mp-20210331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☑						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021


☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number 001-39277

MP MATERIALS CORP.

(Exact name of registrant as specified in its charter)


Delaware						84-4465489
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

6720 Via Austi Parkway, Suite 450

Las Vegas, Nevada 89119

(702) 844-6111

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value of $0.0001 per share	MP	New York Stock Exchange
Warrants to purchase Common Stock	MPWS	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

☑

Smaller reporting company

☑

Emerging growth company

☑

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

As of May 1, 2021, the number of shares of the registrant’s common stock outstanding was 170,745,813.

MP MATERIALS CORP. AND SUBSIDIARIES

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			Page

PART I—FINANCIAL INFORMATION
Item 1. Financial Statements			1
Condensed Consolidated Balance Sheets (unaudited)			1
Condensed Consolidated Statements of Operations (unaudited)			2
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) (unaudited)			3
Condensed Consolidated Statements of Cash Flows (unaudited)			4
Notes to Condensed Consolidated Financial Statements (unaudited)			5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			21
Item 3. Quantitative and Qualitative Disclosures About Market Risk			37
Item 4. Controls and Procedures			37

PART II—OTHER INFORMATION
Item 1. Legal Proceedings			37
Item 1A. Risk Factors			37


Item 4. Mine Safety Disclosures			38

Item 6. Exhibits			39
Signatures			40

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References herein to the “Company,” “we,” “our,” and “us,” refer to MP Materials Corp. and its subsidiaries.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain statements included in this Quarterly Report on Form 10-Q for the three months ended March 31, 2021 (this “Form 10-Q”), that are not historical facts are forward-looking statements under Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities and Exchange Act of 1934, as amended. Forward-looking statements may be identified by the use of the words such as “ estimate,” “plan,” “shall,” “may,” “project,” “forecast,” “intend,” “expect,” “anticipate,” “believe,” “seek,” “target,” or similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding estimates and forecasts of other financial and performance metrics and projections of market opportunity. These statements are based on various assumptions, whether or not identified in this Form 10-Q or our Annual Report on Form 10-K for the year ended December 31, 2020 (the “Form 10-K”), and on the current expectations of our management and are not predictions of actual performance. These forward-looking statements are provided for illustrative purposes only and are not intended to serve as, and must not be relied on by any investor as, a guarantee, an assurance, a prediction or a definitive statement of fact or probability. Actual events and circumstances are difficult or impossible to predict and will differ from assumptions. Many actual events and circumstances are beyond our control.

These forward-looking statements are subject to a number of risks and uncertainties, including:

•unanticipated costs or delays associated with our Stage II optimization project;

•uncertainties relating to our commercial arrangements with Shenghe Resources (Singapore) International Trading Pte. Ltd., an affiliate of Shenghe Resources Holding Co., Ltd., a global rare earth company listed on the Shanghai Stock Exchange;

•the ability to convert current commercial discussions with customers for the sale of rare earth oxide products into contracts;

•potential changes in China’s political environment and policies;

•fluctuations in demand for, and prices of, rare earth minerals and products;

•uncertainties relating to the COVID-19 pandemic;

•the intense competition within the rare earths mining and processing industry;

•uncertainties regarding the growth of existing and emerging uses for rare earth products;

•potential power shortages at the Mountain Pass facility;

•increasing costs or limited access to raw materials that may adversely affect our profitability;

•fluctuations in transportation costs or disruptions in transportation services;

•inability to meet individual customer specifications;

•diminished access to water;

•uncertainty in our estimates of rare earth oxide reserves;

•uncertainties regarding our ability to vertically integrate into further downstream processing and reach full revenue potential;

•risks associated with work stoppages;

•a shortage of skilled technicians and engineers;

•loss of key personnel;

•risks associated with the inherent dangers of mining activity;

•risks associated with events outside of our control, such as natural disasters, wars or health epidemics or pandemics;

•risks related to technology systems and security breaches;

•risks associated with our intellectual property rights;

•ability to compete with substitutions for rare earth minerals;

•ability to maintain satisfactory labor relations;

•risks relating to extensive and costly environmental regulatory requirements;

•risks associated with the terms of our convertible notes and

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•the other factors described elsewhere in this Form 10-Q, included under the headings “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Part II, Item 1A, “Risk Factors” or as described in our Form 10-K, or as described in the other documents and reports we file with the Securities and Exchange Commission (“SEC”).

If any of these risks materialize or our assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements.

These and other factors that could cause actual results to differ from those implied by the forward-looking statements in this Form 10-Q are more fully described within Part II, Item 1A, “Risk Factors” in this Form 10-Q and “Part I, Item 1A. Risk Factors” in our Form 10-K. Such risks are not exhaustive. New risk factors emerge from time to time and it is not possible to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligations to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

In addition, statements of belief and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us, as applicable, as of the date of this Form 10-Q, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and you are cautioned not to unduly rely upon these statements.

iii

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PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MP MATERIALS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


	March 31, 2021		December 31, 2020
(in thousands, except share and per share data)
Assets
Current assets
Cash and cash equivalents	$	1,181,515	$	519,652
Accounts receivable (including related party), net of allowance for credit losses of $0 and $0, respectively	13,925		3,589
Inventories	35,098		32,272
Prepaid expenses and other current assets	8,583		5,534
Total current assets	1,239,121		561,047
Non-current assets
Restricted cash	9,115		9,100
Property, plant and equipment, net	532,504		501,974
Finance lease right-of-use assets	974		1,028
Other non-current assets	812		1,139
Total non-current assets	543,405		513,241
Total assets	$	1,782,526	$	1,074,288
Liabilities and stockholders’ equity
Current liabilities
Accounts payable and accrued liabilities	$	27,500	$	16,159

Current installments of long-term debt	3,105		2,403
Current installments of long-term debt—related party	38,457		22,070
Current portion of finance lease liabilities	279		266
Other current liabilities	3,580		2,163

Total current liabilities	72,921		43,061
Non-current liabilities
Asset retirement obligations	25,859		25,570
Environmental obligations	16,679		16,602
Long-term debt, net of current portion	672,582		961
Long-term debt—related party, net of current portion	17,733		44,380
Finance lease liabilities, net of current portion	687		736
Deferred income taxes	91,635		87,473
Other non-current liabilities	9,273		1,628
Total non-current liabilities	834,448		177,350
Total liabilities	907,369		220,411
Commitments and contingencies (Note 12)
Stockholders’ equity:
Preferred stock ($0.0001 par value, 50,000,000 shares authorized, none issued and outstanding in either period)	—		—
Common stock ($0.0001 par value, 450,000,000 shares authorized, 170,745,864 and 170,719,979 shares issued and outstanding, as of March 31, 2021, and December 31, 2020, respectively)	17		17
Additional paid-in capital	921,643		916,482
Accumulated deficit	(46,503)		(62,622)
Total stockholders’ equity	875,157		853,877
Total liabilities and stockholders’ equity	$	1,782,526	$	1,074,288

See accompanying notes to the Condensed Consolidated Financial Statements.

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MP MATERIALS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


	For the three months ended March 31,
(in thousands, except share and per share data)	2021		2020
Product sales (including related party)	$	59,971	$	20,719

Operating costs and expenses:
Cost of sales (including related party)(excluding depreciation, depletion and amortization)	17,936		12,667
Royalty expense to SNR	—		487
General and administrative	13,583		3,084
Depreciation, depletion and amortization	6,150		1,271
Accretion of asset retirement and environmental obligations	593		564

Total operating costs and expenses	38,262		18,073
Operating income	21,709		2,646
Other income, net	55		82
Interest expense, net	(1,154)		(803)
Income before income taxes	20,610		1,925
Income tax expense	(4,491)		—
Net income	$	16,119	$	1,925

Earnings per share:
Basic	$	0.10	$	0.03
Diluted	$	0.09	$	0.03

Weighted-average shares outstanding:
Basic	168,922,566		66,556,975
Diluted	179,319,489		66,556,975

See accompanying notes to the Condensed Consolidated Financial Statements.

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MP MATERIALS CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(UNAUDITED)


	Preferred Stock			Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity (Deficit)
(in thousands, except share data)	Shares	Amount		Shares	Amount
Balance as of January 1, 2021	—	$	—	170,719,979	$	17	$	916,482	$	(62,622)	$	853,877
Stock-based compensation	—	—		36,320	—		5,673		—		5,673
Shares used to settle payroll tax withholding	—	—		(10,435)	—		(334)		—		(334)
Net income	—	—		—	—		—		16,119		16,119
Other	—	—		—	—		(178)		—		(178)
Balance as of March 31, 2021	—	$	—	170,745,864	$	17	$	921,643

SEC Form 10-Q filed by MP Materials Corp.