USA Rare Earth Announces $75 Million PIPE Investment

Rhea-AI Summary

USA Rare Earth has secured a $75 million private investment in public equity (PIPE) from a major institutional investor. The funding will support capital expenditures for its rare earth magnet manufacturing facility in Stillwater, Oklahoma, along with working capital and operating expenses.

The deal structure includes issuing approximately 8.55 million common stock shares, 2.16 million pre-funded warrants, and PIPE warrants at a $7.00 strike price with a 6-year expiry. The PIPE warrants cover 100% of the aggregate shares.

CEO Joshua Ballard emphasized this investment's strategic timing, highlighting the company's mission to establish one of the largest domestic sintered rare earth magnet facilities in the United States. The facility aims to serve defense, consumer, technology, and industrial sectors. Cantor Fitzgerald & Co. led the placement, with Cohen Capital Markets as co-placement agent.

Positive

• Secured substantial $75M PIPE investment from institutional investor
• Funding fully covers capital expenditure for first phase of rare earth magnet facility
• Majority stockholders already committed to vote in favor of warrant issuance
• Strategic positioning in domestic rare earth magnets production for defense and technology sectors

Negative

• Significant shareholder dilution through issuance of 8.55M new shares and 2.16M pre-funded warrants
• Additional dilution potential from warrants with 6-year expiry at $7.00 strike price
• Securities being sold are not registered under Securities Act, limiting immediate tradability

Insights

Financial Analyst

USA Rare Earth secures $75M funding through PIPE transaction, fully financing first phase of rare earth magnet facility despite dilution.

USA Rare Earth has secured a $75 million equity capital raise through a PIPE transaction with a new institutional investor, representing a significant financial development for the company. The structure involves issuing approximately 8.55 million common shares and pre-funded warrants for an additional 2.16 million shares, alongside warrants for 100% of these aggregate shares at a $7.00 strike price with a 6-year term.

This transaction is notable for coming from a single institutional source rather than multiple investors, potentially indicating strong confidence in the company's strategic direction. According to CEO Joshua Ballard, this funding will "fully fund the capex required for the first phase" of their rare earth magnet manufacturing facility in Stillwater, Oklahoma, marking a critical milestone in the company's development pathway.

The financing structure does represent significant potential dilution for existing shareholders, with approximately 10.71 million new shares potentially entering circulation, plus additional shares if the warrants are eventually exercised. However, in the current challenging fundraising environment, securing full funding for capital expenditures without taking on debt represents a strategic advantage.

The capital allocation plan focuses on two areas: facility capital expenditures and working capital/operating expenses, though the specific breakdown between these categories isn't detailed. The company will require shareholder approval for the warrant share issuance, though stockholders representing a majority of voting power have already committed to supporting this measure.

Rare Earth Industry Specialist

$75M funding accelerates USA Rare Earth's domestic magnet facility, addressing critical national supply chain vulnerability in strategic materials.

The $75 million capital raise for USA Rare Earth's magnet manufacturing facility in Stillwater, Oklahoma represents a significant development in U.S. efforts to rebuild domestic rare earth magnet production capacity. Sintered rare earth permanent magnets, particularly NdFeB (neodymium-iron-boron) magnets, are critical components in defense systems, electric vehicles, wind turbines, and numerous high-tech applications.

The announcement identifies this facility as potentially "one of the largest domestic sintered rare earth magnet facilities in the country," which highlights the strategic significance in addressing a critical supply chain vulnerability. Currently, China dominates global rare earth magnet production, creating national security and economic concerns that have been emphasized across multiple presidential administrations.

The CEO explicitly frames this development within a national security and economic resilience context, stating their mission to "bring domestic rare earth magnets back to the United States defense, consumer, technology, and industrial sectors." This positions the facility as addressing both commercial and defense needs.

While the announcement confirms funding for the "first phase" of the facility, it doesn't specify production capacity targets, timelines for completion, or details about subsequent phases. However, securing dedicated capital specifically for a rare earth magnet manufacturing facility represents tangible progress in rebuilding a domestic supply chain for these critical materials.

The fact that a large institutional investor has committed $75 million specifically to this initiative may signal growing investor confidence in the economic viability of reshoring critical mineral processing and manufacturing, beyond just government incentives and subsidies.

STILLWATER, Okla., April 30, 2025 (GLOBE NEWSWIRE) -- USA Rare Earth, Inc. (Nasdaq: USAR) (USAR or the Company), today announced that it has entered into a securities purchase agreement with a new fundamental institutional investor to raise $75 million of equity capital via a private investment in public equity (“PIPE”). The Company intends to use the proceeds from the offering to fund capital expenditures for its magnet manufacturing facility in Stillwater, Oklahoma, as well as for working capital and operating expenses.

“We are thrilled by the reception we received from potential investors during our PIPE process,” said Joshua Ballard, CEO. “This sizable commitment from a single institution allows us to fully fund the capex required for the first phase of our rare earth magnet facility. It comes at a pivotal moment in USA Rare Earth’s push to build one of the largest domestic sintered rare earth magnet facilities in the country at a time when we as a country most need it. We are on a mission to bring domestic rare earth magnets back to the United States defense, consumer, technology, and industrial sectors. We are now one step closer to achieving our goal.”

Under the terms of the securities purchase agreement, the Company will issue, for an aggregate purchase price of $75 million, an aggregate of approximately 8.55 million shares of common stock (the Issued Shares), pre-funded warrants to purchase an aggregate of approximately 2.16 million shares of common stock (the shares underlying the Pre-Funded Warrants, together with the Issued Shares, “the Aggregate Shares”) and warrants (the PIPE Warrants) to purchase shares of common stock, in an amount equal to 100% of the Aggregate Shares at a strike price of $7.00 per share, with an expiry date of 6-years from the issue date of the PIPE Warrants. The Shares and the PIPE Warrant Shares are entitled to customary resale registration rights.

The Company will hold a special meeting of stockholders to approve the issuance of the Warrant Shares. Stockholders holding a majority of voting power of the outstanding securities of the Company have executed stockholder support agreements to vote their shares in favor of such issuance. The closing of the PIPE also is subject to other customary closing conditions for financing of this nature.

Advisors

Cantor Fitzgerald & Co. acted as lead placement agent for the private placement. Cohen Capital Markets also acted as placement agent for the private placement.

White & Case LLP served as legal counsel to USA Rare Earth. Reed Smith LLP served as legal counsel to the placement agents.

The securities being sold in the private placement have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or applicable state securities laws and accordingly may not be offered or sold in the United States absent registration with the Securities and Exchange Commission or an applicable exemption from the registration requirements of the Securities Act and such applicable state securities laws.

This press release does not constitute an offer to sell or the solicitation of an offer to buy the securities, nor shall there be any sale of the securities being offered in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.

About the Company

USAR is building a vertically integrated, domestic rare earth magnet production supply chain. USAR is currently constructing a 310k square foot rare earth sintered neo magnet manufacturing facility in Stillwater, Oklahoma. USAR also controls mining rights to the Round Top Mountain rare earth and critical minerals deposit in West Texas, which holds significant deposits of heavy rare earths, such as dysprosium and terbium, as well as gallium, beryllium, lithium and other critical tech minerals. USAR's permanent neo magnets and rare earth minerals are required for a wide variety of products used in the defense, automotive, aviation, industrial, medical, and consumer electronics industries.

FORWARD LOOKING STATEMENTS

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995, which involve risks and uncertainties. These statements include statements relating to the Company’s expectations for future development, operations, business strategies and financial performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this press release, words such as “anticipate”, “believe”, “can”, “continue”, “could”, “estimate”, “expect”, “forecast”, “intend”, “may”, “might”, “plan”, “possible”, “potential”, “predict”, “project”, “seek”, “should”, “strive”, “target”, “will”, “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable as of the date made, forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations. These risks and uncertainties include, but are not limited to: the risk that the conditions to the closing of the PIPE are not satisfied; risks relating to the timing of the satisfaction of such conditions and the closing of the PIPE; risks related to the development of our magnet production facility and the timing of expected production milestones; competition in the magnet manufacturing industry; our ability to grow and manage growth profitably; our ability to build or maintain relationships with customers and suppliers; our ability to retain management and key employees; the supply and demand for rare earth minerals; the timing and amount of future production; costs of production, capital expenditures and requirements for additional capital; timing of future cash flow provided by operating activities, if any; uncertainty in any mineral estimates, uncertainty in any geological, metallurgical, and geotechnical studies and opinions; and transportation risks. Detailed information regarding factors that may cause actual results to differ materially will be included in the Company’s periodic filings with the Securities and Exchange Commission (the “SEC”), including the Company’s Form 10-K that the Company filed with the SEC on March 31, 2025. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors. Any forward-looking statements contained in this release speak only as of its date. We undertake no obligation to update any forward-looking statements contained in this release to reflect events or circumstances occurring after its date or to reflect the occurrence of unanticipated events.

For more information, please visit USARE.com and connect with us on LinkedIn and X.

Investor Relations Contact:

Lionel McBee
VP, Investor Relations
lionel.mcbee@usare.com

Media Relations Contact:

Cricket PR
Brian Hyland
(201) 410-4563
USARE@cricketpr.com

FAQ

How much did USA Rare Earth (USAR) raise in their April 2025 PIPE investment?

USA Rare Earth raised $75 million through a private investment in public equity (PIPE) from a single institutional investor in April 2025.

What will USA Rare Earth use the $75M PIPE funding for?

The funding will be used for capital expenditures at their magnet manufacturing facility in Stillwater, Oklahoma, plus working capital and operating expenses.

What are the terms of USA Rare Earth's April 2025 PIPE deal?

The deal includes 8.55M common shares, 2.16M pre-funded warrants, and warrants to purchase 100% of aggregate shares at $7.00 per share with a 6-year expiry.

When will USA Rare Earth (USAR) complete the $75M PIPE investment?

The closing is subject to customary conditions and requires stockholder approval at a special meeting. Major stockholders have already agreed to vote in favor.

Which investment banks managed USA Rare Earth's $75M PIPE offering?

Cantor Fitzgerald & Co. acted as lead placement agent, with Cohen Capital Markets as co-placement agent for the private placement.