MP Materials Corp. Q1 FY2025 earnings call

• Strategic Significance: Geopolitical events validated the need for a domestic rare earth supply chain, positioning MP as a national champion in rare earth magnetics. - Production Progress: Materials Division had strong REO and NdPr oxide production, with Upstream 60K projects bearing fruit. Magnetics Division made progress in metal production for GM, including extended periods of strong production with high quality. - Operational Updates: Upstream 60K projects improved recovery and grade, Midstream circuits made progress despite maintenance issues. Magnetics facility at Independence had outstanding progress in production and equipment testing, with sintering furnaces installed and running test blocks.

Materials Division: Upstream produced 12,213 metric tons of REO in the first quarter, a nearly 10% year-over-year increase, representing the second highest quarterly production in the company's 8-year history. Midstream achieved record NdPr oxide production of 563 metric tons, a 36% sequential increase. NdPr oxide and metal sales continued to non-Chinese customers. Magnetics Division: Began initial on-spec metal production for GM, resulting in $5.2 million in revenue and positive adjusted EBITDA for the quarter. Provided automotive-grade magnets to GM for validation, with plans to deliver commercial production of magnets for GM by yearend. Received a $50 million customer prepayment on April 1st.

• Expect materially improved revenues in Q2 for the Magnetics Division, eventually leveling out to roughly $20 million per quarter over the next 12 months. - Anticipate modestly improved EBITDA margins for the Magnetics Division as production scales. - Plan to bring the onsite heavy rare earth separation facility online next year, leveraging existing heavy rare earth feedstock to support magnet business scaling.

• Potential disruptions from ongoing geopolitical tensions and supply chain uncertainties. - Operational challenges in ramping production and addressing equipment issues, particularly in product finishing.

Q: Details on partners helping accelerate the business A: Active discussions with major commercial and government stakeholders who recognize the urgency, focusing on accelerating the mission with scaled commitments and considering various capital and partnership forms Q: How to manage heavy rare earth supply chain vis-a-vis Independence A: Sufficient heavy rare earth feedstock stockpiled for Independence ramp, and potential to refine third-party heavy rare earth feedstock, with vertical integration and recycling as advantages Q: Production and sales volume in Q2 and beyond A: Targeting a slight increase in Q2 NdPr production vs Q1, with further growth expected in Q3, optimistic about execution despite challenges Q: Thoughts on thrifting heavies A: Extensive IP and R&D on formulations to reduce heavy rare earth content, with focus on different use cases (e.g., robotics vs auto), leveraging vertical integration and recycling Q: Working capital and negotiations A: Strong balance sheet with ample cash, prioritizing capitalizing on the generational opportunity with strategic partnerships, evaluating deals on a case-by-case basis Q: Timeline and momentum post-deescalation of trade tensions A: Uncertain, but national security importance of rare earth magnetics ensures continued momentum regardless of trade deal outcomes; some parties may relax, but defense and other sectors will maintain focus Q: Shipment to China and stockpiling A: Not shipping concentrate to China, stockpiling is manageable with ample storage at Mountain Pass, and profit deferred but not lost as product will be refined over time