Article by Haydn Black courtesy of Mining News Net.
NOT content with weighing into the Australian gas market, most recently with a circa A$250 million bid for Perth Basin explorer Warrego Energy, Gina Rinehart has now dealt herself into the rare earth elements space.
Arafura Rare Earths has just completed a A$121 million placement to accelerate development of its Nolans project in the Northern Territory with Rinehart’s Hancock Prospecting taking a cornerstone stake. Hancock has paid $60 million for a 10% interest in Arafura, one of a number of new shareholders buying into the company as it prepares to start development as one of a new generation of Australian REE producers.
A share purchase plan seeking up to $12 million on the same terms has also opened. The raisings are priced at 37c per share, a 15% discount to recent levels. Canaccord Genuity and Bell Potter Securities acted as joint lead managers.
Arafura managing director Gavin Lockyer said the placement received “exceptional support” and would the company to order long lead items, undertake early contractor engagement, and start initial work at the mine site near Alice Springs.
A processing plant will be built near Darwin. Arafura is continuing to talk with other strategic investors, offtake parties, and debt financiers as it prepares to take a final investment decision in 2023. Last month Arafura signed its first offtake agreement with South Korean automakers Hyundai Motor Company and Kia Corporation to take up to 1500 tonnes per annum of a 99% neodymium-praseodymium oxide product for an initial seven years.
Nolans has an expected capital cost of $1.6 billion, and is targeting annual production of 4400tpa from 2025. Average pre-tax earnings are estimated at $573 million over almost 40 years. Arafura started October with $49 million cash following a $41.5 million placement at 26.5c in August. Arafura’s shares have traded between 17c and 50c over the past year and were off 9% in early trade at 40c, capitalising it at $691 million.
