U.S. Invests $1.6 Billion in USA Rare Earth for Minerals

The U.S. government announced a $1.6 billion investment in USA Rare Earth on Monday, acquiring a 10 percent stake in the Oklahoma-based mining company as part of a broader effort to develop domestic supplies of critical minerals. The deal, which includes federal funding and a low-interest loan through the Commerce Department's CHIPS program, sent shares of the company soaring more than 38 percent before markets opened, following a 62 percent jump in premarket trading.

Under the agreement, USA Rare Earth will receive $277 million in federal funding and a $1.3 billion senior secured loan with a 15-year term at Treasury rates plus 1.5 percent. In exchange, the government will obtain 16.1 million shares of common stock at $17.17 per share, along with warrants for an additional 17.6 million shares at the same price. The investment positions the federal government as the company's largest public shareholder. Separately, USA Rare Earth secured $1 billion in private funding from investors including Inflection Point, through a securities purchase agreement.

The financing supports the company's operations at its magnet manufacturing facility in Stillwater, Oklahoma, which is scheduled to...