Ivanhoe Electric (NYSE-A, TSX: IE) is pursuing more than $1 billion in U.S.-backed debt as early construction begins at its Santa Cruz copper project in Arizona, with first cathode production targeted for 2029, CEO Taylor Melvin says.

The push comes as Washington works to accelerate domestic critical-minerals supply chains, with copper designated a critical mineral under U.S. policy in 2025 — a shift that has steered federal financing tools such as EXIM toward new mine development.

The U.S. Export-Import Bank (EXIM) has raised 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, located 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 roughly 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 by phone in mid-August.

Financing has become the central investor test for Santa Cruz as Ivanhoe advances a redesigned access tunnel designed to reduce 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 heightened interest follows public backing from U.S. President Donald Trump, who said at an Aug. 7 mining roundtable at the State Department that the bank was working to provide more than $1 billion for Santa Cruz. The event featured 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.

In an Aug. 12 note, Mikitchook said securing the funding should matter more to Ivanhoe's shares than further engineering or permitting milestones.

Ivanhoe's Toronto-quoted shares have dropped by more than a third this year as investors weighed whether Santa Cruz could be built without excessive shareholder dilution, and after an earlier timeline to begin construction this year was delayed.

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

Early construction

Crews have begun clearing roads, building fences and preparing the portal excavation, known as a box cut, Melvin said. Box-cut construction could begin 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 roughly a year later. First ore is scheduled for the leach pads in the second half of 2028, with first cathode production in the first half of 2029.

Surface work on the crushing, leaching and cathode plants would run 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 that underscores the broader water constraints facing new mines in the U.S. Southwest, where scarce groundwater has complicated or stalled other proposed projects.

Ivanhoe expects the machine to advance about 10 metres a day, roughly twice the rate of the earlier design. The change requires a smaller portal excavation, eliminates 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 pushed 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 issued 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 begun due diligence, including an engineering review, while Ivanhoe is also in talks with investors at both 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.