Arafura Rare Earths (ASX:ARU) has followed-up a binding term sheet deal made in May with global commodity trader Traxys by inking a new binding offtake deal with the same company.
Traxys North America, the NY-based hub of the Luxembourg-headquartered company, will offtake rare earth materials from Arafura’s NT-based Nolans project once mining commences.
Some 850 tonnes per annum of neodymium-praseodymium (NdPr) oxide will be supplied in a deal that sees pricing linked “to an independent and transparent global seaborne index … such as the recently established Benchmark Minerals Intelligence indices or S&P’s Global Platts North America pricing index.”
Which index in question Arafura and Traxys will observe appears to remain in contention but at any rate it that means the value of ARU’s NdPr oxide will fluctuate along with spot prices plus the cost of shipping.
The offtake deal goes for 5 years and pricing will be conducted in USD; the US government’s critical minerals supply strategy sits in the background, too, with Traxys an industrial proponent of Washington’s ‘Project Vault’ program.
The big question for all of this is perhaps more important for share traders than those investors patiently waiting – and enduring many rounds of capital raising – for Nolans to actually start producing oxide.
The Gina Rinehart-backed company has billions of shares on issue and outside a spike last October when Albanese and Trump met to talk critical metals, has remained rangebound.
Perhaps that – and sometimes spartan market disclosures that mightn’t do too much for some investors’ sense of enthusiasm – is why Arafura shorts have recently climbed back above 5% of shares on issue.
Using week-delayed public data, shorts on ARU hit 5.5% on October 2, after steadily rising all the way through September.
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