Earnings call transcript: MP Materials sees Q3 2025 revenue miss, stock falls

MP Materials Corp (MP) reported its third-quarter 2025 earnings, revealing a slight miss on revenue forecasts and a smaller-than-expected loss per share. The earnings call highlighted a 21% sequential increase in NdPr oxide production and significant strategic advancements. Despite these positive developments, the company’s stock fell 5.43% in regular trading hours, closing at $54.93, before rising 2.28% in aftermarket trading.

Key Takeaways

• Revenue fell short of expectations at $53.55 million against a forecast of $54.46 million.
• Earnings per share (EPS) was better than expected at -$0.10, compared to a forecast of -$0.17.
• NdPr oxide production increased by 21% sequentially and 51% year-over-year.
• The stock experienced a 5.43% drop during regular trading hours but recovered slightly in aftermarket trading.
• Strategic partnerships and expansions are positioning the company for future growth.

Company Performance

MP Materials reported robust growth in NdPr oxide production, achieving a 21% sequential and 51% year-over-year increase. The company maintained its adjusted EBITDA steady both year-over-year and sequentially, demonstrating operational resilience. The firm is advancing its heavy rare earth separation circuit and expects to commence commercial-scale magnet production by the end of 2025.

Financial Highlights

• Revenue: $53.55 million, down from the forecasted $54.46 million.
• Earnings per share: -$0.10, surpassing the forecast of -$0.17.
• NdPr oxide production: 721 metric tons, marking a significant increase.

Earnings vs. Forecast

MP Materials reported an EPS of -$0.10, better than the forecasted -$0.17, resulting in a positive earnings surprise of 41.18%. However, the revenue of $53.55 million fell short of expectations, missing the forecast by 1.67%. This mixed performance reflects the company’s ongoing strategic investments and operational challenges.

Market Reaction

The stock closed down by 5.43% at $54.93 during regular trading hours, reflecting investor concerns over the revenue miss. However, the stock rebounded by 2.28% in aftermarket trading, indicating some recovery in investor sentiment possibly due to the positive EPS surprise and strategic outlook.

Outlook & Guidance

MP Materials is optimistic about returning to profitability in Q4 2025. The company is targeting 10,000 metric tons of magnet production annually, with magnet revenue expected to commence in the second half of 2026. The Department of Defense price protection agreement is anticipated to provide earnings visibility.

Executive Commentary

CEO Jim Litinsky highlighted the strategic importance of self-sufficiency and national industrial resilience, stating, "We are now locked in a new kind of Cold War, a race of mutually assured economic destruction, fought not with weapons but with supply chains." He also expressed confidence in future demand, emphasizing, "We do not lose any sleep over what demand is going to look like in 10 years... I think it is going to be amazing for us."

Risks and Challenges

• Supply Chain Dominance: China’s control over 90% of global NdPr production poses a supply risk.
• Geopolitical Tensions: Rising geopolitical tensions could impact rare earth supply chains.
• Operational Challenges: The commissioning of new facilities and technology integration could face delays.
• Market Volatility: Fluctuations in NdPr prices and demand could affect financial performance.

Q&A

During the earnings call, analysts inquired about heavy rare earth feedstock sourcing strategies and the potential for recycling and third-party material processing. The company addressed long-term market opportunities in AI and advanced technologies, reinforcing its strategic focus on innovation and expansion.

Full transcript - MP Materials Corp (MP) Q3 2025:

Conference Operator: Hello, and welcome to the MP Materials Q3 earnings call. We ask that you please hold all questions until the completion of the formal remarks, at which time you will be given instructions for the question-and-answer session. Also, as a reminder, this conference is being recorded. If you have any objections, please disconnect at this time. With that, I would like to turn the call over to Martin Sheehan, Head of Investor Relations. Mr. Sheehan, you may begin.

Martin Sheehan, Head of Investor Relations, MP Materials: Thank you, Operator, and good afternoon, everyone. Welcome to the MP Materials Third Quarter 2025 earnings conference call. With me today from MP Materials are Jim Litinsky, Founder/Chairman and Chief Executive Officer; Michael Rosenthal, Founder and Chief Operating Officer; and Ryan Corbett, Chief Financial Officer. As a reminder, today’s discussion will contain forward-looking statements relating to future events and expectations that are subject to various assumptions and caveats. Factors that may cause the company’s actual results to differ materially from these statements are included in today’s presentation, earnings release, and in our SEC filings. In addition, we have included some non-GAAP financial measures in this presentation. Reconciliations to the most directly comparable GAAP financial measures can be found in today’s earnings release and the appendix to today’s slide presentation. Any reference in our discussion today to EBITDA means adjusted EBITDA, and tons means metric tons.

Finally, the earnings release and slide presentation are available on our website. With that, I’ll turn the call over to Jim. Jim?

Jim Litinsky, Founder/Chairman and Chief Executive Officer, MP Materials: Thank you, Martin, and good afternoon, everyone. As most of you know, our third quarter was a game-changer, a total acceleration of MP as a vertically integrated national champion with a transformed economic platform for long-term leadership. If you are new to our story, I would encourage you to go to our investor site and listen to our July 10th webcast announcing the DOW deal, as well as our last earnings call, where we went through our DOW and Apple agreements in detail. It has been an exciting and interesting time, to say the least, in the rare earths industry. I have a lot of thoughts to share. Let me first cover our execution for the quarter. Ryan and Michael will then cover the financials and operations, respectively, and I will wrap up with my big-picture thoughts on recent events and the outlook.

With that, let’s go to slide five. In our materials segment, we delivered another outstanding quarter. NdPr oxide production reached 721 metric tons, a 21% sequential increase and a 51% increase year over year. The 721 metric tons of production exceeded the high side of our outlook for the quarter and marks a record. Corresponding sales volumes also set records, showing strong growth in the quarter both year over year and sequentially. In addition, REO and concentrate production was the second highest in our history. This marks the third quarter in the last five that Michael and the team have produced more than 13,000 metric tons of REO. While biannual maintenance outages can create some variability when comparing results sequentially, it is clear that we have made significant progress toward our upstream 60K target, or 60,000 metric tons of annual output.

We are also ramping up the installation of the dozens of mixers/cellulars required for heavy separations. Our new heavy circuit will process approximately 3,000 metric tons of feedstock and produce more than 200 metric tons of dysprosium and terbium annually. We expect this capability to fully enable our planned production of 10,000 metric tons of high-performance NdFeB magnets each year. We are on track to start commissioning this circuit in mid-2026, a major milestone in our vertical integration and a historic step toward restoring America’s ability to produce magnet-grade heavies at scale for the first time in decades. Our long-term purchase price agreement, or PPA, with the Department of Defense commenced on October 1. The agreement provides both earnings visibility and a clear and transformed economic foundation to accelerate our build-out of magnetics production. Importantly, we expect to return to profitability in Q4 of this year and beyond.

Ryan will provide additional PPA accounting and economic details shortly. Moving to the magnetics segment, pursuant to the terms of our Apple agreement, we received the first $40 million prepayment for the production of magnets from recycled materials. Engineering and equipment purchases for the recycling circuit at Mountain Pass and the expansion of magnetics production at Independence are underway. We will receive additional prepayments, $200 million in total, as we make further progress on this build-out for Apple. The Apple partnership, combined with our steady progress at Independence, reflects the acceleration of our U.S. magnetics platform. Commissioning at Independence continued to advance at a rapid pace throughout the quarter. As with Mountain Pass, starting up new equipment, integrating complex systems, and optimizing material handling is a substantial undertaking. Ensuring we bring everything online safely remains our top priority.

Meanwhile, production and sales of magnet precursor products continued throughout the third quarter. Michael will share more detail on that. The pace of commissioning at Independence, combined with steady improvements in metal production, gives us confidence that we remain on track to begin commercial-scale magnet production by year-end. With that, let me hand it over to Ryan to discuss the quarter’s financials. Ryan?

Ryan Corbett, Chief Financial Officer, MP Materials: Thanks, Jim. Turning to slide six and our consolidated results for the quarter. On the left of the slide, you can see the impact to revenue from the accelerated transition to separated product sales, with concentrate no longer sold externally. The absence of concentrate revenue in the quarter was mostly offset by the continued ramp in separated product sales, primarily NdPr, as well as the ramp of magnetic precursor product sales, which began in Q1 of this year. Adjusted EBITDA was generally unchanged both year over year and sequentially. On a sequential basis, the decline in profitable concentrate sales was mostly offset by improving per-unit cost of production for NdPr. On a year-over-year basis, the loss of concentrate sales was offset by the ramp in magnetic precursor sales at Independence, as well as the per-unit cost improvements I just mentioned.

Our adjusted diluted EPS generally followed the trend of our adjusted EBITDA results, with further benefits from higher interest income in the quarter, primarily from our materially higher cash balance, as well as a greater income tax benefit. Moving to slide seven and our operational metrics in the materials segment. Production of REO remained very strong at 13,254 metric tons, albeit down very slightly from our record-setting quarter in Q3 of last year. In the midstream business, as Jim mentioned, production volumes continued to ramp nicely, achieving approximately 50% of our targeted output. Michael will provide more details on the ramp-up shortly, but assuming our debottlenecking continues at the same pace we have seen over the last several quarters, we would expect to hit our targeted throughput towards the end of 2026.

We expect our per-unit production cost profile to decline in line with this ramp, with the impacts on the P&L likely visible approximately one quarter in arrears as we work through averaging costs and inventory. Separated product sales volumes followed production closely, with nearly 20% sequential growth and 30% year-over-year growth. With much of our separated product sales toll-processed into metal across various partners in Southeast Asia, there continues to be a lag between production volume growth and sales as we fill the tolling channel. We expect to continue to scale up metalization to match our growing output with various partners in Southeast Asia and beyond. With that, we expect to build a bit more inventory at these various facilities. This modest working capital build is a natural function of the growth in our oxide production, which we expect to lap once we are at our targeted output levels.

Looking forward, we will begin to recognize intercompany sales from our materials segment to the magnetics segment in the fourth quarter as we continue to produce precursor products for GM and get ready for commercial-scale magnet production at year-end. Note that these intercompany sales, along with the related cost of goods sold, will be recorded at the materials segment but will be eliminated at the corporate consolidated level. The value of that sale and inter-segment profit will remain on the balance sheet at the magnetics segment until it is sold, at which time it will be reflected within magnetics segment revenue and cost of goods sold. As we ramp magnet production and then sales later in the year, there will be some lag between the intercompany sale and the eventual realization of value on a consolidated basis via a magnet sale.

Lastly, on this slide, on the far right, you can see that improved market pricing over the last year flowed through to our realized pricing in the quarter. As a reminder, given the dynamics of the tolling channel I just mentioned, combined with the nature of our sales contracts, some of which use moving averages of market prices, the change in our realized pricing generally lags the trend spot prices seen in the market by a quarter or more. Based on our current view of shipment timing and contract mix, we expect next quarter’s realized price, excluding the impact of the PPA, to approximate $61 per kilogram. Moving to slide eight and our segment financials. On the left side of the page, you can see the initial impact of eliminating concentrate sales in the quarter on both revenue and adjusted EBITDA.

While we had always planned to ramp down sales of concentrate as production and sales of refined products increased, the DoD partnership has accelerated that strategy. While refining operations continue to scale, we expect to collect payments under the PPA for placing concentrate into our strategic stockpile, which I will discuss more in a moment. Moving to the magnetics segment, the primary driver is the ramp-up of production and sales of magnet precursor products, which began in Q1 of this year, positively impacting both revenue and adjusted EBITDA. Before I discuss a handful of housekeeping items for you, I wanted to wrap up with an important reminder on slide nine. This was the slide we pulled together post our DoD announcement, giving an illustrative example of the minimum annual EBITDA we expect to generate as we execute on our growth plan.

Importantly, and I can’t stress this enough, this earnings profile is underpinned by firm, in-place contracts, with much of the cash flow driven by our agreements with the Department of Defense. As long as we execute across our materials and magnetics businesses, we expect to generate very attractive long-term returns. While the contracted nature of our future cash flows gives us tremendous confidence to continue investing and growing our business, we also expect material upside potential derived through upcoming initiatives, including recycling, appreciating NdPr prices, magnet syndication, or other growth opportunities. As Jim mentioned, the price protection agreement with the Department of Defense went into effect as of October 1. I’d like to spend some time walking through the GAAP accounting for this contract, given the material earnings we expect from this feature of our DoD partnership starting in Q4, with the cash impact following soon thereafter in Q1.

First, from an accounting perspective, we have concluded that the top-up PPA payments will not technically be revenue per U.S. GAAP, as the payments are not directly related to the underlying sales contracts we have with our customers. The cash flow comes from a third party, in this case, the Pentagon, that is not, at least as it relates to the PPA, technically our customer. Given that, in the revenue guidelines under ASC 606, we will be recording the PPA as an operating income line item or expense in the case that market pricing exceeds $110 per kilogram. Starting in Q4, you will see PPA income or expense as the first line item below revenue in the P&L, with PPA income therefore forming a core part of our earnings metrics on a go-forward basis.

As it relates to 2026, we expect the PPA payments to be made up of two primary levers. First, we expect top-up payments for NdPr oxide produced from the materials segment and sold either to third parties or internally to our magnetics segment. Second, we expect payments from the contained NdPr value within the concentrate we are stockpiling as we continue to ramp up our refining operations. The top-up payments related to NdPr oxide can be approximated as the difference between our averaged realized sales price and $110 per kilogram, with a few gives and takes, multiplied by the quantity of NdPr oxide sold in the period.

For example, in a quarter where realized prices are $70 per kilogram, our sold volumes multiplied by 70 would be recognized as revenue in line with how we report today, and the $40 per kilo top-up payment up to the $110 floor price would be recognized in the PPA income line, with the full impact of both flowing through EBITDA and earnings. Regarding how to model the PPA payments for stockpiles, particularly concentrate, the per-unit payment will approximate the difference between market prices for NdPr in the quarter and the $110 per kilo floor. In the case of concentrate, the quantities are tethered to the recoverable NdPr within any concentrate we nominate to the stockpile.

For each quarter in 2026, I would expect the difference between our actual NdPr production volume and our quarterly target of 1,500 tons of NdPr to be nominated into the paid stockpile and drive further PPA income. Eventually, this concentrate will be processed and sold at market NdPr prices. Realizing this is complex, we’re happy to take further clarifying questions on the PPA and its impact to our financial statements offline following the call. Moving to the balance sheet, I did want to point out that several of the pieces of the DoD agreement, consisting of the PPA, the Summerville loan, the preferred stock, and the warrant, required us to undertake an analysis of relative fair value and cash versus non-cash consideration received in order to properly account for these financial instruments on the balance sheet under GAAP.

Note that several of the items are therefore recorded at a value that does not match the cash or other consideration received specifically for that feature. There is significant discussion of our methodologies contained in our Form 10Q that we intend to file with the SEC tomorrow. The two most notable outcomes of this are, first, the recording of a $221 million asset called the PPA upfront asset that will be amortized on an accelerated basis over the 10-year term of the PPA. Second, the recognition of non-cash interest expense in excess of our coupon rate on our summarium loan from the Department of Defense, given the relative fair value of that portion of the agreement resulted in a deemed debt discount. The PPA amortization will be presented in our depreciation, depletion, and amortization line in the P&L.

Lastly, before turning it over to Michael, I wanted to address our year-to-date CapEx and remaining 2025 expectations. Through the end of Q3, capital spending has totaled approximately $110 million on a gross basis and $86 million on a net basis, due to $24 million of progress payments received from the Department of Defense under our prior HREE investment agreement. As such, we expect gross CapEx for the full year to be closer to the low end of our initial $150-$175 million range and to perform better than the range on a net basis. We will discuss 2026 capital forecasts and projects on our Q4 call in early February. With that, I will now turn it over to Michael. Michael. Thanks, Ryan. Operationally, we had a strong third quarter with production that came in just above our expectations.

In the upstream circuits, we achieved our second-highest quarterly result for concentrate production, just 4% shy of the all-time record we achieved in last year’s third quarter. The gap is largely attributable to several reagent and pre-floatation trials the team executed that had a minor negative impact on stability and production. It was nonetheless one of our best quarters with very good uptime and highest-ever concentrate grade, exceeding 63%. Midstream production continues to increase, which led to another sequential quarter of record NdPr oxide production in line with our expectations. We are now processing more and more of our concentrate on-site while simultaneously building up a healthy concentrate stockpile. The majority of our circuits are performing well, demonstrating higher uptime and throughput capability while sustaining good product quality. As in prior quarters, a few areas experienced temporary disruptions that modestly held back NdPr production.

As we address these short-term challenges, we are adding resiliency and stability to our operation that we expect to result in sustainable production increases over time. In the first half of October, we successfully completed our semiannual maintenance turnaround, which included several minor debottlenecking efforts and tie-ins for future projects. The outage, along with associated de- and reinventorying, repairs, and startup, affected production for approximately two weeks, depending on the area. We had one area require rework in late October that somewhat impacted October production. As a result, we anticipate fourth-quarter concentrate production to be roughly flat relative to Q4 2024. NdPr oxide production is expected to be flat to slightly up sequentially, with strong growth resuming in Q1 2026. At Mountain Pass, we are accelerating the pace of project execution, particularly on the heavy rare earth circuit.

In the third quarter, we completed most engineering and primary equipment procurement for our terbium and dysprosium production capability, which will be the first heavy rare earth products to come online. Construction and installation of equipment began towards the end of the quarter and has accelerated in October. On slide 10, we have a picture of some of the work underway. We are pleased with this progress. Importantly, we are targeting the start of commissioning of this circuit in the middle of 2026. Regarding supply sources, we are actively engaged with a number of different and different types of potential feedstock providers to supplement our own contained HRE content. I am optimistic about having several long-term supply options. We are also advancing towards completing the restoration of the first train of the chloralkali plant and enhanced brine purification capability.

The recommissioning of our chloralkali plant will add resiliency to the entire Mountain Pass operation by enabling on-site production of key chemical reagents. Pre-commissioning will begin early next year. The plant has two additional trains, with the first one likely to be ready for service by mid-2026. We then have the flexibility to achieve our full capability in phases over a multi-year period at a pace we determine. At Independence, we continue to make meaningful progress in expanding our metal production capabilities. We are actively exploring multiple strategies to optimize costs and scale metal production to support future growth, including our 10X expansion. In August, we began an accelerated trajectory of alloy flake casts at Independence. Meanwhile, installation and pre-commissioning of powder production, pressing, sintering, passivation, machining, and grain boundary diffusion, GBD, are all advancing well.

In our new product introduction area, we continue to refine magnet chemistries and production processes to produce higher and higher quality magnets in an expanding range of magnet grades. Engagement with GM for commercial-scale production qualification is underway, and we are encouraged by the continued collaboration between our respective teams. We remain on track to meet our goal of producing finished magnets by year-end 2025. This will kick off an accelerated qualification process with GM, with magnet revenue expected to begin in the second half of 2026. In addition to supporting GM, our teams at Mountain Pass and Independence have initiated engineering and procurement to support the Apple Recycling Partnership and magnet production expansion. This work includes magnet chemistry development at Independence and pilot testing, design development, and circuit engineering to support the addition of recycling capabilities at Mountain Pass.

Overall, it was a very busy quarter, and we expect the pace of activity to continue accelerating. Our team has remained focused, executing safely, efficiently, and with a strong sense of mission and urgency. I cannot say enough about the quality of the team and capabilities we have built and are building, and the opportunities that lie ahead. With that, I will turn it back to Jim. Thank you, Michael. Moving on to slide 11. You can see the unmatched array of capabilities we have built entirely within MP. This is what true vertical integration looks like, something no other company in the world has achieved in rare earths and magnetics. This quarter was another solid one for MP, and that same execution discipline is now driving progress across our GM, Apple, and DoD partnerships, each deepening our integration, broadening our reach, and advancing our trajectory for long-term growth.

Since we last spoke, we have witnessed a frenzy of attention and volatility around rare earths in recognition of the necessity that we, like most nations, must move at a warp speed to de-risk from reliance on China for this supply chain. The President Trump-Xi Jinping summit in Korea has resulted in a one-year postponement of China’s October 9 rare earth export controls. The reality is that this pause has only underscored the inextricable link between the world’s most advanced semiconductors that America produces and the rare earth supply chain that China dominates, two sides of the same coin at the forefront of the strategic contest between our nations that will shape the global economy for decades to come. We are now locked in a new kind of Cold War, a race of mutually assured economic destruction, fought not with weapons but with supply chains.

Self-sufficiency, allied resilience, and national industrial champions are no longer optional. They are the front lines of security. In the last Cold War, America prevailed through military strength powered by economic might. In Cold War 2.0, the equation has reversed. Economic might itself, expressed through control of critical materials, advanced technologies, and the supply chains that sustain them, has become the decisive measure of national power. Against that backdrop, it is important for investors and policymakers alike to consider, with clear eyes, the complexity and scale required for success in this supply chain. It is very often said that rare earths are not rare. That is true. They are literally everywhere. One could take a sizable piece of land, multiply by some amount of rare earth content percentage within, multiply that times a price basket, and then, lo and behold, claim a rare earth ore body of some major value.

Unfortunately, it is not that simple. What is underappreciated, but far more important, is that economic ore bodies are extremely rare. The vast majority of projects being promoted today simply will not work at virtually any price. Even deposits labeled heavy rich still contain a vast majority of light rare earths and yttrium. When grades sit in the hundreds of parts per million, the cost to concentrate, separate, and refine becomes uneconomic. MP’s overburden and tailings are quite literally more valuable by many multiples than many of those so-called projects. The structure of the existing industry tells the story. China accounts for roughly 90% of global NdPr production. Yet even there, most of that output comes from just two hard rock mines and refineries now controlled by two entities. Think about that.

A country with the world’s largest reserves, a national industrial policy dedicated to dominance, generous subsidies, and accommodative regulatory practices, and still. Only two highly productive, low-cost integrated operations represent the vast majority of their industry. It is not a coincidence that outside of China, the only scaled light rare earth production also comes from two mines, Mountain Pass and Mount Weld, and their respective refiners, MP Materials and Lynas. The lesson is clear. Great ore bodies and scaled refining capability are the indispensable foundation of this industry. Everything else depends on them. In addition, certain types of mineralization, such as allanite, eudialyte, and even coal-based deposits, have never successfully yielded refined rare earths at scale. The reason is straightforward. Their mineralogy is complex, and the concentrations are extremely low.

Now, perhaps there will be breakthroughs someday, and based on our own experience, we would never underestimate the power of human ingenuity. The reality is that even China does not attempt to produce rare earths from those types of deposits today. Michael has my favorite analogy on this. Controlling a eudialyte rare earth ore body today is like having billions in Bitcoin but without the private key. In theory, you can see it on the screen, but you cannot unlock it. That raises the question, what is it really worth? Even with one of the very few economic rare earth feedstocks, building and operating a refinery is capital-intensive and painstaking work. Despite what some promoters might suggest, even the best producers take years to ramp and stabilize output and economics. Lynas took roughly a decade.

MP is on track to reach normalized production in about three years from the start of commissioning. That speed, scale, and discipline speak to the strength of our people, our ore body, our access to decades of operational history, and our platform. The heavy rare earth market has a somewhat different profile. Heavy elements are largely sourced from numerous small clay mines, but once again, separation is aggregated at a smaller number of scaled refineries in China. We do see opportunities for deposits with a much higher proportion of heavy rare earths to support profitable upstream concentrate business. However, the short mine lives and complex minerology or environmental considerations of many of those deposits make it uneconomic to build full refining capability around them. That is what makes our scaled heavy rare earth separation circuit truly distinctive.

It allows us to leverage our broader infrastructure to produce heavies on a low-cost basis, feeding directly into our integrated magnetics business. Moving downstream, even with mined and refined feedstock in hand, the path to a finished magnet is anything but simple. To make a magnet, you must first convert NdPr oxide into metal, then alloy it with iron and boron through strip casting. Each step is technically demanding and essential to performance. Perfecting the precise recipe for automotive-grade EV magnets can take a year or more. Even with an all-out effort, like our partnership with the Department of Defense, building a scaled facility demands years of work and significant capital. Tonnage, while often cited as a proxy for scale, says little about capability. The true test lies in mastering the complexity of magnet grades, sizes, and chemistries.

In today’s rush to localized supply chains, we have seen projects promoted that cannot yet perform grain boundary diffusion, the critical process that enables efficient use of heavy rare earths. Others proclaim full vertical integration while depending on phantom feedstocks or technologies that remain unproven at scale. A business plan that starts with magnets and works backward to mining may sound compelling on paper, but it defies both economic and supply chain reality for the foreseeable future. Scaled recycling is another underappreciated pillar. In magnet manufacturing, typically 20%-50% of material ends up as swerf or kerf magnet scrap. Capturing and reusing those elements, both light and heavy, is essential to a resilient and economic supply chain. All of this reinforces one conclusion. MP Materials, with its vertically integrated assets, partnerships, and execution track record, is uniquely positioned to lead as the Western rare earth supply chain takes shape.

Finally, as the global economic realignment continues, I would encourage investors and policymakers to approach the sector’s capital allocation with clear eyes. With that, let’s open it up for questions. Operator? Thank you. At this time, if you would like to ask a question, please click on the raise hand button, which can be found on the black bar at the bottom of your screen. When it is your turn, you will receive a message on your screen from the host allowing you to talk, and then you will hear your name called. Please unmute. Please accept, unmute your audio, and ask your question. We will wait one moment to allow the queue to form. Our first question will come from Bill Peterson with JPMorgan. Yeah, hi. Good afternoon, and thanks for taking my questions. I’m wondering, I guess, with your current stockpile, SEG Plus stockpile.

How long could that support your heavy production once fully ramped? I guess you talked about engaging with other heavy feedstock suppliers. Are these foreign suppliers, domestic suppliers? I guess in the context of your mentioning that there’s not a lot of viable options out there in terms of ore bodies, I want to get some more context on what type of feedstocks you may have, or maybe if M&A may come into consideration. Yeah, hey, Bill, it’s Ryan. I’ll start and let Michael take some of that. In terms of the SEG Plus stockpile, we have several hundred tons on an REO basis of SEG stockpiled. Obviously, we are producing SEG every single day. From that perspective, we feel good about our inventory at this time to be available for us to commission that circuit and charge that circuit.

Certainly, as we have discussed, we believe with our own internal feedstock, we will be able to satisfy the demands of the Independence facility with that. Turn it over to Michael for the rest of the question. In terms of feedstocks, I think one thing we are very excited about is how our fully integrated site with both ore-based processing as well as light and heavy separation and recycling gives us very unique capability in terms of processing different types of feedstocks. We are in touch with both domestic suppliers, suppliers of recycling material, recycled material, along with some foreign suppliers. Obviously, you see, as much as we do, all of the announcements from various players around the world where we have our opinion on some and are in discussions with many. Like I said, we are confident that we will find several different options. Great. Thanks for that.

On the magnet business, I guess, how is the customer engagement going beyond Apple and GM? I guess. Are people trying to test some of your sample? Or what’s going on with the business for the further optics and Independence and then ultimately 10x? Sure. It’s Ryan again. I think certainly. Since Liberation Day, the supply chain mindset across the space has changed very meaningfully. There’s a tremendous amount of engagement across really every vertical that consumes magnets: automotive, aerospace and defense, consumer electronics, robotics, you name it. I think fundamentally, we are focused on executing first for our foundational customers. And from a 10x perspective, we have the luxury of continuing to operate in the same fashion that we have for the last several years, given the fact that we have 100% offtake secured for 10x.

As we’ve talked about, our Apple agreement anchors the vast majority of the expansion that we’ve planned for Independence. It puts us in a position where we can continue to be very selective with our customers. The engagement is quite significant and broadly very exciting. Thanks, Ryan. Good luck to the team. Thanks for having the execution, Jim, Ryan, and Michael. Thanks. Your next question will come from Lawson Winder with Bank of America. Thank you very much, Operator. Good evening, gentlemen. Nice quarter. Once again, a very interesting and fascinating update. May I ask about a couple of things? Just on the heavy rare earths, there’s the dysprosium and terbium, 200 kilotons annually. How is that roughly split? Secondly, on the heavies, there’s the summarium loam.

As the name implies, there are other rare earths that the DOE would like to access. What’s the timeline to producing some of those other rare earth metals that are particularly of interest to the DOD? Has the DOD set any deadlines? This is Michael. Thanks for the question. In our ore body, the general ratio of dysprosium to terbium is about 3 to 1. That would be kind of the approximate mix. Some of the other third-party feedstocks and recycled material may have slightly different mix, so ultimate production may differ from that to some extent. In terms of other heavy rare earth production, we have made a commitment to produce samarium in 2028, samarium oxide. We feel very comfortable with that type of time frame. We have made no.

Public commitments to produce any other heavy rare earths, although gadolinium would be a logical next one to produce probably around the same time frame. As for the others, I think we are eager and in discussions with various other parties domestically and in allied countries about offtake of our other materials for them to process into other rare earths. To the extent there is strong demand or need, we are capable of doing further separations. Okay. That is very fascinating. Thanks, Michael. Can I ask about the Apple $200 million prepayment? I had not expected $40 million to be paid in Q3 so quickly. Can you help us understand a timeline under which the remaining $160 million would be prepaid? Sure. It is Ryan. We are thrilled to surprise you to the upside. We cannot get into contract specifics, but certainly, the way this was designed was to continue to.

Provide capital for this build-out as we hit certain operational milestones. We actually expect a next payment of relative scale coming up in Q4. I think that over time, as we execute on this plan, we’ve laid out initial magnet volumes targeting mid-2027, and recycling close behind. You’ll continue to see those prepayments on that schedule. Your next question will come from Matt Somerville with DA Davidson. Hey, Matt. Matt, I can see you’ve unmuted. Please go ahead. Unfortunately, we’re not able to hear you, Matt. I’ll just go to our next analyst, and we’ll come back around to you. Our next question will come from David Deckelbaum with TD Cowen. Thanks for taking my questions, guys. Hi, Jim, Ryan, and Michael. Appreciate the time. Hey, David. Ryan, I think you probably astutely pointed out that the key risk here for MP with incentive prices now is execution.

If I heard right, it sounds like you’re targeting the end of 2026 for operating an NdPr separation nameplate. Michael, I guess you alluded to some things around just NdPr separation, I guess, kinks that you’re ironing out now. Is it fair to say as the contract becomes live now with the Department of Defense at $110 a kilo, should we think about you guys ramping as quickly as possible in the 2026 calendar year? Can you provide any color around what we should expect in the ensuing quarters from incremental throughput tonnage? Hey, David, I’ll start. It’s Ryan. I think the important thing to keep in mind from an economic perspective here is we’ve talked about our concentrate stockpile, and frankly, for a variety of reasons, and now economic reasons, that actually has a lot of value to us.

Certainly, we are focused on ramping as quickly and as smartly as possible to serve the market and to prove out this capability. It is important to remember that under the PPA, we still are paid for the NdPr content within the concentrate that we stockpile. Of course, we do not get paid twice. We get paid when we put it into the stockpile. Once we refine that material, we will sell it at market prices. It is a very important value driver for us. We can continue to look at our view of the market and nominate volumes into that stockpile as we produce them and as we see fit. That gives us a lot of operational and economic flexibility in 2026 and beyond. Appreciate that. Just as a follow-up, I think, Jim, you talked about really the availability of swerf.

End-of-life magnetic products. You guys talked about third-party feed, and I know others have asked you about those questions. I guess, as you think about really addressing the supply chain going forward for your own needs, and really internally in this country and for allied nations, where do you prioritize looking at your own capabilities around recycling with, obviously, the startup of the Apple facility over the next few years? How do you think about focusing on swerf and the ability to source that versus looking at third-party feed from ore bodies? I mean, I think it’s an all-of-the-above approach. Obviously, over the next couple of years, we’re maniacally focused. We have a number of projects, right? We are scaling Independence. We are getting 10x underway and quickly, and then doing the multiple pieces of recycling in Mountain Pass. As you know, David, this management team is pretty opportunistic.

We will try to take advantage of opportunities out there. I would say that, again, over the next couple of years, it’s just executing all of this. I’d remind you that we have the feedstock to serve our entire 10,000 tons of magnet capacity. Currently, certainly with the Apple piece being part of the deal that they’re helping provide feedstock. We have the, I guess, to use Ryan’s words from earlier, the luxury of being methodical about how we think about incremental feedstocks. Yeah. One important point also, David, to think about this as Ryan is, as we look at sourcing third-party feedstocks or we look at sourcing magnet material and end-of-life material, I think despite all the focus on price floors, at the end of the day, the economics of this business depend on your cost structure.

As you see some of these other things announced out there, what you should keep in mind is we will be one of the lowest cost producers of these products, whether refined or from mined material. That also gives us the opportunity to be thoughtful in the acquisition of third-party feedstock. With the platform that we have built, we think we are in pole position to be able to acquire most thoughtfully the best potential feedstocks for the business, given the fact that our cost structure will be best in class. For our next question, we will return to Matt Somerville with DA Davidson. Hey, Matt. Matt, I can see that you have unmuted. We are not able to hear you. You may need to select a different microphone input next to your audio button. Okay. We will move to our next question. Yes.

For our next question, we’ll hear from Carlos de Alba with Morgan Stanley. Hey, Carlos. Yes. Hello. Hi. Can you hear me? Yes. Great. All right. Thank you very much. Congrats on the strong performance this quarter. Just maybe on the prior response, Jim, can you clarify? Maybe I misunderstood, but are you going to be able to supply recycled material or have capacity in your recycle line above and beyond the 2,000 tons that you have under contract with Apple? Oh, are you referring to— Actually, Michael, why don’t you take that and kind of— I think. Carlos, if I understand the question, we are building a dedicated line for Apple to manage material and feedstock that they are responsible for providing to us. We also will have the capability to process our own swerf.

We’ll build that modularly to process as that market grows, which we’re very optimistic about additional feedstocks as well over time. All right. Got it. Yeah. Okay. It will be a separated line from the one that you were working or building on for Apple, right? The Apple line will be largely separate from our existing line. The other feedstocks we are evaluating and will leverage our existing infrastructure and capability in light and heavy rare separation in the most thoughtful way possible, depending on the nature of the feedstock and customer requirements. All right. Okay. Michael, maybe you can help us understand what are the thoughts about the ramp-up of the DY and TB output post-commissioning? Our focus initially is obviously on meeting the needs of our customers and Independence for GM.

Because we have this stockpile, we’ll be able to produce amounts greater than our initial ore-based material would supply on a yearly basis. Then we’ll look at what third-party feedstocks we have and what preprocessing is required. The volumes are obviously relatively modest. I think the ability to ramp will depend on how quickly we feel comfortable pushing those volumes. Obviously, we have very high quality requirements and need to make sure we perform. Our next question will come from Ben Kallo with Baird. Hey, guys. Good evening. I was wondering how you think about price floors for heavies as you advise the administration, and if you’ve given any weight to that. Follow-up too. Hey, Ben, you mean what do we think of them intellectually or? I guess when it comes to heavies, the one thing I think this kind of comes at your question another way.

If we reference back to kind of the overall point that I was trying to make in the prepared remarks, when you look at the supply chain in our space and the various areas of it, the heavies area is one where typically you have deposits where it makes sense that there are economics where that could be a concentrate or a mega concentrate or mega feedstock that can go to a refiner like ours, like we have built. Typically, at least we have not seen those sites, the various ones around the world of varying degrees of value, where it would make sense economically to build refining capability around that. We are really well-positioned to accept those feedstocks. That is obviously the work that we are doing with DOW to make sure that we have the material for our business through 10x.

Obviously, there are a variety of ways that you can incentivize that upstream production and get economics to those parties to encourage that production. I do think it is important to think of those as sort of part of a broader supply chain, and there are not necessarily independent standalone economics for sites like that to be a full vertically integrated participant. Just a follow-on, because you guys have, I guess, everyone’s ear. What is the advice to get the heavies to the admin? I’d like to, obviously, the detailed advice that we would give to the government, I think we would try to keep that in confidence.

I think I can speak in general terms, which is what I was hinting at, Ben, in my remarks is that if you look at the structure of this industry and just look at how China has formed. Now, obviously, a lot of that is state-driven, but a lot of it is sort of structural. You should think of this industry as closer to a global structural oligopoly rather than just, "Oh, if we throw a bunch of money at dozens of sites and businesses, we can form a supply chain." Because the reality is that to have the geology—we talked through the geology and the differences between lights and heavies and then the complexity of the magnet business. And when you add all of that up, I mean, the best analogies are if you were going into the aircraft production industry or the smartphone industry.

Think of our great companies like Apple and Boeing, right? You wouldn’t necessarily say if, let’s say, it was reversed and you were trying to create those and the Chinese had the competitor, you wouldn’t necessarily say, "Let’s spread money around to 30 different things." I think the way to think about it, though, is we view MP as America’s national champion. We have structural advantage because we’re fully vertically integrated. We’re years and billions ahead of others. What I would say is if you—there’s various projects out there, both public and private. If you took anything that I’m aware of—now, there may be a bunch of stuff I’m not aware of. But anything I’m aware of, if you gave whatever that was the deal that MP had, I don’t see anywhere where there’s any equity value for any of them, public or private. Now.

I think that’s a very interesting thing. Now, that doesn’t mean that the government shouldn’t catalyze a lot because I think the government is doing an outstanding job catalyzing private capital to come in. To the extent that the government can make investments, whether it’s loans or other forms of support and grants, if X dollars of capital can stimulate 2 or 3X in private capital, they should be doing that as much as possible. I think we’ve seen some really great action out of the administration. My advice would be to keep going, keep doing what you’re doing. I think they’re really thinking about it a thoughtful way. I would just also say that the message of today is.

For private investors, because obviously, we do not want people to get burned, we want people to think that this is a good space, is to just be very clear-eyed about what the actual structural economics are in amidst all the excitement. Your next question will come from Max Yarrow with BMO Capital Markets. Jim, Ryan, and Michael, thanks for taking my question this afternoon. My question is around the ramp-up of the heavy rare earth separation facility. And I was just wondering if the ramp-up time there affects your ability to deliver certain higher-grade magnets to General Motors. I guess the second part is, when we look at the universe of potential feedstocks for that heavy rare earth separation, are there types of concentrates that you cannot process, and which ones are the most ideal for the circuit that you envision? Yeah. Sure, Max. It is Ryan. I will start.

In terms of how we’re positioned from a supply chain and inventory perspective to support our ramp-up at magnetics, I think we’ve discussed over the last several quarters that we had anticipated some of the restrictions that had been put in place and have built a stockpile of products to allow us to commission and ramp the Independence facility. We’ve timed the construction and commissioning of the heavy rare separation circuit to come online to support further growth as we work that inventory position down. I’ll let Michael take the second part. Just to be clear, the question was on whether types of feedstocks for the heavy rare circuit are preferred? Exactly. Certainly, to the extent we got an SEG plus, that would be easier than processing a full mixed rare earth carbonate with lights and heavies.

Our circuit can handle, because we have all of the capabilities, either one of those. We will look at the economics and the distribution and compare those to other alternatives. Thank you. Appreciate you taking my question. I will turn it back. Our final question will come from Lawrence Alexander with Jefferies. Good afternoon. I appreciate kind of the analogies you have tossed out. I guess what I want to tease out as you talk about your opportunistic approach to creating value is the Cold War would have gone very differently if the nuclear missiles had a 10-year expiry date. When you think about the incentives that a 10-year support program from the DoD gives you, and also the way the capital markets might perceive that as setting you up.

For some severe kind of cyclical risk if there’s a recession or otherwise a glut at the end of the 10-year period. And what that does to your cost of capital and how you think about your balance sheet, is the strategy here to double down on the fortress balance sheet vertical integration and just ride through that transition? Or do you feel either the government needs to make a decision soon about extending the support, or you need to make a decision arguably sooner rather than later about adding a second plank to sort of smooth out volatility once you make the transition back into a fully unsupported entity? So, Lawrence, I think it’s actually the opposite. I don’t know how many listeners we have today because there’s another exciting call happening where there’s a trillion-dollar pay plan being proved because we’re going to have humanoid robots, whether it’s.

Musk or Jensen talking about that. I mean, we look out, and I do not know if it is 5, 10 years, whatever it is, but there is no question that physical AI is going to just create explosive growth in rare earth magnetics. The issue is that in the very short term, we cannot be leveraged by the Chinese from a supply chain standpoint. We have got to have an industry that is here and thriving. Actually, if you take my remarks, I want to be clear that when I talk about the structural realities, it is not because that is a forever condition. I do think that there is room for a lot of other players and a lot of other supply. I think that the point is that to get to that 5- or 10-year period, you are going to need materially higher prices. Sort of the.

MP deal, if you will, I just don’t think that’s enough. I think that what you’re really going to see is that in the very short term, the administration has made sure that we have a successful national champion in MP. We’ve got to execute. We are going to sort of pave the path, if you will, to then figure out how there’s much broader supply coming online. Obviously, 10 years is a long enough time to not, in the short term, think about kind of what that role looks like. We’ll think about the next couple of years of getting things online. I think if we don’t have some development in physical AI by then, the markets, I would be least worried about MP relative to pretty much many other places in the market.

I do not lose any sleep over what demand is going to look like in 10 years and what NdPr prices and magnetics prices are going to be. I think it is going to be amazing for us. My bigger guess is that we will have grown our business and moved downstream, just as if you think about us five years ago versus where we are today. I think on that roll date, it will not be as material a portion of our business remotely compared to what it is today. Perfect. Thank you. That concludes the question and answer portion of today’s call. I will now call the back for closing remarks. All right. Thank you, everyone. We think it was a great quarter of execution. We are going to get back to work, and I look forward to talking to you all next quarter.

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