Introduction
Ivanhoe Electric (TSX, NYSE: IE) has announced a major financial boost for its Santa Cruz copper project in Arizona, with the United States Export-Import Bank (EXIM Bank) expressing interest in providing up to $825 million in loans. This potential funding, combined with other non-equity sources, could cover the entire construction cost of the project, sending the company’s stock soaring by 22% to C$8.60 in Toronto trading.
Project Details and Strategic Importance
Located in Casa Grande, Arizona, the Santa Cruz project spans 24.2 sq. km of privately owned land, which simplifies the permitting process. The company is on track to complete a prefeasibility study by June and aims to start construction in the first half of 2026. With a resource estimate of 2.8 million tonnes of indicated copper and 1.8 million tonnes inferred, the project is expected to produce 1.6 million tonnes of copper over a 20-year mine life. The estimated construction cost stands at $1.15 billion.
Executive Chairman Robert Friedland emphasized the project's alignment with U.S. strategic goals, stating that Santa Cruz could be a critical source of domestic copper cathode to support national infrastructure and defense needs. The financing, if finalized, would come through EXIM Bank’s 'Make More in America' initiative, aimed at bolstering the domestic supply of critical minerals.
Analyst Perspective and Market Reaction
BMO Capital Markets analyst Andrew Mikitchook hailed the financing interest as a 'positive de-risking milestone,' describing Santa Cruz as one of the largest 'Made in USA' high-grade, shovel-ready copper projects. However, the funding is not yet guaranteed, as EXIM Bank will conduct due diligence before making a final lending commitment. Ivanhoe Electric is also exploring other financing options to ensure the project’s development.
Critical Analysis
While this development is undoubtedly a significant step forward, there are reasons for cautious optimism. The $825 million loan, while substantial, is still subject to due diligence and formal application processes, which could introduce delays or complications. Additionally, the project’s $1.15 billion construction cost estimate may face inflationary pressures or unforeseen challenges during the three-year build timeline. On the positive side, the strategic importance of domestic copper production in the U.S. could expedite regulatory support and additional funding, positioning Ivanhoe Electric favorably in a critical minerals market increasingly driven by national security and energy transition needs.