TLDR
- USA Rare Earth stock gained 7.9% Monday, closing at $26.72 after reaching an intraday high of $32.07 on massive 121.6 million share volume
- The company announced a non-binding $1.6 billion government financing letter through CHIPS Program alongside a $1.5 billion private investment
- U.S. government will receive 16.1 million shares and 17.6 million warrants, representing potential 8-16% ownership stake
- Total $3.1 billion capital infusion targets mine-to-magnet operations at Round Top facility with 2028 commercial production goal
- Agreement remains subject to approvals and conditions, with company needing additional $4.1 billion in future capital expenditures
USA Rare Earth shares advanced 7.9% Monday following dual financing announcements. The stock touched $32.07 during trading before settling at $26.72.
Trading activity surged to 121.6 million shares. That represents a 439% increase over the typical 22.6 million share daily average.
The company received a non-binding letter of intent for $1.6 billion from the federal government. The CHIPS Program package includes $277 million in proposed grants and a $1.3 billion senior secured loan.
A concurrent $1.5 billion private placement rounds out the financing. Institutional investors will purchase shares at $21.50 each, with the deal scheduled to close January 28, 2026.
The two agreements provide approximately $3.1 billion in total capital. Funds will support USA Rare Earth’s integrated mine-to-magnet platform at its Round Top project in Texas.
Federal Stake and Deal Structure
The Commerce Department will acquire 16.1 million common shares and 17.6 million warrants under the government agreement. This equity position could give federal authorities 8-16% ownership on a fully diluted basis.
The letter of intent is non-binding and requires regulatory approvals and final documentation. Terms could change before any binding agreement is signed.
USA Rare Earth has roughly 148 million shares outstanding currently. Market capitalization stands at $3.7 billion.
Government funding releases in stages based on milestone achievements. Progress at Round Top mining operations, processing infrastructure, and magnet manufacturing capacity will trigger payments.
The company must still raise an estimated $4.1 billion in additional capital spending. A $250 million revolving credit line is also needed.
Domestic Production Push
The Trump administration has prioritized reshoring rare earth supply chains. China maintains control of approximately 85% of global rare earth processing capabilities.
Rare earth elements are essential for consumer electronics, electric vehicle motors, and defense systems including F-35 fighter jets. Beijing has previously used its market dominance as leverage in trade disputes.
USA Rare Earth projects 40,000 tons of daily ore extraction by 2030. Annual magnet production is targeted at 10,000 tons.
Current U.S. rare earth magnet demand sits around 50,000 tons yearly, according to analyst estimates. That figure continues expanding.
The Round Top deposit is located in Hudspeth County, Texas. Company operations include a magnet manufacturing plant in Stillwater, Oklahoma.
Wall Street Outlook
Six equity analysts currently rate USA Rare Earth as a buy. One analyst maintains a sell rating.
Consensus price target across coverage is $24.67. Roth Mkm holds a buy rating with a $35 target.
Benchmark started coverage January 21 with a buy recommendation. The stock trades above its 50-day moving average of $15.71 and 200-day moving average of $17.13.
USA Rare Earth remains unprofitable. The company posted a $0.25 per share loss last quarter, missing analyst expectations by $0.19.
The private placement will issue 69.8 million shares to institutional buyers. Inflection Point anchors the deal with participation from large mutual fund groups.
Stillwater magnet plant commissioning continues with Line 1a production underway. Round Top commercial production is expected to begin in 2028.
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