USA Rare Earth raises $75M for Oklahoma magnet plant

USA Rare Earth (Nasdaq: USAR) announced Wednesday it has secured $75 million from an unnamed institutional investor to fund the buildout of its recently opened magnet manufacturing facility. Despite this, its shares fell nearly 20% on the day.

USAR is currently finishing the construction of a 310,000-square-foot facility in Stillwater, Oklahoma — also known as Innovation Lab — which it officially opened in late March, having already produced the first batch of sintered magnets earlier in the year.

The plant is designed to replicate the complete rare earth magnet production process, the company said. Following the recent commissioning, it will begin producing protypes for customers ahead of commercial operations in 2026.

At full capacity, the state-of-the-art facility is expected to produce 5,000 tonnes, or hundreds of millions of magnets annually, according to company estimates.

The company, which debuted on the NASDAQ mid-March, previously said that it would invest $100 million in the manufacturing facility.

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As part of a vertically integrated supply chain strategy, USAR holds the Round Top deposit in West Texas, where it produced its first sample of dysprosium oxide in January.

The company has said it aims to bring the deposit towards production around the same time as the Oklahoma plant.

The $75 million funding was made via a private investment in public equity (PIPE), the company said.

“This sizable commitment from a single institution allows us to fully fund the capex required for the first phase of our rare earth magnet facility,” USA Rare Earth CEO Joshua Ballard said in a statement.

He also highlighted this as a “pivotal moment” in the company’s push to build what would be one of the largest sintered rare earth magnet facilities in the US.

Under the PIPE transaction, the investor would acquire 8.55 million shares of common stock, pre-funded warrants to purchase another 2.16 million shares and warrants to purchase the combined total number of shares at a strike price of $7.00 per share.

Despite the funding, USAR fell 18.3% at market close to $10.51 apiece, close to where it traded at when it first listed. The stock decline gives the company a market capitalization of $861.3 million.