The combined company will hold more than $500m in net cash to fund future growth strategy
US-based rare earth miner MP Materials has signed a merger agreement with Fortress Value Acquisition, a special purpose acquisition company sponsored by an affiliate of Fortress Investment Group, to create a combined entity valued at $1.5bn.
The combined company, which will be named MP Materials Corp. upon completion of the deal, will have more than $500m in net cash to fund future growth strategy.
Through its Mountain Pass rare earth mining and processing facility, MP Materials supplies materials essential to electric vehicles, wind turbines, defence systems and other advanced technologies.
The site is estimated to contain one of the richest rare earth deposits in the world, with average ore grade of approximately 8%.
MP Materials co-chairman James Litinsky said: “This business combination and becoming a public company is a key milestone in MP Materials’ mission to restore the full rare earth supply chain to the United States of America.”
Transaction proceeds to fund MP Materials’ strategic plan
MP Materials said that the proceeds from the transaction will be used to fund its strategic plan to retrofit and fully recommission its existing on-site refining facilities.
The proceeds will also allow MP Materials to pursue additional downstream growth opportunities in the magnetics industry.
Fortress Value Acquisition CEO Drew McKnight said: “We believe MP Materials is a compelling opportunity to invest in an irreplaceable, world-class asset at a point in time when demand from electric vehicles, wind turbines, and other technologies is hitting an inflection point, and while the need to find a reliable and resilient source for rare earths is crucial for the U.S. and global supply chain.”
Scheduled for completion in the fourth quarter of 2020, the transaction is subject to regulatory and stockholder approvals, and other customary closing conditions.
In April 2020, MP Materials was selected by the US Department of Defense (DoD) to restore the domestic heavy rare earth production to the US.