Hello, and welcome to the MP Materials First Quarter 2025 Earnings Call. We ask that you please hold all questions until the completion of the formal remarks, at which time, you'll be given instructions for the question-and-answer session. Also, as a reminder, this conference is being recorded. If you have any objections, please disconnect at this time. With that, I would like to turn the call over to Martin Sheehan, Head of Investor Relations. Mr. Sheehan, you may begin.

Thank you, operator, and good afternoon, everyone. Welcome to the MP Materials first quarter 2025 earnings conference 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. 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 today's earnings release and the appendix to today's slide presentation. Any reference in our discussion to EBITDA means adjusted EBITDA, and tons means metric tons. Finally, the earnings release and slide presentation are available on our website. With that, I'll turn the call over to Jim. Jim?

Thank you, Martin, and good evening, everyone. This past month has been one of the most consequential in our company's history, fast-moving, challenging, deeply clarifying, and ultimately energizing. For years, we have warned that the global rare earth supply chain was built on a single point of failure. With China's sweeping tariffs and export restrictions, that geopolitical fault line has now become a commercial reality. Regardless of how trade negotiations evolve from here, the system as it existed is broken, and the rare earth humpty-dumpty, so to speak, is not getting put back together. What is now abundantly clear is that the United States must urgently accelerate its full-scale domestic rare earth magnetic supply chain. This is not just about supply security; it is about the future of national defense, with systems like drones, robotics, and other forms of physical AI, and it is about securing trillions of dollars in downstream enterprise value. The events of the past month are a powerful validation of the strategy we have pursued since founding MP. I know some of you will focus on our decision to halt shipments of rare earth concentrate to China. We will speak to the near-term implications and take your questions shortly. But let me be clear. We have prepared for this moment since day one. We are now at an inflection point, not just for MP, but for the country. The vulnerabilities in global supply chains are no longer theoretical; they are central to United States economic and national security. What we are witnessing is the beginning of a generational industrial realignment. Our vertically integrated model, developed with conviction and discipline over years, has positioned MP as America's national champion in rare earth magnetics, serving as the natural partner of choice for the country's most consequential manufacturers across automotive, defense technology, consumer products, and beyond. We are confident that our business should grow to many multiples of its current scale, and recent events are accelerating that trajectory. Scaling, of course, will require significant additional capital. But here is what has changed. We are now in active discussions with major commercial and government stakeholders who recognize the urgency of this moment and are eager to accelerate our mission. Let me be direct. MP took on a mission that many believed was impossible. We assembled billions of dollars in assets. We built a shattered supply chain from the ground up and methodically invested over $1 billion to bring rare earth refining, metalmaking, and magnetics back to the United States. Against the odds, we did what others would not or could not do. And as a result, America is in a fundamentally stronger position at such a critical time because of the dedication and vision of the MP team. From here, the equation evolves. We have laid the foundation, but scaling this mission requires moving in lockstep with public and private partners who understand that MP cannot and should not carry the burden of countering mercantilism alone. Our shareholders have backed a bold vision, and they must be rewarded accordingly. We will deploy capital only where the economics are compelling, the partnerships are strong, and the returns are substantial. And today, the opportunity in front of us has both the scale and momentum to reshape this industry and to deliver transformative value for our shareholders and for the country. Through it all, our principles remain unchanged. We will continue to execute with discipline, protect our balance sheet, and align with partners who share our long-term vision. In the intermediate term, that means executing flawlessly for General Motors, our foundational customer. I believe this will be remembered as the moment MP Materials began its transformation from a rare earth producer to a national champion and a foundational pillar of American industrial resilience. Let's now turn to slide 4 and go over some of the quarter's highlights. Our Materials Division, made up of our Upstream and Midstream operations, continued its strong execution with painstaking effort in the first quarter, demonstrated in part by record NdPr oxide production of 563 metric tons, a 36% sequential increase from the fourth quarter. In addition, the Upstream produced its second highest quarterly production of REO in our eight-year history, as our Upstream 60K optimization projects continue to bear fruit with very strong recoveries in the quarter. We also continue to see strong sell-through of our Midstream production, with most of our 464 metric tons of NdPr oxide and metal sales continuing into Japan, Korea, and to other non-Chinese customers. Moving to the Magnetics Division, we began initial on-spec metal production for GM in the quarter. This is a significant milestone for the company and the country, as we believe this is the first NdPr metal production ever done at scale in the United States. This also resulted in us recording $5.2 million in revenue and positive adjusted EBITDA for the segment in the quarter. In addition, we provided General Motors with our first automotive-grade magnets for them to begin validating. This is another important step for MP, as we continue to make ever-higher quality magnets on our new product introduction line. There is still a lot of work to do on the commercial production equipment which is being installed, but we remain on track to deliver commercial production of magnets for GM by year-end. These recent achievements also unlocked another $50 million customer prepayment which was received on April 1st. With that, let me turn the call over to Ryan to go through the results of the quarter. Ryan?

Thanks, Jim. Moving to slide 6, our consolidated revenue, shown on the left side of the page, increased 25% year-over-year, driven primarily by the 246% increase in NdPr sales volumes, as well as the initial sales of magnet precursor materials in the quarter. Consolidated adjusted EBITDA declined $1.5 million year-over-year to negative $2.7 million. The driver of our EBITDA results continues to be the transition to producing separated products, such as NdPr oxide, which also has the effect of reducing concentrate sales. Our per unit production costs for separated products are declining, but still temporarily elevated as we continue to optimize our processes and ramp production levels towards our targeted throughput. I will have more on this in a moment. Adjusted diluted EPS fell from negative $0.04 a year ago to negative $0.12 this year, primarily due to higher interest expense from the issuance of our 2030 convert, lower interest income, as well as higher depreciation from new assets brought into service over the last year. Recall, also, that first quarter 2024 GAAP EPS was impacted by a $46.3 million non-cash gain associated with the early extinguishment of the majority of our 2026 convertible notes. Turning to slide 7 and the material segment KPIs. On the left side are Upstream KPIs, and on the right side are the KPIs for the Midstream. On the far left, you can see another very strong quarter of REO production at 12,213 metric tons, up nearly 10% compared to last year's first quarter. This is virtually all driven by stronger recoveries from our Upstream 60K projects which Michael will provide some additional detail on shortly. As Jim mentioned, this was our second best quarter of production ever and our best first quarter on record. As we push more of that production through the Midstream to make separated products, we have less REO to sell driving the decline in concentrate sales volumes by nearly a third compared to last year. Realized pricing did recover somewhat from last year and was up slightly from Q4 in line with our expectations. Moving to the right side of the slide, NdPr production volumes grew 36% sequentially, better than our expectations, and were up 330% compared to last year. Sales volumes followed the usual roughly one-quarter lag in production at 464 metric tons. As a reminder, with production volumes still at modest levels and with a longer sales cycle for NdPr metals, the timing of shipments can significantly shift our sales volumes in a given quarterly period. And on the far right of the slide, you can see our realized pricing was in line with our outlook, roughly flat sequentially at $52 a kilogram, which was down 16% from last year when overall market pricing was stronger. Moving to slide 8, Material Segment revenues increased 14% driven by the 246% increase in NdPr oxide sales, as well as the 12% increase in REO realized pricing. Partially offset by the 33% decline in REO sales volumes and the 16% decline in NdPr realized pricing. Note that because our REO realized pricing is on a much shorter lag versus the market compared to NdPr realized pricing, we had the somewhat unusual situation of a year-over-year increase in REO realized pricing while experiencing a year-over-year decline in NdPr pricing. The longer lag in NdPr realized pricing is due in part to a longer sales cycle driven by our metallization efforts in Southeast Asia, as well as differing contractual arrangements for NdPr oxide and metal. Year-over-year segment adjusted EBITDA for the material segment declined from $7.3 million to $3.8 million, mainly due to the lower sales of REO and the higher sales of NdPr oxide and metal. As I mentioned earlier, our production costs for separated products are temporarily elevated as we continue to ramp production levels towards our targeted throughput. Sequentially, the Material Segment adjusted EBITDA improved due to a $3.2 million lower inventory reserve in the current quarter compared to the fourth quarter, as well as continued improvement in efficiencies and NdPr production, including improved fixed cost absorption. Also impacting the comparison was a larger benefit in the fourth quarter from the Section 45x Tax Credit, which in part resulted from a favorable final rulemaking by the IRS in October of 2024. And lastly, moving to the right side of the slide, you see that the initial metal production for General Motors resulted in revenue of $5.2 million in the quarter and adjusted EBITDA of about $0.5 million. We couldn't be more pleased with the dedication, effort, and performance of the team at Independence, which Michael will discuss in more detail shortly. Looking at the outlook for our metal production at Independence, you will note that we now carry approximately $75 million of deferred revenues under our current liabilities, which, by definition, is our present expectation for revenues we will generate over the coming four quarters. So we expect materially improved revenues in Q2, eventually leveling out at roughly $20 million a quarter over the next 12 months. And with that growth should come modestly improved EBITDA margins for the segment. Before turning to the balance sheet, I wanted to give an update on our current expectations regarding our cost of production for NdPr oxide. It has been several years since we outlined our high-level expectations, and with our focus shifting to accelerating all parts of our mid and downstream business, we thought it would be a timely update. Turning to slide 9, we've broken our NdPr cost of production into the fixed portion of costs in dark blue, as well as the variable portion in light blue. I would note that these are all the costs associated with making NdPr, including Upstream mining and beneficiation costs. The bar on the left is where we are currently, slightly north of an average of $60 per kilogram in the first quarter. This is at below 40% of our target production volumes on average for the quarter. As you can see on the right side, we believe that at normalized production, our target costs would be in the low $40 per kilogram, with continued opportunity for improvement. Importantly, note that as we have talked about recently, the overwhelming driver of the decline is expected to be the fixed cost absorption from increasing production. And as we announced in mid-April, soon after coming out of the plant shutdown, we are exceeding 50% of our concentrate throughput being refined in the Midstream circuits. And of course, we also expect some modest improvements in efficiencies on the variable side once we are consistently running at roughly 1,500 metric tons per quarter. One potentially material area for further improvement in our cost structure is via commissioning of the onsite chloralkali facility. We expect the first of three trains of chloralkali to come online next year, which we believe will be able to drive cost savings on chemical reagent inputs, which make up the significant majority of the variable costs we have notionally highlighted on the slide. And based on the track record of the team at Mountain Pass, I am confident they will continue to find ways to improve efficiency in ways they haven't even thought of yet. Lastly, I would point out that taking our initial cost estimates from 2020 and adjusting them for inflation and the significant change in market prices of our two primary variable inputs, hydrochloric acid and caustic soda, which have increased nearly 80%, nets you to almost exactly our current expected run rate cost structure. While we have consistently noted no material deviations from those initial views, save for inflation, this hopefully provides further clarity on why we have such confidence in being among the low-cost producers of NdPr when we achieve our target throughput. Moving to the balance sheet. I wanted to point out a large increase in receivables in the quarter, which was driven by us achieving the final prepayment milestone in our magnetics division during Q1, while the $50 million of cash was received post-quarter on April 1st. Regardless, Q1 is always our major working capital consumer as we pay out annual incentive compensation and renew various annual prepaid expenditures, such as property and casualty insurance. Further, we have continued to invest in greater safety stock of key inventory items and also continue to increase the level of available inventory of oxide at tolling partners as demand for metal from our Midstream business grows. Regarding our debt balance, the small remainder of our 2026 notes were moved to current as they are technically convertible within the next year. We anticipate paying these notes down with cash on hand. Looking at the $759 million in cash, cash equivalents, and short-term investments balance as of March 31st, as I just noted, we have received an incremental $50 million on April 1st and still expect to receive another approximately $50 million in cash from our 2024 tax credits. Turning to capital expenditures, our spend in the quarter was $30.5 million split approximately equally between the Materials and Magnetics divisions. We continue to target between $150 million and $175 million for the year for the company, including our heavy rare earth separation project, the chloralkali recommissioning noted above, as well as the completion of Independence. Specifically, with regards to heavy rare earth separations, given the accelerating long-term outlook for magnetics, as you know, Mountain Pass, while primarily a light rare earth ore body, as one of the world's largest sources of rare earth content, contains a significant amount of heavy rare earths. In fact, right now, we have over 200 tons on an REO basis of heavy rare earth concentrate stockpiled from our initial year of separated product production. In partnership with the Department of Defense, we have been executing on a project to separate the contained dysprosium and terbium in this heavies feedstock, while designing the plant to also accept third-party feedstocks from around the world to further bolster DY and TB production. We expect to bring the facility online next year. And importantly, we have sufficient heavy rare earth feedstock now, and as the plant comes online, to enable the rapid scaling of our magnet business. As we look at the expansion of magnetics beyond our initial Independence capacity, which Jim mentioned in his opening, we believe MP is best positioned to be the refiner of choice for heavy rich feedstocks, particularly as the rare earth market further decouples from China. We have already invested significant capital in this effort, and the vast majority of remaining spend is reflected in our current outlook for this year's capital expenditures net of government grants receivable. With that, let me turn the call over to Michael to go through our operations in a bit more detail. Michael?

Thanks Ryan. The Materials segment had a good quarter. Upstream concentrate production was strong with improved recovery, solid grade and good uptime. As alluded to in our last call, in January, we were hampered by somewhat poor settling and dewatering of concentrate and tailings that impacted throughput and uptime. This was in the range of normal process variability, though the new Upstream 60K assets somewhat compounded the challenge. We have since put the issues behind us. Throughout the quarter, we made further progress in those two previously commissioned Upstream 60K circuits. For the quarter as a whole, both generated positive impact. About 30% of our feed is now passing through the first of these assets, which is generating 65% final grade and high recovery in one pass. The cyclone and screening circuit, the newer of the two, has also largely stabilized and is contributing to improved recovery as well. Over time, we expect a significant narrowing of our grind distribution, and this will contribute to further improvements in mineral recovery and grade. We are working with the vendor of the screens to incorporate screening materials better suited to the fact that our concentrator operates on nearly 100% recycled water. The Midstream circuits made significant progress in the quarter. I am pleased that we were able to sustain stronger uptime while increasing throughput. We did have a couple of short, though untimely, unplanned maintenance interruptions in two primary circuits that impacted our overall Midstream production. As we progress through our ramp, we expect these types of events to continue, though hopefully to moderate in their impact and become less frequent. We experienced a similar pattern of issues during the ramp of our Upstream business in 2018 through 2019, on the way to achieving 93% or greater uptime and above nameplate throughput every year since. During the quarter, we achieved more stable roasting performance and improved NdPr yield in leach. We see incremental improvement in Q2 to date. We also implemented adjustments in purification and separation that have begun to help leverage reagent usage per unit of production. These gains will become more evident in Q2 and beyond. Mechanical issues in product finishing have been a pain point. I will provide more detail in a moment, but we are expecting this to mitigate as we progress through 2025. At our Independence magnetics facility, progress has been outstanding. As Jim mentioned, we began full commercial production of metal and expanded our production capability. We achieved extended periods of strong production with very high quality. Our teams continue to gain experience in operations and troubleshooting, with further progress expected in production yield and conversion rate. The full-scale strip casting equipment is running an increasing number of trial melts. Aided by developments in our prototype facility, we are working to improve flake quality and microstructure in advance of additional full-scale equipment installation. In addition, our sintering furnaces to support the 1,000 metric ton initial capacity are now installed, commissioned, and running test blocks. In our prototype facility, our technical teams are advancing our understanding of desired equipment operating parameters, while also producing prototype magnets with GBD for testing. Overall, it's been a whirlwind of activity. As pertains to our outlook for Q2, in early April, Mountain Pass executed the first semi-annual outage of 2025. With an expanded team of planners and ever-improving coordination among planning, maintenance, projects, and operations, this was executed well, and in general, the process restarted well. During the outage, we addressed an unusual number of equipment installation deficiencies that had held us back in product finishing and had resulted in higher than acceptable ongoing maintenance and operational challenges. The scope of the work and necessary de-inventorying and re-inventorying extended the resumption of normal operating cadence after the outage. Since then, we are seeing significant improvement in performance, with several key initiatives that will be addressed later this quarter. In all, despite the extended outage, we believe we will record a slight increase in Q2 NdPr production versus Q1. We then plan for greater sequential progress in Q3. On the last call, I mentioned material handling as one area of focus. In Q1 and during the April turnaround, we installed several upgrades at modest cost that appear to have made a big difference in these areas, particularly in concentrate roasting and lanthanum finishing. As a result, we have been able to improve throughput and reduce product losses. There are several more material handling improvements planned, particularly in NdPr finishing. As we address one issue, we often expose a new bottleneck. In expectation of an acceleration in progress, we are trying to get ahead of these issues in order to accelerate the trajectory of our ramp. In the Upstream business, in light of the current environment and our decision to halt shipments of concentrate to China, we are slightly adjusting our focus towards increasing concentrate grade and evaluating other means of improving basanocyte recovery versus the recovery of other rare earth-bearing minerals. We will also be trialing reagents that could improve our recycled water quality and support higher grade. Both of these initiatives may have some short-term impact on operations. Despite this, in Q2, we look forward to significant year-over-year growth in Upstream production on an easy comparison with stable sequential output per operating hour. Similarly, we are not abandoning our efforts to optimize our concentrate production and resource usage. For the Upstream 60K initiative, we will reprioritize certain investments that have ancillary benefit of improving the performance of our Midstream operation. This too focuses on concentrate grade as well as the isolation of certain more challenging impurities. Overall, our teams at all sites are energized by the opportunity and the interest brought about by the current environment, and I appreciate the hard work and additional sacrifices of many as we work to accelerate our progress. With that, I will turn it back to Jim.

Thanks, Michael. Let me summarize things. This past month validated the strategy we have pursued since founding MP to build a fully integrated rare earth supply chain that supports American industry and security. We delivered record NdPr oxide production, achieved our first on-spec metal production for GM, and turned EBITDA positive in our Magnetics Division, and our ramp is just beginning. We have reached an inflection point, geopolitically, commercially, and industrially, and MP is now well positioned as the national champion in rare earth magnetics. With intensifying engagement from both government and industry, and our execution already underway, we are transforming from a producer into a pillar of American industrial resilience. With that, let's open the call for questions. Operator?

Our first question will come from David Deckelbaum with TD Cowen.

Thanks, everyone, and I appreciate you guys taking my questions today. Jim, perhaps for you, I think you highlighted, just given the backdrop of what's happening now globally, you're talking to more partners out there. I'm interested in just some additional details there. You obviously are not short on capital right now. When you think about ways that partners might be able to help you accelerate your business or look at other opportunities or shoring up other parts of your supply chain, where do you see sort of the most white space for MP to create value here?

Sure. Hey, David. Hopefully, you appreciated the words freak out from the song. Yes, I mean that's really the best way to describe it. This has been, I think, post-liberation day has been one of the busiest months of all of our lives. Industry players, government, we're talking to government on pretty much a daily basis. The cutoff, this idea that there was a threat that has now been utilized has really changed psychology, I think, from everybody across the board. And so I mean, I think there's frankly, a lot of confusion in the supply chain. I mean, we'll see what happens in Switzerland this weekend. But there's talk of potential shutdowns. I think you heard Ford mention rare earths specifically on their call, Tesla mentioned it pretty much every household name that you could think of in auto, in defense, we've had sort of some contact or another or visits, it's really been quite remarkable. And obviously sort of validating to the approach that we've had the whole time to be vertically integrated and really focus on bringing this capability back. To answer your question specifically, the point I wanted to make on that is that if you look at all these conversations, the key question is, how can you do this faster? How can you accelerate this? Everyone wants us to go faster. And the point that we like to make is that we've invested a lot of capital. And we've taken a lot of risk. And now we were in a much better place, I think, thanks to the efforts of MP. And any additional capital that we put to work, I mean, we've always had, as you know, a pretty high threshold for return on capital to kind of put downstream capital to work. But as we do that, particularly to the extent that we were to go faster, we expect scaled commitments. And or obviously, there's a variety of ways to get there with respect to commitments and other capital. And so the takeaway that I think you should take from that is that I think that the validation in the supply chain should lead to the extent that we are putting incremental capital to work, the returns are going to be pretty extraordinary, or we're not going to put the capital to work. So we feel really good about the dialogue. Obviously, we'll just be cautious and thoughtful about what steps we take. And again we don't want to take on anything that we don't think we can execute. But I will say again aside from the firehose aspect of it, it's really exciting.

Absolutely. Historic times. But just as a follow up, I'd be interested just how you all are thinking about the heavies you pointed out, you want to bring on your own separation circuit next year. How do you think about managing that heavy supply chain vis-a-vis Independence? You obviously successfully sold some magnetic precursor. But how do you think about managing that feed as you move toward permanent magnets towards the end of the year?

Yes, hey, David, it's Ryan. It's a good question. We've talked about, obviously, the precursor sales already beginning, and then moving into commercial production at the end of the year. As you can probably see, and obviously, you don't get the detail that I do on the balance sheet. But we've been very thoughtful about this risk for a very long time, about the potential for heavy rare earths becoming an issue. And so what I'd say is we got ahead of the issue, and we have the relevant amount of material stockpiled to supply ourselves for startup of the Independence facility. And then obviously, Michael and his team are executing rapidly to bring our own facility and operations online to be able to produce from the Mountain Pass ore. I think the other thing that we're seeing that Jim laid out well is with the increased focus on the industry. I think a further appreciation for what Mountain Pass brings to the table as a potential refiner of choice globally for other heavy rich feedstocks, the fact that we've got the baseline production of the significant ore feed that we've got from our own mine, allows us to be probably the most flexible buyer of potential third-party feedstock to refine and bring into the fold in the United States and potentially for ourselves. And the other part of this that you hear a lot of sort of pinpoint solutions to some of these problems. But I think the great thing about our integrated strategy also is the ability to recycle. And so with Independence, and with incremental focus on this industry, we believe recycling is another pretty significant potential source of incremental heavy feedstock. And so suffice to say, we feel good about where we're positioned right now and where that could lead us for the future of Independence.

Our next question will come from Bill Peterson with JPMorgan.

Yes, hi, good afternoon. Thanks for taking the questions and for providing all the details. I wanted to ask about stage two and your ability to push more product in there. Recognize that Michael provided a lot of color on the efforts you're making to improve efficiencies and throughput and so forth, but how should we think about your production and sales volume in the second quarter and into the back half of the year? Just basically in what areas have you been able to kind of increase your throughput and utilizations?

Thanks Bill. As mentioned, we are targeting to increase production in Q2 versus Q1 despite the outage and some other events. And then we'd expect further growth in Q3 without having a scheduled outage. Beyond that, for the foreseeable future, I'd suggest that the trajectory of growth should at least proceed along the lines that we've seen historically. Unfortunately, anything can happen any day, so it's hard to give a longer-term prediction, but we're really optimistic that the process is working, the chemistry is working, and it's just a matter of execution and working through the issues towards reaching our ultimate targets.

Yes, thanks for that. And this is somewhat of an industry question, but also, I think it's maybe part of your own development efforts, but what are your thoughts on thrifting or limiting or eliminating the use of heavies? Maybe how should we think about content and maybe the vehicles today versus robotics and other areas? Just kind of what are your expectations about lowering the content and what are you doing specifically in terms of kind of thrifting within your own development efforts?

Yes, thanks, Bill. And this is Jim. That's obviously been a topic that we've had since the very beginning, since we built the magnetics business. We have over 100 people in the magnetics business today. You've seen that facility. We have 40 engineers. And really from day one, we've had a team working on formulations, IP, thinking about how we get to where we want to get. And obviously, we're now making auto grade magnets, which are the hardest ones to make. And so suffice to say that I think we've generated a central repository of some pretty extraordinary IP and knowledge. And you can imagine that quite a bit of that focus is on the concept of thrifting and reduction. And obviously, depending on the use case, the heavies can be less or more in the case of, say, robotics and drones, it might be less than, say, auto. The last thing I would say, and touching upon something Ryan mentioned at the end of what he said that does sort of tie into this whole issue of material, is just the inherent advantage that we have with the ability to have the vertically integrated assets and recycling. And so the fact that we can take swarf and obviously, eventually, when we're fully normalized, we've got a lot to do to kind of ramp everything up. But the fact that we have the ability to input material back into our process is an enormous advantage. I mean, particularly now, I think with this issue being so topical, rare earth magnetics, and I think you see probably a number of upstarts out there trying to form capital, and we wish them all well. We hope a number are successful. But I have to say, I find it really difficult to see how a standalone producer can succeed relative to somebody who's vertically integrated. When you think about, in the case of a typical auto application, you may have 20% or 30% of the material in the finishing process is cut. And sometimes in the case of consumer electronics, like a smartphone, it could be more than half of the material falls off the production line as you're finishing it or somewhere in the process. And so our ability to kind of think holistically about the business, the use of material, one, from an IP-heavy standpoint, all the way downstream, but all the way really from the resource through downstream and figure out how to maximize throughout the process, we think it's just an inherent advantage to our vertical integration that, again, allows us to be, hopefully over time, substantially low-cost than anybody else, but frankly, able to survive in a very competitive landscape where others are just sort of structurally uneconomic.

Yes, thanks, Jim and Michael, for sharing insights, and good luck navigating the fast and furious environment.

Our next question comes from Laurence Alexander with Jefferies.

So good afternoon. Could you touch on two things? One is your working capital needs for the balance of the year and as you ramp up and how that ties into your views on what is appropriate minimum cash balance in this environment. And second is, have you had any, are you seeing any real shift in automaker discussions in terms of somebody else sort of coming in to help you scale up? And is your priority in negotiations your overall return on capital? Is it to get capital to help fund a ramp? Can you just give a sense for what your relative priorities might be?

Sure, hey Laurence, it's Ryan. I think an important thing to keep in mind in terms of where we sit today in our growth plan and from a balance sheet perspective is, if you look at sort of the state of our various growth projects, we're really entering the harvesting mode of what has been a pretty significant amount of investment over the last several years. And so with that and with the fact that we are accelerating pretty rapidly, as Michael touched on, our Midstream production, our sales of concentrate, which I'm sure is where this question is coming from, from a working capital perspective, we're always going to be a smaller and smaller part of the business. And I think it's easy enough for everyone to sort of model out our cost of production there. And assume we don't sell any concentrate until we're fully ramped. I mean, this is a pretty small working capital use that we view really as that and as something that was sort of an inevitability as we continue to scale the business. And so given the state of our balance sheet, which remains incredibly strong, we're not thinking remotely in terms of minimum cash. I think we have ample cash on the balance sheet, which would be further supported by some of the things I laid out in my prepared remarks regarding prepayments from our foundational customer, as well as another $50 million coming from our tax credits from 2024, which we expect to continue to be a source of cash on a go-forward basis. So we continue to feel very comfortable from that perspective. As it relates to your second question on what is our priority? Every single deal is different. The analogy of drinking from a fire hose, I think was a pretty apt one that Jim mentioned. The desire from a pretty wide swath of names you would know that want to see us in production yesterday from a magnetics perspective is pretty large. And so every single deal is different. I think what we're prioritizing is capitalizing on what feels like a real sort of generational opportunity to make this business many multiples of its current size. And so that may come in various forms. And I think how Jim laid it out in terms of we've done the hard work already, there's a lot more hard work to come. But I think the amount of capital that we've put to work, we expect to see pretty significant commitments from industry and or government alongside us to continue to accelerate this.

Yes, and I'll just touch on that. I referenced this in one of the earlier questions, but I just want to make sure people understand this point. As we think about what's happening in the trade war, obviously there's sort of tariffs both ways, but they're as it stands right now, and of course this could all change tomorrow, but they're pretty much going back to the beginning in April, rare earth magnets are not leaving China. This is an enormous source of leverage against our government. And so this is a key national security industry. And so irrespective of which way this goes, and obviously we hope that the world evolves in a thoughtful, constructive way, that's great for America and good for everyone. But regardless of how this goes, this is a point that can no longer be on the table. I think there's a, and again, we speak to the government pretty much on a daily basis. And I think there is widespread recognition that this issue must be taken off the table going forward. And so the scale of what needs to happen is pretty remarkable. And we are the national champion here. I mean, we are, thanks to us, we're years and billions ahead. And the question is just how we can sort of lead that effort to do something like that. Our expectation is that it should be rewarding for our shareholders.

Our next question will come from Matt Summerville with DA Davidson.

Yes, excuse me, thank you. I wanted to just putting aside for a second quote, help you might get from industry or government. Are you running, I want to make sure I understand this, are you running a different stage 2 playbook today or a different magnetics ramp playbook today in order to, as you put it in your press release from a couple weeks ago, accelerate that stage 2 capacity or that stage 2 ramp and fast track magnets? I guess I'm trying to understand, has the operational playbook evolved in the last month?

Hi, this is Michael. I would say, in general, we've been trying to ramp as quickly as possible. At the margin, however, with what's going on, we are refocusing all of the operation to maximize and optimize the ability to ramp the Midstream assets. So at the margin, focusing on our concentrate production that best supports the Midstream operation, but in general, basically the same. For the magnetics business, I think it's business as usual, although thinking more about what ways we can leverage existing capacity or think about how capacity expansion might look, as we talked about, within the existing footprint or outside of it.

Thanks, and then I just want to be clear relative to a prior question on the heavy side of things. Is there a certain intersection, if you will, that you have to get to between how the magnetics facility ramps and how your Stage 2 separation, or excuse me, your heavy separation operation ramps such that you can remain sort of self-sufficient for somewhat of an extended period of time? Or are you out kind of actively shopping and actively looking to stockpile either spent magnets or other third-party feedstock? Because, I mean, to Jim's point, if earlier magnets aren't leaving China, I imagine there's probably not a lot of heavy rare earth refined heavy leaving China either, although I could be mistaken.

Yes, Matt, it's Ryan. To clarify, we are in a position to be self-sufficient as it stands. We've gotten ahead of this issue and have the required feedstock and required end products from a heavy rare earth perspective to continue to scale Independence on the schedule that we've anticipated.

Our next question will come from Benjamin Kallo with Baird.

Thank you for taking my question. How do you view the timelines? I understand you're focusing on the government sector with many different options, but how quickly do you think these developments will progress? Additionally, where do you believe you stand in terms of investment or partnership—are you at stage one, two, or three? I have a follow-up question.

Yes, hey, Ben, it's Ryan. I think to your last part of the question, where do we see opportunity? I think what we've seen in this environment over the last month or so has been incredibly validating of the vertical integration strategy that we've pursued over the last several years, right. It's important for us to continue to support a diverse magnetics industry, both in the United States and globally, but really what we are seeing a massive acceleration and interest in is having magnetics' true magnet capacity in the United States at scale. It's something that we have always said is an imperative for industry, an imperative for national security, and so the level of interest there is like frankly nothing I've ever seen before. So we will continue to be extremely thoughtful there on how and when. It's very hard to give you a perfect timeline, but for context, magnetics was an idea on a piece of paper in 2020. We made our first hire in 2021. We broke ground on a state-of-the-art facility in 2022, and here we are in May of 2025. And we have an EBITDA positive business. So from that perspective, I think we've got a pretty good track record of going fast when we're going Greenfield. And certainly there were probably a lot of opportunities to do Brownfield and do other things of that sort. So it really depends on the opportunity. We see a lot of opportunities. And so it's sort of an unsatisfying answer in the sense that I can't give you something specific, but we're very, very excited about the activity that we see.

And throughout earnings season, there's some companies that are kind of assuming the trade war deescalates. And I think Jim, you kind of alluded to this. Do you think that you lose momentum if that occurs or is it because this happened that this is going to stay fresh in everyone's memory and the momentum continues for you guys?

Sure. It's a great question. Well, first let's start with, if it doesn't deescalate, I would not be shocked if we see factory shutdowns next month, whether it's aerospace or auto or consumer products. You'd be amazed at how many different things have magnets in them. You'd be amazed at how many producers out there have suppliers that they didn't realize had magnets in their product. And it is a big issue to the extent that there's a deal this weekend and everything is calm. My guess would be that you're going to see a variety of reactions there. There's, I think it's fair to say that most parties are in crisis mode right now because it's a crisis. There's probably some that will relax and not learn the lesson the second time around, so to speak. There are some that will have learned the lesson this time. And there are some that will be in crisis mode still because they'll recognize. So I think it'll be a mix, but I can tell you without any reservation, it is very clear that physical AI is the future of warfare, drones, robotics and those kinds of things. And it is very clear that the United States government, and obviously I don't speak for them, but in my impression from conversations with them and the Department of Defense, et cetera, is that there's a full-on recognition that we can't be reliant on Chinese magnetics for national security purposes. And in particular, I would say the defense tech space how, how does exciting defense tech startup or prime or whatever, no longer answer the question of where their supply chain comes from for this exact reason. So I don't know to what extent memories will get short if there's a deal next week, so to speak. But there will be enough for us to do that it won't matter.

Our last question comes from Corinne Blanchard with Deutsche Bank.

Hey, good evening team. Thanks for taking my question. I'm going to go on the obvious here question, but I really want to understand what's your strategy in terms of the shipment that I'm not going anymore to China. And I think the question is probably like a 40 check question here, but how long can you go without the shipment coming out? What's your view on stockpiling production? If in three to six months, we're still in the same situation. So just trying to understand I would say the key tech inputs here and how they're going, and that could impact your EBITDA and just your strategy on six to nine months.

So Corinne, in the beginning, you cut in and out there like Spies Like Us, if you've ever seen that scene with Chevy Chase, but I think that you want to, do you stockpile?

Yes, sure. I can jump in. It's Ryan. I think I got the full question and jump in Corinne if I missed parts, but I think the important thing to keep in mind is if you think about how low cost we are from a cost of production perspective for concentrate, stockpiling a half a year of concentrate production as an example is like low tens of millions of dollars of working capital, which given the scale of the cash on our balance sheet is not something that we lose a ton of sleep over. I think the reality has always been that the sales of concentrate were always declining and rapidly declining. The better we do on Midstream ramp. And the important thing as well as having that concentrated inventory, the profit is deferred, but it's not lost. We will take that product and we will refine it over time. And I actually think that having some level of concentrate inventory is actually advantageous for a variety of reasons that we're happy to get into, but from that perspective, it's something that we've got the land at Mountain Pass. You've been out there; you've seen the scale of the site. There's plenty of room to store concentrate. And so I think Jim laid out what our strategy is going to be. And so this is sort of always been in some ways an eventuality; this is a little bit of unexpected turn perhaps, but one that we've actually prepared for in many, many ways.

Hey, I'm back. I don't know if you have one more minute. Hey, I think they had put me on mute, but I mean, just for me to understand. So outside of your production, how much is non-China? I think that's what investors are trying to understand.

All of it, Corinne. We're not sending anything to China right now.

And you have the domain for all that production ex China.

Correct. And given what we've seen in the last several weeks, we're incredibly optimistic about the ex-China supply chain.

That concludes the question-and-answer portion of today's call. I will now hand the call back to Mr. Litinsky for closing remarks.

All right. Well, thank you everyone. Obviously, it was a very exciting quarter for us execution-wise across the board. And I think geopolitics kept us a little busy and may for some time. So we will get back to work and see you all soon. Thanks.