USA Rare Earth 2026 Q3 Earnings Call

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 market, my four 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 had 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 non-binding 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 U.S. 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're 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 U.S. 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. 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 four 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 three 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 tons of rare earth oxides. Stage 2, which will increase average production capacity to approximately 6,400 tons 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 S-K 1300 reports expected in the third quarter of 2027. Fluor is undertaking the engineering design of the processing flow sheet.