The Arafura Resources Limited (ASX: ARU) share price is slipping behind its peers in the S&P/ASX All Ordinaries Index (ASX: XAO) on Tuesday.
Shares of the rare earth producer are flat today, while the All Ords is up 1.2%.
This comes amid the release of the company's annual report for FY22 last night.
Let's cover the highlights.
What did the report say?
- Net loss rose by 448.7% year over year to $35.55 million. Most of this cost came from a project cost line item of $28.17 million
- While its losses expanded, its cash balance grew from $10.78 million to $24.68 million
- Total equity also grew from $122.02 million to $132.36 million.
Much of this can be explained by the fact that net proceeds from the issue of shares grew from $116,500 to $47,190,939 during the reporting period.
What else did the company announce?
Arafura reported that the front-end engineering and design for its Nolans project is progressing. The company expects completion by the end of 2022.
Following this, ore commissioning of neodymium (NdPr) is expected in May 2025, with production scaling up over about a year to reach 4,440 tonnes per annum.
Arafura conducted a capital raise of $41.5 million to fund its Nolans project and ongoing operations.
In March, the company also received $30 million in funding from the Federal Government's Modern Manufacturing Initiative.
What did management say?
Arafura Resources chairman Mark Southey provided the following commentary:
During the 2022 financial year, Arafura successfully navigated a rapidly evolving commercial environment ranging from economic volatility caused by geopolitical events along with the ongoing impacts of the COVID pandemic. Geopolitical and market turbulence was combined with an ever-increasing global focus by Governments, OEM customers and investors on energy transition, sustainability and ESG requirements.
What's next?
Arafura also gave a detailed explanation of the neodymium market as well as its strategic positioning within this space moving forward, stating:
NdPr pricing strengthened significantly during the financial year, growing 90% by the end of the year. This substantial increase is assisting our long-term decision-making around project economics and off-take agreements; and comes on the back of global supply chain security risk, increasing international and domestic environmental legislation constraints, tight supply conditions, and steadily growing demand for permanent magnets. By the end of the year, NdPr pricing had risen to US$139/kg, providing real confidence in sustained higher prices and therefore strong project economics. Arafura remains well-placed to supply around 5% of world's NdPr oxide demand.
Arafura share price snapshot
The company's shares currently trade for 40 cents each.
Arafura shares are up significantly in the past month and year-to-date. The gains are 41% and 72%, respectively. Meanwhile, the All Ords is down 3.5% and 11.3% over the same periods.
The company's market capitalisation is around $681.2 million.
