The US$258 million agreement is an expenditure-based contract under which all of Lynas' "properly allocable" construction costs will be reimbursed.
The US DoD was previously expected to contribute about $120 million, with the increase apparently agreed following "detailed design work and cost updates since the original design was complete".
Lynas had A$1 billion cash at the end of June.
The cost of the US development is yet to be divulged.
The project is promoted to be the only scale producer of separated heavy rare earths outside of China.
First production is targeted for fiscal 2026.
Feedstock for the Seadrift plant will be sourced from the Lynas Mt Weld rare earths deposit and Kalgoorlie rare earths processing facility in Western Australia.
Shares in Lynas were up 2.6% to A$6.73 in morning trade, capitalising the company at $6.66 billion.
