USA Rare Earth shares jump on USD1.6b US government funding
Make us a preferred source
Make us a preferred source on Google
The news: Shares in USA Rare Earth (USAR) climbed on Monday after the American rare earths company confirmed that the US government is planning to invest USD1.6 billion ($2.32 billion) into the company.
The numbers: A statement released by the company said that the US Department of Commerce’s Program has provided a letter of intent covering a total of USD1.6 billion, including USD277 million in proposed federal funding and USD1.3 billion in a proposed senior secured loan under the CHIPS Act.
USAR said it will issue 16.1 million shares of common stock and approximately 17.6 million warrants to the US Commerce Department.
USAR also announced an additional USD1.5 billion private raise led by Inflection Point.
Shares in USAR were up over 20% at 8:15am ET (12:15am AEDT Tuesday) during premarket trading after the announcement.
The context: The capital investment will help the company’s spending on rare-earths mining, processing, metal-making and magnet manufacturing, USAR said. The deal is subject to the finalisation of agreements and approvals.
Rare earths production has become a key focus of US President Donald Trump as his administration seeks to challenge China’s dominance in the space as the leading global supplier. The USAR agreement focuses primarily on ‘heavy rare earths’ which are significant in defence applications.
"USA Rare Earth's heavy critical minerals project is essential to restoring U.S. critical mineral independence," said US Secretary of Commerce Howard Lutnick. "This investment ensures our supply chains are resilient and no longer reliant on foreign nations."
The news was first reported by the FT.
