Rare Earth Producer MP Materials to Merge with SPAC Fortress Value Acquisition (FVAC)

MP Materials, owner and operator of Mountain Pass, the only rare earth mining and processing site of scale in North America, today announced a definitive agreement to merge with Fortress Value Acquisition Corp. (NYSE: FVAC), a special purpose acquisition company sponsored by an affiliate of Fortress Investment Group LLC ("Fortress"). Upon completion of the transaction, the combined company will be named MP Materials Corp. and will remain NYSE-listed under the new ticker symbol "MP".

Following completion of the transaction, MP Materials will retain its experienced management team. Co-Chairman James Litinsky will become Chairman and CEO, current CEO Michael Rosenthal will become COO, Ryan Corbett will continue to serve as CFO, and Sheila Bangalore will continue to serve as Chief Strategy Officer and General Counsel.

James Litinsky said, “This business combination and becoming a public company is a key milestone in MP Materials’ mission to restore the full rare earth supply chain to the United States of America. Drew and the Fortress team share our vision that having a Western champion in rare earth magnetics is essential for the onshoring of jobs, national security, and a carbon-reduced future. To achieve our mission, we must be economically competitive and hold ourselves to the highest standards for the benefit of our investors, employees, communities, country, and the environment.”

Drew McKnight, CEO of FVAC, will serve as a member of the MP Materials Board, along with Mr. Litinsky; General Richard Myers, former Chairman of the Joint Chiefs of Staff; Randy Weisenburger, former CFO of Omnicom Group; Dan Gold, CEO of QVT Financial LP, and other directors with diverse and complementary backgrounds in areas critical to MP Materials’ business.

Drew McKnight said, “We believe MP Materials is a compelling opportunity to invest in an irreplaceable, world-class asset at a point in time when demand from electric vehicles, wind turbines, and other technologies is hitting an inflection point, and while the need to find a reliable and resilient source for rare earths is crucial for the U.S. and global supply chain. The electrification of global transportation and infrastructure will be a dominant investment theme over the next several decades, leading to demand for rare earths rapidly outpacing current levels of production and supply. Mountain Pass is the only scaled North American source of supply for these materials, and Jim and his team have already restored Mountain Pass as a global leader in the rare earth market. Together, we will leverage that foundation into a transformational opportunity at a critical time for our nation.”

General Richard Myers said, “The United States was once the global leader in rare earth production, a position that has since been ceded to China. As global industries electrify in the coming decades, the lack of a sustainable, reliable supply of rare earths in North America would represent a single point of failure for national and economic security. The U.S. government has identified the urgent need to reclaim this crucial component of the global supply chain, which would create tremendous benefits for our nation’s leading defense contractors, automakers, and technology companies. I am proud to serve on MP Materials’ Board as we lead the way in making this important mandate a reality.”

World-Class Mine with Focus on Sustainability

MP Materials’ Mountain Pass site contains one of the richest rare earth deposits in the world, with average ore grade of approximately 8%, and includes state-of-the-art processing and separation facilities.

Mountain Pass is also differentiated among rare earth producers in sustainability. Operating using best-in-class environmental practices, Mountain Pass utilizes a closed loop flotation process that enables an estimated 95% reduction in water consumption compared to similar operations, and the site has been recognized by a leading international research center for its superiority in managing environmental effects compared to other rare earth processing facilities2.

Poised to Support the Electrification Boom Across Industries

MP Materials currently produces a rare earth concentrate product that represents an estimated 15% of the world’s production. As part of the Company’s growth plan, it will produce refined Neodymium-Praseodymium (“NdPr”). NdPr is the primary rare earth material used in high-strength permanent magnets that power the traction motors inside electric vehicles, wind turbines, robotics, drones, defense systems, and many other high-growth, advanced motion technologies. While China currently controls over 80% of the global NdPr market, global industries and governments are actively seeking to diversify beyond China to ensure material availability and supply chain certainty to support the anticipated surge in electric vehicle production and other forms of electrification. By 2035, annual consumption of NdPr by electric vehicles alone is forecast to exceed the total expected production of NdPr in 20203.

Transaction Terms & Financing

The combined company will have an estimated post-transaction equity value of approximately $1.5 billion with over $500 million in net cash4. Cash proceeds raised will consist of FVAC’s $345 million of cash in trust and an additional $200 million investment, led by institutional investors including Slate Path Capital, Chamath Palihapitiya and Omega Family Office, at $10.00 per share in the common stock of FVAC immediately prior to closing of the merger.

MP Materials is expected to deliver over $100 million in estimated revenue and nearly $30 million in estimated Adjusted EBITDA in 2020. The net proceeds raised from the transaction will be used to fund MP Materials’ strategic plan to retrofit and fully recommission its existing on-site refining facilities and will further enable the Company to pursue additional downstream growth opportunities in the magnetics industry. MP Materials’ growth strategy is expected to generate estimated Adjusted EBITDA of over $250 million in 2023, subject to rare earth market conditions over that period.

Current MP Materials shareholders, JHL Capital Group LLC and QVT Financial LP, will roll 100% of their existing equity holdings into equity of the combined company. The business combination has been unanimously approved by the boards of directors of both MP Materials and FVAC. Informational meetings with the investment community are anticipated to be held in September 2020. The business combination is expected to close in the fourth quarter of 2020, subject to regulatory and stockholder approvals, and other customary closing conditions.

Advisors

Morgan Stanley & Co. LLC is serving as financial advisor and Sidley Austin LLP is acting as legal advisor to MP Mine Operations LLC (dba “MP Materials”). Simpson Thacher & Bartlett LLP and Murray Devine are serving as legal and financial advisor, respectively, to Secure Natural Resources (the owner of the mineral rights at Mountain Pass), which is also a party to the merger and will become a wholly-owned subsidiary of the combined company.

Deutsche Bank Securities and RBC Capital Markets, LLC are serving as financial advisors, capital markets advisors, and private placement agents to FVAC. Weil Gotshal & Manges, LLP is acting as legal advisor to FVAC.

Investor Webcast Information

Management of MP Materials and FVAC will host an investor webcast on July 15, 2020 at 9:00 a.m. EDT to discuss the proposed transaction. The webcast will be accompanied by a detailed investor presentation. For interested investors who wish to participate, the webcast and replay will be available in the “Investors” section of the MP Materials website at https://mpmaterials.com/.

Alternatively, a domestic toll-free access number is (833) 670-1030 and the international toll-free access number is (236) 738-2212. Once connected with the operator, request access to the Fortress Value Acquisition Corp. and MP Materials business combination call. Due to high call volumes, please dial in 15 minutes prior to the call start time.

An investor presentation with more detailed information regarding the proposed transaction will be furnished to the Securities and Exchange Commission (the “SEC”) by FVAC under the cover of a Current Report on Form 8-K, which can be viewed through the SEC’s EDGAR website at www.sec.gov. A link to Fortress Value Acquisition Corp.’s SEC filings can be found at https://www.fortressvalueac.com/sec-filings.

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