Special Report: Rare earths developer Arafura Resources is a step closer to starting up its Nolans project in the Northern Territory after launching an offer to raise $11.5 million.

The money will in part go towards completing a major study at the site, where activity has already gotten underway including drilling and excavations to figure out plant foundations, tailings dams and access roads.

Arafura (ASX:ARU) is an emerging producer of neodymium-praseodymium (NdPr) – rare earths used to make ultra-strong neodymium-iron-boron (NdFeB) permanent magnets for micro-motors in the electric components of cars, such as seats, mirrors, wipers, steering and braking.

Demand for NdPr is expected to grow 8 per cent annually due to demand from electric car, wind turbine, industrial robot and smart phone makers.

China has been the dominant NdPr producer – but it’s expected the Asian powerhouse will be a net importer by early next decade as it pursues clean energy and develops its electric car industry.

That’s good news for Arafura – which estimates it can supply 5 to 10 per cent of global demand for NdPr oxide for NdFeB magnets.

The project is now well-funded with $2.45 million of the capital raising already locked in from institutional investors who paid $0.08 per share.

Another $9.05 million is up for grabs in a retail offer at the same price.

The offer will open to existing shareholders from August 20 to 29.

Work underway at Arafura's Nolans Rare Earths pilot site
Work underway at Arafura’s Nolans Rare Earths pilot site

“I’m delighted with the success of the Institutional Entitlement Offer and appreciate the support we have received from both existing and new institutional investors as we progress further development of the Nolans NdPr project” said Arafura boss Gavin Lockyer.

“Our feasibility study activities are moving along at a steady pace, the latest of which is an extensive on-site geotechnical program” he added.

This latest round of pre-construction ground work at Nolans comes soon after the project was granted environmental approval by the Northern Territory and Australian governments. It’s hoped the geotechnical study will help lower construction costs for the project.

Following the recent success of the critical fourth phase of its large-scale pilot program, Arafura is also working to complete the remaining phases to support engineering design for the project.

All phases are expected to be complete by November – which will provide around 30kg of NdPr oxide that can be used by prospective customers such as Chinese and Japanese magnet manufacturers to help qualify Arafura as a legitimate supplier.

“This will ultimately underpin an offtake (future sales) arrangement that will aid us in funding our project,” Mr Lockyer said.

“We’re working feverishly to secure offtake, bringing everything together so we’re in a strong position to execute the project in the early part of next year.”


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