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Investing.com -- MP Materials (NYSE:MP) shares surged as much as 32% in premarket trading after the company secured a multibillion-dollar public-private partnership with the U.S. Department of Defense to expand its rare earth capabilities and build a new magnet manufacturing facility.
The agreement includes a $400 million equity investment from the Defense Department through the purchase of preferred stock, convertible at $30.03 per share. The DoD has also committed to a $150 million loan expected within 30 days to support expansion at the company’s Mountain Pass facility.
MP Materials has received $1 billion in commitment letters from JPMorgan and Goldman Sachs to fund its second domestic magnet manufacturing facility, known as the 10X Facility. The new plant will increase U.S. magnet production capacity to 10,000 metric tons per year, with commissioning targeted for 2028.
Under the 10-year agreement, the Defense Department will establish a price floor of $110 per kilogram for MP’s NdPr product and back 100% of magnet sales from the 10X Facility for a decade.
The deal includes warrants that could potentially make the DoD MP Materials’ largest shareholder with a 15% stake. JPMorgan served as the exclusive financial adviser to MP Materials on the transaction.
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