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Today's Exclusive Story
USA Rare Earth Posts Strong Q1 2026 as Massive Serra Vera Deal LoomsSubmitted by Leo Miller. Article Posted: 5/20/2026. 
Key Points
- USA Rare Earth is making big moves as it looks to shake up the rare earth industry outside of China
- The firm posted better-than-expected Q1 financials and provided an update on its $1.6 billion government funding proposal
- Meanwhile, the company is working to close its Serra Verde acquisition, which would provide access to one of the world's top rare-earth assets outside China
- Special Report: Elon Musk: This Could Turn $100 into $100,000
USA Rare Earth (NASDAQ: USAR) is trying to fill a gap in the market created by geopolitical uncertainty. Along with mining companies such as MP Materials (NYSE: MP), USA Rare Earth is helping the United States loosen China’s chokehold on rare earth elements (REEs). China controls the majority of the world’s REE mines and 94% of permanent magnet production, the vital end product of REEs. This is a pressing issue, as permanent magnets are essential to building many modern technologies. That includes advanced weaponry, and the United States does not want to find itself in a position where China can cut off production.
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Ultimately, USA Rare Earth’s goal is to become a vertically integrated mine-to-magnet producer. The company recently delivered its latest earnings report, offering insight into how it is progressing toward that goal. USA Rare Earth Posts Beats, Government Funding Deal Sees a DelayAs an early-stage company, operational improvement matters far more than near-term revenue or profit. That said, financial performance still matters to investors, who want to see the company stay on budget and avoid unnecessary cash burn. Fortunately, the firm posted better-than-expected results in its latest quarter. USA Rare Earth generated revenue of $5.7 million in Q1 2026, up from no revenue a year ago. The result comfortably beat estimates of $4.2 million. The company also topped expectations on the bottom line. Its adjusted loss per share was 12 cents, significantly better than the 16-cent loss analysts had expected. However, loss per share can be a misleading metric. Because USA Rare Earth issues a significant number of shares, its loss per share can improve even if actual losses widen, which is exactly what happened in Q1. Adjusted loss per share improved from 14 cents a year ago, but the company’s adjusted net loss more than doubled to $24.1 million. The takeaway is that USA Rare Earth’s profitability is worsening, not improving. Still, that is fully expected for an early-stage company, and USA Rare Earth has ample capital to absorb losses. The firm ended the quarter with $1.75 billion in cash after receiving $1.5 billion in proceeds from a private investment offering. Additionally, the company said it expects to complete the definitive documentation for its $1.6 billion Department of Commerce funding in May. That is a delay from earlier expectations that the process would be finished in April, but securing the funding is what matters. Importantly, the company says the terms of the deal have not deteriorated. USA Rare Earth Presses Forward, Looks to Enhance Position With Serra VerdeThe company also remained on track with several operational milestones. It still expects to begin fulfilling sales of sintered magnets in Q2 2026. USA Rare Earth also continues to expect its Stillwater magnet capacity to reach 600 metric tons per annum (MTPA) by the end of 2026. Its expectation for 1,200 MTPA in Q1 2027 remains intact as well. However, its planned $2.8 billion acquisition of Serra Verde is by far the biggest development in recent months. The company notes that Serra Verde is the first and only scaled producer of all four magnetic rare earth elements outside of Asia. These elements are neodymium (Nd), praseodymium (Pr), dysprosium (Dy), and terbium (Tb). Acquiring this asset would be a clear win for USA Rare Earth, accelerating its mine-to-magnet buildout and giving it a key advantage over MP Materials. MP’s mines are rich only in light rare earth elements such as Nd and Pr—not heavy rare earths like Dy and Tb. Notably, building advanced technologies such as missile guidance systems requires heavy rare earths. With Serra Verde, USA Rare Earth would have access to both light and heavy REEs, a strategic advantage over MP. The combined company is targeting an EBITDA run rate of $550 million to $650 million by the end of 2027. USA Rare Earth also says the combined company would have a cash position of $3.2 billion, far higher than its current balance. However, the acquisition would be highly dilutive for shareholders. USA Rare Earth plans to issue 127 million shares to help fund the deal, a figure that is substantial relative to its current share count of nearly 233 million. Even so, shares surged 13% on the day of the announcement, indicating that investors favored the strategic value of the deal over the dilution. USA Rare Earth Awaits Deal Closing After Good QuarterOverall, USA Rare Earth delivered a solid quarter, with better-than-expected financial results and continued progress on operational objectives. At the same time, the Serra Verde acquisition could be a game-changer, potentially making the company an anchor in the non-China market. Still, the deal has yet to close, with completion expected in Q3 2025. After the closing, USA Rare Earth plans to host its Investor Day. As the company provides more details about its strategy at the event, it will be an important point to re-evaluate USAR’s future. |
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