Good post.
Everyone should have a read of this article in media today.
As I read it, it was clear that there were very real parallels with IXR situation.
Those issues we have already identified here on HC are addressed (and solutions found) in this ARU deal.
- Govt support by Fed Govt (UK govt re IXR)
- Need to secure non-China supply chain
- Debt funding and grants provided irrespective of low international REE prices
- Debt funding to greatly assist in Equity raising
- Funding support from international Govt agencies (so world wide support).
- Funding allows for major contingencies increase.
- Funding despite concern about ARU production ability due to location (note IXR already demonstrating prod'n ability in Belfast)
- Achieves goal of local processing ability (ie Belfast prod'n for UK and EU)
*** "The commitments highlighted the value in developing local processing capability and supply chains that were less reliant on China to meet growth in demand for electric vehicles and wind turbines, he said."
- These are long term loans of 12 yrs average.
***"Arafura has agreements to supply rare earths to South Korean car makers Hyundai and Kia, Siemens Gamesa Renewable Energy, and GE." --- ring a bell? Ford, LCM etc?
***"The Perth-headquartered company said that it was also looking at options to increase the size of the project and to process ore from third-party mines." --- IXR said the Ionic Tech facilities can also process material on behalf of 3rd parties.
So the message for me is that Western Govts and agencies, banks and Instos are now actually putting up funds to get these projects underway. The above is but one demonstration of that.
The principles above also apply to Makuutu project, if /when IXR can demonstrate its viability - and it will.
So message to us on HC is to ignore the "trolls" haranguing us real investors about Makuutu and IXR.
Just focus on the real developments and opportunities coming IXR's way.
Gina Rinehart-backed Arafura Rare Earths will turn its attention to a major equity raising after nailing down more than $1 billion in debt funding for a critical minerals project in the Northern Territory.
Arafura defied concerns about weak rare earth pricing to secure a $US775 million ($1.167 billion) package for the Nolans project, with backing from agencies in Canada, Germany and South Korea, and commercial lenders.
The total funding package is more than $US1 billion ($1.51 billion), with Arafura and its backers building in a $US280 million reserve to cover potential cost blowouts and operating losses in the ramp-up phase of the Nolans project, about 120 kilometres from Alice Springs.
Arafura said it was targeting an equity raise of $US793 million.
The Albanese government underlined its commitment to breaking China’s stranglehold on rare earth supply in March when it handed Arafura a package of loans totalling $US533 million for the Nolans mine and refinery – despite doubts about viability of producing rare earth oxides and battery-grade phosphoric acid at the remote location.
The taxpayer funding proved instrumental in Arafura locking down the rest of the finance package involving similar credit agencies in Canada, Germany and South Korea, along with Commonwealth Bank and ING.
Arafura chief executive Darryl Cuzzubbo said the finance paved the way for securing the equity funding required for a final investment decision on Nolans. The commitments highlighted the value in developing local processing capability and supply chains that were less reliant on China to meet growth in demand for electric vehicles and wind turbines, he said.
“The Australian government has led the way in debt funding through [Export Finance Australia] and [Northern Australian Infrastructure Facility], which unlocked international support from export credit agencies in Korea, Canada and Germany,” Mr Cuzzubbo added. “The cost overrun facility [$US80 million] and standby liquidity facility [$US200 million] have further derisked the project for commercial lenders and investors.”
Over two days in March, the government also threw its weight behind a $550 million loan for lithium play Liontown Resources, another resources group backed by Mrs Rinehart.
Liontown cancelled the loan – it had been due to expire at the end of October 2025, triggering a bullet repayment – this month in favour of financial backing and an expanded offtake deal with South Korea’s LG Energy Solution.
The Arafura package involves loans with an average life of more than 12 years and ensures the company is funded through to the production of up to 4440 tonnes of neodymium and praseodymium a year.
Arafura has agreements to supply rare earths to South Korean car makers Hyundai and Kia, Siemens Gamesa Renewable Energy, and GE.
Mr Cuzzubbo said Arafura’s next major milestone was to secure equity funding before the end of the year. The Perth-headquartered company said that it was also looking at options to increase the size of the project and to process ore from third-party mines.
Mrs Rinehart’s Hancock Prospecting is Arafura’s biggest shareholder, with a 10 per cent stake, and also holds significant stakes in Lynas Rare Earths and MP Materials, the world’s two biggest non-China producers.
Hancock has previously offered to lend its expertise in major project delivery, while South Korea’s financial support raises the prospect that POSCO, Hancock’s partner in iron ore and energy, may be part of the raise.
(20min delay)