REalloys Inc. (NASDAQ: ALOY) has announced a non-binding Memorandum of Understanding (MOU) with U.S. Critical Materials Corp. (USCM) to secure up to 10% offtake from the Sheep Creek rare earth project in Ravalli County, Montana. Sheep Creek is described as the highest-grade rare earth deposit in the United States, averaging approximately 9% total rare earth oxides (TREO) across a 7,277.5-acre land package with over 60 identified carbonatite formations. The deposit contains confirmed dysprosium and terbium, two heavy rare earth elements critical for high-performance permanent magnets used in F-35 fighter aircraft, missile guidance systems, and radar platforms.
The MOU establishes a framework for REalloys to feed domestically sourced heavy rare earth material into its advanced midstream and downstream operations, which supply U.S. strategic defense stockpiles. This partnership comes as procurement restrictions on Chinese-sourced rare earths are set to take full effect in 2027. According to Lipi Sternheim, CEO of REalloys, the company is executing a diversified strategy by partnering with high-grade developers across allied nations to counteract Chinese dominance. Harvey Kaye, Executive Chairman of USCM, emphasized that Sheep Creek changes the equation for U.S. critical mineral sovereignty, connecting the highest-grade domestic deposit to the only midstream and metallization platform in the Western Hemisphere capable of converting the resource into defense-ready metals.
Under the MOU, the parties will advance metallurgical test work, optimize heavy rare earth processing flowsheets, and negotiate a definitive long-term offtake agreement, with reasonable efforts to execute within one year. The agreement also includes potential strategic equity investment and equity exchange, joint pursuit of government financing, and coordinated government relations. This zero-China-nexus supply chain complies with defense procurement requirements and strengthens national security by diversifying feedstock sources.
The Sheep Creek deposit's grades have been independently verified by Activation Laboratories and Idaho National Laboratory. REalloys' downstream manufacturing operations in Euclid, Ohio, produce advanced heavy rare earth metals, alloys, and magnet components for defense, clean-energy, and high-performance industrial applications. The company serves federal logistics and procurement agencies supporting the Department of Defense, Department of Energy, and NASA.
This strategic alliance is a significant step toward reducing U.S. dependence on foreign rare earth supplies, particularly from China. By securing a domestic feedstock source, REalloys enhances supply chain resilience for critical defense platforms. The partnership also positions both companies to leverage government financing programs, such as DOE Title XVII loan guarantees and DPA Title III awards, to accelerate development. The implications of this announcement extend beyond corporate strategy, addressing a key vulnerability in U.S. national security and advanced manufacturing.
