Item 1. FINANCIAL STATEMENTS

MP MATERIALS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

			September 30, 2023						December 31, 2022
(in thousands, except share and per share data)
Assets
Current assets
Cash and cash equivalents			$	547,668					$	136,627
Short-term investments			536,994						1,045,718
Total cash, cash equivalents and short-term investments			1,084,662						1,182,345
Accounts receivable (including related party), net of allowance for credit losses of $0 and $0, respectively			13,180						32,856
Inventories			77,179						57,554
Income taxes receivable			4,128						2,201
Prepaid expenses and other current assets			9,162						18,872
Total current assets			1,188,311						1,293,828
Non-current assets
Property, plant and equipment, net			1,097,727						935,743
Operating lease right-of-use assets			10,346						99
Inventories			12,589						5,744
Intangible assets, net			9,179						89
Other non-current assets			4,070						2,284
Total non-current assets			1,133,911						943,959
Total assets			$	2,322,222					$	2,237,787
Liabilities and stockholders’ equity
Current liabilities
Accounts payable, construction payables and accrued liabilities			$	92,096					$	72,265
Income taxes payable			—						21,163
Operating lease liabilities			728						84
Other current liabilities			4,188						3,969
Total current liabilities			97,012						97,481
Non-current liabilities
Asset retirement obligations			5,462						5,295
Environmental obligations			16,554						16,580
Long-term debt, net			681,094						678,444
Operating lease liabilities			7,014						15
Deferred income taxes			135,435						122,353
Other non-current liabilities			3,578						4,985
Total non-current liabilities			849,137						827,672
Total liabilities			946,149						925,153
Commitments and contingencies (Note 11)
Stockholders’ equity:
Preferred stock ($0.0001 par value, 50,000,000 shares authorized, none issued and outstanding in either period)			—						—
Common stock ($0.0001 par value, 450,000,000 shares authorized, 177,802,600 and 177,706,608 shares issued and outstanding, as of September 30, 2023, and December 31, 2022, respectively)			17						18
Additional paid-in capital			974,103						951,008
Retained earnings			401,985						361,419
Accumulated other comprehensive income (loss)			(32)						189
Total stockholders’ equity			1,376,073						1,312,634
Total liabilities and stockholders’ equity			$	2,322,222					$	2,237,787

See accompanying notes to the Condensed Consolidated Financial Statements.

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MP MATERIALS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

			For the three months ended September 30,												For the nine months ended September 30,
(in thousands, except share and per share data)			2023						2022						2023						2022
Revenue:
Rare earth concentrate (including related party)			$	52,472					$	124,231					$	212,139					$	425,169
Other rare earth products (including related party)			44						214						101						9,096
Total revenue			52,516						124,445						212,240						434,265
Operating costs and expenses:
Cost of sales (including related party)(excluding depreciation, depletion and amortization)			22,217						22,417						69,137						67,682
Selling, general and administrative			19,561						17,722						57,829						56,150
Advanced projects, start-up, development and other			10,209						2,625						25,711						6,212
Depreciation, depletion and amortization			16,751						2,096						37,076						12,763
Accretion of asset retirement and environmental obligations			227						418						681						1,255
Loss on disposals of long-lived assets, net			1,087						—						5,897						258
Total operating costs and expenses			70,052						45,278						196,331						144,320
Operating income (loss)			(17,536)						79,167						15,909						289,945
Interest expense, net			(1,396)						(1,224)						(4,147)						(4,455)
Other income, net			14,456						6,168						41,970						8,574
Income (loss) before income taxes			(4,476)						84,111						53,732						294,064
Income tax benefit (expense)			200						(20,934)						(13,166)						(72,067)
Net income (loss)			$	(4,276)					$	63,177					$	40,566					$	221,997
Earnings (loss) per share:
Basic			$	(0.02)					$	0.36					$	0.23					$	1.26
Diluted			$	(0.02)					$	0.33					$	0.22					$	1.16
Weighted-average shares outstanding:
Basic			177,231,717						176,543,624						177,034,068						176,476,276
Diluted			177,231,717						193,409,857						193,632,662						193,438,939

See accompanying notes to the Condensed Consolidated Financial Statements.

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MP MATERIALS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)

			For the three months ended September 30,												For the nine months ended September 30,
(in thousands)			2023						2022						2023						2022
Net income (loss)			$	(4,276)					$	63,177					$	40,566					$	221,997
Other comprehensive income (loss), net of tax:
Change in net unrealized gains (losses) on available-for-sale securities			134						319						(221)						(97)
Total comprehensive income (loss)			$	(4,142)					$	63,496					$	40,345					$	221,900

See accompanying notes to the Condensed Consolidated Financial Statements.

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MP MATERIALS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(UNAUDITED)

			Three months ended September 30, 2023 and 2022
			Preferred Stock												Common Stock																		Additional Paid-in Capital						Retained Earnings						Accumulated Other Comprehensive Income (Loss)						Total Stockholders’ Equity
(in thousands, except share data)			Shares						Amount						Shares						Amount
Balance as of July 1, 2023			—						$	—					177,626,668						$	17											$	958,819					$	406,261					$	(166)					$	1,364,931
Stock-based compensation			—						—						37,236						—												6,665						—						—						6,665
Shares used to settle payroll tax withholding			—						—						(13,808)						—												(344)						—						—						(344)
Common stock issued to acquire intangible asset			—						—						152,504						—												8,963						—						—						8,963
Net loss			—						—						—						—												—						(4,276)						—						(4,276)
Unrealized gains on available-for-sale securities			—						—						—						—												—						—						134						134
Balance as of September 30, 2023			—						$	—					177,802,600						$	17											$	974,103					$	401,985					$	(32)					$	1,376,073
Balance as of July 1, 2022			—						$	—					177,534,132						$	18											$	939,900					$	231,235					$	(416)					$	1,170,737
Stock-based compensation			—						—						506						—												8,073						—						—						8,073
Net income			—						—						—						—												—						63,177						—						63,177
Unrealized gains on available-for-sale securities			—						—						—						—												—						—						319						319
Balance as of September 30, 2022			—						$	—					177,534,638						$	18											$	947,973					$	294,412					$	(97)					$	1,242,306

			Nine months ended September 30, 2023 and 2022
			Preferred Stock												Common Stock																		Additional Paid-in Capital						Retained Earnings						Accumulated Other Comprehensive Income (Loss)						Total Stockholders’ Equity
(in thousands, except share data)			Shares						Amount						Shares						Amount
Balance as of January 1, 2023			—						$	—					177,706,608						$	18											$	951,008					$	361,419					$	189					$	1,312,634
Stock-based compensation			—						—						149,922						—												20,607						—						—						20,607
Shares used to settle payroll tax withholding			—						—						(206,434)						(1)												(6,475)						—						—						(6,476)
Common stock issued to acquire intangible asset			—						—						152,504						—												8,963						—						—						8,963
Net income			—						—						—						—												—						40,566						—						40,566
Unrealized losses on available-for-sale securities			—						—						—						—												—						—						(221)						(221)
Balance as of September 30, 2023			—						$	—					177,802,600						$	17											$	974,103					$	401,985					$	(32)					$	1,376,073
Balance as of January 1, 2022			—						$	—					177,816,554						$	18											$	936,299					$	72,415					$	—					$	1,008,732
Stock-based compensation			—						—						60,691						—												25,970						—						—						25,970
Shares used to settle payroll tax withholding			—						—						(342,607)						—												(14,296)						—						—						(14,296)
Net income			—						—						—						—												—						221,997						—						221,997
Unrealized losses on available-for-sale securities			—						—						—						—												—						—						(97)						(97)
Balance as of September 30, 2022			—						$	—					177,534,638						$	18											$	947,973					$	294,412					$	(97)					$	1,242,306

See accompanying notes to the Condensed Consolidated Financial Statements.

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MP MATERIALS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

			For the nine months ended September 30,
(in thousands)			2023						2022
Operating activities:
Net income			$	40,566					$	221,997
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation, depletion and amortization			37,076						12,763
Accretion of asset retirement and environmental obligations			681						1,255
Accretion of discount on short-term investments			(17,334)						(3,921)
Loss on disposals of long-lived assets, net			410						258
Stock-based compensation expense			19,041						25,019
Accretion of debt discount and amortization of debt issuance costs			2,650						3,153
Revenue recognized in exchange for debt principal reduction			—						(13,566)
Deferred income taxes			13,156						62,561
Decrease (increase) in operating assets:
Accounts receivable (including related party)			19,676						34,991
Inventories			(25,498)						(22,386)
Income taxes receivable			(1,927)						(3,857)
Prepaid expenses, other current and non-current assets			490						1,339
Increase (decrease) in operating liabilities:
Accounts payable and accrued liabilities			8,601						(1,271)
Income taxes payable			(21,163)						(3,463)
Other current and non-current liabilities			55						(453)
Net cash provided by operating activities			76,480						314,419
Investing activities:
Additions to property, plant and equipment			(188,927)						(214,332)
Purchases of short-term investments			(705,241)						(1,358,390)
Proceeds from sales of short-term investments			461,042						313,865
Proceeds from maturities of short-term investments			769,907						212,000
Proceeds from government awards used for construction			1,050						5,130
Net cash provided by (used in) investing activities			337,831						(1,041,727)
Financing activities:
Principal payments on debt obligations and finance leases			(2,101)						(5,139)
Tax withholding on stock-based awards			(6,476)						(14,296)
Net cash used in financing activities			(8,577)						(19,435)
Net change in cash, cash equivalents and restricted cash			405,734						(746,743)
Cash, cash equivalents and restricted cash beginning balance			143,509						1,181,157
Cash, cash equivalents and restricted cash ending balance			$	549,243					$	434,414
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents			$	547,668					$	427,969
Restricted cash, current			1,228						5,915
Restricted cash, non-current			347						530
Total cash, cash equivalents and restricted cash			$	549,243					$	434,414

See accompanying notes to the Condensed Consolidated Financial Statements.

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MP MATERIALS CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

NOTE 1—DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION

Description of Business: MP Materials Corp., including its subsidiaries (the “Company” or “MP Materials”), is the largest producer of rare earth materials in the Western Hemisphere. 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, among other products, neodymium-iron-boron (“NdFeB”) permanent magnets.

Currently, the Company primarily produces a rare earth concentrate that is principally sold pursuant to the Offtake Agreement to Shenghe (as such terms are defined in Note 15, “Related-Party Transactions,”), a related party of the Company, that, in turn, typically sells that product to refiners in China. These refiners separate the constituent rare earth elements contained within the concentrate and sell the separated products to their customers. Upon completing initial commissioning of the remaining circuits 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. The Company anticipates selling these new products to customers in the U.S. and around the globe beginning in the fourth quarter of 2023, including to Japanese customers pursuant to a distributorship agreement with Sumitomo Corporation of Americas (“Sumitomo”).

Additionally, 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, with a gradual production ramp that is expected to begin in late 2023. These developments are part of the Company’s Stage III downstream expansion strategy (“Stage III”).

Operating segments are defined as components of an enterprise about which separate financial information is available and evaluated regularly by the chief operating decision maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s CODM views the Company’s operations and manages the business as one reportable segment.

The cash flows and profitability of the Company’s operations are significantly affected by the market price of rare earth products. The prices of rare earth products are affected by numerous factors beyond the Company’s control. The products of the Company are sold globally, with a primary focus in the Asian market due to the refining capabilities of the region. Rare earth products are critical inputs in hundreds of existing and emerging clean-tech applications including electric vehicles and wind turbines as well as robotics, drones, and defense applications.

Basis of Presentation: The unaudited Condensed Consolidated Financial Statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) for interim financial information and with the rules and regulations of the U.S. Securities and Exchange Commission. Accordingly, since they are interim statements, they do not include all of the information and notes required by GAAP for complete consolidated financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

Results of operations and cash flows for the interim periods presented herein are not necessarily indicative of the results that would be achieved during a full year of operations or in future periods. These unaudited Condensed Consolidated Financial Statements and notes thereto should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Form 10-K.

NOTE 2—SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation: The unaudited Condensed Consolidated Financial Statements include the accounts of MP Materials Corp. and its subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates: The preparation of the unaudited Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) the disclosure of contingent assets and liabilities at the date of the unaudited Condensed Consolidated Financial Statements, and (iii) the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results may differ from those estimates.

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Concentration of Risk: Financial instruments that potentially subject the Company to credit risk consist principally of cash, cash equivalents and short-term investments, and trade accounts receivable. The Company believes that its credit risk is limited because the Company’s current contracts are with companies that have a reliable payment history. The Company does not believe that it is exposed to any significant risks related to its cash accounts, money market funds, or short-term investments.

As of September 30, 2023, Shenghe was the Company’s principal customer and accounted for more than 90% of revenue. Rare earth concentrate is not quoted on any major commodities market or exchange and demand for rare earth concentrate is currently constrained to a relatively limited number of refiners, a significant majority of which are based in China. Uncertainty exists as to the market price of rare earth oxide (“REO”), as evidenced by the volatility experienced in 2022 and continued into 2023 due to concerns over the global economic conditions and actual or perceived concerns over increases in the supply of rare earth products. Furthermore, while revenue is generated in the U.S., Shenghe conducts its primary operations in China and may transport and sell products in the Chinese market. Therefore, the Company’s revenue is affected by Shenghe’s ultimate realized prices in China, including the impact of changes in the exchange rate between the Chinese Yuan and the U.S. dollar. In addition, there is an ongoing economic conflict between China and the U.S. that has previously resulted in tariffs and trade barriers that may negatively affect the Company’s business and results of operations. See Note 15, “Related-Party Transactions,” for additional information.

At the onset of the COVID-19 pandemic and through 2022, the Company experienced, at times, significant shipping delays due to congestion and slowdowns at U.S. and international ports caused by shortages in vessels, containers, and truckers, also disrupting the global supply chain. Despite these factors, the Company did not experience a reduction in production or sales due to the COVID-19 pandemic. However, the COVID-19 pandemic contributed to certain cost and schedule pressures for capital projects. The Company continues to monitor the global situation, including the impacts of new and potential future variants of COVID-19, or other factors that may affect international shipping, logistics, and supply chain, or involve responses to government actions such as strikes or other disruptions.

Intangible Assets: Indefinite-lived intangible assets are tested annually for impairment, or more frequently if events or changes in circumstances indicate that it is more likely than not that the assets are impaired. If the carrying amounts of the indefinite-lived intangible assets exceed their fair value, the excess amount is recognized as an impairment. Intangible assets that have a definite life are amortized on a straight-line basis over their estimated useful lives to reflect the expected pattern of economic benefits consumed. The Company reviews the carrying amount of its amortizing intangible assets for possible impairment whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. If the carrying amounts of the amortizing intangible assets exceed their fair value, the excess amount is recognized as an impairment. Once an impairment of an intangible asset has been recorded, it cannot be reversed. No impairment charges were recorded during the three and nine months ended September 30, 2023 and 2022. See also Note 6, “Intangible Assets.”

Leases: The Company determines if an arrangement is, or contains, a lease at contract inception. In some cases, the Company has determined that its lease arrangements include both lease and non-lease components. The Company has elected to use a practical expedient to account for each separate lease component and its associated non-lease components as a single lease component for the majority of its asset classes. The Company recognizes right-of-use (“ROU”) assets and lease liabilities upon commencement for all leases with a lease term greater than 12 months. The Company has elected to use a practical expedient to not recognize leases with a lease term of 12 months or less in the unaudited Condensed Consolidated Balance Sheets for the majority of its asset classes. These short-term leases are expensed on a straight-line basis over the lease term.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at commencement date of the lease based on the present value of lease payments over the lease term. When the rate implicit in the lease cannot be readily determined, the Company utilizes its incremental borrowing rate in determining the present value of the future lease payments. Lease liabilities are accreted each period and reduced for payments. The ROU asset also includes other adjustments, such as for the effects of lease prepayments, initial lease costs, or lease incentives received. The lease term may include periods covered by options to extend or terminate the lease when it is either reasonably certain that the Company will exercise a renewal option, or reasonably certain it will not exercise an early termination option. For operating leases, lease expense is recognized on a straight-line basis over the lease term. For finance leases, the ROU asset amortizes on a straight-line basis over the shorter of the lease term or the useful life of the underlying asset (or the useful life of the underlying asset if title transfers at the end of the lease term or there is a purchase option the Company is reasonably certain to exercise) and the lease liability accretes interest based on the interest method using the discount rate determined at lease commencement. For operating and finance leases, variable lease payments not included in the lease liability are expensed as incurred unless such costs are capitalized as part of another asset (e.g., inventory). Additionally, ROU assets are subject to impairment testing whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. If the carrying amounts of ROU

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assets exceed their fair value, the excess amount is recognized as an impairment. No impairment charges were recorded during the three and nine months ended September 30, 2023 and 2022. See also Note 9, “Leases.”

Stock-Based Compensation: The cost of employee services received in exchange for an award of equity instruments is based on the grant-date fair value of the award. The fair value of Stock Awards (as defined in Note 12, “Stock-based Compensation,”) is equal to the fair value of the Company’s stock on the grant date. The fair value of performance awards that include performance and/or market conditions is determined using a Monte Carlo simulation technique. The Monte Carlo simulation requires the use of inputs and assumptions such as the grant-date closing stock price, expected volatility, correlation coefficient to relevant peer groups or indices, risk-free interest rate and dividend yield.

Compensation cost for Stock Awards with graded vesting schedules is recognized on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in substance, multiple awards, which results in accelerated recognition of compensation cost. Compensation cost for performance awards with cliff vesting schedules is recognized on a straight-line basis over the requisite service period. Compensation cost is not adjusted based on the actual achievement of the market-based performance goals. The Company accounts for forfeitures in the period in which they occur based on actual forfeitures. See also Note 12, “Stock-based Compensation.”

Recently Issued Accounting Pronouncements: During the three and nine months ended September 30, 2023, there were no accounting pronouncements adopted by the Company that had a material impact on the Company’s unaudited Condensed Consolidated Financial Statements. Additionally, as of September 30, 2023, there were no accounting pronouncements pending adoption that are expected to have a material impact on the Company's unaudited Condensed Consolidated Financial Statements.

Reclassifications: Certain amounts in prior periods have been reclassified to conform to the current year presentation.

NOTE 3—CASH, CASH EQUIVALENTS AND INVESTMENTS

The following table presents the Company’s cash, cash equivalents and short-term investments:

			September 30, 2023																								December 31, 2022
(in thousands)			Amortized Cost Basis						Unrealized Gains						Unrealized Losses						Estimated Fair Value						Amortized Cost Basis						Unrealized Gains						Unrealized Losses						Estimated Fair Value
Cash:
Demand deposits			$	1,580					$	—					$	—					$	1,580					$	7,373					$	—					$	—					$	7,373
Cash equivalents:
Money market funds			134,038						—						—						134,038						64,855						—						—						64,855
U.S. agency securities			—						—						—						—						63,605						1						(2)						63,604
U.S. Treasury securities			327,224						48						(4)						327,268						795						—						—						795
Commercial paper			49,662						7						—						49,669						—						—						—						—
Certificates of deposit			35,110						3						—						35,113						—						—						—						—
Total cash equivalents			546,034						58						(4)						546,088						129,255						1						(2)						129,254
Total cash and equivalents			547,614						58						(4)						547,668						136,628						1						(2)						136,627
Short-term investments:
U.S. agency securities			141,873						1						(155)						141,719						979,878						361						(17)						980,222
U.S. Treasury securities			395,217						61						(3)						395,275						65,586						1						(91)						65,496
Total short-term investments			537,090						62						(158)						536,994						1,045,464						362						(108)						1,045,718
Total cash, cash equivalents and short-term investments			$	1,084,704					$	120					$	(162)					$	1,084,662					$	1,182,092					$	363					$	(110)					$	1,182,345

The Company does not intend to sell, nor is it more likely than not that the Company will be required to sell, any investments in unrealized loss positions before recovery of their amortized cost basis. The Company did not recognize any credit losses related to its available-for-sale investments during the three and nine months ended September 30, 2023 and 2022. The unrealized losses on the Company’s available-for-sale investments were primarily due to unfavorable changes in interest rates subsequent to initial purchase. None of the available-for-sale investments held as of September 30, 2023, were in a continuous unrealized loss position for greater than 12 months and the unrealized losses and the related risk of expected credit losses were not material.

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The Company recognized the following income and expense amounts, all of which are included in “Other income, net” within the Company’s unaudited Condensed Consolidated Statements of Operations:

			For the three months ended September 30,												For the nine months ended September 30,
(in thousands)			2023						2022						2023						2022
Gross realized gains			$	1					$	71					$	506					$	71
Gross realized losses			$	—					$	199					$	139					$	199
Interest and investment income(1)			$	14,455					$	6,274					$	41,607					$	8,529

(1)Includes interest and investment income on the Company’s available-for-sale securities and other money market funds.

As of September 30, 2023, the fair values of available-for-sale investments, by remaining contractual maturity, were as follows:

(in thousands)
Due within one year			$	926,223
Due after one year through two years			22,821
Total			$	949,044

NOTE 4—INVENTORIES

The Company’s inventories consisted of the following:

			September 30, 2023						December 31, 2022
(in thousands)
Raw materials and supplies, including spare parts(1)			$	34,680					$	28,590
Work in process(2)			41,367						27,212
Finished goods			1,132						1,752
Total current inventories			77,179						57,554
Add: Non-current portion(3)			12,589						5,744
Total inventories			$	89,768					$	63,298

(1)Includes raw materials to support activities pertaining to the Company’s rare earth metal, alloy and magnet manufacturing capabilities.

(2)Includes packaged and finished NdPr oxide shipped to the Company’s toller for processing into NdPr metal.

(3)Represents stockpiled ore that is not expected to be processed within the next 12 months as well as certain raw materials that are not expected to be consumed within the next 12 months.

NOTE 5—PROPERTY, PLANT AND EQUIPMENT

The Company’s property, plant and equipment consisted of the following:

			September 30, 2023						December 31, 2022
(in thousands)
Land and land improvements			$	16,425					$	16,102
Buildings and building improvements			25,427						15,111
Machinery and equipment			473,578						186,388
Assets under construction			240,219						338,482
Mineral rights			438,395						438,395
Property, plant and equipment, gross			1,194,044						994,478
Less: Accumulated depreciation and depletion			(96,317)						(58,735)
Property, plant and equipment, net			$	1,097,727					$	935,743

Additions to Property, Plant and Equipment: The Company capitalized expenditures related to property, plant and equipment of $199.9 million and $250.1 million for the nine months ended September 30, 2023 and 2022, respectively,

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including amounts not yet paid (see Note 16, “Supplemental Cash Flow Information”). The capitalized expenditures related to machinery, equipment, and assets under construction to support the Company’s Stage II optimization project, its Fort Worth Facility, and its HREE Facility (as defined below). Additionally, the capitalized expenditures for the nine months ended September 30, 2022, included the purchase of approximately 18 acres of land in Fort Worth, Texas.

Placement of Certain Stage II Assets into Service: During the nine months ended September 30, 2023, the Company transferred certain of its assets totaling $248.4 million and pertaining to its Stage II optimization project from assets under construction to buildings, machinery and equipment, with $239.8 million relating to machinery and equipment.

Government Awards: In November 2020, the Company was awarded a Defense Production Act Title III technology investment agreement (“TIA”) from the Department of Defense (“DOD”) to establish domestic processing for separated light rare earth elements in the amount of $9.6 million. During the nine months ended September 30, 2023 and 2022, pursuant to the TIA, the Company had received zero and $5.1 million, respectively, in reimbursements from the DOD. As of September 30, 2023, the Company is entitled to receive an additional $0.1 million from the DOD under the TIA.

In February 2022, the Company was awarded a $35.0 million contract by the DOD’s Office of Industrial Base Analysis and Sustainment program to design and build a facility to process heavy rare earth elements (“HREE”) at Mountain Pass (the “HREE Facility”) (the “HREE Production Project Agreement”). As of September 30, 2023, the Company had received $1.1 million from the DOD under the HREE Production Project Agreement.

Change in Estimates of Asset Retirement Costs: As a result of a decrement to the Company’s asset retirement obligations during the third quarter of 2022, the carrying amount of the Company’s total property, plant and equipment was reduced by $10.4 million, the majority of which pertained to buildings, machinery and equipment, and assets under construction, in the amounts of $0.6 million, $2.7 million and $6.7 million, respectively. Additionally, the Company’s depreciation expense for the three and nine months ended September 30, 2022, was reduced by $2.7 million, reflecting the excess of the decrement over the carrying amount of the related property, plant and equipment. See Note 7, “Asset Retirement and Environmental Obligations,” for further information on the decrement.

The Company’s depreciation and depletion expense were as follows:

			For the three months ended September 30,												For the nine months ended September 30,
(in thousands)			2023						2022						2023						2022
Depreciation expense(1)			$	13,951					$	(656)					$	28,385					$	3,702
Depletion expense			$	2,664					$	2,664					$	8,407					$	8,808

(1)As noted above, during the three months ended September 30, 2022, the Company recorded a reduction to depreciation expense, reflecting the excess of the asset retirement obligation decrement over the carrying amount of the related property, plant and equipment, as a result of changes in the Company’s estimates of cash flows underlying its asset retirement obligations.

The Company recognized $0.8 million and $5.5 million of demolition costs for the three and nine months ended September 30, 2023, which are included in “Loss on disposals of long-lived assets, net” within the Company’s unaudited Condensed Consolidated Statements of Operations, incurred in connection with demolishing and removing certain old facilities from the Mountain Pass site that have not been used in the Company’s operations. There were no impairments recognized for the three and nine months ended September 30, 2023 and 2022.

NOTE 6—INTANGIBLE ASSETS

In August 2023, the Company acquired a license to use patented technology, technical know-how, and other intellectual property pertaining to the development and manufacturing of magnetics products in exchange for 435,729 shares of the Company’s common stock. 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 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.

Upon obtaining the license, the Company recorded a definite-lived intangible asset in the amount of $9.0 million, based on the closing price of the Company’s common stock on the acquisition date. The intangible asset will be amortized on a straight-line basis, with no estimated residual value, over the estimated useful life of 7.5 years, which the Company based on the life of the patents associated with the licensed technology.

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Contemporaneous with the acquisition of the license, the Company entered into a consulting agreement in support of integrating the licensed technology and know-how into its existing processes aimed at the development of magnetics products. Unless earlier terminated, under the consulting agreement, the Company will pay a total of approximately $15 million over the next four years, of which, the first payment will be in cash on the first anniversary of the consulting agreement and the payments pertaining to the second, third, and fourth anniversaries of the consulting agreement may be settled in cash or shares of the Company’s common stock at the Company’s election. The Company will ratably record an expense over the four-year period unless the costs qualify for capitalization.

The Company’s intangible assets were as follows:

			September 30, 2023						December 31, 2022
(in thousands)
Intangible assets with indefinite lives:
Emissions allowances			$	316					$	89
Intangible assets with definite lives:
Patent and intellectual property license			8,963						—
Less: Accumulated amortization			(100)						—
Patent and intellectual property license, net			8,863						—
Intangible assets, net			$	9,179					$	89

Amortization expense related to amortizing intangible assets was $0.1 million for the three and nine months ended September 30, 2023. There was no amortization expense related to amortizing intangible assets recognized for the three and nine months ended September 30, 2022. The following table presents the estimated amortization expense based on amortizing intangible assets as of September 30, 2023:

(in thousands)
Period:
Remainder of 2023			$	299
2024			1,195
2025			1,195
2026			1,195
2027			1,195
Thereafter			3,784
Total			$	8,863

NOTE 7—ASSET RETIREMENT AND ENVIRONMENTAL OBLIGATIONS

Asset Retirement Obligations

The Company estimates asset retirement obligations based on the requirements to reclaim certain land areas associated with mineral extraction activities and certain related facilities at Mountain Pass. Minor reclamation activities related to discrete portions of the Company’s operations are ongoing. As of September 30, 2023, the Company estimated a significant portion of the cash outflows for major reclamation activities including the retirement of Mountain Pass will be incurred beginning in 2056 and 2057.

In June 2021, San Bernardino County approved a re-zoning request for certain of the Company’s properties such that certain of the Company’s processing and separations facilities would be zoned for industrial end uses as opposed to the prior “resource conservation” designation. In September 2022, and as a result of the re-zoning of this land, the Company received final approval from San Bernardino County and the Division of Mine Reclamation (California) on a revised reclamation plan. The revision removed from the regulatory oversight under The Surface Mining and Reclamation Act of 1975 the majority of the buildings and equipment used in the processing and separations facilities, including the land underlying such buildings and equipment.

As a result of the final approval of the reclamation plan, in the third quarter of 2022, the Company revised its estimated cash flows pertaining to the settlement of the reclamation and removal activities associated with Mountain Pass, including removing the previous estimates of the cash flows associated with the processing and separations facilities that no longer

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require reclamation. The changes in estimates resulted in an asset retirement obligation decrement of $13.1 million, of which $10.4 million reduced the carrying amounts of the associated property, plant and equipment, and $2.7 million, reflecting the excess of the decrement over the carrying amount of the related property, plant and equipment, was recorded as a reduction to depreciation expense for the three and nine months ended September 30, 2022.

As of September 30, 2023, the credit-adjusted risk-free rate ranged between 6.5% and 12.0% depending on the timing of expected settlement and when the increment was recognized. There were no significant increments or decrements for the three and nine months ended September 30, 2023, and there were no significant increments for the three and nine months ended September 30, 2022.

The balance as of both September 30, 2023, and December 31, 2022, included current portions of $0.2 million, which are included in “Other current liabilities” within the Company’s unaudited Condensed Consolidated Balance Sheets. The total estimated future undiscounted cash flows required to satisfy the Company’s asset retirement obligations were $50.3 million and $50.4 million as of September 30, 2023, and December 31, 2022, respectively.

Environmental Obligations

The Company has certain environmental remediation liabilities related to the monitoring of groundwater contamination. The Company engaged an environmental consultant to develop a remediation plan and remediation cost projections based upon that plan. Utilizing the remediation plan developed by the environmental consultant, the Company developed an estimate of future cash payments for the remediation plan.

As of September 30, 2023, the Company estimated the cash outflows related to these environmental activities will be incurred annually over the next 24 years. The Company’s environmental remediation liabilities are measured at the expected value of future cash outflows discounted to their present value using a discount rate of 2.93%. There were no significant changes in the estimated remaining remediation costs for the three and nine months ended September 30, 2023 and 2022.

The total estimated aggregate undiscounted cost of $26.8 million and $27.2 million as of September 30, 2023, and December 31, 2022, respectively, principally related to water monitoring activities required by state and local agencies. Based on the Company’s estimate of the cost and timing and the assumption that payments are considered to be fixed and reliably determinable, the Company has discounted the liability. The balance as of both September 30, 2023, and December 31, 2022, included current portions of $0.5 million, which are included in “Other current liabilities” within the Company’s unaudited Condensed Consolidated Balance Sheets.

Financial Assurances

The Company is required to provide the applicable government agencies with financial assurances relating to the closure and reclamation obligations. As of September 30, 2023, and December 31, 2022, the Company had financial assurance requirements of $45.4 million and $43.5 million, respectively, which were satisfied with surety bonds placed with California state and regional agencies.

NOTE 8—DEBT OBLIGATIONS

The Company’s long-term debt was as follows:

			September 30, 2023						December 31, 2022
(in thousands)
Convertible Notes due 2026			$	690,000					$	690,000
Less: Unamortized debt issuance costs			(8,906)						(11,556)
Long-term debt, net			$	681,094					$	678,444

Convertible Notes

In March 2021, the Company issued $690.0 million aggregate principal amount of 0.25% unsecured green convertible senior notes that mature, unless earlier converted, redeemed or repurchased, on April 1, 2026 (the “Convertible Notes”), at a price of par. Interest on the Convertible Notes is payable on April 1st and October 1st of each year, beginning on October 1, 2021. The Convertible Notes may, at the Company’s election, be settled in cash, shares of common stock of the Company, or a combination thereof. The Company has the option to redeem the Convertible Notes, in whole or in part, beginning on April 5, 2024.

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The Convertible Notes are convertible into shares of the Company’s common stock at an initial conversion price of $44.28 per share, or 22.5861 shares, per $1,000 principal amount of notes, subject to adjustment upon the occurrence of certain corporate events. However, in no event will the conversion price exceed 28.5714 shares of common stock per $1,000 principal amount of the Convertible Notes. As of September 30, 2023, based on the conversion price, the maximum number of shares that could be issued to satisfy the conversion feature of the Convertible Notes was 19,714,266. The Convertible Notes’ if-converted value did not exceed its principal amount as of September 30, 2023.

Interest expense related to the Convertible Notes was as follows:

			For the three months ended September 30,												For the nine months ended September 30,
(in thousands)			2023						2022						2023						2022
Coupon interest			$	431					$	431					$	1,293					$	1,293
Amortization of debt issuance costs			884						881						2,650						2,637
Convertible Notes interest expense			$	1,315					$	1,312					$	3,943					$	3,930

The debt issuance costs are being amortized to interest expense over the term of the Convertible Notes at an effective interest rate of 0.51%. The remaining term of the Convertible Notes was 2.5 years as of September 30, 2023.

Equipment Notes

The Company has entered into several financing agreements for the purchase of equipment, including trucks, tractors, loaders, graders, and various other machinery. The Company’s equipment notes, which are secured by the purchased equipment, have terms of between 4 to 5 years and interest rates of between 0.0% and 6.5% per annum.

The current and non-current portions of the equipment notes, which are included within the unaudited Condensed Consolidated Balance Sheets in “Other current liabilities” and “Other non-current liabilities,” respectively, were as follows:

			September 30, 2023						December 31, 2022
(in thousands)
Equipment notes
Current			$	2,193					$	2,392
Non-current			3,147						4,743
			$	5,340					$	7,135

As of September 30, 2023, none of the agreements or indentures governing the Company’s indebtedness contain financial covenants.

NOTE 9—LEASES

The Company has operating and finance leases for certain office space, warehouses, vehicles and equipment used in its operations. In November 2021, the Company entered into a lease agreement for corporate office space. The lease commenced during the second quarter of 2023, and at lease commencement, the Company recorded an operating lease liability of $7.3 million and an ROU asset of $10.3 million, primarily comprised of the lease liability as well as $2.9 million of payments for lessor-owned tenant improvements. 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 election of the Company. Excluding rent abatement in the first year of the lease, the initial annual base rent payment is $1.2 million, subject to an annual escalator.

The Company’s lease agreements do not contain material residual value guarantees or restrictive covenants. As of September 30, 2023, the Company was not reasonably certain of exercising any material purchase, renewal, or termination options contained within its lease agreements.

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As of September 30, 2023, the maturities of the Company’s operating and finance lease liabilities were as follows:

(in thousands)			Operating Leases						Finance Leases
Period:
Remainder of 2023			$	162					$	56
2024			1,422						228
2025			1,441						179
2026			1,337						59
2027			1,370						54
Thereafter			4,066						160
Total lease payments			9,798						736
Less: Imputed interest			(2,056)						(108)
Total			$	7,742					$	628

Supplemental disclosure for the unaudited Condensed Consolidated Balance Sheets related to the Company’s operating and finance leases is as follows:

			Location on Unaudited Condensed Consolidated Balance Sheets						September 30, 2023						December 31, 2022
(in thousands)
Operating Leases:
Right-of-use assets			Operating lease right-of-use assets						$	10,346					$	99
Operating lease liability, current			Operating lease liabilities (included in current liabilities)						$	728					$	84
Operating lease liability, non-current			Operating lease liabilities (included in non-current liabilities)						7,014						15
Total operating lease liabilities									$	7,742					$	99
Finance Leases:
Right-of-use assets			Other non-current assets						$	650					$	451
Finance lease liability, current			Other current liabilities						$	197					$	354
Finance lease liability, non-current			Other non-current liabilities						431						242
Total finance lease liabilities									$	628					$	596

NOTE 10—INCOME TAXES

The Company calculates the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate to its year-to-date pretax book income or loss. The tax effects of discrete items, including but not limited to, excess tax benefits or deficiencies associated with stock-based compensation, valuation allowance adjustments based on new evidence, and enactment of tax laws, are reported in the interim period in which they occur. The effective tax rate (income tax expense or benefit as a percentage of income or loss before income taxes) including discrete items was 4.5% and 24.5% for the three and nine months ended September 30, 2023, respectively, as compared to 24.9% and 24.5% for the three and nine months ended September 30, 2022, respectively. The Company’s effective income tax rate can vary from period to period depending on, among other factors, percentage depletion, executive compensation deduction limitations, the Section 45X Advanced Manufacturing Production Credit, and changes to its valuation allowance against deferred tax assets. Certain of these and other factors, including the Company’s history and projections of pretax earnings, are considered in assessing its ability to realize its net deferred tax assets.

On August 16, 2022, the U.S. government enacted the Inflation Reduction Act of 2022 which, among other things, implements a 15% minimum tax on book income of certain large corporations, a 1% excise tax on net stock repurchases, and provides several tax incentives to promote clean energy for tax years beginning after December 31, 2022. The Company does not expect the minimum tax or excise tax to have a material impact on the unaudited Condensed Consolidated Financial

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Statements. The Company expects to benefit from the Section 45X Advanced Manufacturing Production Credit, which provides a credit equal to 10% of the costs incurred with respect to the production and sale of certain critical minerals, including NdPr oxide.

NOTE 11—COMMITMENTS AND CONTINGENCIES

Litigation: The Company may become party to lawsuits, administrative proceedings, and government investigations, including environmental, regulatory, construction, and other matters, in the ordinary course of business. Large, and sometimes unspecified, damages or penalties may be sought in some matters, and certain matters may require years to resolve. The Company is not aware of any pending or threatened litigation that it believes would have a material adverse effect on its unaudited Condensed Consolidated Financial Statements.

NOTE 12—STOCK-BASED COMPENSATION

2020 Incentive Plan: In November 2020, the Company’s stockholders approved the MP Materials Corp. 2020 Stock Incentive Plan (the “2020 Incentive Plan”), which permits the Company to issue stock options (incentive and/or non-qualified); stock appreciation rights (“SARs”); restricted stock, restricted stock units (“RSUs”) and other stock awards (collectively, the “Stock Awards”); and performance awards, which vest contingent upon the attainment of either or a combination of market- or performance-based goals. As of September 30, 2023, the Company has not issued any stock options or SARs and there were 6,101,859 shares available for future grants under the 2020 Incentive Plan.

Market-Based PSUs: In February 2023, pursuant to the 2020 Incentive Plan, the Company’s Compensation Committee of the Board of Directors adopted a performance share plan (the “2023 Performance Share Plan”). Pursuant to the 2023 Performance Share Plan, for the nine months ended September 30, 2023, the Company granted 62,709 of market-based performance stock units (“PSUs”) at target, all of which cliff vest after a requisite performance and service period of three years. The PSUs have the potential to be earned at between 0% and 200% of the number of awards granted depending on the level of growth of the Company’s total shareholder return (“TSR”) as compared to the TSR of the S&P 400 Index and the S&P 400 Materials Group over the performance period. The fair value of the market-based PSUs was determined using a Monte Carlo simulation technique.

Stock-Based Compensation: The Company’s stock-based compensation was recorded as follows:

			For the three months ended September 30,												For the nine months ended September 30,
(in thousands)			2023						2022						2023						2022
Cost of sales			$	842					$	889					$	2,759					$	2,110
Selling, general and administrative			5,193						6,912						15,603						22,717
Advanced projects, start-up, development and other			263						5						679						192
Total stock-based compensation expense			$	6,298					$	7,806					$	19,041					$	25,019
Stock-based compensation capitalized to property, plant and equipment, net			$	367					$	267					$	1,566					$	951

NOTE 13—FAIR VALUE MEASUREMENTS

Accounting Standards Codification (“ASC”) Topic 820, “Fair Value Measurement” (“ASC 820”), establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority

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to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below:

Level 1:			Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2:			Quoted prices in markets that are not active, quoted prices for similar assets or liabilities in active markets, quoted prices or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability and model-based valuation techniques (e.g., the Black-Scholes model) for which all significant inputs are observable in active markets.
Level 3:			Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity).

The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of assets and liabilities and their placement within the fair value hierarchy. The following methods and assumptions are used to estimate the fair value of each class of financial instruments for which it is practicable to estimate. The fair value of the Company’s accounts receivable, accounts payable, short-term debt and accrued liabilities approximates the carrying amounts because of the immediate or short-term maturity of these financial instruments.

Cash, Cash Equivalents and Restricted Cash

The Company’s cash, cash equivalents and restricted cash are classified within Level 1 of the fair value hierarchy. The carrying amounts reported in the unaudited Condensed Consolidated Balance Sheets approximate the fair value of cash, cash equivalents and restricted cash due to the short-term nature of these assets.

Short-term Investments

The fair value of the Company’s short-term investments, which are classified as available-for-sale securities, is estimated based on quoted prices in active markets and is classified as a Level 1 measurement.

Convertible Notes

The fair value of the Company’s Convertible Notes is estimated based on quoted prices in active markets and is classified as a Level 1 measurement.

Equipment Notes

The Company’s equipment notes are classified within Level 2 of the fair value hierarchy because there are inputs that are directly observable for substantially the full term of the liability. Model-based valuation techniques for which all significant inputs are observable in active markets were used to calculate the fair values of liabilities classified within Level 2 of the fair value hierarchy.

Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The carrying amounts and estimated fair values by input level of the Company’s financial instruments were as follows:

			September 30, 2023
(in thousands)			Carrying Amount						Fair Value						Level 1						Level 2						Level 3
Financial assets:
Cash and cash equivalents			$	547,668					$	547,668					$	547,668					$	—					$	—
Short-term investments			$	536,994					$	536,994					$	536,994					$	—					$	—
Restricted cash			$	1,575					$	1,575					$	1,575					$	—					$	—
Financial liabilities:
Convertible Notes			$	681,094					$	591,923					$	591,923					$	—					$	—
Equipment notes			$	5,340					$	5,142					$	—					$	5,142					$	—

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			December 31, 2022
(in thousands)			Carrying Amount						Fair Value						Level 1						Level 2						Level 3
Financial assets:
Cash and cash equivalents			$	136,627					$	136,627					$	136,627					$	—					$	—
Short-term investments			$	1,045,718					$	1,045,718					$	1,045,718					$	—					$	—
Restricted cash			$	6,882					$	6,882					$	6,882					$	—					$	—
Financial liabilities:
Convertible Notes			$	678,444					$	610,650					$	610,650					$	—					$	—
Equipment notes			$	7,135					$	6,807					$	—					$	6,807					$	—

NOTE 14—EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted earnings (loss) per share is computed by dividing net income (loss) by the weighted-average number of common shares outstanding plus the effect of dilutive potential common shares outstanding during the period using the treasury stock method or the if-converted method, as applicable.

The following table reconciles the weighted-average common shares outstanding used in the calculation of basic earnings (loss) per share to the weighted-average common shares outstanding used in the calculation of diluted earnings (loss) per share:

			For the three months ended September 30,												For the nine months ended September 30,
			2023						2022						2023						2022
Weighted-average shares outstanding, basic			177,231,717						176,543,624						177,034,068						176,476,276
Assumed conversion of Convertible Notes			—						15,584,409						15,584,409						15,584,409
Assumed conversion of restricted stock			—						840,786						620,190						944,925
Assumed conversion of RSUs			—						441,038						393,995						433,329
Weighted-average shares outstanding, diluted			177,231,717						193,409,857						193,632,662						193,438,939

The following table presents unweighted potentially dilutive shares that were not included in the computation of diluted earnings (loss) per share because to do so would have been antidilutive:

			For the three months ended September 30,												For the nine months ended September 30,
			2023						2022						2023						2022
Convertible Notes			15,584,409						—						—						—
Restricted Stock			685,202						—						—						—
RSUs			1,629,938						6,013						3,184						6,013

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The following table presents the calculation of basic and diluted earnings (loss) per share for the Company’s common stock:

			For the three months ended September 30,												For the nine months ended September 30,
(in thousands, except share and per share data)			2023						2022						2023						2022
Calculation of basic earnings (loss) per share:
Net income (loss)			$	(4,276)					$	63,177					$	40,566					$	221,997
Weighted-average shares outstanding, basic			177,231,717						176,543,624						177,034,068						176,476,276
Basic earnings (loss) per share			$	(0.02)					$	0.36					$	0.23					$	1.26
Calculation of diluted earnings (loss) per share:
Net income (loss)			$	(4,276)					$	63,177					$	40,566					$	221,997
Interest expense, net of tax(1):
Convertible Notes			—						985						2,977						2,967
Diluted income (loss)			$	(4,276)					$	64,162					$	43,543					$	224,964
Weighted-average shares outstanding, diluted			177,231,717						193,409,857						193,632,662						193,438,939
Diluted earnings (loss) per share			$	(0.02)					$	0.33					$	0.22					$	1.16

(1)The nine months ended September 30, 2023, was tax-effected at a rate of 24.5%, and the three and nine months ended September 30, 2022, were tax-effected at a rate of 24.9% and 24.5%, respectively.

Basic and diluted earnings (loss) per share were the same for the three months ended September 30, 2023, as all potential common shares outstanding would have been anti-dilutive due to the presentation of net loss during the period.

NOTE 15—RELATED-PARTY TRANSACTIONS

Offtake Agreement: In March 2022, the Company entered into an offtake agreement (the “Offtake Agreement”) with Shenghe Resources (Singapore) International Trading Pte. Ltd. (“Shenghe”), a majority-owned subsidiary of Leshan Shenghe Rare Earth Co., Ltd. (“Leshan Shenghe”) whose ultimate parent is Shenghe Resources Holding Co., Ltd., a leading global rare earth company listed on the Shanghai Stock Exchange. The Offtake Agreement became effective upon the termination of the amended and restated offtake agreement with Shenghe. The initial term of the Offtake Agreement is two years, with the option to extend the term at the Company’s discretion for an additional one-year period.

Pursuant to the Offtake Agreement, and subject to certain exclusions, Shenghe is obligated to purchase on a “take or pay” basis the rare earth concentrate produced by the Company as the exclusive distributor in China, with certain exceptions for the Company’s direct sales globally. In addition, at the discretion of the Company, Shenghe may be required to purchase on a “take or pay” basis certain non-concentrate rare earth products, although the Company may sell all non-concentrate rare earth products in its sole discretion to customers or end users in any jurisdiction.

The sales price of rare earth concentrate sold to Shenghe is based on an agreed-upon price per metric ton, 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. The sales price and other terms applicable to a quantity of offtake products are set forth in monthly purchase agreements between the Company and Shenghe. Under the Offtake Agreement, Shenghe is paid a variable commission on net proceeds to the Company.

Tolling Agreement with VREX Holdco: In October 2023, the Company entered into a tolling agreement with VREX Holdco Ltd. Pte. (“VREX Holdco”) (the “Tolling Agreement”), a wholly-owned subsidiary of Shenghe. VREX Holdco owns Vietnam Rare Earth Company Limited (“VREX”), which owns and operates a metal processing plant and related facilities in Vietnam. This Tolling Agreement replaced the previous tolling agreement signed in March 2023 directly with VREX. Pursuant to the Tolling Agreement, the Company will deliver NdPr oxide to VREX Holdco, which VREX Holdco will then provide to VREX to process into NdPr metal for delivery to the Company’s customers globally. As several of the Company’s potential customers that manufacture magnets outside of China prefer to purchase NdPr metal in addition to NdPr oxide, this Tolling Agreement will enable the Company to distribute NdPr products more widely to customers in Japan and other global markets. During the term of the Tolling Agreement, the Company will pay VREX Holdco a processing fee per unit of rare earth metal produced. The Company will maintain title to the products and directly enter into sales agreements for the produced NdPr metal. The initial term of the Tolling Agreement is three years and may be renewed for additional three-year terms. As of

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September 30, 2023, there have not been any transactions as contemplated under the previous tolling agreement signed in March 2023.

Revenue and Cost of Sales: The Company’s related-party revenue and cost of sales were as follows:

			For the three months ended September 30,												For the nine months ended September 30,
(in thousands)			2023						2022						2023						2022
Revenue:
Rare earth concentrate			$	51,502					$	114,894					$	203,186					$	401,496
Other rare earth products(1)			$	—					$	172					$	—					$	8,646
Cost of sales**(2)**			$	21,829					$	21,842					$	66,817					$	65,368

(1)Represents sales agreements with Shenghe for non-concentrate products, including certain stockpiles of rare earth fluoride.

(2)Excludes depreciation, depletion and amortization and includes shipping and freight.

Purchases of Materials and Supplies: The Company purchases certain reagent products (generally produced by an unrelated third-party manufacturer) used in the flotation process as well as other materials from Shenghe in the ordinary course of business. Total purchases were $5.8 million and $7.6 million for the three and nine months ended September 30, 2023, respectively, as compared to $15.3 million and $18.5 million for the three and nine months ended September 30, 2022, respectively.

Accounts Receivable: As of September 30, 2023, and December 31, 2022, $11.9 million and $29.8 million, respectively, of the accounts receivable as stated in the unaudited Condensed Consolidated Balance Sheets, were receivable from and pertained to sales made to Shenghe in the ordinary course of business.

NOTE 16—SUPPLEMENTAL CASH FLOW INFORMATION

Supplemental cash flow information and non-cash investing and financing activities were as follows:

			For the nine months ended September 30,
(in thousands)			2023						2022
Supplemental cash flow information:
Cash paid for interest			$	1,116					$	1,140
Cash payments related to income taxes			$	23,101					$	16,827
Change in construction payables			$	10,952					$	35,779
Supplemental non-cash investing and financing activities:
Common stock issued to acquire intangible asset			$	8,963					$	—
Operating ROU assets obtained in exchange for lease liabilities			$	7,608					$	168
Revenue recognized in exchange for debt principal reduction			$	—					$	13,566
Decrease in estimates of asset retirement costs			$	—					$	10,395

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