Chinese company, East China Exploration, is set to take a 25 per cent in Perth-based Arafura Resources after subscribing to $24 million worth of shares at a significant premium.
Arafura today confirmed that East China Exploration (ECE) will acquire 60 million shares at prices of up to 40 cents each through two tranches.
At 15:08 AEDT, shares in Arafura were trading at 29c, up 1.5c.
Last month, Arafura flagged the share acquisition, with the first tranche consisting of $8.5 million worth of shares priced at 30c each.
Shares in the second tranche are priced at 40c apiece.
The placement is subject to Foreign Investment Review Board and shareholder approvals.
Funds from the placement will be used to advanced the Nolans rare earths-phosphate and uranium project in the Northern Territory.
Additionally, ECE also has the option to enter into several joint ventures to explore Arafura's other tenements in the NT.
The announcement is below:
Arafura Resources Limited (ASX:ARU) has this week confirmed that the Chinese company East China Exploration (ECE) will invest A$24 million to acquire a 25% interest in Arafura. ECE will acquire 60 million shares at prices up to 40 cents per share by way of two placements.
The details of ECE's commitment were confirmed at ECE's Headquarters in Nanjing, China this week in meetings with Arafura's Chairman, Ian Laurance and Managing Director, Alistair Stephens.
Mr. Laurance and Mr. Stephens met with senior ECE executives. Mr. Laurance, speaking from Nanjing following the meetings, said that the ECE placements would be subject to approval by Arafura shareholders at an EGM that would be held as soon as possible. The ECE involvement would also require FIRB approval and both companies were proceeding with this application.
"ECE, with a history of 54 years, is a major mineral exploration, development and mining group based in the Jiangsu Province of China and they are interested in assisting Arafura to develop the Nolan's rare earths-phosphate and uranium project in Northern Territory", Mr. Laurance said.
"The ECE capital injection will ensure that Arafura has the cash to progress our feasibility work for the Nolans project this year. ECE will then assist us in project financing for mining and processing for the Nolans project."
Mr. Laurance said that following the meetings in Nanjing this week, a delegation of senior ECE Executives will travel to Australia in April to visit the Nolan's site in central Australia and to meet with the Northern Territory Minister for Mines, Hon Kon Vatskalis and the Federal Minister for Resources, Hon Martin Ferguson.
Managing Director Mr. Stephens said that in addition to assisting the funding of the Nolans project, ECE would enter into a series of relevant Joint Ventures to explore Arafura's other tenements in the Northern Territory.
"ECE has had great success in exploration across China and in many other countries and they are keen to bring their expertise to assist Arafura in developing further opportunities." Mr. Stephens said.