Item 2. PROPERTIES

Mountain Pass

We own and operate the Mountain Pass Rare Earth Mine and Processing Facility (previously defined as “Mountain Pass”), which is located on 2,222 fee simple acres of land, approximately 50 miles southwest of Las Vegas, Nevada near Mountain Pass, San Bernardino County, California at geographic coordinates 35°28’56”N latitude and 115°31’54”W longitude. 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, 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. The majority of our facilities and infrastructure currently used to produce a rare earth concentrate were built between 2012 and 2015, are in good operating condition, and benefits from routine maintenance. Modification and recommissioning activities are currently underway on certain idle facilities and infrastructure that we expect to use to separate our rare earth concentrate into other products, including NdPr oxide. The carrying amount of the property, plant and equipment used in the operation of Mountain Pass was approximately $196 million as of December 31, 2021.

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 de-watering, and process water recovery. Our facilities at Mountain Pass are currently 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.

We also own mining and mill site claims over a further 15,000 acres of adjacent land. Approximately 1,118 acres of the 2,222 acres are currently in use (e.g., existing buildings, infrastructure or active disturbance). 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. 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. In addition, we hold 525 unpatented lode and mineral mining claims and mill sites

under the provisions of The Mining Law of 1872. These mining claims and mill sites provide land for mining, ancillary facilities and expansion capacity around Mountain Pass.

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. Mining, milling and separation processes continued under Unocal Corporation, which purchased Molybdenum Corporation of America in 1977, until 1998. In 2005, ChevronTexaco Corporation acquired Unocal Corporation and then, in 2008, Molycorp Minerals, LLC acquired Mountain Pass from Chevron Mining Inc. Operations relating to mining, milling and separations resumed under Molycorp until they were placed into cold-idle status in mid-2015. In July 2017, we acquired Mountain Pass from the Molycorp estate.

We hold the necessary permits to operate Mountain Pass, including conditional use and minor use permits from San Bernardino County, California, and an associated environmental impact report, all of which were issued in 2004, which currently allow continued operation of Mountain Pass through 2042, though we expect to extend such permits to allow for continued operation through at least 2056. Since restarting operations at the facility in the fourth quarter of 2017, our activities have focused on the milling and flotation processes, leading to production of a bastnaesite concentrate, rich in REE, with our first concentrate sales in the first quarter of 2018.

The bastnaesite ore body at Mountain Pass has been mined as a principal source of REE over 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 two main groups of rocks in the Mountain Pass area are Early Proterozoic high-grade metamorphic rocks and Middle Proterozoic ultrapotassic rocks and monazitic carbonatites, which carbonatites are associated with higher levels of REE. The total orebody strike length is approximately 2,750 feet and dip extent is 3,000 feet; true thickness of the more than 2% total rare earth oxide (“TREO”) grade zone ranges between 15 feet and 250 feet. The percentage of each rare earth material contained in typical Mountain Pass

bastnaesite concentrate is estimated to be as follows:


	Estimated Distribution of TREO Content
Element
Cerium	50.2	%
Lanthanum	32.3	%
Neodymium-Praseodymium	15.7	%
SEG+(1)	1.8	%

(1)See the “Rare Earth Resources and Reserves ” section below for definition.

Texas Land

In February 2022, we closed on the purchase of approximately 18 acres of land in Fort Worth, Texas, on which we are building a metal, alloy, and magnet manufacturing and recycling facility as a part of our Stage III strategy.

Corporate Offices

We currently lease our corporate office space at 6720 Via Austi Parkway, Suites 450 and 430, Las Vegas, Nevada 89119, which lease expires on December 31, 2022. In December 2021, we entered into a lease agreement for executive office space at 1700 S. Pavilion Center Drive, Las Vegas, Nevada 89135, which is estimated to commence on January 1, 2023, at which time, we will no longer lease the current office space.

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. Pursuant to the requirements of Regulation S-K Subpart 1300 (“S-K 1300”), SRK prepared a pre-feasibility level Technical Report Summary (“TRS”) for Mountain Pass with an effective date of September 30, 2021 (refer to Exhibit 96.1 to this Annual Report). The mineral resource and mineral reserve estimated in that TRS were subsequently depleted by SRK to present an estimate of our resources and reserves as of December 31, 2021. The depletion removed by SRK represents resources and reserves that were extracted from the Mountain Pass open pit from October 1, 2021, through December 31, 2021.

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. 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 “measured mineral resource” is that part of a mineral resource for which quantity and grade or quality are estimated on the basis of conclusive geological evidence and sampling. The level of geological certainty associated with a measured mineral resource is sufficient to allow a qualified person to apply modifying factors, as defined in this section, in sufficient detail to support detailed mine planning and final evaluation of the economic viability of the deposit. Because a measured mineral resource has a higher level of confidence than the level of confidence of either an indicated mineral resource or an inferred mineral resource, a measured mineral resource may be converted to a proven mineral reserve or to a probable mineral reserve.

An “indicated mineral resource” is that part of a mineral resource for which quantity and grade or quality are estimated on the basis of adequate geological evidence and sampling. The level of geological certainty associated with an indicated mineral resource is sufficient to allow a qualified person to apply modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Because an indicated mineral resource has a lower level of confidence than the level of confidence of a measured mineral resource, an indicated mineral resource may only be converted to a probable mineral reserve.

An “inferred mineral resource” is that part of a mineral resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. The level of geological uncertainty associated with an inferred mineral resource is too high to apply relevant technical and economic factors likely to influence the prospects of economic extraction in a manner useful for evaluation of economic viability. Because an inferred mineral resource has the lowest level of geological confidence of all mineral resources, which prevents the application of the modifying factors in a manner useful for evaluation of economic viability, an inferred mineral resource may not be considered when assessing the economic viability of a mining project and may not be converted to a mineral reserve.

Mineral Reserves

Item 1300 of S-K 1300 defines a “mineral reserve” as an estimate of tonnage and grade or quality of indicated and measured mineral resources that, in the opinion of the qualified person, can be the basis of an economically viable project. More specifically, it is the economically mineable part of a measured or indicated mineral resource, which includes diluting materials and allowances for losses that may occur when the material is mined or extracted. A “proven mineral reserve” is the economically mineable part of a measured mineral resource and can only result from conversion of a measured mineral resource. A “probable mineral reserve” is the economically mineable part of an indicated and, in some cases, a measured mineral resource.

Estimation Methodology

Mineral Resources

The mineral resource estimate has been constrained by a geological model considering relevant rock types, structure, and mineralization envelopes as defined by TREO content within relevant geological features. This geological model is informed principally by diamond core drilling and multiple phases of geological mapping. Sectional interpretation based on the combination of these data were used to influence implicit modeling of the geological data with manual controls where appropriate. Data has been composited to reasonable lengths based on the original sample lengths and expected mining unit scale, and outliers have been addressed during estimation using restrictions on influence.

A number of internal controls have been applied over the history of the Mountain Pass deposit to demonstrate the consistency and reliability of the historic analytical data supporting mineral resource estimation. Almost all data supporting the mineral resource estimation has been generated by some iteration of a site-based laboratory at the Mountain Pass mine. The Mountain Pass laboratory uses various quality assurance and quality control (“QA/QC”) measures to calibrate modern equipment and ensure analytical precision and accuracy. QA/QC generated by previous laboratories has undergone check assays at independent third-party laboratories, and generally demonstrate no consistent bias. The database is also supported by a very limited amount of blind QA/QC inserted during a re-assay program, including site-specific standards of known TREO content, a variety of duplicate samples, and blank samples. The implementation and results of these various QA/QC programs have not been fully aligned with current industry standards and are not comprehensive, but are suitable for use in mineral resource estimation.

Estimates have been validated to the input data using global statistical and visual comparisons, localized swath plot comparisons of mean grades, and review of the limited reconciliation data to the model. In general, estimates are shown to align closely with the input exploration data, but have been demonstrated to be under-reporting relative to the grade control drilling. SRK has dealt with uncertainty and risk at Mountain Pass by classifying the contained resource by varying degrees of confidence in the estimate. The mineral resources at the Mountain Pass deposit have been classified in accordance with S-K 1300. The classification parameters are defined by the distance to composite data, the number of drillholes used to inform block grades and a geostatistical indicator of relative estimation quality (kriging efficiency). As an overall modifier to classification, SRK considered the limited results from the QA/QC noted above and the observed variability in reconciliation in the mineral resource classification as well, both of which preclude statement of measured resources. Bulk density is based on average density measurements collected from the various rock types over the years, and carbonatite density in particular is supported by extensive mining and processing experience with the materials.

A 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 reasonable potential for eventual economic extraction (“RPEEE”). Mineral resources have been constrained within an economic pit shell based on reserve input parameters. For mineral resources, a revenue factor of 1.0 is selected which corresponds to a break-even pit shell. SRK notes that the pit selected for mineral resources has been influenced by setbacks relative to critical infrastructure such as the tailing storage and the REO mill and flotation facility.

A detailed 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. 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. Forecast economic parameters are based on current cost performance for process, transportation, and administrative costs, as well as a first principles estimation of future mining costs. Forecast revenue from concentrate sales and individual separated product sales is based on a preliminary market study commissioned by the Company.

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. 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 full 35-year LoM.

The costs used for pit optimization include estimated mining, processing, sustaining capital, transportation, and administrative costs, including an allocation of corporate costs. Processing and general and administrative (“G&A”) costs used for pit optimization were based on recent actual costs.

Processing recovery for concentrate is variable based on a mathematical relationship to estimate overall TREO recovery versus ore grade. 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 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 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. 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 detailed description of the methodology used to calculate mineral reserves is provided in Exhibit 96.1 to this Annual Report.

Results

Mineral Resources

As of December 31, 2021, SRK estimates total indicated resources of 1.43 million STs with an average grade of 2.83% TREO and 9.08 million STs of inferred resources with an average ore grade of 5.10% TREO. Mineral resources are reported exclusive of mineral reserves. The reference point for the mineral resources is in situ material.


Category	Resource Type	Cut-Off TREO (%)	Mass	Average Value
Million Short Tons (dry)	TREO(1) (%)	La2O3(2) (%)	CeO2 (%)	Pr6O11 (%)	Nd2O3 (%)	Sm2O3 (%)
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	7.03	5.48	1.79	2.73	0.24	0.66	0.05
Within the Resource Pit	2.28	2.06	3.81	1.24	1.90	0.16	0.46	0.03
Total Inferred			9.08	5.10	1.66	2.54	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.

(2)Percentage of individual light rare earth oxides are based on the average ratios; La2O3 is calculated at a ratio of 32.6% grade of TREO% equivalent estimated grade, CeO2 is calculated at a ratio of 49.9% of TREO% equivalent estimated grade, Pr6O11 is calculated at a ratio of 4.3% of TREO% equivalent estimated grade, Nd2O3 is calculated at a ratio of 12.1% of TREO% equivalent estimated grade, and Sm2O3 is calculated at a ratio of 0.9% of TREO% equivalent estimated grade. The sum of light rare earths averages 99.7%; the additional 0.3% cannot be accounted for based on the analyses available to date and has been discounted from this resource statement.

General Notes:

Mineral Resources are reported exclusive of Mineral Reserves.
Mineral Resources are not Mineral Reserves and do not have demonstrated economic viability. There is no certainty that all or any part of the Mineral Resources estimated will be converted into Mineral Reserves estimate.
Mineral Resource tonnage and contained metal have been rounded to reflect the accuracy of the estimate, any apparent errors are 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, 2021, 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). While 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.

The Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (“Prior Year Form 10-K”), did not include a year-end mineral resource estimate. Rather, the resources stated in the Prior Year Form 10-K were estimated as of July 1, 2020, and were inclusive of mineral reserves. Accordingly, it is not practicable to present a meaningful year-over-year comparison of mineral resources pursuant to Item 1304(e) of S-K 1300.

Mineral Reserves

As of December 31, 2021, SRK estimates total proven reserves of 0.05 million STs of ore with an average grade of 9.45% TREO and 30.08 million STs of probable reserves with an average ore grade of 6.33%. Our total proven and probable reserves are estimated as 30.13 million STs with an average grade of 6.34%. The reference point for the mineral reserves is material delivered to the Mountain Pass mill and flotation facility.

Based on these estimated reserves and our expected annual production rate upon completion of the Stage II project (separations facility), our expected mine life is approximately 36 years, including a partial year in 2021 and a partial year in 2056 to complete the processing of stockpiles and separations.

The following table states the amount of our proven and probable mineral reserves as of December 31, 2021.


Category	Description	Run-of-Mine	TREO%	MY%	Concentrate
Million Short Tons (dry)	Million Short Tons (dry)
Proven	Current Stockpiles	0.05	9.45	10.88	0.01
In situ	—	—	—	—
Proven Totals	0.05	9.45	10.88	0.01
Probable	Current Stockpiles	—	—	—	—
In situ	30.08	6.33	6.71	2.02
Probable Totals	30.08	6.33	6.71	2.02
Proven + Probable	Current Stockpiles	0.05	9.45	10.88	0.01
In situ	30.08	6.33	6.71	2.02
Proven + Probable Totals	30.13	6.34	6.72	2.02

General Notes:

Reserves stated as contained within an economically mineable open pit design stated above a 2.49% 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. MY% = (TREO% * Met recovery)/60% concentrate TREO grade.
Indicated mineral resources have been converted to Probable reserves. 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, 2021.
Reserves contain material inside and outside permitted mining but within mineral lease.
Reserves assume 100% mining recovery.
The strip ratio was 6.1 to 1 (waste to ore ratio).
The mineral reserves were estimated by SRK.

The Company’s Prior Year Form 10-K did not include a year-end mineral reserve estimate. The reserves stated in the Prior Year Form 10-K were estimated as of July 1, 2020. Accordingly, it is not practicable to present a year-over-year comparison of mineral reserves pursuant Item 1304(e) of S-K 1300. Notwithstanding, the following comparison is provided to show the change in reserves over the 18-month period from July 1, 2020, to December 31, 2021.


Description	Estimate Date	Run-of-Mine	TREO%	MY%	Concentrate
Million Short Tons (dry)	Million Short Tons (dry)
Proven + Probable Reserves	December 31, 2021	30.13	6.34	6.72	2.02
Proven + Probable Reserves	July 1, 2020	21.14	7.06	7.67	1.62
Difference		8.99	-0.72		0.40
% Difference		43%	(10)%		25%

Reasons for the differences between the two estimates include: additional resource and geotechnical drilling, revised and updated geological block model, revised methodology for applying mining dilution, revised pit slope angles, updated product prices, updated processing recovery assumptions, updated operating costs, and updated cut-off grade. Product prices, processing recovery, operating costs and cut-off grade were adjusted to reflect on-site rare earth separations, construction of which is expected to be complete by year-end 2022.

Factors and Assumptions Affecting Mineral Resource and Mineral Reserve Estimates

There are numerous uncertainties inherent in estimating quantities and qualities of REO reserves and costs to mine recoverable reserves, including many factors beyond our control. We will regularly evaluate our REO reserve estimates. This may be done in conjunction with additional exploration drilling programs. The estimates of REO reserves as to both quantity and quality will also be updated to reflect new drilling or other data received. 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
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.

Actual REO tonnage recovered from identified REO reserves and revenues and expenditures with respect to the same may vary materially from estimates. Further, period-to-period, our future estimates of REO reserves may fluctuate significantly as macroeconomic conditions and our level of understanding with respect to the deposit change. These estimates may not accurately reflect our actual REO reserves. Any inaccuracy in our estimates related to our REO reserves could result in lower-than-expected revenues and higher-than-expected costs.

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