MP Materials (MP) 22 Feb 242023 Q4 Earnings call transcript

Hello, everyone. Thank you for attending today's MP Materials Fourth Quarter 2023 Earnings Call. My name is Sierra, and I'll be your moderator today. [Operator Instructions]. I would now like to pass the conference over to our host, Martin Sheehan.

good and operator, you, afternoon, everyone. Thank the Call. to MP Materials Conference Earnings XXXX Quarter Fourth Welcome today MP Founder me Officer. Chief Officer; With from Ryan Executive Chairman Litinsky, and Officer; and Founder, Michael Chief Rosenthal, Corbett, and Operating Materials Chief Financial are Jim

a caveats. contain statements included Factors results cause company's future discussion that relating subject to to will that earnings release SEC presentation, our actual from today's are and may in expectations are today's these differ various reminder, to As in forward-looking events assumptions statements materially and the and filings.

slide included In today's Any addition, in financial discussion our we in non-GAAP EBITDA reference have comparable can the measures some earnings to release presentation. adjusted in most GAAP presentation. directly EBITDA. to this today's today Reconciliations and found measures means the be financial to appendix

are Finally, on call to the Jim. available Jim? turn our website. slide release the and that, I'll over earnings presentation With

Thanks, everyone. Martin. Good afternoon,

today's with begin me Let a overview of call. brief

discuss will the XXXX. Ryan over Fourth important our first my to operational who of months I will while by Quarter X call followed commentary context then the with I from review First, run some turning KPIs, XXXX, Year highlights progress. financials will through adding will then Michael Full close the and the and macro our from before Q&A.

belt. our MP X diligently Moving production third of on In to business XX,XXX across years year. has consecutive team concentrate XXXX throughout executed X production our now over market Despite all of REO facing MP Slide the metric business. under Upstream of X. we headwinds, for stages our The full formidable tons exceeded

more announced X of value and value increase even identify Mountain next and sustainably with We culmination over focused end, November, Pass modest piloting resource. continue approximately spend. plan to unlocking for extensive increase our in XXK, was research, years announcement opportunities the activity to creation. To the on Upstream XX% learn, that incremental from This REO the production new productivity we development

We have aspects physical of expansion. some already begun the of this

heard Pass lowest say source we return Western have many growth Mountain on me repeatedly, the expansion quickest, you earth rare at the believe As in of of world. risk and capital highest is

our on invested we means Assuming capital That that with expansion. goals, our pricing it especially is in generate multiples achieve this can can we environment. this remarkable,

deposits, So you at for any new example, where often see of those uneconomic earth rare stories large price. are may almost

a likely right positive imagine already return and at even generate today's down we grow producer prices. our prices. At place a resource with projects these New now are to assets now end position project and/or at are higher in through a low-cost underway seeking unique in cycle. economically will any world-class in destroying MP greenfield upstream materially China substantially though, even those to a hard it's or the capital as that can funding up significant And

Moving we In ramped Michael in separated a mission. producing tactically you on expand customer coming products, rare a in months to for moment. To we set production through approaching and operationally huge will walk represents for recently our the metal XXXX, we established and our are Vietnam. including products, Ryan NdPr how opportunity our Midstream financially NdPr began This business. separated and and milestone oxide. MP earth of

Worth of forward to production We have American Metal year. look also pilot making North begun in this facility, we trial Fort and NdPr metal a on

a first Korea, oxide across During sales of in batch delivered more to we customer and NdPr Southeast our we the fourth quarter, Asia. South expect

significant our a have now Japanese we via Sumitomo firm of portion NdPr for our customers from distribution relationship. commitments Importantly,

year. material So look and for even those next sales to year this be higher

headquarters very capability Ryan of our in now while situated will We've magnetics and in And over in are to substantial have Engineering our environment macro roof under on to depth turn pricing continue and operations more our exciting. Downstream our and team fronts. magnetics environment one to in set. Lastly, add Fort executed our on we Worth. more and business, been ago, later made very working the has say extraordinarily for X frustrating, KPIs moment Ryan year, and well. this on to a on the me the closing positive now, Ryan? results. financial call a of said team producing start MP which site. progress has EBITDA is expect later. In we will But remarks. summary, towards revenue my as Stage let modest discuss to metal this I diligently to cover lot start This I commercial means production all are

Thanks, Jim.

circuits separated Lower comparison. our initial REO the the well as as QX also and tons third Slide II the KPIs. consumption II XX,XXX of in due year-over-year production left, our exceeding year concentrate than ramp concentrate volumes year. Sales in tons commissioning in REO for produce to third we volumes products fourth with X in the tons as despite and were REO stage the on of XXXX impacted produced charging Stage NdPr primarily well down and on Let's to other turn X,XXX far more year the a XXXX, full consecutive circuits of modestly Starting of and operational to significant the in review in the in timing sales the around as downstream focus throughout XX,XXX quarters.

the slide. Moving the of middle to

Our price declined alongside price market. realized of the pullback a NdPr significantly the in in

Production longer by costs including Moving Stage production. ton ramp the per descaling II $XXX right. impact driven activities, increased concentrate turnarounds primarily and of stand-alone plant the to

fixed, and concentrate site-wide volumes results Given smaller production sales over absorption. as are a costs general those fixed in as cost this lower well spreading costs turnaround plant fair our amount of I Stage costs

XXX metric we call. of the the on inaugural II fourth sequential tons quarter our nice we lift in oxide of on to a as produced far closing with Lastly, production right, XXXX, our NdPr guided Stage year in last

volumes we well ramp just by primarily realized in decline previously fixed XXXX as decline the Slide addition impacted Moving The to year the financials. flow-through in in to as X EBITDA II. the primary was the was prices our full discussed discussed. absorption change in Stage of of adjusted cost the pricing and in driver Revenue as

Lastly, investments corporate we modest to make in our continue infrastructure. certain

in Some of the half the still continue XXXX most declining early the the the a during part XX%. were robust new in an lower change at year, before the adjusted through service back in by implementation investment II margins goes notably which diluted depreciation higher brought interest circuits offset being of QX. Despite quite EPS the partially income average the of The of addition in price live just will drivers year, assets, in EBITDA and SAP the on by higher year, cash same income expense. balance impacted by additional discussed, primarily was rest Stage namely into during our tax placed lower to that on

in Turning both our to in unplanned planned as due X,XXX Slide concentrate sales and will products. refined primarily this higher fell results. more we quarter. to and NdPr circuits Concentrate expand quarter other produce Concentrate fourth consumed II volumes in production X year-over-year, moment. sequentially on in tons downtime, down Michael X,XXX of was the around to tons a Stage

costs combination the pronounced ton costs plant Production per as turnaround production in the metric descaling more quarter. Stage longer more I detailed $XXX sequentially as of from the our our well on increased

separation crushing, as For management, targets, Mountain power purification, with others. With site-wide roasting We interconnected I now now circuits impurity mining service, turnarounds essentially brine X the II leach, primary and removal, and turnaround and including infrastructure planned plant our in water along and the operations beneficiation treatment product expenses. context think Stage X about of related our on additional circuits. tailings Pass with plant, at circuits, facilities these multiple finishing Stage plants, encompass at drying

II As teams a performed of the how functions. support these and this now infrastructure year-over-year as and demands. One note portion building is sequentially more is the down operations that the corresponding cannot well increase emphasize production inventory. quarter and with costs into as enough maintenance of new further site-wide in costs are on well these I all Stage

refining cost was the of our difficult related sales, other more that rare product versus goods the through as processes P&L. Note costs well NdPr to of out sold digits expensed one-timers cost the baseline production modest mid-single concentrate of in and not and calculation. the you product see sales to included production being year-over-year. in we and Following low the NdPr When midstream all quarter compares, the also up earth metallization some our as strip through were

spot in Lastly, product cost separated determined that we pricing. the exceeded inventory value in of based carrying the realizable our of recent quarter, decline a rapid early net on the its portion

we the achieving production cost our the cost onion as and production which the profile As production per expected not our touches products, pushing once sales costs of resulted recur expected American our That our million we customers. These we continue product a certain levels, our the to logistics we've rates volumes past, additional lanthanum into where production $X.X run unit cost us reach profile are full production included at we often where for throughput. unexpected is the was not half early to higher of about in ramp is back of More are this and charge separated put in requires we operations maximize and our as the particularly in will rework on of our serve plant that EBITDA. QX. as the ramp was in to peeling confidence supply North levels. taking and labor per adjusted staffed to But we may rate impacted finishing circuit-by-circuit us early quarter, Lanthanum related in cost the further spoken than towards unit yet once sensitive P&L higher of and write-down and normalize. This given gives than chain cost charges in of aren't said, looking

Moving to Slide X.

regards pricing pricing adjusted our impacted as previously concentrate concentrate see can mainly by EBITDA revenue sales discussed. our and to in again With results, volumes You specifically.

prices spot the would expect concentrate realized a decline of current current hold quarter we sequential mid-teens first pricing. the quarter, remainder in Assuming for

to WACC for more with QX prices market equivalent oxide expect As QX reflect off for notable pricing NdPr we sales, prices a the price. average prices metal of based oxide and

be our of expect the spot VAT. in roughly Chinese net the and calculated of to price the middle market price spot realizations We

Moving year over $X billion on to of under our the with We the cash. in net and cash CapEx just sheet of ended XXXX. spend $XXX million gross balance and

or $XX CapEx received $XXX million during As CapEx $XXX gross million the Net growth on million, for million with million spent of the $X.X Defense. year. totaled $XXX from we of Department CapEx net of maintenance CapEx, roughly

I. a capital raw maintain amount materials the Stage work-in-process parts from commissioning as well same as was in our working XXXX we've spare of and seen and as as II flow, in II increases cash world-class significant Stage to in Stage of Regarding uptime endeavor ramp-up of permanent inventory investment year we with some levels in

was to investment will capital flexibility. also maintain and up customer toll separated These inventory with processing needs, to required working goods inventory in certain Further channels metal us in on-the-ground for and our meet maintain particularly Japan semi-finished continuous operational product investments sales to growing fill sufficient set production.

metallization convert starting of ultimately in in in VRX NdPr While Through target we flow ability and funded metal we the into much partner of some which X/X markets metal, some semi-permanent, VRX revenue QX a of of primary Japan, China. processing moment. Further, owner of investment our investment, Mountain significantly and This output the XX% as facility serve, stake that invested is, particularly number cash the reduce expansion about can as of oxide million sales this us to a will of to customers to NdPr Vietnam. as our expanding investment in gives secured $XX the in Pass' toll Holdco, I'll have business. the outside QX ultimate therefore, ramp in and the talk we indeed approximately we

income of will impact an compares investment financial VRX modestly beginning our EPS statements, our recognize results equity in net which proportional We and share in financial will QX. method as our

While think how we to forward-looking provide generally through not I do about financially. walk do want XXXX we guidance, and operationally

the managing a current I of we in we the will on more our sales, shipping, in expect given are tons the book now detail but quarter. for as environment, moment, responding NdPr to cover XXX it ramp separated by year. tactically relates product timing depending a of to separations the remainder Firstly, little first of highlight to in the wanted ramp Michael our production environment than this sales that to pricing market

matters upside. year To this our cash MP we in our near-term to remain our goal really production ability levels long-term for position get flow potential environment. to targeted we while clear, price low achieve Our throughput in confident costs maximum is but maximize we there a be how and extremely

example. profit move normalized kind NdPr we of might our via we the as the of as always not unnecessary quickly a less or want The though, profitability. downstream as every illustrative to the impacts. product. Ordinarily, concentrate factor structure we opportunity we much incremental is any NdPr kilogram business. an price, provide NdPr, again, not not a world, to oxide an opportunity about the capture say, is we higher $X world refined We capture lot cost single say, most relative concentrate would weighed product as opportunity in the $XX cost refining costs theoretical gross me the production shaving, greater versus But Let our refined kilogram of optimized. eat so guidance, material refining, our of net about of incremental potential. Because inefficiencies cost significant But exceed the majority of and of $XX per where of important we the think state cost this our or our salable profit against flow-through the illustratively fully think optimize costs all conditions selling dollar possible. upstream as maximizing to is avoid production incremental of of that incremental as per variable simply, process off Put can $X is cost the at, product our that of benefit at you ramp in $XXX $XX when a up the a

XXXX production mainly ramping positioned is price But more model environment. in as this by MP uniquely methodically downside of think added low a with a So just consideration.

and will advantage, be in will detail expand Michael We in more moment. about utilizing on that thoughtful this a

Turning magnetics our to business.

EBITDA modest early metal with positive Fort and sales We are Worth thrilled from our expect progress revenue and later this contributions starting early year.

focus current be much expectation impact production we efficient material reflected Importantly, of be as we more that of to deferred we P&L in growth, hitting impact, early production certain our meaningful than Fort the to in which capital cash will result statements magnetic expect precursor revenue. our in products as on prepayments, Worth financial of milestones flow their product expect given

business early in customers strongly, discussions must to our in and of still customer continue uses roughly cash year we and ongoing, should delivering American-made operational expect result the success our being metal are sources that we While in this NdPr neutral XXXX. execute to magnetics in

$XXX production for Pass have couple to Regarding magnet CapEx, total net last precursor as goals achieve cost to guided Fort separations million full our plan we of consistently and roughly a growth our the Worth. product rare capital in years of Mountain at and

within Importantly, despite since our forecast. inflation on we remain enduring margin initial of error the that assessment

spend While than of had slightly expected will some XXXX. initially slip in CapEx reported we higher that XXXX, to

of production strong we this well that Pass our execution. early to investment, strong Upstream prices Mountain maintain expectations we our this further well to and the the XXK year 'XX, other on the make that strengthen down CapEx. Within cycle. between of spot profile. Even as full some capital and to $XXX very million cost our pricing including progress on CapEx, will pricing Taking regarding of regarding high-return caveats investments position a all total of further $XXX we initiatives and for to timeline both in million go to capital expect maintenance forecasting, this with into with plan, So as expect as spend current as potential through improve disclosed to approximately previously continue expect stages

of relevant or milestones a flow I product million production as with well our to to execution the operational our Stage with to III of of portion and thoughtful QX We leading balance plan. credits. We to II greater expectation on investment, and receipt discuss a tax XXx lot strongly gross capital certain expect a over ahead that it ramp of see Michael? cash-generative prepayments, results. than million concentrate the cash With Michael net $XXX to in of strongly the least and as working initial $XXX of Stage normalization achievement significant business, turn end of capital XXXX operating at of us, positive our $XXX of cash will million sheet cash, set funding

quarter Ryan. Upstream but hour our year-over-year. quarter operation. for The fourth an Pass business, was was up exciting In challenging operating concentrate production Thanks, Mountain per the

operating and factors combined several concentrate However, for hours therefore lower production.

solid had just first in to discussed, we operations. returned all the Upon early we and case. As was II less performance in included is on well Stage with site-wide often October, schedule. our Ryan outage scheduled restart that rework of November, required than The the outage executed completed

locally. learned, our pulled December, that preventative like that in certain next another and over us with maintenance solid upstream scheduling it confident reoccurring. Also But X.X all, to released lesson we grinding had operations prevent X improved cost production. unexpected approximately Approximately while approximately parts of non-operating several years failed On events months power the us were plant promptly their prior mill. of status will It to into This until somewhat is the consecutive XXXX. In cost capacity several immediately instruments important life outage. an days uptime. year available the expected service of had forward ancillary from was X another identified December procedures production additional these circuit However, this X has from plant was need grinding available, the not X grinding the and XX% powered skewed maintenance was are of in in up days we replacement. Instrument ever of outages. we but we an X and had of weekends, collectively not current our in planned power our our stability circuit And plants. result cause issue

our hour and improve uptime, of addition, efforts of production productivity. efficiency our demonstrating continued XXXX to per In level resulted REO highest in

in We expect renewed growth XXXX.

providing opportunity positive thorough circuits the few with inaugural scheduled midstream X conduct II service. after there were their of outage, surprises. equipment Stage the the new to discoveries serious to mentioned, mechanical a had months us of inspection previously As note, On a X or

However, than our than the attribute expected identified we process of re-inventorying included required led outage new from curing the this certain lanthanum installation that a more materials de-inventorying, we rubberware extraction cerium review, and circuits, circuit fourth excursion production project separates in a subpar the put restore optimization new planned. Part took Recognizing recovery the preparing, construction in the we cerium. In resulted and for workmanship issue an this rather the And weeks models our of After and in separation rubber-lined to from several We thorough addressing agitators. that this we in stability, than have adjusted service. are lost NdPr have II output. existing us behind which to fortunately, issues of NdPr new confident though quality. for installation quarter, good. slower appropriate action a identified and a of section vessels to these the the Stage inappropriate comprehensive we risk, to issue impacted section of monitoring and

and particularly are teams that took continue can to confidence earlier summary, changes reached in my the expected this feel we to to tonnes in in all production XXX with to period. In were bolsters we that and in result significantly of point. and quality progress Xx XXXX our opportunity circuits the circuits, significant Despite starting quarters is oxide the the circuit technology NdPr operations to we together. all capability continue certain several turning that challenges, incident, improve. these most This concentration that commissioned The quarter, previous after During going come and of Stage core stability II as increased as those We in implement that higher volume throughput will a well forward. produced operation, perform. chemistry have

NdPr customers. quarters, of last the have oxide many our with and we NdPr target major in customers our Importantly, qualified X metal and

going will more production convert quickly So forward, we into revenue.

sake. cost for improvement, and for we in NdPr production on focused production the on optimization room volume's as increase pricing are before extracting we operational pushing However, environment, more yields of focusing variable the current even volume we reducing volumes. have Where are efficiencies

approach low-cost operation us that drive generation existing concentrate cost profits products. towards this flexibility model affords our ensuring to while market-leading separated the prudent and maximizes cash and Our integrated take structure we for

incurring important sufficient run latter, to like certain are relatively at this improve creates the where the To viewed continue chemistry. incremental from bottlenecks in we when from costs extent, must end, areas inefficiencies, volumes and admittedly running and I'd we circuits. commercial progress. solely costs our short-term, that operations. In higher some to of evaluate the this near-term lower continue are make in For circuits II execution. all capability at uptime To But Stage lens the to to certain reiterate variable we we

week, progress opportunity address furiously these improvement after are There sometimes are reveals to We we see and one working progress. additional area, week elsewhere. in for

have date costs. Recently, and examples made but a ton rejection. will provide are absolute reagent stage, improve of XX% with X%, rejection XQ produced towards same this In increasing very production results. making understand maintaining games yield to can key our variable few the than circuit, a consistently achieving financial breakthroughs to is reduce high types working like consumption our be will plus, our per so driving you more we've and with of leach believe cerium of at target NdPr we at to been NdPr we X% cerium while to be other still more the our time, further, and in sustainable opportunity NdPr in evident There I'd improvements This recovery. improvement the several we philosophy. and

Next, heavy rare process bulk the separation or rare light our involves first earths from step SEG+. separation of of the earths

feed had initially XX% limiting effectiveness here X.X% the At is down SEG+ than here. And volume the concentrate light time, be extraction. same separation, would efficiency produced. samarium reagent focused per to vice improvements Nd and remain of benefit usage the versa. X% ton rare greater time. this with of earths Our on assumed than of our from we Pr. This earth a in target the fraction reduction and with amount light greater for levels to in of stability, we ton of additional primary achieved less NdPr focus the SEG+ particular XXX% have the over production XX% spec is in rare improve in per our on We and down this to circuit now of on These opportunity

production, production, percentage target only We've in lanthanum our X/X the single-digit represents a of of but seen revenue. per Lastly, which capability. recently largest production volume a increase shift

we is an where significant production. debottlenecking our for and cost to this However, operational room area have of mechanical reduce

upgrades will operators look We in implement will maintenance reduce several and help to XQ and low-cost that teams. the our burden on

We these expect in to achieve a year. return on a upgrades under investment for

for first to concentrate will run XX.X% reliability we plant As production operate experienced and years greater that rates, XQ, the than the expect operations. we've that return power normal of at X will for the

which concentrate from more difference production. it higher will our efficiencies to we production expect of of be relative we oxide much growth will And do environment, focused also with as volume up the in made and on, February result for of Therefore, in not NdPr reducing we to spent that, materially, Given XQ, through back I'll significant operational in current XQ. The have we production. to our and in efficiently projects. grow ramping on-spec possible the XQ improvements But as in variable costs the obvious over produce turn will January cost extracting commitment Jim. on attention above by expect

Thanks, Michael.

job. excellent just you doing from heard is at Michael, Mountain As team an the Pass

while A refining The said made, of upstream on be expansion. efficiencies, progress the lot be or executing it can same ramp NdPr are been say maniacally on nearly of The is dramatic whether from and the are for state has the peak XXXX. about they steep year, towards spend. Unfortunately, revenue think a the II. that and has decided in to production been as particularly being macro of has lot beginning price levels, is I obvious industries magnetics over XX% We kind the the calls, vehicle has to pendulum team. have we I factors least. right mindful decline its Street not basic The in the working first swung. of capital market demand electric But more recent Wall it we Stage recent from past for has on were bigger the now. essentially it know to commission just something in happened the China. officially has impacts in been months. The has Armageddon discussed collapsed

seen We by now around announcements OEMs and have is to to number dramatic disappointing sales slowing down and of timelines. One from in been major been rising press the discipline This around expectations EV hybrid the the increased reports timeline acceleration any a now was In followed critical prospects the for worse NdPr of inventories. recent bright has capital versus variety expectations. a relative electrification electrification The And all bullish existing which cost ICE the is sales versus of the for materials case, extended. are reasons, penetration has demand therefore, levels. higher. near-term capital for prior spot

And distress my some we will out there. guess stress. We seeing see some is are

of is EV of downstream reset the their is expansion. something control. the environment pricing will EV strategic Western nor Those control The happening our majors buy and of aggressive price us what back and investors Lynas. Whatever controls clear will a prices In our be. What number significant and can corporate our of management. are be. That made have assume and and we across sheet not now, and of pushed almost NdPr space. assets, about then I were Some execution can accordingly. XX% they balance remaining and material inherent firmly so our the sector cyclical super not There value of is stopping paint we the That stock. We long execution China to much operational OEMs penetration financial when pace higher, share is Not ago, amount then market not in excess so rare to been A to believe MP the extend prices, leverage is commodities said, is that XX% be projects to will think our we landscape. we the Neither although in we materials we our value long-term and via broad that Chinese brush said, of what lot are it we X have a rational have have scenarios. equally of in where more geopolitical of economically the proceed canceled, a is in variety capabilities remains. a earths, the long-term

Our was right balance the prudent decision a maintain to decision. sheet

like market cost too uniquely seems replacement far value the it though, strategic assets. given the and of swung nature, pendulum position has low-cost our Now

it to recent this. others think assets really there that appreciate our given some say, press I is understand who reports fair and are

the at wanted ground to lay work I'm the M&A you just section I comment to will I this on speculation to mention time. If keep So this to this in that referring asked, transcript. back going not

hope you're right enjoying live So now. it I

However, I largest crystal shareholder. want I'm clear. be to the

Our extremely team and duties To in employees we our do the We will fiduciary are take the sense it. to do extent shareholders. future, seriously. something management makes our large

also to payback our opportunities. the as timing more of means adds In can us now critical remain out cost a manufactured it assumptions, be is and more continue intellectual deadlines. to the of playbook. risk, or matter opportunistic capital means That of and plans Having organization unemotional than You and achieving home one paramount. aspects count and on run all down the somewhat periods. new to those prior MP are execute exists will result the It higher. to is throw there fortitude to be with thoughtful. In a meantime, of cycle,

operator? with With patience rewarded. think be do I will us So that,

Instructions]. [Operator

Deckelbaum TD David with Cowen. today Our first comes question from

that just $XX range XXX The -- comments take square efficiency a guess now more of you out the and that between that If over incentive give think of at this ]. and Ryan that together, NdPr a production? Is all Jim, it max expect wanted I should enhancements kind the Thanks, back balanced up get like and with the some long of what Ryan, $XX a a sort approach $XX separation kilo organization laid rate they wanted understand about price Michael, kind of Michael's fulsome Ryan -- of the I is like that tonne NdPr pricing target just assuming obviously in with changed to irrespective just just just we for more still month [ has looking things to to I Michael. there facility or we the selling is making that year. around is around how level? or where term, that now, to operational guess versus concentrate. I you I

Sure. level, David, $XX start. it's $XX question another separately. might the can we push I'll I incentive to address on back Ryan. that's but that

question, I from of think cost production there view where frankly, no change is view, our perspective. get core of our and we we a think target answer to long-term our will your structure in

significant we've seen target confident producer very the are the to We in a being that in And we in results production. confidence early low-cost continue world. build from reaching our

incremental lot I think price again, a are production, so that pool profit concentrate point, might when $XX at is the from of at to those you're that is early going what that, the a pool, to we're inherent there price incremental a inefficiencies profit stages look not matter say available much in variable oxide. When for really early cost these to trying profit at $XX you smaller. point, inefficiencies $XX incremental pool

closely the that And some thinking upstream really saying interim. about of inefficiencies versus as very in profit pool so [indiscernible] very, and the incremental cost product is selling that we're all opportunity of we're

so And really we an operational cycle, have scaled what sake, we push ready how target here to in the this get volume's want Michael, volume to else for message the you'd for you perspective. think not the we on going to from pricing know, I environment. be is anything our and That's is message. if add but up I big matters are don't

too Not add there. to much

I meet those as work efficient possible. the Ryan in way through going that said, most to we're that And had as with targeted. volumes ability the we comfortable to production we're very think

hoping Appreciate could of if it. bit was XXx. the I you on give little a just color

might think have you more this on the visibility refresh of some Could around us funds And what's is I as you've we And for? source mentioned just that? the expectation, something that you that guess, applied just it when already a year. timing? I

Sure.

oxide. So David, the mineral for production tax NdPr the on side credit the is XXX critical

see of have that nearly exactly and point that about of various definition quite our press this magnitude receivable receivable. to the aware the calculation. What million bit ongoing to nuance that we a on of as about calculation, it put a order make in in with to into funds on a regulations. costs there's speak $XX my earlier the government proposed of of the we've being into actually of you're source million release existing the this of based is XXXX conservative and There's approach a sheet a probably this You'll dialogue balance lot grant treasury we $XX

nuances One NdPr year II millions into circumstances our facts service assets in the our and order meet of unique is of this year. hundreds that put the we in of certain to dollars sales of made the related and fact here of production, Stage

of XXXX. take be nuances so XX% And course, initial production tax us would those of an there going forward, then, in that's cost. to credits production targeted ongoing credit at And allow

definition overall cost. is right is treasury the now debate of think exactly with the production what I

the so the forward feel that on we back confident that But And conservative to that. numbers here in of put interpretation you get one. are very again, we

next today Our George with from question Gianarikas Canaccord. comes

I'd still that's like curious on your whether this environment. discussion ask this I'm pricing to this long be current if past. which $XX. $XX how that that thinking? conference level to to Inc. as so, We've it's unprofitable. that expect that's relatively at through money the given you hard make at you on China at was And about level calls your broken had Jim to we've thought assessments And

Sure, George.

who's being always a flowing here. macro -- rates there's EV and unpredictable, demand lot industries So to one of are anxiety, of give basic a parts through. the of still with to respect lot But pricing, impacts talk a with the prices. I'm direction it certainly caveat takes of pick commodities think I I'll pretty as and puts that things going the be and to to some we But mean around look able not are comes perfectly I when China. XX% parts. and is models And kind in landscape, moving there's that moving those remember still interest of disappointment, different range

distill So this moving of sort what it's quarter. really parts are the hard in to

new cost term, sense. -- But in even saw any overruns NPV past the levels just and -- our I funding at headlines week saw projects to again, comments, this don't NdPr is government said in of these much to there some levels, some negative. make of we $XX -- is up I actually huge is analyst a We these pretty with were earlier about potentially back Australia project reports, uneconomic long at big as that having we're talking go

been this that supply as a seen of so we've what environment, lot as well there And in is think demand disruption there's been I has destruction.

around the like so that I to relative disappointing And going many consumer just levels. expectations pullbacks China, and but sort HVAC keep headwinds of with of electronics XX% At sort some we've some to moving supply what so point, were there's of back sort disruption industries destruction. the basic had XX% again, parts. But associated macro with at or the of these prior the that coupled this the in with some maybe in EVs commensurate is demand then of

lot And demand there hybrid talk pocket. concern Hybrid of I at the the crazy, on XX%, the around of sort last about, some you sales mean, a would do a that sales about that, on I sort is hiccup say sort were by right? think EV guess a going or XX% of You're I cases. I you're air concern side, in of that thing happening is lot if what's an is -- that seeing there's of seeing look out where then and the And EV really up landscape. go this the

utilize And incremental X/X about NdPr of that not ICE EV an so to would that think let's when the hybrids penetration, typically we XX% forget vehicle use.

going be the are demand. new of hybrid plug-in electric, a the of in if And big state so electric/battery this we're world combined portion to where hybrids

that you're of faster see macro might out people that on track other get going then that China. think some sort think things of through sort XX% play and than that of growth to I the back of will

long-winded we as will certainly don't know. destruction again, well. has to a saying, pretty this back But way environment supply -- respect that's come demand been is the with and So of then remarkable prices, commodity

guess. short So medium the and anyone's remain term is we bullish, but long-term in

a color. business. Lynas rumored the appreciate know really entertain Maybe be merger in like What as follow-up. would curious piece Europe or just just you industrial can that said the on of I logic if the I'm you us. I something takeover. your

and you're from want what that's ask company look always this objectively, you refer just guess I'll have. question I way things was that good cut comment asking. I I back other to wondering I on guess, in how fun many M&A a at I are to asked way would of get I generic any the appreciate I and speculation. mean, can I mean, and I what sense, costs different the So when that. any a is ways say guess would that to each there around jokes I learn I it. all companies could don't you script. And

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Carlos today Alba comes from De Stanley. Our with next Morgan question

Yes.

will on mentioned that? a Ryan prepayment? we a is if your the you question it So some Can it of of level understand this bit model didn't little prepayment properly I -- comment that I to expect downstream And so about you oxide sales. get get a or when was think can more downstream, you to as do

it's Carlos, Ryan.

or specific You mentioned to cover We're talking into on not help in customer course for conversations portion quantum. are very would prepayments of of the What were expectation as related a we business prepared were an I details the that the year likely of the significant was remarks, Fort my about that's to going and magnetics right. timing Obviously, CapEx Worth go facility. remaining that over ongoing.

that we is and you possible. rapidly and with tried success to though to operational that message guys expect from I major we capital give the the pushing to understand as as a think expect perspective. building towards I year balance sheet where blocks end the we're that

here. but of we of quantum with through the it's remarks is you ours puts the backsolve will as to very go But what think those takes, course a positive of you obviously success and I lot into measure can kind And of and think so of I that the them year. take something do

All right.

did, the company tolling that you're company [ that investment the that you with. ] working you also I the Vietnam, think Okay. in And mentioned the foreign of

at I control fully Is think now. you stay XX% there integrate that that that operation. and you an maybe to a you expectation Or potentially more little would like own bit level.

your on So mean, bit you maybe destiny more tooling a of that little control have you -- I process.

put we Yes, is may have was a how support to in of capital business any growth amount we it's question. think at order in now have don't in to I growth the place working factor particular we that us. the that the output great time that have The of I really potential in, think a the facility. things structure over say, for well prescriptive on stake view in that we right other look very than XX%

a of drive that over arrangement, time. facility which the to with to amount able to that addition investment, lot have through certainty tolling In as us we obviously the volumes we'll be provides of the

bit I we've the quite a the now, and in framework that combination of VRX. accomplished think tolling investment with as it so And stands right

comes from question Deutsche Bank. Blanchard Corinne Next with

talk you could III. Phase about Maybe the

again how much? you Texas Is construction So the facility. remaining you said CapEx, walk through, us completed and the expected any there of the there? you timing Can

take Yes. that. Corinne, it's Ryan. I'll

my Sort of answer to Carlos. following on

building well alloy relates that to of and at service, in of equipment both date target the been XXXX. and the precursor products, metal in ahead production continue the And bring of the and And to magnet has Worth significant in-service Stage III continue Fort building. as to factory that meet completed end we our fit the that. as infrastructure out the into facility, lot it As itself of a is but capital support to

for this regard was drive our certain those prepayments metal that the at producing our facility And DFW in expectation so would success to initiatives. customer on some my earlier in of commentary year, and based later

cash continue a -- execute, in capital there the important Stage go flow assuming perspective, here we really to prepayment III. the to XXXX, a for versus relates I as balanced impact certainly, is in on still products it the thing But sort from more on the cash of investment to that is Stage So plant. III flow of think

Okay.

maybe of it's I that question, get trying So to kind was and answer. a difficult obviously,

to have like talk III, You little pricing critical where it. have II. for you to Phase But you volume about started the a you a of bit already reconsider level in some Phase where have do to reconsider cadence the

thought have critical it's months that like, X not It X seems are now. -- ago, a would obviously, would we price that ago, it think level. to XX, like a I we months be challenge, XX around but where maybe it's

So I'm already which the get trying you which into price just -- to at -- there? levels better do changing strategy

Sure. Well, multiple Corinne, let that. me parts to -- there's

make were beginning we on back our to business making all. how business the investment. that In to earlier said way think that we up other attractive weren't we stand-alone Peter a Paul. think rob -- if business to as capital repeatedly them very I in we I Stage have III, take to it With careful were some going words, return to going that and on to of you earn me respect an we we set sure viewing Let calls, where pay that

world that capital, what exist. doubt that of electrification doesn't chain the proceeded we're But sure attractive an a the initial I And that so contracts the talking to has pace that structured Western to on of was overall around penetration. business. felt make basically of supply as we no changed we the tell that, the would and with cost we like that world respect about with that There's you perception playbook is

out of chain just capital from -- the willing with desire exist. Admittedly, that back of opportunity. can't that if we're from kind to -- see know really to And act of knows. I think customers, always things we're from supply can large. that yourselves that environment if a and repeatedly, a within addressed and zero commodities even people is at challenge me, time to any just the all of take tough, to attractive lot is say the though prices. forgive sort execution today, still we a kind knows. you And Even position what to prices, nobody the this on this pain very overall Nobody But on is I are everything there's you something make With the opportunistic and of extent still earlier, hearing to and I writ for it's from you ground To want there's this from so other we throw something important, flexible you all any and makes going can control. inside, predict sense. changes, the to playbook a I happen I standpoint respect because do

up world. our to we set a to look business, sure of sheet our that could we And survive low-cost at balance at from environments. initial you And our the variety make if concentrate business look today, beginning, just we're a producer the

as get they forever. but so indefinitely uneconomic they that course, for And cannot period things persist be way a time, of can uneconomic, of

expand incredible. in And And so were mean, of we done billion. again, REO XX%. I few about worth absolutely not and of about the this wanted ago, sort MP environment. think amount think our right, perceived get We're capital things cost. $XX call approximately still today. the a on a there's what Upstream is cool of we by if this standing is work today, about as that's that couple when of lot the XXK years be that's negative AI being as highlight if focus assets modest pendulum we And low output today, before -- you people is But why to you a our to on EVs is a I to to had business. of again, the

that period now of a new for over XX%, add without that long upside and by adjusting billion time. means the So is inflation $XX

can executing and the is we these we that things so, that this. point do all And control forth, pendulums is work the back swing and control can on

And thoughtfully were cost. really Stage to is important. thought We business, not -- I is made -- might that's incredible and few the bucks also environment, XXX lastly, the were in progress bucks having survive so environments that go. We've our But think -- II, through thinking way we last respect or prices do II. care we here this NdPr, have sure few I this very low are a comments ultra our that but point new just for to do. also With playbook about is we if Ryan's we fight like And about a of I making Stage why, cost. great that refining a in to what in at long operations, is And there makes right?

strongly. have have lot because right? cost you survived control have took to you we -- hand And get -- these you you you assets lived If -- We through down and mouth cycle of when went time. of of no but a survive cycle need it a alternative quite we've 'XX, was and in work. down great really that, to through for that's When some your to do a

this how so And about lot time do of doubt no and prices. we will, not thinking trying time, We a that's we're that predict things. to spend

Bill from question with next comes JPMorgan. Peterson Our

And sort similar is Stage minimum kind cycle I'd of pricing right of it Is different guess I of maybe a lines -- need would where words, like price a you to advantage a in kind higher cost yield, guess, ] II, a leverage. can take to improvements finishing. II? maybe question would rated is continue to level [ of improvements there I improve there run minimum of other from or debottlenecking such higher that Stage running really cost you make you try way. overall lower -- through questions level more to of a like environment, could to across separation, ask was a there if you level? that In by

want go you do Michael, ahead? to

Michael. is This

Sorry about that.

just think circuits the commercial all significant that throughput part volumes. off are to I with we at and running start last question, of currently

demonstrate throughput effectiveness So chemistry demonstrate we at those able capability to of and to processes. our the demonstrate are levels

question. we in business uptime in do run of parts Stage II do the a Stage the of business the So that's not lower upstream II at than or all business. We

As to of we operation. make improvements the each continue in area

concentrate producing see about for trade-off We'll We through versus will that at cost the Ryan structure that down that and see II Stage come more swing. pendulum sale. modest also more and running talked running volumes

material get XQ, reagent -- an expect we of once effective we as a we where through far. or starting so more at we in it and run recovery become we're in But gets that expect I that NdPr method, yields And mentioned, to the more leach most leach noticeable. and maximizing will position area

will when we're We produce not have finishing. also material or a product. through operations in in, that make material at to that for finished we it we're example, as losing processes But sure to purification want product point, losing inefficient

hard make the before that game up those we process we through process. the losing and of all sure things, process, So want we part to of in volume push running the integrated end won efficiently have one

volume's the pushing do And see every [as] And see not process also That we'll the every progress pricing we is that what to start. works. confident already opportunity that better. a for very single see in said. day, we're repeat it to day. So necessity current just because see environment, sake just we've the We of trade-off the we volume do we [indiscernible] economic that

was is may right guys you not make XX number where what do mean, how that work some And kind framework I then what there of pricing, XXX. on more of attractive, the sense? be may the like to -- What XX the see -- maybe that

this Yes, Ryan. is Bill,

the XX Mike, my price. offhand was do on I that It to it incentive free unattractive. that, XX that many feel -- projects [indiscernible], was not start. in, think I'll comment think to was is maybe for actually greenfield my jump I not but

referring the think what probably I we've will That's of seen to comment. largest potential not Jim's XX back that are likely to in and which supply be lot one a will world. and XX to the economic out there think projects additions Western at be, exactly there hopeful they of is

So that was my comment.

our I the it incremental XX, product XX. think know profit product we the profit get every going upstream and is do trade-off again, make is on in separating But not, versus and an to at we makes that pushing you significant incremental suboptimized of what of cost There's and you Michael process variable through can product parts selling from suboptimized on I to think we decision yield run as incremental -- or at day, based at adding volume profit just potential whether trade-off XX dollar the to XX concentrate the for the selling potential at oxide. are prices these losing the of There or the maybe incremental math to the was volume if sake. or to push that a walking that worth that not it, XX. single profit

reality sort I and think financial broken stuff lot because online global calls, hard that meeting a just hard analysis these the massive to -- because referenced of online. sort necessarily that it really we and they will expand to number. come at earn cost this but has that incentive can practical it probably the And the is when I pick look an biggest online. incremental was number supply just does out assign is come a upon how perspective, that it want of Ryan things as of sort an -- and reality it's on referenced, like complete where said of source not easy attractive are because get to to to get have I've come out this I about potential add know again, a overruns just talked From and a the record, expected The have people supply and to of of return price Australia again, online and then expect is, there's of support capital at sort very about

It's that that's also any to to that Upstream we there these is XX. to supply want also you clear, there's to was incremental really here, maximize prices At our was because not cash or long-term flow. get to of cycle not ultimately cost what get go moving a are ability the the the seems ability our value pendulum should we not we to suggest lot That's being people what again, have. was And numbers, is. bring days. view amount But why faster know the take point was we that because are swing. appreciate But this at I of on profit still working back challenging. we relevant comment Again, incremental the thoughtful to very those typically, just a structure That giving And when supply. our extra will why, maniacally down Ryan XX online. these believe be that XXK thing of to about medium if or the we be

people back more even And so that much pendulum may than quickly swing think.

that's well M&A ask I'd kind you're to way, actually of to getting but in all similar understood. what maybe different like of kind a Yes, at.

a about actually I efforts, ] You if other even at opposed out on heavy for market ] these as are you stressed of may like I'm M&A, interest that light sense assets are mentioned like that's days. just [ that. rumored there wondered valuation as talking magnetization potential earlier there as think about lower maybe [ areas a makes Are assets your or take about the about things to rares not part of as -- to you I'm talking there long-term assets. the

inevitably it whatever, And they y project, rate discount it typically, or -- I about you is now. rate. absolutely, where is typically happens us promoted it have do able and period it Bill. how and over mean about what disconnect at there's that's $X.XX, to is long x think Xx cost think it's to a started we for expectation to to at a turns is a pick out our when important have and we've positioned -- if lot you able something. y why happens a will. there be who's dollars I want we'll Yes, the the talked someone up of or time, then going they to company you invested is think very like plus discount to be get cost And be times of offensive

to there cause that sort doable needs perspectives to two catalysts so sides. typically be of all for is that those to And converge something

caused times weather, that now that times like the of to And kinds that are happen. that cause

saying expect XXK, run opportunities go so a anything think And home some Upstream But is, right will be out see out way long-winded that looking from there we're opportunity always the is investment opportunistically which that relative we an now. standpoint there of the this. again, that's to of I enormous whatever I and to is an a

David Sunderland Our Final Bayard. with comes from question

I the update. talk volumes about the been year that's wondering this up X Upstream XXK, more you ramping Appreciate think incremental Guys, physical spent and that we on completed a years. for expansion about that little could just the be from if time. thanks will was over next capital for maybe any just that how already the bit

Mike, you kick to want us off?

year be amount capital total relatively right. spend this of The That's modest. will

additional efficient have circuit, small the to kind grinding, more one have That's we which capital recovery. ongoing. We think contributor capacity there we grinding to some also our which a flotation activity we of equipment key expansion better that and release result help in think will will be

and We execute we're working have of all capital these as efficiently significant plans other as piloting to possible. activity,

the As at optimizations, One are we some sort the investments, it. I've of change throughput past, larger a there's that three the which effectively have sort no sort to of are in Others of bigger modest looking production. which capital increases and sort lead much for investments there's over of capital. ways is said potential, of step of then possibility improvement hope

talked about second I one that we the category think now in modest. with is ongoing the So project

this recovery, don't capital that change step but be would into some hope in we we year. degree to that Modest plans that of for built have our

to online of half we in So bring the hope year. the second sometime it

Litinsky Jim questions. over for will turn conference I conclude all now remarks. you will the your to the further Thank That session. for Q&A

business And coming very are that ahead. for And Okay. clearly think pricing I remarkable. to board reiterate just well despite has the really what no execution stages doubt Well, positioned across a environment, I the all we been wanted tough and the thank our years have everyone. you, of months is I that across

just prices can focus execute So for and working we won't that we it. things control the keep on were we wish We'll but to on higher, continuing you all.

quarter. look you forward to So we everyone. Thanks, seeing next

call. That you for concludes conference participation. all Thank your today's

disconnect You lines. may now your