ioneer Ltd finalized a term sheet and offer of a conditional commitment for a proposed loan of up to $700 million from the U.S. Department of Energy (DoE) Loan Programs Office to finance the construction of the Rhyolite Ridge lithium-boron project in Nevada, USA. The term of the proposed loan is approximately 10 years at a fixed interest rate based on U.S. Treasury rates.
The proposed loan is to be made under the DoE’s Advanced Technology Vehicles Manufacturing (ATVM) loan program in support of the Biden Administration’s critical minerals strategy. DoE has more than $50 billion in remaining loan authority under the ATVM program to support the manufacture of eligible advanced technology vehicles including electric vehicles (EVs), and qualifying components and materials, in the United States. Domestic processing of critical minerals, such as lithium, for use in EV batteries qualifies for the ATVM loan program.
“Rhyolite Ridge is a major step towards bolstering domestic lithium production for clean energy technologies, and [we are] excited to further develop an environmentally responsible U.S. supply chain for critical materials,” said Jigar Shah, Director of DoE’s Loans Programs Office.
Discussion with the DoE started in February 2021, Ioneer submitted an application in October 2021 and it was deemed substantially complete in December 2022, which initiated a third-party due diligence process that has been ongoing since March 2022. The Conditional Commitment is based on a revised Plan of Operations submitted by Ioneer to the U.S. Bureau of Land Management (BLM), now in the National Environmental Policy Act (NEPA) process, which completely avoids all direct impact and minimizes indirect impact on Tiehm’s buckwheat, a protected species of flowering plant endemic to region.
Rhyolite Ridge is an advanced undeveloped U.S. lithium project, and it is on track to provide a long-life source of both lithium and boron for delivery into the U.S. domestic EV supply chain. The DoE commitment demonstrates its strong support for the project and, if finalized, the loan would be the first-ever by the agency to provide financing for the processing component of a project where lithium is extracted and refined on site.
The proceeds from the DoE loan, along with Sibanye Stillwater Ltd.’s expected equity contribution to secure a 50% stake in the Rhyolite Ridge project are anticipated to fund a substantial part of the preliminary capital expenditure.
The proposed loan amount remains subject to several conditions, including:
- Positive Record of Decision (ROD) issued by the BLM;
- Updated cost estimate including a P85 cost contingency;
- Updated resource and reserve statements and mine plan to incorporate the southern extension to the deposit;
- Updated economic model based on the updated information above;
- All necessary permits; and
- Final Investment Decision (FID) by both Ioneer and Sibanye-Stillwater.
Ioneer and Sibanye-Stillwater will continue to progress work on the engineering, complete additional drilling post ROD to delineate the southern limits of the deposit where mining is expected to commence and optimize the mine plan. Based on these outcomes, ioneer said an updated capital and operating cost estimate will be provided to stakeholders before making an FID.
In related news, ioneer was cited for a permit breach for its November 2022 geotechnical drilling program at Rhyolite Ridge. The placement and storage of drill program-related equipment along Cave Springs Road was not authorized under the permit issued by the BLM for the Program. What occurred was a violation of BLM regulatory requirements; no Tiehm’s buckwheat was disturbed.
“We take full responsibility for the breach and sincerely regret the inadvertent noncompliance with the permit,” Ioneer Managing Director Bernard Rowe said. “Since day one, Ioneer has instructed our staff and contractors about the need to observe all permit conditions. We are investigating exactly how this failure occurred, and we will take action to assure total compliance in the future.”