Item 1. FINANCIAL STATEMENTS

MP MATERIALS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


(U.S dollars in thousands, except share and per share data)	March 31, 2025		December 31, 2024
Assets
Current assets
Cash and cash equivalents	$	198,343	$	282,442
Short-term investments	560,814		568,426
Total cash, cash equivalents and short-term investments	759,157		850,868
Accounts receivable, net of allowance for credit losses of $0 and $0, respectively (including related party)	69,719		18,874
Inventories	133,084		107,905
Income taxes receivable	23,805		23,672
Government grant receivable	19,205		19,799
Prepaid expenses and other current assets	17,903		10,204
Total current assets	1,022,873		1,031,322
Non-current assets
Property, plant and equipment, net	1,278,830		1,251,496
Operating lease right-of-use assets	9,629		8,680
Inventories	20,338		19,031

Intangible assets, net	7,071		7,370
Other non-current assets	29,383		15,659
Total non-current assets	1,345,251		1,302,236
Total assets	$	2,368,124	$	2,333,558
Liabilities and stockholders’ equity
Current liabilities
Accounts and construction payable	$	20,867	$	23,562
Accrued liabilities	69,141		64,727
Current portion of long-term debt	67,346		—
Deferred revenue	75,335		56,880
Other current liabilities	15,518		18,850
Total current liabilities	248,207		164,019
Non-current liabilities


Long-term debt, net of current portion	842,415		908,729
Deferred revenue	69,474		43,120
Operating lease liabilities	6,390		5,798
Deferred government grant	22,029		20,087
Deferred investment tax credit	25,178		25,502
Deferred income taxes	80,695		85,309
Other non-current liabilities	37,625		26,114
Total non-current liabilities	1,083,806		1,114,659
Total liabilities	1,332,013		1,278,678
Commitments and contingencies (Note 13)
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, 178,695,379 and 178,445,570 shares issued, and 163,445,597 and 163,195,788 shares outstanding, as of March 31, 2025, and December 31, 2024, respectively)	18		18
Additional paid-in capital	965,487		961,434
Retained earnings	297,654		320,302
Accumulated other comprehensive income (loss)	(1)		173
Treasury stock, at cost, 15,249,782 shares for both periods	(227,047)		(227,047)
Total stockholders’ equity	1,036,111		1,054,880
Total liabilities and stockholders’ equity	$	2,368,124	$	2,333,558

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 March 31,
(U.S. dollars in thousands, except share and per share data)		2025		2024
Revenue (including related party)		$	60,810	$	48,684
Operating costs and expenses:
Cost of sales (excluding depreciation, depletion and amortization) (including related party)		48,831		35,594
Selling, general and administrative		24,166		21,267
Depreciation, depletion and amortization		21,384		18,385
Start-up costs		976		1,287
Advanced projects and development		474		4,206
Other operating costs and expenses (income), net		(243)		377
Total operating costs and expenses		95,588		81,116
Operating loss		(34,778)		(32,432)
Interest expense, net		(7,615)		(2,857)
Gain on early extinguishment of debt		—		46,265
Other income, net		15,218		12,657
Income (loss) before income taxes		(27,175)		23,633
Income tax benefit (expense)		4,527		(7,144)
Net income (loss)		$	(22,648)	$	16,489

Earnings (loss) per share:
Basic		$	(0.14)	$	0.09
Diluted		$	(0.14)	$	(0.08)

Weighted-average shares outstanding:
Basic		163,764,345		174,556,850
Diluted		163,764,345		186,791,826

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 March 31,
(U.S. dollars in thousands)		2025		2024
Net income (loss)		$	(22,648)	$	16,489
Other comprehensive loss, net of tax:

Change in net unrealized losses on available-for-sale securities		(174)		(275)



Total comprehensive income (loss)		$	(22,822)	$	16,214

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 March 31, 2025 and 2024
	Preferred Stock			Common Stock			Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total Stockholders’ Equity
(U.S. dollars in thousands, except share data)	Shares	Amount		Shares	Amount
Balance as of January 1, 2025	—	$	—	163,195,788	$	18	$	961,434	$	320,302	$	173	$	(227,047)	$	1,054,880
Stock-based compensation	—	—		433,759	—		7,695		—		—		—		7,695
Shares used to settle payroll tax withholding	—	—		(183,950)	—		(3,642)		—		—		—		(3,642)




Net loss	—	—		—	—		—		(22,648)		—		—		(22,648)
Unrealized losses on available-for-sale securities	—	—		—	—		—		—		(174)		—		(174)
Balance as of March 31, 2025	—	$	—	163,445,597	$	18	$	965,487	$	297,654	$	(1)	$	(227,047)	$	1,036,111

Balance as of January 1, 2024	—	$	—	178,082,383	$	17	$	979,891	$	385,726	$	145	$	—	$	1,365,779
Stock-based compensation	—	—		234,763	1		7,802		—		—		—		7,803
Shares used to settle payroll tax withholding	—	—		(238,314)	—		(3,950)		—		—		—		(3,950)
Repurchases of common stock	—	—		(13,012,388)	—		—		—		—		(202,558)		(202,558)
Common stock issued for services	—	—		240,663	—		3,737		—		—		—		3,737

Capped call options, net of tax	—	—		—	—		(49,271)		—		—		—		(49,271)
Net income	—	—		—	—		—		16,489		—		—		16,489
Unrealized losses on available-for-sale securities	—	—		—	—		—		—		(275)		—		(275)
Balance as of March 31, 2024	—	$	—	165,307,107	$	18	$	938,209	$	402,215	$	(130)	$	(202,558)	$	1,137,754

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 three months ended March 31,
(U.S. dollars in thousands)	2025		2024
Operating activities:
Net income (loss)	$	(22,648)	$	16,489
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depreciation, depletion and amortization	21,384		18,385

Accretion of discount on short-term investments	(5,691)		(8,493)
Gain on early extinguishment of debt	—		(46,265)

Stock-based compensation expense	7,353		7,467
Change in fair value of derivative instrument	(6,997)		—
Amortization of debt issuance costs	1,033		913
Lower of cost or net realizable value reserve	3,164		5,991
Deferred income taxes	(4,558)		7,144
Other	65		276
Decrease (increase) in operating assets:
Accounts receivable (including related party)	(50,845)		(11,571)
Inventories	(31,103)		(20,943)

Government grant receivable	(6,364)		(1,617)
Prepaid expenses, other current and non-current assets	(7,100)		(3,243)
Increase (decrease) in operating liabilities:
Accounts payable and accrued liabilities	(1,786)		(7,633)

Deferred revenue	44,809		—
Deferred government grant	2,723		1,489
Other current and non-current liabilities	(6,637)		485
Net cash used in operating activities	(63,198)		(41,126)
Investing activities:
Additions to property, plant and equipment	(30,467)		(51,838)
Purchases of short-term investments	(364,680)		(390,608)
Proceeds from sales of short-term investments	23,164		22,954
Proceeds from maturities of short-term investments	354,613		460,110

Proceeds from sale of property, plant and equipment	1,666		—
Proceeds from government awards used for construction	—		96
Net cash provided by (used in) investing activities	(15,704)		40,714
Financing activities:
Proceeds from issuance of long-term debt	—		747,500
Payment of debt issuance costs	—		(15,125)
Payments to retire long-term debt	—		(428,599)
Purchase of capped call options	—		(65,332)
Repurchases of common stock	—		(200,764)
Principal payments on debt obligations and finance leases	(1,361)		(811)
Tax withholding on stock-based awards	(3,642)		(3,949)

Net cash provided by (used in) financing activities	(5,003)		32,920
Net change in cash, cash equivalents and restricted cash	(83,905)		32,508
Cash, cash equivalents and restricted cash beginning balance	283,603		264,988
Cash, cash equivalents and restricted cash ending balance	$	199,698	$	297,496

Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	198,343	$	296,468
Restricted cash, current	815		692
Restricted cash, non-current	540		336
Total cash, cash equivalents and restricted cash	$	199,698	$	297,496

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. Headquartered in Las Vegas, Nevada, the Company owns and operates the Mountain Pass Rare Earth Mine and Processing Facility (“Mountain Pass”) located near Mountain Pass, San Bernardino County, California, the only rare earth mining and processing site of scale in North America. The Company is also developing a rare earth metal, alloy and magnet manufacturing facility in Fort Worth, Texas (the “Independence Facility”), where the Company produces and sells magnetic precursor products and anticipates manufacturing neodymium-iron-boron (“NdFeB”) permanent magnets by the end of 2025. The Company’s operations are organized into two reportable segments: Materials and Magnetics. See Note 20, “Segment Reporting,” for additional information.

The Company produces refined rare earth oxides and related products as well as rare earth concentrate products. The rare earth concentrate is principally sold pursuant to the Offtake Agreement to Shenghe (as such terms are defined in Note 19, “Related-Party Transactions”), a related party of the Company, that, in turn, typically sells that product to refiners in China. The Company also produces and generates revenue from the sale of separated rare earth products, including neodymium-praseodymium (“NdPr”) oxide. Additionally, the Company has a long-term agreement with General Motors Company (NYSE: GM) (“GM”) to supply U.S.-sourced and manufactured rare earth materials and finished magnets used in electric motors.

The cash flows and profitability of the Company’s operations are significantly affected by the market price of rare earth products, which are generally also impacted by taxes and tariffs. 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, metallization, and magnet manufacturing capabilities of the region. See the “Concentration of Risk” section in Note 2, “Significant Accounting Policies,” for additional information. 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 and are presented in U.S. dollars. 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.

Concentration of Risk: Financial instruments that potentially subject the Company to credit risk consist principally of cash, cash equivalents and short-term investments, and receivables from customers. 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.

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As of March 31, 2025, Shenghe was the principal customer of the Materials segment and accounted for more than 60% of the Company’s consolidated revenue for the three months ended March 31, 2025, the vast majority of which related to sales of concentrate, versus more than 80% of the Company’s consolidated revenue for the three months ended March 31, 2024 (see Note 19, “Related-Party Transactions,” for additional information).

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”) primarily due to concerns over the global economic conditions and actual or perceived concerns over increases in the supply of or slower growth in the demand for 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, the economic conflict between China and the U.S., marked by recent escalations in trade disputes and the imposition of additional tariffs, has had, and is expected, at least in the near-term, to continue to have, a material negative impact on the Company’s business, revenues, and cash flows. These developments introduce uncertainty regarding potential impacts on the Company’s direct exports, supplier pricing, and the possibility of reciprocal or retaliatory tariffs from other affected countries. Broader trade policies and ongoing political tensions may also reduce trade volumes between major international economies, leading to disruptions in supply chains and financial market instability.

Because the Company’s revenue is derived from the sale of rare earth products, shifts in the market price of these products, including the levying of taxes, tariffs, or other fees, are expected to have a significant negative effect on the Company’s results of operations and cash flows, particularly in its Materials segment. As a result of the item discussed in Note 22, “Subsequent Events,” the Company’s rare earth concentrate revenues are expected to be materially lower through at least the second quarter of 2025 as the Company prioritizes further processing the concentrate into separated rare earth products or stockpiling the concentrate for future use.

Revenue Recognition: For certain product sales primarily within the Magnetics segment, the Company receives requests from customers to temporarily hold purchased products at the Company’s facilities. These products are sold under terms included in bill-and-hold arrangements that may result in different timing for revenue recognition versus shipment. The Company recognizes revenue under these arrangements only when there is a substantive reason for the agreement, the ordered goods are identified separately as belonging to the customer, the goods are currently ready for physical transfer to the customer, and the Company does not have the ability to use the product or to direct it to another customer. Assuming these required revenue recognition criteria are met, revenue is recognized upon completion of product manufacture, which is the point in time control of the product transfers to the customer. See Note 14, “Revenue Recognition,” for additional information.

Performance-based Performance Stock Units: The Company recognizes the performance-based performance stock units’ (“performance-based PSUs”) grant-date fair value as compensation cost on a straight-line basis over the requisite service period if it is probable that a performance condition will be achieved. No compensation cost will be recognized for a performance condition that is not probable of being achieved. The Company will re-evaluate at the end of each reporting period whether or not a performance condition is probable of being achieved. If, based on this re-evaluation, the Company estimates an increase in overall compensation cost, then the Company will recognize a cumulative catch-up of compensation cost in the period of the re-evaluation. Alternatively, if the Company estimates a decrease in overall compensation cost, the Company will defer reversing compensation cost until achievement of the performance condition is estimated to be improbable. Previously recognized compensation costs related to forfeited awards will be reversed in the period the forfeiture actually occurs. See Note 16, “Stockholders’ Equity and Stock-Based Compensation,” for additional information.

Convertible Debt and Embedded Derivatives: The Company accounts for its convertible debt in accordance with Accounting Standards Codification (“ASC”) Subtopic 470-20, “Debt with Conversion and Other Options” (“ASC 470-20”), whereby the convertible instrument is initially accounted for as a single unit of account, unless it contains a derivative that must be bifurcated from the host contract in accordance with ASC Topic 815, “Derivatives and Hedging,” or the substantial premium model in ASC 470-20 applies. When it is determined that an embedded derivative is required to be bifurcated, the Company recognizes the bifurcated embedded derivative, measured at fair value, as a separate derivative asset or liability upon initial recognition and in subsequent periods at fair value with changes in fair value included in profit or loss each reporting period. As of March 31, 2025, the fair value of the redemption feature included in the portion of the 2030 Notes (as defined in Note 10, “Debt Obligations ”) that were issued in December 2024 was $7.0 million and is included in “Other non-current assets” within the Company’s unaudited Condensed Consolidated Balance Sheets. The fair value of the same feature as of December 31, 2024, was not material. Changes in the fair value each reporting period are included in “Other income, net” within the

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Company’s unaudited Condensed Consolidated Statements of Operations. See Not e 17, “Fa ir Value Measurements ,” for additional information.

Recently Adopted Accounting Pronouncements: In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2023-07, “Improvements to Reportable Segment Disclosures” (“ASU 2023-07”), which expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets. The Company adopted ASU 2023-07 on a retrospective basis as of December 31, 2024, for annual periods, and for interim periods beginning in 2025. See Note 20, “Segment Reporting,” for additional information.

Recently Issued Accounting Pronouncements: During the three months ended March 31, 2025, there were no accounting pronouncements adopted by the Company that had a material impact on the Company’s unaudited Condensed Consolidated Financial Statements. The Company is currently evaluating the effect of adopting ASU No. 2024-03, “Income Statement—Reporting Comprehensive Income Expense Disaggregation Disclosures” and ASU No. 2024-04, “Induced Conversions of Convertible Debt Instruments” on its disclosures.

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:


	March 31, 2025								December 31, 2024
(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	$	12,994	$	—	$	—	$	12,994	$	1,889	$	—	$	—	$	1,889
Cash equivalents:
Money market funds	26,537		—		—		26,537		164,477		—		—		164,477

U.S. Treasury securities	73,997		—		—		73,997		86,320		17		—		86,337
Commercial paper	78,078		1		(1)		78,078		29,731		8		—		29,739
Certificates of deposit	6,737		—		—		6,737		—		—		—		—

Total cash equivalents	185,349		1		(1)		185,349		280,528		25		—		280,553
Total cash and equivalents	198,343		1		(1)		198,343		282,417		25		—		282,442
Short-term investments:
U.S. agency securities	2,240		—		—		2,240		2,240		—		—		2,240
U.S. Treasury securities	548,474		32		(19)		548,487		544,410		222		(12)		544,620
Commercial paper	7,834		—		—		7,834		16,661		6		—		16,667
Certificates of deposit	2,253		—		—		2,253		4,897		2		—		4,899
Total short-term investments	560,801		32		(19)		560,814		568,208		230		(12)		568,426
Total cash, cash equivalents and short-term investments	$	759,144	$	33	$	(20)	$	759,157	$	850,625	$	255	$	(12)	$	850,868

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 months ended March 31, 2025 and 2024. 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 March 31, 2025, 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 March 31,
(in thousands)		2025		2024
Gross realized gains		$	2	$	2
Gross realized losses		$	—	$	6
Interest and investment income(1)		$	8,565	$	12,870

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

As of March 31, 2025, all outstanding available-for-sale investments had contractual maturities within one year and aggregated to a fair value of $719.6 million.

Accrued interest receivable was $0.5 million and $0.6 million as of March 31, 2025 and December 31, 2024, respectively, and is included in “Prepaid expenses and other current assets” within the unaudited Condensed Consolidated Balance Sheets.

NOTE 4—INVENTORIES

The Company’s inventories consisted of the following:


	March 31, 2025		December 31, 2024
(in thousands)
Raw materials and supplies, including spare parts	$	58,328	$	48,400
Mined ore stockpiles	31,248		31,142
Work in process	22,529		14,447
Finished goods	20,979		13,916
Total current inventories	133,084		107,905
Add: Non-current portion(1)	20,338		19,031
Total inventories	$	153,422	$	126,936

(1)Primarily 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. The stockpiled ore amounts as of March 31, 2025 and December 31, 2024, were $12.7 million and $12.3 million, respectively.

As of March 31, 2025, the Company determined that a lower of cost or net realizable value reserve of $3.2 million was necessary on certain of the Company’s work in process and finished goods inventories. The reserve recorded as of March 31, 2024, was $6.0 million. The reserve was largely attributable to continued elevated carrying costs of the Company’s production of separated products given the current stage of ramping the midstream operations facilities to normalized production levels. Changes in the reserve are included in “Cost of sales (excluding depreciation, depletion and amortization) (including related party)” within the Company’s unaudited Condensed Consolidated Statements of Operations.

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NOTE 5—PROPERTY, PLANT AND EQUIPMENT

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


	March 31, 2025		December 31, 2024
(in thousands)
Land and land improvements	$	42,888	$	42,789
Buildings and building improvements	99,111		96,961
Machinery and equipment	688,072		662,333
Assets under construction	219,555		202,544
Mineral rights	438,395		438,395
Property, plant and equipment, gross	1,488,021		1,443,022
Less: Accumulated depreciation and depletion	(209,191)		(191,526)
Property, plant and equipment, net	$	1,278,830	$	1,251,496

Additions to Property, Plant and Equipment: The Company capitalized expenditures related to property, plant and equipment of $34.0 million and $56.6 million for the three months ended March 31, 2025 and 2024, respectively, including amounts not yet paid (see Note 21, “Supplemental Cash Flow Information”). The capitalized expenditures for the three months ended March 31, 2025 and 2024, related primarily to machinery, equipment and assets under construction to support the Company’s Independence Facility, as well as various projects at Mountain Pass, including the separations facility for heavy rare earth elements.

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


	For the three months ended March 31,
(in thousands)		2025		2024
Depreciation expense		$	18,137	$	14,900
Depletion expense		$	2,880	$	3,132

There were no property, plant and equipment impairments recognized for the three months ended March 31, 2025 and 2024.

NOTE 6—EQUITY METHOD INVESTMENT

The Company’s equity method investment balance, which is included in “Other non-current assets” within the Company’s unaudited Condensed Consolidated Balance Sheets, was $8.8 million and $9.1 million, as of March 31, 2025, and December 31, 2024, respectively, and pertains to the Company’s 49% equity interest in VREX Holdco Pte. Ltd. (“VREX Holdco”). VREX Holdco wholly owns Vietnam Rare Earth Company Limited (“VREX”), which owns and operates a metal processing plant and related facilities in Vietnam. The Company determined that VREX Holdco is a variable interest entity, but that the Company is not the primary beneficiary. Consequently, the Company does not consolidate VREX Holdco, and instead, accounts for its investment in VREX Holdco under the equity method of accounting as it has the ability to exercise significant influence, but not control, over VREX Holdco’s operating and financial policies.

For the three months ended March 31, 2025 and 2024, the Company recognized $0.3 million and $0.1 million of the Company’s share of VREX Holdco’s net loss, respectively, which was included in “Other income, net” within the Company’s unaudited Condensed Consolidated Statements of Operations. As of March 31, 2025, intra-entity profit or loss eliminations were immaterial.

In November 2024, VREX’s metal processing operations in Vietnam were paused. In February 2025, VREX Holdco, the Company, and Shenghe entered into an agreement whereby, subject to any required regulatory approvals, VREX Holdco would return to the Company the dollar amount of the Company’s initial investment, which was $9.7 million, in exchange for its 49% equity interest in VREX Holdco. As a result, as of March 31, 2025, the Company concluded that its equity method investment had not experienced an other-than-temporary decline in value since it expects to receive an amount at least equal to the carrying amount of the investment. No impairment charges were recorded during three months ended March 31, 2025 and 2024. As of March 31, 2025, the Company was not utilizing VREX as a toll processor, and instead, has been using its other toll processors to convert its NdPr oxide into metal.

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NOTE 7—INTANGIBLE ASSETS

The Company’s intangible assets were as follows:


	March 31, 2025		December 31, 2024
(in thousands)


Intangible assets with definite lives:
Patent and intellectual property license	$	8,963	$	8,963
Less: Accumulated amortization	(1,892)		(1,593)

Intangible assets, net	$	7,071	$	7,370

Amortization expense related to amortizing intangible assets was $0.3 million for both the three months ended March 31, 2025 and 2024. No impairment charges were recorded during the three months ended March 31, 2025 and 2024.

NOTE 8—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 March 31, 2025, 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 2053.

As of March 31, 2025, the credit-adjusted risk-free rate ranged between 6.5% and 11.5% depending on the timing of expected settlement and when the increment was recognized. There were no significant increments or decrements for the three months ended March 31, 2025 and 2024.

The balance as of both March 31, 2025, and December 31, 2024, 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 $51.5 million and $51.6 million as of March 31, 2025, and December 31, 2024, respectively.

Environmental Obligations

The Company has certain environmental monitoring and remediation obligations related to the groundwater contamination in and around Mountain Pass. The Company engages environmental consultants to develop remediation plans and the related cost projections, which are used to develop an estimate of future cash payments to estimate the Company’s environmental obligations. As assessments and remediation progress occur, the Company periodically reviews its estimates and records any necessary adjustments in the period in which new information becomes available.

As of March 31, 2025, the Company estimated the cash outflows related to these environmental activities will be incurred annually over the next 30 years but could be longer. The Company’s environmental obligations are measured at the expected value of future cash outflows discounted to their present value using a discount rate of 4.78%. There were no significant changes in the estimated remaining costs for the three months ended March 31, 2025 and 2024.

The total estimated aggregate undiscounted cost of $39.2 million and $39.5 million as of March 31, 2025, and December 31, 2024, respectively, principally related to groundwater monitoring and remediation 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 balances as of March 31, 2025, and December 31, 2024, both included current portions of $0.9 million, which are reported under “Other current liabilities” within the Company’s unaudited Condensed Consolidated Balance Sheets. The non-current portions are included in “Other non-current liabilities” within the Company’s unaudited Condensed Consolidated Balance Sheets.

Financial Assurances

The Company is required to provide certain government agencies with financial assurances relating to closure and reclamation obligations. As of March 31, 2025, and December 31, 2024, the Company had financial assurance requirements of $45.4 million and $45.5 million, respectively, which were satisfied with surety bonds placed with applicable California state and regional agencies.

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NOTE 9—ACCRUED LIABILITIES

The Company’s accrued liabilities consisted of the following:


	March 31, 2025		December 31, 2024
(in thousands)
Accrued payroll and related	$	11,239	$	17,370
Accrued construction costs	41,058		36,016
Accrued taxes(1)	3,671		4,039
Other accrued liabilities	13,173		7,302
Accrued liabilities	$	69,141	$	64,727

(1)The March 31, 2025, and December 31, 2024, balances both include excise tax liability of $2.0 million.

NOTE 10—DEBT OBLIGATIONS

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


	March 31, 2025						December 31, 2024
(in thousands)	Principal Amount		Unamortized Debt Issuance Costs		Carrying Amount		Principal Amount		Unamortized Debt Issuance Costs		Carrying Amount
Convertible Notes due 2026	$	67,699	$	(353)	$	67,346	$	67,699	$	(440)	$	67,259
Convertible Notes due 2030	862,793		(20,378)		842,415		862,793		(21,323)		841,470
Total long-term debt	$	930,492	$	(20,731)	909,761		$	930,492	$	(21,763)	908,729
Less: Current portion					(67,346)						—
Total long-term debt, net of current portion					$	842,415					$	908,729

Convertible Notes due 2026

In March 2021, the Company issued $690.0 million in aggregate principal amount of 0.25% unsecured convertible senior notes (the “2026 Notes”) at a price of par. Interest on the 2026 Notes is payable on April 1st and October 1st of each year, beginning on October 1, 2021.

In March 2024, contemporaneous with the pricing of the 2030 Notes (as defined below), the Company entered into privately negotiated transactions with certain holders of the 2026 Notes to repurchase $400.0 million in aggregate principal amount of the 2026 Notes, using $358.0 million of the net proceeds from the offering of the 2030 Notes. The price the Company paid to repurchase the 2026 Notes, 89.5% of par value, was the same for each lender and approximated the trading price of the 2026 Notes at the time of the repurchases. Subsequent to the issuance of the 2030 Notes, the Company repurchased an additional $80.0 million in aggregate principal amount of the 2026 Notes in open market transactions for $70.6 million. As a result of these repurchases in the first quarter of 2024, the Company recorded a $46.3 million gain on early extinguishment of debt included within the Company’s unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2024.

The remaining 2026 Notes outstanding mature, unless earlier converted, redeemed or repurchased, on April 1, 2026, and become convertible at the option of the holder beginning on January 1, 2026, through the business day immediately preceding the maturity date. The initial conversion price of the remaining 2026 Notes is approximately $44.28 per share, or 22.5861 shares per $1,000 principal amount of notes, subject to adjustment upon the occurrence of certain events. As of March 31, 2025, the 2026 Notes are included in “Current portion of long-term debt” within the Company’s unaudited Condensed Consolidated Balance Sheets due to the 2026 Notes becoming convertible within one year.

In March 2024, the Company provided a written notice to the trustee and the holders of the 2026 Notes that it has irrevocably elected to fix the settlement method for all conversions that may occur subsequent to the election date, to a combination of cash and shares of the Company’s common stock with the specified dollar amount, per $1,000 principal amount of the 2026 Notes, of $1,000. As a result, for any conversions of 2026 Notes occurring after the election date, a converting holder will receive (i) up to $1,000 in cash per $1,000 principal amount of the 2026 Notes and (ii) shares of the Company’s

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common stock for any conversion consideration in excess of $1,000 per $1,000 principal amount of the 2026 Notes converted. Prior to the election being made, the Company could have elected to settle the 2026 Notes in cash, shares of the Company’s common stock or a combination thereof.

Convertible Notes due 2030

In March 2024, the Company issued $747.5 million in aggregate principal amount of 3.00% unsecured convertible senior notes that mature, unless earlier converted, redeemed or repurchased, on March 1, 2030 (the “2030 Notes” and, together with the 2026 Notes, the “Convertible Notes”), at a price of par. Interest on the 2030 Notes is payable on March 1st and September 1st of each year, beginning on September 1, 2024.

The 2030 Notes are convertible into cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s election, at an initial conversion price of approximately $21.74 per share, or 45.9939 shares per $1,000 principal amount of 2030 Notes, subject to adjustment upon the occurrence of certain events.

The Company has the option to redeem for cash the 2030 Notes, in whole or in part, beginning on March 5, 2027, if certain conditions are met as set forth in the indenture governing the 2030 Notes. The redemption price is equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest.

Capped Call Options

In March 2024, in connection with the offering of the 2030 Notes, the Company entered into privately negotiated capped call transactions (the “Capped Call Options”) with certain financial institutions (“Counterparties”). The Capped Call Options cover, subject to anti-dilution adjustments substantially similar to those in the 2030 Notes, 34.4 million shares of the Company’s common stock, the same number of shares that initially underlie the 2030 Notes issued in March 2024. The Capped Call Options have an expiration date of March 1, 2030, subject to earlier exercise.

The Capped Call Options are expected generally to reduce the potential dilution to the Company’s common stock upon conversion of the 2030 Notes and/or offset cash payments the Company is required to make in excess of the principal amount of the converted 2030 Notes, as the case may be, in the event that the market price per share of the Company’s common stock, as measured under the terms of the Capped Call Options, is greater than the strike price of the Capped Call Options, which initially corresponds to the initial conversion price of the 2030 Notes, or approximately $21.74 per share of common stock, with such reduction and/or offset subject to an initial cap of $31.06 per share of the Company’s common stock.

The Capped Call Options are separate transactions, entered into by the Company with each of the Counterparties, and are not part of the terms of the 2030 Notes. Holders of the 2030 Notes will not have any rights with respect to the Capped Call Options. The Capped Call Options meet the criteria for classification as equity and, as such, are not remeasured each reporting period. During the first quarter of 2024, the Company paid $65.3 million for the Capped Call Options, which was recorded as a reduction to “Additional paid-in capital” within the Company’s unaudited Condensed Consolidated Balance Sheets along with the offsetting associated deferred tax impact of $16.1 million.

The Company elected to integrate the Capped Call Options with those 2030 Notes issued in March 2024 for federal income tax purposes pursuant to applicable U.S. Treasury Regulations. Accordingly, the $65.3 million gross cost of the purchased Capped Call Options will be deductible for income tax purposes as original discount interest over the term of the 2030 Notes.

Interest expense related to the Convertible Notes was as follows:


	For the three months ended March 31,
(in thousands)		2025		2024
Coupon interest		$	6,513	$	1,914
Amortization of debt issuance costs		1,033		913
Convertible Notes interest expense		$	7,546	$	2,827

The debt issuance costs associated with the 2026 Notes and the 2030 Notes are being amortized to interest expense over the terms of each note at effective interest rates of 0.51% and 3.52%, respectively. The remaining term of the 2026 Notes and the 2030 Notes were 1.0 year and 4.9 years, respectively, as of March 31, 2025.

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As of March 31, 2025, and December 31, 2024, accrued and unpaid interest pertaining to the Convertible Notes was $2.2 million and $8.7 million, respectively, and is included in “Other current liabilities” within the Company’s unaudited Condensed Consolidated Balance Sheets.

Equipment Notes

The Company has financing agreements for the purchase of certain equipment, including trucks and loaders, graders, and various other machinery. The Company’s equipment notes, which are secured by the purchased equipment, have terms of between 4 years to 6 years and interest rates of between 4.5% and 7.4% per annum.

In December 2024, the Company entered into a secured uncommitted non-revolving credit facility (the “Uncommitted Credit Facility”) with Caterpillar Financial Services Corporation, providing an aggregate borrowing capacity of $25.0 million, which the Company may use only to finance agreed-upon equipment. During the three months ended March 31, 2025, the Company executed promissory notes under the Uncommitted Credit Facility to finance new equipment, including trucks and wheel loaders, for use at Mountain Pass. As of March 31, 2025, the Company had $13.4 million of borrowings outstanding under the Uncommitted Credit Facility. The interest rates for the various borrowings, including existing and any potential future promissory notes executed under the Uncommitted Credit Facility, will approximate market rates at the time of borrowing and will be fixed for the duration of the respective advance. The purchase of the equipment through the execution of these notes is disclosed as a non-cash investing and financing activity in Note 21, “Supplemental Cash Flow Information.”

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:


	March 31, 2025		December 31, 2024
(in thousands)
Equipment notes
Current	$	3,518	$	2,098
Non-current	11,390		539
	$	14,908	$	2,637

As of March 31, 2025, none of the agreements governing the Company’s indebtedness contain financial covenants.

NOTE 11—LEASES

The Company has operating and finance leases for corporate office space, warehouses, vehicles and equipment used in its operations. The Company’s lease agreements do not contain material residual value guarantees or restrictive covenants. As of March 31, 2025, the Company was not reasonably certain of exercising any material purchase, renewal, or termination options contained within its lease agreements. No right-of-use asset impairment charges were recorded during the three months ended March 31, 2025 and 2024.

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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	March 31, 2025		December 31, 2024
(in thousands)
Operating leases:
Right-of-use assets	Operating lease right-of-use assets	$	9,629	$	8,680

Operating lease liability, current	Other current liabilities	$	1,417	$	1,066
Operating lease liability, non-current	Operating lease liabilities	6,390		5,798
Total operating lease liabilities		$	7,807	$	6,864

Finance leases:
Right-of-use assets	Other non-current assets	$	837	$	905

Finance lease liability, current	Other current liabilities	$	341	$	517
Finance lease liability, non-current	Other non-current liabilities	198		218
Total finance lease liabilities		$	539	$	735

NOTE 12—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 16.7% and 30.2% for the three months ended March 31, 2025 and 2024. 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 (the “45X Credit”), and changes to its valuation allowance against deferred tax assets. Certain of these and other factors, including the Company’s history and future reversals of existing taxable temporary differences, are considered in assessing its ability to realize its net deferred tax assets. As of March 31, 2025, the Company provided a valuation allowance against certain state tax credits that it believes, based on the weight of available evidence, are not more likely than not to be realized.

In March 2024, the Company was awarded a $58.5 million Section 48C Qualifying Advanced Energy Project Tax Credit (the “48C Credit”) to advance the construction on the Independence Facility. The 48C Credit is an investment tax credit equal to 30% of qualified investments for certified projects that meet prevailing wage and apprenticeship requirements and are placed in service after the date of the award. The 48C Credit is not eligible for direct pay (i.e., it is nonrefundable); however, it is transferable to an unrelated taxpayer at a negotiated rate. The current and noncurrent portions of the 48C Credit recognized are included in “Other current liabilities” and “Deferred investment tax credit,” respectively, within the Company’s unaudited Condensed Consolidated Balance Sheets.

NOTE 13—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. Other than the matter described below, 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.

The Company is currently in a dispute with a general contractor for a construction project, which is scheduled to go to binding arbitration. The Company disputes that it owes any monies (and believes it has a valid claim against the contractor) in connection with this construction project. The Company is unable to estimate a range of loss, if any, at this time. If an unfavorable outcome were to occur in the binding arbitration, it is possible that the impact could be material to the Company’s unaudited Condensed Consolidated Financial Statements in the period in which any such outcome becomes probable and reasonably estimable.

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NOTE 14—REVENUE RECOGNITION

The following table disaggregates the Company’s revenue from contracts with customers by segment and by type of good sold, which are transferred to customers at a point in time:


	For the three months ended March 31,
(in thousands)		2025		2024
Revenue category by segment
Materials segment
Rare earth concentrate		$	30,115	$	40,076
NdPr oxide and metal		24,321		8,327
Other revenue		1,183		281
Total Materials segment revenue		55,619		48,684

Magnetics segment
Magnetic precursor products		5,191		—

Total revenue		$	60,810	$	48,684

Rare earth concentrate revenue was primarily generated from sales to Shenghe under the Offtake Agreement (as defined in N ote 19, “Related-Party Transactions”). The sales price of rare earth concentrate sold to Shenghe is based on a preliminary market price (net of taxes, tariffs, and certain other agreed charges) per MT and estimated exchange rate between the Chinese yuan and the U.S. dollar, with an adjustment for the ultimate market price of the product realized by Shenghe upon sales to their customers, including the impact of changes in the exchange rate between the Chinese yuan and the U.S. dollar. There were no tariffs that impacted the Company’s sales for the three months ended March 31, 2025 and 2024.

NdPr oxide and metal revenue was generated from individual sales agreements as well as sales made under the Company’s distribution agreement with Sumitomo Corporation of Americas.

Other revenue was generated primarily from sales of other refined products, including lanthanum carbonate and cerium chloride.

Magnetic precursor products revenue commenced in the first quarter of 2025 and was generated from sales of NdPr metal produced at the Independence Facility under the long-term supply agreement with GM. During the three months ended March 31, 2025, the Company recognized $5.2 million of revenue under a bill-and-hold arrangement, under which control of the product transfers to the customer, but the product remains in the physical possession of the Company. The performance obligation is satisfied at the point in time the finished product is packaged, segregated and ready for shipment to GM. There were no bill-and-hold transactions during the three months ended March 31, 2024.

Contract Balances: The Company recognizes revenue based on the criteria set forth in ASC Topic 606, “Revenue from Contracts with Customers.” Given the nature of the Company’s contracts with customers, contract assets are not material for any period presented. Furthermore, the amount of revenue recognized in the periods presented from performance obligations that were satisfied (or partially satisfied) in previous periods were not material to any period presented.

Contract liabilities, commonly referred to as deferred revenue, represent the Company’s obligation to transfer goods or services to a customer for which the Company has received consideration or has the unconditional right to receive consideration in advance of such transfer. Deferred revenue decreases as revenue is recognized from the satisfaction of the related performance obligations.

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The following table summarizes the activity of the Company’s deferred revenue:


(in thousands)	For the three months ended March 31, 2025
Beginning balance(1)	$	100,000
Additions to deferred revenue	50,000
Revenue recognized during the period(2)	(5,191)
Ending balance(1)	$	144,809

(1) Contract liabilities are included as current and non-current deferred revenue in the Company’s unaudited Condensed Consolidated Balance Sheets based on the Company’s expectation of when the performance obligations will be satisfied.
(2) All of the revenue recognized during the period was included in the beginning deferred revenue balance.

There was no deferred revenue activity recognized during the three months ended March 31, 2024.

Pursuant to the long-term agreement with GM, GM prepaid to the Company $50.0 million in April 2025 and $100.0 million during the year ended December 31, 2024, for magnetic precursor products. The $50.0 million received in April 2025 was the final prepayment for magnetic precursor products under the long-term agreement with GM and was recorded as deferred revenue as of March 31, 2025, in the Company’s unaudited Condensed Consolidated Balance Sheets based on the Company’s unconditional right to the consideration as of March 31, 2025.

As of March 31, 2025, the Company classified $75.3 million of the $144.8 million total remaining prepayment as current deferred revenue and $69.5 million as non-current deferred revenue in its unaudited Condensed Consolidated Balance Sheets based on the Company’s expectation of when the performance obligations will be satisfied. The Company currently estimates that the performance obligations associated with the current deferred revenue will be satisfied within one year after March 31, 2025, and between approximately one and two years after the same date for the non-current deferred revenue. The Company’s estimate of when the performance obligations will be satisfied and revenue will be recognized is dependent upon the timing of the production ramp of NdPr metal at the Independence Facility. There were no other deferred revenue balances as of both March 31, 2025 and December 31, 2024.

NOTE 15—GOVERNMENT GRANTS

Income-Based Grants: In August 2022, the U.S. government enacted the Inflation Reduction Act of 2022, which, among other things, promotes clean energy adoption by providing several tax incentives for the domestic production and sale of eligible components. Specifically, the 45X Credit provides a credit equal to 10% of eligible “production costs incurred” with respect to the production and sale of critical minerals, including NdPr oxide. In October 2024, the Internal Revenue Service released final regulations on the 45X Credit, which among other things, added direct and indirect materials costs, including costs related to the extraction or acquisition of raw materials, to the definition of “production costs incurred,” which were previously excluded from the definition under the proposed regulations released in December 2023. The impact of the new guidance, including a cumulative adjustment to reflect the inclusion of direct and indirect costs on previous sales, was accounted for in the fourth quarter of 2024.

As of March 31, 2025, and December 31, 2024, the government grant receivable balance and deferred government grant within the Company’s unaudited Condensed Consolidated Balance Sheets pertained to the 45X Credit. The non-current portion of government grant receivable, which is included in “Other non-current assets,” was $7.0 million and zero as of March 31, 2025 and December 31, 2024, respectively. The current portion of deferred government grant, which is included in “Other current liabilities,” was $2.3 million and $2.0 million as of March 31, 2025 and December 31, 2024, respectively.

The benefits (reduction of expenses) recognized in the Company’s unaudited Condensed Consolidated Statements of Operations pertaining to the 45X Credit were recorded as follows:


	For the three months ended March 31,
(in thousands)		2025		2024
Cost of sales (excluding depreciation, depletion and amortization) (including related party)		$	3,263	$	469
Selling, general and administrative		$	377	$	—
Depreciation, depletion and amortization		$	535	$	455

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NOTE 16—STOCKHOLDERS' EQUITY AND STOCK-BASED COMPENSATION

Treasury Stock

In March 2024, the Company’s Board of Directors approved a share repurchase program (the “Program”) effective for one year under which the Company became authorized to repurchase up to an aggregate amount of $300.0 million of the Company’s outstanding common stock. In August 2024, the Company’s Board of Directors approved a $300.0 million increase to the Program, bringing the total authorized amount to $600.0 million. The Program was also extended and is effective until August 30, 2026. The authorization does not require the purchase of any minimum number of shares.

During the three months ended March 31, 2024, the Company repurchased 13.0 million shares of its common stock at an aggregate cost of $200.8 million. Of the number of shares repurchased during the three months ended March 31, 2024, 12.3 million were repurchased in March 2024 contemporaneous with the 2030 Notes offering using $191.6 million of the net proceeds from such offering. The shares repurchased in connection with the 2030 Notes offering were privately negotiated transactions with or through one of the initial purchasers of the 2030 Notes or its affiliate at a price of $15.53 per share, which was equal to the closing price per share of common stock on the date of such transactions. No shares were repurchased during the three months ended March 31, 2025.

As of March 31, 2025, $375.0 million was available for additional share repurchases under the Program.

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 March 31, 2025, the Company has not issued any stock options or SARs and there were 4,834,796 shares available for future grants under the 2020 Incentive Plan.

Performance-Based PSUs: In March 2025, pursuant to the 2020 Incentive Plan, the Compensation Committee of the Company’s Board of Directors adopted a performance share plan (the “2025 Performance Share Plan”). Pursuant to the 2025 Performance Share Plan, during the three months ended March 31, 2025, the Company granted 235,533 of performance-based PSUs at target, all of which cliff vest after a requisite performance period of three years. The performance-based PSUs have a requisite service period of approximately three years and have the potential to be earned in 50% increments between 0% and 200% of the number of granted awards depending on the achievement of the performance conditions. The fair value of these performance-based PSUs was determined using the Company’s stock price on the grant date.

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


	For the three months ended March 31,
(in thousands)		2025		2024
Cost of sales (excluding depreciation, depletion and amortization) (including related party)		$	2,034	$	1,459
Selling, general and administrative		5,115		5,762
Start-up costs		204		114
Advanced projects and development		—		132
Total stock-based compensation expense		$	7,353	$	7,467

Stock-based compensation capitalized to property, plant and equipment, net		$	1,279	$	336

NOTE 17—FAIR VALUE MEASUREMENTS

ASC Topic 820, “Fair Value Measurement,” establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for

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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, 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.

Derivative Instrument

The Company’s derivative instrument pertains to the redemption feature included in the portion of the 2030 Notes that were issued in December 2024. This instrument’s fair value is measured using a binomial lattice model, which utilizes observable inputs (e.g., the Company’s stock price) and unobservable inputs (e.g., the expected volatility and instrument specific discount rate) that cause the valuation measurements to be classified as Level 3. The significant unobservable inputs used in the determination of the fair value of instruments classified as Level 3 have an inherent measurement uncertainty that, if changed, could result in higher or lower fair value measurements of the derivative instrument as of the reporting date. The following assumptions were used within the model:


Valuation Assumptions:	March 31, 2025
Expected volatility	40.0		%
Risk-free interest rate	4.0		%
Discount rate	11.5		%
Dividend yield	—		%
Term to maturity	4.9 years
Stock price	$	24.41

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

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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:


	March 31, 2025
(in thousands)	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	198,343	$	198,343	$	198,343	$	—	$	—
Short-term investments	$	560,814	$	560,814	$	560,814	$	—	$	—
Restricted cash	$	1,355	$	1,355	$	1,355	$	—	$	—
Derivative instrument	$	6,997	$	6,997	$	—	$	—	$	6,997
Financial liabilities:
2026 Notes	$	67,346	$	66,292	$	66,292	$	—	$	—
2030 Notes	$	842,415	$	1,189,679	$	1,189,679	$	—	$	—
Equipment notes	$	14,908	$	14,850	$	—	$	14,850	$	—


	December 31, 2024
(in thousands)	Carrying Amount		Fair Value		Level 1		Level 2		Level 3
Financial assets:
Cash and cash equivalents	$	282,442	$	282,442	$	282,442	$	—	$	—
Short-term investments	$	568,426	$	568,426	$	568,426	$	—	$	—
Restricted cash	$	1,161	$	1,161	$	1,161	$	—	$	—
Financial liabilities:
2026 Notes	$	67,259	$	63,528	$	63,528	$	—	$	—
2030 Notes	$	841,470	$	902,395	$	902,395	$	—	$	—
Equipment notes	$	2,637	$	2,596	$	—	$	2,596	$	—

The following table summarizes the changes in fair value of the Company’s Level 3 assets measured on a recurring basis:


(in thousands)	Derivative Instrument
Balance as of January 1, 2025	$	—
Included in earnings(1)	6,997
Balance as of March 31, 2025	$	6,997

(1)The gain is included in “Other income, net” within the Company’s unaudited Condensed Consolidated Statements of Operations.

NOTE 18—EARNINGS (LOSS) PER SHARE

Basic earnings or loss per share is computed by dividing net income or loss by the weighted-average number of common shares outstanding during the period. Diluted earnings or loss per share is computed by dividing net income or 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. During the periods when there is a net loss, potentially dilutive common stock equivalents have been excluded from the calculation of diluted loss per share as their effect is anti-dilutive.

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

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	For the three months ended March 31,
		2025	2024
Weighted-average shares outstanding, basic		163,764,345	174,556,850
Assumed conversion of 2026 Notes		—	12,234,976




Weighted-average shares outstanding, diluted		163,764,345	186,791,826

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


	For the three months ended March 31,
		2025	2024

2030 Notes		39,683,215	34,380,440
Restricted stock		—	342,601
RSUs		1,818,967	1,889,538
PSUs		355,532	—
Total		41,857,714	36,612,579

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


	For the three months ended March 31,
(in thousands, except share and per share data)		2025		2024
Calculation of basic earnings (loss) per share:
Net income (loss)		$	(22,648)	$	16,489
Weighted-average shares outstanding, basic		163,764,345		174,556,850
Basic earnings (loss) per share		$	(0.14)	$	0.09

Calculation of diluted loss per share:
Net income (loss)		$	(22,648)	$	16,489
Interest expense, net of tax(1):
2026 Notes(2)		—		740
Gain on early extinguishment of debt(1)(2)(3)		—		(32,279)
Diluted loss		$	(22,648)	$	(15,050)
Weighted-average shares outstanding, diluted		163,764,345		186,791,826
Diluted loss per share		$	(0.14)	$	(0.08)

(1)The three months ended March 31, 2024, were tax-effected at a rate of 30.2%.

(2)The 2026 Notes were antidilutive for the three months ended March 31, 2025. Convertible debt becomes antidilutive whenever the combined impact of interest expense and any gains or losses recognized on actual settlements of convertible debt (net of tax) per common share obtainable upon conversion exceeds basic earnings or loss per share.

(3)Pertains to the 2026 Notes, a portion of which were repurchased during the three months ended March 31, 2024.

In connection with the issuance of the 2030 Notes, the Company entered into Capped Call Options, which were not included for purposes of calculating the number of diluted shares outstanding, as their effect would have been anti-dilutive. The Capped Call Options are expected to partially offset the potential dilution to the Company’s common stock upon any conversion of the 2030 Notes. The Company has not exercised any of the Capped Call Options as of March 31, 2025.

As discussed in Note 10, “Debt Obligations,” in March 2024, the Company provided a written notice to the trustee and the holders of the 2026 Notes that it has irrevocably elected to fix the settlement method for all conversions that may occur subsequent to the election date, to a combination of cash and shares of the Company’s common stock with the specified dollar amount per $1,000 principal amount of the 2026 Notes of $1,000. As a result, subsequent to the election, only the amounts in

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excess of the principal amount are considered in diluted earnings or loss per share. The amount of the 2026 Notes settled in shares of common stock will have a dilutive impact on diluted earnings or loss per share when the average market price of the Company’s common stock for a given period exceeds the conversion price, which was initially approximately $44.28 per share of common stock.

NOTE 19—RELATED-PARTY TRANSACTIONS

Offtake Agreement: In January 2024, 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. whose ultimate parent is Shenghe Resources Holding Co., Ltd., a leading global rare earth company listed on the Shanghai Stock Exchange. The Offtake Agreement replaced and extended the offtake agreement with Shenghe entered into in March 2022. The initial term of the Offtake Agreement is two years, with the option for the Company to extend the term 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. 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 (the “Tolling Agreement”), which has an initial term of three years with options to be renewed for additional three-year terms. Pursuant to the Tolling Agreement, the Company delivered NdPr oxide to VREX Holdco, which VREX Holdco then caused VREX to process into NdPr metal for delivery to the Company’s customers globally in exchange for a processing fee per unit of rare earth metal produced paid to VREX Holdco. The Company maintained title to the products and directly entered into sales agreements for the produced NdPr metal.

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


	For the three months ended March 31,
(in thousands)		2025		2024
Revenue:
Rare earth concentrate		$	30,115	$	40,076
NdPr oxide and metal		$	8,797	$	546

Cost of sales (excluding depreciation, depletion and amortization)		$	22,824	$	19,232

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 $16.1 million and $1.1 million for the three months ended March 31, 2025 and 2024.

Accounts Receivable: As of March 31, 2025, and December 31, 2024, $7.6 million and $14.9 million, respectively, of the accounts receivable as stated within the Company’s unaudited Condensed Consolidated Balance Sheets, were receivable from and pertained to sales made to Shenghe in the ordinary course of business.

Aircraft Lease and Time Sharing Agreement: On November 13, 2024, the Company entered into an aircraft operating lease agreement effective as of January 1, 2025, with an entity affiliated with James H. Litinsky, the Company’s Chairman and Chief Executive Officer, providing for the lease of an aircraft (the “Aircraft Lease”). The rent payable by the Company under the Aircraft Lease is $0.5 million per year.

In addition, on November 13, 2024, the Company entered into a time sharing agreement effective as of January 1, 2025, with Mr. Litinsky, pursuant to which he may lease the aircraft from the Company for limited personal use (“Time Sharing Agreement”). For flights taken under the Time Sharing Agreement, Mr. Litinsky will pay for the actual expenses of such flights as listed in the Time Sharing Agreement, but not to exceed the maximum amount permitted under the Federal Aviation Administration rules.

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In connection with the Company’s use of the aircraft, the Company contracted with a third party and will pay for certain fixed and variable expenses associated with the Company’s use of the aircraft.

NOTE 20—SEGMENT REPORTING

The Company’s reportable segments, which are primarily based on the Company’s internal organizational structure and types of products, are its two operating segments—Materials and Magnetics (no operating segments have been aggregated). Where applicable, prior period amounts have been recast to conform to this segment reporting structure, which was modified during the fourth quarter of 2024.

The Materials segment operates Mountain Pass, which produces refined rare earth products as well as rare earth concentrate and related products. The Materials segment primarily generates revenue from sales of rare earth concentrate, primarily sold for further distribution to a single, principal customer in China, and sales of NdPr oxide and metal, primarily sold to customers in Japan, South Korea, and broader Asia. Refer to the “Concentration of Risk” section in Note 2, “Significant Accounting Policies,” and Note 19, “Related-Party Transactions,” for information about the Company’s principal customer.

The Magnetics segment operates the Independence Facility, where the Company produces and sells magnetic precursor products and anticipates manufacturing NdFeB permanent magnets by the end of 2025. The first sales of magnetic precursor products, including NdPr metal, were recognized during the first quarter of 2025, to a single customer in the U.S.

The CODM uses Segment Adjusted EBITDA as management’s primary segment measure of profit or loss in assessing segment performance and deciding how to allocate the Company’s resources. Segment Adjusted EBITDA is calculated as segment revenues less significant segment expenses, specifically, cost of sales (excluding depreciation, depletion and amortization and stock-based compensation expense) and selling, general and administrative expenses (excluding stock-based compensation expense), as well as certain other operating expenses (referred to as “other segment items”). Significant segment expenses and other segment items also exclude certain costs that are non-recurring, non-cash or are not related to the segments’ underlying business performance. A reconciliation of total Segment Adjusted EBITDA to consolidated income or loss before income taxes for the three months ended March 31, 2025 and 2024, is included in the tables below.

As the Company’s CODM manages the Company’s assets on a consolidated basis, the CODM is not regularly provided asset information for the reportable segments.

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The following tables present the Company’s reportable segment information:


	For the three months ended March 31, 2025
(in thousands)	Materials		Magnetics		Total
Revenue from external customers	$	55,619	$	5,191	$	60,810

Total consolidated revenues					$	60,810
Significant segment expenses:
Cost of sales (excluding depreciation, depletion and amortization and stock-based compensation expense)(1)	44,477		2,376
Selling, general and administrative (excluding stock-based compensation expense)(2)	7,009		2,285
Other segment items(3)	375		37
Segment Adjusted EBITDA	$	3,758	$	493	4,251

Reconciling items to consolidated loss before income taxes
Corporate expenses and other(4)					(6,947)

Depreciation, depletion and amortization					(21,384)
Interest expense, net					(7,615)
Stock-based compensation expense					(7,353)
Initial start-up costs					(772)
Transaction-related and other costs					(2,816)
Accretion of asset retirement and environmental obligations					(373)

Gain on disposals of long-lived assets, net					616

Other income, net					15,218
Loss before income taxes					$	(27,175)

Segment capital expenditures	$	15,343	$	15,124	$	30,467
Total capital expenditures for the three months ended March 31, 2025					$	30,467

(1)The primary difference between this significant segment expense and “Cost of sales (excluding depreciation, depletion and amortization) (including related party)” within the Company’s unaudited Condensed Consolidated Statements of Operations relates to stock-based compensation, which as disclosed in Note 16, “Stockholders’ Equity and Stock-Based Compensation,” was $2.0 million for the three months ended March 31, 2025. Other differences are the result of excluding certain other costs because they are non-recurring, non-cash or are not related to the segments’ underlying business performance.

(2)The primary differences between this significant segment expense and “Selling, general and administrative” within the Company’s unaudited Condensed Consolidated Statements of Operations relates to stock-based compensation and unallocated corporate costs, which are included in “Corporate expenses and other” in the table above. As disclosed in Note 16, “Stockholders’ Equity and Stock-Based Compensation,” the total stock-based compensation expense included in “Selling, general and administrative” within the Company’s unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2025, was $5.1 million. Other differences are the result of excluding certain other costs because they are non-recurring, non-cash or are not related to the segments’ underlying business performance.

(3)Principally relates to expenses included in “Advanced projects and development” within the Company’s unaudited Condensed Consolidated Statements of Operations.

(4)Corporate expenses and other represents costs incurred at the corporate level that are not allocated to the operating segments, specifically relating to executive compensation, investor relations, other corporate costs, and unallocated shared service functions such as legal, information technology, human resources, finance and accounting and supply chain. “Corporate expenses and other” is included in the table above to reconcile the total of Segment Adjusted EBITDA to the Company’s consolidated loss before income taxes.

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	For the three months ended March 31, 2024
(in thousands)	Materials		Magnetics		Total
Revenue from external customers	$	48,684	$	—	$	48,684
Total consolidated revenues					$	48,684
Significant segment expenses:
Cost of sales (excluding depreciation, depletion and amortization and stock-based compensation expense)(1)	34,165		—
Selling, general and administrative (excluding stock-based compensation expense)(2)	6,751		1,969
Other segment items(3)	429		738
Segment Adjusted EBITDA	$	7,339	$	(2,707)	4,632

Reconciling items to consolidated income before income taxes
Corporate expenses and other(4)					(5,865)
Depreciation, depletion and amortization					(18,385)
Interest expense, net					(2,857)
Stock-based compensation expense					(7,467)
Initial start-up costs					(1,173)
Transaction-related and other costs					(3,797)
Accretion of asset retirement and environmental obligations					(231)
Loss on disposals of long-lived assets, net					(146)
Gain on early extinguishment of debt					46,265
Other income, net					12,657
Income before income taxes					$	23,633

Segment capital expenditures	$	36,875	$	14,963	$	51,838

Total capital expenditures for the three months ended March 31, 2024					$	51,838

(1)The primary difference between this significant segment expense and “Cost of sales (excluding depreciation, depletion and amortization) (including related party)” within the Company’s unaudited Condensed Consolidated Statements of Operations relates to stock-based compensation, which as disclosed in Note 16, “Stockholders’ Equity and Stock-Based Compensation,” was $1.5 million for the three months ended March 31, 2024. Other differences are the result of excluding certain other costs because they are non-recurring, non-cash or are not related to the segments’ underlying business performance.

(2)The primary differences between this significant segment expense and “Selling, general and administrative” within the Company’s unaudited Condensed Consolidated Statements of Operations relates to stock-based compensation and unallocated corporate costs, which are included in “Corporate expenses and other” in the table above. As disclosed in Note 16, “Stockholders’ Equity and Stock-Based Compensation,” the total stock-based compensation expense included in “Selling, general and administrative” within the Company’s unaudited Condensed Consolidated Statements of Operations for the three months ended March 31, 2024, was $5.8 million. Other differences are the result of excluding certain other costs because they are non-recurring, non-cash or are not related to the segments’ underlying business performance.

(3)Principally relates to expenses included in “Advanced projects and development” within the Company’s unaudited Condensed Consolidated Statements of Operations.

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NOTE 21—SUPPLEMENTAL CASH FLOW INFORMATION

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


	For the three months ended March 31,
(in thousands)	2025		2024
Supplemental cash flow information:
Cash paid for interest	$	13,001	$	594

Cash payments related to income taxes, net - state	$	135	$	—
Change in construction payables and accrued construction costs	$	3,505	$	4,744
Supplemental non-cash investing and financing activities:

Property, plant and equipment acquired with equipment notes	$	13,437	$	—
Common stock issued in exchange for financial advisory services	$	—	$	3,737
Operating right-of-use assets obtained in exchange for lease liabilities	$	1,451	$	—

Excise tax obligation related to repurchases of common stock	$	—	$	1,794

NOTE 22—SUBSEQUENT EVENTS

On April 17, 2025, in response to China’s retaliatory tariffs and export controls, the Company announced the strategic decision to cease shipments of rare earth concentrate to China. Historically, through the Company’s Materials segment, the Company sold the vast majority of its rare earth concentrate to Shenghe under the terms of the Offtake Agreement, and Shenghe typically sold that product to refiners in China.

As a result of the cessation of shipments to China, the Company has temporarily lost a principal source of its revenue. Sales of rare earth concentrate to Shenghe accounted for approximately 50% of the Company’s revenue for the three months ended March 31, 2025. Despite ceasing shipments to Shenghe, the Offtake Agreement continues in effect through expiration in January 2026 (subject to the Company’s option in its discretion to extend the term for an additional one-year period) and would govern future shipments of rare earth concentrate to Shenghe in the event that the Company resumes shipping to China during the term of the Offtake Agreement, should shipments resume.

The Company is now prioritizing accelerating the ramp of its separated rare earth products and generating sales of such separated products to customers located outside of China**—**including Japan and South Korea. The Company continues to produce concentrate, and to the extent not further processed and sold as separated product, will stockpile such concentrate for future use. This includes potential sales to customers located outside of China.

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