USA Rare Earth Maps Serra Verde Deal’s Losses and Funding
Preliminary purchase consideration for Serra Verde rose to $3.153 billion.
USA Rare Earth (USAR), a rare-earth developer, projected that its Serra Verde combination would widen its first-quarter operating loss to $53.052 million from a standalone loss of $36.675 million. Net loss attributable to USA Rare Earth would increase to $73.345 million from $66.989 million.
The transaction would add revenue alongside substantial production costs. Combined first-quarter revenue would total $6.286 million, compared with $5.698 million for USA Rare Earth alone. A standalone gross profit of $106,000 would become a $4.315 million pro forma gross loss after Serra Verde contributed a $4.421 million gross loss.
The same pattern extended across 2025. Pro forma revenue would have reached $4.129 million, up from USA Rare Earth’s standalone $1.643 million, while a $195,000 gross profit would have become a $33.424 million gross loss. Operating loss would have widened to $244.036 million from $59.503 million, and net loss attributable to the company would have increased to $453.070 million from $297.559 million.
The preliminary accounting consideration compared with the roughly $2.8 billion equity value announced in April, which was based on USA Rare Earth’s share price at the time. The transaction’s cash-and-stock terms remained $300 million and 126.849 million shares. The combined March 31 balance sheet carried $1.659 billion of cash, $90.6 million below USA Rare Earth’s standalone balance after accounting for the merger payment and other transaction adjustments.
Serra Verde expanded its U.S. International Development Finance Corp. facility to $565 million from $465 million by adding a $100 million tranche and extending the maximum term to 15 years from 12 years. Borrowings totaled $325 million at March 31, and the additional tranche closed June 4. USA Rare Earth also completed definitive agreements for as much as $1.6 billion of Commerce Department support, including $277 million of federal funding and $1.3 billion of senior secured loan capacity. No loans had been drawn as of July 16.
The Commerce agreements carried additional accounting costs. The department’s 16.1 million shares were valued at $451.4 million, resulting in a $174.4 million charge to accumulated deficit, while a warrant for 17.6 million shares was initially recorded as a $430.9 million liability subject to remeasurement through earnings. Separately, USA Rare Earth issued two 5.05 million-share earnout tranches after its stock met the $15 and $20 thresholds, removing the related pro forma liability.
Serra Verde’s offtake obligation now covers all Phase 1 rare-earth products and includes escalating annual floor prices. Proceeds above those floors, cost savings and yield variances are split 70% to Serra Verde and 30% to the counterparty. The parties extended the agreement’s conditions-precedent deadline to Aug. 14 from June 12, leaving completion of those conditions as the next transaction milestone.