Thanks. Good morning, everyone. Matt Summerville with D.A. Davidson, hosting a fireside chat discussion with Jim Litinsky, the chairman and CEO for MP Materials. We're just gonna kick it off. We're gonna go right into Q&A this morning. So one of the things I wanted to kind a do to level set everything for folks in the room and investors online: Can you spend a few minutes talking about the uniqueness of the Mountain Pass asset base? Can you compare and contrast your asset with other major producers of rare earth material? And at a high level, what differentiates MP from your competition, if you will? Sure, and thanks for having me, Matt. It's great to be here. Sure. I think this is the kickoff session of the conference, right? It is, indeed. It's a pleasure to be here, and hopefully everyone's coffee is kicking in now. Mountain Pass is a world-class asset. It's actually been around for about 70 years. They originally found the ore body in the 1950s. Production on the site has been around for a long time, so it's a well-known ore body, or rare earth grade. When you look at a rare earth asset, the key thing that you really need to understand... Every ore body is different. There are different types. The key ones are bastnaesite and monazite. But the key thing to really understand is the grade, the percentage of rare earths, because as I jokingly say, you know, "If you have a backyard, you have a rare earth mine." There are rare earths in every kind of rock. And so the key thing is, is can you process them economically? And so at Mountain Pass, we have a 6.5% grade. If you think about the industry, you know, outside of China, there's really just us and one other, public competitor in Australia who have, you know, what I would call world-class ore bodies. Everything else, if you hear of projects around the world, you know, ours are around 6, 6 and change%. Those are typically 1%-2% or less, and so there's a material difference in the economics. With respect to Mountain Pass, we also— You know, I typically say we operate in California, so we wear that with a badge of honor. We have a dry tailings process. You know, low single-digit percentage of sites in the world in mining and refining have a dry tailings process, and in fact, in rare earths, we're the only one. And so when you add up the fact that we're able to, you know, have a very economic ore body because of the high concentration, we process it very environmentally friendly. You know, that also adds up to us being able to be a low-cost producer to the world in this space. And then, by the way, I guess I last said and cover for China, which obviously dominates the industry, the ore bodies are typically 1%-2% as well. So really, you know, Mountain Pass of an asset with respect to rare earths. Understood. Thank you. Maybe, kind of dovetail into an operational update for the Mountain Pass asset base and your longer term views. Sure. Can you sort of provide a state of the union as to where MP is at with respect to Stage I, Stage II, and Stage III? And define along the way what each stage is responsible for to kind of, again, level-set- Yeah ... the playing field for folks. Sure. For those new to the business, there are really three key stages. When we refer to one, two, and three, the first one is concentrate. When you think about MP, but this really would go for any rare earth operation, kind of for the full stream, you know, ultimately, these materials go into, you know, high strength, or, you know, highly efficient magnetics. To get from sort of the ground to a magnet, you have to first take the ore, what we referred to in the previous question about kind of a 6%-6.5% ore body. You take that ore, you concentrate that down, and you mine it, and I think a lot of people have an impression of a mine as you sort of take rocks out of the ground and put them in a bag and ship them, and that's really not what this is. It's much closer to kind of think of it as... almost looks more of like an oil refinery. I encourage people to check it out on our website. You mine the material, you concentrate that 6% to 60%-65%, and you'll see we have, in our Stage I, we have, you know, a typical 1.5 ton tote. You'll have, you know, you can see them on our website. You know, they look like that. Those will be, call it a 60% grade or 60% rare earth, REO content, and that's our Stage I business. And so the key to be successful in this business, you must, must have a successful Stage I business, because that is the feedstock to each of the downstream pieces of the process. And so what we've demonstrated, and I think it's, you know, nine quarters in a row of north of 10,000 tons of REO. You know, the production on the site, it's been really extraordinary what our team has been able to accomplish in the last few years since we've been a public company. But getting that right, getting that REO production into Stage I, again, it's critical because that drives your cost structure, right? If you can't be in that first stage in a low-cost, effective way, then it doesn't matter how good you are at the next pieces of the puzzle. You know, so that gets you in the game. Historically, we have shipped that concentrated product to China, where it gets refined and then made into a magnet, and those magnets are sold to, you know, depending on the use case, for an EV, for Tesla or GM, or an iPhone, or a wind turbine, all the use cases, and we can kind a talk about those. Stage II, which we said on the last call, we are now refining the material, and we had, you know, quite an extensive optimization project on site to get those refining assets online, is where we'll take that concentrate of Stage I and turn it into separated rare earth product, and so that, you know, is the refining process. Then we'll move on from there, and we have in Stage III in our business, in Fort Worth, we have an initial magnetics facility under construction, where we'll take the refined product. And by the way, once you make that refined product, it really opens up the market for, you know, China and then elsewhere in Asia to sell that product. It really by not having a concentrate, you know, typically the only other rest-of-world refiners are in China. So if you have a concentrated product, you have to sell them to China. If you have a refined product, it really opens up the market. There are a variety of places to sell. So now our ability to sell to a lot more customers, you know, is opened up because we're now refining. The refined product then gets... And I'm simplifying in the Stage III to be, you know, magnetics. The refined product has to be metallized, alloyed, and then turned into a magnet. So it's really sort of a handful of stages in one that's really going from a refined REO to a magnet. We announced, this is going back to last year, we have a deal with GM that'll be the foundational customer of the facility that we're building in Fort Worth, Texas. That facility, by the way, we broke ground on that last year. It's, it's topped off. We're working on the inside, so that building structure is done. It's, you know, it's, it's enormous. There's nothing like it in the Western world. It's the first of its kind because this industry is 90+% controlled in China. That facility, as I said, it's done. It'll take us a while to-- we have to get all the equipment in. We've got a lot of equipment we've ordered. We have a lot more that we have to, you know, finalize. Once we get all of that in, we'll be making magnets, and those magnets will go, again, initially, GM Ultium platform will be the key magnetic supplier to that platform, and then we'll have other customers, you know, across the use cases, as well as other OEMs, as you know, we're not, we're not exclusive. The point is that we will complete-- Once we are shipping magnets out of Fort Worth, we will complete that whole supply chain from the, you know, from the rock for... at the mine, all the way through to the magnet that'll go to the end customer. Those are the three stages of the business. Understood. Thank you. One of the things I'm sure is pretty topical on people's minds is NdPr pricing. Yes. You know, pricing has moved from a high of around $175 a kilogram, I wanna say in February of 2022, down to $60. It's recovered a bit, I think, into the $70s as of a few days ago. I haven't been able to check it the last couple of days. Talk about what kind of dynamics are influencing that kind of pricing behavior. Is it economical for new resources to come online at these pricing levels? Just kind a talk through— Sure. the supply side and the demand side of things as part of that. Yeah, good question. Yeah, it's certainly been a surprising year from an NdPr price perspective, and I think, you know, particularly given the enormous secular change happening in our space, there are-- I think there's a lot more investor attention on the commodities that are driving electrification than, than typical commodities investors around the world, or, or, or even if you think about oil or any, any other commodities. You have a lot of people who've-- who are looking at this space and are, are sorta somewhat confused, and there's a key concept that I think will help people. Before... I, I wanna give this background, and then I'll get into- Sure ... the dynamics of NdPr. But we shouldn't forget that commodities are spot markets, right? They're supply and demand on spot, and so typically you can have, in something as, you know, mature as oil, you can certainly have a long-dated forward curve that can reflect some aspects of longer-dated supply and demand, although there are a lot of moving parts to that. In our space, which, of course, there's no, you know, sort of real forward curve that marks the fact that you have enormous compounding demand, where you can sort of see in all obviousness that three to five years from now, the amount of demand for our materials is really spiking, that really doesn't get reflected well in the markets today, because today it's a spot, you know, supply-demand market. So I think a lot of times people do get confused by the short-term volatility because they say: Wait a second, you know, electric vehicles are growing. Why wouldn't the price of NdPr today discount everything it knows through 2032? And that's just not typically how commodities markets work. That said, it also makes it an incredible opportunity as an investor because if you have, you know, a time horizon that goes beyond sort of the near-term supply and demand, there's opportunity and a lot of financial leverage to kind of to understand that dynamic. When we look at our space today, you know, as you said, Matt, NdPr last year was around $175 at the peak, and then now we... You know, earlier this year, we pulled all the way into the 60s, and now we're in the low 70s, and it's, you know, for most of this year, it's been somewhat stable. And, you know, hopefully, who knows? That feels like some kind of bottom before sort of the next significant upcycle. But I think the drivers that we see, and again, with commodities, you know, as I always say, in the short term, very hard to predict prices. I have no clue what they're gonna do tomorrow or the next couple of months. Longer term, I have views, and we can. I think you have my book. But I think in the short term, the key driver that we see, the drivers are, there's really actually both supply drivers and demand drivers. So on the, you know, on the demand side, what I think some people gotta do the math here, about 75% of NdPr demand are, you know, is still sort of legacy industry stuff. So we're talking about disk drives, you know, HVAC equipment, GDP growth kind of stuff, or even there's, you know, stuff that controls the windows in ICE vehicles. So there's historical GDP stuff. That's 75% of it. 25% of it is electric mobility transport, you know, electrification, the EVs that we're talking about. That piece is growing 30%, you know, sort of as far as the eye can see, and we expect that to continue. But if you think about it, 30% growth, 20, 30% growth, pick your number, if it's, you know, on 25%-... Coupled with a 5%-10% pullback on 75% is going to lead to sort of actually a decline or no grow, you know. China has been significantly challenged all year. I mean, I think that's apparent, you know, across the commodity landscape and in, in many other areas. I think we've actually seen those impacts in our space, where just the challenge that has happened macroeconomically in China, nothing related to rare earths, has pulled back demand a bit on an industrial standpoint, and I think that's been some impact. Additionally, the border between China and Myanmar had been closed for a couple of years during COVID. You know, Myanmar, unfortunately, you know, is controlled by a military junta that does allow a lot of what I would call illegal, extremely environmentally destructive production, where they literally will take rare earth material on the side of a mountain. I'm simplifying, but pour acid on it, they'll get something they can send into China, and then the acid just kind a goes down, unfortunately, into a river, and there's been just disasters. There's been lots of articles about this, but disastrous consequences, you know, almost equivalent to, like, a blood diamonds concept, where it's just—I think, I think more attention needs to be on that. But that will always be sort of a, you know, I, I wish it weren't the case, but that, that appears to always be sort of some element of supply that comes into the market in China, and that that supply had built up, and excuse me. That supply had built up. Wrong pipe, and has now, had now came back in this year. Sorry. Okay, go ahead. Take your time. So I just want to put a finer point on supply side risk- Mm. As you look out over the next few years. Are there new resources, newer resources-... that could potentially come online? Where do you see incremental sources of supply, if any? Again, I'm just trying to put a finer point on supply side risk here. Yeah. At these prices, it's really challenging. We're talking about, you know, at $70 NdPr. You know, my estimate for break-even NdPr incentivization of production is around $120. I think there certainly will come a point where it's economic, but we are so far away from that. You really—when you think about if you had all of the human capital, all of the financial capital, and the ore body, you're talking about billions of dollars, years to get online. Even at these prices, we believe the Chinese industry loses money. Really, you know, I don't know what the exact break-even number is, but it's certainly significantly higher than it is today. Okay. I want to spend a couple of minutes just talking a little bit more about Stage II. With respect to Stage II, you have quite a bit of optionality in terms of what you do with the material. Consume it internally in your Stage III, as you touched on, which is small at first, provide it to a tolling partner in Vietnam, sell it via Sumitomo, sell it to magnet makers directly, or sell it into China, is kind of all the different things I think about. What informs your decision as to the paths, paths chosen for that Stage II material and how you best optimize the economics for shareholders on that? Sure. Well, ultimately, it's optimization of economics. You know, going into China, historically, we're at a significant disadvantage, because there's a VAT on the product. But once, now that we have a Stage II product, that's opened up the market to Japanese producers, Vietnamese producers, and so ultimately, you saw, you referred to, we have a deal with Sumitomo, so we'll be able. That will help us sell into Japanese industry. The good news is that there's. You know, this is not a huge industry of players where there's thousands of customers to get to know. There are a handful of producers, and so, you know, we'll work amongst those to figure out the value-maximizing position. For us, you know, we expect to supply all of them, or many of them, and we'll just make the economic decision to do so. We also announced, if you go back a number of months, we have a deal now for metal capacity in Vietnam. So we will be able to take refined material from Mountain Pass, metalize that, and that will open up us to be able to sell to additional customers. So now that we're refining material, there's really, there's a, you know, a broader array of customers that we'll be able to go to. Will this eventually lead to virtually none of your Stage II output going into China? Is that sort of an end goal of the company? Well, I think today- Goal might be the wrong word. Yeah. No, wait, say that again. I said goal might be the wrong word, but you- No. Well, we've made clear from the beginning that our, you know, our goal was to restore the full rare earth supply chain to the USA. That's been our goal. I think we've, you know, There were a lot of people who doubted that we would get to the refining step, let alone magnetics. We're now refining, so, you know, we've brought that to the USA. We, the Fort Worth facility will show that we can complete that supply chain. But then again, I think it is a global market. We'll, you know, we'll want to, excuse me, sell it all and maximize value. ... Maybe just, just a quick update on where you are with respect to the Stage II ramp, how close you are to hitting- Give me a second. My throat is- Sure. Excuse me one second. No problem. Excuse me. A really sore throat. I do not have COVID, though, so No. Tested, so don't worry, everyone. No worries. Thank you. I lost my voice last night. No worries. Go ahead. Just to refresh- Yeah ... I just wanna talk about where you're at with the Stage II ramp, when you expect to hit, you know, kind of run rate production, and how the Stage III is- Yeah ... is set to capacitize. So, well, yeah, the great news, and we talked about this on the call, is that all of the circuits that are required for Stage II run rate production are now operating in Mountain Pass. To go from sort of refining to run rate, the key thing is you wanna do it economically, and you wanna do it consistently. At any one point in time, you can have different flow-throughs of different circuits, and so the key in the ramp-up is to get all of that operating smoothly. We're working through, obviously, the, you know, kinks in a variety of the circuits to kind a get that process going, and that will take some time, but we-- I think the key news that we broke on the last call, which is a remarkable thing, is that, as we look at everything that's been built, you know, we feel very good about the chemistry. There's nothing we see that... You know, we didn't screw anything up from that standpoint, so that's good to go, you know, for a run rate basis. And then, for the circuits that we built also, everything that we have is capable of going run rate, and now it's a question of fixing the challenges to get that ramp in any kind of industrial process, to get that up and going. There's a number of issues always that you're working through. You know, you kind of, you know, fix one thing here, and another thing breaks here, and all that, and we're talking about a multi-billion dollar refining facility. Things are looking really good, and the last thing I would say on that: Do not expect-- and I think 'cause we get a lot of questions, you know, from people from a modeling standpoint, do not expect this to be a linear process. You'll see improvement, but you may see, you know, you may see step function changes, so it will not be a curve where it's sort of like you do 10 this month, 20, then 30, then 40. You know, you could see certain amounts, and then all of a sudden, a step function jump up, and that's a function of at any one point, you could be working on the flow-through of a specific circuit, and then that comes online, and then boom- Sure ... you know, you have a step function change. The other key, the last thing again, I wanna stress enough as people think about this, is that the key is to get it all done economically, right? Because if you, if you-- We have such an advantage with our Stage I business, where you look, and we are a low-cost producer of concentrate to the world, that we wanna maintain that through the stages of the process. The tinkering that we do now is not just sort of, "Get there as quickly as you can." It's really just getting there, but also doing it thoughtfully, so that we can, you know... Obviously, the name of the game is to produce at the lowest cost we can. Understood. Maybe spend a minute talking about go-forward customer arrangements. I would imagine auto OEMs, wind turbine OEMs, the U.S. Department of Defense, potentially others, would like to effectively tie down their respective rare earth supply chains. We see more of that activity with lithium and EV battery. Why aren't we seeing more of that activity in the rare earth supply chain today? Yeah. 'Cause that seemingly to me is gonna be a bigger, more problematic choke point for them. Certainly. Well, with respect to the, you know, the lithium and other space, remember that that is a... You know, if you take a typical EV, you may have $10,000-$15,000 of battery materials and cost, versus a couple hundred bucks for a rare earth magnet. The reality is, in the scheme of cost impact, it's not as high, although if you mess up the magnet part, it can be as high. It's critical, but it's not as high from a, "Hey, let's get this production online." In the rare earth space, you know, unfortunately for most, I think fortunately for us, there's also just not as many options, right? It's not as diverse. Lithium is somewhat ubiquitous. You know, copper, cobalt, you know, some of these others, there are other sources, and so there is a lot more positioning, structuring, things that people can do. With respect to the rare earth space, you really have an industry that is completely dominated in China, and then you have us, and then, you know, Lynas, the Australian company, and so there's really just two companies outside of China. And so even if... And I really stress this point because I think it sometimes gets lost. Even if we had all the rare earth in the world in the U.S., we'd still be sending it to China to be made into magnets. And so I think the challenge is, until we can really demonstrate that we can have the full supply chain on an economic basis, it's hard to plan around anything, because you know you're ultimately going through China anyway. And so that, I think, is what's so exciting for us as a company, is that because we can show that this, you know, that this can be done, we've obviously shown in refining to date, you know, it allows us to really open up and broaden this supply chain. And I do think as the rest of world, you know, sort of the non-China supply chain matures, you will see more of that. You will see a lot more of that. You know, certainly for us, you know, we, we have that deal with GM, and, and it's you know, this is not just a small deal. This is a large foundational deal. It's the, you know, the vast majority of the output of that facility, of the Fort Worth facility, and so that is this is an, an enormous deal. And, you know, one of the things that I've said to investors, you know, since we've been public... You know, if you, if you go back to when we went public in 2020, we referred to magnetics as sort of a 2025+ event. You know, there's a lot, there's a lot that needs to be done to execute. You know, fast-forward to today, it's now 2023. We've got a facility built, a deal with GM. You know, the amount of progress that we've made in a short time is extraordinary. If I had wanted to go out and announce, you know, "Hey, we're gonna do 10 times the size of what we chose to build," you know, in the environment that we're in, we probably could've done that. The reality is, is that when you build, and especially when you go into a new space, you're gonna make mistakes. You're gonna not do things as efficiently as you'd like, and so it's very important to us to execute. And, you know, execution, execution, execution, and so, you know, we wanted to sorta hit base hits before we just go for a home run. And so for us, it's a function of just sort of making sure... I think we're moving, again, extraordinarily fast, but we wanna make sure we can execute what we... you know, rather than kind a reaching for all that could be out there, we've chosen to just kind of, you know, stay more conservative on that front. Because ultimately, by the way, we are, you know, we're focused on return on capital, right? I'm the largest shareholder of the company, and, you know, we wanna make sure that if we're gonna make mistakes early in the process, we'll do it on, you know, an initial facility, not on 10 times the, the, the amount. Got it. I think we just have about two or three more minutes, but I wanna touch on U.S. government legislative mandates, Inflation Reduction Act, tax incentives. Can you just provide a bit of a legislative overview- Sure ... in terms of, you know, what requirements will be borne by OEMs in terms of source materials for drivetrains, et cetera, and the kind of positioning- Yeah, okay. of the company? So there are two major things with respect to that. There's 45X, which is a 10% tax credit for and Mountain Pass will be getting that. So whatever the cost structure is to produce material at Mountain Pass, you know, just pick a number, run it through your model. If it's $100 million, $10 million is a credit back. That, obviously, we'll enjoy. 48C is 30% of cost, CapEx coming back to you. That is, there's an amount set for that, or I think it's around $10 billion, and a certain amount of that is allocated for certain areas, we'll say. And there'll be a lot of competition for that. Certainly, the rare earth magnetics space is one of the designated areas that is eligible for that, and so, you know, we think that's an exciting opportunity. We know that that's a competitive area, but that could be, you know, a big amount of capital to the extent that we are able to get that as well. Okay. And then I wanted to at least spend a minute to acknowledge the balance sheet. The company has very strong balance sheet with net cash. How do you think about the near-term and longer-term optimal capital structure for the company, and how capital may be deployed looking out over the next few years outside of growth-related CapEx? Yeah. Well, if you go back to sort of the beginning of the public life of the company, I've always said that I want the leverage in the commodity, not on the balance sheet. And we recognize we're, you know, capital structure really matters. You need to have a capital structure commensurate for the business that you're in. We, I think, for all the reasons we've discussed on the stage here today, going from, you know, with the volatility and the price of the commodity, you can have huge swings in the cash flow of the business. The good news is, even at these prices where we're pretty sure a significant chunk of Chinese industry is losing money, we're making money. We're not making as much as we'd like, but we're making money. That is incredible, right? And that is a great thing for sort of the long-term value of the business to show that, you know, at these very stressed levels in pricing, we can, you know, be successful. That said, it is still a volatile business. We're aware of that. And, you know, I think sometimes there's a tendency to, you know, signal with stock buybacks as to rather than just create value. And so you have people who be like, "Yeah, we'll go buy back X," and, you know, maybe it makes it, it's a rounding error of difference on the value. We really think about the world in an expected value way, and so it's... You know, if there's an 80% chance a buyback could create some value, but there's a 3% chance that prices are gonna stay low for a couple of years, and it's not the right thing to do in the short term, you know, that you have to consider those realities. And, you know, we have an owner/operator culture. I'm the largest shareholder, as I, you know, said previously. And so what we really think about when it comes to capital allocation is where we can really move the needle, right? It's not, you know, sort of little small signals. So when it comes to that kind of stuff, you know, we, as I like to say, we won't do something small to just sort of feed a signal or something like that. To the extent that we do something, we wanna make sure that it is the right long-term thing to do for long-term shareholders of the business. But to your point, we are, you know, we look at the value of the company today, and if you just look at the replacement costs of the assets and the scale of the opportunity, you know, it doesn't foot, right? But, you know, it's a very volatile space, as we said, and the volatility that we've seen, you know, downwards, I think, you know, can just as easily snap back upwards. So, you know, it's frustrating out there in the short term, but we just wanna make sure that we can continue to execute, have the balance sheet to make it through any volatility that we see, and then, you know, the scale of snapbacks in this space are, you know, pretty extraordinary. Perfect. Well, I think that's a good spot to wrap up. Thank you. I really appreciate it, Jim. Thank you for your time. Appreciate it.