USA Rare Earth Inc. (NASDAQ:USAR) is one of the 10 Stocks With Double-Digit Returns.
USA Rare Earth extended its winning streak to a 6th consecutive day on Monday, surging 13.18 percent to close at $22.58 apiece, as investors took heart from its expansion initiative with the acquisition of a rare earth miner for $2.8 billion.
In an updated report, USA Rare Earth Inc. (NASDAQ:USAR) said that it inked a definitive agreement with Serra Verde Group for the acquisition of its entire stake for a combination of cash and stock transaction.
USA Rare Earth’s magnet facility in Stillwater, Oklahoma. Photo from the USA Rare Earth website
Serra Verde, which owns the Pela Ema rare earth mine and processing plant in Goiás, Brazil, will be acquired for $300 million in cash and more than 126.8 million USAR shares, which, as of Friday’s $19.95 closing price, implied an equity value of $2.8 billion.
The acquisition is expected to close in the third quarter of the year, subject to customary closing conditions and regulatory approvals.
“The acquisition of Serra Verde represents a transformational step in delivering on our ambition to build a global champion and the partner of choice in rare earth elements, oxides, metals and magnets,” USA Rare Earth Inc. (NASDAQ:USAR) CEO Barbara Humpton said, noting that Serra Verde is the only producer outside Asia capable of supplying all four magnetic rare earths at scale, including Dysprosium, Yttrium, and Terbium.
“By combining Serra Verde’s world-class operations and team with our processing, separation, metallization, and magnet-making capabilities, we are advancing our goal of creating a fully integrated platform that will serve as a cornerstone of global rare earth supply security for decades to come,” she added.
Serra Verde recently secured a $565 million in financial backing from the US International Development Finance Corp. for its expansion initiatives. It also secured a 15-year offtake agreement to supply a special purpose vehicle and private capital sources with all four magnetic rare earths required to make a permanent NdFeB magnet.
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