Ivanhoe Electric plans US$150 million offering

Ivanhoe Electric Inc. [IE-TSX, NYSE] said it is planning to raise US$150 million from an underwritten public share offering.

Proceeds are earmarked for a preliminary feasibility study at the Santa Cruz Copper project in Arizona, mineral rights payments, drilling and other exploration activities, and other working capital and general corporate purposes.

The company also said it intends to grant the underwriters a 30-day option to purchase up to an additional US$22.5 million worth of shares.

Ivanhoe Electric is headed by billionaire mining magnate Robert Friedland. His previous endeavors include nickel discoveries in the Voisey’s Bay area of Newfoundland and Labrador and more recently copper mining operations in Mongolia and the Democratic Republic of Congo (DRC). The DRC assets are held by Ivanhoe Mines Ltd. [IVN-TSX, IVPAF-OTC].

Friedland is Executive Chairman of Ivanhoe Electric, which is led by President and CEO Taylor Melvin.

The company has said it is aiming to develop mineral deposits in the U.S. in order to support American supply chain independence and to deliver critical metals needed for electrification of the economy.

News of the financing plan comes just days after Ivanhoe announced the completion of an initial assessment (IA) for the Santa Cruz project.

“Our goal is to develop a modern copper mine that produces copper with among the lowest levels of carbon dioxide output in the industry, a product we think has the potential to attract a premium price in the future,’’ the company said in a press release.

The IA is a preliminary technical and economic study focusing on the potential for a high grade 15,000 tonne-per-day underground oxide copper mining operation (to be largely powered by renewable energy).

The IA envisions an underground operation producing 50,000 tonnes per year of cathode copper over a 20-year initial mine life based on a life-of-mine average grade of 1.58% copper and a cash cost of US$1.36 a pound

The initial capital expenditure is estimated at US$1.15 billion followed by a life of mine sustaining capital expenditure of 988 million.

There is the potential for future growth with additional resources from the Texaco Deposit (not included in the IA) and the deeper sulfide resources at Santa Cruz, which is situated in a prolific mining region that hosts some of the largest copper mines in the United States.

Santa Cruz is one of the company’s two flagship properties. The other is the Tintic Copper-Gold project in Utah.  “Santa Cruz is situated in a prolific mining region that hosts some of the largest copper mines in the United States,’’ the company said.

Ivanhoe recently began drilling at the historic Tintic copper-gold district after more than five years of property acquisition, digitization of old mine records and meticulous geologic mapping.

On September 13, 2023, Ivanhoe Electric shares closed at $21.08, and currently trade in a 52-week range of $22.65 and $10.70.