Form 8-K
8-K — USA Rare Earth, Inc.
Accession: 0001213900-26-055511
Filed: 2026-05-13
Period: 2026-05-13
CIK: 0001970622
SIC: 1000 (METAL MINING)
Item: Other Events
Item: Financial Statements and Exhibits
Documents
8-K — ea0290293-8k_usa.htm (Primary)
EX-23.1 — CONSENT OF PRICEWATERHOUSECOOPERS AUDITORES INDEPENDENTES LTDA (ea029029301ex23-1.htm)
EX-99.1 — RISK FACTORS (ea029029301ex99-1.htm)
EX-99.2 — SUPPLEMENTAL DISCLOSURES (ea029029301ex99-2.htm)
EX-99.3 — AUDITED FINANCIAL STATEMENTS OF SVRE HOLDINGS LTD. FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024 (ea029029301ex99-3.htm)
EX-99.4 — UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS OF USAR FOR THE YEAR ENDED DECEMBER 31, 2025 (ea029029301ex99-4.htm)
GRAPHIC (ea029029301_img1.jpg)
GRAPHIC (ea029029301_ex99-2img1.jpg)
XML — IDEA: XBRL DOCUMENT (R1.htm)
8-K — CURRENT REPORT
8-K (Primary)
Filename: ea0290293-8k_usa.htm · Sequence: 1
false
0001970622
0001970622
2026-05-13
2026-05-13
iso4217:USD
xbrli:shares
iso4217:USD
xbrli:shares
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 OR 15(d)
of
The Securities Exchange Act of 1934
Date
of Report (Date of earliest event reported): May 13, 2026
USA
Rare Earth, Inc.
(Exact
Name of Registrant as Specified in its Charter)
Delaware
001-41711
98-1720278
(State
or Other Jurisdiction
of
Incorporation)
(Commission File Number)
(I.R.S.
Employer
Identification
No.)
100
W. Airport Road, Stillwater, OK 74075
(Address
of Principal Executive Offices) (Zip Code)
(813)
867-6155
(Registrant’s
telephone number, including area code)
Not
applicable
(Former
Name or Former Address, if Changed Since Last Report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions:
☐ Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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 $0.0001
USAR
The Nasdaq Stock Market LLC
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
EXPLANATORY
NOTE
As
previously announced, USA Rare Earth, Inc. (“USAR,” “we,” “our,” and “us”) entered into
a definitive Agreement and Plan of Merger (the “Merger Agreement”), dated as of April 19, 2026, by and among (i) USAR, (ii)
Middlebury Merger Sub Ltd., a business company limited by shares incorporated under the laws of the British Virgin Islands and an indirect,
wholly owned Subsidiary of USAR, (iii) SVRE Holdings Ltd., a business company limited by shares incorporated under the laws of the British
Virgin Islands (“SVRE”), and (iv) Serra Verde Rare Earths Ltd., a company incorporated and existing under the laws of the
British Virgin Islands, solely in its capacity as the representative of SVRE’s shareholders. The Merger Agreement provides for
the merger of SVRE with and into Merger Sub, with Merger Sub surviving such merger as an indirect, wholly owned subsidiary of USAR.
Item
8.01 Other Events.
In
connection with the transactions contemplated by the Merger Agreement (the “Merger”) and to update certain risk factors previously
disclosed in USAR’s Form 10-K for the year ended December 31, 2025 that was filed with the Securities and Exchange Commission (the
“SEC”) on March 30, 2026, USAR is filing this Current Report on Form 8-K for the purpose of supplementing disclosures contained
in USAR’s filings with the SEC.
The
updated disclosures are set forth in Exhibit 99.1, 99.2 and 99.3 hereto and comprise the following information:
● Risks
relating to the Merger
● Risks
relating to SVRE
● Risks
relating to USAR
● Information
About SVRE
● Management’s
Discussion and Analysis of Financial Condition and Results of Operations of SVRE
● Audited
financial statements of SVRE for the years ended December 31, 2025 and 2024 (the “Audited
Financial Statements”)
● Unaudited
pro forma condensed combined financial statements of USAR for the year ended December 31,
2025, giving effect to the Merger.
A
copy of the consent of PricewaterhouseCoopers Auditores Independentes Ltda. with respect to their report dated May 12, 2026 with respect
to the Audited Financial Statements is included as Exhibit 23.1 hereto.
Cautionary
Note Regarding Forward-Looking Statements
This
report, including the exhibits filed hereto, contains “forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995. These statements include those relating to the proposed U.S. government collaboration and the expected
timing of executing definitive documents relating thereto, the proposed acquisition of Serra Verde Group (“SVG”), our business
plans, strategy, goals and prospects, our plans for and prospects of our other acquisitions, investments and other business development
activities, including the announced Carester SAS (“Carester”) and Texas Mineral Resources Corp. (“TMRC”) transactions
and other statements regarding USAR’s expectations for future development, operations, strategies, transactions and financial performance.
Such statements can be identified by the fact that they do not relate strictly to historical or current facts. Words such as “aim,”
“anticipate,” “believe,” “can,” “continue,” “could,” “estimate,”
“expect,” “growth,” “intend,” “may,” “might,” “plan,” “potential,”
“project,” “propose,” “should,” “target,” “vision,” “will,” “would”
and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not
forward-looking.
1
Forward-looking
statements are subject to risks and uncertainties and potentially inaccurate assumptions that could cause actual results to differ materially
from our expectations, including without limitation: risks that the proposed transactions with SVG, Carester and TMRC may not be consummated
on their anticipated timelines or at all; we may not realize the anticipated benefits of our proposed and prior acquisitions, including
expected synergies, financial performance, estimated EBITDA and, in the case of Serra Verde, integration of operations, on the anticipated
timeline or at all; the ability of our Stillwater magnet manufacturing facility to commence commercial operations on the timing and with
the production capacity anticipated or at all; our limited operating history; our ability to commercially extract minerals from the Round
Top deposit on our anticipated timeline or at all; risks that we may experience delays, unforeseen expenses, increased capital costs,
and other complications while developing our projects; our ability to raise necessary capital on acceptable terms or at all; potential
dilution to existing stockholders and the adverse effect on our stock price if we issue additional common stock or equity-linked securities;
the volatility of our stock price; our ability to enter into definitive agreements for the proposed U.S. government financing, which
is subject to conditions precedent and final government approvals, on the anticipated terms or at all and, if executed, to satisfy the
milestones and other conditions of such financing, which could impose conditions to access such financing over a period of time; the
availability of rare earth oxide, metal feedstock and other materials, utilities (including power and water) and equipment in quantities
and prices that allow us to develop and commercially operate our Stillwater facility and other facilities; our ability to meet individual
customer specifications and produce a consistently high quality product; fluctuations in demand for and prices of neo magnets and our
other products, including without limitation as a result of dumping, predatory pricing and other tactics by USAR’s competitors
or state actors or the overall competitive environment; our ability to achieve positive cash flow or profitability or the ability to
access cash flow within our corporate structure due to restrictions contained in our financing agreements; our ability to convert current
commercial discussions and/or memorandums of understanding with customers for the sale of our neo magnets and other products into definitive
orders; geopolitical developments or disruptions, such as changes in the political environment, export/import or environmental policy
of the People’s Republic of China, the United States or other countries in which we operate or sell products or otherwise; war,
terrorism, natural disasters or public health emergencies; our ability to retain or recruit key personnel; environmental, health and
safety regulations; and our ability to comply with requirements for federal, state and local government incentives and financing.
Additional
risks and detailed information regarding factors that may cause actual results to differ materially has been and will be included in
the Company’s filings with the SEC. Any forward-looking statements speak only as of the date of this report (or such other date
as is specified in such statements), and USAR undertakes no obligation to update any forward-looking statements as a result of new information
or future events or developments, except to the extent required by law.
Item
9.01 Financial Statements and Exhibits.
(d)
Exhibits.
The
following exhibits are attached with this current report on Form 8-K:
Exhibit
No.
Description
23.1
Consent of PricewaterhouseCoopers Auditores Independentes Ltda.
99.1
Risk factors
99.2
Supplemental disclosures
99.3
Audited
financial statements of SVRE Holdings Ltd. for the years ended December 31, 2025 and 2024
99.4
Unaudited pro forma condensed combined financial statements of USAR for the year ended December 31, 2025
104
Cover Page Interactive Data
File (embedded within the Inline XBRL document)
2
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
USA Rare Earth, Inc.
Date: May 13, 2026
By:
/s/ Valerie Ford Jacob
Valerie Ford Jacob
Chief Legal Officer
3
EX-23.1 — CONSENT OF PRICEWATERHOUSECOOPERS AUDITORES INDEPENDENTES LTDA
EX-23.1
Filename: ea029029301ex23-1.htm · Sequence: 2
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-288885) of USA Rare Earth, Inc. of our report dated May 12, 2026 relating to the financial statements of
SVRE Holdings Ltd., which appears in this Current Report on Form 8-K.
/s/ PricewaterhouseCoopers
Auditores Independentes Ltda.
Goiânia, Goiás
May 13, 2026
EX-99.1 — RISK FACTORS
EX-99.1
Filename: ea029029301ex99-1.htm · Sequence: 3
Exhibit 99.1
RISK
FACTORS
Unless
otherwise noted or the context otherwise requires, references to the “Company,” “USAR,” “USA Rare Earth”
“we,” “us,” or “our” refer to USA Rare Earth, Inc. and its subsidiaries and references to the “SVRE
Merger” refer to merger of SVRE Holdings Ltd. (“SVRE”) with and into Middlebury Merger Sub Ltd. (“Merger Sub”),
an indirect, wholly owned subsidiary of USAR, with Merger Sub continuing as the surviving company and an indirect, wholly owned subsidiary
of USAR, pursuant to the Agreement and Plan of Merger, dated as of April 19, 2026 (as it may be amended from time to time, the “Merger
Agreement”), by and among USAR, Merger Sub, SVRE and Serra Verde Rare Earths Ltd., as Shareholder Representative. The following
discussion sets forth what management currently believes could be the most significant risks and uncertainties that could impact our
business, results of operations, and financial condition. You should consider carefully the risks and uncertainties described below,
together with all of the other information contained in USAR’s Annual Report on Form 10-K filed with the Securities and Exchange
Commission (the “SEC”) on March 30, 2026. If any of the following events occur, our business, results of operations, and
financial condition may be materially adversely affected. In that event, the trading price of our securities could decline, and you could
lose all or part of your investment. The risks and uncertainties described below are not the only ones we face. Additional risks and
uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that adversely
affect our business or results of operations. References to past events are provided by way of example only and they or the lack of reference
to any past event or example are not intended to be a representation as to whether or not such factors have occurred in the past or their
likelihood of occurring in the future.
Risks
relating to the SVRE Merger
If
the public markets assign lower values to the SVRE business than the values used in negotiating the terms of the SVRE Merger, the trading
price of Common Stock may decline.
The
stock of SVRE is not publicly traded, so there is no current market-based valuation for SVRE’s business. In negotiating the SVRE
Merger, we used what we believe to be a reasonable valuation for SVRE and considered the advice of our financial advisor in the SVRE
Merger. The public markets may not value the SVRE business in the same manner as we have valued it for purposes of negotiating the terms
of the SVRE Merger. If either USAR’s future financial performance is materially better than projected (and SVRE does not also perform
materially better), or if SVRE’s future financial performance is materially lower than projected (and USAR’s performance
is not similarly lower), the market may conclude that the value assigned to SVRE in the SVRE Merger was too high. In any of these events,
the trading price of the shares of USAR’s common stock, par value $0.0001 per share (“Common Stock”), may decline.
The
SVRE Merger may not be completed on its anticipated timeline or at all, which could adversely affect USAR’s business operations
and stock price.
To
complete the SVRE Merger, USAR stockholders must approve the issuance of Common Stock as contemplated by the Merger Agreement. In addition,
the Merger Agreement contains additional closing conditions. These conditions may not be satisfied or waived.
If
we are unable to complete the SVRE Merger, USAR would be subject to a number of risks, including the following:
● USAR
would not realize the benefits of the SVRE Merger; and
● the
trading price of Common Stock may decline to the extent that the current market price reflects
a market assumption that the SVRE Merger will be completed.
The
occurrence of either of these events individually or in combination could have a material adverse effect on the results of operations,
financial position and cash flows of USAR or the trading price of our Common Stock.
While
the SVRE Merger is pending, USAR and SVRE are subject to business uncertainties and contractual restrictions that could disrupt their
respective businesses or give rise to the termination of the Merger Agreement.
The
Merger Agreement contains customary representations, warranties and covenants of the parties, including, among others, covenants by each
of USAR and SVRE to conduct their respective businesses in the ordinary course between the execution of the Merger Agreement and the
consummation of the SVRE Merger and not to engage in certain kinds of transactions during such period without the other party’s
consent (including with respect to dividends, capital expenditures above specified thresholds, the incurrence of indebtedness, the issuance
of equity securities (subject to specified carve-outs), and acquisitions and dispositions of assets). These restrictions may prevent
us from pursuing otherwise attractive business opportunities in accordance with our business strategy or making other changes to our
business prior to the closing or termination of the Merger Agreement. These restrictions could be in place for an extended period of
time if the consummation of the merger is delayed and could adversely affect USAR’s or SVRE’s financial condition and results
of operations.
USAR
may fail to realize the anticipated benefits of the SVRE Merger and its other proposed and prior acquisitions, including expected synergies,
financial performance and integration of operations, on the anticipated timeline or at all.
USAR
believes that there are significant benefits and synergies that may be realized through combining its existing business with SVRE’s
business, as well as through the proposed transaction with Carester SAS (“Carester”) (the “Carester Transaction”)
and the proposed acquisition of Texas Mineral Resources Corp. (“TMRC”) (the “TMRC Transaction”). However, the
effort to realize these benefits and synergies is a complex process and may disrupt the operations of USAR, SVRE or the businesses involved
in the Carester Transaction or the TMRC Transaction if not implemented in a timely and efficient manner.
The
full benefits of the SVRE Merger, including the anticipated synergies, financial performance, growth opportunities and supply-chain benefits,
may not be achieved within the time frame USAR anticipates or at all. The synergies achieved could be less than currently anticipated,
and integration may result in additional or unforeseen expenses. Integration efforts also may divert management’s attention and
resources, and we could also experience disruptions due to the combination of different management teams. In addition, the integration
of SVRE’s operations is expected to be complex, and USAR is required to devote significant attention and resources to successfully
align the respective business practices and operations of USAR and SVRE. This process and other integration challenges may disrupt
USAR’s business and limit the anticipated benefits of the SVRE Merger.
Failure
to achieve the anticipated benefits of the SVRE Merger, the Carester Transaction or the TMRC Transaction, or to identify all of the risks
associated with these transactions, could adversely affect the combined company’s results of operations or cash flows, decrease
or delay any accretive effect of the SVRE Merger, and negatively impact the price of our Common Stock and the combined company’s
long-term value.
Following
the consummation of the SVRE Merger, the combined company will be subject to political, economic, regulatory, tax, currency and other
risks associated with SVRE’s operations in Brazil and Switzerland that could adversely affect the combined company’s business,
results of operations and financial condition.
SVRE conducts its mining and processing operations in Brazil through its Brazilian subsidiary. SVRE’s Swiss subsidiary, SV Management
Switzerland AG, co-ordinates the sale of product to third-parties. As a result, following the closing the combined company will be subject to a range of
risks inherent in operating internationally, including: the application of additional and changing legal, regulatory and taxation regimes
(including in respect of mining, environmental, health and safety, labor, anti-corruption, sanctions, trade and customs matters); the
requirement to obtain and maintain governmental permits and authorizations to operate the Pela Ema mine and processing plant; price controls,
exchange controls and limitations on the repatriation of earnings; political, social and economic instability and disruptions in Brazil
and other applicable regions (including in connection with Brazilian elections and changes in administration or legislative priorities);
fluctuations in foreign currency exchange and interest rates (including with respect to the Brazilian real and the Swiss franc); difficulties
in staffing and managing multinational operations across multiple time zones, languages and legal systems; and limitations on the ability
to enforce legal rights and remedies in foreign jurisdictions. If the combined company is unable to successfully manage these and other
risks associated with the integration and management of SVRE’s operations, such risks could have a material adverse effect on the
combined company’s business, results of operations or financial condition.
2
In
addition, the SVRE Merger and the combined company’s Brazilian operations may be subject to heightened scrutiny from political
parties, governmental authorities, non-governmental organizations, community groups and other interested parties, including through litigation,
legislative or regulatory initiatives or other actions concerning foreign ownership or operation of Brazilian strategic mineral assets.
For example, on April 25, 2026, a Brazilian political party filed a petition with the Brazilian Supreme Court (Supremo Tribunal
Federal) raising constitutional concerns relating to the protection of the national interest in strategic mineral resources in connection
with the SVRE Merger; a separate complaint has been submitted to the Brazilian Attorney General (Procurador-Geral da República)
by members of another Brazilian political party requesting an investigation into governmental conduct relating to U.S.–Brazil cooperation
on critical minerals and rare earths; and a member of the Brazilian Congress has filed a complaint with the Brazilian antitrust authority
(Conselho Administrativo de Defesa Econômica, or CADE) and the Brazilian Ministry of Mines and Energy requesting that CADE review
the SVRE Merger, including under its statutory authority to call in transactions that do not meet mandatory notification thresholds,
and raising concerns relating to vertical integration, exclusivity arrangements and supply chain effects. Although USAR does not believe
that these matters or similar actions, if commenced, would prevent the consummation of the SVRE Merger, any such actions or initiatives
could result in increased regulatory or governmental scrutiny of the combined company’s Brazilian operations, additional or more
burdensome compliance requirements, increased legal and management expense, reputational harm and other operational challenges, any of
which could have a material adverse effect on the combined company’s business, results of operations and financial condition.
The
combined company’s success following the SVRE Merger will depend, in part, on its ability to retain and motivate key employees.
The
success of the combined company following the SVRE Merger will depend, in part, on the retention of key employees of USAR and SVRE, including
SVRE’s senior leadership team. As a condition to the closing, USAR is required to appoint Sir Mick Davis and Thras Moraitis to
the Board of Directors of USAR (the “Board”), and certain SVRE key employees have entered into employment letter agreements
that will become effective at the closing. It is possible that one or more of these or other key employees might decide not to remain
with the combined company following the closing, and the loss of any such key employees could have a material adverse effect on the combined
company’s business, financial condition, results of operations and growth prospects. In addition, no assurance can be given that
USAR, after completion of the SVRE Merger, will be able to attract management personnel and other key employees to the same extent that
USAR and SVRE have previously been able to attract their own employees.
The
issuance of shares of Common Stock in the SVRE Merger and other contemplated issuances will dilute the voting power of existing USAR
stockholders and their percentage interest in any future earnings of USAR.
In
connection with the SVRE Merger, USAR will issue 126,849,307 shares of Common Stock to the former SVRE securityholders as aggregate
stock merger consideration.
As
a result, the issuance of shares of Common Stock in the SVRE Merger will significantly reduce the relative voting power of existing USAR
stockholders and dilute their percentage interest in any future earnings, dividends or other distributions of USAR. The actual
extent of any such dilution will depend on a number of factors, including the number of shares of Common Stock outstanding at the effective
time of the SVRE Merger, the future operating results of USAR and the combined company, and the timing and amount of any future issuances
of Common Stock or other equity securities by USAR.
The
impact of dilution to USAR’s shareholders will also be impacted by other transactions that are currently pending or contemplated,
or that may be entered into in the future, including (1) USAR’s agreement to issue 3,823,328 shares of Common Stock as merger
consideration in connection with the TMRC Transaction, (2) USAR’s agreement to issue $277 million of Common Stock and
warrants to acquire approximately 17.5 million shares of Common Stock as part of the Expected U.S. Government Transaction (as
defined below) contemplated by the non-binding letters of intent with the U.S. Department of Commerce, (3) our commitment to
issue approximately $13.5 million of Common Stock (or pay cash) to Carester in connection with the Carester Transaction, and (4) our
obligation to issue an additional 5.05 million shares of Common Stock as earnout shares if our stock price stays over $20 for 20
out of 30 trading days.
3
USAR
will incur significant transaction, compliance and other merger-related fees and costs.
USAR
has incurred and expects to continue to incur significant transaction fees and other non-recurring costs associated with negotiating
and completing the SVRE Merger. In addition, USAR expects to incur costs associated with combining the operations of its business with
those of SVRE. The amount of transaction costs expected to be incurred is a preliminary estimate
and subject to change. In addition, it is expected that USAR’s costs related to legal and regulatory compliance may increase substantially,
at least in the near term, because SVRE has not previously been required to comply with the reporting, internal control, public disclosure
and similar legal and regulatory compliance obligations and requirements applicable to publicly traded companies. Although USAR expects
that the elimination of duplicative costs, as well as the realization of other efficiencies related to the integration of the businesses,
may offset incremental transaction and merger-related costs over time, this net benefit may not be achieved in the near term or at all.
The
public resale by former SVRE securityholders of Common Stock received in the SVRE Merger could have a negative effect on the trading
price of Common Stock following completion of the SVRE Merger.
In
the SVRE Merger, we will issue 126,849,307 shares of Common Stock to the SVRE securityholders, including Serra Verde Rare Earths Ltd.,
VB (Rare Earths) Limited and EMG Fund V SVRE Holdings, LLC, who we expect will be the three largest holders of our Common Stock following
the SVRE Merger. None of these shares will be registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”)
at closing and they will only be able to be resold pursuant to a separate registration statement or an applicable exemption from registration
(under both federal and state securities laws). The shares will be subject to contractual restrictions under the terms of the Registration
Rights Agreement expected to be entered into at closing of the SVRE Merger by and among USAR and the SVRE securityholders that are entitled
to receive shares of Common Stock as consideration for the SVRE Merger (the “Registration Rights Agreement”) and under the
terms of the Lockup Agreements (as defined below).
The
former SVRE securityholders have certain rights to require USAR to register their shares for public resale under the terms of the Registration
Rights Agreement and we have agreed to file a resale registration statement on Form S-3 immediately following the closing of the
SVRE Merger to register the resale of such shares of USAR held by the former SVRE security holders. Once registered, the shares of USAR
held by the former SVRE security holders will be freely tradable and will not be subject to any restrictions or require further registration
under the Securities Act, subject to compliance with the contractual restrictions contained in the Lockup Agreements. In addition, if
we propose to register any of our shares in a registered public offering, the former SVRE securityholders have a right to include their
shares in such offering through a valid piggyback registration of shares, subject to the right of the underwriters of an offering to
limit the number of shares included in such registration.
The
former SVRE securityholders entitled to receive shares of Common Stock as merger consideration will enter into a Lockup Agreement with
USAR (each, a “Lockup Agreement”). Each Lockup Agreement will become effective at the closing of the SVRE Merger and will
impose transfer restrictions on the shares of Common Stock held by the former SVRE securityholder immediately following the closing (excluding
shares acquired in the public market) in three equal tranches.
If
all or a substantial portion of these shares of our Common Stock issued in the SVRE Merger are resold into the public markets or there
is a perception that such sales may occur, the market for and the trading price of our Common Stock may be adversely affected. Any such
sales of our Common Stock issued in the SVRE Merger may also make it more difficult for us to raise capital by selling equity or equity-related
securities at a time and price that we otherwise would deem appropriate.
4
USAR
may not enter into definitive agreements for the proposed U.S. government financing on the anticipated terms, on the anticipated
timeline, or at all, and, if executed, USAR may be unable to satisfy the milestones and other conditions required to access such financing.
USAR’s
business plans and capital requirements depend, in part, on its ability to obtain U.S. government financing on acceptable terms
and on the anticipated timeline. The negotiation, execution and effectiveness of any such financing are subject to a number of conditions
precedent and final government approvals outside USAR’s control, and changes in U.S. governmental policy or budgetary priorities,
changes in administration, congressional action or shifts in the strategic priorities of the relevant U.S. government counterparties
could result in material changes to the proposed terms or in the abandonment of the proposed financing altogether. For example, USAR
has entered into non-binding letters of intent with the DOC (as defined below) contemplating a long-term financing package (“the
Parent Loan Agreement”), which had not been entered into as of May 13, 2026, and there can be no assurance that the Parent Loan
Agreement will be entered into on the anticipated terms, on the anticipated timeline, or at all. If the Parent Loan Agreement (or any
other U.S. government financing) is entered into, USAR’s ability to draw down funds is expected to be subject to ongoing conditions,
including the achievement of construction, operational, financial and other milestones over an extended period of time, compliance with
affirmative and negative covenants and the absence of defaults. The failure to satisfy any such milestones or conditions could delay
or prevent USAR from accessing all or a portion of the financing on the anticipated terms or at all, and could require USAR to seek replacement
financing on less favorable terms. If USAR is unable to access the contemplated financing in a timely manner or in the amounts currently
expected, USAR may need to delay, scale back or abandon the development of strategic initiatives, which could have a material adverse
effect on USAR’s and the combined company’s business, financial condition, results of operations and prospects, and on the
trading price of Common Stock.
The
combined company will assume substantial indebtedness under SVRE’s Retained Finance Agreement with the DFC, which contains restrictive
covenants and other requirements that could adversely affect the combined company’s financial flexibility, operations and ability
to consummate the SVRE Merger.
In
connection with the SVRE Merger, Merger Sub, as the surviving company in the SVRE Merger, will continue to be obligated under the
Finance Agreement entered into on January 21, 2026 by and between SVRE and the U.S. International Development Finance Corporation
(“DFC”), which was amended on March 5, 2026 (as further amended from time to time, the “Retained Finance
Agreement”), which provides SVRE with long-term debt financing in an aggregate principal amount of up to $565.0 million
to support its rare earth mining and processing operations, consisting of (i) a first tranche in a principal amount of up to
$465.0 million (the “Initial Loan”) and (ii) a second tranche in a principal amount of up to
$100.0 million (the “Incremental Loan” and, together with the Initial Loan, the “DFC Loan”). The full
disbursement of the Incremental Loan is required to occur prior to, and is a condition to, the closing of the SVRE Merger, and the
SVRE Merger is also conditioned on the receipt of certain consents, amendments or waivers from the DFC, including the release of the
SVRE securityholders from an equitable share mortgage granted in favor of the DFC over certain SVRE shares. If SVRE is unable to
cause the Incremental Loan to be fully disbursed prior to 5:00 p.m. Eastern Time on December 31, 2026, or if any of the required DFC
consents, amendments or waivers is not obtained, is delayed or is conditioned on terms that USAR or SVRE is unwilling or unable to
accept, the SVRE Merger may not be completed on its anticipated timeline or at all, which could have a material adverse effect on
USAR’s business, financial condition, results of operations and the trading price of Common Stock.
As
a condition to providing the consents required in connection with the SVRE Merger, the DFC may require Merger Sub to execute and deliver
a joinder, assumption or confirmation agreement pursuant to which Merger Sub assumes or confirms SVRE’s obligations under the Retained
Finance Agreement and to maintain or re-create the related security interests and liens. In addition, pursuant to the DFC Side Letter
to be entered into by SVRE and DFC as a condition to the disbursement of the Incremental Loan, the DFC has the right to nominate an
observer and a director to the board of directors of Merger Sub, the appointment of which, if so designated, is a condition to USAR’s
obligation to complete the SVRE Merger. The Retained Finance Agreement also contains financial maintenance covenants and customary affirmative
and negative covenants, including restrictions on SVRE’s ability to pay dividends and make other restricted payments as detailed
below, incur additional indebtedness, grant liens, dispose of assets and take certain other actions, that could limit the operational
and financial flexibility of the combined company following the closing, restrict its ability to pursue alternative financing or strategic
initiatives on favorable terms and require the combined company to dedicate a portion of its cash flow to the service and repayment of
the indebtedness owed to the DFC, any of which could have a material adverse effect on the combined company’s business, financial
condition, results of operations and prospects.
5
Importantly,
the Retained Finance Agreement will restrict Merger Sub’s ability to distribute cash to USAR or any of its affiliates following
the closing of the SVRE Merger. Merger Sub will be generally prohibited from paying any dividend or other distribution on its equity
interests, repaying any debt owed to a shareholder or affiliate (other than another obligor under the Retained Finance Agreement), or
paying any management, development or operating fees to any affiliate (each, a “Restricted Payment”), unless certain conditions
(the “Restricted Payment Conditions”) are satisfied at the time of the proposed Restricted Payment. These conditions include,
among others, that the debottlenecking and optimization project at SVRE’s mine has been completed, that at least one full principal
installment on the DFC Loan has been paid from cash revenues received under an offtake agreement, that no default or event of default
exists under the Retained Finance Agreement, that specified historic and prospective debt service coverage ratios (each not less than
1.3 to 1.0) are satisfied for the four most recently ended fiscal quarters, that each reserve account is funded to its required level
(including a debt service reserve and an operation and maintenance reserve), that a specified minimum cash balance is maintained outside the reserve and
restricted payments accounts, and that no offtake counterparty is in material default. In addition, even when permitted, each Restricted
Payment generally requires SVRE to simultaneously prepay the DFC Loan in an amount equal to 50% of the amount being distributed (or,
in the case of the Incremental Loan, 25% of the amount being distributed), in each case subject to a maximum aggregate cap of $465,000,000
(reduced dollar-for-dollar by prior voluntary prepayments). As a result, USAR and its other affiliates should not expect to receive any
cash dividends, distributions, intercompany loan repayments, management fees or other upstream cash payments from Merger Sub for an extended
period following the closing, and may never receive such payments if the foregoing conditions are not satisfied. This lack of access
to Merger Sub’s cash flows could materially limit the combined company’s liquidity, ability to service indebtedness incurred
at the parent level, pay dividends to its stockholders, fund operations or pursue strategic initiatives.
The
combined company’s failure to comply with the covenants and other obligations under the Retained Finance Agreement, or the occurrence
of any other event of default thereunder, could result in the acceleration of the indebtedness owed to the DFC and the enforcement of
the related security interests, and could trigger cross-default, change of control or similar provisions under SVRE’s other material
contracts. If the combined company is required to repay the indebtedness owed to the DFC prior to its scheduled maturity, it may be required
to refinance such indebtedness on less favorable terms, raise additional capital on dilutive or otherwise unfavorable terms, or delay,
scale back or abandon strategic initiatives, any of which could have a material adverse effect on the combined company’s business,
financial condition, results of operations and prospects, and on the trading price of Common Stock.
USAR
will have continuing contractual obligations related to the SVRE Merger, which will impact its business and corporate governance.
The
Board Appointment Agreement to be entered into by and between USAR and VB (Rare Earths) Limited, Registration Rights Agreement, employment
letter agreements with key employees of SVRE and other transaction documents include obligations that will be in effect after the completion
of the SVRE Merger, including board matters, registration rights, and employment obligations to certain SVRE key employees. These continuing
obligations could limit the Board’s flexibility with respect to board composition and corporate governance matters, require USAR
to devote management time and resources to compliance with its registration and other contractual commitments, and result in significant
additional shares of Common Stock becoming available for public resale, which could adversely affect the market price of Common Stock.
In
addition to the SVRE Merger and the other transactions described herein, USAR may pursue and consummate additional acquisitions or other
strategic transactions at any time, which may be announced before, concurrently with or after the special meeting of stockholders of
USAR related to the SVRE Merger and which could be material to USAR and the combined company.
As
part of its ongoing business strategy, USAR regularly evaluates potential acquisition opportunities and other strategic transactions
in the ordinary course of business, and from time to time engages in discussions and negotiations with potential acquisition targets,
partners and others and may enter into letters of intent, term sheets or other preliminary agreements with respect to potential acquisitions
or other strategic transactions. In addition to the SVRE Merger, USAR has entered into non-binding letters of intent with the U.S. Department
of Commerce in respect of the Parent Loan Agreement and has entered into definitive agreements in respect of the Carester Transaction
and the TMRC Transaction. USAR may, at any time before, concurrently with or following the special meeting of stockholders of USAR related
to the SVRE Merger (the “Special Meeting”) and the closing of the SVRE Merger, enter into additional letters of intent or
definitive agreements with respect to additional acquisitions or strategic transactions, subject to restrictions in the Merger Agreement
on USAR’s pre-closing conduct. There can be no assurance that any such transaction will be consummated on the terms contemplated,
or at all. Any such additional transaction may be material to USAR and the combined company and could result in additional dilution to
USAR stockholders, the incurrence of additional indebtedness, the assumption of unknown or contingent liabilities, integration challenges,
diversion of management’s attention and additional transaction costs. The pendency, announcement or consummation of any such additional
transaction, or the failure to consummate any such transaction, could have a material adverse effect on USAR’s and the combined
company’s business, financial condition, results of operations and prospects, and on the trading price of Common Stock. USAR stockholders
voting on the share issuance proposal at the Special Meeting will not have the opportunity to evaluate, and are not being asked to approve,
the specific terms of any such additional transactions, which may not be known at the time of the Special Meeting.
6
The
SVRE Merger is subject to the receipt of consents and approvals or waivers from government entities that may not be received, may take
longer than expected or may impose burdensome conditions.
Before
the SVRE Merger may be completed, approvals or waivers must be obtained from US SIIE, LLC, a special purpose vehicle capitalized by the
U.S. government and private capital sources, in connection with the offtake agreement dated April 20, 2026 by and between SV Management
Switzerland AG, a subsidiary of SVRE, and US SIIE, LLC (as amended from time to time, the “Offtake Agreement”) for the long-term
supply of rare earth materials produced by SVRE and related call option agreement to be entered into by and among SVRE, certain SVRE
securityholders and US SIIE, LLC on or before the closing date (as amended from time to time, the “Call Option Agreement”),
the DFC in connection with the Retained Finance Agreement and the U.S. Department of Commerce in connection with the Parent Loan
Agreement. Government entities could impose conditions on their approvals or waivers needed in connection with approval of the SVRE Merger
or require changes to the terms of the SVRE Merger. Such conditions or changes could have the effect of delaying or preventing completion
of the SVRE Merger or imposing additional costs on or limiting the revenues of the combined company following the SVRE Merger, any of
which might have an adverse effect on the combined company following the SVRE Merger.
The
unaudited pro forma financial information and unaudited forecasted financial information included in the Proxy Statement is for illustrative
purposes only and the actual financial condition and results of operations of USAR after the SVRE Merger may differ materially.
The
unaudited pro forma condensed combined financial information included in Exhibit 99.4 and unaudited forecasted financial information
included in the preliminary proxy statement related to the SVRE Merger filed with the SEC on May 13, 2026 (the “Proxy Statement”)
is presented for illustrative purposes only and is not necessarily indicative of what USAR’s actual financial condition or results
of operations would have been had the SVRE Merger been completed on the dates indicated, nor is it indicative of the future financial
condition or results of operations of the combined company.
The
unaudited pro forma condensed combined financial information reflects adjustments that are based upon preliminary estimates, including
to record the identifiable SVRE assets acquired and liabilities assumed at fair value and to record the resulting goodwill. The fair
value estimates reflected in Exhibit 99.4 are preliminary, and final amounts will be based upon the actual consideration paid and the
fair value of the assets and liabilities of SVRE as of the date of the completion of the merger. Accordingly, the final acquisition accounting
adjustments may differ materially from the pro forma adjustments reflected in Exhibit 99.4, and these differences could have a material
impact on the combined company’s reported financial position and results of operations following the closing.
The
forecasted financial information included in the Proxy Statement was not prepared with a view toward public disclosure, and such unaudited
forecasted financial information was not prepared with a view toward compliance with published guidelines of any regulatory or professional
body for the preparation or presentation of prospective financial information. Neither BDO USA, P.C. (USAR’s independent accountants),
nor any other independent accountants, have audited, reviewed, compiled nor applied agreed upon procedures, examined or performed any
procedures with respect to the forecasted financial information contained in the Proxy Statement, nor have they expressed any opinion
or any other form of assurance on such information or the achievability thereof, and, accordingly, such independent accountants assume
no responsibility for, and disclaim any association with, USAR’s and SVRE’s forecasted financial information. The reports
of such independent accountants included or incorporated by reference in the Proxy Statement, as applicable, relate exclusively to the
historical financial information of the entities named in those reports and do not cover any other information in the Proxy Statement
and should not be read to do so. The forecasted financial information included in the Proxy Statement speaks only as of the date on which
such information was prepared, and USAR does not undertake any obligation, other than as required by applicable law, to update the forecasted
financial information included herein to reflect events or circumstances after the date the forecasted financial information was prepared
or to reflect the occurrence of anticipated or unanticipated events or circumstances.
7
SVRE
is, and the combined company will be, subject to extensive environmental, health and safety laws and regulations.
SVRE’s
operations are subject to extensive Brazilian federal, state and local laws and regulations governing environmental, health and safety
matters, including regarding the permitting, operation, monitoring, closure, reclamation and remediation of mining sites. Any failure
to comply fully with all applicable laws, regulations and permits could subject the combined company to administrative, civil or criminal
fines or penalties, directives suspending or limiting operations or the imposition of other compliance measures or sanctions, any of
which could have a material adverse effect on the combined company’s business, financial condition, results of operations and growth
prospects.
Governmental
authorities have in the past undertaken, and may in the future undertake, investigations or enforcement actions with respect to SVRE’s
operations, or the operations of the combined company after the SVRE Merger, which could result in fines, revocation of environmental
licenses and permits or suspension of SVRE’s activities, any of which could have a material adverse effect on the combined company’s
business, financial condition, results of operations and growth prospects. The proposed merger may attract additional regulatory attention
to SVRE’s operations. Any perception by regulators or the public that the combined company is not adequately addressing environmental
and social issues at the site could result in heightened scrutiny, additional conditions on operating permits, delays in obtaining new
authorizations required for planned expansion activities or adverse publicity. Furthermore, any existing enforcement proceedings and
outstanding compliance obligations of SVRE will become obligations of the combined company following the closing of the SVRE Merger,
and the combined company will be responsible for all related fines, penalties, remediation costs, and any resulting litigation or claims.
The
opinion of USAR’s financial advisor will not reflect changes in circumstances that may occur or that may have occurred between
the signing of the Merger Agreement and the closing of the SVRE Merger.
On
April 19, 2026, Moelis & Company LLC (“Moelis”) delivered its oral opinion to the Board, which was subsequently
confirmed by delivery of Moelis’ written opinion, dated April 19, 2026, to the effect that, as of such date and based upon
and subject to assumptions made, procedures followed, matters considered and qualifications and limitations set forth in the opinion,
the consideration to be paid by USAR in the SVRE Merger was fair from a financial point of view to USAR.
However,
USAR has not obtained any updated opinion from its financial advisor as of the date of this filing and does not expect to receive updated,
revised or reaffirmed opinions prior to the consummation of the SVRE Merger. Changes in the operations and prospects of USAR or SVRE,
general market and economic conditions and other factors that may be beyond the control of USAR, and on which the financial advisor’s
opinion were based, may significantly alter the value of USAR or SVRE or the value of their respective equity by the time the merger
is completed, and thus the fairness of the merger consideration, from a financial point of view, to USAR. However, the opinion does
not speak as of the time the SVRE Merger will be completed or as of any date other than the date of such opinion. As a result, the opinion
does not and will not address the fairness, from a financial point of view, of the merger consideration to be paid by us in the SVRE
Merger pursuant to the Merger Agreement at the time the SVRE Merger is completed or at any time other than the date when the opinion
was rendered.
USAR
may waive one or more of the conditions to completion of the SVRE Merger without re-soliciting shareholder approval.
USAR
may, subject to applicable law, determine to waive, in whole or part, one or more of the conditions to completion of the SVRE Merger
prior to consummating the SVRE Merger. Any determination whether to waive any conditions, or to re-solicit shareholder approval to amend
or supplement the Proxy Statement as a result of such a waiver, will be made by USAR at the time of such waiver based on the facts and
circumstances as they exist at that time.
The
market price of Common Stock may continue to fluctuate after the SVRE Merger.
The
market price of Common Stock may fluctuate significantly following completion of the SVRE Merger and holders of
Common Stock could lose some or all of the value of their investment in such shares. In addition, the stock market has experienced significant
price and volume fluctuations in recent times which, if they continue to occur, could have a material adverse effect on the market for,
or liquidity of, our Common Stock, regardless of USAR’s actual operating performance.
8
Risks
relating to SVRE
SVRE
faces physical climate risks, including extreme weather events and rising temperatures, that could disrupt operations at the Pela Ema
mine and processing plant in Brazil and materially adversely affect the combined company’s business and results of operations.
SVRE’s
mining and processing operations at the Pela Ema mine in Goiás, Brazil are exposed to significant physical climate risks, including
extreme weather events such as floods, droughts, and rising temperatures that threaten operational continuity, supply chain integrity,
and employee health and safety. Events such as fire, explosion, flood, or extreme weather can cause significant damage to SVRE’s
mine facilities, processing equipment, and infrastructure at the Pela Ema mine, resulting in disruptions to operations, energy inefficiencies,
and delays to critical logistics and transportation networks. In addition, transition risks arising from regulatory shifts, including
the implementation of Brazil’s carbon trading system, could increase operational costs and necessitate substantial investment in
new technologies and processes to achieve compliance. If any of these climate-related risks materialize, they could have a material adverse
effect on the combined company’s business, financial condition, results of operations and prospects.
SVRE’s
inability to meet product quality specifications, including radionuclide requirements, could limit its
market opportunities and materially adversely affect the combined company’s revenue.
SVRE’s
ability to sell its rare earth products may depend on meeting stringent product quality specifications, including
requirements related to radionuclide content and other impurities. Failure to consistently meet these specifications could result in
reduced product quality, inability to satisfy customer requirements, lower demand, financial consequences, and limited sales options. If SVRE is unable to achieve and maintain the requisite product quality, it could have a material adverse effect on
the combined company’s business, financial condition, results of operations and prospects.
Exchange
rate volatility, inflation in Brazil, changes in Brazilian tax laws, and financial reporting risks could materially adversely affect
the combined company’s financial condition and results of operations.
SVRE’s
cash flows are subject to exchange rate volatility because product prices are predominantly indexed to the U.S. dollar while a significant
portion of operating costs are denominated in Brazilian Reals. Unfavorable movements in the BRL/USD exchange rate could significantly
impact profitability. The Brazilian currency has historically been subject to significant exchange rate fluctuations in relation to the
US dollar and other currencies and has been devalued from time to time over the past decades. These exchange rate movements have been
attributable to economic conditions in Brazil, Brazilian governmental policies and actions, developments in global foreign exchange markets
and other factors.
In
addition, unanticipated changes in Brazilian tax laws could increase the combined company’s tax burden, and inflation in Brazil
could increase the cost of labor, energy, and other inputs. Brazil has historically faced high rates of inflation. Such inflation combined
with certain measures taken by the Brazilian government in an attempt to curb inflation have, historically, adversely affected the Brazilian
economy. Financial reporting and accounting risks, including inaccuracies in asset valuation and inventory errors, could further impact
financial results. These financial risks could have a material adverse effect on the combined company’s business, financial condition,
results of operations and prospects.
9
Interventions
by the Brazilian government in the local economy could have a material adverse effect on the combined company’s business, financial
condition and results of operations.
The
Brazilian government has from time to time intervened in the Brazilian economy by changing monetary, tax, credit and tariff policies
to influence the course of the Brazilian economy. Government actions to control inflation and implement other policies can include monetary
and fiscal policies, wage and price freezing, exchange rate policies, capital controls and import restrictions. Any of these changes
could have a material adverse effect on the combined company’s business, financial condition, results of operations and prospects.
Brazilian
law permits the Brazilian government to impose temporary restrictions on conversions of Brazilian currency into foreign currencies and
on remittances to foreign investors of proceeds from their investments in Brazil, whenever there is a serious imbalance in Brazil’s
balance of payments or there are reasons to expect a pending serious imbalance. Although no such restrictions are currently in place,
Brazilian banks may also impose similar restrictions on conversions and remittances. Any imposition of restrictions on conversions and
remittances could have a material adverse effect on the combined company’s business, financial condition, results of operations
and prospects.
Supply
chain disruptions and logistics constraints could delay product delivery and disrupt SVRE’s access to essential materials, materially
adversely affecting the combined company’s operations.
SVRE’s
operations depend on reliable supply chains and logistics infrastructure for both the delivery of finished products to customers and
the receipt of essential inputs including diesel, electricity, water, reagents, and equipment. Product delivery may be disrupted or delayed
due to road, storage, and port infrastructure constraints, customs clearance issues, port congestion, carrier and container availability,
and increasing insurance costs. Political, economic, climate, or social factors, such as the ongoing conflict in the Middle East, can
lead to disruptions affecting the availability and cost of essential materials and equipment. These supply chain and logistics risks
could have a material adverse effect on the combined company’s business, financial condition, results of operations and prospects.
Delays
in obtaining or renewing permits and licenses, and regulatory investigations or penalties, could slow SVRE’s production and materially
adversely affect the combined company’s business.
SVRE’s
mining and processing operations require numerous permits and licenses from Brazilian federal, state, and municipal authorities. Delays
in obtaining or renewing necessary permits or licenses can slow production or delay improvement and expansion projects. The Brazilian
mining regulatory regime requires ongoing compliance with environmental, safety, and operational standards, and any failure to maintain
compliance could result in lawsuits, regulatory investigations, substantial penalties, or suspension of operations. These permitting,
licensing, and regulatory risks could have a material adverse effect on the combined company’s business, financial condition, results
of operations and prospects.
Changes
in royalty rates or the imposition of new royalties at the federal, state, or municipal level in Brazil could reduce SVRE’s cash
flows and materially adversely affect the combined company’s financial condition.
SVRE’s
operations are subject to Federal royalties over mining products in Brazil, and any changes to current royalty rates or the approval
of new royalties at the state or municipal level could result in significant cash flow reductions. In addition, SVRE is party to two
Royalty Agreements with affiliates of Orion Mine Finance pursuant to which Orion holds a perpetual royalty interest at a royalty rate
of 5.25% (in the aggregate) in respect of all products extracted and recovered from the SVRE rare earths projects located in Brazil.
Any increase in governmental royalty rates, combined with existing contractual royalty obligations, could significantly reduce the profitability
of SVRE’s operations and have a material adverse effect on the combined company’s business, financial condition, results
of operations and prospects.
10
SVRE’s
inability to attract, retain and develop skilled employees during its operational ramp-up could disrupt operations and materially adversely
affect the combined company’s business.
SVRE’s
operations require a skilled workforce in a remote area of central Brazil, and SVRE faces significant risks related to the shortage of
skilled labor necessary for efficient operations, the failure to attract and retain high-caliber employees during the ramp-up of the
Pela Ema mine and processing plant, and non-compliance with fair employment practices, diversity and non-discrimination requirements,
and laws pertaining to freedom of association and collective bargaining. SVRE anticipates hiring a significant number of additional full-time
employees as part of its ramp-up to full Phase I capacity, and there can be no assurance that SVRE will be able to recruit and retain
the personnel needed to operate the Pela Ema facility at the planned scale. Competition for experienced mining and processing personnel,
labor market dynamics in the region, and the specialized nature of rare earth operations may make it difficult to attract qualified candidates.
Any failure to build and maintain a skilled workforce could result in operational inefficiencies, increased costs, safety incidents,
and delays to the ramp-up and expansion of operations, any of which could have a material adverse effect on the combined company’s
business, financial condition, results of operations and prospects.
In
addition, various federal labor laws govern SVRE’s relationships with its employees. SVRE’s business may be adversely affected
by legal or governmental proceedings brought by or on behalf of employees, including lawsuits alleging violations of federal law governing
workplace and employment matters such as various forms of discrimination, wrongful termination, harassment and similar matters. Brazil
has specialized courts for labor disputes, which have jurisdiction over any disputes involving a company and their employees. Brazilian
labor courts have historically tended to favor employees, which serves as an incentive for terminated employees to bring actions in the
labor courts.
Risks
associated with community relations could result in a loss of SVRE’s social license to operate, protests, operational disruptions,
and project delays that could materially adversely affect the combined company’s business.
SVRE’s
operations at the Pela Ema mine depend on maintaining positive relationships with local communities in the municipality of Minaçu
and surrounding areas. Risks associated with community relations include protests, unrest, strikes, loss of community support, legal
action, operational disruption, project delays, and the need for damage compensation. There are also risks related to land use disputes,
unplanned environmental impacts, and impairment or destruction of cultural heritage. The presence of a large number of employees in local
areas, coupled with an influx of job seekers and expectations of economic and social benefits, could negatively affect the health, social
peace, and cohesion of neighboring communities, potentially leading to social unrest and a loss of the social license to operate. Any
significant deterioration in community relations could result in regulatory action, legal proceedings, and delays to ongoing and planned
projects, any of which could have a material adverse effect on the combined company’s business, financial condition, results of
operations and prospects.
Delays
in flowsheet optimization, debottlenecking, and Phase II expansion could increase project costs and timelines, and materially adversely
affect the combined company’s business and results of operations.
SVRE
is currently implementing a flowsheet optimization and capacity increase project at the Pela Ema facility, which is critical to
achieving the production volumes and cost profile necessary for commercial operations. The technological complexity of the
debottlenecking process, potential delays or errors in engineering, and unforeseen events such as inclement weather, labor disputes,
or supply chain disruptions may lead to delays in construction and commissioning, impacting the project timeline, budget, and
overall plant ramp-up. In addition, the potential for a Phase II expansion is subject to risks related to economics, geology,
design, engineering, and the successful implementation of lessons learned from Phase I. Delays in Phase II
development could result in increased project costs, prolonged development timelines, and potential operational inefficiencies. The
failure to complete the debottlenecking and optimization project on time and on budget not proceeding with a Phase II expansion, or delays to Phase II planning and
execution, could have a material adverse effect on the combined company’s business, financial condition, results of operations
and prospects.
Uncertainty
regarding the terms and stability of SVRE’s offtake arrangements could result in unstable revenue streams and materially adversely
affect the combined company’s financial condition.
SVRE’s
revenue is dependent on the terms and performance of its offtake arrangements, including the Offtake Agreement pursuant to which 100%
of Phase I production of the four magnetic rare earth elements is allocated on a take-or-pay basis. The ability to convert other offtake
arrangements into favorable long-term firm commitments, and the stability of such commitments over time, are subject to risks including
shifts in demand, contract renegotiations, and changes in the commercial or regulatory landscape. Geopolitical pressures, as well as
other trade limitations, may also impact SVRE’s ability to negotiate favorable terms. Any delays or unfavorable conditions in the
conversion of offtake agreements, or the failure of counterparties to perform under existing agreements, could result in unstable revenue
streams and increased vulnerability to demand fluctuations, which could have a material adverse effect on the combined company’s
business, financial condition, results of operations and prospects.
11
Fluctuations
in rare earth market demand and prices, and limited demand for SVRE’s products, could materially adversely affect
the combined company’s revenue and profitability.
The
revenue and profitability of SVRE’s operations are dependent upon the market prices of rare earth elements, which are subject to
significant volatility. Factors such as increased supply, the development of rare earth substitutes, accelerated
recycling, and tailings reprocessing advancements, could contribute to volatile and unpredictable prices, impacting revenues and profitability.
While the Offtake Agreement includes guaranteed minimum floor prices for certain rare earth products, which are expected to mitigate
certain price risks, there can be no assurance that these protections will be sufficient to offset sustained declines in market demand
or prices for rare earth products generally. In addition, the limited availability of separation capacity outside of China, coupled with
existing sales volumes and product specification constraints, may limit SVRE’s ability to establish new commercial alliances, raise
funding, and sell to alternative offtakers at market prices. These market and demand risks could have a material adverse effect on the
combined company’s business, financial condition, results of operations and prospects.
Product
delivery disruptions due to logistics constraints, customs clearance issues, and sales readiness deficiencies could delay revenue generation
and materially adversely affect the combined company’s operations.
SVRE’s
ability to generate revenue depends on the timely delivery of its products to customers. Product delivery may be disrupted or delayed
by road, storage, and port infrastructure constraints, customs clearance issues, port congestion, carrier and container availability,
increasing insurance costs, lack of sales team competency, adverse weather events or geopolitical tensions affecting the logistics sector.
In addition, the logistics supply chain may be affected by damage to infrastructure and reduced transported volumes. Any significant
disruption to SVRE’s sales readiness and product delivery capabilities could delay revenue generation and have a material adverse
effect on the combined company’s business, financial condition, results of operations and prospects.
SVRE
may face significant risks in pursuing downstream integration opportunities, which could increase costs and divert resources without
achieving the anticipated strategic benefits.
SVRE
and the combined company may seek to extend operations beyond mining and mixed rare earth carbonate production into the midstream and
downstream rare earth value chain, including separation, metallization, and permanent magnet production. Finding suitable and adequately
priced downstream integration opportunities involves significant risks, including strategic misalignment with potential partners, unfavorable
commercial terms, increased costs, and compliance challenges. Current operational performance, prevailing rare earth market prices, and
cultural and technological differences between organizations may hinder integration efforts. Any failure to successfully identify, negotiate,
and execute downstream integration opportunities could result in the diversion of management attention and resources without achieving
the anticipated strategic or financial benefits, which could have a material adverse effect on the combined company’s business,
financial condition, results of operations and prospects.
Differences
between planned and actual recovery and yield rates could reduce SVRE’s production volumes and revenues, and materially adversely
affect the combined company’s results of operations.
SVRE’s
production forecasts and financial projections are based in part on geological models, mineral resource and reserve estimates, and assumed
recovery and yield rates. Actual recovery and yield rates may differ materially from planned levels due to inaccurate geological models,
overestimated reserves, suboptimal extraction methods, equipment performance issues, or ineffective reagents. Imprecision in mineral
resource and reserve estimates may lead to inaccuracies in project planning, potentially affecting the economic viability of mining operations.
Any sustained shortfall in recovery or yield rates could result in lower production volumes, higher per-unit costs, and reduced revenues,
which could have a material adverse effect on the combined company’s business, financial condition, results of operations and prospects.
12
Higher
than anticipated operating and maintenance costs, and risks related to SVRE’s dry-stack tailings management, could reduce margins,
increase capital requirements, and materially adversely affect the combined company’s financial condition.
SVRE’s
operations may be subject to higher than anticipated operating and maintenance costs, including excessive consumption of reagents, electricity,
or diesel, additional capital expenditure requirements, and increased costs associated with the handling and transport of radioactive
materials. Any such cost increases could put significant pressure on margins and cash flows, particularly during the ramp-up to commercial-scale
production. In addition, SVRE’s use of a dry-stack tailings method, requires detailed design criteria and strict operational procedures,
which, if not properly executed or maintained, could compromise the effectiveness of the waste management system and increase the likelihood
of containment breaches or other failures. The materialization of any of these operational cost and tailings management risks could have
a material adverse effect on the combined company’s business, financial condition, results of operations and prospects.
Risks
relating to USAR
Risks
Related to Manufacturing and Production
The
Stillwater Facility is under development and is not yet completed, we have not commenced commercial production and sales of neo magnets,
and we have no history in commercial magnet-making operations and the lack of such commercial operations limits the accuracy of any forward-looking
forecasts, prospects or business outlook or plans.
We
have not commenced commercial production of neo magnets at our magnet manufacturing facility located in Stillwater, Oklahoma (the “Stillwater
Facility”), and we may not be able to secure the necessary feedstock, offtake, or equipment in order to economically produce neo
magnets, including from our operations and rights related to Round Top Mountain and the Round Top Mountain heavy rare earth metals deposit
(the “Round Top Project”, and together with the Stillwater Facility, our “Projects”). We have not realized any
revenues to date from the sale of neo magnets, critical minerals or rare earth minerals, and our operating cash flow needs have been
substantially financed through the incurrence of debt and equity raises and not through cash flows derived from our operations. As a
result, we have little historical financial and operating information available to help you evaluate our performance. Any profitability
in the future from our magnet business will be dependent upon economical development of the Stillwater Facility and production of neo
magnets, which is subject to numerous risk factors. Accordingly, we may not realize profits, including in the medium to long term. Additional
expenditures are required to construct, complete and install additional neo magnet production equipment and our neo magnet production
capabilities might not be able to fully utilize the nameplate capacity of the equipment. In addition, we have no operating history upon
which to base estimates of future operating costs and capital requirements in our magnet business. Actual operating costs and economic
returns of any and all of our Projects may materially differ from the costs and returns estimated, and accordingly our financial condition,
results of operations and cash flows may be negatively affected. In the near term, our development and growth depends on our ability
to: (i) successfully produce magnets at the Stillwater Facility; (ii) secure one or more reliable sources of rare earth feedstock at
prices that are acceptable and attractive to us; and (iii) secure one or more neo magnet customers that are willing and able to purchase
our neo magnets at prices that are expected to be profitable for us. Delays in the completion of the Stillwater Facility or the Round
Top Project could have a material adverse effect on our business, results of operations and financial condition.
The
Round Top Project is at the exploration stage and we have not commenced construction or commission of the mine nor related facilities,
and the development of the Round Top Project into a producing mine is subject to a variety of risks, any number of which may cause the
development of the Round Top Project into a producing mine to not occur, be delayed, or not result in the commercial extraction of minerals.
We
do not have declared mineral resources as defined under Item 1300 of Regulation S-K and have not yet begun to extract minerals at commercial
scale from the Round Top Project. The Round Top Project might not be able to be commercially mined and our ongoing exploration programs
may not result in the development of profitable commercial mining operations. Few properties or deposits that are explored are ultimately
developed into producing mines. Major expenses will be required to complete the Round Top Project. We may not be able to develop the
Round Top Project into an operating mine and doing so may not result in the commercial extraction of mineral deposits. There are many
factors that may result in the Round Top Project not reaching completion or production, including failure to obtain adequate funding,
failure to successfully complete a pre-or a definitive feasibility study that the project could profitably produce rare earth minerals,
failure to meet lease related timelines, failure to satisfy other operational risks regarding obtaining adequate power, water, expertise
and human resources, failure to obtain and sustain the necessary permits for operations and other aspects of the business of operating
the Round Top Project. We may never reach commercial or profitable production of rare earth minerals. Even if the Round Top Project is
mined, we may not realize profits from our exploration or development activities in the short, medium, or long term. The actual risks
that we will face in the future in connection with the Round Top Project are unknown at this time, but may include:
● The
preliminary and definitive feasibility studies, when delivered, may not support the economic
viability of the Round Top Project moving forward, and the assumptions used in the studies
to underpin the viability of the Round Top Project (including, but not limited to, the prices
of critical minerals or rare earth minerals) may not remain accurate in the future.
13
● We
are in the process of developing a flow sheet with respect to the processing of rare earth
minerals from our assets in the Round Top Project, but we may not be able to do so. If we
are unable to develop a flow sheet that results in profitable production, our business and
results of operations may be harmed.
● An
increase in the global supply of rare earth magnets or critical and rare earth minerals related
products, dumping, predatory pricing and other tactics by our competitors or state actors
may adversely affect our profitability.
● When
compared to many industrial and commercial operations, mining exploration and development
projects are high risk and subject to uncertainties. Each mineral resource is unique and
the nature of the mineralization, and the occurrence and grade of the minerals, as well as
behavior of the mineral resource during mining, are unpredictable. Any mineral resource estimates
may be materially different from mineral quantities we may recover, any life-of-mine estimates
may prove inaccurate and market price fluctuations and changes in operating and capital costs
may render mineral resources uneconomic to mine. Uncertainty and/or error in our estimates
of minerals in the Round Top Project could result in lower-than-expected revenues and higher-than-expected
costs.
● The
mining and production of rare earth and critical minerals and related products is a highly
competitive industry in a high demand and growth environment and additional rare earth and
critical mineral manufacturing, refining and mining competitors could result in a reduction
in revenue.
● The
imposition of tariffs related to rare earths and other critical minerals and a resulting
trade dispute could disrupt the market for our products.
● The
mining and production of rare earth and critical minerals and related products is a capital-intensive
business that requires the commitment of substantial resources; if we do not have sufficient
capital or resources to provide for such activities, it could negatively impact our business.
● The
performance of the Round Top Project will depend on its ability to reach favorable production
rates for the separation of rare earths.
● The
revenue generated by the Round Top Project may be negatively impacted by possible competition
from substitutions for critical and rare earth minerals.
● Our
continued growth depends on our ability to obtain commercial deployment of our mineral processing
and purification technology, or the identification of third-party technologies or processes,
and the ability of any such technology and/or processes to efficiently process and purify
one or more feedstocks of mixed rare earth mineral concentrates.
● Actual
capital costs, operating costs, production and economic returns may differ significantly
from those we have anticipated, and future development activities may not result in profitable
mining, processing or production operations.
● The
Round Top Project has no operating history on which to base estimates of future operating
costs and capital requirements. Before operations commence, any projections we may produce
are based upon estimates and assumptions made at the time they were prepared. If these estimates
or assumptions prove to be incorrect or inaccurate, our actual operating results may differ
materially from any forecasted results.
● Our
resource estimates, if any, may change significantly when new information or techniques become
available. In addition, by their very nature, resource estimates are imprecise and depend
to some extent on interpretations, which may prove to be inaccurate. As further information
becomes available through additional fieldwork and analysis, our estimates, if any, are likely
to change and these changes may result in a reduction in our resources. These changes may
also result in alterations to our development and mining plans, which may, in turn, adversely
affect our operations.
14
● We
face opposition from organizations that oppose mining which may disrupt or delay our Round
Top Project.
● We
will be required to obtain and sustain governmental permits and approvals to develop and
operate the Round Top Project, a process which is often costly, time-consuming and somewhat
uncertain as to outcome. These permits may include permits related to disposal of radioactive
mineral waste, which will depend on how we conduct our processing operations in the future
as well as what thresholds (regarding whether a permit is required or not) are set by the
government at that point in time. Failure to obtain or retain any necessary permits or approvals
for our planned operations may negatively impact our business.
● Our
mining rights are held by one of our subsidiaries, which as of December 31, 2025, is owned
approximately 81.3% by us and approximately 18.7% by a minority member of the applicable
subsidiary. If the minority member does not meet its capital contribution requirements, then
we would need to raise additional funds to cover the minority member’s shortfall in
connection with the Round Top Project in exchange for additional equity in the subsidiary.
Additionally, if the value of the equity of the minority member increases then the rate of
dilution of the minority member’s equity in the subsidiary will decrease. Further,
our interests may not align at all times with such minority member and divergence of interests
may negatively impact our business.
● A
third-party has obtained prospecting permits from the Texas General Land Office (“GLO”)
for land in close proximity to our Round Top Project, including land for which we have an
active surface lease. There is a possibility for the third-party to convert such prospecting
permits into mineral leases and, if converted, such mineral leases would potentially impact
our ability to conduct our operations as currently planned.
● Land
reclamation and mine closure may be burdensome and costly.
● Because
of the dangers involved in the mining of minerals, there is a risk that we may incur liability
or damages as we conduct our business.
● We
and our management do not have experience operating a mine and may not have a complete or
accurate understanding of the risks we may face in the future related to the Round Top Project.
We
may experience time delays, unforeseen expenses, increased capital costs, and other complications in operating our business that could
delay the start of revenue-generating activities and increased revenues, and increase our development costs.
The
production of neo magnets and strip-cast and alloy manufacturing and mineral exploration and mining by their nature involve significant
risks and hazards, including environmental hazards, as well as industrial and mining accidents. These include, for example, occupational
hazards, leaks, ruptures, explosions, chemical spills, seismic or other natural events, fires, flooding, discharges of gasses and toxic
substances, contamination of water, air or soil resources, unusual and unexpected rock formation affecting mineralization or wall rock
characteristics, ground or slope failures, rock bursts, wildfires, radioactivity and other accidents, incidents, or conditions resulting
from mining or manufacturing activities, including, among others, blasting and the transport, storage and handling of hazardous materials.
In particular, the production of strip-cast and alloys and neo magnets involves the use of heavy equipment and operations at high temperatures.
These operations can be dangerous and safety incidents in these operations may cause damage to and loss of equipment, injury or death,
monetary losses and potential legal liabilities. Any such incidents could have a material adverse effect on our business, operating results
and financial condition. Furthermore, there is the risk that relevant regulators may impose fines and work stoppages for non-compliant
production or mining operating procedures and activities, which could reduce or halt production or mining until lifted. The occurrence
of any of these events could delay or halt production, increase production costs and result in financial and regulatory liability for
us, which could have a material adverse effect on our business, results of operations and financial condition. In addition, the relevant
environmental authorities have issued and may issue administrative directives and compliance notices in the future, to enforce the provisions
of the relevant statutes to take specific anti-pollution measures, continue with those measures and/or to complete those measures. The
authorities may also order the suspension of part, or all of, our operations if there is non-compliance with legislation. Contravention
of some of these statutes may also constitute a criminal offense and an offender may be liable for a fine or imprisonment, or both, in
addition to administrative penalties. As a result, the occurrence of any of these events may have a material adverse effect on our business,
results of operations and financial condition.
15
Our
research and development programs may not succeed in achieving their technological objectives, which could impair our ability to establish
commercially viable extraction, separation, and magnet manufacturing operations.
Our
business model and long-term commercial success depend heavily on the successful outcome of our research and development activities across
three distinct programs: (i) our Colorado Facility, focused on developing proprietary extraction and separation technologies (the “Colorado
Facility”); (ii) our in-house Innovations Lab and R&D Program at the Stillwater Facility, focused on developing the intellectual
property, technologies, and processes for manufacturing of sintered neodymium-iron-boron (“NdFeB”) permanent magnets; and
(iii) our research and development enhancements to our metal-making operations at Less Common Metals Ltd. (“Less Common Metals”).
There is no assurance that any of these programs will yield commercially viable, scalable results. The Colorado Facility is a development
and demonstration facility, not a commercial production facility, and the technologies developed there may prove insufficient or prohibitively
costly to scale. Similarly, our Innovations Lab may fail to develop magnet formulations and processes that are competitive in performance
and cost, or that satisfy the exacting qualification requirements of defense and commercial customers. Finally, our research and developments
enhancements at Less Common Metals may not result in commercially scalable processes and products. If our research and development programs
fail to achieve their objectives, or if successful results cannot be translated into scalable commercial processes in a timely manner,
our business, results of operations, and financial condition could be materially and adversely affected.
Until
our Round Top Project is capable of satisfying our feedstock needs, if ever, our business is subject to the availability of rare earth
oxide and metal feedstock, in quantities and prices that allow us to develop and commercially operate our Stillwater Facility and provide
cost-effective feedstock to Less Common Metals.
Our
Round Top Project is in its exploration stage and is not currently able to satisfy the feedstock needs necessary for the development
and commercial operation of our Stillwater Facility and may never be able to do so. Unless and until our Round Top Project is capable
of satisfying our feedstock needs, we will be required to enter into feedstock supply agreements with third-parties. We are in the process
of pursuing feedstock supply and offtake arrangements with potential counterparties in an effort to provide adequate sources of feedstock
for the purchase of all or substantially all of our production from our Stillwater Facility, once operational, on terms favorable to
us. If we are unable to secure supply agreements that ensure that all of our feedstock needs are met, we may not achieve our goals. If
this happens, our results of operations and financial condition could be materially and adversely affected.
The
production of neo magnets and manufacturing of strip-cast and alloy are capital-intensive and require the commitment of substantial resources;
if we do not have sufficient capital or other resources necessary to provide for such production and manufacturing, it could negatively
impact our business.
Neo
magnet production, and strip-cast and alloy manufacturing, requires large amounts of capital. We expect to materially increase our capital
expenditures and working capital requirements to begin commercial production of neo magnets, as well as support the growth of our business
and operations. To support this growth, we will need to raise additional capital (debt or equity) from time-to-time to complete or fund
our long-term strategic goals. Our long-term strategic goals are based on, among other things, expectations as to capital expenditures,
and if we are unable to fund those long-term capital expenditures or the level of necessary capital expenditures increases above our
current expectations, we will not achieve the long-term targets set forth in our strategic goals or be able to develop currently contemplated
or future capital projects or be able to continue production at cost-effective levels. Furthermore, any such reduction in long-term capital
expenditures may cause us to forego some of the benefits of any future increases in commodity prices, as it is generally costly or impossible
to resume production immediately or complete a deferred expansionary capital expenditure project once delayed, which may adversely affect
our results of operations or financial condition.
16
We
will need to manufacture our products to exacting specifications in order to provide customers with a consistently high-quality product.
An inability to meet customer specifications would negatively impact our business.
We
need to manufacture our products to meet customer needs and specifications. An inability to perfect the relevant production process to
the level necessary in order to meet customer specifications may have a material adverse effect on our financial condition or results
of operations. In addition, customer needs and specifications may change over time. Any delay or failure in developing processes to meet
changing customer needs and specifications may have a material adverse effect on our financial condition or results of operations.
We
may be adversely affected by fluctuations in demand for, and prices of, our products.
Because
our revenue is, and will for the foreseeable future be, derived from the production and sale of our products, changes in demand for,
and the market price of, and taxes and other tariffs and fees imposed upon such products and their inputs could significantly affect
our profitability. Our financial results may be significantly adversely affected by declines in the prices of our products. Prices for
our products may fluctuate and are affected by numerous factors beyond our control such as interest rates, exchange rates, taxes, tariffs,
inflation or deflation, currency fluctuations, shipping and other transportation and logistics costs, global and regional supply and
demand, potential industry trends, such as competitor consolidation or other integration methodologies, and the political and economic
conditions of countries that produce and procure our products. Furthermore, supply side factors have a significant influence on price
volatility for critical and rare earth minerals, necessary feedstock, and prices. Supply of rare earth minerals, necessary feedstock,
and neo magnets is currently dominated by Chinese producers. The Chinese Central Government regulates production via quotas and environmental
standards and has changed, and may continue to change, such production quotas and environmental standards. Periods of over supply or
speculative trading of critical and rare earth minerals can lead to significant fluctuations in the market price.
In
contrast, extended periods of high commodity prices may create economic dislocations that may be destabilizing to critical and rare earth
minerals supply and demand and ultimately to the broader markets. Some periods of high critical and rare earth mineral market prices
generally are beneficial to our financial performance if we are producing rare earth minerals. If magnet prices rise in concert with
such higher mineral prices, strong critical and rare earth mineral prices will also create economic pressure to identify or create alternate
technologies that ultimately could depress future long-term demand for our products or increase our third-party feedstock costs, and
at the same time may incentivize development of competing mining and manufacturing operations.
Additionally,
because we are currently dependent on third parties for feedstock, changes in the demand for, the market price of, or taxes, tariffs,
or other fees imposed on such feedstock may affect our ability to acquire our supply needs at an economical price. Changes in the price
of feedstock could materially and adversely affect our operations and ultimate financial results.
Risks
Related to Business Operations
Since
our inception, we have generated negative operating cash flows and we may experience negative cash flow from operations in the future.
We may not be successful in achieving profitability.
We
are an early-stage company with a limited operating history. Since our inception, we have generated negative operating cash flows and
we may experience negative cash flow from operations in the future. We incurred a net loss of $298.5 million for the year ended December
31, 2025 and had an accumulated deficit of $387.4 million as of December 31, 2025. Our 2025 revenues were derived solely from our Less
Common Metals business for a portion of the year following the Less Common Metals acquisition (“LCM Acquisition”), and we
have not yet generated revenues from our Stillwater Facility or mineral production from the Round Top Project. We expect to sustain substantial
operating expenses without generating sufficient revenues to cover those expenditures for the foreseeable future. Our future operations
and strategic plans may be dependent upon the identification and successful completion of equity or debt financings. We may not be successful
in completing equity or debt financings or in achieving profitability.
17
We
may not be able to convert current commercial discussions and/or memorandums of understanding with customers for the sale of our neo
magnets and other products into definitive contracts, which may have a negative effect on our business.
We
do not currently have any contractually committed customers for the planned output and delivery of neo magnets. We have commissioned
and are producing under Phase 1a and are in the process of commissioning Phase 1b at our Stillwater Facility. The success of our business
depends on our ability to generate revenue and operate profitably, which depends in part on our ability to identify target customers
and convert such contacts into meaningful orders or expand on current customer relationships. We do not currently have any revenue or
definitive off-take or sales agreements with customers in place in our magnet business. Although we are in periodic discussions with
potential customers regarding potential offtake agreements, there is no assurance that the parties will be able to reach an agreement
or that we will be able to produce and deliver the required neo magnets in accordance with the customer’s required specifications
and timing requirements. If we are unable to negotiate, finalize and maintain such agreements and satisfy the conditions thereto in order
to enter into definitive agreements, or are only able to do so on terms that are unfavorable to us, we will not be able to generate any
revenue, which would have a material adverse effect on our business, prospects, operating results and financial condition.
We
anticipate that our products will be delivered to certain customers on an early trial deployment basis for customer evaluation. If our
targeted customers do not commit to making meaningful orders, it could adversely affect our business, prospects and results of operations.
Our customers may require protections in the form of price reductions and other remedies for late delivery or performance problems. Delays
in delivery of our products, unexpected performance problems or other events could cause us to fail to meet these contractual commitments,
resulting in delays in obtaining necessary materials used in our production process, defects in material or workmanship or unexpected
problems in our manufacturing process, which could lead to unanticipated revenue and earnings losses and financial penalties. The occurrence
of any of these events could harm our business, prospects, results of operations and financial results.
Prior
to reaching expected production rates at the Stillwater Facility, we intend to enter into short-and long-term sales contracts with new
customers. However, there can be no assurance that these customers will enter into sales contracts for our products. Even if we do enter
into offtake and/or sales agreements, we may fail to deliver the product required by such agreements or may experience production costs
in excess of the fixed price to be paid to us under such agreements. The failure to enter into such contracts may have a material adverse
effect on our financial position and results of operations.
The
amount of capital required for completion and build-out of our Projects may increase materially from our current estimates, and we expect
to raise further funds through equity or debt financing, joint ventures, production sharing arrangements or other means. Consequently,
we depend on our ability to successfully access the capital and financial markets. Any inability to access the capital or financial markets
may limit our ability to fund our ongoing operations, execute our business plan or pursue investments that we may rely on for future
growth.
Until
we generate significant revenue from our operations, we will continue to incur operating and investing net cash outflows associated with,
but not limited to, the build out and growth of our Stillwater Facility and expansion generally of our footprint, maintaining and acquiring
properties, undertaking ongoing activities and the funding obligations to develop the assets of our Projects. We will require additional
capital to fund our ongoing operations, complete our Stillwater Facility, and - in connection with our Round Top Project - explore and
define rare earth mineralization and establish any future mining or rare earth manufacturing operations. Such additional funding may
not be available to us on satisfactory terms, or at all.
18
In
order to finance our future ongoing operations and future capital needs, we will require additional funds through the issuance of additional
equity or debt securities. Depending on the type and terms of any financing we pursue, shareholders’ rights and the value of their
investment in our ordinary shares could be reduced. Any additional equity financing will dilute shareholdings. If the issuance of new
securities results in diminished rights to holders of our ordinary shares, the market price of our ordinary shares could be negatively
impacted. New or additional debt financing, if available, may involve restrictions on financing and operating activities. In addition,
if we issue secured debt, the holders of the debt would have a claim to our assets that would be prior to the rights of shareholders
until the debt is paid. Interest on such debt would increase costs and negatively impact operating results.
If
we are unable to obtain additional financing, as needed, at competitive rates, our ability to fund our current operations and implement
our business plan and strategy will be affected, and we would be required to reduce the scope of our operations and scale back our exploration,
development and mining programs. There is, however, no guarantee that we will be able to secure any additional funding or be able to
secure funding which will provide us with sufficient funds to meet our objectives, which may adversely affect our business and financial
position. Certain market disruptions may increase our cost of borrowing or affect our ability to access one or more financial markets.
Such market disruptions could result from:
● adverse
economic conditions, including inflationary factors and recessionary fears;
● adverse
general capital market conditions, including rising interest rates;
● poor
performance and health of the neo magnets industry in general;
● bankruptcy
or financial distress of neo magnet companies or marketers;
● significant
decrease in the demand for neo magnets; or
● adverse
regulatory actions that affect our exploration and construction plans or the use of our current
and planned products generally.
If
additional capital is not available in sufficient amounts or on a timely basis, we will experience liquidity problems, and we could face
the need to significantly curtail current operations, change our planned business strategies and pursue other remedial measures. Any
curtailment of business operations would have a material negative effect on operating results, the value of our outstanding common and
preferred shares.
A
power or other utility disruption or shortage at our Projects could temporarily delay operations and increase costs, which may negatively
impact our business.
Our
facilities currently rely on electricity and other utilities each provided by a single utility company in West Texas and North-Central
Oklahoma, respectively. Instability in electrical or other utility supply for those utility companies or in other utilities relied upon
by Less Common Metals could cause sporadic outages and brownouts. Any such outages or brownouts could have a negative impact on our production.
As a result, our revenue could be adversely impacted and our relationships with our customers could suffer, adversely impacting our ability
to generate future revenue and otherwise perform our contractual obligations. In addition, if power to any of our Projects is disrupted
during certain phases of our production processes, we may incur significant expenses that may adversely affect our business.
Risks
Related to Acquisitions and Strategic Transactions
We
are or may be subject to risks associated with acquisitions and strategic transactions.
As
part of our ongoing business strategy, we regularly evaluate potential acquisition opportunities in the ordinary course of business as
well as other types of strategic transactions. We may, from time to time, engage in discussions and negotiations with potential acquisition
targets, partners or others, and we may enter into letters of intent, term sheets, or other non-binding or binding preliminary agreements
with respect to potential acquisitions or other strategic transactions. These discussions and negotiations could subject us to a number
of risks, including risks associated with sharing proprietary information, non-performance by a third party and increased expenses.
19
Any
particular acquisition or other strategic opportunity we pursue may be material to our business, financial condition, results of operations,
and cash flows. Acquisitions, if consummated, may be structured in a variety of ways and may be funded through cash on hand, borrowings,
the issuance of equity or equity-linked securities (including shares of our Common Stock), or a combination thereof. The consideration
paid in any acquisition may include cash, stock, assumption of liabilities, earnout arrangements, or other forms of consideration, or
any combination of the foregoing.
In
addition, we may acquire additional assets, products, technologies or businesses, which may require shareholder approval and approvals
and licenses from relevant government authorities for the acquisitions and to comply with any applicable laws and regulations, which
could result in increased delay and costs. Failure to obtain necessary approval may derail our business strategy. For example, our recent
LCM Acquisition required approval from the U.K. Secretary of State under the National Security and Investment Act 2021 and the SVRE Merger
is subject to approval under the Hart-Scott-Rodino Antitrust Improvement Act of 1976.
We
cannot provide any assurance that any discussions, negotiations, or letters of intent will result in a definitive agreement or that any
proposed transaction will be consummated on the terms contemplated, or at all. Further, future acquisitions and the subsequent integration
of new assets and businesses into us may require significant attention from our management and could result in a diversion of resources
from our existing business, which in turn could have an adverse effect on our business operations. Acquired assets or businesses may
not generate the expected financial results and may require additional investments in the acquired business after closing. Acquisitions
could result in the use of substantial amounts of cash, the incurrence of substantial indebtedness, potentially dilutive issuances of
equity securities, the occurrence of significant goodwill impairment charges, amortization expenses for other intangible assets and exposure
to potential unknown liabilities of the acquired business. Moreover, the costs of identifying and consummating acquisitions may be significant.
Risks
Related to the Expected U.S. Government Transaction
The
Expected U.S. Government Transaction is expected to be funded in phases over time and is subject to our achieving milestones, and there
can be no assurance that such milestones will be achieved on the expected timeline or at all.
On
January 26, 2026, we announced that we had entered into a non-binding letter of intent (the “Letter of Intent”) with the
U.S. Department of Commerce covering total potential funding of approximately $1.6 billion, including $277.0 million in direct funding
awards under the CHIPS Act, and $1.3 billion in senior secured debt with a 15-year term with an expected rate of Treasury plus 150 basis
points (“bps”) (collectively, the “Expected U.S. Government Transaction”). The Letter of Intent for the Expected
U.S. Government Transaction provides, and the definitive agreements for such collaboration will provide for the grant and debt financing
from the government to reimburse us for capital expenditures incurred to be released to us in phases over time subject to our achievement
of specified business milestones related to the development of the Round Top Project, the development and expansion of processing and
separation facilities, the development and expansion of metal making and strip casting facilities, and the development and expansion
of our magnet manufacturing capacity.
To
meet the milestones to obtain funding awards and debt financing under the Expected U.S. Government Transaction, and to execute on our
current business plan, including the acquisition of SVRE and the expansion of facilities for our operations, we will be required to raise
a significant amount of capital during 2026 and 2027 and establish a $250.0 million revolving credit facility by December 31, 2026. There
can be no assurance that such milestones will be achieved on the expected timeline, or at all. If we are unable to meet such milestones,
the corresponding funding will not be released to us. Our satisfaction of any given milestone, and receipt of the associated funding,
does not guarantee that we will be able to meet any subsequent milestones. Further, our satisfaction of one or more milestones for one
project, does not guarantee that we will be able to meet any milestones for the other projects. Construction, development, and expansion
of our planned facilities and projects are subject to risks of delays, cost overruns, supply chain disruptions, labor availability constraints,
permitting challenges, and other execution risks, which could increase required capital, delay milestone achievement, and adversely affect
our financial condition and project economics.
If
we do not receive the financing contemplated by the Expected U.S. Government Transaction, or any part of it, due to delays in meeting
or failure to meet one or more milestones, our ability to fund our current operations and implement our business plan and strategy will
be affected, and we may be required to reduce the scope of our operations and scale back our exploration, development and mining programs
unless we are able to obtain alternative financing. Any curtailment of business operations would have a material negative effect on operating
results and the value of our outstanding securities.
20
In
addition, if we are unable to meet certain final milestones within two years of the target completion dates, any funding released to
us prior to that date will be subject to clawback, which would adversely affect our liquidity, capital resources, and project economics.
While
we may execute Definitive Agreements with the government and receive funding thereafter, there can be no assurances that the authorization
and continued support for the transactions contemplated by the Definitive Agreements will not be modified, challenged or impaired in
the future, which would have a material adverse effect on our business, prospects, financial condition and results of operation.
Given
the heightened sensitivity and complexity of contracting with a government entity, particularly in a high profile industry implicating
national security, there can be no assurances that terms of the Expected U.S. Government Transaction, including definitive documentation
(the “Definitive Agreements”) once executed, will not be modified, challenged or impaired in the future, which could have
a material adverse effect on our business, prospects, financial condition and results of operations. We believe there are multiple factors
that may contribute to this uncertainty, including, but not limited to, the interpretation of current and future, and enactment of future,
federal and international laws, regulations, administrative actions and rulings, and interpretations and changes to interpretations thereof,
whether by a court or within the legislative or executive branches of the federal government; our ability to comply with any conditions
or other requirements imposed by such laws, regulations, actions and rulings, and changes thereto; a determination by the legislative,
judicial, or executive branches of the federal government that any aspect of Expected U.S. Government Transaction, or the related Definitive
Agreements, was unauthorized, void, or voidable; future changes in federal administration and related executive and legislative priorities;
the continued availability of Congressional appropriations and Department of Commerce funding; geopolitical developments; and the legal
and strategic challenges associated with enforcing the obligations of and seeking performance from a government counterparty, especially
in conjunction with the unique defenses and remedies available to the federal government. Furthermore, while the Department of Commerce
is expected to be contractually bound under the Definitive Agreements, if reached, for the Expected U.S. Government Transaction, no other
agency, office or branch of the federal government has made any assurances or will have any obligations under the such Definitive Agreements
to actively support, accede to or refrain from challenging, investigating or otherwise impeding the commitments and obligations of the
parties to the Definitive Agreements, whether now or in the future. The Expected U.S. Government Transaction may also be challenged by
other third parties and are subject to the risk of litigation, both the cost and result of which could materially adversely affect our
business, prospects, financial condition and results of operations.
Future
funding will be required to meet milestones. Our ability to raise additional equity or debt financing may be adversely affected by market
conditions, interest rates, investor risk appetite, or macroeconomic factors beyond our control.
Our
business plan requires significant additional capital, which may include equity and/or debt financing, beyond the Expected U.S. Government
Transaction, and our ability to obtain such capital will depend on market conditions and our operating performance, and may result in
higher costs of capital, increased leverage, or dilution to existing stockholders. To meet the milestones to obtain funding awards and
debt financing to reimburse us for our capital expenditures incurred under the Expected U.S. Government Transaction, and to execute on
our current business plan, including the acquisition of SVRE and the expansion of facilities for our operations, we will be required
to raise a significant amount of capital during 2026 and 2027 and establish a $250.0 million revolving credit facility by December 31,
2026. Depending on the type and terms of any financing we pursue, stockholders’ rights and the value of their investment in our
Common Stock could be reduced. Any additional equity financing will dilute shareholdings. If the issuance of new securities results in
diminished rights to holders of Common Stock, the market price of our Common Stock could be negatively impacted. New or additional debt
financing, if available, may involve restrictions on financing and operating activities. Interest on such debt would increase costs and
negatively impact operating results. In addition, as the debt financing component of the Expected U.S. Government Transaction will be
secured, issue secured debt, the government will have a claim to our assets that would be prior to the rights of shareholders until the
debt is paid. This may make it more difficult for us to raise additional debt financing on attractive terms, or at all.
21
If
we are unable to obtain additional financing, as needed, at competitive rates, our ability to fund our current operations and implement
our business plan and strategy will be affected, and we would be required to reduce the scope of our operations and scale back our exploration,
development and mining programs. There is, however, no guarantee that we will be able to secure any additional funding or be able to
secure funding which will provide us with sufficient funds to meet our objectives, which may adversely affect our business and financial
position. Certain market disruptions may increase our cost of borrowing or affect our ability to access one or more financial markets.
Such market disruptions could result from:
● adverse
economic conditions, including inflationary factors and recessionary fears;
● adverse
general capital market conditions, including rising interest rates;
● poor
performance and health of the metals and neo magnets industry in general;
● bankruptcy
or financial distress of metals or neo magnet companies or marketers;
● significant
decrease in the demand for metals or neo magnets; or
● adverse
regulatory actions that affect our exploration and construction plans or the use of our current
and planned products generally.
Risks
Related to our Securities
The
issuance of additional shares of our Common Stock or equity-linked securities could result in significant dilution to our existing stockholders
and adversely affect the market price of our Common Stock.
We
have issued, and expect to continue to issue, shares of our Common Stock and equity-linked securities in connection with various transactions
and financing activities. Any such issuances could result in significant dilution to the ownership interests, voting power, and earnings
per share of our existing stockholders and have other significant consequences. In connection with the Expected U.S. Government Transaction,
we expect to issue approximately 16.1 million shares of our Common Stock and warrants to purchase approximately 17.5 million additional
shares. Further, we expect to require substantial additional capital to fund our operations and project development, and we may seek
to raise such capital through the issuance of additional shares of Common Stock, preferred stock, warrants, convertible notes, or other
equity or equity-linked securities.
If
the TMRC Transaction is completed, we expect to issue approximately 3.82 million shares of our Common Stock as merger consideration.
In connection with the SVRE Merger, we expect to issue 126,849,307 shares of Common Stock to SVRE securityholders. More broadly, we regularly
evaluate potential acquisitions and other strategic transactions that may be funded, in whole or in part, through the issuance of shares
of our Common Stock or other equity-linked securities.
In
addition, certain of our outstanding securities, including our Series A Cumulative Convertible Preferred Stock and Preferred Investor
Warrants, contain “full ratchet” anti-dilution provisions, which may result in a greater number of shares of our Common Stock
being issued. The Certificate of Designation for our Series A Cumulative Convertible Preferred Stock and the Preferred Investor Warrants
each contain “full ratchet” anti-dilution provisions applicable to the conversion price and exercise price, respectively,
which may result in a greater number of shares of Common Stock being issued upon conversions or exercises in the case of the Series A
Cumulative Convertible Preferred Stock and the Preferred Investor Warrants than if the conversions or exercises were effected at the
conversion price or exercise price in effect currently.” The effect of any of the above described issuances or other transactions
we may undertake could result in significant dilution to the ownership interests, voting power, and earnings per share of our existing
stockholders as well as impair our ability to raise capital on favorable terms and adversely affect the market price of our Common Stock.
22
EX-99.2 — SUPPLEMENTAL DISCLOSURES
EX-99.2
Filename: ea029029301ex99-2.htm · Sequence: 4
Exhibit 99.2
INFORMATION
ABOUT SVRE
Unless the context otherwise requires, for
purposes of this section, the terms “we,” “us,” “our” or “the Company” refer to SVRE
Holdings Ltd. and its subsidiaries, collectively, as they currently exist.
The Business
We operate one of the largest known ionic clay rare
earth deposits outside of Asia. Rare earth elements (“REEs”) and the corresponding rare earth oxides (“REOs”)
are fundamental inputs to a broad range of advanced technologies across sectors including defense, aerospace, energy, transport and robotics.
From the Pela Ema deposit, we produce all four critical magnetic REEs: dysprosium (“Dy”), terbium (“Tb”), neodymium
(“Nd”) and praseodymium (“Pr”).
Nd and Pr are crucial inputs for neodymium-iron-boron
(“NdFeB”) permanent magnets. NdFeB magnets are the most widely used type of rare earth magnets and are critical for many advanced
technologies, including electric vehicle (“EV”) motors, drones, defense systems, medical equipment, wind generators and robotics.
Dy and Tb are critical additives that allow magnets to maintain high magnetic strength and resist demagnetization in high-temperature,
high-performance applications such as EV motors and wind generators.
The Company’s ionic clay deposit offers advantages
compared to hard-rock deposits, including: (i) reliance on shallow open pit mining, (ii) soft ore that allows free digging without
crushing or milling, (iii) a relatively high share of heavy REEs, (iv) low in-situ radioactivity, (v) low energy
consumption and related carbon emissions, and (vi) ore processed with mild reagents such as sodium chloride (i.e., table salt) or
ammonium sulfate, a common fertilizer.
We expect global demand for REOs to grow significantly
over the next 25 years, driven primarily by demand for permanent magnets associated with, among other things, the transition to EVs
and renewable energy. In 2025, China continued to be the largest contributor to the global REO market. Companies and governments are increasingly
prioritizing diversification and security of their supply chains for critical materials, with related national security implications illustrated
by U.S. Government efforts to onshore production in industries deemed critical, including those that require rare earth minerals.
Public and private interests are also increasingly demanding sustainability throughout production value chains.
Our mission is to enable and accelerate the development
of new technologies dependent on REEs. Our vision is to become a leading, responsible provider of REEs and associated products, and to
play an active role in the development of supply ecosystems for critical end-use markets, including energy, transport, medical, specialty
alloys and defense, while delivering value to our shareholders, employees, communities and other stakeholders.
We process our ore at Pela Ema to produce a mixed
rare earth carbonate (“MREC”), which is simpler and lower-cost to separate than the mineral concentrate typically produced
at hard-rock deposits. Sales of MREC commenced in 2024 with multiple customers, who separate the constituent REOs and sell them to various
end users. During 2025, the Company limited sales to facilitate an optimization and growth project described below.
On April 20, 2026, SV Management Switzerland
AG (the “Seller”), a wholly owned subsidiary of the Company, entered into a long-term offtake agreement (the “Offtake
Agreement”) with US SIIE, LLC (the “Buyer”), a special purpose vehicle capitalized by the U.S. government and private
capital sources. The Offtake Agreement provides for the sale and purchase of 100% of Phase I production from the Pela Ema facility
of Nd, Pr, Dy and Tb (collectively, the “Products”) on a take-or-pay basis. The term of the Offtake Agreement continues until
the earlier of: (i) the date the Seller has delivered Products derived from 198 million metric tons of run of mine ore; and
(ii) 20 years after the Pela Ema facility commences commercial operations. The Offtake Agreement includes guaranteed minimum
floor prices for each of Nd, Pr, Dy and Tb, as well as mechanisms for shared upside. The Buyer intends to resell the Products to entities
that will separate and process the Products for sale to companies serving end markets and applications.
The Company retains the option to develop separation
facilities and to deliver Product to Buyer as higher-value products such as separated oxides. The Company also has the ability to monetize
elements that do not currently form part of the Products, including Yttrium.
History of Ownership and Current Operations
Serra Verde Pesquisa e Mineração
Ltda. (“SVPM”), the operating subsidiary of the Serra Verde Group, was acquired by Denham Capital in 2011. Over the following
nine years, SVPM completed exploration and studies at Pela Ema. Construction of integrated processing facilities commenced in 2020.
In 2022, Vision Blue Resources Limited and The Energy & Minerals Group made their initial investments in the Company, contributing
mining industry experience and management expertise to advance the development of Pela Ema. Commissioning, first production and sales
of MREC occurred during 2024. Since SVPM’s acquisition by Denham Capital in 2011, more than $1 billion of capital has been
invested in Pela Ema.
All permits necessary to operate the Pela Ema facility
at current Phase I capacity are in place, a process that can take an average of 20 years for a mine in Brazil. Expansion to
Phase II will require additional licenses and approvals as described under “Environmental, Health and Safety Matters”
below.
An optimization and growth project launched in 2024,
which is on-going, aims to increase efficiency and production capacity, with corresponding reductions in aggregate and per unit costs.
A product optimization project, also underway, will evaluate additional processing to reduce impurities and the already low, naturally
occurring radionuclides in the MREC. Following completion of these projects and ramp-up later in 2026, production of total rare earth
oxides equivalent from Phase I is expected to average approximately 6,400 metric tons per year over the life of the mine. The Company
plans to evaluate additional opportunities to increase Phase I production and reduce costs through, among other options, larger mining
vehicles, long-distance conveyor belts and optimizing use of reagents.
Production Expansion Opportunity
The Company’s current mine plan for Pela Ema
relies on less than half of the total estimated mineral resource. This represents a potential opportunity to double production from the
same mineral deposit while preserving a similar mine life. In connection with this opportunity, the Company is investigating the use of
direct ionic exchange as part of processing. Direct ionic exchange, which is not in-situ leaching, has the potential to significantly
reduce capital and operating costs associated with the incremental facilities necessary to support a doubling of production capacity.
If pursued and successfully implemented, these plans could be operational as early as 2030.
Downstream Expansion Opportunity
The Company is evaluating opportunities to extend
its business beyond mining and MREC production into the midstream and downstream rare earth value chain. The strategic rationale is supported
by both market and geopolitical developments. Vertical integration could allow the Company to capture additional margin along the value
chain, reduce geopolitical risk, and serve a growing pool of customers seeking diversified, traceable, and responsibly produced rare earth
products. Although Phase I production from Pela Ema is fully allocated to the Offtake Agreement, the agreement provides the Company
with the option to deliver more advanced rare earth products such as separated rare earth oxides, which the Company expects to investigate
in close alignment with the Buyer. A potential Phase II expansion could double production by 2030, providing additional feedstock
to support downstream investments.
The Company has the option to develop or acquire
its own separation facility. From there, the value chain extends into metals, alloys, and permanent magnet production, which the Company
may pursue through joint ventures, partnerships, standalone structures, or strategic transactions. The Company may also consider consolidation
opportunities with other producers of heavy REE deposits given the Company’s know-how in heavy REE and ionic clay deposits.
Pela Ema has been recognized as a project of interest
by the Minerals Security Partnership. On January 21, 2026, the Company secured a $565 million financing package from the U.S. International
Development Finance Corporation. In addition, the Company has secured the Offtake Agreement, which includes guaranteed minimum floor prices
for each of Nd, Pr, Dy and Tb, which the Company believes helps de-risk cash flows.
2
Our Strengths
Significant Resource Base: The
Pela Ema deposit is one of the most significant ionic clay rare earth deposits outside of Asia. Based on the current Phase I mine
plan, the resource supports a projected mine life of more than 20 years. The resource contains a relatively high share of the heavy
REOs essential to permanent magnet production.
Strategic Location: The
Pela Ema facility is located in the State of Goiás, Brazil, an established mining jurisdiction with developed infrastructure. The
facility has direct highway access to the Santos and Salvador ports, among others, as well as proximity to clean water sources and two
major hydroelectric power plants, which support reliable, low-carbon operations.
Cost-Effective Operating Approach:
Because ionic clay ore does not require blasting, crushing or milling, the Company benefits from a relatively simple, scalable
operating model. A potential Phase II expansion could double production by 2030 and may further enhance scale and unit cost
performance.
Sustainability Profile: The
Company’s operations feature a relatively low carbon footprint, recirculation of approximately 90% of process water (recovered from
the thickener and press filters), tailings management compliant with the Global Industry Standard on Tailings Management (“GISTM”),
and low in-situ radioactivity. The Company has invested more than $1 million in social programs and reports more than 13 million
person hours and 1,000 consecutive days without a lost time injury as of the date of this document.
Strategic Market Position: Pela Ema
is the most significant ionic clay rare earth asset outside of Asia. The facility is fully permitted for Phase I, constructed
and currently ramping up. We expect Pela Ema to contribute a significant share of heavy REE production outside of Asia. The project
has been recognized as a project of interest by the Minerals Security Partnership. On January 21, 2026, the Company secured a
$565 million financing package from the U.S. International Development Finance Corporation to reimburse the Company for capital expenditures incurred. In addition, the Company has
secured the Offtake Agreement, which includes guaranteed minimum floor prices for each of Nd, Pr, Dy and Tb, which the Company
believes helps de-risk its cash flows.
The Pela Ema Facility
At Pela Ema, we operate an open-pit mine containing
one of the world’s most significant ionic clay rare earth deposits outside of Asia. In addition to the mine, the Pela Ema facility
includes associated infrastructure supporting mining and processing operations, including stockpiles, ion exchange, filters, and thickener
facilities, a tailings filter plant, dry-stack tailings, as well as laboratories to support research and development activities, administrative
buildings, warehouses and support buildings.
Processing at Pela Ema includes five primary process
steps: screening, ion exchange, press filters and precipitation, thickening, and concentrate press filters. Our use of a dry-stack tailings
process allows recycling of the process water recovered from the thickener and press filter steps, and eliminates the need for high-risk
wet tailings ponds and traditional impoundment dams. Approximately 90% of our process water is recirculated.
3
Tailings consist of the oversize ore separated at
the screening plants, as well as the filter cake generated at the central processing plant. Such material is deposited at the dry-stack
facility, which is GISTM compliant. Subject to receipt of the necessary permits, we expect to backfill approximately 50% of the oversize
ore into mined-out pits. Backfilling is expected to reduce tailings handling costs and provide environmental rehabilitation benefits.
Oversize material contains a relatively low share of ionic absorption clay but contains primary REE minerals, allowing for potential future
production of concentrate (e.g., monazite or xenotime) or REE concentrate in a similar way to hard-rock deposits. Studies are proposed
to consider the opportunity for additional production from the processing of this material.
The Pela Ema facility is located approximately 30
kilometers west-northwest of the city of Minaçu, in the State of Goiás, central Brazil. Highways BR-050 and BR-153 provide
access to the Santos and other ports. Product is typically transported from the Pela Ema facility by truck to the Port of Santos, the
largest port in Brazil and the Company’s primary delivery point.
The Company has access to clean water sources and
two major hydroelectric power plants, supporting reliable, low-carbon operations at Pela Ema, with approximately 90% of process water
recirculated.
4
The Pela Ema facility is located on a mineral tenement
portfolio held by SVPM in the municipality of Minaçu, in the northern part of the State of Goiás, Brazil. The “directly
affected area” authorized under Installation License No. 284/2019 covers 4,362.62 hectares (approximately 10,780 acres) of potential
area to be exploited, grouped across seven mining processes. Lands surrounding the Pela Ema facility are predominantly private rural properties,
with land use dominated by pasture and limited cropping. Pela Ema is located far from ecologically or socially sensitive areas in the
Amazon. The granted mining concessions and authorized licenses provide land for mining, processing, ancillary facilities and expansion
capacity.
The Pela Ema deposit is an REE- and yttrium-rich
weathered granite containing xenotime, monazite and other REE-bearing minerals. The enrichment occurs in the lateritic profile. The upper
mottled zone is reddish-brown, heavily degraded rock rich in iron and minerals such as quartz, re-precipitated iron hydroxides and clays.
The mottled zone transitions into saprolite, the main REE bearing horizon, with an average thickness of 4.5 meters. Saprolite is reddish
to whitish and less degraded. REEs have been absorbed primarily onto kaolinite, illite, montmorillonite and gibbsite clays, typically
representing between 15% and 40% of the saprolite mass. The lowest layer, saprock, is variably developed and most evident in the central
plateau. It is the transition between the saprolite and bedrock that has a moderate clay and REE content.
Customers
The entirety of Pela Ema’s Phase I production
is allocated to the Offtake Agreement. The Buyer is contractually obligated under the Offtake Agreement to purchase all of our MREC product
on a take-or-pay basis (meaning the Buyer is obligated to pay for the Products even if it is unable or unwilling to take delivery). The
Buyer may sell the Products it acquires under the Offtake Agreement to third-party customers globally, which will process and resell these
further processed products.
Suppliers
We use certain reagents in our processing facilities,
which are purchased from third-party suppliers. These reagents are subject to pricing volatility and supply availability. In the event
of a supply disruption, we believe alternative reagents could be sourced. We may not be able to pass increased reagent prices through
to our customers in the form of price increases. A significant increase in price, decrease in availability or restriction on use of these
reagents could materially increase our operating costs and adversely affect our profit margins.
Competition
The rare earth mining and processing markets are
capital intensive and competitive. Outside of the major rare earth producers in China, two other producers operate at scale: MP Materials
Corp. and Lynas Rare Earths Ltd. Certain of our competitors have greater financial resources and other strategic advantages relative to
the Company.
Increased production from the Pela Ema deposit,
alongside production increases from other producers, may lead to predatory pricing or competitive responses. Any increase in rare earth
products exported from other nations and increased competition (whether legal or illegal) could result in price reductions, reduced margins
and loss of potential market share, any of which could materially adversely affect our profitability. Certain Chinese competitors have
historically produced at relatively low costs due to domestic regulatory factors, including less stringent environmental regulations.
For example, certain Chinese producers use wet-tailings storage, which is significantly less expensive but more harmful to the environment
than the dry-stack tailings approach we use. Even upon successful completion of our optimization and growth projects at the Pela Ema facility,
if we are unable to achieve our anticipated cost of production, then strategic advantages held by competitors, such as lower labor and
production costs, could have a material adverse effect on our business. As a result, we may not be able to compete effectively against
current and future competitors.
Consistent with U.S. Government critical minerals
policy, the minimum floor prices for each of Nd, Pr, Dy and Tb under the Offtake Agreement are intended to mitigate certain of the foregoing
risks by helping to de-risk cash flows.
5
Environmental, Health and Safety Matters
We are subject to extensive Brazilian federal, state
and municipal laws, regulations and permits applicable to mining and mineral processing, including those covering employee health and
safety, air emissions, greenhouse gases (“GHG”) emissions, water usage and discharges, waste management, handling of hazardous
and radioactive substances, soil and groundwater remediation, land use, and reclamation. Compliance has a significant effect on our results
of operations and competitive position, and we expect to continue to incur significant operating and capital expenditures for monitoring,
compliance, pollution control equipment, permitting and infrastructure upgrades. Future laws or changes in interpretation or enforcement
could involve substantial additional costs or delay, limit or prohibit operations.
Permits and Approvals
The Pela Ema facility is subject to environmental
licensing by the State Secretariat for Environment and Sustainable Development of Goiás (“SEMAD/GO”) under the shared
competence framework of Complementary Law No. 140/2011 and Technical Cooperation Agreement No. 64/2023 between SEMAD/GO and the Brazilian
Institute of Environment and Renewable Natural Resources (“IBAMA”). Environmental licensing is governed by CONAMA Resolution
No. 237/1997 and Federal Law No. 6,938/1981 (environmental policy). Mining activities are also subject to federal oversight by the National
Mining Agency (ANM) under Decree-Law No. 227/1967 (the Brazilian Mining Code).
We hold the necessary environmental licenses to
operate Pela Ema, including Corrective Operating License No. 225/2023, issued by SEMAD/GO on December 15, 2023 and valid through
October 18, 2028, authorizing extraction at Fazenda Capão Grande and Fazenda Alto da Boa Vista in Minaçu, Goiás.
The license imposes conditions covering water quality monitoring, erosion control, vegetation recovery, effluent management, fauna and
flora conservation, mine closure planning and periodic reporting.
Expansion projects may require new licenses, environmental
impact assessments and environmental impact reports. Failure to obtain, maintain or renew licenses could delay or restrict operations
and result in fines or penalties.
Mine Health and Safety Laws
Mining operations in Brazil are governed by Law
No. 6,514/1977 (occupational safety and health), Regulatory Standard NR-22 of the Ministry of Labor and Employment (standards for training,
mining procedures, blasting and equipment), and other federal and state regulations. New or more stringent rules could increase our operating
costs.
We maintain a comprehensive safety program. Employees
and contractors must complete initial and annual refresher safety training, and our Stop Work Authority program empowers any employee
or contractor to halt work they deem unsafe.
Workers’ Compensation
We compensate employees for work-related injuries
and occupational diseases under Law No. 8,213/1991 (social security benefits) and the Consolidation of Labor Laws, including mandatory
contributions to the National Social Security Institute (INSS) for Work Accident Insurance. Costs vary with accident frequency and claim
handling. We also maintain additional insurance for our Minaçu, Goiás operations and administrative facilities.
Surface Mining Control and Reclamation
Our environmental licenses, approved mining plan,
plan for recovery of degraded areas and applicable laws set operational, reclamation and closure standards, and require us to restore
the surface area on completion of mining. As of December 31, 2025, we have recorded a liability of approximately $4.4 million
for decommissioning, reclamation and restoration of Pela Ema.
Water Usage and Pollution Control
Federal Law No. 9,433/1997 (water resources policy),
state regulations and CONAMA Resolutions Nos. 357/2005, 430/2011 and 503/2021 govern water usage and effluent discharges from our operations.
We hold all required water resource use authorizations, which establish wastewater management standards and require ongoing monitoring,
sampling and reporting as preconditions for issuance and renewal.
6
Air Pollution Control
Our operations are regulated under Federal Law No.
6,938/1981 (environmental policy), CONAMA Resolutions No. 003/1990 (air quality) and No. 382/2006 (industrial emissions), and SEMAD/GO
regulations. We operate the air pollution control devices required by our licenses and generally must obtain licenses before installing
new sources of air pollution.
Our operations also emit GHGs and are subject to
Law No. 12,187/2009 (climate change policy), with GHG regulation continuing to evolve. New GHG rules could require license modifications,
additional pollution controls or higher operating costs (including indirectly through energy prices), but may also increase demand for
rare earth products used in clean-technology applications such as EVs and wind turbines.
Hazardous and Radioactive Substances and Wastes
Federal Law No. 6,938/1981 (environmental policy)
and Federal Law No. 9,605/1998 (environmental crimes) impose strict liability, without regard to fault, on parties contributing to releases
of hazardous substances, and may apply to properties we or our predecessors currently or formerly owned, leased or operated, or to which
waste was sent.
Rare earths contain naturally occurring radioactive
materials, including thorium and uranium. Their handling and disposal is regulated by the National Commission for Nuclear Energy, from
whom we hold an operating license.
Solid and hazardous waste from processing, remediation
and facility expansion is managed under Law No. 12,305/2010 (National Solid Waste Policy) and SEMAD/GO regulations.
Biodiversity and Land Use
Brazilian law establishes protected areas and land
use restrictions that may affect our operations, including Law No. 9,985/2000 (protected areas), Law No. 5,197/1967 (wildlife protection)
and Law No. 12,651/2012 (forests), which mandates preservation areas and reserves and requires SEMAD/GO authorization for vegetation suppression.
Before disturbing new land, we conduct a biological
survey for nesting birds, protected vegetation and protected animals. To date, no surveys have identified species with conservation status
or protected habitat on or near our ore reserve, although several Cerrado fauna species are protected in the surrounding area. Under our
licenses and approved plan for recovery of degraded areas, we stockpile topsoil and vegetation for revegetation, supplemented by broadcast
seeding with native, locally adapted seed and planting of seedlings and shrubs in compliance with state and municipal rules on the removal
of native Cerrado vegetation.
Other Environmental Laws
We are also required to comply with numerous other
Brazilian federal, state and municipal environmental laws, including Complementary Law No. 140/2011 (protection of notable natural landscapes,
and the protection of flora, fauna and ecosystems), Federal Law No. 12,305/2010 (solid waste), Federal Law No. 12,651/2012 (forests) and
Federal Law No. 9,605/1998 (environmental crimes).
Employees
As of December 31, 2025, we had approximately
350 employees and an additional 260 individuals engaged through contractors and working exclusively for the Company. We anticipate hiring
an additional 300 full-time employees as part of our ramp-up to full Phase I capacity of approximately than 6,400 metric tons per
year of total rare earth oxides.
Certain of our employees in Brazil are covered by
collective-bargaining arrangements customary in the Brazilian mining industry. We consider our relationships with our employees and their
representative organizations to be constructive.
Legal Proceedings
From time to time, we may be subject to legal and
governmental proceedings and claims in the ordinary course of business. We are not currently a party to any material legal or governmental
proceedings and, to our knowledge, none is threatened.
7
MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis
(“MD&A”) should be read in conjunction with the audited Consolidated Financial Statements for the year ended December
31, 2025 and notes thereto (the “Consolidated Financial Statements”). The financial information included therein was prepared
in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and presented in United
States Dollars.
The MD&A contains forward-looking statements.
Forward-looking statements include all statements that are not historical facts. In some cases, these statements can be identified by
the use of forward-looking terminology such as “anticipate,” “believe,” “continue,” “could,”
“estimate,” “expect,” “intend,” “may,” “might,” “objective,” “plan,”
“predict,” “project,” “should,” “will,” and “would,” or the negative thereof
or other comparable terminology. Forward-looking statements include, but are not limited to, statements regarding the development and
construction of SVRE’s integrated mining and processing project in Minaçú, Goiás, Brazil, expected Project
(as defined below) completion timing, production targets, financing plans, currency exchange rate impacts, and our liquidity and capital
resources. Forward-looking statements are subject to a number of risks and uncertainties, including but not limited to: risks related
to construction, commissioning, and ramp-up of the Project; risks related to mineral exploration and production in Brazil; fluctuations
in foreign currency exchange rates, in particular the Brazilian Real relative to the U.S. dollar; commodity price volatility; regulatory
and permitting risks; our ability to obtain additional financing on acceptable terms or at all; and other factors. Actual results may
differ materially from those anticipated.
Executive Overview
The Serra Verde Group, including SVRE Holdings Ltd.
(the “Company” and, together with its subsidiaries, the “Group,” “SVRE,” “we,” “our”
and “us”), is developing Pela Ema (the “Project”), one of the largest known ionic-clay Rare Earth Element (“REE”)
deposits outside of Asia. Ionic clays can be mined with low-cost open pit mining techniques and processed using simple, low energy and
environmentally benign technologies and reagents.
The Project is located in an established mining
area in central Brazil in the state of Goiás. SVRE has access to a skilled workforce from the nearby town of Minaçú
and mine operations are close to existing transport, renewable power, water and other infrastructure. The Project revolves around a large,
long-life deposit containing an elevated proportion of high value heavy and light REEs, including neodymium (Nd), praseodymium (Pr), terbium
(Tb) and dysprosium (Dy), that are key to permanent magnet production as well as applications in the automotive, energy, aerospace and
defense, robotics, healthcare, and other critical industries.
SVRE has secured all permits required for the Project,
which is designed to produce a Mixed Rare Earth Carbonate (MREC). As of December 31, 2025, the Project remains in the development
stage and has not yet achieved the milestones necessary to be considered operational. We are currently implementing a process optimization
and growth project that we expect will result in higher production capacity, a sustained lower operating cost profile and enhanced product
quality. We expect to complete construction and commence commercial operations in 2027.
While revenue increased significantly in 2025 compared
to 2024, we remain in the pre-operational stage and are not yet producing at the scale of production necessary to fund ongoing operations.
We remain in a net loss position and continue to fund our operations and capital expenditure primarily through our cash position and third-party
financing arrangements.
Recent Developments
Interim Funding/Cost Overrun Facility
On January 12, 2026, SVRE entered into an interim
funding and cost overrun facility with OMF Fund III (F) Ltd. and certain shareholders (the “Interim Facility”) to fund near-term
construction expenditures and cost overruns at the Project. In connection with the Interim Facility, the Company issued warrants (the
“warrants”) to the shareholder lenders to purchase 1,028,571 ordinary shares of the Company at an exercise price of $0.01
per ordinary share. The warrants are exercisable upon specified triggering events (including a public offering or a company sale), subject
to their terms. The balance of $18 million under the Interim Facility (including principal and accrued interest) was repaid in full
on March 6, 2026 with proceeds of the first drawdown of the DFC Facility (defined below).
8
DFC Senior Secured Term Loan Facility
On January 21, 2026, SVRE entered into a senior
secured 12-year term loan facility with the DFC of up to $565.0 million (the “DFC Facility”). The DFC Facility is structured
in tranches and is intended to fund the debottlenecking and optimization Project. The DFC Facility also permitted proceeds of the DFC
Facility to be used for the repayment of the Interim Facility and OMF Credit Agreement, (as defined below) and the redemption of the OMF
Class A Preferred Shares (as defined below).
Interest under the DFC Facility accrues at a floating
rate based on SOFR plus a 4.0% spread. The DFC Facility includes, among other charges, a commitment fee on undisbursed amounts, a facility
fee, and an annual maintenance fee. The DFC Facility is secured by the assets of SVRE and each of its subsidiaries, and is guaranteed
by Serra Verde Pesquisa e Mineração Ltda. (“SVPM”) and each of SVRE’s other subsidiaries. In connection
with the DFC Facility, SVRE agreed to issue warrants to DFC for shares equivalent to 12% of the fair market value of SVRE at the time
of exercise. SVRE expects to draw on the DFC Facility in accordance with a construction drawdown schedule tied to defined milestones.
The first drawdown of $325.0 million of the DFC Facility occurred on March 6, 2026. The term of the DFC Facility will be extended
to 15 years in connection with certain conditions precedent defined in the Offtake Agreement.
Offtake Agreement with the United States Government
On April 20, 2026, SV Management
Switzerland AG (the “Seller”), a wholly owned subsidiary of the Company, entered into a long-term Offtake Agreement (the
“Offtake Agreement”) with US SIIE, LLC (the “Buyer”), a special purpose vehicle capitalized by the U.S.
government and private capital sources. The Offtake Agreement provides for the sale and purchase of 100% of Phase 1 production
from the Company’s mine and processing facility in Brazil (the “Facility”), Neodymium (Nd),
Praseodymium (Pr), Dysprosium (Dy), and Terbium (Tb) in the form of mixed rare earth carbonate (collectively, the
“Products”). The term of the Offtake Agreement will continue until the earlier to occur of: (i) the date the Seller
has delivered the Products derived from 198,000,000 metric tons of run of mine ore; or (ii) the date that is 20 years
after the Facility commences commercial operations. The terms of the Offtake Agreement include guaranteed minimum floor prices for
each of Neodymium, Praseodymium, Dysprosium and Terbium, as well as mechanisms for shared upside. The Buyer intends to resale the
products to entities who will separate and process the products for sale to companies serving all end markets and applications.
Merger Agreement with USAR
On April 19, 2026, the Company entered into
the Agreement and Plan of Merger (the “Merger Agreement”) with USA Rare Earth, Inc. (“USAR”), Middlebury Merger
Sub Ltd., an indirect wholly owned subsidiary of USAR (“Merger Sub”) and Serra Verde Rare Earths Ltd., acting in the capacity
of shareholder representative. Pursuant to the Merger Agreement, and subject to the satisfaction of customary closing conditions and receipt
of required regulatory approvals, the Company will merge with and into Merger Sub, with Merger Sub surviving as an indirect, wholly owned
subsidiary of USAR (the “Merger”). The Merger is expected to close in the third quarter of 2026.
The aggregate consideration to be received by SVRE’s
shareholders at closing consists of (i) US$300,000,000 in cash and (ii) 126,849,307 shares of Common Stock. Based on USAR’s
share price of US$19.95 as of April 17, 2026, the implied total transaction value is approximately US$2.8 billion. Upon closing,
SVRE’s shareholders will own approximately 34% of USAR on a pro-forma basis. Completion of the Merger is subject to certain closing
conditions.
Upon closing, all outstanding warrants will be automatically
exercised and converted into ordinary shares immediately prior to the Merger. All outstanding RSUs and SARs, whether vested or unvested,
will accelerate in full and be cancelled in exchange for a pro rata portion of the Merger consideration. Stock options not subject to
performance conditions will be similarly cancelled on a cashless basis for Merger consideration, while performance-vesting options held
by continuing service providers will be substituted with USAR RSUs subject to continued service vesting. The Company’s equity incentive
plan will be terminated at closing. No fractional shares will be issued.
9
The Merger Agreement contains customary reciprocal
representations and warranties covering, among other matters, corporate organization, capitalization, financial statements, compliance
with law, tax matters, and material contracts. Except in cases of fraud, all representations and warranties will not survive the closing
of the Merger and will not give rise to post-closing indemnification obligations. USAR may, at its election and expense, obtain a representations
and warranties insurance policy, which, if obtained, must waive subrogation rights against the Company’s shareholders except in
cases of fraud.
Shareholders receiving USAR common stock in the
Merger will be subject to a phased lock-up: one-third of the shares received will be freely transferable at closing, one-third released
after 90 days, and the remaining one-third after 180 days. USAR has agreed to file a shelf registration statement for the resale
of all shares issued in the Merger on the first business day following closing.
Key Factors Affecting Our Performance and Financial Condition
Development Stage Status and Pre-Commercial Production Economics
We are engaged in the mineral exploitation of rare
earth elements through an integrated mining and processing operation that currently produces limited quantities of MREC while the process
optimization and growth project is completed, with the Project currently under construction and expected to start ramping up production
later in 2026 and reach completion in 2027. This development-stage status is the single most defining factor shaping SVRE’s financial
results. Although SVRE announced the commencement of commercial production of MREC from Phase I of its Pela Ema deposit in January 2024,
as of December 31, 2025, SVRE has not yet achieved the milestones necessary to be considered fully operational. As a consequence,
revenue for the year ended December 31, 2025 was only $2.5 million, against cost of sales of $36.1 million, producing a
gross loss of $33.6 million. The magnitude of capital commitment to the Project is reflected in construction in progress of $531.9 million
at December 31, 2025, compared to $418.7 million at December 31, 2024, reflecting significant investment in an asset not
yet generating a commercial return. Until throughput and production volumes are sufficient to generate revenue at the scale needed to
absorb operating costs, the gross loss will remain the dominant driver of SVRE’s operating performance.
Rare Earth Market Prices and Inventory Net Realizable Value Dynamics
The market price of rare earth products, particularly
MREC and its constituent rare earth oxides, directly determines both the revenue achievable upon sale and the net realizable value at
which inventory must be carried on the balance sheet. SVRE values its inventory at the weighted average cost or net realizable value in
accordance with ASC 330, with net realizable value determined based on estimated selling prices in the ordinary course of business,
less reasonably predictable costs of completion, disposal, and transportation. SVRE evaluates its inventory for potential valuation adjustments
at least on a quarterly basis, or sooner when events or changes in circumstances indicate that the net realizable value may be below carrying
cost, including as a result of changes in rare earth market prices. Importantly, under ASC 330, once inventory is written down to
its net realizable value, the reduced carrying amount becomes the new cost basis and may not be subsequently written back up, even in
the event of a recovery in market prices. The financial impact of this policy has been dramatic and non-linear across periods. The elevated
carrying cost of the Company’s inventories reflects the cost structure inherent to a facility not yet operating at commercial scale,
where fixed and semi-fixed operating costs are absorbed by a limited volume of production, resulting in a per-unit cost of inventory that
significantly exceeds what would be expected under normalized commercial operations. As a consequence, even at prevailing market prices,
the net realizable value of inventory has been insufficient to recover the carrying cost in the years ending December 31 2024
and December 31, 2025, necessitating recognition of impairment expenses. During the year ended December 31, 2024, the Company
recognized an inventory impairment expenses of $47.8 million related to its concentrate and in-process inventories. During the year
ended December 31, 2025, the Company recognized a further inventory impairment expenses of $33.7 million on newly produced inventory,
reflecting continued pressure from both below-commercial-scale production costs and rare earth market pricing conditions. Together, these
charges represent a cumulative loss of approximately $81.5 million in cost of sales across the two periods.
10
The Ability and Cost of Financing Our Operations
The table below represents the balances for key
debt and financing obligations for the years ended December 31, 2024 and 2025 as well as the year over year changes.
Debt and Financing Obligations
Year Ended
December 31,
Change
(in millions, except percentage)
2025
2024
($)
(%)
OMF Credit Agreement
107
93
14
15
OMF Class A Preferred Shares
45
41
4
10
OMF Royalty Agreement
73
56
17
30
Given the pre-commercial status, SVRE has been entirely
dependent on external financing to fund its operations and capital expenditure program, and the cost of maintaining that financing structure
is becoming an increasingly significant factor in SVRE’s results of operations. At December 31, 2025, we have a number of financing
arrangements in place with significant interest obligations. The OMF Credit Agreement (as defined below) had an opening balance of $93.0 million
at January 1, 2025, with accrued interest of $14.3 million during 2025, bringing the closing balance to $107.3 million
at December 31, 2025. Simultaneously, the OMF Class A Preferred Shares (as defined below) had an opening balance of $41.1 million,
with accrued interest of $4.3 million added during 2025, increasing the closing balance to $45.4 million. The OMF Royalty Agreement
(as defined below) had an opening balance of $55.5 million, with accrued interest of $17.7 million added during 2025, increasing
the closing balance to $73.0 million. The combined accreting cost of these three instruments alone — approximately
$36.6 million of interest accrued in 2025 — significantly exceeds SVRE’s total revenue and represents a compounding
obligation that grows with each passing period. This financing cost dynamic is a direct reflection of the broader challenge facing development-stage
critical minerals companies, namely the extended timeline from initial capital commitment to commercial production creates a period of
prolonged financial exposure in which capital providers require increasing compensation for the execution risks they bear.
Foreign Currency Exchange Rate Volatility
Exchange Rates of R$ per US$
Period-End
Average
High
Low
2023
4.8413
4.9927
5.4459
4.7202
2024
6.1923
5.3905
6.1991
4.8543
2025
5.5024
5.5855
6.2086
5.2729
January 2026
5.2301
5.3380
5.4372
5.1838
February 2026
5.1495
5.2006
5.2587
5.1382
March 2026
5.2194
5.2316
5.2878
5.1596
Foreign currency exchange rate movements have historically
been a key driver of variability in SVRE’s reported net loss from period to period, and this dynamic was particularly pronounced
during the periods ended December 31, 2024 and 2025. Exchange variation, net, was a gain of $49.5 million for the year ended
December 31, 2025, compared to $(93.7) million for the year ended December 31, 2024
The primary source of this volatility is the
currency profile of Serra Verde Pesquisa e Mineração Ltda. (“SVPM”), SVRE’s Brazilian operating
subsidiary, which has the Brazilian Real (“BRL”) as its functional currency. SVPM has historically carried significant
intercompany liability balances denominated in U.S. dollars (“USD”), reflecting the USD-denominated financing
arrangements through which the Project has been funded. Because these liabilities are denominated in a currency other than
SVPM’s functional currency, they are subject to remeasurement at each reporting date. When the BRL depreciates relative to the
USD, the BRL-equivalent value of these USD-denominated liabilities increases, generating a remeasurement loss that is recognized in
the consolidated statement of operations as exchange variation. Conversely, when the BRL appreciates relative to the USD, a
remeasurement gain is recognized. Given the magnitude of the intercompany balances outstanding, even moderate movements in the
BRL/USD exchange rate can produce material impacts on reported results.
The effect of changes in foreign exchange rates
on cash was $(42.8) million in 2025, compared to an income of $92.0 million in 2024, demonstrating that currency movements also materially
impact reported cash balances independently of actual cash generation or consumption.
11
This sensitivity is a structural feature of SVRE’s
business model — a largely BRL-cost, USD revenues and USD-financed mining project reporting in USD — and
will remain a significant driver of reported results for as long as intercompany balances remain outstanding in a currency other than
SVPM’s functional currency, and the BRL/USD exchange rate continues to experience significant fluctuation.
Cost Inflation and Access to Raw Materials
Increasing costs due to inflation or other factors
beyond our control or limited access to raw materials may adversely affect our profitability. Operation of the Project will involve use
of significant quantities of chemical reagents and diesel fuel. Though we may enter into long-term purchase agreements, chemical reagents,
diesel and other raw materials sourced from third parties may be subject to significant volatility in cost and availability. In addition,
third parties may not honor their agreements with us and/or declare force majeure, and as a result, we may need to obtain such chemical
reagents from other parties at higher costs and expense and there may be a delay in obtaining such chemical reagents. Further, supply
chains reliant on sea vessels, trains, and/or trucks may subject us to transportation delays in obtaining these chemical reagents. We
may not be able to pass increased costs for these chemical reagents, diesel fuel or other raw materials through to our customers in the
form of price increases. There can be no assurance that we will be able to purchase the necessary chemical reagents, diesel fuel or other
raw materials from third parties on terms that are acceptable to us. The failure to obtain chemical reagents, diesel fuel or other raw
materials as needed will have an adverse effect on our financial condition and results of operations.
Key Performance Indicators
In evaluating the performance of our business, we
use the key performance indicators (“KPIs”) outlined below. However, as our business continues to evolve, the metrics that
management uses to evaluate the business may change or be revised.
Summary of operational performance
Year Ended
December 31,
Change
(In units, except percentage)
2025
2024
(units)
(%)
Ore Processed (tonnes)
132,173
584,946
(452,773 )
(77 )
TREO Produced(1) (tonnes)
40
150
(110 )
(73 )
TREO Sales (tonnes)
138
11
127
1,155
Ore Processed
Ore processed represents total tonnes of ore material
fed through the Company’s beneficiation facilities during the period, categorized by particle size distribution (<1mm and >1mm
fractions).
This metric provides investors with visibility into
production activity levels and facility utilization rates. It serves as the primary input measure for the production process and directly
correlates with downstream production of MREC and TREO. Changes in ore processing volumes signal strategic or operational shifts
that impact revenue generation capacity and cost structure.
Management uses ore processed as the primary operational
metric to monitor production activity, evaluate facility utilization against installed capacity, plan production schedules, and assess
the effectiveness of process improvements. During the process optimization and growth project implementation, this metric tracks planned
production and will be used to measure the success of the production ramp-up in 2026.
Ore processed is measured by weight (tonnes) at
the point of entry into the beneficiation circuit. Measurement includes all ore fed to the processing facilities regardless of ultimate
recovery rates or product quality.
12
Ore processed declined 77% from 584,946 tonnes for
the year ended December 31, 2024 to 132,173 tonnes for the year ended December 31, 2025 due to a strategic decision to curtail
operations in order to (i) perform maintenance activities, (ii) focus on implementation of the process optimization and growth
project, and (iii) manage operating expenditure while completing financing activities.
TREO Production
Total Rare Earth Oxide (“TREO”) production
is measured in metric tonnes. This measure includes both TREO volumes in bagged MREC, our finished product, and TREO in the thickener
that has been produced but not yet bagged. TREO production is an indicator of our ability to convert Ore processed into finished product
that ultimately will be sold.
TREO production is the primary output measure of
the Company’s operations and the basis for revenue generation. This metric allows investors to assess production efficiency, evaluate
the relationship between ore input and saleable product output, and understand inventory dynamics when compared to TREO sales. It provides
insight into the Company’s ability to convert ore resources into marketable product.
Management uses TREO production to monitor metallurgical
performance, evaluate recovery rates from ore processing, plan inventory levels, and forecast revenue potential. This metric is critical
for production planning, quality control assessment, and evaluating the technical success of process improvements implemented through
the process optimization and growth project.
TREO production declined 73% from 150 tonnes for
the year ended December 31, 2024 to 40 tonnes for the year ended December 31, 2025 due to a strategic decision to curtail operations
in order to (i) perform maintenance activities, (ii) focus on implementation of the process optimization and growth project,
and (iii) manage operating expenditure while completing financing activities.
TREO Sales
TREO sales represent the volumes in metric tonnes
of TREO contained in MREC sold to customers. A unit, or MT, is considered sold once we recognize revenue on its sale as determined in
accordance with US GAAP. Our TREO sales volume is a measure of our ability to convert MREC production into revenues. TREO sales volumes
are our only source of revenue.
TREO sales is the direct driver of revenue and provides
investors with the volume component of revenue generation. When analyzed alongside realized price, this metric allows investors to decompose
revenue performance into volume and price effects. The relationship between TREO sales and TREO production reveals inventory management
strategies and the sustainability of current sales levels.
Management uses TREO sales to monitor commercial
performance, evaluate sales team effectiveness, track customer relationships and market share, and plan production levels to meet customer
demand. This metric is essential for revenue forecasting, inventory management decisions, and assessing the Company’s competitive
position in the rare earth market.
TREO sales are measured in tonnes of contained oxide
content at the point of sale. Revenue recognition occurs upon transfer of control to the customer, typically at shipment or delivery depending
on contract terms. Sales volumes are based on assayed oxide content in the product delivered, using the same assay methodologies applied
to production measurement.
TREO sales increased 1,155% to 138 tonnes for the
year ended December 31, 2025, compared to 11 tonnes for the year ended December 31, 2024. This substantial increase occurred
despite a 73% decrease in TREO production during the same period, reflecting a strategic shift in the Company’s operational focus
and working capital management.
The increase in sales was primarily attributable
to the monetization of inventory accumulated during 2024. During 2024, the Company produced 150 tonnes of TREO but sold only 11 tonnes,
resulting in significant inventory buildup. In 2025, management prioritized the conversion of this inventory into cash to support operational
requirements and reduce working capital levels during the period of operational curtailment. The sale of 138 tonnes in 2025, compared
to production of only 40 tonnes, resulted in a drawdown of inventory of approximately 98 tonnes.
13
As of December 31, 2025, TREO inventory levels
were 46 tonnes, compared to 117 tonnes at December 31, 2024. The Company believes current inventory levels are appropriate to support
near-term customer commitments while maintaining operational flexibility as production ramps up following completion of the capacity expansion
project.
Summary of financial performance
Realized Price per Kg of TREO
We calculate the realized price per kilogram of
TREO Sales for a given period as the quotient of: (i) our TREO sales revenues as determined in accordance with US GAAP for a given
period, divided by (ii) our TREO sales volumes for the same period. Realized price per kg is an important measure of the market price
of TREO contained in MREC and key determinant of revenue.
Realized price allows investors to understand the
price component of revenue performance, separate from volume effects. This metric provides insight into market conditions, the Company’s
pricing power, product quality and differentiation, and the effectiveness of commercial strategies. Management uses realized price to
evaluate commercial performance, assess the effectiveness of pricing strategies, monitor market conditions and competitive dynamics.
Year Ended
December 31,
Change
(in thousands, except tonnes and percentage)
2025
2024
($)
(%)
TREO Sales (tonnes)
138
11
127
1,155
Revenues
2,486
214
2,272
1,062
Realized Price (USD/kg)
18.33
19.91
(1.58 )
(5 )
The average realized price per kilogram of TREO
decreased 5% to $18.33 for the year ended December 31, 2025, compared to $19.91 for the year ended December 31, 2024. This decrease
was primarily attributable to changes in product quality and mix, specifically a lower average TREO grade in MREC shipments and variations
in the relative proportions of individual rare earth oxides contained in the product sold.
COGS Cash Cost per tonne
COGS Cash Cost per tonne is a non-GAAP operational
metric calculated as (Operating Costs + Sales & Marketing Costs) divided by TREO Sales volume (tonnes). Operating Costs include
cash operating expenses incurred at production facilities (labor, energy, materials, maintenance, and other direct operating costs). Sales &
Marketing Costs include cash expenses related to sales activities, marketing, logistics, and customer service. The result is expressed
in total dollars.
This metric is intended to provide investors with
visibility into the cash operating costs associated with producing and selling TREO on a per-unit basis. Management uses this metric to
evaluate per-unit cash operating efficiency and monitor cost trends relative to sales volumes.
Year Ended
December 31,
Change
(in thousands, except tonnes and percentage)
2025
2024
($)
(%)
Sales and marketing costs(1)
(251 )
(72 )
(179 )
249
Cost of sales(1)
(2,331 )
(5,855 )
3,524
(60 )
TREO Sales (tonnes)
138
11
127
1,155
COGS Cash cost per tonne
(18.71 )
(538.81 )
520.10
(97 )
(1) Excludes non-cash costs
14
COGS cash cost per tonne decreased 97% to $18.71
per tonne for the year ended December 31, 2025, compared to $538.81 per tonne for the year ended December 31, 2024. This significant
improvement was primarily attributable to substantially higher sales volumes (138 tonnes in 2025 versus 11 tonnes in 2024), which resulted
in improved absorption of fixed production costs across a significantly larger sales base as well as cost reduction initiatives.
Results of Operations
Year Ended December 31, 2025 Compared to Year Ended December 31,
2024
The following table sets forth our consolidated
results of operations for the years ended December 31, 2025 and 2024:
Year Ended
December 31,
Change
(in thousands, except percentage)
2025
2024
($)
(%)
Revenue
2,486
214
2,272
1061.8
Cost of sales
(36,105 )
(53,673 )
17,568
(32.7 )
Gross margin
(33,619 )
(53,459 )
19,840
(37.1 )
General and administrative expenses
(25,803 )
(25,772 )
31
(0.1 )
Other expenses, net
(1,440 )
(104 )
(1,230 )
(586.2 )
Financial income
2,671
3,119
(448 )
(14.4 )
Financial expenses
(9,873 )
(1,285 )
(8,588 )
(688 )
Foreign currency exchange, net
49,532
(93,651 )
143,183
152.9
Loss before income taxes
(18,532 )
(171,152 )
152,620
(89.2 )
Deferred tax income
—
9,943
(9,943 )
(100 )
Net loss
(18,532 )
(161,209 )
142,677
(88.5 )%
Revenue
Revenue increased $2.3 million to $2.5 million
for the year ended December 31, 2025, compared to $0.2 million for the year ended December 31, 2024. Revenue in both periods
consisted entirely of “MREC” produced at the Project and sold under an offtake agreement. Pricing under the offtake agreement
was determined by contractual formulas that reference the quantity and quality of TREO content in each shipment and prevailing benchmark
market prices for individual rare earth oxides, including high-value magnet rare earths such as neodymium (Nd), praseodymium (Pr), terbium
(Tb), and dysprosium (Dy).
The year-over-year increase in revenue was primarily
driven by higher volumes of TREO contained in MREC sold in 2025 compared to 2024,. Higher sales volumes were partially offset by lower
Realized prices. Lower average TREO grade in MREC shipments in 2025 compared to 2024 was partially mitigated by more favorable benchmark
market prices for rare earth oxides during the period.
Revenue disclosed for 2025 and 2024 above was achieved
under an offtake agreement that was suspended by mutual agreement in February 2026 due primarily to restricted production levels.
Our last delivery under that offtake agreement was in February 2026.
Cost of Sales and Inventory Impairment
Year Ended
December 31,
Change
(in thousands, except percentage)
2025
2024
($)
(%)
Cost of sales
(2,331 )
(5,855 )
3,524
60.2
Inventory impairment
(33,774 )
(47,818 )
14,044
29.4
Cost of sales is comprised of all direct and indirect
costs incurred in the production of MREC and related rare earth products, including mining and processing costs, reagents and
consumables, labor, equipment depreciation, site overhead, and transportation costs to the point of sale, as well as inventory valuation
adjustments. Excluding inventory impairment Cost of sales decreased by $3.55 million, or 60.2%, to $2.3 million for the year
ended December 31, 2025, from $5.9 million for the year ended December 31, 2024. Increased fixed cost absorption and cost
reduction initiatives lowered the costs of volumes sold.
15
The inventory impairment losses recorded reflect
high per unit cost structure inherent to a facility not yet operating at commercial scale, where fixed and semi-fixed operating costs
are absorbed by a limited volume of production, resulting in a per-unit cost of inventory that significantly exceeds what would be expected
under normalized commercial operations. The $14.0 million lower inventory impairment loss in the year ended December 31, 2025
versus the year ended December 31, 2024 reflects lower inventory volumes at year end as well as higher realized prices
General and Administrative Expenses
Year Ended
December 31,
Change
(in thousands, except percentage)
2025
2024
($)
(%)
Salaries and personnel expenses
(17,223 )
(16,364 )
(859 )
5
Professional fees
(5,995 )
(5,372 )
(624 )
11.6
Office and facilities costs
(558 )
(635 )
77
12.1
Taxes
(420 )
(1,015 )
595
58.6
Other
(1,607 )
(2,386 )
780
32.7
General and administrative expenses comprise costs
associated with the overall management and administration of SVRE that are not directly attributable to production or project development
activities. These include salaries and personnel expenses, professional fees, office and facilities costs, taxes, and other overhead expenses
incurred in support of SVRE’s corporate functions. General and administrative (“G&A”) expenses for the year ended
December 31, 2025 totaled $ 25.8 million, in line with $ 25.8 million incurred in 2024. The absence of material year-over-year
variation reflects a stable cost structure, with increases in certain expense categories offset by reductions in others.
Financial Income and Expenses
Financial income and expenses comprise all gains,
losses, income, and expenses arising from SVRE’s financing activities and financial instruments, as distinct from its operating
activities.
Financial income
Year Ended
December 31,
Change
(in thousands, except percentage)
2025
2024
($)
(%)
Income from financial investments
2,671
482
2,189
454
Loss (Gain) on fair value change in private placement warrants liability
—
2,637
(2,637 )
(100 )
Financial income decreased by $0.4 million,
or 14.4%, to $2.7 million for the year ended December 31, 2025, from $3.1 million for the year ended December 31,
2024. While income from financial investments increased significantly to $2.7 million in 2025 from $0.5 million in 2024, reflecting
higher cash balances throughout the year, this was offset by the fair value remeasurement of the private placement warrants liability
that was recognized in 2024. In 2025, the fair value remeasurement of the private placement warrant liability resulted in a loss of $7.6 million,
compared to a gain of $2.6 million in the prior year driven by changes in SVRE’s estimated equity value per share and other
valuation inputs used to measure the warrants at each reporting date.
Financial expenses
Year Ended
December 31,
Change
(in thousands, except percentage)
2025
2024
($)
(%)
Loss on fair value change in private placement warrants liability
(7,652 )
—
(7,652 )
100
Interests on loans and financing
(700 )
(307 )
(393 )
128
Interest and penalties on overdue amounts
(479 )
(297 )
(182 )
61
Accretion expense – ARO
(278 )
(223 )
(55 )
25
Tax on financial transactions
(228 )
(124 )
(104 )
84
Other income (expense)
(532 )
(334 )
(198 )
59
16
Financial expenses increased by $8.6 million
due to a $7.6 million loss on fair value change in private placement warrants liability resulting from changed valuation inputs and
assumptions, $0.4 million increase in interest on loans and financing reflecting higher outstanding loan balances.
ARO is the estimated present value of the future
costs associated with the decommissioning, reclamation, and restoration of the Project site at the end of its operational life, recognized
in accordance with ASC 410. The ARO liability is measured at the present value of expected future cash flows, discounted at a credit-adjusted
risk-free rate, and is accredited over time as the obligation approaches its settlement date. This accretion — representing
the unwinding of the discount applied to the liability — is recognized as a financial expense in the consolidated statement
of operations and increases each period as the outstanding ARO balance grows. SVRE recognized ARO accretion expense of $0.3 million
for the year ended December 31, 2025, compared to $0.2 million for the year ended December 31, 2024, an increase of $0.1 million,
reflecting the growth in the underlying ARO liability balance and the passage of time.
Exchange Variation, Net
Year Ended
December 31,
Change
(in thousands, except percentage)
2025
2024
($)
(%)
Exchange variation, net
49,530
(93,651 )
143,181
152.9
Exchange variation arises primarily from the remeasurement
of BRL-denominated monetary assets and liabilities into U.S. dollars.
SVPM, SVRE’s Brazilian operating subsidiary,
which has BRL as its functional currency, carries sizable intercompany liability balances denominated in USD, reflecting the USD-denominated
financing arrangements through which the Project has been partially funded. Because these liabilities are denominated in a currency other
than SVPM’s functional currency, they are subject to remeasurement at each reporting date. When the BRL depreciates relative to
the USD, the BRL-equivalent value of these USD-denominated liabilities increases, generating a remeasurement loss that is recognized in
the consolidated statement of operations as exchange variation. Conversely, when the BRL appreciates relative to the USD, a remeasurement
gain is recognized. Exchange variation was a net gain of $49.5 million for the year ended December 31, 2025, compared to a net
loss of $(93.7) million for the year ended December 31, 2024, representing a favorable change of $143.2 million. The net foreign
exchange gain of $49.5 million in 2025 compares to a net foreign exchange loss of $93.7 million in 2024. These amounts are unrealized
and non-cash in nature, and arise primarily from the remeasurement of U.S. dollar-denominated intercompany loan balances held by
SVPM, whose functional currency is the Brazilian Real. Under applicable accounting standards, monetary assets and liabilities denominated
in a currency other than the entity’s functional currency are remeasured at each reporting date using the prevailing closing exchange
rate, with the resulting gain or loss recognized in the consolidated statements of operations.
The gain of $49.5 million in 2025 reflects
the approximately 11.1% appreciation of the Brazilian Real against the U.S. dollar during the year, with the period-end BRL/USD rate
strengthening from R$6.1923 at December 31, 2024 to R$5.5024 at December 31, 2025. This appreciation reduced the BRL equivalent
of SVPM’s USD-denominated intercompany liability of $346.9 million, generating a significant unrealized remeasurement gain.
Conversely, the loss of $93.7 million in 2024 reflected the sharp depreciation of the BRL against the USD during 2024, with the period-end
rate weakening from R$4.8413 at December 31, 2023 to R$6.1923 at December 31, 2024, a depreciation of approximately 27.9%, which
increased the BRL equivalent of the same USD-denominated obligation and resulted in a corresponding remeasurement loss.
Deferred Tax
SVRE accounts for income taxes in accordance with
ASC 740, under which deferred tax assets are recognized for deductible temporary differences and tax loss carryforwards to the extent
that it is probable that sufficient future taxable income will be available against which those assets can be utilized. A valuation allowance
is established to reduce deferred tax assets to the amount that is more likely than not to be realized.
17
As of the beginning of the year ended December 31,
2024, SVRE carried a deferred tax asset balance of $7.0 million on its balance sheet. During the year ended December 31, 2024,
management reassessed the recoverability of its deferred tax assets in light of SVRE’s pre-operational status and the uncertainty
surrounding the timing and magnitude of future taxable income. As a result of this assessment, SVRE recognized a deferred tax expense
of $9.9 million in its consolidated statement of operations, representing the full write-off of previously recognized deferred tax
assets, including both the opening balance and additional temporary differences arising during the period. This adjustment reflects management’s
conclusion that, given the Project’s development stage and the absence of a near-term taxable income base, it is not more likely
than not that these assets will be realized in the foreseeable future.
As of December 31, 2024 and December 31,
2025, the carrying value of deferred tax assets on the consolidated balance sheet was nil. No deferred tax provision was recognized during
the year ended December 31, 2025, consistent with SVRE’s continued pre-operational status and management’s assessment
that the recognition criteria for deferred tax assets have not been met. SVRE will continue to reassess this position at each reporting
date as the Project advances toward commercial production
Net Loss
Year Ended
December 31,
Change
(in thousands, except percentage)
2025
2024
($)
(%)
Net loss
(18,532 )
(161,209 )
142,677
(88.5 )%
Net loss improved to $(18.5) million for the year
ended December 31, 2025, from $(161.2) million for the year ended December 31, 2024, an improvement of $142.7 million,
or 88.5%. The primary contributors to the improvement were: the $143.2 million favorable change in exchange variation, the $3.5 million
reduction in cost of sales, the $14.0 million lower inventory impairment, and the $2.3 million increase in revenue, in each
case as discussed above. These improvements were partially offset by the increase in financial expenses of $ 8.6 million, mainly
driven by a $7.6 million loss on fair value change in private placement warrants liability resulting from changed valuation assumptions.
Although the net loss improved significantly, SVRE remains in a net loss position and is not yet generating positive cash flow from operations
at a commercial scale. We expect to continue reporting net losses until the Project achieves commercial production and generates sufficient
revenue to cover operating and financing costs.
EBITDA
EBITDA (Earnings Before Interest, Taxes, Depreciation,
and Amortization) is a non-GAAP financial measure calculated as net income (loss) plus interest expense, income tax expense (benefit),
and depreciation and amortization. EBITDA includes all operating revenues and expenses, including non-cash items such as inventory impairments.
EBITDA allows investors to evaluate the Company’s
operational performance and cash generation capability independent of capital structure (interest), tax position (taxes), and historical
capital investment decisions (depreciation and amortization). This metric facilitates comparison with industry peers that may have different
financing structures, tax situations, or asset ages. EBITDA provides a proxy for operating cash flow before working capital changes and
capital expenditures.
Management uses EBITDA as the primary metric for
evaluating operational performance, measuring progress toward cash flow breakeven, making operational decisions regarding cost management
and production levels, and assessing the effectiveness of strategic initiatives including the process optimization and growth project.
EBITDA is incorporated into executive compensation programs, aligning management incentives with operational performance improvement.
Year Ended
December 31,
Change
(in thousands, except percentage)
2025
2024
($)
(%)
Net loss, as reported
(18,532 )
(161,209 )
142,677
(88.5 )%
Addback:
Interest expense, net
700
307
393
128
Income tax provision or (benefit)
(9,943 )
9,943
(100 )
Depreciation and amortization
1,335
1,464
(129 )
(9 )
EBITDA
(16,497 )
(169,381 )
152,884
(90.2 )
EBITDA loss decreased 90.2% to $16.5 million
for the year ended December 31, 2025, compared to $169.4 million for the year ended December 31, 2024, representing a significant
improvement of $152.9 million. This improvement was primarily attributable to higher revenues from increased TREO sales volumes,
substantially lower unit costs resulting from improved fixed cost absorption and cost reduction initiatives, and a lower inventories impairment
provision in 2025 compared to 2024.
18
Liquidity and Capital Resources
Overview
Liquidity refers to our ability to generate sufficient
cash flows and to access external financing needed to meet the cash requirements of our business operations, including working capital
needs, capital expenditure commitments, contractual obligations, and debt service. As a development-stage company, we do not currently
generate cash flows from operations sufficient to fund our working capital requirements, capital expenditure program, or debt service
obligations. Our liquidity position and our ability to continue as a going concern are therefore dependent on our ability to access external
financing until the Project achieves commercial production levels sufficient to fund ongoing operations independently.
As of December 31, 2025, we had cash and cash
equivalents of $2.6 million, compared to $79.2 million as of December 31, 2024. The decrease of $76.6 million reflects
the combined effect of cash used in operations, continued investment in the construction of the Project, the absence of new capital raises
during the year, and the adverse impact of foreign exchange movements on our BRL-denominated cash balances.
Cash used in operating activities was $(2.4) million
in 2025, a significant improvement from $(189.0) million in 2024, driven primarily by a reduction in the net loss from $(161.2) million
to $(18.5) million, lower inventory build of $(28.5) million compared to $(63.2) million in the prior year, and a reduction in accounts
payable and accrued expenses of $8.1 million. Cash used in investing activities was $(16.2) million in 2025, compared to $(45.7)
million in 2024, consisting entirely of capital expenditures for the construction of the Project, which the Company deliberately phased
to preserve liquidity while the DFC Facility was being finalized. Financing activities used $(2.4) million in 2025, compared to providing
$182.1 million in 2024, when the Company raised $144.3 million in capital contributions and borrowed $40.0 million under
existing credit facilities. No new material financing proceeds were received during 2025. Additionally, the depreciation of the Brazilian
Real against the U.S. dollar resulted in a non-cash foreign exchange loss on cash of $(60.3) million in 2025, compared to a positive
effect of $92.0 million in 2024, reflecting the significant portion of our cash balances held in BRL.
Material Cash Requirements and Contractual Obligations
As of December 31, 2025, our material known
cash requirements include: (i) the outstanding balance under our Credit Agreement with OMF Fund III (F) Ltd. of $107.3 million,
maturing December 31, 2029, bearing interest at 10% plus the greater of 3-month SOFR or 2%; (ii) Class A Preferred Shares
of $45.4 million, mandatorily redeemable on December 31, 2029, bearing a cumulative 10% return; (iii) royalty obligations
of $73.0 million, representing a perpetual 2.625% royalty on sales, with annual minimum payments commencing after the first sale
following March 31, 2026; (iv) lease obligations of $1.1 million; and (v) ongoing capital expenditures required to
complete the construction of the Project, which had $531.9 million of construction in progress as of December 31, 2025. The
Company expects to reach commercial production in 2027, and the remaining capital required to complete the Project is expected to be funded
primarily through the DFC Facility.
Sources of Liquidity
The primary source of funding for the completion
of the Project is the DFC Facility, a senior secured term loan facility of up to $565.0 million entered into with the DFC subsequent
to December 31, 2025, pursuant to an agreement signed on January 21, 2026. The DFC Facility provides for an initial tranche
of $465.0 million and an incremental tranche of $100.0 million, with a term of up to 12 years from first closing and quarterly
sculpted principal repayments (subject to a potential extension to 15 years upon satisfaction of certain conditions under the Offtake
Agreement). In addition, in January 2026, SVRE secured interim bridge funding of $24.0 million from its shareholders and $8.0 million
from OMF, providing near-term liquidity to support operations and construction activities pending the first drawdown under the DFC Facility.
Management believes that the proceeds from the DFC Facility, together with cash generated from operations as the Project ramps up toward
commercial production, will be sufficient to fund the completion of the Project and meet SVRE’s obligations as they come due. However,
there can be no assurance that the DFC Facility will be drawn in the amounts or on the timeline currently anticipated, or that additional
financing will not be required.
Cash Flows
The following table summarizes our cash flows for
the years ended December 31, 2025 and 2024:
Year Ended
December 31,
(All figures in thousands of U.S. dollars.)
2025
2024
Net cash provided by (used in)
Operating activities
(2,380 )
(189,001 )
Investing activities
(16,220 )
(45,676 )
Financing activities
(2,378 )
182,089
19
Operating Activities
Net cash used in operating activities was $(2.4)
million for the year ended December 31, 2025, compared to $(189.0) million for the year ended December 31, 2024, an improvement
of $186.6 million. The substantial reduction in operating cash outflows was primarily attributable to a significant narrowing of
the net loss, which decreased to $(18.5) million in 2025 from $(161.2) million in 2024. and a meaningful reduction in working capital
consumption. Inventory increase declined to $(28.5) million in 2025 from $(63.2) million in 2024, a reduction of $34.7 million, as
the Company more carefully managed production levels and expenditures to preserve liquidity. Accounts payable and accrued expenses provided
a cash inflow of $0.4 million in 2025, compared to a cash outflow of $(8.6) million in 2024, a favorable change of $8.1 million
driven by improved payment cycle management and the timing of vendor settlements.
Non-cash charges also contributed meaningfully to
the reconciliation between net loss and operating cash flows. Inventory impairment charges of $33.8 million in 2025, while lower
than the $47.8 million recorded in 2024, continued to represent a significant non-cash adjustment. Share-based compensation increase
to $8.2 million from $7.4 million in the prior year primarily due to an increase in recognition of expenses related to stock
appreciation rights (SARS) awards. Recoverable taxes were $(2.2) million in 2025 compared to $(0.2) million in 2024, driven by the timing
of tax credit recoveries in Brazil.
Investing Activities
Net cash used in investing activities was $(16.2)
million for the year ended December 31, 2025, compared to $(45.7) million for the year ended December 31, 2024, a reduction
of $29.5 million. The decrease reflects a deliberate phasing of construction expenditures at the Project to preserve liquidity while
the DFC Facility — which closed in March 2026 — was being finalized. Despite the lower pace of spending,
the Project continued to advance materially, with construction in progress growing from $418.7 million at December 31, 2024
to $531.9 million at December 31, 2025. Capital expenditures remain the sole driver of investing cash outflows in both periods,
underscoring the Company’s development stage profile.
Financing Activities
Net cash used in financing was $2.4 million
for the year ended December 31, 2025 versus net cash provided of $182.1 million for the year ended December 31, 2024. $184.8 million
of debt and equity proceeds were received in the year ended December 31, 2024 while no financing proceeds were received in the year
ended December 31, 2025.
Effect of Exchange Rate Changes on Cash
The effect of foreign exchange movements on cash
and cash equivalents was $(60.3) million for the year ended December 31, 2025, compared to a positive effect of $92.0 million
for the year ended December 31, 2024. Because we hold a significant portion of our cash in BRL, and SVRE’s reporting currency
is the U.S. dollar, movements in the BRL/USD exchange rate have a direct impact on the reported U.S. dollar value of cash and
cash equivalents.
In 2025, the appreciation of the BRL against the U.S. dollar resulted
in a significant reduction in the U.S. dollar equivalent of BRL-denominated cash balances. This line item is expected to remain material
and volatile as long as SVRE maintains significant BRL-denominated cash balances.
Debt and Financing Obligations
The following summarizes SVRE’s material financing
obligations as of December 31, 2025:
OMF Credit Agreement
On October 21, 2021, the Company entered into
a credit agreement with OMF Fund II (BC) Ltd. and affiliated lenders (the “OMF Credit Agreement”), establishing a senior secured
non-revolving facility that accrues interest at 9% per annum plus the greater of (i) 3 months SOFR plus 26.161 basis points
and (ii) 2%, per annum. In 2025, the OMF Credit Agreement was amended to extend the maturity date to December 31, 2029, as well
as the annual rate was modified to 10%, plus the greater of (i) three-month SOFR and (ii) 2% per annum. As of December 31,
2025, the outstanding balance under the OMF Credit Agreement, including accrued interest, was $107.3 million. Interest accrued under
the OMF Credit Agreement has been added to the principal balance. The OMF Credit Agreement is secured by the assets of the Company and
its subsidiaries. The outstanding balance of the OMF Credit Agreement was fully repaid on March 6 , 2026 with proceeds from the DFC
Facility.
20
OMF Royalty Agreement
On October 21, 2021, the Company entered into
a royalty rights agreement (as amended, the “OMF Royalty Agreement”) with OMF Fund II (F) Ltd. (who subsequently
transferred all of its rights, title, liabilities, obligations and interests under the OMF Royalty Agreement to OMF Fund III (Cr)
Ltd.) and TMF Canada Inc., as collateral agent. The OMF Royalty Agreement provides for the sale of royalties’ rights, over future
cash flows originated from sale or other disposal of products extracted and recovered from the Project in exchange for a payment of US$
40,000 in two tranches. The Royalty Rate on each tranche is 2.625%, subject to a decrease upon certain milestones to 2.375%. As of December 31,
2025, the total OMF Royalty Agreement liability was $73.0 million, of which $5.8 million is classified as current and $67.3 million
is classified as non-current.
OMF Class A Preferred Shares Liability
The Company’s Class A preferred shares
are classified as a financial liability on the balance sheet. As of December 31, 2025, the Class A preferred shares liability
had a carrying value of $45.4 million. The Class A preferred shares accrue dividends/interest at a rate of 10% per annum, and
the mandatory redemption date has been extended to December 31, 2029. The Class A preferred shares were redeemed on March 6,
2026 with proceeds from the DFC Facility. Together with the settlement in full of the OMF Credit Agreement, SVRE’s obligations — representing
an aggregate carrying value of approximately $152.7 million as of December 31, 2025 — were extinguished. These transactions
represent a significant change in SVRE’s capital structure and debt obligations following the balance sheet date.
Former Caterpillar Supplier Financing
During 2025, SVRE settled in full its outstanding
obligations under an equipment financing arrangement with Caterpillar Financial Services. Accordingly, the balance outstanding under this
arrangement was zero as of December 31, 2025.
Refer to Note 24 to the Consolidated Financial
Statements and “Recent Developments” above for information regarding financial obligations entered by SVRE subsequent to December 31,
2025.
Capital Expenditures
Capital expenditures during the year ended December 31,
2025 consisted primarily of continued construction of the Project, as reflected in the growth of construction in progress from $418.7 million
at December 31, 2024 to $531.9 million at December 31, 2025. Total property, equipment and other tangible assets, net,
were $559.5 million as of December 31, 2025, compared to $444.9 million as of December 31, 2024. We expect to continue
making significant capital expenditures as we complete construction of the Project. The quantum and timing of future capital expenditures
will depend on Project progress, construction costs, and the availability of funding under the DFC Facility and other financing arrangements.
The DFC Facility, providing for up to $565.0 million in borrowings, has been structured to fund the remaining capital requirements
to bring the Project to commercial production, which we currently expect to occur in 2027. We cannot guarantee that the Project will be
completed on time or on budget, or that the financing provided by the DFC Facility will be sufficient to fund all remaining capital requirements.
Critical Accounting Estimates
Our Consolidated Financial Statements have been
prepared in accordance with U.S. Generally Accepted Accounting Principles. The preparation of these Consolidated Financial Statements
requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures.
We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances.
We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from these estimates. To the extent that there
are material differences between these estimates and our actual results, our future financial statements will be affected. We consider
an accounting judgment, estimate or assumption to be critical when (i) the estimate or assumption is complex in nature or requires
a high degree of judgment and (ii) the use of different judgments, estimates and assumptions could have a material impact on our
Consolidated Financial Statements. Our significant accounting policies are described in Note 3, “Significant Accounting Policies,”
in the notes to the Consolidated Financial Statements. Our critical accounting estimates are described below.
Inventories
All inventories are carried at the lower of cost
or net realizable value. Net realizable value represents the estimated selling price of the product in the ordinary course of business
based on current and long-term metals market prices, less reasonably predictable costs of completion, disposal, and transportation.
We evaluate the carrying amount of inventory each
reporting period, considering recent and expected metals market prices, forecasted production levels, and other relevant factors. This
evaluation requires significant judgment, particularly given the pre-commercial production stage of our operations, during which production
costs and market price fluctuations can materially affect the net realizable value of our products.
21
Although considerable effort is made to ensure the
accuracy of our forecasts, any significant unfavorable changes in commodity prices, demand, or cost assumptions could have a material
negative impact on the value of our inventories and our results of operations. We may continue to incur write-downs of our inventories
until such time that we achieve commercial production at anticipated throughput levels.
See Note 4, “Inventories,” in the
notes to the Consolidated Financial Statements for further information.
Mineral Properties and Mine Development
We capitalize mine development costs upon completion
of a final feasibility study, when it has been determined that a mineral property can be economically developed. Capitalized mine development
costs are amortized using the units-of-production method over the estimated life of the ore body, based on recoverable minerals to be
mined from proven and probable mineral reserves.
This method requires significant judgment and estimation,
including the assessment of the quantity and quality of proven and probable mineral reserves, expected future production rates, and the
total estimated costs to develop and extract those reserves. Reserve estimates are inherently uncertain and are based on geological data,
engineering assessments, commodity price assumptions, and operating cost projections.
Changes in reserve estimates are recognized prospectively
and could materially affect the amortization rate and the carrying value of our mineral properties. Any significant revision to our reserve
estimates, production assumptions, or the assessed economic viability of the project could result in material adjustments to our financial
statements.
See Note 6, “Property and Equipment,
net,” in the notes to the Consolidated Financial Statements for further information.”
Asset Retirement Obligations (“ARO”)
We recognize asset retirement obligations for estimated
costs of legally and regulatory required closure, dismantlement, and reclamation activities associated with our mining operations, including
general mine closure, drainage, residue dump, facilities decommissioning, and environmental rehabilitation.
In determining fair value, management makes estimates
based on the expected timing of closure activities, the estimated cost of such activities as determined with the assistance of an independent
engineering contractor, and a risk-free discount rate reflecting current market assessments of the time value of money. The ARO liability
is subsequently increased each period through accretion expense to reflect the passage of time.
Although we base our estimates on independent engineering
assessments and reevaluate our estimated timing and cash flows regularly, the inherent uncertainty in predicting future closure costs,
regulatory requirements, and the long-term nature of our mining operations means these estimates are subjective and may vary over time.
See Note 14, “Asset Retirement Obligations,”
in the notes to the Consolidated Financial Statements for further information.
22
Private Placement Warrant Liability
Our private placement warrants are classified as
liabilities and remeasured at fair value at each reporting date, with changes in fair value recognized in the Consolidated Statements
of Operations. The fair value is determined using a Monte Carlo simulation model, which is classified as a Level 3 measurement within
the fair value hierarchy, as it relies on significant unobservable inputs.
The model incorporates key assumptions including
the Company’s share price, expected volatility, risk-free interest rate, expected term, and management’s estimates of the
probability and timing of a Triggering Event — defined as a Public Offering, Investor Qualified Sale, or Company Sale.
The warrants are only exercisable upon the occurrence of such a Triggering Event, and the timing of that event is modeled using a Poisson
distribution based on management’s judgment.
Expected volatility is estimated based on the historical
volatility of a select group of peer companies, and the risk-free rate is derived from the Brazilian Treasury zero-coupon yield curve
for a maturity consistent with the expected remaining life of the warrants. Given the reliance on significant unobservable inputs, changes
in assumptions — particularly with respect to share price volatility, the risk-free rate, and the estimated probability
and timing of a Triggering Event — could result in material fluctuations in the fair value of the warrant liability and
the related gains or losses recognized in our Consolidated Statements of Operations.
See Note 16, “Private Placement Warrant
Liability,” in the notes to the Consolidated Financial Statements for further information.
Royalty Agreement
The royalty agreement is accounted for as a debt
instrument in accordance with ASC 470 — Debt (Sales of Future Revenues), and is measured using the effective interest
method. Under this method, the carrying value of the royalty liability is determined based on the present value of estimated future royalty
payments over the life of the agreement.
Because the royalty is perpetual and based on a
percentage of future product revenues, the measurement of the liability requires significant judgment and estimation, including assumptions
regarding future production volumes, the timing of commercial production, long-term commodity prices, and the applicable discount rate.
The expected timing of the commencement of minimum annual royalty payments, which are triggered after the first product sale, also requires
management judgment and directly affects the measurement of the liability.
These estimates are reviewed at each reporting period,
and changes in estimated future cash flows are recognized prospectively through an adjustment to the effective interest rate. Given the
long-term and perpetual nature of the royalty obligation, changes in production, pricing, or timing assumptions could have a material
impact on the carrying value of the royalty liability and the related interest expense recognized in our Consolidated Statements of Operations.
See Note 11, “Royalty Agreement,”
in the notes to the Consolidated Financial Statements for further information.
Quantitative and Qualitative Disclosures About Market Risk
Foreign Currency Exchange Rate Risk
We will generate revenue primarily in U.S. dollars.
However, our operations are conducted in Brazil, and we incur a significant portion of our operating costs in BRL, including labor, local
reagents, utilities, and other site-level expenditures. We are therefore exposed to fluctuations in the BRL/USD exchange rate. A strengthening
of the BRL relative to the USD would increase our operating costs in USD terms, which could adversely affect our margins and results of
operations. We also incur costs and obligations denominated in Swiss Francs (“CHF”). Fluctuations in the CHF/USD exchange
rate may affect the USD cost of these obligations. We use certain hedging instruments to manage our exposure to foreign currency risk. To
the extent our foreign currency exposures become more material, we may enter into additional hedging transactions to manage our exposure
to fluctuations in foreign currency exchange rates. The economic impact of currency exchange rate movements is often linked to variability
in real growth, inflation, interest rates, governmental actions, and other factors. We continue to evaluate the need for additional currency-specific
protections as our business and the market evolve.
23
Interest Rate Risk
DFC Loan Facility
On January 21, 2026, we entered into the DFC
Facility. The DFC Facility bears interest at variable rates exposing us to interest rate risk. An increase in prevailing interest rates
could increase our interest expense and adversely affect our cash flows and results of operations.
Cash Equivalents and Short-Term Investments
Our cash equivalents and short-term investments
are subject to market risk due to changes in interest rates. Fixed-rate securities may have their market value adversely affected by a
rise in interest rates. Due in part to these factors, our future investment income may fall short of expectations due to changes in interest
rates, or we may suffer losses in principal if we are forced to sell securities that have declined in market value. We have not historically
entered into investments for trading or speculative purposes.
Commodity Price Risk
Our results of operations depend in significant
part upon the market prices of REEs, and particularly the prices of the four magnetic REEs — neodymium (Nd), praseodymium
(Pr), dysprosium (Dy), and terbium (Tb) — which together with yttrium (Y) represent the most significant portion
of the economic value of our primary commercial product, MREC. Our MREC is an intermediate REE product produced from our ionic clay
deposit in the municipality of Minaçu, Goiás, Brazil, and contains all four magnetic REEs at commercially meaningful grades.
MREC is not quoted on any major commodities market or exchange. Product attributes vary significantly across producers, and pricing for
Nd, Pr, Dy, and Tb contained in MREC is primarily benchmarked against prices for corresponding separated oxides. We expect demand for
these four REEs to continue to grow, driven by the global energy transition and increasing adoption of permanent magnet motors in electric
vehicles, wind turbines, robotics, and aerospace and defense applications. However, actual demand and pricing may fluctuate for numerous
reasons beyond our control, including supply from other producers, new mineral discoveries, technological changes that may increase or
reduce reliance on magnetic REEs for permanent magnets, shifts in demand, and actions by governments. Supply and demand dynamics for other
oxides and their applications might also affect our economics.
SVRE has entered into the Offtake Agreement, which
is expected to significantly mitigate the risks of commodity price fluctuations associated with our magnetic REE products by guaranteeing
minimum prices of $110 per kg for Nd and Pr, $550 per kg for Dy, and $2,050/kg for Tb oxide equivalents sold under the Offtake Agreement.
This arrangement is expected to allow SVRE to realize a more stable effective price for its magnetic REE products, with limited exposure
to price declines. The Offtake Agreement covers 100% of SVRE’s qualifying magnetic REE output, as well as other REEs under certain
circumstances, providing a meaningful measure of certainty with respect to our medium- and longer-term cash flows.
MREC is an intermediate product and we do not currently
produce separated oxides at commercial scale. The realized price for our MREC is therefore derived from the blended value of its constituent
REE fractions, and is subject to discounts applied relative to the price of the separated products by adjusting for separation costs and
recovery yields. As we evaluate downstream processing options, including potential separation capabilities, our exposure to individual
REE commodity prices may evolve.
The reagents used in our ion exchange circuit are
commodity inputs subject to price volatility caused by supply conditions, weather, transportation costs, and other unpredictable factors.
We have not historically used options or swap contracts to manage commodity price volatility related to reagent inputs. When possible,
we seek to limit our exposure by entering into long-term supply contracts and negotiating price increase limitations.
We rely on power supplied under a Power Purchase
Agreement (“PPA”). There are two nearby hydroelectric plants in the Tocantins River basin. Hydroelectric availability is
subject to rainfall and drought risk. While our PPA provides pre-agreed pricing, any disruption to power supply could require us to source
power from alternative, more expensive sources. Such price fluctuations may cause volatility in our results of operations and cash flows
in the future.
24
GOVERNMENT
SUPPORT AND FINANCING
USAR and SVRE are party to, or expect to enter into,
the following government-related financing and offtake arrangements, each of which is relevant to the consummation of the Merger.
The Retained Finance Agreement
On January 21, 2026, SVRE entered into a Finance
Agreement with the DFC, which was amended on March 5, 2026 (as further amended from time to time, the “Retained Finance Agreement”).
The Retained Finance Agreement provides SVRE with a long-term debt financing to support the debottlenecking and optimization of its rare
earth mining and processing operations in an aggregate committed amount not to exceed $565 million, consisting of (i) an initial
loan tranche with a principal amount not to exceed $465 million and (ii) a second loan tranche with a principal amount not to
exceed $100 million (the “Incremental Loan”). As of March 31, 2026, the aggregate outstanding principal amount of
indebtedness of SVRE and its subsidiaries under the Retained Finance Agreement was approximately $325 million. The Incremental Loan
is required to be fully disbursed prior to the closing of the Merger.
In connection with the Retained Finance
Agreement, upon the disbursement of the Incremental Loan the DFC will hold warrants to purchase ordinary shares of SVRE, which
warrants will be automatically exercised immediately prior to the closing. As a condition to the disbursement of the Incremental
Loan, SVRE and the DFC will enter into a side letter (the “DFC Side Letter”) pursuant to which the DFC will have the
right to nominate (i) a director to the board of directors of Merger Sub, and (ii) an observer to attend all meetings of
the board of directors of Merger Sub, which appointments, if made, are conditions to USAR’s obligation to complete the
Merger.
The transactions contemplated by the Merger Agreement
require certain consents, amendments or waivers under the Retained Finance Agreement, including (i) the release of the SVRE securityholders
from an equitable share mortgage granted in favor of the DFC over certain SVRE shares, and (ii) the consent from the DFC to permit
the transactions contemplated by the Merger Agreement under the Retained Finance Agreement. As a condition to providing such consents,
the DFC may require the surviving company to assume SVRE’s obligations under the Retained Finance Agreement and to maintain or re-create
the related security interests. At this time, the DFC has not requested that USAR nor any of its subsidiaries (other than Merger Sub and
its subsidiaries) provide guarantees, pledges, purchase rights or other credit support in connection with such consents.
The Offtake Agreement and Related Call Option Agreement
On April 20, 2026, SV Management
Switzerland AG (“SV Management Switzerland”), a subsidiary of SVRE, entered into an offtake agreement with a special
purpose vehicle capitalized by the U.S. government and private capital sources (the “Counterparty”) (as amended from time to time,
the “Offtake Agreement”) for the long-term supply of rare earth materials produced by SVRE.
The Offtake Agreement contemplates the sale and purchase of 100% of
the rare earth payable products produced by SVRE from the first phase of operations at the Pela Ema project, subject to limited carve-outs.
SVRE’s obligation to deliver the full annual contract quantity is contingent on the full disbursement of the Incremental Loan by
an agreed date; if the Incremental Loan is not so disbursed, SVRE’s delivery obligation reduces from 100% to 75% of the first phase
of operations at the Pela Ema project. The Offtake Agreement provides for a term ending on the earlier of (i) the date on which deliveries
by SV Management Switzerland equal the rare earth products produced from 198,000,000 metric tons of run-of-mine ore and (ii) the
date that is 20 years after the date on which SVRE’s facility becomes capable of producing the contemplated products (the “Commercial
Operations Date”), with mutually agreed extensions subject to the consent of the U.S. government. The purchase price for the
principal payable rare earth elements is determined on the basis of contractual floor prices, escalated by 2% annually, with 70% of the
excess of the prevailing market index price over the applicable floor price payable to SV Management Switzerland and certain cost savings
and yield variances allocated 70% to SV Management Switzerland and 30% to the Counterparty. Prior to the Commercial Operations Date, SV
Management Switzerland is required to offer to the counterparty all rare earth products available for sale, and the Counterparty is obligated
to purchase such products subject to agreement on the terms and conditions for such sale. The commencement of deliveries under the Offtake
Agreement is subject to the satisfaction or waiver of certain conditions precedent by an agreed long-stop date, June 12, 2026, including
the execution of the Call Option Agreement, the receipt by the Counterparty of specified financial support from the U.S. government, confirmation
that the Retained Finance Agreement is in place and confirmation by the U.S. government that SVRE is not owned or controlled by restricted
persons; if the conditions precedent are not satisfied or waived by such date, either party may terminate the Offtake Agreement without
liability.
25
In connection with the Offtake Agreement, SVRE, the SVRE securityholders
and the Counterparty have agreed to enter into a related call option agreement, to be dated on or before the closing date (as amended
from time to time, the “Call Option Agreement”).
Pursuant to the Call Option Agreement, upon
the occurrence of certain specified triggering events, including, among others, the insolvency or bankruptcy of SV Management Switzerland
or its mining subsidiary (subject to a carve-out where certain U.S. government entities are lenders), the voluntary cessation of
all or substantially all of the mining operations at the project site for 60 or more consecutive days, breaches by SV Management
Switzerland of certain obligations under the Offtake Agreement (including the change of control and assignment provisions), and events
of default under new approved lender financing documents, the Counterparty shall have the option to purchase all (but not less than all)
of the equity interests in SVRE held by each SVRE securityholder party to the Call Option Agreement. The purchase price would be equal
to the fair market value of the equity interests, as determined by a panel of three independent experts. The Call Option Agreement restricts
transfers of SVRE equity interests by the SVRE securityholders to certain third parties without the Counterparty’s prior written
consent and automatically terminates upon the earliest of (i) the closing of the sale of equity interests thereunder, (ii) with
respect to any SVRE securityholder party, the date on which such shareholder no longer holds any equity interests in SVRE due to a permitted
transfer, or (iii) the termination of the Offtake Agreement, subject to a 180-day survival period if the Offtake Agreement is terminated
by the Counterparty following a fundamental seller default. The consummation of the Merger requires the receipt of certain consents,
amendments or waivers under each of the Offtake Agreement and the Call Option Agreement, including the release of the SVRE securityholders
from the Call Option Agreement. It is anticipated that neither USAR nor any of its subsidiaries (other than Merger Sub and its subsidiaries)
will be required to provide guarantees, pledges, purchase rights or other credit support in connection with such consents.
The Parent Loan Agreement
On January 26, 2026, USAR entered into
a letter of intent with the U.S. Department of Commerce (the “DOC”) setting forth the principal terms on which USAR
expects to enter into a long-term financing package with the DOC to support the development of USAR’s domestic rare earth and
magnet supply chain, including the Round Top Mountain heavy rare earth elements deposit and USAR’s Stillwater magnet
manufacturing facility. The financing is intended to reimburse USAR for capital expenditures incurred in connection with such
development. The letter of intent contemplates that USAR and the DOC will enter into (i) a direct funding agreement among USAR,
the subsidiary guarantors party thereto from time to time and the DOC, (ii) a loan guarantee agreement among USAR, the
subsidiary guarantors party thereto from time to time and the DOC and (iii) a note purchase agreement among USAR, the Federal
Financing Bank and the Secretary of Commerce (collectively, the “Parent Loan Agreement”).
The Parent Loan Agreement had not been entered into
as of the date of the Merger Agreement. USAR expects to enter into the Parent Loan Agreement on terms consistent with the letter of intent
prior to the closing of the Merger; however, the completion of the Parent Loan Agreement is subject to conditions precedent and final
government approvals outside USAR’s control, and there can be no assurance that the Parent Loan Agreement will be entered into on
the anticipated terms, on the anticipated timeline, or at all. If the Parent Loan Agreement has been entered into prior to the closing,
the consummation of the Merger requires the receipt of any consents, amendments or waivers required thereunder in connection with the
transactions contemplated by the Merger Agreement.
The Royalty Agreements
SVRE is party to two royalty agreements with affiliates
of Orion Mine Finance: (i) an amended and restated royalty agreement dated as of July 11, 2022, among SVRE, as grantor, the other
royalty parties named therein, OMF Fund III (CR) Ltd., as royalty holder, and TMF Canada Inc., as collateral agent (as amended, supplemented
and/or otherwise modified from time to time, the “Non-Buyback Royalty Agreement”), and (ii) a royalty agreement (buyback)
dated as of August 15, 2023, among SVRE, as grantor, the other royalty parties named therein, OMF Fund III (F) Ltd. (“OMF F”),
as royalty holder, and TMF Canada Inc., as collateral agent (as amended, supplemented and/or otherwise modified from time to time, the
“Buyback Royalty Agreement” and, together with the Non-Buyback Royalty Agreement, the “Royalty Agreements”). Under
the Royalty Agreements, SVRE has granted to the applicable royalty holders a perpetual royalty interest at a royalty rate of 5.25% (in
the aggregate) in respect of all products extracted and recovered from the Serra Verde rare earths projects located in Brazil.
In connection with the transactions contemplated
by the Merger Agreement, the parties to the Royalty Agreements amended each Royalty Agreement to, among other things, add a definition
of “Permitted Transaction” to permit the Merger, exempt the Merger from the general prohibition on Transfers, and add USAR
to the schedule of additional holders. As a condition to providing such amendments to the Royalty Agreements, Orion Mine Finance will
require the surviving company to assume SVRE’s obligations under the Royalty Agreements and to maintain or re-create the related
security interests.
Concurrently with the execution of the Merger Agreement,
SVRE and OMF F entered into a payout letter to the side letter, dated as of March 5, 2026, between SVRE and OMF F (the “Orion Side
Letter”), which provided OMF F a right to receive a Post-Optimal Redemption Payment (as defined under the Orion Side Letter). Pursuant
to such payout letter, OMF F confirmed that once the Post-Optimal Redemption Payment is received, SVRE’s obligation under the Orion
Side Letter will be satisfied.
26
EX-99.3 — AUDITED FINANCIAL STATEMENTS OF SVRE HOLDINGS LTD. FOR THE YEARS ENDED DECEMBER 31, 2025 AND 2024
EX-99.3
Filename: ea029029301ex99-3.htm · Sequence: 5
Exhibit 99.3
Audited Financial Statements of SVRE Holdings
Ltd.
INDEX
TO FINANCIAL STATEMENTS OF SVRE
Audited
Consolidated Financial Statements for SVRE Holdings Ltd.
for the Years Ended December 31, 2025 and 2024
Page
Report of Independent Auditors
F-2
Consolidated Balance Sheets
F-4
Consolidated Statements of Operations
F-5
Consolidated Statement of Comprehensive Loss
F-6
Consolidated Statements of Changes in Stockholders’ Equity
F-7
Consolidated Statement of Cash Flows
F-8
Notes to the Consolidated Financial Statements
F-9
F-1
Report of Independent Auditors
To the Board of Directors
Opinion
We have audited the accompanying consolidated financial
statements of SVRE Holdings Ltd. and its subsidiaries (the “Company”), which comprise the consolidated balance sheets as of
December 31, 2025 and 2024, and the related consolidated statements of operations, of comprehensive loss, of changes in stockholders’
equity and of cash flows for the years then ended, including the related notes (collectively referred to as the “consolidated
financial statements”).
In our opinion, the accompanying consolidated financial
statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and
the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted
in the United States of America.
Basis for Opinion
We conducted our audit in accordance with auditing
standards generally accepted in the United States of America (US GAAS). Our responsibilities under those standards are further described
in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are required
to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements
relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Responsibilities of Management for the Consolidated Financial Statements
Management is responsible for the preparation and
fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States
of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation
of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements,
management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about
the Company’s ability to continue as a going concern for one year after the date the consolidated financial statements are available
to be issued.
Auditors’ Responsibilities for the Audit of the Consolidated
Financial Statements
Our objectives are to obtain reasonable assurance
about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and
to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance
and therefore is not a guarantee that an audit conducted in accordance with US GAAS will always detect a material misstatement when it
exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered
material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable
user based on the consolidated financial statements.
F-2
In performing an audit in accordance with US GAAS,
we:
● Exercise professional judgment and maintain professional
skepticism throughout the audit.
● Identify and assess the risks of material misstatement of
the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks.
Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.
● Obtain an understanding of internal control relevant to the
audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion
on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed.
● Evaluate the appropriateness of accounting policies used
and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated
financial statements.
● Conclude whether, in our judgment, there are conditions or
events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for
a reasonable period of time.
We are required to communicate with those charged
with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal
control-related matters that we identified during the audit
/s/ PricewaterhouseCoopers Auditores Independentes Ltda.
Goiânia – GO, Brazil
May 12, 2026
F-3
SVRE Holdings Ltd.
Consolidated balance sheets
As of December 31,
2025 and 2024
All amounts in thousands of US dollars (except share and per share data)
Note
2025
2024
Assets
Current assets:
Cash and cash equivalents
2,556
79,162
Accounts receivable
80
6
Other receivables
—
124
Inventories
4
18,566
14,854
Recoverable taxes
2,881
718
Other current assets
5
1,455
2,241
Total current assets
25,538
97,105
Non-current assets:
Property and equipment, net
6
559,528
444,876
Intangible assets
7
6
Right-of-use assets
1,170
1,739
Deferred financing costs
10.3
4,031
—
Other non-current assets
160
163
Total non-current assets
564,896
446,784
Total assets
590,434
543,889
Liabilities
Current liabilities:
Accounts payable and accrued expenses
7
17,081
12,021
Related parties
—
170
Salaries and social charges
8
6,378
5,420
Taxes payable
1,029
1,158
Loans and financing
10.1
—
343
Current portion of long-term leases
960
1,074
Royalty agreement
11
5,769
156
Other current liabilities
809
1,122
Total current liabilities
32,026
21,464
Non-current liabilities:
Class A preferred shares
12
45,377
41,109
Royalty agreement
11
67,258
55,302
Credit agreement
10.2
107,262
93,007
Asset retirement obligations
14
4,423
3,721
Long-term leases, less current portion
324
760
Provision for contingencies
13
1,449
45
Private placement warrants liability
16
8,625
973
Total non-current liabilities
234,718
194,917
Total liabilities
266,744
216,381
Stockholder’s equity
18
Ordinary shares – 96,714,286 – issued outstanding, without par values.
—
—
Class A ordinary shares – 96,714,285.71 – issued outstanding, without par values.
—
—
Additional paid capital
614,383
606,134
Accumulated other comprehensive loss
(31,111 )
(37,576 )
Accumulated deficit
(259,582 )
(241,050 )
Total stockholder’s equity
323,690
327,508
Total liabilities and stockholder’s equity
590,434
543,889
The accompanying notes are an integral part of
these consolidated financial statements.
F-4
SVRE Holdings Ltd.
Consolidated statements of operations
For the years ended December 31, 2025 and 2024
All amounts in thousands of US dollars, except per share amount
Note
2025
2024
Revenue
19
2,486
214
Costs of sales
(36,105 )
(53,673 )
Total gross margin
(33,619 )
(53,459 )
General and administrative expenses
20
(25,803 )
(25,772 )
Other expenses, net
(1,440 )
(104 )
Total operating expenses
(27,243 )
(25,876 )
Operating loss
(60,862 )
(79,335 )
Financial income
21
2,671
3,119
Financial expenses
21
(9,873 )
(1,285 )
Foreign currency exchange, net
49,532
(93,651 )
Loss before income taxes
(18,532 )
(171,152 )
Deferred tax income
15
—
9,943
Net loss
(18,532 )
(161,209 )
Net loss per share attributable to SVRE Holdings Ltd.
Basic and diluted loss per share
(0.10 )
(1.25 )
Weighted-average shares outstanding:
Basic and diluted
193,428,571.42
128,149,622.22
The accompanying notes are an integral part of
these consolidated financial statements.
F-5
SVRE Holdings Ltd.
Consolidated statement of comprehensive loss
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars
2025
2024
Net loss
(18,532 )
(161,209 )
Other comprehensive loss
Foreign currency translation adjustment
6,465
(24,509 )
Total comprehensive loss
(12,067 )
(185,718 )
The accompanying notes are an integral part of
these consolidated financial statements.
F-6
SVRE Holdings Ltd.
Consolidated statements of changes in stockholders’ equity
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars
Ordinary shares
Class ordinary shares
Class B ordinary shares
Additional
paid in
Accumulated
Accumulated
other
comprehensive
Total
stockholder’s
Quantity
Amount
Quantity
Amount
Quantity
Amount
capital
deficit
loss
equity
Balance as of January 01, 2024
111,428,571.42
—
—
—
—
—
441,554
(79,841 )
(13,067 )
348,646
Capital contribution, net of issuance cost
—
48,000,000.00
—
3,928,571.43
—
144,344
—
—
144,344
Conversion of shares
(14,714,285.71 )
48,714,285.71
(3,928,571.43 )
—
—
—
—
—
Share-based compensation
—
—
—
—
—
—
7,436
—
—
7,436
Dividend in kind
—
—
—
—
—
—
12,800
—
—
12,800
Net loss
—
—
—
—
—
—
—
(161,209 )
—
(161,209 )
Foreign currency translation adjustment
—
—
—
—
—
—
—
—
(24,509 )
(24,509 )
Balance as of December 31, 2024
96,714,285.71
—
96,714,285.71
—
—
—
606,134
(241,050 )
(37,576 )
327,508
Share-based compensation
—
—
—
—
—
—
8,249
—
—
8,249
Net loss
—
—
—
—
—
—
—
(18,532 )
—
(18,532 )
Foreign currency translation adjustment
—
—
—
—
—
—
—
—
6,465
6,465
Balance as of December 31, 2025
96,714,285.71
—
96,714,285.71
—
—
—
614,383
(259,582 )
(31,111 )
323,690
The accompanying notes are an integral part of
these consolidated financial statements.
F-7
SVRE Holdings Ltd.
Consolidated statement of cash flows
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars
Note
2025
2024
Cash flows from operating activities:
Net loss
(18,532 )
(161,209 )
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
1,790
2,082
Depreciation of right of use assets
1,041
1,138
Provision for contingencies
13
1,398
(1,909 )
Sundry interest incurred
898
666
Accretion expense – ARO
14
278
223
Deferred taxes
15
—
(9,943 )
Deferred financing costs
(4,031 )
—
Gain (loss) on fair value change in private placement warrants liability
16
7,652
(2,637 )
Inventory impairment
4
33,774
47,818
Disposal of property, plant and equipment
(177 )
Share-based compensation
8,249
7,436
Changes in operating assets and liabilities
Recoverable taxes
(2,163 )
(173 )
Inventories
4
(28,541 )
(63,204 )
Other current assets
5
789
(64 )
Accounts receivable
(74 )
(6 )
Other receivables
124
(124 )
Accounts payable and accrued expenses
7
424
(8,555 )
Salaries and social charges
8
(390 )
173
Taxes payable
(129 )
(713 )
Net cash used in operating activities
2,380
(189,001 )
Cash flows from investing activities:
Acquisition of property and equipment
(16,220 )
(45,678 )
Intangible assets
—
2
Net cash used in investing activities
(16,220 )
(45,676 )
Cash flows from financing activities:
Capital contributions
18
—
144,344
Lease payments
(1,233 )
(1,138 )
Proceeds of credit agreement net of issuance costs
10.2
—
39,982
Royalty payments
11
(95 )
(9 )
Payment of principal suppliers financing
10.1
(343 )
(683 )
Payment of interest cost overrun commitment
10.2
(700 )
(364 )
Payment of interest
10.1
(7 )
(43 )
Net cash used in financing activities
(2,378 )
182,089
Exchange rate difference on cash and cash equivalents
(60,388 )
92,049
Net increase (decrease) in cash and cash equivalents
(76,606 )
39,461
Cash and cash equivalents at beginning of year
79,162
39,701
Cash and cash equivalents at end of year
2,556
79,162
The accompanying notes are an integral part of
these consolidated financial statements.
F-8
SVRE Holdings Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars unless otherwise stated
1 Description
of the organization and business operations (development)
SVRE Holdings Ltd., a British Virgin Islands (“BVI”)
company limited by shares incorporated on December 21, 2018, collectively with its subsidiaries (the “Company”, “SVRE”,
“we”, “our” or “us”) are developing Pela Ema (the “Project”), one of the largest known
ionic-clay Rare Earth Element (“REE”) deposit outside of Asia.
The Project is located in Minaçu, an established mining
area in central Brazil in the state of Goiás, a traditional mining district with well-developed and mature infrastructure, including
roads and highway systems with easy access to oceanic ports, telecommunications, services, labor, and an abundant water supply. SVRE has
access to a workforce from the nearby town of Minaçu and mine operations are close to existing transport, renewable power, water
and other infrastructure. The Project also benefits from a large, long-life deposit containing an elevated proportion of high value heavy
and light REEs, including neodymium (Nd), praseodymium (Pr), terbium (Tb) and dysprosium (Dy), that are key to permanent magnet production
as well as applications in the automotive, energy, aerospace and defense, robotics, healthcare, and other critical industries.
SVRE has secured all permits required for the Project, which
is designed to produce a Mixed Rare Earth Carbonate (“MREC”). As of December 31, 2025, the Project remains in the development
stage and has not yet achieved the milestones necessary to be considered operational. We are currently implementing an expansion and optimization
project that we expect will result in higher production capacity, a sustained lower operating cost profile and enhanced product quality.
We expect to complete construction and commence commercial operations in 2027.
2 Presentation of the consolidated financial statements
The consolidated financial statements were prepared in accordance
with accounting principles generally accepted in the United States of America (“US GAAP”). These consolidated financial
statements comprise the financial statements of the Company. These consolidated financial statements have been prepared on a historical
cost basis except for financial instruments that have been measured at fair value.
(a) Basis of presentation
The accompanying consolidated financial statements have been
prepared on the basis that the Company will continue as a going concern, which assumes that the Company will be able to meet its obligations
and continue its operations for a period of one year after the date the financial statements are issued or are available to be issued.
Management believes that the going concern assumption is appropriate
for these financial statements based on its continuing ability to raise financings through equity and debt issuances, including financial
support obtained from its stockholders until the Company achieves production and sales levels that allow it to fund operations without
the need for financings.
(b) Functional and presentation currency
The United States Dollar (U.S. dollar) is the functional
currency of the Company. The functional currencies of the Company’s international subsidiaries are the local currency of the country
in which the subsidiary is located. For US GAAP purposes, the Company has elected to use the U.S. dollar as its reporting currency,
as it believes such presentation is more meaningful to readers. These consolidated financial statements are presented in U.S. dollar,
except where otherwise indicated.
F-9
SVRE Holdings Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars unless otherwise stated
2 Presentation
of the consolidated financial statements (cont.)
(c) Use of judgement, estimates and assumptions
The preparation of the consolidated financial statements,
in conformity with US GAAP requires management to make estimates, assumptions and judgments that affect reported amounts of assets, liabilities,
revenues, and expenses. Actual results may differ from such estimates. Estimates where there is potential risk of material adjustments
to assets and liabilities in future accounting periods include the useful lives of property and equipment, the recoverability of the carrying
value of property and equipment, fair value measurements for financial instruments, discount rates for leases, the recoverability and
fair value of financial instruments and measurement of deferred tax assets and contingent liabilities.
On an ongoing basis, the Company bases its estimates on historical
experience and on various other assumptions that management believes are reasonable under the circumstances. The Company reassesses these
estimates on a regular basis; however, actual results could differ from these estimates.
(d) Principles of consolidation
The financial statements of subsidiaries are included in the
consolidated financial statements as of the date that control commences until the date that control ceases. Control exists when the Company
has the power, directly or indirectly, to govern the financial and operating policies of an entity to obtain benefits from its activities.
The accounting policies of subsidiaries are aligned with the policies adopted by the Company. Intergroup balances and transactions and
any revenues and expenses arising from intergroup transactions have been eliminated in preparing the consolidated financial statements.
3 Summary of significant accounting policies
The significant accounting policies applied in the preparation
of these consolidated financial statements are set out below. These policies have been consistently applied to all periods presented.
(a) Cash and cash equivalents
Cash and cash equivalents include cash on hand, bank deposits,
and other short-term highly liquid investments, with an original maturity of three months or less and with immaterial risk of change
in value, with the objective of meeting short-term commitments.
(b) Fair value of financial instruments
The Group accounts for certain assets and liabilities at fair
value. The Group follows the guidance of Accounting Standards Codification (“ASC”) Topic 820, Fair Value Measurement
(“ASC 820”) and ASC Topic 825, Financial Instruments (“ASC 825”). Fair value is defined as the
price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at
the measurement date.
A reporting entity shall disclose either in the body of the
financial statements or in the accompanying notes, the fair value of financial instruments and the level of the fair value hierarchy within
which the fair value measurements are categorized in their entirety (Level 1, 2, or 3).
The three levels of inputs are:
● Level 1 inputs: Unadjusted quoted prices in active markets for identical assets or liabilities
accessible to the reporting entity at the measurement date.
F-10
SVRE Holdings Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars unless otherwise stated
3 Summary
of significant accounting policies (cont.)
● Level 2 inputs: Other than quoted prices included in Level 1 inputs that are observable for the
asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
● Level 3 inputs: Unobservable inputs for the asset or liability used to measure fair value to the
extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity
for the asset or liability at measurement date.
(c) Inventories
Inventories are stated at the lower of weighted average cost
or net realizable value, in accordance with ASC 330. Net realizable value represents the estimated future sales price of the product
based on current and long-term metals prices, less the estimated costs to complete production and bring the product to sale. The Company
evaluates inventory for impairment when events or changes in circumstances indicate that net realizable value may be below carrying cost,
including changes in metals market prices. Write-downs (or “impairment”) of inventories to net realizable value are reported
as a component of “cost of goods sold” in the consolidated statement of operations. Under ASC 330, once inventory is
written down to its net realizable value, the reduced carrying amount becomes the new cost basis and may not be subsequently written back
up, even in the event of a recovery in market prices.
The major classifications are as follows:
Stockpiles
Stockpiles represent ore that has been extracted from the
mine and are available for further processing. Mine sequencing may result in mining material at a faster rate than can be processed. Costs
are added to stockpiles based on current mining costs incurred including applicable overhead and depreciation and amortization relating
to mining operations and removed at each stockpile’s average cost per recoverable unit as material is processed.
In-process Inventory
In-process inventories represent material that is currently
in the process of being converted to a saleable product. In-process inventories are valued at the lower of the cost of the material fed
into the process attributable to the source material coming from the mines, stockpiles, plus the in-process conversion costs, including
applicable amortization relating to the process facilities incurred to that point in the process or net realizable value.
Concentrate Inventory
Concentrate inventories represent MREC available for shipment
or in transit for further processing when the sales process has not been completed. The Company values concentrate inventory at the lower
of cost or net realizable value. Costs are added and removed to the concentrate inventory based on grades in the concentrate, including
an allocable portion of support costs and amortization.
Materials and Supplies
Materials and supplies are valued at the lower of cost or
net realizable value. Cost includes applicable taxes and freight.
F-11
SVRE Holdings Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars unless otherwise stated
3 Summary
of significant accounting policies (cont.)
(d) Property and equipment, net
Property and equipment include machinery, equipment, furniture,
offices equipment, software license, leasehold improvements and are stated at cost less accumulated depreciation.
An item of property and equipment is derecognized upon disposal
or when there are no future economic benefits resulting from its continuing use. Any gain or loss arising on the disposal or de-recognition
of an item of property and equipment is determined as the difference between sales proceeds and the net carrying amount of the asset and
is recognized in the statement of operations.
Depreciation is calculated on a straight-line basis at the
rates described below, which take into account the estimated useful lives of the assets. The estimated useful lives of fixed assets in
the current and prior year are as follows:
Machinery and equipment
14 years
Furniture and office equipment
11 years
Computers
5 years
Vehicles
5 years
Software
10 years
Construction in progress is not depreciated. Estimated useful
lives, the estimated residual values, and depreciation methods are reviewed at the end of each year, and the effects of any changes in
estimates are recorded prospectively. Assets held through finance lease are depreciated over their expected useful lives, pursuant to
the terms and conditions of the lease agreement.
Asset Retirement Obligations
The Group has asset retirement obligations (“ARO”)
arising from regulatory requirements. The liability is initially measured at fair value and subsequently adjusted for accretion expense
and changes in the amount or timing of the estimated cash flows. When the provision is recognized, the corresponding cost is capitalized
as part of property and equipment, and it is depreciated over the useful life of the related mining asset. Such provision reflects the
estimated expenditures to be incurred in the future, mainly related to: (i) General closure; (ii) Additional mine drainage;
(iii) Residue dump; (iv) Facilities closure; (v) Environmental monitoring/Rehabilitation and (vi) Programs/Actions
(Social, Environmental, Water).
The long-term liability is discounted at present value using
a risk-free interest rate that reflects current market assessments of the time value of money and the risks specific to the liability
and is reduced by payments for mine closure and decommissioning of mining assets.
Judgment is required to determine key assumptions used on
the asset retirement obligation measurement such as interest rate, cost of closure, useful life of the mining asset considering the current
conditions of closure and the projected date of depletion of mine. Any changes in these assumptions may significantly impact the recorded
provision. Therefore, the estimated costs for closure of the mining assets are deemed to be a critical accounting estimate and annually
reviewed.
The Company measures changes in the ARO liability due to passage
of time by applying an interest method of allocation to the amount of the liability at the beginning of the period. The increase in the
carrying amount of the liability is recognized as an expense classified as an operating item in the consolidated statements of operations,
hereinafter referred to as ARO accretion expense. The Company periodically reassesses the timing and amount of cash flows anticipated
associated with the ARO and adjusts the fair value of the liability accordingly under the guidance in ASC 410-20.
F-12
SVRE Holdings Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars unless otherwise stated
3 Summary
of significant accounting policies (cont.)
Asset Retirement Costs (“ARC”) were estimated
by an independent and specialized engineering contractor hired by the Company.
Mineral Properties and Mine Development
As of December 31, 2025, the mine was in the Development
Stage. The capitalization of mine development costs began when final feasibility study was completed. A Development Stage property is
a property that has mineral reserves disclosed, but no material extraction.
Mine development costs include engineering and metallurgical
studies, drilling, and other related costs to delineate an ore body, the removal of overburden to initially expose an ore body at open
pit surface mines and the building of access ways, shafts, lateral access, drifts, ramps, and other infrastructure at underground mines.
Mine development costs are amortized using the units-of-production method over the estimated life of the ore body, based on recoverable
minerals to be mined from proven and probable reserves. Costs of exploration, carrying and retaining unproven mineral lease properties
are expensed as incurred.
Drilling and related costs incurred at the Group’s operating
mines are expensed as incurred in exploration, unless the Company can conclude with a high degree of confidence, prior to the commencement
of a drilling program, that the drilling costs will result in the conversion of a mineralized material into proven and probable reserves.
The Company’s assessment is based on the following factors: (i) results from previous drilling programs; (ii) results
from geological models; (iii) results from a mine scoping study confirming economic viability of the resource; and (iv) preliminary
estimates of mine inventory, ore grade, cash flow and life of mine. In addition, the Company must have all permitting and/or contractual
requirements necessary to have the right to and/or control of the future benefit from the targeted ore body.
Pre stripping
In surface mining operations, entities may find it necessary
to remove mine waste materials (overburden) to gain access to mineral ore deposits. This waste activity is known as ‘stripping’.
During the development phase of the mine (before production begins), stripping costs are usually capitalized in property and equipment
as part of the depreciable cost of building, developing, and constructing the mine. These capitalized costs will be depreciated or amortized
on a systematic basics, usually by using the units of production method once the mine is considered operational.
Capitalized interest
The interest of loans that are directly attributable to the
acquisition, construction or production of a qualified asset are part of the interest of such asset and, therefore, are capitalized. The
remaining costs of loans are recognized as expenses for the period in which they are incurred, if applicable. Capitalization of the interest
of loans is initiated when expenditures are incurred with the qualified asset and loan costs are incurred, and capitalization ceases when
the qualified asset is ready for use or when construction or production of the asset is suspended for long periods.
(e) Impairment of Long-lived Assets
Long-lived non-financial assets are evaluated at the end of
each reporting period by management for indicators that carrying value is impaired and may not be recoverable. When indicators of impairment
are present, non-financial assets are tested for impairment as an individual asset, as part of an asset group or at the reporting unit
(“RU”) level. An asset group is the lowest level for which there are identifiable cash flows (i.e. both cash inflows and cash
outflows) that are largely independent of the net cash flows of other groups of assets. A RU is an operating segment or one level below an
operating segment if certain conditions are met. Impairment tests for non-financial assets subject to depreciation or amortization are
applied to individual assets if possible. If this is not possible, then these assets are tested for impairment at the asset group level.
An impairment loss is recorded for non-financial assets only if the asset’s, or asset group’s, carrying amount exceeds its
recoverable amount (i.e. the carrying amount is greater than the undiscounted cash flows of the asset or asset group). If the carrying
amount is not recoverable, then the impairment loss is the difference between the carrying amount of the asset (asset group) and the fair
value of the asset (asset group). An impairment loss for an asset group is allocated pro rata to the non-financial assets in the asset
group. Impairment losses are recognized in the consolidated statements of operations (pre-operating costs).
F-13
SVRE Holdings Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars unless otherwise stated
3 Summary
of significant accounting policies (cont.)
(f) Provision for contingencies
The Company accrues loss contingencies when it is both probable
that the Company will incur the loss and when it can reasonably estimate the amount of the loss or range of loss. The Company does not
accrue for contingent losses that, in its judgment, are not considered probable. However, if the Company determines that a contingent
loss is reasonably possible, the Company discloses the possible loss in the consolidated financial statements. Legal costs are expensed
as incurred. See Note 13.
(g) Deferred income taxes
The Company accounts for deferred income taxes in accordance
with ASC Topic 740, Income Taxes (“ASC 740”). ASC 740 requires a company to use the asset and liability method
of accounting for income taxes, whereby deferred tax assets are recognized for deductible temporary differences, and deferred tax liabilities
are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and
liabilities and their tax bases.
Deferred tax assets are reduced by a valuation allowance when,
in the opinion of management, it is more likely than not that some portion, or all of, the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax laws and rates in the period of enactment.
Under ASC 740, a tax position is recognized as a benefit
only if it is “more likely than not” that the tax position would be sustained in a tax examination being presumed to occur.
The amount recognized is the largest amount of tax benefit that is greater than 50% likely of being realized on examination. For tax positions
not meeting the “more likely than not” test, no tax benefit is recorded.
(h) Administrative expenses
Administrative expenses represent expenses incurred during
the year and mainly comprise expenses of management compensation, salaries and charges for administrative personnel, legal and judicial
expenses, professional fees and office supplies.
(i) Earnings per share
The Company computes the basic earnings (losses) per share
by dividing the net income (loss) by the weighted average number of ordinary shares outstanding during the period. The Company computes
the diluted earnings (losses) per share by dividing the net income (loss) by the weighted-average number of shares outstanding, inclusive
of the impacts of each share that would have been outstanding assuming the issuance of common shares for all dilutive potential common
shares outstanding during the reporting period, unless doing so would result in an anti-dilutive effect.
F-14
SVRE Holdings Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars unless otherwise stated
3 Summary
of significant accounting policies (cont.)
(j) Foreign currency translation and transactions gain and
losses
Translation into U.S. dollar (reporting currency) is
made based on exchange rates effective at the end of the reporting period for the consolidated financial statement position accounts and
on the average rates for profit or loss accounts, and historical rates for capital contributions, with translation gains and losses recognized
in the statement of comprehensive loss and presented in “foreign currency translation adjustment” as part of consolidated
statement of changes in stockholder’s equity.
Foreign currency transactions are translated into the U.S. dollar
(“US$”) using the exchange rates prevailing on the transaction or valuation dates when items are remeasured. Exchange gains
and losses resulting from the settlement of these transactions and from the translation at the exchange rates effective at the end of
the reporting period, for monetary assets and liabilities in currencies other than the functional currency, are recorded in the consolidated
statements of operations.
(k) Leases
The Company leases real estate, vehicles and equipment in
noncancelable finance leases accounted for in accordance with ASC 842, Leases. Lease costs are presented in the consolidated statements
of operations and consolidated statement of comprehensive loss as follows: (i) finance lease right-of-use (“ROU”) asset
amortization in costs of sales, general and administrative expenses, and (ii) interest on finance lease liabilities in financial
expense on the consolidated statements of operations and consolidated statement of comprehensive loss. At the inception of an arrangement,
the Company determines whether the arrangement is, or contains, a lease. A contract is, or contains, a lease when there is a right to
control the use of an identified asset for a period of time. A lease is a finance lease if one or more of the following criteria are met:
(i) the lease transfers ownership of the asset by the end of the lease term, (ii) the lease contains an option to purchase the
asset that is reasonably certain to be exercised, (iii) the lease term is for the major part of the remaining useful life of the
asset, (iv) the present value of the lease payments equals or exceeds substantially all of the fair value of the asset, or (v) the
asset is specialized in nature to have no alternative use to the lessor at the end of the lease term. A lease is classified as an operating
lease if it does not meet any of the finance lease criteria noted above.
At lease commencement, the Company recognizes a ROU asset
and lease liability for all leases. The Company adopted the following practical expedients:
(i) the Company will not separate the lease component from the
non-lease component for all asset classes. The Company has therefore not allocated consideration in a contract between lease and non-lease
components; and
(ii) the Company recognizes the payments on short-term leases
(leases with terms at inception of 12 months or fewer) in general and administrative on the consolidated Statements of Operations
and consolidated statements of comprehensive loss on a straight-line basis over the lease term.
(iii) No outstanding lease payable is recognized on the consolidated
balance sheets with respect to these leases.
A ROU asset is initially measured by adding the initial measurement
of the lease liability, any lease payments made to the lessor at or before lease commencement, any initial direct costs incurred by the
lessee, and subtracting any lease incentives received. The lease liability is initially measured at the present value of the minimum lease
payments, discounted using the rate implicit in the lease or the Company’s incremental borrowing rate based on the original lease
term. The rate implicit in the lease is used whenever that rate is readily determinable. If the rate implicit in the lease is not readily
determinable, the Company utilizes its incremental borrowing rate, which is the rate for a collateralized
loan with the same term as the lease. Variable lease payments that depend on an index or a rate are initially measured using the index
or rate at the commencement date.
F-15
SVRE Holdings Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars unless otherwise stated
3 Summary
of significant accounting policies (cont.)
Lease Expense
The Company recognizes the amortization of its finance lease-related
ROU assets, including purchase options when it is reasonably certain to exercise the related purchase option, on a straight-line basis
over the shorter of the lease term or the useful life of the underlying asset as amortization expense. The Company recognizes its finance
lease-related ROU assets’ lease liability discount over the shorter of the lease term or useful life of the underlying asset as
interest expense. Any variable lease payments are expensed as incurred.
(l) Warrant liability
The Company accounts for warrants as either equity-classified
or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance
in ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC Topic 815, Derivatives and Hedging
(“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480,
meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification
under ASC 815, including whether the warrants are indexed to the Company’s own common shares and whether the warrant holders
could potentially require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions
for equity classification. This assessment, which requires the use of judgment, is conducted at the time of warrant issuance and as of
each subsequent reporting period end date while the warrants are outstanding. For issued or modified warrants that meet all of the criteria
for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance.
For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded
at their initial fair value on the date of issuance, and each balance sheet date thereafter.
The Company accounts for the warrants issued in connection
with the Private Placement in accordance with the guidance contained in ASC 815 “Derivatives and Hedging” whereby under
that provision the warrants do not meet the criteria for equity treatment and must be recorded as a liability. Accordingly, the Company
classifies the warrant instrument as liability at fair value and adjusts the instrument to fair value at each reporting period. This liability
will be re-measured at each balance sheet date until the warrants are exercised or expire, and any change in fair value will be recognized
in the Company’s statement of operations.
The fair value of warrants was estimated using an internal
valuation model. The valuation model utilizes inputs and other assumptions and may not be reflective of the price at which they can be
settled. Such warrant classification is also subject to re-evaluation at each reporting period. The fair value of the warrants initially
was estimated using a Monte Carlo simulation approach.
(m) Dividend in kind
Dividend in kind is recorded using the guidance in ASC Topic 845,
Nonmonetary Transactions (“ASC 845”), which is classified as a nonreciprocal transfer of nonmonetary assets and is accounted
at fair value, if the fair value of the nonmonetary asset distributed is objectively measurable and would be clearly realizable to the
distributing entity in an outright sale at or near the time of the distribution. The fair value of the asset received shall be used to
measure the cost if it is clearer than the fair value of the asset surrendered. Similarly, a nonmonetary asset received in a nonreciprocal
transfer shall be recorded at the fair value of the asset received. A transfer of a nonmonetary asset to a stockholder or to another entity
in a nonreciprocal transfer shall be recorded at the fair value of the asset transferred and a
gain or loss shall be recognized on the disposition of the asset. The Company recorded a fair value charge for stock dividends declared
on preferred stock as a charge to additional paid-in capital when a retained earnings deficit exists by analogy to ASC 480-10-S99-2
(SAB Topic 3.C, Redeemable Preferred Stock). That guidance indicates that amortization of a discount to the redemption amount of
preferred stock should be charged to additional paid-in capital in the absence of retained earnings.
F-16
SVRE Holdings Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars unless otherwise stated
3 Summary
of significant accounting policies (cont.)
The dividend in kind issued in favor of the stockholders at
fair value are recognized as a liability on the date of issuance.
For subsequent measurement, the fair value will be measured
at each reporting period, and any changes in fair value recognized in retained earnings. Due to the fact that the Company had no retained
earnings at recognition, the charge was recorded as a charge to additional paid-in capital, by analogy to ASC 480-10-S99-2 (SAB Topic 3.C,
Redeemable Preferred Stock).
(n) Royalty
According to ASC Topic 470, Debt, Royalties are classified
as a debt as the Company has significant continuing involvement in the generation of the cash flows until the extinguishment of the mining
project. The debt will be amortized under the interest method through the effective rate determined by the Company considering the estimated
future cash flows. The estimates are revisited by the Company at each reporting period. When the amount and timing of the estimated future
cash flow change, the Company will apply the prospective approach method. In the prospective approach method, the Company will compute
a new effective interest rate based on the current carrying value of the debt and the revisited estimated remaining cash flows. Changes
in cash flows from previous estimates are included in future interest expense on a prospective basis.
(o) Debt issuance costs
Debt issuance costs represent incremental costs directly attributable
to the issuance of the Group’s debt arrangements. Debt issuance costs are capitalized and amortized to interest expense over the
contractual term of the related debt using the effective interest method.
In accordance with ASC Topic 835, Interest (“ASC 835”),
debt issuance costs related to recognized long-term debt are presented on the consolidated balance sheets as a direct deduction from the
carrying amount of the related debt.
To the extent debt issuance costs are incurred in advance
of the execution of the funding related debt arrangement, such amounts are recorded as Deferred financing costs on the consolidated balance
sheets until the related debt is recognized, at which time the costs are reclassified to a direct deduction from the related debt. If
it becomes probable that the related financing will not be completed, any deferred costs associated with the abandoned financing are expensed
in the period such determination is made.
(p) Share-based compensation plans
The Company accounts for equity-based compensation in accordance
with ASC 718, Compensation — Stock Compensation. Compensation cost is measured at grant-date fair value and recognized
over the requisite service period as a charge to operating expenses, with corresponding credit to additional paid-in capital. The Company
accounts for forfeitures as they occur.
F-17
SVRE Holdings Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars unless otherwise stated
3 Summary
of significant accounting policies (cont.)
Stock Options are valued at grant date using the Monte
Carlo option-pricing model, incorporating assumptions for expected term, expected volatility, risk-free interest rate, and dividend
yield. Options are subject to service and performance conditions. Compensation cost is recognized on a graded-vesting basis over the
requisite service period. For performance-condition tranches, compensation cost is recognized when achievement of the condition is
probable, with cumulative adjustments recorded in the period of reassessment. Where the service inception date precedes the grant
date, compensation cost is accrued from the service inception date using preliminary fair value estimates and adjusted to grant-date
fair value once the grant date is established.
RSUs are valued at grant date based on the fair value of the
Company’s ordinary shares, as determined by the most recent arm’s-length transactions. RSUs are subject to service conditions,
and compensation cost is recognized on a straight-line basis over the requisite service period.
SARs are measured based on the fair value at the grant date.
SARs are subject to service conditions, and compensation cost is recognized on a graded-vesting basis. SARs may be settled in cash or
shares at the Company’s discretion and are classified as equity awards, as the Company has no substantive obligation to settle in
cash and has the intent and ability to deliver shares.
Modifications to awards are accounted for by measuring incremental
fair value at the modification date. Any incremental cost is recognized immediately for vested awards or over the remaining service period
for unvested awards. Total compensation cost recognized is never reduced below the original grant-date fair value.
Equity-based awards are granted by SVRE Holdings Ltd. to employees
of its subsidiaries. In the standalone financial statements of the subsidiaries, compensation cost is recognized with a corresponding
capital contribution from the parent. Forfeitures of SO, RSU and SARs are recognized in the period in which they occur, rather than estimated
at the grant date.
(q) Revenue
The Company recognizes revenue in accordance with ASC 606,
Revenue from Contracts with Customers. Revenue is derived from sales of MREC under contracts with customers. Revenue is recognized at
a point in time when control of the product transfers to the customer. Sales prices are determined based on contractual pricing formulas
that consider the quantity and quality of rare earth oxides in each shipment and benchmark market prices. Sales are initially invoiced
on a provisional basis and subsequently adjusted through a final invoice in accordance with the contractual pricing terms; accordingly,
the transaction price includes variable consideration. The Company includes estimates of variable consideration in the transaction price
to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty is resolved.
Differences between provisional and final pricing are recognized as adjustments to revenue in the period in which the changes occur.
Customer advances received prior to the transfer of control
are recorded as contract liabilities and recognized as revenue when control transfers to the customer.
(r) Recently issued accounting pronouncements
Recently Issued Accounting Pronouncements Adopted in 2025
In December 2023, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740): Improvements
to Income Tax Disclosures, which is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments
in this ASU provide for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid. This
ASU is effective for fiscal years beginning after December 15, 2025 for nonpublic companies. Early adoption permitted in any
annual period in which financial statements have not yet been issued (or made available for issuance), either prospectively or retrospectively.
The Company adopted this pronouncement retrospectively.
F-18
SVRE Holdings Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars unless otherwise stated
3 Summary
of significant accounting policies (cont.)
Recently Issued Accounting Pronouncements Not Yet Adopted
In March 2024, the FASB issued ASU 2024-02, Codification
Improvements — Amendments to Remove References to the Concepts Statements. The amendment in this ASU contains amendments
to the ASC that remove references to various FASB Concepts Statements. This ASU is effective for fiscal years beginning after December 15,
2025, including interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the
impact of adopting this ASU on the consolidated financial statements and disclosures.
In November 2024, the FASB issued ASU 2024-03, Income
Statement — Reporting Comprehensive Income (Topic 220): Disaggregation of Income Statement Expenses. This ASU requires
additional disclosures by disaggregating the costs and expense line items that are presented on the face of the income statement. The
disaggregation includes: (i) amounts of purchased inventory, employee compensation, depreciation, amortization, and other related
costs and expenses; (ii) an explanation of costs and expenses that are not disaggregated on a quantitative basis; and (iii) the
definition and total amount of selling expenses. This ASU is effective for fiscal years beginning after December 15, 2026, and
interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted. The Company is currently
evaluating the impact of adopting this ASU on the consolidated financial statements and disclosures.
In November 2024, the FASB issued ASU 2024-04, Debt — Debt
with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments. FASB issued this update
to improve the relevance and consistency in application of the induced conversion guidance in Subtopic 470-20, Debt — Debt
with Conversion and Other Options. The amendments in this update clarify the requirements for determining whether certain settlements
of convertible debt instruments should be accounted for as an induced conversion. The amendments in this update are effective for all
entities for fiscal years beginning after December 15, 2025, and interim reporting periods within those annual reporting periods.
Early adoption is permitted for all entities that have adopted the amendments in Update 2020-06. The Company is currently evaluating
the impact of adopting this ASU on the consolidated financial statements and disclosures.
In January 2025, the FASB issued ASU 2025-01, Income
Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40):
Clarifying the Effective Date. This ASU amends the effective date of ASU 2024-03 to clarify that all public business entities are
required to adopt the guidance in fiscal years beginning after December 15, 2026, and interim periods within fiscal years
beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting this
ASU on the consolidated financial statements and disclosures.
In July 2025, the FASB issued ASU No. 2025-05, Financial
Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets.
This ASU provides a practical expedient for measuring credit losses on accounts receivable and contract assets. The guidance is effective
for fiscal years beginning after December 15, 2025, and interim periods within those fiscal years, with early adoption
permitted. The Company is currently evaluating the impact of adopting this ASU on the consolidated financial statements and disclosures.
In December 2025, the FASB issued ASU No. 2025-12,
Codification Improvements, which includes amendments intended to clarify and improve various aspects of the FASB Accounting Standards
Codification. The guidance is effective for fiscal years beginning after December 15, 2026, including interim periods within
those fiscal years, with early adoption permitted. The Company is evaluating the potential impact of this guidance on the consolidated
financial statements and disclosures.
F-19
SVRE Holdings Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars unless otherwise stated
4 Inventories
2025
2024
Materials and supplies
7,444
6,469
Stockpiles
10,080
6,252
In-process inventory
116
139
Concentrate inventory
926
1,994
Total
18,566
14,854
During the fiscal year ended December 31, 2024, the Company
recognized an inventory impairment charge of US$47,818 related to its Concentrate inventory and In-process inventory. Based on metals
market prices, the net realizable value of these inventories was determined to be below their carrying cost. Accordingly, the carrying
value of the Concentrate and In-process inventory was reduced to net realizable value, and the reduction was recognized in the consolidated
statement of operations under cost of sales.
During the fiscal year ended December 31, 2025, the Company
recognized an inventory valuation loss of US$ 33,774 related primarily to Concentrate inventory.
5 Other assets
2025
2024
Prepaid expenses
1,455
2,241
Judicial deposits
160
163
Total
1,615
2,404
Current
1,455
2,241
Non-current
160
163
6 Property and equipment, net
As of December 31, 2025 and December 31, 2024 the
Company’s property and equipment consisted of the following:
Useful Life
(in years)
2025
2024
Machinery and equipment
14
12,633
11,299
Furniture and office equipment
11
1,278
1,164
Computers
5
1,678
1,572
Vehicles
5
168
150
Software
10
1,721
1,557
Construction in progress
531,929
418,652
Mineral properties and mine development
14,020
12,458
Others
9
3,513
2,895
Property and equipment
566,940
449,747
Accumulated depreciation and amortization
(7,412 )
(4,871 )
Property and equipment, net
559,528
444,876
Construction in progress includes costs incurred in the implementation
of the industrial plant and its related infrastructure for US$ 349,310 and equipment under installation costs of US$ 104,339. These assets
will be placed in service and depreciated upon completion of construction, installation, and certification.
No impairment losses were recognized on long-lived assets
during the years ended December 31, 2025 and 2024.
F-20
SVRE Holdings Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars unless otherwise stated
7 Accounts payable and accrued expenses
2025
2024
Suppliers
10,281
6,816
Accrued expenses
6,757
5,167
Contractual retentions
43
38
Total
17,081
12,021
8 Salaries and social charges
2025
2024
Provisions(1)
5,530
4,141
Social Charges
848
1,279
Total
6,378
5,420
(1) Provisions for performance incentive awards, such as bonus.
9 Financial instruments measured at fair value
The Company’s financial instruments measured at fair
value consist of private placement warrants classified as Level 3 in the fair value hierarchy. There were no transfers between levels
in the fair value hierarchy during 2025 and 2024. See Note 16.
10 Loans and financing
10.1 Suppliers Financing Caterpillar
In 2021, the Company signed a supplier financing agreement
with Banco Caterpillar S.A. in the amount of US$ 2,735, with an annual interest rate of 5.45%. The agreement provides for payment of principal
and interest on a quarterly basis in 16 consecutive installments, with the last installment paid in December 2025. The purpose of this
agreement is to finance purchase of trucks and other equipment from the Caterpillar Group.
2025
2024
Opening balance
343
1.029
(+) Accrued interest
7
40
(-) Payment of principal
(343 )
(683 )
(-) Interest paid
(7 )
(43 )
Closing balance
—
343
Current
—
343
Non-current
—
—
10.2 Credit Agreement
In October 2021, SVRE entered into a senior secured,
non-revolving credit facility (the “Credit Agreement”) with OMF FUND III (F) Ltd.. Following the most recent amendment
to the Credit Agreement on October 18, 2024, the facility provides a total committed amount of US$ 80,000, with contractual maturity
scheduled for December 31, 2029. The facility allows borrowings in multiple tranches of up to US$ 20,000 each. Borrowings under the
facility bear interest at an annual rate of 10%, plus the greater of (i) three-month SOFR and (ii) 2% per annum. Additionally,
the agreement also provides that up to US$ 35,000 (“Cost Overrun Commitment”) shall be advanced by way of one or more Cost
Overrun Advances, with interest at an annual rate of 11% plus the greater of (i) three-month SOFR and (ii) 2% per annum.
F-21
SVRE Holdings Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars unless otherwise stated
10 Loans
and financing (cont.)
The first borrowing of US$ 40,000 was funded in September 2023,
net of US$ 654 in debt issuance costs, a second borrowing of US$ 40,000 was funded in February 2024, net of US$ 18 in additional
issuance costs. The Company may capitalize interest payments into the loan principal, at its option, through December 31, 2026.
As of December 31, 2025 and 2024, the Company had fully
drawn the initial commitment under the facility.
2025
2024
Opening balance
93,007
40,878
(+) Addition
—
40,000
(-) Debt issuance costs
—
(18 )
(+) Accrued interest
14,255
12,147
Closing balance
107,262
93,007
Current
—
—
Non-Current
107,262
93,007
In accordance with ASC 835, debt issuance costs are presented
as an adjustment to the carrying amount of the related liability in the consolidated balance sheets. As of December 31, 2025, debt
issuance costs amounted to US$ 0 (zero), and as of December 31, 2024, they amounted to US$ 18.
Under the facility agreement, The Company is required to pay
a commitment fee to OMF FUND III (F) Ltd. equal to 2% per annum of the undrawn portion of the Cost Overrun Commitment, payable
quarterly in arrears.
2025
2024
Opening balance
—
—
(+) Accrued interest
700
364
(-) Payments
(700 )
(364 )
Closing balance
—
—
Prior to the latest amendment, (i) the contractual maturity
date was April 30, 2026, and (ii) the interest rate structure differed from the current terms. The Company evaluated the modification
in accordance with ASC 470-50 guidance. Based on this assessment, the Company determined that the changes to the contractual cash
flows were not substantial and, therefore, did not meet the criteria for extinguishment accounting. Consequently, the amendment was accounted
for as a modification of the existing debt.
10.3 Financing costs
As of December 31, 2025, the Company incurred certain
third-party costs directly attributable to obtaining a financing arrangement that had not been executed or funded as of year-end. Accordingly,
no related debt was recognized as of December 31, 2025. The Company accounts for such costs as follows:
Deferred financing cost
The Company capitalizes incremental costs directly attributable
to obtaining the financing of US$ 4,031 as of December 31, 2025. These costs are presented within Deferred financing cost in non-current
assets on the consolidated balance sheets. Upon execution and funding of the related debt, the Company expects to present the associated
debt issuance costs as a direct deduction from the carrying amount of the related debt in accordance with ASC 835-30 and amortize
such costs to interest expense over the term of the related debt using the effective interest method. If the related financing is not
completed, the Company will expense the deferred costs in the period in which the financing is abandoned or when it becomes probable that
the financing will not be completed.
F-22
SVRE Holdings Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars unless otherwise stated
10 Loans
and financing (cont.)
Accrued financing costs
The Company recognizes liabilities for third-party services
incurred but not yet invoiced as of the reporting date when the Company has a present obligation and the amount is reasonably estimable.
Accordingly, as of December 31, 2025, the Company recorded US$2,340 in Accounts payable and accrued expenses for financing-related
professional fees for services performed through year-end for which invoices had not yet been received.
11 Royalty agreement
On October 21, 2021, SVRE entered into a royalty rights
agreement (“Royalty Agreement”) with OMF Fund III (F) Ltd. (the “Original Royalty Holder”) and TMF Canada
Inc.. In consideration for a payment of US$40,000 (the “Royalty Purchase Price”), the agreement granted the Original Royalty
Holder a perpetual royalty over future cash flows from the sale or other disposal of products extracted from the Project. On February 23,
2023, the Original Royalty Holder assigned all of its rights and obligations under the Royalty Agreement to OMF Fund III (CR) Ltd.,
a company organized under the laws of the Cayman Islands.
The royalty rate was initially set at 4.75%, calculated and
due quarterly in U.S. dollars, and subject to adjustment under the terms of this agreement. The Royalty Purchase Price was payable
in two tranches. The first tranche of US$ 20,000 (US$ 17,784 net of transaction costs of US$ 2,216) was received on October 25, 2021
and the second tranche of US$ 20,000 (US$ 19,673 net of transaction costs of US$ 327) was received on September 29, 2023.
On August 15, 2023, the Royalty Agreement was amended
to (i) split into two separate royalty agreements: the Buyback Royalty Agreement, under which SVRE held a buyback option, and the
Non-Buyback Royalty Agreement, each with a royalty rate of 2.375% and (ii) require the Company to make an annual payment if actual
royalty bearing sales fall below a specified percentage of forecasted sales for any 12-month period.
On October 18, 2024, the parties amended the royalty
agreements to remove the buyback option of the Buyback Royalty Agreement and to increase the royalty rate of both agreements to 2.625%.
The same amendment also postponed the commencement of the annual minimum payments to after the first actual sale following March 31,
2026. As of the date of issuance of these financial statements, no sales have been recorded by the Company subsequent to March 31,
2026.
The Company accounts for the Royalty Agreement as a debt instrument
under ASC 470 — Debt (Sales of Future Revenues), because the Company retains significant continuing involvement
in generating the cash flows that serve as the basis for the royalty payments to the royalty holder. The debt is measured using the effective
interest method, and the estimates of future cash flows are reviewed each reporting period; changes in those estimates are recognized
on a prospective basis.
2025
2024
Opening balance
55,458
48,946
Royalty payments
(95 )
(9 )
Accrued interest
17,664
6,521
Closing balance
73,027
55,458
Current
5,769
156
Non-current
67,258
55,302
F-23
SVRE Holdings Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars unless otherwise stated
11 Royalty
agreement (cont.)
The following SVRE’s subsidiaries are Guarantors under
both agreements: SVRE Marketing Ltd., Serra Verde International Trading Company SRL, Serra Verde Mining LLC, Serra Verde Mid Mining Holdings
LLC and Serra Verde Pesquisa e Mineração Ltda. By amending agreements dated March 5, 2026, SV Management Switzerland
AG and SVRE UK Limited were added as Guarantors under each agreement.
All shares and assets of the Company and its subsidiaries
have been pledged as collateral for the Royalty Agreement, as amended.
12 Class A preferred shares
On October 21, 2021, the Company issued 1,000 Class A
preferred shares to OMF for aggregate proceeds of US$ 30,000. The instrument provides for cumulative cash remuneration at an annual fixed
rate of 10%, which is recognized as interest expenses in the consolidated statements of operations.
The Class A Preferred Shares are mandatorily redeemable
on a fixed date, December 31, 2029, as amended on October 18, 2024, and may be subject to acceleration upon the occurrence of
certain specific events. The Company is unconditionally obligated to redeem the instrument for cash, and the remuneration is payable regardless
of whether dividends are declared.
Based on these contractual terms, the Company determined that
Class A Preferred Shares represent a mandatorily redeemable financial instrument with an unconditional obligation to transfer assets.
Accordingly, the instrument is classified as a financial liability in accordance with ASC 480 and was initially recognized at fair
value, which approximated the liquidation amount at the time of issuance. The conversion features included in the agreement were assessed
and determined not to be substantive. As a result, the instrument does not qualify for equity or mezzanine classification. After initial
recognition, the liability is measured at amortized cost, with the fixed 10% annual return recognized as interest expense over the term
of the instrument.
Prior to the amendment executed on October 18, 2024,
the mandatory redemption date was October 21, 2025. The Company evaluated the amendment in accordance with ASC 470 and concluded
that the changes in contractual cash flow did not meet the criteria for debt extinguishment. Accordingly, the amendment was accounted
for as a modification of the existing liability.
The carrying amount of the Class A Preferred Shares liability
as of December 31, 2025 and 2024 is summarized below:
2025
2024
Opening balance
41,109
37,233
(+) Annual interest of 10% incurred
4,268
3,876
Closing balance
45,377
41,109
F-24
SVRE Holdings Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars unless otherwise stated
13 Provision for contingencies
2025
2024
Opening balance
45
2,499
Additions
1,398
—
Reversal
—
(1,909 )
Foreign currency translation adjustment
6
(545 )
Closing balance
1,449
45
Contingent liabilities reasonable possible to occur, but not
accrued, as of December 31, 2025, amounted US$ 4,282 (US$ 3,508 as of December 31, 2024).
14 Asset retirement obligations — ARO
The Company has ARO arising from regulatory requirements.
2025
2024
Opening balance
3,721
4,323
(+/-) Accretion/reversal expense
—
134
(+) Interests incurred
278
223
(+/-) Foreign currency translation adjustment
424
(959 )
Closing balance
4,423
3,721
15 Deferred tax
Significant components of the Income tax (expense) benefit
on earnings from continuing operations were as follows:
2025
2024
Deferred
Domestic
—
—
Foreign
—
9,943
Total Deferred
—
9,943
F-25
SVRE Holdings Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars unless otherwise stated
15 Deferred
tax (cont.)
Net deferred tax assets (liabilities) as of December 31,
2025, and December 31, 2024 were comprised of the following:
2025
2024
Deferred tax assets:
Pre operational expenses
19,352
22,928
Impairment charges
5,041
8,149
Provision for interest
5,027
2,337
Management compensation
2,404
1,281
Accrued expenses
579
1,629
Provision for contingencies
493
15
Allowance for doubtful accounts
458
407
Other differences
2,604
1,635
Net operating losses
9,184
2,394
Total deferred tax assets
45,142
40,777
Valuation allowance
(38,237 )
(18,978 )
Deffered tax assets, net
6,905
21,799
Deferred tax liabilities:
Foreign exchange
(6,905 )
(21,799 )
Total deferred tax liabilities
(6,905 )
(21,799 )
Deferred tax assets (liabilities), net
—
—
Effective tax rate:
2025
2024
Loss before income taxes
(10,769 )
(171,152 )
Brazil’s taxes at statutory rate (subsidiary)
3,661
34 %
58,192
34 %
Nondeductible/nontaxable items
(272 )
(3 )%
(1,248 )
(1 )%
Valuation allowance
(3,389 )
(31 )%
(56,943 )
(33 )%
Income tax expense – current and deferred
—
0 %
—
0 %
Effective tax rate – %
0 %
0 %
As of December 31, 2025 and 2024, the Company has recognized
deferred tax assets primarily related to deductible temporary differences and tax losses. However, due to the Company’s history
of cumulative losses and the uncertainty regarding the realization of these deferred tax assets, a valuation allowance has been recorded
to offset the full amount of the deferred tax assets provisions.
The recognition of a valuation allowance is based on management’s
assessment that sufficient taxable income may not be available in the foreseeable future to utilize these assets. As a result, no deferred
tax benefit has been recognized in the consolidated financial statements in 2025 and 2024. Management will continue to evaluate the need
for a valuation allowance and will adjust it as necessary based on future taxable income projections and other relevant factors.
The decision was based on an assessment of the recognition
criteria under applicable accounting standards. In particular, the Company considered uncertainties regarding the generation of sufficient
taxable income in the near term, which is necessary to realize the tax benefits. Tax liabilities arising on a monthly basis will continue
to be recognized as incurred. If future developments provide greater assurance regarding the generation of taxable income, the Company
will reassess this position and may recognize deferred tax assets accordingly.
The Company only has operations internationally (mainly in
Brazil, Switzerland and Uruguay). For the years ended December 31, 2025 and 2024, no income tax has been paid.
F-26
SVRE Holdings Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars unless otherwise stated
16 Private placement Warrant liability
On December 29, 2022, the Company issued private placement
warrants to Energy and Minerals Group (“EMG”) and Vision Blue Resources Limited (“VBR”) (collectively the “Investors”)
in connection with the US$ 150,000 equity investment. The Company agreed to issue and sell to each Investor the corresponding number of
fully paid and nonassessable ordinary shares, without par value, of the Company at a price of US$0.01 per warrant, along with 844,285.46
and 584,285.54 warrants to each of the Investors, respectively, duly authorized, validly issued, and free from all liens.
The warrants are subject to automatic exercise in full only
upon the occurrence of a public offering, investor qualified sale or Company sale, each representing a Triggering Event. The warrants
are not exercisable under any other circumstances. If no Triggering Event occurs, the warrants remain outstanding and do not provide the
holders with any alternative exercise or settlement rights.
The warrants are classified as liabilities as they do not
meet the criteria for equity classification. Accordingly, the warrant liabilities are measured at fair value, with changes in fair value
recognized in the Consolidated statement of income.
The fair value of the warrant liabilities is classified within
Level 3 of the fair value hierarchy under ASC 820, Fair Value Measurements. The Company estimates the fair value of the warrants
using Monte Carlo simulation model, which incorporates significant inputs such as the Company’s share price, expected volatility,
risk-free interest rate, expected term, and the estimated probability of the Triggering Event.
The Company estimates the volatility of its common stock based
on historical volatility of select peer companies that matches the expected remaining life of the warrants. The risk-free interest rate
is based on the Brazilian Treasury zero-coupon yield curve on the grant date for a maturity like the expected remaining life of the warrants.
Under the terms of the amended warrant agreement in 2024, the warrants cannot be exercised in any manner other than upon the occurrence
of a Triggering Event, and are not subject to any other exercise conditions. Maturity is modelled probabilistically based on the timing
of potential triggering events (Public Offering, Investor Qualified Sale, or Company Sale). To estimate the timing uncertainty, a Poisson
distribution is applied, using cumulative probabilities derived from management’s estimates of trigger-event likelihood. Each simulation
run captures both the uncertainty in event timing and its effect on warranty value, aligning the financial valuation with realistic business
assumptions and market conditions.
2025
2024
Spot price
US$ 9.08
US$ 2.50
Strike price
US$ 3.10
US$ 3.10
Free Risk Rate (year)
5.57 %
6.31 %
Volatility (year)
41.11 %
39.44 %
The table below presents a roll forward of the private placement
warrant liability:
2025
2024
Opening balance
973
3,610
Gain (loss) on fair value change in private placement warrants liability
7,652
(2,637 )
Closing balance
8,625
973
F-27
SVRE Holdings Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars unless otherwise stated
17 Dividend in kind
On October 23, 2024, the Company entered into a new Investment
Agreement among its stockholders — EMG, VB, and SVRE Rare Earths — which superseded all prior agreements between
the parties. Under the amended terms, the obligation to accrue a dividend-in-kind (“DIK”) was removed, and the investors irrevocably
waived their right to any future accruals. Concurrently, EMG and VB’s combined interest increased to 50% of the Company’s
share capital, establishing joint control between the shareholder groups, and the Company completed a capital increase of US$120,000 through
the issuance of Class A ordinary shares.
The previously recognized DIK balance of US$12,800 thousand
was derecognized and reclassified to Additional Paid-in Capital. As the transaction occurred between the Company and its stockholders
acting in their capacity as stockholders, it was accounted for as a capital transaction in accordance with ASC 505-10, with no gain
or loss recognized in the Consolidated statement of operations. The DIK amount was absorbed into the recapitalization as an integral component
of the consideration supporting the new 50% equity interest held by EMG and VB.
18 Stockholders’ Equity
Below is the Company’s stockholding structure on December 31,
2025 and December 31, 2024:
Stockholder
Class
Quantity
Interest
(%)
Serra Verde Rare Earths Ltd.
Ordinary shares
96,714,285.71
50.00 %
Energy and Minerals Group
Class A ordinary shares
47,991,785.71
24.81 %
Vision Blue Resources Limited
Class A ordinary shares
48,722,500.00
25.19 %
Total
193,428,571.42
100.00 %
The capital contributions for the years ended December 31,
2025 and December 31, 2024 were US$ 0 (zero) and US$ 144,344 (US$ 147,500, net of US$ 3,156 cost of issuance of common shares), respectively,
as follows:
● On May 28, June 17, July 18, August 30
and September 19, 2024, the Company received capital contributions totaling US$ 27,500 from Serra Verde Rare Earths Ltd. This contribution
was made through the issuance of 3,928,571.43 new Class B Ordinary Shares, without par value (the “Class B Ordinary Shares”).
● On October 23, 2024, the Company received an additional
capital contribution totaling US$ 120,000 from EMG and VB. As a result of this contribution, the Company ceased to be controlled
by Serra Verde Rare Earths Ltd, a privately owned entity. This contribution was made through the issuance of 48,000,000 new Class A
Ordinary Shares, without par value (the “Class A Ordinary Shares”). Furthermore, the 25,714,286 outstanding Ordinary
Shares held by EMG and VB were converted into 48,714,285.71 Class A Ordinary Shares, at a conversion rate of 1.894 Ordinary
Shares to 1 Class A Share. Additionally, the 3,928,571.43 outstanding Class B Ordinary Shares held by Serra Verde Rare Earths
Ltd were converted into 11,000,000 Ordinary Shares, at a conversion rate of 2.8 Class B Shares to 1 Ordinary Share.
F-28
SVRE Holdings Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars unless otherwise stated
18 Stockholders’
Equity (cont.)
Following the 2024 capital contributions the Company has two
classes of shares: Class A Ordinary Shares and Ordinary Shares. The Class A Ordinary Shares have distinct rights compared to
the Company’s Ordinary shares. These rights include priority over the ordinary shareholders in certain matters, including but not
limited to distributions in a specific distribution waterfall.
The basic and diluted loss per share for the period ended
December 31, 2025 and December 31, 2024, are presented at the same amount, as potentially dilutive instruments such as warranty,
stock options, restricted share units, dividend in kind, and preferred class A shares, were not considered in the calculation, given that
they are considered anti-dilutive in loss scenarios.
19 Revenue
Revenues for the years ended December 31, 2025 and
2024 were US$ 2,486 and US$ 214, respectively.
For the year ended December 31, 2025, one customer accounted
for 90% of the Company’s revenues. For the year ended December 31, 2024, a single customer accounted for substantially all
of the Company’s revenues.
20 General and administrative expenses
2025
2024
Salaries and personnel expenses
(17,223 )
(16,364 )
Professional fees
(5,995 )
(5,372 )
Office and facilities costs
(558 )
(635 )
Taxes
(420 )
(1,015 )
Others
(1,607 )
(2,386 )
Total
(25,803 )
(25,772 )
21 Financial income and expenses
2025
2024
Financial income
Income from financial investments
2,671
482
Gain on fair value change in private placement warrants liability
—
2,637
Total financial income
2,671
3,119
Financial expenses
Loss on fair value change in private placement warrants liability
(7,652 )
—
Interests on loans and financing
(700 )
(307 )
Tax on financial transactions
(228 )
(124 )
Interest and penalties on overdue amounts
(479 )
(297 )
Accretion expense – ARO
(278 )
(223 )
Other income (expense)
(536 )
(334 )
Total financial expenses
(9,873 )
(1,285 )
F-29
SVRE Holdings Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars unless otherwise stated
22 Shared-based compensation
In October 2023, the Company’s shareholders approved
the Serra Verde Long Time Incentive Plan (the “LTIP”), which permits the Company to issue stock options, stock appreciation
rights (“SARs”) and restricted stock units (“RSUs”). The total compensation cost capitalized amount to US$1,378
in 2025 and US$918 in 2024.
Stock Appreciation Rights (SARs)
On October 17, 2023, the Company granted Stock Appreciation
Rights (SARs) to certain employees. SARs are a form of equity-based compensation that entitles the holder to receive cash or stock, based
on the appreciation in the value of a specified number of shares over a predetermined exercise price. The Company choses whether cash
or stock is paid with the expectation that payment will be in shares. The fair value of the SARs is determined at the grant date using
a Monte Carlo simulation model. The significant assumptions used in the model include the expected term of the options, expected share
price volatility, an expected dividend yield, and a risk-free interest rate based on government securities with a maturity consistent
with the expected term. Upon settlement, the Company intends to issue shares to employees equal to the appreciation in the stock price
over the exercise price. SARs are subject to tax withholding requirements. The SARs granted are subject to various vesting conditions
and forfeiture provisions as outlined in the Company’s compensation plans.
The assumptions used in determining the fair value of SARs
are as follows:
Year ended
December 31,
2025
Year ended
December 31,
2024
Year ended
December 31,
2023
Expected term
5.2 – 6.0
6.3 – 7.0
7.2
Expected volatility
39.44% – 48.18%
37.66% – 39.36%
38.27 %
Expected dividend yield
—
—
—
Risk-free interest rate
4.96% – 6.57%
4.92% – 4.97%
6.52 %
In December 2024, the original plan was modified, and a new
share-based compensation plan was approved. Under the new plan, a total of 3,668,147 SARs were granted to employees, and the related compensation
expense is expected to be recognized over a period of 6 years, as employees fulfill the requisite service conditions. The cancellation
of the original plan resulted in a modification of the SARs granted under the previous plan. During 2025, additional grants of 16,130
SARs were made, bringing the total SARs granted to 3,684,277. As of December 31, 2025, 2,988,394 have vested and the total share-based
compensation expense recognized is US$ 3,173. The modification in 2024 has been accounted for under ASC 718, Compensation — Stock
Compensation, as a Type I modification under ASC 718, as vesting was considered probable both before and after the modification.
Number of
SARs
Weighted-
Average
Grant Date
Fair per SARs
Nonvested as of December 31, 2023
2,249,544
1.00
Granted
16,130
1.00
Vested
(995,756 )
1.00
Nonvested as of December 31, 2024
1,269,918
1.00
Granted
16,130
2.30
Vested
(583,377 )
1.05
Nonvested as of December 31, 2025
702,671
1.02
F-30
SVRE Holdings Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars unless otherwise stated
22 Shared-based
compensation (cont.)
Restricted Stock Units (RSUs)
On October 17, 2023, the Company granted Restricted Stock
Units (RSUs) to certain employees. RSUs are a form of equity-based compensation that represent the right to receive cash or shares
of the Company’s common stock upon vesting, subject to the condition that the beneficiary remains employed with the Company. The
Company choses whether the RSUs are settled in cash or shares. The fair value of the RSUs is determined based on the share price at the
grant date and is recognized as compensation expense over the requisite service period. Upon vesting, the Company intends to issue shares
of common stock to employees. The RSUs are subject to various vesting conditions and forfeiture provisions as disclosed in the Company’s
compensation plans.
In December 2024, the Company approved a modification
of the original RSU plan and implemented a new share-based compensation plan. This modification included changes to the number of RSUs,
vesting schedule, and other terms of the awards. Under the new plan, the total RSUs granted to employees are 2,220,464, with an extended
vesting period of 6 years.
This modification has been accounted for under ASC 718,
Compensation — Stock Compensation, as a Type I modification under ASC 718, as vesting was considered probable
both before and after the modification. Although the fair value of the modified RSUs is lower than the fair value of the original awards,
the modification did not result in a reduction of total compensation expense, as ASC 718 requires that the total compensation cost
recognized be no less than the grant-date fair value of the original awards. The total compensation cost recognized reflects the original
grant-date fair value as a minimum, with incremental compensation cost recognized over the extended vesting period where applicable. The
impact of these RSUs on the financial position, cash flows, and results of operations is reflected in the financial statements for the
year ended December 31, 2025 and 2024.
Total RSU stock-based compensation expense for the year ended
December 31, 2025, was US$ 1,680 (US$ 2,508 for the year ended December 31, 2024).
Number of
RSUs
Weighted-
Average Grant
Date Fair per
RSU
Nonvested as of December 31, 2023
2,220,464
2.5
Granted
16,130
2.5
Vested
(842,403 )
2.5
Nonvested as of December 31, 2024
1,394,191
2.5
Granted
16,130
4.0
Vested
(365,803 )
2.6
Nonvested as of December 31, 2025
1,044,518
2.5
Stock Options (SOs)
In December 2024, the Company granted Stock Options to
certain employees. Stock Options are a form of equity-based compensation that grant employees the right to purchase shares of the Company’s
common stock upon vesting, subject to the condition that the beneficiary remains employed with the Company. The fair value of the Stock
Options is determined at the grant date using a Monte Carlo simulation model. The significant assumptions used in the model include the
expected term of the options, expected share price volatility, an expected dividend yield, and a risk-free interest rate based
on government securities with a maturity consistent with the expected term. The resulting fair value is recognized as a compensation expense
over the requisite service period. Upon vesting, employees may exercise their options to purchase shares of common stock at the predetermined
exercise price.
F-31
SVRE Holdings Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars unless otherwise stated
22 Shared-based
compensation (cont.)
The Company has elected to use the graded vesting method for
recognizing compensation expense related to the Stock Options. Under this method, compensation expense is recognized over the vesting
period on a separate basis for each vesting portion of the award, which results in different expense amounts being recognized for each
vesting tranche.
Upon vesting, employees may exercise their options to purchase
shares of common stock at the predetermined exercise price. The Stock Options are subject to various vesting conditions, including both
time-based and performance-based criteria, as disclosed in the Company’s compensation plans. These vesting conditions are designed
to align the interests of the employees with those of the Company’s shareholders.
The assumptions used in determining the fair value of SOs
are as follows:
Year ended
December 31,
2025
Year ended
December 31,
2024
Expected term
5.0 – 5.3
6.0
Expected volatility
48.18% – 49.37%
39.44 %
Expected dividend yield
—
—
Risk-free interest rate
4.96% – 5.24%
6.57 %
The Company granted 13,122,094 Stock Options to employees
in 2025 and 2024. The compensation expense for these options is expected to be recognized on average over a period of 4 years as
employees fulfill the requisite service and performance conditions.
Number of
Options
Average fair
Value per
Option
Nonvested as of December 31, 2023
—
—
Granted
12,782,414
1.00
Vested
(4,929,120 )
1.00
Forfeited
(696,168 )
1.00
Nonvested as of December 31, 2024
7,157,126
1.00
Granted
339,680
3.70
Vested
(3,298,953 )
1.03
Forfeited
(609,375 )
1.00
Nonvested as of December 31, 2025
3,588,478
1.23
Total Stock Options compensation expense recognized for the years
ended December 31, 2025 and 2024, was US$ 3,395 and US$ 4,929, respectively. Forfeitures of Stock Options are recognized in the period
in which they occur, rather than estimated at the grant date.
The weighted-average grant date fair value of Stock Options
granted during the year ended December 31, 2025, was US$ 1.03 per option. The weighted-average grant date fair value of Stock Options
granted during the year ended December 31, 2024, was US$ 1.00 per option.
F-32
SVRE Holdings Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars unless otherwise stated
23 Related Party Transactions
During the years ended December 31, 2025 and 2024,
the Company engaged MN Consultoria Empresarial Ltda., a consulting firm wholly owned by an immediate family member of the Company’s
Chief Operating Officer (“COO”), to provide business management consulting and advisory services, including financial planning
and administrative support. The COO did not participate in the negotiation and was not the sole approver of the transaction. The terms
of the engagement were based on standard commercial conditions and approved by the Audit Committee and the Board of Directors.
The Company paid approximately US$ 256 in 2025 (US$ 646 in
2024) for these services.
As of December 31, 2025, the Company has an outstanding
payable balance of US$ 0 (zero) (US$ 170 as of December 31, 2024).
Consolidated balance sheets
2025
2024
Accounts payable and accrued expenses
Suppliers
—
100
Accrued expenses
—
70
Total
—
170
24 Subsequent events
The Company has analyzed its operations subsequent to December
31, 2025, to May 11, 2026, the date these consolidated financial statements were approved, and has determined that it does not have any
material subsequent events to disclose in these consolidated financial statements, except for the below:
Interim funding
On January 12, 2026, the Company entered into arrangements
for interim funding under a cost overrun facility with certain shareholders (MVB Investment Holdings LLC, VB (Rare Earths) Limited, and
EMG Fund V SVRE Holdings, LLC, collectively, the “Participants”) and OMF FUND III (F) Ltd.. The arrangements
contemplated up to US$24,000 of interim funding from the Participants and up to $8,000 from OMF FUND III (F) Ltd., subject to
specific conditions. Amounts advanced mature on December 31, 2029 and interest is capitalized through maturity. The Company had received
US$18,000 of proceeds from the Participants (US$12,000 in January 2026 and US$6,000 in February 2026). No amounts had been funded
by OMF FUND III (F) Ltd. as of that date. In connection with the Participants’ funding, the Company issued 1,028,571 warrants
to purchase ordinary shares at an exercise price of US$ 0.01 per share (342,857 warrants issued to each Participant based on equal
funding), with quantities determined at one warrant per US$17.50 of principal amount funded, subject to the rounding mechanics in the
warrant documentation. The warrants are exercisable upon specified triggering events (including a public offering or a company sale),
subject to their terms.
Finance agreement with the DFC
On January 21, 2026, the Company entered into a finance
agreement with the United States International Development Finance Corporation (“DFC”) providing for a senior secured
term loan facility in an aggregate principal amount not to exceed US$565,000 comprised of (i) an initial tranche of up to US$465,000
and (ii) an incremental tranche of up to US$100,000 (together, the “Facility”). The Facility is expected to be available
in up to six disbursements, subject to satisfaction of certain conditions. Annual interest accrues at a floating rate based on Term SOFR
plus a 4.0% spread, and the Facility includes, among other items, a commitment fee on undisbursed amounts, a facility fee, and an annual
maintenance fee. The term of the Facility is not to exceed twelve years from the first closing date, with
principal repayable in quarterly sculpted installments through maturity. The obligations under the Facility are expected to be guaranteed
pursuant to certain guaranty agreements and secured by first-priority liens on specified collateral (including pledged shares) under related
security documents. The agreement also includes customary affirmative and negative covenants, reporting requirements, and events of default.
In connection with the incremental tranche, the agreement contemplates issuance to DFC of a warrant to purchase ordinary shares representing
up to 10% (and an additional 2% upon the incremental loan, on a fully diluted basis, subject to the terms of the warrant) at a nominal
exercise price.
F-33
SVRE Holdings Ltd.
Notes to the consolidated financial statements
For the years ended December 31, 2025 and 2024
All amounts in thousands of U.S. dollars unless otherwise stated
24 Subsequent
events (cont.)
Merger Agreement with USAR
On April 19, 2026, the Company entered into the Agreement
and Plan of Merger (the “Merger Agreement”) with USA Rare Earth, Inc. (“USAR”), Middlebury Merger Sub Ltd., an
indirect wholly owned subsidiary of USAR (“Merger Sub”) and Serra Verde Rare Earths Ltd., acting in the capacity of seller
representative. Pursuant to the Merger Agreement, and subject to the satisfaction of customary closing conditions and receipt of required
regulatory approvals, the Company will merge with and into Merger Sub, with Merger Sub surviving as a wholly owned subsidiary of USAR,
which is expected to close in the third quarter of 2026.
The aggregate consideration to be received by the Company’s
shareholders at closing consists of (i) US$300,000 in cash and (ii) 126,849,307 common stocks of USAR. Based on USAR share
price of US$19.95 as of April 17, 2026, the implied total transaction value is approximately US$2,800,000. Upon closing, the Company’s
shareholders will own approximately 34% of USAR on a pro forma basis. Completion of the Merger is subject to certain closing conditions.
Upon closing, all outstanding warrants will be automatically
exercised and converted into ordinary shares immediately prior to the Merger. All outstanding RSUs and SARs, whether vested or unvested,
will accelerate in full and be cancelled in exchange for a pro rata portion of the merger consideration. Stock options not subject to
performance conditions will be similarly cancelled on a cashless basis for merger consideration, while performance-vesting options held
by continuing service providers will be substituted with USAR RSUs subject to continued service vesting. The Company’s equity incentive
plan will be terminated at closing. No fractional shares will be issued.
The Merger Agreement contains customary reciprocal representations
and warranties covering, among other matters, corporate organization, capitalization, financial statements, compliance with law, tax matters,
and material contracts.
Offtake Agreement
On April 20, 2026, SV Management Switzerland AG (the
“Seller”), a wholly owned subsidiary of the Company, entered into a long-term Offtake Agreement (the “Offtake Agreement”)
with US SIIE, LLC (the “Buyer”), a special purpose vehicle capitalized by the U.S. government and private capital sources.
The Offtake Agreement provides for the sale and purchase of 100% of Phase 1 production from the Company’s mine and processing
facility in Brazil (the “Facility”), Neodymium (Nd), Praseodymium (Pr), Dysprosium (Dy), and Terbium (Tb) in the form of mixed
rare earth carbonate (collectively, the “Products”). The term of the Offtake Agreement will continue until the earlier to
occur of: (i) the date the Seller has delivered the Products derived from 198,000,000 metric tons of run of mine ore; or (ii) the
date that is 20 years after the Facility commences commercial operations. The terms of the Offtake Agreement include guaranteed minimum
floor prices for each of Neodymium, Praseodymium, Dysprosium and Terbium, as well as mechanisms for shared upside. The SPV intends to
resale the products to entities who will separate and process the products for sale to companies serving all end markets and applications.
Environmental
In March 2026, subsequent to the balance sheet date,
the Company received notices of violation (“NOVs”) from the environmental regulatory authority, alleging non-compliance with
certain environmental laws and regulations. The alleged violations include, among other matters, operation of facilities without the required
environmental licenses, suppression of vegetation in protected areas, and unauthorized effluent discharges. The aggregate amount of administrative
penalties proposed under the NOVs is approximately US$2,644.
The Company has filed preliminary defenses and is currently
engaged in administrative proceedings with the environmental authority to contest the assessments. Based on the information currently
available and in consultation with external legal counsel, management has determined that an unfavorable outcome is neither probable nor
reasonably estimable at this time. Accordingly, in accordance with ASC 450, Contingencies, no liability has been recognized in the
accompanying consolidated financial statements, as the recognition criteria have not been met.
F-34
EX-99.4 — UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS OF USAR FOR THE YEAR ENDED DECEMBER 31, 2025
EX-99.4
Filename: ea029029301ex99-4.htm · Sequence: 6
Exhibit 99.4
UNAUDITED
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Introduction
The following unaudited pro forma condensed combined
financial information is derived from the historical consolidated financial statements of USA Rare Earth, Inc. (“USAR” or
the “Company”), and the historical consolidated financial statements of SVRE Holdings Ltd. (“SVRE”), and gives
effect to (i) the Merger (as defined below), and (ii) the Private Placement (as defined below) (collectively, the “Pro
Forma Transactions”).
On August 21, 2024, Inflection Point Acquisition
Corp. II, a Cayman Islands exempted company (“IPXX”) entered into a Business Combination Agreement (as amended on November 12,
2024 and January 30, 2025, the “Business Combination Agreement”), by and among IPXX, USA Rare Earth, LLC, a Delaware
limited liability company, and IPXX Merger Sub, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of IPXX. Pursuant
to the Business Combination Agreement, IPXX Merger Sub, LLC merged with and into USA Rare Earth, LLC, with USA Rare Earth, LLC continuing
as the surviving company, and IPXX changed its name to USA Rare Earth, Inc. On March 13, 2025, USAR consummated the previously announced
merger contemplated by the Business Combination Agreement and USA Rare Earth, LLC became a direct wholly owned subsidiary of USAR. This
transaction is already reflected in the USAR historical audited consolidated balance sheet as of December 31, 2025 and the historical
statement of operations of IPXX from January 1, 2025 to March 12, 2025 is not material to the pro forma presentation of the
Merger for the purpose of unaudited pro forma condensed combined statement of operations.
Merger
On April 19, 2026, USAR entered into a Merger
Agreement by and among (i) USAR, (ii) Middlebury Merger Sub Ltd. (“Merger Sub”), (iii) SVRE, and (iv) Serra
Verde Rare Earths Ltd. The Merger Agreement provides for the merger of SVRE with and into Merger Sub, with Merger Sub surviving such merger
as an indirect, wholly owned subsidiary of USAR (the “Merger”), subject to the satisfaction or waiver of the conditions precedent
to such closing. In the Merger, USAR will issue 126,849,307 shares of USAR’s common stock, par value $0.0001 per share (“Common
Stock”) and pay an aggregate of $300 million of merger consideration.
Private Placement
On January 26, 2026, USAR, entered into a securities
purchase agreement, for the private placement of 69,767,442 shares of USAR’s Common Stock, for aggregate gross proceeds of approximately
$1.5 billion, at a price per share of $21.50 (the “Private Placement”). USAR closed the Private Placement and issued
the shares of Common Stock on January 28, 2026.
Non-Binding Letter of Intent with U.S. Department of Commerce — Parent
Loan Agreement
On January 26, 2026, USAR also entered
into non-binding letters of intent with the U.S. Department of Commerce (the “DOC”) covering a total of approximately $1.6 billion,
including $277.0 million in direct funding awards under the Creating Helpful Incentives to Produce Semiconductors and Science Act
(the “CHIPS Act”), and $1.3 billion in senior secured debt with a 15-year term with an expected rate of Treasury + 150
basis points (collectively, the “Expected U.S. Government Transaction”). Disbursement of the direct funding and debt
proceeds to USAR is contingent upon USAR achieving certain project, financing and commercial milestones. The letter of intent for the
Expected U.S. Government Transaction is non-binding and remains subject to negotiation and execution of definitive documentation
(the “Definitive Agreements”), satisfaction of conditions precedent, and final government approvals. Considering that the
Definitive Agreements are yet to be executed and requires USAR to make investments and take future actions to receive funds, no adjustments
for the Expected U.S. Government Transactions have been included within the unaudited pro forma condensed combined financial information.
The Retained Finance Agreement
On January 21, 2026, SVRE entered into a
Finance Agreement with the United States International Development Finance Corporation (the “DFC”), which was
amended on March 5, 2026 (as further amended from time to time, the “Retained Finance Agreement”). The Retained
Finance Agreement provides SVRE with long-term debt financing to support its rare earth mining and processing operations in an
aggregate committed amount not to exceed $565 million, consisting of (i) an initial loan tranche with a principal amount
not to exceed $465 million and (ii) a second loan tranche with a principal amount not to exceed $100 million (the
“Incremental Loan”). As of March 31, 2026, the aggregate outstanding principal amount of indebtedness of SVRE and
its subsidiaries under the Retained Finance Agreement was approximately $327 million. The Incremental Loan is required to be
fully disbursed prior to the closing of the Merger. Adjustments for the Retained Finance Agreement have been included within the
unaudited pro forma condensed combined financial statements.
The Offtake Agreement
On or about the date of the Merger
Agreement, SV Management Switzerland AG (“SV Management Switzerland”), a subsidiary of SVRE, entered into an offtake
agreement with a special purpose vehicle capitalized by the U.S. government, as well as private capital sources (the “Counterparty”)
(as amended from time to time, the “Offtake Agreement”) for the long-term supply of rare earth materials produced by
SVRE.
The Offtake Agreement provides for the sale
of 100% of the rare earth products produced from phase one of the Pela Ema project, subject to limited carve-outs, although
SVRE’s delivery obligation will be reduced to 75% of phase one production if the Incremental Loan is not fully disbursed by
the agreed date. The agreement remains in effect until the earlier of specified production-based volume delivery thresholds and the
date that is 20 years after the date on which SVRE’s facility becomes capable of producing the contemplated products (the
“Commercial Operations Date”), unless extended with the consent of the U.S. government. Pricing is based on annually
escalated contractual floor prices, with amounts above the applicable floor price, as well as certain cost savings and yield
variances, allocated 70% to SV Management Switzerland and 30% to the Counterparty. Commencement of deliveries is subject to the
satisfaction or waiver of specified conditions precedent by the agreed long-stop date, June 12, 2026, and either party may terminate
the agreement without liability if such conditions are not satisfied or waived by that date. As it is considered probable that the
Offtake Agreement will be executed prior to closing of the Merger, adjustments related to the Offtake agreement have been included
within the unaudited pro forma condensed combined financial statements.
Presentation Periods
The unaudited pro forma condensed combined financial
information has been prepared in accordance with Article 11 of Regulation S-X and should be read in conjunction with the accompanying
notes.
The unaudited pro forma condensed combined balance
sheet as of December 31, 2025 combines the audited consolidated balance sheet of USAR as of December 31, 2025 with the audited
consolidated balance sheet of SVRE as of December 31, 2025, giving effect to the Pro Forma Transactions as if they had been consummated
on December 31, 2025.
The unaudited pro forma condensed combined statement
of operations for the year ended December 31, 2025 combines the audited consolidated statement of operations of USAR for the year
ended December 31, 2025 with the audited consolidated statement of operations of SVRE for the year ended December 31, 2025,
giving effect to the Pro Forma Transactions as if they had been consummated on January 1, 2025.
The unaudited pro forma condensed combined financial
information was derived from, and should be read in conjunction with, the following historical financial statements and the accompanying
notes:
● The historical audited consolidated financial statements
of USAR as of and for the year ended December 31, 2025, as included in the Company’s Annual Report on Form 10-K filed
with the SEC on March 30, 2026;
● The historical audited financial statements of SVRE as of
and for the year ended December 31, 2025, included as Exhibit 99.3.
2
The unaudited pro forma condensed combined financial
information should also be read together with other financial information included elsewhere in USAR’s filings with the SEC.
Accounting for the Merger
The unaudited pro forma condensed combined financial
information has been prepared using the acquisition method of accounting in accordance with accounting principles generally accepted in
the United States (“U.S. GAAP”). USAR has been identified as an accounting acquirer for accounting purposes, and
thus accounts for the Merger as a business combination in accordance with Accounting Standards Codification Topic 805, Business Combinations
(“ASC 805”). Under the acquisition method of accounting, SVRE’s assets and liabilities will be recorded at their
respective fair values. Any difference between the purchase price for SVRE and the fair value of the identifiable net assets acquired
(including intangibles) will be recorded as goodwill. The assets and liabilities of SVRE have been measured based on various preliminary
estimates using assumptions that USAR’s management believes are reasonable and based on currently available information. Accordingly,
the pro forma adjustments are preliminary and have been made solely for the purpose of providing this unaudited pro forma condensed combined
financial information.
Differences between these preliminary estimates
and the final purchase accounting may occur, and the final purchase accounting could be materially different from the preliminary estimates
used to prepare the accompanying unaudited pro forma condensed combined financial information and could have a material impact on the
combined company’s future results of operations and financial position.
Basis of Pro Forma Presentation
The unaudited pro forma condensed combined financial
information appearing below does not consider any potential effects of changes in market conditions on revenues or expense efficiencies,
among other factors. In addition, as explained in more detail in the accompanying notes, the preliminary allocation of the pro forma purchase
price reflected in the unaudited pro forma condensed combined financial information is subject to adjustment and may vary significantly
from what will be recorded upon completion of the final purchase price allocation.
The unaudited pro forma condensed combined financial
information has been prepared based on the aforementioned historical financial statements and the assumptions and adjustments as described
in the notes to the unaudited pro forma condensed combined financial information. The pro forma adjustments reflect transaction accounting
adjustments related to the Pro Forma Transactions, which are discussed in further detail below. The unaudited pro forma condensed combined
financial information is presented for illustrative purposes only and do not purport to represent the combined company’s consolidated
results of operations or the consolidated financial position that would actually have occurred had the Merger been consummated on the
dates assumed or to project the combined company’s consolidated results of operations or consolidated financial position for any
future date or period.
The accounting policies followed in preparing the
unaudited pro forma condensed combined financial information are those used by USAR as set forth in the audited historical financial statements.
The unaudited pro forma condensed combined financial information reflect any material adjustments known at this time to conform SVRE historical
financial information to USAR’s significant accounting policies based on the Company’s initial review and understanding of
SVRE’s significant accounting policies. A more comprehensive comparison and assessment will occur, which may result in additional
differences being identified. Additionally, USAR has included certain preliminary presentation adjustments for consistency in the financial
statement presentation. See Notes 2 and 3 below for more information.
The unaudited pro forma condensed combined
financial information is presented for illustrative purposes only and does not reflect the costs of any integration activities or cost
savings or synergies that may be achieved because of the Merger.
USAR and SVRE have not had any historical material
relationship prior to the Merger. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.
3
Unaudited Pro Forma Condensed Combined Balance
Sheet
As of December 31, 2025
(in thousands)
USAR
Historical
SVRE
Presentation
Adjustments
Transaction
Accounting
Adjustments
Other
Material
Transactions
Pro Forma
Combined
ASSETS
Current assets
Cash and cash equivalents
$ 359,925
$ 2,556
$ (300,000 )
(B)
$ (45,377 )
(D)
$ 1,658,851
299,009
(E)
1,450,000
(F)
(107,262 )
(G)
Accounts receivables
3,764
80
3,844
Inventories
18,535
18,566
37,101
Recoverable taxes
—
2,881
2,881
Prepaid expenses and other current assets
3,151
1,455
4,606
Total current assets
385,375
25,538
—
(300,000 )
1,596,370
1,707,283
Property, plant and
equipment, net
86,449
559,528
1,170
(A)
2,563,351
(B)
3,196,480
(14,018 )
(A)
Mineral interests
17,339
—
14,018
(A)
31,357
Goodwill
134,848
—
1,556,905
(B)
1,691,753
Other intangible assets, net
68,612
7
246,684
(B)
315,303
Equipment deposits
1,879
—
—
—
—
1,879
Operating lease right-of-use assets
321
—
—
—
—
321
Finance lease right-of-use assets
—
1,170
(1,170 )
(A)
—
Deferred financing costs
—
4,031
4,031
Other non-current assets
176
160
336
Total assets
$ 694,999
$ 590,434
$ —
$ 4,066,940
$ 1,596,370
$ 6,948,743
LIABILITIES, MEZZANINE AND STOCKHOLDER’S EQUITY
Liabilities
Current liabilities
Accounts payable
$ 11,069
$ 17,081
$ (6,757 )
(A)
$ 21,393
Accrued liabilities
14,073
—
13,135
(A)
113,000
(C)
141,017
809
(A)
Contract liabilities
10,500
—
10,500
Notes payable
1,849
—
1,849
Salaries and social charges
—
6,378
(6,378 )
(A)
—
Taxes payable
—
1,029
1,029
Other current liabilities
—
809
(809 )
(A)
—
Royalty agreement
—
5,769
5,769
Finance leases, current
283
960
1,243
Operating leases, current
137
—
—
137
Total current liabilities
37,911
32,026
—
113,000
—
182,937
4
Unaudited Pro Forma Condensed Combined Balance
Sheet
As of December 31, 2025 — (Continued)
(in thousands)
USAR
Historical
SVRE
Presentation
Adjustments
Transaction
Accounting
Adjustments
Other
Material
Transactions
Pro Forma
Combined
Class A preferred shares
—
45,377
(45,377 )
(D)
—
Royalty agreement
—
67,258
153,831
(B)
221,089
Credit agreement
—
107,262
299,009
(E)
299,009
(107,262 )
(G)
Asset retirement obligations
—
4,423
4,423
Deferred grants
8,200
—
8,200
Finance leases, non-current
592
324
916
Operating leases, non-current
185
—
185
Other liabilities
—
1,449
1,449
Earnout liabilities
108,671
—
108,671
Warrant liabilities
19,534
8,625
(8,625 )
(B)
19,534
Deferred tax liability
16,715
—
903,109
(B)
919,824
Total liabilities
191,808
266,744
—
1,161,315
146,370
1,766,237
Commitments and contingencies
Mezzanine equity
12% Series A Cumulative Convertible Preferred Stock
8,905
—
—
—
—
8,905
Total mezzanine equity
8,905
—
—
—
—
8,905
Stockholders’ equity
Common stock
15
—
127
(B)
7
(F)
149
Accumulated other comprehensive income (loss)
130
(31,111 )
31,111
(B)
130
Additional paid-in capital
879,848
614,383
(614,383 )
(B)
1,449,993
(F)
5,672,029
3,342,188
(B)
Accumulated deficit
(387,360 )
(259,582 )
259,582
(B)
(500,360 )
(113,000 )
(C)
Non-controlling interest
1,653
—
1,653
Total stockholders’ equity
494,286
323,690
—
2,905,625
1,450,000
5,173,601
Total liabilities, mezzanine equity, and stockholder’s equity
$ 694,999
$ 590,434
$ —
$ 4,066,940
$ 1,596,370
$ 6,948,743
Please refer to the notes to the unaudited pro
forma condensed combined financial information.
5
Unaudited Pro Forma Condensed Combined Statement
of Operations
For the Year Ended December 31, 2025
(in thousands except per share amounts)
USAR
Historical
SVRE
Presentation
Adjustments
Transaction
Accounting
Adjustments
Other
Material
Transactions
Pro Forma
Combined
Revenue
$ 1,643
$ 2,486
$ 4,129
Cost of revenue
1,448
36,105
37,553
Gross profit
195
(33,619 )
—
—
—
(33,424 )
Operating expenses:
Selling, general and administrative
43,135
25,803
278
(AA)
113,000
(CC)
195,346
13,130
(DD)
Research and development
15,885
—
15,885
Amortization of intangible assets
678
—
678
Other expenses, net
—
1,440
1,440
Total operating expenses
59,698
27,243
278
126,130
—
213,349
Loss from operations
(59,503 )
(60,862 )
(278 )
(126,130 )
—
(246,773 )
Other expense, net
Interest and dividend income
5,446
2,671
8,117
Loss on fair market value of financial instruments, net
(244,488 )
—
(7,652 )
(AA)
7,652
(EE)
(244,488 )
Interest expense and other income (loss), net
(139 )
(9,873 )
7,930
(AA)
4,268
(FF)
(26,422 )
(29,308 )
(GG)
700
(HH)
Foreign currency exchange, net
—
49,532
49,532
Total other expense, net
(239,181 )
42,330
278
—
(16,688 )
(213,261 )
Loss before taxes
(298,684 )
(18,532 )
—
(126,130 )
(16,688 )
(460,034 )
Benefit from taxes
(160 )
—
(160 )
Net loss
(298,524 )
(18,532 )
—
(126,130 )
(16,688 )
(459,874 )
Net loss attributable to non-controlling interest
(965 )
—
(965 )
Net loss attributable to USA Rare Earth, Inc.
$ (297,559 )
$ (18,532 )
$ —
$ (126,130 )
$ (16,688 )
$ (458,909 )
Net loss per share attributable to USA Rare Earth, Inc.:
Basic and diluted
$ (3.31 )
$ (0.10 )
$ (1.65 )
Number of shares used in per share calculations:
Basic and diluted
98,021
193,429
294,638
Please refer to the notes to the unaudited pro
forma condensed combined financial information.
6
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL INFORMATION
1. Basis of Presentation
The pro forma adjustments have been prepared as
if the Pro Forma Transactions had been consummated on December 31, 2025, in the case of the unaudited pro forma condensed combined
balance sheet, and, in the case of the unaudited pro forma condensed combined statements of operations, as if the Pro Forma Transactions
had been consummated on January 1, 2025, the beginning of the earliest period presented in the unaudited pro forma condensed combined
statements of operations.
The unaudited pro forma condensed combined financial
information has been prepared assuming the acquisition method of accounting in accordance with U.S. GAAP. Under this method,
SVRE’s assets and liabilities will be recorded at their respective fair values. Any difference between the purchase price for SVRE
and the fair value of the identifiable net assets acquired (including intangibles) will be recorded as goodwill. The assets and liabilities
of SVRE have been measured based on various preliminary estimates using assumptions that USAR’s management believes are reasonable
and based on currently available information. Accordingly, the pro forma adjustments are preliminary and have been made solely for the
purpose of providing this unaudited pro forma condensed combined financial information.
The pro forma adjustments represent management’s
estimates based on information available as of May 13, 2026 and are subject to change as additional information becomes available and
additional analyses are performed.
One-time direct and incremental transaction costs
will be expensed as incurred under ASC 805.
USAR has performed a preliminary review to identify
any accounting policy differences between the accounting policies used in SVRE’s financial statements and those of the Company,
where the impact was potentially material and could be reasonably estimated, with the Company identifying no such differences.
2. Adjustments to the Unaudited Pro Forma Condensed Combined Balance
Sheet as of December 31, 2025
The adjustments included in the unaudited pro forma
condensed combined balance sheet as of December 31, 2025 are as follows:
(A) Reflects reclassification adjustments to conform SVRE’s
historical balances to the financial statement presentation of USAR.
(B) Reflects the purchase price allocation adjustments to record
SVRE’s identifiable assets acquired and liabilities assumed at their estimated fair values as of the acquisition date. The related
statement of operations adjustments are reflected at adjustment (BB). Additionally, this adjustment reflects the recording of the preliminary
estimate of goodwill and the elimination of the historical equity balances of SVRE.
Pursuant to ASC 805, the preliminary purchase price was
allocated among the identified net assets to be acquired, based on a preliminary analysis. Goodwill is expected to be recognized as a
result of the Merger, which represents the excess fair value of consideration over the fair value of the underlying net assets of SVRE. The
deferred income taxes represent the deferred tax impact associated with the incremental differences in book and tax basis created from
the preliminary purchase price allocation. Deferred taxes associated with estimated fair value adjustments were calculated using the statutory
corporate tax rate in Brazil of 34%. The estimates of fair value are based upon preliminary valuation assumptions, and are believed to
be reasonable, but are inherently uncertain and unpredictable. As a result, actual results may differ from estimates, and the difference
may be material.
7
The following is a preliminary estimate of fair value of the
assets acquired and the liabilities assumed by USAR in the Merger, reconciled to the estimated purchase consideration (in thousands):
Net Assets Identified
Preliminary
Estimate of
Fair Value
Cash and cash equivalents
$ 2,556
Accounts receivable
80
Inventories
18,566
Recoverable taxes
2,881
Prepaid expenses and other current assets
1,455
Property, plant and equipment, net
3,122,879
Finance lease right-of-use assets
1,170
Other intangible assets, net(1)
246,691
Deferred financing costs
4,031
Other non-current assets
160
Accounts payable
(17,081 )
Salaries and social charges
(6,378 )
Taxes payable
(1,029 )
Other current liabilities
(809 )
Royalty agreement – current(2)
(5,769 )
Finance leases, current
(960 )
Class A preferred shares
(45,377 )
Royalty agreement – noncurrent(2)
(221,089 )
Credit agreement
(107,262 )
Asset retirement obligations
(4,423 )
Finance leases, current
(324 )
Provision for labor risks
(1,449 )
Deferred tax liabilities
(903,109 )
Total net assets identified
$ 2,058,410
Goodwill
1,556,905
Total purchase consideration
$ 3,642,315
Value Conveyed
Cash consideration(3)
$ 300,000
Equity consideration(4)
3,339,942
Pre-combination expense for vested performance stock options(5)
2,373
Total purchase consideration
$ 3,642,315
(1) Other
intangible assets is comprised of an Offtake Agreement. Although as of May 13, 2026 the definitive agreement for this Offtake Agreement
has yet to be executed, the transaction is contingent on the execution of a definitive agreement and accordingly it is considered probable
that the definitive agreement will be executed. The Offtake Agreement asset is expected to be amortized over a period of 20 years.
(2) This
reflects an increase in the fair value of the liability for royalty payments due to an increase in estimated future cash payments. The
increase in estimated future cash payments is primarily related to the anticipated impact of the Offtake Agreement.
(3) This
amount represents cash consideration paid to SVRE’s shareholders.
(4) Equity
consideration is provided in the form of Common Stock of USAR and is calculated as 126,849,307 shares of USAR Common Stock to be issued
to SVRE shareholders, multiplied by $26.33, the closing share price of USAR on May 1, 2026.
8
The
following table shows the effect of changes in USAR’s share price and the resulting impact on the estimated purchase consideration,
and estimated goodwill:
Change in Share Price of USAR
Share
Price
Estimated
Purchase
Consideration
(in thousands)
Estimated
Goodwill
(in thousands)
Increase of 25%
$ 32.91
$ 4,477,301
$ 2,391,891
Decrease of 25%
19.75
2,807,330
721,920
(5) This
reflects the pre-combination expense pertaining to options to purchase SVRE shares subject to performance-vesting conditions (the “Performance-Vesting
Options”) which will be substituted with USAR time-vesting restricted stock units.
(C) Reflects the impact of nonrecurring expenses related to estimated
transaction costs, primarily comprised of investment banking fees, legal fees, issuance costs, accounting and audit fees, and other related
advisory costs. No amount was incurred and accrued on the balance sheet as of December 31, 2025. The related income statement adjustment
is reflected at adjustment (CC).
(D) Reflects the redemption of SVRE’s Class A Preferred
Shares pursuant to the side letter agreement, dated March 5, 2026, between SVRE and OMF Fund III (F) Ltd (“Orion”).
The related income statement adjustment is reflected at adjustment (FF).
(E) Reflects the issuance of the long-term debt financing of
SVRE pursuant to the Retained Finance Agreement in an aggregate principal amount of $327 million, net of estimated debt discount
and debt issuance costs of $28 million. The related income statement adjustment is reflected at adjustment (GG).
(F) Reflects the issuance of USAR’s Common Stock in an
amount of $1,450 million, net of issuance costs of $50 million, as described in the section entitled “Private Placement”.
(G) Reflects the repayment of the credit agreement dated October 21, 2021
by and among SVRE, OMF Fund II (BC) Ltd. and affiliated lenders that established a senior secured non-revolving facility (the “OMF
Credit Agreement”) with the proceeds from the Retained Finance Agreement. The related income statement adjustment is reflected at
adjustment (HH).
9
3. Adjustments to the Unaudited Pro Forma Condensed Combined Statement
of Operations for the year ended December 31, 2025
The adjustments included in the unaudited pro forma
condensed combined statement of operations for the year ended December 31, 2025 are as follows:
(AA) Reflects a reclassification adjustment to conform SVRE’s
historical expenses to the financial statement presentation of USAR.
(BB) Reflects the pro forma impacts related to the purchase price
allocation discussed at adjustment (B). This includes the following impacts:
● Amortization of other intangible assets — Other
intangible assets is comprised of an Offtake Agreement. As of May 13, 2026, the definitive agreement for this Offtake Agreement has yet
to be executed, and delivery pursuant to the Offtake Agreement has not started. Accordingly, amortization of the Offtake Agreement had
not commenced as of the pro forma transaction date and, therefore, no related amortization expense has been reflected.
● Interest on royalty agreement — No
adjustment has been included for the anticipated increase in interest expense as the anticipated incremental interest expense related
to the increase in estimated future cash payments will not be recognized until the Offtake Agreement is executed and as volumes are delivered
pursuant to the agreement.
(CC) Reflects the recognition of nonrecurring expenses related
to estimated transaction costs in the amount of $113 million, which are primarily comprised of investment banking fees, legal fees,
issuance costs, accounting and audit fees, and other related advisory costs. The related balance sheet adjustment is reflected at adjustment
(C).
(DD) Reflects the recognition of post-combination stock-based
compensation expense in the amount of $13.1 million related to Performance-Vesting Options which will be substituted with USAR time-vesting
restricted stock units.
(EE) Reflects the elimination of the recognized loss due to the
change in fair value of warrant liability in an amount equal to $7.7 million related to the private placement warrants issued by
SVRE to its investors. These warrants will be settled through equity consideration to the holders pursuant to the Merger. The related
balance sheet adjustment is reflected in adjustment (B).
(FF) Reflects the elimination of interest related to Class A
Preferred Shares in an amount equal to $4.3 million due to their redemption pursuant to the side letter agreement, dated March 5,
2026, between SVRE and Orion. The related balance sheet adjustment is reflected at adjustment (D).
(GG) Reflects estimated interest expense related to long-term
debt financing of SVRE pursuant to the Retained Finance Agreement, as presented at adjustment (E), calculated using an estimated interest
rate of Term SOFR plus 4%. This adjustment also includes the amortization of estimated debt discount and debt issuance costs of $2.3 million.
An increase or decrease of one-eighth of a percent in the interest rate would not result in a significant change in interest expense
for the year ended December 31, 2025. The related balance sheet adjustment is reflected at adjustment (E).
(HH) Reflects the elimination of interest related to the OMF Credit
Agreement in an amount equal to $0.7 million due to their repayment. The related balance sheet adjustment is reflected at adjustment
(G).
10
4. Unaudited Pro Forma Net Loss Per Share
The pro forma net loss per share calculations have
been performed for the year ended December 31, 2025, assuming the Pro Forma Transactions had been consummated on January 1,
2025.
(in thousands except per share amounts)
For the
Year Ended
December 31,
2025
Numerator
Pro forma net loss attributable to USA Rare Earth, Inc.
$ (458,909 )
Declared and deemed dividends, and interest accretion
(26,594 )
Pro forma undistributed net loss attributable to USA Rare Earth, Inc.
$ (485,503 )
Denominator
USAR pro forma weighted average number of common shares outstanding-basic
98,021
Add: Shares to be issued to SVRE shareholders in a Merger
126,849
Add: Shares to be issued in a private placement
69,747
Pro forma weighted average shares of common stock outstanding – basic & diluted
294,638
Pro forma net loss per share – basic & diluted
$ (1.65 )
The Company’s potentially dilutive outstanding
securities were excluded from the computation of pro forma diluted net loss per share because their effect would have been anti-dilutive.
11
GRAPHIC
GRAPHIC
Filename: ea029029301_img1.jpg · Sequence: 7
Binary file (16187 bytes)
Download ea029029301_img1.jpg
GRAPHIC
GRAPHIC
Filename: ea029029301_ex99-2img1.jpg · Sequence: 8
Binary file (348953 bytes)
Download ea029029301_ex99-2img1.jpg
XML — IDEA: XBRL DOCUMENT
XML
Filename: R1.htm · Sequence: 13
v3.26.1
Cover
May 13, 2026
Cover [Abstract]
Document Type
8-K
Amendment Flag
false
Document Period End Date
May 13, 2026
Entity File Number
001-41711
Entity Registrant Name
USA
Rare Earth, Inc.
Entity Central Index Key
0001970622
Entity Tax Identification Number
98-1720278
Entity Incorporation, State or Country Code
DE
Entity Address, Address Line One
100
W. Airport Road
Entity Address, City or Town
Stillwater
Entity Address, State or Province
OK
Entity Address, Postal Zip Code
74075
City Area Code
813
Local Phone Number
867-6155
Written Communications
false
Soliciting Material
false
Pre-commencement Tender Offer
false
Pre-commencement Issuer Tender Offer
false
Title of 12(b) Security
Common Stock, par value $0.0001
Trading Symbol
USAR
Security Exchange Name
NASDAQ
Entity Emerging Growth Company
true
Elected Not To Use the Extended Transition Period
false
X
- Definition
Boolean flag that is true when the XBRL content amends previously-filed or accepted submission.
+ References
No definition available.
+ Details
Name:
dei_AmendmentFlag
Namespace Prefix:
dei_
Data Type:
xbrli:booleanItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Area code of city
+ References
No definition available.
+ Details
Name:
dei_CityAreaCode
Namespace Prefix:
dei_
Data Type:
xbrli:normalizedStringItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Cover page.
+ References
No definition available.
+ Details
Name:
dei_CoverAbstract
Namespace Prefix:
dei_
Data Type:
xbrli:stringItemType
Balance Type:
na
Period Type:
duration
X
- Definition
For the EDGAR submission types of Form 8-K: the date of the report, the date of the earliest event reported; for the EDGAR submission types of Form N-1A: the filing date; for all other submission types: the end of the reporting or transition period. The format of the date is YYYY-MM-DD.
+ References
No definition available.
+ Details
Name:
dei_DocumentPeriodEndDate
Namespace Prefix:
dei_
Data Type:
xbrli:dateItemType
Balance Type:
na
Period Type:
duration
X
- Definition
The type of document being provided (such as 10-K, 10-Q, 485BPOS, etc). The document type is limited to the same value as the supporting SEC submission type, or the word 'Other'.
+ References
No definition available.
+ Details
Name:
dei_DocumentType
Namespace Prefix:
dei_
Data Type:
dei:submissionTypeItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Address Line 1 such as Attn, Building Name, Street Name
+ References
No definition available.
+ Details
Name:
dei_EntityAddressAddressLine1
Namespace Prefix:
dei_
Data Type:
xbrli:normalizedStringItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Name of the City or Town
+ References
No definition available.
+ Details
Name:
dei_EntityAddressCityOrTown
Namespace Prefix:
dei_
Data Type:
xbrli:normalizedStringItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Code for the postal or zip code
+ References
No definition available.
+ Details
Name:
dei_EntityAddressPostalZipCode
Namespace Prefix:
dei_
Data Type:
xbrli:normalizedStringItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Name of the state or province.
+ References
No definition available.
+ Details
Name:
dei_EntityAddressStateOrProvince
Namespace Prefix:
dei_
Data Type:
dei:stateOrProvinceItemType
Balance Type:
na
Period Type:
duration
X
- Definition
A unique 10-digit SEC-issued value to identify entities that have filed disclosures with the SEC. It is commonly abbreviated as CIK.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
+ Details
Name:
dei_EntityCentralIndexKey
Namespace Prefix:
dei_
Data Type:
dei:centralIndexKeyItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Indicate if registrant meets the emerging growth company criteria.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
+ Details
Name:
dei_EntityEmergingGrowthCompany
Namespace Prefix:
dei_
Data Type:
xbrli:booleanItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Indicate if an emerging growth company has elected not to use the extended transition period for complying with any new or revised financial accounting standards.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Securities Act
-Number 7A
-Section B
-Subsection 2
+ Details
Name:
dei_EntityExTransitionPeriod
Namespace Prefix:
dei_
Data Type:
xbrli:booleanItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Commission file number. The field allows up to 17 characters. The prefix may contain 1-3 digits, the sequence number may contain 1-8 digits, the optional suffix may contain 1-4 characters, and the fields are separated with a hyphen.
+ References
No definition available.
+ Details
Name:
dei_EntityFileNumber
Namespace Prefix:
dei_
Data Type:
dei:fileNumberItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Two-character EDGAR code representing the state or country of incorporation.
+ References
No definition available.
+ Details
Name:
dei_EntityIncorporationStateCountryCode
Namespace Prefix:
dei_
Data Type:
dei:edgarStateCountryItemType
Balance Type:
na
Period Type:
duration
X
- Definition
The exact name of the entity filing the report as specified in its charter, which is required by forms filed with the SEC.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
+ Details
Name:
dei_EntityRegistrantName
Namespace Prefix:
dei_
Data Type:
xbrli:normalizedStringItemType
Balance Type:
na
Period Type:
duration
X
- Definition
The Tax Identification Number (TIN), also known as an Employer Identification Number (EIN), is a unique 9-digit value assigned by the IRS.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b-2
+ Details
Name:
dei_EntityTaxIdentificationNumber
Namespace Prefix:
dei_
Data Type:
dei:employerIdItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Local phone number for entity.
+ References
No definition available.
+ Details
Name:
dei_LocalPhoneNumber
Namespace Prefix:
dei_
Data Type:
xbrli:normalizedStringItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 13e
-Subsection 4c
+ Details
Name:
dei_PreCommencementIssuerTenderOffer
Namespace Prefix:
dei_
Data Type:
xbrli:booleanItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 14d
-Subsection 2b
+ Details
Name:
dei_PreCommencementTenderOffer
Namespace Prefix:
dei_
Data Type:
xbrli:booleanItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Title of a 12(b) registered security.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection b
+ Details
Name:
dei_Security12bTitle
Namespace Prefix:
dei_
Data Type:
dei:securityTitleItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Name of the Exchange on which a security is registered.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 12
-Subsection d1-1
+ Details
Name:
dei_SecurityExchangeName
Namespace Prefix:
dei_
Data Type:
dei:edgarExchangeCodeItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as soliciting material pursuant to Rule 14a-12 under the Exchange Act.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Exchange Act
-Number 240
-Section 14a
-Subsection 12
+ Details
Name:
dei_SolicitingMaterial
Namespace Prefix:
dei_
Data Type:
xbrli:booleanItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Trading symbol of an instrument as listed on an exchange.
+ References
No definition available.
+ Details
Name:
dei_TradingSymbol
Namespace Prefix:
dei_
Data Type:
dei:tradingSymbolItemType
Balance Type:
na
Period Type:
duration
X
- Definition
Boolean flag that is true when the Form 8-K filing is intended to satisfy the filing obligation of the registrant as written communications pursuant to Rule 425 under the Securities Act.
+ References
Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher SEC
-Name Securities Act
-Number 230
-Section 425
+ Details
Name:
dei_WrittenCommunications
Namespace Prefix:
dei_
Data Type:
xbrli:booleanItemType
Balance Type:
na
Period Type:
duration