USA Rare Earth, Inc. (USAR) has entered into definitive funding agreements with the U.S. Department of Commerce (DOC) to secure approximately $1.6 billion in funding under the CHIPS Act. The agreements, which include direct funding and a loan guarantee, are intended to support the construction and expansion of USAR's domestic rare earth mining, processing, and magnet manufacturing facilities.
Key Details
- Total Funding: The package consists of a $277.0 million Direct Funding Agreement and a $1.3 billion Loan Guarantee Agreement for senior secured debt to be provided by the Federal Financing Bank (FFB). The funds will support five key projects, including the Round Top Mine in Texas and facilities in Stillwater, Oklahoma.
- Equity Issuance to Government: As part of the transaction, USAR issued 16,132,790 shares of common stock and a warrant to purchase 17,600,584 additional shares at an exercise price of $17.17 per share to the DOC.
- Future Capital Requirements: USAR is required to raise additional equity of $375.0 million (plus the acquisition costs for Serra Verde Group) by March 31, 2027, and another $875.0 million by December 31, 2027. The company noted it has already satisfied its $1.45 billion equity raise requirement for 2026.