Arafura (ASX:ARU) considers $100m senior debt facility for NT project

• Arafura (ARU) receives a letter of support from the Northern Australia Infrastructure Facility (NAIF) relating to a potential senior debt facility
• The facility would form part of a funding package for ARU’s wholly owned Nolans Rare Earth Project in the NT
• Under key terms stated by NAIF, the facility provides a loan amount of up to $100 million over a maximum 15-year term
• Managing Director Gavin Lockyer says the company is targeting a final investment decision by late next year
• Shares in Arafura closed at 16.5 cents on June 17

Arafura (ARU) has received a without commitment letter of support from the Northern Australia Infrastructure Facility (NAIF) in relation to a potential senior debt facility.

NAIF is an initiative established by the Australian Government to facilitate the development of infrastructure in Northern Australia via debt funding. It aims to generate community benefits in the region, with a focus on Indigenous engagement.

The proposed facility would form part of a funding package for ARU’s wholly owned Nolans Rare Earth Project, which lies 135 kilometres north of Alice Springs in the Northern Territory.

According to Arafura, development of the Nolans Neodymium-Praseodymium (NdPr) Project’s ore to oxide business model broadly aligns with NAIF’s strategic considerations, as well as objectives outlined by the Government’s Critical Minerals Strategy.

Nolans is reportedly the only shovel-ready NdPr-focussed project in Australia with all environmental approvals in place and is set to process high-grade separated rare earth oxides domestically.

With a mine-life of 38 years, the project is slated to offer long-term, diversified employment opportunities, with a strategy to promote Indigenous participation at the project site and supply chain.

Under key terms set out in the NAIF’s letter, the potential senior debt facility would enable the company to take out a loan of up to $100 million over a maximum 15-year term.

Arafura Managing Director Gavin Lockyer said ARU was extremely pleased to receive backing from the NAIF.

“The Australian Government’s Critical Minerals Strategy is focussed on the development of critical mineral projects and downstream processing capacity within Australia to strengthen sustainable supply chains,” he said.

“This is also aligned with global customers’ critical raw material diversification plans and their environmental, social and governance priorities.”

Additionally, last month Arafura received a letter of support from Export Finance Australia for a loan of up to $200 million on a 15-year term.

The company has also applied for grant funding under the Federal Government’s Modern Manufacturing Initiative.

“The Australian Government’s support improves our position in finalising binding senior debt terms with the target for a final investment decision in the latter half of 2022,” Mr Lockyer added.

Shares in Arafura were trading at 16.5 cents each at market close on June 17.