Arafura Rare Earths Ltd (ASX: ARU) shares more than doubled in 2022, but can this top run continue?
The Arafura share price soared 121% from 21 cents to 46 cents apiece between the market close on 31 December 2021 and the end of trading on 30 December 2022.
Today, Arafura shares are trading 0.48% higher at 52.8 cents at the time of writing.
Let's take a closer look at how 2022 played out for the mineral exploration company and the outlook for 2023.
Image source: Getty Images
What happened in 2022?
The company's upward trajectory last year had a few bumpy patches along the way, as the graph below shows.
Arafura shares soared a hefty 153% between late February and early June, then lost 42% of those gains in the following months to mid-October.
In another big bounce, Arafura shares then surged 68% between market close on 14 October and 30 December.
Arafura is developing the rare earths Nolans Project in the Northern Territory.
Highlights in 2022 included the company signing a non-binding MOU with Hyundai in May for the sale of NdPr oxide from the Nolans Project.
In August, Arafura received firm commitments from investors for a $41.5 million capital raise for the project.
On 7 November, Arafura signed a binding offtake agreement with Hyundai and Kia to supply NdPr from the Nolans Project for a seven-year term. Also in November, the company received mining authorisation from the Northern Territory Government for the project.
Arafura managing director Gavin Lockyer said:
This approval, following the recent Hyundai/Kia Offtake Agreement and Project Update, adds to the momentum that should allow Arafura to commence procurement and construction, with FID expected to occur in early 2023
In December, Arafura received more firm commitments from investors for a $121 million capital raise to fast-track development at the Nolans Project. This included $6o million from Gina Rinehart's Hancock Prospecting.
What's ahead?
The demand for rare earths and news out of the company's Nolans Project may be the major influences on Arafura's performance in 2023.
Analysts at Bell Potter have placed a speculative buy rating on the Arafura share price with a 64-cent price target. The broker said it was anticipated the project would "feed potentially 8% of global supply directly into the permanent magnet market servicing expansion of electric vehicles and wind turbines".
Meanwhile, Future Market Insights is tipping the rare earths market to grow to 10.1% compound annual growth rate between 2022 and 2033. Analysts said:
The surging demand for rare earth metals can be ascribed to the increase in the sales of consumer electronics.
Furthermore, growth in the sales of electric vehicles is also expected to surge the demand for rare earth metals during the forecast period.
Arafura share price snapshot
The Arafura share price has raced ahead, surging more than 136% in the last 52 weeks. In the last month alone, Arafura shares have soared 21%.
Arafura has a market capitalisation of around $1.06 billion based on the current share price.
