Ioneer Ltd (ASX:INR, OTC:GSCCF) has surged after its Rhyolite Ridge Lithium-Boron Project in Nevada piqued the interest of the US Department of Energy (DOE), lining it up for a multi-million-dollar loan that brings it a step closer to fully funded construction.
The ASX-lister has dotted the I’s and crossed the T’s on a term sheet with the energy-focused government arm, with up to US$700 million on the cards to finance the Nevada-based project’s construction.
The DOE will provide the funding through its Advanced Technology Vehicles Manufacturing program, with fixed interest rates baked into each advance over the 10-year loan term.
Shares have been as much as 29.68% higher in the first half hour of ASX trading to A$0.59 while the company's market cap is approximately A$1.18 billion.
One step closer to complete funding package
This conditional commitment has been two years in the making, meaning today’s announcement culminates extensive technical, legal and market due diligence by the DOE.
Together with an investment from multinational miner Sibanye-Stillwater, which is expected to pick up a 50% stake in the project, Ioneer believes the DOE funding brings it a step closer to a complete funding package for Rhyolite Ridge.
Ioneer claims Rhyolite Ridge as the most advanced undeveloped US lithium project and once it enters production, the company hopes to provide a secure, sustainable and reliable domestic source of lithium for the growing electric vehicle ecosystem.
Shot in the arm for domestic production
Ioneer executive chairman James Calaway said the DOE’s involvement “highlights Rhyolite Ridge’s strategic role in strengthening America’s critical mineral supply chain”.
Managing director Bernard Rowe echoed his comments, noting the company was pleased to receive the conditional commitment for up to US$700 million.
“We look forward to working with the DOE and Sibanye-Stillwater to complete the remaining milestones to start construction of Rhyolite Ridge.”
If finalised, the loan would be the first in DOE history to provide financing for the processing component of a project where lithium is extracted and refined at site.
DOE Loan Programs Office director Jigar Shah said: “Rhyolite Ridge is a major step towards bolstering domestic lithium production for clean energy technologies, and LPO is excited to further develop an environmentally responsible US supply chain for critical materials.”
Where to from here?
There are several milestones on the to-do list for Ioneer to secure the DOE funding.
Chief among them is a positive record of decision (ROD) from the Bureau of Land Management and reaching a final investment decision (FID) with Sibanye-Stillwater but others include:
- Updated cost estimates, including a P85 cost contingency;
- Updated resource and reserve statements and a mine plan incorporating a southern extension to the lithium deposit;
- Updated economic modelling based on the updated information above; and
- All the necessary permits.
Based on these outcomes, an updated capital and operating cost estimate will be provided to stakeholders before making an FID.
Of course, the final loan is subject to approval from the Ioneer and Sibanye-Stillwater boards, receipt of all material governmental consents necessary for the loan and the negotiation and execution of binding loan documents.
When binding loan documents are signed, certain closing conditions must be satisfied before the loan commitment from DOE becomes effective and funds can be advanced.
"Will positively impact climate change"
Commenting on the conditional commitment, Sibanye-Stillwater CEO Neal Froneman said Rhyolite Ridge was a world-class lithium project, ideally positioned to provide locally mined and beneficiated metals to further develop the US battery ecosystem.
“The proposed loan represents a significant step towards further de-risking funding and ultimately progressing Rhyolite Ridge to production,” he explained.
“We are encouraged by the DOE’s commitment to developing the US national battery metals mining industry through supportive funding programs such as the ATVM program.”
Froneman also praised the commitment of the Ioneer team to date, saying it ensured Rhyolite Ridge’s swift advancement once the necessary permits have been granted.
“This is a significant milestone in the development of this critical project which promises to positively contribute to reducing climate change,” he continued.
Sibanye-Stillwater’s battery metals strategy is primarily focused on the US and Europe, where there’s a developing need for battery metals to support the transition towards electrification in their established automotive industries.
The mining company’s expertise — particularly in the US project space — and its deep relationships with automakers and automotive OEMs globally are expected to add significant value to Rhyolite Ridge as Ioneer works to enter production.