USA Rare Earth (NASDAQ: USAR) surged to a three-month high after confirming a non-binding funding agreement with the US government worth up to USD$3.1 billion.
The Oklahoma-based company said Monday it signed a letter of intent with the Department of Commerce covering a USD$1.6 billion financing package.
Consequently, investors pushed the stock up as much as 16 per cent to USD$32.07, its highest level since October. The proposed package includes USD$277 million in direct federal funding and a USD$1.3 billion senior secured loan. Additionally, the loan would fall under the Commerce Department’s CHIPS program, which targets domestic semiconductor and supply-chain manufacturing.
The company said the agreement reflects federal recognition of its mine-to-magnet strategy and national security role. Further, the structure would give the US government a 10 per cent ownership stake in the company. That stake would come through 16.1 million shares and roughly 17.6 million warrants priced at USD$17.17 each.
Meanwhile, USA Rare Earth confirmed it also signed a separate securities purchase agreement for a USD$1.5 billion private investment in public equity. That PIPE transaction involves 9.8 million shares priced at USD$21.50 each. Additionally, the company said Inflection Point and other strategic investors committed to the financing.
Consequently, the combined transactions could deliver USD$3.1 billion in total capital. Year to date, USA Rare Earth’s share price and market value have nearly doubled. The company’s market capitalization now approaches USD$4 billion.
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The Stillwater plant has a yearly capacity of 5,000 tonnes
Chief executive Barbara Humpton described the federal partnership as a turning point for domestic rare earth supply chains. She said the deal would accelerate efforts to build an independent US source of critical minerals and magnets. Furthermore, management framed the agreement as central to reducing reliance on foreign suppliers. The company is developing the Round Top rare earth project near Sierra Blanca, Texas. Production at the mine is currently scheduled to begin in late 2028.
Round Top contains unusually high concentrations of heavy rare earth elements. These materials include dysprosium, which manufacturers use in permanent magnets. Additionally, such magnets power electric vehicles, wind turbines, and advanced defense systems. The project anchors a broader domestic value chain, according to the company. That chain also includes a magnet manufacturing facility in Stillwater, Oklahoma.
The Stillwater plant has an annual capacity of about 5,000 tonnes and is expected to enter commercial operations this year. In addition, USA Rare Earth operates a processing and separation laboratory in Wheat Ridge, Colorado.
The company said the new funding would reduce financial risk across all three assets. Consequently, management expects faster construction timelines and earlier scaling decisions.
By 2030, the company plans to mine roughly 40,000 metric tons per day of ore at Round Top.
It also aims to process 8,000 tonnes per annum of rare earth materials. Additionally, those volumes would include feedstock from third-party suppliers. The company also intends to reshore heavy rare earth metal and alloy production. That plan targets 10,000 tonnes per annum of capacity.
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Researchers develop digital twins at Wheat Ridge lab
Those capabilities currently do not exist anywhere in the United States.
USA Rare Earth recently acquired UK-based Less Common Metals to support that effort. Meanwhile, the company plans to expand neodymium-iron-boron magnet production to 10,000 tonnes annually.
Commerce Secretary Howard Lutnick said the project aligns with federal critical mineral independence goals. He added that the investment would strengthen supply chains essential to economic and national security.
Separately, USA Rare Earth announced a partnership with the US Department of Energy’s National Energy Technology Laboratory. The collaboration will focus on advanced separation technologies for heavy rare earth elements. Additionally, researchers will develop digital twins at the Wheat Ridge laboratory and the Round Top site.
The company said those tools should improve efficiency and recovery rates.
Ultimately, management aims to establish the first fully domestic mine-to-magnet supply chain in the country. Energy Secretary Chris Wright said the partnership supports efforts to end reliance on foreign critical materials. He stated the initiative would expand domestic mining, processing, and manufacturing capacity.
Furthermore, Wright said the project would support high-quality US jobs while strengthening national security.
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