Photo: Peggy Greb, USDA

The potential for USA Rare Earth (USAR) to flourish in the near future comes with one glaring risk - its new Stillwater Facility. Both possible delays with the development of the facility, which is due to begin commercial-scale production in the first quarter of 2026,  and challenges it may encounter with the operation of the facility once it's complete, could lead potential customers to competitors like MP Materials (MP), which already has a rare-earth magnet production facility up and running in Texas.

USA Rare Earth Strategic Plans

USA Rare Earths:

1. is nearing completion of a rare earth sintered (i.e., material that has been compacted and fused into a solid mass by applying heat or pressure without melting it completely into a liquid) neo magnet manufacturing plant in Stillwater, OK:
2. holds certain mining rights to the Round Top Mountain deposit near Sierra Blanca, TX, and expects to complete the Pre-Feasibility Study for the development project in the second half of 2026;
3. has inked a deal to acquire Less Common Metals Ltd. (LCM), a UK-based manufacturer of specialized rare earth metals and both cast and strip cast alloys. LCM is the only proven ex-China producer of both light and heavy rare earth permanent magnet metals and alloys at scale, and its acquisition will significantly accelerate USA Rare Earth’s mine-to-magnet strategy, establishing an end-to-end rare earth supply chain; 
4. is progressing toward pilot-scale testing of its swarf recycling flow sheet which marks an important step in closing the loop between mining, processing and recycling;
5. has signed an agreement with Enduro Pipeline Services for the delivery of neo magnets in early 2026; and
6. has entered into a joint development agreement with ePropelled to develop a strategic supply and purchase relationship of sintered neo magnets for use in the latter’s state-of-the-art motors.

Analyst Assessment and Projection Of The Rare Earth Metals Stock

While USA Rare Earth’s pending acquisition of LCM and the development of its Stillwater facility position it to become a key player in rebuilding the U.S. rare earth supply chain, Zacks asserts that its continued losses, lack of current revenues and estimated downgrades suggest that profitability remains a few years away.

Investors already holding the stock may stay invested, given the strong long-term potential and strategic progress, but new investors may prefer to wait for a more favorable entry point once financial visibility improves. 

What About The Rare Earth Metals Warrant (USARW)? 

As outlined in Intro To Stock Warrants the steps for successful warrant investing include: 

1. Identifying a company that offers a long-term warrant with at least a 36 months expiration date (USARW expires in 39 months) because the longer the remaining life of a warrant the more time there is for the company to execute on their business plan and, in the event of a market downturn, more time for a favorable turnaround.
2. Selecting a company that you think has great potential because if the company does not perform and execute on its business plan the common shares will not rise and, therefore, their associated warrants will nor rise either and, if the common shares decline, their associated warrants will decline by an even greater percentage. 
3. Identifying a warrant currently priced to deliver an enhanced return of at least 1.5-to-1 (i.e. a 50% greater return than the associated stock) and the current leverage of USARW is 4.3-to-1. Go here for an example of how to calculate the Return on Investment (ROI) of a warrant as compared to the associated stock).
4. Choosing a warrant that has a high strike price as this makes the warrant more likely to expire “in the money” and have intrinsic value.
5. Choosing a warrant with a high conversion ratio because you want the warrant to convert into as much stock as possible. 

The USARW meets 4 of the 5 criteria for success but the most important - that the stock has great potential - is not being met, if we are to agree with Zack's assessment above that 'Investors already holding the stock may stay invested, given the strong long-term potential and strategic progress but new investors may prefer to wait for a more favorable entry point once financial visibility improves."

Suggested Action

The USARW has a strike, or exercise, price of $11.50 (i.e., the stock must rise to a minimum of $11.50 by February 27th, 2029, before the warrant can be  converted into the stock by Canadians). Currently, (November 14th) the stock has surpassed $11.50 so if you are Canadian and own any warrants, now might be a good time to consider converting the warrants into the associated stock. If you are American, the SEC does not allow you to convert your warrants into the associated stock and, given Zack's above assessment it warrants considering selling the warrant. Remember, it is paramount to do your own due diligence before deciding what action to take.

Our Critical Minerals Stocks Portfolio

Despite its name, USA Rare Earth is not a pure-play rare earth metals company. Instead it is, in fact, a critical minerals company given the fact that the company also mines lithium (Read:  Here's How Rare Earth Metals And Critical Minerals Stocks Differ From Each Other) and, as such, is included on our New Pure-Play Critical Minerals Mining Stocks Portfolio  rather than in our Pure-play Rare Earth Metal Stocks Portfolio (Read: All About Rare Earth Metals: Production, Reserves, Stocks).

More By This Author:

The Trump Truth Social Media Equities Have Crashed YTD - Here's Why & What Their Futures Hold
Here's How Rare Earth Metals And Critical Minerals Stocks Differ From Each Other
All 5 Pure-Play CyberSecurity Software Stocks Fell W/e November 7th - Here's Why