be maintaining, I'll call it, a global supply chain, and they're sensitive, not wanting to be cut off from supply. So rather than call attention to them, we are quietly working with them to assure them supply for overall resilience. The key question everybody has to ask is what would be the cost of having access to nothing. And that is what's driving our early sales strategy.

Rob, is there anything you'd add?

Yes. And I would just add that the forecast that you see in the business model that you see is actually based upon the prices that we are quoting to our current customers. So these are -- this is reality based. This is a reality-based model. And the costs as well of the actual raw material, the oxides and the metal that we need are also fully costed. So this business model is a -- what I would call has price integrity all the way from the mine through the metal all the way up into the magnets and also allows each of our businesses to operate as part of the value chain on a stand-alone basis going forward.

I guess just the final question was the $110 price floor? Or how is that NdPr price baked into your magnet pricing, I guess?

Yes. We're assuming $125. So we're assuming a higher price, and that's an input for us. So we do not actually make light rare earths at round top. So that is an input. So we have to purchase it from the market. And the $125 represents roughly the price at which we're currently buying NdPr and seeing ourselves buying NdPr going forward. So what's interesting there is NdPr is already more expensive than the price floor.

And ladies and gentlemen, with that, we'll be ending today's question-and-answer session as well as today's conference call. We do thank you for attending today's presentation. You may now disconnect your lines.

Good afternoon, and welcome to USA Rare Earth's 2025 Third Quarter Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Lionel McBee, Vice President of Investor Relations. Please go ahead.

Thank you, operator. Hello, everyone, and welcome to USA Rare Earth's 2025 Third Quarter Earnings Conference Call. I'm joined today with our Chief Executive Officer, Barbara Humpton; and our Chief Financial Officer, Rob Steele.

Earlier this afternoon, we issued our third quarter fiscal 2025 results. Our 10-Q, earnings release and slide presentation can be found on the Investor Relations section of our website at usare.com. Following Barbara and Rob's discussion of our quarterly results and updates on the business, we will open the lines for Q&A.

During today's call, we may make projections and other forward-looking statements under the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995 regarding future events or the future financial performance of the company. These statements may discuss our business, economic and market outlook, growth expectations, new products and their performance, cost structure and business strategy. Forward-looking statements are based on information currently available to us and on management's beliefs, assumptions, estimates or projections. Forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and other factors.

We refer you to the documents the company files from time to time with the SEC, specifically the company's Form 10-K and Form 10-Q. These documents identify important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements. All statements made during this call are made only as of today, November 6, 2025, and the company expressly disclaims any intent or obligation to update any forward-looking statements made during this call to reflect subsequent events or circumstances, unless otherwise required by law. And with that, I will turn the call over to Barbara. Barbara?

Thank you, Lionel. This is my first earnings call as the CEO of USA Rare Earth, and I feel privileged to lead this company at such a pivotal moment. Our work addresses what I believe is the defining business challenge of our era. I see this endeavor as mission-critical. The western world has awaken to the stark reality of how dangerously fragile our rare earth supply chain has become over the last 30 years, how critical these materials have become to every sector of our economies and just how dependent we've become on China to supply these critical needs.

At USA Rare Earth, we are aggressively working to eliminate that single point of failure, diversify the supply chain and ultimately remove the geopolitical leverage for the benefit of the U.S. and our allies. We are well capitalized, debt-free and working to lead our industry forward. Our goal is to become the partner of choice across the value chain: investing, collaborating and consolidating to rebuild the proprietary technologies that will define the future.

I have served just over 1 month as CEO. And during that time, I've had the chance to visit our sites across the United States, meet the team at LCM in the U.K. and hear from numerous customers and stakeholders. You've heard us present our mine-to-magnet strategy. But today, let me take you from magnet-to-mine and share my observations.

First, magnets. At our magnet manufacturing plant in Stillwater, I met David Bushi and his team of engineers who are assembling Line 1a and preparing for commissioning. David's plan is rigorous, and the team is executing well. The entire facility from the manufacturing floor to the front door is being brought back to life.

The magnet sales pipeline is strong. And while many of you are curious about the customers we are engaging, I know you will also understand our need to be discreet. The work we're doing is highly sensitive, both for national security and commercial reasons. In a moment, Rob will give you additional insights. But for now, I'll move to the next link in the chain, and that's metals.

The acquisition of LCM, Less Common Metals, creates a unique competitive advantage and enhances our revenue-generating ability. The transaction is a transformational one that significantly accelerates our strategy and establishes a fully integrated rare earth supply chain. With LCM's proven operations, we gained more than 30 years of unparalleled expertise in metal and alloy production, securing the feedstock for our Stillwater facility and adding a critical link, connecting our domestic mining operations to our downstream magnet production.

LCM will continue to meet demand for metals, alloys and strip cast from other customers. One of their most crucial offerings is samarium, recently identified by the U.S. Geological Survey as the #1 critical mineral at highest risk of having supply chain vulnerabilities. LCM's ability to produce samarium and samarium cobalt are vital to sectors, including defense and medicine.

With the help of Grant Smith and his team of experts, we're also addressing the shortage of skilled talent in metal making by launching an apprenticeship program that will train U.S. metal makers, transferring critical expertise to rebuild America's rare earth supply chain. In short, this transaction combines domestic resources, advanced technology and world-class talent. We remain on track for closing before year-end and can't wait to welcome the impressive LCM team to our organization.

Let's move on to processing. Now Grant Smith is keenly focused on the upstream sources that will provide the oxides needed to produce metals and alloys. And that's why I was thrilled to meet the processing team at USA Rare Earth.

Ben Kronholm manages the midstream research and development lab in Wheat Ridge, Colorado, where we continue to progress our proprietary rare earth extraction and purification technologies. This integration across functions differentiates us in the industry and enables us to deliver value to our stakeholders.

And that brings us to mining and at Round Top Mountain, North America's largest deposit of heavy rare earth and other critical minerals. We recently announced Alex Moyes, our new VP of Mining, who joins us from Ramaco. We're assembling a team with strong technical skills, operational experience and a shared dedication to building a resilient U.S.-based rare earth supply chain. Their efforts are turning this vision into reality. And it is within this context, vision to reality that we have several important milestones that we are pleased to announce regarding our processing and mining initiatives.

The first is related to recycling. Our Wheat Ridge lab has now progressed our swarf recycling flow sheet through bench scale testing with promising results. This allows us to begin progressing with pilot scale testing of our recycling flow sheet in the first quarter of 2026. The ability to recycle our own swarf, which is reusing our scrap material from finishing magnets is an important capability to creating a circular supply chain and making our operating costs more efficient.

Second, based on our successful leaching and SX piloting, we are now thrilled to begin the pre-feasibility study phase of Round Top development project. This is particularly exciting as we are moving to the PFS stage with our most challenging SX circuits derisked at pilot scale. We're targeting completion of our PFS around the third quarter of 2026.

Lastly, while piloting these SX methods, we found that in addition to our heavy rare earth separations, we've also extracted and isolated hafnium. Hafnium is used in multiple strategic industries, including advanced semiconductors, nuclear reactors and aerospace materials, further broadening the breadth of our offering.

As you can tell, this first month has been busy, and I'm motivated by what I've seen so far. And it's the people who matter. And no one has been more helpful to my onboarding than my partner in finance, Rob Steele, CFO of USA Rare Earth. He has exactly the background we need at this phenomenal moment of transformation. Let me hand the baton to Rob, who will take you through more details about the business.

Thank you, Barbara. I know I speak for the entire leadership team when I say we're inspired by your vision and the momentum you've already created. It's an exciting time to be part of this mission.

Let me start with our cash position, which remains strong at over $400 million as of November 3, 2025. Including the exercise of the remaining investor warrants pursuant to our notice of redemption issued last week, we will obtain an additional $123 million of cash. Our strong cash position allows us the flexibility and liquidity to execute and accelerate our magnet-to-mine strategy as we secure, reshore and grow. For magnets, we continue to see thousands of tons of growing demand for 2026 and in particular, 2027 and beyond, across a wide range of industries, including agriculture, industrial, defense and medical as well as high-growth sectors like drones and data centers, sectors which are projected to double and triple in size over the next decade and require massive quantities of precision-engineered micromagnets with advanced surfacing.

The question we consistently receive from our customers is how quickly can you produce, which speaks to the appetite for magnets made in the United States. Given our strong cash position, breadth of customer demand and growing pipeline into and beyond 2026, we are accelerating our plans for growth in our manufacturing capabilities and with our personnel. These plans include enhancing our magnet finishing capabilities to meet customer specifications across multiple industries, accelerating our investment in Line 1b to ramp Line 1 to 1,200 metric tons and making additional customer-facing improvements to our Stillwater magnet plant. Altogether, we should be able to complete this additional work for approximately $100 million. In addition, we will be investing in human capital and hiring in preparation for our Q1 commissioning and enhancing our core infrastructure, including systems and cybersecurity to ensure operational readiness.

In September, we announced the acquisition of LCM, which creates value across our entire supply chain. LCM significantly accelerates our strategy and delivers unique ex-China metal making capabilities for the U.S., our allies and importantly, becomes our supply of strip cast for our Stillwater manufacturing facility. Their current capacity includes 1,500 metric tons of NdFeB strip cast and is expected to expand to 2,000 metric tons going into 2026.

We will invest in and expand LCM's capabilities, and we will further benefit from an experience curve effect as we grow with LCM. We are planning on expanding LCM's capabilities in the U.S., U.K. and Europe to support the broader ex-China industry, including for a wide range of defense and industrial applications. These plans include establishing a strategic light and heavy rare earth metal and alloy manufacturing facility in France, building upon LCM's strong relationships with governments and supply chain customers. We look forward to sharing more as these plans crystallize over the next several quarters.

As Barbara mentioned, the acquisition of LCM is expected to close by the end of the calendar year, subject to customary closing conditions, including regulatory approval in the United Kingdom.

Regarding formal guidance for 2026, we look forward to sharing that with you during our fourth quarter results in early 2026. In the meantime, we are intensely focused on ramping our magnet production capacity and ensuring we have the flexibility to scale with customer demand.

We are also in the process of securing the metal inventory needed to support projected growth in 2026 and beyond. And our feedstock sourcing strategy incorporates both mined and recycled non-China-based feedstock via our LCM acquisition, enabling us to lay the groundwork for sustained supply into 2027.

Operationally at Stillwater, we will begin running metal to test our first manufacturing line in the next few weeks. This will be a key milestone that will allow us to validate our supply chain and qualify the raw materials on commercial scale equipment and paves the way for commissioning in Q1 2026, which remains on track. As for Round Top and Wheat Ridge, given our success with our bench and pilot testing, we will begin investing in our PFS in Q4 2025 and investing in our pilot for swarf recycling in Q1 2026. And as we are accelerating our investment in our capabilities for Line 1 and Round Top, we now anticipate adjusted ongoing operating expenses in Q4 2025 to be $13 million to $15 million.

For the third quarter of 2025, we reported operating expenses of $15.9 million. Our ongoing adjusted operating expenses for the quarter were $8.9 million, adjusted for M&A-related expenses, stock-based compensation and severance costs.

We reported a net loss attributable to common stockholders of $156.7 million or a loss per share of $1.64. This includes a noncash fair value adjustment of $142.4 million related to our warrant and earn-out liabilities. Excluding this, our adjusted net loss was $14.3 million or an adjusted net loss per share of $0.25, which we believe is a more accurate reflection of our core operating performance. Going forward, we will provide this adjustment to facilitate your analysis of our results.

We ended the quarter with $257.7 million in cash and no significant debt, positioning us well to execute on our near-term milestones, the LCM acquisition and accelerate our manufacturing capabilities.

In summary, we remain financially strong and are deploying capital with focus and discipline to support scalable long-term growth at attractive returns while meeting the needs of our growing customer base. We now have the financial flexibility to consider lower cost funding options for future phases, and we expect our cost of capital to improve as we continue to execute.

Now I will turn it back over to Barbara for closing comments.

Thank you, Rob. So here's what you can expect from us. While the industry is in the middle of the geopolitical spotlight, we are focused on controlling what we can to capitalize on the market opportunity. We're advancing each of our key initiatives with precision. Our job is disciplined execution of our plan.

We appreciate your outreach. Since we announced our acquisition of LCM, we've heard from many of you. You recognize the unique opportunity we have to transform the supply chain as well as the approach we're taking: open, collaborative and trustworthy. We aspire to be the partner of choice in this sector.

The increased focus on critical rare earth only reinforces what we are building, a fully integrated U.S.-based rare earth material and magnet platform that supports national priorities, delivers supply chain stability and creates long-term value for our shareholders. We're working at the intersection of global necessity and technological innovation at a level not seen in decades. The simple truth is that industries worldwide cannot meet their ambitious goals without a stable supply of rare earth materials, and USA Rare Earth is helping to make that happen.

But this isn't something we can do alone. As I've said publicly, networks beat hierarchies. We're collaborating across industries and governments to create an ecosystem that guarantees a reliable, sustainable supply for America and our allies. We are proud to be part of this mission and energized by the scale of what lies ahead.

Operator, let's open the line for Q&A.

[Operator Instructions] The first question comes from Neal Dingmann with William Blair.

My first question is just on the magnet facility. Specifically, you all mentioned in the prepared remarks about being on track for the commissioning of the commercial scale production in first quarter of next year. Just wondering, could you discuss, Barbara or for you Rob, what steps still are left to achieve this? And what will be needed beyond that to bring the entire Line 1 online?

Sure. It's Rob. I'll take this.

Go ahead, Rob.

So in terms of the line itself, it really comes down to execution at this point. And the 2 big elements of execution are making sure that we have the equipment installed and up and running, which is going to be completed in Q1 as part of our commissioning.

And the second piece is human capital and making sure we have the trained engineers and manufacturing personnel to be able to operate the line. So those are the 2 big pieces that we're focusing on at this point in time. And we are on track, as we said, to complete -- to essentially complete installing what we need for premanufacturing by the beginning of -- end of Q1, beginning of Q2.

Sounds great. And then my second question, just on LCM. While I know the deal hasn't closed yet, just be able to discuss what gives you all the confidence that going forward that LCM will be able to timely source its needed oxides?

Yes, sure. So as part of our diligence process, what was really important to us is exactly that, that they had the ability to source the range of rare earth oxides and other critical minerals that we need to support not only our efforts, but the needs of their customers as well. And so if you look at what they're going to be doing and have been doing, they are going to be supplying us and they're going to be supplying third-party magnet manufacturers and also supplying samarium and samarium cobalt to the U.S. government as well. And all of those sources are coming from Europe currently, and we expect that to be sufficient to meet our demand certainly over the next year to 18 months.

The next question comes from George Gianarikas with Canaccord.

Welcome, Barbara. Maybe to start, I just -- I know you need to use discretion with regard to the customer conversations that you're having, but can you maybe give a little form and shape as to what end markets they may be involved in and how broad in scope some of those conversations are?

Yes. Let me jump in on this. Rob, sorry, let me just jump in on this quickly with some information about those customer segments. The -- probably the primary thing for us to be thinking about right now is that we prioritize the defense sector. And so conversations with leading aerospace entities and particularly those innovative front runners who need to assure reliable supply.

Now we all know that the aerospace sector is a small segment of the addressable market, but we prioritize that because of its criticality. In addition to that then, we are really pleased at the response from both automotive and then the agricultural sector. Moving forward then, some of the more interesting things are the expanding energy sector. And as you heard in Rob's remarks, the details related to semiconductors as well as data center. Rob, sorry, I jumped in on you.

No, that's great. That's perfect. And I think, George, as you look at the demand curve and overall demand, we don't have enough capacity to supply demand for 2026. And certainly, as you look at the demand curve expand in '27, in fact, our demand curve goes out to 2033. What we have to be doing is investing in capacity and capability to meet that demand for a wide range of magnet types. And so that's exactly what we're doing.

And maybe as a follow-up to that, to the extent you're trying to build this capacity, you had mentioned previously that it's obviously a capital equipment constraint and a human capital constraint, which of the 2 is more tight and more difficult to procure?

I mean, I think they're both critical, and they're both elements that we have to work on. Now the capital equipment is a little bit easier to plan, and we do have to plan in advance for that because some of the equipment can take as long as a year to arrive. And as a consequence of that, we're already looking at Line 2. So we're making plans there to potentially move forward on that to make sure we have the equipment we need to expand beyond 1,200 metric tons and into 2,400 metric tons in 2026-'27 time frame. So that's one piece, but that is somewhat predictable.

The human capital front really is all about -- again, it's an execution story and making sure you're planning in advance to make sure you have the people you need to be sufficient to run the equipment at full scale. And we're already doing that at our facility right now and making further plans to expand well in advance of our capacity that we have coming online.

The next question comes from Derek Soderberg with Cantor.

My congrats as well to Barbara. So Barbara, starting with you, you mentioned that the LCM acquisition is on track to close before year-end. But I imagine because the acquisition is pretty strategic to the U.K. and U.S. militaries that there might be some added hoops to jump through. To the extent you can, I'm wondering if there's a close collaboration between the U.S. and U.K. governments on the acquisition? And can you provide some insight into your confidence level that the acquisition will actually close? And then I've got a follow-up.

Yes. Thanks, Derek. Good question. Yes, we actually have high confidence in this. Right now, the U.K. government, of course, will go through a national security interest determination, right, of their own. We don't see any signals of issues there. And in fact, you can witness the close collaboration of our governments in their ongoing work, particularly in this critical minerals sector.

We believe that expansion in the U.K. is the appropriate first step as we look to really scale this capability outside of China. So the LCM has already begun. So just order ahead of demand as we are doing for the Stillwater facility in Oklahoma, they're getting ready for the increased demand on their operations. And in fact, Grant Smith has been circling the globe, working with all of his stakeholders to ensure everyone understands, in particular, the value proposition of scaling this business and enabling LCM to continue to address the needs of the full competitive field. This is an area where LCM will have a broad set of customers that even extend beyond those to be addressed by our magnet-making capability.

Got it. That's helpful. And then, Rob, I think in the past, correct me if I'm wrong, the plan is to sort of do sort of a cost-plus model for magnet agreements. In that scenario, would all of the plant overhead and direct labor be sort of rolled into the target gross margin you're talking about? And then...

That's correct. That's correct.

Got it. And then can you help us sort of quantify the variable and fixed costs maybe for the first 1,200 tons or the first line fully up and running or maybe it's easier to do for the full plant just as we're nearing production here? Wondering if you can help us understand some of the variable and fixed cost estimates.

Yes. Let me -- I don't have that in front of me right now. Let us follow up on that. I'd be happy to do that.

The next question comes from Subhasish Chandra with Benchmark Company.

The question -- so you talked about the comfort with oxides. Just curious if that extends to the heavies and sort of with the LTM relationship and your expansion, I think, of your customer base, where does the heavy investment? Where is your comfort level there?

Yes. So I mean -- so in terms of heavies and global sourcing right now, as I mentioned, I mean, we feel based on current global capacity for heavies, we feel very good that the current capacity will -- can supply us over the next year to 18 months. What is happening in parallel is there is a number of places where heavy capacity is expanding from upstream feedstock and growing. And the processing capability is being expanded in a number of places in parallel. That capacity does have to be put in place from processing heavy rare earth concentrates into oxide. But we feel confident based upon the number of different potential sources that are ex China that we will have the source of heavies in place to be able to supply us going forward. And it's more than a handful of projects that are going on to be able to provide those heavies. And so what you're looking at is global ex-China expansion in parallel given current capabilities and current investments that are going on.

Okay. Got it. And then on the PFS, so the PEA, was it last time -- a, does the sort of the PEA still apply? Does that need to be updated at all? Or should we sort of assume that as a given a constant before you launch a PFS?

Yes. I mean the PEA is not our PEA. That's TMRC's PEA. I think we've always looked at it as something that provides a general guideline as to what types of minerals are there. But our flow sheet is not based upon their flow sheet. It is a different flow sheet. And so the economics that we're looking at are different than those on the PEA. So I would say it's helpful, but doesn't really apply to our approach to driving economics from the heavies and critical minerals out of Round Top.

Okay. Got it. So we should wait for your PFS for...

You bet, yes. You bet. I mean the economics that we're looking at are very good. But it is a different -- it assumes a different flow sheet and slightly different mix of rare earths and minerals, particularly ours is focused on heavies. That's really important to understand. Our flow sheet is really focused on heavies and critical metals. It is not really focused on lights.

The next question comes from Suji Desilva with ROTH Capital.

Rob, Lionel and Barbara, best of luck in the new role. So the initial customer MOUs are hitting a phase now where you'll be getting POs, I'm wondering if the pricing is coming in as expected if the customers are comfortable with the levels you had kind of guided to earlier?

As expected, yes.

Great. And then your thoughts on larger customers who might support line expansion with capital infusions of their own versus using USAR capital to grow across the diversified customers. Any updated thoughts there?

Yes. I mean we're still primarily focused on using our own capital to expand the line. I mean you raised a good question. It is a debate. But given the demand and the demand curve that we have across a wide range of customers and industries, it does support going on our own in terms of our investments near term. Now having said that, of course, we cannot rule out a large customer, many of which we are talking to coming in and taking down an entire line. But for the time being, we're going with a range of different customers across a range of different magnet types and be able to produce for them over a number of years using batch processing. So yes, that is our current focus.

This concludes our question-and-answer session. I would like to turn the conference back over to Lionel McBee for any closing remarks.

Thank you. And thank you all again for joining us this evening and for your time. Please feel free to reach out to us with any additional questions tomorrow or over the coming days. Look forward to speaking with you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.