First Phosphate Corp. (CSE:PHOS) announced it has secured a letter of interest (LOI) from the Export-Import Bank of the United States (EXIM), indicating potential financing of up to US$170 million.
The LOI, received on September 26, is aimed at supporting First Phosphate's acquisition of US goods and services in Canada, with a maximum repayment term of 10 years before its expiration on October 14, 2024.
EXIM is a government agency focused on promoting American jobs by facilitating the export of US goods and services. It operates independently within the Executive Branch and steps in when private sector lenders are unable or unwilling to provide financing.
EXIM aims to level the global playing field for American businesses, enabling them to compete effectively overseas. By assuming credit and country risks that private lenders might shy away from, EXIM helps companies create more well-paying American jobs.
The transaction stands to potentially benefit from special considerations under Section 402 of EXIM's 2019 reauthorization, focusing on mitigating competitive impacts from select countries, including China.
In practical terms, this means that the funding provided by EXIM to First Phosphate may come with certain advantages or incentives aimed at mitigating any advantage gained by foreign competition, particularly from China, in similar export opportunities. These advantages could include more favorable terms, interest rates, or conditions designed to support American businesses and industries, fostering their leadership and competitiveness, particularly in areas identified as "Transformational Export Areas" under EXIM's China and Transformational Exports Program (CTEP).
First Phosphate CEO John Passalacqua expressed gratitude to EXIM and US policymakers for their efforts in strengthening the North American lithium iron phosphate (LFP) battery supply chain, telling shareholders that the company is “committed to creating a strategic purified phosphoric acid reserve” to help develop the LFP battery industry in North America.
“Access to this stable, government-backed financing allows us to build out our projects judiciously while limiting the amount of equity dilution to our shareholders,” Passalacqua added.
EXIM will conduct standard due diligence before issuing a final commitment, ensuring compliance with all policies, legal, and eligibility requirements.
First Phosphate holds over 1,500 square kilometres of royalty-free, district-scale land claims in the Saguenay-Lac-St-Jean Region of Quebec.