Ivanhoe Electric lines up $825M loan for copper project

Ivanhoe Electric (TSX, NYSE: IE) said the United States export credit agency is interested in lending up to $825 million (C$1.15 billion) for the company’s Santa Cruz copper project in Arizona. The stock surged.

Coupled with other non-equity sources of financing such as grants, the EXIM Bank money “could cover the construction cost for Santa Cruz,” Ivanhoe Electric said in a statement Tuesday. The loan, which is outlined in a letter of interest, would need to be repaid over 15 years. It would be provided through the lender’s “Make More in America” initiative, which aims to increase the U.S. supply of critical minerals

Ivanhoe Electric is putting together a prefeasibility study for Santa Cruz that’s due to be completed in June. It expects to receive permits and start construction activities in the first half of 2026. The Santa Cruz resource is entirely beneath privately owned land, which Ivanhoe Electric said will simplify permitting process and timelines.

“This is clearly a positive de-risking milestone and will enable the company to fast track the remaining permitting and start of construction,” Andrew Mikitchook, a BMO Capital Markets mining analyst, said in a note Tuesday. He called Santa Cruz “one of the largest ‘Made in USA’ high-grade, shovel-ready copper projects.”

Ivanhoe Electric shares soared 22% to C$8.60 ($6.19) apiece in mid-morning trading in Toronto. That gave the company a market value of about C$1.1 billion.

Due diligence

Ivanhoe Electric said it’s assessing EXIM Bank’s interest as well as other financing options to develop Santa Cruz. Should then company proceed with a formal application, EXIM Bank will need to conduct due diligence to determine if a final lending commitment would be made.

“Santa Cruz is positioned perfectly to be a source of pure copper cathode to help the United States achieve its strategic mission of greater self-reliance on domestic production of critical metals,” executive chairman Robert Friedland said in the statement. “The United States urgently needs more domestically produced copper to support the rapid expansion and rebuilding of its electric transmission and transportation infrastructure, national defense capabilities, and technologies of the future.”

Located in Casa Grande, about 77 km south of Phoenix, the project encompasses 24.2 sq. km of private land, including associated water rights. Last June, Ivanhoe secured approval to zone over half of the property for industrial use, a major permitting milestone for the proposed copper mine.

Ivanhoe acquired its land title in May 2023. It obtained full ownership of the mineral rights comprising the project a year later after taking up its purchase option.

Since late 2022, the company has conducted about 120,000 metres of drilling on the project. Santa Cruz has a resource estimate of 2.8 million tonnes of copper in the indicated category (226.7 million tonnes grading 1.24% total copper) and 1.8 million tonnes of copper in the inferred category (149 million tonnes grading 1.24% total copper).

Ivanhoe Electric’s initial assessment estimates copper production to be 1.6 million tonnes over a 20-year mine life. Building the underground mine could take three years and cost about $1.15 billion, according to the most recent company estimate.