U.S. Government Invests in Rare Earth Mining
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
0mins
Source: Fool
- Government Investment Plan: The U.S. Commerce Department signed a letter of intent with USA Rare Earth to provide $1.6 billion in funding, including $277 million in direct investment and $1.3 billion in loans, aimed at bolstering American rare earth mining and enhancing national competitiveness in the global rare earth market.
- Stock Surge: Following the investment announcement, USA Rare Earth's stock soared by 29.5% during trading, indicating a positive market reaction to government support and reflecting investor optimism regarding the future of the rare earth industry.
- Production Goals Set: USA Rare Earth aims to extract 40,000 metric tons of rare earth minerals from its Round Top deposit by 2030 and process 8,000 metric tons of heavy rare earth elements annually, showcasing the company's ambitious plans for resource development, despite the Round Top mine not expected to come online until 2028.
- Financial Position Improvement: This investment will strengthen USA Rare Earth's balance sheet, as the company ended the third quarter with $257.6 million in cash, although it still faces high risks and uncertainties, particularly with no revenue expected in the next two years.
Analyst Views on USAR
Wall Street analysts forecast USAR stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for USAR is 22.75 USD with a low forecast of 15.00 USD and a high forecast of 28.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
5 Analyst Rating
5 Buy
0 Hold
0 Sell
Strong Buy
Current: 24.770
Low
15.00
Averages
22.75
High
28.00
Current: 24.770
Low
15.00
Averages
22.75
High
28.00
About USAR
USA Rare Earth, Inc. is a supplier of sintered neo magnets and other rare earth metals. The Company is engaged in developing a NdFeB magnet manufacturing plant in Stillwater, Oklahoma, and intends to establish domestic rare earth and critical minerals supply, extraction, and processing capabilities to both supply its magnet manufacturing plant and market surplus materials to third parties. It is focused on developing domestic rare earth production that offers sustainable and secure domestic supply of materials critical to key industries. Its vertically integrated approach consists of sourcing rare earth elements (REEs), in addition to other critical minerals such as gallium, to producing finished NdFeB magnets. The Company serve a variety of industries, such as defense, robotics, electric vehicles, wind power, appliances, cordless tools and computing and semiconductors. The Company owns, Less Common Metals Ltd., which is a scaled ex-China rare earth metal and alloy manufacturer.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
