Ivanhoe Electric gets $200M loan for U.S. copper mine

Ivanhoe Electric (NYSE-A, TSX: IE) says it’s secured a $200 million (C$280 million) bridge loan from a bank syndicate amid a push to build the next major United States copper mine in Arizona.

The loan — backed by National Bank Capital Markets, Société Générale and BMO Capital Markets — serves as “an important component” of the overall financing strategy for Ivanhoe Electric’s flagship Santa Cruz project, according to a company statement Thursday. Ivanhoe Electric is aiming to start construction in the first half of 2026, with first copper cathode production targeted for late 2028.

“Advanced” talks with potential minority interest partners and lenders for a complete project financing package are ongoing, Ivanhoe Electric also said. These partners would include the U.S. Export Import Bank and commercial banks.

With Thursday’s debt facility, which follows an equity financing announced last month, “it appears that Ivanhoe Electric is financed through to final investment decision and early construction,” Andrew Mikitchook, a mining analyst at BMO Capital Markets in Toronto, said in a note to clients. “We expect the market to reward further Santa Cruz development and financing milestones in the near term.”

Confidence vote

Getting the backing of “top-tier mining financiers” represents a clear vote of confidence in project, said Ivanhoe Electric executive chairman Robert Friedland. Santa Cruz, which would be one of the first new U.S. copper mines in almost two decades, “is the first step in our vision to grow a new American-based and American-focused critical metals company,” he said.

“The bank group conducted extensive technical due diligence as part of their credit approval process, and we are grateful for their support for our company and the Santa Cruz copper project,” added CEO Taylor Melvin.

Once the bridge loan closes, probably in December, Ivanhoe Electric will have added over $360 million in liquidity this quarter, Melvin said. This will place the company in an “exceptionally strong financial position” as it enters a critical development year for the project, he added.

Ivanhoe Electric shares fell 4.2% to $18.01 by the close of New York trading Thursday amid broader stock-market declines. That gave the company a market capitalization of about $1.9 billion.

Long-term producer

Located in Casa Grande, about 77 km south of Phoenix, Santa Cruz hosts a large underground deposit that is being earmarked as a long-term U.S. producer of copper cathodes. Ivanhoe has been working on the project since 2022 and has so far delineated 3 million tonnes of indicated copper resources, about half of which are mineable reserves.

An updated preliminary feasibility study, published earlier this year, outlined a potential 23-year mine capable of producing 72,000 tonnes of 99.99% pure copper cathodes annually in the first 15 years.

Using a base case copper price of $4.25 per lb., the study gave the project an after-tax net present value of $1.4 billion and an internal rate of return of 20%. Initial capital costs were pegged at $1.24 billion, for an estimated capital intensity of $17,000 per tonne of copper. Santa Cruz’s cash costs of $1.32 per lb. over the life of mine would rank in the first quartile globally and the lowest in America.

Public offering

Ivanhoe Electric’s financing announcement comes about seven months after the company said the U.S. EXIM Bank was interested in lending up to $825 million for Santa Cruz. 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 April 15.

In February, Ivanhoe Electric said it would raise $60 million via a public offering.