Arafura Rare Earths has signed a $200 million binding term sheet with the National Reconstruction Fund Corporation (NRFC) for its flagship Nolans rare earths project in the Northern Territory.
The NRFC was established by the Federal Government and has $15 billion to invest in seven priority areas, with value-add in resources being one of them.
Value-add in resources refers to investing more in Australia’s mining industry to ensure the country can meet the growing demand for critical minerals such as rare earths.
“Rare earth minerals are strategically important resources that are crucial to modern economies and the global transition to net-zero,” NRFC chairman Martijn Wilder said.
“Arafura’s Nolans project demonstrates the enormous contribution that Australia can make to the global supply of rare earth minerals and the considerable opportunities for Australia to add value to the raw materials that it mines.”
Funds from the NRFC will be issued through unsecured convertible notes, which will have a seven-year conversion period and a two-year non-convertible period.
The convertible notes will convert into fully paid Arafura ordinary shares at a fixed conversion price, which will represent a 40 per cent premium to the reference price.
This will be determined by the future equity raising required to fully fund and develop Nolans, which is expected to be announced close to the project’s final investment decision. If the convertible notes don’t convert to shares, the margin on the coupon will increase by three per cent.
Arafura managing director Darryl Cuzzubbo welcomed NRFC’s backing, saying it de-risks the equity funding required for Nolan’s development.
“I am immensely proud to confirm a $200 million commitment from the NRFC, which demonstrates the strategic and economic importance of Nolans to the Northern Territory, and Australia more broadly,” Arafura managing director Darryl Cuzzubbo said.
“On behalf of the board and management of Arafura, I would like to thank both the NRFC and the Commonwealth Government for their continued support and look forward to the next steps of achieving a final investment decision on Nolans project in the first half of this year.”
Arafura has also secured almost $900 million from Euler Hermes Aktiengesellschaft, $840 million from the Federal Government, up to $US300 million ($484 million) from Export Development Canada, up to $US150 million ($242 million) from the Export-Import Bank of Korea, and $US775 million ($1.25 billion) from commercial lenders and export credit agencies – all of which will go towards developing Nolans.
Nolan will include a mine, process plant and related infrastructure. The project is aimed at mining the rare earth elements neodymium and praseodymium, two highly sought-after magnet materials.
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