USA Rare Earth secures $75 million in PIPE deal

STILLWATER, Okla. - USA Rare Earth, Inc. (NASDAQ:USAR), a company engaged in developing a domestic rare earth magnet supply chain, has finalized a securities purchase agreement to raise $75 million through a private investment in public equity (PIPE). The $1.05 billion market cap company, which has shown strong momentum with an 18.2% return over the past week according to InvestingPro data, will use the capital infusion for expanding its magnet manufacturing facility in Stillwater, Oklahoma, and for general corporate purposes.

The agreement with a fundamental institutional investor will allow the issuance of approximately 8.55 million shares of common stock and pre-funded warrants for roughly 2.16 million shares, alongside warrants to purchase an equal number of shares at a $7.00 strike price, expiring six years from the issue date. InvestingPro analysis indicates the stock typically trades with high volatility, maintaining a healthy current ratio of 3.22, which suggests strong short-term liquidity.

Joshua Ballard, CEO of USA Rare Earth, expressed enthusiasm about the funding, noting its significance in advancing the construction of what is anticipated to be one of the largest sintered rare earth magnet facilities in the United States. "This sizable commitment from a single institution allows us to fully fund the capex required for the first phase of our rare earth magnet facility," Ballard stated.

The transaction is structured to grant customary resale registration rights to the shares and warrants involved. It also includes a special meeting of stockholders to approve the issuance, with the majority of voting power already pledged in support through executed stockholder support agreements.

Cantor Fitzgerald & Co. served as the lead placement agent, with Cohen Capital Markets also acting in this capacity. Legal counsel was provided to USA Rare Earth by White & Case LLP and to the placement agents by Reed Smith LLP.

The securities sold in this PIPE are unregistered under the Securities Act of 1933 and may not be offered or sold in the U.S. without registration or an exemption. This press release, based on a press release statement, is not an offer to sell these securities.

USA Rare Earth is currently constructing a 310,000 square foot manufacturing facility in Oklahoma and controls mining rights to the Round Top Mountain deposit in West Texas, which contains a variety of critical minerals. These developments are part of the company’s strategy to supply rare earth magnets and materials vital for defense, automotive, aviation, industrial, medical, and consumer electronics sectors. While the company reported negative EBITDA of $15.35 million in the last twelve months, InvestingPro data reveals 7 additional key insights about the company’s financial health and growth prospects. Subscribers can access detailed analysis and Fair Value estimates to make more informed investment decisions.

In other recent news, USA Rare Earth has appointed William Robert (Rob) Steele Jr. as the new Chief Financial Officer. Steele, who brings over 30 years of financial expertise, will oversee finance, accounting, and investor relations, aiming to support the company’s expansion in mining and magnet manufacturing. This appointment follows a corporate reorganization where USA Rare Earth, previously Inflection Point Acquisition Corp. II, became a Delaware corporation after a business combination with USA Rare Earth, LLC. Additionally, the company announced a change in its certifying accountant, dismissing UHY LLP and hiring HORNE LLP to audit its financial statements for the year ending December 31, 2025. The change in accounting firms comes after the business combination, although no specific reasons for the switch were provided. Furthermore, USA Rare Earth experienced a significant stock surge following China’s announcement of export restrictions on rare earth elements, which are crucial for high-tech industries. This market reaction underscores the strategic importance of rare earth elements, potentially benefiting companies like USA Rare Earth.

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