For the second time in more than a year, county commissioners voted to allow a mining company to begin the process of issuing tax-exempt industrial revenue bonds to finance a processing facility outside Delta.
Ares Strategic Mining was back before commissioners seeking a second vote on an inducement resolution last week. The resolution essentially allows the county to be named as a sponsor for raising up to $10 million through the sale of tax-exempt bonds.
The company had previously won passage of a similar resolution in September 2021 but didn’t issue the bonds after plans changed when the company considered placing the proposed processing facility closer to its mine sites in Juab County, which would require that county to sponsor the bonds.
Ares is developing a one-of-a-kind fluorspar mining operation, with 6,000 acres and about 200 mine sites in Juab County. But the company told commissioners locating the processing facility closer to the mines was later deemed unfeasible and it is now planning to locate it on industrial land off US 6 outside Delta.
Fluorspar is widely used in steel and aluminum manufacturing as well as chemical production and electronics.
Patrick Mullen, the county’s economic development opportunity zone and financial incentives director, reminded commissioners at their regular meeting last Tuesday that Ares had already come to them for permission to go to the state’s bonding authority.
“What they are really asking for here today is a really unique kind of municipal financing tool in which the company themselves will be able to access municipal finance markets through Millard County. But it doesn’t put any financial obligation on the county. It allows them to go access tax-exempt bonds and borrow from investors at more favorable rates,” he told commissioners.
The company successfully won the go-ahead from the Private Activity Bond (PAB) committee last year to move forward.
“Now the final step is to come back before this commission and kind of talk about why they are ready to go forward with this,” Mullen said.
James Walker, Ares’ CEO, said the proceeds from the bond sale would go only toward building the processing plant, which he called “the only one of its kind in the country.”
Walker said he anticipates the facility to begin operations next year, employing about 50 people and paying a higher wage than the area’s average pay.
Commissioner Dean Draper asked why Juab County was still listed as the bond sponsor on Ares’ application to the bond authority.
“We opted to try and build the facility at the mine site in Juab. When we actually located a very decent plot of land just off Highway 6 outside of Delta, Utah, that gave us a way better manufacturing base,” the CEO responded. “The reason why it showed Juab being the sponsor was because of that initial difficulty sourcing that industrial land.”
Draper further questioned how Ares would come up with the additional $500,000—it had applied for $10.5 million—through its bonding effort since Utah’s Private Activity Bond Authority is only allowed under federal rules to authorize a maximum of $10 million.
Fred Williams, a bond attorney with law firm Snell & Wilmer’s Phoenix office, said the additional funds would come from the sale of taxable bonds, which has no statutory limit. He said the $500,000 will cover the company’s costs for issuing the tax exempt bonds.
Viktoriya Griffin, Ares’s chief financial officer, said the total project cost is anticipated to be about $14 million with $10 million coming from bond proceeds. She said about a further $8 million in expenses is anticipated with financing for that coming from the sale of equity. She said the company’s parent organization is a publicly-traded company and shares in that company would finance the remainder of the project.
County Treasurer Sheri Dearden asked whether the company anticipated closing on its bond sales by the PAB-set deadline of the third Saturday in December. Williams said it would close by the deadline and that the company would return in a matter of weeks to seek a final approval from the county on a bond authorization resolution.
County Attorney Patrick Finlinson said the county was hiring an outside bond attorney to review the proposed bond issuance on the county’s behalf.
He reiterated that the county would suffer no encumbrances from any bond sale, simply act as a sponsor and
pass through for the financing.
“This inducement resolution doesn’t bind us to issue the bonds. I asked Fred (Williams) to add that language specifically and he did. That’s right in this resolution,” Finlinson told commissioners. “It’s not binding us to do this. It’s enabling them to take the next step and pursue the financing.”
Commissioner Bill Wright asked Dearden whether the county has ever acted as a sponsor on such a bond issuance before. She said this was the first time. And, she added, the state has only approved tax exempt industrial revenue bond issuances three times in the past 25 years.
“It’s a new arena to a lot of people,” Dearden said.
She said she was anxious to look at the company’s internal financial picture before advising the county to move forward.
Griffin said that material would be forwarded to the county as soon as commissioners passed the inducement resolution.
A number of questions were raised about water use and transportation issues, but County Planner Adam Richins reminded commissioners that such issues could be more adequately dealt with during the company’s conditional use permitting process.
A number of comments were made about water usage and concerns raised by Delta City officials. Walker said the company would not be using city water. Asked how Ares would manage waste water, the CEO said plans call for it to be recycled and reused over and over.
After the discussion, commissioners passed a bond inducement resolution unanimously. A bond authorization resolution is likely to come before the commission—the county plays a role in setting the bond term, interest rates, and principal amounts, Williams said—in the next few weeks.