ENNMAT I have noticed from your previous post that you are negative on this company however this is a 63 page update from Arafura with all the current information available to the market,tell me what you think.
ARAFURA RESOURCES LIMITED
ARAFURA DELIVERS NOLANS PROJECT UPDATE
• Definitive Nolans Rare Earths Project Update released; • Substantial progress achieved on one of the world’s most advanced rare earth development projects; • A Project Base Case has been established and Project economics are robust: - A$4.3 billion Net Present Value; - 30% Internal Rate of Return; - Capital payback within four years of operation; and • Arafura is on track to become one of the world’s largest rare earth producers. Australian Rare Earths company Arafura Resources Limited (ASX: ARU) (“Arafura” or the “Company”) is pleased to provide a definitive Project Update on its Nolans Rare Earths Project (“Nolans” or the “Project”). The Company has continued to progress Nolans – one of the most advanced rare earths development projects in the world – despite the current difficult global financial markets. The Project Update sets out the substantial progress achieved on Nolans to date, including: • Extensive testwork that has provided the Company with detailed knowledge of all facets of the design chain, from demonstration of technology through to mine design and process flowsheet optimisation; • Practical application of the results of this testwork to the Project’s design, which is fundamental to the successful development of a rare earths project and significantly de-risks the Nolans Project; • Customer qualification feedback that Rare Earth Oxide (“REO”) products from the Nolans Bore resource meet product specifications; • Well-advanced environmental studies with no significant issues emerging; • Development of a Base Case for the Nolans Project that is expected to deliver excellent returns to shareholders; and • A clear path forward to complete the development of the Nolans Project. Arafura’s Chief Executive Officer, Chris Tonkin, said, “We are very pleased to provide a detailed Project Update to the market. We are striving for ongoing transparency to ensure that all stakeholders are informed of the significant achievements that have been made on the Project and the Company’s overall strategic objectives. “Importantly, this update reinforces the strong commercial appeal of the Nolans Project with robust returns expected on the basis of assumptions that we believe to be conservative. The advanced stage of our Nolans Project is a key point of difference over other rare earths projects and significantly de-risks our path to both production and commercialisation,” he added. “We look forward to providing regular updates to the market on progress at Nolans and our funding plans as we move towards a final investment decision and look to raise finance from mid-2013 to develop and construct the Nolans Project.” Arafura is currently at an advanced stage of a feasibility study into Nolans, developed on a Base Case that includes a mine and a concentrator at Nolans Bore in the Northern Territory, and a chemical processing operation at Whyalla in South Australia. As a result of advanced feasibility work, project risk and uncertainty have been reduced significantly while project economics remain very robust. The Project’s Base Case generates a net present value of A$4.3 billion, an internal rate of return of 30% and capital payback within the fourth year of operations. The core capital cost for the Base Case is estimated at A$1,395 million with Companyoperated ancillary plants costed at an additional A$517 million. The increase in capital expenditure over earlier expectations is in line with comparable global development projects on a like-for-like basis. The Company is progressing its Base Case towards the key milestone of raising finance for the Project. This includes finalising: • The land acquisition in Whyalla for the processing plant; • Production of a separated Lanthanum Oxide product to 99% purity; • Refinement of marketing samples and offtake negotiations; • Sulphation demonstration-scale plant operation for materials handling analysis; • Public submissions for the Environmental Impact Statement studies; • Mine and Plant Design engineering to levels of +/- 25% accuracy; • Transport, logistics and raw material costings to +/- 25% accuracy; and • Information Memoranda for potential investors and financiers. A key final step to validate the process flowsheet and mass balance, as well as the major recycle circuits, is the successful operation of an Integrated Pilot Plant (“IPP”) that will be constructed early next year. The IPP results will also be used to verify the final engineering design. The Company is also assessing a number of options for process improvements, and work on this program is scheduled for completion by October 2012. The results may change the Base Case if they deliver a benefit to Project economics and satisfy the Company’s
Mr Tonkin said, “Arafura remains on track to become one of the world’s largest rare earths producers and the only new REO supplier globally with significant volumes available for sale. The demand outlook for rare earths looks strong, with timing of first production from Nolans expected to coincide with a forecast major global rare earths supply shortage.” Separately, shareholders will shortly receive a Notice of Extraordinary General Meeting (“EGM”) to vote on a previously announced capital injection of approximately A$9.9 million from ECE Nolans Investment Company (“ECE”), the Company’s long-term and largest shareholder. ECE has been very supportive of Arafura over a difficult period and its capital injection will be made by way of a share placement. The EGM will be held in Perth in September 2012. - ENDS - For further information contact: Chris Tonkin Chief Executive Officer T: +61 8 6210 7666
ARU Price at posting:
16.5¢ Sentiment: Buy Disclosure: Held
(20min delay)