American Rare Earths (ASX: ARR) has achieved a significant financing breakthrough with the receipt of US government backing for its Halleck Creek rare earths development in Wyoming.

The Halleck Creek project has the potential to be among the largest rare earth deposits in the US and has become a major focus as the Biden administration moves to reduce the nation’s dependence on Chinese supplies of magnet-grade rare earths.

In a further show of the project’s importance, ARR’s 100%-owned subsidiary Wyoming Rare (USA) Inc. (WRI) has received a non-binding letter of interest (LoI) from the Export-Import Bank of the United States (EXIM), the country’s official export credit agency.

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“This letter of interest from EXIM […] highlights the US government’s commitment to securing a robust domestic rare earth supply chain,” American Rare Earths chief executive officer Chris Gibbs said.

If completed, the arrangement would provide debt funding of up to $666 million for the construction and execution phase of the Cowboy State mine (CSM) at Halleck Creek—the project’s entire estimated initial capital expenditure requirement.

The CSM will be developed as the first step in a multi-phased approach to developing the Halleck Creek deposit.

‘Multi-generational resource’

“The Halleck Creek project is set to become a key multi-generational resource for the US and we are proud to be at the forefront of this transformative initiative,” Mr Gibbs said.

“We look forward to collaborating with EXIM and the US government to bring this critical project to fruition.”

“The potential funding also paves the way to accelerate offtake agreements and attract strategic investors for WRI.”

Strategic importance

While not a final commitment, the LoI highlights the strategic importance of the Halleck Creek operation.

EXIM said it made the offer based on the preliminary information submitted regarding expected US exports and US jobs to be created through the CSM project.

It will now conduct its due diligence before proceeding with any final financing arrangement.

Extensive review

American Rare Earths announced in August that, following an extensive strategic review, the board had implemented changes to best position the Halleck Creek project as a strategic resource for US markets.

The project will now be developed under WRI with its own dedicated capital structure and funding sources, improving its attractiveness to US-based investment.

The company believes Halleck Creek has significant upside potential, with more than 75% of mineralised zones yet to be drilled and the deposit remaining open at depth.

The deposit has a 2.34 billion tonne JORC resource, containing 7.48 million tonnes of total rare earth oxides including key magnet metals like neodymium and praseodymium oxides.