Mentioned:
USAR -17.31% MP -9.59%
The United States Department of Commerce is committed to scaling up the rare earth supply in America. Which is exactly why they’re taking an ownership stake in a publicly traded company.
What’s happening:
- USA Rare Earth (NASDAQ: USAR) has landed up to $1.6B USD in potential funding from the United States federal government
By the numbers:
- The United States Department of Commerce’s CHIPS Program has provided a letter of intent to USA Rare Earth which includes $277M USD in federal funding and $1.3B USD in a senior secured loan
- USA Rare Earth is also raising $1.5B USD concurrently in a new equity financing round led by Inflection Point
Why it matters:
- This is one of the largest loan commitments the American government has ever provided for a rare earth company
Going deeper:
- USA Rare Earth has publicly stated that they plan to use the new capital to advance their flagship Round Top deposit and dramatically scale up their processing and magnet manufacturing capabilities
- Upon closing of the funding and senior secured loan deal, the United States Department of Commerce would own roughly 16.1M common shares and 17.6M warrants in USA Rare Earth
The intrigue:
- This is not the first time the American government has taken an equity stake in a publicly traded rare earth company, previously putting $400M USD into MP Materials (NYSE: MP) in exchange for a 15% ownership stake
