USA Rare Earth, Inc. (NASDAQ:USAR) shares are trading higher Monday after the company announced a non-binding letter of intent with the U.S. government for access to $1.6 billion in funding to accelerate the domestic rare earth value chain.
CHIPS Act Support, Private Capital Investment
USA Rare Earth said the letter of intent with the Department of Commerce's CHIPS Program includes $277 million in proposed federal funding and a proposed $1.3 billion senior secured loan under the CHIPS Act. The LOI is subject to further diligence, final agreements, customary closing conditions and approvals.
The company also announced a $1.5 billion common stock PIPE transaction anchored by Inflection Point, with participation from large mutual fund complexes. The PIPE consists of 69.8 million shares issued at $21.50 per share and is expected to close on Jan. 28, subject to customary closing conditions.
Together, the proposed government funding and private-sector investment would provide approximately $3.1 billion of capital.
USA Rare Earth said the capital is expected to accelerate and de-risk its growth plans across mining, processing, metal-making and magnet manufacturing. By 2030, the company aims to extract 40,000 metric tons per day of rare earth and critical mineral feedstock from its Round Top deposit, process 8,000 metric tons per year of heavy rare earth and critical mineral oxides and concentrates, reshore 10,000 metric tons per year of heavy rare earth metal and alloy-making capacity, expand neodymium-iron-boron magnet production capacity to 10,000 metric tons per year and process 2,000 metric tons per year of magnet production swarf.
In addition, USA Rare Earth said it entered into a collaboration with the U.S. Department of Energy's National Energy Technology Laboratory to advance heavy rare earth separation technologies using digital twin technology at its Wheat Ridge lab and Round Top deposit.
Technical Picture Of USA Rare Earth
Currently, USA Rare Earth is trading at $28.02, which positions it 68.7% above its 20-day simple moving average (SMA) and 56.5% above its 100-day SMA, indicating strong short-term momentum. Over the past 12 months, shares have increased by 33.53% and are currently positioned closer to their 52-week highs than lows, reflecting a robust upward trend.
The RSI is at 74.50, indicating that the stock is in overbought territory, which may suggest a potential pullback. Meanwhile, the MACD is above its signal line, reinforcing a bullish outlook for the stock.
The combination of an overbought RSI and a bullish MACD suggests mixed momentum, indicating that while the stock has been strong, caution may be warranted for potential corrections.
USAR Price Action: At the time of writing, USA Rare Earth stock is trading 19.50% higher at $29.88, according to data from Benzinga Pro.
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