Arafura Rare Earths has gained further support for its Nolans project through a letter of interest from Canadian export credit agency Export Development Canada (EDC) for potential funding of up to US$300 million (AU$441 million).
The company’s neodymium-praseodymium (NdPr) project in the Northern Territory boasts a resource estimate of 56 million tonnes at an average 2.6 per cent rare earths oxide and 11 per cent phosphate. A significant component of the project will be downstream processing, with Arafura signalling its clear intent for a beneficiation, extraction and separation plant.
It is believed to be one of the only advanced ore-to-oxide projects of scale in the western world and is expected to churn out 4440 tonnes of NdPr oxide a year when it hits peak production in 2028. The two rare earths are essential components in the manufacture of permanent magnets for wind turbines.
Arafura says EDC’s support is linked to a strategic arrangement between the credit agency and global giant General Electric Company (GE) to advance the energy transition.
Last year, the company signed a non-binding memorandum of understanding to negotiate a long-term sale and purchase agreement to secure rare earths for GE’s renewable energy division. The agreement also outlined a potential strategic equity investment by GE in Arafura.
This is further demonstration of the strategic significance that international governments place on the project and its capacity to provide a sustainable supply of critical NdPr to meet the needs of major businesses in key global jurisdictions. We are proud to include GE among the tier-one OEMs associated with offtake from Nolans, and welcome GE’s provision of its Aero power generation technology for the Project. Arafura Rare Earths managing director Gavin Lockyer
Last April, Arafura announced the appointment of Société Générale and National Australia Bank (NAB) as the initial mandated lead arrangers (MLA) for Nolans’ debt financing facility. Their role was, in part, to seek to arrange limited recourse debt finance of about US$510 million (AU$749 million).
In January, leading international project financier KfW IPEX-Bank was appointed as an additional MLA and bookrunner to arrange and syndicate the debt-financing facility for Nolans.
While EDC’s support for the Nolans project is not a full commitment and is subject to due diligence procedures, the potential funding will likely reduce the proposed debt-financing facility targeted by the MLAs.
Arafura says it has also mutually agreed to terminate NAB’s role as MLA under a mandate letter, with Société Générale and KfW IPEX-Bank to continue in the role.
The latest letter of interest follows a provisional untied loan guarantee of up to US$600m (AU$882 million) from major German export credit agency Euler Hermes Aktiengessellschaft. Arafura has also secured a combined $350 million from Export Finance Australia and the Northern Australia Infrastructure Facility.
The Nolans project seems to be gaining significant traction among investors, with Australia’s richest woman Gina Rinehart recently backing the operation by cornerstoning Arafura’s $121 million capital raise in December. Ms Rinehart’s iron ore company Hancock Prospecting cut a cheque for $60 million, almost half of the recent capital raise, at an investment of 37 cents a share for a 10 per cent stake in the rapidly-advancing rare earths company.
In November, Arafura signed a binding offtake agreement to supply NdPr from its Nolans project to major motor vehicle manufacturers, Hyundai and Kia.
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