MP Materials Corp.

Ladies and gentlemen, thank you for standing by and welcome to today's MP Materials third quarter 2020 financial results call and webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star and the number one on your telephone keypad. If you require any further assistance at all, please press star zero. I would now like to turn the call over to Mr. Jeff Matejka, Investor Relations. Please go ahead.

Thank you, Michelle, and good day, everyone. Welcome to MP Materials' third quarter 2020 earnings call. With me today are James Latinsky, Chairman and Chief Executive Officer of MP Materials, Michael Rosenthal, Chief Operating Officer, and Ryan Corbett, Chief Financial Officer. During today's call, we will make certain forward-looking statements that do not constitute historical fact under the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are predictions, projections, and other statements about future events that are based on current expectations and assumptions, and as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this communication. For more information about factors that may cause actual results to materially differ from forward-looking statements, please refer to the risks, uncertainties, and other factors discussed in our SEC silence. During the call, management will also discuss certain non-GAAP financial measures which we believe to be useful in evaluating MP materials operating performance. These measures should not be considered in isolation or as a substitute for MP Materials financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measures is available in our current report on Form 8-K, filed today with the SEC, actually filed yesterday evening with the SEC, and our earnings presentation available on our website at MPMaterials.com slash investors. With that, I will now open the call up to James Latinsky for opening remarks. Jim?

Thank you, Jeff, and welcome everyone to MP Materials' first earnings call as a public company. We're all very excited to be here, and I want to express a bit of gratitude to everybody who helped us through the business combination and listing process. We're grateful for all the efforts. It was a lot of blood, sweat, and tears, and we appreciate it, and we're excited for all our new partners on the phone today who will join us on our mission to restore the full rare supply chain to the United States of America. Since today's our first earnings call, I'm just going to begin with a refresher on the business and the MP story, and then I'll turn it over to Ryan to walk through our financials and metrics in more detail. He'll update you a bit on our Stage 2 optimization, and then we will open it up to questions. So, let's start at the top, and for those of you, there is a slide presentation on the IR section of our website. I'm beginning on Slide 5. So, So for those who don't know us, we own and operate Mountain Pass. It's the iconic American industrial asset with a unique and storied history. More important than that history, however, is that today Mountain Pass is the only scaled source of valuable rare earths operating in the Western Hemisphere. It's a world-class facility with unmatched sustainability profile. When we acquired Mountain Pass in 2017, We saw a powerful opportunity to fill a critical gap in U.S. economic and national security by creating a domestically sourced supply chain of rare earth materials as we enter this new age of electrification. When we acquired it, Mountain Pass was in cold idle status with a skeleton crew of eight people on site. And in just about three years' time, we have taken the site to being fully operational, and we deliver 15% of the global rare earth content in the world today from Mountain Pass with nearly 300 employees. So that accomplishment, and we should say, obviously, that the, you know, for those of you who knew, the key use case is NDPR, and we'll get into that later in the conversation. So, what we've done to date, that represents our first stage of our operating plan for Mountain Pass and for MP Materials. The next stage will be refining, which is optimizing the existing facility that will enable us to produce separated rare earth oxides, and we will be able to move downstream and capture greater margin. Looking further out, our ultimate goal is to move further downstream into magnet production to complete our mission where we'll be, you know, doing the full supply chain for magnetics. So this opportunity is what spurred our business combination with Fortress. Again, we raised $545 million in equity for our long-term plan, and we are already cash flow positive, and we expect to continue. Moving on, the next slide. So Mountain Pass is truly unique. I think a great way to describe it is what Saudi Arabia is to oil, we believe Mountain Pass can represent that to rare earths. It has a 70-year history. For those of you who don't know, it was the global leader in rare earth production for decades. And more recently, about $1.7 billion was invested by prior ownership to modernize the facility with a best-in-class sustainability profile, meeting stringent California environmental mandates. Critical to the Mount Pass story is our unique combination of a world-class resource and this state-of-the-art facility. We believe we're the only co-located facility like this anywhere globally. And the advantage of co-location is that it's vital to consider that advantage when you think about a market that is now dominated in China. We were able to you know, regain 15% global market share, really based on two things, the tremendous need for rare earths globally and, you know, now the opportunity to become a key supply alternative for those in the rest of the world. You know, these are, you know, the sort of great opportunities for us to have this co-located facility, which, again, is really unprecedented elsewhere in the world. Today, we're producing approximately 38,000 metric tons of rare earth in concentrated form. And as we execute on stage two, we expect to produce approximately 20,000 metric tons of refined rare earth oxides and are targeting production of north of 6,000 metric tons of separated NDPR. Based on our S4 pricing assumptions, that will support a target adjusted EBITDA of approximately 250 million in 2023. I want to emphasize that executing on our Stage 2 and hitting these targets is our near-term focus. Stage 3 is not possible without Stage 2, so we will be maniacally execution-focused. But I would say that behind the scenes, we continue to plan. We are working in parallel. to make sure that we ultimately achieve our mission over time of transforming this company, the cash flow stream, to transform our business, reduce our volatility, and grow our profits over time, which we believe will create a lot of enterprise value. Moving to the next slide, I'm on slide seven now. So why are we focused on NDPR? When we bought Mountain Pass, our thesis was simple. Electrification is one of the biggest, if not the biggest, investable themes in the coming decade. Rare earths are the foundation of that opportunity. Simply put, NDPR magnets are proven to be the most efficient electric motor technology. Many of you may follow the battery market, where everyone, including Tesla, is searching for the best long-term chemistry. But when it comes to the motors, it's the magnet. I think that's a really key distinction that I think people often get confused Our materials do not end up in the battery. They end up in the motor. And so, you know, it's really agnostic to the strategies that you see out there, whether if it's lithium ion or hydrogen or solid state, whatever these technologies ultimately are, you know, the rare earth or permanent magnet motor is likely to, you know, really be the dominant technology for decades to come. And as the largest producer of NDPR in the West, we are effectively a picks and shovels play on the EV revolution and broader electrification theme across all sectors. Moving on to the next slide, and this is, I think, you know, one of the things that is so compelling about the opportunity. When you think about you know, electric vehicles and wind turbines, drones, robots, but just focus on electric vehicles for a moment. And we have roughly 2 to 3 percent penetration globally. And, you know, look around to various estimates of penetration. If you think we're going from 2% or 3% to maybe 30% or plus over the coming decade, that's going to create a 15-bagger in the market for magnets for electric vehicles. And you can do the ultimate math of, if penetration goes to 90-plus percent from this approximate 2% or 700 million-plus today, we're talking about an electric motor magnet market that is in the tens of billions of dollars. And, again, we are the only source of supply of scale in the Western Hemisphere. So, moving on, you know, this chart, I think, really, really shows that, to date, this demand is served by China, as well as one facility in Malaysia that is, of course, in the Chinese sphere of influence. The Chinese have really thoughtfully, methodically, and strategically taken control of the rare earth market. You know, especially in today's geopolitical environment, this creates a lot of economic and security risk in the U.S., obviously for Japan and many other nations as well. It's clear to us and from our industry conversations that the world needs and will support a diversifying supply chain participant, and MP is the only scaled operation today that can meet that demand. And it's important to add that, you know, the demand environment, as you saw in the prior chart, really will necessitate a need for significantly more supply. But that supply isn't easy to build. Remember my earlier comments about, you know, ore body, you know, us being the, Mount Pass being the, you know, Saudi Arabia for the analogy purposes. You know, it really is a barrier to entry. This is a capital-intensive business. The mining aspect is a small piece. It's typically about 10% of the cost structure. It takes years and billions to find, vet, build, mine, and ultimately separate rare earths at scale. And so when NDPR really becomes, you know, even, you know, so critical in the commonplace, I think people will be, you know, excited to recognize, you know, how much of a significant competitive advantage we have today at Mountain Pass in the Western world. Moving on to the next slide. You know, we want to restore this supply chain. And I just want to talk through our strategy a bit before I hand it off to Ryan. You know, our stage one is complete. We're delivering our concentrate. It's approximately 15 percent of the world NDPR supply. And we're doing so profitably and with a strong and consistent growth profile. And I would remind you that as we think about moving forward to stage two, you know, on the next slide, that our supply will, this will not be additive to the market. Our supply is currently being sold into China, and those refiners separate that into NDPR. When we move downstream and finish our stage two over the coming year and change, we'll be able to capture those refining margins, you know, for ourselves and expand our customer base and geographic reach. Moving on, you know, for stage three, we will then be in a position to, you know, to fulfill our mission moving downstream. And, you know, we're doing all this in the continental United States, which of course means the onshoring of jobs and enhancing our national defense and economic security. And it will be an important contribution to a sustainable future for all of us. I'm just gonna touch on a couple key things on these slides on the stage one. If you look here, and I think this is just a really important point to make that might be, although it was in our findings, might be some new information for you all. Molycorp, in their best annualized period, the predecessor entity, was only able to produce approximately 12,000 tons of REO. We are now producing approximately 38,000. So our production is north of 3.2 times the predecessor entity. So we've really solved the challenges that they had. And I'd remind you that, you know, at some point in this life cycle, you know, as I like to say, death taxes and cycles, You know, at some point in the prior boom, Molycorp had a $6 billion enterprise value, and we're now producing north of three times of what their best period was ever. You know, on stage two, if we can move to slide 12, I'll just point out, you know, when you think about it, when we were kind of thinking about our predecessor entity and you look at that target, That would have implied that they were able to produce approximately 675 tons of NDPR hours. Because our optimization project is going to add roasting back into the refining process, which was something that they skipped, You know, we should actually be able to inherit the benefits of our ore body that will significantly lower our costs and improve our reliability, as well as reduce our environmental footprint. And so that should lead to an even higher recovery of NDPR. So we'll be able to really maximize the economic power of Mountain Pass, focusing on the much higher value NDPR at a lower cost. So that's our, you know, that's our near-term focus, stage two. But moving on, and I'm on slide 13 now, you know, we believe that there's a more compelling long-term opportunity, particularly when you think about the numbers I showed you earlier of taking advantage of this unique asset and advantage that we have and building a fully integrated supply chain in the West. And, you know, we really have a tremendous head start to do so. And so we're in the early stages of this process. As I said, we are running this in parallel. We are focused on the execution of our Stage 2. And we're very open that this is a long-term, multi-year plan. We need to be execution-focused. We will buy, build, and or JV. But the key thing to remember here, as you think about our company today, and I know many people, investors, often focus on the coming quarter or two, economically, This opportunity is truly transformational for our company. It really will allow us to reduce the volatility of our cash flow, significantly grow our cash flow, and that should transform our company into a true industrial asset that we think is second to none in the world. With that, I'm going to hand it off to Ryan, who's going to walk through our financial results, and then we'll take Q&A. Ryan, over to you.