MP Materials surges after smaller loss, Pentagon, Apple deals boost outlook

MP Materials MP shares jumped more than 10% in premarket trading on Friday, after the U.S. rare earths miner posted higher output, a smaller-than-expected quarterly loss and forecast further production gains.

The Las Vegas-based company operates the only U.S. rare earths mine and has seen its stock more than quadruple this year as Washington moves to secure domestic supplies and cut dependence on China.

Production of neodymium and praseodymium (NdPr), the most in-demand rare earths, jumped nearly 120% in the second quarter to a record 597 metric tons.

In the current quarter, NdPr oxide production is expected to rise 10% to 20% sequentially, Founder and Chief Operating Officer Michael Rosenthal said on a post-earnings call.

Analysts at TD Cowen said strong upstream volumes and magnetics output drove a 40% EBITDA beat, with commercial magnet production on track by the year-end.

They now expect the company to hit a 60,000-tonne annual run-rate of rare earth oxide output a year ahead of schedule.

The results come weeks after MP signed a multibillion-dollar deal with the U.S. Department of Defense that guarantees a $110 per kg price floor for NdPr, nearly double the Chinese market levels, and could make the Pentagon its biggest shareholder.

That was followed by a $500 million rare earth magnet supply agreement with Apple AAPL, whose prepayments will cover most of the cost to expand MP's Independence mine in Texas.

Stage III magnetics operations are already EBITDA-positive and, alongside government and Apple funding, leave the company well-capitalized to accelerate growth, brokerage DA Davidson said.

MP posted an adjusted loss of 13 cents per share for second quarter, while analysts estimated a 19-cent loss.