Special Report: Arafura has executed an advisory agreement with Talaxis to help push development of its Nolans neodymium-praseodymium (NdPr) project in the NT.

Under the agreement, Talaxis, a wholly-owned subsidiary of Noble Group, will introduce potential strategic partners to finance development of the project and target key markets and counterparties for Arafura Resources’ (ASX:ARU) product mix.

Noble Group is a major Hong Kong-based commodities trader.

Talaxis will also identify the optimal logistics routes to take Arafura’s products to market as well as locate the logistics routes and access to infrastructure for the transport and handling of project inputs, including reagents.

Talaxis became a substantial shareholder in Arafura with more than 5 per cent of the company’s issued share capital after acting as a sub-underwriter on a $23.2m entitlement offer last year.

“We are pleased to formalise this agreement, which reinforces Talaxis’ commitment to its investment in Arafura and aligns itself with our objective to preserve and enhance shareholder value,” Arafura managing director Gavin Lockyer said.

“Arafura sees significant value in continuing to leverage the substantial network and resources of Talaxis and the Noble Group for the development of the Nolans project.”

Nolans is classified by the Australian government as a key critical minerals project and boasts an economic reserve of 19.2 million tonnes at 3 per cent total rare earths (TREO), enough to keep the mine ticking for an initial 23 years.

NdPr, which is used for the manufacture of rare earth permanent magnets that are finding increased use in electric cars, makes up a significant 26.4 per cent of the project’s total rare earths content.

Read: Heavy rare earths prices are due some hefty gains in 2020, says Lynas

In a definitive feasibility study that was released in February 2019, Arafura pegged Nolans as a very low-cost producer, with operating costs of just $US25.94 ($36.85) per kilogram of its cornerstone NdPr oxide product.

The project is expected to produce 4,357 tonnes of NdPr oxide per annum and has robust economics with a net present value (NPV) of $729m and internal rate of return (IRR) of 17.43 per cent.

IRR and NPV are used to estimate the profitability of a proposed mining operation. The higher the number, the more profitable it is.

In January this year, Arafura appointed global tier one consultancy KBR as the project management consultant to the integrated project management team for the Nolans project.

According to Arafura’s timeline, construction could begin at Nolans as early as next year.


This story was developed in collaboration with Arafura Resources, a Stockhead advertiser at the time of publishing.
This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.