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USA Rare Earth Takes Off On Merger, White House Talks
  
USA Rare Earth ( USAR) stock broke out on Thursday, then continued to fly higher Friday after new CEO Barbara Humpton confirmed talks with the White House in a CNBC interview. After federal investments in rare-earth play MP Materials ( MP) and Lithium Americas ( LAC) lit a fire under those stocks, traders are keen to get ahead of the next deal.
"This is a field where it will not be a zero sum game," Humpton said. "It's going to take a lot of players to build out this marketplace."
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?Trump's China Deal Catapults Rare Earths Into Global Focus
USA Rare Earth MergerThough flying under the radar recently as the Department of Defense became the biggest investor in MP Materials, part of a massive package of financial support, USA Rare Earth quietly entered the conversation with its Sept. 29 merger.
Humpton, former CEO of Siemens USA, came on board on Sept. 29 as USA Rare Earth announced the $227 million acquisition of U.K.-based Less Common Metals (LCM). The deal aimed to accelerate USA Rare Earth's "mine-to-magnet strategy," giving it a foothold in every step of the rare earth supply chain.
LCM Chairman Grant Smith said in a Sept. 29 call explaining the deal that his company had recently won a U.S. Defense Dept. grant to expand samarium metal production in the U.K. in support of U.S. industry needs.
Samarium is used in samarium cobalt magnets that maintain their properties under temperatures high enough to liquefy lead. They are used in Lockheed Martin's F-35 fighter jet, Tomahawk missiles and other key defense applications.
USAR Talks With U.S. Involve 'Capital'USA Rare Earth has mining rights to a deposit of heavy rare-earth materials in Texas from which it has extracted gallium and heavy rare earth concentrates. However, mining the site is a long-term project. The near-term focus has been building what it termed "a 5,000-ton magnet production facility" in Stillwater, Okla., that the company has said was on track for commissioning in the first quarter of 2026.
The LCM deal secures "the feedstock for our Stillwater facility," providing a source of metals that will be made into magnets," USA Rare Earth Chairman Michael Aaron Blitzer said on the Sept. 29 call. The merger announcement touted LCM as "the only proven ex-China producer of both light and heavy rare earth permanent magnet metals and alloys at scale." It also noted LCM's "established supply of raw materials outside of China."
Canaccord raised its price target on USAR stock to 22 from 21 on Tuesday, keeping a buy rating. The research firm called the LCM deal underappreciated, according to TheFly.com investment site.
USA Rare Earths CFO Robert Steele actually went into a bit more depth about government talks on Sept. 29. He said the firm was speaking with the U.S. government about potentially being "a capital source through the combination of loans, grants, and potential other opportunities."
USAR StockUSAR leapt 16.8% to 26.54 in early Friday stock market action. On Thursday, USAR surged 23.4%, clearing a 19.68 buy point from a six-week cup base, according to MarketSurge pattern recognition. The buy zone only ran through 20.66.
USAR went public March 14 through a special purpose acquisition company (SPAC) merger with Inflection Point Acquisition Corp., which formerly traded on the Nasdaq as IPXX.
Be sure to read IBD's The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.
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