Loan of up to US$700 million offered for Ioneer’s Rhyolite Ridge Project

Image credit: Sibanye Stillwater

Ioneer Ltd has announced the completion of a term sheet and the offer of a Conditional Commitment for a potential loan from the U.S Department of Energy (DOE) Loan Programs Office for a proposed loan of up to $700 million to finance the building of the Rhyolite Ridge Lithium-Boron Project in Nevada, USA.

According to the term sheet, the proposed loan is for up to US$700 million with a duration of roughly 10 years. For the duration of the loan, the interest rate will be fixed from the date of each advance at applicable U.S. Treasury rates. 

“The Conditional Commitment 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,” Ioneer Executive Chairman James Calaway said.

The proposed loan will be given through the DOE’s Advanced Technology Vehicles Manufacturing (ATVM) loan program to support the Biden Administration’s critical minerals policy. DOE has over $50.0 billion in remaining credit authorisation under the ATVM program to assist the domestic production of eligible advanced technology vehicles, including electric vehicles (EVs), and qualifying components and materials. The ATVM loan program is available for the domestic processing of critical minerals such as lithium for use in EV batteries.

“Rhyolite Ridge is a major step towards bolstering domestic lithium production for clean technologies, and LPO is excited to further develop an environmentally responsible U.S supply chain for critical materials,” DOE’s Loans Programs Office Director Jigar Shah said.

Ioneer submitted an application to the DOE’s ATVM loan program in October 2021 after beginning pre-application negotiations in February 2021. In December 2021, according to Ioneer, the application was declared substantially complete, triggering a third-party due diligence procedure that has been underway since March 2022. The Conditional Commitment is based on a revised Plan of Operations presented by Ioneer to the U.S. Bureau of Land Management (BLM), which is currently undergoing the National Environmental Policy Act (NEPA) procedure and avoids any direct and indirect impacts on Tiehm’s buckwheat.

According to Ioneer, Rhyolite Ridge is the most advanced underdeveloped lithium project in the United States, and it is on course to give a long-lasting, ecologically-friendly source of both lithium and boron to the domestic US EV supply chain.

When all precedent conditions for the joint venture have been met or waived, as appropriate, the proceeds from the DOE loan and Sibanye Stillwater Limited’s (Sibanye-Stillwater) anticipated equity contribution to secure a 50 per cent stake in the Rhyolite Ridge Project are expected to finance a sizable portion of the preliminary capital expenditure estimate from the revised plan of operations included in the application submitted to the DOE. Completing the term sheet and receipt of the DOE’s Conditional Commitment are essential steps in completing the funding for the Rhyolite Ridge Project.

Ioneer said it would continue to work with Sibanye-Stillwater in carrying out more drilling after ROD to define the deposit’s southern boundaries, where mining is anticipated to start, and they will continue to advance the mine plan’s engineering work. Before making an FID, stakeholders will be given an updated estimate of capital and operating costs based on these results.

“We are pleased to have finalised the term sheet and received a Conditional Commitment from the DOE for up to a $700 million loan from the ATVM program. The Conditional Commitment is the culmination of 23 months of discussions with and due diligence by the Loan Programs Office and it represents a significant milestone for Rhyolite Ridge. We look forward to working with the DOE and Sibanye-Stillwater to complete the remaining milestones to start construction of Rhyolite Ridge,” Ioneer Managing Director Bernard Rowe said.

Sibanye-Stillwater CEO Neal Froneman stated: “Rhyolite Ridge is a world-class lithium project which is ideally positioned to provide locally mined and beneficiated metals to further develop the U.S. battery ecosystem. The proposed loan represents a significant step towards further de-risking funding and ultimately progressing Rhyolite Ridge to production. We are encouraged by the DOE’s commitment to the development of the U.S. national battery metals mining industry through supportive funding programs such as the ATVM program and the commitment of the Ioneer team to date, aimed at ensuring that this high-quality project can be swiftly advanced once the necessary permits have been granted and outstanding conditions have been fulfilled. This is a significant milestone in the development of this critical project which promises to positively contribute to reducing climate change.”

“Sibanye-Stillwater’s battery metals strategy is primarily focused on the U.S. and Europe in recognition of the developing need for battery metals for the transition towards greater

electrification of their established automotive industries. Sibanye-Stillwater is well placed to be a supportive partner and add significant value to Rhyolite Ridge given its complementary global mining experience and expertise, including its US mining operational and project development expertise, hydrometallurgical expertise and deep relationships with automakers and automotive OEMs globally,”  Froneman added.

The final loan is contingent upon the negotiation and signature of legally binding loan instruments, the approval of the Ioneer and Sibanye-Stillwater Boards, and the receipt of all relevant governmental consents required for the loan. Certain closing criteria must be met after the execution of legally binding loan instruments for the loan commitment from DOE to take effect and for cash to be advanced.