MP Materials Corp. (MP) 2021 Q2 法說會逐字稿

Hello, and welcome to the MP Materials' Second Quarter 2021 Financial Results Conference Call and Webcast. (Operator Instructions)

各位好，歡迎參加 MP Materials 2021 年第二季財務業績電話會議與網路直播。（接線員指示）

I'll now hand over to Martin Sheehan, Head of Investor Relations at MP Materials. Please go ahead when you're ready.

接下來我將把時間交給 MP Materials 投資人關係主管 Martin Sheehan。您準備好時請開始。

Thank you, operator, and good day, everyone. Welcome to MP Materials' Second Quarter 2021 Earnings Call. With me today are Jim Litinsky, Chairman and Chief Executive Officer of MP Materials; Michael Rosenthal, Chief Operating Officer; and Ryan Corbett, Chief Financial Officer.

謝謝接線員，大家好。歡迎參加 MP Materials 2021 年第二季財報電話會議。今天與我一同出席的有：MP Materials 董事長兼執行長 Jim Litinsky；營運長 Michael Rosenthal；以及財務長 Ryan Corbett。

Before we get to Jim's and Ryan's opening remarks, I'd like to remind you that during today's call, we will make certain forward-looking statements that do not constitute historical facts under the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions, and as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from forward-looking statements in this communication. For more information about factors that may cause actual results to materially differ from forward-looking statements, please refer to the cautionary language in the earnings release and in our filings with the SEC, including the Risk Factors section in our recent SEC filings.

在進入 Jim 與 Ryan 的開場致詞之前，我想提醒各位，在今天的電話會議中，我們將發表若干前瞻性陳述；依據 1995 年《美國私人證券訴訟改革法案》的安全港條款，這些陳述不構成歷史事實。前瞻性陳述係基於目前的預期與假設，對未來事件所作的預測、推估及其他陳述，因此存在風險與不確定性。許多因素可能導致本次溝通中所述之前瞻性陳述與實際未來事件出現重大差異。關於可能導致實際結果與前瞻性陳述存在重大差異之因素的更多資訊，請參閱我們新聞稿及向 SEC 提交之文件中的警示性語言，包括我們近期 SEC 申報文件中的「風險因素」章節。

During the call, management will also discuss certain non-GAAP financial measures, which we believe to be useful in evaluating MP Materials' operating performance. These measures should not be considered in isolation or as a substitute for MP Materials' financial results prepared in accordance with GAAP. A reconciliation of these measures to the most directly comparable GAAP measures is available in our current report on Form 8-K filed today and can be found on our website, investors.mpmaterials.com. And please check our investor website regularly and follow us on Twitter, Instagram and LinkedIn, where we often provide news and information on the company.

在本次電話會議中，管理層也將討論若干非 GAAP 財務衡量指標，我們認為這些指標有助於評估 MP Materials 的營運表現。這些指標不應被單獨考量，亦不應作為依 GAAP 編製之 MP Materials 財務結果的替代。這些指標與最直接可比之 GAAP 指標的調節表，已載於我們今日提交的 Form 8-K 當期報告中，並可於我們網站 investors.mpmaterials.com 查閱。此外，請定期造訪我們的投資人網站，並在 Twitter、Instagram 與 LinkedIn 關注我們；我們經常在上述平台發布公司新聞與資訊。

With that, I'll turn the call over to Jim. Jim?

接下來我把電話交給 Jim。Jim？

Thanks, Martin, and thank you to everyone joining us on the call this afternoon. We've had a busy and very productive second quarter, so let me run down what we will cover on the call today. First, I will recap the highlights of another quarter of outstanding results. Second, Ryan will provide color on our operational and financial performance. Third, I will provide an update on our Stage II optimization plan, including new developments on the heavy rare earth front. Then I will share an exciting update on our Stage III plans. After wrapping up the prepared remarks, we will open it up for Q&A.

謝謝你，Martin，也感謝今天下午加入我們電話會議的各位。我們第二季非常忙碌且成果豐碩，讓我先說明今天電話會議將涵蓋的內容。第一，我將回顧本季另一個表現出色季度的重點。第二，Ryan 將就我們的營運與財務表現提供更多說明。第三，我將更新我們第二階段（Stage II）最佳化計畫的進展，包括重稀土方面的新發展。接著我會分享我們第三階段（Stage III）計畫的令人振奮更新。在完成事先準備的發言後，我們將開放問答。

Let's start with the second quarter highlights on Slide 4. The highlight of the quarter operationally was clearly our production levels. We produced 10,305 metric tons of REO in concentrate. We believe this is the largest quarterly total in the site's 60-year history. What is even more impressive about this result is that we had a 1-week planned shutdown in the quarter to perform preventive maintenance. Last year, we delayed the plant shutdown due to COVID. Put succinctly, the amount of REO produced per operating hour increased 14% year-over-year. Michael and the team continue to do amazing work in fine-tuning and improving our Stage I processes.

我們先從投影片第 4 頁的第二季重點開始。本季在營運面最突出的亮點，顯然是我們的產量水準。我們生產了 10,305 公噸的濃縮物 REO。我們相信這是該場址 60 年歷史中最大的單季總量。更令人印象深刻的是，本季我們安排了為期 1 週的計畫性停機，以進行預防性維護。去年因 COVID 我們延後了工廠停機。簡而言之，每運轉小時所生產的 REO 量年增 14%。Michael 與團隊持續在微調並改善我們第一階段（Stage I）流程方面做出卓越的工作。

And while production levels will vary slightly quarter-to-quarter, especially as we begin tie-ins of our Stage II assets, this quarter's efficiency gives us continued comfort in our Stage I processes supporting our guided NdPr oxide production. The combination of solid production and thus sales volume as well as higher pricing resulted in record financials as our revenue more than doubled year-over-year. This and continued solid cost control resulted in adjusted EBITDA increasing nearly sixfold.

雖然產量在各季之間會有些微波動，尤其當我們開始將第二階段（Stage II）資產進行接管（tie-ins）時，但本季的效率讓我們對第一階段（Stage I）流程能支撐我們所指引的 NdPr 氧化物產量更具信心。穩健的產量（因此也帶動銷售量）加上更高的價格，使我們的營收年增逾倍並創下紀錄。同時，持續良好的成本控管也使調整後 EBITDA 幾乎成長至去年的六倍。

Importantly, our adjusted EBITDA margin also hit an all-time high of 64%, demonstrating the leverage we get from strong NdPr pricing. Ryan will talk more about our sales and production volumes in a minute. I will update you in detail on Stage II after that, but the headline is we are making steady progress. Despite supply chain and COVID challenges, we remain confident in our goal of achieving run rate production of 6,075 metric tons of NdPr in 2023. And lastly, we have some exciting news to share on Stage III. But first, though, I will turn it over to Ryan for a more detailed rundown of our operational and financial results. Ryan?

重要的是，我們的調整後 EBITDA 利潤率也創下歷史新高，達到 64%，展現我們在 NdPr 價格強勁時所具備的營運槓桿。Ryan 稍後會更詳細說明我們的銷售與產量。之後我會就第二階段（Stage II）提供更深入的更新，但重點是我們正穩步推進。儘管面臨供應鏈與 COVID 的挑戰，我們仍對在 2023 年達成 NdPr 年化產能（run rate）6,075 公噸的目標充滿信心。最後，我們也有一些關於第三階段（Stage III）的令人振奮消息要分享。不過在那之前，我先把時間交給 Ryan，請他更詳細說明我們的營運與財務結果。Ryan？

Thanks, Jim, and hello, everyone. I'll share some additional color on the quarter, beginning on Slide 6. Our record quarterly production in Mountain Pass of 10,305 metric tons was up 11% from last year and 5% sequentially despite the maintenance shutdown Jim mentioned. This shutdown was the largest and most complex outage in our history, but we completed the maintenance work early and, most importantly, safely.

謝謝你，Jim，各位好。我將從投影片第 6 頁開始，補充本季的一些細節。我們在 Mountain Pass 的單季產量創下紀錄，達 10,305 公噸，較去年增加 11%，較前一季增加 5%，即便如 Jim 所提到本季有維護停機。這次停機是我們歷史上規模最大且最複雜的一次，但我們提前完成維護工作，且最重要的是，安全完成。

The driver of our higher production in the quarter was both a higher feed rate of ore into the mill and modestly improved recoveries of REO in our flotation process. A higher feed rate will often negatively impact recovery percentages, but improvements in our processes and reagent schemes allowed us to actually increase recoveries compared to last year while still growing our feed rates.

本季產量提高的驅動因素，包含磨礦廠的礦石進料速率提升，以及我們浮選流程中 REO 回收率的小幅改善。較高的進料速率往往會對回收率百分比造成負面影響，但我們在流程與藥劑制度上的改善，使我們在提高進料速率的同時，回收率仍能較去年提升。

Moving clockwise on the slide, our sales volumes continued to closely mirror production at 9,877 metric tons of REO. This was down 4% from last year, but up 1% sequentially. As always, shipping causes modest timing differences in our revenue results versus production. I would also point out that in 2020, due to typical seasonality around Chinese New Year plus the initial wave of COVID-19 in China, our sales in Q1 of 2020 were seasonally low with a big catch-up quarter in the second quarter. This year, we didn't see the usual seasonal slowdown in the first quarter, so results across the first 2 quarters were much more balanced than normal. On a year-to-date basis, metric tons of REO sold were up 5.7%, which roughly equals the 6.2% increase in year-to-date production.

沿著投影片順時針方向，我們的銷售量持續與產量高度一致，REO 銷售量為 9,877 公噸。這較去年下降 4%，但較前一季上升 1%。一如往常，出貨會造成我們營收結果與產量之間出現些許時間差。我也要指出，2020 年因中國農曆新年常見的季節性因素，加上中國 COVID-19 的第一波疫情，2020 年第一季銷售季節性偏低，第二季則出現大幅補回。今年第一季並未出現往常的季節性放緩，因此前兩季的結果比平常更為均衡。以年初至今來看，REO 銷售公噸數增加 5.7%，大致等同於年初至今產量增加 6.2%。

On the top right, you can see the bigger impact that demand for NdPr is having on our business with realized pricing of REO up 137% and to $7,343 per metric ton, also up a strong 25% sequentially. I would point out that there is often a slight lag between observed market prices and our realized price as we ultimately true up our contract prices to our spot price recognized upon the product sale overseas.

在右上角，各位可以看到 NdPr 需求對我們業務帶來的更大影響：REO 的實現價格上升 137%，達到每公噸 7,343 美元，較前一季也強勁上升 25%。我也要指出，觀察到的市場價格與我們的實現價格之間往往會有些微落後，因為我們最終會在產品海外銷售時，依據所認列的現貨價格對合約價格進行最終調整（true up）。

And finally, on the bottom right, you can see our reported production costs were up about 9% versus last year and 4% sequentially. In the quarter, we continued to ramp hiring for Stage II, some of which flows through the P&L and impacted our cost of production by about $130 per metric ton. Importantly, we've made the strategic decision to begin hiring well ahead of Stage II commissioning. We believe that having the people who will operate and maintain our Stage II processes and equipment on site now allows them to see firsthand the engineering and construction of the facility.

最後，在右下角，各位可以看到我們申報的生產成本較去年上升約 9%，較前一季上升 4%。本季我們持續為第二階段（Stage II）擴大招募，其中一部分會反映在損益表上，使每公噸生產成本約增加 130 美元。重要的是，我們已做出策略性決定，在第二階段試車投產（commissioning）之前就開始提前招募。我們相信，讓未來將操作與維護第二階段流程與設備的人員現在就進駐現場，能使他們親眼見證設施的工程與建造。

We think investing in people ahead of Stage II commissioning will pay off in the long run from both an operating and maintenance cost perspective. So bottom line, a cleaner year-over-year comp, excluding the ramp in Stage II-related hiring, would be about $1,400 per metric ton, showing our continued execution on cost discipline with our production efficiencies more than offsetting any material cost inflation.

我們認為，在第二階段（Stage II）試車投產前就投資於人才，從營運與維護成本的角度來看，長期將會帶來回報。因此，總結而言，若排除第二階段相關招募擴編的影響，較為乾淨的年對年比較約為每公噸 1,400 美元，顯示我們在成本紀律上的持續執行，而我們的生產效率提升已足以抵銷任何原物料成本上漲。

Moving to Slide 7, you can see on the top left, what is, for the most part, the simple P times Q of our business. That is realized price times metric tons sold, drove $73.1 million of revenue in the quarter, up 141% over last year. And demonstrating the leverage in the business from the price of our concentrate as well as our solid cost management, adjusted EBITDA increased nearly 6x to $46.4 million and was up a strong 41% sequentially. This leverage also translated into improving adjusted EBITDA margins as they increased 37 percentage points versus Q2 2020 to 64% in the quarter and increased 7 percentage points quarter-over-quarter.

接著看第 7 張投影片，您可以在左上角看到，這在很大程度上就是我們業務簡單的 P 乘以 Q，也就是已實現價格乘以銷售的公噸數，帶動本季營收達 7,310 萬美元，較去年成長 141%。同時也展現出我們業務的槓桿效應，來自精礦價格上升以及我們穩健的成本管理，調整後 EBITDA 幾乎成長 6 倍至 4,640 萬美元，且較前一季強勁成長 41%。這種槓桿效應也反映在調整後 EBITDA 利潤率的改善：本季利潤率較 2020 年第二季提高 37 個百分點至 64%，且較前一季提高 7 個百分點。

And the adjusted EBITDA performance, combined with the very low cost of debt on our balance sheet, resulted in adjusted net income increasing significantly, up nearly 6x to $33.4 million as you can see on the bottom right of the page. I'd like to point out in the quarter, excluding stock comp and other onetime expenses, we had a slight increase in G&A costs in part related to Stage III and other growth and development activities. These development activities totaled just shy of $1 million in the quarter. We expect these costs to grow modestly going forward, and are considering ways to further delineate these costs for you in the P&L.

而調整後 EBITDA 的表現，加上我們資產負債表上極低的負債成本，使得調整後淨利大幅增加，如您在頁面右下角所見，幾乎成長 6 倍至 3,340 萬美元。我想指出，本季若排除股票酬勞與其他一次性費用，我們的 G&A（一般及管理）成本略有增加，部分與第三階段（Stage III）及其他成長與開發活動相關。這些開發活動本季合計接近 100 萬美元。展望未來，我們預期這些成本將溫和成長，並正在考慮在損益表中進一步為您清楚區分這些成本的方式。

Lastly, in the quarter, we had a noncash charge of $1.8 million related to the write-down of unprocessed ore inventories. Specifically, we had a stockpile of mined ore that was left from the Molycorp days. Our initial inspections of the surface of the pile some years ago now led us to believe that this was a typical lower grade stockpile that would eventually be mixed into our mill feed.

最後，本季我們認列了 180 萬美元的非現金費用，與未處理礦石存貨的減記有關。具體而言，我們有一座在 Molycorp 時期留下的已採礦石堆置場。幾年前我們對堆置場表面的初步檢查，使我們相信這是一個典型的較低品位礦堆，最終會被混入我們的磨礦進料中。

But recently, we moved the stockpile as part of a new mining phase. And upon analysis of the entirety of the pile, we discovered a much higher amount of alluvial material that would complicate efficient processing and recovery in the mill. As such, we wrote off the carrying cost of the inventory since we no longer believe it is of sufficient quality to mix into our normal process. This onetime write-off is removed from our results when looking at adjusted EBITDA and adjusted net income.

但近期，作為新一輪採礦階段的一部分，我們移動了該堆置場。對整個堆體進行分析後，我們發現其中含有更高比例的沖積物（alluvial material），這會使磨礦廠的高效率處理與回收變得更為複雜。因此，我們將該存貨的帳面成本予以沖銷，因為我們不再認為其品質足以混入我們的正常製程。這筆一次性沖銷在檢視調整後 EBITDA 與調整後淨利時會自結果中剔除。

Moving to Slide 8. You can see that Stage I continues to produce strong normalized free cash flow from operations. Here, we've updated this chart for the first 6 months of 2021. Like last quarter, in the appendix section of the slides, you'll see a detailed walk of how we get from our adjusted EBITDA to our reported operating cash flow and then our reported free cash flow. But looking at Slide 8 on the left side of the chart, you see our year-to-date free cash flow for the company was a positive $3.3 million after a total spend of about $45 million on CapEx.

接著看第 8 張投影片。您可以看到第一階段（Stage I）持續產生強勁的、常態化的營運自由現金流。在此我們已將此圖表更新為 2021 年前 6 個月的數據。如同上季，在投影片附錄部分，您會看到我們如何從調整後 EBITDA 逐步推導至已揭露的營運現金流，再到已揭露的自由現金流的詳細說明。不過，先看第 8 張投影片左側圖表，您會看到公司年初至今的自由現金流為正 330 萬美元，前提是資本支出（CapEx）總額約 4,500 萬美元。

Now adjusting for our offtake paydown of $23 million, $43 million in growth CapEx and deal expenses and onetime items, our Stage I process generated $70 million of normalized free cash flow so far this year. That's more than double the $34 million Stage I produced for all of 2020. That's also a tremendous 53% free cash flow margin, up from 25% from full year 2020.

現在，若調整我們的承購（offtake）償還 2,300 萬美元、4,300 萬美元的成長型資本支出，以及交易費用與一次性項目，我們的第一階段製程今年迄今已產生 7,000 萬美元的常態化自由現金流。這比第一階段在 2020 年全年產生的 3,400 萬美元多出一倍以上。這也代表高達 53% 的自由現金流利潤率，較 2020 年全年的 25% 明顯提升。

Keep in mind, the reason we adjust out our offtake paydown is that the offtake balance is essentially debt. But per U.S. GAAP, the impacts of the paydown of that agreement runs through operating cash flow instead of financing as we've discussed in prior quarters. And also as discussed last quarter, you should expect that our CapEx spend on Stage II will begin ramping through the last 2 quarters of 2021 and into 2022. However, in light of our recent and expected cash flow performance and assuming continued strong NdPr pricing, it's worth pointing out the significantly higher proportion of Stage II costs we expect to fund with operating cash flow versus our original expectations, which maintains the significant firepower we have on our balance sheet. Furthermore, this is all in the context of rapid progress on paying down our offtake advances, which will provide an additional free cash flow tailwind in 2022. More on that on the next slide.

請記住，我們之所以調整剔除承購償還，是因為承購餘額本質上屬於債務。但依照美國 GAAP，如同我們在前幾季討論過的，該協議償還的影響會反映在營運現金流中，而非融資現金流。此外，如同上季所述，您應可預期我們在第二階段（Stage II）的資本支出將在 2021 年最後兩季開始加速，並延續至 2022 年。然而，鑑於我們近期及預期的現金流表現，並假設 NdPr 價格持續強勁，值得指出的是，相較於我們原先的預期，我們預計將以營運現金流支應更高比例的第二階段成本，從而維持我們資產負債表上可運用的強大火力。此外，這一切也發生在我們快速償還承購預付款的背景下，這將在 2022 年為自由現金流帶來額外的順風。下一張投影片會再多談一些。

So on Slide 9, a quick balance sheet update. Our adjusted diluted shares outstanding at the end of the quarter were roughly 178.2 million. This includes the shares exchanged for warrants, which we completed in early June, but excludes shares associated with the convertible notes that are out of the money. We no longer have any earn-outs or warrants outstanding, so this is a clean number. And having put all of this behind us, we will likely no longer show this slide in future quarters.

因此在第 9 張投影片，我們快速更新一下資產負債表。本季末我們的調整後稀釋流通股數約為 1.782 億股。這包含我們在 6 月初完成的以股份交換認股權證所發行的股份，但不包含與可轉換公司債相關、目前處於價外（out of the money）的股份。我們已不再有任何或有對價（earn-outs）或未到期認股權證，因此這是一個乾淨的數字。既然這些都已處理完畢，我們未來幾季可能不再展示這張投影片。

I should note that in our GAAP financials, for the diluted share count, we do include our green convertible bond as if it were converted into shares. This results in a share count of 193.1 million, which we use to calculate fully diluted EPS, again per the recent ASU requiring full as-converted treatment for convertible notes regardless of whether they are in the money. Obviously, if we were using as-converted shares to build to our enterprise value calc, we would also need to remove the face value of the notes.

我也要補充，在我們的 GAAP 財報中，計算稀釋股數時，我們會將綠色可轉債視同已轉換為股份納入計算。這會使股數變為 1.931 億股，我們用此數字來計算完全稀釋每股盈餘（EPS），同樣是依據近期 ASU 的要求：對可轉換公司債不論是否價內，均需採用「視同已轉換」（as-converted）的完整處理。當然，如果我們在計算企業價值（enterprise value）時使用視同已轉換的股數來推導，我們也需要同時扣除該票面金額（face value）的債券。

Also in the quarter, despite steady progress on Stage II, our cash balance actually grew by $15 million and now stands at just south of $1.2 billion. Lastly, we paid down our Shenghe offtake advances by approximately $11.7 million in the quarter, with the balance now at just under $49 million. Importantly, we believe we will pay down the full balance of the offtake advances over the next 12 months, and you'll see when we file our 10-Q that we've thus classified the entire obligation as current on the balance sheet. Obviously, our ability to meet that time line is subject to REO pricing.

另外在本季，儘管第二階段持續穩步推進，我們的現金餘額實際上增加了 1,500 萬美元，目前略低於 12 億美元。最後，我們本季將盛和（Shenghe）承購預付款償還約 1,170 萬美元，餘額目前略低於 4,900 萬美元。重要的是，我們相信在未來 12 個月內將償還全部承購預付款餘額；您也會在我們提交 10-Q 時看到，我們因此已將該項義務在資產負債表上全數分類為流動負債。當然，我們能否達成該時間表仍取決於稀土氧化物（REO）價格。

In wrapping up, the headlines are exceptionally strong performance, a good story on production efficiency and costs and a strengthening cash flow and balance sheet picture owing to our execution and a favorable pricing environment. That's expected to result in accelerating the paydown of our offtake advances and preserving more of our balance sheet for the future, including Stage III and beyond.

總結來說，重點包括：表現極為強勁；在產能效率與成本方面有良好進展；並且由於我們的執行力與有利的價格環境，現金流與資產負債表狀況持續改善。這預期將帶動我們加速償還承購預付款，同時為未來（包括第三階段及其後）保留更多資產負債表資源。

Now I'll turn it back to Jim.

現在我把時間交回給 Jim。

Thanks, Ryan. Most of you know that our Stage II project is the optimization of our site to move beyond today's profitable concentrate production to separating rare earth oxides at Mountain Pass. Our success is critical to the global industry and supply chain security since today, nearly 90% of all rare earth separation is done in China. Stage II is also expected to provide significant upside to our financial profile as we've spoken about on prior calls.

謝謝你，Ryan。各位多數都知道，我們的第二階段（Stage II）專案是對場址進行最佳化，讓我們從目前獲利的精礦生產，進一步在 Mountain Pass 進行稀土氧化物分離。我們的成功對全球產業與供應鏈安全至關重要，因為目前將近 90% 的稀土分離都在中國完成。正如我們在先前的電話會議中提到的，第二階段也預期將為我們的財務輪廓帶來顯著上行空間。

Let's turn to Slide 11 to see recent photos of our progress, including some of the key equipment being installed. The top left shows the rebar being laid for the foundation of our salt crystallizer, and below that one of the key crystallizer components being delivered to the plant. I guess it looks like a space capsule but it actually does water treatment. On the top right, you can see the inside of our new concentrate dryer. Isn't it beautiful inside? I love this photo. And lastly, on the bottom right, you can see the steel structure for our new concentrate filter press has gone up and is shown surrounded by 2 cranes. The rest of the picture is our existing facility.

讓我們看第 11 張投影片，看看我們近期進展的照片，包括正在安裝的一些關鍵設備。左上角顯示的是我們鹽結晶器（salt crystallizer）基礎的鋼筋正在鋪設；其下方則是其中一個關鍵結晶器組件運抵工廠。我猜它看起來像太空艙，但其實是用於水處理。右上角您可以看到我們新的精礦乾燥機內部。裡面是不是很漂亮？我很喜歡這張照片。最後在右下角，您可以看到我們新的精礦板框壓濾機（filter press）的鋼構已經立起來，周圍有兩台吊車。畫面其餘部分則是我們既有的設施。

Moving on to Slide 12, one of the big upgrades for Stage II is installing a roaster back into the process. Here, you can see a picture of a roaster, also referred to as a calciner. It has officially arrived at Mountain Pass, and as of yesterday, has been placed on its foundation frame. This roughly 90-foot long rotary oven will evenly heat our concentrate without the need for any chemicals. The oxidation process will allow us to cost-effectively remove roughly 20,000 metric tons annually of lower-value cerium concentrate from the process. By removing the majority of the cerium, the remaining processes to isolate the high-value NdPr will operate at much lower cost with a much improved environmental profile while also allowing us to get higher levels of first pass on-spec production of NdPr.

接著看第 12 張投影片，第二階段（Stage II）的一項重大升級，是將焙燒爐重新納入製程。這裡你可以看到一張焙燒爐的照片，也稱為煅燒爐（calciner）。它已正式抵達 Mountain Pass，並於昨日就位於其基礎框架上。這座約 90 英尺長的旋轉窯爐將在不需要任何化學品的情況下，均勻加熱我們的精礦。氧化程序將使我們能以具成本效益的方式，將每年約 20,000 公噸的低價值鈰（cerium）精礦自製程中移除。透過移除大部分的鈰，後續用以分離高價值 NdPr 的製程將以更低成本運作，環境表現也將大幅改善，同時也讓我們在首次通過（first pass）即可達規格（on-spec）的 NdPr 產出比例提高。

In addition, we continue to make nice progress across Stage II. Structures for filtration, drying and roasting are starting to take shape. The foundation for the salt crystallizer is advancing as the picture on the previous slide demonstrated. Improvements to our leaching, impurity removal and separations processes are underway as well. Vertical construction is happening, and the start of installations is anticipated to follow later in the year.

此外，我們在第二階段各項工作上持續取得良好進展。過濾、乾燥與焙燒的結構體開始成形。鹽結晶器的基礎工程也在推進中，如前一張投影片的照片所示。我們在浸出、雜質去除與分離流程方面的改善也同步進行。垂直施工正在展開，預期今年稍晚將接續開始設備安裝。

I am very proud of what our team is accomplishing, particularly at such a challenging time. We all see the press reports about shortages of things like semiconductors or labor. Hotels, restaurants and stores are struggling to find staff. Steel and resin, among many other materials, have huge backlogs. Already this earnings season, we have seen a number of companies talking about stressed supply chains, bottlenecks, labor costs and/or shipping issues. Like other companies that you are hearing from, these challenges, along with the COVID Delta reemergence, have our full attention and, therefore, we are more focused than ever. Our team is managing these variables closely.

我為團隊所達成的成果感到非常自豪，尤其是在如此具挑戰性的時期。我們都看到媒體報導，像是半導體或勞動力等出現短缺。飯店、餐廳與商店都在苦於找不到員工。鋼材與樹脂等許多材料也有龐大積壓訂單。在這個財報季至今，我們已看到不少公司談到供應鏈吃緊、瓶頸、勞動成本和／或運輸問題。和你們正在聽到的其他公司一樣，這些挑戰，再加上 COVID Delta 變異株再度出現，已成為我們關注的重點，因此我們比以往更專注。我們的團隊正密切管理這些變數。

Engineering and construction project, as large as ours, is actually a good window into the general challenges the industrial economy is facing. We've had to manage through some friction around the work product of vendors and subcontractors who are also struggling with staffing and resources. And a lot more workers are still expected to be deployed at Mountain Pass in the coming months as construction efforts accelerate. Many kinds of materials, some still in short supply, are utilized in making our final design a reality.

像我們這樣規模龐大的工程與建設專案，其實正好反映工業經濟所面臨的一般性挑戰。我們必須處理供應商與分包商在交付成果上的一些摩擦，而他們同樣也在為人力與資源不足所苦。隨著施工加速，未來幾個月預期還會有更多工人派駐 Mountain Pass。為了讓最終設計得以落地，我們需要使用多種類型的材料，其中有些仍然供應短缺。

As we work towards completion, we may ultimately have to make decisions between cost and schedule as issues and change orders come up. Overall, though, we are optimistic as Stage II is already visibly taking shape at Mountain Pass and we believe our goal to achieve production levels of 6,075 metric tons of NdPr in 2023 remains on track.

在我們朝完工邁進的過程中，當問題與變更單（change orders）出現時，我們最終可能必須在成本與工期之間做出取捨。不過整體而言，我們仍保持樂觀，因為第二階段在 Mountain Pass 已經明顯成形，我們也相信 2023 年達成 NdPr 產量 6,075 公噸的目標仍按計畫推進。

Moreover, I would argue that the current environment enhances the expected return of our project investment and confirms the increasing importance of our mission. Potential incremental costs pale in comparison to the excess free cash flow we already generate. And then, of course, we expect a significant uplift in our cash flow potential once we complete Stage II.

此外，我會主張目前的環境提升了我們專案投資的預期報酬，並再次確認我們使命的重要性日益提高。潛在的增量成本與我們已經產生的超額自由現金流相比，顯得微不足道。當然，一旦第二階段完成，我們預期現金流潛力將出現顯著提升。

To put some further color on why the global situation makes me very bullish about our business prospects, I would like to analogize today's COVID shock with the 1973 oil shock. I encourage you all to study the history if you're interested. But the main takeaway is that an unexpected and significant global economic supply shock can end up reverberating for years, not months. In fact then, many people expected the event to be transitory or short-lived. Yet instead, psychology around prices and supply chain shifted. Rising prices and fear over supply became a further self-fulfilling prophecy across the economy.

為了更具體說明為何全球局勢讓我對我們的業務前景非常看多，我想把今天的 COVID 衝擊類比為 1973 年的石油危機。有興趣的話，我鼓勵各位研究那段歷史。但主要重點是：一個出乎意料且重大的全球經濟供給衝擊，其影響可能會回響多年，而不是幾個月。當時，許多人原本預期事件只是暫時或短期的；然而，市場對價格與供應鏈的心理預期卻發生轉變。價格上漲與對供應的恐懼，進一步在整體經濟中形成自我實現的預言。

The COVID shock has happened in the backdrop of an already weary geopolitical environment with respect to supply chain security. In the materials space, I previously mentioned demand backlogs for some things that stretch into next year. And of course, that assumes limited incremental demand in the coming months and no acceleration from an infrastructure build. What might happen if we believe the hundreds of billions of dollars of projected investment across new and legacy OEMs on EVs alone in the next few years?

COVID 衝擊發生時，背景是地緣政治環境早已對供應鏈安全感到疲憊不安。在材料領域，我先前提到某些品項的需求積壓已延伸到明年。而且，這還是假設未來幾個月新增需求有限，且不會因基礎建設擴張而加速。若我們相信未來幾年僅在電動車（EV）方面，新舊 OEM 預計投入的數千億美元投資，會發生什麼事？

I believe that if you do the math on some of the quantities implied by these projected investments, shortages and shocks are here to stay for quite some time. In fact, I'll make a bold prediction. I believe that at some point in the next 5 years, we will see at least 1 major global household name auto OEM as well as many other small ones, fail or need a bailout due to failure to gain access to a critical material. By the way, I do not mean that prices went up on them. I mean that they will be one of the ones who realize too late that the new market regime means the supply chain is existential in the Fourth Industrial Revolution. In this kind of world, our assets and our opportunity set are more strategic and valuable than ever.

我認為，如果你把這些預計投資所隱含的數量需求算一算，短缺與衝擊將在相當長一段時間內持續存在。事實上，我要做一個大膽預測：我相信在未來 5 年的某個時間點，我們將看到至少 1 家全球家喻戶曉的大型汽車 OEM，以及許多其他較小的 OEM，因無法取得某種關鍵材料而倒閉或需要紓困。順帶一提，我的意思不是他們只是面臨價格上漲；而是他們會是那些太晚才意識到，在第四次工業革命的新市場體制下，供應鏈是攸關生存的存在性（existential）議題的公司。在這樣的世界裡，我們的資產與機會集合比以往任何時候都更具策略性與價值。

Okay. Moving on to the bottom half of the slide. To achieve our mission, to restore the full rare earth supply chain to the United States, we need to manufacture permanent magnets here. Some of the key elements needed for Stage III will be derived from the separation of heavy rare earths. NdPr is the primary ingredient by far in the cost of goods in most rare earth magnets. But small volumes and heavy elements like dysprosium and terbium are also often added as they keep the magnet magnetized at higher operating temperatures.

好，接著看投影片下半部。為了達成我們的使命——將完整的稀土供應鏈恢復到美國——我們需要在美國本土製造永磁體。第三階段（Stage III）所需的一些關鍵要素，將來自重稀土的分離。NdPr 在多數稀土磁體的銷貨成本（cost of goods）中，是最主要的成分；但也常會加入少量的重元素，例如鏑（dysprosium）與鋱（terbium），因為它們能讓磁體在較高的工作溫度下仍保持磁化。

The current design of Stage II calls for producing a concentrate of heavy rare earths, but our ambitions have always been higher as separating heavies on-site meaningfully enhances our ability to fully produce magnets in the United States. Over the last 12 months, in part with funding from the Department of Defense, which we previously disclosed, we have been doing R&D and significant piloting to analyze separating those heavy rare earths ourselves, as has been done during the majority of Mountain Pass' 60-year-plus history.

第二階段目前的設計規劃是生產重稀土精礦，但我們的企圖一直更高：在現場分離重稀土，能實質提升我們在美國完整生產磁體的能力。在過去 12 個月中，部分在我們先前已揭露的國防部（DoD）資金支持下，我們進行研發與重要的中試（piloting），以分析由我們自行分離這些重稀土的可行性——而這在 Mountain Pass 超過 60 年的歷史中，大多數時間都是如此運作的。

We were also happy to host a senior leadership team from DoD last week to see our progress. The heavy rare earth piloting work has yielded positive results and we believe demonstrated the commercial feasibility of the project. As such, we are gaining confidence that there is a high return opportunity to separate heavy rare earths at Mountain Pass. Doing so would be strategic to our mission, while also generating an attractive return on capital. We expect to share more details with you in the future. But with that as a segue, let me share with you some exciting news on our Stage III progress on Slide 13.

我們也很高興上週接待國防部（DoD）的高階領導團隊來訪，了解我們的進展。重稀土中試工作已產生正面結果，我們相信這證明了該專案的商業可行性。因此，我們對在 Mountain Pass 分離重稀土存在高報酬機會的信心正在提升。這麼做將有助於我們使命的策略性，同時也能帶來具吸引力的資本報酬。我們預期未來會與各位分享更多細節。以此作為銜接，接下來讓我在第 13 張投影片與各位分享我們第三階段進展的一些令人振奮的消息。

As we've talked about previously, the interest from potential magnet partners and customers has really begun to accelerate over the last 6 to 9 months. These discussions were also an important driver in us pursuing last quarter's green bond offering. Many of these conversations have come to the vein of, "How can we help you get to magnet-making faster?" These potential customers and/or partners are clearly focused on getting a western and, importantly, environmentally sustainable supply chain for magnetics.

如同我們先前談到的，過去 6 到 9 個月間，潛在磁體合作夥伴與客戶的興趣確實開始加速升溫。這些討論也是我們在上一季推動綠色債券發行的重要驅動因素之一。許多對話都聚焦在這個方向：「我們能如何幫助你更快進入磁體製造？」這些潛在客戶和／或合作夥伴顯然非常重視建立一條西方的、且更重要的是環境永續的磁性材料供應鏈。

We have been busy behind the scenes building an extraordinary team. We've been hiring key engineering and operations talent with expertise in alloy, metal and magnet, science and manufacturing, all of whom are dedicated full time to the Stage III project. The team is diverse and motivated. And the progress we are making gives us the confidence to accelerate the timetable. Therefore, I am pleased to announce that we are moving forward with building a metal, alloy and magnet manufacturing facility here in the United States, and we expect to share the location before year-end.

我們一直在幕後忙於打造一支卓越的團隊。我們已聘用具備合金、金屬與磁體相關科學與製造專長的關鍵工程與營運人才，且他們全職投入第三階段專案。團隊多元且充滿動力。我們所取得的進展，讓我們有信心加快時程。因此，我很高興宣布，我們將推進在美國本土興建金屬、合金與磁體製造設施，並預期在年底前公布選址。

We are doing detailed work on the potential project, and are engaged with several jurisdictions on choosing a site. Our first magnet facility will be modest relative to the scale of the resource at Mountain Pass and our capital structure. It will be scalable in nature, and we expect it to achieve a high ROI. And while the initial facility will be modest relative to the scale of our business, it will be of enormous commercial and geopolitical consequence.

我們正在就該潛在專案進行細緻的工作，並正與多個司法管轄區就選址事宜展開接洽。我們的第一座磁材設施相較於 Mountain Pass 的資源規模以及我們的資本結構將屬於較為適度的規模。其本質將具備可擴充性，我們預期可實現高投資報酬率（ROI）。此外，儘管初期設施相較於我們業務規模將較為適度，但其商業與地緣政治影響將極為重大。

The last scaled and vertically integrated domestic magnet producer ceased operations and relocated to China in 2003. We've had a strategic void in our supply chain for nearly 2 decades, and we are racing to fill it as quickly as possible. We plan to share the details around the timing, the cost of the facility and how we are thinking about production volumes and economics at a later date. Needless to say, we are very excited to be taking this first concrete step towards our vision of restoring that last piece of the full rare earth supply chain to the United States.

上一家具規模且垂直整合的美國本土磁材生產商於 2003 年停止營運並遷往中國。近 20 年來，我們的供應鏈一直存在策略性缺口，而我們正全力以最快速度補上這一環。我們計畫在日後再分享有關時程、設施成本，以及我們對產量與經濟效益的思考細節。不用說，我們對於邁出這第一個具體步驟、朝著將稀土完整供應鏈最後一塊拼圖恢復至美國的願景前進，感到非常振奮。

So to sum it up on Slide 14, Stage I execution continues. Demand for NdPr remains strong, driving both sales and pricing, which is flowing through to our bottom line. Stage II construction is progressing nicely through a challenging global landscape. Our piloting on separating heavy rare earths is giving us increased confidence we can do this profitably at Mountain Pass. And Stage III is now taking shape much earlier than originally anticipated.

因此在第 14 頁投影片做個總結：第一階段（Stage I）執行持續推進。NdPr 需求依然強勁，帶動銷售與價格，並反映到我們的獲利表現。第二階段（Stage II）建設在充滿挑戰的全球環境下仍進展良好。我們在重稀土分離方面的試點工作，讓我們更有信心能在 Mountain Pass 以具獲利性的方式完成。第三階段（Stage III）如今也比原先預期更早開始成形。

I would like to take a moment to thank our employees, we now exceed 350. Everyone is working really hard, and it shows in our results. Let's keep up the great work. With that, I would like to reiterate, we are uniquely positioned to restore the full rare earth supply chain to the United States, and are proud to be a Western champion of the electrification and sustainability revolution.

我想花點時間感謝我們的員工，目前人數已超過 350 位。大家都非常努力，成果也反映在我們的業績上。讓我們繼續保持。最後我想再次強調，我們具備獨特優勢，能將稀土完整供應鏈恢復至美國，並以身為電氣化與永續革命的西方領導者而自豪。

With that, let's open the lines for questions. Operator?

那麼，現在我們開放提問。接線員？

(Operator Instructions) Our first question today comes from David Deckelbaum of Cowen.

（接線員指示）今天的第一個問題來自 Cowen 的 David Deckelbaum。

So just a couple for me. Just one, the price that you received for your rare earth basket this quarter was inordinately high. Obviously, we've seen strength recently in the price of NdPr. It looks like you had a higher yield of NdPr in terms of your typical basket. Is that fair to say? Or -- and what would be driving that? Or what would have driven such a high sales realization this quarter?

我這邊只有幾個問題。第一個是，你們本季稀土組合（basket）的實現價格異常偏高。顯然我們近期看到 NdPr 價格走強。看起來你們的典型組合中 NdPr 的產出占比更高。這樣說合理嗎？或者——是什麼在驅動？又或者是什麼因素導致本季銷售實現價格如此之高？

Ryan, why don't you take that?

Ryan，你來回答一下？

Yes, sure. David, really no difference in NdPr yield. Obviously selling the concentrate and we're producing a consistent basket in line with the elemental distribution in the ore body. And so no change there. I would say that concentrate tends to occasionally have discrete supply and demand drivers that are not perfectly aligned with what you see in market data for NdPr as an example. And so obviously, given the inordinate proportion of supply that we represent, in our opinion, it just -- it shows the very, very strong demand for our product.

好的，當然。David，NdPr 的產出率其實沒有差異。我們顯然是在銷售精礦，而我們所生產的組合一貫穩定，與礦體中的元素分布一致，所以這部分沒有變化。我會說，精礦有時會受到一些離散的供需驅動因素影響，這些因素未必與你在市場數據中看到的 NdPr（例如）完全同步。因此，考量到我們所代表的供給占比異常之高，在我們看來，這只是反映出市場對我們產品非常、非常強勁的需求。

And so while our pricing does tend to mimic very closely, the movements in NdPr that you can observe and tends to do so with some amount of lag, which could explain some of the higher pricing in Q2, that's really the driver here. Nothing having to do with the mix of products sold.

因此，雖然我們的定價確實往往非常貼近你所觀察到的 NdPr 價格變動，且通常會有一定程度的滯後，這可能解釋了第二季較高的定價，但真正的驅動因素就在這裡，與銷售產品組合無關。

Yes, David, and that's why we're rushing to get Stage II done as quickly as possible because we certainly give up revenue by selling an intermediate product.

是的，David，這也是為什麼我們正加速盡快完成第二階段（Stage II），因為出售中間產品確實會讓我們放棄部分營收。

Yes, absolutely. Understand that, that margin uplift potential. Just -- and thanks for outlining some of the ambitions around Stage III. I'm just curious just on Stage III. I'll let some others ask around Stage II, but you said that you would announce the location of the facility this year. I guess that then means the operations there in still take the form of the potential to JV or build or buy somebody else that could potentially be housing that facility. And I'm just curious, as you look at some of the Biden administration's initiatives, particularly around desires to refine rare earths and secure that supply chain here, if you think that Stage III would be qualifying for some additional government grants to help you financing something like that?

是的，完全理解，那個毛利提升的潛力。只是——也謝謝你們說明第三階段（Stage III）的一些企圖。我想就第三階段問一下：你提到今年會宣布設施所在地點。我想這表示那邊的營運仍可能採取合資（JV）、自建，或收購某個可能承載該設施的對象等形式。我也想了解，從拜登政府的一些倡議來看，特別是希望在本土精煉稀土並確保供應鏈安全這一塊，你們是否認為第三階段有機會符合額外的政府補助（grants）資格，以協助你們為這類項目融資？

Sure. Well, so I'm sure you saw a lot of the coverage all day today with the executive order out of the White House and all the big automakers -- or most of the big automakers talking about getting to 50% EVs by 2030. You can imagine that with all of that behind the scenes, there's also a big push in the supply chain, particularly given everything that's happened with semiconductors. And I think you can see it actually in an earnings season. If you look at some of the calls, for example, Tesla called it out and some of the others called it out. If you have -- if you're missing one piece of the supply chain, you can't produce. And we'll see what the final infrastructure builds, and we'll see what comes out of D.C.

當然。我相信你今天一整天都看到白宮行政命令的相關報導，以及各大車廠——或多數大型車廠——談到在 2030 年前達到 50% 電動車（EV）的目標。你可以想像，在這些檯面下，供應鏈也正被大力推動，尤其是在半導體事件之後。我想你其實也能在財報季看到這點。如果你聽一些電話會議，例如 Tesla 提到過，其他公司也提到過：只要供應鏈少了一個環節，你就無法生產。我們會看看最終的基礎建設方案如何，也會看看華盛頓特區（D.C.）最後會推出什麼。

We do -- we hear a clamoring on all sides to make sure that we have the supply chain here. And obviously, you heard my comments about how important this is. And I think that when people start to do the math of how much investment is coming this way and what that means as far as the upstream, we need a lot of investment. And obviously, we're one of the leaders in that and expect to make that investment. But I do think we will see a lot of support from both sides of the aisle.

我們確實——聽到各方都在強烈呼籲，務必確保供應鏈留在本土。你也聽到我對其重要性的評論。我認為當人們開始計算有多少投資正流向這裡，以及這對上游意味著什麼時，就會發現我們需要大量投資。顯然，我們是其中的領導者之一，也預期會進行這些投資。但我確實認為，我們將會看到來自兩黨的許多支持。

What exact shape or form that takes is still unknown. We've sort of heard some interesting things behind the scenes. There could be various credits or benefits or other grants, who knows, again, what shape or form it will take. But I do think that we're going to see something because they're just -- there needs to be -- like -- as you've heard me say, this is a Fourth Industrial Revolution. It's a total transformation, and they're just -- the scale of investment is not there yet, and it needs to come.

至於具體會以何種樣貌或形式呈現，目前仍不清楚。我們在檯面下聽到一些有趣的說法，可能會有各式各樣的抵減、優惠或其他補助，誰知道呢——同樣地，還不確定會是什麼形式。但我確實認為會有一些措施出現，因為——正如你聽我說過的，這是第四次工業革命，是一次全面轉型，而目前投資規模仍不足，必須加大投入。

Our next question today comes from Carlos De Alba of Morgan Stanley.

我們今天的下一個問題來自 Morgan Stanley 的 Carlos De Alba。

So just a question on -- good. Very strong results, congratulations.

我只有一個問題——很好。業績非常強勁，恭喜。

Thank you. Thank you.

謝謝。謝謝。

So just -- it seems that on Stage II, you are sort of hinting that your CapEx may have to go up or maybe there could be some delays on your schedule. Is there too early to say sort of a magnitude of that potential trade-off? And if you had to make it given your strong balance sheet, is it fair to assume that you would opt to potentially increase the CapEx, but still complete the project on time so you can produce at full capacity on 2023?

那麼——看起來在第二階段（Stage II）方面，你們似乎在暗示資本支出（CapEx）可能需要上調，或是時程上可能會有一些延遲。現在是否還太早，無法說明這種潛在取捨的大致幅度？另外，若必須做出取捨，考量你們強勁的資產負債表，是否可以合理假設你們會選擇可能提高 CapEx，但仍按時完成專案，以便在 2023 年達到滿產？

Well, I think you heard the statement I made about there's certainly anytime you're building a project, there's a trade-off on schedule and cost and we certainly -- I think the statements I made really sort of speak from themselves in that we -- we're humans just like you reading the newspaper, and we see all of these things happening around the world and we've experienced them. I think that we've done a really great job managing the things that come up and -- whether it's in labor, whether it's vendors, there are all these things that things are disrupted out there. And so what we want to do is we obviously just want to make sure that we're level-headed about the work that we have to do to get this job done and that we're very focused, and we want you to know that we're very focused.

我想你有聽到我提到：任何時候在建設專案，都會在進度與成本之間存在取捨。我先前的說法其實已經不言自明——我們跟你一樣都是普通人，也在看報紙，看到全球各地正在發生的事情，我們也親身經歷了。我認為我們在管理各種突發狀況方面做得非常好——不論是勞動力、供應商，各種環節都在受到干擾。因此我們想做的是，務必以冷靜務實的態度看待完成這項工作所需做的事情，並且保持高度專注；我們也希望你知道，我們非常專注。

As far as putting something specific on it, it's just -- it's so hard, Carlos, because -- we just -- again, we don't know what's around the corner with Delta and with the labor situation, all of these things. But we're -- again, we reiterated our confidence in our 2023 run rate target. And you can see from the photos that we continue to make a lot of progress, and it's really exciting out there and there's a lot of people working. And so we feel really good about it, but we just want to obviously be realistic that we just don't know what may unfold in the world.

至於要把某個具體數字放上去，這真的——很難，Carlos，因為——我們只是——再說一次，我們不知道 Delta 以及勞動力情勢接下來會發生什麼，還有所有這些事情。但我們——再一次，我們重申對 2023 年運行率目標的信心。你也可以從照片中看到，我們持續取得很大進展，現場真的很令人振奮，而且有很多人在工作。所以我們對此感覺非常好，但我們也顯然希望務實一點，因為我們真的不知道世界接下來可能會如何發展。

And obviously, given my views about how we see the coming months and years, we hopefully around ahead of thinking about these things. So I'll give you one small example, Carlos, resin is a hard thing to get right now. If you're out there trying to buy something with resin, you basically can't get it. And we had a vendor that wanted to give us a delay, and we were able to get a Defense Production Act focus on getting that sooner. And so those are the kinds of things that we're managing. And so we obviously will -- hopefully, DoD will be able to help us with things like that. And so we feel really good that we'll continue to kind of do the blocking and tackling to get this job done. But we also just we're -- we see what you see, so we're just trying to be careful.

而且顯然，基於我對未來幾個月與幾年走勢的看法，我們希望能提前思考這些事情。我給你一個小例子，Carlos，樹脂現在很難取得。如果你在外面想買含樹脂的東西，基本上你買不到。我們有一家供應商想要給我們延遲，但我們能夠透過《國防生產法》來聚焦，讓那項供應更快到位。所以這就是我們正在管理的事情類型。因此我們顯然會——希望國防部（DoD）能在這類事情上幫助我們。所以我們很有信心，我們會持續把這些基礎工作做好、把這個任務完成。但我們也只是——我們看到的跟你看到的一樣，所以我們只是想要謹慎一些。

No, fair enough. That makes sense. And then just in terms of the maintenance downtime that you're experiencing in the second quarter, how much did that impact in terms of volumes and perhaps in terms of your cost? How much lower cost will you be able to achieve had you been producing at 100% without the maintenance? And also given the accumulation of REO that you experienced in the last quarter, and given the sequence of shippings that you -- shipments that you have already for the third quarter, do you expect to reduce that inventory in the third quarter or it may take a little bit longer?

不，這樣很合理。這說得通。接著就你們在第二季經歷的維修停機而言，這對產量以及可能對成本的影響有多大？如果沒有維修、以 100% 產能生產，你們本來可以達到多低的成本？另外，考量你們上一季 REO 的累積，以及你們第三季已經安排的出貨節奏——出貨——你們預期第三季會降低那個庫存，還是可能需要更久一點？

Ryan, why don't you take that?

Ryan，你來回答一下好嗎？

Sure. I'd say, Carlos, the way we think about the business, and I think you hinted at this, is REO produced per operating hour, right, which will drive the -- our view of efficiency of production. So to your point, if we were producing without that week shutdown, our production number would have been even higher than it was. Jim, I think, called out the number in his prepared remarks of 14% year-over-year growth in the per hour production number. And so we're not going to get into specifics on the production cost impact given the fact that we may take shutdowns here and then all the time for a variety of reasons. But suffice to say, it has an impact, it absolutely has an impact on the production cost. And so that incremental efficiency would have flowed through much more clearly in our reported number to the extent we didn't have that shutdown.

好的。我會說，Carlos，我們看待這個業務的方式——我想你也提到了——是每個運轉小時所生產的 REO，對吧？這會驅動——我們對生產效率的看法。所以如你所說，如果沒有那一週的停機，我們的產量數字會比實際更高。Jim 我想在他準備好的發言中提到，每小時產量年增 14%。至於生產成本的影響，我們不會深入到具體數字，因為我們可能會因各種原因不時停機。但簡而言之，它有影響，確實對生產成本有影響。因此，如果沒有那次停機，那種額外的效率提升會在我們報告的數字中更清楚地反映出來。

And then on the inventory number, if you're talking about finished goods inventory, the finished goods inventory in Q2 was not significantly higher. As we've mentioned, the 10,305 versus the 9,877, it does imply some build. But those shipments are lumpy and it's purely just a matter of securing bookings on outbound ships. So it's not anything out of the ordinary. Certainly, we've called out in the past, and call out further in our filings, COVID makes the shipping situation a bit more difficult than it normally would be, but we've had very good luck moving our product to the extent that we need to. And so I don't think there's anything unique to call out in the future. Just keep in mind, as we've mentioned many times before, the lumpiness that could be possible. But given the sales structure and contracts that we have, it's purely a timing impact and nothing further.

至於庫存數字，如果你指的是成品庫存，第二季的成品庫存並沒有顯著更高。如我們提到的，10,305 對 9,877，確實意味著有些增加。但出貨是有波動的，純粹只是取得出港船舶訂艙的問題。所以沒有任何不尋常之處。當然，我們過去也提過，並且會在申報文件中進一步說明，COVID 讓航運情況比平常更困難一些，但只要我們需要，我們在把產品運出去方面一直很順利。所以我不認為未來有什麼特別需要指出的。只要記得，如我們之前多次提到的，可能會出現的波動性。但考量我們的銷售架構與合約，這純粹是時間點影響，沒有其他因素。

All right. Okay. And then last question for me is on -- what will be the implications of basically the announcement to go ahead with Stage III probably earlier than anyone expected? What are the implications of that regarding your Shenghe agreement?

好。好的。那我最後一個問題是——基本上宣布要推進第三階段（Stage III），而且可能比任何人預期都更早，這會有什麼影響？這對你們與 Shenghe 的協議有什麼影響？

Implications as far as -- well, remember that once the offtake will be paid down pretty soon. Ryan -- as Ryan said, it's around -- as of the end of the quarter, it's around $48 million. We expect that to be paid down. And as you said, it's now in sort of our short term, we expect that to be paid down within the year. So I think it's -- there's really no impact because that will be gone. And I would stress again that they're a distribution party. They don't have -- we're certainly free to sell any product anywhere that we want. They don't have any special rights or anything like that. So there's really -- there's no impact. We're going to proceed with our mission as we've clearly stated.

影響是指——嗯，記得承購（offtake）款項很快就會償還完。Ryan——如 Ryan 所說，截至本季末大約是 4,800 萬美元。我們預期那會被償還。而且如你所說，現在它算是在我們的短期項目裡，我們預期一年內會償還完。所以我認為——基本上沒有影響，因為那會消失。我也要再次強調，他們是分銷方。他們沒有——我們當然可以自由把任何產品賣到任何我們想賣的地方。他們沒有任何特殊權利或類似的東西。所以真的——沒有影響。我們會按照我們清楚表述的使命繼續推進。

Fair enough. And they would potentially remain as shareholders, right?

了解。他們可能仍會是股東，對吧？

Well, we're a public company. I mean I don't know if they're going to buy Apple or Tesla or Boeing or GM next. It's a question for them. But obviously, we appreciate all our shareholders, and we're going to -- we're working for our shareholders. So -- whoever they are.

嗯，我們是一家上市公司。我的意思是，我不知道他們接下來會不會買 Apple、Tesla、Boeing 或 GM。那是他們要回答的問題。但顯然，我們感謝所有股東，而我們會——我們是為股東工作的。所以——不管他們是誰。

Our next question comes from Tyler Langton of JPMorgan.

下一個問題來自摩根大通（JPMorgan）的 Tyler Langton。

Just a follow-up question on Stage II. I think of the sort of -- I guess, a little over $200 million of CapEx, could you remind us maybe how much is left to be spent? And maybe sort of how much of that is kind of locked in from a price perspective? And then also for -- to separate heavy rare earths, do you have kind of a rough sense on what the CapEx profile could be for that?

關於第二階段（Stage II）我有個追問。我想在大約——我猜略高於 2 億美元的資本支出（CapEx）中，你們能否提醒我們大概還剩多少要花？以及其中有多少從價格角度來看算是已經鎖定？另外，為了分離重稀土，你們對那部分的資本支出輪廓大概有個概念嗎？

For heavy -- why don't I -- we haven't broken a lot of that. Why don't I -- Ryan, I'll give it to you to do the best that you can do on that, and then you can cover heavies if you want, which -- and I'll finish up.

關於重稀土——我先說，我們沒有把那部分拆得很細。不如——Ryan，我交給你，盡你所能回答，然後如果你願意也可以談談重稀土——然後我再補充收尾。

Sure. Yes. So our original estimate, Tyler, on Stage II was $220 million of gross capital for the specific optimization project. As of the Q2 results of growth CapEx, we have spent a little over $40 million, but not all of that is Stage II. Recall and we had called out in our filings that we have some other chunkier projects that make up some of that capital spend, including the recommissioning of our combined heat and power plant and several other growth initiatives. So I would not kind of pull that out and assume that that's all Stage II. Obviously, there are other projects that are ongoing, growth projects on site in preparation for Stage II. So there is still a good ways to go on that sort of original number.

好的。是的。Tyler，我們對第二階段（Stage II）的原始估算，是針對特定優化專案的總資本支出 2.2 億美元。截至第二季的成長型資本支出（growth CapEx）結果，我們已經花了略高於 4,000 萬美元，但那並不全是第二階段。請回想一下，我們在申報文件中也提到，我們還有一些較大型的專案構成那部分資本支出，包括我們的熱電共生（combined heat and power）電廠重新投運，以及其他幾項成長計畫。所以我不會把那個數字直接抽出來就假設全都是第二階段。顯然，現場還有其他正在進行的專案、為第二階段做準備的成長專案。因此，距離原先那個數字還有相當一段路要走。

What I'd say on heavies and on all of this is, obviously, we are managing this project and whatever potential incremental high-return opportunities come to pass for the long-term success of the business. We're obviously not -- we're not managing it for a short-term headline on what the CapEx number is. So I think it's safe to bet that there are going to be other high-return opportunities, as heavies as a perfect example, to enhance the project as we go along. And that's one thing to keep in mind as you think through modeling out CapEx over the next little bit here. But I think that's really all that we've disclosed. I don't know, Jim or Michael, if you have anything to add on to that.

至於重稀土以及整體而言，我想說的是，顯然我們是在管理這個專案，以及任何可能出現、能為業務長期成功帶來高報酬的增量機會。我們顯然不是——不是為了短期的新聞標題去管理資本支出數字。所以我認為可以合理預期，未來會有其他高報酬機會出現；重稀土就是一個完美例子，能在我們推進過程中強化這個專案。這是你在接下來一段時間建模資本支出時需要記住的一點。不過我想這就是我們已披露的全部內容。我不確定，Jim 或 Michael，你們是否還有什麼要補充的。

No, no. I think that sums it up, and I just might -- I would go back to Slide 8 and look at the free cash flow power of what we've already accomplished just in Stage I, and obviously recognizing the significant uplift that we have. And I think it's really impressive thing that we've been able to achieve operationally that we can make all of these high return on capital investments, still generate -- paydown debt and still generate cash flow for the business.

不，不。我想這就總結了，而且我可能——我會回到第 8 張投影片，看看我們在僅僅第一階段就已經達成的自由現金流實力，並且當然也要認知到我們所帶來的顯著提升。我認為我們在營運上能夠達成這件事真的很令人印象深刻：我們可以進行所有這些高資本報酬的投資，同時仍然——償還債務，並且仍為業務產生現金流。

And so we certainly -- we've obviously made clear that we have a mission to get all the way to complete the full supply chain. And so these are a component and magnets are component. And -- but I think we're certainly going as fast as we can in also with recognition that we ultimately work for our shareholders, and our job is to make sure that we're making investments that have a very high return on capital because, ultimately, that's what we're here to do. We are a public company.

因此我們當然——我們也很明確地表示，我們的使命是一路做到完整的全供應鏈。所以這些是其中一部分，而磁材也是其中一個組成部分。——但我認為我們確實是在盡可能快地推進，同時也認知到我們最終是為股東工作，而我們的工作是確保我們所做的投資具有非常高的資本報酬率，因為歸根結底，這就是我們存在的目的。我們是一家上市公司。

And so I think it's just suffice to say that to the extent that as we're going to come out with some kind of heavy thing or whatever we might come with next, we'll do our best to convey to you kind of the economics as best we can on a go-forward basis, but we're not -- we are managing to making sure that as we invest incremental dollars that those dollars have a high return on that capital. And so that's how we think about it.

所以我想只要說，當我們接下來要推出某種重大項目或不管我們下一步可能推出什麼時，我們會盡最大努力在未來的基礎上，盡可能向各位傳達其經濟性；但我們不是——我們是在管理並確保，當我們投入額外的資金時，這些資金能對該資本帶來高報酬。所以我們就是這樣思考的。

Okay, great. No, that's helpful. And then, I guess, I know you can't probably get into too many specifics, but just -- I mean, are your customers or sort of potential customers and sort of like the EV supply chain kind of expressing more interest, I guess, in signing sort of long-term supply agreements? I just -- sort of any color you could provide that would be helpful.

好的，很棒。不，這很有幫助。然後，我想，我知道你可能不能談太多細節，但就是——我的意思是，你們的客戶或潛在客戶，以及像電動車供應鏈這一塊，是否表現出更大的興趣，想要簽訂某種長期供應協議？我只是——任何你能提供的補充說明都會很有幫助。

Sure. Yes. Well, I would say that we've had dialogue with a variety of parties, and it's broad. It's not just EVs, right? And it certainly is EVs intensely, but it's also there's -- you've heard me say all of the things that are out there, wind turbines, drones, all of these exciting things. And there's standard other industrial items that you wouldn't think of. And so as part of this transformation for electrification, magnetics are really important. So there's a lot of industrial customers that we are pretty, I would say, engaged with and figuring things out.

當然。是的。嗯，我會說我們已經與各式各樣的對象進行對話，而且範圍很廣。不只是電動車，對吧？當然電動車的確非常密集，但也還有——你聽我說過外面所有那些東西：風力渦輪機、無人機，這些令人興奮的事物。還有一些你可能想不到的其他標準工業品。因此，作為這場電氣化轉型的一部分，磁性材料非常重要。所以我們與許多工業客戶可以說是相當投入地互動，並一起把事情釐清。

I think that there's a lot of demand. It's certainly, the semiconductor issue I think created a lot more -- I'm trying to think of the right word here, but a lot more excitement or urgency, the greater sense of urgency to make sure that there is supply chain security. And then obviously, I think when people start to really look at the numbers, of what we're talking about, again, that urgency will only increase. And then as I've made clear, I think that I do believe that some of the last companies to realize that supply chain is existential, it's going to be existential and they'll be too late.

我認為需求很大。半導體問題我想確實帶來了更多——我在想用什麼詞比較恰當，但就是帶來了更多的興奮或緊迫感，更強烈的緊迫感，去確保供應鏈安全。然後很明顯地，我想當人們開始真正去看我們所談的數字時，那種緊迫感只會增加。而且如我已經說得很清楚的，我確實相信，有些最後才意識到供應鏈是攸關生存的公司——這將會是攸關生存的——他們會太晚。

So I think that there'll be -- those who don't figure out how to lock down deals with us or someone like us, they're going to regret it. And so we're having all of those conversations and also realizing that we're in an outstanding strategic position. And so the last thing we want to do is make a bad deal for ourselves. We obviously want to make the right deal, and if it means being patient to make the right deal, we'll be patient. But we can -- we certainly have what I believe are a lot of options on the table, and we'll continue moving forward until we ultimately do something. But again, the growth prospects are pretty exciting.

所以我認為——那些沒有想辦法與我們或像我們這樣的公司把交易鎖定下來的人，他們會後悔。因此我們正在進行所有這些對話，同時也意識到我們處於極佳的策略位置。所以我們最不想做的就是為自己做一筆糟糕的交易。我們當然想做正確的交易，而如果這意味著要有耐心才能做成正確的交易，我們就會有耐心。但我們——我確實相信我們桌上有很多選項，我們會持續往前推進，直到最終做出某些決定。不過再次強調，成長前景相當令人振奮。

Final question for the moment is from Matt Summerville of D.A. Davidson. (Operator Instructions)

目前最後一個問題來自 D.A. Davidson 的 Matt Summerville。（接線員指示）

Just a couple of quick ones. I just want to be clear, has output taken a permanent step function move higher here with Stage I given that 14% year-over-year growth metric you talked about in REO tons per hour? And it sounds like you've maybe fine-tuned sort of the process involving reagents such that you're not getting slowed down as you increase the feed rate. So can you just put all that together and help me out a little bit there?

我只有幾個很快的問題。我只是想確認一下，鑑於你提到 REO 每小時噸數年增 14% 這個指標，第一階段是否讓產出在這裡永久性地上移了一個台階（step function）？而且聽起來你們可能也微調了涉及試劑的流程，使得在提高進料速率時不會被拖慢。所以你能不能把這些整合起來，幫我釐清一下？

Sure. Michael, do you want to chime in and talk operations?

當然。Michael，你要不要補充一下，談談營運？

Sure. Yes, thanks for the question. I would say that over the last 3 years, we've been consistently working to increase the mineral recovery of our flotation process. And then as we get to a stable level, we try to increase the throughput and that process is ongoing. I don't think I'd necessarily say that 14% is representative of the step function that we'll see for the full year. But yes, I think we're quite pleased with how the last quarter has gone. And hope we continue to see stable growth.

好的。是的，謝謝你的問題。我會說在過去 3 年裡，我們一直持續努力提高浮選流程的礦物回收率。然後當我們達到一個穩定水準後，我們會嘗試提高處理量，而這個過程仍在進行中。我不一定會說 14% 就代表我們全年會看到的那種台階式提升。但是的，我想我們對上一季的表現相當滿意，也希望能持續看到穩定成長。

And then per one of the slides, Ryan, you pointed out the $130, I think, per ton incremental cost from onboarding folks ahead of Stage II going into production. Is there another incremental wave of hiring we should be thinking about as we model out production costs going forward from here?

然後根據其中一張投影片，Ryan，你指出因為在第二階段投產前提前招募人員，導致每噸約 130 美元的增量成本。我們在建模未來的生產成本時，是否還需要考慮另一波增量招募？

Yes, it's a good question. I'd say for the rest of the year, obviously, we don't give specific guidance. But I -- again, using your term on step change, I wouldn't expect one for the rest of this year. Certainly, we're going to continue to make the right long-term decisions when we find the right candidates for certain roles that make sense to bring on, obviously, significantly ahead of commissioning. So you could see it tick up some, but I don't expect a step change.

是的，這是個好問題。我會說今年剩下的時間，當然我們不提供具體指引。但我——再次借用你所說的台階式變化（step change），我不預期今年剩下的時間會出現那樣的變化。當然，當我們找到合適的人選、適合的職位，且在試車投運（commissioning）之前相當提前的時間點引進是合理的，我們會持續做出正確的長期決策。所以你可能會看到它略有上升，但我不預期會有台階式變化。

Obviously, our -- we can talk more about 2022 when we get closer. But 2022 is certainly a year of transition as we onboard full suite of folks to get ready to get Stage II up and running. And so that's a bit of a different story. And that's kind of how I think about it.

很明顯地，我們——等更接近時，我們可以再多談 2022 年。但 2022 年確實是一個轉型之年，因為我們會引進完整的一整套人員，為第二階段的啟動與運轉做好準備。所以那會是稍微不同的情況。我大概就是這樣看待的。

I'll just allow a moment for any further questions to come through. (Operator Instructions) We have no further questions on the line, so I'll hand back to the team.

我先留一點時間，看看是否還有其他問題進來。（接線員指示）線上沒有其他問題了，所以我把時間交還給團隊。

All right. Well, thank you, everyone. Again, we're really proud this was a very productive quarter, and we will keep at it, and we look forward to chatting with you all soon. So thank you, and see you soon.

好的。嗯，謝謝各位。再次強調，我們真的很自豪，這是一個非常有成效的季度；我們會繼續努力，也期待很快再與各位交流。所以謝謝大家，回頭見。

Thanks, everyone.

謝謝各位。

Thank you all for joining today's conference. The call has now concluded, and you may now disconnect your lines.

感謝各位參加今天的電話會議。本次會議到此結束，您現在可以掛斷電話。