Arafura raises $18.5m for Nolans rare earth development

Perth-based mineral explorer Arafura Resources NL has raised around $18.5 million through a placement to fund the operation of a rare earths treatment plant and further drilling at its Nolans project.

The full text of a company announcement is pasted below

The Directors of Arafura Resources Ltd (ASX:ARU) advise that the Company has raised approximately $18.5 million before costs through the allocation of 18.5 million new shares. The stock placement was managed through Intersuisse Corporate Pty Ltd to institutional and sophisticated investors, pursuant to Section 708 of the Corporations Act.

Proceeds from the placement will be used to further advance the Nolans project beyond the prefeasibility stage. The funds will be used as follows;

• $5 million over 6 months commencing in February 2008 for the operation of a rare earths and phosphoric acid pilot plant, to optimise the treatment process.
• Additional costs for engineering studies to refine the cost structure of the Nolans project.
• $3 million of the funds will be used in the next 6 months in an intensive drilling campaign for detailed assessment of current resources, define additional resources and target higher grade zones of mineralisation at Nolans (in progress),
• $3 million will be undertaken in exploratory assessment for rare earths and other commodities on other projects in 2008.
• The remainder of the funds will be for working capital and project development studies.

Commenting on the capital raising, the Managing Director Alistair Stephens stated "The strong institutional support in the placement is a very encouraging endorsement of the recent analysis underpinning the Nolans project pre-feasibility study. Arafura is well placed to take the project through pilot plant to feasibility and eventual operations" he added.

This funding enhances Arafura's financial position with respect to its current project development program.