Highlights
- USA Rare Earth closed a $217M acquisition of UK-based Less Common Metals, adding proven alloy and strip-casting capability to its Oklahoma magnet plant, targeting commercial production by 1H26.
- The stock has surged 942% in volume amid geopolitical tailwinds, but remains pre-revenue with approximately $122M in cash and execution risks around feedstock supply and scalable US refining.
- To graduate from geopolitically important to structurally investable, USAR must prove assured oxide supply, repeatable domestic refining at scale, and binding Tier-1 customer offtakes.
USA Rare Earth (opens in a new tab) is one of the loudest American answers to China’s grip on rare earths: an aspiring mine-to-magnet chain that now spans a U.S. magnet plant in Stillwater, Oklahoma, and—after a September deal—the metals/alloys engine room of Less Common Metals (LCM) in the U.K. It’s a powerful narrative. But for investors, two unresolved gears still determine whether this story runs at scale: assured, high-quality upstream feedstock and repeatable, scalable midstream refining in the U.S.
Since late September, momentum has been real. USAR closed the LCM acquisition for ~$217M (cash plus stock), adding proven strip-casting, alloying, and recycling capability—the muscle between oxides and finished NdFeB magnets that most Western hopefuls lack. Management continues to guide commercial U.S. magnet output in 1H26, supported by an innovations lab already doing “recipe” and customer-qualification work. This is how you court auto, defense, and industrial buyers: show metals, show process control, show magnets.
Markets have noticed. Headlines this week swung from rallies to pullbacks as traders triangulated policy risk, valuation, and Washington’s next move. Motley Fool (opens in a new tab) flagged a sharp intraday slide on Oct. 14 amid chatter that the administration might back other critical-minerals names; MarketBeat (opens in a new tab) tallied a 942% volume spike as the stock whipsawed; Seeking Alpha (opens in a new tab) praised the CEO hire and LCM deal but called out a valuation sprint ahead of fundamentals. Volatility is not the thesis—but it is the weather you’re sailing in.
What do the numbers say?
Yahoo Finance (opens in a new tab) shows a company with cash ($122M), minimal debt ($1.4M), and no core revenues yet; losses reflect a build-out phase (TTM EBITDA ≈ –$25M; EPS ≈ –$0.79). The cap table is active (insiders and institutions both present), short interest hovers near ~10% of float, and the price has sprinted from single digits to the $30s–$40s range over 52 weeks—testimony to geopolitical optionality more than cash flow. Translation: the market is paying forward for execution.
Where the story is strongest is downstream. With LCM, USAR can produce rare earth metals and alloys today, while Stillwater targets full-rate magnets tomorrow. That combination instantly improves customer conversations and qualification pathways in a world where China still commands ~70% of mining and >90% of magnet manufacturing. Even sober takes agree the West needs exactly this kind of stack—and soon.
Where the story is thinnest—for now—is the hard plumbing between mine and metal. Round Top (TX) remains a low-grade, long-lead project that has cycled through studies for years; until it is financed, permitted, and producing to spec, U.S. oxide supply will lean on third parties. Meanwhile, the U.S. refining step (oxide→metal) at industrial volumes and tight QA remains to be proven at scale; LCM helps materially, but it is in the U.K., which dilutes a pure “made-in-USA” pitch for certain federal programs and introduces tariff/FTA variables over time. These are solvable problems—but they are not yet solved.
Policy risk cuts both ways. China’s October export-control escalation over rare earths and battery inputs is a structural tailwind for non-China value chains—but it’s also a volatility machine for stocks priced on geopolitics. If Beijing issues licenses broadly, multiples can compress; if controls bite, contracts and funding can accelerate. Position sizing should respect that binary.
What must USAR prove next?
- Feedstock assurance: multi-year oxide supply (Round Top or third-party) with spec/penalties/logistics baked into enforceable offtakes.
- Refining repeatability: demonstrated yields and ppm-level QA at scalable U.S. throughput, not just pilot metrics.
- Customer lock-in: binding magnet/alloy offtakes with Tier-1s or defense primes to anchor capex and working capital. The company informed REEx that it was targeting the mid-market.
REEx Bottom Line
Along with MP Materials (in actual production), USA Rare Earth remains one of the most advanced U.S. magnet platform candidates on narrative and optionality, now with real midstream muscle via LCM. But until feedstock and domestic refining repeatability are bankable, the equity remains a wager on execution under policy crosswinds. For long-duration investors, the checkpoints above—not headlines—will decide whether USAR graduates from geopolitically important to structurally investable.
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Excellent article. I have a small position, but will wait for more developments before taking a larger position.