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Arafura Resources signs MoU aimed at establishing NdPr oxide offtake

Published: 09:09 24 Sep 2019 AEST

Arafura Resources Ltd - Arafura Resources signs MoU aimed at establishing offtake
The MoU allows for the long-term sale of NdPr oxide from Nolans

Arafura Resources Ltd (ASX:ARU) has signed a second memorandum of understanding (MoU) to supply rare earth products from its 100% owned Nolans NdPr Project in the Northern Territory.

The MoU is with one of China’s leading manufacturers of neodymium iron boron (NdFeB) permanent magnets named Baotou Tianhe Magnetics Technology Co., Ltd.

Tianhe Magnetics has been operating for more than 30 years and has sales offices in Europe, US, Japan, South Korea and across China.

A definitive feasibility study (DFS) was completed for the Nolans Project in February 2019 highlighting a $729 million, 23-year mining operation producing 4,357 tonnes of NdPr oxide per annum.

MoU to lead towards offtake agreement

The provisions outlined in the MoU are non-binding on both parties and are intended to provide a framework for negotiating a final offtake agreement for the sale of up to 900 tonnes per annum of NdPr oxide.

The MoU also contemplates Tianhe Magnetics working with Arafura to develop further opportunities for long-term offtake of NdPr oxide or metal with third party end users.

Recent letter to shareholders

In a recent letter to shareholders, Arafura's chairman Mark Southey said: "FY19 was a year of great progress for the company.

"Whether one looks at the project’s fundamentals, engagement with the market and financiers or the configuration of the project, the company continued to move closer to the goal of commercialising the massive resource of neodymium and praseodymium at the Nolans site.

"This goal is drawing closer, particularly when one reflects on the fragile state of global NdPr supply, complicated by the overlay of China-US trade tensions and the questions this raises over the security of supply to US defence and other industries.

"We have delivered a long-awaited definitive feasibility study (DFS) on the project with positive results; completed a rigorous and highly technical pilot program to help ensure a smooth production ramp-up at the Nolans Project and give additional comfort to the finance community; configured a fully integrated Australian-based NdPr project producing a value-added export product; sourced vital capital to the company to fund a big year ahead and introduced a highly credentialed strategic rare earths sector investor as a key shareholder to the company."

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