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$MP Beats Profit Expectations & Announces the Start of Rare Earth Processing in the U.S.
Currently sitting at ~7% of my portfolio, MP Materials ($MP) (standing for Mountain Pass - a revived mine active in California/Nevada) posted their earnings yesterday and gave an update on their multi-phase plan to develop and secure the rare earth material supply chain within the United States.

$MP has been on my radar since it first came to market as a SPAC in the fall of 2020. Up about 7% today, it has been one of the better (profitable) companies that listed during the SPAC boom we saw during the pandemic.

MP focuses on the extraction of Neodymium-Praseodymium (NdPr), a rare earth material used in high-strength magnets needed for electric vehicles, robotics, wind turbines, drones and other advanced motion technologies.

In order to achieve the mission of creating and securing the supply chain, MP is following a three stage plan to vertically integrate the full cycle from extraction to production of the magnets needed.

At the Q2 earnings call, MP not only beat revenue and profit estimates, bringing in ~$64 million in revenue and ~$7.4 million in net income. During this period, the company also produced 10,863 tons of NdPr concentrate, a 5% increase than the year ago period.

Once the concentrate is mined, it is then shipped to Chinese partners where it is further processed and refined. As part of the Stage 2 Plan, MP announced that they have begun to process and refine small amounts of the concentrate in California, after three years of building out the infrastructure. They expect initial shipments and sales of this processed NpDr material to begin in Q3.

They also announced the continued development of their Stage 3 plan, which includes building a magnet manufacturing facility located in Forth Worth, Texas that will be used to supply $GM with the magnetic components needed for their electric vehicle motors as part of a long term strategic agreement signed in 2021.

$MP is another company as part of my long term thesis involving the resurgence of American based supply chains and manufacturing capabilities. Although a long way away, and much more work to be done - MP is leading the charge as a successful model of how a company can be built from the ground up, and deliver on their objectives.

Taylor's avatar
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