Arafura Resources Limited (ASX:ARU) has launched a Patersons Securities Limited-led $3 million Share Purchase Plan to help progress its wholly-owned Nolans Neodymium Praseodymium (NdPr) Project in the Northern Territory (NT).
The underwritten offer will be priced at a 20% discount to the 5-day volume-weighted average price of shares before the date-of-issue.
Shareholders will be offered the new shares free of fees and brokerage costs.
The company plans also to use the funds towards working capital as it works on a definitive feasibility study (DFS) for the Nolans project, 135 kilometres from Alice Springs, and reaches a final investment decision stage.
Arafura plans to build a separation plant on-site at the NT project that is adjacent to the Amadeus natural gas pipeline and 10 kilometres from the Stuart Highway, after discarding an earlier plan to build the plant in South Korea.
The rare earths project is considered one of the world’s largest undeveloped NdPr projects.
Its JORC-compliant resource of 56 million tonnes grading 2.6% total rare earth oxides with 26.4% neodymium praseodymium enrichment could potentially provide 5-10% of global demand of the oxide for use in permanent magnets.
Arafura is nearing completion of a pilot program and is expecting to finish the DFS in December 2018 and move towards a final decision on the project in 2019.
Arafura’s non-renounceable share purchase plan is open to shareholders that were on its register at 7pm market time last Friday, November 9, 2018.
Investors can subscribe to up to $15,000 in new shares, with the parcels that shareholders can invest in being sized at their choice of $1,000, $2,500, $5,000, $7,500, $10,000 and $15,000 lots.
Patersons will also offer shares under a top-up placement at the same price as the SPP, up to the company’s maximum placement capacity under ASX Ltd (ASX:ASX) listing rules.
The underwriter’s fees are 6% of gross proceeds, meaning Arafura can take home up to $2.82 million from its capital raising.
Shareholders will be despatched an offer this Friday, November 16, and have until Friday, December 7, 2018, to apply, with new shares expected to be quoted on the Australian Securities Exchange on Monday, December 17.
A copy of the offer will be available at the company’s website www.arultd.com from Friday, with online applications welcome.
For further information on the share purchase plan, call the Link Market Services Ltd share registry between 8.30am and 5pm AEDT on weekdays, on (+61) 1300 222 378.