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USAR Struggles With Growing Development Expenses: What Lies Ahead?
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Key Takeaways
USA Rare Earth is advancing Round Top and Oklahoma projects but remains pre-revenue with ongoing losses.
USAR's Q3 SG&A jumped to $11.4M from $0.8M, driven by legal, hiring and overhead costs.
Round Top is set for production in late 2028, but high development spending will pressure near-term results.
USA Rare Earth, Inc. (USAR - Free Report) is advancing its rare earth mining and magnet manufacturing operations in the United States, including the Round Top project in Texas and a facility in Oklahoma. However, the company remains in the pre-revenue stage, as its assets are yet to reach commercial-scale production, resulting in continued operating losses.
USAR is facing rising development costs as it progresses through the project phase. In the third quarter of 2025, selling, general and administrative expenses surged to $11.4 million from $0.8 million a year ago, driven by higher legal and consulting fees, workforce expansion, recruitment costs and increased overheads.
Research and development expenses also climbed to $4.45 million from $1.16 million in the same quarter last year, primarily due to higher employee-related costs. As a result, the company reported a loss of 25 cents per share for the quarter.
Despite these cost pressures, USAR continues to move toward commercializing its rare earth projects, although production is still several quarters away. It is worth noting that the Round Top project is expected to begin commercial production in late 2028, two years ahead of its earlier timeline. Until revenues start flowing, elevated development spending and operating expenses are likely to weigh on the company’s near-term financial performance.
USAR’s Peer Performance
Among its major peers, Rio Tinto Group (RIO - Free Report) is benefiting from rising copper production, driven by strong operational performance across its assets. However, weather-related disruptions earlier in 2025 affected Rio Tinto’s iron ore volumes. Planned maintenance activities at some copper mining projects temporarily reduced Rio Tinto’s output in 2025, while cost pressures from inflation and higher sustaining capital spending impacted margins.
Its another peer, NioCorp Developments Ltd. (NB - Free Report) , is facing cost pressure. In the second quarter of fiscal 2026, NioCorp’s total operating expenses increased significantly on a year-over-year basis due to expenses incurred for the advancement of the Elk Creek Project. Rising costs and expenses, if not controlled, might affect NioCorp Developments’ margin performance.
USAR’s Price Performance, Valuation & Estimates
Shares of USAR have gained 42.2% in the past three months compared with the industry’s growth of 12.5%.
Image Source: Zacks Investment Research
From a valuation standpoint, USAR is trading at a forward price-to-earnings ratio of negative 60.08X against the industry’s average of 13.69X. USA Rare Earth has a Value Score of F.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for USAR’s 2026 earnings has increased over the past 60 days.
View the Zacks #1 Rank List
Image: Bigstock
USAR Struggles With Growing Development Expenses: What Lies Ahead?
Key Takeaways
USA Rare Earth, Inc. (USAR - Free Report) is advancing its rare earth mining and magnet manufacturing operations in the United States, including the Round Top project in Texas and a facility in Oklahoma. However, the company remains in the pre-revenue stage, as its assets are yet to reach commercial-scale production, resulting in continued operating losses.
USAR is facing rising development costs as it progresses through the project phase. In the third quarter of 2025, selling, general and administrative expenses surged to $11.4 million from $0.8 million a year ago, driven by higher legal and consulting fees, workforce expansion, recruitment costs and increased overheads.
Research and development expenses also climbed to $4.45 million from $1.16 million in the same quarter last year, primarily due to higher employee-related costs. As a result, the company reported a loss of 25 cents per share for the quarter.
Despite these cost pressures, USAR continues to move toward commercializing its rare earth projects, although production is still several quarters away. It is worth noting that the Round Top project is expected to begin commercial production in late 2028, two years ahead of its earlier timeline. Until revenues start flowing, elevated development spending and operating expenses are likely to weigh on the company’s near-term financial performance.
USAR’s Peer Performance
Among its major peers, Rio Tinto Group (RIO - Free Report) is benefiting from rising copper production, driven by strong operational performance across its assets. However, weather-related disruptions earlier in 2025 affected Rio Tinto’s iron ore volumes. Planned maintenance activities at some copper mining projects temporarily reduced Rio Tinto’s output in 2025, while cost pressures from inflation and higher sustaining capital spending impacted margins.
Its another peer, NioCorp Developments Ltd. (NB - Free Report) , is facing cost pressure. In the second quarter of fiscal 2026, NioCorp’s total operating expenses increased significantly on a year-over-year basis due to expenses incurred for the advancement of the Elk Creek Project. Rising costs and expenses, if not controlled, might affect NioCorp Developments’ margin performance.
USAR’s Price Performance, Valuation & Estimates
Shares of USAR have gained 42.2% in the past three months compared with the industry’s growth of 12.5%.
Image Source: Zacks Investment Research
From a valuation standpoint, USAR is trading at a forward price-to-earnings ratio of negative 60.08X against the industry’s average of 13.69X. USA Rare Earth has a Value Score of F.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for USAR’s 2026 earnings has increased over the past 60 days.
Image Source: Zacks Investment Research
The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.