MP Materials (MP), the rare-earth miner that operates the Mountain Pass mine in California, has fallen about 60% from its highs, from roughly 100 USD a share last October to about 40 USD. Analysts' average price target is about 71 USD. Under a deal with the Department of Defense last July, the Pentagon set a 10-year price floor of 110 USD per kilogram for NdPr, which the author says makes MP much less vulnerable than other miners. However, the government's price-protection income of 17.6 million USD last quarter accounted for more than 60% of adjusted EBITDA, leading the author to question whether to value the stock on its own earnings or pay a premium for government-dependent profits. The author wants to see the business generate substantial profits on its own and reduce reliance on the Pentagon's payments before feeling more confident, noting the price floor expires at the end of 2035.
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