MP Materials Corp. / DE Q2 FY2022 Earnings Call

Good afternoon, and thank you for attending today’s MP Materials Second Quarter 2022 Earnings Conference Call. My name is Austin, and I’ll be your moderator for today. I would now like to pass the conference over to your host, Martin Sheehan with MP Materials. Martin, please proceed.

Thank you, operator, and good day, everyone. Welcome to MP Materials' second quarter 2022 earnings call. With me today from MP Materials are Jim Litinsky, Founder, Chairman and Chief Executive Officer; Michael Rosenthal, Founder and Chief Operating Officer; and Ryan Corbett, Chief Financial Officer. Before we get to our opening remarks, as a reminder, today’s discussion will contain forward-looking statements relating to future events and expectations that are subject to various assumptions and caveats. Factors that may cause the company’s actual results to differ materially from these statements are included in today’s presentation, earnings release, and in our SEC filings. In addition, we have included some non-GAAP financial measures in this presentation; reconciliations to the most directly comparable GAAP financial measures can be found in the appendix to today's presentation and earnings release. Any reference in our discussion today to EBITDA means adjusted EBITDA. Finally, the earnings release and slide presentation are available on our website. With that, I'll turn the call over to Jim. Jim?

Thanks, Martin. And thank you all for joining us this afternoon. Let me start by giving you a quick rundown on our plan for today's call. First, I will open with the highlights of the quarter, followed by Ryan's review of our financials and KPIs, and then I'll return to update you on stages 2 and 3 progress and address some highlights from our just published and inaugural ESG report before opening the call up to Q&A. So let's get started on Slide 4. Our second quarter results continue to demonstrate solid execution. In the quarter, we produced 10,300 metric tons and sold 10,000 metric tons of REO in concentrate. Both figures are consistent with last year's second quarter. Given the significant increase in construction on-site, investment in maximizing the long-term value of the mineral resource, as well as planning and coordinating for Stage 2 commissioning, we are really pleased with the team's ability to focus and deliver on hitting world-class production and shipping targets. Similar to last quarter, we executed well throughout the quarter, maintaining cost discipline and benefited from record realized prices. This resulted in another quarter of solid financial performance. Revenue was up 96% year-over-year to $143.6 million. Adjusted EBITDA was up 137% to $110 million. Our adjusted EBITDA margin expanded 13 points to 77%, and we earned $0.43 per share in adjusted diluted EPS, an increase of 139%. This strong financial performance brought our year-to-date normalized Stage 1 free cash flow to approximately $227.7 million. Ryan will provide additional detail on the KPIs that drove this strong performance in just a minute. But first with regards to stages 2 and 3, as we've previously highlighted, our primary focus continues to be on completing construction of our Stage 2 optimization project this year, which remains on track. Construction pace continues to ramp, and we expect to maintain the current pace into the fourth quarter. We remain on target for mechanical completion by year-end, and we've begun pre-commissioning, which includes checkouts and initial performance testing on both legacy and new circuits in preparation for commissioning. In addition, our Stage 3 facility is going vertical and forward, and we remain heavily focused on key hires, procurement of long lead equipment and other items tracking for a late 2023 start of production for magnetic alloy. I'll provide a few more details on stages 2 and 3 in just a minute, but first let me turn the call over to Ryan to run through our results in a bit more detail. Ryan?

Thanks, Jim. As Jim just highlighted, Q2 was another strong quarter operationally and financially, and we delivered it even as construction activity at Mountain Pass approached its peak. As I go through the details, I'll point out how the numbers reflect both continued efforts to optimize production and a step-up in Stage 2 related work. On Slide 6, starting with the bottom left graph, as Jim mentioned, production volumes remain very solid in line with last year's output at 10,300 metric tons. There are a few considerations in comparing period to period that I’ll remind everybody about. As we've stated in prior quarters, while we remain focused on Stage 2 pre-commissioning, we are always working to optimize our Stage 1 reagent schemes, as well as looking to understand bottlenecks and trade-offs to maximize REO production over time. A major advantage of our orebody is consistency and neurology, but we continue to optimize our feed grade and composition to maximize the life of mine, which can drive some lumpiness quarter-to-quarter but supports production growth over the medium and long term. This is particularly true this year, as we incorporate changes afforded by the new and larger mine plan and lower cut-off grade as discussed on our fourth quarter call. Also, recall that we typically take at least a one-week shutdown for preventative plant maintenance in the second and fourth quarters. So we generally have lower output in those quarters, which we saw here in Q2 sequentially. A major focus for the remainder of the year is completing the transition to Stage 2 operations, particularly in the concentrate dry and roasting areas that tie directly into our existing location and concentrate filtration circuits. As we prepare for Stage 2 commissioning and our second semi-annual outage in the fourth quarter, that may include additional stage two tie-ins. We expect Q3 production to look similar to the first quarter of this year. We currently project that our fourth quarter outage may be slightly longer than prior years. Moving clockwise on the chart to sales volumes, our logistics team continues to manage well through a highly dynamic shipping environment, allowing us to shift the vast majority of our production each quarter. As you see on the top right, pricing remains strong in the quarter, up about 90% year-over-year and 1% quarter-over-quarter. On a sequential basis, recall that NDPR pricing hit a recent high in the early March timeframe. Given the slight lag in our realized prices versus market agencies, some of that strong March pricing was realized in our Q2 results. NDPR pricing has recently pulled back to below $120 per kilogram, and given our realized pricing is highly correlated with NDPR pricing, we expect to see a decline in our Q3 realized pricing versus Q2 in the mid-teens percentage points if current prices hold. Although it will remain nicely ahead of last year's Q3. Lastly, on the bottom right graph of the slide, core stage one production costs despite inflationary pressure remain roughly in the $1,300 to $1,400 per metric ton range. Keep in mind, we are usually on a higher end of this range during quarters with a maintenance shutdown. In the second quarter, excluding the growth in Stage 2 advanced recommissioning-related costs, year-over-year core production costs were roughly flat at just over $1,400 per metric ton. The higher year-over-year Stage 2 related costs were mostly associated with impacts from the restart of our combined heat and power plant early this year, alongside continued hiring for the operation and maintenance of future circuits. As you'll recall from our last earnings call, the heat and power plant must run at a certain minimum power output for operational and permit compliance. As such, it is currently generating power in excess of Stage 1 needs, which we are primarily dissipating in our load banks. The cost of this temporary inefficiency represents just over half of the $350 per metric ton impact in the quarter, and will, of course, continue for the next couple of quarters as we commission and scale Stage 2 operations. The Stage 2 related costs impacting our overall production costs went from about $290 to $350 per metric ton sequentially, mainly due to lower quarterly shipping volumes in the denominator. Given our focus on getting to Stage 2 commissioning, we will ramp our hiring in the back half of the year. Summarizing our results on Slide 7, you can see that on a year-over-year basis, revenue was up 96%, adjusted EBITDA was up 137%, diluted adjusted EPS was up 139%, and EBITDA margins increased 13 percentage points, all primarily driven by higher realized pricing and, with regards to our profitability metrics, cost controls and production efficiencies outweighing inflationary pressures. Quarter-over-quarter comparisons for all four metrics were primarily impacted by the lower shipments in the quarter versus Q1. Moving to Slide 8, year-to-date normalized Stage 1 free cash flow grew to $227.7 million through the end of June, driven by higher operating cash flows generated from improved profitability. Net capital expenditures totaled $117.5 million year-to-date with another approximately $32 million of CapEx related payables on the balance sheet at the end of the quarter. As we talked about earlier this year, CapEx will be back-loaded ramping as the year progresses, primarily related to our three key investments. First, completion of the light rear portion of the Stage 2 construction and related investments in Mountain Pass. Second, our Fort Worth magnetics facility, and lastly, initial investments in heavy separations and recycling at Mountain Pass. While Stage 2's strong cash flow has funded our investments to date this year, we would expect to see the impact of the higher CapEx spend on free cash flow in the back half of the year, but we will only need to draw modestly on our fortress balance sheet to absorb this ramp spend. Regarding the balance sheet, we took advantage of the recent rise in treasury rates to invest a portion of our cash balance into higher yielding, short duration U.S. government-backed securities in the quarter. As such, we closed the quarter with approximately $600 million of short-term investments, in addition to $654 million of cash and cash equivalents, for a total balance of $1.26 billion of cash equivalents and short-term investments. You will see the impact of this move from cash into short-term investments on the cash flow statement when we file our 10-Q. In summary, another strong quarter across the board for the company's operations. Production, cost control, and demand for our product continue to highlight the significant early success of our three-stage strategy, which gives us further confidence in our ability to execute on stages 2 and 3. With that, I'll turn it back to Jim.

Thanks, Ryan. Let's turn to Slide 10 to discuss our progress on downstream expansion in the quarter. Here's a good shot of our concentrate dryer and consigner 2 of the major stage two optimization projects at Mountain Pass. We mentioned last quarter that construction had re-accelerated, and we have now hit peak effort on site. We also mentioned adding a night shift. As such, we now have craft labor, electricians, pipe fitters, and iron workers on site nearly 20 hours a day, 6 days a week over two shifts. We expect to sustain this effort into the fourth quarter. In certain areas where construction is more advanced, our project team has already begun mechanical checkouts of construction and started identifying a punch list of items to complete the job. For the balance of the project, the remaining critical path items are largely related to piping, electrical, and ancillary equipment installation. We do continue to work through isolated supply chain issues, but at this point, nearly all process equipment, tanks, pumps, steel, pipe, electrical wire, and process instruments are on-site. Chips and other automation control equipment have proven the most unpredictable supply chain challenges, and we are working diligently to manage through those. The great news is that as of today, we don't see any impediments to starting performance testing in the fourth quarter, largely in process sequence, beginning with the concentrate dryer, calciner, and lead circuit. This will be a very important first step in our recommissioning efforts. Regarding the recommissioning of existing assets, we also made important progress on a number of fronts in the second quarter. We completed upgrades to our NdPr separation facility, completed work on parts of our impurity removal and iron removal processes, continued upgrades to process automation hardware and software, completed work on part of our brine recovery and treatment facilities, and recommissioned our upgraded brine concentrator facility, which is a critical precursor to successfully operate our salt crystallizer and maintain site-wide water balance. We also continued front-end engineering of our heavy rare separation and finishing circuits and began key procurement activities. Additionally, we advanced our integrated magnet recycling plans to provide the most comprehensive and efficient recycling capability for various end-of-life and process waste across our two sites. Many other optimization projects are underway, and we are excited that they are also on pace to be completed to support Stage 2 commissioning and operations. Moving to Stage 3 on Slide 11, it's early, but we are off to a great start. If you recall last quarter, we showed a picture with the initial grading of the site underway. You can see in this updated picture that concrete slab-on-grade is poured, and we have started going vertical with the walls. Most of the foundations are completed as are our underground utilities. We have also established a supply base for all our major process equipment and have placed the orders for key long lead manufacturing equipment to support the start of alloy production. Importantly, we continue to grow a talented team with a focus on project execution and process and product engineering. Moving on to Slide 12, I just wanted to briefly touch on our inaugural ESG report, which we published a week or so ago. You can find it on our website under the Sustainability heading or in the Investor section under Resources. There are some great highlights listed on the slide, although I won't go through them all. The most important things to know are; one, our mission is to create a western supply of sustainably sourced raw materials that are critical to electrifying the world; two, we operate the most environmentally responsible rare earth production site in the world, a significant competitive advantage for us going forward; and three, we know that it is our people that drive our success. So we remain very focused on hiring and developing a diverse and talented workforce. We view our owner-operator culture as another key competitive advantage for us. We continue to grow and add new talent across our Mountain Pass, Las Vegas, and Fort Worth locations, adding nearly 50 people in the second quarter and bringing our total headcount to roughly 450. In wrapping up, I wanted to highlight that in early July, we reached our 5-year anniversary as a company. I realize for many of you that we've only been a public company for about 20 months, but the original formation of the company by Michael and myself dates back to 2017. Thanks to the MP team, Mountain Pass is now producing more annual REO content than it ever has in its 70-year history. Therefore, that means that the United States of America has never before produced as much rare earth content domestically. To highlight and reward the incredible efforts of the team and to show our commitment to our owner-operator culture, in July we awarded all non-executive employees a restricted stock grant. Not only is the U.S. capability in our industry stronger than it has ever been, but we are continuing to build upon our culture of shared success across all members of our team. MP is already a remarkable success story over the past 5 years, but our team operates with the mindset that MP is an iconic American company just getting started on its journey. I remain incredibly optimistic about our future. With that, let's open it up for questions.

Our first question is with Matt Summerville from D.A. Davidson.

First, Jim, on the last call, you gave a little bit of an overview on what you thought was driving NdPr pricing at that point kind of heading south off of the late February, early March high. I was wondering if you could do a similar market assessment on what you think is driving more recent pricing actions of $120 a kilogram? And then I have a follow-up.

Sure. So, Matt, as I said last time, you'll always hear me say that commodities are commodities, and no one really knows; they are driven by supply and demand, and it's hard to predict. What I would say is this: ultimately, it is a market, and in the last few months, the global economy has really obviously deteriorated post-Russia. There have been a lot of challenges. We've seen across the commodity landscape, prices have come down. So certainly, any commodity will not be immune from that. As we think about our commodity, which a large growth case is, of course, going into the auto supply chain, auto sales in the U.S. are really good relative to where they were prior to the price decline beginning because there have been such shortages and backlogs. Frankly, employment is still great. So, even as we feel like, and it is, my belief is we're in a recession that started at the beginning of the year on a real basis. Employment is still strong. This means auto sales continue strong, and so we don't see that here. I would say on the Chinese side, it's always hard to read the tea leaves on what’s going on over there. Certainly, with all of the lockdowns, you've seen a setback in auto sales there. So, there's nothing that we see with respect to our market, in particular other than the dramatic geopolitical landscape that is impacting everything. What I would just add, just to give further context, because I think it's important to view it from the landscape of at least my macro view: If you recall early last year, when in early '21 when people were talking about transitory inflation, I think I was one of the early people to come out and say, I don't think it's so transitory. The better analogy is thinking about the reverberating supply chain shocks of the 1973 oil embargo and what that did to the economy. As the year unfolded, people realized it wasn't transitory. I still think that analogy holds. We've hit this period where the economy has now taken a hit because of all the factors that we don't need to rehash. Commodities prices have pulled back, and I think there's a bit of celebration out there. But if you go back to that '70s analogy, there's no perfect analogy, but there was a period in the mid-70s where things pulled back, growth slowed, but then because the supply challenges weren't solved, it accelerated higher again into the late '70s. I actually think we're in a period where we’ve had this pullback. All commodities have pulled in. Whether the next 3, 6, or 9 months will be challenging or very challenging. As we look out a year or two or beyond, when eventually markets pick back up, particularly with all the investment going into electrification, I think we're going to see a reacceleration irrespective of what the Fed does, barring some dramatic spike. Again, these are supply issues, and you can't deal with supply issues just by short-term cuts in demand because economies need to grow on a real basis over a long period. In summary, we remain very bullish that everything we've said before about the rise of electrification and the demand for NdPr is still true. So go ahead. What's the follow-up?

Got it. Yes, I was just going to ask if you could give a little more help on how the unabsorbed production costs for Stage 2 will ramp in the back half? It sounds like you have somewhat of a milestone coming in the fourth quarter when you start to test some of the equipment and some of the facilities. Relative to the $350 million, how much chunkier, if you will, will we get from there in the back half of the year?

Yes. Matt, it's Ryan. I can take that. If you look at the $350 million sequentially versus the $290 million, if you do the math on the product that was sold through versus those numbers, the total dollars didn't actually change that meaningfully. The ramp on a per unit basis is, to your point, you're getting the descaling from a lower sequential shipment. If you look at those dollars and how those may change over the course of the year, as we discussed in the prepared remarks, about half of that impact is the inefficiency of the combined heat and power plant that will certainly continue, and the other half is primarily related to labor and other associated costs that I do think will start to scale a little bit in Q3 and a bit more in Q4. We don't have specific guidance on that, but I think it is fair to assume, taking into account the ups and downs of sequential production, that if you just look at it on a dollars basis, certainly in Q4 as we start to ramp hiring, you will start to see a bit more of an impact. I would also flag that based on the type of costs we're incurring, those costs can find themselves in capitalized project costs as well. So it's not like all of our hiring will make its way into this, but I would be prepared for a little bit of a step up in the back half of the year. One other thing I'd flag overall on this point is we've made very clear as we ramp that this will be a transition year as we move into producing our Stage 2 products. You can expect to see the impacts of that on our financial statements as we begin to ramp. Obviously, we're extremely excited about the progress we've been making, but the reality is as we transition, you will start to see that.

Our next question is with Robin Fiedler from BMO.

Nice quarter. I have a question on the inflation reform act. In the proposed bill, there is a section on potential production tax credit about 10% for critical material processing, specifically in your case. I'm curious to know if you have any insight into that and how that might look for you guys specifically? If it is passed, would this be applied to each stage of your operations or maybe just Stage 2, for example? Any kind of unique insight you might have into that would be great.

Sure. So, Robin, big picture, just to lay the background. The bill has not been passed yet, and I've heard there was a headline that they're going to vote Saturday; who knows. From what we see from the bill, it will accelerate electrification, EVs, wind turbines, and electric pumps. It's fantastic for our supply chain. This is just another positive fuel to the fire of all the things that we've been discussing and the importance of everything that we've been doing. This has been the mission that we've been on. When we think about all of the supply chain challenges, the government and industry have said repeatedly that they want us to bring more production onshore. This bill, along with the chips act, represents great and positive steps forward. It's fair to say that the bill kind of came out as somewhat of a surprise to everyone because people weren't expecting it. If we look at the content in the bill today, it's fantastic for us, and yes, to answer your question directly on the production tax credit, we believe that our operation will be eligible for that. We have to read the fine print in what's passed and ensure our tax team is working closely on which aspects of the stages of our operation specifically apply. But I think it's fair to say, from initial reading, it should be very good for us, and it is something that will be a material benefit as we see it as written. Of course, anything can happen, and certainly, it hasn't passed yet, but we're excited to see it.

Understood. Maybe just a quick follow-up on that and somewhat related.

No, I was just going to say for those who don't know, the tax credit as written is 10% of whatever that eligible cost will be, meaning 10% that would be a credit you would get. So it could be material dollars to us, which is great.

And I just say, if this passes, I would agree with you. It would certainly help to accelerate all these end markets that you would benefit from. Earlier this week, we saw other companies decide to upsize their capacity plans ahead of what they were originally planning. Just curious, with everything going on, have you guys thought about potentially changing plans on the upstream side, or is it still likely more of a focus for you only after Stage 2 and 3 are completed?

Well, as you know, I have always said that my belief is that the quickest, lowest risk, highest return additional Western supply would be expansion at Mountain Pass. I feel very strongly about that. I would tell you that our near-term priority is getting Stages 2 and 3 executed. We're obviously just beginning - about to begin commissioning. So, we want to ensure that all hands are on deck to get what we have in the coming months done right. That’s the primary focus. But over time, adding additional capacity is a very high return endeavor for us. I can’t address their specific announcement because it was hard to see in that announcement. You’d have to ask them about their own capacity expansion, how much of that was really catch-up CapEx versus previous numbers. The key takeaway is that supply in this space requires scale. There will be a lot of capital formation happening among juniors out there raising capital. We need more supply, and the reality is that when you look at the numbers, we are well-positioned to take advantage of this growth cycle. If there are parties out there that learn the hard way what I'm saying, we’ll be in a good position to help those parties and get that supply online. One of the important things to highlight with respect to the announcement is that a big component of it was bringing their environmental standards up to par with something closer to the dry tailings process we have at Mountain Pass. We've repeatedly discussed how much investment has been made and how important it was that we are the most sustainable producer in the space. It’s great to see them make those announced improvements as well.

Our next question is from George Gianarikas from Canaccord Genuity.

Great results. I’d like to ask a bit about several announcements from major traditional auto OEMs regarding battery and EV materials. I’m sure you've seen them recently from Ford and GM. I know GM is already a partner, but I’d like to get your take on what's happening with you guys and what you expect over the next 12-24 months in terms of additional announcements and additional deals, since the rush to secure material seems to be peaking. What does that mean for MP?

Yes. The best way to describe it is, we are not demand constrained; we are very supply constrained in this space. There is no shortage of OEMs recognizing that all aspects of the critical material supply chain, especially with the announcements you just mentioned, are important. In particular, our space, given unique attributes, our industry, and the benefits that we can provide with respect to certainty in rule of law jurisdiction and environmental standards. It’s not just about auto; it’s also about wind and several other verticals in electrification that this will be relevant for. As the auto industry scrambles for materials, other areas scramble as well. The conversations continue and have increased with other parties. Each deal that we pursue is a long-term deal. We're spending a significant amount of management time contemplating the iterations of these deals and JV type opportunities. It’s fair to say this process has only accelerated because we know where penetration is in electrification. If the inflation reduction act passes, it will further accelerate that. We’re in a great position, and we need to execute.

May I ask a follow-up to that? When you think about future deal structuring, is there potential demand just for your rare earth material, or do you plan on structuring everything going forward from a magnet perspective? Or does it not matter what are the most economic returns?

There's certainly demand for both. Historically, I’ve said that I think long-term, our magnetics business could significantly exceed the current expected output of our ore body because we can take advantage of magnetics growth opportunities. We have opportunities on both 2 and 3. You should expect us to be economically driven, and we are an owner-operator culture. As the largest shareholder, I’m committed to maximizing long-term enterprise value for MP while ensuring we only pursue what we can execute. We won’t be in a rush but remain focused on pursuing thoughtful long-term deals.

Our next question is with Ben Kallo from Baird.

Just on pricing differential between what you think domestic production will be versus China. Is there an expectation for a premium?

Obviously, with oxide, we sell a commodity that is dominated by the Chinese supply chain, and therefore has been and will continue to be priced as a domestic China product. What you’re seeing is that as the scaled players outside of China gain scale, like us, over time, that may manifest in a different pricing scheme for our products. I wouldn’t comment specifically about pricing except to say we have been clear about our strategy in the magnetic space: to build our capability as quickly as possible, get to scale, and come down the cost curve. We aim for long-term partnerships with customers and want to get there quickly.

That's great. I know, Jim, you said you're focused on Stage 2 and 3 before anything else. But are you doing work now on expansion at Mountain Pass?

Certainly. You should imagine that we are considering long-term growth. For example, a year ago, we said having a magnetics business was a 20-25 year vision. Fast-forward a year, we have made extraordinary progress on the magnetics side. We continue to grow outstanding units of capital on that front and have infrastructure for GM and a business taking shape. Our business model means we consider all potential expansion opportunities as we grow our business. You should assume that we’re thinking about all the ways we can expand, but we need to execute Stage 2 first. We’ll take this one step at a time.

Our next question is with Corrine Blanchard from Deutsche Bank.

Most of my questions have been answered, but I’d add maybe two. The first one on pricing: Can you give your view about the way you think it will continue over the next 6 to 12 months? And the second question, can you just remind me what are the next big steps for the Stage 3 facility?

On the first part, I covered some of the pricing of NdPr. This is typically a seasonally weak period, the kind of summer months for NdPr. Spot price dynamics are a market. We've seen global commodities pull back, and my comments around the supply-demand dynamics remain quite strong. We are positioned well in this space. As far as Stage 3, we are building the facility, and designing the process flow, getting all equipment ready for alloy production. We expect late 2023 to begin selling alloy to GM, and as we move forward, begin manufacturing magnets.

Next question is with Lawson Winder from Bank of America.

Evening and thank you for the update. I just wanted to ask about the concentrate pricing discount. It appears to be trending lower. I suspect this reflects that the Chinese industry has much larger separation capacity than it does concentrate. I'd love to get your views on what you think is driving that and if you think it could continue downward. At some point, do we get to a situation where selling concentrate into China is a higher value-add compared to selling oxide given the 25% tariff?

Lawson, it’s Ryan. The discount we’ve talked about previously is impacted by how NdPr pricing trends. When NdPr pricing increases, the discount typically reduces and vice versa. As for oxide versus concentrate, we are bullish on selling oxide outside of China. It will take time to transition, but there is significant unfilled demand for our product outside of China. Our strategy focuses on moving downstream into Stage 2 while building our internal consumption in Stage 3.

Maybe just a follow-up on that. Can you quantify your expectation on how much product you'll be selling outside of China in year 1 or 2?

We do have clearer visibility regarding our future plans than we did before, but we won’t provide specific forward guidance at this time. The trends we've been discussing continue to accelerate, driven by supply additions on our commodity and in the magnetic side outside of China. You can expect that this will come with the requisite incremental demand. There is a significant amount of oxide to sell into the open market, and our goal is to sell as much of that outside of China as we can.

Our final question will come from Abhishek Sinha from Northland.

Most of the questions I've had have been answered. I just wanted to ask one thing about your downstream business: other than GM, have you seen any significant interest from other parties that you could share with us?

Yes, the amount of customers is significant. It’s not just OEMs; we’ve got wind and several other use cases. We’re having many conversations, but we won’t name specific parties until we have something concrete to share.

I understand. Just a follow-up for the GM contract: You mentioned late '23 for selling alloy and then 2025 for magnets. Are there any timeline constraints you are contractually bound to with GM?

I don't want to discuss specific terms of our deal, but we’re working as quickly as possible; there’s strong interest from the government and the industry to expedite the supply chain. We’ve experienced challenges during our Stage 2, but we are confident moving forward. Supply chain constraints persist, and we’ve been proactive in working on solutions. We are in contact with GM and ensure transparency around our operations. All parties have an interest in swift supply as this is strategic to national security. We’re staying proactive and focused on getting this done.

That concludes today's Q&A. I’d now like to pass the conference back to the management team for any closing remarks.

Thank you, everyone. We appreciate your attention, and we look forward to seeing you all soon. Have a great night.

That concludes today's call. Thank you for your participation. You may now disconnect your lines.