Guess which ASX small-cap mining stock is rocketing 32% today

This mining stock is being given a major cash injection from the government.

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Renascor Resources Ltd (ASX: RNU) shares have returned from a brief trading halt with a bang.

At the time of writing, the ASX small-cap mining stock is up over 32% to 11 cents.

Why is this ASX small-cap mining stock rocketing?

Investors have been fighting to get hold of the graphite developer's shares today after it announced the receipt of major government funding.

According to the release, Export Finance Australia (EFA) has confirmed and approved a $185 million loan facility from the Australian Government's $4 billion Critical Minerals Facility.

These funds will be used to fast-track the construction of the upstream portion of the BAM Project.

The BAM Project combines the Siviour Graphite Deposit in South Australia, which is the largest reported graphite reserve outside of Africa, and a state-of-the-art processing facility in South Australia. It will manufacture Purified Spherical Graphite for the electric vehicle battery supply chain through Renascor's eco-friendly purification process.

The loan facility comprises a $150 million term facility and a $35 million cost overrun facility to support any unforeseen increase in capital cost through construction.

The ASX small-cap mining stock advised that the drawdown of the loan facility will be subject to a number of conditions. This includes the completion of all due diligence to the satisfaction of EFA.

Though, it highlights that EFA has been progressing with its due diligence on the upstream Graphite Concentrate operation. It notes that aspects of the due diligence have been completed already and no fatal flaws were identified.

'Delighted'

The ASX small-cap mining stock's managing director, David Christensen, was delighted with the news. He stated:

We are delighted to have received confirmation that the A$185 million conditionally approved loan from the Critical Mineral Facility is approved to support our strategy of fast-tracking the construction of the upstream portion of the BAM Project. Our phased development strategy provides us with an early-mover advantage by entering the market with reliable supply of natural graphite concentrates from Australia, an IRA-aligned jurisdiction.

The strategy allows us to generate early cashflows, accelerate production of graphite concentrates, continue to build valuable offtake relationships with leading anode suppliers, operate and optimise the PSG Pilot Plant and PSG product qualification, and de-risk the subsequent development of the downstream PSG processing facility. In the Siviour graphite deposit, Renascor is fortunate to be endowed with a large world class asset. The support from the Australian Government and EFA is testament to the gravity of the opportunity for Renascor, and Australia, to become a world-leading supplier of graphite into the Lithium-ion battery supply chain.

Renascor's shares remain down over 50% on a 12-month basis despite today's monster gain. Shareholders will no doubt be hoping today is a turning point.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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