Arafura Secures Project Funding Milestone with Capital Raise Completion

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The critical path to developing one of the West's most significant rare earths projects has been cleared of a major hurdle. Arafura Rare Earths has successfully concluded a substantial capital raising initiative, amassing approximately A$481.4 million to underpin the financing of its flagship Nolans project in Australia's Northern Territory. This funding achievement marks a pivotal step toward a final investment decision.

Trading of new shares issued under the company’s Share Purchase Plan (SPP) commenced on the Australian Securities Exchange (ASX). The SPP, which closed on December 9, raised A$7.1 million through 748 applications, resulting in the issuance of roughly 23.1 million new shares at A$0.28 each. This retail component complements a previously completed two-tranche institutional placement that gathered A$475 million in early December.

The second and larger institutional tranche, worth about A$351.6 million and involving over 1.25 billion new shares, received shareholder approval at an extraordinary general meeting held on December 5.

Strategic Backing from a Mining Giant

A notable feature of the placement was a A$125 million investment from Hancock Prospecting, Australia's largest private mining company. This commitment elevates Hancock's stake in Arafura to approximately 15.7%, a move interpreted by the market as a strong endorsement of the Nolans project's strategic value.

Multi-Layered Finance Package for Development

The equity raise forms a core part of a broader, multi-sourced financing package for the Nolans project, which carries an estimated capital cost of US$1.23 billion. The comprehensive structure includes several key elements:

• Senior Debt Facilities: US$775 million in facilities with in-principle approval from Export Finance Australia, Export Development Canada, the Northern Australia Infrastructure Facility (NAIF), and commercial banks including KfW IPEX-Bank and ING.
• Australian Government Equity: A$200 million in conditional funding from the National Reconstruction Fund Corporation.
• Export Finance Australia Equity: Up to US$100 million as a conditional equity investment.
• German Raw Materials Fund: Advanced discussions are ongoing regarding an investment of approximately €100 million.

According to the company, the primary remaining condition before targeting a Final Investment Decision (FID) in the first quarter of 2026 is securing the final tranche of German government-linked funds, amounting to roughly A$115 million.

Positioning in the Global Rare Earths Landscape

The Nolans project is designed to become one of only two fully integrated 'ore-to-oxide' rare earths operations outside of China. By managing the entire processing chain on-site, Arafura aims to produce refined neodymium-praseodymium (NdPr) oxide, rather than raw concentrate, capturing a greater portion of the value chain.

The project's geopolitical significance was underscored in October through the US-Australia Compact on Critical Minerals and Rare Earths Supply Chains. Within this framework, the US Export-Import Bank provided a non-binding letter of interest for potential project financing of up to US$300 million.

Projected Economics and Output

Based on its definitive feasibility study, Arafura forecasts the following key metrics for Nolans:

• Mine Life: 38 years
• Annual NdPr Oxide Production: 4,440 tonnes
• Annual SEG/HRE Oxide Production: 573 tonnes
• Post-Tax NPV8: Ranging from US$1.73 billion (base case) to US$2.55 billion (incentive case)
• Post-Tax IRR: Between 17.2% and 20.6%

Market Context and Demand Drivers

The global rare earths market is experiencing structural growth, primarily fueled by the accelerating adoption of electric vehicles and the expansion of renewable energy infrastructure. Industry analysis suggests demand for NdPr could roughly double over the next decade, while new non-Chinese supply sources are slow to emerge.

Currently, China controls an estimated 90–99% of the world's rare earths processing capacity, creating supply chain dependencies for manufacturers in the electric vehicle, wind turbine, and defense sectors.

Path Forward to Construction

With shareholder approvals secured and the financing package largely locked in, Arafura has significantly de-risked the pathway to FID. The main outstanding item remains finalizing terms with the German Raw Materials Fund, which would represent the last major component of the funding mix.

In investor presentations, CEO Darryl Cuzzubbo has highlighted the parallel support from Australian and US government agencies, emphasizing the geopolitical importance of establishing Western rare earths supply chains and the role Nolans is poised to play.

Share Price Impact and Next Steps

The capital raising activity introduced notable volatility to the share price. The placement price of A$0.28 represented a 25.3% discount to the last closing price of A$0.375 prior to the announcement, reflecting both a standard placement discount and the dilutive effect of the large issuance volume.

With the SPP shares now trading, this funding round is complete. The company can now focus on advancing the project toward its construction phase. Ongoing progress will heavily depend on securing the remaining German funds as planned ahead of the targeted FID in Q1 2026.