USA Rare Earth said Monday that it received $277 million in federal funding and a $1.3 billion loan under the Commerce Department’s CHIPS Program.
“With this unprecedented show of public and private support for our company, we are positioned to accelerate the build-out of important domestic capabilities that are essential to U.S. national security, global economic competitiveness, and critical technologies of the future,” USA Rare Earth CEO Barbara Humpton said.
The company said it also raised $1.5 billion through a private investment in public equity, or PIPE, anchored by Beverly Hills PE firm Inflection Point with participation from large mutual funds. The PIPE financing includes 69.8 million common shares at $21.50 each.
Latham & Watkins advised USA Rare Earth on its partnership with the federal government. White & Case advised the company on the PIPE.
Cantor Fitzgerald acted as lead placement agent and Moelis was the co-placement agent for the PIPE transaction, and DLA Piper represented the placement agents.
The company is building a sintered neo magnet manufacturing facility in Stillwater, Okla., that is expected to be online by June 30. USA Rare Earth mines elements at its Round Top deposit in West Texas and has a research and development facility outside Denver.
“USA Rare Earth’s heavy critical minerals project is essential to restoring U.S. critical mineral independence,” according to Commerce Secretary Howard Lutnick. Humpton spoke to CNBC Monday about the deal.
Bill Frauenhofer, director of the CHIPS program, said its funding and loan to USA Rare Earth “will be instrumental for the construction of a domestic integrated supply chain for critical minerals and [neodymium] magnets, which are essential for semiconductor chip manufacturing.”
The CHIPS program was established during the Biden Administration to fund semiconductor manufacturing, R&D, and workforce development with nearly $53 billion of federal funding available.
USA Rare Earth expects that by 2030 it will be able to extract 40,000 metric tons per day of rare earth and critical mineral feedstock from the Round Top deposit, which is expected to begin commercial production in 2028.
Latham & Watkins represented USA Rare Earth with a team led by partners Steven Stokdyk and David Zaheer, and associate Mark Goshgarian from Los Angeles.
White & Case advised the company on the PIPE with a team led by partners Joel Rubinstein and Jonathan Rochwarger in New York, Jason Rocha in Houston and Melissa Taylormoore in Washington. The team also included associates Russell Deutsch in New York, as well as Bryson Manning and Daniel Quesenberry in Houston.
USA Rare Earth trades on Nasdaq under the ticker symbol “USAR.”