TLDR
- USAR drops 8.78% despite securing access to a $1.6B CHIPS funding deal today.
- USA Rare Earth gains federal backing, yet shares slide after a sharp early spike.
- CHIPS deal lifts USAR funding capacity, but stock retreats to the $28 level.
- Round Top project gains support while USAR stock erases early market strength.
- USAR funding package reaches $3.5B, yet market reaction turns negative fast.
USA Rare Earth (USAR) shares slipped after an early jump, even as the company secured major federal backing. USAR traded at $28.00, down $2.70, after touching nearly $32.50 during the session. The 8.78% decline showed sharp profit-taking after the initial reaction to the funding news.
USA Rare Earth Inc, USAR
The stock move came after USA Rare Earth announced definitive agreements with the US Department of Commerce. The deal gives the company access to up to $1.6 billion under the CHIPS Program. However, the funding depends on project milestones and other conditions in the agreements.
The package includes up to $277 million in federal funding and $1.3 billion in senior secured loan capacity. USA Rare Earth also agreed to issue 16.1 million shares to the Department of Commerce. In addition, the government will receive about 17.6 million warrants under the transaction.
Funding Deal Supports Rare Earth Expansion
USA Rare Earth plans to use the structure to expand its mine-to-magnet supply chain. The company aims to develop mining, processing, metal production, alloy making, and magnet manufacturing assets. Therefore, the agreement supports a wider domestic push around critical minerals and permanent magnets.
The company had already closed a $1.5 billion private capital raise in January 2026. It also signed strategic customer agreements and advanced the Round Top project in Texas. Together with earlier raises, the new package lifts committed capital to about $3.5 billion.
Round Top, located in Hudspeth County, Texas, remains central to the company’s growth plan. USA Rare Earth targets commercial production at the deposit in 2028. The site includes heavy rare earths and critical minerals needed across several advanced manufacturing sectors.
Round Top And Magnet Capacity Take Focus
The agreements support processing and separation from the Round Top project. USA Rare Earth listed dysprosium, terbium, yttrium, gadolinium, gallium, zirconium and other minerals in the plan. These materials serve semiconductor, defense, aerospace, data center, energy, mobility, and healthcare supply chains.
The company also plans to reshore heavy rare earth metal and alloy-making capacity through Less Common Metals. USA Rare Earth targets 10,000 tons per year of metal, alloy, and strip-casting capacity. It says those capabilities currently do not exist at scale inside the United States.
The plan also covers NdFeB magnet manufacturing in Stillwater, Oklahoma, and Blacksburg, South Carolina. USA Rare Earth targets 10,000 tons per year of magnet production across those sites. Latham & Watkins advised the company, while Moelis & Company served as financial advisor.
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