• Funding package to help develop mine, magnet facility

• Deal to be announced on Monday, investor call planned

• Latest investment by Trump admin into minerals sector

Jan 24 (Reuters) - The Trump administration is taking a 10% stake in USA Rare Earth USAR.O as part of a $1.6 billion debt-and-equity investment package aimed at helping the company develop a domestic mine and magnet facility, two sources familiar with the deal told Reuters.

The deal and a separate $1 billion private investment will be unveiled on Monday and Oklahoma-based USA Rare Earth will host a morning conference call with investors to discuss the terms, according to one of the sources who was briefed on the plans.

The White House did not immediately respond to a Reuters request for comment. USA Rare Earth declined to comment.

China is the largest global processor of rare earths, a group of 17 minerals used to make a range of electronics and military equipment. The U.S. produces only small volumes of rare earths, which has sparked a push in recent years from Washington to increase output.

USA Rare Earth has been developing a mine in Sierra Blanca, Texas, with Texas Mineral Resources TMRC.PK that is slated to open by 2028 and has a magnet manufacturing facility in Stillwater, Oklahoma, that is expected to launch later this year.

As part of the USA Rare Earth investment, Washington will receive 16.1 million shares in the company along with warrants for an additional 17.6 million shares, according to the sources. Both would be priced at $17.17 a share, near where the company's stock traded earlier this month.

The Financial Times was first to report on the investment.

The deal is the latest move by the Trump administration to move into the critical minerals space after taking equity stakes last year in MP Materials MP.N, Lithium Americas LAC.TO and Trilogy Metals TMQ.TO.

A senior Trump official said last month that the administration was planning more "historic deals" with the U.S. mining sector to increase production of lithium, rare earths and other critical minerals used in national defense, artificial intelligence and other related areas.

USA Rare Earth has hired Cantor Fitzgerald, a financial services firm chaired by Brandon Lutnick, the son of U.S. Secretary of Commerce Howard Lutnick, to help with fundraising efforts, one of the sources said.