USA Rare Earth NASDAQ: USAR outlined details of its planned acquisition of Serra Verde Group during a conference call, describing the deal as a step toward building an integrated, non-Asian rare earth supply chain spanning mining through magnet production. The company said it has entered into a definitive agreement to acquire 100% of Serra Verde Group, which owns an integrated rare earth mine and processing facility in Goiás, Brazil.
Transaction overview and strategic rationale
Chief Executive Officer Barbara Humpton said Serra Verde is “the only scaled producer of all four magnetic rare earths in the Western world” and described it as a strategically important source of supply amid continued concentration of rare earth mining and processing capacity in China. Humpton cited estimates that China controls “approximately 70% of rare earth mining and over 90% of rare earth processing, metal making, and permanent magnet production,” adding that in heavy rare earths China holds “99% of the world's processing capacity.”
Humpton also pointed to April 2025 export controls imposed by the Chinese government as a catalyst that elevated the urgency of establishing alternative supply. She said Serra Verde’s Phase 1 nameplate capacity, expected to be achieved by the end of 2027, is projected to produce approximately 6,400 metric tons of total rare earth oxides per year, and she characterized the asset as a major contributor to non-China heavy rare earth capacity.
As part of the strategic rationale, Humpton highlighted USA Rare Earth’s broader “mine to magnet” platform and prior moves, including its metal and alloy making footprint through Less Common Metals and a partnership with Carester for heavy rare earth separation capacity. She said the Serra Verde acquisition provides an “upstream anchor” and a bridge to the development of USA Rare Earth’s Round Top project.
Serra Verde asset profile and operating milestones
Serra Verde Group CEO and incoming USA Rare Earth President Thras Moraitis framed the acquisition as the creation of a “rare earth powerhouse” positioned to address growing demand from electric vehicles, robotics and “physical AI,” defense and aerospace, semiconductors, and medical applications. He emphasized that Serra Verde focused on heavy rare earths as the most constrained segment, identifying dysprosium, terbium, and yttrium as facing acute supply limitations.
Moraitis described Serra Verde’s Pela Ema operation as a large ionic clay deposit with “over 20 years of mine life.” He said the extraction process requires “no drilling, no blasting, no crushing or milling,” and uses “only benign reagents” in the ionic exchange process. He also cited the site’s use of hydroelectric power, biofuels for mobile equipment, and its location outside environmentally or socially sensitive areas.
Moraitis said Serra Verde commenced commercial production in early 2024 after completing construction of its processing plant and securing required permits and licenses, with total equity capital invested exceeding $700 million by that point. He added that the company has gone “over three years without a lost time injury” and has maintained strong relationships with local communities and regulators.
On ramp-up and expansion, Moraitis said Phase 1 ramp-up would commence in the third quarter of this year toward a run rate of around 4,000 tons per annum of total rare earth oxides by year-end, with Phase 2 to be completed by mid-2027 and a run rate of 6,400 tons per annum by the end of 2027. He said additional growth options are being evaluated, including potential to double run-of-mine production.
Offtake structure and price floors
Management repeatedly emphasized Serra Verde’s 15-year offtake agreement covering 100% of Phase 1 production with a special-purpose vehicle (SPV) capitalized by U.S. government parties and private capital. Humpton said Serra Verde is “the only mine in the world that has price floors for each of neodymium, praseodymium, dysprosium, and terbium” through such an arrangement.
In response to analyst questions, Moraitis said Serra Verde had historically supplied product to China due to limited separation capacity outside China, and noted that legacy Chinese contracts were due to expire by the end of this year. He said the floor-price structure was designed to counter the shortcomings of China-referenced benchmark pricing and to provide long-term stability for investment across the sector.
Chief Financial Officer Rob Steele provided specific floor prices included in the agreement: $110 per kg for NdPr, $575 per kg for dysprosium, and $2,050 per kg for terbium. Steele also said that above those levels, USA Rare Earth would retain “70% of the shared upside when index prices exceed these levels.”
Financial terms, ownership, and outlook
Steele said the transaction implies a total equity value of approximately $2.8 billion, consisting of $300 million in cash and 126.849 million shares of newly issued USA Rare Earth common stock. Using a closing share price of $19.95 as of April 17, Steele said that implies an equity value for Serra Verde of about $2.8 billion. The companies expect the transaction to close in the third quarter of 2026, subject to customary closing conditions and regulatory approvals.
Upon closing, Steele said existing USA Rare Earth shareholders are expected to own approximately 66% of the combined company, with Serra Verde legacy shareholders, including Vision Blue Resources, owning about 34%.
Steele said pro forma liquidity would be approximately $3.2 billion, reflecting the transaction and USA Rare Earth’s “pending non-binding LOI with the Department of Commerce.” He added that Serra Verde comes “fully funded through to positive cash flow,” supported by a $565 million financing facility from the U.S. International Development Finance Corporation (DFC).
On earnings potential, Steele outlined two modeled scenarios based on deliveries to the SPV. If Serra Verde delivers mixed rare earth carbonate under the offtake agreement, he said the asset is expected to generate $300 million to $400 million in annualized run-rate EBITDA by the end of 2027. If USA Rare Earth utilizes integrated separation capabilities to produce oxides, including through its Carester partnership and its own facilities, Steele said Serra Verde could achieve $550 million to $650 million in annualized run-rate EBITDA by the end of 2027, based on an illustrative average total rare earth oxide basket price of approximately $190 per kg.
Looking further out, Steele said the combined value chain could generate approximately $1.8 billion in annualized EBITDA by the end of 2030 with about 80% free cash flow conversion. He attributed the free cash flow profile to major capital expenditures being complete more than 12 months earlier and a shift to maintenance capex, adding that Serra Verde is modeled at “well north of a 75% EBITDA margin.”
Operational integration and next steps
During Q&A, management discussed optionality for separation and processing as Serra Verde ramps. Humpton said Serra Verde has been producing mixed rare earth carbonate and has on-site separation capability, and noted that USA Rare Earth’s Wheat Ridge team has tested Serra Verde material and “proven our ability to successfully separate those magnetic elements.” Moraitis added that multiple separation facilities are being built in the U.S. and elsewhere, but said the preference would be to process through the company’s own facilities as part of the combined strategy.
Steele also addressed expected product mix, telling analysts that NdPr represents about 20% to 22% of the overall production basket, or roughly 1,700 to 1,800 tons of separated NdPr. He said yttrium is included in the $190 per kilogram basket price assumption used for the oxide scenario.
When asked whether the acquisition changes USA Rare Earth’s need to raise additional capital tied to its Department of Commerce process, Steele said it does not, and that the company would still be required to raise additional capital as part of that transaction. He described related milestones as tied to ramping capabilities across magnet making, metal making, and Round Top development, including completion of a definitive feasibility study and progress toward production.
Humpton closed the call by reiterating that the company views the deal as positioning USA Rare Earth as a comprehensive, integrated rare earth platform outside of Asia, supported by government partnerships, secured offtake economics, and expanded leadership. She said Thras Moraitis and Sir Mick Davis are expected to join the board, with Moraitis also joining as president.
About USA Rare Earth NASDAQ: USAR
USA Rare Earth NASDAQ: USAR is a development-stage critical minerals company focused on advancing a fully integrated rare earth element (REE) and lithium project in the United States. Its flagship asset is the Round Top deposit in West Texas, a large, polymetallic concentration of light and heavy rare earth elements, lithium and other co-products. The company seeks to move this asset through resource delineation, pilot-scale processing and eventual commercial production to address growing domestic demand for secure REE supply chains.
In addition to exploration, USA Rare Earth is engineering an on-site separation facility that will utilize dry magnetic separation and hydrometallurgical flowsheets to produce mixed rare earth carbonates.
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