Highlights

  • Second quarter revenue was $5.8 million, all from Less Common Metals, and the net loss was $12.0 million.
  • Unrestricted cash was $1.53 billion after a $1.50 billion January equity financing; six-month operating cash use was $75.3 million.
  • Commerce Department agreements cover $277.0 million of funding and a $1.30 billion loan guarantee; no disbursements had been received.
  • A proposed $2.83 billion Serra Verde acquisition, including 126.8 million new shares, awaited shareholder approval as of the filing.

USA Rare Earth (NASDAQ:USAR) shares were trading near their 52-week low at USD 10.16 on October 21, 2026, up 1.04%. The rare earth magnet and metals company agreed on April 19 to acquire the parent of Serra Verde for about $2.83 billion, signed Commerce Department funding agreements on June 3 and reported second quarter 2026 results in a Form 10-Q filed August 10.

Based in Stillwater, Oklahoma, USA Rare Earth is a Delaware corporation that says it is building a mine-to-magnet rare earth value chain, spanning oxide extraction and separation, conversion into metals and alloys, and production of sintered neodymium-iron-boron magnets. It calls itself an early-stage company with a limited operating history. All current revenue comes from Less Common Metals, a metal and alloy maker in Cheshire, United Kingdom, acquired on November 18, 2025; it has no revenue yet from magnet manufacturing or mineral production. Its fiscal year ends December 31.

Second Quarter Net Loss of $12.0 Million and a Gross Loss

Revenue for the quarter ended June 30, 2026 was $5.8 million, and $11.5 million for six months. Cost of revenue was $7.4 million, leaving a gross loss of $1.6 million and a gross margin of negative 27.2%, compared with positive 1.9% in the first quarter. The company cited higher raw material costs not fully offset by price increases, plus inventory adjustments.

Operating expenses rose to $44.7 million from $8.8 million. Selling, general and administrative expense was $32.6 million, mainly on consulting and legal costs for acquisitions and higher headcount, and research and development expense was $10.8 million. Other income of $33.8 million included $14.6 million of dividend income and a $22.4 million net gain on financial instruments, which combined a $107.4 million gain on the government grant warrant with a $70.7 million earnout loss and a $14.2 million Series A warrant loss. The net loss was $12.0 million, or $0.05 per share, versus $142.7 million, or $1.54. Six-month net loss was $80.0 million. It also booked $4.5 million of liquidated damages after a registration statement was suspended from March 30 to June 5.

Funding Agreements, Acquisitions and Dilution

Under the June 3 agreements, the Commerce Department direct funding is $277.0 million and the loan guarantee is $1.30 billion. The company issued 16.1 million shares, valued at $451.4 million, and a warrant for 17.6 million shares at a $17.17 exercise price, valued at $430.9 million, as conditions precedent. Initial funding is subject to milestone approval. The company must raise $375.0 million of equity plus the cash cost of Serra Verde by March 31, 2027 and a further $875.0 million by December 31, 2027, and set up a revolving facility of up to $250.0 million by June 30, 2027.

The Serra Verde deal would pay $300.0 million in cash and 126.8 million shares, which the company said would cause substantial dilution. Serra Verde operates the Pela Ema project in Brazil. As of the filing, a stockholder meeting was set for August 28, 2026, and closing also required regulatory approvals. Other transactions include a 13.6% stake in Carester for about $45.7 million, expected to close in the third quarter of 2026, and the August 7 purchase of Texas Mineral Resources for about 3.8 million shares, valued at $73.9 million.

Operations, Capital Needs and Outlook

The company produced yttrium metal commercially for the first time in April, began operating a hydrometallurgical demonstration facility in Wheat Ridge, Colorado on June 15 and chose Blacksburg, South Carolina for a facility planned at 6,400 tons a year of magnets, with commissioning targeted for 2028. It also has a Texas grant agreement of up to $14.2 million and was selected for up to $19.3 million from the Department of Energy, subject to negotiation.

Management believes existing cash will fund near-term needs for at least 12 months, but expects long-term capital requirements to exceed current resources and said it must raise significant capital during 2027, which could dilute shareholders. The filing gives no revenue or earnings guidance and says the company expects operating losses until its facilities reach profitable commercial operation.