24/06/2021 - 14:00

Arafura raises $45m for rare earth project

24/06/2021 - 14:00

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Arafura Resources is moving closer toward rare earth production, having secured funds to begin design and engineering works for its Nolans project in the Northern Territory.

Arafura will begin front-end engineering and design works for its Nolans project near Alice Springs. Photo: Arafura Resources

Arafura Resources is moving closer toward rare earth production, having secured funds to begin design and engineering works for its Nolans project in the Northern Territory.

Perth-based Arafura is proposing a rare earth mine and processing operation 135 kilometres north of Alice Springs, expected to cost about $1 billion to build.

Arafura says its Nolans project will account for up to 10 per cent of the world's magnet rare earths supply once developed.

It holds a net present value of $1.4 billion and is expected to produce neodymium-praseodymium oxide and mixed middle-ready rare earths (with phosphate as a by-product) over a 38-year period.

Annual underlying earnings are estimated to be $354 million.

Arafura says it will use the proceeds from a placement and share purchase plan to finance front-end engineering and design works, estimated to take 12 months to complete.

A final investment decision is expected in the second half of 2022.

Managing director Gavin Lockyer said Nolans could help diversify rare earth supply chains.

“The Nolans project is the only new shovel ready NdPr oxide (neodymium) project in Australia capable of delivering advanced materials into the critical minerals supply chain,” he said.

“The company welcomes the support of new and existing shareholders and looks forward to applying their funds towards advancing the Nolans project.”

Mr Lockyer said the placement had attracted a number of Australian and offshore investors.

Arafura will issue about 33 million shares to raise $40 million under the placement, with Petra Capital acting as lead manager and bookrunner.

The offer is priced at 12 cents and represents almost a 30 per cent discount to Arafura’s last closing price on June 21.

The SPP is priced on the same terms and will raise up to $5 million.

Arafura emerged from a trading halt this morning, with its share price closing down 24 per cent to trade at 13 cents on Thursday.

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