MP Materials Corp.

Hello, everyone. Thank you for your patience. Welcome to the MP Materials fourth quarter 2021 financial results conference call and webcast. My name is Daisy and I'll be coordinating today's call. You will have the opportunity to ask a question at the end of the presentation. If you would like to register a question, please press star followed by one on your telephone keypads. I will now hand over to your host, Martin Sheehan, the head of investor relations from MP Materials. So, Martin, please go ahead.

Thank you, Operator, and good day, everyone. Welcome to MP Materials' fourth quarter 2021 earnings call. With me today are Jim Latinsky, Chairman and Chief Executive Officer of MP Materials, Michael Rosenthal, Chief Operating Officer, and Ryan Corbett, Chief Financial Officer. Before we get to Jim's, Michael's, and Ryan's opening remarks, as a reminder, today's discussion will contain forward-looking statements relating to future events and expectations that are subject to various assumptions and caveats. Factors that may cause the company's actual results to differ materially from these statements are included in today's presentation, earnings release, and in our SEC filings. In addition, we have included some non-GAAP financial measures in this presentation. Reconciliations to the most directly comparable GAAP financial measures can be found in the appendix to today's presentation and earnings release. Any reference to our discussion today to EBITDA means adjusted EBITDA. Finally, the earnings release and slide presentation are available on our website. With that, I'll turn the call over to Jim. Jim?

Thanks, Martin, and thank you to everyone joining us this afternoon. I assume many of you saw or heard about the White House event on Tuesday announcing our new partnership with the Department of Defense. That was a really special day for all of us at MP Materials, so on behalf of the entire team, I wanted to again thank the President, the Department of Defense, and the State of California for all their confidence and support in us as we continue to execute on our mission to restore the full rare earth supply chain to the United States. It was a very busy quarter and year, and we have a lot of exciting things to discuss today. First, I will recap the highlights of a remarkable year. I will then provide some more detail on our December announcement regarding our initial Stage 3 magnetics facility and our agreement with General Motors. Next, Michael and I will cover our plans regarding our heavy rare earths expansion and give an update on Stage 2 process flow. Then, Ryan will summarize our financial performance, provide color on the new SK1300 Reserve Report, and discuss our upcoming investment and operating expectations. I would be remiss if I did not address the short reports, so I will do that before wrapping it up with some closing thoughts. After that, we'll open it up for Q&A. So let's start with slide four. Here is a summary of some of our major accomplishments in 2021 and year-to-date. MP has an execution-focused owner-operator culture, and I think our outstanding results demonstrate that. We produced over 42,000 metric tons of rare earth oxides in concentrates. This represents the highest production in the 70-year history of Mountain Pass and the highest primary production in U.S. history. This was driven by continued improvement in efficiencies in the plant's operations, including feed rates, mineral recoveries, and plant uptimes. Record production and a focus on efficiencies and costs, combined with strong market pricing, led to a doubling of our annual revenues and an over five times increase in our adjusted EBITDA for 2021 compared to 2020. And significant growth in adjusted EBITDA resulted in $154 million of normalized Stage 1 free cash flow. This cash flow generation meant that we were able to make significant growth investments throughout the year while maintaining around $490 million in net cash. The delta between our gross and net cash holdings is essentially the $690 million green convertible bond we issued last March. As we scale financially and operationally in pursuit of our mission, being a green bond issuer sends an important signal to key industry and government stakeholders about MP's commitment to this supply chain and the environment. Our Fortress balance sheet positions us with firepower to continue to invest in the substantial growth opportunities in front of us while also being better ready to both absorb any potential volatility and be opportunistic as we work to create long-term shareholder value. Next, we have wonderful news on our key resource, Mountain Pass. We recently completed the new SEC regulation SK-1300 reserve report. Ryan will cover it more in a bit, but it extended our mine life by 11 years and our contained REO reserves by 28%, versus the last study from mid 2020, we have consistently said that mountain pass is a unique world-class ore body. And we are happy that even more detailed outside diligence on it versus last time has added significantly to its estimated life and value. We will talk more about progress on stage stages two and three in a moment, but I want to congratulate Michael and his team for something of the utmost importance, an outstanding safety record. We went the whole year without a lost time injury and are now actually approaching 700 consecutive days without such an injury. Our employee count has grown by over 50% since the end of 2020 to nearly 400 strong today. MP is growing in people, assets, and complexity, and it is no small feat to do so safely. I want to highlight how proud I am of everyone at MP for this. We continue to make progress on stage two. and have had some notable recent achievements. We recommissioned our combined heat and power plant and our reverse osmosis water treatment plant. Both of these are needed for stage two commissioning. In fact, in January, we went into island mode. This means that we are now generating 100% of our heat, power, and steam onsite instead of getting it from the grid. This is beneficial for cost and operational reliability and resiliency as we further invest in Mountain Pass. The last part of our earnings deck has pictures from around Mountain Pass, so please check that out. While Stage 2 progresses, separating some rare earths at Mountain Pass, a remarkable achievement in and of itself, was never our end goal. We have made clear that restoring the full rare earth magnetic supply chain was what we were after, and we have also made clear that this would not happen overnight. It will be painstaking, and take time. In 2020, around the time we went public, we were awarded a preliminary contract by the DoD to begin design work and study the feasibility of separating heavies at mountain paths. Heavy rare earths, specifically terbium and dysprosium, are typically utilized in small amounts along with significantly more NDPR in rare earth magnets. These small amounts of heavies typically improve the performance of magnets at high temperatures. Therefore, successfully delivering on MP's mission meant our original Stage 2 process flow would get us almost all the way there, but not fully. A tremendous amount of work has gone on behind the scenes. Our team has designed, piloted, and refined our technological approach. The hope was that we could expand and enhance our Stage 2 process flow to accelerate towards our overall goal and also grow the economic potential of our site. The $35 million award from DoD is clearly a huge vote of confidence in MP. We are humbled and grateful, and I will talk more about what this all means in a moment. But that is not it. We are pursuing our mission on parallel fronts. We believe critical industry and government stakeholders are counting on us, so we will move as quickly as we can so long as we preserve our execution-focused owner-operator culture. Over the course of 2021, we built up our world-class MP Magnetics team, and we continue to grow that team. The pace has been pretty amazing, but also methodical and pragmatic. In December, we announced we are building our first magnetics manufacturing facility in Fort Worth, Texas, and that we signed a binding long-term agreement with General Motors as the foundational automotive customer of the facility. I am very pleased to report that we broke ground on the new facility last week. We have a long way to go, but what an incredible milestone. Let's discuss some more specifics about it on slide five. Our new Fort Worth facility will convert rare earth oxides we produced at Mount Pass into metal and ultimately neodymium iron boron or NDFEB alloy and magnets. Along with the groundbreaking, we are already sourcing long lead equipment The objective is to have this facility ready to begin delivering alloy in late 2023 and magnets in 2025. We are currently planning to produce about 1,000 metric tons of NDFEB magnets per year with some additional alloy capacity, which could feed roughly 500,000 EV motors. This would consume just mid- to high-single-digit percentages of our current expected Mountain Pass NDPR outputs. So we have significantly more runway to expand the magnetics business over time. As we position the company to enter the magnetics business, we are also expanding into magnetics recycling. And we believe MP is uniquely positioned for leadership in this burgeoning opportunity. Let me explain. There's a fair amount of waste generated in the magnetics manufacturing process. With such valuable material inputted into the process, maintaining a competitive cost structure is greatly aided by having the ability to do something with that waste. Our team has been conducting extensive piloting at Mountain Pass for the last 18 months, and some of these pilot projects include large commercial partners. Our extraction assets and the high level of co-location in our operation mean we can run a highly integrated, closed-loop magnetic manufacturing process where materials are mined, refined, metallized, alloyed, and then made into finished magnets. And materials created along the way can be fed back into the process. MP is now positioned to become the only truly integrated magnetic company in the world outside of China that can do this. Plus, as the world electrifies, and many electric vehicles, when turbines and other like assets get to the end of their life, MP expects to participate in recycling those end-of-life permanent magnets. Our full integration means we believe we will be able to insert those third-party feeds into various points in our asset base. Michael will explain more on this in a moment. Lastly, as I mentioned earlier, we have a binding long-term agreement with General Motors as the foundational automotive customer for MP Magnetics and our Fort Worth facilities. We expect a gradual production ramp to begin in late 2023, beginning with the supply of alloy to GM, with a gradual expansion into finished magnet production in the 2025 timeframe. With recent efforts around our heavy expansion and breaking ground in Fort Worth, we believe MP has pulled forward our mission by at least a couple years, at least certainly compared to where we expected to be at this point back when we went public. We believe this is incredibly significant for American industry. GM and other future MP customers will have access to rare earth magnets produced in the U.S. entirely of sustainable U.S.-sourced materials. That is simply not possible today, given the state of the supply chain, and filling this void is significant to both our businesses and the American economy overall. Let's move on to slide six. As the long list of achievements on the last two slides suggests, We entered 2022 in a much stronger position than a year ago. The electrification of the global economy, even as the capital markets appear more challenging recently, is accelerating. Our business developments clearly suggest that critical industry and government stakeholders want MP to become a Western champion in our industry, and they want it to happen as quickly as possible. By the way, Our stage two heavy rare earth addition is being designed to accept third party feed. So that should expand what we thought of as our previous light and heavy rare earth output potential. And it also means we can help other Western projects develop as we become a potential customer for their intermediate materials. We realize the scale of this opportunity and we are pushing forward on parallel paths. We know that we must execute with precision and we must get it right. Against this backdrop, we continue to see many supply chain, labor, logistical, and materials challenges throughout the global economy. I would say that in Q4 of 2021, we did not make as much progress on stage two construction as we had hoped. Issues around Omicron created labor issues all around the economy that were well documented this past quarter, and we, along with our contractors and suppliers, certainly saw our share of that. Executing an expansion and scope changes in an inflationary environment is testing all of us. Nothing is happening as fast as we would like, but we remain relentless. Engineering and procurement are wrapping up, and construction is accelerating. We are still targeting to mechanically complete the light rare earth portion, i.e. separation, finishing, and related infrastructure of our Stage 2 later this year, but with the expanded construction and scope around heavies and recycling, next year won't be a full normalized year but we still expect to achieve full run rate production volumes in 2023. ryan is going to discuss our current expectations around capex which was previewed a bit in our announcement on tuesday and what this all means financially and operationally in a bit but let me be crystal clear in saying that all this is extremely exciting we are generating significant operating cash flow today we are pulling forward the opportunity We believe we are investing at high returns on capital. We believe everyone, well, almost everyone, is rooting for our success. And we believe we are creating significant enterprise value. I'll be back after Ryan, but before that, let me turn it over to Michael for more process details around stages two and three. Michael.

Thanks, Jim. I'd like to start by saying that I couldn't agree more with how exciting the heavy rare earth opportunity is for us. I'd also like to acknowledge our engineering, analytical, maintenance, and project team for the significant work that went into this analysis and design. I'd also like to thank the Department of Defense for its support of our project and helping spearhead the government's efforts into securing this critical supply chain in the United States. When we initially conceived the Stage 2 flow sheet, which is included on Slide 7, we had anticipated heavy rare earth separation being a longer-term possibility. However, as our strategy for Stage 3 magnetic became more clearly defined and as our magnet recycling capability in support of this project and long-term environmental sustainability has progressed, the necessity and attractiveness of HREE separation, sometimes called the SAG-plus separation, has become more apparent. You can see a simplified depiction of where the heavy rail circuit will fit into the flow on the bottom of the slide. As Jim mentioned, certain HRE, namely terbium and dysprosium, add key functionality to high-end magnetics. Our Stage 3 operation and third-party customers are interested in a stable domestic source of these elements in the same way they are eager for NDPR. Magnet recycling is a critical component of metal and magnet manufacturing. The U.S. must have both capabilities. Spent magnets, or metal and magnet-facilitated process waste, contains NDPR, along with terbium and dysprosium in many cases. For process waste, a lot of cost was sunk into that material before it fell out of the process. Therefore, the waste must be turned back into a valuable commodity. To do so, the elements in some cases must be reseparated. Therefore, heavy-rare separation becomes even more intricately linked to magnet production and our Stage 3 plans. You can see in the top right how recycled magnet materials could be fed back into our separation process at Mountain Pass. Over the past 18 months, partially supported by our initial DOD grant, we have been working towards a technical and operational plan for HRE separation. We have also evaluated how to incorporate heavy rare earths into the Stage 2 flow sheet and our site infrastructure. This has contributed to ongoing R&D and capital expenditures throughout 2021. As our confidence increased and supply chain concerns intensified, last summer we decided to pre-purchase certain equipment that we believed would help improve the efficiency of a future heavy rare earth separation plan. The heavy rare earth circuit largely runs in parallel to the existing Stage 2 plan. However, there are also important tie-ins to common site infrastructure, storage, and systems that minimize our environmental footprint, improve efficiency, and reduce costs. Importantly, As we consider third-party feedstocks to bolster our heavy rare earth supply, there is an expectation that these feedstocks may come with additional light rare earth elements as well, namely NDPR, lanthanum, and cerium. We have long factored this in, but this has resulted in some additional scope to Stage 2, primarily related to sizing and optimization of existing, rather than new, assets to accommodate the potential for higher light rare earth volumes that may come with heavy separation. As such, these investments will help to seamlessly integrate heavy rare earth separation and magnet recycling into the broader Stage 2 plan and will be factored into our CapEx budget, which Brian will touch on in a moment. We expect to implement changes to existing assets to support new and increased flows, and we must expect some disruption as we incorporate additional assets into the Stage 2 scope. Our long-term interest in supporting a diverse rare earth supply chain is core to our mission. With the announcement of the first step of our Stage 3 plan and the DOD's support for our heavier-earth project, we now have additional stakeholders sooner than we might have anticipated. Ensuring the quality and sustainability of the mountain pass feed into the supply chain is of preeminent importance. We will therefore be especially prudent with our Stage 2 ramp and will prioritize assuring our long-term success over meeting any short-term deadline. Moving to Slide 8. The purpose of this slide is simply to show the unique advantage we have as a vertically integrated company. We can take the waste from magnet manufacturing or end-of-life magnets and determine the optimal place in the end-to-end flow to recycle the material, whether it be into the melt or back to mountain pass to produce fresh oxide. This level of integration will enable us to maximize value and minimize cost and is highly unique in the global magnet industry. We have also been working with large commercial partners on piloting these processes at scaled volumes, at mountain pass, and at vendors' locations. Hopefully this slide and the previous one give you a better feel on the process flows and a visual understanding of some of the complexities that we will contend with, particularly as we incorporate heavy separation and magnet recycling into our mountain pass processes. With that, I will turn it over to Ryan. Ryan?

Thanks, Michael. As Jim already hit on the highlights, I will quickly go over our annual results starting on slide 10. In 2021, we saw modest improvements on all of the key inputs in our production growth algorithm. Uptime, feed rates, and recoveries all improved compared to 2020, resulting in a 10% increase in total rare earth production. You can see on the bottom left, compared to 2019, production is up over 50%. Obviously, from here, incremental improvements get more challenging, but Michael and the team continue to focus on making thoughtful improvements to continually drive higher volumes, which we expect will primarily come through improved mineral recoveries. On the top left, you'll see that we continue to ship virtually everything we produce, despite a very challenging shipping and logistics environment. And moving to the right, you can see the strong growth in pricing, driven primarily by strong demand for our concentrate product due to the contained NDPR. I'll discuss that a bit more later. Finishing up on the bottom right, you can see that production costs were up modestly versus last year, but when excluding about $140 per metric ton of Stage 2 pre-commissioning costs that hit the P&L, production costs were actually down slightly year over year despite the inflationary environment. Moving to slide 11, Jim mentioned the strong revenue and adjusted EBITDA growth in the year, which you can see in the top two graphs. And on the bottom two, you can see the leverage we get from solid production and shipping but strong pricing demonstrated by 2021's adjusted EBITDA margin nearly doubling to 66%. On the bottom right, you can see that much of our adjusted EBITDA flows through to adjusted net income. We believe these results show the power of where Mountain Pass sits on the cost curve, and we look forward to building on this success in 2022. Moving to slide 12 and our fourth quarter results, again, a similar story on a year-over-year basis with production volumes up about 10%, driven by improved feed rates and mineral recovery, slightly offset by lower uptime in the quarter. Sequentially, you'll see our production volumes declined about 14%, which was driven by our biannual maintenance shutdown occurring in Q4 this year, as we discussed on our last call. While the shutdown was very successful, restarting was a bit choppier than we had hoped for which slightly delayed our ramp back up to full efficiency and similar to the annual results shipments for the most part tracked our production volumes with some lumpiness in the actual timing of shipments causing most of the variability between our year-over-year comparisons and you'll recall despite all of the shipping challenges we had an exceptional quarter of shipping in the third quarter as we not only were able to ship our record quarterly production then, but also catch up on modest inventories that had built up from earlier quarters in 2021. Shipping and logistics then became even more challenging early in Q4, before finally starting to ease at the very tail end of the quarter, which left us with another very back-end loaded shipping schedule, which is reflected in our higher than average receivables, which, similar to last quarter, we have since fully collected. On the right side, you see the continued growth in realized pricing, driven by the tighter supply-demand and concentrate, driven by NDPR pricing, as reflected in the 31% sequential increase in our realized price. And on the bottom right, production costs were down year-over-year, even with some additional pre-commissioning costs for Stage 2, as we remain resolutely focused on costs, with a bit of an easier year-over-year compare, given our reagent testing in Q4 of 2020 that we previously discussed. Sequentially, costs were up about 5%, all due to higher costs associated with Stage 2 pre-commissioning, as efficiency's ex-Stage 2 costs offset cost inflation. These Stage 2-related costs totaled about $200 per metric ton, so excluding these, costs would have been down approximately 17% year over year. As for our quarterly financials on slide 13, you can see our revenues were flat sequentially as lower shipments were offset by improved pricing with year-over-year revenues more than doubling. Moving to the top right, the same story can be told for adjusted EBITDA with the strong leverage from pricing and our efficient operations resulting in improved margins both sequentially and year-over-year. And just like our annual chart, our growth and adjusted EBITDA nicely converted to adjusted net income. And lastly, on our financials on slide 14, the strong EBITDA from Stage 1 in large part flows through to our normalized Stage 1 free cash flow after adjusting for the $55 million of pay down of the Shanghai offtake agreement and about $113 million of growth capex. Growth capex consisted partly of Stage 2 optimization spend in addition to the cost for recommissioning our combined heat and power and water treatment plant, as well as other investments, primarily at Mountain Pass. I would also like to point out that as of the end of the fourth quarter, there was just over $16 million remaining on our offtake agreement with Shanghai, and that remaining $16 million should be paid off by the end of the first quarter of 2022. That will mark the end of our offtake agreement with Shanghai, and therefore the recoupment mechanism, which will provide a nice step up in GAAP operating cash flow for 2022. And you can see on the chart, removing this recoupment feature and all else equal, our GAAP operating cash flow would be $55 million higher. With the offtake agreement nearly complete, we have recently received offers from several potential distributors, offtakers, and refiner groups. Our goal is to maximize our profitability and minimize the various risks associated with exporting nearly 80,000 metric tons of concentrate into China. As market demand has grown, we have also begun laying the groundwork for strategic supply relationships with large multinational customers who are interested in tracing their supply chain back to our ore body. While we are producing and selling rare earth concentrate into China, we expect to continue distributing via Shanghai to our various end customer refiners, which allows us to leverage in-place logistics for our material until we ramp the direct sales of oxides to customers located primarily outside of China. Moving to slide 15, as Jim pointed out, one of the most exciting highlights in the quarter was the completion of our updated reserve report in line with new SK-1300 regulations. This resulted in a suggested mine life of 35 years, assuming consistent feed rates to the mill, which is an increase of roughly 11 years from our last estimate done in July of 2020. This was a very comprehensive program, which included completing an updated geotechnical drilling program, a revised and updated geological block model, and updates of product prices, including the improved economics of stage two, as well as our latest operating costs. I would also note that we believe the results are based off of conservative estimates for most of the key variables, including long-term pricing and volumes. An example of the conservatism we see is the economic cutoff grade used in the report of 2.49% for our reserves is higher than many producing mines today. We expect to investigate upstream technologies that over time should allow us to efficiently process these lower grade ores and better incorporate the lower grade material in our ore body into our mine planning and reserves. The resulting analysis showed a 43% increase in proven and probable ore reserves to a little over 27 million metric tons and a roughly 380,000 metric ton or 28% increase in the rare earths contained in that ore. In addition, the report highlights a further 457,000 metric tons of indicated and inferred rare earth resources not currently in the reserve that we will look to incorporate over time. Needless to say, we are really pleased with this update. It solidifies our belief in what a vast resource we have in Mountain Pass to continue feeding our downstream vision, the economics of which, of course, are not yet captured here. Moving on to the next slide, and before I turn it back over to Jim to wrap up, I wanted to give you some color on our near-term investment levels. At the White House on Tuesday, we committed to investing approximately $700 million into the rare supply chain through 2024. Let me start by saying that the evolution of our business reinforces the need for discipline and planning around how we are allocating capital to these various projects that support our mission. Many of these projects are now both overlapping and integrated, but all are collectively focused on one objective, how best to drive optimal returns as we leverage our asset base at Mountain Pass and execute on our move downstream. The $700 million investment includes, one, the completion of stage two, of which a significant portion was still left to be spent as of the end of 2021. This now also includes the additional scope of heavy brewer separations. Two, our initial Fort Worth Magnetics facility and associated investments in recycling at Fort Worth and Mountain Pass. We note that with the groundbreaking and long-lead purchasing commencing, we expect to incur a significant portion of this investment in 2022. And three, various efficiency projects we will continue to embark on at Mountain Pass. In total, we expect to spend approximately $500 million in CapEx in 2022 and the remaining approximately $200 million net of the contribution by the Department of Defense in the 2023 and 2024 time frame. I would imagine there will be continued additional vertical and horizontal investment opportunities in the coming years to consider, and we will update you with any material changes to our investment plans. So what will that investment get you, our shareholders, when we are fully operating, our separations capability, including heavies, and our initial magnet facility is at run rate? Or the benchmark? And I say this with all of our caveats around forward-looking statements. Were we to assume current spot pricing for the full year of 2022, we would expect to be currently at a run rate of of $450 to $500 million of annualized adjusted EBITDA from sales of concentrate, i.e., our current business. It is important to note, though, that year-to-date spot NDPR pricing has been lower than current spot, and our realized pricing also tends to move with NDPR prices with a small lag. So this run rate is not meant to be calendar year 2022 guidance. After our investments in Stage 2, including heavies, In the achievement of full run rate in our initial magnetics facility, our model indicates expected total adjusted EBITDA for MP would nearly double to approximately $900 million to $1 billion at current spot prices. We are not sharing these figures as formal guidance as we don't intend to update it with every tick of rare earth pricing or movement in other operating conditions, but we wanted to give you all detailed insight into how we are modeling planned spend and the potential returns. I want to reiterate that we are in a challenging and volatile macro environment with inflation, supply chain, and other challenges. So like any model, including one where the inputs involve commodity pricing, these numbers could ultimately fluctuate quite a bit. That said, I think this demonstrates that we believe our incremental investment opportunity set is both big in scale and very financially attractive. Of course, we must execute, as Jim always stresses. But to recap, when aggregating the approximately $113 million of growth capex already spent in 2021, plus the anticipated $700 million we intend to deploy, we expect an incremental run rate EBITDA opportunity of nearly $500 million in the current pricing environment, resulting from our downstream expansions. And keep in mind that this assumes a downstream magnetics business that only consumes single-digit percentages of our upstream output. So we will be methodical, but we expect exciting further reinvestment opportunities over time. Lastly, I would highlight again that given the significant free cash flow generated from our current business, We believe we can continue to invest in these growth projects that significantly expand enterprise value while still maintaining a net cash balance and conservative fortress balance sheet. With that, I'll turn it back over to Jim. Jim?

Thanks, Ryan. We are still on slide 16, and I love this picture. Many of you have heard me say how proud we are that we wear the American flag on our sleeves. The mission we have taken on is important, disruptive, and very challenging. We are also capitalists, and we believe what we are doing is going to be very rewarding. Yet, for two quarters in a row, we and our shareholders have been the victim of drive-by stock-rage short-seller statements. Sell-side analysts and investors not taken in by misleading soundbites figured things out. But according to Bloomberg reporting, at least one of these parties appears to be involved in a United States Department of Justice probe around potential trading abuses and other crimes. So we take addressing this issue very seriously on behalf of our shareholders, many of whom are rightly very angry at those involved in producing these false and misleading short seller statements. First, I want to make clear that we respect honest, rigorous, and thoughtfully researched short selling. It is a critical market function. Some of you already know this, but I ran a sizable hedge fund for nearly 15 years before returning my outside liquid capital so I could focus full time on creating long-term shareholder value at MP. The reason I bring that up is that I think it is fair to say that I have the appropriate background to be able to delineate fundamental short selling from outright market manipulation and securities fraud. So let me address the fundamental claims raised about MP, and then I will give you some overall perspective in case this happens to us again. In a nutshell, the report claimed that we engaged in a scheme with Shanghai, our distributor, to inflate prices, that the mountain pass ore body is uneconomic, according to a dated German study utilizing inputs from our predecessor eight years ago, and that a single lost shipping container was evidence of round-tripped inventory. The disseminator of these false and misleading statements never called us, and its entire thesis would have been debunked by a simple phone call or, frankly, by reading our SEC filings. First, regarding the pricing of our products, Shanghai is a distributor. They are paid a commission to achieve the best possible price from a number of refiners in China who are eager to purchase MP's product and who ultimately set the price that we receive. Trying to overlay our product sales versus import data versus the ultimate sell-through by a distributor, all with completely different timing parameters and in a rapidly rising price environment, is purposely deceptive and misleading in my view. Next, I think the viability and economics of our ore body speaks for itself. Ryan and I covered it today, and the SK-1300, which reflects extensive outside due diligence, will also be filed along with our Form 10-K next week. Making a claim about MP based on a dated German study with eight-year-old information from our predecessor that went bankrupt is also purposefully misleading, in my view. And lastly, We shipped roughly 4,000 containers last year. The disseminator of these misleading statements attempted to focus on one container, which got lost and was returned to sender back to Long Beach before being rerouted to its proper destination port. Trying to cause the market to believe falsely without any context that a single lost container was evidence of anything constitutes market manipulation and again, purposefully misleading in my view. To the contrary, I would argue the only thing that is evidence of is that our team is pretty darn good at logistics. So it is clear to me that the disseminator of these false and misleading statements was not actually doing legitimate research. There was no attempt to gather and check facts with context for an actual investment thesis, and it was certainly not about acting in the public's interest. The apparent goal was stock manipulation. in the hopes that harsh allegations would create enough doubt to scare our investors for a day or maybe more, I think the government is going to deal with this kind of behavior eventually. And I think what they are going to find is that there are actors behind these false statements profiting from the chaos they create and the investors they hurt. For those who were hurt by this, though, I would ask the following question. Why would someone pay for so-called, quote, research reports where there is basically no substantive research being done and that are already being given out to the world for free. It would seem to me that a very plausible explanation is that it is for advanced knowledge on timing of manipulation events and or to influence the stock prices of the companies when they are actually attacked by false and misleading statements. Let's be clear. If that is the case and there are purchases and sales of securities That is securities fraud. I think we might ultimately see criminal charges and or liability extend to the parties funding and facilitating those involved in disseminating false information and trading in advance on that information. Before concluding on this topic, I want to address insider sales. I know I have made this point very clear since we went public, but it is worth reiterating. I am deemed the beneficial owner of two major blocks of shares, approximately 42 million shares in the name of JHL Capital Group and approximately 16.8 million shares in my name. The JHL Capital Group name shares are almost entirely the institutional investors who were invested with me when this journey began in late 2014, nearly eight years ago. Those holders are foundations, family offices, insurance companies, and many other institutional investors who are entitled to have their capital returned to them over time. When MP went public, I went out of my way to make this very clear and even segregated my personal position from my investor's entity so that I could return money thoughtfully to my investors over time while also providing the market with more transparency around my primary personal investment alongside shareholders. For an unscrupulous party to make accusations without any context is again purposefully misleading in my view. Thank you to the research analysts and investors who helped clarify all that. I believe in the importance of our mission and the incredible opportunity in front of us. MP is helping to solve a major problem for industry and the country. Many great companies have been through these kinds of challenges, so we just consider it a rite of passage for MP. We will be unwavering until it is done. And with that, I will open it up for Q&A. Operator?

Thank you very much. Our first question is from Tyler Langton from JP Morgan. Tyler Langton, please go ahead. Your line is open.

Good afternoon. Thanks for taking my question. I guess maybe to start with stage two, Can you provide a little bit more detail? I know you mentioned sort of obviously, you know, Omicron and, you know, sort of labor shortage, but are there any, I guess, you know, sort of key sort of processes, you know, or equipment that are sort of causing the delays?

No, I mean, I think that what we said pretty much speaks for itself. You know, I think you've heard commentary around companies in the global economy of just the challenges this past quarter and, You know, anytime you have one thing slip up, it can have ramifications with something else. But there's nothing specific I would cite other than sort of what we said in the comments.

Okay, no, that's helpful. And then just on the CapEx front, the $700 million, can you provide any sort of rough numbers in terms of, you know, what's going to be directed towards Stage 2, you know, for Fort Worth and recycling and then efficiencies? Sure.

No, I mean, I think, so, you know, obviously we talked a lot about it in the script, but we're, you know, essentially because we have all of these projects, we're just, we're transitioning to an overall CapEx number, and we're not breaking that out into individual projects. So, sorry, I can't help you on that front.

Okay. All right. That's it. Thanks so much. Yeah, no problem.

Thank you. As a reminder, if anyone would like to register a question, please press star followed by one on your telephone keypad. Our next question is from Matt Somerville from DA Davidson. Matt, your line is open. Please go ahead.

Excuse me. Thanks. Good evening. A couple of questions. First, with respect to stage one output and potential outages you anticipate incurring in 22, what would be a reasonable expectation for year-over-year growth in stage one output? I guess I'm trying to get a feel for how much moving forward you're able, you know, to push the envelope on mineral recovery.

Hey, Michael, why don't you take that one? Yeah. Sure, thank you. As we said, we continue to work to improve the overall mineral recovery. And we think there's still significant opportunity, although the exact timing of how and when that materializes is difficult to predict. We continue to optimize our existing circuit and make adjustments and upgrades to it to make things better and better. We do expect probably to have some interruption from construction and tie-ins throughout the year, but I don't think that would be terribly material. So overall, we think that uptime will be probably down slightly, but offset by the continued improvements. You saw in the second half of the year there was some improvement year over year, and we think that has not all been reflected fully into the full run rate. Not sure if that answers your question. Thanks.

Yeah, yeah, thank you. That's helpful. And then as my follow-up question, I'm curious. you know, as the offtake agreement comes to an end here this quarter, where, you know, the home might be for where you ultimately can begin to sell stage one material before it's obviously consumed in stage two. And then similarly, I would be curious as to where geographically you might be looking to source stage two feedstock. Thank you. Those third-party feedstock.

So, Ryan, yep. Ryan, why don't you go ahead and cover that?

Matt, on that front, what I mentioned in the script is that we do intend for the majority of the stage one product that is being sold into the market to continue to distribute that through Shanghai. Even today, we do have direct supply. customers that we sell our stage one product to, and we have the ability to do that to the extent we so choose. But obviously, given the preponderance of refining capacity being in China and the ability for us to easily distribute with existing in-place logistics, we do have an agreement on terms with Shanghai to continue distributing through them once the offtake is complete. We continue to see pretty strong demand directly from customers, you know, really, really far up the supply chain who want to have visibility to, you know, exactly where their materials are coming from. And so it is a good opportunity for us to continue to develop those direct relationships that we intend to leverage once we are into stage two and selling separated products. So, I think the majority will continue to make their way to where the refining is in China through Shanghai, but we continue to develop our own direct sales force as well. Jim, do you want to cover the third-party feedstock?

Yeah, I think – sorry, what was the question again on third-party feedstock?

I was just curious where geographically you would plan to potentially source that material and how much material could ultimately go through the Stage 2 process. I guess at the end of the day, I'm curious as to what that 6075 number looks like if you're not only processing materials, even more concentrate than you maybe originally kind of guided to in the SPAC. And now you're also willing to take in third party material.

Sure. So I can't tell you specifically where, because obviously, I wouldn't want to give up, you know, strategic advantage of the company and kind of negotiating and thinking about where and how we make uh future investments and whatnot um but i think to the heart of your question uh it is as we said today um when you look at the what we've outlined and you can go back to one of you know to the slide where we kind of show you the whole the whole uh process flow um the our ability now to take third party feed really allows us the ability to take you know say a carbonate from somewhere else in the world and that can go somewhere into our process in a way that will give us additional lights and heavies. And so, you know, we also mentioned in the script that we have been sort of positioning and adjusting for that. And so I'm not going to give you sort of a specific number, but I think it would be correct to assume that, you know, we will be able to do sort of more than we contemplated two years ago.

Understood. Thank you, guys. Sure.

Thank you. Our next question is from David Dekelbaum from Cowen. David, your line is open. Please go ahead.

Hey, David. Thanks for the time. Hey, guys. Thanks, Jim, Ryan, and Michael. I appreciate all the color tonight. Sure. I was hoping maybe at a high level, you know, the reserve report is obviously highly encouraging. You pointed out all the conservatism that you see in the report, and yet at the same time, you have 11 more effective economic years at 35 years. You guys have a lot on your plate right now. Stage two is taking on more complexity. You're expanding into stage three, but if we get back to stage one, You know, how should we think about expansions and, you know, is there a correct mine life given how robust demand is growing right now that you'd like to kind of goal-seek around or target over the next few years?

Sure. So, great question. I'll cover it and maybe if Ryan or Michael want to chime in with additional thoughts. I think the way to think about it, I'll start with, I'll just step back high level. I think we may have said this on a prior call, but If you think about just the U.S. auto fleet, you know, as that goes from ICE to electric, we probably need, just for our domestic auto fleet, three mountain passes. You know, and that's obviously leaving out sort of the rest of the world and all the other applications and growth that we're going to see around electrification. So there's no question there's a lot more supply needed. Certainly it makes sense – to expand the potential output at Mountain Pass vis-a-vis pretty much at least anything I see in the Western world or frankly anywhere else in the world to expand what you said is sort of what our stage one output is. And I would also say it's also frankly helpful from an environmental standpoint in the sense that before you start doing a brand new mine with all of the impact that that could have with a much lower grade, worse economics, potentially other environmental challenges. It makes sense, frankly, from government stakeholders to want to see our, you know, our site expanded. So I think we obviously have a strong economic interest, and I also think government stakeholders have that interest. um yes you also noted this in your question we have a full plate of projects and so um as you as you can tell already at mp we work on lots of parallel paths um and we're trying to move as quickly as we can whilst also getting things right um so i guess i would say to your question it's it's definitely something that is top of mind as far as top of mind, not mine, um, as far as, you know, things we want to think of, but realistically, you know, that is, we have a lot to get done, uh, first. Uh, and so, um, I would, I would also just add, you know, if you look at the reserve report, um, you know, fun, fun, you, you look at our cutoff grade and that's above, where the ore body you know actual ore body grade is of a lot of other you know hopeful projects so um there's certainly a lot of um you know it makes a lot of economic sense for more a lot more to be done at mountain pass um but uh ryan michael do you want to cover anything on this question i think you hit it jim i the only thing i'd add is obviously you know there are technologies out there that you know will continue to stare at to jim's point um on

you know, the lower grade material that would allow us potentially to make some interesting changes to be able to, you know, leverage material that, you know, hasn't even made it into the reserve at this point. But, you know, I agree with everything that Jim said. Certainly with everything on our plate, we have been adding, you know, very capable teams in all of these areas. And this is one that we'll continue to look at doing the same thing.

I appreciate the responses to that. And then, you know, if I could just ask one more on the GM as a foundation customer, and congrats on that announcement in December. You outlined, Ryan, I think, like the size of the prize in terms of EBITDA with, I think, Stage 2 and Stage 3 up and running at $1 billion. How do we think about the pricing involved for end-fabricated magnets? Are these going to be on fixed-price contracts where you can just earn back a margin on the hundreds of millions of dollars you're spending on the plant, or will there be some variability in the pricing with GM?

What I'd say on that is, you know, we certainly are not going to get into the specifics of our agreement with General Motors, but I would say take sort of Jim's adage that he said many times that we firmly believe is we're not going to rob Peter to pay Paul. So, you know, we're not going to enter into an agreement on the magnetic side that in any way prevents us from earning, you know, a market price on our material in the upstream business. And so I think the very exciting thing about what we're seeing develop in terms of the demand domestically and across globally as China, frankly, is a willingness for customers to look at the value that they get from the rare earths and the rare earth magnetics that we are going to provide and understand and are willing to pay – a fair price and allow us to earn what we believe is a very healthy margin and return on capital to pursue this opportunity. And so it allows us to continue to benefit from what we all see as very exciting supply-demand dynamics. from a pricing standpoint on the upstream business, but then be able to continue to move downstream methodically, capture, you know, what we think are nice high returns on capital and continue to morph the business into something that, you know, adds an additional technological component to it. It adds, you know, some smoothing of volatility to it. And so frankly, you know, the reason we're so excited about this is the market has really come our way from that perspective. And so, you know, we're excited about the opportunity.

Indeed. And I would just add on that, you know, yeah, it's hard for us to don't expect us to give out economics of of any specific customer in the future, as you can imagine. But I do think it's just worth repeating when you think about the way the world is headed. And I think we were you know, we sort of highlighted this over the past year with the semiconductor issue. And now, you know, in sort of the very serious situation that we see on our televisions today with Russia, Ukraine, I mean, what would a company or country pay to have some diversity in their natural gas from Russia, right? What would they pay to have some diversity in their semiconductors? And so you're seeing this theme kind of across the board of people recognizing that as the world economy evolves here, the ability to have a fully integrated offering to a customer has a lot of strategic value, and it is a difficult thing to create. And so we really think that our franchise sort of provides that opportunity, and obviously the foundational deal is suggestive of that, and we expect to have a number of customers like that in the future. And so, again, I would just highlight that we believe that we will be able to get the economics of our stage two business and then earn attractive returns on capital in our stage three business that will add additional total dollars, which, you know, obviously is just grows enterprise value. And so from every indication that we see, as we talk to people day to day, you know, that, that, that, that thesis, if you will, remains intact and is growing by the day.

Thanks, Jim.

Sure.

Thank you. Our next question is from Ben Callow from Baird. Ben, your line is open. Please go ahead.

Hi, everyone. This is George Genericus, actually. Good evening. Hey, George. I had a couple of questions. First, on the heavies, can you help us quantify what the opportunity looks like there from a revenue perspective?

Well, I would just say high level, we expect to consume all of our heavies into our magnetics business. So it wouldn't be a separate, yeah, it wouldn't be a separate item.

Okay. And next, with regard. Go ahead, Michael. Michael, wait.

Go ahead, Michael. I think you want to add into that. The dysprosium. Michael, you're good. The disposium and terbium from our SCG plus that we've previously reported that would be fed into the magnetic business. Those represent the vast majority of the value. I just wanted to clarify that point.

Got it. And then you gave out some numbers, the 450 to 500. and the 900 to a billion in EBITDA, were those stage one and stage two numbers? I just wanted to make sure I understood, I heard those correctly.

Yeah, sure, George. No, go ahead, Brian. This is Brian. Yeah, so what we had said is if you take current spot of NDPR, our expectation is if you run rated stage one or current business, that was the first number, the 450 to five. If you look at what we expect to be able to earn With current market pricing and all the caveats that come with that, you know, current cost structure and all those sorts of things that we expect, the $900 to a billion was with us fully ramped on stage two and with the initial Fort Worth Magnetics facility ramped.

Understood. And that $450 to $500 assumes 42,000 metric tons, production similar to this year?

We haven't gotten into the specifics of that. And we tried to make clear, you know, it's not meant to be calendar year 2022 guidance. Obviously, taking today's spot price is not necessarily indicative. But, you know, we haven't gotten into the specifics other than, you know, I certainly share Michael's sentiment on, you know, his discussion earlier on how we would triangulate around our anticipated production for the year.

Okay. And so given that set of metrics, you know, the $700 million that you've articulated is funded through the business for the most part. Can you help us understand a little bit about the financing needs of the business over the next two, three years?

Well, I mean, I can take that. You know, you can look at our balance sheet right now, right? We have a little under $500 million in net cash, right? We have $1.2 billion approximately in gross cash. And if you look at the run rate of the business, take this quarter if you want, obviously prices have moved materially since Q4, which is what we reported today. But pick your number in between. And I think if you look at the cash flow that we're generating and do that math, you can see that we believe we'll be able to fund all this with our net cash position. So You know, we feel very, very comfortable with the balance sheet and we want to maintain a fortress balance sheet because, you know, we and I said this in my remarks earlier, you know, we when you're in a business with volatility, you want to make sure that you can absorb volatility. But you also in times of volatility want to be able to be opportunistic. And I think that our balance sheet and our investment program and where we see the state of the business today affords us that, that we can do all of those things. Understood.

Thanks, guys. Yeah.

Thank you. Our next question is from Carlos D'Alba from Morgan Stanley. Carlos, your line is open. Please go ahead.

Great. Thank you very much, everyone. So first question is, do you envision that for stage three, the current mountain pass deposit and the heavies that you have there combined with the recycled production that you will generate will be enough to support um your uh your at least your first plant of magnetic magnetics plant or do you expect that but potentially you need to buy from third parties well carlos i think i think it would be fair to say that you should assume that we would would not um you know go do business that we didn't think we could deliver on um so uh i think i think you can

make your conclusion that, you know, we believe we'll be able to provide the heavies that we need.

But not necessarily from your deposit?

Oh, yeah, from our deposit with the initial facility, yes. You know, obviously, as we scale beyond that, you know, it's a different question, but we do believe that we'll be able to provide from our existing deposit, yes.

All right, great. And then the other point, I don't know if it is for you, James, or Michael, what stage of completion is the stage two project right now, and how do you see the progress throughout the year? I mean, basically it seems from the commentary that we should expect only really to start late in Q4 and then have a sort of gradual ramp up in 2023 until you reach full capacity at some point in 2023, right?

Yeah, I think that as I said in the prepared remarks, Carlos, we expect to be mechanically complete later this year, and sometime in 2023, we will be hitting run rate production. This past quarter was, you know what's going on in the world. It was a little slower than we would have liked, but we're progressing forward and trying to execute this as quickly as we possibly can.

All right. And final question is, in terms of the cash flow generation, so once the offtake agreement is done, you guys will basically have a step up in your cash flow operations that you show in your financials, right?

Yeah, Brian, go ahead. Yeah, that's exactly right. You know, if you look at the cash flow waterfall that we provide over the course of the year in the current offtake arrangement, we obviously pay down, you know, with each sale. And so, you know, going forward with the offtake complete, if you just take last year's numbers from an operating cash flow perspective, we'd have a step up of about $55 million in operating cash flow purely from transitioning away from the prepaid offtake arrangement.

All right, excellent. And if I may squeeze a last one, Ryan, since you were talking about cash regeneration, we're talking about cash regeneration, how should we think about working capital, particularly receivables for the quarter? I guess it depends on the sequencing of the shipments, but how is it going so far? Is it a smooth quarter and maybe you can reduce by the quarter and the amount of receivables that you hold in your balance sheet?

It's a great question, Carlos. I'll refer you back to my remarks on the pace of shipping in Q4, which was a repeat of Q3 and even a bit crazier. um so far what we've seen is is encouraging um in terms of how the port is operating and our ability to get product out the door um you know i'd never in this environment want to make a hard prediction on on timing of shipments but i would say that you know the improvement that we saw towards the tail end of q4 so far has continued all right excellent thank you very much guys thanks

Thank you. Our next question is from Lawson Winder from Bank of America. Lawson, your line is open. Please go ahead.

Hi, guys. Good evening, and thank you for the presentation, and also congratulations on the free money from the government. That's never a bad thing. I just wanted to ask about the $500 million of incremental EBITDA that you spoke to on the call. So it would seem to me that the vast majority of that would likely be from the separation facility, both the combination of the light and heavy rare earth. Am I thinking about that correctly? Is the bulk of that being from that? Or is there going to be a significant portion coming from this mag facility?

So, Lawrence, that was another creative way of asking the same question. But we haven't broken that out. But, Ryan, if you want to... address that? You may go ahead.

Yeah, I mean, look, obviously, just given the scale of the upstream versus the downstream, you know, you know, majority of the portion, you know, would be coming from, you know, to including lights and heavies. I think, you know, we've given I'd refer you back to some of our prior commentary to try to triangulate around, you know, what our expectations are from a production cost perspective. And so, you know, you can you can do that math. and think about what are the potential volumes that we talked about in Stage 2. We told you that we were referencing that number at today's spot. And if you do that math, you do get a very attractive return on capital for the magnetics business. And so I think there are a lot of moving parts that go into that math, but I think we've given you guys hopefully the – the pieces to be able to do it um and just given as as we talked about um a little bit earlier um you know we don't want to get into the specific economics of any one customer's arrangement we don't want to get uh you know much more detailed than that but hopefully that's helpful yeah no that that is helpful color um also could i uh ask about sort of the timeline on all the moving parts here so

And I'm just trying to understand Stage 2. So when Stage 2 starts up towards the end of 2022, is it going to be a startup for both the light and the heavy, or should we think about it as being Stage 2 starting up for the light and then a possible future shutdown to tie in the heavy?

Michael, do you want to go ahead and take that? Yeah, that's a good question. when we start up the lights you know one of the products that we've shown on the chart is the scg plus concentrate so that is a a product that we you know had originally planned to to sell and now we'll probably stock pilot but we won't start up with the heavy earth um separation facility until a later date more coinciding with the startup of the uh magnetics production in stage three um we would hope to start up Slightly earlier for heavies, but certainly not with stage two. So we'll be running stage two, normalizing that operation, and preparing for tie-ins for the heavy air separation.

Okay, that's clear. And then how should we think about how disruptive the tie-ins of the heavies would be? Well, actually, both the heavies and the – the sort of recycling and recycled material handling angle of that?

Michael, go ahead. I think we would say the primary thing is whether we have to do any facilitating investments to ensure smooth handling or any preprocessing of any additional material, third-party material, recycled material. into our circuit. I wouldn't expect a hugely disruptive impact, but there will be periodic impact, and then the throughput potentially could be modestly impacted for short periods of time while that normalizes. But they are discrete in many cases, and so the disruption wouldn't be lengthy for the most part.

Yeah, that's super helpful. And then just finally, I wanted to ask a question or perhaps two on the updated reserve. Obviously, an additional 11 years is really exciting, especially if the price of NDPR keeps rising. But what I wanted to understand is with the lower-grade material that is coming into the mine plan now, does that start into the mine plan in the near term, or is this something that's going to be back-end loaded?

Yeah, I'm happy to take that. The way we've built out the mine plan is that, you know, over time, the grade will, you know, continue to sort of average down, if you will. It's not sort of a stair step in any way. And, you know, the way that we've built out to, you know, this mine life, obviously, is with an assumption is as... As you see head grade come down, you have the obvious impacts on recovery throughout the mill. I think what we see is very conservative assumptions in the report about how that will come to pass. And certainly with some of the comments I made earlier about our ability to look at potential upstream technologies and new processes to look at some of the lower-grade material, I think those things would also translate very well into our ability to continue to maintain and grow recoveries, even with a lower average head grade coming into the mill over time. And so, obviously, you know, when you look at the reserve slide, you see the difference between, you know, the contained REO. If you look, though, at recoverable REO versus contained REO, the increase is, you know, almost the same. I think, you know, 25% versus 28% that you'll see in the report. And so, you know, there really is nothing super meaningful there, and particularly with the investments we intend to make, you know, we feel very good about, you know, multi-decade ability to continue to improve.

Okay, that's extremely helpful. And then... With the estimated distribution of TREO content that you guys had previously disclosed, with this updated reserve estimate, does that change at all?

No, it does not change meaningfully. The distribution you'll see when we file, the distribution that we see coming out of our con product today has been quite stable. The way the reserve report was was put together, you know, certainly with a primarily light rare earth ore body, was focused on the light rare earth content. And so I think we have an ability, particularly now that we've got, you know, real plans in place at this point that have developed, you you know, and accelerated towards the end of 2021, whereas, you know, this report is actually an effective date of Q3 and then depleted to the end of the year. You know, I think an opportunity for us absolutely going forward is to invest some more time in incorporating better the heavy rare earth portion into the reserves. I don't know, Mike, if you have any other thoughts on that or, you know, distribution over time.

No, you hit on it. I think that the natural distribution has been very stable over very long periods of time, going back decades.

Right. That's super helpful. If I could just fit in one more question, on the SEG+, 1.7% of the total TRL content, what percent of that 1.7% is DY and TB?

We haven't disclosed that. I think we would prefer not to, other than referring back to Jim's comment about being sufficient to handle our initial commitments for the Stage 3 facility. Okay. That's fair. Thanks very much. Thank you. Yeah.

Thank you. We have time for one more question, and that is from Lawrence Alexander from Jefferies. Lawrence, your line is open. Please go ahead.

Choices, choices. No, but thanks for fitting me in. Can you just flesh out your thinking about recycling? I mean, any incremental color you can give us now that you've been, as you say, pursuing multiple tracks at the same time in terms of potential capex over the next few years? how the margin structure might compare with the Stage 2, Stage 3. Can you give some thoughts on how that's going to fit into the MOSAIC?

I would say on the CapEx, I would just refer you back obviously to the, you know, the statements Ryan made in the prepared remarks just because we're not going to break out any of these specific parallel investments. We want to make sure that we, you know, guide you to an overall CapEx figure. But maybe, Michael, if you want to address, you know, sort of thoughts on recycling and kind of how you see it integrating with the operation, go ahead.

Sure. Yeah, there's two parts, and they're similar but slightly different. One is the process waste that would come off of magnetics plants, some of which would be recycled within the magnetic operation itself in the Stage 3, and some of which would come back to Mountain Pass to be separated. And the other would be end-of-life magnets. We've done a lot of our work on end-of-life magnets in terms of digesting them, removing, you know, iron and boron and other things and producing separated oxides. You know, you could see it as, and probably the most efficient would be to leverage the existing assets and existing infrastructure, which largely can handle all of these processes. There could be certain customers who may want, you know, purely recycled material that doesn't interact, which would have different economics. And we'd have to evaluate whether that's attractive or not. But I think the attractive thing for Mountain Pass is leveraging existing processes, which do essentially the exact same thing that magnet recycling requires, but having material that has fewer complex impurities and larger separation factors between the elements given that they have in the rare earths, generally neodymium, praseodymium, terbium, dysprosium, maybe very, very trace amounts of others. But it makes it a simpler separation.

Thank you. OK. Yeah.

Thank you. This is all the questions we have time for today. So I'll hand back over to Jim for any closing remarks.

Okay, thank you, Operator. And I just wanted to thank everyone. I know it was a long call today, but we obviously have had a lot of exciting things to report to you. So thank you for your time today, and we look forward to future updates. Have a good night, everyone.

Thank you, everyone, for joining today's call. You may now disconnect your lines and have a lovely day.