Mining company USA Rare Earth Inc. on Monday announced that it is set to receive $3.1 billion of new funding through collaborations with the U.S. government and a private investment in public equity funding commitment, in deals shaped by three law firms.
The company entered into a non-binding letter of intent with the U.S. Department of Commerce that will provide $1.6 billion of funding and also said that it is set to receive $1.5 billion of PIPE funding anchored by Inflection Point, according to a Monday statement.
The $1.6 billion includes $277 million in proposed federal funding and $1.3 billion in a proposed senior secure loan under the CHIPS Act, and the PIPE funding also included participation from "large" mutual fund complexes, the statement said.
Latham & Watkins LLP and White & Case LLP acted as legal counsel to USA Rare Earth in its agreements with the government, while White & Case also advised the company on the PIPE transaction, and DLA Piper LLP acted as legal counsel to the placement agent in the PIPE transaction.
"This landmark collaboration with the U.S. government represents a transformative step in USAR's mission to secure and grow a resilient, independent domestic rare earth value chain," said USA Rare Earth CEO Barbara Humpton. "With this unprecedented show of public and private support for our company, we are positioned to accelerate the build-out of important domestic capabilities that are essential to U.S. national security, global economic competitiveness, and critical technologies of the future."
Proceeds from this new funding will help the company continue plans to build a magnet manufacturing plant in Stillwater, Oklahoma, and a mine at a rare earth deposit in Sierra Blanca, Texas, according to the statement.
The capital is also expected to speed up and de-risk the company's growth objectives across mining, processing, metal-making and magnet manufacturing, the statement said. With this funding, USA Rare Earth is expected to be able to extract 40,000 metric tons per day of rare earth and critical mineral feed stock by 2030.
"USA Rare Earth's heavy critical minerals project is essential to restoring U.S. critical mineral independence," said Secretary of Commerce Howard Lutnick. "This investment ensures our supply chains are resilient and no longer reliant on foreign nations."
USA Rare Earth also announced a collaboration with the U.S. Department of Energy to advance rare earth element separation technologies at its Wheat Ridge lab and Round Top deposit, according to the statement.
"The DOE is partnering with USAR to rebuild the critical minerals supply chain," said U.S. Energy Secretary Chris Wright. "By expanding domestic mining, processing, and manufacturing capabilities, we are creating good-paying American jobs and safeguarding our national security."
The collaborations with the government reflect the importance of USA Rare Earth's role in closing the rare earth element and critical mineral supply gap for industries such as semiconductors, critical technologies and advanced manufacturing, the company said.
Under the terms of the agreement, USA Rare Earth will issue the Department of Commerce 16.1 million shares of common stock and roughly 17.6 million warrants. For the PIPE transaction, the company will issue around 69.8 million shares at $21.50 each, according to the statement.
The PIPE funding is expected to close Wednesday, and the funding from the Department of Commerce is expected this quarter.
The White & Case team advising USA Rare Earth was led by capital markets partners Joel Rubinstein, Jonathan Rochwarger and Jason Rocha and included U.S. government contracts partner Melissa Taylormoore.
The Latham team advising USA Rare Earth was led by Steven Stokdyk and David Zaheer.
The DLA Piper team advising the placement agent includes partner Stephen Alicanti.
Jan 26
Deal Summary
