SW US CEO chat: Ivanhoe Electric maps $1B debt path for Arizona copper project

Ivanhoe Electric (NYSE-A, TSX: IE) CEO Taylor Melvin says the company aims to secure more than $1 billion in U.S.-backed debt as it starts early construction at its Santa Cruz copper project in Arizona and targets first cathode production in 2029.

The U.S. Export-Import Bank (EXIM) has increased its potential loan for Santa Cruz to $1.1 billion (C$1.5 billion), a third above the $825-million preliminary financing interest it expressed last year. The underground project, about 65 km southeast of Phoenix, carried an initial cost of $1.24 billion in its 2025 prefeasibility study. Melvin said Ivanhoe is discussing a funding mix of about 70% debt and 30% equity.

“We’re in advanced discussions in our work with the U.S. Export-Import Bank on a project debt facility that could reach or even exceed a billion dollars for the Santa Cruz project,” Melvin told The Northern Miner in mid-August by phone.

The financing has become the main investor test for Santa Cruz as Ivanhoe advances a redesigned access tunnel intended to lower groundwater risk. The company ended June with more than $250 million in cash and an undrawn $200-million bank credit line.

Financing focus

EXIM’s increased interest comes after U.S. President Donald Trump publicly backed the financing effort at an Aug. 7 mining roundtable at the State Department, saying the bank was working to provide more than $1 billion for Santa Cruz. The event included more than $2 billion in U.S. financing commitments for mining and critical-minerals projects.

Melvin, who attended the roundtable, said Ivanhoe aims to secure project-financing commitments through year-end and into early next year.

BMO Capital Markets analyst Andrew Mikitchook said Ivanhoe’s treasury should fund early works and the tunnel-boring machine well into 2027 without drawing its $200-million bridge facility, giving the company time to close the broader financing package.

Securing the funding should matter more to Ivanhoe’s shares than further engineering or permitting milestones, Mikitchook said in an Aug. 12 note.

Ivanhoe’s Toronto-quoted shares have fallen by more than a third this year as investors focused on whether Santa Cruz could get built without excessive shareholder dilution and after an earlier timeline to start construction this year was delayed.

The stock closed at C$13.98 apiece on Wednesday, giving Ivanhoe Electric a market capitalization of C$1.61 billion. Shares had ranged between C$11.04 and C$28.81 over the previous 12 months.

Early construction

Crews have started clearing roads, building fences and preparing the portal excavation, known as a box cut, Melvin said. Box-cut construction could start soon, before the company receives and assembles the tunnel-boring machine through the first half of next year.

Ivanhoe plans to start driving the decline in mid-2027 and reach the copper reserve about a year later. It aims to place first ore on its leach pads in the second half of 2028 and produce first cathode in the first half of 2029.

Surface work on the crushing, leaching and cathode plants would proceed alongside underground development.

Ivanhoe has secured its mine-land reclamation, air-quality, dust-control, aquifer-protection and land-use permits for the initial work.

Tunnel switch

The revised design replaces two smaller declines with a single tunnel about 4 km long and 9.3 metres wide.

The Robbins crossover machine can move through wet gravel and hard rock while installing a steel-reinforced concrete lining behind it. That lining would seal the decline as it crosses an aquifer above the dry orebody, a challenge underscoring the broader water constraints confronting new Southwest U.S. mines.

Ivanhoe expects the machine to advance about 10 metres a day, roughly twice the earlier design rate. The change requires a smaller portal excavation, removes the need for silica-gel grouting and installs a conveyor large enough to move material throughout the mine life.

BMO views the tunnel-boring switch as a worthwhile trade-off. It delayed first production to 2029 but should reduce the risk of driving the decline through groundwater and changing ground conditions, while adding less than $20 million to capital after offsetting savings.

Santa Cruz’s 2025 prefeasibility study valued the project at $1.4 billion after tax and outlined a 23-year mine producing an average of about 72,000 tonnes of copper annually during its first 15 years.

At $4.25-per-lb. copper, the study estimated a 20% internal rate of return and cash operating costs of $1.32 per pound.

Funding path

EXIM gave Ivanhoe a preliminary letter of interest for as much as $825 million in April 2025. Melvin’s comments after his Washington visit suggest the bank could take on a larger share of Santa Cruz’s financing than previously indicated, with the final amount and terms still under negotiation.

BMO considers Ivanhoe’s financing risk moderate, citing its cash position and management’s access to capital.

Commercial banks have started due diligence, including an engineering review, while Ivanhoe is also speaking with investors at the company and project levels.

“We’re going to have a lot more useful life to use this asset as we engineer the most efficient solutions to develop the tremendous growth opportunities that we have,” Melvin said, “in and around the current Santa Cruz project.”

—With files from Blair McBride and Colin McClelland.