Hello, and welcome to the MP Materials Q3 Earnings Call. This conference is being recorded. If you have any objections, please disconnect at this time. 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 Third 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 today 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 afternoon, everyone. As most of you know, our third quarter was a game changer, a total acceleration of MP as a vertically integrated national champion with a transformed economic platform for long-term leadership. If you are new to our story, I would encourage you to go to our investor site and listen to our July 10 webcast announcing the DoW deal as well as our last earnings call, where we went through our DoW and Apple agreements in detail. It has been an exciting and interesting time to say the least in the rare earths industry. I have a lot of thoughts to share. Let me first cover our execution for the quarter. Ryan and Michael will then cover the financials and operations, respectively; and I will wrap up with my big picture thoughts on recent events and the outlook. So with that, let's go to Slide 5. In our Materials segment, we delivered another outstanding quarter. NdPr oxide production reached 721 metric tons, a 21% sequential increase and a 51% increase year-over-year. The 721 metric tons of production exceeded the high side of our outlook for the quarter and marks a record. Corresponding sales volumes also set records, showing strong growth in the quarter, both year-over-year and sequentially. In addition, REO and concentrate production was the second highest in our history. This marks the third quarter in the last 5 that Michael and the team have produced more than 13,000 metric tons of REO. While biannual maintenance outages can create some variability when comparing results sequentially, it is clear that we have made significant progress toward our Upstream 60K target or 60,000 metric tons of annual output. We are also ramping up the installation of the dozens of mixer-settlers required for heavy separations. Our new heavy circuit will process approximately 3,000 metric tons of feedstock and produce more than 200 metric tons of dysprosium and terbium annually. We expect this capability to fully enable our planned production of 10,000 metric tons of high-performance NdFeB magnets each year. And we are on track to start commissioning this circuit in mid-2026, a major milestone in our vertical integration and a historic step toward restoring America's ability to produce magnet-grade heavies at scale for the first time in decades. Our long-term purchase price agreement, or PPA, with the Department of War commenced on October 1. The agreement provides both earnings visibility and a clear and transformed economic foundation to accelerate our build-out of magnetics production. Importantly, we expect to return to profitability in Q4 of this year and beyond. Ryan will provide additional PPA accounting and economic details shortly. Moving to the Magnetics segment. Pursuant to the terms of our Apple agreement, we received the first $40 million prepayment for the production of magnets from recycled materials. Engineering and equipment purchases for the recycling circuit at Mountain Pass and the expansion of magnetics production at Independence are underway. We will receive additional prepayments, $200 million in total, as we make further progress on this build-out for Apple. The Apple partnership, combined with our steady progress at Independence, reflects the acceleration of our U.S. magnetics platform. Commissioning at Independence continues to advance at a rapid pace throughout the quarter. As with Mountain Pass, starting up new equipment, integrating complex systems, and optimizing material handling is a substantial undertaking. Ensuring we bring everything online safely remains our top priority. Meanwhile, production and sales of magnet precursor products continued throughout the third quarter. Michael will share more detail on that. The pace of commissioning in Independence, combined with steady improvements in metal production, gives us confidence that we remain on track to begin commercial scale magnet production by year-end. With that, let me hand it over to Ryan to discuss the quarter's financials. Ryan?

Thanks, Jim. Turning to Slide 6 and our consolidated results for the quarter. On the left of the slide, you can see the impact to revenue from the accelerated transition to separated product sales, with concentrate no longer sold externally. The absence of concentrate revenue in the quarter was mostly offset by the continued ramp in separated product sales, primarily NdPr as well as the ramp of magnetic precursor product sales, which began in Q1 of this year. Adjusted EBITDA was generally unchanged both year-over-year and sequentially. On a sequential basis, the decline in profitable concentrate sales was mostly offset by improving per unit cost of production for NdPr. On a year-over-year basis, the loss of concentrate sales was offset by the ramp in magnetic precursor sales at Independence as well as the per unit cost improvements I just mentioned. Our adjusted diluted EPS generally followed the trend of our adjusted EBITDA results, with further benefits from higher interest income in the quarter primarily from our materially higher cash balance as well as a greater income tax benefit. Moving to Slide 7 and our operational metrics in the Materials segment. Production of REO remained very strong at 13,254 metric tons, albeit down very slightly from our record-setting quarter in Q3 of last year. In the midstream business, as Jim mentioned, production volumes continued to ramp nicely, achieving approximately 50% of our targeted output. Michael will provide more details on the ramp-up shortly, but assuming our debottlenecking continues at the same pace we have seen over the last several quarters, we would expect to hit our targeted throughput towards the end of 2026. We expect our per unit production cost profile to decline in line with this ramp with the impacts on the P&L likely visible approximately 1 quarter in arrears as we work through averaging costs and inventory. Separated product sales volumes followed production closely with nearly 20% sequential growth and 30% year-over-year growth. With much of our separated product sales toll processed into metal across various partners in Southeast Asia, there continues to be a lag between production volume growth and sales as we fill the tolling channel. We expect to continue to scale up metallization to match our growing output with various partners in Southeast Asia and beyond. And with that, we expect to build a bit more inventory at these various facilities. This modest working capital build is a natural function of the growth in our oxide production, which we expect to lap once we are at our targeted output levels. Looking forward, we will begin to recognize intercompany sales from our Materials segment to the Magnetics segment in the fourth quarter, as we continue to produce precursor products for GM and get ready for commercial scale magnet production at year-end. Note that these intercompany sales, along with the related cost of goods sold, will be recorded at the Materials segment but will be eliminated at the corporate consolidated level. The value of that sale and intersegment profit will remain on the balance sheet at the Magnetics segment until it is sold, at which time it will be reflected within Magnetics segment revenue and cost of goods sold. As we ramp magnet production and then sales later in the year, there will be some lag between the intercompany sale and the eventual realization of value on a consolidated basis via a magnet sale. Lastly, on this slide, on the far right, you can see that improved market pricing over the last year flowed through to our realized pricing in the quarter. As a reminder, given the dynamics of the tolling channel I just mentioned, combined with the nature of our sales contracts, some of which use moving averages of market prices, the change in our realized pricing generally lags the trend spot prices seen in the market by a quarter or more. Based on our current view of shipment timing and contract mix, we expect next quarter's realized price, excluding the impact of the PPA, to approximate $61 per kilogram. Moving to Slide 8 and our segment financials. On the left side of the page, you can see the initial impact of eliminating concentrate sales in the quarter on both revenue and adjusted EBITDA. While we had always planned to ramp down sales of concentrate as production and sales of refined products increased, the Department of War partnership has accelerated that strategy. While refining operations continue to scale, we expect to collect payments under the PPA for placing concentrate into our strategic stockpile, which I will discuss more in a moment. Moving to the Magnetics segment. The primary driver is the ramp-up of production and sales of magnet precursor products, which began in Q1 of this year, positively impacting both revenue and adjusted EBITDA. Before I discuss a handful of housekeeping items for you, I wanted to wrap up with an important reminder on Slide 9. This was the slide we pulled together post our DoW announcement, giving an illustrative example of the minimum annual EBITDA we expect to generate as we execute on our growth plan. Importantly, and I can't stress this enough, this earnings profile is underpinned by firm in-place contracts with much of the cash flow driven by our agreements with the Department of War. As long as we execute across our Materials and Magnetics businesses, we expect to generate very attractive long-term returns. And while the contracted nature of our future cash flows gives us tremendous confidence to continue investing in growing our business, we also expect material upside potential derived through upcoming initiatives, including recycling, appreciating NdPr prices, magnet syndication, or other growth opportunities. As Jim mentioned, the price protection agreement with the Department of War went into effect as of October 1. I'd like to spend some time walking through the GAAP accounting for this contract given the material earnings we expect from this feature of our DoW partnership starting in Q4 with the cash impact following soon thereafter in Q1. First, from an accounting perspective, we have concluded that the top-up PPA payments will not technically be revenue per U.S. GAAP, as the payments are not directly related to the underlying sales contracts we have with our customers. The cash flow comes from a third party, in this case, the Pentagon, that is not, at least as it relates to the PPA, technically our customer. Given that, in the revenue guidelines under ASC 606, we will be recording the PPA as an operating income line item or expense in the case that market pricing exceeds $110 per kilogram. Starting in Q4, you will see PPA income or expense as the first line item below revenue in the P&L, with PPA income therefore forming a core part of our earnings metrics on a go-forward basis. As it relates to 2026, we expect the PPA payments to be made up of 2 primary levers: first, we expect top-up payments for NdPr oxide produced from the Materials segment and sold either to third parties or internally to our Magnetics segment; and second, we expect payments from the contained NdPr value within the concentrate we are stockpiling as we continue to ramp up our refining operations. The top-up payments related to NdPr oxide can be approximated as the difference between our average realized sales price and $110 per kilogram with a few gives and takes multiplied by the quantity of NdPr oxides sold in the period. So for example, in a quarter where realized prices are $70 per kilogram, our sold volumes multiplied by 70 would be recognized as revenue, in line with how we report today. And the $40 per kilo top-up payment up to the $110 floor price would be recognized in the PPA income line, with the full impact of both flowing through EBITDA and earnings. Regarding how to model the PPA payments for stockpiles, particularly concentrate, the per unit payment will approximate the difference between market prices for NdPr in the quarter and the $110 per kilo floor. But in the case of concentrate, the quantities are tethered to the recoverable NdPr within any concentrate we nominate to the stockpile. For each quarter in 2026, I would expect the difference between our actual NdPr production volume and our quarterly target of 1,500 tons of NdPr to be nominated into the paid stockpile and drive further PPA income. Eventually, this concentrate will be processed and sold at market NdPr prices. Realizing this is complex, we're happy to take further clarifying questions on the PPA and its impact to our financial statements offline following the call. Moving to the balance sheet. I did want to point out that several of the pieces of the DoW agreement, consisting of the PPA, the samarium loan, the preferred stock, and the warrant required us to undertake an analysis of relative fair value in cash versus noncash consideration received in order to properly account for these financial instruments on the balance sheet under GAAP. Note that several of the items are therefore recorded at a value that does not match the cash or other consideration received specifically for that feature. There is significant discussion of our methodologies contained in our Form 10-Q that we intend to file with the SEC tomorrow, but the 2 most notable outcomes of this are: first, the recording of a $221 million asset called the PPA upfront asset that will be amortized on an accelerated basis over the 10-year term of the PPA; and second, the recognition of noncash interest expense in excess of our coupon rate on our samarium loan from the Department of War, given the relative fair value of that portion of the agreement resulted in a deemed debt discount. The PPA amortization will be presented in our depreciation, depletion, and amortization line in the P&L. Lastly, before turning it over to Michael, I wanted to address our year-to-date CapEx and remaining 2025 expectations. Through the end of Q3, capital spending has totaled approximately $110 million on a gross basis and $86 million on a net basis due to $24 million of progress payments received from the Department of War under our prior HREE investment agreement. As such, we expect gross CapEx for the full year to be closer to the low end of our initial $150 million to $175 million range and to perform better than the range on a net basis. We will discuss 2026 capital forecasts and projects on our Q4 call in early February. With that, I will now turn it over to Michael. Michael?

Thanks, Ryan. Operationally, we had a strong third quarter with production that came in just above our expectations. In the upstream circuits, we achieved our second highest quarterly result for concentrate production just 4% shy of the all-time record we achieved in last year's third quarter. The gap is largely attributable to several reagents and pre-flotation trials the team executed that had a minor negative impact on stability and production. It was nonetheless one of our best quarters with very good uptime and highest ever concentrate grade exceeding 63%. Midstream production continues to increase, which led to another sequential quarter of record NdPr oxide production in line with our expectations. We are now processing more and more of our concentrate on-site while simultaneously building up a healthy concentrate stockpile. The majority of our circuits are performing well, demonstrating higher uptime and throughput capability while sustaining good product quality. As in prior quarters, a few areas experienced temporary disruptions that modestly held back NdPr production. As we address these short-term challenges, we are adding resiliency and stability to our operation that we expect to result in sustainable production increases over time. In the first half of October, we successfully completed our semi-annual maintenance turnaround, which included several minor debottlenecking efforts and tie-ins for future projects. The outage along with associated de- and re-inventorying, repairs, and start-up affected production for approximately 2 weeks depending on the area. We had one area require rework in late October, and that somewhat impacted October production. As a result, we anticipate fourth quarter concentrate production to be roughly flat relative to Q4 2024 and NdPr oxide production to be flat to slightly up sequentially with strong growth resuming in Q1 2026. At Mountain Pass, we are accelerating the pace of project execution, particularly on the heavy rare earths circuit. In the third quarter, we completed most engineering and primary equipment procurement for our terbium and dysprosium production capability, which will be the first heavy rare earth products to come online. Construction and installation of equipment began towards the end of the quarter and has accelerated in October. On Slide 10, we have a picture of some of the work underway. We are pleased with this progress. Importantly, we are targeting the start of commissioning of this circuit in the middle of 2026. Regarding supply sources, we are actively engaged with a number of different and various types of potential feedstock providers to supplement our own contained HREE content. I am optimistic about having several long-term supply options. We are also advancing towards completing the restoration of the first train of the chlor-alkali plant and enhanced brine purification capability. The recommissioning of our chlor-alkali plant will add resiliency to the entire Mountain Pass operation by enabling on-site production of key chemical reagents. Pre-commissioning will begin early next year. The plant has 2 additional trains, with the first one likely to be ready for service by mid-2026. We then have the flexibility to achieve our full capability in phases over a multiyear period at a pace we determine. At Independence, we continue to make meaningful progress in expanding our metal production capabilities. We are actively exploring multiple strategies to optimize costs and scale metal production to support future growth, including our 10X expansion. In August, we began an accelerated trajectory of alloy flake casts at Independence. Meanwhile, installation and pre-commissioning of powder production, pressing, sintering, passivation, machining, and grain boundary diffusion, GBD, are all advancing well. In our new product introduction area, we continue to refine magnet chemistries and production processes to produce higher and higher quality magnets in an expanding range of magnet grades. Engagement with GM for commercial scale production qualification is underway, and we are encouraged by the continued collaboration between our respective teams. We remain on track to meet our goal of producing finished magnets by year-end 2025. This will kick off an accelerated qualification process with GM, with magnet revenue expected to begin in the second half of 2026. In addition to supporting GM, our teams at Mountain Pass and Independence have initiated engineering and procurement to support the Apple recycling partnership and magnet production expansion. This work includes magnet chemistry development at Independence and pilot testing, design development, and circuit engineering to support the addition of recycling capabilities at Mountain Pass. Overall, it was a very busy quarter, and we expect the pace of activity to continue accelerating. Through it all, our team has remained focused, executing safely, efficiently, and with a strong sense of mission and urgency. I cannot say enough about the quality of the team and capabilities we have built and are building and the opportunities that lie ahead. With that, I will turn it back to Jim.

Thank you, Michael. Moving on to Slide 11. You can see the unmatched array of capabilities we have built entirely within MP. This is what true vertical integration looks like, something no other company in the world has achieved in rare earths and magnetics. This quarter was another solid one for MP, and that same execution discipline is now driving progress across our GM, Apple, and DoW partnerships, each deepening our integration, broadening our reach, and advancing our trajectory for long-term growth. Since we last spoke, we have witnessed a frenzy of attention and volatility around rare earths in recognition of the necessity that we, like most nations, must move at warp speed to derisk from reliance on China for the supply chain. The President Trump-Xi Jinping summit in Korea has resulted in a 1-year postponement of China's October 9 rare earth export controls. But the reality is that this pause has only underscored the inextricable link between the world's most advanced semiconductors that America produces and the rare earth supply chain that China dominates, 2 sides of the same coin at the forefront of the strategic contest between our nations that will shape the global economy for decades to come. We are now locked in a new kind of cold war, a race of mutually assured economic destruction, fought not with weapons but with supply chains. Self-sufficiency, allied resilience, and national industrial champions are no longer optional. They are the front lines of security. In the last cohort, America prevailed through military strength powered by economic might. In Cold War 2.0, the equation has reversed. Economic might itself expressed through control of critical materials, advanced technologies and the supply chains that sustain them has become the decisive measure of national power. Against that backdrop, it is important for investors and policymakers alike to consider with clear eyes the complexity and scale required for success in this supply chain. It is very often said that rare earths are not rare. That is true. They are literally everywhere. One could take a sizable piece of land, multiply by some amount of rare earth content percentage within, multiply that times a price basket, and then lo and behold, claim a rare earth orebody of some major value. Unfortunately, it is not that simple. What is underappreciated but far more important is that economic ore bodies are extremely rare. The vast majority of projects being promoted today simply will not work at virtually any price. Even deposits labeled heavy rich still contain a vast majority of light rare earths and yttrium. And when grades sit in the hundreds of parts per million, the cost to concentrate, separate, and refine becomes uneconomic. MP's overburden and tailings are quite literally more valuable by many multiples than many of those so-called projects. The structure of the existing industry tells the story. China accounts for roughly 90% of global NdPr production, yet even there, most of that output comes from just 2 hard rock mines and refineries now controlled by 2 entities. Think about that. A country with the world's largest reserves, a national industrial policy dedicated to dominance, generous subsidies and accommodative regulatory practices and still only 2 highly productive, low-cost integrated operations represent the vast majority of their industry. It is not a coincidence that outside of China, the only scaled light rare earth production also comes from 2 mines, Mountain Pass and Mount Weld, and their respective refiners, MP Materials and Lynas. The lesson is clear. Great ore bodies and scaled refining capability are the indispensable foundation of this industry. Everything else depends on them. In addition, certain types of mineralization such as allanite, eudialyte, and even coal-based deposits have never successfully yielded refined rare earths at scale. The reason is straightforward. Their mineralogy is complex, and the concentrations are extremely low. Now perhaps there will be a breakthrough someday, and based on our own experience, we would never underestimate the power of human ingenuity. But the reality is that even China does not attempt to produce rare earths from those types of deposits today. Michael has my favorite analogy on this. Controlling a eudialyte rare earth ore body today is like having billions in Bitcoin but without the private key. In theory, you can see it on the screen, but you can't unlock it. And that raises the question: What is it really worth? Even with one of the very few economic rare earth feedstocks, building and operating a refinery is capital-intensive and painstaking work. Despite what some promoters might suggest, even the best producers take years to ramp and stabilize output, and economics. Lynas took roughly a decade. MP is on track to reach normalized production in about 3 years from the start of commissioning. That speed, scale, and discipline speak to the strength of our people, our ore body, our access to decades of operational history, and our platform. The heavy rare earth market has a somewhat different profile. Heavy elements are largely sourced from numerous small clay mines, but once again, separation is aggregated at a smaller number of scale refineries in China. We do see opportunities for deposits with a much higher proportion of heavy rare earths to support profitable upstream concentrate business. However, the shortened mine lives and complex mineralogy or environmental considerations of many of those deposits make it uneconomic to build full refining capability around them. That's what makes our scaled heavy rare earth separation circuit truly distinctive. It allows us to leverage our broader infrastructure to produce heavies on a low-cost basis feeding directly into our integrated Magnetics business. Moving downstream. Even with mined and refined feedstock in hand, the path to a finished magnet is anything but simple. To make a magnet, you must first convert NdPr oxide into metal, then alloy it with iron and boron through strip casting. Each step is technically demanding and essential to performance. Perfecting the precise recipe for automotive-grade EV magnets can take a year or more. And even with an all-out effort, like our partnership with the Department of War, building a scaled facility demands years of work and significant capital. Tonnage, while often cited as a proxy for scale, says little about capability. The true test lies in mastering the complexity of magnet grades, sizes, and chemistries. In today's rush to localize supply chains, we have seen projects promoted that cannot yet perform grain boundary diffusion, the critical process that enables efficient use of heavy rare earths. Others proclaim full vertical integration while depending on phantom feedstocks or technologies that remain unproven at scale. A business plan that starts with magnets and works backward to mining may sound compelling on paper, but it defies both economic and supply chain reality for the foreseeable future. Scaled recycling is another underappreciated pillar. In magnet manufacturing, typically 20% to 50% of material ends up as swarf or kerf, magnet scrap. Capturing and reusing those elements, both light and heavy, is essential to a resilient and economic supply chain. All of this reinforces one conclusion. MP Materials, with its vertically integrated assets, partnerships, and execution track record, is uniquely positioned to lead as the western rare earth supply chain takes shape. Finally, as the global economic realignment continues, I would encourage investors and policymakers to approach the sector's capital allocation with clear eyes. With that, let's open it up for questions.

Our first question will come from Bill Peterson with JPMorgan.

I'm curious about your current SEG+ stockpile and how long it can sustain heavy production once fully ramped up. You mentioned engaging with other heavy feedstock suppliers; are these suppliers based domestically or internationally? Given that you indicated there are limited viable options in terms of ore bodies, I would like to understand more about the types of feedstocks you might have and whether mergers and acquisitions could be considered.

Yes, Bill, it's Ryan. I'll start and let Michael take some of that. In terms of the SEG+ stockpile, we have several hundred tons on an REO basis of SEG stockpiled. Obviously, we are producing SEG every single day, and so from that perspective, we feel good about our inventory at this time to be available for us to commission that circuit and charge that circuit. And certainly, as we've discussed, we believe, with our own internal feedstock, we will be able to satisfy the demands of the Independence facility with that. I'll turn it over to Michael for the rest of the question.

In terms of feedstocks, I think one thing we're very excited about is how our fully integrated site with both ore-based processing as well as light and heavy separation gives us very unique capability in terms of processing different types of feedstocks. So we are in touch with both domestic suppliers, suppliers of recycling material, recycled material along with some foreign suppliers. Obviously, you see, as much as we do, all of the announcements from various players around the world where we have our opinion on some and are in discussions with many. But I guess we're confident that we will find several different options.

Great. Regarding the magnet business, how is customer engagement progressing beyond Apple and GM? Are there people testing some of your samples? What is the current status of the business with further offtakes in Independence and the goal of achieving 10X?

Sure. It's Ryan again. I think, certainly, since Liberation Day, the supply chain mindset across the space has changed very meaningfully. There's a tremendous amount of engagement across really every vertical that consumes magnets: automotive, aerospace and defense, consumer electronics, robotics, you name it. I think, fundamentally, we are focused on executing first for our foundational customers. And from a 10X perspective, we have the luxury of continuing to operate in the same fashion that we have for the last several years given the fact that we have 100% offtake secured for 10X. As we've talked about, our Apple agreement anchors the vast majority of the expansion that we've planned for Independence, and so it puts us in a position where we can continue to be very selective with our customers. But the engagement is quite significant and broadly very exciting.

Your next question will come from Lawson Winder with Bank of America.

Great quarter and once again, a very intriguing update. May I ask about a couple of things? Regarding the heavy rare earths, specifically dysprosium and terbium, how is the annual volume of 200 kilotons roughly divided? Additionally, concerning the samarium loan, as the name suggests, there are other rare earths that the Department of Energy would like to tap into. What is the timeline for producing some of those other rare earth metals that are particularly of interest to the Department of Defense? Has the Department of Defense set any deadlines?

This is Michael. Thanks for the question. In our ore body, the general ratio of dysprosium to terbium is about 3:1, so that would be kind of the approximate mix. Some of the other third-party feedstocks and recycled material may have slightly different mix, so ultimate production may differ from that to some extent. In terms of other heavy rare earth production, we have made a commitment to produce samarium in 2028, so samarium oxide, and we feel very comfortable with that type of timeframe. We have made no sort of public commitments to produce any other heavy rare earth, although gadolinium would be a logical next one to produce probably around the same timeframe. As for the others, I think we are eager and in discussions with various other parties domestically and in allied countries about offtake of our other materials for them to process into other rare earths. But to the extent there's strong demand or need, we're capable of doing further separations.

Okay. That's very fascinating. And then can I ask about the Apple $200 million prepayment? I had not expected $40 million to be paid in Q3 so quickly. Can you help us understand a timeline under which the remaining $160 million would be prepaid?

Sure. It's Ryan. We are thrilled to surprise you to the upside. We can't get into contract specifics, but certainly, the way this was designed was to continue to provide capital for this build-out as we hit certain operational milestones. We actually expect a next payment of relative scale coming up in Q4. And I think that, over time, as we execute on this plan, we've laid out initial magnet volumes targeting mid-'27 and recycling close behind, you'll continue to see those prepayments on that schedule.

Your next question will come from Matt Summerville with D.A. Davidson. Matt, I can see I've unmuted, please go ahead. Unfortunately, we're not able to hear you, Matt. I'll just go to our next analyst, and we'll come back around to you. Our next question will come from David Deckelbaum with TD Cowen.

Jim, Ryan, and Michael, thank you for your time. Ryan, you rightly pointed out that the main risk for MP concerning incentive prices is execution. If I understood correctly, it appears you are aiming for the end of 2026 for the operating NdPr separation nameplate. Michael, it seems you mentioned some issues regarding NdPr separation that you are currently resolving. Is it accurate to say that as the contract with the Department of War at $110 a kilo goes live, we should expect you to ramp up as quickly as possible in the 2026 calendar year? Can you also provide any insight on what we might anticipate in terms of incremental throughput tonnage in the upcoming quarters?

David, I'll start. It's Ryan. I think the important thing to keep in mind from an economic perspective here is we've talked about our concentrate stockpile, and frankly, for a variety of reasons and now economic reasons, that actually has a lot of value to us. And so certainly, we are focused on ramping as quickly and as smartly as possible to serve the market and to prove out this capability, but it's important to remember that under the PPA, we still are paid for the NdPr content within the concentrate that we stockpile. Of course, we don't get paid twice. We get paid when we put it into the stockpile, and then once we refine that material, we'll sell it at market prices. But it's a very important value driver for us, and we can continue to look at our view of the market and nominate volumes into that stockpile as we produce them and as we see fit. So that gives us a lot of operational and economic flexibility in 2026 and beyond.

Appreciate that. And then just as a follow-up, I think, Jim, you talked about really the availability of swarfs, end-of-life magnetic products. You guys talked about third-party feed, and I know others have asked you about those questions. But I guess as you think about really addressing the supply chain going forward for your own needs and really internally in this country and for allied nations, where do you prioritize looking at your own capabilities around recycling with obviously the startup of the Apple facility over the next few years? How do you think about focusing on swarfs and the ability to source that versus looking at third-party feed from ore bodies?

I believe we're taking a comprehensive approach. Over the next few years, we have several projects underway. We're expanding Independence, ramping up 10X quickly, and working on various recycling efforts at Mountain Pass. This management team is quite opportunistic, so we'll aim to leverage available opportunities. In the coming years, our focus will be on executing these initiatives. I want to emphasize that we currently have enough feedstock to meet our full magnet capacity of 10,000 tons, especially with the support from Apple in providing feedstock. As Ryan mentioned earlier, we have the advantage of being thoughtful in our approach to securing additional feedstocks.

Yes. One important point to consider is that as we explore sourcing third-party feedstocks, including magnet material and end-of-life material, the economics of our business ultimately hinge on our cost structure. While there are various announcements regarding price floors, it's essential to recognize that we will be among the lowest cost producers of these products, whether they are refined or sourced from mined material. This advantage allows us to be strategic in acquiring third-party feedstock. With the platform we have established, we believe we are well-positioned to thoughtfully procure the best potential feedstocks for our business, given that our cost structure is top-tier.

For our next question, we'll return to Matt Summerville with D.A. Davidson. Matt, I can see that you've unmuted, but we can't hear you. You might need to select a different microphone input next to your audio button. Okay, we'll move to our next question, which will come from Carlos De Alba with Morgan Stanley.

Can you hear me?

Yes.

Great. Congratulations on the strong performance this quarter. Jim, could you clarify something from your previous response? I may have misunderstood. Will you be able to supply recycled material or have capacity in the recycling line beyond the 2,000 tons you have contracted with Apple?

Are you referring to, actually, Michael, why don't you take that and comment?

Carlos, if I understand the question, we are building a dedicated line for Apple to manage material and feedback that they are responsible for providing to us. We also will have the capability to process our own swarf, and we'll build that modularly to process as that market grows, which we're very optimistic about additional feedstocks as well over time.

All right. Good. Yes. Okay. And it will be a separated line from the one that you were working on for Apple, right?

The Apple line will mostly operate independently from our current line, but we are assessing other feedstocks and will utilize our existing infrastructure and capabilities in light and heavy rare earth separation in a careful manner based on the characteristics of the feedstock and the needs of our customers.

All right. Okay. And then, Michael, maybe you can help us understand what is the thought about the ramp-up of the Dy and Tb output post-commissioning?

Our focus initially is obviously on meeting the needs of our customers and Independence for GM. And because we have this stockpile, we'll be able to produce amounts greater than our initial ore-based material we'd supply on a yearly basis. And then we'll look at what third-party feedstocks we have and what preprocessing is required. But the volumes are obviously relatively modest, so I think the ability to ramp will depend on how quickly we feel comfortable pushing those volumes. Obviously, we have very high quality requirements and need to make sure we perform.

Our final question will come from Ben Kallo with Baird.

I was wondering how you think about the price floors for heavies as you advise the administration and if you've given any weight to that. I have a follow-up too.

Ben, are you asking about our intellectual perspective on them? Regarding heavies, I want to approach your question from a different angle. Referring back to my earlier points, when examining the supply chain in our industry, the heavies sector is typically characterized by deposits that make the economics viable for production of a concentrate or feedstock that can be utilized in our refinery. However, we haven't encountered locations globally that present the economic rationale for building refining capabilities around them. Consequently, we are well-positioned to take in those feedstocks. Our collaboration with DoW aims to secure the necessary materials for our business through 10X. There are various methods to incentivize upstream production and offer economic benefits to encourage that output. It's vital to view these operations as part of a broader supply chain since their economics are not necessarily independent or viable as fully integrated participants.

So just a follow-on because you guys have, I guess, everyone's ear, so what is the advice to get the heavies to the administration?

I want to emphasize that while we intend to keep our detailed advice to the government confidential, I can share some general insights. When examining the structure of this industry, especially how it has developed in China, it's evident that much of it is state-driven, yet there are significant structural aspects to consider. This industry resembles a global structural oligopoly rather than an environment where simply investing in numerous sites will create a robust supply chain. The geological factors are crucial, and we often discuss the variations between light and heavy materials, as well as the complexities of the magnet industry. If you compare this to the aircraft production or smartphone sectors, like Apple or Boeing, it becomes clear that you wouldn't just distribute funds across multiple projects. We see MP as America's national champion, benefiting from a fully vertical integration and years of investment, which puts us ahead of competitors. Regarding various projects – both public and private – that I'm aware of, none appear to have the equity value that the deal MP secured. This is noteworthy. However, that doesn't imply the government shouldn't actively foster these initiatives. They've been effective in attracting private capital, and if they can leverage investments that lead to doubled or tripled private funding, they should pursue that aggressively. The administration has taken commendable steps so far, and I advise them to continue this momentum. It's crucial for private investors to remain realistic about the structural economics of this space amidst all the enthusiasm.

Your next question will come from Max Yerrill with BMO Capital Markets.

My question is around the ramp-up of the heavy rare earth separation facility. And I was just wondering if the ramp-up time there affects your ability to deliver certain higher-grade magnets to General Motors. And then I guess the second part is, when we look at the universe of potential feedstocks for that heavy rare earth separation, are there types of concentrates that you cannot process? And which ones are the most ideal to the circuit that you envision?

Yes. Sure, Max. It's Ryan. I'll start. In terms of how we're positioned from a supply chain and inventory perspective to support our ramp-up of magnetics, I think we've discussed over the last several quarters that we had anticipated some of the restrictions that had been put in place and have built a stockpile of products to allow us to commission and ramp Independence facility. We've timed the construction and commissioning of the heavy rare earth separation circuit to come online to support further growth as we work that inventory position down. I'll let Michael take the second part.

Just to be clear, the question was on whether types of feedstocks for the heavy rare earth circuit are preferred?

Exactly.

Certainly, to the extent we got an SEG+, that would be easier than processing a full mixed rare earth carbonate with lights and heavies. But our circuit can handle both of those as we have all the capabilities of either one of those. So we will look at the economics and the distribution and compare those to other alternatives.

Our final question will come from Laurence Alexander with Jefferies.

I appreciate the analogies you've mentioned, and I want to explore your opportunistic approach to creating value. How would the cold war have differed if nuclear missiles had a 10-year expiry date? When considering the implications of a 10-year support program from the Department of Defense, how might capital markets view this regarding potential cyclical risks in case of a recession or a surplus at the end of the 10-year period? What impact could this have on your cost of capital and your balance sheet strategy? Are you planning to strengthen your balance sheet and focus on vertical integration to navigate this transition, or do you believe the government should decide soon about extending support, or that you need to consider adding another strategy to mitigate volatility as you move back to being a fully unsupported entity?

So Laurence, I think it's actually the opposite. I'm not sure how many listeners we have today because there's another exciting call about a $1 trillion pay plan being approved, focusing on humanoid robots, whether it’s Musk or Jensen discussing that. Looking ahead, whether it's 5, 10 years, or whatever timeframe, physical AI is undoubtedly going to drive significant growth in rare earth magnetics. The immediate challenge is that we cannot rely on China for our supply chain; we need a thriving domestic industry. I want to clarify that when I mention structural realities, it's not a permanent situation. I believe there is potential for many other players and additional supply, but to reach that 5 to 10-year future, we will require considerably higher prices. Therefore, the MP deal may not be sufficient. In the short term, the administration has ensured that we have a successful national champion in MP. We must execute our plans, but we will also pave the way for broader supply coming online. Ten years is ample time to consider our future role, but for now, we need to focus on the coming years to ramp things up. If we don't see some advancements in physical AI by then, I would be less concerned about MP compared to many other areas in the market. I'm not worried about what demand will look like in 10 years or the prices of NdPr and magnetics. I believe it will be very positive for us. I predict that we will have expanded our business and moved downstream. If you compare us now to five years ago, I think by the time we reach that rollout date, MP will represent a much smaller part of our business compared to today.

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

All right. Well, thank you, everyone. We think it was a great quarter of execution. We are going to get back to work, and I look forward to talking to you all next quarter.