From Uranium in Canada, we're now gonna move to rare earths in the U.S. For those of you who are one session in here today, you've already heard great stories about the wider market and some of the awesome automotive uptake from MP Materials from Jim Litinsky. Been a long time, Colin. It's been a long time since been over. For those who don't know MP Materials, it's a large rare earths producer, roughly 15% global market share, and really a leading producer outside of China. We're seeing a company here which is moving downstream, into rare earth separation and refining, and looking towards in-house permanent magnet motors. Jim, just to kick things off here on our chat, give us the MP story. Give us the background to those in the audience. Sure. Let me give a quick background for those who don't know on what rare earths are. Rare earths are inputs into magnetics that go into typically motors or any kind of electrified motion. The rare earth materials are the things that power the electrification economy. The key thing about them is rare earths are not particularly rare. They're pretty ubiquitous actually. You've seen recent announcements of, you know, I jokingly say, countries trying to get into NATO that announce huge finds, and it's very easy to find rare earths, but it's very difficult to make money selling rare earths and to process them. We'll get into that. People understand, the key, the key ingredient that we make, is the key one is NdPr, neodymium- praseodymium, and that goes into the, again, high-powered magnets. The story, our story is actually, you know, it's been a long time coming. For those of you who know the space, there was a predecessor, that, you know, had a great story. This was before they went public, before the Model S was even on the road. They had sort of a rise and fall that is somewhat notorious. I ran an investment firm for about 15 years, a hedge fund. I'm not a miner originally by trade by any means, but I got involved in 2015 in anticipation of this predecessor entity going bankrupt. In 2017, after we could be here for hours to talk about the story, of us taking control of Mountain Pass. Suffice to say, when I founded the company in 2017, MP Materials, we had eight employees. Mountain Pass was in care and maintenance. The widespread view of the experts was that this site could never be successful. Fast-forward to five years later to today, we just reported a few days ago, in the year 2022, we did just under $400 million of Adjusted EBITDA. We're now 530 people. We have a $6 billion market cap. It has been, you know, hopefully a great American success story that others will be repeating in this upcycle. Just to give you an idea of what we've been able to achieve in our young life as a company, we, again, started with eight people in care and maintenance. We relaunched the site. Last year, we produced 43,000 tons of REO. To put that in perspective, that's three and a half times the best quarter annualized the predecessor ever did prior to their bankruptcy. We're profitable. We'd be profitable at any price that NdPr was at when they went public. We've, you know, we've really turned around this site and then some and have created what is, if not the one of the low-cost producers of rare earth materials in the world. As you said in the beginning, we have a, you know, approximately a 15% share, aside from one Chinese producer. We're the largest in the world. The remainder of our business, so right now we sell a concentrated product. Our second stage, which is, you know, essentially now physically complete, is to produce separated rare earths. The key thing with rare earth magnetics are is you get a concentrated you get the rare earths, you get a concentrated product, you then refine it, and then you turn it into a magnet. Just in the concentrated product, that's the, you know, those are the financial results we've already achieved. We are in the process of turning on those separation facility that's in commissioning, our expectation is to hit run rate by year-end. That will be the second stage. The third stage is we're building a magnetics facility. We have a long-term contract with GM. That facility is in Fort Worth. You can actually, if you look at our Twitter feed, you can see our recent earnings. You can kind of see that building is complete. We have to do all the insides, but our expectation, that deal, is that we'll be selling GM alloy in 2023 and magnets in 2025. The last thing I would just say is that, you know, it has been extremely important to us, and I have a feeling we'll get into some of this, but, you know, we have a fortress balance sheet. We have $1.2 billion in cash. We have $500 million in net cash. We have a very cash flow positive business, and in fact, last year, we were able to make all these growth investments and still generate some free cash flow above the growth investments that we made. You know, we believe we're creating a true Western or really a global champion in magnetics, and we've got a fortress balance sheet to make it through the hiccups and an exciting growth opportunity, which I'm sure we'll talk about. It's interesting, you commented at lunch that you're very confident in supply and demand. Can you I mean, I didn't let you elaborate what the demand was, if you want, and where NdPr goes into in terms of the magnet side. Absolutely. I mean, how you see that being balanced perhaps by the supply and the imports of China. Absolutely. Not to reference another firm, but they're not a bank, but if you look, there's actually a great report by Adamas, which is, you know, does pretty good rare earth research. They put out a 2035 rare earth magnets report that talked about the demand for rare earths, NdPr in magnets to be 3x what it is today by 2035. Which obviously for those in commodities markets understand that that kind of growth is just enormous, that you could have 1% or 2% in copper would just completely blow out prices. In a commodity, you know, with a lot of, you know, elasticity that can be, you know, an enormous amount of demand. If you break those numbers down even further, roughly 20% of the market today is for EVs and wind turbines, the ultra-high growth areas. The rest are, you know, some mix of GDP and exciting growth areas like robotics, drones, power tools. There's a lot of HVAC, there's a lot of electrification stories. If you kind of assume that 80% grows at GDP or even declines, that 20% of just EVs and wind turbines, if you compound that out at, you know, 30% a year, you know, that is likely that the demand for just those two verticals will be 3 x the market is today by 2035. When we think about that, just to put that in perspective, when you consider that Mountain Pass is approximately 15% of rare-earth production today, and you kinda, you know, do some fancy math around what might be recycled and whatnot, it's fair to say we estimate that you probably need 15 Mountain Passes by 2035 to satisfy that level of demand. Of course, you know, as I said earlier, the thing about rare earths is if you had the economic ore body today that was viable, if you had all the human capital and the financial capital, you're still talking about three to five years to build it. I think that, the practical reality is that the backdrop over the next decade, who knows what the next two weeks or, you know, few months, but over the next decade is extremely bullish, for demand in our space, and there needs to be a lot more supply. I mean, just on demand, if I think right, I mean, people will start to look at substitution and elasticity. In things like an offshore wind turbine. Yeah ...you want the highest quality. Is that the kind of? Yeah. That's a great question because you know, ultimately there's a price for everything, and you wanna think about, okay, well, where is that substitution effect? Well, if you think about the materials... Again, a magnet is in the motor. The energy gets to a motor, and this is just EVs, but I'll do turbines in a second, but it's same concept. The energy gets to the motor, the magnet moves the motor. Regardless of how that energy gets there, you need a magnet. You need most like 90% chance you need a rare earth magnet. The bill of materials on that battery is much more expensive. You know, typically maybe $10,000-$20,000. If your rare earth magnet is a few hundred dollars, to lose 10% of your efficiency, you're talking about multiples in price, where it begins to even think about substitution if you have the size and, you know, torque issues, 'cause a rare earth magnet is much more efficient. It can be smaller, it can be shaped in different way. It's much easier to do. Before you even begin to really consider those trade-offs, prices need to be substantially higher than here. When it comes to offshore wind turbines, the rare earth magnets really dramatically extend the timeline for which there needs to be maintenance or a full takedown of the thing. you know, I think it's like nearly 100% share in offshore wind turbines because of the scale of having to replace that, you know, 10, 20 story building tower, with, you know, that has a magnet. Like, I mean, the, the cost of that versus just, "Okay, I'll pay up for the magnet," is, you know, that is just an enormous differential. Wonderful. I mean, coming back, you mentioned a three-stage strategy before. Stage 1, get it done. Stage 2, the commissioning. Yeah. Just elaborate on. Oh, sure. What it means to the business. Yeah. Sure. Right now we sell a concentrated product. The separations facilities are in China. You know, the, our downstream companies are buying magnets from China, and the Chinese industry has a 90% share in magnetics. Even if we had all the rare earths in the world in the U.S., we'd still be sending them to China to be made into magnets. Instead of refining and making magnets in China, our entire mission is to restore this full supply chain here. What we're commissioning now is that, you know, we're making approximately, last year we made 43,000 metric tons of concentrate. You can look at the split of what percentage are the various rare earths, approximately 16% of that is NdPr. Mm-hmm. We will then, instead of shipping that concentrate to China, we are gonna send that through our facilities and separate it. What we have previously stated is the run rate target is a little north of 6,000 tons, metric tons of NdPr that we'll be producing out of Mountain Pass at the end of this year. We will then, we'll still for, you know, for the near future, have to sell, you know, sell to China, Japan, elsewhere in Asia while we finish our magnetics facility, the facility in Fort Worth. You know, we've said with the current capacity that we've stated, that can take about under 10% of our upstream production from Mountain Pass. We will then, once we get that under our belt, our intention is to move even further, where we'll, you know, produce what we call 10X of where we are and then, you know, potentially beyond. We'll be able to grow our magnetics business with our upstream feed, but we've got a ways to go to do that. I suppose just review, you mentioned Fort Worth. I mean, I don't touch it up here. I mean, where are you in the construction? What are the key milestones for you? Sure. Just to give perspective, we broke ground on that facility in April, last April. We completed the shell towards the end of last year. What, you know, I will say, our, you know, our partners in Texas who are building for us, they did an incredible job. Tech, Fort Worth, you know, things happen fast there. They want our industry. It's gone, you know, incredibly well. We were able to get the shell, and this is a 250,000 sq ft building, 70 acres. It's a pretty big site, but it's our, you know, it's our baby site. It's a small site. We wanted to make sure that, you know, had we wanted to kinda go out and build something much larger, the demand is certainly there, the interest is there, but we wanted to make sure that we walk before we run. I'm the largest shareholder of the company. We are maniacal about return on capital. We wanted to make sure that, you know, if we made mistakes, they're, you know, lowercase m, not capital M. Where we are today is we will soon, well, later this year, we will make an alloy product that we'll sell to GM, and then by 2025, we'll make magnets for GM. It'll take us some time to finish out the inside of the building, you know, get the magnets that we make qualified for GM and then hit run rate production in 2025. That's interesting because it's a very different thing. Yeah. I mean, going from the mining side and then actually into the downstream side and integrating that value chain. I mean, again, it's a whole different set of skill set. Have you put a different structure in place in terms of operations to do that? Yeah. Well, absolutely. You know, we are an execution-focused culture. We're an owner-operator company. You know, as I told you our story, our history, you know, I certainly had essentially no knowledge of mining, you know, when I got involved in buying the distressed debt of the predecessor MP Materials. I think what we've been able to do is we've shown over the last five years that we've been able to execute really well operationally, and it's a function of we have an incredible team. Yes, I have a financial investment background. My COO, Michael Rosenthal, he essentially went to the site the day we closed on in 2017 and has almost not left. He sleeps there often. We are maniacal about execution. I think we showed, you know. There were a number of skeptics. The conventional wisdom and the experts was that, again, Mountain Pass could not be, you know, saved and operated. I think obviously the financial results and the operating results speak for themselves. I think we have a very healthy, you know, measured skepticism of any kind pulling, but, you know, bringing online any operating asset. You know, we're confident that we'll be able to, you know, execute in these businesses. You know, for we're now commissioning our stage 2. We said on our last earnings call, which was a few days ago, that we're now making a roasted concentrate, which is a key step along the way to making separated rare earths, and that everything that we've seen from the data, you know, and this is the actual physical plant data, that the yields and what we expect of reagent usage, et cetera, are sort of on track, that we feel very good. You know, no showstoppers that we'll be able to get to run rate production. Then magnetics, you know, when we took the... I hope that we have been thoughtful with the public markets about although we have this enormous opportunity executing this methodically, and, you know, when we went public, we didn't even have a magnetics team. We said to investors, "Look, here's our long-term vision. This is a 2025 plus event. Assign no value because this is years off." Meanwhile, it's not 2025, it's 2023. We've got a building almost done. We've got a long-term contract with GM. By the way, I'd add, it is not an exclusive and we expect to build a bigger, broader business. We'll have other OEMs, but we'll also have a number of other verticals, you know, whether it's robotics or power tools. We're building, you know, we are building a magnetics champion. I think this is just an enormous opportunity and- I mean, since st age 3, I mean, you're being, I would say modest at the moment, perhaps. I mean, how big could it go? Yeah. How big, I mean, do you have enough space at Fort Worth? Well, I think the analogy is, it's a, it's a good analogy, but not a great analogy. The analogy is the semiconductor industry in 1970s. Mm-hmm ... where, you know, if you think about the world in the 1970s, there were some people doing some stuff in Silicon Valley. There were mainframe computers, we didn't have a, you know, this is before Apple even existed. We didn't have a computer in every home, right? You knew computers were gonna be big one day in a decade or two. You knew that the, like it was the future. I think electrification, again, it's not the same. I'm not trying to say this is as grandiose or in any way of that scale of an opportunity, but electrification is now obvious. Industry has committed. The world has committed. Frankly, China has committed much more than, and Europe too, but we're, we've, we're catching up and our industry is catching up. I think there'll be a robot in every home. You know, if you look out 20 years from now, you know, and who knows what the use case will be, but all roads lead to. You know, I think magnetics will be an enormous opportunity. One of the things about magnetics and why I think it's a decent analogy is, you know, it's not like software where you can just say, "Hey, I've got an idea," you know, stuff a bunch of people in a garage with some soda and, you know, whatever and, you know, out comes. This is a scale business, right? It requires, you know, capital, expertise. Once you've got that scale, the barriers to entry are enormous for a very long time. We've got this advantage of Mountain Pass. This, you know, this asset that allows us to be in business in a way that nobody else can, in a way that allowed us to earn a customer like GM, where they recognize that there is such a, you know, a huge amount of this that needs to come into the world, they want it to be first. They want it to be a good partner to us. You know, I mean, how often in life do you have the downstream saying, "This is so critical that we're willing to, you know, help someone go into business," right? That is a, an incredibly, frankly, a, you know, humbling burden. We've gotta execute for them well. What it means is that this is an extraordinary opportunity. Frankly because of those assets, we're able to take advantage of it. It also means that for others coming in, other than, you know, what's happening in China, there's an enormous barrier to entry. As we execute this right, the franchise that we build, you know, is gonna be very attractive. Let's talk about the GM deal. And then more because, I mean, this industry technology will change, but GM I'd imagine are working with you on what... Absolutely ... what they actually need. I mean, again, do you think that will lead on? Once you get that established position, is it then you go, "Well, OEMs you have to come to us"? Well, I mean, I think our attitude will never be like, "You have to come to us." The customer's always right. You know, it's funny, in the last panel you asked. Mm-hmm ... you know, about what made you successful with GM. We didn't get to it. You know, what popped into my head then is we have not yet been successful with GM. We have earned the right to have a chance to be successful with GM. We have a long way to go. I think that what we have done is, you know, this deal was the culmination of a year-long deep due diligence dive into us, a lot of back and forth. Ultimately, you know, and we were talking to a lot of other parties, and we ultimately felt comfortable that they would be a good long-term partner to us as we wanted to build a business. They recognized that we wanted to build a business. This wasn't an exclusive situation. They know that we wanna build a bigger, broader business. But frankly, they also had the right culture about it. You know, the same way that we weren't gonna say, you know, "Hey, you need our product and otherwise it's China." You know, we recognize that that's not the kinda attitude that we're gonna take. We wanna, we wanna create a champion, and then we'll have a very attractive business. You know, we're not crazy. We recognize that the customer's right, and we've got to serve them and provide low cost. When you're scaling it, you will get a deal in place like you had for Fort Worth to be able to add. Sure. Okay. Yeah. Got it. Just a interesting question come in on the app, actually. Are there any parallels in China or elsewhere to give an indication of ramp-up times at magnet facility? Mm. ... any teething issues that they might have incurred? To set the stage, the 90% of the magnetics business is in China, approximately 10% is Japan. you know, there's a handful of processes to basically take an oxide, you metalize it. I'm skipping. you metalize it, you alloy it, and you turn it into a magnet. The good news is this is not like rocket science where we're, you know, landing shuttles on a platform in the middle of the ocean. This is reasonably understood metallurgy and magnet making. you know, we're pretty confident that we can, you know, execute that well. The way it's done in China today is not necessarily high tech. We think that there are enormous number of. There are a lot of ways where our business is gonna differ, where we think we can actually build a true champion, make some significant leaps forward in intellectual property. You know, and really that's why, by the way, in our earnings call, I referenced there's a picture in our slide deck where I kinda showed the shell of the building that we built. The top portion of that building connecting into our factory is, you know, a research lab. We're creating the center of magnetics really in the world. When I mean research lab, this is not like a think tank. This is a highly focused commercial organization on making money. We will have the talent, and I think that the good thing is that this, you know, because of the balance sheet we have, because of the business, the attractive cash flow business that we have, this is not like a franchise bet. Like we, you know, if we make a bunch of mistakes in this facility, you know, hopefully we'll still be profitable with it. The good thing is that we're gonna have incredible human capital coupled with this facility, coupled with a great long-term partner in GM that has structurally understood that we need to make money in this business. The ability to communicate with them to develop further IP and take this industry a leap forward, you know, I think some incredible things are gonna come out of that. That's when we'll start to do 10X and really scale. Let's talk the Inflation Reduction Act. Uh-huh. I mean, hot topic. Clearly an opportunity for you. I mean, two questions. I see one on the app. Like, with minority Chinese SOE shareholders, are you Inflation Reduction Act compliant? You can address that one maybe. Yeah. I mean, secondly, how is it gonna help you? Well, I'm the largest shareholder of the company. We have the General Counsel of Lockheed Martin on our board. We have the former Chairman of the Joint Chiefs on our board. We trade on the NYSE, we're pretty much as American as any company gets. My guess is that we're more, you know, sort of more American employees as a percentage of our employees than, you know, 90% of the S&P or something like that. We have a 7% shareholder in Shanghai, but it's, you know, our stock trades on the New York Stock Exchange, anyone can buy our stock. Certainly and in fact, I think that actually there's part of the Inflation Reduction Act that was written specifically for us and others like us, there's two major provisions that matter. Section 45X, which is a perpetual, not, you know, there's no life, a perpetual tax credit for critical materials, operating expenses. We are very confident that Mountain Pass qualifies for that. That will be whatever our operating expenses are, take 10% of that per year in dollars, not, you know, not a deduction, in a credit back to us. That is an enormous amount of value that we will achieve, you know, right away at Mountain Pass. Of course, there's Section 48C, which, you know, Magnetic's facilities will qualify for that. We're watching that. That is a little bit more uncertain because the regulations are, you know, still being formed. There's still a kind of comment period, we don't exactly know. Who knows what other, you know, other pieces of politics might get in there, such as, you know, I know this morning they announced that for semiconductors, they were gonna require childcare provided. We, you know, we're watching that unfold to see kind of where and how that might be attractive for us. Of course, I keep going back to the reality is that anything we do, we are focused on, you know, a great risk-adjusted attractive return on capital. We have the balance sheet that we have. We, you know, we can form capital in whatever way we think is, you know, most effective for our shareholders. That is an incredible position to be in. We were talking in the last panel of, you know, a lot of the companies that are trying to build out this supply chain have to think about their businesses with offtakes, and effectively those offtakes can very often take on the nature of extremely expensive financings. We are totally agnostic. We do not need to think about financing with respect to selling our product. When we think about our product in stage 2 if it's going to stage 3, we think about it that we look in a deal as if it's going in at market price. You know, we're not gonna rob Peter to pay Paul. We're able to build out a franchise with attractive returns on capital, be totally agnostic as to how we're gonna form that capital, you know, and have two very attractive verticals growing. By the way, last thing, and I didn't mean to, but I think this is important, is having those verticals, having the balance sheet, and having the franchise that we have, I do think, and we want more of this supply chain to exist, but as many of the investors in this room know, you know, I always jokingly say, if you're building a project, go out, get three bids, add them up. That's how much it'll cost. Whatever the timeline is that you think it is, you know, double it and then start kinda thinking about it. My guess is that as we enter this boom period, and it is just the beginning, it is, you know, the second inning, is that there's going to be hopefully a lot more capital formation. I think that there's probably gonna be a number of projects, and again, this is, you know, two, three, four years, five years out, that'll end up in a similar situation as the mess that we cleaned up with great success. I think that we'll have the ability with our platform to rinse and repeat that in a number of ways. Two very quick questions for you to finish up. I mean, people think rare earths and they have visions of China and big pits in the ground and lots of dust and pollution. Yeah. I mean, how do you address that rare earths are environmentally unfriendly? Yeah. I could give you a lot of stats, but I love to just say we operate in the State of California. We are proud to operate in the State of California. Let me give you some of the important things. 95% of the water we utilize is recycled. You know, so we repurpose. We have a dry tailings process. What that means, and by the way, I believe it's approximately 3% of new mines in the world have it. There's not a single rare earth mine and processing facility in the world that has this other than us. What essentially means is that our tailings go back into dry, into a lined impoundment. If you recall, I think like a little over two years ago, there was a bunch of hoopla around Tesla Battery Day, where they talked about going into lithium mining, and they were gonna return the material to the ground exactly as it came, but for the lithium. Well, in rare earths, we do that today. That's dry tailings. I could go on and on about attributes, but suffice to say that, you know, we operate in the State of California. When the President of the United States announced the DoD grant to us about a year ago to work on heavy separation, the Governor of California joined that announcement. I think it's fair to say that, you know, we are hopefully a source of great pride in the State of California of a success story in mining that's also doing things the right way. And, just one last minute here on capital allocation. Yeah. You've got a strong balance sheet. I mean, what's your thoughts on capital allocation? What's your thoughts on, I mean, any other land packages that you have? Yeah. You might spend in the mining side? Well, we are, you know, we work for the shareholders. You know, I'm obviously the largest, but we've also, here, you know, we are an owner-operator culture. When we went public, we made sure that every employee of the company had an opportunity to be a shareholder. It didn't matter, you know, from a janitor, a maintenance technician, whomever, everyone, it thinks like an owner, we are maniacally focused on creating value. We are totally agnostic as to what form that takes, it leaves us free to change our minds because we, you know, we do not wanna do anything stupid with the money because it's our money. I think hopefully we've earned the right to say that we've been, you know, created great returns for people. If you look at sort of where we were at when we went public, what we said we would do and what we've done, we have not only created great returns, but I think we've been able to exceed expectations, on a number of levels. I think, you know, if we can continue to do that over time, it's gonna be a great result. Oh, wonderful. Thank you very much for joining me. Thank you. Thank you. Thanks, Colin.