USA Rare Earth has completed capitalization arrangements totaling $1.55 billion for the special purpose vehicle that will purchase 100% of Serra Verde Group’s Phase 1 rare earth production under a 15-year offtake agreement. The U.S. Department of War committed $750 million to the SPV, representing a $250 million increase from the $500 million originally contemplated.
A Tier-1 institutional bank also provided a commitment letter for a senior secured borrowing-base revolving credit facility of up to $500 million.
The U.S. government separately entered into a forward purchase contract covering at least $300 million of rare earth products over five years.
The bank facility is intended to provide working capital for purchases of rare earth materials from SV Management Switzerland.
Serra Verde’s offtake agreement includes take-or-pay provisions and guaranteed price floors for magnetic rare earths, including dysprosium and terbium.
Completing the capitalization satisfies one of the closing conditions for USA Rare Earth’s proposed acquisition of Serra Verde.
USA Rare Earth expects the merger to close promptly after its August 28 shareholder meeting, assuming the remaining conditions are satisfied or waived.
After closing, USA Rare Earth would own the Pela Ema mine in Goiás, Brazil, which the company describes as the only ionic-clay rare earth mine in commercial production outside Asia.
Serra Verde is also the only commercial producer outside Asia of all four magnetic rare earths.
More than $1 billion has already been invested in Serra Verde.
The acquisition would expand USA Rare Earth’s integrated mine-to-magnet platform across the U.S., U.K. and Brazil, combining mining with metal-making, alloys and permanent magnet manufacturing.
KEY QUOTE:
“With more than $1 billion already invested, Serra Verde is one of the world’s most advanced rare earth projects and the only commercial producer of all four magnetic rare earths outside Asia.”
Michael Blitzer, Executive Chairman Of USA Rare Earth
