USA Rare Earth consolidating control of Texas deposit for $73M
USA Rare Earth, Inc. (USAR) said on Thursday that it is planning to acquire the remaining outstanding minority interest of a Texas rare earth deposit in a $73 million all-stock deal.
The company will be acquiring all outstanding shares of Texas Mineral Resources Corp. (TMRC) for about 3.8 million shares of USAR common stock.
The deal makes USA Rare Earth the sole operator of Round Top rare earth deposit in Texas. The company has called Round Top the richest known deposit of heavy rare earth elements, gallium and beryllium, calling it a "cornerstone" of its integrated mine-to-magnet value chain.
USAR said that it is developing the leading globally integrated mine to magnet platform that is essential for the modern defense, robotics, energy, semiconductor and advanced manufacturing industries.
“This acquisition secures a vital pillar in our strategy to build the world’s leading globally integrated, non-China critical mineral technology platform,” USAR CEO Barbara Humpton said in a statement. “We’re consolidating operational control of the Round Top project while ensuring long-term leasehold access for the adjacent land required to transition efficiently from development to commercial production.”
She added that the consolidation of Round Top "strengthens our ability to execute our Accelerated Mining Plan by providing full access to the land required to help meet the strong and growing demand for heavy rare earths and critical minerals.”
USAR said in January that it was making a "significant acceleration" of its timeline to begin mining at Round Top, with commercialization now slated to happen in late 2028.
This is two years earlier than the company had previously targeted.
Humpton said in a statement at the time that the company was "challenging ourselves to innovate and pursue creative solutions that accelerate our timeline for securing, reshoring, and growing the US rare earth value chain."
In addition to its rare earth deposit in Texas, USAR has a 310,000 square foot magnet manufacturing facility in Stillwater, Oklahoma, which it expects to eventually deliver the largest metal-and-alloy-making and strip-casting production outside of China.
William Blair sees 'significant valuation upside'
William Blair analyst Neal Dingmann reiterated an Outperform rating for USAR in a client note on Thursday, citing "significant valuation upside as the company progresses toward Round Top milestones."
However, Dingmann is not yet convinced of USAR meeting its accelerated timeline.
"While the company has laid out various financial estimates through 2030, we take a conservative approach assuming slightly longer timelines at Round Top," he said.
The Trump administration has been aggressively trying to ramp up domestic mining production of rare earth minerals to lessen America's reliance on China, which controls about 90% of the global production of these critical minerals.
In January, USAR entered into a non-binding letter of intent (LOI) with the US Commerce Department in conjunction with the Department of Energy (DOE) that will include approximately $300 million in federal funding and a $1.3 billion loan.
The Commerce Department will also take 16.1 million shares of common stock and 17.6 million stock warrants, giving the US government a 10% stake in the company.
Back in July, the Defense Department entered into a 10-year public-private relationship with MP Materials (MP) as part of a multibillion dollar package that will allow MP Materials to construct its second domestic magnet manufacturing campus, called the 10X, in North Lake, Texas.
USAR shares have surged 60.5% so far this year.