Arafura Resources (ASX: ARU) is an emerging rare earths producer. Arafura is currently developing its Nolans rare earths-phosphate-uranium project in Australia’s Northern Territory. The project is underpinned by a 30 million tonne resource that can sustain a 20-year mine life.
Arafura has expanded the scope of a Bankable Feasibility Study for the Nolans Project and extended the expected completion date of the Nolans Project Bankable Feasibility Study by nine to twelve months to simplify the Nolans Project flow sheet to focus predominately on production of rare earth products.
Arafura announces placement and rights issue to advance Nolans Project
Perth-based speciality metals explorer and developer Arafura Resources (ASX: ARU) has announced a placement of $17.5 million and a renounceable Rights Issue to raise up to an additional $17.8 million to advance the Nolans Project to meet world demand for Rare Earths.
Major Shareholder East China Exploration & Development Bureau has been invited to maintain its pro-rata shareholding (24.86%) at the Placement price.
Any investment by ECE will require Australian and Chinese regulatory approvals.
The funds raised, together with Arafura’s existing cash reserves, will be used for ongoing drilling and exploration activity with the aim to define the full extent of the Nolans resource; progressing activities of the Nolans Project’s Bankable Feasibility Study and the Environmental Study and corporate and offer costs as well as working capital requirements.
Arafura Managing Director Dr Steve Ward said the capital raising had been structured to both attract new institutional Shareholders and, importantly, to encourage maximum participation by existing Shareholders.
“The Board’s decision to include a pro-rata Rights Issue to existing Shareholders is in recognition of their long-term support of Arafura throughout the development of its key asset, the wholly-owned Nolans Rare Earth Project, and provides further opportunity to participate in the Company’s future growth,” Dr Ward said.
“The new funds will enable Arafura to move forward at full pace with the Nolans Project and with other related work programs.”
Demand for Rare Earths continues to grow underpinned by new technology and clean energy applications. Industry commentators all note that suppliers will struggle to keep pace with future demand, with shortfalls likely.
Historically, China has supplied approximately 95% of the global rare earth needs. In the past few months, China has indicated its intention to reduce and regulate exports to meet its increasing domestic needs. This will further tighten global rare earth markets.
Dr Ward said Arafura’s 100%-owned Nolans Project contained a world-class rare earths deposit capable of supporting a 20-year mine life and the Company was targeting production of 20,000 tonnes of Rare Earth Oxide per annum from 2013.
“The fact that Arafura is one of the few near-term rare earths producers outside China capable of supplying customers in markets throughout the world makes the Company attractive to all global rare earth users," he said.
