19/05/2022 - 09:58

Arafura lines up Hyundai rare earths deal

19/05/2022 - 09:58

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Arafura Resources shares are trading higher on the back of a new potential seven-year offtake deal with South Korean-based automotive business Hyundai.

Arafura lines up Hyundai rare earths deal
Arafura has signed a non-binding MoU with Hyundai. Photo: Unsplash

Arafura Resources shares are trading higher on the back of a new potential seven-year offtake deal with South Korean-based automotive business Hyundai.

The Perth-based rare earths hopeful told the market it had signed a non-binding memorandum of understanding with Hyundai for the supply of up to 1,000 to 1,500 tonnes per annum of NdPr Oxide from its planned Nolans project in the Northern Territory.

Arafura is targeting first production in 2025 and is currently in the process of securing financing for the $1 billion project, which is set to include a mine beneficiation and rare earths processing plant and separation plant.

It last month onboarded NAB and Societe Generale to lead a $US510 million debt raise and has already received a pledge of $200 million from Export Finance Australia and $100 million from the Northern Australia Infrastructure Facility.

A further $30 million was contributed by the federal government through its Modern Manufacturing Initiative.

Subject to negotiations, the Hyundai deal would start that year for a seven-year term and account for a more than a third of Arafura’s average annual production capacity.

The parties say they are working to pin down a definitive offtake arrangement by September this year.

Broadly, Arafura says today’s announcement falls within its wider offtake strategy, targeting automotive original equipment manufacturers.

Arafura managing director Gavin Lockyer said he was looking forward with ‘great optimism;’ about next steps for the offtake.

“We are delighted with the relationship that we have been developing with Hyundai over a sustained period of time and our growing connection with other organisations in South Korea focused on the electric vehicle market,” Mr Lockyer said.

“We look forward with great optimism about the next steps in the offtake agreement process and the impetus this will provide for the development of our rare earths deposit at Nolans, which is strategically and economically important for Australia.”

Fellow Perth-based junior Liontown Resources also recently struck a deal in the international electric vehicle market, booking a five-year supply arrangement with Tesla Corporation.

Arafura shares were up 14.3 per cent to trade at 40 cents at 11:29 am AEST.

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