Arafura Rare Earths: Investor Sentiment Shifts as Key Milestone Approaches

Arafura AU000000ARU5

A significant surge in trading activity and share price for Arafura Rare Earths points to renewed market confidence, shifting focus back to the company's flagship Nolans project. The critical question now is whether the final investment decision is on the immediate horizon.

The equity's recent performance has notably outpaced the broader resources sector. In the latest session, shares advanced by 6.00% to AUD 0.265. This move was accompanied by exceptionally high volume, with approximately 57 million shares changing hands—a figure that substantially exceeds the monthly average. From a technical perspective, this activity allowed the stock to break through a key short-term resistance level at AUD 0.25, a development often interpreted as a sign of returning institutional interest.

This reassessment appears driven by the Nolans Rare Earths Project. The financial overhang has largely been alleviated following an October 2025 placement that raised AUD 475 million. Interestingly, the current share price remains below the placement price of AUD 0.28. Market observers see a discrepancy here, given the firm off-take agreements already secured with automotive giants Hyundai and Kia.

The Final Hurdle: Securing Energy Supply

All attention is now fixed on resolving the project's power supply. A previous arrangement with the Mereenie Joint Venture concluded earlier this year, forcing Arafura to seek alternative sources. Market speculation is currently centered on the expectation that a non-binding memorandum of understanding with Tamboran Resources will soon be formalized into a firm gas supply contract.

This step is crucial. Securing a gas supply from the Beetaloo Basin represents the last major precondition for accessing debt financing and reaching a final investment decision (FID), targeted for early 2026. The company's solid financial base, reinforced by a AUD 100 million commitment from Export Finance Australia, provides the necessary foundation for this final push.

The Critical Path to Final Investment Decision

The first quarter of 2026 is set to be a pivotal period for the stock's trajectory. Investors are primarily awaiting news of a binding gas supply agreement with Tamboran Resources, which would clear the final technical obstacle. Before that, the upcoming quarterly report in January will provide concrete updates on construction progress at the Nolans site and details on finalizing the approximately USD 1 billion debt package. Successful execution on these fronts is expected to further narrow the gap between the current share price and the project's perceived fair value.