As the markets opened in New York on Saturday morning AEDT, the US Department of Energy had some good news for the emerging Aussie lithium-boron supplier, Ioneer.
As part of the US drive to achieve long-term critical mineral supply chain security, the US Energy Department revealed plans to loan Ioneer (ASX:INR, Nasdaq: IONR) (IONR) as much as US$700 million so the Aussie-run small cap can get to work building out its Rhyolite Ridge lithium project way out in Nevada.
Once INR meets the agreed upon conditions precedent, the very significant funding from both the DOE loan, and the expected 50% equity investment from expected Joint Venture partner Sibanye Stillwater are ‘anticipated to fund a substantial part of the preliminary capital expenditure estimate from the latest (revised) plan of operations.
INR said in a statement to the ASX that the funds represent ‘a significant step towards completing the funding’ for the entire Rhyolite Ridge Project.
Top-to-toe, for Joe
The Energy Department’s Jigar Shah, who heads the Agency’s Loan Programs Office, told Reuters over the weekend that getting INR’s Rhyolite Ridge project off the ground would boost US-originated lithium production and represent a huge step forward in President Biden’s goal of creating a top-to-toe US EV supply chain.
Shah meanwhile, told Reuters he was “more than excited” at the prospect of helping develop the Rhyolite Ridge Lithium-Boron Project, which the Energy Department says would produce enough lithium to build 370,000 EVs every year and slash gasoline use in the states by nearly 145 million gallons per annum.
That’s circa 550,884,708.68 litres a year.
The right stuff, the right time, the right place
It’s barely been six months since INR completed its secondary listing on the Nasdaq as part of a strategic bet on the trajectory of American demand for electric vehicles (EV) and the subsequent choices facing the US administration of President Joe Biden for battery minerals investment.
Now with a commitment for a 10-year loan at prevailing US Treasury rates in the bank and the enthusiastic support of committed US officials, Ioneer’s Executive Chair James Calaway and MD Bernard Rowe, can get to work unlocking what they’ve found out in the desert at Nevada.
A 2020 study puts Rhyolite Ridge’s price tag at about US$785 million.
The loan instantly sent INR shares on the Nasdaq Composite higher on Friday, gaining some 18% and then closing the week out almost 25% the better.
Ground breaking for breaking ground
It’s the very first loan that Washington has initiated for a US-based processing facility and lithium mine, with the US Energy Secretary Jennifer Granholm reportedly approving it herself.
And at around AU$1.125 billion, it’s undoubtedly a landmark moment for the emerging Aussie lithium sector.
The loan was no give away. The process has been ticking over for more than two years of what INR said was ‘extensive and detailed technical, legal, and market due diligence’ by the DOE.
In fact, the DOE’s highly-specialised Advanced Technology Vehicles Manufacturing (ATVM) office led the thorough review of the INR prospect, and while the loan remains conditional on permitting and other targets, the funds will go straight off the bat into creating a very, very big lithium carbonate processor.
A key role in critical supply
In an interview over the weekend with Reuters, James Calaway said the commitment from the Biden administration was pretty clear.
“(It) highlights Rhyolite Ridge’s strategic role in strengthening America’s critical mineral supply chain in providing a secure, sustainable, and reliable domestic source of lithium for the growing electric vehicle ecosystem.”
“The (US) government is sending a strong signal that it’s time to let us go build this mine…We now have the capital to build a very important facility to supply lithium for the United States.”
The Rhyolite Ridge Lithium-Boron Project was attracting a lot of attention, even before the lithium fascination of the last few years. According to INR it’s the only known lithium-boron deposit in North America and one of only two such deposits (that anyone knows about) in the world.
Calaway says closing out the DOE loan is conditional on several achievements including a positive Record of Decision and Final Investment Decision and INR will update its pre-pandemic number crunching considering the amount of inflation sloshing about and the US Federal Reserve’s current rate tightening cycle.
Rowe’s first ducks: Ford, Toyota/Panasonic
But MD Bernard Rowe isn’t the first to call Rhyolite Ridge ‘the most advanced undeveloped lithium project’ in the states.
“And we’re now in a position to deliver on what will be an environmentally sustainable, long-life source of both lithium and boron for delivery into the fast-growing American domestic EV supply chain.”
Rowe told Stockhead his team were looking forward to working with the DOE and expected Joint Venture partner Sibanye-Stillwater to complete the remaining milestones and start construction at Rhyolite Ridge.
The timing couldn’t be better either, with the Ford Motor Company revealing last week that it just doubled Q4 sales of its own burgeoning EV portfolio – and a Toyota / Panasonic EV joint venture already on board and waiting for what’s close to the surface out in Nevada.
This article was developed in collaboration with Ioneer (ASX:INR), a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.
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