What changed in this filing

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Item 1. Business

2026-03-30 compared with 2025-03-31 · 458 added, 840 removed, 16 unchanged (99% of the section changed)

USARE is a company whose mission is to establish

a domestic rare earth magnet supply chain that supports the future state of energy, mobility, and national security in the United States.

USARE is developing a rare earth sintered neo magnet (“ neo magnet ”) manufacturing plant in Stillwater, Oklahoma, and

intends to establish domestic rare earth and critical minerals supply, extraction, and processing capabilities to both supply its magnet

manufacturing plant and market surplus materials to third-parties.

Rare earth magnets are critical to various business sectors and industries,

including the defense, automotive, aviation, industrial, medical and consumer electronics industries, among others.

USARE is planning

to take a broad approach to the industries it serves with the intention of providing high quality sintered neo magnets to a variety of

industries and customers.

The Company’s intention is to take a structured approach to building out its supply chain to supply feedstock

to its magnet facility.

While our vision is to ultimately vertically integrate our operations, we will be evaluating each stage of the

magnet supply chain to find the optimal approach to maximizing value from mine to magnet.

USARE controls rights to a deposit of rare earths,

the Round Top Deposit (as defined below), in West Texas.

While this deposit could potentially provide significant value to USARE and its

operations over the long term, USARE initially will be focused on partnering with ex-China suppliers and building or buying the capabilities

we need to profitably manufacture high quality neo magnets in the United States.

USARE’s long-term approach — from

sourcing rare earths, in addition to other critical minerals such as gallium, to producing finished neo magnets — assists

in strengthening the United States’ control over critical supply chains such as the supply of rare earth minerals and magnets

and thus reducing domestic reliance on foreign, particularly Chinese, imports.

USARE’s focus on developing domestic rare earth production

aligns with national priorities, offering the future potential of a sustainable and secure domestic supply of materials critical to key

History of USARE

USA Rare Earth, LLC, a Delaware limited liability

company, was organized in Delaware in 2019.

In connection with the Company’s organization a member of the Company contributed its

rights related to Round Top to the Company.

In May 2021 the Company completed the acquisition

of 80% of the equity interests of Round Top Mountain Development LLC (“ RTMD ”) pursuant to a contribution agreement

with the Company, Texas Mineral Resource Corp.

(“ TMRC ”) and RTMD whereby TMRC and the Company contributed their respective

rights and interests in and to Round Top to RTMD.

Concurrently, the Company, TMRC and RTMD entered into a limited liability company

agreement of RTMD.

As of December 31, 2024, USA Rare Earth, LLC is the owner of approximately 81% of the equity interests in

On the Closing Date, we consummated the Business

Combination and Inflection Point Acquisition Corp.

II was renamed “USA Rare Earth, Inc.” As a result of the Business Combination,

we are a holding company, all of whose assets are held directly or indirectly by, and all of whose operations are conducted through, USARE

OpCo and whose only direct asset consists of equity ownership of USARE OpCo.

As the manager of USARE OpCo, we have all management powers

over, and full control of, the business of USARE OpCo, including the power to take all action we deem necessary, appropriate, advisable,

incidental, or convenient to accomplish the purposes of USARE OpCo set forth in its A&R Operating Agreement

USARE OpCo is the sole owner of USARE Rare Earth

Magnets, LLC, a Delaware limited liability company (“ Magnet Sub ”), which owns, directly or indirectly, the Company’s

magnet equipment and real estate in Stillwater, Oklahoma comprising the Stillwater Facility.

USARE’s Facilities

Stillwater, Oklahoma Magnet Manufacturing

Magnet Production .

Company’s magnet production facility is located in Stillwater, Oklahoma (the “ Stillwater Facility ”).

The Stillwater Facility is an industrial facility of approximately 310,000 square feet that was built in 1984, with an addition being

added in 1988.

The Stillwater Facility sits on an approximately 40-acre parcel that is serviced by municipal utilities.

The facility,

as currently constructed, will allow for the buildout of up to 4,800 tpa nameplate capacity within the current facility.

The large lot

surrounding the facility can also provide the space to build on new manufacturing capacity or capabilities in the future.

USARE purchased

the Stillwater Facility in 2022 and has contributed significant capital into the facility to date, including initial acquisition costs,

structural improvements, renovations, the purchase of magnet production equipment, and purchase and installation of lab equipment for

the Company’s in-house Innovations Lab (the “ Lab ”).

The Stillwater Facility contains magnet production

equipment, which the Company owns outright.

The Company engaged a third-party team with experience utilizing the equipment as independent

consultants to assist in the initial installation and testing of the equipment.

The Company believes that this equipment, supported by

a third-party team who has run it successfully in the past, could help the Company rapidly commission the facility once completed.

The Company has ordered the remaining finishing equipment and has begun to build out the infrastructure it needs at the facility to support

commercial production with the intention of commissioning the facility in 2026

In connection with the completion of the Stillwater

Facility, the Company is developing its Lab to support the Company’s magnet production capabilities and accompanying required assessment

of finished product for satisfaction of customer specifications and requirements.

On March 31, 2025 the Company announced it has commissioned

its Lab and will begin prototyping permanent neo magnets for its customers in the second quarter of 2025.

The Lab will further support

our objective of completing the first phase of the Stillwater Facility to allow for the initial commercial production of neo magnets in

For phase 1, we are targeting 1,200 tpa of nameplate capacity, which will require significant additional expenditures.

to add future capacity in multiple phases over the next few years to ultimately achieve 4,800 tpa nameplate capacity.

The speed of that

buildout will be based on future customer demand and market conditions.

Our plan to sell to a diverse set of customers across a variety

of industries is expected to be a differentiator in the market.

We also believe that our focus in developing strong, in-house lab

capabilities to develop new intellectual property ourselves, as well as together with our customers, to potentially improve magnet technology,

will provide a powerful incentive for customers to work with us in the coming years.

Corporate Offices .

Company’s corporate offices are also located at the Stillwater Facility at 100 W Airport Road, Stillwater, Oklahoma 74075.

this location, the Company manages its overarching business strategy, investor relations, and the development of partnerships with key

stakeholders in both the public and private sectors.

Oklahoma provides access to a skilled workforce and a business-friendly environment.

Colorado Mining Research Facility

The Company’s Wheat Ridge, Colorado facility

(the “ Colorado Facility ”) is the central hub for the Company’s research activities focused on rare earth and

critical minerals extraction and separation as well as advanced processing technologies.

The Colorado Facility is not a production facility,

but rather develops and refines the technologies that, with success, would be applied at the Company’s Round Top Project.

focus of the Colorado Facility’s research is the development of separation processes to minimize the use of organic solvents, intended

to result in a lower waste profile as compared to alternative separation methods.

The Colorado Facility’s work is critical

in creating new methods for separating and processing rare earths in a way that is both cost-effective and environmentally sustainable.

These efforts have been ongoing, and the facility has successfully separated a number of rare earths, including dysprosium and terbium,

among others, from its Round Top Deposit to date.

These efforts support the Company’s commitment to domestic rare earth production

and the long-term stability of the United States’ rare earth supply chain.

The Colorado Facility comprises two leased buildings

adjacent to each other.

The Company renewed its leases on both buildings in February 2025 with both leases expiring in the first quarter

As further discussed below, the Company holds a radioactive equipment registration issued for the benefit of its Colorado Facility.

Item 1 — Business

USA Rare Earth, Inc.’s mission is to be a global leader in the supply of critical minerals and advanced materials and the partner of choice in producing rare earth elements, oxides, metals and magnets.

Rare earth elements and critical minerals are vital inputs to end markets including national security, technological innovation, and the increasing number of advanced manufacturers who seek a reliable source of rare earth materials and magnets.

We intend to deploy capital in effective and efficient ways to develop our assets and to deliver innovative, high-quality products to our partners and customers.

We are building an integrated rare earth mine to magnet value chain that we project will be resilient through economic cycles, and well-positioned to meet today’s market dynamics and national security priorities.

As we advance this strategy, we plan to deliver high‑margin organic growth driven by disciplined execution as we develop world‑class assets and capabilities.

Our value chain model also prioritizes identifying strategic opportunities for additional growth and expansion.

We intend to secure relationships with the private and public sector, scaling our production and building strong capabilities across each link of our integrated value chain.

We have mining rights to what we believe is one of North America’s largest recoverable deposits of heavy rare earth elements (“HREE”) which includes dysprosium, terbium and yttrium, as well as critical minerals such as gallium and hafnium, which we believe should be sufficient for our metal and magnet making needs, as well as to help meet global third-party demand.

We believe our pipeline of strategic expansionary projects should provide opportunities for growth.

Our growing list of projects includes:

• The establishment of a secure domestic supply chain for rare earths through our proposed collaboration with the U.S.

Government subject to the negotiation of definitive agreements and the achievement of specified milestones.

Under the letter of intent we signed in January 2026, the U.S.

government is expected to provide a total of $1.6 billion in direct funding awards and loans under the CHIPS Act, which should significantly accelerate and de-risk our build-out plans.

If completed, the proposed collaboration would represent the largest government financing initiative to date for a rare earth company, reflecting the strategic importance of establishing a secure domestic supply chain for critical minerals, metals and permanent magnets.

Rare earth oxides, metals, alloys and permanent magnets are essential parts of semiconductors and related manufacturing technology, as well as radar systems, missile and fighter jet guidance systems, and lightweight precision aerospace components, among many other applications.

• The implementation of our Accelerated Mining Plan (“AMP") that anticipates the start of commercial production at Round Top in late 2028.

To assure our own domestic supply of material for metal making, we plan to mine raw material from our deposit at Round Top in Sierra Blanca, Texas, which we believe is one of the richest recoverable deposits of heavy rare earths in North America.

• The expansion of our metal making capabilities.

In November 2025, we acquired Less Common Metals Ltd.

(“Less Common Metals”), a proven ex-China producer of both light and heavy rare earth metals and alloys at scale.

Since the closing of this deal in November 2025, we have begun to expand this operation to the benefit of the U.S.

and its allies.

In January 2026, with the support of the French government, we announced plans to build a metal making plant in Lacq, France with 3,750 metric tons per year (“MTPA”) of metal making production capacity.

Metal making links the processing and separation capabilities that we're developing in Wheat Ridge, Colorado with our magnet manufacturing facility we are developing in Stillwater, Oklahoma (“Stillwater Facility”).

USA Rare Earth, Inc.

| 2025 Annual Report (Form 10-K) | 1

Executing on our mission requires a world-class team that can set a new pace for our industry’s dynamic development.

We have assembled a team of industry experts to guide our strategic expansion program, supported by strong operational leaders with decades of experience in rare earths and other specialized industrial sectors.

Our innovators are challenging conventional thinking and leveraging advanced technology to accelerate and scale USA Rare Earth.

We are building a leading global rare earth value chain, from mine to magnet and beyond.

We intend to secure, reshore, and grow the materials intelligence and production technologies required to stand up a resilient rare earth industry.

This advanced industrial operating system should strengthen supply-chain security for the national defense, manufacturing and technology of the U.S.

and its allies.

Our plan is to build an integrated platform to encompass the entire rare earth value chain:

extraction and separation of rare earth oxides;

conversion of oxides into metals, alloys and strip-cast;

and production of sintered neodymium-iron-boron (“NdFeB”) permanent magnets.

This capability should address the supply-chain vulnerabilities created by China’s current dominance of rare earth processing, metal and magnet manufacturing.

Our operating priorities are to:

• develop our geologically unique Round Top Mountain HREE deposit (“Round Top Deposit”), which our analysis shows contains one of the largest HREE deposits in North America, while simultaneously securing light rare earth elements (“LREE”) and additional HREEs to support our business;

• apply our proprietary separation and extraction technologies we plan to develop at our research and development facility in Wheat Ridge, Colorado (the “Colorado Facility”), including solvent extraction processes optimized for the unique mineralogy of the Round Top Deposit, as well as third-party mixed rare earth carbonate (“MREC”) and swarf from magnet-making operations;

• expand our capacity to supply rare earth metals, alloys, and strip-cast products at commercial scale through our recently acquired Less Common Metals subsidiary in Cheshire, United Kingdom (“U.K.”), with further planned expansion into the U.S.

• build and expand our rare earth magnet manufacturing capability, starting with our Stillwater Facility, which has commissioned our first phase of production.

Our vision is to build a global rare earth value chain that combines the strategic advantages of integration with the commercial flexibility for each link to serve third-party customers and operate with standalone economics.

• The first link in the chain is our Round Top Deposit, where we have commenced our AMP including our Pre‑Feasibility Study (“PFS”) in the first half of 2026.

• The second link is our metal and alloy‑making business, Less Common Metals, which we believe possesses one of the strongest non‑China capabilities for converting rare earth element (“REE”) and critical mineral oxides into metals and alloys.

This includes neodymium, praseodymium, dysprosium, terbium, samarium, yttrium, gallium, and other related REE metals and alloys used in high‑performance magnets.

We intend to also use Less Common Metals’ capabilities in the U.S.

and expand our footprint in Europe, initially with our operations in France.

USA Rare Earth, Inc.

| 2025 Annual Report (Form 10-K) | 2

• The third link in our value chain is integrated magnet manufacturing, where we expect to produce NdFeB blocks and finished permanent magnets in a broad range of grades, dimensions, shapes, and coatings to suit customer specifications.

At our Stillwater Facility, we successfully commissioned Phase 1a of sintered NdFeB permanent magnet block production in the first quarter of 2026, which involved running and testing the equipment to ensure production readiness.

We expect to begin fulfilling customer orders in the second quarter of 2026, and anticipate further capacity expansion with the commissioning of Phase 1b, supporting increased production volumes to address customer demand.

History of USA Rare Earth

We were formerly known as Inflection Point Acquisition Corp.

II (“Inflection Point”) and originally incorporated on March 6, 2023 as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses.

On August 21, 2024, Inflection Point entered into a business combination agreement (as amended, the “Business Combination Agreement”) by and among Inflection Point, USA Rare Earth, LLC, a Delaware limited liability company (“USARE OpCo”) and IPXX Merger Sub, LLC, a Delaware limited liability company and a direct wholly owned subsidiary of Inflection Point (“Merger Sub”).

On March 12, 2025, Inflection Point completed a domestication into a Delaware corporation by filing a notice of deregistration with the Cayman Islands Registrar of Companies, together with the necessary accompanying documents, and filing a certificate of incorporation and a certificate of corporate domestication with the Secretary of State of the State of Delaware, pursuant to which Inflection Point was domesticated and continued as a Delaware corporation, changing its name to “USA Rare Earth, Inc.”

On March 13, 2025 (the “Closing Date”), pursuant to the Business Combination Agreement, Merger Sub merged with and into USARE OpCo, with USARE OpCo continuing as the surviving company (the “Merger”), and on March 14, 2025, shares of our Common Stock and warrants to purchase shares of our Common Stock at an exercise price of $11.50 per share began trading on Nasdaq under the symbols, “USAR” and “USARW,” respectively.

See Note 2, “Merger Transaction and Acquisition - IPXX Business Combination Agreement,” of the Notes to Consolidated Financial Statements in Part II, Item 8, “Financial Statements and Supplementary Data,” of this Annual Report on Form 10-K (the “Notes”) for further discussion on the Merger.

Unless otherwise indicated, the historical financial information included in this annual report on Form 10-K (this “Annual Report”), including the recast audited financial statements and the notes thereto in Part II.

Item 8 , “Financial Statements and Supplementary Data” and the information in Part II.

Item 7 , “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are that of USA Rare Earth LLC prior to the consummation of the Merger.

The Less Common Metals Acquisition

On November 18, 2025 (“Acquisition Date”), Laconia Acquisition Sub Limited (“Laconia”), our wholly owned subsidiary, acquired Indian Ocean Rare Metals Pte.

(“IORM”), the parent of Less Common Metals (also referred to as “LCM”).

The Less Common Metals acquisition, is expected to enhance our industry relationships, secure reliable sources of critical rare earth metals and alloys used in magnet production, improve control over the value chain and associated costs, support sustainable recycling initiatives for rare earth materials, and provide access to alternative low-cost feedstock.

See Note 2, “Merger Transaction and Acquisition - Acquisition of Indian Ocean Rare Earth Metals Pte.

Ltd.,” of the Notes for further discussion of the Less Common Metals acquisition.

USA Rare Earth, Inc.

| 2025 Annual Report (Form 10-K) | 3

Proposed Acquisition of Texas Mineral Resources Corp.

The Round Top Project (as defined below) consists of our operations and rights related to Round Top Mountain and the Round Top Deposit, including, but not limited to, land rights, water rights, and the Colorado Facility, which supports our operations at Round Top Mountain (“Round Top Project,” and together with the Stillwater Facility, our “Projects”).

Round Top Mountain Development (“RTMD”) is our joint venture with Texas Mineral Resources Corporation (“TMRC”) that is driving the research and development of the Round Top Project.

As of December 31, 2025, we held an 81.3% interest and TMRC held the remaining 18.7% interest in RTMD.

On March 4, 2026, we entered into a Definitive Agreement and Plan of Merger (the “TMRC Merger Agreement”) with TMRC and two newly formed merger subsidiaries that are our wholly owned subsidiaries, pursuant to which the first merger subsidiary will merge with and into TMRC, with TMRC surviving as a wholly owned subsidiary of ours, followed promptly by a second merger in which the surviving entity will merge with and into the second merger subsidiary, with such second merger subsidiary surviving as our wholly owned subsidiary (collectively, the “TMRC Mergers”) .

The acquisition would secure outstanding minority interests, establishing us as the sole operator and 100% economic beneficiary of the Round Top Project.

This strategic transaction is expected to streamline our operations as we work to build a global leader in critical minerals and technology.

We are developing a leading globally integrated mine to magnet platform, which is a U.S.-anchored value chain essential for the aerospace, defense, semiconductors, data centers, physical artificial intelligence (“AI”), energy, mobility, healthcare, and numerous industrial sectors.

Subject to the terms and conditions set forth in the TMRC Merger Agreement, at the effective time of the first merger, each issued and outstanding share of TMRC common stock (subject to specified exclusions) will be converted into the right to receive a number of shares of our common stock equal to the quotient obtained by dividing 3,823,328 by the aggregate number of TMRC shares outstanding on a fully diluted basis as of immediately prior to the effective time of the first merger, with cash paid in lieu of fractional shares.

The closing of the TMRC Mergers is subject to customary conditions, including, among others, the requisite approval of TMRC stockholders, required Nasdaq listing authorization (if applicable), the absence of any law or order prohibiting consummation of the TMRC Mergers, and the effectiveness of a registration statement on Form S-4, which will include a prospectus relating to our shares to be issued as merger consideration and a proxy statement relating to TMRC’s stockholder meeting to approve the proposed transactions.

The TMRC Merger Agreement provides for certain customary termination rights for each of us and TMRC, including if the closing has not occurred within nine months of signing or if TMRC's stockholders do not approve the transaction.

Industry Overview

REE magnets, which include neo magnets, are one of the most powerful types of permanent magnets commercially available, as noted in a February 2023 report by the U.S.

Department of Commerce, Bureau of Industry and Security.

Certain REE magnets exhibit strong magnetic properties due to the atomic structure of REE which permits a dense concentration of magnetic field lines.

This allows for the production of REE magnets with powerful magnetic fields relative to their size and weight which may be resistant to demagnetization, making them ideal for applications that require both high efficiency and compactness, such as devices and motors used in the aerospace, defense, semiconductors, data centers, physical AI, energy, mobility, healthcare, and numerous industrial sectors.

Strategic Importance of Heavy and Light Rare Earths (and Gallium)

HREEs, such as dysprosium, terbium and yttrium, are indispensable to U.S.

defense and advanced‑technology platforms because they enable high performance in permanent magnets used in precision‑guided aerospace systems, jet engines, radar, medical resonance imaging (“MRI”) devices, semiconductors, traction motors, as well as other critical technologies.

China controls ~99% of global HREE processing, leaving the U.S.

and its allies highly exposed.

LREEs, most notably neodymium-praseodymium and samarium, are also important, forming the backbone of high‑strength magnets deployed broadly across mobility, medical devices, sensors, and industrial equipment, as well as defense systems.

USA Rare Earth, Inc.

| 2025 Annual Report (Form 10-K) | 4

Gallium is also essential to semiconductors, high‑frequency electronics, satellite communications, and defense‑grade power electronics, is also concentrated, with China producing approximately 99% of refined supply, creating vulnerabilities across multiple strategic technology domains.

In addition, during 2025, China imposed and expanded export controls and restrictions on certain rare earths and related materials, requiring companies to secure special export licenses and obtain Chinese government approval for exports of products containing even small amounts of Chinese-origin rare earths, among other restrictions.

Effective January 1, 2027, the implementation of Defense Federal Acquisition Regulation Supplement (“DFARS”) 225.7018 will prohibit the Department of War from acquiring samarium-cobalt and NdFeB permanent magnets, or any covered materials, mined, refined, separated, melted, or produced in China or other covered countries.

These expanded sourcing restrictions are intended to address long-standing supply‑chain vulnerabilities tied to China’s dominant role in rare earth mining and processing and to reduce reliance on non‑aligned foreign nations.

As the restrictions take effect, the U.S.

Department of War procurement will increasingly require compliant, non‑China magnet supply, which remains limited and represents a critical gap ahead of the 2027 deadline.

The shift is expected to create a bifurcated and larger global non-China market in which domestically compliant magnets command differentiated pricing relative to non‑compliant Chinese‑origin material, supporting investment in North American and allied mine‑to‑magnet capacity while reshaping long‑term procurement dynamics

These dependencies and regulations highlight the urgent need for the U.S.

and allied nations to stand up new mining, refining, and magnet‑manufacturing capacity to establish secure value chains for the aerospace, defense, semiconductors, data centers, physical AI, energy, mobility, healthcare, and numerous industrial sectors.

Over the past several decades, the REE mine‑to‑magnet industry outside of China has been marked by underinvestment, aging infrastructure, and a shrinking cohort of experienced scientists and engineers.

A new generation of scientists and engineers is now entering the field with modern training, fresh perspectives, and access to advanced technologies.

Tools such as high‑fidelity computer modeling, digital twins, AI‑driven process optimization, and emerging platforms like quantum computing are expected to transform how REE mining, processing, metal‑making, magnet‑formula development, and advanced manufacturing can be designed, validated, and scaled.

This new technical talent, combined with next‑generation analytical and production technologies, is expected to drive a renaissance in the non-China rare earth industry;

supporting greater innovation, higher efficiency, and a more resilient, strategically aligned mine‑to‑magnet ecosystem.

Mining (Upstream)

There are a large number of REE deposits outside of China, but only three large commercial-scale rare earth mining operations currently produce meaningful volumes of refined oxide, and those three account for only a small fraction of global supply of HREEs.

Processing, Separation, Metal and Alloy Making (Midstream)

REE processing and separation is predominantly performed in China, with an estimated 90% of global REE processing and approximately 99% of global HREE processing, underscoring the near‑total dependence on Chinese separation capacity.

Conversion of separated oxides into metals and magnet alloys is a distinct, capital and materials intelligence-intensive step that remains highly concentrated in or tied to China.

Non‑China metallurgical capability is expanding, but remains small in absolute terms relative to significant potential demand.

This midstream bottleneck, especially for HREE and samarium‑containing alloys, remains a critical limitation on downstream magnet manufacturing outside of China.

Magnet Making (Downstream)

NdFeB permanent magnets are used across aerospace, defense, semiconductors, data centers, physical AI, energy, mobility, healthcare, and numerous industrial sectors.

Production is overwhelmingly dominated by China.

This tight downstream capacity, combined with upstream HREE scarcity and midstream metal/alloy gaps, underscores the need for U.S.

and allied nations to stand up integrated “mine‑to‑magnet” capacity to secure supply.

USA Rare Earth, Inc.

| 2025 Annual Report (Form 10-K) | 5

Industry Production Process

Mining and Processing Ore into Rare Earth Oxides

Rare earth oxide (“REO”) production begins with the extraction of rare earth–bearing ore from open‑pit or underground mines.

Once mined, REE ore is crushed and subjected to a physical beneficiation process, to create REE concentrate.

The REE concentrate is processed further through hydrometallurgical circuits that separate rare earth elements from the host minerals and produce mixed or separated REO products.

The production of REO requires specialized chemical processing infrastructure and significant environmental and regulatory compliance due to the handling of reagents and naturally occurring radioactive materials present in certain ores.

Converting Rare Earth Oxides into Rare Earth Metals and Strip‑Cast Alloys

To produce REE metals, REO is first converted into REE chlorides or fluorides, which are then reduced via metallothermic reduction reactions (“MRRs”), commonly using calcium or lithium as the reducing agent.

The resulting metal is refined to achieve the purity levels required for alloying.

REE metals such as dysprosium, terbium, neodymium, praseodymium, samarium, and others are then combined with iron, cobalt and other alloying elements using induction melting or vacuum melting to form master alloys.

These alloys are rapidly solidified through strip‑casting, a process in which molten alloy is deposited onto a chilled wheel to produce thin flake with a controlled microstructure.

Strip‑cast alloy flake is the primary feedstock for sintered NdFeB permanent magnet production and must meet stringent specifications for composition, grain structure, and magnetic performance.

Producing Sintered Neodymium-Iron-Boron Permanent Magnets from Strip‑Cast Alloy

Sintered NdFeB permanent magnet production begins with milling strip‑cast alloy flake into a fine powder and aligning the powder’s crystal structure in a strong magnetic field to maximize magnetic anisotropy.

The aligned powder is then compacted into a green body and sintered at high temperature to achieve near‑theoretical density.

Post‑sintering heat treatment is used to optimize grain boundary phases and enhance magnetic properties.

The sintered blocks are subsequently machined to final dimensions and coated with protective plating, typically nickel‑copper‑nickel, epoxy, or other corrosion‑resistant coatings, to meet application and environmental durability requirements.

Finished NdFeB permanent magnets produced through this process are the highest‑performance commercial permanent magnets available and are critical inputs to traction motors, power electronics, servomotors, industrial motors, MRI, advanced electronics, and other devices.

USA Rare Earth, Inc.

| 2025 Annual Report (Form 10-K) | 6

Our value chain currently operates in multiple locations.

Our Round Top Mountain Development joint venture with TMRC operates in two locations, at the Round Top Deposit located in Sierra Blanca, Texas, and the related research and development facility located in Wheat Ridge, Colorado.

Our metal, alloy, and strip-cast making operations are currently performed at our Less Common Metals subsidiary with operations.

We have planned metal-making operations in Lacq, France and in the U.S., initially at our Stillwater Facility, which is also the same facility of our initial U.S.

magnet-making operation.

Round Top Mountain

controls the mining rights to Round Top Mountain, which is an above-ground mineral deposit near Sierra Blanca, Texas that contains a large

deposit of rare earths, including both light and heavy rare earths, such as neodymium, dysprosium, and terbium, as well as other critical

minerals such as gallium, beryllium and lithium among others (such deposits, collectively, the “ Round Top Deposit ”,

and USARE’s development there, the “ Round Top Project ,” and together with the Stillwater Facility, the “ Projects ”).

One of the most significant aspects of the Round Top Deposit is its deposit of heavy rare earths, which are particularly scarce but critical

for the production of high-performance neo magnets.

The presence of heavy rare earths in great quantities could become a significant competitive

advantage to USARE, and value creator, as heavy rare earths such as dysprosium and terbium are critical to magnet production and tend

to be of much higher value in commodity markets due to their rare nature.

In contrast to light rare earths, such as those found at Mountain

Top in California, heavy rare earths are, in general, significantly harder to source and are primarily mined in China, underscoring the

importance of establishing Round Top Deposit as a critical domestic supply of rare earth and critical mineral feedstock.

In addition to

rare earths, the Round Top Deposit also contains a large deposit of gallium, a critical mineral for semiconductor, computer chip and some

military technologies, among others, that were recently banned for export to the United States by China.

China is the source of approximately

98% of primary gallium according to a January 2023 USGS Mineral Commodity Summary on gallium.

In addition, the deposit holds beryllium,

which is used in a variety of technologies from x-rays and MRIs to military radar and nuclear power.

Finally, the Round Top Deposit holds

lithium, a critical material for battery production, making it a dual-source project that supports the electrification of vehicles, production

of renewable energy technologies, and defense technologies, among other critical industries.

Rare earth oxide is a necessary component

in producing NdFeB alloy used to produce neo magnets.

Round Top Mountain is approximately eight miles

southeast of Sierra Blanca, Texas.

Sierra Blanca, the county seat of Hudspeth County, is itself approximately 85 miles southeast of El

The Round Top Project’s approximate center is located at 31.2766º N, 105.4742º W.

Round Top Mountain’s

location allows access to nearby Interstate 10 and Ranch Road 1111, and potential access to the nearby Union Pacific Railroad which has

two main branches approximately three miles from Round Top Mountain.

The Company expects Interstate 10 and the Union Pacific Railroad

to aid in the future distribution of rare earth and critical minerals once the Company’s Round Top Project is fully operational

and producing.

Although not critical to scaling up its magnet production, the Company intends for its Round Top Project to serve as a

long-term additional source of feedstock for its magnet production at the Stillwater Facility, which would help the Company achieve

its goals of providing domestic, virgin feedstock for its magnet production.

The Company believes that the integration of the

Round Top Project’s mine into its operations would not only help it meet growing demand for both domestic rare earth magnets and

battery materials, but also importantly allow it to achieve greater supply chain security, cost control, and independence from foreign

For more information about the Round Top Project,

see the section entitled “— Description of the Round Top Project ”.

Market Opportunity and Growth

Science and Construction of Neo Magnets

Neo magnets are one of the most powerful

types of permanent magnets commercially available, as noted in a February 2023 report by the U.S.

Department of Commerce, Bureau of Industry

and Security.

Neo magnets exhibit strong magnetic properties due to the atomic structure of neodymium, a rare earth, which permits a dense

concentration of magnetic field lines.

This allows for the production of neo magnets that can produce powerful magnetic fields relative

to their size and weight and may be resistant to demagnetization, making them ideal for applications that require both high efficiency

and compactness, such as electric vehicle motors, wind turbines, and advanced electronics.

The production of neo magnets involves a sophisticated

process that includes the alloying of neodymium with iron and boron, followed by additional processing techniques to form the desired

magnetic shape and performance.

The properties of the magnets can be further enhanced by adding heavy rare earths such as dysprosium and

terbium through additional post-sintering processing in a process called “Grain Boundary Diffusion” which can increase

the magnets’ resistance to heat — a critical factor for high-performance applications.

This technological complexity,

coupled with the limited availability of key rare earth materials, has made the development and production of neo magnets a highly specialized

and strategically important industry.

The Rare Earth Magnet Industry:

and Growth Opportunities

The global rare earth magnet industry has experienced

rapid growth over the past decade according to the 2024 Statistical Review of World Energy by the Energy Institute, driven by the rise

of electric vehicles, renewable energy technologies, and advanced electronics.

Neo magnets are crucial to these technologies due to their

high magnetic strength and resistance to demagnetization.

As nations push globally for cleaner energy solutions and decarbonization, the

demand for neo magnets is expected to continue growing significantly as noted by the U.S.

Department of Energy in its 2022 supply chain

deep dive assessment “Rare Earth Permanent Magnets” (the “ DOE Report ”).

However, the industry faces notable challenges.

China currently dominates the global supply chain of the world’s rare earth production.

This creates supply chain vulnerability

for other nations, particularly the United States, as geopolitical tensions and export restrictions (such as China’s December 2023

rare earth technology export ban) could disrupt access to these critical materials.

Additionally, rare earth extraction and processing

is generally environmentally challenging, requiring the development of more sustainable and efficient technologies to meet global demand

while minimizing potential environmental impact.

Despite these challenges, USARE believes that

both the domestic and global rare earth magnet industries are poised for substantial growth.

The global shift toward electrification of

transportation, the rise of wind energy, and the ongoing demand for advanced electronics create significant opportunities for manufacturers

that can establish stable and sustainable supply chains.

The automotive industry is a major purchaser of neo magnets, particularly in

connection with the production of electric vehicles that require neo magnets for traction motors, which are crucial components to the

performance and efficiency of electric cars.

As countries set aggressive targets for electric vehicle adoption in an effort to combat

climate change, the demand for neo magnets is expected to surge over the next decade, as noted in the DOE Report.

Even in a potential

scenario of slower growth for electric cars that is now possible in the United States due to the anticipated changing policies of the

Trump administration, there are significant growth opportunities for domestic supply of neo magnets in the existing domestic market due

to potential instability in supply of rare earth magnets from China.

In addition, growth in EV sales globally outside of China and the

United States remains robust.

Similarly, wind turbines rely on neo magnets for their generators, which convert wind energy into electricity.

As governments worldwide set ambitious targets for increasing the share of renewable energy in their power grids, the installation of

new wind turbines is expected to rise, further driving the need for neo magnets as noted in the DOE Report.

While the recent Trump administration

executive order to stop the building of wind turbines on federal lands and offshore may slow down the growth of this industry in the United

States, we believe that global growth in wind power outside of China will continue to increase, and existing infrastructure projects in

the United States will need to be maintained and have their parts replaced in the coming years.

In addition, the use of magnets includes

a wide variety of other industries, including industries as diverse as robotics, medicine, semiconductors, computing, power tools, among

Importantly, the defense industry is a critical consumer of neo magnets, which uses them in precision-guided munitions, radar

systems, aerospace technology, and naval craft.

As nations invest in not only modernizing their defense capabilities, but also in purchasing

from safer domestic supply the demand for domestic neo magnets in defense technologies is expected to continue to grow as noted in the

The Company believes it is well-positioned to

capitalize both on existing domestic demand, which is currently sourcing magnets from China, as well as on the anticipated growth in the

demand for neo magnets and reduce United States reliance on foreign suppliers.

Business Plan

Feedstock Relationships

and Initial Neo Magnet Production

The first stage of the Company’s business

plan is focused on laying the groundwork for its neo magnet production by predominantly securing essential raw material feedstock through

strategic business relationships and launching initial production of neo magnets at its Stillwater Facility.

While ultimately the Company

intends to satisfy its feedstock needs through the future development of its Round Top Project, the Company does not believe it is critical

to success and in the near term the Company intends to source its feedstock needs from third-party suppliers.

Feedstock Sources

The Company has established a business relationship

with a supplier of feedstock to supply a portion of its raw material feedstock to USARE for use in the initial production of the Company’s

The supplier is a vertically integrated, producer of critical metals and NdFeB alloy (also known as “ strip cast ”)

produced from rare earth oxides, with the ability to source rare earth oxides from sources other than China.

USARE has entered into a

long-term Metal Sales and Tolling Framework Agreement with the supplier, whereby USARE has agreed to purchase 60% of its NdFeB feedstock

for phase 1 and 2 of its magnet production capacity from the supplier.

The agreement is effective through December 31, 2028,

subject to earlier termination by the parties.

The purchase price for the strip cast feedstock that USARE purchases from the supplier

will be determined in accordance with a set schedule, which ties the purchase price to a relevant index and certain chemical specifications.

The Company intends to establish relationships

with additional companies to assist in meeting its planned future feedstock requirements to continue to build out and strengthen its domestic

and global supply of rare earths from third-parties until such time that the Round Top Project is able to substantially augment its

current supply of light and heavy rare earths needed for production, and such activities may include rare earth oxide supply agreements

once the Company is able to utilize rare earth oxide feedstock for in-house alloy production.

Initial Neo Magnet Production

Stage I of the Company’s business plan

includes the completion of the Stillwater Facility, its magnet production facility in Stillwater, Oklahoma.

Upon completion of the facility

and the initial production of neo magnets, the Company expects its Stillwater Facility to be one of the first United States-based producers

of neo magnets.

Magnet production at the Stillwater Facility is currently planned in three phases, starting with 1,200 tpa nameplate capacity

in phase 1 and potentially doubling in each subsequent phase to a total planned production of 4,800 tpa nameplate capacity.

The Stillwater

Facility is expected to initially have a production line with 600 tpa nameplate capacity utilizing currently owned equipment, with a goal

to complete the remaining phase 1 capacity (representing a total of 1,200 tpa nameplate capacity in phase 1) in 2026.

The Company believes

this will make the Stillwater Facility one of the most significant sources of neo magnets outside of China, once complete.

competitors, the Company is not building its initial lines for a single customer and is instead focused on building a manufacturing facility

and capability that is flexible enough) to serve a variety of customers in diverse industries.

It is the Company’s belief that such an approach will allow it to reach its early revenue targets sooner than it might otherwise

would be able to through due to the long qualification process with large automotive clients.

The Company is in the process of engaging potential

customers for offtake agreements.

Scaling Magnet Production

and Expanding Business Partnerships

Stage II of the Company’s

business plan is focused on scaling magnet production at its Stillwater Facility and expanding the Company’s business

relationships, both with feedstock suppliers and customers.

The Company intends to scale magnet production at its Stillwater

Facility from 1,200 tpa nameplate capacity in phase 1 through phases 2 and 3 of magnet production capacity, potentially doubling the

production of the prior phase, with a target total nameplate capacity of 4,800 tpa.

How rapidly the Company will scale is dependent

on demand and access to the capital to do so.

To support the increased production, the Company intends to (i) expand its

partnerships and supply agreements with key industry players, and (ii) develop in-house metal making and strip casting

capabilities to support its magnet production, to help provide for the continued and reliable flow of feedstock into the

Company’s production lines at the Stillwater Facility until its Round Top Project is capable of satisfying the Company’s

feedstock needs.

These expanded partnerships will help the Company diversify its feedstock supply sources, reduce potential supply

chain risks and assist in further securing the Company’s position in the neo magnet market.

Additionally, the Company is working to strike

a balance between obtaining a sufficiently broad customer base and securing offtake that can jumpstart production, which could come from

large manufacturers over time.

Over time, the Company will be engaged in discussions with potential customers for offtake agreements.

The Company’s target customers for offtake could include key players in the automotive, energy, and defense industries, each of

which requires a reliable and long-term supply of neo magnets.

By seeking to secure multi-year offtake agreements, the Company

aims to lock-in demand for its products, minimize market volatility risks and provide for a consistent revenue stream.

Mining Development

at Round Top Mountain

Stage III of the Company’s business

plan represents the full realization of the Company’s longer-term strategy.

In this stage, the Company intends to focus on

developing the mining operations at its Round Top Project.

While the Company does not believe the development of the Round Top Deposit

is critical to our success in our magnet business, once operational, the Round Top Project’s mine is expected to provide a domestic

source of rare earths, feeding directly into the Company’s Stillwater magnet production facility, as well as selling to the broader

rare earth commodity markets.

By developing the Round Top Project into an economically producing mine, the Company aims to be able to

self-sustain magnet production operations without relying on external sources for rare earth feedstock.

This development is expected

to enable the Company to maintain cost efficiencies and quality control over the entire production process.

As part of its long-term growth

strategy, the Company aims to expand the production capacity of both the Round Top Project and its Stillwater Facility, solidifying the

Company’s efforts as it seeks to position itself as a key player in the domestic and global rare earth markets.

Through the development

of the Round Top Project into an economically producing mine, the Company intends to enhance its capacity to meet the rapidly growing

demand for rare earth and critical minerals, positioning itself as a leader in the transition to a more secure energy future.

If successful,

this stage will mark the full vertical integration of the Company’s operations from mine to magnet and is expected to open up new

markets and revenue streams for the Company.

The Company acknowledges that investing in mining

deposits such as Round Top holds inherent risks.

It is our intention to take a structured and measured approach to the development of

We are planning a five phased approach:

(1) flow sheet development, (2) prefeasibility study, (3) pilot plant, (4) definitive

feasibility study, and (5) detailed engineering, construction, and commissioning of the mine.

At each stage of this phased approach, investment

requirements are expected to increase as we define the economic and operational basis for the future mine.

Today, we are investing in

research to establish a technically sound flow sheet.

Once we have established an economically viable execution strategy in our prefeasibility

study following this flow sheet, we intend to construct pilot facilities to validate the Round Top process and provide data for detailed

By moving to a pilot phase, we can minimize investments while further reducing the execution risk inherent in the building

of a full-scale producing mine.

The results of each stage of this approach allow us the opportunity to pause or stop development,

if results are negative, or increase our commitment if results are positive;

thereby reducing our risk.

This measured and focused approach

will allow us to both manage cash in these early years, as well as pause or stop development if it looks like the mine may not be viable

over the long term, either due to operational constraints or changes in the rare earth market itself.

Patents, Trademarks, and Licenses

USARE has applied for a United States patent

in connection with its methods for metal extraction.

This patent application is currently pending.

Additionally, the Company utilizes

trade secret protection and non-disclosure agreements to protect its proprietary rare earth technology.

USARE holds a trademark for

Generally, the Company relies on a combination of trade secret protection, non-disclosure and licensing agreements, patents

and trademarks to establish and protect its proprietary intellectual property rights.

Government Programs and Grants

Tax Incremental Financing

On June 6, 2022, USARE executed a redevelopment

agreement providing for tax increment financing (the “ TIF Agreement ”) with the Stillwater Economic Development

Authority (the “ Authority ”), a public trust having as its beneficiary the City of Stillwater, Oklahoma, whereby the

Authority has provided upfront development financing assistance to USARE of $7.0 million for the development of the Stillwater Facility

(the “ Upfront Assistance ”).

Additionally, entry into the TIF Agreement made the Company eligible to receive a manufacturing

and research and development ad valorem tax emption for a period of five years.

The Company applied and received approval for the

ad valorem tax exemption for the year ending December 31, 2023.

After the expiration of the exemption period, the TIF Agreement requires

the Authority to disburse to the Company 90% of the incremental ad valorem taxes generated by the ad valorem taxes assessed against the

Stillwater Facility and paid by the Company.

Under the terms of the TIF Agreement, among other things, the Company is required to complete

the Stillwater Facility and in doing so to make an investment of approximately $140 million, including $9.9 million in building

and land acquisition costs, $17 million in immediate building improvement construction costs and $113 million in additional

building improvements and new equipment purchases, and to employ a specified number of employees at specified levels of median compensation

at various stages of the development.

Subject to agreed extensions, the Company agreed to commence certain phases of the development of

the Stillwater Facility by no later than March 31, 2026, and complete that advanced development by no later than June 30, 2027,

subject to certain exceptions.

Should the Company default on its obligations under the TIF Agreement and after certain notice, cure periods

and possible exceptions, the Authority may terminate the TIF Agreement and could make demand for immediate repayment in full of the Upfront

Governor’s Fund

On April 15, 2022, as restated on July 1,

2024, USARE entered into an agreement with the Oklahoma Department of Commerce to receive a $1.2 million award to be used for the

renovation of an existing building at the Stillwater Facility (the “ Governor’s Fund Agreement ”), to be paid in

$0.6 million increments when the Company had cumulatively spent $1.0 million and $2.0 million, respectively, in qualifying

costs related to developing the Stillwater Facility by March 31, 2023, and May 31, 2023, respectively.

As of December 31,

2023, the Company incurred qualifying costs that exceeded the cumulative $2.0 million threshold specified in the Governor’s

Fund Agreement.

The total award of $1.2 million was requested and received by the Company on April 6, 2023.

Per the terms of

the Governor’s Fund Agreement, the award is subject to repayment if the Company does not invest over $50 million in project,

real and personal property improvements (as described in the Governor’s Fund Agreement) at the Stillwater Facility as well as comply

with employment requirements of creating and fulfilling at least 100 new direct jobs at the Stillwater Facility at specified compensation

levels and certain other limited circumstances.

The Company is currently seeking to comply with such requirements.

In 2022, USARE was accepted for participation

in the Oklahoma Quality Jobs Program (“ Jobs Program ”), an incentive program that provides qualifying companies quarterly

cash rebates of up to 5% of the wages paid for new direct jobs created for a period of up to 10 years, with, in the case of the Company,

a maximum payout of approximately $2.8 million, if it makes a qualifying claim for payment under the Jobs Program prior to January 1,

2026 and fulfills certain conditions pursuant to an agreement between Magnet Sub and the State of Oklahoma, dated December 19, 2022 (the

“ Jobs Program Agreement ”).

Under the Jobs Program Agreement, the Company must meet or exceed applicable payroll and

employee headcount requirements and maintain operations in Oklahoma for a specified period.

To date, the Company has not become eligible

to make any claims under the Jobs Program.

The Company faces, or is expected to face, significant

competition both domestically and globally in the rare earth market, particularly in the production of sintered rare earth neo magnets.

The most prominent global competitor is China, which controls a substantial majority of the world’s rare earth magnet production

and has established dominance in the neo magnet supply chain and magnet production.

China’s rare earth and magnet industries benefit

from extensive government support, allowing Chinese companies to offer rare earths and magnets at subsidized prices, often undercutting

other producers.

Moreover, Chinese companies have invested heavily in improving their processing capabilities, giving them a technological

and cost advantage in the global market.

Round Top Mountain, we believe, contains one of the largest recoverable HREE deposits in North America, along with other valuable critical minerals.

We believe this deposit will supply a material portion of the U.S.

Having significant quantities of HREE including dysprosium, terbium, yttrium and gadolinium, and other critical minerals such as gallium, hafnium and zirconium, Round Top Mountain could become a significant competitive advantage to us, as well as generate significant value.

These HREEs and other critical minerals tend to have higher value when compared to the LREEs, due to their scarcity outside of Chinese controlled production.

We do not plan to recover LREEs at Round Top Mountain as our total REO basket (i.e., the weighted average value of the individual REOs contained in the deposit based on their relative proportions and market prices) is ~72% HREEs, which we believe is one of the highest concentrations globally.

Round Top Mountain is uniquely characterized by a HREE distribution and concentration that is equal to, or higher than, many ionic clay deposits and conventional hard-rock resources.

The mineralogy of the deposit enables a simplified and lower‑cost processing flowsheet (i.e., the sequence of processing steps and equipment used to convert mined ore into a salable product), compared to traditional REE operations;

whereas conventional processing typically requires crushing, grinding, flotation, magnetic separation, roasting, acid baking, and leaching, Round Top Project’s flowsheet consists only of mining, crushing, heap leaching, and solvent extraction, reducing capital intensity, energy consumption, and operational complexity.

The project also benefits from advantageous infrastructure, including proximity to major highways, access to rail, and availability of a skilled labor force in the nearby El Paso, Texas region

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| 2025 Annual Report (Form 10-K) | 7

Our planned Round Top Mountain flowsheet currently contemplates ore extraction (top-down mining) with overland conveying, followed by a series of crushing circuits to prepare the ore for heap leach stacking.

Bulk volume heap leaching on minerals that are readily dissolved in dilute sulfuric acid and sending pregnant leach solution (“PLS”) straight to hydrometallurgical (“Hydromet”) processing avoids the high capital costs associated with wet milling, flotation, magnetic separation, and cracking circuits used at most hard-rock REE operations.

Our process is designed to use organic solvents that result in a lower environmental waste profile and are readily recyclable, supporting both cost efficiency and the sustainability objectives increasingly required by commercial customers and defense.

In December 2025, we announced an acceleration of the commercialization timeline for Round Top Mountain with commercial production targeted for late 2028, two years earlier than previously planned, under our AMP.

Our plan is to begin to operate our Hydromet demonstration facility, including five solvent‑extraction circuits, continuously to obtain sufficient steady state data required for commercial plant design.

These circuits are designed to process HREEs, including dysprosium, terbium and yttrium, as well as critical minerals such as hafnium and zirconium.

We expect that this parallel‑process approach will reduce development costs and enable completion of the definitive feasibility study by early 2027, supporting the targeted commencement of commercial production at Round Top Mountain by late 2028.

RTMD is our joint venture and a limited liability company majority owned and controlled by us for the purpose of developing the Round Top Mountain and holds 100% of the mining rights to the Round Top Deposit.

As of December 31, 2025, we held a 81.3% interest and TMRC held the remaining 18.7% interest in RTMD.

TMRC’s interest is reported as a “non-controlling interest” in the Consolidated Statements of Operations and Comprehensive Loss in Part II, Item 8 , “Financial Statements and Supplementary Data,” of this Annual Report.

For further discussion on adjustment of ownership percentages, see Note 5, “Variable Interest Entity,” of the Notes.

As discussed further above, on March 4, 2026, we entered into the TMRC Merger Agreement with respect to the proposed TMRC Mergers.

For further information regarding the Round Top Project, see Part I, Item 2, “Properties – Round Top Project”.

Colorado Research and Development Facility

Our Colorado Facility is the central hub for our research and development activities focused on rare earth and critical minerals extraction and separation as well as advanced processing technologies.

We expect that this facility, with 500+ planned mixer/settlers should become one of the largest and most sophisticated solvent extraction ("SX") demo facilities in the nation.

In collaboration with the U.S.

Department of Energy’s National Energy Technology Laboratory, we, at our Colorado Facility, are leveraging digital twin technologies to advance HREE separation technologies.

The Colorado Facility is not a commercial production facility, but rather develops and refines the technologies that, with success, would be applied at the Round Top Project.

The Colorado Facility serves as the technical engine driving our proprietary extraction and separation technology platform, which is the foundational intellectual property underpinning our entire processing approach.

The current focus of the Colorado Facility’s research is the development of separation processes to minimize the use of organic solvents and other reagents, while increasing recovery, intended to result in a lower waste profile as compared to alternative separation methods.

The Colorado Facility’s work is critical in creating robust commercial methods for separating and processing rare earths in a way that is both cost-effective and environmentally sustainable.

Our methods are designed to use organic solvents that result in a lower environmental waste profile and are readily recyclable, both supporting cost efficiency and the sustainability objectives increasingly required by defense and commercial customers.

To date, we have successfully separated all HREEs from LREEs and are now beginning our work on individual separations including dysprosium and terbium, as well as critical minerals, such as hafnium and zirconium, from the Round Top Deposit.

Furthermore, we have demonstrated our ability to redissolve third party MREC in preparation for REE separation and we are currently in the process of separating third party MREC at the demonstration scale, and we have developed a flowsheet based on bench top analysis and are currently in the process of demonstrating our ability to recycle swarf from NdFeB permanent magnet production at our demonstration facility.

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Department of Energy's (the “DOE”) National Energy Technology Laboratory has signed a letter of intent (“LOI”) to collaborate with us to advance heavy REE separation technologies at the Colorado Facility and Round Top Deposit, leveraging digital twin technology.

The DOE has prioritized innovation in process modeling, the use of digital twins, and the deployment of test beds for material-processing research and development.

Through this partnership, we expect that the DOE will contribute to the development of digital twins to advance REE separation technologies, with the ultimate goal of establishing the country's first fully domestic mine-to-magnet supply chain.

Less Common Metals

Our subsidiary, Less Common Metals, has operated as one of Europe’s REE metallurgy facilities for decades, building a strong track record in converting REE oxides into high-purity metals, master alloys, and strip-cast products at commercial scale, including neodymium-praseodymium, dysprosium, terbium, gadolinium and samarium metals;

dysprosium-iron, terbium and samarium-cobalt strip-cast alloys;

and critical strategic metals, such as yttrium.

In addition, Less Common Metals has the ability to convert recycled magnet oxides/fluorides into new metal products which supports our circular value chain objectives, and reduces our dependence on mine feed stock.

Current annual capacity is approximately 2,500 MTPA of REE and critical mineral metal and alloy, with plans to significantly expand in the U.S., U.K.

Our expansion into France through our Less Common Metals Europe SAS (“Less Common Metals-Europe”) subsidiary includes plans to develop a 3,750 MTPA metal and alloy production facility in Lacq, France.

The France expansion is strategically aligned with the European Union’s (“EU”) Critical Raw Materials Act which mandates that by 2030 at least 10% of the EU’s annual consumption of strategic raw materials be sourced from domestic extraction and at least 40% from domestic processing.

The Less Common Metals-Europe facility is projected to serve European defense and industrial customers directly, reducing logistics costs and tariff exposure while building regional and global customer relationships and enhancing value chain resilience.

The Less Common Metals-Europe facility is planned to be located near Carester SAS’s Caremag oxide processing facility, which is scheduled for commissioning in late 2026.

The combination of oxide processing with metal and alloy production is expected to create an integrated European rare earth midstream hub, supporting both regional and global customers while enhancing supply‑chain resilience.

Less Common Metals’ Proven Production Capabilities

Less Common Metals has a comprehensive suite of REE metallurgical capabilities using a range of specialized equipment.

This includes molten salt electrolysis cells and metallothermic reduction furnaces for converting REE oxides/fluorides into high-purity metals;

vacuum induction melting systems for producing custom alloy compositions to precise customer specifications;

strip-casting lines that produce thin alloy flakes with optimized grain-boundary microstructure for subsequent hydrogen decrepitation and jet milling in sintered magnet production;

and a full analytical laboratory with inductively coupled plasma spectrometry, X-ray fluorescence, and other characterization instruments to ensure product consistency and traceability.

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Less Common Metals’ current production portfolio includes individual REE metals (neodymium, praseodymium, dysprosium, terbium, samarium, gadolinium, yttrium, lanthanum, cerium, and others), NdFeB and samarium-cobalt master alloys formulated to customer specifications, strip-cast alloy flakes optimized for sintered magnet production, mischmetal, and custom alloy compositions for specialized defense and industrial applications.

Customers and Markets Served

Less Common Metals serves a diverse customer base spanning European, Japanese and North American defense contractors, permanent magnet manufacturers, mobility manufacturers, industrial automation companies, and specialty industrial users.

Less Common Metals has a strategic partnership with Solvay SA (“Solvay”), a multinational chemical company, to supply rare earth metals to Permag LLC, a leader in high-precision magnets and magnetic assemblies, and Arnold Magnetic Technologies Corporation, a producer of advanced permanent magnets.

The Less Common Metals facility’s ability to produce both light and heavy rare earth metals and alloys positions it uniquely to serve customers requiring DFARS-compliant materials ahead of the January 2027 prohibition on Chinese-origin REE magnets in U.S.

weapons systems.

Less Common Metals’ established relationships with European defense and industrial customers validate the technology platform and provide the foundation for expansion into U.S.

defense value chains as our integrated mine-to-magnet capability matures.

Magnet Manufacturing

By 2029, we plan to build facilities in the U.S.

capable of producing an aggregate of 10,000 MTPA of sintered NdFeB permanent magnet, beginning at our Stillwater Facility.

Our objective is to manufacture both sintered NdFeB permanent magnet blocks and finished sintered NdFeB permanent magnets to meet customer requirements across aerospace, defense, semiconductors, energy, mobility, healthcare, and a wide range of industrial markets.

Our capabilities include research and development to create proprietary magnet formulas, large‑scale production of sintered NdFeB permanent magnet blocks, and finishing operations that support a broad range of shapes and sizes.

We commissioned Phase 1a of our Stillwater Facility in the first quarter of 2026.

At full production capacity, we expect this line will produce approximately 600 MTPA of sintered NdFeB permanent magnet blocks.

We are currently procuring equipment and completing engineering for commissioning of Phase 1b at the same facility.

At full production capacity, we expect Phase 1b will produce approximately 600 MTPA of sintered NdFeB permanent magnet blocks.

Our Magnet Research and Product Development (“R&D”) Program

Our in-house Innovations Lab (the “Lab”), housed within the Stillwater Facility, and magnet development program (“R&D Program”) focus on developing the intellectual property, including technologies and processes for the development, qualification and manufacturing of sintered NdFeB permanent magnets.

Our R&D Program encompasses intellectual property development across multiple NdFeB grades, including standard grades (N35–a standard grade of neodymium magnets through N52–the strongest commercially available neodymium magnets, offering maximum magnetic strength (Gauss) in a compact, brittle package) and high-temperature grades (N35SH through N45UH, and beyond) that incorporate dysprosium and/or terbium additions to maintain coercivity at elevated operating temperatures.

High-temperature grade (SH–Super High, UH–Ultra High, and EH–Extra High) designations are critical for defense applications, including precision-guided munitions, satellite attitude control systems, and directed energy weapons, as well as mobility or traction motors where magnets must maintain performance levels above 150°C.

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Our research and development capabilities for sintered NdFeB permanent magnets also include advanced grain‑boundary‑diffusion (also known as “GBD”), which enhances magnetic performance while significantly reducing the need for both LREEs and HREEs.

This technology enables more efficient material utilization and supports cost-effective, sustainable solutions for specialized magnet applications.

Stillwater Magnet Production Equipment

Our Stillwater Facility houses a complete sintered NdFeB permanent magnet production line, including hydrogen decrepitation (“HD”), course grinding, jet milling, which further reduces the material particle size, wet pressing and magnetic pole alignment, sintering process, and post-sinter heat treatment.

Our products then go through both a finishing and grinding process to meet the dimensional tolerances and surface specifications of our customers.

Following these steps the part surfaces are coated with either nickel-copper-nickle, zinc, or epoxy.

Parts can also be magnetized based on our customers specifications.

Our finishing capabilities include precision grinding, slicing, wire electrical discharge machining (“EDM”), and surface treatment including nickel, zinc, and epoxy coating lines.

These finishing operations are essential for producing magnets to the dimensional tolerances and surface specifications required by defense and precision industrial customers.

Target Products and Customer Applications

Our Stillwater Facility is designed to produce sintered NdFeB permanent magnets in standard and custom geometries, including blocks, arcs, rings, and discs.

We are actively engaged in customer qualification programs and prototype supply discussions with commercial original equipment manufacturers (OEMs) and defense contractors.

Our focus, including considering the DFARS 225.7018 restriction on Chinese-origin rare earth magnets, is to manufacture sintered NdFeB permanent magnet in a variety of shapes, sizes and strengths that will be applicable to a wide range of sectors, such as aerospace, defense, semiconductors, data centers, physical AI, energy, mobility, healthcare, and numerous industrial sectors, and application usage, such as traction motors, power electronics, servomotors, industrial motors, MRI, advanced electronics, and other devices.

These sectors and applications demand magnets that are size specific, have a wide range of strength for their applications, and can tolerate a range of heat specifications.

Swarf Recycling

We intend to recycle the sintered NdFeB permanent magnet swarf generated during our finishing operations.

Swarf refers to the fine metallic particles and scrap material produced when magnet blocks are cut, ground, or shaped to final dimensions.

We believe these finishing steps may generate between 10% to 30% swarf as a percentage of total magnet finishing.

We plan to collect and process this material for reuse by creating a swarf recycling processing line producing REE oxides that can be reintegrated into our Less Common Metals metal and alloy making process which ultimately is used to create strip cast material used in the magnet production process.

This closed‑loop approach is expected to reduce waste, improve raw material efficiency, and support a fully integrated, circular production cycle.

We expect to have our swarf processing line in operation by the end of 2027, and our intention is to ultimately recycle 100% of our swarf in-house.

We face, or are expected to face, significant competition both domestically and globally in the rare earth market, particularly in the production of sintered REE neo magnets.

The most prominent global competitor is China, which controls a substantial majority of the world’s rare earth magnet production and has established dominance in the neo magnet supply chain and magnet production.

China’s rare earth and magnet industries benefit from extensive government support, allowing Chinese companies to offer REEs and magnets at subsidized prices, often undercutting other producers.

Moreover, Chinese companies have invested heavily in improving their processing capabilities, giving them a technological and cost advantage in the global market, and we believe, at the expense of world sustainability and employee practice standards.

Since December 2023, China has banned the export of such technologies and capabilities.

This dominant stronghold poses a challenge for the Company as it seeks to build a vertically integrated domestic supply chain.

Domestically, the Company competes with a small

number of companies, including MP Materials Corp.

which is operating the only major rare earth mine in the United States and recently

began commissioning a 1,000 tpa magnet facility in Fort Worth, Texas.

Additionally, there is growing competition from emerging players

that are developing innovative technologies for rare earth separation and processing, as well as magnet production.

As the demand for

rare earth materials and neo magnets grows, the Company will need to not only navigate price competition but also innovate in separation

and processing techniques while simultaneously securing long-term customer offtake agreements.

Seasonality and Business Cycles

The Company’s operations in magnet production,

and its planned future operations in mining, are both subject to certain seasonality and business cycles that can affect production output

and market demand.

These cycles are influenced by external factors such as weather conditions, regulatory changes, fluctuations in raw

material prices whether due to changes in supply, demand, or inflation, and market demand for end products such as electric vehicles,

renewable energy, and defense applications.

The demand for neo magnets can be cyclical.

demand is often driven by customer sentiment and demand, which may align with government policy changes, incentive programs, and general

economic cycles.

How this cyclicality may or may not affect USA Rare Earth will depend on the concentration of our customers in specific

industries as we scale.

With our planned strategy of serving a wide range of industries, we believe this cyclicality may be offset by

a diverse set of customers in differing industries.

Human Capital

The Company’s workforce spans multiple

states, with employees located in Texas, Oklahoma, Missouri, California, Colorado, Ohio, and Florida, and encompasses a diverse range of

professionals, including engineers, scientists, mining specialists, and manufacturing experts.

The Company’s leadership is

focused on attracting, developing, and retaining top talent across these areas to support its mission in building a vertically

integrated domestic supply chain for rare earths and rare earth neo magnets.

As of December 31, 2024, the Company had 29 employees.

We have not experienced any work stoppages.

None of our employees are represented by a labor union or are parties to a collective

bargaining agreement.

A significant challenge for the Company and the

broader rare earth industry is the shortage of experienced magnet production and mining professionals.

The specialized nature of magnet

production and rare earth mining, processing, and refining requires expertise that has been in decline, particularly in the United States,

where magnet production and rare earth mining has been limited for decades.

This shortage could present significant obstacles for companies

like USARE that are working to establish a vertically integrated, domestic rare earth supply chain.

The lack of skilled professionals

with the necessary expertise can slow down project timelines, increase operational costs, and foster reliance on international talent.

This dominant stronghold poses a challenge for us as we seek to build an integrated domestic value chain.

USA Rare Earth, Inc.

| 2025 Annual Report (Form 10-K) | 11

Domestically, we compete with MP Materials Corporation (“MP Materials”), which operates a LREE mine in the U.S.

and is pursuing a mine‑to‑magnet strategy;

however, its resource base is primarily light rare earth elements.

In downstream magnet manufacturing, we face competition from Noveon Magnetics Inc.

and VACUUMSCHMELZE GmbH & Co.

KG (VAC), both of which operate established U.S.

magnet‑making capabilities.

We also consider KSM Metals Co., Ltd., owned by Australian Strategic Materials Ltd.

and currently in the process of being acquired by Energy Fuels, Inc., as an emerging competitor in rare‑earth metal‑making capacity.

Internationally, our primary competitors include Lynas Rare Earth Ltd., a leading non‑Chinese rare earth producer whose operations are largely focused on LREEs with only limited HREE production, and Serra Verde Group, which produces both LREE and HREE but currently relies on processing pathways that flow through China.

There is growing competition from emerging players that are developing innovative technologies for rare earth separation and processing, as well as magnet production.

As the demand for HREE materials and neo magnets grows, we will need to not only navigate price competition but also innovate in separation and processing techniques while simultaneously securing long-term customer offtake agreements.

While we are an early-stage company with a limited operating history, we intend to compete by building a leading global rare earth value chain that encompasses extraction and separation of rare earth oxides;

conversion of oxides into metals, alloys and strip-cast;

and production of sintered NdFeB permanent magnets.

Seasonality and Cyclical Factors

Our magnet production operations and planned future mining activities are subject to seasonal and cyclical factors that may affect production levels and market demand.

These factors include, among others, weather-related events, such as severe thunderstorms, tornadoes, flash flooding, hail, high winds, ice storms, and extreme heat, changes in regulatory requirements, fluctuations in raw material prices resulting from changes in supply and demand or inflationary pressures, and changes in demand for end-use applications, among other factors.

Demand for NdFeB permanent magnets can also exhibit other types of cyclicality.

Customer ordering patterns are often shaped by broader economic conditions, government policies, and industry‑specific incentive programs.

The extent to which these cycles may affect our business will depend on the concentration of our customer base within particular end markets and sectors as we scale.

As we execute our strategy to serve a broad range of industries, we believe that diversification across multiple sectors may help mitigate the effects of demand cyclicality over time.

Intellectual Property

We have applied for a U.S.

patent in connection with our proprietary methods for metal extraction.

This patent application is currently pending.

Additionally, we utilize trade secret protection and non-disclosure agreements to protect our proprietary rare earth technology.

We hold a trademark for our logo.

Generally, we rely on a combination of trade secret protection, non-disclosure and licensing agreements, patents and trademarks to establish and protect our proprietary intellectual property rights.

USA Rare Earth, Inc.

| 2025 Annual Report (Form 10-K) | 12

Environmental, Health and Safety Matters

The Company is, or may become, subject to numerous

and extensive federal, state and local laws, regulations, permits and other legal requirements applicable to the magnet production, mining

and mineral processing industries, including those pertaining to employee health and safety, air emissions, water usage, wastewater and

stormwater discharges, air quality standards, greenhouse gas (“ GHG ”) emissions, waste management, plant and wildlife

protection, handling and disposal of hazardous and radioactive substances, remediation of soil and groundwater contamination, land use,

reclamation and restoration of properties, the discharge of materials into the environment and groundwater quality and availability.

laws, regulations, permits and legal requirements have had, and will continue to have, a significant effect on our results of operations,

earnings and competitive position.

Environmental laws and regulations, as well as stakeholder expectations, continue to evolve, which

may require us to meet stricter standards and give rise to greater enforcement, result in increased fines and penalties for non-compliance,

and result in a heightened degree of responsibility for companies and their officers, directors and employees.

Future laws, regulations,

permits or legal requirements, as well as the interpretation or enforcement of existing requirements, may require substantial increases

in capital or operating costs to achieve and maintain compliance or otherwise delay, limit or prohibit operations, or other restrictions

upon, our current or future operations or result in the imposition of fines and penalties for failure to comply.

Complying with this panoply

of regulations is complicated and requires significant attention and resources.

The Company’s employees have a significant amount

of experience working with various federal, state and local authorities to address compliance with such laws, regulations and permits;

We are, or may become, subject to numerous and extensive federal, state and local laws, regulations, permits and other legal requirements applicable to the metal and magnet production, mining and mineral processing industries, including those pertaining to employee health and safety, air emissions, water usage, wastewater and stormwater discharges, air quality standards, greenhouse gas (“GHG”) emissions, waste management, plant and wildlife protection, handling and disposal of hazardous and radioactive substances, remediation of soil and groundwater contamination, land use, reclamation and restoration of properties, the discharge of materials into the environment and groundwater quality and availability.

Such laws, regulations, permits and legal requirements have had, and will continue to have, a significant effect on our results of operations, earnings and competitive position.

Environmental laws and regulations, as well as stakeholder expectations, continue to evolve, which may require us to meet stricter standards and give rise to greater enforcement, result in increased fines and penalties for non-compliance, and result in a heightened degree of responsibility for companies and their officers, directors and employees.

Future laws, regulations, permits or legal requirements, as well as the interpretation or enforcement of existing requirements, may require substantial increases in capital or operating costs to achieve and maintain compliance or could otherwise delay, limit or prohibit operations, or impose other restrictions upon, our current or future operations or result in the imposition of fines and penalties for failure to comply.

Complying with this panoply of regulations is complicated and requires significant attention and resources.

Our employees and consultants have a significant amount of experience working with various federal, state and local authorities to address compliance with such laws, regulations and permits;

however, we cannot assure you that at all times we have been or will be in compliance with such requirements.

The Company expects to continue to incur significant

sums for ongoing operating environmental expenditures, including salaries, and the costs for monitoring, compliance, reporting, pollution

control equipment and permitting.

In addition, the Company plans to invest significant capital to maintain and upgrade certain infrastructure

related to environmental sustainability and safety.

At the Stillwater Facility, the Company currently

holds and is implementing a Spill Prevention and Countermeasures Control (“ SPCC ”) Plan.

At the Round Top Project, the

Company has obtained coverage under the Texas Commission on Environmental Quality (“ TCEQ ”) Construction Stormwater

Permit TXR150000 and maintains the associated Storm Water Pollution Prevention Plan.

At one or both sites, the Company currently expects

that it may need to obtain many or all of the following permits in the future to conduct its business as currently planned:

● Radioactive equipment registration

● Petroleum storage tank registration

● Industrial stormwater permit (or coverage under a general stormwater

● Industrial waste registration

● Air emissions permit

● Industrial waste water on-site sewage and/or process water

discharge permit

● Other building and/or construction permits

Environmental, Health & Safety

Laws and Regulations

The numerous and extensive federal, state and

local environmental, health and safety laws and regulations to which the Company is or may be subject include the laws and regulations

listed below.

Violation of such laws and associated regulatory programs can result in civil, criminal and administrative penalties and

substantial liability for the costs of correcting violations and remediating any environmental damage caused by the violations.

certain statutes, private citizens may bring enforcement suits.

We expect to maintain regular communication with regulatory bodies to

stay updated on any changes or additional requirements.

We expect to continue to incur significant sums for ongoing environmental expenditures relating to our operations, including salaries, and the costs for monitoring, compliance, reporting, pollution control equipment and permitting.

In addition, we plan to invest significant capital to maintain and upgrade certain infrastructure related to environmental sustainability and safety.

Environmental, Health & Safety Laws and Regulations – United States

There are numerous and extensive federal, state and local environmental, health and safety laws and regulations to which we are or may become subject, including the laws and regulations listed below.

Violation of such laws and associated regulatory programs can result in civil, criminal and administrative penalties and substantial liability for the costs of correcting violations and remediating any environmental damage caused by the violations.

Under certain statutes, private citizens may bring enforcement suits.

We expect to maintain regular communication with regulatory bodies to stay updated on any changes or additional requirements.

Mine Health and Safety Laws.

fully adhere to the safety standards enforced by the Mine Safety and Health Administration (“ MSHA ” ) under the

Federal Mine Safety and Health Act of 1977, we plan to develop comprehensive mine safety and health programs in connection with

the commissioning of the Round Top Project’s mine if and when such commissioning occurs including, but not limited to, regular MSHA

inspections and reporting protocols, mandatory MSHA training programs (Part 46/48) for all personnel, implementation of emergency

response and hazard mitigation plans, and continuous monitoring of air quality, dust, noise, and other environmental health factors.

To fully adhere to the safety standards enforced by the Mine Safety and Health Administration (“MSHA”) under the Federal Mine Safety and Health Act of 1977, we plan to develop comprehensive mine safety and health programs in connection with the commissioning of the Round Top Project’s mine if and when such commissioning occurs including, but not limited to, regular MSHA inspections and reporting protocols, mandatory MSHA training programs (Part 46/48) for all personnel, implementation of emergency response and hazard mitigation plans, and continuous monitoring of air quality, dust, noise, and other environmental health factors.

Surface Mining Control and Reclamation.

may in the future, if and when the Round Top Project is a producing mine, be subject to applicable mining controls and land reclamation

requirements.

We may in the future, if and when the Round Top Project is a producing mine, be subject to applicable mining controls and land reclamation requirements.

These controls and requirements generally establish operational, reclamation, and closure standards for surface mining operations.

It is likely that we will need to meet comprehensive environmental protection and reclamation standards during the course of, and upon

completion of, mining activities, and any failure to meet such standards may subject us to fines, penalties, or other sanctions.

It is likely that we will need to meet comprehensive environmental protection and reclamation standards during the course of, and upon completion of, mining activities, and any failure to meet such standards may subject us to fines, penalties, or other sanctions.

Endangered Species Act.

Endangered Species Act (“ ESA ”) and comparable state statutes regulate activities that could have an adverse effect

on threatened and endangered species, including the habitat and ecosystems upon which they depend.

Compliance with ESA requirements can

significantly delay, limit, or even prevent the development of projects, including the development of mining claims, and can also result

in increased development costs.

In addition, the ESA authorizes both civil and criminal penalties for ESA violations and authorizes citizen

suits against any person alleged to be in violation of the ESA.

The Endangered Species Act (“ESA”) and comparable state statutes regulate activities that could have an adverse effect on threatened and endangered species, including the habitat and ecosystems upon which they depend.

Compliance with ESA requirements can significantly delay, limit, or even prevent the development of projects, including the development of mining claims, and can also result in increased development costs.

In addition, the ESA authorizes both civil and criminal penalties for ESA violations and authorizes citizen suits against any person alleged to be in violation of the ESA.

USA Rare Earth, Inc.

| 2025 Annual Report (Form 10-K) | 13

National Environmental Policy Act.

National Environmental Policy Act (“ NEPA ”) require agencies to integrate environmental considerations into their decision-making processes

by evaluating the environmental impacts of their proposed actions, including issuance of permits to mining facilities, and assessing alternatives

to those actions.

If a proposed federal action could significantly affect the environment, the agency must prepare a detailed statement

known as an Environmental Impact Statement (“ EIS ”).

The United States Environmental Protection Agency (the “ EPA ”),

other agencies, and any interested third parties may review and comment on the scoping of the EIS and the adequacy of and findings set

forth in the draft and final EIS.

This process can cause delays in issuance of required permits or result in changes to a project

to mitigate its potential environmental impacts, which can in turn impact the economic feasibility of a proposed project.

The National Environmental Policy Act (“NEPA”) requires federal agencies to integrate environmental considerations into their decision-making processes by evaluating the environmental impacts of their proposed actions, including issuance of permits to mining facilities, and assessing alternatives to those actions.

If a proposed federal action could significantly affect the environment, the agency must prepare a detailed statement known as an Environmental Impact Statement (“EIS”).

Environmental Protection Agency (the “EPA”), other agencies, and any interested third parties may review and comment on the scoping of the EIS and the adequacy of and findings set forth in the draft and final EIS.

This process can cause delays in issuance of required permits or result in changes to a project to mitigate its potential environmental impacts, which can in turn impact the economic feasibility of a proposed project.

Clean Water Act.

Clean Water Act (“ CWA ”) and comparable state statutes impose restrictions and controls on the discharge of pollutants

into waters of the United States (or state waters under state laws).

The CWA can regulate storm water from mining facilities and

require a storm water discharge permit for certain activities.

The CWA and regulations implemented thereunder also prohibit discharges

of dredged and fill material in wetlands and other waters of the United States unless authorized by an appropriately issued permit.

CWA regulations and controls generally have become more stringent over time, and it is possible that additional restrictions will be imposed

in the future.

The Clean Water Act (“CWA”) and comparable state statutes impose restrictions and controls on the discharge of pollutants into waters of the U.S.

(or state waters under state laws).

The CWA can regulate storm water from mining facilities and require a storm water discharge permit for certain activities.

The CWA and regulations implemented thereunder also prohibit discharges of dredged and fill material in wetlands and other waters of the U.S.

unless authorized by an appropriately issued permit.

CWA regulations and controls generally have become more stringent over time, and it is possible that additional restrictions will be imposed in the future.

Safe Drinking Water Act.

Safe Drinking Water Act (“ SDWA ”) and comparable state statutes, the Underground Injection Control (“ UIC ”)

program, and related state-administered programs regulate the drilling and operation of subsurface injection wells.

The Safe Drinking Water Act (“SDWA”) and comparable state statutes, the Underground Injection Control (“UIC”) program, and related state-administered programs regulate the drilling and operation of subsurface injection wells.

Clean Air Act.

Clean Air Act (“ CAA ”) and comparable state statutes govern the emission of air pollutants from many stationary and

mobile sources, including mining, beneficiation, and processing activities.

Our operations may produce air emissions, including fugitive

dust and other air pollutants, from stationary equipment, storage facilities, and the use of mobile sources, such as trucks and heavy

construction equipment, that are subject to review, monitoring, control requirements and emission limits under the CAA and state air quality

New sources, equipment or process enhancements, including with respect to the growth of our operations and Stage II optimization

projects, may require additional permits, and existing sources may be required to incur capital costs to remain in compliance.

permitting rules and issued permits or licenses may impose conditions or other limitations on production levels or result in additional

capital or other expenditures to comply with such rules or permits.

Comprehensive Environmental, Response, Compensation,

and Liability Act (“CERCLA”) .

CERCLA and comparable state laws impose strict, joint and several

liability on current and former owners and operators of sites and on persons who disposed of or arranged for the disposal of hazardous

substances found at such sites, regardless of the lawfulness of the original activities that led to the contamination.

Moreover, current

owners or operators of sites can be held liable for contamination caused by others, including former owners or operators, even if the

current owners or operators did not contribute to the contamination.

CERCLA authorizes the EPA and, in some cases, third parties to take

actions in response to threats to public health or the environment and to seek to recover from the potentially responsible parties the

costs of such actions.

The Clean Air Act (“CAA”) and comparable state statutes govern the emission of air pollutants from many stationary and mobile sources, including mining, beneficiation, and processing activities.

Our operations may produce air emissions, including fugitive dust and other air pollutants, from stationary equipment, storage facilities, and the use of mobile sources, such as trucks and heavy construction equipment, that are subject to review, monitoring, control requirements and emission limits under the CAA and state air quality laws.

New sources, equipment or process enhancements, including with respect to the growth of our operations and Stage II optimization projects, may require additional permits, and existing sources may be required to incur capital costs to remain in compliance.

In addition, permitting rules and issued permits or licenses may impose conditions or other limitations on production levels or result in additional capital or other expenditures to comply with such rules or permits.

Comprehensive Environmental, Response, Compensation, and Liability Act (“CERCLA”).

CERCLA and comparable state laws impose strict, joint and several liability on current and former owners and operators of sites and on persons who disposed of or arranged for the disposal of hazardous substances found at such sites, regardless of the lawfulness of the original activities that led to the contamination.

Moreover, current owners or operators of sites can be held liable for contamination caused by others, including former owners or operators, even if the current owners or operators did not contribute to the contamination.

CERCLA authorizes the EPA and, in some cases, third parties to take actions in response to threats to public health or the environment and to seek to recover from the potentially responsible parties the costs of such actions.

Resource Conservation and Recovery Act (“RCRA”).

and comparable state statutes govern the generation and disposal of solid waste and hazardous waste.

Although certain mining, beneficiation,

and mineral processing wastes currently are exempt from regulation as hazardous wastes under RCRA, EPA has limited the disposal options

for certain wastes designated as hazardous wastes under RCRA.

It is possible that wastes generated by our operations may in the future

be designated as hazardous wastes and may therefore become subject to more rigorous and costly management, disposal, and clean-up requirements.

RCRA and comparable state statutes govern the generation and disposal of solid waste and hazardous waste.

Although certain mining, beneficiation, and mineral processing wastes currently are exempt from regulation as hazardous wastes under RCRA, EPA has limited the disposal options for certain wastes designated as hazardous wastes under RCRA.

It is possible that wastes generated by our operations may in the future be designated as hazardous wastes and may therefore become subject to more rigorous and costly management, disposal, and clean-up requirements.

Atomic Energy Act.

Nuclear Regulatory Commission (“ NRC ”), pursuant to its authority under the Atomic Energy Act of 1954, as

amended, oversees the regulatory framework governing the control of radioactive materials, including beneficiation and processing of rare

earths that contain radioactive source materials such as uranium and thorium.

The NRC is responsible for issuing licenses that govern

the handling of source material involving certain concentrations of radioactive material.

Our Round Top Project operations, once the Round

Top Project mine is operational, including waste generation, may be subject to NRC regulations in order to receive title to, possess,

use, transfer, deliver or export source and byproduct materials.

The Nuclear Regulatory Commission (“NRC”), pursuant to its authority under the Atomic Energy Act of 1954, as amended, oversees the regulatory framework governing the control of radioactive materials, including beneficiation and processing of rare earths that contain radioactive source materials such as uranium and thorium.

The NRC is responsible for issuing licenses that govern the handling of source material involving certain concentrations of radioactive material.

Once operational, our Round Top Project, including waste generation at the project, may be subject to NRC regulations in order to receive title to, possess, use, transfer, deliver or export source and byproduct materials.

USA Rare Earth, Inc.

| 2025 Annual Report (Form 10-K) | 14

Workers’ Compensation Laws.

compensation laws in the states in which we operate govern our compensation of employees for work-related injuries.

Agencies in those

states consider changes in workers’ compensation laws from time to time.

Our costs will vary based on the number and severity of

accidents that may occur at our facilities and our costs of addressing these claims.

We are insured under various workers’ compensation

programs for our operations at our facilities.

From time to time, we may become involved in legal

proceedings or be subject to claims that arise in the ordinary course of our business, the outcomes of which are subject to uncertainty.

Any claims against us, whether meritorious or not, can be time-consuming, result in costly litigation, require significant management

time, create a negative perception of the company with communities, stakeholders, and government agencies and result in the diversion

of significant operational resources.

Workers’ compensation laws in the states in which we operate govern our compensation of employees for work-related injuries.

Agencies in those states consider changes in workers’ compensation laws from time to time.

Our costs will vary based on the number and severity of accidents that may occur at our facilities and our costs of addressing these claims.

We are insured under various workers’ compensation programs for our operations at our facilities.

From time to time, we may become involved in legal proceedings or be subject to claims that arise in the ordinary course of our business, the outcomes of which are subject to uncertainty.

Any claims against us, whether meritorious or not, can be time-consuming, result in costly litigation, require significant management time, create a negative perception of the company with communities, stakeholders, and government agencies and result in the diversion of significant operational resources.

See Item 3 , “ Legal Proceedings ,” for information regarding legal proceedings.

Description of the Round Top Project

Round Top Deposit, located in Hudspeth County, Texas near the city of Sierra Blanca, Texas, was initially identified as a potential source

of minerals in the mid-20 th century and has long been recognized for its minerology, particularly its rare earths including

heavy rare earths that are critical for a variety of advanced technologies.

However, despite its potential, the Round Top Deposit remained

largely untapped for many years due to the lower global demand for rare earths and the dominance of cheaper feedstock from foreign

markets, particularly from China.

Interest in the Round Top Deposit resumed in the

early 21 st century as geopolitical concerns and technological advancements led to a renewed focus on securing domestic

supplies of critical materials such as rare earths.

The Round Top Deposit is considered exceptional in its geological composition, as

it contains gallium, lithium, and at least 15 of the 17 rare earths, including a particularly high estimated concentration of heavy

rare earths like dysprosium and terbium.

Documented exploration began in Sierra Blanca

in the 1970s when W.N.

McAnulty initiated trenching and limited drilling of fluorite deposits in the vicinity of Sierra Blanca, Texas.

McAnulty recognized and identified beryllium mineralization associated with the massive fluorite.

Adverse economic conditions for fluorite

precluded development.

In the 1970s, several uranium companies identified anomalous radiation and associated mineralization associated

with the beryllium-fluorite deposit.

During the 1980s, Cabot Corporation (“ Cabot ”),

a large chemical company with a beryllium fabrication division, initiated exploration at Round Top Mountain for beryllium.

In 1987, Cyprus

Metals Company (“ Cyprus ”) entered into a joint venture with Cabot and took over the project.

The Cyprus exploration

program drilled Sierra Blanca, Round Top Mountain and Little Round Top.

Eventually, Cyprus focused on Round Top, specifically the “west

end ore zone”.

Extensive development drilling (82,000 feet), underground exploration drift (1,115 feet) and trial mining resulted

in the completion of an internal feasibility study in June 1988 (Cyprus Sierra Blanca, Inc., 1988), which study would not be sufficient

for Item 1300 purposes.

During the Cabot-Cyprus development project,

the Texas Bureau of Economic Geology (“ BEG ”) conducted extensive research at Round Top and the surrounding area.

study identified beryllium mineralization and rare earth mineralization in the rhyolite.

The research resulted in the three publications,

one in 1987 on the mineralogy of the rhyolite (Rubin, et al., 1987), another in 1988 on the beryllium mineralization (Rubin et al., 1988),

and another in 1990 on the detailed mineralogy and geochemistry of the rhyolite (Price et al., 1990).

The 1990 Price, et al., publication,

Geological Society of America Special Paper 246, is generally considered the most complete publication to date on Round Top.

In late 2007, Standard Silver Corporation, later

to be renamed TRER in 2010, and then TMRC in 2013, acquired prospecting permits for Round Top from the Texas General Land Office (“ GLO ”).

Accessibility .

Round Top Project is located approximately eight miles northwest of the town of Sierra Blanca, Texas, which is the nearest town to Round

Top Mountain and has a small population.

The site is accessed from Interstate 10 through a series of paved and unimproved dirt roads.

The property is not traversed by county roads and consists of a series of graded and primitive jeep roads.

The nearest major airport is

located in El Paso, Texas, 88 miles to the northwest.

The site is approximately three miles north of Interstate 10.

A railroad line is

located near the Round Top Project and a spur line stops at a stone quarry within three miles of the Round Top Project.

Skilled mining

labor and support could potentially be found in the El Paso area and in the mining areas of New Mexico and Arizona.

Land and Water Leases .

RTMD is a limited liability company majority owned

and controlled by USARE for the purpose of developing the Round Top Deposit.

TMRC (a mining exploration company) is the minority owner

In May 2021, the Company completed the acquisition of 80% of RTMD, which controls the Company’s Round Top Project,

including 100% of the mining rights to the Round Top Deposit, by entering into a Contribution Agreement and Operating Agreement with TMRC.

acquisition resulted in the consolidation of RTMD with USARE, and the recording of a “non-controlling interest” for the

remaining 20%.

Since May 2021, TMRC has elected to forfeit some of its ownership in RTMD in exchange for USARE meeting TMRC’s

capital call obligations.

As of December 31, 2024, USARE owns 81% of

the equity interests in RTMD, with TMRC owning the remaining approximately 19%.

Pursuant to RTMD’s governing documents, in the event

that TMRC does not fund its share of mandatory capital contributions called for by USARE as managing member, USARE is obligated to cover

the shortfall by making additional capital contributions to RTMD.

In the event that USARE does not cover the shortfall, the capital

call will be withdrawn.

If the capital call is funded by USARE, additional equity interests in RTMD will be issued to USARE and TMRC will

be proportionally diluted in accordance with the amended and restated limited liability company agreement.

The Round Top Deposit is located on state property

owned by the GLO.

RTMD is party to a 19-year initial term, renewable Mining Lease Agreement (M-113117) with the GLO, dated September 2,

2011, and amended on January 26, 2012, March 29, 2012, and September 14, 2022.

M-113117 will expire on September 1,

2030 unless extended.

RTMD has also entered into an additional 19-year renewable Mining Lease Agreement (M-113629), dated November 1,

2011, with the GLO.

Leases M-113117 and M-113629 (each a “ Mineral Lease ” and together, the “ Mineral

Leases ”) represent approximately 860 and 90 acres, respectively, for a total of 950 leases acres in the Round Top Project area.

M-113629 will expire on October 31, 2030 unless extended.

The Mineral Leases provide RTMD with the use of the property identified,

including certain rights with respect to the surface and subsurface, together with the corresponding rights of ingress and egress, for

the purposes of mineral exploration, development, and exploitation of minerals.

As the Round Top Project is still in its exploration stage,

the Company is currently paying delay rental payments on an annual basis to the GLO as follows:

Anniversary Date 2024

Anniversary Date 2025-2029

Anniversary Date 2024

Anniversary Date 2025-2029

If and when the Round Top Project begins producing,

the Mineral Leases would be converted into producing leases upon the satisfaction of certain conditions, which includes:

(i) a minimum

advance annual royalty of $500,000 for lease M-113117 and $50,000 for lease M-113629, due promptly following sales of leased minerals

or the removal of leased minerals in commercial quantities from the leased premises and (ii) a production royalty equal to 8% of

the market value of uranium and other fissionable minerals and 6.25% of the market value of all other leased minerals.

In addition to the Mineral Leases, the Company

currently owns approximately 2037 acres of mine processing land and holds a current purchase option on 5,670 acres of which 950 acres

are authorized for mining and the remainder (4,720 acres) is contemplated for future use as mine processing land (e.g., for use to assist

in mine development, as leach fields, and/or as plant site) (the “ Purchase Option ”).

Unless exercised prior, the Purchase

Option will expire upon the expiration of Mining Lease M-113117 (September 2, 2030).

As consideration for the Purchase Option,

the Company is required to pay $10,000 to the GLO on each annual anniversary of the Effective Date of the Purchase Option (as defined

in the Purchase Option) during the option term.

If the Company fails to make a timely payment of the option fee, the Purchase Option will

On August 26, 2022, the Company submitted to the GLO a Notice of Intent to exercise the Purchase Option.

In February 2023,

the GLO sent its appraisal of the value of the property associated with the Purchase Option to the Company.

The Company and GLO are negotiating

the exercise of the Purchase Option.

The Company is lessee under GLO Surface Lease

SL2004002 (Grazing/Agricultural), which lease is for a term commencing on November 24, 2003 and expiring on November 23, 2028,

for approximately 55,000 acres of surface rights in proximity to the Company’s Round Top Project (the “ Surface Lease ”).

The Surface Lease is a pre-paid lease with a pro rata credit schedule and a “preference right agreement” to purchase

all or part of the land.

The Surface Lease grants the Company the right to use the leased premises for hunting, grazing, range and wildlife

research, and any other purpose ancillary thereto, and allows, with GLO approval, the Company to commercially develop groundwater and

to use the land for electric generation by wind power.

Pursuant to the Surface Lease, the Company has the right to purchase all or part

of the leased premises during the term of the lease in accordance with the terms set forth in the preference right agreement, an exhibit

to the Surface Lease, provided that any purchase of tracts of land must be contiguous.

The Surface Lease contains certain additional obligations,

such as an obligation to maintain stated insurance coverages in certain situations, and to post certain deposits or bonds prior to commencing

construction of any wind turbine, tower, buildings, or substations.

The Company has the right to early terminate the lease, in which case

the Company would be entitled to receive a refund of the prepayments made under the lease.

There is no Company renewal option under the

Surface Lease and any renewal of the Surface Lease is at the sole discretion of the GLO.

The Company is lessee under GLO Groundwater Lease

SL20150003, dated August 1, 2014, as amended, for approximately 8,828 acres of water rights (the “ Groundwater Lease ”).

The Groundwater Lease grants USARE rights in the land, including rights of ingress and egress, for the purpose of exploring, evaluating,

drilling for, producing, developing, and extracting groundwater from the leased land for industrial and potable water use in connection

with USARE’s Round Top Project (including, without limitation, mineral processing and metal extraction/processing).

The Groundwater

Lease will expire concurrently with the M-113117 Mineral Lease.

The Company has not commenced water production and is currently obligated

to pay annual delay rentals in the amount of $6,500 on or before each anniversary of the effective date of the Groundwater Lease.

first anniversary of the Effective Date that immediately follows the Company’s commencement of water production from the leased

premises the Company shall make a production payment equal to the greater of (1) $1,667.67 multiplied times the number of months

of production of water during the 12-month period ending 60 days before the production payment is due, or (2) $0.95 per

1,000 gallons of the gross volume of water produced by the leased premises covered by the lease during the 12-month period ending

60 days before the production payment is due.

On each anniversary of the effective date of the Groundwater Lease thereafter during

the remaining term of the Groundwater Lease, the Company will be required to make a production payment equal to the greater of (1) $20,000,

or (2) $0.95 per 1,000 gallons of the gross volume of water produced from the leased premises during the 12-month period ending

60 days before the production payment is due.

There is no Company renewal option under the Groundwater Lease and any renewal of the

Groundwater Lease is at the sole discretion of the GLO.

The premises leased under the Groundwater Lease

has two existing water wells.

Prior to commencing production of rare earth minerals at the Round Top Project, the Company will need to

establish that the existing wells are functioning water wells producing enough water to support production or potentially drill additional

wells, which would entail additional expense for production.

If the Company determines that the groundwater supply is not suitable for

the Company’s Round Top Project, then the Company has the right to terminate the Groundwater Lease.

Upon expiration or earlier termination

of the Groundwater Lease, the Company will be required to restore the leased premises to its original topographical condition that existed

as of the Effective Date, to the extent the topographical condition has been altered.

The Company has entered into four easements with

GLO that affect the Round Top Project.

The first easement is Miscellaneous Easement ME20210085 (“ ME20210085 ”), which

commenced on April 1, 2021 and expires on March 31, 2031 unless extended by the Company pursuant to the terms of ME20210085.

ME20210085 is a nonexclusive easement for a right of way to construct, maintain, operate, inspect and repair one roadway in a location

set forth on the easement.

The second easement is Miscellaneous Easement

(Pipelines) ME20210086 (“ ME20210086 ”), which commenced on April 1, 2021 and expires on March 31, 2031 unless

extended by the Company pursuant to the terms of ME20210086.

ME20210086 is a nonexclusive easement for a right of way to construct, maintain,

operate, inspect, repair, change the size of, and replace one 4.5-inch O.D.

pipeline for the purpose of transporting fresh water

in a location set forth on the easement.

The third easement is Miscellaneous Easement ME20210087

(“ ME20210087 ”), which commenced on April 1, 2021 and expires on March 31, 2031 unless extended by the Company

pursuant to the terms of ME20210087.

ME20210087 is a nonexclusive easement for a right of way to construct, maintain, operate, inspect

and repair one 24-kV electric line in a location set forth on the easement.

The fourth easement is Miscellaneous Easement

ME20220142 (“ ME20220142 ”), which commenced on September 1, 2022 and expires on August 31, 2032 unless extended

by the Company pursuant to the terms of ME20220142.

ME20220142 is a nonexclusive easement for a right of way to construct, maintain, operate,

inspect and repair one roadway in a location set forth on the easement.

Historical Non-Item 1300 Resource

Feasibility Studies .

Cyprus established certain non-reported resources in conjunction with

a 1988 internal feasibility study, which historical resource estimate would not qualify as a resource by either historical 43-101 standards

nor current Item 1300 of Regulation S-K (“ Item 1300 ”) standards.

In 2012, TMRC completed a PEA prepared by

a mining consulting firm on the Round Top Deposit (NI 43-101 Preliminary Economic Assessment — Round Top Project,

June 22, 2012).

The resource model in that PEA was updated in early 2013 with additional drilling and assay data and was documented

in a resource statement by a mining consulting firm (Resource Estimate and Statistical Summary — Round Top Project, September 30,

The 2013 PEA was an update of the 2012 PEA and utilized the resource estimate from the September 2013 study.

was then superseded in 2019 when USARE and TMRC engaged a mining consulting firm to prepare its resource statement (NI 43-101 Preliminary

Economic Assessment — Round Top Project, August 16, 2019).

Neither the 2012 PEA, the 2013 PEA, nor the 2019 PEA were

prepared on the basis of compliance with Item 1300 and are not resource estimates of USARE under Item 1300.

The 2019 PEA provided an initial overview of the

Round Top Deposit’s minerology, confirming that the site contains both heavy rare earths and lithium.

While the 2019 PEA set the

stage for further detailed studies, in light of the rapid global economic changes, technological changes that have occurred since 2019,

and changes in economic environment and pricing, including with respect to extraction costs and economic returns, the Company is not relying

on the 2019 PEA for the purpose of reporting mineral resources.

The Company does not currently intend to update the 2019 PEA and is instead

working toward conducting a pre-feasibility study (“ PFS ”).

The Company intends to update the “flow sheet”

used as a key input in such estimates to reflect the Company’s expected separation and processing methodologies at that time.

does not make any representation that any historical estimate is a current mineral resource estimate for the Round Top Project.

is no known significant production reported from previous operators.

Accordingly, following the 2019 PEA, USARE has

been actively working on advancing the project through the next stages of the project, focusing on the subsequent PFS, which the Company

intends to eventually progress to a Definitive Feasibility Study (“ DFS ”).

The PFS would provide an updated and more

detailed analysis of the technical and economic feasibility of the Round Top Project, including resource modeling, mine design, and processing

methodologies.

This step is critical in defining and refining the operational and financial plans for the Round Top Project.

stage, the DFS, would provide the most definitive plan for the full-scale development of the mine, including final cost estimates,

engineering plans, and potential environmental impacts, all necessary for securing financing and moving toward full production.

Exploration Status .

is the Company’s view that the Round Top Project is considered an “exploration stage property” under Item 1300,

in that the Round Top Project is a property that has no mineral reserves disclosed.

Mineral resources that are not mineral reserves have

no demonstrated economic viability.

USARE has not itself conducted any exploration activities at the Round Top Project and does not have

any current determination as to a proposed program of exploration or development.

However, as discussed above in the section entitled

“— History ”, various other parties have historically performed exploration activities at the site, including

TMRC from whom USARE acquired its rights in the Round Top Project through the Company’s subsidiary RTMD.

Between January 2010

and August 2019, TMRC conducted the following exploration activities:

surface sampling, logging cuttings from historical reverse

circulation drilling, aeromagnetic surveying, anaeroradiometric survey, stream sediment surveying, gravity surveying, and exploratory

To date, 173 historical drill holes have been located, and, between 2011 and 2019, TMRC drilled 84 reverse circulation holes

and 2 core holes and analyzed 3,081 drill samples.

In early 2019, TMRC assayed previously collected RC samples to collect geochemical

data for some additional elements from existing drill holes to expand the knowledge of lithium, zircon, and other elements which metallurgical

test work had indicated might impact project economics.

The Round Top Project’s equipment and facilities

and related infrastructure are in generally good condition and are not material to the Company’s business as currently conducted.

For information regarding current and expected

future permitting requirements and associated timelines and information regarding such permits, see the section entitled “— Permits

and Approvals ”.

Environmental Impact .

Round Top Project has been envisioned with an emphasis on minimizing environmental impact, particularly in comparison to traditional mining

One of the key environmental advantages of the Round Top Project’s site is its location in an arid, sparsely populated

area of Texas, which reduces the likelihood of significant impacts on local communities or ecosystems.

Due to the above-ground nature

of the deposit, the project is currently expected to predominantly utilize in-situ leaching for rare earth extraction, which is generally

considered less environmentally disruptive than traditional mining techniques.

This process involves dissolving minerals using solutions

and extracting them without large-scale surface disruption, reducing the need for large open-pit mining operations that could

potentially lead to undesirable environmental impacts.

Additionally, USARE endeavors to use sustainable

practices by focusing on using closed-loop recycling systems to minimize waste and reduce water usage in its operations.

is exploring the possibility of using renewable energy sources to power its projects.

However, like all mining operations, in the future,

the Company will likely need to manage concerns related to chemical use, water management and contamination, and waste management.

Environmental, Health and Safety Laws and Regulations – United Kingdom and European Union

Our newly acquired subsidiary, Less Common Metals, which operates a rare earth metallurgy facility in the U.K., is or may be subject to several U.K.

and EU laws and regulations applicable to rare earth oxide processing, metal and alloy production, chemicals handling and manufacturing.

These include laws and regulations that govern air emissions (including GHG emissions), water usage, wastewater and effluent discharges, waste management, handling and disposal of hazardous substances, chemicals registration and authorization, prevention and, if necessary, remediation of soil and groundwater contamination, land use, industrial permitting, and product compliance.

Non-compliance with such laws and regulations can result in civil, criminal and administrative penalties and substantial liability for the costs of correcting non-compliances and associated remediation.

Environmental and sustainability laws continue to develop in each of the U.K.

Such developments may require us to meet stricter standards or give rise to greater enforcement risk, and may increase liability risk for officers and directors.

Meeting the developing requirements may require increases in capital or operating costs to achieve and maintain compliance.

The environmental, health and safety laws and regulations which Less Common Metals is or may be subject to include the laws and regulations listed below.

Environmental Permitting .

Less Common Metals’ operations in the U.K.

are likely regulated under the Environmental Permitting (England and Wales) Regulations 2016, enforced by the Environment Agency (“EA”).

As an industrial facility engaged in the production of rare earth metals and alloys for the permanent magnet industry, with processes involving fused salt electrolysis, vacuum induction casting, strip casting, solid state co-reduction, milling and hydrogen decrepitation, Less Common Metals may be required to hold an Environmental Permit governing, amongst other things, any releases to air, water and land, and which imposes review, monitoring, and control requirements.

Facilities of this type and scale are also often subject to the Industrial Emissions Directive (as retained in law in the U.K.

and enforced by the EA), which requires high-pollution industrial installations to operate under emissions permits based on Best Available Techniques.

The EA may vary, suspend, or revoke permits for non-compliance, and can impose significant civil and criminal penalties.

Maintaining compliance with existing and future permits, or dealing with modifications can result in operational constraints and costs.

Similar permitting regulations are likely to apply in relation to Less Common Metals’ existing and proposed operations in France.

Environmental Impact Assessment .

Any material expansion, modification or new development of Less Common Metals’ facilities in the U.K.

which falls within the scope of the Town and Country Planning (Environmental Impact Assessment) Regulations 2017 may be subject to a requirement to carry out a formal Environmental Impact Assessment (“EIA”) as part of the planning consent process.

An EIA requires an assessment of potential effects of such development on the environment, including air quality, water, biodiversity, noise, and human health.

It is possible for an EIA process to cause delays in obtaining required consents or result in conditions being imposed that affect the economic viability or operational parameters of a proposed project.

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Land Condition .

Given the site in the U.K.

has historical industrial and manufacturing use, and given the nature of the REE oxide processing operations conducted by Less Common Metals, there is a risk that contamination may be present in, on, or under the site arising from current or historic operations.

Land contamination is regulated under Part IIA of the Environmental Protection Act 1990 and the Contaminated Land (England) Regulations 2006.

If land is designated as contaminated under this regime, remediation notices may be served on those who caused or knowingly permitted the contaminating substances to be present in the land.

We cannot assure you that we will not be required to undertake remediation works in the future, or that the costs of any such remediation will not be material to our financial condition or operations.

Regimes governing liability for historic land liability also exist in France.

Chemicals Regulation .

Operations involving the handling, processing, and production of chemical substances are likely subject to the U.K.

Registration, Evaluation, Authorisation and Restriction of Chemicals regime (“UK Reach”), enforced by the Health and Safety Executive (“HSE”).

UK REACH is the U.K.’s standalone equivalent of Regulation (EC) No 1907/2006 on the Registration, Evaluation, Authorisation and Restriction of Chemicals (“EU REACH”).

UK REACH imposes registration, data submission, and authorization obligations in respect of substances manufactured or imported into Great Britain above prescribed tonnage thresholds.

Rare earth compounds, including oxide feedstocks and metal products, may be subject to registration requirements.

Failure to register substances or comply with authorization conditions can result in obstructions to manufacturing or the supply of those substances, and may give rise to enforcement action by the HSE.

If substances or articles are supplied into the EU or European Economic Area, including for the purpose of operations in France, these may also be subject to obligations under EU REACH, which again requires registration requirements for substances manufactured in or imported into the EU above defined tonnage thresholds, and authorization for certain substances, such as substances of very high concern.

Non-compliance with EU REACH can result in the prohibition of supply into the EU market and enforcement action by competent authorities in the relevant EU member state.

Waste Regulation .

The generation, storage, treatment, and disposal of waste is dealt with in similar ways across the U.K., the EU and France, with local regimes all rooted in the EU Waste Framework Directive.

In the U.K., these include the Environmental Permitting (England and Wales) Regulations 2016, the Waste (England and Wales) Regulations 2011, and the Hazardous Waste (England and Wales) Regulations 2005.

These regimes impose requirements as to the classification, handling, storage, transfer, treatment and disposal of both non-hazardous and hazardous waste arising from industrial operations.

Producers of hazardous waste are subject to additional documentation, consignment and disposal obligations.

Violations of applicable waste regulations may result in civil and criminal penalties.

Air Emissions .

For any installations falling within scope of the U.K.

Emissions Trading Scheme (“UK ETS”) or the EU Emissions Trading System (“EU ETS”) with GHG emissions above applicable thresholds, operators of such installations are required to surrender allowances equivalent to their verified emissions annually, and failure to do so may result in financial penalty.

Critical Raw Materials .

Any rare earth elements and metals produced or processed which are classified as critical raw materials by the U.K.

and the EU are subject to strategic emerging regulations.

In the U.K., the Critical Minerals Strategy published by the U.K.

Government identifies rare earth elements as strategic priorities and may give rise to funding mechanisms for the processing of such materials.

In the EU, Regulation (EU) 2024/1252 on Critical Raw Materials (“CRMA”) establishes benchmarks for the EU’s domestic capacities in extraction, processing and recycling of strategic raw materials, including rare earth elements, and imposes due diligence, auditing, and supply chain risk obligations on companies placing certain raw materials or products containing them on the EU market.

Evolving requirements under the CRMA and its implementing regulations, and any similar emerging U.K.

rules, may impose additional operational, reporting, or supply chain obligations on Less Common Metals and its customers, and could affect the competitive environment in which we operate.

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Health and Safety .

There are several health and safety regulations relevant to Less Common Metals’ activities in the U.K., including the Health and Safety at Work etc.

Act 1974 (UK) and regulations made thereunder, including the Control of Substances Hazardous to Health Regulations 2002 (“COSHH”), the Management of Health and Safety at Work Regulations 1999, the Dangerous Substances and Explosive Atmospheres Regulations 2002 (“DSEAR”), and the Control of Major Accident Hazards Regulations 2015 (“COMAH”).

COSHH requires the assessment and control of workplace exposure to hazardous substances, including rare earth compounds, metal dusts, and process chemicals.

Given the scale and nature of Less Common Metals operations, the facility may be subject to COMAH obligations applicable to establishments storing or handling hazardous substances above prescribed threshold quantities, which impose requirements relating to major accident prevention, storage, safety reports, engagement with local authorities.

The Health and Safety Executive is the regulatory authority responsible for enforcement.

Failure to comply with health and safety requirements imposed by the HSE can result in improvement or prohibition notices, and civil or criminal liability.

Similar health and safety regimes are likely to be in place locally in France.

Permits and Approvals

At our Stillwater Facility, we currently hold and are implementing a Spill Prevention and Countermeasures Control (“SPCC”) Plan.

At the Round Top Project, we have obtained coverage under the Texas Commission on Environmental Quality (“TCEQ”) Construction Stormwater Permit TXR150000 and maintain the associated Storm Water Pollution Prevention Plan.

At one or both sites, we currently expect that we may need to obtain many or all of the following permits in our future to conduct its business as currently planned:

• Radioactive equipment registration

• Petroleum storage tank registration

• Industrial stormwater permit (or coverage under a general stormwater permit)

• Industrial waste registration

• Air emissions permit

• Industrial waste water on-site sewage and/or process water discharge permit

• Other building and construction permits

Human Capital Resources

Our workforce is the foundation of our ability to execute on our mission.

As of December 31, 2025, we had a total of 132 employees, all of whom are full-time, across multiple locations in the U.S., principally in Oklahoma, Colorado, and Washington D.C., and in the United Kingdom.

Our team encompasses engineers, scientists, mining specialists, manufacturing experts, and operations professionals with deep expertise in rare earth processing, metal-making, and magnet manufacturing.

None of our employees are represented by a labor union or are parties to a collective bargaining agreement, and we consider our employees relations to be good.

Our global operations management brings extensive domain knowledge, expertise and leadership to the critical minerals, metals, and magnet value chain, and has been building a team of experts in the field who are process- and goal-focused, with the drive to execute successfully.

We support employee development through training programs that build leadership and technical skills, as well as product and manufacturing training to deepen understanding of our processes, and pathways for career advancement as we scale operations across our platform.

We recognize that attracting talent is only part of the equation;

retaining and developing our talent is equally critical.

We are committed to creating an environment where employees can thrive professionally and personally through competitive compensation and benefits, including variable pay tied to company and individual performance, equity participation for all full-time employees where permitted, professional and educational training as needed, and comprehensive health and welfare benefits, including mental wellness programs.

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We believe in supporting our employees through training and professional development.

To assess and improve retention and engagement, we are designing and implementing an employee pulse check program that will provide regular, real-time feedback on employee sentiment, allowing us to identify and address concerns as they emerge rather than retrospectively.

We maintain open communication through regular town hall meetings and small-group sessions with executive leadership.

Our Code of Business Conduct, reflected in our employee manual and training programs, includes policies against harassment, bullying, and workplace bias, and serves as a foundation for maintaining our culture as we grow.

We are committed to providing a safe and healthy workplace.

We continuously strive to meet or exceed compliance with all laws, regulations, and accepted practices pertaining to workplace safety.

All employees are required to comply with established safety policies, standards, and procedures, and to complete annual safety training based on their job function.

We have developed and maintain company-wide policies to ensure employee safety and compliance with domestic and international safety standards.

Additional Information

Our website is https://usare.com.

We also maintain an Investor Relations website as a routine channel for distribution of important information, including news releases, presentations, and financial statements (https://investors.usare.com).

We intend to use our Investor Relations website as a means of complying with our disclosure obligations under Regulation FD.

Accordingly, investors should monitor our Investor Relations website in addition to press releases, SEC filings, and public conference calls and webcasts.

Our Annual Report on Form 10‑K, Quarterly Reports on Form 10‑Q, Current Reports on Form 8‑K, all amendments to those reports, and the Proxy Statement for our Annual Meeting of Stockholders are made available, free of charge, in the Investor Relations section of our website, as soon as reasonably practicable after these documents have been filed with, or furnished to, the SEC.

The information contained on our website, or any other website, is not part of this report nor is it considered to be incorporated by reference herein or with any other filing we make with the SEC.

Our headquarters and primary manufacturing center is located at 100 W.

Airport Road, Stillwater, Oklahoma 74075, and our main telephone number is (813) 867-6155.

The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.

The address of the SEC website is http://www.sec.gov.

We have included this website address only as an inactive textual reference and do not intend it to be an active link to the SEC website.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business