5 ASX Critical Mineral Stocks with over $100m in government funding committed!

5 ASX Critical Mineral Stocks with over $100m in government funding committed!

Liontown Resources (ASX:LTR)

Liontown is Australia’s newest lithium producer. Its Kathleen Valley Project in WA has a current Mineral Resource Estimate of 156Mt at 1.4% lithium and could produce over 500ktpa over a 23-year life of mine. A key challenge for the project has been falling lithium prices.

This has not been enough to stop it entering production, but it has been on shaky ground and had a funding package withdrawn just 3 months after signing a commitment letter and credit approved term sheet. As we mentioned, funding was secured. There was some private funding, but $110m came from the Clean Energy Finance Corporation (CEFC) and another $120m came from Export Finance Australia (EFA). The government is keen on the critical mineral project not just because of the lithium and potential for it to be an export earner (not to mention its potential to contribute to our local automotive and renewable energy industry), but also because it is a low-emission project.

Hastings Technology Metals (ASX:HAS)

Hastings has the Yangibana Rare Earths Project with an inventory of 20.9Mt containing 188kt of Total Rare Earth Oxide (TREO). It has just over $200m in government funding committed, and the project has an $865m NPV with an 11% discount rate and 31% IRR. OK, this company still has not met the conditions to access the money just yet, because the Northern Australia Infrastructure fund (NAIF) is looking to see if it is still eligible in light of exposure to China.

Hastings wants to produce an intermediate product in China, cheaper than it would be in the West, and it welcomed a Chinese investor to buy 9.8% of its shares. Good for their shareholders if it can secure the money, but not good for the government institutions funding critical minerals projects – because the very reason is to diversify away from China. As of November, the NAIF confirmed it was not yet allowed to draw down the money. Since then, Hastings has announced an MoU with Saudi Arabia to potentially build a supply chain there – only time will tell if this comes to anything or if this makes a difference to the NAIF’s views on the project.

South 32 (ASX:S32) and Element 25 (ASX:E25)

Let’s deal with both these critical minerals companies at once. They are both manganese developers with South 32 having the Clark deposit in Arizona and Element 25 having the Butcherbird project in WA. They will receive US Department of Energy (DoE) funding of US$166m or A$250m. The Clark deposit is the only advanced project in the US with a pathway to produce battery-grade manganese, and this money will provide 30% of the cost of construction of a manganese production facility.

Element 25 has a US connection in the form of aspirations of a plant in Louisiana that’ll refine the metal into a battery-grade product. The funding is in addition to financing and offtake from GM and Stellantis to the tune of US$85m and US$30m respectively.

Arafura (ASX:ARA)

Here’s the critical mineral company that gave us the inspiration for this article. It has the Nolans project in the NT, which will be the first ore-to-oxide operation in Australia and supply 4% of the world’s neodymium and praseodymium by 2032. Phase 1 of the project alone will support the production of 4m EVs. The company’s largest shareholder is Gina Rinehart’s Hancock Prospecting with an 8.6% stake.

Last year, Arafura unveiled $840m in loans and grants including $495m from the Critical Minerals Facility, $200m from the NAIF and $115m in federal export financing. Earlier this week, the company executed a binding term sheet of $200m in unsecured convertible notes with the National Reconstruction Fund (NRF). Convertible notes are loans that can be converted into shares. The project will cost $1.68bn all up and the rest will be funded via equity rather than debt. This is the largest investment by the NRF to date but is its sixth overall.

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