Mp Materials Corp. · NYSE:MP
Mp Materials — SPAC Merger (July 2020)
49 slides from Mp Materials's SPAC merger presentation, Jul 15, 2020
Slide 1: Powering Progress: Investing in America's Next-Generation Supply Chain
POWERING PROGRESS INVESTING IN AMERICA’S N E X T - G E N E R AT I O N S U P P LY C H A I N July 15, 2020
Slide 2: Disclaimers
DISCLAIMERS This presentation is provided for informational purposes only and has been prepared to assist interested parties in making their own evaluation with respect to a potential business combination between MP Mine Operations LLC doing business as MP Materials (“MPMO”) and Secure Natural Resou
Slide 3: Disclaimers (Cont.)
DISCLAIMERS (CONT.) Financial Information; Non-GAAP Financial Measures The financial information and data contained in this presentation is unaudited and does not conform to Regulation S-X. Accordingly, such information and data may not be included in, may be adjusted in or may be presented differen
Slide 4: MP Materials
MP MATERIALS Our mission is to restore the full rare earth supply chain to the United States of America. Our success will drive the onshoring of jobs, national security and a carbon-reduced future. 4
Slide 5: Introduction
INTRODUCTION • MP Materials (“MP”) proposes to combine with Fortress Value Acquisition Corp. (“FVAC”) to create a combined company with an estimated $1.5 billion post-transaction equity valuation (with $525MM of net cash)(1)(2) • MP is at the center of the electric transportation ecosystem, serving
Slide 6: Leadership
LEADERSHIP James Litinsky – Chairman & CEO Mr. Litinsky is the Founder, Chief Executive Officer and Chief Investment Officer of JHL Capital Group LLC. Before founding JHL in 2006, Mr. Litinsky was a member of the Drawbridge Special Opportunities Fund at Fortress Investment Group. Prior to Fortress,
Slide 7: Executive Summary: Business Overview
EXECUTIVE SUMMARY: BUSINESS OVERVIEW • MP owns and operates one of the world’s largest integrated rare earth mining and processing facilities in Mountain Pass, CA − The only major rare earths resource in the Western Hemisphere with a proven, multi-decade reserve base − A rich, decades-long history a
Slide 8: Executive Summary: Proposed Transaction
EXECUTIVE SUMMARY: PROPOSED TRANSACTION • MP Materials and Fortress Value Acquisition Corp. have executed definitive agreements to enter into a business combination (the “Transaction”) • It is anticipated that the post-closing public company will be a Delaware corporation, retain the MP Materials na
Slide 9: Asset
SECTION 1 jibe. MP marteriAcs
Slide 10: MP Materials At-A-Glance
MP MATERIALS AT-A-GLANCE MOUNTAIN PASS IS A UNIQUE, WORLD CLASS ASSET Rich Rare Earths History Our Business Model ~70 years $1.7BB Since Production Started in Total Capital Invested Mountain Pass Vast, High Grade Reserve Refining Plant 804k mt 8% ore grade Beneficiation Recoverable tREO World-Class
Slide 11: A Rich Rare Earth History
A RICH RARE EARTH HISTORY MP MATERIALS ACQUIRED A HISTORICALLY HIGH QUALITY ASSET AFTER A PERIOD OF CHALLENGED EXECUTION BUT SUBSTANTIAL CAPITAL INVESTMENT Molybdenum Corporation of America (“Molycorp”) Molycorp completes IPO begins production at and launches Project Mountain Pass after Phoenix to r
Slide 12: EV Supply Chain Demands a Western Hemisphere Supplier
EV SUPPLY CHAIN DEMANDS A WESTERN HEMISPHERE SUPPLIER POTENTIAL TO RESTORE CRITICAL INDUSTRIAL INPUT TO THE UNITED STATES Scaled Rare Earth Oxide Producer Potential Select End Users (Europe) NdPr Magnet Producer Potential Select End Users (Americas) Potential Select End Users (APAC) Opportunity to b
Slide 13: Unique Global Supply Position Without Alternatives
UNIQUE GLOBAL SUPPLY POSITION WITHOUT ALTERNATIVES HIGH BARRIERS TO ENTRY IN THE EX-CHINA RARE EARTH RESOURCES MARKET Annual Production EXISTING / tREO mT “STAGE II” GREENFIELD BROWNFIELD RETROFIT COST: SEVERAL BILLION in AGGREGATE ~$350MM CAPEX REQUIRED COST: ~$170MM SEPARATED REOs EXPECTED IN 2022
Slide 14: Differentiated ESG Thesis Versus Competitors
DIFFERENTIATED ESG THESIS VERSUS COMPETITORS MP POSITIONED AS ONLY RARE EARTHS PRODUCER THAT SATISFIES CONSUMERS’ GROWING DEMAND FOR FULLY GREEN SUPPLY CHAINS Other Major Global Peers Produces critically important rare earths to power the new economy Sourced primarily from bastnaesite ore with l
Slide 15: Sustainably-Sourced Materials Powering the Green Revolution
SUSTAINABLY-SOURCED MATERIALS POWERING THE GREEN REVOLUTION ESG DESIGNED FROM INCEPTION WITH AN ENVIRONMENTALLY FRIENDLY “GREEN MINE” • Utilizes a state-of-the-art dry tailings process, eliminating the need for high-risk wet tailings ponds • Water reclaimed from the paste tailings facility is recycl
Slide 16: Post-Transaction Equity Value Below Replacement Cost
MP’S ESTIMATED POST-TRANSACTION EQUITY VALUE OF $1.5BB(1) IS BELOW REPLACEMENT COST $1.7BB OF CAPITAL IN THE GROUND Replacement Cost Selected Existing Facilities at Mountain Pass Facility ($MM) ASSET ACQUISITION INSTALL FACILITY VALUE YEAR Mine Production $11 2013 Crushing Facility 13 2012 Mill & Fl
Slide 17: Market Growth
SECTION 2 Market Growth
Slide 18: The Sustainable Mobility Ecosystem
THE SUSTAINABLE MOBILITY ECOSYSTEM PUBLIC INVESTORS ARE SEEKING WAYS TO GET EXPOSURE TO THE TRANSFORMATIVE CHANGES AHEAD FROM EVs AND CLIMATE CHANGE INVESTMENT Semiconductors Cap Goods Metals & Mining Machinery Energy “Cars and Climate” Electric Utilities “Cars and48Climate” Batteries 43 48 Autos /
Slide 19: Rare Earths Are Critical Materials for the Coming Decades
RARE EARTHS ARE CRITICAL MATERIALS FOR THE COMING DECADES NdPr MAGNETS(1) ARE ESSENTIAL BUILDING BLOCKS FOR THIS EVOLUTION 60 59 Nd Pr WIND INDUSTRIAL ROBOTICS ELECTRIC DRONES ELECTRIC ELECTRIC TURBINES AUTOMATION VEHICLES PUB. TRANSPORT AVIATION Annual Domestic Automotive Number Of Jobs In % Of Pri
Slide 20: The Transformation Has Begun
THE TRANSFORMATION HAS BEGUN MP IS THE BEACHHEAD OF THE NEW EV SUPPLY CHAIN “MS forecasts 113 million EVs globally by 2030 and 924 million by 2050. (…) To fully build out the required global infrastructure to support electric vehicles, we forecast $11 trillion of total expenditure through 2050, or $
Slide 21: Tipping Point
TIPPING POINT GOVERNMENTS ARE MANDATING A RAPID SHIFT TO EVs Canada Netherlands Norway United Kingdom France European Union Target to sell 100% zero- Plan to ban all new petrol EVs accounted for 58% of all car Proposed ban on selling Gasoline and diesel Denmark calls for EU ban emission vehicles by
Slide 22: Global Supply Unable to Meet Forecasted Demand
GLOBAL SUPPLY UNABLE TO MEET FORECASTED DEMAND EVs ALONE COULD CONSUME THE ENTIRE WORLD SUPPLY WITHIN A DECADE Global Electric Vehicle Units Sales / % of Global Total Vehicle Unit Representative Electric Drivetrain Sales EVs would Unit sales (MM) consume % ~101%(1) of 100.0 current annual 100% NdPr
Slide 23: Rare Earths Essential Even to Competing Technologies
RARE EARTHS ARE ESSENTIAL EVEN TO COMPETING TECHNOLOGIES WITHIN THE ECOSYSTEM THE MOST EFFICIENT BATTERY CHEMISTRY FOR EVs IS STILL UNKNOWN, BUT MOTOR TECHNOLOGY IS WELL-SETTLED Key Lithium Ion Battery Technologies Other Technologies Battery Solid State Hydrogen Fuel LCO LMO LFP NMC NCA Chemistry Ba
Slide 24: Advanced High-Growth End-Markets
ADVANCED HIGH-GROWTH END-MARKETS NdPr MAGNETS ARE CRITICAL FOR ADVANCED TECHNOLOGIES EXPERIENCING STRONG SECULAR GROWTH Key NdPr Magnet Market Segments 2019 Other 28% EV Powertrains 9% Speakers 5% E-transport 6% Disk Drives 35 kt NdPr(1) 4% Wind Turbines HVAC 9% 8% Robotics 1% Other Consumer Automot
Slide 25: Powering Green Energy
POWERING GREEN ENERGY WIND TURBINES DRIVING NdPr MAGNET DEMAND GROWTH Global Installed Capacity Representative Direct-Drive Wind Turbine GW 3,000 NdPr Magnet Wind turbines require up to ~232kg of NdPr / MW Worldwide 2,000 additions expected to average 62GW of wind 77GW globally capacity added global
Slide 26: Powering National Security
POWERING NATIONAL SECURITY RARE EARTHS ARE ESSENTIAL INPUTS TO THE NATIONAL DEFENSE SUPPLY CHAIN Rare Earths Usage by Weapons Platform Select Rare Earth Defense Applications lbs Nd, Pr, Sm, Dy, Tb Neodymium, F-35 920 lbs. Praseodymium, Rare Earth Elements Samarium, Dysprosium, Used Terbium Rare Eart
Slide 27: Answering U.S. Government's Call to Action
MP MATERIALS IS ANSWERING U.S. GOVERNMENT’S CALL TO ACTION THE U.S. GOVERNMENT SEES RARE EARTHS AS KEY TO OUR NATIONAL SECURITY SUPPLY CHAIN • Executive Order 13817 “A Federal Strategy to Ensure Secure and Reliable Supplies of Critical Materials” (December 2017) • Secretary of the Interior presents
Slide 28: Strategy
aaah SECTION 3 owe Strategy M MATERIALS
Slide 29: Road Map
ROAD MAP EXECUTING ON OUR LONG TERM PLAN Stage I Stage II Stage III Status Complete In-Process Future NdPr, La, Ce, Heavy Rare Earth Product RE Concentrate NdPr Magnets Concentrate Market China Global Global STRATEGY 29
Slide 30: Establishing a Fully Integrated Value Chain
ESTABLISHING A FULLY INTEGRATED VALUE CHAIN MP BRINGS DECADES OF RARE EARTH KNOW-HOW TO RESTORE DOMESTIC SUPPLY Currently being retrofitted Facilities to be developed Flotation Filter Press Crushing STAGE I: Mining, Concentrate Milling and Flotation Grinding Purification Rare Earth Filter Leach Rota
Slide 31: World-Class Ore Body
WORLD-CLASS ORE BODY HIGH-GRADE MINE ENABLES SUPERIOR VALUE CREATION ACROSS ALL STAGES Resource Contained Recoverable Metric Grade tREO tREO • Uniquely high-grade mine with significant content of higher Resources Tons (tREO %) Tons Tons (1) value-added rare earth elements Nd and Pr • ~2,200 fee simp
Slide 32: Stage I: Fully Operational and Profitable
STAGE I: FULLY OPERATIONAL AND PROFITABLE BUSINESS ON TRACK TO GENERATE $40MM+ 2020 FURTHER ADJUSTED EBITDA Preliminary Financial Summary(1) (Unaudited, $MM) Q1 2020 Q1 2020 Annualized Revenue $20.7 $82.9 Total Costs (16.7) (66.7) Cost of Sales (11.8) (47.4) Freight and Shipping (1.9) (7.5) General
Slide 33: Stage II: Proven Technology Executed at Mountain Pass
STAGE II: PROVEN TECHNOLOGY SUCCESSFULLY EXECUTED AT MOUNTAIN PASS FOR DECADES CONTINUED EXECUTION BY NEW MANAGEMENT TEAM • Reintroduction of concentrate drying Key Stage II Project Items Description and roasting to the Mountain Pass processing facility Concentrate Thickening Replacement of the exis
Slide 34: Commodity Price Historical and Forecast
COMMODITY PRICE HISTORICAL AND FORECAST NdPr PRICE INCREASE EXPECTED DUE TO STRONG DEMAND / TIGHT SUPPLY DYNAMIC NdPr Price $ / kg $197.28 200 175 150 $141.00 $127.00 125 $102.00 100 $89.00 $81.00 75 $70.35 $70.70 $60.00 $70.00 50 $65.00 $50.00 $44.20 $40.00 25 0 2008 2009 2010 2011 2012 2013 2014 2
Slide 35: Stage II Earnings Power Under Different Price Scenarios
STAGE II EARNINGS POWER UNDER DIFFERENT PRICE SCENARIOS LOW-COST PRODUCER PROFITABLE ACROSS DIFFERENT NdPr PRICES Stages I and II Revenue and Adj. EBITDA Estimates (1) NdPr Oxide Price: $50 $70 $90 $525 $415 $362 $306 $252 $256 $195 $183 $133 $143 $121 $60 Stage I Stage II Stage I Stage II Stage I S
Slide 36: Stage II Financial Overview
STAGE II FINANCIAL OVERVIEW STRONG TOP LINE GROWTH, ALREADY ADJ. EBITDA POSITIVE AND ANTICIPATING STRONG FCF CONVERSION AT RUN-RATE Revenue(1) Adj. EBITDA (1) (2) $MM $MM 500 300 415 252 349 172 250 150 171 82 102 75 29 8 0 0 2019 2020E 2021E 2022E 2023E 2019 2020E 2021E 2022E 2023E Margin: 8.0% 28.
Slide 37: Stage III: Benefits of Vertical Integration
STAGE III: BENEFITS OF VERTICAL INTEGRATION SIGNIFICANT DOWNSTREAM EARNINGS POTENTIAL Illustrative Permanent Magnet Motor • Uniquely positioned to capture significant downstream profit opportunity via buy, build or JV strategy as the sole NdPr Magnets commercial-scale source of magnetic feedstock in
Slide 38: Deal Structure
Deal Structure SECTION 4 GN MATERIALS
Slide 39: Pro Forma Ownership
PRO FORMA OWNERSHIP Transaction Sources Transactions Uses $MM | Approximate Figures $MM | Approximate Figures SPAC Cash in Trust(1) $345.0 Pay Down Existing Debt $21.1 Equity Rollover(2) 919.4 Cash to Balance Sheet(1) 488.9 PIPE 200.0 Equity Rollover(2) 919.4 Sponsor Warrants Converted to Common Sha
Slide 40: Sponsor Promote Restructured as an Earn-Out
LONG-TERM PARTNERSHIP: SPAC SPONSOR “PROMOTE” RESTRUCTURED AS AN “EARN-OUT” FVAC SPONSOR HAS AGREED TO SUBJECT THEIR FOUNDER SHARES TO SHARE PRICE VESTING CONDITIONS AT A SIGNIFICANT PREMIUM TO THE TRANSACTION VALUE Size Structure 50% @ $12.00 / share(2) Sponsor Promote Shares 8.625MM(1) 25% @ $14.0
Slide 41: Valuation
SECTION 5 aw Valuation
Slide 42: Valuation Benchmarking
VALUATION BENCHMARKING MP MATERIALS RUN-RATE MULTIPLES AT A SIGNIFICANT DISCOUNT TO PEERS EV / Adj. EBITDA Multiples (Run-rate 2023E for MP Materials; 2021E for Peers(1)) (x) Electrification Average: 21.0x Specialty Materials Average: 10.7x EV Revolution Average: 9.1x 35 28.7x 25.3x 26 18.9x 15.0x 1
Slide 43: Operational Benchmarking
OPERATIONAL BENCHMARKING MP MATERIALS OUTPERFORMS PEERS IN KEY OPERATIONAL METRICS 2022E Adj. EBITDA Margin (1) % 60% 49.4% 45.6% 43.4% 45.6% 28.4% 28.0% 27.3% 27.4% 30% 25.3% 19.2% 17.5% 19.3% 15.6% N/A (4) N/A (4) 0% 2022E FCF Conversion (1) (2) % 120% 93.9% 86.5% 82.5% 67.9% 63.8% 65.8% 67.9% 65.
Slide 44: Valuation Summary
VALUATION SUMMARY DISCOUNTED ENTERPRISE VALUE SENSITIVITY ANALYSES Stage II Run-Rate Discounted Enterprise Value Stage III Illustrative Future Value Assuming Stage II Adj. EBITDA of $252MM and August 2020 Valuation Date Sensitivity of Incremental Stage III EBITDA Scenarios, Assuming Stage II Adj. EB
Slide 45: Supplemental Materials
APPENDIX A Supplemental Materials
Slide 46: MP Materials Executive Leadership
MP MATERIALS EXECUTIVE LEADERSHIP James Litinsky – Chairman & CEO Mr. Litinsky is the Founder, Chief Executive Officer and Chief Investment Officer of JHL Capital Group LLC. Before founding JHL in 2006, Mr. Litinsky was a member of the Drawbridge Special Opportunities Fund at Fortress Investment Gro
Slide 47: Post-Transaction Board of Directors
MP MATERIALS POST-TRANSACTION BOARD OF DIRECTORS(1) James Litinsky – Chairman Mr. Litinsky is the Founder, Chief Executive Officer and Chief Investment Officer of JHL Capital Group LLC. Before founding JHL in 2006, Mr. Litinsky was a member of the Drawbridge Special Opportunities Fund at Fortress In
Slide 48: MP Materials Operational Leadership
MP MATERIALS OPERATIONAL LEADERSHIP Peter Landi – Manager, Process Technology and Engineering Mr. Landi has over 9 years of experience in the rare earth industry, primarily at Mountain Pass. He has served in various leadership roles supporting process engineering, plant operations, process and produ
Slide 49: Reconciliations of Non-GAAP Measures
RECONCILIATIONS OF NON-GAAP MEASURES Reconciliations of GAAP to Non-GAAP Measures(1) ($MM) FY 2019 Q1 2020 Net Income (GAAP) ($5.1) $1.5 (+) Depreciation and Amortization 4.7 1.1 (+) Asset Retirement and Environmental Liability Accretion 2.1 0.4 (+) Interest Expense 3.0 0.7 (+) Income Tax Provision