NASDAQ: USAR

History of USARE

USA Rare Earth, LLC, a Delaware limited liability
company, was organized in Delaware in 2019. In connection with the Company’s organization a member of the Company contributed its
rights related to Round Top to the Company.

In May 2021 the Company completed the acquisition
of 80% of the equity interests of Round Top Mountain Development LLC (“RTMD”) pursuant to a contribution agreement
with the Company, Texas Mineral Resource Corp. (“TMRC”) and RTMD whereby TMRC and the Company contributed their respective
rights and interests in and to Round Top to RTMD. Concurrently, the Company, TMRC and RTMD entered into a limited liability company
agreement of RTMD. As of December 31, 2024, USA Rare Earth, LLC is the owner of approximately 81% of the equity interests in
RTMD.

On the Closing Date, we consummated the Business
Combination and Inflection Point Acquisition Corp. II was renamed “USA Rare Earth, Inc.” As a result of the Business Combination,
we are a holding company, all of whose assets are held directly or indirectly by, and all of whose operations are conducted through, USARE
OpCo and whose only direct asset consists of equity ownership of USARE OpCo. As the manager of USARE OpCo, we have all management powers
over, and full control of, the business of USARE OpCo, including the power to take all action we deem necessary, appropriate, advisable,
incidental, or convenient to accomplish the purposes of USARE OpCo set forth in its A&R Operating Agreement

USARE OpCo is the sole owner of USARE Rare Earth
Magnets, LLC, a Delaware limited liability company (“Magnet Sub”), which owns, directly or indirectly, the Company’s
magnet equipment and real estate in Stillwater, Oklahoma comprising the Stillwater Facility.

1

USARE’s Facilities

Stillwater, Oklahoma Magnet Manufacturing
Facility

Magnet Production. The
Company’s magnet production facility is located in Stillwater, Oklahoma (the “Stillwater Facility”).
The Stillwater Facility is an industrial facility of approximately 310,000 square feet that was built in 1984, with an addition being
added in 1988. The Stillwater Facility sits on an approximately 40-acre parcel that is serviced by municipal utilities. The facility,
as currently constructed, will allow for the buildout of up to 4,800 tpa nameplate capacity within the current facility. The large lot
surrounding the facility can also provide the space to build on new manufacturing capacity or capabilities in the future. USARE purchased
the Stillwater Facility in 2022 and has contributed significant capital into the facility to date, including initial acquisition costs,
structural improvements, renovations, the purchase of magnet production equipment, and purchase and installation of lab equipment for
the Company’s in-house Innovations Lab (the “Lab”).

The Stillwater Facility contains magnet production
equipment, which the Company owns outright. The Company engaged a third-party team with experience utilizing the equipment as independent
consultants to assist in the initial installation and testing of the equipment. The Company believes that this equipment, supported by
a third-party team who has run it successfully in the past, could help the Company rapidly commission the facility once completed.
The Company has ordered the remaining finishing equipment and has begun to build out the infrastructure it needs at the facility to support
commercial production with the intention of commissioning the facility in 2026

In connection with the completion of the Stillwater
Facility, the Company is developing its Lab to support the Company’s magnet production capabilities and accompanying required assessment
of finished product for satisfaction of customer specifications and requirements. On March 31, 2025 the Company announced it has commissioned
its Lab and will begin prototyping permanent neo magnets for its customers in the second quarter of 2025. The Lab will further support
our objective of completing the first phase of the Stillwater Facility to allow for the initial commercial production of neo magnets in
2026. For phase 1, we are targeting 1,200 tpa of nameplate capacity, which will require significant additional expenditures. We intend
to add future capacity in multiple phases over the next few years to ultimately achieve 4,800 tpa nameplate capacity. The speed of that
buildout will be based on future customer demand and market conditions. Our plan to sell to a diverse set of customers across a variety
of industries is expected to be a differentiator in the market. We also believe that our focus in developing strong, in-house lab
capabilities to develop new intellectual property ourselves, as well as together with our customers, to potentially improve magnet technology,
will provide a powerful incentive for customers to work with us in the coming years.

Corporate Offices. The
Company’s corporate offices are also located at the Stillwater Facility at 100 W Airport Road, Stillwater, Oklahoma 74075. From
this location, the Company manages its overarching business strategy, investor relations, and the development of partnerships with key
stakeholders in both the public and private sectors. Oklahoma provides access to a skilled workforce and a business-friendly environment.

Colorado Mining Research Facility

The Company’s Wheat Ridge, Colorado facility
(the “Colorado Facility”) is the central hub for the Company’s research activities focused on rare earth and
critical minerals extraction and separation as well as advanced processing technologies. The Colorado Facility is not a production facility,
but rather develops and refines the technologies that, with success, would be applied at the Company’s Round Top Project. The current
focus of the Colorado Facility’s research is the development of separation processes to minimize the use of organic solvents, intended
to result in a lower waste profile as compared to alternative separation methods.

The Colorado Facility’s work is critical
in creating new methods for separating and processing rare earths in a way that is both cost-effective and environmentally sustainable.
These efforts have been ongoing, and the facility has successfully separated a number of rare earths, including dysprosium and terbium,
among others, from its Round Top Deposit to date. These efforts support the Company’s commitment to domestic rare earth production
and the long-term stability of the United States’ rare earth supply chain.

The Colorado Facility comprises two leased buildings
adjacent to each other. The Company renewed its leases on both buildings in February 2025 with both leases expiring in the first quarter
of 2028. As further discussed below, the Company holds a radioactive equipment registration issued for the benefit of its Colorado Facility.

2

Round Top Mountain

Overview. USARE
controls the mining rights to Round Top Mountain, which is an above-ground mineral deposit near Sierra Blanca, Texas that contains a large
deposit of rare earths, including both light and heavy rare earths, such as neodymium, dysprosium, and terbium, as well as other critical
minerals such as gallium, beryllium and lithium among others (such deposits, collectively, the “Round Top Deposit”,
and USARE’s development there, the “Round Top Project,” and together with the Stillwater Facility, the “Projects”).
One of the most significant aspects of the Round Top Deposit is its deposit of heavy rare earths, which are particularly scarce but critical
for the production of high-performance neo magnets. The presence of heavy rare earths in great quantities could become a significant competitive
advantage to USARE, and value creator, as heavy rare earths such as dysprosium and terbium are critical to magnet production and tend
to be of much higher value in commodity markets due to their rare nature. In contrast to light rare earths, such as those found at Mountain
Top in California, heavy rare earths are, in general, significantly harder to source and are primarily mined in China, underscoring the
importance of establishing Round Top Deposit as a critical domestic supply of rare earth and critical mineral feedstock. In addition to
rare earths, the Round Top Deposit also contains a large deposit of gallium, a critical mineral for semiconductor, computer chip and some
military technologies, among others, that were recently banned for export to the United States by China. China is the source of approximately
98% of primary gallium according to a January 2023 USGS Mineral Commodity Summary on gallium. In addition, the deposit holds beryllium,
which is used in a variety of technologies from x-rays and MRIs to military radar and nuclear power. Finally, the Round Top Deposit holds
lithium, a critical material for battery production, making it a dual-source project that supports the electrification of vehicles, production
of renewable energy technologies, and defense technologies, among other critical industries. Rare earth oxide is a necessary component
in producing NdFeB alloy used to produce neo magnets.

Round Top Mountain is approximately eight miles
southeast of Sierra Blanca, Texas. Sierra Blanca, the county seat of Hudspeth County, is itself approximately 85 miles southeast of El
Paso, Texas. The Round Top Project’s approximate center is located at 31.2766º N, 105.4742º W. Round Top Mountain’s
location allows access to nearby Interstate 10 and Ranch Road 1111, and potential access to the nearby Union Pacific Railroad which has
two main branches approximately three miles from Round Top Mountain. The Company expects Interstate 10 and the Union Pacific Railroad
to aid in the future distribution of rare earth and critical minerals once the Company’s Round Top Project is fully operational
and producing. Although not critical to scaling up its magnet production, the Company intends for its Round Top Project to serve as a
long-term additional source of feedstock for its magnet production at the Stillwater Facility, which would help the Company achieve
its goals of providing domestic, virgin feedstock for its magnet production.

The Company believes that the integration of the
Round Top Project’s mine into its operations would not only help it meet growing demand for both domestic rare earth magnets and
battery materials, but also importantly allow it to achieve greater supply chain security, cost control, and independence from foreign
suppliers.

For more information about the Round Top Project,
see the section entitled “— Description of the Round Top Project”.

Market Opportunity and Growth

Science and Construction of Neo Magnets

Neo magnets are one of the most powerful
types of permanent magnets commercially available, as noted in a February 2023 report by the U.S. Department of Commerce, Bureau of Industry
and Security. Neo magnets exhibit strong magnetic properties due to the atomic structure of neodymium, a rare earth, which permits a dense
concentration of magnetic field lines. This allows for the production of neo magnets that can produce powerful magnetic fields relative
to their size and weight and may be resistant to demagnetization, making them ideal for applications that require both high efficiency
and compactness, such as electric vehicle motors, wind turbines, and advanced electronics.

The production of neo magnets involves a sophisticated
process that includes the alloying of neodymium with iron and boron, followed by additional processing techniques to form the desired
magnetic shape and performance. The properties of the magnets can be further enhanced by adding heavy rare earths such as dysprosium and
terbium through additional post-sintering processing in a process called “Grain Boundary Diffusion” which can increase
the magnets’ resistance to heat — a critical factor for high-performance applications. This technological complexity,
coupled with the limited availability of key rare earth materials, has made the development and production of neo magnets a highly specialized
and strategically important industry.

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The Rare Earth Magnet Industry: Challenges
and Growth Opportunities

The global rare earth magnet industry has experienced
rapid growth over the past decade according to the 2024 Statistical Review of World Energy by the Energy Institute, driven by the rise
of electric vehicles, renewable energy technologies, and advanced electronics. Neo magnets are crucial to these technologies due to their
high magnetic strength and resistance to demagnetization. As nations push globally for cleaner energy solutions and decarbonization, the
demand for neo magnets is expected to continue growing significantly as noted by the U.S. Department of Energy in its 2022 supply chain
deep dive assessment “Rare Earth Permanent Magnets” (the “DOE Report”).

However, the industry faces notable challenges.
China currently dominates the global supply chain of the world’s rare earth production. This creates supply chain vulnerability
for other nations, particularly the United States, as geopolitical tensions and export restrictions (such as China’s December 2023
rare earth technology export ban) could disrupt access to these critical materials. Additionally, rare earth extraction and processing
is generally environmentally challenging, requiring the development of more sustainable and efficient technologies to meet global demand
while minimizing potential environmental impact.

Despite these challenges, USARE believes that
both the domestic and global rare earth magnet industries are poised for substantial growth. The global shift toward electrification of
transportation, the rise of wind energy, and the ongoing demand for advanced electronics create significant opportunities for manufacturers
that can establish stable and sustainable supply chains. The automotive industry is a major purchaser of neo magnets, particularly in
connection with the production of electric vehicles that require neo magnets for traction motors, which are crucial components to the
performance and efficiency of electric cars. As countries set aggressive targets for electric vehicle adoption in an effort to combat
climate change, the demand for neo magnets is expected to surge over the next decade, as noted in the DOE Report. Even in a potential
scenario of slower growth for electric cars that is now possible in the United States due to the anticipated changing policies of the
Trump administration, there are significant growth opportunities for domestic supply of neo magnets in the existing domestic market due
to potential instability in supply of rare earth magnets from China. In addition, growth in EV sales globally outside of China and the
United States remains robust. Similarly, wind turbines rely on neo magnets for their generators, which convert wind energy into electricity.
As governments worldwide set ambitious targets for increasing the share of renewable energy in their power grids, the installation of
new wind turbines is expected to rise, further driving the need for neo magnets as noted in the DOE Report. While the recent Trump administration
executive order to stop the building of wind turbines on federal lands and offshore may slow down the growth of this industry in the United
States, we believe that global growth in wind power outside of China will continue to increase, and existing infrastructure projects in
the United States will need to be maintained and have their parts replaced in the coming years. In addition, the use of magnets includes
a wide variety of other industries, including industries as diverse as robotics, medicine, semiconductors, computing, power tools, among
others. Importantly, the defense industry is a critical consumer of neo magnets, which uses them in precision-guided munitions, radar
systems, aerospace technology, and naval craft. As nations invest in not only modernizing their defense capabilities, but also in purchasing
from safer domestic supply the demand for domestic neo magnets in defense technologies is expected to continue to grow as noted in the
DOE Report.

The Company believes it is well-positioned to
capitalize both on existing domestic demand, which is currently sourcing magnets from China, as well as on the anticipated growth in the
demand for neo magnets and reduce United States reliance on foreign suppliers.

Business Plan

Stage I: Feedstock Relationships
and Initial Neo Magnet Production

The first stage of the Company’s business
plan is focused on laying the groundwork for its neo magnet production by predominantly securing essential raw material feedstock through
strategic business relationships and launching initial production of neo magnets at its Stillwater Facility. While ultimately the Company
intends to satisfy its feedstock needs through the future development of its Round Top Project, the Company does not believe it is critical
to success and in the near term the Company intends to source its feedstock needs from third-party suppliers.

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Feedstock Sources

The Company has established a business relationship
with a supplier of feedstock to supply a portion of its raw material feedstock to USARE for use in the initial production of the Company’s
neo magnets. The supplier is a vertically integrated, producer of critical metals and NdFeB alloy (also known as “strip cast”)
produced from rare earth oxides, with the ability to source rare earth oxides from sources other than China. USARE has entered into a
long-term Metal Sales and Tolling Framework Agreement with the supplier, whereby USARE has agreed to purchase 60% of its NdFeB feedstock
for phase 1 and 2 of its magnet production capacity from the supplier. The agreement is effective through December 31, 2028,
subject to earlier termination by the parties. The purchase price for the strip cast feedstock that USARE purchases from the supplier
will be determined in accordance with a set schedule, which ties the purchase price to a relevant index and certain chemical specifications.

The Company intends to establish relationships
with additional companies to assist in meeting its planned future feedstock requirements to continue to build out and strengthen its domestic
and global supply of rare earths from third-parties until such time that the Round Top Project is able to substantially augment its
current supply of light and heavy rare earths needed for production, and such activities may include rare earth oxide supply agreements
once the Company is able to utilize rare earth oxide feedstock for in-house alloy production.

Initial Neo Magnet Production

Stage I of the Company’s business plan
includes the completion of the Stillwater Facility, its magnet production facility in Stillwater, Oklahoma. Upon completion of the facility
and the initial production of neo magnets, the Company expects its Stillwater Facility to be one of the first United States-based producers
of neo magnets. Magnet production at the Stillwater Facility is currently planned in three phases, starting with 1,200 tpa nameplate capacity
in phase 1 and potentially doubling in each subsequent phase to a total planned production of 4,800 tpa nameplate capacity. The Stillwater
Facility is expected to initially have a production line with 600 tpa nameplate capacity utilizing currently owned equipment, with a goal
to complete the remaining phase 1 capacity (representing a total of 1,200 tpa nameplate capacity in phase 1) in 2026. The Company believes
this will make the Stillwater Facility one of the most significant sources of neo magnets outside of China, once complete. Unlike its
competitors, the Company is not building its initial lines for a single customer and is instead focused on building a manufacturing facility
and capability that is flexible enough) to serve a variety of customers in diverse industries. It is the Company’s belief that such an approach will allow it to reach its early revenue targets sooner than it might otherwise
would be able to through due to the long qualification process with large automotive clients.

The Company is in the process of engaging potential
customers for offtake agreements.

Stage II: Scaling Magnet Production
and Expanding Business Partnerships

Stage II of the Company’s
business plan is focused on scaling magnet production at its Stillwater Facility and expanding the Company’s business
relationships, both with feedstock suppliers and customers. The Company intends to scale magnet production at its Stillwater
Facility from 1,200 tpa nameplate capacity in phase 1 through phases 2 and 3 of magnet production capacity, potentially doubling the
production of the prior phase, with a target total nameplate capacity of 4,800 tpa. How rapidly the Company will scale is dependent
on demand and access to the capital to do so. To support the increased production, the Company intends to (i) expand its
partnerships and supply agreements with key industry players, and (ii) develop in-house metal making and strip casting
capabilities to support its magnet production, to help provide for the continued and reliable flow of feedstock into the
Company’s production lines at the Stillwater Facility until its Round Top Project is capable of satisfying the Company’s
feedstock needs. These expanded partnerships will help the Company diversify its feedstock supply sources, reduce potential supply
chain risks and assist in further securing the Company’s position in the neo magnet market.

Additionally, the Company is working to strike
a balance between obtaining a sufficiently broad customer base and securing offtake that can jumpstart production, which could come from
large manufacturers over time. Over time, the Company will be engaged in discussions with potential customers for offtake agreements.
The Company’s target customers for offtake could include key players in the automotive, energy, and defense industries, each of
which requires a reliable and long-term supply of neo magnets. By seeking to secure multi-year offtake agreements, the Company
aims to lock-in demand for its products, minimize market volatility risks and provide for a consistent revenue stream.

5

Stage III: Mining Development
at Round Top Mountain

Stage III of the Company’s business
plan represents the full realization of the Company’s longer-term strategy. In this stage, the Company intends to focus on
developing the mining operations at its Round Top Project. While the Company does not believe the development of the Round Top Deposit
is critical to our success in our magnet business, once operational, the Round Top Project’s mine is expected to provide a domestic
source of rare earths, feeding directly into the Company’s Stillwater magnet production facility, as well as selling to the broader
rare earth commodity markets. By developing the Round Top Project into an economically producing mine, the Company aims to be able to
self-sustain magnet production operations without relying on external sources for rare earth feedstock. This development is expected
to enable the Company to maintain cost efficiencies and quality control over the entire production process. As part of its long-term growth
strategy, the Company aims to expand the production capacity of both the Round Top Project and its Stillwater Facility, solidifying the
Company’s efforts as it seeks to position itself as a key player in the domestic and global rare earth markets. Through the development
of the Round Top Project into an economically producing mine, the Company intends to enhance its capacity to meet the rapidly growing
demand for rare earth and critical minerals, positioning itself as a leader in the transition to a more secure energy future. If successful,
this stage will mark the full vertical integration of the Company’s operations from mine to magnet and is expected to open up new
markets and revenue streams for the Company.

The Company acknowledges that investing in mining
deposits such as Round Top holds inherent risks. It is our intention to take a structured and measured approach to the development of
the mine. We are planning a five phased approach: (1) flow sheet development, (2) prefeasibility study, (3) pilot plant, (4) definitive
feasibility study, and (5) detailed engineering, construction, and commissioning of the mine.

At each stage of this phased approach, investment
requirements are expected to increase as we define the economic and operational basis for the future mine. Today, we are investing in
research to establish a technically sound flow sheet. Once we have established an economically viable execution strategy in our prefeasibility
study following this flow sheet, we intend to construct pilot facilities to validate the Round Top process and provide data for detailed
engineering. By moving to a pilot phase, we can minimize investments while further reducing the execution risk inherent in the building
of a full-scale producing mine. The results of each stage of this approach allow us the opportunity to pause or stop development,
if results are negative, or increase our commitment if results are positive; thereby reducing our risk. This measured and focused approach
will allow us to both manage cash in these early years, as well as pause or stop development if it looks like the mine may not be viable
over the long term, either due to operational constraints or changes in the rare earth market itself.

Patents, Trademarks, and Licenses

USARE has applied for a United States patent
in connection with its methods for metal extraction. This patent application is currently pending. Additionally, the Company utilizes
trade secret protection and non-disclosure agreements to protect its proprietary rare earth technology. USARE holds a trademark for
its logo. Generally, the Company relies on a combination of trade secret protection, non-disclosure and licensing agreements, patents
and trademarks to establish and protect its proprietary intellectual property rights.

Government Programs and Grants

Tax Incremental Financing

On June 6, 2022, USARE executed a redevelopment
agreement providing for tax increment financing (the “TIF Agreement”) with the Stillwater Economic Development
Authority (the “Authority”), a public trust having as its beneficiary the City of Stillwater, Oklahoma, whereby the
Authority has provided upfront development financing assistance to USARE of $7.0 million for the development of the Stillwater Facility
(the “Upfront Assistance”). Additionally, entry into the TIF Agreement made the Company eligible to receive a manufacturing
and research and development ad valorem tax emption for a period of five years. The Company applied and received approval for the
ad valorem tax exemption for the year ending December 31, 2023. After the expiration of the exemption period, the TIF Agreement requires
the Authority to disburse to the Company 90% of the incremental ad valorem taxes generated by the ad valorem taxes assessed against the
Stillwater Facility and paid by the Company. Under the terms of the TIF Agreement, among other things, the Company is required to complete
the Stillwater Facility and in doing so to make an investment of approximately $140 million, including $9.9 million in building
and land acquisition costs, $17 million in immediate building improvement construction costs and $113 million in additional
building improvements and new equipment purchases, and to employ a specified number of employees at specified levels of median compensation
at various stages of the development. Subject to agreed extensions, the Company agreed to commence certain phases of the development of
the Stillwater Facility by no later than March 31, 2026, and complete that advanced development by no later than June 30, 2027,
subject to certain exceptions. Should the Company default on its obligations under the TIF Agreement and after certain notice, cure periods
and possible exceptions, the Authority may terminate the TIF Agreement and could make demand for immediate repayment in full of the Upfront
Assistance.

6

Governor’s Fund

On April 15, 2022, as restated on July 1,
2024, USARE entered into an agreement with the Oklahoma Department of Commerce to receive a $1.2 million award to be used for the
renovation of an existing building at the Stillwater Facility (the “Governor’s Fund Agreement”), to be paid in
$0.6 million increments when the Company had cumulatively spent $1.0 million and $2.0 million, respectively, in qualifying
costs related to developing the Stillwater Facility by March 31, 2023, and May 31, 2023, respectively. As of December 31,
2023, the Company incurred qualifying costs that exceeded the cumulative $2.0 million threshold specified in the Governor’s
Fund Agreement. The total award of $1.2 million was requested and received by the Company on April 6, 2023. Per the terms of
the Governor’s Fund Agreement, the award is subject to repayment if the Company does not invest over $50 million in project,
real and personal property improvements (as described in the Governor’s Fund Agreement) at the Stillwater Facility as well as comply
with employment requirements of creating and fulfilling at least 100 new direct jobs at the Stillwater Facility at specified compensation
levels and certain other limited circumstances. The Company is currently seeking to comply with such requirements.

Jobs Program

In 2022, USARE was accepted for participation
in the Oklahoma Quality Jobs Program (“Jobs Program”), an incentive program that provides qualifying companies quarterly
cash rebates of up to 5% of the wages paid for new direct jobs created for a period of up to 10 years, with, in the case of the Company,
a maximum payout of approximately $2.8 million, if it makes a qualifying claim for payment under the Jobs Program prior to January 1,
2026 and fulfills certain conditions pursuant to an agreement between Magnet Sub and the State of Oklahoma, dated December 19, 2022 (the
“Jobs Program Agreement”). Under the Jobs Program Agreement, the Company must meet or exceed applicable payroll and
employee headcount requirements and maintain operations in Oklahoma for a specified period. To date, the Company has not become eligible
to make any claims under the Jobs Program.

Competition

The Company faces, or is expected to face, significant
competition both domestically and globally in the rare earth market, particularly in the production of sintered rare earth neo magnets.
The most prominent global competitor is China, which controls a substantial majority of the world’s rare earth magnet production
and has established dominance in the neo magnet supply chain and magnet production. China’s rare earth and magnet industries benefit
from extensive government support, allowing Chinese companies to offer rare earths and magnets at subsidized prices, often undercutting
other producers. Moreover, Chinese companies have invested heavily in improving their processing capabilities, giving them a technological
and cost advantage in the global market. Since December 2023, China has banned the export of such technologies and capabilities.
This dominant stronghold poses a challenge for the Company as it seeks to build a vertically integrated domestic supply chain.

Domestically, the Company competes with a small
number of companies, including MP Materials Corp. which is operating the only major rare earth mine in the United States and recently
began commissioning a 1,000 tpa magnet facility in Fort Worth, Texas. Additionally, there is growing competition from emerging players
that are developing innovative technologies for rare earth separation and processing, as well as magnet production. As the demand for
rare earth materials and neo magnets grows, the Company will need to not only navigate price competition but also innovate in separation
and processing techniques while simultaneously securing long-term customer offtake agreements.

Seasonality and Business Cycles

The Company’s operations in magnet production,
and its planned future operations in mining, are both subject to certain seasonality and business cycles that can affect production output
and market demand. These cycles are influenced by external factors such as weather conditions, regulatory changes, fluctuations in raw
material prices whether due to changes in supply, demand, or inflation, and market demand for end products such as electric vehicles,
renewable energy, and defense applications.

7

The demand for neo magnets can be cyclical. This
demand is often driven by customer sentiment and demand, which may align with government policy changes, incentive programs, and general
economic cycles. How this cyclicality may or may not affect USA Rare Earth will depend on the concentration of our customers in specific
industries as we scale. With our planned strategy of serving a wide range of industries, we believe this cyclicality may be offset by
a diverse set of customers in differing industries.

Human Capital

The Company’s workforce spans multiple
states, with employees located in Texas, Oklahoma, Missouri, California, Colorado, Ohio, and Florida, and encompasses a diverse range of
professionals, including engineers, scientists, mining specialists, and manufacturing experts. The Company’s leadership is
focused on attracting, developing, and retaining top talent across these areas to support its mission in building a vertically
integrated domestic supply chain for rare earths and rare earth neo magnets. As of December 31, 2024, the Company had 29 employees.
We have not experienced any work stoppages. None of our employees are represented by a labor union or are parties to a collective
bargaining agreement.

A significant challenge for the Company and the
broader rare earth industry is the shortage of experienced magnet production and mining professionals. The specialized nature of magnet
production and rare earth mining, processing, and refining requires expertise that has been in decline, particularly in the United States,
where magnet production and rare earth mining has been limited for decades. This shortage could present significant obstacles for companies
like USARE that are working to establish a vertically integrated, domestic rare earth supply chain. The lack of skilled professionals
with the necessary expertise can slow down project timelines, increase operational costs, and foster reliance on international talent.

Environmental, Health and Safety Matters

The Company is, or may become, subject to numerous
and extensive federal, state and local laws, regulations, permits and other legal requirements applicable to the magnet production, mining
and mineral processing industries, including those pertaining to employee health and safety, air emissions, water usage, wastewater and
stormwater discharges, air quality standards, greenhouse gas (“GHG”) emissions, waste management, plant and wildlife
protection, handling and disposal of hazardous and radioactive substances, remediation of soil and groundwater contamination, land use,
reclamation and restoration of properties, the discharge of materials into the environment and groundwater quality and availability. Such
laws, regulations, permits and legal requirements have had, and will continue to have, a significant effect on our results of operations,
earnings and competitive position. Environmental laws and regulations, as well as stakeholder expectations, continue to evolve, which
may require us to meet stricter standards and give rise to greater enforcement, result in increased fines and penalties for non-compliance,
and result in a heightened degree of responsibility for companies and their officers, directors and employees. Future laws, regulations,
permits or legal requirements, as well as the interpretation or enforcement of existing requirements, may require substantial increases
in capital or operating costs to achieve and maintain compliance or otherwise delay, limit or prohibit operations, or other restrictions
upon, our current or future operations or result in the imposition of fines and penalties for failure to comply. Complying with this panoply
of regulations is complicated and requires significant attention and resources. The Company’s employees have a significant amount
of experience working with various federal, state and local authorities to address compliance with such laws, regulations and permits;
however, we cannot assure you that at all times we have been or will be in compliance with such requirements.

The Company expects to continue to incur significant
sums for ongoing operating environmental expenditures, including salaries, and the costs for monitoring, compliance, reporting, pollution
control equipment and permitting. In addition, the Company plans to invest significant capital to maintain and upgrade certain infrastructure
related to environmental sustainability and safety.

At the Stillwater Facility, the Company currently
holds and is implementing a Spill Prevention and Countermeasures Control (“SPCC”) Plan. At the Round Top Project, the
Company has obtained coverage under the Texas Commission on Environmental Quality (“TCEQ”) Construction Stormwater
Permit TXR150000 and maintains the associated Storm Water Pollution Prevention Plan.

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At one or both sites, the Company currently expects
that it may need to obtain many or all of the following permits in the future to conduct its business as currently planned:

●Radioactive equipment registration

●Petroleum storage tank registration

●Industrial stormwater permit (or coverage under a general stormwater
permit)

●Industrial waste registration

●Air emissions permit

●Industrial waste water on-site sewage and/or process water
discharge permit

●Other building and/or construction permits

Environmental, Health & Safety
Laws and Regulations

The numerous and extensive federal, state and
local environmental, health and safety laws and regulations to which the Company is or may be subject include the laws and regulations
listed below. Violation of such laws and associated regulatory programs can result in civil, criminal and administrative penalties and
substantial liability for the costs of correcting violations and remediating any environmental damage caused by the violations. Under
certain statutes, private citizens may bring enforcement suits. We expect to maintain regular communication with regulatory bodies to
stay updated on any changes or additional requirements.

Mine Health and Safety Laws. To
fully adhere to the safety standards enforced by the Mine Safety and Health Administration (“MSHA”) under the
Federal Mine Safety and Health Act of 1977, we plan to develop comprehensive mine safety and health programs in connection with
the commissioning of the Round Top Project’s mine if and when such commissioning occurs including, but not limited to, regular MSHA
inspections and reporting protocols, mandatory MSHA training programs (Part 46/48) for all personnel, implementation of emergency
response and hazard mitigation plans, and continuous monitoring of air quality, dust, noise, and other environmental health factors.

Surface Mining Control and Reclamation. We
may in the future, if and when the Round Top Project is a producing mine, be subject to applicable mining controls and land reclamation
requirements. These controls and requirements generally establish operational, reclamation, and closure standards for surface mining operations.
It is likely that we will need to meet comprehensive environmental protection and reclamation standards during the course of, and upon
completion of, mining activities, and any failure to meet such standards may subject us to fines, penalties, or other sanctions.

Endangered Species Act. The
Endangered Species Act (“ESA”) and comparable state statutes regulate activities that could have an adverse effect
on threatened and endangered species, including the habitat and ecosystems upon which they depend. Compliance with ESA requirements can
significantly delay, limit, or even prevent the development of projects, including the development of mining claims, and can also result
in increased development costs. In addition, the ESA authorizes both civil and criminal penalties for ESA violations and authorizes citizen
suits against any person alleged to be in violation of the ESA.

National Environmental Policy Act. The
National Environmental Policy Act (“NEPA”) require agencies to integrate environmental considerations into their decision-making processes
by evaluating the environmental impacts of their proposed actions, including issuance of permits to mining facilities, and assessing alternatives
to those actions. If a proposed federal action could significantly affect the environment, the agency must prepare a detailed statement
known as an Environmental Impact Statement (“EIS”). The United States Environmental Protection Agency (the “EPA”),
other agencies, and any interested third parties may review and comment on the scoping of the EIS and the adequacy of and findings set
forth in the draft and final EIS. This process can cause delays in issuance of required permits or result in changes to a project
to mitigate its potential environmental impacts, which can in turn impact the economic feasibility of a proposed project.

Clean Water Act. The
Clean Water Act (“CWA”) and comparable state statutes impose restrictions and controls on the discharge of pollutants
into waters of the United States (or state waters under state laws). The CWA can regulate storm water from mining facilities and
require a storm water discharge permit for certain activities. The CWA and regulations implemented thereunder also prohibit discharges
of dredged and fill material in wetlands and other waters of the United States unless authorized by an appropriately issued permit.
CWA regulations and controls generally have become more stringent over time, and it is possible that additional restrictions will be imposed
in the future.

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Safe Drinking Water Act. The
Safe Drinking Water Act (“SDWA”) and comparable state statutes, the Underground Injection Control (“UIC”)
program, and related state-administered programs regulate the drilling and operation of subsurface injection wells.

Clean Air Act. The
Clean Air Act (“CAA”) and comparable state statutes govern the emission of air pollutants from many stationary and
mobile sources, including mining, beneficiation, and processing activities. Our operations may produce air emissions, including fugitive
dust and other air pollutants, from stationary equipment, storage facilities, and the use of mobile sources, such as trucks and heavy
construction equipment, that are subject to review, monitoring, control requirements and emission limits under the CAA and state air quality
laws. New sources, equipment or process enhancements, including with respect to the growth of our operations and Stage II optimization
projects, may require additional permits, and existing sources may be required to incur capital costs to remain in compliance. In addition,
permitting rules and issued permits or licenses may impose conditions or other limitations on production levels or result in additional
capital or other expenditures to comply with such rules or permits.

Comprehensive Environmental, Response, Compensation,
and Liability Act (“CERCLA”). CERCLA and comparable state laws impose strict, joint and several
liability on current and former owners and operators of sites and on persons who disposed of or arranged for the disposal of hazardous
substances found at such sites, regardless of the lawfulness of the original activities that led to the contamination. Moreover, current
owners or operators of sites can be held liable for contamination caused by others, including former owners or operators, even if the
current owners or operators did not contribute to the contamination. CERCLA authorizes the EPA and, in some cases, third parties to take
actions in response to threats to public health or the environment and to seek to recover from the potentially responsible parties the
costs of such actions.

Resource Conservation and Recovery Act (“RCRA”). RCRA
and comparable state statutes govern the generation and disposal of solid waste and hazardous waste. Although certain mining, beneficiation,
and mineral processing wastes currently are exempt from regulation as hazardous wastes under RCRA, EPA has limited the disposal options
for certain wastes designated as hazardous wastes under RCRA. It is possible that wastes generated by our operations may in the future
be designated as hazardous wastes and may therefore become subject to more rigorous and costly management, disposal, and clean-up requirements.

Atomic Energy Act. The
Nuclear Regulatory Commission (“NRC”), pursuant to its authority under the Atomic Energy Act of 1954, as
amended, oversees the regulatory framework governing the control of radioactive materials, including beneficiation and processing of rare
earths that contain radioactive source materials such as uranium and thorium. The NRC is responsible for issuing licenses that govern
the handling of source material involving certain concentrations of radioactive material. Our Round Top Project operations, once the Round
Top Project mine is operational, including waste generation, may be subject to NRC regulations in order to receive title to, possess,
use, transfer, deliver or export source and byproduct materials.

Workers’ Compensation Laws. Workers’
compensation laws in the states in which we operate govern our compensation of employees for work-related injuries. Agencies in those
states consider changes in workers’ compensation laws from time to time. Our costs will vary based on the number and severity of
accidents that may occur at our facilities and our costs of addressing these claims. We are insured under various workers’ compensation
programs for our operations at our facilities.

From time to time, we may become involved in legal
proceedings or be subject to claims that arise in the ordinary course of our business, the outcomes of which are subject to uncertainty.
Any claims against us, whether meritorious or not, can be time-consuming, result in costly litigation, require significant management
time, create a negative perception of the company with communities, stakeholders, and government agencies and result in the diversion
of significant operational resources. See Item 3 — Legal Proceedings for information regarding legal proceedings.

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Description of the Round Top Project

History. The
Round Top Deposit, located in Hudspeth County, Texas near the city of Sierra Blanca, Texas, was initially identified as a potential source
of minerals in the mid-20th century and has long been recognized for its minerology, particularly its rare earths including
heavy rare earths that are critical for a variety of advanced technologies. However, despite its potential, the Round Top Deposit remained
largely untapped for many years due to the lower global demand for rare earths and the dominance of cheaper feedstock from foreign
markets, particularly from China.

Interest in the Round Top Deposit resumed in the
early 21st century as geopolitical concerns and technological advancements led to a renewed focus on securing domestic
supplies of critical materials such as rare earths. The Round Top Deposit is considered exceptional in its geological composition, as
it contains gallium, lithium, and at least 15 of the 17 rare earths, including a particularly high estimated concentration of heavy
rare earths like dysprosium and terbium.

Documented exploration began in Sierra Blanca
in the 1970s when W.N. McAnulty initiated trenching and limited drilling of fluorite deposits in the vicinity of Sierra Blanca, Texas.
McAnulty recognized and identified beryllium mineralization associated with the massive fluorite. Adverse economic conditions for fluorite
precluded development. In the 1970s, several uranium companies identified anomalous radiation and associated mineralization associated
with the beryllium-fluorite deposit.

During the 1980s, Cabot Corporation (“Cabot”),
a large chemical company with a beryllium fabrication division, initiated exploration at Round Top Mountain for beryllium. In 1987, Cyprus
Metals Company (“Cyprus”) entered into a joint venture with Cabot and took over the project. The Cyprus exploration
program drilled Sierra Blanca, Round Top Mountain and Little Round Top. Eventually, Cyprus focused on Round Top, specifically the “west
end ore zone”. Extensive development drilling (82,000 feet), underground exploration drift (1,115 feet) and trial mining resulted
in the completion of an internal feasibility study in June 1988 (Cyprus Sierra Blanca, Inc., 1988), which study would not be sufficient
for Item 1300 purposes.

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During the Cabot-Cyprus development project,
the Texas Bureau of Economic Geology (“BEG”) conducted extensive research at Round Top and the surrounding area. The
study identified beryllium mineralization and rare earth mineralization in the rhyolite. The research resulted in the three publications,
one in 1987 on the mineralogy of the rhyolite (Rubin, et al., 1987), another in 1988 on the beryllium mineralization (Rubin et al., 1988),
and another in 1990 on the detailed mineralogy and geochemistry of the rhyolite (Price et al., 1990). The 1990 Price, et al., publication,
Geological Society of America Special Paper 246, is generally considered the most complete publication to date on Round Top.

In late 2007, Standard Silver Corporation, later
to be renamed TRER in 2010, and then TMRC in 2013, acquired prospecting permits for Round Top from the Texas General Land Office (“GLO”).

Accessibility. The
Round Top Project is located approximately eight miles northwest of the town of Sierra Blanca, Texas, which is the nearest town to Round
Top Mountain and has a small population. The site is accessed from Interstate 10 through a series of paved and unimproved dirt roads.
The property is not traversed by county roads and consists of a series of graded and primitive jeep roads. The nearest major airport is
located in El Paso, Texas, 88 miles to the northwest. The site is approximately three miles north of Interstate 10. A railroad line is
located near the Round Top Project and a spur line stops at a stone quarry within three miles of the Round Top Project. Skilled mining
labor and support could potentially be found in the El Paso area and in the mining areas of New Mexico and Arizona.

Ownership; Land and Water Leases.

RTMD is a limited liability company majority owned
and controlled by USARE for the purpose of developing the Round Top Deposit. TMRC (a mining exploration company) is the minority owner
of RTMD. In May 2021, the Company completed the acquisition of 80% of RTMD, which controls the Company’s Round Top Project,
including 100% of the mining rights to the Round Top Deposit, by entering into a Contribution Agreement and Operating Agreement with TMRC. This
acquisition resulted in the consolidation of RTMD with USARE, and the recording of a “non-controlling interest” for the
remaining 20%. Since May 2021, TMRC has elected to forfeit some of its ownership in RTMD in exchange for USARE meeting TMRC’s
capital call obligations.

As of December 31, 2024, USARE owns 81% of
the equity interests in RTMD, with TMRC owning the remaining approximately 19%. Pursuant to RTMD’s governing documents, in the event
that TMRC does not fund its share of mandatory capital contributions called for by USARE as managing member, USARE is obligated to cover
the shortfall by making additional capital contributions to RTMD. In the event that USARE does not cover the shortfall, the capital
call will be withdrawn. If the capital call is funded by USARE, additional equity interests in RTMD will be issued to USARE and TMRC will
be proportionally diluted in accordance with the amended and restated limited liability company agreement.

The Round Top Deposit is located on state property
owned by the GLO. RTMD is party to a 19-year initial term, renewable Mining Lease Agreement (M-113117) with the GLO, dated September 2,
2011, and amended on January 26, 2012, March 29, 2012, and September 14, 2022. M-113117 will expire on September 1,
2030 unless extended. RTMD has also entered into an additional 19-year renewable Mining Lease Agreement (M-113629), dated November 1,
2011, with the GLO. Leases M-113117 and M-113629 (each a “Mineral Lease” and together, the “Mineral
Leases”) represent approximately 860 and 90 acres, respectively, for a total of 950 leases acres in the Round Top Project area.
M-113629 will expire on October 31, 2030 unless extended. The Mineral Leases provide RTMD with the use of the property identified,
including certain rights with respect to the surface and subsurface, together with the corresponding rights of ingress and egress, for
the purposes of mineral exploration, development, and exploitation of minerals. As the Round Top Project is still in its exploration stage,
the Company is currently paying delay rental payments on an annual basis to the GLO as follows:

M-113117

Anniversary Date 2024
$134,154.90

Anniversary Date 2025-2029
$178,873.20

M-113629

Anniversary Date 2024
$13,500.00

Anniversary Date 2025-2029
$18,000.00

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If and when the Round Top Project begins producing,
the Mineral Leases would be converted into producing leases upon the satisfaction of certain conditions, which includes: (i) a minimum
advance annual royalty of $500,000 for lease M-113117 and $50,000 for lease M-113629, due promptly following sales of leased minerals
or the removal of leased minerals in commercial quantities from the leased premises and (ii) a production royalty equal to 8% of
the market value of uranium and other fissionable minerals and 6.25% of the market value of all other leased minerals.

In addition to the Mineral Leases, the Company
currently owns approximately 2037 acres of mine processing land and holds a current purchase option on 5,670 acres of which 950 acres
are authorized for mining and the remainder (4,720 acres) is contemplated for future use as mine processing land (e.g., for use to assist
in mine development, as leach fields, and/or as plant site) (the “Purchase Option”). Unless exercised prior, the Purchase
Option will expire upon the expiration of Mining Lease M-113117 (September 2, 2030). As consideration for the Purchase Option,
the Company is required to pay $10,000 to the GLO on each annual anniversary of the Effective Date of the Purchase Option (as defined
in the Purchase Option) during the option term. If the Company fails to make a timely payment of the option fee, the Purchase Option will
terminate. On August 26, 2022, the Company submitted to the GLO a Notice of Intent to exercise the Purchase Option. In February 2023,
the GLO sent its appraisal of the value of the property associated with the Purchase Option to the Company. The Company and GLO are negotiating
the exercise of the Purchase Option.

The Company is lessee under GLO Surface Lease
SL2004002 (Grazing/Agricultural), which lease is for a term commencing on November 24, 2003 and expiring on November 23, 2028,
for approximately 55,000 acres of surface rights in proximity to the Company’s Round Top Project (the “Surface Lease”).
The Surface Lease is a pre-paid lease with a pro rata credit schedule and a “preference right agreement” to purchase
all or part of the land. The Surface Lease grants the Company the right to use the leased premises for hunting, grazing, range and wildlife
research, and any other purpose ancillary thereto, and allows, with GLO approval, the Company to commercially develop groundwater and
to use the land for electric generation by wind power. Pursuant to the Surface Lease, the Company has the right to purchase all or part
of the leased premises during the term of the lease in accordance with the terms set forth in the preference right agreement, an exhibit
to the Surface Lease, provided that any purchase of tracts of land must be contiguous. The Surface Lease contains certain additional obligations,
such as an obligation to maintain stated insurance coverages in certain situations, and to post certain deposits or bonds prior to commencing
construction of any wind turbine, tower, buildings, or substations. The Company has the right to early terminate the lease, in which case
the Company would be entitled to receive a refund of the prepayments made under the lease. There is no Company renewal option under the
Surface Lease and any renewal of the Surface Lease is at the sole discretion of the GLO.

The Company is lessee under GLO Groundwater Lease
SL20150003, dated August 1, 2014, as amended, for approximately 8,828 acres of water rights (the “Groundwater Lease”).
The Groundwater Lease grants USARE rights in the land, including rights of ingress and egress, for the purpose of exploring, evaluating,
drilling for, producing, developing, and extracting groundwater from the leased land for industrial and potable water use in connection
with USARE’s Round Top Project (including, without limitation, mineral processing and metal extraction/processing). The Groundwater
Lease will expire concurrently with the M-113117 Mineral Lease. The Company has not commenced water production and is currently obligated
to pay annual delay rentals in the amount of $6,500 on or before each anniversary of the effective date of the Groundwater Lease. On the
first anniversary of the Effective Date that immediately follows the Company’s commencement of water production from the leased
premises the Company shall make a production payment equal to the greater of (1) $1,667.67 multiplied times the number of months
of production of water during the 12-month period ending 60 days before the production payment is due, or (2) $0.95 per
1,000 gallons of the gross volume of water produced by the leased premises covered by the lease during the 12-month period ending
60 days before the production payment is due. On each anniversary of the effective date of the Groundwater Lease thereafter during
the remaining term of the Groundwater Lease, the Company will be required to make a production payment equal to the greater of (1) $20,000,
or (2) $0.95 per 1,000 gallons of the gross volume of water produced from the leased premises during the 12-month period ending
60 days before the production payment is due. There is no Company renewal option under the Groundwater Lease and any renewal of the
Groundwater Lease is at the sole discretion of the GLO.

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The premises leased under the Groundwater Lease
has two existing water wells. Prior to commencing production of rare earth minerals at the Round Top Project, the Company will need to
establish that the existing wells are functioning water wells producing enough water to support production or potentially drill additional
wells, which would entail additional expense for production. If the Company determines that the groundwater supply is not suitable for
the Company’s Round Top Project, then the Company has the right to terminate the Groundwater Lease. Upon expiration or earlier termination
of the Groundwater Lease, the Company will be required to restore the leased premises to its original topographical condition that existed
as of the Effective Date, to the extent the topographical condition has been altered.

The Company has entered into four easements with
GLO that affect the Round Top Project. The first easement is Miscellaneous Easement ME20210085 (“ME20210085”), which
commenced on April 1, 2021 and expires on March 31, 2031 unless extended by the Company pursuant to the terms of ME20210085.
ME20210085 is a nonexclusive easement for a right of way to construct, maintain, operate, inspect and repair one roadway in a location
set forth on the easement.

The second easement is Miscellaneous Easement
(Pipelines) ME20210086 (“ME20210086”), which commenced on April 1, 2021 and expires on March 31, 2031 unless
extended by the Company pursuant to the terms of ME20210086. ME20210086 is a nonexclusive easement for a right of way to construct, maintain,
operate, inspect, repair, change the size of, and replace one 4.5-inch O.D. pipeline for the purpose of transporting fresh water
in a location set forth on the easement.

The third easement is Miscellaneous Easement ME20210087
(“ME20210087”), which commenced on April 1, 2021 and expires on March 31, 2031 unless extended by the Company
pursuant to the terms of ME20210087. ME20210087 is a nonexclusive easement for a right of way to construct, maintain, operate, inspect
and repair one 24-kV electric line in a location set forth on the easement.

The fourth easement is Miscellaneous Easement
ME20220142 (“ME20220142”), which commenced on September 1, 2022 and expires on August 31, 2032 unless extended
by the Company pursuant to the terms of ME20220142. ME20220142 is a nonexclusive easement for a right of way to construct, maintain, operate,
inspect and repair one roadway in a location set forth on the easement.

Historical Non-Item 1300 Resource
Estimates; Feasibility Studies. Cyprus established certain non-reported resources in conjunction with
a 1988 internal feasibility study, which historical resource estimate would not qualify as a resource by either historical 43-101 standards
nor current Item 1300 of Regulation S-K (“Item 1300”) standards. In 2012, TMRC completed a PEA prepared by
a mining consulting firm on the Round Top Deposit (NI 43-101 Preliminary Economic Assessment — Round Top Project,
June 22, 2012). The resource model in that PEA was updated in early 2013 with additional drilling and assay data and was documented
in a resource statement by a mining consulting firm (Resource Estimate and Statistical Summary — Round Top Project, September 30,
2013). The 2013 PEA was an update of the 2012 PEA and utilized the resource estimate from the September 2013 study. The 2013 PEA
was then superseded in 2019 when USARE and TMRC engaged a mining consulting firm to prepare its resource statement (NI 43-101 Preliminary
Economic Assessment — Round Top Project, August 16, 2019). Neither the 2012 PEA, the 2013 PEA, nor the 2019 PEA were
prepared on the basis of compliance with Item 1300 and are not resource estimates of USARE under Item 1300.

The 2019 PEA provided an initial overview of the
Round Top Deposit’s minerology, confirming that the site contains both heavy rare earths and lithium. While the 2019 PEA set the
stage for further detailed studies, in light of the rapid global economic changes, technological changes that have occurred since 2019,
and changes in economic environment and pricing, including with respect to extraction costs and economic returns, the Company is not relying
on the 2019 PEA for the purpose of reporting mineral resources. The Company does not currently intend to update the 2019 PEA and is instead
working toward conducting a pre-feasibility study (“PFS”). The Company intends to update the “flow sheet”
used as a key input in such estimates to reflect the Company’s expected separation and processing methodologies at that time. USARE
does not make any representation that any historical estimate is a current mineral resource estimate for the Round Top Project. There
is no known significant production reported from previous operators.

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Accordingly, following the 2019 PEA, USARE has
been actively working on advancing the project through the next stages of the project, focusing on the subsequent PFS, which the Company
intends to eventually progress to a Definitive Feasibility Study (“DFS”). The PFS would provide an updated and more
detailed analysis of the technical and economic feasibility of the Round Top Project, including resource modeling, mine design, and processing
methodologies. This step is critical in defining and refining the operational and financial plans for the Round Top Project. The final
stage, the DFS, would provide the most definitive plan for the full-scale development of the mine, including final cost estimates,
engineering plans, and potential environmental impacts, all necessary for securing financing and moving toward full production.

Exploration Status. It
is the Company’s view that the Round Top Project is considered an “exploration stage property” under Item 1300,
in that the Round Top Project is a property that has no mineral reserves disclosed. Mineral resources that are not mineral reserves have
no demonstrated economic viability. USARE has not itself conducted any exploration activities at the Round Top Project and does not have
any current determination as to a proposed program of exploration or development. However, as discussed above in the section entitled
“— History”, various other parties have historically performed exploration activities at the site, including
TMRC from whom USARE acquired its rights in the Round Top Project through the Company’s subsidiary RTMD. Between January 2010
and August 2019, TMRC conducted the following exploration activities: surface sampling, logging cuttings from historical reverse
circulation drilling, aeromagnetic surveying, anaeroradiometric survey, stream sediment surveying, gravity surveying, and exploratory
drilling. To date, 173 historical drill holes have been located, and, between 2011 and 2019, TMRC drilled 84 reverse circulation holes
and 2 core holes and analyzed 3,081 drill samples. In early 2019, TMRC assayed previously collected RC samples to collect geochemical
data for some additional elements from existing drill holes to expand the knowledge of lithium, zircon, and other elements which metallurgical
test work had indicated might impact project economics.

The Round Top Project’s equipment and facilities
and related infrastructure are in generally good condition and are not material to the Company’s business as currently conducted.

For information regarding current and expected
future permitting requirements and associated timelines and information regarding such permits, see the section entitled “— Permits
and Approvals”.

Environmental Impact. The
Round Top Project has been envisioned with an emphasis on minimizing environmental impact, particularly in comparison to traditional mining
operations. One of the key environmental advantages of the Round Top Project’s site is its location in an arid, sparsely populated
area of Texas, which reduces the likelihood of significant impacts on local communities or ecosystems. Due to the above-ground nature
of the deposit, the project is currently expected to predominantly utilize in-situ leaching for rare earth extraction, which is generally
considered less environmentally disruptive than traditional mining techniques. This process involves dissolving minerals using solutions
and extracting them without large-scale surface disruption, reducing the need for large open-pit mining operations that could
potentially lead to undesirable environmental impacts.

Additionally, USARE endeavors to use sustainable
practices by focusing on using closed-loop recycling systems to minimize waste and reduce water usage in its operations. The Company
is exploring the possibility of using renewable energy sources to power its projects. However, like all mining operations, in the future,
the Company will likely need to manage concerns related to chemical use, water management and contamination, and waste management.

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