EXIM Bank's $456M Funding Boost for Wyoming Rare Earth Project
ARR (ARR) Share Update September 2024 Monday 23rd
EXIM Bank Issues Letter of Interest for Wyoming Rare Earth Project Funding
American Rare Earths' subsidiary, Wyoming Rare (USA) Inc., has received a non-binding Letter of Interest for up to $456 million in debt financing from the Export-Import Bank of the United States (EXIM) for the Cowboy State Mine area at the Halleck Creek Project.
Instant Summary:
- Wyoming Rare (USA) Inc. receives a non-binding Letter of Interest from EXIM for up to $456M in debt financing.
- The financing package is for the construction and execution phase of the Cowboy State Mine area at the Halleck Creek Project.
- Repayment term is set for 15 years under EXIM’s Make More In America Initiative.
- The Cowboy State Mine area is the first step in a multi-phase development of the Halleck Creek deposit.
- The Halleck Creek deposit contains 7.48 million tonnes of total rare earth oxides, including key magnet metals like Neodymium (Nd) and Praseodymium (Pr) oxides.
Project Overview
American Rare Earths (ASX: ARR | OTCQX: ARRNF | ADR: AMRRY) announced that its subsidiary, Wyoming Rare (USA) Inc. (WRI), received a non-binding Letter of Interest from the Export-Import Bank of the United States (EXIM) to provide up to $456 million in debt financing for the Cowboy State Mine area (CSM) at the Halleck Creek Project. This amount aligns with the initial capital expenditure estimate for the CSM as outlined in the March 2024 Scoping Study.
The CSM project is a crucial first step in a multi-phased approach to developing the Halleck Creek deposit, a significant rare earths asset for the United States. The EXIM Bank, the official export credit agency of the US Federal Government, made the offer based on preliminary information about expected U.S. exports and job creation through the CSM project.
Financing Details
The proposed debt financing package comes with a 15-year repayment term under EXIM's Make More In America Initiative. This initiative aims to support U.S. exporters and job creation. The transaction may also be eligible for special consideration under Section 402 of EXIM's 2019 reauthorization, which focuses on mitigating the competitive impact of export support from countries like China and advancing U.S. leadership in Transformational Export Areas.
Strategic Importance
While the Letter of Interest is not a final commitment, it underscores the strategic importance of the Halleck Creek project. EXIM will now conduct its due diligence before proceeding with any final financing arrangement. The company will update the market once a definitive funding agreement with EXIM is finalized.
Company Statements
Chris Gibbs, CEO of American Rare Earths, commented, 'This Letter of Interest from EXIM Bank is a significant milestone, highlighting the U.S. Government’s commitment to securing a robust domestic rare earth supply chain. The Halleck Creek project is set to become a key, multi-generational resource for the U.S., and we are proud to be at the forefront of this transformative initiative.'
Joe Evers, President of WRI, added, 'We are grateful for the recognition and support from EXIM Bank, which will be instrumental in securing the funding needed to fast-track the development of this important project.'
The announcement of potential financing from EXIM Bank is likely to positively impact American Rare Earths' stock price. The financing will enable the company to advance the Cowboy State Mine area, a critical component of the Halleck Creek Project. This project is expected to significantly boost the U.S. rare earth supply chain, reducing reliance on foreign sources, particularly from China.
Investor Reaction:
Analysts are likely to view this development favorably, as it highlights the U.S. Government's support for domestic rare earth projects. The potential for a substantial financing package from EXIM Bank could attract strategic investors and accelerate offtake agreements, enhancing the company's growth prospects.
Conclusion:
Investors should keep an eye on further updates regarding the finalization of the financing agreement with EXIM Bank. The successful execution of the Cowboy State Mine area could position American Rare Earths as a leading player in the U.S. rare earth market. This development presents a promising opportunity for long-term growth and value creation.