- Arafura Rare Earths (ASX:ARU) receives a non-binding LOI from Korea EXIMbank for up to US$150 million in debt financing for the Nolans project
- The proposed financing includes a direct loan of US$75 million or more and an additional amount, equal to or less than US$75 million, as a debt guarantee
- The LOI is tied to the binding off-take arrangement between Arafura, Hyundai, and Kia, securing the supply of up to 1500 tonnes per annum of NdPr oxide, constituting approximately 40 per cent of the annual production from Nolan
- ARU shares last traded at 20.3 cents
Arafura Rare Earths (ASX:ARU) has secured a non-binding letter of interest (LOI) from Korea EXIMbank (KEXIM) for up to US$150 million (A$225 million) in debt financing for the Nolans Project.
The proposed financing includes a direct loan of $75 million or more and an additional amount, equal to or less than $75 million, as a debt guarantee. The direct loan is required to match or exceed the KEXIM debt guarantee, which will assist in reducing liquidity needs from commercial banks.
“Arafura’s foundation off-take agreement with Hyundai and Kia was the beginning of a meaningful relationship with Korea, and our engagement with KEXIM further strengthens that relationship,” ARU Managing Director Gavin Lockyer said.
“KEXIM’s indication of support for Nolans directly reflects the significant contribution that NdPr from the Project will play in delivering upon Korea’s long-term aspirations to be a global leader in electric vehicles and other sustainability-focused technologies.
“We are delighted at the prospect of working closely with KEXIM as we continue our efforts to bring this globally significant project into full construction, and subsequently into production.” Mr Lockyer said.
KEXIM’s support is linked to the strategic importance of NdPr supply for Korea’s automotive sector. The LOI is tied to the binding off-take arrangement between Arafura, Hyundai, and Kia, securing the supply of up to 1500 tonnes per annum of NdPr oxide, constituting approximately 40 per cent of the 85 per cent of annual production from Nolans earmarked for long-term sales agreements under Arafura’s off-take strategy.
The in-principle support from KEXIM aligns with Arafura’s debt-led funding strategy and complements previous LOIs from EDC and Euler Hermes. While indicative, KEXIM’s participation is subject to standard due diligence procedures.
ARU shares last traded at 20.3 cents.