Australia’s richest person Gina Rinehart will up her stake in Arafura Rare Earths, as it becomes the latest developer to rattle the tin off the back of a soaring share price.
The developer of the Nolans rare earth project in the Northern Territory has launched a $475 million two-tranche institutional placement and $50 million share purchase plan, discounted 25 per cent to 28 cents a pop.
Mrs Rinehart’s private mining vehicle Hancock Prospecting has committed to subscribe for $125 million, which will up its holding from about 10 per cent to 15.7 per cent.
It also lifts the value of the mining magnate’s rare earths portfolio, which is estimated to sit above $3.5 billion through her multiple interests.
The market was told the placement was fully underwritten, with the exception of Hancock, and that Arafura was also undertaking a share purchase plan.
Under the SSP, Arafura is tapping existing shareholders for about $50 million at the same price, which would bring total proceedings of the overall raise to $525 million.
Barrenjoey Markets and Canaccord Genuity are acting as joint lead managers, bookrunners and underwriters to the placement, while Johnson Winter Slattery has been engaged for legal advice.
Arafura plans to put the funds towards Nolans’ capital costs, with the project tipped to cost $1.7 billion to build over a three-year construction timeframe.
The developer also told the market it had picked Hatch as the preferred engineering, procurement and construction management provider for its rare earths project.
It all comes just a week after Arafura was named one of the big beneficiaries of the US President Donald Trump and Prime Minister Anthony Albanese's $13.5 billion critical minerals deal.
Arafura received conditional backing worth US$100 million from Export Finance Australia and could potentially pocket US$300 million from Export-Import Bank of the United States.
It builds on Arafura’s existing $1.05 billion debt and financing package, and Tuesday’s raise comes after the developer tapped investors for $85 million in August.
Arafura managing director Darryl Cuzzubbo told the market on Tuesday that the raise marked a transformational milestone as they advanced towards a final investment decision.
He said following the raise he would be advancing discussions with strategic customers and partners for the balance of funding required for the rare earths project.
Mr Cuzzubbo added that Australian and US government support and deal underscored the geopolitical significant of Western rare earth supply chains and the Nolans project.
“In light of this backdrop, we are confident that we can finalise our remaining equity funding package in a timely and attractive manner,” he said.
Arafura’s market capitalisation has more than doubled to $1.1 billion from August, shortly after rare earth stocks went on a tear after the US Department of War's landmark deal with MP Materials.
The DoD is investing $US400 million in MP Materials to secure its supply of rare earths, and is setting a price floor for the neodymium-praseodymium (NdPr) it’s planning to buy at $US110 per kilogram.
It came after China – which has the monopoly on rare earths production and processing – imposed export restrictions on heavy rare earths terbium and dysprosium in response to US tariffs introduced in April.
The Australian government followed in the US' footsteps and pledged a $1.2 billion critical minerals stockpile plan, under which its considering similarly setting a price floor and taking an equity stake - sending the share price of local developers soaring.
Arafura's share price over the past 6 months:
Mrs Rinehart also sits on the share registry of California rare earths miner MP Materials and WA miner but Malaysian processor Lynas Rare Earths.
Arafura has become the latest rare earths developer to tap investors amid heighted geopolitical interest in the critical mineral with defence and renewable technology applications.
Last week Australian Strategic Materials rattled the tin for $55 million to double alloy production and propel its US expansion, but its share price took a hit.
Prior to that, St George Mining added $72.5 million to its bank balance - including $22.5 million from Mrs Rinehart - to develop its Araxa rare earths project in Brazil.
Mrs Rinehart also has a stake in Brazilian Critical Minerals, which launched its own $120 million raise. The biggest local player, Lynas, raised $815 million in August.
