Good morning, and welcome to J.P. Morgan's Natural Resources Conference. My name is Bill Peterson, U.S. Metals and Mining analyst. I'm really pleased to start off with MP Materials. We have Ryan Corbett, the CFO, with us here this morning. Thanks for supporting us. MP has been at our conference as long as I've been covering the space, and it's never a dull moment in the space. We're going to walk through a number of things on this call. This is actually being webcasted, so if there are any questions, make sure to use the microphone. Ryan, to start off, I think most people are aware of MP, but maybe you can speak briefly about the evolution and the vertically integrated magnet business model, and maybe as an aside, we hosted Jim last year. This was before the deal. Right Announcements: lots has changed in that one-year timeframe. No question. Thank you, Bill, for having us. Happy to be here again. For those of you that aren't familiar with MP Materials, we're the second-largest producer of rare earth products globally. We operate the Mountain Pass rare earth mining and refining facility in Mountain Pass, California, which is one of the world's preeminent rare earth ore bodies. The only fully co-located mining and refining facility in the world. We also are in the midst of transitioning the business to be a fully vertically integrated business. When we went public in 2020, we talked about bringing the magnetics opportunity online, and starting to think about it in 2025. Here we are in 2026, on the verge of commercial deliveries to our first foundational customer, General Motors. That will be out of our Independence facility, which is a fully integrated metal flake magnet, finished magnet manufacturing facility in Fort Worth, Texas. That's our first magnet plant. That was initially designed for 1,000 tons of capacity and will be expanded to 3,000 tons. To your point a moment ago, Bill, one of the more exciting initiatives for us was in July of last year, we announced a transformational public-private partnership with the Department of War. The department is now our largest shareholder and our business partner in what we call 10X, which is our much larger -scale magnet facility that we just broke ground on in Northlake, Texas, just several miles away from Independence, where we will take our magnet capacity from that initial 1,000 tons that we built out for GM to 10,000 tons of ultimate finished magnet capacity. Great. We're going to dive into a lot of these things, but we just got news yesterday that we saw China's export restrictions. First of all, these export restrictions have been around now for some time. Sure MP was named and included on the list, I think, yesterday. I guess how should we think about the implications of this? Is the damage done at this stage? Maybe, and kind of importantly, how do these export restrictions at all impact the company, if at all— Sure ...either directly or indirectly? Look, this is something that, in general, is not a huge shock to us. Given what I mentioned a moment ago about having the Department of War as our largest shareholder, it's not a tremendous shock that the Chinese may view us as in the defense supply chain. We've spent many, many years building out a robust supply chain. I think you see a lot of newcomers to the space. We've been doing this for many, many years. We are a scaled producer. We've built out a secure supply chain. Particularly for the magnetic side, you think about the fact that we've been at this since 2020, building up the entirety of our value chain ex-China. That's one of the things that I think is pretty interesting about this announcement and the developments in the market writ large is what good is a Western magnet supply chain if it's not decoupled from the strategic adversary here in the space, which is China, who dominates the space today? I think that this announcement, while we don't see, at this time, any immediate impact to our business given how we've planned, I think it underscores the strategic value of what we're building. It's one of the things that we spend a lot of time thinking about as we see a lot of these moves in the space. Jim mentioned on our last call, our CEO, Jim Litinsky, really the binding constraint on building out the supply chain, we believe, is scaled NdPr oxide production. There are two scaled producers outside of China right now, ourselves and Lynas, a lot of the moves that you're seeing I think underscore the fact that that is the case, that NdPr is the binding constraint. It's not as easy as saying shovel-ready and putting a shovel in the ground. It takes many, many, many years and billions of dollars. I think that the strategic value of the integrated supply chain that we can bring to customers at this point is so critical and, frankly, underscored by announcements, moves you see in the space, et cetera. Well, let's stick with the announcements. There's been just a plethora of announcements of U.S. magnet projects. How should investors think about the viability of these as well as the competitive landscape? Maybe just higher level, even this morning we saw an announcement with Energy Fuels and VAC. Mm-hmm We've seen announcements with USA Rare Earth and a lot of their M&A activities. How should we think about the broader landscape? I think what you need to think about here, in general, when you look across the space, fundamentally the demand profile is growing so significantly that there will be many winners in the space. What I think you need to look at is demonstrated capability at scale. You need to look at balance sheets, you need to look at management teams, and you need to look at fundamental capabilities, right? I think there's a lot of discussion of, Okay, we'll do a mine over here. We'll do a magnet plant over here. There are a lot of steps in between. Sub-steps of the steps that I think, frankly, some of these folks that are getting into the business are just learning that they're going to need to take. You can have all the metal making you want. If you don't have fluorination capability, you can't feed it unless you're getting supply from China. This is a complex multi-step process to go from something in the ground to a magnet of the quality that's required for an electric vehicle that meets the quality and repeatability standards that are required for that industry. Same with aerospace, et cetera. Certainly the demand growth in the space will necessitate incremental capacity. To my point a moment ago, if you just break down the space right now and look at the capacity of ex-China NdPr to be produced and the capacity of ex-China magnet making, where the vast majority to date of actual in-process magnet makers outside of China are the Japanese and ourselves, that market is balanced at the moment. It's roughly 30,000 tons, let's say, of magnet capacity and 15,000 tons of ex-China NdPr capacity, and that is sort of the rule of thumb. Divide magnets by two to get to NdPr oxide. We've now seen announced another 30,000 tons of magnet capacity ex-China announced I don't know where that NdPr is coming from. The view is that that number will go to 160,000 tons. You just think about the scale of investment and time, and intellectual property that is required to support something of this scale of Mountain Pass, which you've been to. Think about the amount of time it took Lynas to go from something in the ground to a refined product. I think it was seven plus years, and they're a proven operator. I fundamentally believe that the binding constraint here is going to be provable, demonstrable, scaled access to feedstock to be able to power that downstream part of the business. That's without getting into the technology of the downstream, where we've been investing significantly since 2021. We brought our first employee on in that business since 2021. We sort of joke they're the best-funded startup in the space. It's a benefit of having the umbrella of the vertically integrated platform. What that has brought to bear is grain boundary diffusion technology, know-how, et cetera, on the magnet -making side; and, of course, the Chinese have been doing this and dominating the market for decades. We are not saying we are surpassing them tomorrow. I do think that today we are the leading ex-China magnet manufacturer in the Western world, and give us a few years and we will be absolutely on the cutting edge. We can dive into the various parts of the value chain from upstream to downstream. I wanted to talk a little bit about policy and government support. The government has provided a lot of support to the industry, and MP, you mentioned it before. Now the bipartisan House Select Committee on China— Sure ...has introduced a bill for additional magnet metal and production tax credits. I guess, what's the importance of this type of legislation, and what could it mean for MP specifically? Sure. Yeah, I think that certainly there has been a renewed focus, certainly since what we saw with the initial trade restrictions from China in April, which effectively shut down exports of magnets to the United States from China. It took several weeks before we saw the first automotive plant shut down because they didn't have access to magnets. I think that still, despite all the focus on space today, there still is not a full understanding and grasp by the general public of just how critical these parts are to, you name it, vehicles, AI, and all of these growth engines of the economy. I think that what we saw with our public-private partnership with the Department of War really catalyzed general formation of capital broadly in the space, which we expected would happen and which we think is a great thing. The uniqueness of our deal with the Department of War is a true alignment of incentives, and bringing to bear a floor price on our commodities and contracted cash flow across our businesses allows us to invest in this with confidence. We know what our cash flow looks like at a minimum on the other end of building a 10,000-ton magnet plant. That's not something that you jump into without real visibility if you're being a responsible steward of capital. That gave us a tremendous advantage to continue to invest in technology and people. By the time that is done, I think we'll be in incredible shape. You look at the bipartisan bill that was introduced, I think it gets even further to what is required from an industrial capacity perspective to continue to support this industry and really decouple in a way that serves downstream industry needs, so downstream of magnets, right. One of the interesting parts of that bill is a tax credit for electric motor manufacturers that are consuming domestically produced magnets. Unquestionably, that's great for us, right. That's an opportunity for our customers to look out and see if we invest in capacity to take MP magnets into our motors in the United States instead of somewhere else in the world. It drives incremental economics for them, which, of course, ultimately will accrue across the supply chain. I think that the initiatives from government, it's been a whole of government approach. I think some elements of it are smarter and longer -lasting than others, you see the importance of this demonstrated by the actions that are being taken across executive, legislative, etc. Yeah. You just talked about the arrangement with the Department of War. Maybe just walk through the floor price on the NdPr side, the 10X side, and the magnet side and what that means. Sure. One of the things that I get asked a lot about is what can drive upside to the— Sure ...to the numbers. Yep. What are the most likely scenarios, or how do you view the potential upside? Yeah, look, I think that when we announced the deal with the Department of War in July, that was actually before we had announced a very exciting arrangement with Apple, where we'll be providing the magnet side of Independence. It was before we announced Apple as our foundational customer for the recycling business, which we're building co-located with the refining facility at Mountain Pass. what we attempted to do is give a real view of what we look at as floor earnings power pro forma for getting these operations online and scaled, and that is what we view it as. I don't think anyone will be celebrating if that is the ultimate outcome. I think we view that as the bare minimum over time. The critical thing with the Department of War arrangements is we are the largest producer of NdPr oxide in the Western world, say, for Lynas, and catching up pretty quickly. Our target is to get to 6,000 tons on a run rate basis exiting this year. What the price floor brought for us is confidence and reinvestment economics to be able to support the broader build-out of the business. The way it functions is we continue to sell our product, as we always have. To the extent market prices are below $110 per kilogram, we have a top-up payment from the Department of War to the materials segment of the business. What you've seen since that was announced is the beginning of a real bifurcation in pricing. One of the things that we've pointed out for a long time is that the mercantilist policies in China and the focus on this industry as highly strategic have led them to subsidize this space with low pricing for a very long time. When we announced the deal, I believe NdPr market pricing was in the $50s. It's now over $100. It's hovered pretty close to $110, and it got there pretty quickly after we announced that transaction. Since that transaction, you've also seen the only other scaled producer in Lynas have a similar arrangement with the same price floor with the Japanese, where they committed the vast majority of their offtake to the Japanese market. I think it speaks to the fact that one of the critical missing pieces here is being able to compete when you're looking at a capitalist structure where you need to earn market returns and competing with a couple of hands tied behind your back versus the Chinese. I think the incentive for them to operate the way that they've operated in the past is greatly reduced when essentially 100% of scaled production outside of the country is now being guaranteed a certain floor price. I think that that's critical. Yeah. On your point on 10X, what we structured with the Department of War is a guaranteed minimum EBITDA of that facility when we bring the capacity online. We're targeting getting initial capacity starting at the end of 2028 and scaling into that. That gives us a view of our minimum economics in that facility. We also indicated the opportunity for significant upside to that earnings power within the four walls of 10X. Our minimum EBITDA is $140 million. I think if you translate the economics that we see in existing and various potential deals that we're seeing at Independence, which we're seeing potentially for 10X at this point, I think the earnings power in the four walls of that facility is much closer to $400 million. We have a structure where we share that upside with the Department of War. Certainly, for us, that $140 million could easily double once we start to commercially syndicate that capacity out to commercial customers. Maybe on this last point, on the upside from the magnet side, what types of customers do you envision working with to drive that upside? The demand has become increasingly broad-based. I think that when you look at the scenario that scaled manufacturers faced in April, it was a food fight, right? It was, How do I keep my plants operating when the vast majority of magnet consumption is coming from imports from China? That has translated from sort of a short-term, I just need to keep the lights on, to, I need a long-term strategy to ensure that never happens again. If you look at it, automotive certainly is a very exciting space. That's where we have our initial foundational customer in General Motors, and it's beyond just electric vehicles, right? It's hybrids. It's internal combustion. 20% of the market plus is automotive today. I think where we're seeing a tremendous amount of growth is consumer electronics. Apple is our second customer at Independence, and certainly, all consumer electronics have a pretty significant amount of magnet content. Then you look at everything that's happened in the world, frankly, since then. The future of warfare is drones and robotics. You're seeing physical AI starting to really take shape. Fundamentally, permanent magnets, rare -earth permanent magnets, are the absolute essential piece of dexterity for a humanoid robot. You cannot get the degrees of freedom in a hand or in any of the actuators that are necessary from a torque density and size perspective without rare -earth permanent magnets. So, it's all of those physical manifestations of AI, and then the traditional sense of AI that people are thinking about right now, which is data center build-out. 75% of memory that is going into AI data centers right now is hard disk drives. Hard disk drives are significant magnet consumers. That's a really exciting opportunity set for us. Drones, all of these really exciting growth industries rely on a secure supply of rare -earth permanent magnets. So, I think that we're entering an era where, in 2021, everyone was very excited about electric vehicles and what that meant for demand over time. That trend obviously looked different than some people were expecting in 2021, but I actually think the ultimate numbers will end up being quite similar, if not eventually better, because what we're seeing is not just EVs and ICE, and eventually they meet and overtake. It's that every ICE platform now is being hybridized and electrified, and you have no alternative often in a hybrid powertrain. There are a variety of motor technologies you can use in a full BEV. Permanent magnet motors have a 90% market share. For a hybrid, as an example, you tend to find the electric powertrain embedded in the transmission. You cannot fit anything other than the more compact size that you get from a rare earth permanent magnet motor. There's a tremendous number of growth vectors that we're focused on. I'm going to come back to magnets in a second, but you mentioned that you feel you're on track to reach run rate levels of your NdPr production later this year. Where do you see upside to this? You talked about even the needs just even for your magnet's side. Sure. Is this through efficiency gains or other incremental investments? How should we think about the upside to your run rate? Well, in general, we're a company that wants to execute first and then provide forward guidance later. Our focus right now is getting to that run rate before we start talking about expansion. However, what I would say is, what is often not captured when people talk about the ultimate output of Mountain Pass is the integrated recycling line that we're building. Again, talking about the benefits of scale and integration, we have the ability to bring scaled recycling online, leveraging, as an example, the installed base of assets at Mountain Pass. We have our own power plant, we have our own water treatment plant. We have a tremendous amount of, let's call it, base load primary production that allows us to bring in a wide range of feedstock without upsetting the circuits, right? We have such a large base under us of primary material that our ability to bring in other recycled feedstock is second to none, given that opportunity set. Recycling will be additive, you can imagine that we've talked about the fact that Apple is the vast majority of the expansion from a magnet perspective at Independence. We intend to feed the Apple magnets with recycled feedstock. You can kind of do the math. There will be significant upside from a recycling perspective at Mountain Pass as well. Yeah. Coming back to magnets, another question we get a lot is related to your qualification process at your lead customer, which is GM Sure. Maybe you can speak to that, what needs to be solved or how that's going, and also the cadence of magnet production, that ramp thereafter. Sure. I think the important thing for us is that we have already produced magnets to the required specifications, quality specifications, etc., both on the new product introduction line, which you've seen as sort of a factory within a factory to prove out our technology and our capabilities. The phase that we're in right now is qualifying the much larger -scale operation, the full commercial operation, and every piece of equipment. I think what's probably underappreciated about the beauty of being in the automotive business is it's not just, Can you deliver me a magnet on spec? It's, exactly how did you make it? We are in a process right now, the Production Part Approval Process, or PPAP, or approval process, excuse me, that is not just about can we deliver magnets. I think we've demonstrated that we can deliver magnets. It's really getting into the nitty-gritty of taking stopwatches and observing the cycle time at every piece of equipment. Really understanding the quality characteristics and our ability to identify quality at each stage. Of course, they have their own needs on their side of motor testing, et cetera, including regulatory testing that's required and that has certain timelines for them to be able to put our magnets into a vehicle, run it through regulatory testing, and things like that. I think that where we are at right now, we've talked about the second half, starting initial deliveries for revenue on the magnet side. A lot of that is in our control, a lot of it is not, given the timelines of the customer, and ultimately our goal is to support the customer. It's very clear that we are well on our way, and we're excited to start delivering at commercial scale for them. From a cadence perspective, we had always planned for a very modest set of growth quarter-over-quarter once we get into production. This is not, you know, anyone that tells you. we've heard some people say, Oh, you just turn it on. For an automotive customer, that's not how it works. You go through a bunch of processes to prove out your run at rate capabilities, and you add to those as you go. It will be a modest increment over time. Certainly, given the structure of that contract and our capabilities that we've proven to ourselves and the vast majority that we've proven to the customer, we're very excited about where we are at this point. Another question we get is around MP's heavy strategies. Some of this relates to M&A we've seen in the space. You nonetheless talked about limiting even the amount of heavies you even need, and then you talked about recycling— Sure ...as well as even maybe stockpiling. I guess the question is how do you see your heavy strategy evolving? You're building a separation facility. Sure. Do you need to buy something, or do you feel you have ample feedstock? How should we think about the heavy strategy? I think that the way that we've structured our business, with a focus on contracted cash flows at each piece, that methodology found its way to how we contract for critical raw materials, right? If you think about it, Independence and 10X are the two magnet facilities. Independently, we will cover all of our heavy earth needs from the Mountain Pass ore body and from the refinery that we're bringing online as we speak. For 10X, we have the Department of War as the contractor off-take party and have them with an agreement to provide their best efforts to source with us for third-party feedstock. That feeds into the strategy of building a very robust and flexible refining facility that can bring in not just the Mountain Pass ore and separate the Mountain Pass ore into the heavy rares for magnets but also third-party feedstocks. We're in the market acquiring third-party feedstock now. We're working closely with our government partners to bring other feedstocks to bear. From our perspective, our strategy is such that we are very well protected and have clear pathways to ensure that we've got what we need. I think, to your point that you started with, from a technology perspective, there are folks in the market right now that are talking about, Oh, you need heavies, but meanwhile, they don't have grain boundary diffusion technology, which means the quantity of heavies that you need for any unit of magnet could be two to three times what you otherwise would get if you had that technology. I think the amazing thing to think about is when we sort of initially scoped out the parts that we'd be making for our foundational customer, we had settled on a recipe, if you will, with a heavy rare earth content, and since we have continued to develop our process and our technology from that 2021 timeframe to today, we've reduced the heavy rare earth content that we've taken into production that we're using right now on a commercial scale, we've reduced it by 60%. You hear and see headlines all the time about thrifting and rare -earth thrifting. What that really is is heavy rare -earth thrifting. There really is not a great way or any way to replace the strength that you get from an NdFeB magnet by getting rid of NdPr. This sort of circles back to our fundamental view of NdPr as the binding constraint. We do not see heavies as a binding constraint. We see access to scaled NdPr as the driver for who will be successful in this space. Just want to see, we're getting close to the end, just want to see if anyone has any questions. If you do, we do have a microphone. Just wait a second here. Thank you. Can you talk, you just mentioned that for the magnet part, you have a guaranteed EBITDA of $140 million. Mm-hmm. You see a lot of upside for that. Yes. Can you talk a little bit about how you get the upside there? How to get to the upside? Sure. The way that this was structured was we faced the Department of War as the initial 100% offtake party. If we had never signed a single contract for a commercial customer, we would get that baseline EBITDA inflated at 2% a year starting in July of last year. The reality is that the way this was structured was to align incentives between us and the department on going out both to the defense industrial base, which is technically, while of course it's defense -oriented, a commercial customer, right? We'd face a prime or a tiered supplier of a prime. In addition to broadly commercial customers, automotive, hard disk, consumer electronics, et cetera, all of those contracts will be done on a purely arm's -length commercial basis. The economics that we see as viable, from a pricing perspective, get you an earnings profile that is well in excess of that minimum EBITDA. As we go out and commercially syndicate these volumes, that's how we expect to unlock the incremental earnings power of that facility. The beauty of this structure, though, is we are in no rush. We do not need to go sign contracts now to put out a press release. We do not need to go sign contracts now to go get project finance. The way we've structured the balance sheet and the way we've structured these agreements is we are in construction right now with a robust balance sheet and visibility on cash flow, and we can take our time. Frankly, all of the moves that we've seen in the space, I think, play directly into our strategy of just showing how strategically valuable the access to true scale and demonstrated access to raw materials are. It's one thing to say, I've got a shovel-ready project that may be ready in six years, but if you contract to get a magnet out of 10X starting in 2028, you can go see where the NdPr oxide is that's going to be needed to make that. That's a tremendous advantage that nobody else has in the space. Well, we have reached our 30 minutes. We probably could've gone for another 30 minutes, but we covered a lot of topics. Ryan, I look forward to following all the projects you have going on, and thanks for your time this morning and all the insights you shared. Thank you. Appreciate the time. Thanks, Bill.