Arafura flags $28m impairment

Rare earths company Arafura Resources says it will incur a $27.7 million non-cash impairment charge against its Nolans project in the Northern Territory.

In a statement, Gavin Lockyer-led Arafura said it would be disclosing the non-cash charge in its upcoming half-year report, against the evaluation assets of Nolans.

“The anticipated impairment charge has resulted from a review of the deferred evaluation costs for Nolans and specifically those incurred in the development of the now superseded hydrochloric acid pre-leach flow sheet,” Arafura said in a statement.

“The company has taken a conservative approach and decided to expense the evaluation costs for the demonstration-scale HCI pre-leach and sulphation program in 2011 and 2012.”

Arafura said it believes it was prudent to make the adjustment to better reflect the financial position of the company.

“The impairment charge is non-cash in nature and has no bearing of future cash flows or the cash position of the company,” it said.

“The company is continuing its optimisation work to potentially realise further expenditure improvements for the flow sheet.”

Arafura is progressing joint venture plans with South Korean green energy and chemical firm OCI Company.

Arafura shares were unchanged at 5.3 cents each at the close.