Raymond James Snippets Coverage of UCU - 37 page report-
37 page report total...some snippets
...We believe Ucore is poised to deliver a step-change in financial performance beginning in FY2026 as production ramps-up. As shown in
Exhibit 1, Ucore is currently pre-revenue and pre-production. Underpinned by the staged commissioning of its LSMC, we forecast revenue to reach
~$54 mln in FY2026, scaling rapidly to ~$753 mln by FY2030. This growth trajectory reflects the transition from initial production to full-scale
operations, with stage 1 and 2 of LSMC contributing an incremental 2,500 tonnes of REO capacity each in FY2027 and FY2028 while stage 3 adding
an incremental 5,000 tonnes —ramping up to a total of 10,000 tonnes by FY2029. We estimate gross margins of 30% in FY2026, gradually rising
to 35% by FY2028 largely reflecting margin improvement driven by scale efficiencies. We estimate EBITDA in FY2026 to be slightly above break
even territory and grow to ~$229 mln by FY2030, reflecting strong operating leverage and disciplined cost management as production scales.
Additionally, we believe the company’s financial profile is expected to strengthen materially over the medium-term, positioning Ucore as a leading
North American supplier of critical REE.
Plenty of advantages for Ucore in the Pelican state. Ucore’s selection of Alexandria, Louisiana as the site for its SMC reflects a deliberate strategy
to optimize logistics, cost structure, and regulatory positioning. Located in central Louisiana, we note that Ucore’s facility is strategically located
away from the gulf coast where the effects of any possible extreme weather events — like floods or hurricanes — will be limited on the companies
business operations. We also highlight that the region offers access to established chemical infrastructure, competitive power rates, and a skilled
local workforce, all of which support efficient operations and long-term scalability. Additionally, the site’s ESG profile is enhanced by the closed-
loop nature of Ucore’s RapidSXTM technology, which produces minimal waste and uses significantly less chemical input than conventional SX. The
company has also secured US$15 mln in state-level incentives from Louisiana Economic Development, reinforcing local government support for
the project. Further, LSMC is located within a designated Foreign Trade Zone, enabling tariff-free movement of feedstock and finished products —
an increasingly valuable advantage amid shifting global trade dynamics in our view. We believe that management views Louisiana not only as a
cost-effective launchpad for domestic refining, but also as a potential hub for future feedstock aggregation and downstream partnerships across
North America and allied jurisdictions.
Expected timeline of Bokan-Dotson Ridge development reevaluated. Management now believes that the prospective development of the
Bokan Project is best slotted for the latter half of this decade after the Louisiana SMC and a North American centric REE supply chain is fully
established. While the company had initially planned to update its 2013 PEA, it determined in Aug-25 that completing an updated mineral resource
estimate (MRE) would be a more appropriate next step. As of the date of this report, the updated MRE is targeted for completion in 4Q25.
VALUATION & RECOMMENDATION
Given Ucore’s differentiated positioning, advanced development timeline, and strategic relevance to US supply chain objectives, we initiate
coverage with an Outperform rating and a target price of $14.50/sh. Our $14.50/sh target price is based on our 10-year discounted cash flow
analysis, applying a 12.0% WACC and 3.0% terminal growth rate (see Exhibit 11 below). To illustrate the sensitivity of our valuation to key inputs,
we present a two-variable sensitivity table showing a range of target prices based on our assumed WACC and terminal growth rate. We believe the
discount and growth rate properly reflects the early stage and growth potential of the business. We note that our cash flows reflect full production
of REO from all three stages of the LSMC by FY2029, totaling 10,000 tpa, after a gradual ramp-up period for each respective stage. That said, we
note that Ucore management anticipates that initial REO monetization will be from currently economically valuable REE (NdPr, Tb, and Dy with
some Sm and Gd a possibility). Therefore, we assume initial throughput processing of ~35% in FY2026, gradually increasing to 70% in FY2035.
Lastly, we assume a foreign exchange rate of US$0.73/C$ in our model.
A key input to our valuation is the assumed REO basket price of US$110,000 per tonne (US$110/kg). This reflects the US government’s introduction
of a US$110/kg floor price for NdPr oxide, which was initially granted to MP Materials. We expect this pricing support to be extended to other
domestic producers, including Ucore, given its strategic alignment with national critical mineral objectives.
While we include a comparables table for reference, we note that most publicly traded peers are in early stages of development and lack
meaningful operating metrics (see Exhibit 12).
jmho
37 page report total...some snippets
...We believe Ucore is poised to deliver a step-change in financial performance beginning in FY2026 as production ramps-up. As shown in
Exhibit 1, Ucore is currently pre-revenue and pre-production. Underpinned by the staged commissioning of its LSMC, we forecast revenue to reach
~$54 mln in FY2026, scaling rapidly to ~$753 mln by FY2030. This growth trajectory reflects the transition from initial production to full-scale
operations, with stage 1 and 2 of LSMC contributing an incremental 2,500 tonnes of REO capacity each in FY2027 and FY2028 while stage 3 adding
an incremental 5,000 tonnes —ramping up to a total of 10,000 tonnes by FY2029. We estimate gross margins of 30% in FY2026, gradually rising
to 35% by FY2028 largely reflecting margin improvement driven by scale efficiencies. We estimate EBITDA in FY2026 to be slightly above break
even territory and grow to ~$229 mln by FY2030, reflecting strong operating leverage and disciplined cost management as production scales.
Additionally, we believe the company’s financial profile is expected to strengthen materially over the medium-term, positioning Ucore as a leading
North American supplier of critical REE.
Plenty of advantages for Ucore in the Pelican state. Ucore’s selection of Alexandria, Louisiana as the site for its SMC reflects a deliberate strategy
to optimize logistics, cost structure, and regulatory positioning. Located in central Louisiana, we note that Ucore’s facility is strategically located
away from the gulf coast where the effects of any possible extreme weather events — like floods or hurricanes — will be limited on the companies
business operations. We also highlight that the region offers access to established chemical infrastructure, competitive power rates, and a skilled
local workforce, all of which support efficient operations and long-term scalability. Additionally, the site’s ESG profile is enhanced by the closed-
loop nature of Ucore’s RapidSXTM technology, which produces minimal waste and uses significantly less chemical input than conventional SX. The
company has also secured US$15 mln in state-level incentives from Louisiana Economic Development, reinforcing local government support for
the project. Further, LSMC is located within a designated Foreign Trade Zone, enabling tariff-free movement of feedstock and finished products —
an increasingly valuable advantage amid shifting global trade dynamics in our view. We believe that management views Louisiana not only as a
cost-effective launchpad for domestic refining, but also as a potential hub for future feedstock aggregation and downstream partnerships across
North America and allied jurisdictions.
Expected timeline of Bokan-Dotson Ridge development reevaluated. Management now believes that the prospective development of the
Bokan Project is best slotted for the latter half of this decade after the Louisiana SMC and a North American centric REE supply chain is fully
established. While the company had initially planned to update its 2013 PEA, it determined in Aug-25 that completing an updated mineral resource
estimate (MRE) would be a more appropriate next step. As of the date of this report, the updated MRE is targeted for completion in 4Q25.
VALUATION & RECOMMENDATION
Given Ucore’s differentiated positioning, advanced development timeline, and strategic relevance to US supply chain objectives, we initiate
coverage with an Outperform rating and a target price of $14.50/sh. Our $14.50/sh target price is based on our 10-year discounted cash flow
analysis, applying a 12.0% WACC and 3.0% terminal growth rate (see Exhibit 11 below). To illustrate the sensitivity of our valuation to key inputs,
we present a two-variable sensitivity table showing a range of target prices based on our assumed WACC and terminal growth rate. We believe the
discount and growth rate properly reflects the early stage and growth potential of the business. We note that our cash flows reflect full production
of REO from all three stages of the LSMC by FY2029, totaling 10,000 tpa, after a gradual ramp-up period for each respective stage. That said, we
note that Ucore management anticipates that initial REO monetization will be from currently economically valuable REE (NdPr, Tb, and Dy with
some Sm and Gd a possibility). Therefore, we assume initial throughput processing of ~35% in FY2026, gradually increasing to 70% in FY2035.
Lastly, we assume a foreign exchange rate of US$0.73/C$ in our model.
A key input to our valuation is the assumed REO basket price of US$110,000 per tonne (US$110/kg). This reflects the US government’s introduction
of a US$110/kg floor price for NdPr oxide, which was initially granted to MP Materials. We expect this pricing support to be extended to other
domestic producers, including Ucore, given its strategic alignment with national critical mineral objectives.
While we include a comparables table for reference, we note that most publicly traded peers are in early stages of development and lack
meaningful operating metrics (see Exhibit 12).
jmho
