Arafura confirms robust financials for Nolans NdPr project

An updated feasibility study has reaffirmed and upgraded the robust economics for Arafura’s Nolans neodynium-praseodymium (NdPr) project.

Some of the new numbers include net present value (NPV) and internal rate of return (IRR) – both measures of a project’s profitability – of $1.4bn and 18.1 per cent respectively, up from the 2019 feasibility study NPV of $968m and IRR of 17.97 per cent.

Operating costs are estimated at a low US$24.76 ($31.59) per kilogram of NdPr oxide while earnings before interest, taxes, depreciation, and amortisation has been estimated at $354m per annum based on a life of mine of 38 years.

Arafura Resources (ASX:ARU) moved to update the feasibility study on the recent strength in rare earths prices, increasing interest from financiers and potential offtake partners, and project changes determined through optimisation work.

“The feasibility study update confirms Nolans as a shovel-ready world-class NdPr rare earths project with ultra-low operating costs and the capacity to deliver robust financial returns over an initial mine life nearing 40 years,” managing director Gavin Lockyer said.

“It will provide an important tool with which to progress discussions on financing and offtake towards a successful close.”

“Following the non-binding letter of support from Export Finance Australia for a A$200m facility, we are working towards securing binding senior debt terms in line with the target for a final investment decision in the second half of 2022.”

He added that the rising demand for permanent magnets to support the manufacture of electric vehicles and the lack of alternative NdPr sources outside of China meant that the company was moving ahead with greater confidence than ever before.

The company is targeting to start front-end engineering design work in the middle of 2021 and noted that the updated feasibility study will provide the basis for securing finance through export credit agencies and other sources.

Nolans NdPr project

The Nolans NdPr project will comprise a mine, process plant and related infrastructure to be constructed 135km north of Alice Springs.

It has an ore reserve of 29.5 million tonnes grading 2.9 per cent total rare earth oxides with NdPr making up 26.4 per cent of the rare earths content.

Approvals are already in place and all Arafura needs to start development is to secure financing and offtake.

This article was developed in collaboration with Arafura Resources, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.