US Markets

Rare earths developer Arafura to raise $30 mln for Australian project - document

Arafura Resources Ltd is set to raise at least A$40 million ($30.04 million) as it seeks to develop its Nolans rare earths project in central Australia, according to a term sheet obtained by Reuters on Tuesday.

MELBOURNE, June 22 (Reuters) - Arafura Resources Ltd ARU.AX is set to raise at least A$40 million ($30.04 million) as it seeks to develop its Nolans rare earths project in central Australia, according to a term sheet obtained by Reuters on Tuesday.

The capital raising will be in exchange for shares priced at 12 Australian cents each, which implies a discount of about 30% to the last close and will come in two tranches.

Majority shareholder ECE Nolas Investment Company will not participate in the placement, which is being run by Petra Capital, according to the term sheet.

The funding comes amid a renewed focus by Australia and other countries to diversify the production of minerals that are critical for the production of electric vehicles, consumer electronics and wind turbines in a market that is currently dominated by China.

The United States earlier this month said it would work with allies to secure the minerals needed for electric vehicle batteries and process them domestically in light of environmental and other competing interests.

The funds raised by Arafura are intended to be used to commence engineering and design activities as well as general working capital requirements.

The project is expected to reach a final investment decision in the second half of next year, with first production targeted for 2024. Discussions for supply are advancing with nine potential customers for 120% of the planned production, the term sheet said.

The project has conditional support from Australia's Northern Australian Infrastructure Fund for potential senior debt funding of up to A$100 million and Export Finance Australia for an additional A$200 million.

Demand for rare earth minerals neodymium and praseodymium (NdPr) is seen doubling to 98,000 tonnes by 2030 from 47,000 tonnes last year, according to the term sheet.

($1 = 1.3317 Australian dollars)

(Reporting by Melanie Burton; Additional reporting by Paulina Duran in Sydney; Editing by Amy Caren Daniel)

((melanie.burton@thomsonreuters.com Twitter: @MelanieMetals; +613 9286 1421; Reuters Messaging: melanie.burton.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Latest Markets Videos

    Reuters

    Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

    Learn More