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USA Rare Earth hopes to raise up to $500m in IPO

Pini Althaus, CEO, USA Rare Earth. Image from USA Rare Earth.

USA Rare Earth, a private company with ambitious plans for a domestic rare earths supply chain has hired bankers to explore going public in a deal that could value the strategic minerals company at more than $1 billion, according to a source familiar with the matter and documents seen by Reuters.

The company, which is developing the Round Top rare earths deposit in Texas, is considering an initial public offering (IPO) or going public via a special purpose acquisition company (SPAC), though it does not plan to issue debt, according to the source and documents.

Investors are growing more interested in exposure to rare earths, 17 minerals used to build electronics

Any offering is expected to raise between $300 million to $500 million, which would be used in part to finance the Texas mine and processing facility. The company hopes to have it operating by 2023.

Investors are growing more interested in exposure to rare earths, 17 minerals used in certain military applications, ceramics, wind turbines, electric cars and medical equipment. China is the world’s largest producer and has threatened to stop exporting these minerals to the United States.

USA Rare Earth is the development and funding partner of the Round Top project. Lithium makes up about 30% of Round Top’s mineralized material. It also owns sintered rare earth magnet manufacturing equipment previously owned and operated by Hitachi Metals in North Carolina, and earlier this year opened a rare earth and critical minerals facility in Wheat Ridge, Colorado to commission a pilot plant.

“We’ve got a very unique deposit in a number of respects – we have 16 of the 17 rare earths, with many in the rare earths categories that speak to a number of defense applications, and manufacturing. It is probably the largest heavy rare earths deposit in the world outside of China,” Pini Althaus, CEO of USA Rare Earth told MINING.COM last year.

Last year, the Canadian and U.S Governments reaffirmed their commitment to strengthening the North American supply chain for critical minerals – essential to both countries’ national security and economic growth.

Reviving domestic rare earths production has become a priority in Washington as relations with China have grown more frayed, and with U.S. lawmakers leery of relying on a rival for critical defense components.

USA Rare Earth rival MP Materials Corp, which controls California’s Mountain Pass mine, The only active rare earths mine in the US, went public last year in a SPAC deal worth nearly $1.5 billion. Its stock price more than doubled since its November debut.

Goldman Sachs Group Inc and BMO are serving as advisors to USA Rare Earth. Company representatives did not immediately respond to a request for comment from Reuters.

(With files from Reuters)