Arafura’s rare earths project delayed as search for equity...

Arafura’s rare earths project delayed as search for equity partners continues
The start of work on Arafura’s Rare Earths project has been delayed.

Arafura Rare Earths Limited’s Nolans Project, one of three major resource developments hoped to turbo-charge the NT economy in coming years, has been put on hold.

It had been hoped the critical minerals start-up would achieve final investment decision this year, but challenges finalising debt agreements and raising equity have seen proposed start times pushed back until 2024.

The company now hopes to begin work in the second half of next year.Nolans will cost about $1.6bn to develop, funded by a 50-50 mix of debt and equity.

Arafura is also sweating on the federal government signing off on a $350m joint contribution from the Northern Australia Infrastructure Facility and Export Finance Australia assistance.

Arafura Rare Earth’s chief executive Gavin Lockyer said he remained confident the project would go ahead when the additional equity had been secured.

One of the final pieces in the company’s debt jigsaw was locked in this week with announcement of a US$150m debt financing agreement with the Export-Import Bank of Korea, Korea EXIMbank.

The deal is linked to the seven-year binding offtake agreement between Arafura Rare Earths, and the Hyundai and Kia car companies for the supply of up to 1500 tonnes a year of NdPr oxide, which locked-up about half of the Nolans resource.

In addition to the NAIF and EFA $350m debt facility and the new $150m South Korean contribution, Arafura also has $300m from Export Development Canada and $600m loan guarantee from German credit agency Euler Hermes Aktiengesellschaft.

“We’re waiting for approvals from the federal government side of things around NAIF and EFA funding, and hoping they get through their credit and board processes in coming months, which will then require ministerial sign-off,” Mr Lockyer said.

“We’re targeting having all our debt finalised by March. The Korean announcement this week was a big boost for us and it was really the last piece of the debt jigsaw puzzle.”

The search for equity partners continues after Hancock Prospecting took a 10 per cent shareholding in Arafura Resources last year.“We’ve been working on the equity side for a number of years and we’ve got ongoing discussions with Hyundai for potential investment into the company and we’d be hopeful Hancock Prospecting will maintain that 10 per cent holding going forward,” Mr Lockyer said.

“We’re working with a number of other strategic investors from Korea and some Europeans and we’d like to think around March when the debt is finalised they’ll be ready to go out to the market and have raised that capital in the first half of next year.

“We’d love to be in full construction through the second half of next year.”

The construction team building a 200-person accommodation camp, 20km of water pipeline, a borefield and access roads has recently been laid off.

“We finished that last month and the view then was hopefully the funding would be in place by now and we could roll into construction straightaway. Obviously the funding’s taking a bit longer than anticipated.”

Arafura’s Nolans project, development at Beetaloo Basin and the Santos’ Barossa gas project, which is stalled in the courts, are three imminent resource project’s the NT government is hoping will help grow the economy to $40bn by 2030.