Gina Rinehart-backed Arafura Rare Earths has launched a $20 million placement, as it continues preparations for a $1.2 billion raising needed to fund its flagship project.
Gina Rinehart-backed Arafura Rare Earths has launched a $20 million placement, as it continues preparations for a $1.2 billion raising needed to fund its flagship project.
The rare earths aspirant emerged from a trading halt today with the announcement it had launched a $20 million fully underwritten placement.
The company is also planning to raise an additional $7 million through a share purchase plan, with oversubscriptions for a further $3 million.
It comes a day after Arafura told the market it was gearing up towards a major $US793 million ($1.2 billion) equity raising, an amount three times its market capitalisation.
Yesterday's announcement also detailed a finalised debt package, totalling $US775 million ($1.2 billion), for the development of the Nolans rare earths project.
It’s understood today's smaller placement is essentially an interim raising as a part a phased plan that is likely to take about six months. Its plans include raising capital from key customers and industry players before going to the wider market.
In the interim, the company is tightening its spending to conserve cash while the funding plan is put in place. Its targetting a final investment decision by the end of this year.
In today’s announcement, Arafura said the placement, across two tranches, was at an offer price of 16 cents per share, a discount of about 15 per cent to its last closing price.
Arafura said it remained focused on completing the equity component of the funding requirements for Nolans by the end of 2024.
That means it will be tapping investors for a further $1 billion to fund the project, which has been tipped to reach $1.6 billion in construction costs.
The proposed Nolans rare earths mine and refinery, 125 kilometres north of Alice Springs, plans to target 4,4000 tonnes of neodymium and praseodymium oxide per annum.
Those rare earths elements are key in the production of magnets and renewable technologies such as wind turbines.
It comes against a backdrop of a subdued market for rare earths, with prices remaining at five-year lows.
