The US government wants to fund this ASX stock’s green metals project for A$1bn

Mon 16 Jan 23, 4:11pm (AEST)
A snapshot of the iconic White House in Washington DC, USA
Source: iStock

Key Points

  • The US government has offered Ioneer Limited an initial assurance it will fund its lithium-boron project to the tune of A$999m
  • Move comes as the US seeks to secure domestic supply chain for critical minerals following Russia’s invasion of Ukraine
  • Ioneer must reach a positive FID before loan granted, which is dependent on NYSE-listed heavyweight earning 50% interest

The US Department of Energy (DOE) has offered a conditional commitment to ASX-listed lithium heavyweight Ioneer Limited (ASX:INR) to fund its US-based Rhyolite Ridge lithium-boron project in Nevada to the tune of US$700m (A$999m). 

Ioneer shares were up 22.5% to 55.8c in the final hour of Monday’s trading on the back of the news. 

A conditional commitment, in US government lingo, is essentially a preliminary assurance the funding will come through, so long as Ioneer can satisfy pending legal and financial compliance requirements.

The largest of those conditions to note is that US-listed Sibayne-Stillwater (NYSE:SBSW) is expected to secure a 50% interest in the Rhyolite Ridge Project by way of equity contribution. Ioneer’s preliminary capex estimates rely on Sibayne Stillwater’s contributions. 

“The proposed loan represents a significant step towards further de-risking funding and ultimately progressing Rhyolite Ridge to production,” Sibayne Stillwater CEO Neal Froneman said. 

Positive FID needed 

Ioneer must also publish a positive Final Investment Decision (FID). 

The proposed loan, all things in order, will be made by the DOE’s Loan Program Office’s Advanced Technology Vehicles Manufacturing program on a ten year contract with a fixed interest rate from the date of each payment pegged to US Treasury rates. 

“We are pleased to have finalised the term sheet and received a Conditional Commitment from the DOE for up to a $700m loan from the ATVM program,” Ioneer managing director Bernard Rowe said. 

“We look forward to working with the DOE and Sibanye-Stillwater to complete the remaining milestones to start construction of Rhyolite Ridge.”

What’s boron got to do with it? 

Boron is found as a silvery metal in ore, with pure boron most commonly refined into a black-coloured powder. It is a key material used in the manufacturing of solar panels. 

The same properties that make boron an attractive material to use in solar panel manufacture also see it used in smartphones. Specifically, the metal boosts the heat resistance of touchscreens. 

Boron is also used in the manufacture of wind turbine components, and Electric Vehicle (EV) components

80% of global supply comes from Turkey, with Rio Tinto one of two companies dominating the international supply chain. 

Russia’s war in Ukraine last year encouraged initiatives from world governments everywhere prioritising the fast-track development of domestic critical mineral supply chains. 

It is in this context that Ioneer stands to receive nearly A$1bn from the US Department of Energy. 

High-profile company 

Looking past its A$1bn-range market cap, there are other reasons the US DOE is looking at Ioneer. 

The Australian-listed company was one lithium offtake partner selected by automaker giant Ford in July last year. The other was Rio Tinto (ASX:RIO). Under that deal, Ioneer will supply Ford with 7,000tn of lithium carbonate per annum for 5 years starting in 2025.

A look at Ioneer's six month charts
A look at Ioneer's six month charts


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Written By

Jonathon Davidson

Finance Writer

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication.

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