USA Rare Earth: A Most Curious Venture

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USA Rare Earth, you see, is currently experiencing a rather predictable wobble. The market, as it so often does, is throwing a bit of a tantrum. One might almost suspect it’s doing it on purpose. Shares have retreated, but honestly, one wouldn’t expect a straight ascent, would one? Especially not with a company that’s, shall we say, still in the preliminary stages of actually producing anything.

It’s a pre-revenue entity, you understand. Years away from turning a proper profit. Risky? Terribly. But, and this is where it becomes mildly diverting, recent developments suggest the gamble might, just might, pay off. One always appreciates a bit of a long shot, don’t you think? It adds a certain…spice.

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Therefore, rather than fleeing the scene at the first sign of trouble, one might consider a spot of accumulation. A rather sensible strategy, wouldn’t you agree? Especially if the price dips. One mustn’t be afraid of a little turbulence.

USA Rare Earth and its Rather Ambitious Gambit

The Americans, you see, are attempting to loosen China’s grip on the rare-earth market. A perfectly sensible ambition, if one may say so. And USA Rare Earth, along with a few others, is rather eagerly stepping forward to capitalize on the resulting incentives. A bit of patriotic fervor mixed with entrepreneurial spirit. One can hardly fault them.

Their plan revolves around a deposit in Sierra Blanca, Texas – Round Top, they call it. Apparently, it contains fifteen of the seventeen rare-earth elements. Rather impressive, if you’re into that sort of thing. They’re also constructing a magnet production facility in Oklahoma and, rather shrewdly, have acquired Less Common Metals. A clever acquisition, wouldn’t you say?

The entire undertaking is estimated to cost a staggering $4.1 billion. A considerable sum, naturally. But they’ve managed to raise around $1.5 billion in equity and secured a letter of intent for $1.6 billion in government funding. Progress, you see. They still require another $650 million, which may necessitate some shareholder dilution. But, given the current market capitalization of $5.1 billion, it shouldn’t be too devastating. A minor inconvenience, really.

A Long-Term Perspective, Naturally

The potential payoff, should their plans come to fruition, is, shall we say, substantial. They’re now projecting annual revenue of $2.6 billion and EBITDA of $1.2 billion by 2030. Ambitious, certainly. But not entirely implausible. Leading mining companies currently trade at enterprise value/EBITDA ratios of 9x to 10x. Which suggests USA Rare Earth could, one day, be worth around $12 billion. A rather handsome sum, wouldn’t you agree?

Assuming they use their future cash flow to pay down their federal loans, the stock could at least double in price over the next few years. Of course, it won’t be a smooth ride. There will be volatility, setbacks, and, undoubtedly, periods of profound boredom. But that, my dear, is simply the nature of the market. One must learn to endure it with a stiff upper lip and a perfectly mixed martini.

If the shares dip, one might consider accumulating a position. A small, speculative one, naturally. It’s no sure thing, of course. There’s always the question of price support from the government. But, assuming one treats it as a bit of a lark, shares below $25 per share might prove to be a rather astute investment. A delightful little gamble, wouldn’t you say?

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2026-02-13 08:22