-- USA Rare Earth (USAR) on Monday agreed to acquire Brazilian rare earths miner Serra Verde in a cash-and-stock deal with an equity value of about $2.8 billion, as the critical minerals producer aims to boost its rare earth operations.
The transaction comprises $300 million in cash and about 126.8 million newly issued USA Rare Earth shares, the company said in a statement. USA Rare Earth's stock increased 2.2% in the most recent premarket activity.
In a separate statement, Serra Verde, the owner of the Pela Ema rare earth mine and processing plant in Brazil, said the deal with USA Rare Earth will establish a multinational mine-to-magnets rare earths company with eight operations in Brazil, the US, France and the UK and operating capabilities across mining, processing, separation, metallization and magnet making.
"Serra Verde's Pela Ema mine is a one-of-a-kind asset and the only producer outside Asia capable of supplying all four magnetic rare earths at scale," USA Rare Earth Chief Executive Barbara Humpton said. "By combining Serra Verde's world-class operations and team with our processing, separation, metallization and magnet-making capabilities, we are advancing our goal of creating a fully integrated platform that will serve as a cornerstone of global rare earth supply security for decades to come."
The deal, which requires approval from regulators, is expected to complete in the third quarter.
"We are excited to contribute our operational expertise, government partnerships, and significant growth potential to this combined platform," according to Serra Verde CEO Thras Moraitis. "We believe the combined company will deliver a fully integrated rare earth solution at scale, accelerate growth, and create enhanced value for all stakeholders."
Additionally, the companies announced that Serra Verde has secured a $565 million financing package from the US International Development Finance Corporation for its optimization and expansion initiatives. The Brazilian firm also entered into a 15-year offtake agreement to supply a special purpose vehicle capitalized by various US government agencies, as well as private capital sources, with all four magnetic rare earths.
Serra Verde is estimated to produce an average of about 6,400 metric tons of total rare earth oxide per year by the end of 2027 as part of its phase 1 capacity.
As part of the deal, Moraitis and Serra Verde Chairman Mick Davis will join the USA Rare Earth's board.