More, more, more: Arafura eyes another US$300M in funding for flagship

Arafura Rare Earths (ASX:ARU) has confirmed its receipt of conditional approval for a further US$300M (A$452M) in funding from Export Development Canada (EDC.)

The company noted on Monday that its own ambitions to mine and produce neodymium-praseodymium (NdPr) aligns with the strategic overhead of EDC.

NdPR is a crucial component for many technologies including renewables tech like wind turbines; the rare earths are permanently magnetic. Up to 600kg is needed per turbine, and that’s just looking at wind generation.

In the background, too, is Canberra’s ambitions to take market share from China when it comes to rare earths processing, which the Australian market wholemeal currently relies on.

Canberra’s interest is so keen, in fact, it recently gave the company $800M. Arafura’s project is in the NT, also home to the emerging Beetaloo Basin.

“Debt financing from EDC signifies the increasing geostrategic importance of the Nolans Project and securing global diversity in the NdPr supply chain,” Arafura MD Darryl Cuzzubbo said.

“EDC has responded strongly to Nolans as a strategic opportunity that will underpin the electrification economy … NdPr is critical in electrical vehicles, wind turbines and robotics.”

The company sees itself getting closer to a positive FID – not long after WA’s own Gina Rinehart revealed an investment into Arafura.

Arafura stated on Monday the company has now received “conditional approvals for 68% of the targeted US$775M … funding for the Nolans project.”

EDC’s facility is “conditionally” approved in that Arafura must first achieve binding offtake agreements for 80% of its output target.

Some HotCopper users were quick to point out on Monday this latest development may impact the investment theses adopted by those shorting the stock.

Arafura Rare Earths is currently the 15th most shorted stock on the ASX according to a service that ports Morningstar data.

Of Arafura’s 2.5B pool of ordinary shares, 165.4M shorts in May 13 has fallen to 155M shorts as at Monday 27 May.

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