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What changed in MP Materials Corp. / DE's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of MP Materials Corp. / DE's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+521 added−495 removedSource: 10-K (2024-02-28) vs 10-K (2023-02-28)

Top changes in MP Materials Corp. / DE's 2023 10-K

521 paragraphs added · 495 removed · 376 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

83 edited+19 added−16 removed40 unchanged
Biggest changeThis expected growth will be driven by secular growth in demand for NdPr magnets. 1 Table of Contents Rare earth materials are used in a diverse array of end markets, including: • Clean-Energy and Transportation Technologies: traction motors in EVs and hybrid electric vehicles, and generators in wind power turbines; • Consumer and Medical Applications: miniaturization of smart phones and other mobile devices, computing devices, speakers and microphones, as well as fiber optics, lasers, robotics, medical ventilators, precision actuators, and optical sensors; • Critical Defense Systems: guidance and control systems, communications, global positioning systems, radar and sonar, drones, and railguns; and • Essential Industrial Infrastructure: power tools, pollution-control systems in traditional internal-combustion automobiles, glass polishing, and LED lighting and phosphors.
Biggest changeRare earth materials are used in a diverse array of end markets, including: • Electric Mobility: traction motors in passenger xEVs, commercial xEVs, special purpose vehicles, two-wheelers, and other applications; • Renewable Power Generation: wind power generators, for on- and offshore applications; • Energy-Efficient Motors, Pumps and Compressors: heating, ventilation and air conditioning (“HVAC”) systems, elevators, escalators, consumer appliances and other industrial applications; • Industrial and Service Robotics: motors, actuators, brakes and sensors used in industrial robots and welders, as well as service robots; • Consumer and Medical Applications: smart phones, tablets, laptops, hard disk drives, audio speakers, microphones, cameras, printers, cordless power tools as well as fiber optics, laser crystals, x-ray equipment, prostheses, dental crowns and more; • Critical Defense Systems: guidance and control systems, communications, avionics, global positioning systems, radar and sonar, drones, thermal barrier coatings and firearms; and • Catalysts and Phosphors: catalysts for vehicle emissions reduction and fuel refining, as well as phosphors for energy-efficient lighting and counterfeit currency detection.
The Company believes it is unique among scaled rare earth producers in its use of a dry tailings process that allows recycling of the water used in its milling and flotation circuit and eliminates the need for high-risk wet tailings ponds and traditional impoundment dams.
The Company believes it is unique among scaled rare earth producers in its use of a dry tailings process that allows recycling of the water used in the milling and flotation circuit and eliminates the need for high-risk wet tailings ponds and traditional impoundment dams.
Stage I Following the acquisition of Mountain Pass in July 2017, the Company began implementing Stage I, which was designed to re-establish stable, scaled production of rare earth concentrate leveraging the existing processing facility. Stage I includes mining the primarily bastnaesite ore followed by comminution, which involves crushing and grinding the ore into a milled slurry.
Stage I Following the acquisition of Mountain Pass in July 2017, the Company began implementing Stage I, which was designed to re-establish stable, scaled production of rare earth concentrate leveraging the site’s existing processing facility. Stage I includes the mining of primarily bastnaesite ore followed by comminution, which involves crushing and grinding the ore into a milled slurry.
In February 2022, the Company was awarded a $35.0 million contract by the Department of Defense’s Office of Industrial Base Analysis and Sustainment Program to design and build a facility to process HREE.
In February 2022, the Company was awarded a $35.0 million contract by the Department of Defense’s Office of Industrial Base Policy, Industrial Base Analysis and Sustainment program, to design and build a facility to process HREE.
Together, these changes materially increased plant uptime and reliability driving enhanced flotation throughput, REO recovery and production as well as tailings facility reliability and throughput at a significantly lower cost per processed ton.
Together, these changes materially increased plant uptime and reliability driving enhanced flotation throughput, REO recovery and production as well as tailings facility reliability and throughput at a lower cost per processed ton.
The Company is developing a greenfield metal, alloy and magnet manufacturing facility in Fort Worth, Texas, with GM as a foundational customer. The Company intends to continue exploring future opportunities to invest in, develop, and/or sponsor new downstream opportunities for REO, rare earth metals and alloys and rare earth products that contribute to the electrification of the industrial economy.
The Company is developing a greenfield metal, alloy and magnet manufacturing facility in Fort Worth, Texas, with GM as a foundational customer. The Company intends to continue exploring future opportunities to invest in, develop, and/or sponsor new downstream opportunities for REO and rare earth products that contribute to the electrification of the industrial economy.
All newly-hired employees at Mountain Pass complete a minimum of 24 hours of Federal Mine Safety and Health Administration (“MSHA”) training during the onboarding process and must, at a minimum, complete annual refresher training. Following their initial training, depending on their job classification, new employees complete supervised field training specific to their roles and responsibilities.
All newly-hired employees at Mountain Pass complete a minimum of 24 hours of Federal Mine Safety and Health Administration (“MSHA”) training during the onboarding process and must, at a minimum, complete annual refresher training. Following their initial training, depending on their job classification, new employees complete targeted online and supervised field training specific to their roles and responsibilities.
To date, nearly all U.S. states and the District of Columbia have mandated or offer incentives to support deployment of EVs or alternative fuel vehicles and supporting infrastructure, either through state legislation or private utility incentives within the state, with similar mandates and incentives in other countries globally.
To date, nearly all U.S. states and the District of Columbia have mandated or offer incentives to support deployment of xEVs or alternative fuel vehicles and supporting infrastructure, either through state legislation or private utility incentives within the state, with similar mandates and incentives in other countries globally.
In addition, the U.S. government is actively seeking to end the country’s reliance on foreign REE sources, and the Company believes that its constructive relationship with key regulatory agencies and the relative stability of U.S. policies provides it with an advantage relative to non-U.S. REE producers.
In addition, the U.S. government is actively seeking to end the country’s reliance on foreign REE sources, and the Company believes that its constructive relationship with key regulatory agencies and the relative stability of U.S. policies provide it with an advantage relative to non-U.S. REE producers.
The global effort to curb carbon emissions and address climate change often focuses on the impact of the transportation system, and the Company believes that its products will play a significant role in advancing those efforts.
The global effort to curb carbon emissions and address climate change often focuses on the impact of the transportation system. The Company believes that its products will play a large role in advancing those efforts.
Environmental and Regulatory Matters The Company is subject to numerous federal, state and local environmental laws, certifications, regulations, permits, and other legal requirements applicable to the mining and mineral processing industry, including, without limitation, those pertaining to employee health and safety, air quality standards and emissions, water usage, wastewater and stormwater discharges, GHG emissions, hazardous and radioactive and other waste management, plant and wildlife protection, remediation of contamination, land use, reclamation and restoration of properties, procurement of certain materials used in the Company’s operations, groundwater quality and the use of explosives.
Environmental and Regulatory Matters The Company is subject to numerous federal, state and local environmental laws, certifications, regulations, permits, and other legal requirements applicable to the mining and mineral processing industry, including, without limitation, those pertaining to employee health and safety, air quality standards and emissions, water usage, wastewater and stormwater discharges, GHG emissions, hazardous and radioactive and other waste management, storage and handling of naturally occurring radioactive material, plant and wildlife protection, remediation of contamination, land use, reclamation and restoration of properties, procurement of certain materials used in the Company’s operations, groundwater quality and the use of explosives.
Environmental laws and regulation continue to evolve which may require the Company to meet stricter standards and give rise to greater enforcement, result in increased fines and penalties for non-compliance, and result in a heightened degree of responsibility for companies and their officers, directors and employees.
Environmental laws and regulation continue to evolve which may require the Company to meet stricter standards and give rise to greater enforcement, result in increased fines and penalties for non-compliance, and result in a heightened 7 Table of Contents degree of responsibility for companies and their officers, directors and employees.
Litinsky is also the Founder, Chief Executive Officer and Chief Investment Officer of JHL Capital Group LLC (“JHL”), an alternative investment management firm. Before founding JHL in 2006, he was a member of the Drawbridge Special Opportunities Fund at Fortress Investment Group.
Mr. Litinsky is the Founder, Chairman and Chief Executive Officer of MP Materials. Mr. Litinsky is also the Founder, Chief Executive Officer and Chief Investment Officer of JHL Capital Group LLC (“JHL”), an alternative investment management firm. Before founding JHL in 2006, he was a member of the Drawbridge Special Opportunities Fund at Fortress Investment Group.
One of the unique attributes of bastnaesite ore is the ability to convert the trivalent cerium in the mixed rare earth concentrate to 2 Table of Contents tetravalent cerium that has a low propensity to dissolve, enabling cerium to be separated expediently along with other insoluble gangue elements without selective extraction.
One of the unique attributes of bastnaesite ore is the ability to convert the trivalent cerium in the mixed rare earth concentrate to tetravalent cerium that has a low propensity to dissolve, enabling cerium to be removed expediently along with other insoluble gangue elements without selective extraction.
Diversity and Inclusion MP Materials believes that a diverse and inclusive workforce and Board of Directors produces better overall decision-making for employees, which benefits the organization. In addition to hiring employees with requisite skills, the Company has taken steps to assemble a diverse workforce.
Diversity, Inclusion and Meritocracy MP Materials believes that a diverse, inclusive and meritocratic workforce and Board of Directors produces better overall decision-making for employees, which benefits the organization. In addition to hiring employees with requisite skills, the Company has taken steps and will continue to strive to assemble a diverse and inclusive workforce.
Stage III The Company’s mission is to restore the full rare earth magnetics supply chain to the U.S. by pursuing opportunities to integrate further downstream into converting NdPr into metal, alloy, and permanent magnet products, as well as advancing magnet recycling capabilities.
Stage III The Company’s mission is to restore the full rare earth magnetics supply chain to the U.S. by pursuing opportunities to integrate further downstream by converting NdPr oxide into permanent magnets and precursor products, as well as advancing magnet recycling capabilities.
Successful completion of this project will establish, for the first time in many years, commercial-scale processing and separation of HREE in support of commercial and defense applications in the United States.
Successful completion of this project will establish, for the first time in many years, commercial-scale processing and separation of HREE in support of commercial and defense applications in the U.S.
The Company believes the self-contained nature of its operations, with mining, milling, separations, and finishing all on one site, creates additional cost advantages and operational risk mitigation and upon the full commissioning of Stage II, the Company’s integrated site will incur lower costs of packaging, handling and transportation as compared to competitors who lack co-located processing.
The Company believes the self-contained nature of its operations, with mining, milling, separations, and finishing all on one site, creates additional cost advantages and operational risk mitigation. Upon achieving the designed throughput of separated products, the Company’s integrated site will incur lower costs of packaging, handling and transportation as compared to competitors who lack co-located processing.
The location of Mountain Pass, which is immediately adjacent to Interstate 15, within one hour of truck drive-time to a major railhead and four hours to the Ports of Los Angeles and Long Beach, offers significant transportation advantages that create meaningful cost efficiencies in securing incoming supplies and shipping its final products.
Mountain Pass, located immediately adjacent to Interstate 15 and within a one-hour drive of a major railhead and a four-hour drive of the Ports of Los Angeles and Long Beach, offers transportation advantages that create meaningful cost efficiencies in securing incoming supplies and shipping its final products.
Workforce Composition Since relaunching production at Mountain Pass in July 2017, the Company has increased its full-time equivalent (“FTE”) employee base from eight contractors in 2017 to 486 employees as of December 31, 2022, of which approximately 80% were field-based employees. This represents a 33% increase of FTE employees in 2022, on top of a 32% increase in 2021.
Employees Since relaunching production at Mountain Pass in July 2017, the Company has increased its full-time equivalent (“FTE”) employee base from eight contractors in 2017 to 681 employees as of December 31, 2023, of which approximately 81% were field-based employees. This represents a 40% increase of FTE employees in 2023, on top of a 33% increase in 2022.
As of December 31, 2022, based on employees’ self-reporting, veterans and women represented 4% and 16%, respectively, of the Company’s workforce and 17% of managerial or supervisory positions were occupied by women. As of December 31, 2022, women represented 28% of the Company’s Board of Directors.
As of December 31, 2023, based on employees’ self-reporting, veterans and women represented 4% and 17%, respectively, of the Company’s workforce and 21% of managerial or supervisory positions were occupied by women. As of December 31, 2023, women represented 28% 5 Table of Contents of the Company’s Board of Directors.
Human Capital Resources The people of MP Materials are the Company’s most valuable asset in progressing toward and ultimately fulfilling the Company’s mission.
Human Capital Resources The people of MP Materials are the Company’s most valuable asset in fulfilling the Company’s mission.
To ensure the ongoing safety of employees and any contractors working on-site, the Company has a clear set of health and safety guidelines in place and routinely conducts trainings. The Company believes that the achievement of superior safety performance is both an important short-term and long-term strategic initiative in managing its operations.
To ensure the ongoing safety of employees and any contractors working on-site, the Company has a clear set of health and safety guidelines in place and routinely conducts general as well as equipment- and process-specific safety training. The Company believes that the achievement of superior safety performance is both an important short-term and long-term strategic imperative in managing its operations.
The Company intends to apply its experience and skill sets across the rare earth value chain, while allocating capital effectively and responsibly, toward opportunities demonstrated to be in the best interest of its stockholders and consistent with its mission.
The Company intends 4 Table of Contents to apply its experience and skill sets across the critical minerals and related value chain, while allocating capital effectively and responsibly, toward opportunities demonstrated to be in the best interest of its stockholders and consistent with its mission.
To meet the growth in demand for EVs, the Company believes automotive OEMs will redesign their supply chains to ensure a ready and stable supply of rare earth products as they transition their engine, transmission and motor manufacturing facilities to build EV components.
To meet the growth in demand for xEVs, the Company believes automotive OEMs will redesign their supply chains to ensure a ready and stable supply of rare earth products as they transition their facilities to build electric vehicle components.
Certain REE serve as critical inputs for the rare earth magnets located inside the electric motors and generators powering carbon-reducing technologies such as electric vehicles (“EVs”) and wind turbines, as well as drones, defense systems, robotics and many other high-growth, advanced technologies.
Certain rare earth elements (“REE”) serve as critical inputs for the rare earth magnets inside the electric motors and generators powering carbon-reducing technologies such as hybrid and electric vehicles (referred to collectively as “xEVs”) and wind turbines, as well as drones, defense systems, robotics and many other high-growth, advanced technologies.
Shenghe then sells the rare earth concentrate it acquires to customers in China that process the refined products.
Shenghe then sells the rare earth concentrate it acquires to customers in China for processing into refined products.
Therefore, the Company encourages investors, the media, and others interested in MP Materials to review the information the Company posts on the social media channels listed on its investor relations website.
It is possible that the information the Company posts on social media could be deemed to be material information. Therefore, the Company encourages investors, the media, and others interested in MP Materials to review the information the Company posts on the social media channels listed on its investor relations website.
Removal of the lower-value cerium early in the Company’s separations process allows for a significant reduction in the mass of material to be separated and finished, thus dramatically reducing the energy, reagents, and wastewater required to produce the higher-value NdPr.
Removal of the lower-value cerium early in the Company’s separations process allows for a significant reduction in the mass of material to be separated and finished, thus reducing the energy, reagents, and wastewater required to produce the higher-value NdPr. Additionally, roasting facilitates a lower temperature leach that reduces maintenance costs and downtime.
The Company is currently pursuing vertical integration through further downstream processing of REO into rare earth metals, alloys and finished magnet products, including recycling. The Company intends to accomplish this through a buy, build and/or joint venture strategy to achieve technical and cost leadership.
The Company is currently pursuing vertical integration through further downstream processing of REO into finished magnet products and precursor materials, and incorporating process waste and end-of-life magnet recycling. The Company intends to accomplish this through a buy, build and/or joint venture strategy to achieve technical and cost leadership.
The Company strives to develop and maintain an owner-operator culture that instills an entrepreneurial spirit where its employees feel motivated and empowered to deliver results through an unwavering commitment to doing what is right in a safe environment.
At the core of the Company’s success is the relentless pursuit to maintain and nurture an owner-operator culture that instills an entrepreneurial spirit where its employees feel motivated and empowered to deliver results through an unwavering commitment to doing what is right in a safe environment.
Upon the full commissioning of Stage II, the Company believes Mountain Pass will be one of the largest, most advanced and efficient fully-integrated REO processing facilities in the world, and the only such facility located in the Western Hemisphere.
Upon achieving our designed throughput of separated products, the Company believes Mountain Pass will be one of the largest, most advanced and efficient fully-integrated REO processing facilities in the world, and the only such facility located in the Western Hemisphere.
MP Materials strongly encourages the reporting of near-miss incidents so that it can mitigate hazards or change procedures to improve workforce safety in advance of any actual incident. In January 2023, the Company passed the 1,000-day milestone without a lost-time injury.
MP Materials strongly encourages the reporting of near-miss incidents so that it can mitigate hazards or change procedures to improve workforce safety in advance of any actual incident. As of December 31, 2023, the Company had completed over 1,300 days without a lost-time injury.
With continued state-sponsored consolidation, there remain two major rare earth groups in China. These groups and their affiliates control (and/or allocate to unaffiliated third parties) substantially all of China’s quota for concentrate production and rare earth refining.
With continued state-sponsored consolidation, there remain two major rare earth groups in China. These groups and their affiliates control (and/or allocate to unaffiliated third parties) substantially all of China’s quota for concentrate production and rare earth refining. Outside of China, there are few other producers operating at scale, with processing capabilities located in Australia and Malaysia.
The Company’s Code of Business Conduct and Ethics is also available on the investor relations section of its website. The information contained on its website, or accessible from its website, is not incorporated into, and should not be considered part of, this Form 10‑K or any other documents the Company files with, or furnishes to, the SEC.
The information contained on its website, or accessible from its website, is not incorporated into, and should not be considered part 8 Table of Contents of, this Form 10‑K or any other documents the Company files with, or furnishes to, the SEC.
The NdPr product that the Company intends to produce at Mountain Pass is essential to the permanent magnet motor technology deployed in the significant majority of current EVs. In addition, the Company believes end consumers will demand that the materials used to build these vehicles be extracted sustainably.
The NdPr oxide that the Company began producing in the third quarter of 2023 at Mountain Pass is essential to the permanent magnet motor technology deployed in a significant majority of current xEVs. In addition, the Company believes end consumers will demand that the materials used to build these vehicles be extracted sustainably. MP Materials is committed to environmental responsibility.
In April 2022, the Company entered into a long-term supply agreement with General Motors Company (NYSE: GM) (“GM”) to supply U.S.-sourced and manufactured rare earth materials, alloy and finished magnets for the electric motors in more than a dozen models using GM’s Ultium Platform.
Additionally, in April 2022, the Company entered into a long-term agreement with General Motors Company (NYSE: GM) (“GM”) to supply U.S.-sourced and manufactured rare earth materials and finished magnets for the electric motors in more than a dozen models based on GM’s Ultium Platform. These developments are part of the Company’s Stage III downstream expansion strategy (“Stage III”).
Additionally, on August 16, 2022, the U.S. government enacted the 3 Table of Contents Inflation Reduction Act of 2022 which, among other things, provides several tax incentives to promote clean energy, including tax credits on the purchase of EVs.
Additionally, on August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022, which, among other things, provides several tax incentives to promote clean energy adoption, including tax credits on the purchase of xEVs and the production of certain critical minerals such as NdPr oxide.
The Company currently produces a rare earth concentrate that is principally sold pursuant to the Offtake Agreement (as defined in Note 3 “ Relationship and Agreements with Shenghe , ” in the notes to the Consolidated Financial Statements) to Shenghe (as defined in the “ Cust omers ” section below), that, in turn, typically sells that product to refiners in China.
The rare earth concentrate is principally sold pursuant to the Offtake Agreement (as defined in Note 20 , “Related Party Transactions,” in the notes to the Consolidated Financial Statements) to Shenghe (as defined in the “Customers” section below), that, in turn, typically sells that product to refiners in China.
The Company provides opportunities for employees to engage with executive management through events such as virtual town hall sessions, family days and routine stand-up briefings. Methodical execution is key to ensuring the Company goals are achieved and exceeded.
In the fourth quarter of 2023, the Company achieved professional certification for its engagement efforts, and will continue its focus on providing opportunities for employees to interact with executive management through events such as virtual town hall sessions, family days and routine stand-up briefings. Methodical execution is key to ensuring Company goals are achieved and exceeded.
Lastly, the Company has begun construction of the Fort Worth Facility to convert a portion of the REO produced at Mountain Pass into rare earth metal, alloy, and magnet products to be marketed directly to end users.
Lastly, the Company is establishing downstream (“Stage III”) capabilities at its Fort Worth Facility to convert a portion of the REO produced at Mountain Pass into rare earth magnets and its precursor products to be marketed directly to end users.
Investors and others should note that the Company may announce material financial information to its investors using its investor relations website (https://investors.mpmaterials.com/overview), SEC filings, press releases, public conference calls and 8 Table of Contents webcasts.
Investors and others should note that the Company may announce material financial information to its investors using its investor relations website (https://investors.mpmaterials.com/overview), SEC filings, press releases, public conference calls and webcasts. The Company uses these channels as well as social media to communicate with its stockholders and the public about the Company, its services and other issues.
(“Shenghe”), a majority-owned subsidiary of Leshan Shenghe Rare Earth Co., Ltd. whose ultimate parent is Shenghe Resources Holding Co., Ltd., a leading global rare earth company listed on the Shanghai Stock Exchange, under the terms of the Offtake Agreement, which became effective in March 2022. 6 Table of Contents Under the Offtake Agreement, Shenghe is contractually obligated to purchase the Company’s rare earth concentrate product meeting certain minimum specifications as the exclusive distributor in China on a “take-or-pay” basis (such that they are obliged to pay for product even if they are unable or unwilling to take delivery), with certain exceptions for the Company’s direct sales globally.
Under the Offtake Agreement, Shenghe is contractually obligated to purchase the Company’s rare earth concentrate product meeting certain minimum specifications as the exclusive distributor in China on a “take-or-pay” basis (such that they are obliged to pay for product even if they are unable or unwilling to take delivery), with certain exceptions for the Company’s direct sales globally.
The Company is also pursuing sales opportunities to other customers for its future rare earth metal, alloy and magnet products. Suppliers The Company uses certain proprietary chemical reagents in its flotation process, which it currently purchases from third-party suppliers. These products are subject to pricing volatility, supply availability and other restrictions and guidelines.
The Company is also pursuing sales opportunities to other customers for its future magnet products. Suppliers The Company uses certain proprietary chemical reagents in its flotation process, which it currently purchases from third-party suppliers. The hydrometallurgy, separations, and product finishing processes are reliant upon certain commodity reagents.
The REE group includes 17 elements, primarily the 15 lanthanide elements. Lanthanum, cerium, praseodymium and neodymium are considered “light” REE (“LREE”); samarium, europium and gadolinium are often referred to as “medium” REE; while terbium, dysprosium, holmium, erbium, thulium, ytterbium and lutetium are considered “heavy” REE (“HREE”).
Lanthanum, cerium, praseodymium, neodymium and promethium are considered “light” REE (“LREE”); samarium, europium and gadolinium are often referred to as “medium” REE; while terbium, dysprosium, holmium, erbium, thulium, ytterbium and lutetium are considered “heavy” REE (“HREE”). Two additional elements, yttrium and scandium, are often classified as HREE although they are not lanthanides.
ITEM 1. BUSINESS Overview MP Materials Corp., including its subsidiaries (the “Company,” “MP Materials,” “we,” “our,” and “us”), is the largest producer of rare earth materials in the Western Hemisphere. The Company owns and operates the Mountain Pass Rare Earth Mine and Processing Facility (“Mountain Pass”), the only active rare earth mining and processing site of scale in North America.
ITEM 1. BUSINESS Overview MP Materials Corp., including its subsidiaries (the “Company,” “MP Materials,” “we,” “our,” and “us”), is the largest producer of rare earth materials in the Western Hemisphere.
The Company also conducted four planned emergency response drills and 24 real-world responses that included detailed post-accident review and best practice findings. The Company utilizes a formalized digital data reporting system to track all incidents reportable to the California Occupational Health and Safety Administration and MSHA. The Company tracks lost time injuries, recordable injuries, recordable injury rates, and near-miss reports.
The Company utilizes a formalized digital data reporting system to track all incidents reportable to the California Occupational Health and Safety Administration and MSHA. The Company tracks lost time injuries, recordable injuries, recordable injury rates, and near-miss reports.
Further, CRU estimates that the NdPr segment of the REO market, which makes up the significant majority of the market value, is expected to grow at an 8.6% CAGR through 2030 (excluding the impact of closed loop recycling), well in excess of the overall REO market.
(“Adamas”). Further, Adamas estimates that the NdPr segment of the REO market, which makes up a significant majority of the market value, is expected to grow at an 8.5% CAGR through 2035 (excluding the impact of swarf recycling), well in excess of the overall REO market. This expected growth will be driven by secular growth in demand for NdPr magnets.
MP Materials is committed to protecting biodiversity and the Company’s environmental management plans cover biodiversity impacts, waste and noise management, air and water pollution, water extraction and discharge, as well as natural resource and toxic chemical usage.
The Company’s environmental management plans cover biodiversity impacts, waste and noise management, air and water pollution, water extraction and discharge, as well as natural resource disturbance and toxic chemical usage. The Company believes this commitment to responsible production of REO is a strong competitive advantage.
In addition, the Company plans for at least 150 full-time employees as part of Stage III, the majority of which will support the Fort Worth Facility.
In addition, the Company has hired 32 employees at its Fort Worth Facility in 2023 and plans for at least 100 additional full-time employees as part of Stage III.
MP Materials is restoring the resource independence of the United States—removing the single point-of-failure in the supply chain for these products and ensuring that American industry can determine its own future in the automotive, aerospace, renewable energy, and information technologies industries.
MP Materials is restoring the resource independence of the U.S.— removing the single point-of-failure in the supply chain for these products and ensuring that American industry can determine its own future in the automotive, robotics, aerospace, renewable energy, and information technologies industries. 6 Table of Contents Customers Currently, the Company sells the vast majority of its rare earth concentrate to Shenghe Resources (Singapore) International Trading Pte.
The success of the Company’s business reflects its ability to manage its costs. Its production achievements in Stage I have provided economies of scale to lower production costs per unit of REO produced in concentrate. Furthermore, Stage II was designed to enable the Company to continue to manage its cost structure for separating REE through an optimized facility process flow.
The success of the Company’s business reflects its ability to manage its costs. The Company’s production achievements in Stage I have provided economies of scale to lower production costs per unit of REO produced in concentrate.
In the event of a supply disruption or any other restriction, the Company believes that alternative reagents could be sourced for certain processes. The solvent extraction and finishing processes are highly reliant upon standard commodity reagents.
These chemicals are subject to pricing volatility, supply availability and other restrictions and guidelines. In the event of a supply disruption or any other restriction, the Company believes that alternative reagents could be sourced for certain processes.
As electrification drives significant global growth in demand for REE, the Company believes global economic trends, geopolitical realities and sustainability mandates are coalescing to further its opportunity to create stockholder value. Further, the Company believes businesses are increasingly prioritizing diversification and security of their global supply chains to reduce reliance on a single producer or region for critical materials.
Further, the Company believes businesses are increasingly prioritizing diversification and security of their global supply chains to reduce reliance on a single producer or region for critical materials.
More than 60 years of operations at Mountain Pass have demonstrated that the Company’s ore body is one of the world’s largest and highest-grade rare earth resources. The low-volume nature of rare earth mining coupled with the exceptional scale and quality of the ore body results in a resource with significant viability well into the future.
The low-volume nature of rare earth mining coupled with the exceptional scale and quality of the ore body results in a resource with significant viability well into the future.
The Company believes equity ownership reinforces an unwavering commitment to its workforce and enhances its employees’ sense of their contribution to the Company’s success. 4 Table of Contents Ensuring the Company attracts, develops and retains top talent across all functions with diverse experiences, backgrounds and perspectives is critical to the Company’s success.
Ensuring the Company attracts, develops and retains top talent across all functions with diverse experiences, backgrounds and perspectives is critical to the Company’s success.
Health, Safety and Well-Being The health, safety, and well-being of the Company’s employees, suppliers and communities are a priority, with “Safety” being one of the Company’s six core values, along with “Empowerment,” “Entrepreneurship,” “Integrity,” “Results,” and “Unwavering.” MP Materials is committed to maintaining a strong safety culture and continuing to emphasize the importance of its employees’ role in identifying, mitigating and communicating safety risks.
Health, Safety and Well-Being The health, safety, and well-being of the Company’s employees, suppliers and communities are a priority, with “Safety” being one of the Company’s six core values, along with “Empowerment,” “Entrepreneurship,” “Integrity,” “Results,” and “Unwavering” effort.
In each calendar quarter of 2022, the Company’s employee retention rate was approximately 92% or higher, which the Company believes demonstrates that it has prioritized investments and communication to ensure its team is healthy, incentivized, proud to work for MP Materials, and believes in the Company’s mission.
An employee retention rate of 95% or higher, which was achieved in every calendar quarter during 2023, continues to demonstrate the Company’s priorities of ensuring its team is healthy, incentivized, proud to work for MP Materials, and believes in the Company’s mission.
Beginning in the fourth quarter of 2022, the Company began commissioning the assets required for the latter three steps of production. Upon full commissioning of these process steps, the Company will produce separated rare earth products that will be marketed directly to end users and via distributors, with revenue generated primarily from the magnet supply chain.
In 2023, the Company commenced midstream operations (“Stage II”), which consist of the latter three primary process steps to produce separated rare earth products that are marketed directly to end users and indirectly via distributors, with revenue generated primarily from the magnet supply chain.
As part of Stage II, the Company has reintroduced an oxidizing roasting circuit, reoriented parts of the plant process flow, increased product finishing capacity, improved wastewater management, and made other improvements to materials handling and storage.
More specifically, the Company reintroduced an oxidizing roasting circuit, reoriented portions of the plant process flow, increased product finishing capacity, improved wastewater management, and made other improvements to materials handling and storage. The roasting step that oxidizes the rare earth concentrate in a rotary kiln is crucial to ensuring cost-competitiveness.
Having completed Stage I of its optimization plan (“Stage I”) (discussed below), the Company is engaged in the first two of these steps at scale. The rare earth concentrate produced from these steps is marketed to refiners via a distribution arrangement.
Through its upstream operations (“Stage I”) (discussed below), which are comprised of the first two of these process steps, the Company produces rare earth concentrate that is marketed to refiners via a distribution arrangement.
The Company also regularly enters into short- and long-term sales contracts with other customers for the sale of its rare earth concentrate. In addition, the Company intends to enter into short- and long-term sales contracts and/or distribution relationships with existing and new customers for separated rare earth products.
The Company also regularly enters into short- and long-term sales contracts with other customers for the sale of its rare earth concentrate. In January 2024, the Company entered into a new offtake agreement with Shenghe (the “New Offtake Agreement”), that replaced and extended the Offtake Agreement.
These refiners separate the constituent rare earth elements (“REE”) contained in the Company’s concentrate and sell the separated products to their customers. Upon completing commissioning of the Stage II optimization project (“Stage II”), the Company anticipates producing and selling separated rare earth products, including neodymium-praseodymium (“NdPr”) oxide.
Following the commissioning of the Company’s Stage II optimization project (“Stage II”) in the third quarter of 2023, the Company began producing separated rare earth products, including neodymium-praseodymium (“NdPr”) oxide, that it began selling to customers globally in the fourth quarter of 2023.
The aggregate global market for rare earth oxides (“REO”) totaled approximately 186,000 metric tons (“MTs”) in 2022 and is expected to grow at a compound annual growth rate (“CAGR”) of approximately 4.1% through 2030, according to research by the CRU Group (“CRU”).
The REE in the Mountain Pass ore body are contained primarily within bastnaesite and related minerals in which LREE are most abundant. 1 Table of Contents The aggregate global market for rare earth oxides (“REO”) totaled approximately 209,000 metric tons (“MTs”) in 2023 and is expected to grow at a compound annual growth rate (“CAGR”) of approximately 6.1% through 2035, according to research by Adamas Intelligence Inc.
Further, MP Materials is solving for the overconcentration of the rare earth supply today while helping to enable a more sustainable future.
Sustainability and Natural Resources The Company’s business provides a key input to carbon-reducing technologies critical for the transition to a low-carbon economy. Further, MP Materials is solving for the foreign-controlled overconcentration of the rare earth supply while helping to enable a more sustainable future.
The Company believes that the ability to capture significant value from magnet production requires a scaled, steady supply of NdPr, which the Company believes it is uniquely positioned to provide in the Western Hemisphere. Strategy Offer the Western Hemisphere a trusted, sustainable source of supply for materials and components that enable the development of critical industries.
By offering magnet customers a complete, end-to-end Western supply chain solution, the Company believes vertical integration represents a material incremental value creation opportunity. The Company believes that the ability to capture significant value from magnet production requires a scaled, steady supply of NdPr, which the Company believes it is uniquely positioned to provide in the Western Hemisphere.
Litinsky 45 Chairman of the Board and Chief Executive Officer Michael Rosenthal 44 Chief Operating Officer Ryan Corbett 33 Chief Financial Officer Elliot Hoops 48 General Counsel and Secretary James H. Litinsky. Mr. Litinsky is the Founder, Chairman and Chief Executive Officer of MP Materials. Mr.
Information About Our Executive Officers The persons serving as executive officers of MP Materials and their positions with the Company are as follows: Name Age Position James H. Litinsky 46 Chairman of the Board and Chief Executive Officer Michael Rosenthal 45 Chief Operating Officer Ryan Corbett 34 Chief Financial Officer Elliot Hoops 49 General Counsel and Secretary James H. Litinsky.
None of the Company’s employees are subject to any collective bargaining agreements. The Company is committed to creating employment opportunities for U.S. workers, and estimates that Stage II, once fully commissioned, will support approximately 200 full-time employees, of which approximately 75 remain to be hired as of December 31, 2022.
None of the Company’s employees are subject to any collective bargaining agreements. The Company is committed to creating employment opportunities for U.S. workers, and with the completion of the initial commissioning of Stage II, the Company has added approximately 200 employees over the past two years.
The vertical integration into magnet production would establish MP Materials as the first and only fully-integrated source of supply for rare earth magnets in the Western Hemisphere. By offering magnet customers a complete, end-to-end Western supply chain solution, the Company believes vertical integration represents a material incremental value creation opportunity.
The Fort Worth Facility serves as the business and engineering headquarters for the Company’s magnetics division. The Company’s vertical integration into magnet production would establish MP Materials as the first and only fully-integrated source of supply for rare earth magnets in the Western Hemisphere.
In April 2022, the Company entered into a long-term supply agreement with GM to supply rare earth alloy flake and finished magnet products, that will be manufactured at the Fort Worth Facility, for the electric motors in GM’s Ultium Platform .
The Company intends to enter into other short- and long-term sales contracts with existing and new customers for separated rare earth products. In April 2022, as discussed above, the Company entered into a long-term agreement with GM to supply magnets and related products manufactured at the Fort Worth Facility.
As the Company progresses with its Stage II and Stage III projects, it will continue to strive to assemble a diverse and inclusive workforce. 5 Table of Contents Employee Engagement and Development Employee engagement efforts are critical in ensuring all employees feel heard, respected, and valued, and that applicable actions are taken when feedback is received.
Additionally, as of December 31, 2023, 49% of the Company’s workforce was composed of underrepresented minorities. Employee Engagement and Development Employee engagement efforts are critical in ensuring all employees feel heard, respected and valued, and that applicable actions are taken when feedback is received.
In addition, as a part of its Stage III downstream expansion strategy (“Stage III”), the Company is constructing its initial rare earth metal, alloy and magnet manufacturing facility in Fort Worth, Texas (the “Fort Worth Facility”), where it anticipates manufacturing, among other products, neodymium-iron-boron (“NdFeB”) permanent magnets.
The Company, which is headquartered in Las Vegas, Nevada, owns and operates the Mountain Pass Rare Earth Mine and Processing Facility (“Mountain Pass”), the only rare earth mining and processing site of scale in North America, and is constructing a rare earth metal, alloy and magnet manufacturing facility in Fort Worth, Texas (the “Fort Worth Facility”), where the Company anticipates manufacturing neodymium-iron-boron (“NdFeB”) permanent magnets and its precursor products.
The Company expects to continue to incur significant sums for ongoing operating environmental expenditures, including salaries, and the costs for monitoring, compliance, remediation, reporting, pollution control equipment and permitting. 7 Table of Contents Information About Our Executive Officers The persons serving as executive officers of MP Materials and their positions with the Company are as follows: NAME AGE POSITION WITH THE COMPANY James H.
Complying with these regulations is complicated and requires significant attention and resources. The Company expects to continue to incur significant sums for ongoing operating environmental expenditures, including salaries, and the costs for monitoring, compliance, remediation, reporting, pollution control equipment and permitting.
The Company aims to reinvigorate the industrial history of the rare earths supply chain that originated in the United States and provide a domestic alternative to both current and future users of rare earths that helps them avoid the risks associated with the single point-of-failure currently represented by China in the global rare earth supply chain.
The Company aims to provide users of rare earths a domestic alternative that helps avoid the risks 3 Table of Contents associated with the single point-of-failure that Chinese producers represent.
For example, all mill workers go through specific Lock Out/Tag Out/Try Out training, confined-space work and rescue, forklift classroom, and in-the-field training.
For example, operations and maintenance workers go through specific Lock Out/Tag Out/Try Out training, confined-space work and rescue, forklift classroom, and in-the-field training. In total, during 2023, the Company’s employees completed over 22,000 hours of new hire and/or annual refresher training and 1,600 hours of emergency medical response training, including first aid and CPR.
In February 2022, the Company commenced construction of its initial rare earth metal, alloy and magnet manufacturing facility in Fort Worth, Texas, completing the building shell in September 2022. As currently designed, the Company expects the Fort Worth Facility will produce approximately 1,000 MTs of finished rare earth magnets per year, sufficient to power approximately 500,000 EV motors annually.
In February 2022, the Company commenced construction of a rare earth metal, alloy and magnet manufacturing facility in Fort Worth, Texas, completing the building and office space in November 2023.
In addition, the Company has an electrical and instrumentation apprenticeship program in which it pays for its employees to attend trade school to increase their opportunity for future advancement. Sustainability and Natural Resources The Company’s business provides a key input to carbon-reducing technologies critical for the transition to a low-carbon economy.
In addition, the Company has partnered with educational institutions, governmental authorities and strategic outside organizations to further enhance and improve access to the talent required to advance the Company’s mission. The Company also has an electrical and instrumentation apprenticeship program that pays for employees to attend trade school to increase their opportunity for future advancement.
Upon reaching run-rate production of REE in Stage II, the Company expects to be a global low-cost, high-volume producer of NdPr oxide, which represents a majority of the value contained in its concentrate.
As the Company increases production of separated products over time, it expects to improve the Company’s per-unit costs of NdPr oxide, which represents a majority of the value contained in the Company’s concentrate.
In living up to the owner-operator culture, in 2022, the Company issued a time-vested grant to all then-active, non-executive employees to celebrate the five-year anniversary of MP Materials.
Throughout 2023, in living up to the owner-operator culture, all employees received a time-vested equity grant at the time of joining the Company. The Company believes equity ownership reinforces the employees’ sense of their contribution to the Company’s success.
This process flow will allow the Company to use significantly less energy and raw materials per ton of separated REO. Optimization of logistics is also central to maintaining a low-cost position relative to other global producers.
Despite the initial phase of NdPr oxide production leading to elevated per-unit costs, the Company anticipates a decrease in per-unit production costs over time as production volumes expand. Optimization of logistics is also central to maintaining a low-cost position relative to other global producers.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeIf we infringe, or are accused of infringing, the intellectual property rights of third parties, it may increase our costs or prevent us from being able to commercialize new products. • If we are unable to perform the obligations under our long-term supply agreement with GM, this may have a material adverse effect on our financial position and results of operations. • We may not be able to convert current commercial discussions with customers for the sale of rare earth products into contracts, which may have a material adverse effect on our financial position and results of operations. • The COVID-19 pandemic, or other outbreaks, epidemics or pandemics, could have an adverse effect on our business. • We are subject to a number of operational risks of our business, including power outages or shortages at the Mountain Pass facility; increasing costs or limited access to raw materials; disruptions in transportation or other services; inability to process REO that meet individual customer specifications; access to water; uncertainty in our estimates of REO reserves; labor matters/labor relations; cybersecurity breaches; and/or environmental, social and governance (“ESG”) matters. • The conditional conversion feature of our Convertible Notes, if triggered, may adversely affect our financial condition and operating results. • Conversion of our Convertible Notes may dilute the ownership interest of our stockholders or may otherwise depress the price of our common stock. • Certain provisions in the indenture governing the Convertible Notes may delay or prevent an otherwise beneficial takeover attempt of us. • Servicing our debt requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our debt.
Biggest changeIf we fail to adequately enforce or defend our intellectual property rights, our business may be harmed. • If we are unable to perform the obligations under our long-term supply agreement with GM, this could have a material adverse effect on our financial position and results of operations. • We may not be able to convert current commercial discussions with customers for the sale of REO products into contracts, which may have a material adverse effect on our financial position and results of operations. • We may not successfully establish or maintain collaborative, joint venture and licensing arrangements, which could adversely affect our ability to vertically integrate into further downstream processing of our REO. • Outbreaks, epidemics or pandemics could have an adverse effect on our business. • We are subject to a number of operational risks of our business, including power outages or shortages at the Mountain Pass facility; increasing costs or limited access to raw materials; disruptions in transportation or other services; inability to process REO that meet individual customer specifications; access to water; uncertainty in our estimates of REO reserves; labor matters/labor relations; cybersecurity breaches; and/or environmental, social and governance (“ESG”) matters. • We are subject to regulatory and business risks associated with our investment in VREX Holdco Pte.
These requirements may result in significant costs, liabilities and obligations, impose conditions that are difficult to achieve or otherwise delay, limit or prohibit current or planned operations and future growth. Consequently, the modernization and expansion of the Mountain Pass facility and the development of our Fort Worth Facility may be delayed, limited or prevented and current operations may be curtailed.
These requirements may result in significant costs, liabilities and obligations, impose conditions that are difficult to achieve or otherwise delay, limit or prohibit current or planned operations and future growth. Consequently, the modernization and expansion of Mountain Pass and the development of our Fort Worth Facility may be delayed, limited or prevented and current operations may be curtailed.
Patents also will not protect our products and processes if competitors devise ways of making products without infringing our patents. If we are unable to perform the obligations under our long-term supply agreement with GM, this will have a material adverse effect on our financial position and results of operations. We entered into a binding long-term supply agreement with GM.
Patents also will not protect our products and processes if competitors devise ways of making products without infringing our patents. If we are unable to perform the obligations under our long-term supply agreement with GM, this could have a material adverse effect on our financial position and results of operations. We entered into a binding long-term supply agreement with GM.
There can be no assurance that such equipment and materials will be procured on time or not be delayed due to circumstances beyond our control. Further, we will need to hire and recruit a sufficient number of engineers, operators and other professionals to successfully design and operate the Fort Worth Facility.
There can be no assurance that such equipment and materials will be procured on time or not be delayed due to circumstances beyond our control. Further, we will need to hire a sufficient number of engineers, operators and other professionals to successfully design and operate the Fort Worth Facility.
The publication of our sustainability report may result in increased investor, media, employee, and other stakeholder attention to our ESG initiatives, and such stakeholders may not be satisfied with our ESG practices or initiatives. Organizations that inform investors on ESG matters have developed rating systems for evaluating companies on their approach to ESG.
The publication of our ESG report may result in increased investor, media, employee, and other stakeholder attention to our ESG initiatives, and such stakeholders may not be satisfied with our ESG practices or initiatives. Organizations that inform investors on ESG matters have developed rating systems for evaluating companies on their approach to ESG.
These provisions provide for, among other things: (i) no cumulative voting with respect to the election of our Board; (ii) the division of the our Board into three classes, with only one class of directors being elected in each year; (iii) the ability of our Board to issue one or more series of preferred stock; (iv) advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings; (v) certain limitations on convening special stockholder meetings; (vi) limiting the ability of stockholders to act by written consent; (vii) the ability of our Board to fill a 22 Table of Contents vacancy created by the expansion of the board of directors or the resignation, death, or removal of a director in certain circumstances; (viii) providing that our Board is expressly authorized to make, alter or repeal our bylaws; (ix) the removal of directors only for cause; and (x) that certain provisions may be amended only by the affirmative vote of at least 66.7% of the shares of common stock entitled to vote generally in the election of our directors.
These provisions provide for, among other things: (i) no cumulative voting with respect to the election of our Board; (ii) the division of the our Board into three classes, with only one class of directors being elected in each year; (iii) the ability of our Board to issue one or more series of preferred stock; (iv) advance notice for nominations of directors by stockholders and for stockholders to include matters to be considered at our annual meetings; (v) certain limitations on convening special stockholder meetings; (vi) limiting the ability of stockholders to act by written consent; (vii) the ability of our Board to fill a vacancy created by the expansion of the board of directors or the resignation, death, or removal of a director in certain circumstances; (viii) providing that our Board is expressly authorized to make, alter or repeal our bylaws; (ix) the removal of directors only for cause; and (x) that certain provisions may be amended only by the affirmative vote of at least 66.7% of the shares of common stock entitled to vote generally in the election of our directors.
Uncertainty in our estimates related to our REO reserves could result in lower-than-expected revenues and higher-than-expected costs or a shortened estimated life for the mine at the Mountain Pass facility.
Uncertainty in our estimates related to our REO reserves could result in lower-than-expected revenues and higher-than-expected costs or a shortened estimated life for the mine at Mountain Pass.
The Second Amended and Restated Certificate of Incorporation also provides that, to the fullest extent permitted by law, the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the United States federal securities laws, including the Securities Act and the Exchange Act.
The Second Amended and Restated Certificate of Incorporation also provides that, to the fullest extent permitted by law, the federal district courts of the United States of America will be the exclusive forum for resolving any complaint asserting a cause of action arising under the U.S. federal securities laws, including the Securities Act and the Exchange Act.
You may not be able to resell your shares at an attractive price due to a number of factors such as those listed in “Risks Relating to our Business and Industry” above and the following: (a) results of operations that vary from the expectations of securities analysts and investors; (b) changes in expectations as to the Company’s future financial performance, including financial estimates and investment recommendations by securities analysts and investors; (c) declines in the market prices of stocks generally and market prices of 21 Table of Contents mining-related companies in particular; (d) strategic actions by the Company or its competitors; (e) announcements by the Company or its competitors of significant contracts, acquisitions, joint ventures, other strategic relationships or capital commitments; (f) any significant change in the Company’s management; (g) changes in general economic or market conditions or trends in the Company’s industry or markets; (h) changes in business or regulatory conditions, including new laws or regulations or new interpretations of existing laws or regulations applicable to the Company’s business; (i) future sales of the Company’s common stock or other securities; (j) investor perceptions of the investment opportunity associated with the Company’s common stock relative to other investment alternatives; (k) the public’s response to press releases or other public announcements by the Company or third parties, including the Company’s filings with the SEC; (l) litigation involving the Company, the Company’s industry, or both, or investigations by regulators into the Company’s operations or those of our competitors; (m) guidance, if any, that the Company provides to the public, any changes in this guidance or the Company’s failure to meet this guidance; (n) the development and sustainability of an active trading market for the Company’s stock; (o) actions by institutional or activist stockholders; (p) declines in the market price of our stock as a result of negative reports on the Company by research firms that engage in short selling; (q) changes in accounting standards, policies, guidelines, interpretations or principles; and (r) other events or factors, including those resulting from natural disasters, war, acts of terrorism, health pandemics or responses to these events.
You may not be able to resell your shares at an attractive price due to a number of factors such as those listed in “Risks Relating to our Business and Industry” above and the following: (a) fluctuations in demand for, and prices of, REE and magnet products; (b) results of operations that vary from the expectations of securities analysts and investors; (c) changes in expectations as to the Company’s future financial performance, including financial estimates and investment recommendations by securities analysts and investors; (d) declines in the market prices of stocks generally and market prices of mining-related companies in particular; (e) strategic actions by the Company or its competitors; (f) announcements by the Company or its competitors of significant contracts, acquisitions, joint ventures, other strategic relationships or capital commitments; (g) any significant change in the Company’s management; (h) changes in general economic or market conditions or trends in the Company’s industry or markets; (i) changes in business or regulatory conditions, including new laws or regulations or new interpretations of existing laws or regulations applicable to the Company’s business; (j) future sales of the Company’s common stock or other securities; (k) investor perceptions of the investment opportunity associated with the Company’s common stock relative to other investment alternatives; (l) the public’s response to press releases or other public announcements by the Company or third parties, including the Company’s filings with the SEC; (m) litigation involving the Company, the Company’s industry, or both, or investigations by regulators into the Company’s operations or those of our competitors; (n) guidance, if any, that the Company provides to the public, any changes in this guidance or the Company’s failure to meet this guidance; (o) the development and sustainability of an active trading market for the Company’s stock; (p) actions by institutional or activist stockholders; (q) declines in the market price of our stock as a result of negative reports on the Company by research firms that engage in short selling; (r) changes in accounting standards, policies, guidelines, interpretations or principles; and (s) other events or factors, including those resulting from natural disasters, war, acts of terrorism, health pandemics or responses to these events.
Any unexpected costs or delays in the commercialization of separated REE products or rare earth magnets, or less than expected demand for the critical existing and emerging technologies that use rare earth products, could have a material adverse effect on our financial condition or results of operations.
Any unexpected costs or delays in the manufacturing of separated REE products or rare earth magnets, or less than expected demand for the critical existing and emerging technologies that use rare earth products, could have a material adverse effect on our financial condition or results of operations.
We may be impacted by natural disasters, wars, health epidemics or pandemics or other events outside of our control. For example, Mountain Pass is located in San Bernardino County, California near active faults, which could lead to nearby earthquakes.
We may be impacted by natural disasters, wars, health epidemics or pandemics or other events outside of our control. For example, Mountain Pass is located in San Bernardino County, California, near active faults, that could lead to nearby earthquakes.
Because the vast majority of our rare earth concentrate product is currently sold to Shenghe under our Offtake Agreement for further processing by third-party customers in China, the possibility of adverse changes in trade or political relations with China, political instability in China, increases in labor or shipping costs, subsidies to related industries, the occurrence of prolonged adverse weather conditions or a natural disaster such as an earthquake or typhoon, or the continuation of COVID-19 or the outbreak of another global pandemic disease could severely interfere with the sale and/or shipment of our products and would have a material adverse effect on our operations.
Because the vast majority of our rare earth concentrate product is currently sold to Shenghe under our Offtake Agreement for further processing by third-party customers in China, the possibility of adverse changes in trade or political relations with China, political instability in China, increases in labor or shipping costs, subsidies to related industries, the occurrence of prolonged adverse weather conditions or a natural disaster such as an earthquake or typhoon, or an outbreak of a global pandemic disease could severely interfere with the sale and/or shipment of our products and would have a material adverse effect on our operations.
If these industries introduce new technologies or products that no longer require the rare earth materials or NdFeB magnets we produce or may produce in the future, or suitable substitutes become available, it could result in a decline in demand for our rare earth materials or NdFeB magnets.
If these industries introduce new technologies or products that no longer require the rare earth materials or NdFeB magnets we produce or may produce in the future, or suitable substitutes become available, this could result in a decline in demand for our rare earth materials or NdFeB magnets.
In the event that we are not able to mitigate these risks and fail to comply with the terms of the agreement with GM, this will have a material adverse effect on our financial position and results of operations.
In the event that we are not able to mitigate these risks and fail to comply with the terms of the agreement with GM, this could have a material adverse effect on our financial position and results of operations.
Under the federal Comprehensive Environmental Response, Compensation and Liability Act, and analogous state statutes, our liability for claims for contamination at our current or former properties, and at third-party sites at which we disposed of waste, may be joint and several, so that we may be held responsible for more than our share of any contamination, or even for the entire share.
Under the federal Comprehensive Environmental Response, 20 Table of Contents Compensation and Liability Act, and analogous state statutes, our liability for claims for contamination at our current or former properties, and at third-party sites at which we disposed of waste, may be joint and several, so that we may be held responsible for more than our share of any contamination, or even for the entire share.
If major disasters such as earthquakes, wild fires, health epidemics or pandemics, floods or other events occur, or our information system or communications network breaks down or operates improperly, our ability to continue operations at Mountain Pass may be seriously damaged, or we may have to stop or delay production and shipment of our products.
If major disasters such as earthquakes, wildfires, health epidemics or pandemics, floods or other events occur, or our information system or communications network breaks down or operates improperly, our ability to continue operations at Mountain Pass may be seriously damaged, or we may have to stop or delay production and shipment of our products.
As a result of intellectual property infringement claims, or to avoid potential claims, we might: • be prohibited from, or delayed in, selling rare earth products, including alloy flake and magnets, or licensing some of our products or using some of our processes unless the patent holder licenses the patent to us, which it is not required to do; • be required to pay substantial royalties or grant a cross license to our patents to another patent holder; or • be required to redesign a product or process so it does not infringe a third party’s patent, which may not be possible or could require substantial funds and time.
As a result of intellectual property infringement claims, or to avoid potential claims, we might: • be prohibited from, or delayed in, selling rare earth products, including magnet materials, or licensing some of our products or using some of our processes unless the patent holder licenses the patent to us, which it is not required to do; • be required to pay substantial royalties or grant a cross license to our patents to another patent holder; or • be required to redesign a product or process so it does not infringe a third party’s patent, which may not be possible or could require substantial funds and time.
There can be no assurance that we will be able to purchase the necessary chemical reagents from third parties on terms that are acceptable to us. The failure to obtain chemical reagents as needed will have an adverse effect on our financial condition and results of operations.
There can be no assurance that we will be able to purchase the necessary chemical reagents from third parties on 16 Table of Contents terms that are acceptable to us. The failure to obtain chemical reagents as needed will have an adverse effect on our financial condition and results of operations.
The extent to which the COVID-19 pandemic and other variants will impact our operations, our business and the economy is highly uncertain and will also depend on future developments that cannot be predicted, including new information which may emerge concerning the severity of the disease, the duration and spread of the outbreak, including the spread of other variants, the scope of travel restrictions imposed, mandatory or voluntary business closures, the impact on businesses and financial and capital markets, and the extent and effectiveness of actions taken throughout the world to contain the virus or treat its impact, including the effectiveness and availability of vaccines.
The extent to which an outbreak, epidemic or pandemic will impact our operations, our business and the economy is highly uncertain and will also depend on future developments that cannot be predicted, including new information which may emerge concerning the severity of the disease, the duration and spread of the outbreak, including the spread of variants, the scope of travel restrictions imposed, mandatory or voluntary business closures, the impact on businesses and financial and capital markets, and the extent and effectiveness of actions taken throughout the world to contain the virus or treat its impact, including the effectiveness and availability of vaccines.
Moreover, environmental legislation and regulation are evolving in a manner that may impose stricter standards and enforcement, increased fines and penalties for non-compliance, cessation of operations, more stringent 19 Table of Contents environmental assessments, and a heightened degree of responsibility for companies and their officers, directors and employees.
Moreover, environmental legislation and regulation are evolving in a manner that may impose stricter standards and enforcement, increased fines and penalties for non-compliance, cessation of operations, more stringent environmental assessments, and a heightened degree of responsibility for companies and their officers, directors and employees.
Our sales may be adversely affected by the current and future political environment in China and the policies of the China Central Government. China’s government has exercised and continues to exercise substantial control over nearly all sectors of the Chinese economy through regulation and state ownership.
Our sales may be adversely affected by the current and future political environment in China and the policies of the China Central Government. China’s government has exercised and continues to exercise substantial control over many sectors of the Chinese economy through regulation and state ownership.
Our employees, consultants, contractors, outside scientific collaborators and other advisors may unintentionally or willfully disclose our confidential information to competitors, and confidentiality agreements may not provide an adequate remedy in the event of unauthorized disclosure of confidential or proprietary information.
Our employees, consultants, contractors, outside scientific collaborators and other advisors may unintentionally or willfully disclose our confidential information to competitors, and confidentiality 14 Table of Contents agreements may not provide an adequate remedy in the event of unauthorized disclosure of confidential or proprietary information.
Any changes in United States and China relations, including through changes in policies by the Chinese government could adversely affect our financial condition and results of operations, including changes in laws, regulations or the interpretation thereof, confiscatory taxation, governmental royalties, restrictions on currency conversion, imports or sources of supplies, or the expropriation or nationalization of private enterprises.
Any changes in U.S. and China relations, including through changes in policies by the Chinese government, could adversely affect our financial condition and results of operations, including changes in laws, regulations or the interpretation thereof, confiscatory taxation, governmental royalties, restrictions on currency conversion, imports or sources of supplies, or the expropriation or nationalization of private enterprises.
In addition, our business faces increasing scrutiny related to ESG issues, including sustainable development, renewable resources, environmental stewardship, supply chain management, climate change, DEI, workplace conduct, human rights, philanthropy and support for local communities. Implementation of our environmental and sustainability initiatives will require financial expenditures and employee resources.
In addition, our business faces increasing scrutiny related to ESG issues, including sustainable development, renewable resources, environmental stewardship, supply chain management, climate change, diversity, inclusion and meritocracy, workplace conduct, human rights, philanthropy and support for local communities. Implementation of our environmental and sustainability initiatives will require financial expenditures and employee resources.
The deterioration or destruction of any part of Mountain Pass, or a failure of any necessary equipment to operate as designed, may significantly hinder our ability to reach or maintain anticipated production rates within the expected time frame or at all.
The deterioration or destruction of any part of Mountain Pass, or a failure of any necessary equipment to operate as designed, may significantly hinder our ability to reach or maintain anticipated production rates within the expected timeframe or at all.
If we are unsuccessful in being able to construct and commence production at our Fort Worth 13 Table of Contents Facility, within the expected time frame or at all, we will not be able to take advantage of our downstream value creation opportunity and thus we may not be able to reach our full revenue potential.
If we are unsuccessful in being able to commence production at our Fort Worth Facility, within the expected time frame or at all, we will not be able to take advantage of our downstream value creation opportunity and thus we may not be able to reach our full revenue potential.
Our intellectual property rights may be challenged or infringed upon by third parties or we may be unable to maintain, renew or enter into new license agreements with third-party owners of intellectual property on reasonable terms. In addition, our intellectual property may be subject to infringement or other unauthorized use outside of the United States.
Our intellectual property rights may be challenged or infringed upon by third parties, or we may be unable to maintain, renew or enter into new license agreements with third-party owners of intellectual property on reasonable terms. In addition, our intellectual property may be subject to infringement or other unauthorized use outside of the U.S.
To implement this vertical integration strategy successfully, we may need to license certain intellectual property related to these downstream processes and/or develop the ability, or collaborate with, purchase, or form a joint venture with existing participants in the metal, alloy, and magnet production supply chain.
To implement this vertical integration strategy successfully, we may need to 15 Table of Contents license certain intellectual property related to these downstream processes and/or develop the ability, or collaborate with, purchase, or form a joint venture with existing participants in the metal, alloy, and magnet production supply chain.
Furthermore, even without such regulation, increased awareness and any adverse publicity in the global marketplace, including the investing community, about potential impacts on climate change by us or other companies in our industry could harm our reputation or 20 Table of Contents our access to capital.
Furthermore, even without such regulation, increased awareness and any adverse publicity in the global marketplace, including the investing community, about potential impacts on climate change by us or other companies in our industry could harm our reputation or our access to capital.
Most of these activities require significant lead times and must be advanced concurrently. Unanticipated costs or delays associated with our Stage II project could have a material adverse effect on our financial condition or results of operations and could require us to seek additional capital, which may not be available on commercially acceptable terms or at all.
Most of these activities require significant lead times and must be advanced concurrently. Unanticipated costs or delays could have a material adverse effect on our financial condition or results of operations and could require us to seek additional capital, which may not be available on commercially acceptable terms or at all.
In such case, our ability to protect our intellectual property rights by legal recourse or otherwise may be limited, particularly in countries where laws or enforcement practices are undeveloped or do not recognize or protect intellectual property rights to the same extent as the United States.
In such case, our ability to protect our intellectual property rights by legal recourse or otherwise may be limited, particularly in countries where laws or enforcement practices are undeveloped or do not recognize or protect intellectual property rights to the same extent as the U.S.
Because our revenue is, and will be for the foreseeable future, from the sale of rare earth products, changes in demand for, and the market price of, and taxes and other tariffs and fees imposed upon rare earth minerals and products could significantly affect our profitability.
Because our revenue is, and will be for the foreseeable future, from the sale of rare earth products, changes in demand for, and the market price of, and taxes and other tariffs and fees imposed upon REE and magnet materials could significantly affect our profitability.
Changes in either patent laws or interpretations of patent laws in the United States or elsewhere may diminish the value of our intellectual property or narrow the scope of our patent protection. Even if patents are issued regarding our products and processes, our competitors may challenge the validity of those patents.
Changes in either patent laws or interpretations of patent laws in the U.S. or elsewhere may diminish the value of our intellectual property or narrow the scope of our patent protection. Even if patents are issued regarding our products and processes, our competitors may challenge the validity of those patents.
Design, engineering or construction delays may impair our ability to perform under our long-term supply agreement with GM. In addition, we will need to procure all of the necessary equipment and materials needed to produce alloy flake and magnets, some of which may be difficult to obtain.
Design, engineering or construction delays may impair our ability to perform under our long-term supply agreement with GM. In addition, we will need to procure the necessary equipment and materials needed to produce magnets and their precursor materials, some of which may be difficult to obtain.
Rare earth mineral and product prices may fluctuate and are affected by numerous factors beyond our control such as interest rates, exchange rates, taxes, inflation or deflation, fluctuation in the relative value of the U.S. dollar against foreign currencies on the world market, shipping and other transportation and logistics costs, global and regional supply and demand for rare earth minerals and products, potential industry trends, such as competitor consolidation or other integration methodologies, and the political and economic conditions of countries that produce and procure rare earth minerals and products.
REE and magnet material prices may fluctuate and are affected by numerous factors beyond our control such as interest rates, exchange rates, taxes, inflation or deflation, fluctuation in the relative value of the U.S. dollar against foreign currencies 10 Table of Contents on the world market, shipping and other transportation and logistics costs, global and regional supply and demand for rare earth minerals and products, potential industry trends, such as competitor consolidation or other integration methodologies, and the political and economic conditions of countries that produce and procure REE and magnet materials.
If we are unsuccessful in reaching and maintaining expected production rates for REO at Mountain Pass, including by failing to reach anticipated throughput, recoveries, uptimes, yields, product quality, or any combination thereof, within expected time frames or at all, we may not be able to reach our full revenue potential.
If we are unsuccessful in reaching and maintaining expected production rates for REO at Mountain Pass, including by failing to reach anticipated throughput, recoveries, uptimes, yields, product quality, or any combination thereof, within expected timeframes or at all, we may not be able to reach our full revenue potential or achieve our anticipated cost structure.
Although none of our employees are currently subject to any collective bargaining arrangements, our employees could, in the future, choose to be represented as a collective unit, which may result in labor disputes, work stoppages or other disruptions in our production efforts that could adversely affect us.
Production at Mountain Pass is dependent upon the efforts of our employees. Although none of our employees are currently subject to any collective bargaining arrangements, our employees could, in the future, choose to be represented as a collective unit, which may result in labor disputes, work stoppages or other disruptions in our production efforts that could adversely affect us.
A work stoppage by any of the third parties providing services in connection with the construction projects at Mountain Pass and our magnet facility being developed in Fort Worth, Texas could significantly delay our Stage II and Stage III projects, respectively, and disrupt our operations, reduce our revenues and materially adversely affect our results of operations.
A work stoppage by any of the third parties providing services in connection with construction projects at Mountain Pass and our magnet facility being developed in Fort Worth, Texas, could significantly delay completion of such projects and disrupt our operations, reduce our revenues and materially adversely affect our results of operations.
Upon the completion and commissioning of our Stage II project, we expect to be able to process REE to meet customer needs and specifications and to provide customers with a consistently high-quality product while meeting ever-stricter purity requirements. An inability to meet individual customer specifications may have a material adverse effect on our financial condition or results of operations.
An inability to process REO that meet individual customer specifications may have a material adverse effect on our financial condition or results of operations. With the commencement of Stage II operations, we expect to be able to process REE to meet customer needs and specifications and to provide customers with a consistently high-quality product while meeting ever-stricter purity requirements.
A shortage of skilled technicians and engineers may further increase operating costs, which may materially adversely affect our results of operations. Efficient production of rare earth products, alloy flake and magnets using modern techniques and equipment requires skilled technicians and engineers.
A shortage of skilled technicians and engineers may further increase operating costs, which may materially adversely affect our results of operations. Efficient production of rare earth products and magnet materials using modern techniques and equipment requires skilled technicians and engineers.
Our information technology systems are subject to disruption, damage or failure from a variety of sources, including, without limitation, computer viruses, security breaches, cyber-attacks, natural disasters and defects in design.
We depend upon information technology systems in the conduct of our operations. Our information technology systems are subject to disruption, damage or failure from a variety of sources, including, without limitation, computer viruses, security breaches, cyber-attacks, natural disasters and defects in design.
Fluctuations in transportation costs or disruptions in transportation services or damage or loss during transport could decrease our competitiveness or impair our ability to supply rare earth minerals or products to our customers, which could adversely affect our results of operations. We currently transport our rare earth concentrate product via ocean freight.
Fluctuations in transportation costs or disruptions in transportation services or damage or loss during transport could decrease our competitiveness or impair our ability to supply REE or magnet products to our customers, which could adversely affect our results of operations. We currently transport our rare earth concentrate and NdPr oxide products via ocean freight.
We may incur expenses or delays relating to such events outside of our control, which could have a material adverse impact on our business, operating results and financial condition. We are dependent upon information technology systems, which are subject to cyber threats, disruption, damage and failure. We depend upon information technology systems in the conduct of our operations.
We may incur expenses or delays relating to such events outside of our control, which could have a material adverse impact on our business, operating results and financial condition. 19 Table of Contents We are dependent upon information technology systems, which are subject to cyber threats, disruption, damage and failure.
There is a risk that we may infringe, or may be accused of infringing, the proprietary rights of third parties under patents and pending patent applications belonging to third parties that may exist in the United States and elsewhere in the world that relate to our rare earth products and processes, including our planned future production of alloy flake and magnets in Stage III.
There is a risk that we may infringe, or may be accused of infringing, the proprietary rights of third parties under patents and pending patent applications belonging to third parties that may exist in the U.S. and elsewhere in the world that relate to our rare earth products and processes, including our planned future production of magnet materials in Stage III.
We completed an offering of Convertible Notes in March 2021. In the event the conditional conversion feature of our Convertible Notes is triggered, holders of the Convertible Notes will be entitled to convert them at any time during specified periods at their option.
In the event the conditional conversion feature of our Convertible Notes is triggered, holders of the Convertible Notes will be entitled to convert them at any time during specified periods at their option.
Our ability to fulfil the obligations under our long-term agreement with GM to supply them with rare earth alloy flake and finished magnets is subject to a number of risks and contingencies. We are embarking on building the first scaled rare earth magnet manufacturing facility in the United States in several decades.
Our ability to fulfil the obligations under our long-term agreement with GM to supply them with magnet materials is subject to a number of risks and contingencies. We are embarking on building the first scaled rare earth magnet manufacturing facility in the U.S. in several decades.
Some of these risks are: • We may be adversely affected by fluctuations in demand for, and prices of, rare earth minerals and products, alloy flake and magnets. • The success of our business will depend, in part, on the growth of existing and emerging uses for rare earth products. • An increase in the global supply of rare earth products, dumping, predatory pricing and other tactics designed to inhibit our further downstream integration by our competitors may materially adversely affect our profitability. • We operate in a highly competitive industry. • We currently rely on Shenghe to purchase the vast majority of our rare earth concentrate product on a “take-or-pay” basis and sell that product to end users in China; we cannot assure you that they will continue to honor their contractual obligations to purchase and sell our products, or that they will make optimum efforts to market and sell our products. • Changes in China’s political environment and policies, including changes in export policy or the interpretation of China’s export policy and policy on rare earths production or the import of rare earth feedstock, may adversely affect our financial condition and results of operations. • The production of rare earth products is a capital-intensive business and will require the commitment of substantial resources and if we do not have sufficient resources to provide for such production, it could have a material adverse effect on our financial condition or results of operations. • Our continued growth depends on our ability to successfully complete and commission the Stage II project at Mountain Pass, our only rare earth mining and processing facility. 9 Table of Contents • The production of alloy flake and magnets in Stage III is dependent upon the successful completion and commissioning of our Stage II project and our ability to complete the construction of our Fort Worth Facility; an unanticipated delay in the completion of Stage II or Stage III could have a material adverse effect on our ability to produce alloy flake and magnets. • We may not be able to adequately protect our intellectual property rights.
Some of these risks are: • We may be adversely affected by fluctuations in demand for, and prices of, REE and magnet materials. • The success of our business will depend, in part, on the growth of existing and emerging uses for rare earth products. • An increase in the global supply of rare earth products, dumping, predatory pricing and other tactics designed to inhibit our further downstream integration by our competitors may materially adversely affect our profitability. • We operate in a highly competitive industry. • Our ability to generate revenue will be diminished if we are unable to compete with substitutions for our rare earth materials. • We currently rely on Shenghe to purchase the vast majority of our rare earth concentrate product on a “take-or-pay” basis and sell that product to end users in China; we cannot assure you that they will continue to honor their contractual obligations to purchase and sell our products, or that they will make optimum efforts to market and sell our products. 9 Table of Contents • Changes in China’s political environment and policies, including changes in export policy or the interpretation of China’s export policy and policy on rare earths production or the import of rare earth feedstock, may adversely affect our financial condition and results of operations. • The production of rare earth products is a capital-intensive business that requires the commitment of substantial resources; if we do not have sufficient resources to provide for such production, it could have a material adverse effect on our financial condition or results of operations. • Our continued growth depends on our ability to reach anticipated production rates for the separation of REE as part of the Stage II project at Mountain Pass, our only rare earth mining and processing facility. • The production of magnet materials in Stage III is dependent upon our ability to complete the buildout of our Fort Worth Facility; an unanticipated delay in the completion of Stage III could have a material adverse effect on our ability to produce magnets. • If we infringe, or are accused of infringing, the intellectual property rights of third parties, it may increase our costs or prevent us from being able to commercialize new products. • We may not be able to adequately protect our intellectual property rights.
We cannot predict the impact of the COVID-19 pandemic, or other outbreaks, epidemics or pandemics, but it may materially and adversely affect our business, financial condition and results of operations. A power outage or shortage at Mountain Pass could temporarily delay mining and processing operations and increase costs, which may materially adversely impact our business.
We cannot predict the impact of an outbreak, epidemic or pandemic, but it may materially and adversely affect our business, financial condition and results of operations. A power outage or shortage at Mountain Pass could temporarily delay mining and processing operations and increase costs, which may materially adversely impact our business.
In addition, third parties may not honor their agreements with us and as a result, we may need 16 Table of Contents to obtain such chemical reagents from other parties at higher costs and expense and there may be a delay in obtaining such chemical reagents.
In addition, third parties may not honor their agreements with us and/or declare force majeure, and as a result, we may need to obtain such chemical reagents from other parties at higher costs and expense and there may be a delay in obtaining such chemical reagents.
We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations.
We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
Pursuant to a settlement agreement, that contamination has been remediated by Chevron Mining Inc., which retained ownership of the ponds and the pipeline and provided a full indemnity to the previous buyer of Mountain Pass for liabilities related to the Ivanpah wastewater pipeline.
Pursuant to a settlement agreement, that contamination has been remediated by Chevron Mining Inc., which retained ownership of the ponds and the pipeline and provided a full indemnity to the previous buyer of Mountain Pass for liabilities related to the Ivanpah wastewater pipeline. In 2023, the remaining portion of the pipeline was removed from Mountain Pass and safely disposed.
Any disruption to our current process, including our water treatment plant used to make highly-pure water; decreases in available water supply; or inability to recycle sufficient volumes of distillate may have a material adverse effect on our operations and our financial condition or results of operations.
Any disruption to our current process, including our water treatment plant used to make highly-pure water, decreases in available water supply, or inability to recycle sufficient volumes of distillate may have a material adverse effect on our operations and our financial condition or results of operations. We face regulatory and business risks associated with our investment in VREX Holdco.
If a court were to find these provisions of our Second Amended and Restated Certificate of Incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition.
If a court were to find these provisions of our Second Amended and Restated Certificate of Incorporation inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition. 23 Table of Contents Increased scrutiny regarding our sustainability and ESG practices could impact our reputation and our stock price.
The progress of Stage II, the amounts and timing of expenditures and the success of this project will depend in part on the following: (a) the successful completion of the Stage II facilities and the operational resumption of a portion of the existing process, plant and equipment, and the further enhancement and development of such existing process, plant and equipment; (b) the ability of the new equipment and Stage II facilities to separate REO as designed and engineered; (c) our ability to timely procure new equipment and materials, certain of which may involve long lead-times, or to repair existing equipment; (d) the failure of service providers or vendors to meet contractually-negotiated delivery or completion deadlines or meet performance specifications or guarantees; (e) maintaining, and procuring, as required, applicable federal, state and local permits; (f) the incorporation of project change orders, due to engineering, process, health and safety, or other considerations; (g) negotiating contracts for equipment, earthwork, construction, equipment installation, labor and completing infrastructure and construction work following commissioning; (h) impact of planned and unplanned shut-downs and delays in our production; (i) impact of stoppages or delays on construction projects; (j) disputes with contractors or other third parties; (k) negotiating sales and offtake contracts for our planned production; (l) the execution of any joint venture agreements or similar arrangements with strategic partners; (m) the impact of COVID-19 or similar pandemics on our business, our strategic partners’ or suppliers’ businesses, logistics or the global economy; and (n) other factors, many of which are beyond our control.
The progress, the amounts and timing of expenditures and the success of these projects will depend in part on the following: (a) the ability of the Stage II facilities to separate REO as designed and engineered; (b) our ability to timely produce metal at the metal processing plant and related facilities in Vietnam under our tolling agreement with VREX Holdco (the “Tolling Agreement”); (c) our ability to timely procure new equipment and materials, certain of which may involve long lead-times, or to repair existing equipment; (d) the ability of service providers or vendors to meet contractually-negotiated delivery or completion deadlines or meet performance specifications or guarantees; (e) maintaining, and procuring, as required, applicable federal, state and local permits; (f) the incorporation of project change orders, due to engineering, process, health and safety, or other considerations; (g) negotiating contracts for equipment, earthwork, construction, equipment installation, labor and completing infrastructure and construction work following commissioning; (h) impact of planned and unplanned shut-downs and delays in our production; (i) impact of stoppages or delays on construction projects; (j) disputes with contractors or other third parties; (k) negotiating sales and offtake contracts for our planned production; (l) the execution of any joint venture agreements or similar arrangements with strategic partners; and (m) other factors, many of which are beyond our control.
If any of these estimates or assumptions prove to be wrong or we are unable to complete and commission our Stage II project, it may significantly hinder our ability to complete the Fort Worth Facility within the expected time frame or at all.
If any of these estimates or assumptions prove to be wrong, it may significantly hinder our ability to complete the Fort Worth Facility within the expected time frame or at all.
There can be no assurance that even if we complete construction of the Fort Worth Facility, obtain the equipment and materials needed, and hire the necessary employees, that we will successfully produce alloy flake and magnets at the volumes and quality necessary to meet the requirements under our long-term supply agreement with GM.
There can be no assurance that, following the completion of construction of the Fort Worth Facility, we will obtain the equipment and materials needed and hire the necessary employees in order to successfully produce magnet materials at the volumes and quality necessary to meet the requirements under our long-term supply agreement with GM.
It may be difficult for us to hire employees with the experience, education and skills needed to produce alloy flake and magnets, and we may need to hire employees from other countries if we cannot recruit employees in the United States. We will also face competition for these employees.
It may be difficult for us to hire employees with the experience, education and skills needed to produce magnet materials, and we may need to hire employees from other countries if we cannot recruit employees in the U.S. We will also face competition for these employees.
Additionally, once we complete and commission our Stage II project, we will require an even greater amount of water for our CHP plant, separation and extraction processes, and product finishing operations, including significant demand for highly-pure water.
Additionally, with the commencement of Stage II operations, we require an even greater amount of water for our CHP plant, separation and extraction processes, and product finishing operations, including significant demand for highly-pure water.
Over the past few years, there has been significant restructuring of the Chinese market in line with Chinese Central Government policy; however, periods of over-supply or speculative trading of rare earth minerals can lead to significant fluctuations in the market price of rare earth minerals.
Over the past few years, there has been significant restructuring of the Chinese market in line with Chinese Central Government policy; however, periods of over-supply or speculative trading of REE and magnet materials can lead to significant fluctuations in the market price of such products.
We are actively working to complete our Stage II project, which includes installing a concentrate drying and roasting circuit, upgrading and restarting the product leaching circuit, recommissioning separation and extraction circuits, improving materials handling and brine management capability, and constructing new product finishing circuits to re-establish the full capability to produce separated rare earth products at Mountain Pass.
In 2023, we completed construction and the initial commissioning of our Stage II project, which included installing a concentrate drying and roasting circuit, upgrading and restarting the product leaching circuit, recommissioning separation and extraction circuits, improving materials handling and brine management capability, and constructing new product finishing circuits to re-establish the full capability to produce separated rare earth products at Mountain Pass.
If we do not comply with investor or stockholder expectations and standards in connection with our ESG initiatives, or are perceived to have not responded appropriately to address ESG issues within our company, our brand and reputation, as well as our business, financial condition, and results of operations could be negatively impacted, and our share price could be materially and adversely affected. 23 Table of Contents Risks Relating to our Convertible Notes The conditional conversion feature of our Convertible Notes, if triggered, may adversely affect our financial condition and operating results .
If we do not comply with investor or stockholder expectations and standards in connection with our ESG initiatives, or are perceived to have not responded appropriately to address ESG issues within our company, our brand and reputation, as well as our business, financial condition, and results of operations could be negatively impacted, and our share price could be materially and adversely affected.
We cannot assure you that they will continue to honor their contractual obligations to purchase and sell our products, or that they will make optimum efforts to market and sell our products. We currently sell the vast majority of our rare earth concentrate to Shenghe, which typically sells that product to refiners in China.
We currently rely on Shenghe to purchase the vast majority of our rare earth concentrate product on a “take-or-pay” basis and sell that product to end users in China; we cannot assure you that they will continue to honor their contractual obligations to purchase and sell our products, or that they will make optimum efforts to market and sell our products.
While we managed to mitigate these intermittent delays in shipping rare earth concentrate product through these ports, our ability to continue to maintain stable shipments may be impacted if port delays due to congestion return or worsen. In addition, we will in the future need to transport our products to our future customers wherever they may be located.
While we managed to mitigate these intermittent delays in shipping rare earth concentrate product through these ports, our ability to continue to maintain stable shipments may be impacted if port delays due to congestion return or worsen.
Our continued growth is based on successfully completing and commissioning the Stage II project and reaching anticipated production rates for the separation of REE in accordance with our expected timeframe.
Our continued growth is based on reaching anticipated production rates for the separation of REE in accordance with our expected timeframe.
Federal, state and local laws and regulations establish reclamation and closure standards applicable to our surface mining and other operations as well. Estimates of our total reclamation and mine closing liabilities are based upon our reclamation plan, third-party expert reports, current applicable laws and regulations, certain permit terms, our engineering expertise related to these requirements and review by regulatory agencies.
Estimates of our total reclamation and mine closing liabilities are based upon our reclamation plan, third-party expert reports, current applicable laws and regulations, certain permit terms, our engineering expertise related to these requirements and review by regulatory agencies.
A takeover of us may trigger the requirement that we repurchase the Convertible Notes and/or increase the conversion rate, which could make it more costly for a potential acquirer to engage in such takeover. Such additional costs may have the effect of delaying or preventing a takeover of us that would otherwise be beneficial to investors.
A takeover of us may trigger the requirement that we repurchase the Convertible Notes and/or increase the conversion rate, which could make it more costly for a potential acquirer to engage in such takeover.
It is expensive and time consuming, with no certain outcome, to pursue a claim that a third party illegally obtained and is using our trade secrets. Moreover, our competitors may independently develop equivalent knowledge, methods and know-how.
It is expensive and time consuming, with no certain outcome, to pursue a claim that a third party illegally obtained and is using our trade secrets. Moreover, our competitors may independently develop equivalent knowledge, methods and know-how. Failure to obtain or maintain trade secret protection could adversely affect our competitive business position.
A prolonged or significant economic contraction in the United States or worldwide could put downward pressure on market prices of rare earth minerals and products. Protracted periods of low prices for rare earth minerals and products could significantly reduce revenues and the availability of required development funds in the future.
A prolonged or significant economic contraction in the U.S., China, or worldwide could put downward pressure on market prices of REE and magnet materials. Protracted periods of low prices for REE and magnet materials could significantly reduce revenues and the availability of required development funds in the future.
China 11 Table of Contents Rare Earth Group will have enhanced pricing power of key rare earths, such as dysprosium and terbium, which will likely bring changes to the global rare earth supply chain. These competitive pressures could have a material adverse effect on our business.
Ltd (“China Rare Earth Group”), that will account for more than half of China’s heavy rare earths supplies. China Rare Earth Group will have enhanced pricing power of key rare earths, such as dysprosium and terbium, which will likely bring changes to the global rare earth supply chain. These competitive pressures could have a material adverse effect on our business.
However, strong rare earth mineral prices also create economic pressure to identify or create alternate technologies that ultimately could depress future long-term demand for rare earth minerals and products, and at the same time may incentivize development of competing mining properties .
However, strong REE prices also create economic pressure to identify or create alternate technologies that ultimately could depress long-term demand for rare earth minerals and products, and at the same time may incentivize development of competing mining properties . The success of our business will depend, in part, on the growth of existing and emerging uses for rare earth products.
Even upon successful completion of Stage II at Mountain Pass, if we are not able to achieve consistent product quality at our anticipated costs of production, then any strategic advantages that our competitors may have over us, including, without limitation, lower labor, compliance and production costs, could have a material adverse effect on our business.
If we are not able to achieve consistent product quality at our anticipated costs of production, then any strategic advantages that our competitors may have over us, including, without limitation, lower labor, compliance and production costs, could have a material adverse effect on our business. Industry consolidation may result in increased competition, which could result in a reduction in revenue.
If we incur a significant amount of freight charges, our gross profit will be negatively affected if we are unable to pass on those charges to customers.
If we incur a significant amount of freight charges, our gross profit will be negatively affected if we are unable to pass on those charges to customers. In addition, we may be adversely affected by the need to ship to alternative ports.
Because of the dangers involved in the mining of minerals and the manufacture of mineral products, there is a risk that we may incur liability or damages as we conduct our business.
Because of the dangers involved in the mining of minerals and the manufacture of mineral products, there is a risk that we may incur liability or damages as we conduct our business. The mining of minerals and the manufacture of mineral products involve numerous hazards that could cause bodily harm or environmental damage and subject us to liability.
The success of our business will depend, in part, on the growth of existing and emerging uses for rare earth products. Our strategy is to produce rare earth products that are used in critical existing and emerging technologies, such as hybrid and electric vehicles, wind turbines, robotics, medical equipment, military equipment and other high-growth, advanced motion technologies.
Our strategy is to produce REE and magnet products that are used in critical existing and emerging technologies, such as hybrid and electric vehicles, wind turbines, robotics, medical equipment, military equipment and other high-growth, advanced motion technologies.
The trading price of our common stock has historically experienced, and may continue to experience, significant volatility, which could cause you to lose all or part of your investment. Moreover, the stock market recently has experienced extreme volatility, in part as a result of strong and atypical retail investor interest in particular stocks.
Risks Related to Our Common Stock Our stock price has experienced, and may in the future experience, volatility, and you could lose all or part of your investment as a result. The trading price of our common stock has historically experienced, and may continue to experience, significant volatility, which could cause you to lose all or part of your investment.
Demand for rare earth concentrate is currently constrained to a relatively limited number of refiners, a significant majority of which are based in China.
We currently sell the vast majority of our rare earth concentrate to Shenghe, which typically sells that product to refiners in China. Demand for rare earth concentrate is currently constrained to a relatively limited number of refiners, a significant majority of which are based in China.
We maintain and operate one water supply well field for potable and process water and own land and wells in another water supply well field that we may be able to operate in the future.
We maintain and operate one water supply well field for potable and process water and own land and wells in another water supply well field that we may be able to operate in the future. In addition, significant volumes of water are recycled from process brine to reduce ground water usage.
Lack of growth in these markets may adversely affect the demand for our products. In contrast, extended periods of high commodity prices may create economic dislocations that may be destabilizing to rare earth minerals supply and demand and ultimately to the broader markets. Periods of high rare earth mineral market prices generally are beneficial to our financial performance.
In contrast, extended periods of high commodity prices may create economic dislocations that may be destabilizing to REE and magnet material supply and demand and ultimately to the broader markets. Periods of high REE market prices generally are beneficial to our financial performance.
Future sales, or the perception of future sales, by us or our stockholders in the public market could cause the market price for our common stock to decline. The sale of shares of common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of common stock.
The sale of shares of common stock in the public market, or the perception that such sales could occur, could harm the prevailing market price of shares of common stock.
We expect these trends to continue as demand for rare earth materials increases. Industry consolidation may result in competitors with more compelling product offerings or greater pricing flexibility than we have, or business practices that make it more difficult for us to compete effectively, including on the basis of price, sales, technology or supply.
Industry consolidation may result in competitors with more compelling product offerings or greater pricing flexibility than we have, or business practices that make it more difficult for us to compete effectively, including on the basis of price, sales, technology or supply. For example, in December 2021, China merged three state entities to establish the China Rare Earth Group Co.

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Item 2. Properties

Properties — owned and leased real estate

40 edited+12 added−10 removed37 unchanged
Biggest changeWhile other rare earth elements, often referred to as heavy rare earths, are present in the deposit, they are not accounted for in this estimate due to historic data limitations. 29 Table of Contents The following table is provided to show the change in mineral resources from December 31, 2021, to December 31, 2022: Description Estimate Date Million Short Tons (dry) TREO La 2 O 3 CeO 2 Pr 6 O 11 Nd 2 O 3 Sm 2 O 3 (%) (%) (%) (%) (%) (%) Measured and Indicated Mineral Resources December 31, 2022 1.43 2.83 0.92 1.41 0.12 0.34 0.03 Measured and Indicated Mineral Resources December 31, 2021 1.43 2.83 0.92 1.41 0.12 0.34 0.03 Difference — — — — — — — % Difference — % — % — % — % — % — % — % Inferred Mineral Resources December 31, 2022 8.90 5.13 1.67 2.56 0.22 0.62 0.04 Inferred Mineral Resources December 31, 2021 9.08 5.10 1.66 2.54 0.22 0.62 0.05 Difference (0.18) 0.03 0.01 0.02 0.00 0.00 (0.01) % Difference (2.0) % 0.7 % 0.6 % 0.9 % (1.2) % 0.4 % (9.4) % There is no change to the Measured and Indicated resources because they are exclusive of reserves and are located outside of the reserves pit.
Biggest changeThe following table is provided to show the change in mineral resources from December 31, 2022, to December 31, 2023: Description Estimate Date Million Short Tons (dry) TREO La 2 O 3 CeO 2 Pr 6 O 11 Nd 2 O 3 Sm 2 O 3 (%) (%) (%) (%) (%) (%) Indicated Mineral Resources December 31, 2023 1.45 2.75 0.89 1.37 0.12 0.33 0.02 Indicated Mineral Resources December 31, 2022 1.43 2.83 0.92 1.41 0.12 0.34 0.03 Difference 0.02 (0.08) (0.03) (0.04) 0.00 (0.01) (0.01) % Difference (1) 1.4 % (2.8) % (2.8) % (2.7) % (2.0) % (2.1) % (21.6) % Inferred Mineral Resources December 31, 2023 9.09 5.05 1.65 2.52 0.21 0.61 0.04 Inferred Mineral Resources December 31, 2022 8.90 5.13 1.67 2.56 0.22 0.62 0.04 Difference 0.19 (0.08) (0.02) (0.04) (0.01) (0.01) 0.00 % Difference (1) 2.1 % (1.7)% (1.3)% (1.8)% (1.7)% (1.8)% (3.8)% (1) Percentages do not recompute as presented due to rounding.
A mineral resource is a reasonable estimate of mineralization, taking into account relevant factors such as cut-off grade, likely mining dimensions, location or continuity, that, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable. It is not merely an inventory of all mineralization drilled or sampled.
A mineral resource is a reasonable estimate of mineralization, taking into account relevant factors such as cut-off grade (“COG”), likely mining dimensions, location or continuity, that, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable. It is not merely an inventory of all mineralization drilled or sampled.
Estimates of economically recoverable REO reserves, however, necessarily depend upon a number of variable factors and assumptions, all of which may vary considerably from actual results, such as: • geological, mining and processing conditions and/or effects from prior mining that may not be fully identified by available data or that may differ from experience; • the strategic approach to mining and processing the deposit may change depending upon market demand, corporate strategy and other prevailing economic conditions; • assumptions concerning future prices of rare earth products, foreign exchange rates, process recovery rates, transportation costs, operating costs, capital costs, and reclamation costs; and 31 Table of Contents • assumptions concerning future effects of regulation, including the issuance of required permits and taxes by governmental agencies and foreign government policy relating to import or export of rare earth products.
Estimates of economically recoverable REO reserves, however, necessarily depend upon a number of variable factors and assumptions, all of which may vary considerably from actual results, such as: • geological, mining and processing conditions and/or effects from prior mining that may not be fully identified by available data or that may differ from experience; • the strategic approach to mining and processing the deposit may change depending upon market demand, corporate strategy and other prevailing economic conditions; • assumptions concerning future prices of rare earth products, foreign exchange rates, process recovery rates, transportation costs, operating costs, capital costs, and reclamation costs; and 32 Table of Contents • assumptions concerning future effects of regulation, including the issuance of required permits and taxes by governmental agencies and foreign government policy relating to import or export of rare earth products.
Mountain Pass includes an open-pit mine in the production stage, infrastructure supporting mining and processing operations, overburden and ore stockpiles, a crusher and mill/flotation plant, separation plants, product finishing facilities, tailings processing and storage facilities, a water treatment plant, a chlor-alkali facility, and on-site evaporation ponds, as well as laboratory facilities to support product analysis and research and development activities, offices, maintenance shops, warehouses and support buildings.
Mountain Pass includes an open-pit mine in the production stage, infrastructure supporting mining and processing operations, overburden and ore stockpiles, a crusher, a mill/flotation plant, hydrometallurgy facilities, separation plants, product finishing facilities, tailings processing and storage facilities, a water treatment plant, an idle chlor-alkali facility, and on-site evaporation ponds, as well as laboratory facilities to support product analysis and research and development activities, offices, maintenance shops, warehouses and support buildings.
QA/QC generated by previous laboratories has undergone check assays at independent third-party laboratories, and generally demonstrate no consistent bias. The quality analytical database is also supported by a limited amount of blind quality control samples inserted during a re-assay program, including site-specific standards of known TREO 27 Table of Contents content, a variety of duplicate samples, and blank samples.
QA/QC generated by previous laboratories has undergone check assays at independent third-party laboratories, and generally demonstrate no consistent bias. The quality analytical database is also supported by a limited 28 Table of Contents amount of blind quality control samples inserted during a re-assay program, including site-specific standards of known TREO content, a variety of duplicate samples, and blank samples.
These mining claims and mill sites provide land for mining, ancillary facilities and expansion capacity around Mountain Pass. 25 Table of Contents Mountain Pass represents the largest commercial source of rare earth materials in the Western hemisphere. Molybdenum Corporation of America began REE mining operations at Mountain Pass in 1952.
These mining claims and mill sites provide land for mining, ancillary facilities and expansion capacity around Mountain Pass. 26 Table of Contents Mountain Pass represents the largest commercial source of rare earth materials in the Western hemisphere. Molybdenum Corporation of America began REE mining operations at Mountain Pass in 1952.
Since restarting operations at the facility in the fourth quarter of 2017, the Company’s activities have focused on the milling and flotation processes, leading to production of a bastnaesite concentrate, rich in REE, with the first concentrate sales in the first quarter of 2018.
Since restarting operations at the facility in the fourth quarter of 2017, the Company’s activities initially focused on the milling and flotation processes, leading to production of a bastnaesite concentrate, rich in REE, with the first concentrate sales in the first quarter of 2018.
The optimized pit shell selected to guide final pit design was based on a combination of the revenue factor (“RF”) 0.45 pit (used on the north half of the deposit) and the RF 1.00 pit shell (used on the south half of the deposit).
The optimized pit shell selected to guide final pit design was based on a combination of the revenue factor (“RF”) 0.70 pit (used on the north half of the deposit) and the RF 1.00 pit shell (used on the south half of the deposit).
The inter-ramp pit slopes used for the design are based on geotechnical studies and range from 42° to 47°. Measured resources in stockpiles were converted to proven reserves. Indicated pit resources were converted to probable reserves by applying the appropriate modifying factors to potential mining pit shapes created during the mine design process.
The inter-ramp pit slopes used for the mineral reserves pit design are based on geotechnical studies and range from 44° to 47°. Measured resources in stockpiles were converted to proven reserves. Indicated pit resources were converted to probable reserves by applying the appropriate modifying factors to potential mining pit shapes created during the mine design process.
The calculated COG for the reserves is 2.49% TREO, which was applied to indicated blocks contained within an ultimate pit, the design of which was guided by economic pit optimization.
The calculated COG for the reserves is 2.43% TREO, which was applied to indicated blocks contained within an ultimate pit, the design of which was guided by economic pit optimization.
SRK generated a cash flow model which indicated positive economics for the LoM plan, which provides the basis for the reserves. Reserves within the new ultimate pit are sequenced for the remaining 34-year LoM. The costs used for pit optimization include estimated mining, processing, sustaining capital, transportation, and administrative costs, including an allocation of corporate costs.
SRK generated a cash flow model which indicated positive economics for the LoM plan, which provides the basis for the reserves. Reserves within the new ultimate pit are sequenced for the remaining 33-year LoM (2024 through 2056). The costs used for pit optimization include estimated mining, processing, sustaining capital, transportation, and administrative costs, including an allocation of corporate costs.
Portions of the fee lands, none of which are actively being mined or are currently anticipated to be mined for the purpose of recovering ore, are subject to mineral reservations in favor of the United States for some properties and the State of California for other properties.
Portions of the fee lands, none of which are actively being mined or are currently anticipated to be mined for the purpose of recovering ore, are subject to mineral reservations in favor of the U.S. for some properties and the State of California for other properties.
The following table states the amount of the Company’s proven and probable mineral reserves as of December 31, 2022.
The following table states the amount of the Company’s proven and probable mineral reserves as of December 31, 2023.
The further depletion removed by SRK in this Annual Report represents resources and reserves that were extracted from the Mountain Pass open pit from January 1, 2022, through December 31, 2022. 26 Table of Contents Mineral Resource and Mineral Reserve Definitions Mineral Resources Item 1300 of S-K 1300 defines a “mineral resource” as a concentration or occurrence of material of economic interest in or on the Earth’s crust in such form, grade or quality, and quantity that there are reasonable prospects for economic extraction.
The depletion removed by SRK represents resources and reserves that were extracted from the Mountain Pass open pit from October 1, 2023, through December 31, 2023. 27 Table of Contents Mineral Resource and Mineral Reserve Definitions Mineral Resources Item 1300 of S-K 1300 defines a “mineral resource” as a concentration or occurrence of material of economic interest in or on the Earth’s crust in such form, grade or quality, and quantity that there are reasonable prospects for economic extraction.
This above cut-off grade material was not included in the previous reserves estimate because the material had not been identified by the wider spaced resource drilling that informed the resource block model utilized for the 2021 TRS.
This above COG material was not included in the previous reserves estimate because the material had not been identified by the wider spaced resource drilling that informed the resource block model utilized for the 2023 TRS.
Processing and selling, general and administrative (“SG&A”) costs used for pit optimization were based on historical actual costs. Processing recovery for concentrate is variable based on a mathematical relationship to estimate overall TREO recovery versus ore grade.
Processing and SG&A costs used for pit optimization were based on historical actual costs. Processing recovery for concentrate is variable based on a mathematical relationship to estimate overall TREO recovery versus ore grade.
It is noted that reserves depletion due to mining and processing during 2022 was partially offset by additional above cut-off grade material that was identified by closely spaced blasthole sampling.
It is noted that reserves depletion due to mining and processing during 2023 was partially offset by additional above COG material that was identified by closely spaced blasthole sampling.
A description of the methodology used to calculate mineral resources is provided in Exhibit 96.1 to this Annual Report. Mineral Reserves SRK developed a life-of-mine (“LoM”) plan for the Mountain Pass operation in support of mineral reserves . For economic modeling, 2022 production was assumed to be bastnaesite concentrate.
A description of the methodology used to calculate mineral resources is provided in Exhibit 96.1 to this Annual Report. Mineral Reserves SRK developed a life-of-mine (“LoM”) plan for the Mountain Pass operation in support of mineral reserves.
Internal controls to demonstrate the consistency and reliability of the historic analytical data supporting the mineral resource estimate (which forms the basis for the mineral reserve estimate) are discussed above. 28 Table of Contents A description of the methodology used to calculate mineral reserves is provided in Exhibit 96.1 to this Annual Report.
Inferred resources present within the LoM pit are treated as waste. Internal controls to demonstrate the consistency and reliability of the historic analytical data supporting the mineral resource estimate (which forms the basis for the mineral reserve estimate) are discussed above. A description of the methodology used to calculate mineral reserves is provided in Exhibit 96.1 to this Annual Report.
Category Description Run-of-Mine TREO% MY% Concentrate Million Short Tons (dry) Million Short Tons (dry) Proven Current Stockpiles 0.34 7.40 8.40 0.03 In situ — — — — Proven Totals 0.34 7.40 8.40 0.03 Probable Current Stockpiles — — — — In situ 28.96 6.31 6.67 1.93 Probable Totals 28.96 6.31 6.67 1.93 Proven + Probable Current Stockpiles 0.34 7.40 8.40 0.03 In situ 28.96 6.31 6.67 1.93 Proven + Probable Totals 29.30 6.32 6.69 1.96 General Notes: • Reserves stated as contained within an economically mineable open pit design stated above a 2.49% TREO COG. 30 Table of Contents • Mineral reserves tonnage and contained metal have been rounded to reflect the accuracy of the estimate, and numbers may not add due to rounding. • MY% (mass yield) calculation is based on 60% concentrate grade of the product and the ore grade dependent metallurgical recovery.
Category Description Run-of-Mine TREO% MY% Concentrate Million Short Tons (dry) Million Short Tons (dry) Proven Current Stockpiles 0.64 4.28 3.68 0.02 In situ — — — — Proven Totals 0.64 4.28 3.68 0.02 Probable Current Stockpiles — — — — In situ 27.82 6.25 6.60 1.84 Probable Totals 27.82 6.25 6.60 1.84 Proven + Probable Current Stockpiles 0.64 4.28 3.68 0.02 In situ 27.82 6.25 6.60 1.84 Proven + Probable Totals 28.46 6.20 6.54 1.86 31 Table of Contents General Notes: • Reserves stated as contained within an economically mineable open pit design stated above a 2.43% TREO COG. • Mineral reserves tonnage and contained metal have been rounded to reflect the accuracy of the estimate, and numbers may not add due to rounding. • MY% (mass yield) calculation is based on 60% concentrate grade of the product and the ore grade dependent metallurgical recovery.
There is no certainty that all or any part of the Mineral Resources estimated will be converted into the Mineral Reserves estimate. • Mineral Resource tonnage and contained metal have been rounded to reflect the accuracy of the estimate, any apparent rounding errors are considered insignificant. • Mineral Resource tonnage and grade are reported as diluted. • The Mineral Resource model has been depleted for historical mining based on the December 31, 2022, pit topography. • Pit optimization cut-off grade is based on an average TREO% equivalent concentrate price of $7,059 per ST of dry concentrate (60% TREO, net of the incremental benefits and costs related to REE separations), average mining cost at the pit exit of $1.825 per ST mined plus $0.018 per ST mined for each 15 feet bench above or below the pit exit, combined milling and G&A costs of $69.90 per ST milled, concentrate freight of $177 per ST of dry concentrate, and an average overall pit slope angle of 42° including ramps. • The mineral resource statement reported herein only includes the rare earth elements cerium, lanthanum, neodymium, praseodymium, and samarium (often referred to as light rare earths).
There is no certainty that all or any part of the mineral resources estimated will be converted into the mineral reserves estimate. • Mineral resource tonnage and contained metal have been rounded to reflect the accuracy of the estimate, any apparent rounding errors are considered insignificant. • Mineral resource tonnage and grade are reported as diluted. 30 Table of Contents • The mineral resource model has been depleted for historical mining based on the December 31, 2023, pit topography. • Pit optimization is based on an average TREO% equivalent concentrate price of $12,461 per dry ST of 60% TREO concentrate, average mining cost at the pit exit of $1.70 per dry ST mined plus $0.068 per dry ST mined for each 15 feet bench above or below the pit exit, combined milling and SG&A costs of $78.94 per dry ST ore milled, separations facility costs of $1,551 per dry ST of 60% TREO concentrate treated, freight of $163 per ST of dry product shipped, sustaining capital costs of $30.48 per dry ST of ore mined, and overall pit slope angles of 39° to 45° including ramps. • The mineral resource statement reported herein only includes the REE cerium, lanthanum, neodymium, praseodymium, and samarium (often referred to as LREE).
Measured mineral resources have been converted to Proven reserves. • Reserves are diluted at the contact of the 2% TREO geological model triangulation (further to dilution inherent to the resource model and assume selective mining unit of 15 feet x 15 feet x 30 feet). • Mineral reserves tonnage and grade are reported as diluted. • Pit optimization COG is based on an average TREO% equivalent concentration price of $6,139 per ST of dry concentrate (60% TREO, net of the incremental benefits and costs related to REE separations), average mining cost at the pit exit of $1.825 per ST mined plus $0.018 per ST mined for each 15 feet bench above or below the pit exit, combined milling and G&A costs of $69.90 per ST milled, concentrate freight of $177 per ST of dry concentrate, and an average overall pit slope angle of 42° including ramps. • The topography used was from December 31, 2022. • Reserves contain material inside and outside permitted mining but within mineral lease. • Reserves assume 100% mining recovery. • The strip ratio for the remaining reserves is 5.7 to 1 (waste to ore ratio). • The mineral reserves were estimated by SRK.
Measured mineral resources have been converted to proven reserves. • Reserves are diluted at the contact of the 2% TREO geological model triangulation (further to dilution inherent to the resource model and assume selective mining unit of 15 feet x 15 feet x 30 feet). • Mineral reserves tonnage and grade are reported as diluted. • Pit optimization is based on an average TREO% equivalent concentrate price of $10,836 per dry ST of 60% TREO concentrate, average mining cost at the pit exit of $1.70 per dry ST mined plus $0.068 per dry ST mined for each 15 feet bench above or below the pit exit, combined milling and SG&A costs of $78.94 per dry ST ore milled, separations facility costs of $1,551 per dry ST of 60% TREO concentrate treated, freight of $163 per ST of dry product shipped, sustaining capital costs of $30.48 per dry ST of ore mined, and overall pit slope angles of 39° to 45° including ramps. • Reserves contain material inside and outside permitted mining but within mineral lease. • Reserves assume 100% mining recovery. • The strip ratio for the remaining reserves is 6.3 to 1 (waste to ore ratio). • The mineral reserves were estimated by SRK.
Category Resource Type Cut-Off TREO (%) Mass Average Value Million Short Tons (dry) TREO (1) (%) La 2 O 3 (2) (%) CeO 2 (%) Pr 6 O 11 (%) Nd 2 O 3 (%) Sm 2 O 3 (%) Indicated Within the Reserve Pit 2.28-2.49 0.91 2.38 0.78 1.19 0.10 0.29 0.02 Within the Resource Pit 2.28 0.52 3.61 1.18 1.80 0.16 0.44 0.03 Total Indicated 1.43 2.83 0.92 1.41 0.12 0.34 0.03 Inferred Within the Reserve Pit 2.28-2.49 6.80 5.54 1.80 2.77 0.23 0.67 0.05 Within the Resource Pit 2.28 2.10 3.81 1.24 1.90 0.16 0.46 0.03 Total Inferred 8.90 5.13 1.67 2.56 0.22 0.62 0.05 (1) TREO% represents the total of individually assayed light rare earth oxides on a 99.7% basis of total contained TREO, based on the historical site analyses.
Category Resource Type Cut-Off TREO (%) Mass Average Value Million Short Tons (dry) TREO (1) (%) La 2 O 3 (2) (%) CeO 2 (2) (%) Pr 6 O 11 (2) (%) Nd 2 O 3 (2) (%) Sm 2 O 3 (2) (%) Indicated Within the Reserve Pit 2.18 0.94 2.31 0.75 1.15 0.10 0.28 0.02 Within the Resource Pit 2.18 0.51 3.56 1.16 1.78 0.15 0.43 0.03 Total Indicated 2.18 1.45 2.75 0.89 1.37 0.12 0.33 0.02 Inferred Within the Reserve Pit 2.18 6.68 5.52 1.80 2.75 0.23 0.67 0.05 Within the Resource Pit 2.18 2.41 3.74 1.22 1.86 0.16 0.45 0.03 Total Inferred 2.18 9.09 5.05 1.65 2.52 0.21 0.61 0.04 (1) TREO% represents the total of individually assayed light rare earth oxides on a 99.7% basis of total contained TREO, based on the historical site analyses.
The following table is provided to show the change in reserves from December 31, 2021, to December 31, 2022: Description Estimate Date Run-of-Mine TREO% MY% Concentrate Million Short Tons (dry) Million Short Tons (dry) Proven + Probable Reserves December 31, 2022 29.30 6.32 6.69 1.98 Proven + Probable Reserves December 31, 2021 30.13 6.34 6.72 2.02 Difference (0.83) (0.02) (0.03) (0.04) % Difference (2.8)% (0.3)% (0.4)% (1.7)% The reason for the differences between the two estimates is due to reserves that were mined and processed during 2022.
The following table is provided to show the change in reserves from December 31, 2022, to December 31, 2023: Description Estimate Date Run-of-Mine TREO% MY% Concentrate Million Short Tons (dry) Million Short Tons (dry) Proven + Probable Reserves December 31, 2023 28.46 6.20 6.54 1.86 Proven + Probable Reserves December 31, 2022 29.30 6.32 6.69 1.96 Difference (0.84) (0.12) (0.15) (0.10) % Difference (2.9)% (1.9)% (2.2)% (5.1)% The reason for the differences between the two estimates is due to reserves that were mined and processed during 2023.
The bastnaesite ore body at Mountain Pass has been mined as a principal source of REE for a period of over 60 years. The Mountain Pass REE deposit is located within an uplifted block of Precambrian metamorphic and igneous rocks that are bounded to the south and east by basin-fill deposits in California’s Ivanpah Valley.
The Mountain Pass REE deposit is located within an uplifted block of Precambrian metamorphic and igneous rocks that are bounded to the south and east by basin-fill deposits in California’s Ivanpah Valley.
SRK prepared a pre-feasibility level Technical Report Summary for Mountain Pass with an effective date of September 30, 2021 (the “2021 TRS”) (refer to Exhibit 96.1 to this Annual Report).
Pursuant to the requirements of Regulation S-K Subpart 1300 (“S-K 1300”), SRK prepared a pre-feasibility level Technical Report Summary for Mountain Pass with an effective date of October 1, 2023 (the “2023 TRS”) (refer to Exhibit 96.1 to this Annual Report).
An economic cut-off grade (“COG”) of 2.28% TREO has been developed to ensure that material reported as a mineral resource can satisfy the definition of having reasonable prospects for economic extraction (“RPEE”) as required for SEC definition. Mineral resources have been constrained within an economic pit shell based on reserve input parameters.
An economic COG of 2.18% TREO has been developed to ensure that material reported as a mineral resource can satisfy the definition of having reasonable prospects for economic extraction as required for the SEC definition.
The carrying amount of the property, plant and equipment used in the operation of Mountain Pass was approximately $443 million as of December 31, 2022. Mountain Pass directly abuts Interstate 15 and may be accessed by existing hard-surface roads. Water at Mountain Pass is supplied through active water wells, pit dewatering, and process water recovery.
Mountain Pass directly abuts Interstate 15 and may be accessed by existing hard-surface roads. Water at Mountain Pass is supplied through active water wells, pit dewatering, and process water recovery.
In addition, MP Materials holds 525 unpatented lode and mineral mining claims and mill sites under the provisions of The Mining Law of 1872.
The lands surrounding Mountain Pass are mostly public lands managed by the Bureau of Land Management and the National Park Service. In addition, MP Materials holds 525 unpatented lode and mineral mining claims and mill sites under the provisions of The Mining Law of 1872.
Recommissioning activities are currently underway on certain previously idle facilities and infrastructure that the Company expects to use to separate its rare earth concentrate into other products, including NdPr oxide, with recommissioning activities completed for certain of the assets.
In 2023, the Company completed recommissioning activities on its previously idle separation facilities at Mountain Pass and completed construction of new assets, which are utilized to separate rare earth concentrate into other products, including NdPr oxide.
Mineral Reserves As of December 31, 2022, SRK estimates total proven reserves of 0.34 million STs of ore with an average grade of 7.40% TREO and 28.96 million STs of probable reserves with an average ore grade of 6.31%. Our total proven and probable reserves are estimated as 29.30 million STs with an average grade of 6.32%.
Mineral Reserves As of December 31, 2023, SRK estimates total proven reserves of 0.64 million STs of ore with an average grade of 4.28% TREO and 27.82 million STs of probable reserves with an average ore grade of 6.25%. The Company’s total proven and probable reserves are estimated as 28.46 million STs with an average grade of 6.20%.
The mineral resources and mineral reserves estimated in the 2021 TRS were subsequently depleted by SRK to present an estimate of the Company’s resources and reserves as of December 31, 2021, as disclosed in the Company’s annual report on Form 10-K for the year ended December 31, 2021.
The mineral resource and mineral reserve estimated in the 2023 TRS were subsequently depleted by SRK to present an estimate of our resources and reserves as of December 31, 2023.
Results Mineral Resources As o f December 31, 2022, SRK estimates total indicated resources of 1.43 million short tons (“STs”) with an average grade of 2.83% TREO and 8.90 million STs of inferred resources with an average grade of 5.13% TREO. Mineral resources are reported exclusive of mineral reserves.
Results Mineral Resources As of December 31, 2023, SRK estimates total indicated resources of 1.45 million STs with an average grade of 2.75% TREO and 9.09 million STs of inferred resources with an average grade of 5.05% TREO. Mineral resources are reported exclusive of mineral reserves. The reference point for mineral resources is in situ material.
Fort Worth Facility The Company owns approximately 18 acres of land in Fort Worth, Texas, on which it is building a metal, alloy, and magnet manufacturing facility as a part of its Stage III strategy. Corporate Offices The Company has a lease for corporate office space at 1700 S. Pavilion Center Drive, 8 th Floor, Las Vegas, Nevada 89135.
Fort Worth Facility The Company owns approximately 18 acres of land in Fort Worth, Texas, on which it is constructing a metal, alloy, and magnet manufacturing facility as part of its Stage III strategy. The building and building improvements were substantially completed in the fourth quarter of 2023.
From 2023 onward, it was assumed that the Company will operate a separations facility at Mountain Pass that will allow the Company to separate bastnaesite concentrate into four individual REO products for sale: neodymium and praseodymium (previously defined as “NdPr”) oxide, samarium, europium, and gadolinium (“SEG+”) oxalate, lanthanum carbonate, and cerium chloride.
For economic modeling of the mineral reserves, SRK assumed that 2024 production will be a combination of bastnaesite concentrate sales and sales of four individual REO products: neodymium and praseodymium (previously defined as “NdPr”) oxide; samarium, europium, and gadolinium (“SEG+”) oxalate; lanthanum carbonate; and cerium chloride.
MP Materials’ facilities at Mountain Pass are powered by a natural gas-powered CHP plant, which was installed at Mountain Pass to produce electricity and steam and to minimize or eliminate reliance on the regional electric power grid. The Company also owns mining and mill site claims over a further 15,000 acres of adjacent land.
MP Materials’ facilities at Mountain Pass are powered by a natural gas-powered CHP plant, which was installed at Mountain Pass to produce electricity and steam and to minimize or eliminate reliance on the regional electric power grid. As of December 31, 2023, approximately 1,118 acres of the 2,222 acres were in use (e.g., existing buildings, infrastructure or active disturbance).
The specific minerals reserved on those parcels vary according to the type of land patent or conveyance document through which the land was acquired or conveyed. The lands surrounding Mountain Pass are mostly public lands managed by the Bureau of Land Management and the National Park Service.
The specific minerals reserved on those parcels vary according to the type of land patent or conveyance document through which the land was acquired or conveyed. The Company also owns mining and mill site claims over a further 15,000 acres of adjacent land.
The reference point for the mineral reserves is material delivered to the Mountain Pass mill and flotation facilities.
The reference point for the mineral reserves is material delivered to the Mountain Pass mill and flotation facilities. Based on these estimated reserves, the Company’s expected remaining mine life is approximately 33 years (2024 through 2056) to complete the processing of stockpiles and separations.
From this evaluation, pit optimization was performed based on an equivalent concentrate price of $6,139 per dry short ton (“ST”) of 60% TREO concentrate (net of the incremental benefits and costs related to REE separations). The results of pit optimization guided the design and scheduling of the ultimate pit.
From this evaluation, pit optimization was performed based on an equivalent concentrate price of $10,836 per dry ST of 60% TREO concentrate. The equivalent concentrate price reflects the gross contained value realized from sales of the four individual REO products produced from the onsite separations facility.
The reason for the difference between the two estimates of Inferred resources (a portion of which is inside the reserves pit) is due to Inferred resources that were mined and processed during 2022.
The difference as compared to the previous year is due to inferred resources located within the mineral reserve pit that were mined and processed during 2023, and a change in the mineral resource COG due to updated project economics.
Removed
The majority of the Company’s facilities and infrastructure currently used to produce a rare earth concentrate were completed between 2012 and 2015, is in good operating condition, and benefits from routine maintenance.
Added
The Mountain Pass facilities and infrastructure, the majority of which were constructed between 2012 and 2023, are in good operating condition and benefit from routine maintenance. The net carrying amount of property, plant and equipment used in the operation of Mountain Pass was approximately $577 million as of December 31, 2023.
Removed
Approximately 1,118 acres of the 2,222 acres are currently in use (e.g., existing buildings, infrastructure or active disturbance).
Added
In third quarter of 2023, the Company also commenced production of separated finished rare earth oxides and compounds. The bastnaesite ore body at Mountain Pass has been mined as a principal source of REE for a period of over 60 years.
Removed
The lease for the Company’s former corporate office space at 6720 Via Austi Parkway, Suites 450 and 430, Las Vegas, Nevada 89119, expired on December 31, 2022. Rare Earth Resources and Reserves Introduction Mineral resources and mineral reserves were estimated by SRK Consulting (U.S.) Inc. (“SRK”) pursuant to the requirements of Regulation S-K Subpart 1300 (“S-K 1300”).
Added
Corporate Office The Company has a lease for corporate office space at 1700 S. Pavilion Center Drive, Suite 800, Las Vegas, Nevada 89135. The lease has an initial term of 91 months expiring in October 2030, with an option to renew for one five-year period at the Company’s election.
Removed
All material assumptions and information pertaining to the disclosure of the Company’s mineral resources and mineral reserves, including material assumptions relating to all modifying factors, price estimates, and scientific and technical information, and as described in the 2021 TRS, remain current as of December 31, 2022.
Added
Rare Earth Resources and Reserves Introduction Mineral resources and mineral reserves were estimated by SRK Consulting (U.S.) Inc. (“SRK”) for inclusion in this Annual Report.
Removed
We therefore refer to the 2021 TRS given that it remains current in all material respects.
Added
Mineral resources have been constrained within an optimized economic pit shell based on reserve input parameters, with the exception of the assumed equivalent concentrate price ($12,461 per dry short ton (“ST”) of 60% TREO concentrate), which is set 15% higher than the reserves price.
Removed
Inferred resources present within the LoM pit are treated as waste.
Added
The equivalent concentrate price used for pit optimization reflects the gross contained value realized from sales of the four individual REO products (see below) produced from the onsite separations facility.
Removed
The reference point for the mineral resources is in situ materia l.
Added
The equivalent concentrate price is calculated based on (i) the expected percentage distribution of the REO products in the bastnaesite concentrate, (ii) the expected metallurgical recoveries for the separations facility and (iii) the expected sales prices for the REO products.
Removed
It is noted that mineral resource depletion due to mining and processing during 2022 was partially offset by additional above cut-off grade material that was identified by closely spaced blasthole sampling.
Added
For purposes of calculating the end-of-year (“EOY”) 2022 mineral resources, the equivalent concentrate price was reflected net of the operating costs of the separations facility, while the equivalent concentrate price for EOY 2023 mineral resources is reflected gross of these costs, with the operating costs instead included along with the other estimated operating costs (mining; processing; selling, general and administrative (“SG&A”); etc.) that were used in the pit optimization.
Removed
This above cut-off grade material was not included in the previous resource estimate because the material had not been identified by the wider spaced resource drilling that informed the resource block model utilized for the 2021 TRS.
Added
During 2023 the Company completed construction of a separations facility at Mountain Pass that allows the Company to separate bastnaesite concentrate into four individual REO products for sale. The separations facility is currently ramping up and the Company expects the plant to operate at full design capacity by the end of 2024.
Removed
Based on these estimated reserves and the Company’s expected annual production rate upon completion and commissioning of the Stage II project (separations facility), the Company’s expected remaining mine life is approximately 34 years , including a partial year in 2056 to complete the processing of stockpiles and separations.
Added
The equivalent concentrate price is calculated based on (i) the expected percentage distribution of the REO products in the bastnaesite concentrate, (ii) the expected metallurgical recoveries for the separations facility and (iii) the expected sales prices for the REO products.
Added
For purposes of calculating the EOY 2022 mineral reserves, the equivalent concentrate price was reflected net of the operating costs of the separations facility, while the equivalent concentrate price for EOY 2023 mineral reserves is reflected gross of these costs, with the operating costs instead included along with the other estimated operating costs (mining, processing, SG&A, etc.) that were used in the pit optimization. 29 Table of Contents The results of pit optimization guided the design and scheduling of the ultimate pit.
Added
While other REE, often referred to as HREE, are present in the deposit, they are not accounted for in this estimate due to historic data limitations.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

7 edited+3 added−1 removed4 unchanged
Biggest changeIn addition, the Company is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future as it is currently expected that available cash resources will be utilized in connection with our ongoing operations and development projects, including for the completion of our Stage II project, HREE Facility at Mountain Pass, and Fort Worth Facility.
Biggest changeIn addition, the Company is not currently contemplating and does not anticipate declaring any stock dividends in the foreseeable future as it is currently expected that available cash resources will be utilized in connection with our ongoing operations and capital expenditures to support our development projects.
The stock price performance shown in this graph is based on historical data and is neither indicative of, nor intended to forecast, future stock price performance. *$100 invested on November 18, 2020, in stock or October 31, 2020, in index, including reinvestment of dividends. Fiscal year ended December 31 st . Copyright © 2023 Russell Investment Group.
The stock price performance shown in this graph is based on historical data and is neither indicative of, nor intended to forecast, future stock price performance. *$100 invested on November 18, 2020, in stock or October 31, 2020, in index, including reinvestment of dividends. Fiscal year ended December 31 st . Copyright © 2024 Russell Investment Group.
The total cumulative return calculations are for the period commencing November 18, 2020, for investments in stock, or October 31, 2020, for investments in index, and ending December 31, 2022, and include the reinvestment of dividends.
The total cumulative return calculations are for the period commencing November 18, 2020, for investments in stock, or October 31, 2020, for investments in index, and ending December 31, 2023, and include the reinvestment of dividends.
Repurchase of Securities During the three months ended December 31, 2022, neither the Company nor any of its affiliates repurchased shares of the Company’s common stock registered under Section 12 of the Exchange Act. 32 Table of Contents Stock Performance Graph The following graph compares the cumulative total stockholder return for the Company’s common stock to the cumulative total returns for the Russell 2000 Index, S&P MidCap 400 Index and a peer group.
Repurchase of Securities During the three months ended December 31, 2023, neither the Company nor any of its affiliates repurchased shares of the Company’s common stock registered under Section 12 of the Exchange Act. 33 Table of Contents Stock Performance Graph The following graph compares the cumulative total stockholder return for the Company’s common stock to the cumulative total returns for the Russell 2000 Index, S&P MidCap 400 Index and a peer group.
All rights reserved. 11/18/20 12/31/20 12/31/21 12/31/22 MP Materials Corp. $ 100.00 $ 213.19 $ 300.99 $ 160.90 Russell 2000 Index $ 100.00 $ 128.68 $ 147.75 $ 117.55 S&P MidCap 400 Index $ 100.00 $ 121.73 $ 151.87 $ 132.03 Peer Group $ 100.00 $ 112.07 $ 170.93 $ 180.34
All rights reserved. 11/18/20 12/31/20 12/31/21 12/31/22 12/31/23 MP Materials Corp. $ 100.00 $ 213.19 $ 300.99 $ 160.90 $ 131.54 Russell 2000 Index $ 100.00 $ 128.68 $ 147.75 $ 117.55 $ 137.45 S&P MidCap 400 Index $ 100.00 $ 121.73 $ 151.87 $ 132.03 $ 153.74 Peer Group $ 100.00 $ 112.07 $ 170.93 $ 180.34 $ 186.27
Holders of Record According to Continental Stock Transfer & Trust Company, the Company’s transfer agent, there were 129 active holders of record of the Company’s common stock as of February 15, 2023.
Holders of Record According to Continental Stock Transfer & Trust Company, the Company’s transfer agent, there were 128 active holders of record of the Company’s common stock as of February 15, 2024.
Copyright © 2023 Standard & Poor’s, a division of S&P Global.
Copyright © 2024 Standard & Poor’s, a division of S&P Global.
Removed
Unregistered Sales of Equity Securities The Company did not have any sales of unregistered equity securities during the three months ended December 31, 2022.
Added
Unregistered Sales of Equity Securities On August 18, 2023, the Company acquired a license to use patented technology, technical know-how, and other intellectual property pertaining to the development and manufacturing of magnetic products in exchange for 435,729 shares of its common stock.
Added
Pursuant to the terms of the agreement to acquire the license, 152,504 shares were issued immediately and the remaining shares will be issued as follows: 43,573 shares on each of the first, second, and third anniversaries of the acquisition date and an additional 152,506 shares on the fourth anniversary of the acquisition date.
Added
The securities were issued in reliance upon the exemption from registration available under Regulation S under the Securities Act of 1933, as amended.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

115 edited+85 added−69 removed29 unchanged
Biggest changeHighlights from the year ended December 31, 2022, include: • Revenue of $527.5 million, representing growth of 59% year over year, driven by an increase in realized price per rare earth oxide (“REO”) equivalent metric ton (“MT”); • Net income of $289.0 million, representing growth of 114% year over year, largely driven by higher revenue, offset by higher cost of sales and selling, general and administrative expenses; • Adjusted EBITDA (see below) of $388.6 million, representing growth of 77% year over year, driven by higher per-unit profitability, offset partially by higher personnel and other general and administrative costs; • Adjusted Net Income (see below) of $320.6 million, representing growth of 108% year over year, largely driven by higher Adjusted EBITDA; • Diluted earnings per share of $1.52, compared to $0.73 per share in the prior year; • Net cash provided by operating activities of $343.5 million, an increase from $102.0 million in the prior year; • Strong concentrate production volumes that remained steady year over year despite significant Stage II construction and recommissioning activities; • Maintained strong balance sheet with cash, cash equivalents and short-term investments totaling $1,182.3 million as of December 31, 2022, despite significant capital expenditures to support Stage II and the Fort Worth Facility; 34 Table of Contents • Substantially completed construction and/or commissioning of several circuits of the Stage II optimization project, including concentrate drying and roasting; • Commenced construction of our Fort Worth Facility, including completion of the building shell in September 2022, and the entrance into a long-term supply agreement with GM to supply U.S.-sourced and manufactured rare earth materials, alloy and finished magnets; and • Awarded a $35.0 million contract in February 2022 by the Department of Defense’s Office of Industrial Base Policy and Sustainment Program to design and build a facility to process heavy rare earth elements (“HREE”) at Mountain Pass.
Biggest changeHighlights from the year ended December 31, 2023, include: • Completed construction and/or initial commissioning of all circuits of our Stage II optimization project; • Commenced production and sales of separated rare earth products in the third quarter and fourth quarter of 2023, respectively; • Announced “Upstream 60K” strategy targeting an approximately 50% expansion of rare earth oxide (“REO”) in concentrate output at Mountain Pass within four years with modest incremental investment; • Maintained strong concentrate production volumes despite continued construction and commissioning activities; • Completed construction of the building for the Fort Worth Facility, opened the office space that will serve as our company-wide magnetics headquarters, and made further progress on advancing our metal and magnet-making production capabilities; • Advanced the engineering and design and began procuring equipment for our heavy rare earth elements (“HREE”) processing and separations facility at Mountain Pass (the “HREE Facility”); • Entered into a tolling agreement with and subsequently acquired a 49% equity interest in VREX Holdco (as defined in the “Recent Developments” section below); • Maintained a strong balance sheet with cash, cash equivalents and short-term investments totaling $997.8 million as of December 31, 2023, despite significant capital expenditures to support Stage II, the Fort Worth Facility, and the HREE Facility; 35 Table of Contents • Generated revenue of $253.4 million, net income of $24.3 million, and diluted earnings per share (“EPS”) of $0.14; • Generated Adjusted EBITDA (see below) of $102.5 million, Adjusted Net Income (see below) of $71.4 million, and Adjusted Diluted EPS (see below) of $0.39; and • Generated net cash provided by operating activities of $62.7 million.
Non-GAAP Financial Measures We present Total Value Realized, Production Costs, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, and Free Cash Flow, which are non-GAAP financial measures that we use to supplement our results presented in accordance with GAAP.
Non-GAAP Financial Measures We present Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, Free Cash Flow, Production Costs, and Total Value Realized, which are non-GAAP financial measures that we use to supplement our results presented in accordance with GAAP.
Additionally, our location offers significant transportation advantages that create meaningful cost efficiencies in securing incoming supplies and shipping of our final products. We currently operate a single site in a single location, and any stoppage in activity, including for reasons outside of our control, could adversely impact our production, results of operations and cash flows.
Additionally, our location offers transportation advantages that create meaningful cost efficiencies in securing incoming supplies and shipping of our final products. We currently operate a single site in a single location, and any stoppage in activity, including for reasons outside of our control, could adversely impact our production, results of operations and cash flows.
Income tax benefit (expense) consists of an estimate of U.S. federal and state income taxes and income taxes in the jurisdictions in which we conduct business, adjusted for federal, state and local allowable income tax benefits, the effect of permanent differences and any valuation allowance against deferred tax assets.
Income tax expense consists of an estimate of U.S. federal and state income taxes in the jurisdictions in which we conduct business, adjusted for federal, state and local allowable income tax benefits, the effect of permanent differences and any valuation allowance against deferred tax assets.
See also “Cautionary Note Regarding Forward-Looking Statements.” Executive Overview MP Materials Corp., including its subsidiaries (the “MP Materials,” “we,” “our,” and “us”), is the largest producer of rare earth materials in the Western Hemisphere.
See also “Cautionary Note Regarding Forward-Looking Statements.” Executive Overview MP Materials Corp., including its subsidiaries (“we,” “our,” and “us”), is the largest producer of rare earth materials in the Western Hemisphere.
Refer to the “Non-GAAP Financial Measures” section below for the definitions of Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS, as well as a reconciliation of net income (loss) to Adjusted EBITDA and Adjusted Net Income, and Diluted EPS to Adjusted Diluted EPS.
Refer to the “Non-GAAP Financial Measures” section below for the definitions of Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS, as well as a reconciliation of net income to Adjusted EBITDA and Adjusted Net Income, and Diluted EPS to Adjusted Diluted EPS.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion and analysis of our financial condition and results of operations together with our Consolidated Financial Statements and related notes appearing elsewhere in this annual report on Form 10-K for the year ended December 31, 2022 (this “Annual Report”).
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS You should read the following discussion and analysis of our financial condition and results of operations together with our Consolidated Financial Statements and related notes appearing elsewhere in this annual report on Form 10-K for the year ended December 31, 2023 (this “Annual Report”).
(4) Amount for the year ended December 31, 2021, principally represents a non-cash gain recognized as a result of the Small Business Administration’s approval to forgive the Paycheck Protection Loan, which is included in “Other income, net” within our Consolidated Statements of Operations.
(7) Amount for the year ended December 31, 2021, principally represents a non-cash gain recognized as a result of the Small Business Administration’s approval to forgive the Paycheck Protection Loan, which is included in “Other income, net” within our Consolidated Statements of Operations.
Interest expense, net principally consists of the expense associated with the 0.25% per annum interest rate and the amortization of the debt issuance costs on our Convertible Notes (as defined in the “Liquidity and Capital Resources” section below) and the amortization of the discount on our debt obligation to Shenghe, offset by interest capitalized.
Interest expense, net principally consists of the expense associated with the 0.25% per annum interest rate and the amortization of the debt issuance costs on our Convertible Notes (as defined in the “Liquidity and Capital Resources” section below) and the amortization of the discount on a prior debt obligation to Shenghe, offset by capitalized interest.
Management’s Discussion and Analysis of Financial Condition and Results of Operations, Comparison of the Years Ended December 31, 2021, 2020, and 2019,” of our annual report on Form 10-K for the year ended December 31, 2021, filed with the U.S. Securities and Exchange Commission on February 28, 2022.
Management’s Discussion and Analysis of Financial Condition and Results of Operations, Comparison of the Years Ended December 31, 2022, 2021, and 2020,” of our annual report on Form 10-K for the year ended December 31, 2022, filed with the U.S. Securities and Exchange Commission on February 28, 2023.
A discussion of changes in our results of operations and cash flows between years ended December 31, 2021 and 2020, has been omitted from this Annual Report, but may be found in “Part II, Item 7.
A discussion of changes in our results of operations and cash flows between years ended December 31, 2022 and 2021, has been omitted from this Annual Report, but may be found in “Part II, Item 7.
Advanced projects, start-up, development and other consists principally of costs incurred in connection with research and development of new processes or to significantly enhance our existing processes, certain government contracts, and start-up costs, as well as costs incurred to support growth initiatives or pursue other opportunities.
Advanced projects and development consists principally of costs incurred in connection with research and development of new processes or to significantly enhance our existing processes, and certain government contracts, as well as costs incurred to support growth initiatives or pursue other opportunities.
In determining fair value, management makes estimates based on the expected timing of reclamation activities; cash flows to perform activities, which involves utilizing an assumption for future 47 Table of Contents inflation; amount and uncertainty associated with the cash flows, including adjustments for a market risk premium; and discounts such amounts using a credit-adjusted risk-free rate.
In determining fair value, management makes estimates based on the expected timing of reclamation activities; cash flows to perform activities, which involves utilizing an assumption for future inflation; amount and uncertainty associated with the cash flows, including adjustments for a market risk premium; and discounts such amounts using a credit-adjusted risk-free rate.
These include the trend toward electrification; geographic supply chain diversification, particularly in relation to China; the U.S. government initiatives to restore domestic supply of key minerals; and the increasing acceptance of environmental, social and governance mandates.
These include the trend toward electrification; geographic supply chain diversification, particularly in relation to China; the U.S. government initiatives to restore domestic supply of critical minerals; and the increasing acceptance of environmental, social and governance mandates.
In addition, following certain corporate events that occur prior to the maturity date of the Convertible Notes or if we deliver a notice of 41 Table of Contents redemption, we will, in certain circumstances, increase the conversion rate for holders who elect to convert their outstanding notes in connection with such corporate event or notice of redemption, as the case may be.
In addition, following certain corporate events that occur prior to the maturity date of the Convertible Notes or if we deliver a notice of redemption, we will, in certain circumstances, increase the conversion rate for holders who elect to convert their outstanding notes in connection with such corporate event or notice of redemption, as the case may be.
While our unit of production and sale is a MT of embedded REO equivalent, the actual weight of our rare earth concentrate is significantly greater, as the concentrate also contains non-REO minerals, loss-on-ignition, and residual moisture from the production process. We target REO content of greater than 60% per dry MT of concentrate (referred to as “REO grade”).
While our unit of production and sale is a MT of contained REO, the actual weight of our rare earth concentrate is significantly greater, as the concentrate also contains non-REO minerals, loss-on-ignition, and residual moisture from the production process. We target REO content of greater than 60% per dry MT of concentrate (referred to as “REO grade”).
Cost of sales (excluding depreciation, depletion and amortization) consists of production- and processing-related labor costs (including wages and salaries, benefits, and bonuses), mining and processing supplies (such as reagents), parts and labor for the maintenance of our mining fleet and processing facilities, other facilities-related costs (such as property taxes and utilities), packaging materials, and shipping and freight costs.
Cost of sales (excluding depreciation, depletion and amortization) consists of production- and processing-related labor costs (including wages and salaries, benefits, bonuses, and stock-based compensation), mining and processing supplies (such as reagents), parts and labor for the maintenance of our mining fleet and processing facilities, other facilities-related costs (such as property taxes and utilities), packaging materials, and shipping and freight costs.
The elemental distribution of REO in our concentrate is relatively consistent over time and production lot. We consider this the natural distribution, as it reflects the distribution of elements contained, on average, in our ore. 35 Table of Contents REO Sales Volume Our REO sales volume for a given period is calculated in MTs.
The elemental distribution of REO in our concentrate is relatively consistent over time and production lot. We consider this the natural distribution, as it reflects the distribution of elements contained, on average, in our ore. REO Sales Volume Our REO Sales Volume for a given period is calculated in MTs.
Asset Retirement and Environmental Obligations: See Note 10, “Asset Retirement and Environmental Obligations,” in the notes to the Consolidated Financial Statements for our estimated cash requirements to settle asset retirement and environmental obligations.
Asset Retirement and Environmental Obligations: See Note 8 , “Asset Retirement and Environmental Obligations,” in the notes to the Consolidated Financial Statements for our estimated cash requirements to settle asset retirement and environmental obligations.
Purchase Obligations: Our outstanding purchase obligations as of December 31, 2022, primarily consist of purchase orders initiated with vendors and suppliers in the ordinary course of business for operating and maintenance capital expenditures that will be settled within one year. In certain instances, we are permitted to cancel, reschedule or adjust these orders.
Purchase Obligations: Our outstanding purchase obligations as of December 31, 2023, primarily consist of purchase orders initiated with vendors and suppliers in the ordinary course of business for operating and maintenance capital 45 Table of Contents expenditures that will be settled within one year. In certain instances, we are permitted to cancel, reschedule or adjust these orders.
We define Production Costs, which is a non-GAAP financial measure, as our cost of sales (excluding depletion, depreciation and amortization) less stock-based compensation expense included in cost of sales, shipping and freight costs, and costs attributable to certain other sales. Production cost per REO MT is a key indicator of our concentrate production efficiency.
We define Production Costs, which is a non-GAAP financial measure, as our cost of sales (excluding depletion, depreciation and amortization) (“COS”) less stock-based compensation expense included in COS, shipping and freight costs, and costs not attributable to concentrate sales. Production Cost per REO MT is a key indicator of our concentrate production efficiency.
Rare earth concentrate is not quoted on any major commodities market or exchange and demand is 40 Table of Contents currently limited to a relatively limited number of refiners, a significant majority of which are based in China.
Rare earth concentrate is not quoted on any major commodities market or exchange and demand is currently constrained to a relatively limited number of refiners, a significant majority of which are based in China.
Our significant accounting policies are described in Note 2, “Significant Accounting Policies,” in the notes to the Consolidated Financial Statements. Our critical accounting estimates are described below. Revenue We recognize revenue from sales of rare earth products produced from our facility.
Our significant accounting policies are described in Note 2 , “Significant Accounting Policies,” in the notes to the Consolidated Financial Statements. Our critical accounting estimates are described below. Revenue We recognize revenue from sales of rare earth products produced at Mountain Pass.
(5) Tax impact of adjustments is calculated using an adjusted effective tax rate, which excludes the impact of discrete tax costs and benefits, to each adjustment. The adjusted effective tax rates were 16.3%, 17.5% and 25.0% for the years ended December 31, 2022, 2021 and 2020, respectively.
(8) Tax impact of adjustments is calculated using an adjusted effective tax rate, which excludes the impact of discrete tax costs and benefits, to each adjustment. The adjusted effective tax rates were 25.9%, 16.3% and 17.5% for the years ended December 31, 2023, 2022 and 2021, respectively.
We calculate Adjusted Diluted EPS as our GAAP diluted EPS excluding the per share impact, using GAAP diluted weighted-average shares outstanding as the denominator, of stock-based compensation expense; transaction-related, start-up and other non-recurring costs; gain or loss on sale or disposal of long-lived assets; write-downs of inventories; royalty expense; settlement charge; tariff rebates; and other items that we do not consider representative of our underlying operations; adjusted to give effect to the income tax impact of such adjustments; and the release of valuation allowance.
We calculate Adjusted Diluted EPS as our GAAP diluted EPS excluding the per share impact, using adjusted diluted weighted-average shares outstanding as the denominator, of stock-based compensation expense; initial start-up costs; transaction-related and other costs; gain or loss on disposals of long-lived assets; certain write-downs of inventories; tariff rebates; and other items that we do not consider representative of our underlying operations; adjusted to give effect to the income tax impact of such adjustments; and the release of valuation allowance.
Total Value Realized, Production Costs, Adjusted EBITDA, Adjusted Net Income, Adjusted Diluted EPS, and Free Cash Flow are not intended to be a substitute for any GAAP financial measure and, as calculated, may not be comparable to other similarly titled measures of performance or liquidity of other companies within our industry or in other industries.
Adjusted EBITDA, Adjusted Net Income, 46 Table of Contents Adjusted Diluted EPS, Free Cash Flow, Production Costs, and Total Value Realized are not intended to be substitutes for any GAAP financial measures and, as calculated, may not be comparable to other similarly titled measures of performance or liquidity of other companies within our industry or in other industries.
Our principal customer, Shenghe, purchased the vast majority of our production for the years ended December 31, 2022, 2021 and 2020, and is an affiliate of an equity holder of MP Materials.
Shenghe purchased the vast majority of our production for the years ended December 31, 2023, 2022 and 2021, and is an affiliate of an equity holder of MP Materials.
Other: In order to support our Stage II separations, HREE Facility, and Fort Worth Facility, we expect to hire at least an additional 175 full-time employees within the next two years, which will result in additional cash requirements for salaries, benefits and training.
Other: In order to support our Fort Worth Facility, we expect to hire at least an additional 100 full-time employees within the next two years, which will result in additional cash requirements for salaries, benefits and training.
The transaction price with Shenghe is typically based on an agreed-upon price per MT but subject to certain quality adjustments based on REO content, with an adjustment for the ultimate market price of the product realized by Shenghe in their sales to their customers, further adjusted for certain contractually negotiated amounts.
The transaction price with Shenghe is typically based on an agreed-upon price per MT, with an adjustment for the ultimate market price of the product realized by Shenghe in their sales to their customers, further adjusted for certain contractually negotiated amounts.
Adjusted EBITDA We define Adjusted EBITDA as our GAAP net income or loss before interest expense, net; income tax expense or benefit; and depreciation, depletion and amortization; further adjusted to eliminate the impact of stock-based compensation expense; transaction-related, start-up and other non-recurring costs; accretion of asset retirement and environmental obligations; gain or loss on sale or disposal of long-lived assets; write-downs of inventories; royalty expense; settlement charge; tariff rebates; and other income or loss.
Adjusted EBITDA We define Adjusted EBITDA as our GAAP net income before interest expense, net; income tax expense or benefit; and depreciation, depletion and amortization; further adjusted to eliminate the impact of stock-based compensation expense; initial start-up costs; transaction-related and other costs; accretion of asset retirement and environmental obligations; gain or loss on disposals of long-lived assets; certain write-downs of inventories; tariff rebates; and other income or loss.
As part of Stage II, we have reintroduced an oxidizing roasting circuit, reoriented portions of the plant process flow, increased product finishing capacity, improved wastewater management, and made other improvements to materials handling and storage.
More specifically, we have reintroduced an oxidizing roasting circuit, reoriented portions of the plant process flow, increased product finishing capacity, improved wastewater management, and made other improvements to materials handling and storage.
The sales price of rare earth concentrate sold to Shenghe under these agreements is based on an agreed-upon price per MT, subject to certain quality adjustments depending on the measured characteristics of the product, with an adjustment for the ultimate market price of the product realized by Shenghe upon sales to their customers, including the impact of changes in the exchange rate between the Chinese Yuan and the U.S. dollar.
The sales price of rare earth concentrate sold to Shenghe under both agreements is based on an agreed-upon price per MT, with an adjustment for the ultimate market price of the product realized by Shenghe upon sales to their customers, including the impact of changes in the exchange rate between the Chinese Yuan and the U.S. dollar.
Other income, net for the year ended December 31, 2022, increased year over year as a result of interest and investment income earned on our short-term investments, which were purchased starting in the second quarter of 2022.
Other income, net for the year ended December 31, 2023, increased year over year as a result of interest and investment income earned on our short-term investments, which were purchased starting in the second quarter of 2022. Interest and investment income is principally generated from accretion of the discount on such investments.
The effective tax rate (income taxes as a percentage of income or loss before income taxes) was 15.3% and 15.7% for the years ended December 31, 2022 and 2021, respectively.
The effective tax rate (income tax expense as a percentage of income before income taxes) was 26.5%, 15.3% and 15.7% for the years ended December 31, 2023, 2022 and 2021, respectively.
As of December 31, 2022, SRK Consulting (U.S.), Inc., an independent consulting firm that we retained to assess our reserves, estimated total proven and probable reserves of 1.96 million short tons of REO contained in 29.30 million short tons of ore at Mountain Pass, with an average ore grade of 6.32%.
As of December 31, 2023, SRK Consulting (U.S.), Inc., an independent consulting firm that we retained to assess our reserves, estimated total proven and probable reserves of 1.86 million short tons of REO contained in 28.46 million short tons of ore at Mountain Pass, with an average ore grade of 6.20%.
We aim to allocate an amount equal to the net proceeds from the Convertible Notes offering to existing or future investments in, or the financing or refinancing of, eligible “green projects.” Eligible green projects are intended to reduce our environmental impact and/or enable the production of low-carbon technologies.
At the time of issuance, we aimed to allocate an amount equal to the net proceeds from the Convertible Notes offering to existing or future investments in, or the financing or refinancing of, eligible “green projects” intended to reduce our environmental impact and/or enable the production of low-carbon technologies.
We consider net income (loss) and diluted earnings (loss) per share (“EPS”) to be the most directly comparable financial measures calculated in accordance with generally accepted accounting principles in the United States (“GAAP”) to Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS, which are non-GAAP financial measures.
We consider net income and diluted EPS to be the most directly comparable financial measures calculated in accordance with generally accepted accounting principles in the U.S. (“GAAP”) to Adjusted EBITDA, Adjusted Net Income, and Adjusted Diluted EPS, which are non-GAAP financial measures.
The following table presents a reconciliation of our Free Cash Flow, which is a non-GAAP financial measure, to our net cash provided by operating activities, which is determined in accordance with GAAP: For the year ended December 31, (in thousands) 2022 2021 2020 Net cash provided by operating activities (1) $ 343,514 $ 101,971 $ 3,277 Additions to property, plant and equipment, net (2) (321,465) (119,488) (22,370) Free Cash Flow $ 22,049 $ (17,517) $ (19,093) 46 Table of Contents (1) As a result of the accounting treatment for the A&R Offtake Agreement, $13.6 million, $54.8 million and $21.3 million of our product sales for the years ended December 31, 2022, 2021, and 2020, respectively, were excluded from cash provided by operating activities since that portion of the sales price was retained by Shenghe to reduce the debt obligation.
The following table presents a reconciliation of our Free Cash Flow, which is a non-GAAP financial measure, to our net cash provided by operating activities, which is determined in accordance with GAAP: For the year ended December 31, (in thousands) 2023 2022 2021 Net cash provided by operating activities (1) $ 62,699 $ 343,514 $ 101,971 Additions to property, plant and equipment, net (2) (259,097) (321,465) (119,488) Free Cash Flow $ (196,398) $ 22,049 $ (17,517) (1) Under the terms of the A&R Offtake Agreement and pursuant to the accounting treatment thereof, $13.6 million and $54.8 million of our revenue for the years ended December 31, 2022 and 2021, respectively, was excluded from cash provided by operating activities since that portion of the sales price was retained by Shenghe to reduce the debt obligation.
In addition, $13.6 million of our product sales was excluded from cash provided by operating activities for the year ended December 31, 2022, since that portion of the sales price was retained by Shenghe to reduce the debt obligation, compared to $54.8 million in the prior year.
In addition, $13.6 million of our revenue was excluded from cash provided by operating activities for the year ended December 31, 2022, since that portion of the sales price was retained by Shenghe to reduce the debt obligation, with no similar amount in the current year.
These estimates use an estimated economical cut-off of 2.49% total rare earth oxide. Based on these estimated reserves and our expected annual production rate of REO upon completing the commissioning of Stage II, our expected mine life was approximately 34 years as of December 31, 2022.
These estimates use an estimated economical cut-off grade of 2.43% total rare earth oxide. Based on these estimated reserves and our expected annual production rate of REO upon production ramp-up of Stage II, our expected mine life was approximately 33 years as of December 31, 2023.
We believe Free Cash Flow is useful for comparing our ability to generate cash with that of our peers. The presentation of Free Cash Flow is not meant to be considered in isolation or as an alternative to cash flows from operating activities and does not necessarily indicate whether cash flows will be sufficient to fund cash needs.
The presentation of Free Cash Flow is not meant to be considered in isolation or as an alternative to cash flows from operating activities and does not necessarily indicate whether cash flows will be sufficient to fund cash needs.
See the “Non-GAAP Financial Measures” section below for a reconciliation of our Production Costs, which is a non-GAAP financial measure, to our cost of sales (excluding depletion, depreciation and amortization), which is determined in accordance with GAAP, as well as the calculation of production cost per REO MT.
See the “ Non-GAAP Financial Measures ” section below for a reconciliation of our Production Costs, which is a non-GAAP financial measure, to our COS, which is determined in accordance with GAAP, as well as the calculation of Production Cost per REO MT.
The following table presents a reconciliation of our Production 43 Table of Contents Costs to our cost of sales (excluding depreciation, depletion and amortization), which is determined in accordance with GAAP, as well as the calculation of production cost per REO MT: For the year ended December 31, (in thousands, unless otherwise stated) 2022 2021 2020 Cost of sales (excluding depreciation, depletion and amortization) $ 92,218 $ 76,253 $ 63,798 Adjusted for: Stock-based compensation expense (1) (2,853) (4,294) (277) Shipping and freight (2) (13,002) (8,923) (8,220) Other (3) (1,715) (79) (446) Production Costs 74,648 62,957 54,855 Divided by: REO sales volume (in MTs) 43,198 42,158 38,367 Production Cost per REO MT (in dollars) $ 1,728 $ 1,493 $ 1,430 (1) Pertains only to the amount of stock-based compensation expense included in cost of sales.
The following table presents a reconciliation of our Production Costs to our COS, which is determined in accordance with GAAP, as well as the calculation of Production Cost per REO MT: For the year ended December 31, (in thousands, unless otherwise stated) 2023 2022 2021 Cost of sales (excluding depreciation, depletion and amortization) $ 92,714 $ 92,218 $ 76,253 Adjusted for: Stock-based compensation expense (1) (3,932) (2,853) (4,294) Shipping and freight (2) (7,485) (13,002) (8,923) Write-down of inventories (3) (2,285) — — Other (4) (3,198) (1,715) (79) Production Costs 75,814 74,648 62,957 Divided by: REO Sales Volume (in MTs) 36,837 43,198 42,158 Production Cost per REO MT (in dollars) $ 2,058 $ 1,728 $ 1,493 (1) Pertains only to the amount of stock-based compensation expense included in “Cost of sales (excluding depreciation, depletion and amortization)” within our Consolidated Statements of Operations.
See the “Quarterly Performance Trend” section below. 38 Table of Contents The increase in other sales for the year ended December 31, 2022, as compared to the prior year, was driven primarily by $8.5 million of revenue related to a sales agreement with Shenghe entered into in March 2022 for certain stockpiles of rare earth fluoride (“REF”).
Other rare earth products revenue for the year ended December 31, 2023, decreased as compared to the prior year, primarily driven by $8.5 million of revenue related to a sales agreement with Shenghe entered into in March 2022 for certain stockpiles of rare earth fluoride (“REF”).
This measure refers to the REO content contained in the rare earth concentrate we produce. Our REO production volume is a key indicator of our mining and processing capacity and efficiency. The rare earth concentrate we currently produce is a processed, concentrated form of our mined rare earth-bearing ores.
Our REO Production Volume is a key indicator of our mining and processing capacity and efficiency. The rare earth concentrate is a processed, concentrated form of our mined rare earth-bearing ores.
See the “Non-GAAP Financial Measures” section below for a reconciliation of our Total Value Realized, which is a non-GAAP financial measure, to our product sales, which is determined in accordance with GAAP, as well as the calculation of realized price per REO MT.
See the “Non-GAAP Financial Measures” section below for a reconciliation of our Total Value Realized, which is a non-GAAP financial measure, to our rare earth concentrate sales, which is determined in accordance with GAAP.
Over time, we expect to be able to continue to grow our expected mine life through additional exploratory drilling and improved processing capabilities, which may result in changes to various assumptions underlying our mineral reserve estimate. 37 Table of Contents Mining activities in the United States are heavily regulated, particularly in California.
Over time, we expect to be able to continue to grow our expected mine life through additional exploratory drilling and improved processing capabilities, which may result in changes to various assumptions underlying our mineral reserve estimate. Mining activities in the U.S. are heavily regulated, particularly in California. Regulatory changes may make it more challenging for us to access our reserves.
(2) Includes $1.3 million for the year ended December 31, 2022, of shipping and freight costs associated with sales of REF stockpiles. (3) Amount for the year ended December 31, 2022, pertains primarily to costs (excluding shipping and freight) attributable to sales of REF stockpiles.
(4) Amount for the year ended December 31, 2023, pertains to costs (excluding shipping and freight) associated with non-concentrate products. Amount for the year ended December 31, 2022, pertains primarily to costs (excluding shipping and freight) attributable to sales of REF stockpiles.
We currently produce a rare earth concentrate that is principally sold pursuant to the Offtake Agreement to Shenghe (as such terms are defined in Note 3 “Relationship and Agreements with Shenghe,” in the notes to the Consolidated Financial Statements), that, in turn, typically sells that product to refiners in China.
We produce rare earth concentrate products as well as refined rare earth oxides and related products. The rare earth concentrate is principally sold pursuant to the Offtake Agreement to Shenghe (as such terms are defined in Note 20, “Related Party Transactions,” in the notes to the Consolidated Financial Statements), that, in turn, typically sells that product to refiners in China.
A unit, or MT, is considered sold for purposes of this performance indicator once we recognize revenue on its sale. Our REO sales volume is a key measure of our ability to convert our production into revenue.
A unit, or MT, is considered sold once we recognize revenue on its sale as determined in accordance with GAAP. Our REO Sales Volume is a key measure of our ability to convert our concentrate production into revenue.
Furthermore, during the year ended December 31, 2022, we recorded another decrement of $13.1 million, the effect of removing estimated cash flows pertaining to certain of our processing and separations facilities at Mountain Pass that no longer required reclamation.
Furthermore, during the year ended December 31, 2022, we recorded a decrement of $13.1 million, the effect of removing estimated cash flows pertaining to certain of our processing and separations facilities at Mountain Pass that no longer required reclamation. See Note 8 , “Asset Retirement and Environmental Obligations,” in the notes to the Consolidated Financial Statements for more information.
The following table presents a reconciliation of our Adjusted Net Income, which is a non-GAAP financial measure, to our net income (loss), which is determined in accordance with GAAP: For the year ended December 31, (in thousands) 2022 2021 2020 Net income (loss) $ 289,004 $ 135,037 $ (21,825) Adjusted for: Stock-based compensation expense (1) 31,780 22,931 5,014 Transaction-related, start-up and other non-recurring costs (2) 9,216 3,716 4,438 Loss on sale or disposal of long-lived assets, net 391 569 101 Write-down of inventories — 1,809 — Royalty expense — — 2,406 Settlement charge — — 66,615 Tariff rebates (3) — (2,050) (10,347) Other (4) (273) (3,754) (352) Tax impact of adjustments above (5) (6,716) (4,071) (16,969) Release of valuation allowance (2,845) — (9,333) Adjusted Net Income $ 320,557 $ 154,187 $ 19,748 (1) Principally included in “Selling, general and administrative” within our Consolidated Statements of Operations.
The following table presents a reconciliation of our Adjusted Net Income, which is a non-GAAP financial measure, to our net income, which is determined in accordance with GAAP: For the year ended December 31, (in thousands) 2023 2022 2021 Net income $ 24,307 $ 289,004 $ 135,037 Adjusted for: Stock-based compensation expense (1) 25,236 31,780 22,931 Initial start-up costs (2) 20,607 7,432 378 Transaction-related and other costs (3) 11,435 1,784 3,338 Loss on disposals of long-lived assets, net (4) 6,326 391 569 Write-down of inventories (4)(5) — — 1,809 Tariff rebate (6) — — (2,050) Other (7) (51) (273) (3,754) Tax impact of adjustments above (8) (16,482) (6,716) (4,071) Release of valuation allowance — (2,845) — Adjusted Net Income $ 71,378 $ 320,557 $ 154,187 (1) Principally included in “Selling, general and administrative” within our Consolidated Statements of Operations.
Adjusted Net Income and Adjusted Diluted EPS We calculate Adjusted Net Income as our GAAP net income or loss excluding the impact of stock-based compensation expense; transaction-related, start-up and other non-recurring costs; gain or loss on sale or disposal of long-lived assets; write-downs of inventories; royalty expense; settlement charge; tariff rebates; and other items that we do not consider representative of our underlying operations; adjusted to give effect to the income tax impact of such adjustments; and the release of valuation allowance.
Amount for the year ended December 31, 2021, principally represents a non-cash gain recognized as a result of the Small Business Administration’s approval to forgive the Paycheck Protection Loan. 47 Table of Contents Adjusted Net Income and Adjusted Diluted EPS We calculate Adjusted Net Income as our GAAP net income excluding the impact of stock-based compensation expense; initial start-up costs; transaction-related and other costs; gain or loss on disposals of long-lived assets; certain write-downs of inventories; tariff rebates; and other items that we do not consider representative of our underlying operations; adjusted to give effect to the income tax impact of such adjustments; and the release of valuation allowance.
Recently Adopted and Issued Accounting Pronouncements Recently adopted and issued accounting pronouncements are described in Note 2, “Significant Accounting Policies,” in the notes to the Consolidated Financial Statements. Other Information COVID-19 Pandemic The COVID-19 pandemic remains on-going and continues to impact the global economy.
Recently Adopted and Issued Accounting Pronouncements Recently adopted and issued accounting pronouncements are described in Note 2 , “Significant Accounting Policies,” in the notes to the Consolidated Financial Statements.
These results were achieved through an optimized reagent scheme, lower process temperatures, better management of the tailings facility, and a commitment to operational excellence, driving approximately 95% uptime. Our Stage I optimization project enabled us to achieve what we believe to be world-class production cost levels for rare earth concentrate.
These results were achieved by optimizing the reagent scheme, reducing process temperatures, improving tailings facility management, and committing to operational excellence, which has allowed us to achieve approximately 92% uptime in 2023. Our Stage I optimization plan enabled us to achieve what we believe to be world-class production cost levels for rare earth concentrate.
The success of our business reflects our ability to continue to manage our costs. Our production achievements in Stage I have provided economies of scale to lower production costs per MT of REO produced in concentrate. Furthermore, Stage II was designed to enable us to continue to manage our cost structure for separating REE through an optimized facility process flow.
The success of our business reflects our ability to continue to manage our costs. Our production achievements in Stage I have provided economies of scale to lower production costs per MT of REO produced in concentrate.
Our Mineral Reserves Our ore body has proven over more than 60 years of operations to be one of the world’s largest and highest-grade rare earth resources.
We expect our Stage III efforts to continue to benefit from geopolitical developments, including initiatives to repatriate critical materials supply chains. Our Mineral Reserves Our ore body has proven over more than 60 years of operations to be one of the world’s largest and highest-grade rare earth resources.
For example, in completing the transition to separated rare earth products, we may determine that production cost per REO MT, which is a metric focused solely on Stage I concentrate operations, is no longer meaningful in evaluating and understanding our business or operating results.
For example, beginning with the first quarter of 2024, we will no longer present Production Cost per REO MT, which is a metric focused solely on Stage I concentrate operations, as it will no longer be meaningful in evaluating and understanding our business or operating results.
In addition, we expect to spend approximately $8 million to $10 million within the next two years on implementing a new enterprise resource planning system. Lastly, our engineering, procurement, and construction contracts are typically cancellable.
We also expect to spend an additional $5 million to $6 million within the next year on completing the implementation of a new enterprise resource planning system. Lastly, our engineering, procurement, and construction contracts are typically cancellable.
As noted above, as we evolve as a business and transition from a producer of rare earth concentrate to a producer of separated rare earth products, the metrics that management anticipates using to evaluate the business may change or be revised.
However, as our business continues to evolve and transitions from production of rare earth concentrate to production of separated rare earth products, the metrics that management uses to evaluate the business may continue to change or be revised.
The following table presents a reconciliation of our Adjusted EBITDA, which is a non-GAAP financial measure, to our net income (loss), which is determined in accordance with GAAP: For the year ended December 31, (in thousands) 2022 2021 2020 Net income (loss) $ 289,004 $ 135,037 $ (21,825) Adjusted for: Depreciation, depletion and amortization 18,356 24,382 6,931 Interest expense, net 5,786 8,904 5,009 Income tax expense (benefit) 52,148 25,158 (17,636) Stock-based compensation expense (1) 31,780 22,931 5,014 Transaction-related, start-up and other non-recurring costs (2) 9,216 3,716 4,438 Accretion of asset retirement and environmental obligations 1,477 2,375 2,255 Loss on sale or disposal of long-lived assets, net 391 569 101 Write-down of inventories — 1,809 — Royalty expense — — 2,406 Settlement charge — — 66,615 Tariff rebates (3) — (2,050) (10,347) Other income, net (4) (19,527) (3,754) (352) Adjusted EBITDA $ 388,631 $ 219,077 $ 42,609 (1) Principally included in “Selling, general and administrative” within our Consolidated Statements of Operations. 44 Table of Contents (2) Amount for the year ended December 31, 2022, is principally comprised of start-up costs, which relate to the restart of our CHP plant as well as certain costs associated with our Stage II optimization project and Stage III initiatives.
The following table presents a reconciliation of our Adjusted EBITDA, which is a non-GAAP financial measure, to our net income, which is determined in accordance with GAAP: For the year ended December 31, (in thousands) 2023 2022 2021 Net income $ 24,307 $ 289,004 $ 135,037 Adjusted for: Depreciation, depletion and amortization 55,709 18,356 24,382 Interest expense, net 5,254 5,786 8,904 Income tax expense 8,768 52,148 25,158 Stock-based compensation expense (1) 25,236 31,780 22,931 Initial start-up costs (2) 20,607 7,432 378 Transaction-related and other costs (3) 11,435 1,784 3,338 Accretion of asset retirement and environmental obligations (4) 908 1,477 2,375 Loss on disposals of long-lived assets, net (4) 6,326 391 569 Write-down of inventories (4)(5) — — 1,809 Tariff rebate (6) — — (2,050) Other income, net (7) (56,048) (19,527) (3,754) Adjusted EBITDA $ 102,502 $ 388,631 $ 219,077 (1) Principally included in “Selling, general and administrative” within our Consolidated Statements of Operations.
Selling, general and administrative expenses consist primarily of accounting, finance and administrative personnel costs, including stock-based compensation expense related to these personnel; professional services (including legal, regulatory, audit and others); certain engineering expenses; insurance, license and permit costs; facilities rent and other costs; office supplies; general facilities expenses; and certain environmental, health and safety expenses.
Selling, general and administrative (“SG&A”) expenses consist primarily of personnel costs (including salaries, benefits, bonuses, and stock-based compensation) of our administrative functions such as executives, accounting and finance, legal, and information technology; professional services (including legal, regulatory, audit and others); certain engineering expenses; insurance, license and permit costs; corporate office lease cost; office supplies; and certain environmental, health and safety expenses.
As of December 31, 2022, we had $7.1 million in principal (and accrued interest) outstanding under the equipment notes, of which $2.4 million is due within the next 12 months. Leases: We have lease arrangements for certain equipment and facilities, including office space, vehicles and equipment used in our operations.
Equipment Notes: We have financing agreements for the purchase of certain equipment, including trucks, tractors, loaders, graders, and various other machinery. As of December 31, 2023, we had $4.7 million in principal (and accrued interest) outstanding under the equipment notes, of which $2.1 million is due within the next 12 months.
The reintroduction of the oxidizing roasting step will allow us to capitalize on the inherent advantages of the bastnaesite ore at Mountain Pass, which is uniquely suitable to low-cost refining by selectively eliminating the need to carry cerium, a lower-value mineral, through the separations process.
Furthermore, we designed our Stage II process flow to capitalize on the inherent advantages of the bastnaesite ore at Mountain Pass, that is well-suited to low-cost refining by selectively eliminating the need to carry cerium, a lower-value mineral, through the separations process.
The increase in production cost per REO MT was driven by higher materials, supplies and payroll costs, including an increase in employee headcount to support the expansion of operations, as well as higher energy costs incurred following the restart of our combined heat and power (“CHP”) plant in January 2022.
The increase in Production Cost per REO MT was driven by higher payroll costs, including the increase in employee headcount to support the expansion of operations, and to a lesser extent, higher materials and supplies costs as well as higher property and other taxes.
As mentioned above, in completing the transition to separated rare earth products, we may determine that production cost per REO MT, which is a metric focused solely on Stage I concentrate operations, and consequently, Production Costs, are no longer meaningful in evaluating and understanding our business or operating results.
As mentioned above, beginning with the first quarter of 2024, we will no longer present Production Cost per REO MT, which is a metric focused solely on Stage I concentrate operations, as it will no longer be meaningful in evaluating and understanding our business or operating results. Accordingly, we will also no longer present Production Costs.
Production cost per REO MT varies period to period based on the timing of scheduled outages of our production facilities for maintenance. See the “Quarterly Performance Trend” section below.
Production Cost per REO MT varies period to period based on the timing of scheduled outages of our production facilities for maintenance. See the “Quarterly Performance Trend” section below. With the commissioning of Stage II in 2023, the expected headcount growth to support our refining operations is largely complete as of December 31, 2023.
These developments are a part of our Stage III downstream expansion strategy (“Stage III”). Certain REE serve as critical inputs for the rare earth magnets located inside the electric motors and generators powering carbon-reducing technologies such as electric vehicles (“EVs”) and wind turbines, as well as drones, defense systems, robotics and many other high-growth, advanced technologies.
Certain rare earth elements (“REE”) serve as critical inputs for the rare earth magnets inside the electric motors and generators powering carbon-reducing technologies such as hybrid and electric vehicles (referred to collectively as “xEVs”) and wind turbines, as well as drones, defense systems, robotics and many other high-growth, advanced technologies.
Furthermore, in April 2022, we entered into a long-term supply agreement with General Motors Company (NYSE: GM) (“GM”) to supply U.S.-sourced and manufactured rare earth materials, alloy and finished magnets for the electric motors in more than a dozen models using GM’s Ultium Platform, with a gradual production ramp that is expected to begin in late 2023, starting with alloy.
Additionally, in April 2022, we entered into a long-term agreement with General Motors Company (NYSE: GM) (“GM”) to supply U.S.-sourced and manufactured rare earth materials and finished magnets for the electric motors in more than a dozen models based on GM’s Ultium Platform. These developments are part of our Stage III downstream expansion strategy (“Stage III”).
We believe integration into magnet production will provide some protection from commodity pricing volatility, while also enhancing our business profile as the producer of a critical industrial output in addition to a producer of resources. We expect our Stage III efforts to continue to benefit from geopolitical developments, including initiatives to repatriate critical materials supply chains.
These initiatives support our long-term plans to become a leading global source for rare earth magnets. We believe integration into magnet production will provide some protection from commodity pricing volatility, while also enhancing our business profile as the producer of a critical industrial output in addition to a producer of resources.
Quarterly Performance Trend While our business is not highly seasonal in nature, we sometimes experience a timing lag between production and sales, which may result in volatility in our results of operations between periods.
For additional information on the 45X Credit, refer to Note 12 , “Income Taxes,” and Note 16 , “Government Grants,” in the notes to the Consolidated Financial Statements. 43 Table of Contents Quarterly Performance Trend While our business is not highly seasonal in nature, we sometimes experience a timing lag between production and sales, which may result in volatility in our results of operations between periods.
As illustrated in Note 10, “Asset Retirement and Environmental Obligations,” in the notes to the Consolidated Financial Statements, our asset retirement obligations have decreased from $25.6 million as of December 31, 2020, to $5.5 million as of December 31, 2022, as a result of revisions in our estimated timing and cash flows pertaining to required reclamation activities.
As a result, these estimates and assumptions are subjective and can vary over time. Since December 31, 2020, our asset retirement obligations have decreased from $25.6 million to $5.7 million as of December 31, 2023, as a result of revisions in our estimated timing and cash flows pertaining to required reclamation activities.
We believe we benefit from the continued growth of the rare earth market, particularly the market for NdPr and permanent magnets, and from several demand tailwinds for REE.
Accordingly, the demand for our products may be impacted by demand for these downstream products, particularly the continued growth in xEVs. Despite the current macroeconomic conditions, we continue to believe we benefit from the growth of the rare earth market, particularly the market for NdPr and permanent magnets, and from several demand tailwinds for REE.
The completion of our mission to become a fully integrated domestic magnetics producer is expected to be capital intensive. In accelerating the strategic opportunity for the separation of HREE, enhancements were made to the initial scope of the Stage II project.
The completion of our mission to become a fully integrated domestic magnetics producer is expected to be capital intensive.
Critical Accounting Estimates Preparation of the Consolidated Financial Statements in accordance with GAAP requires our management to make judgments, estimates and assumptions that impact the reported amount of revenue and operating expenses, assets and liabilities and the disclosure of contingent assets and liabilities.
(2) Amounts for the years ended December 31, 2023, 2022 and 2021, are net of $2.8 million, $5.1 million and $4.4 million, respectively, in proceeds from government awards used for construction. 50 Table of Contents Critical Accounting Estimates Preparation of the Consolidated Financial Statements in accordance with GAAP requires our management to make judgments, estimates and assumptions that impact the reported amount of revenue and operating expenses, assets and liabilities and the disclosure of contingent assets and liabilities.
In addition, quarterly production is impacted by the timing of scheduled outages of our production facilities for maintenance, which typically occur in the second and fourth quarter.
The timing lag may be the result of, or influenced by, factors such as the timing and duration of shipments or the time required to convert materials. In addition, quarterly production of concentrate is impacted by the timing of scheduled outages of our production facilities for maintenance, which typically occur in the second and fourth quarters.
These refiners separate the constituent rare earth elements (“REE”) contained in our concentrate and sell the separated products to their customers. Upon completing commissioning of the Stage II optimization project (“Stage II”), we anticipate producing and selling separated rare earth products, including neodymium-praseodymium (“NdPr”) oxide.
Following the commissioning of our Stage II optimization project (“Stage II”) in the third quarter of 2023, we began producing separated rare earth products, including neodymium-praseodymium (“NdPr”) oxide, that we began selling to customers globally in the fourth quarter of 2023.
In addition, we are constructing our initial rare earth metal, alloy and magnet manufacturing facility in Fort Worth, Texas (the “Fort Worth Facility”), where we anticipate manufacturing, among other products, neodymium-iron-boron (“NdFeB”) permanent magnets.
We own and operate the Mountain Pass Rare Earth Mine and Processing Facility (“Mountain Pass”), the only rare earth mining and processing site of scale in North America, and are also constructing a rare earth metal, alloy and magnet manufacturing facility in Fort Worth, Texas (the “Fort Worth Facility”), where we anticipate manufacturing neodymium-iron-boron (“NdFeB”) permanent magnets and its precursor products.
Our results of operations and cash flows depend in large part upon the market prices of REO and particularly the price of rare earth concentrate.
As of December 31, 2023, we had $997.8 million of cash, cash equivalents and short-term investments and $690.0 million principal amount of long-term debt. Our results of operations and cash flows depend in large part upon the market prices of REO and particularly the price of rare earth concentrate.
We also operate in a competitive industry, and many of our key competitors are based in China, where competitors may not be subject to the same rigorous environmental standards and production costs are typically lower than in the United States. 36 Table of Contents Maximizing Production Efficiency In 2022, REO production continued to be approximately 3.5x greater than the highest ever production in a twelve-month period achieved at Mountain Pass prior to the implementation and completion of Stage I.
We also operate in a competitive industry, and many of our key competitors are based in China, where competitors may not be subject to the same rigorous environmental standards and production costs are typically lower than in the U.S.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeQUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We have in the past and may in the future be exposed to certain market risks, including commodity price, foreign currency, and interest rate risks, in the ordinary course of our business, as discussed further below. 48 Table of Contents Commodity Price Risk Our results of operations depend in large part upon the market prices of REO and particularly the price of rare earth concentrate.
Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We have in the past and may in the future be exposed to certain market risks, including commodity price, foreign currency, and interest rate risks, in the ordinary course of our business, as discussed further below.
We expect demand for NdPr to continue to grow, driving demand for our concentrate, and in the future, separated NdPr oxide and permanent magnets containing NdPr.
We expect demand for NdPr to continue to grow, driving demand for our concentrate, separated NdPr oxide, and in the future, permanent magnets containing NdPr.
We have not entered into derivative contracts to protect the price of our products, and do not expect to do so in the foreseeable future, as there is no liquid market for such contracts and their cost may be prohibitive, if they could be obtained at all. The solvent extraction and finishing processes are highly reliant upon standard commodity reagents.
We have not entered into derivative contracts to protect the price of our products, and do not expect to do so in the foreseeable future, as there is no liquid market for such contracts and their cost may be prohibitive, if they could be obtained at all. The solvent extraction and finishing processes are highly reliant upon commodity reagents.
When possible, we seek to limit our exposure by entering into long-term contracts and price increase limitations in contracts. Also, we currently use natural gas to operate our CHP plant which powers our processing and separations facilities at Mountain Pass, and expect to use natural gas to power generators at our Fort Worth Facility in the future.
When possible, we seek to limit our exposure by entering into long-term contracts and price increase limitations in contracts. Also, we currently use natural gas to operate our CHP plant, which powers our processing and separations facilities at Mountain Pass, and expect to use natural gas to power backup generators at our Fort Worth Facility in the future.
As of December 31, 2022, a hypothetical increase of 100-basis points in interest rates would not have a material impact on the value of our cash equivalents or short-term investments in our Consolidated Financial Statements. 49 Table of Contents
As of December 31, 2023, a hypothetical increase of 100-basis points in interest rates would not have a material impact on the value of our cash equivalents or short-term investments in our Consolidated Financial Statements. 52 Table of Contents
Rare earth concentrate is not quoted on any major commodities market or exchange as product attributes vary and demand is currently constrained to a relatively limited number of refiners, a significant majority of which are based in China. Our rare earth concentrate contains a significant amount of NdPr.
Rare earth concentrate is not quoted on any major commodities market or exchange as product attributes vary and demand is currently constrained to a relatively limited number of refiners, a significant majority of which are based in China. 51 Table of Contents NdPr represents a significant portion of the economic value of our rare earth concentrate.
Interest Rate Risk We had cash, cash equivalents and short-term investments totaling $1,182.3 million as of December 31, 2022, of which $1,175.0 million was invested in money market funds, U.S. Treasury and agency securities. Our cash, cash equivalents and short-term investments are held for working capital and general corporate purposes.
Interest Rate Risk We had cash, cash equivalents and short-term investments totaling $997.8 million as of December 31, 2023, of which $995.0 million was invested in money market funds, U.S. Treasury and agency securities, commercial paper and certificates of deposit. Our cash, cash equivalents and short-term investments are held for working capital and general corporate purposes.
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Commodity Price Risk Our results of operations depend in large part upon the market prices of REO and particularly the price of rare earth concentrate.

Other MP 10-K year-over-year comparisons