The Arafura Rare Earths Ltd (ASX: ARU) share price is on the move on Tuesday morning.
At the time of writing, the rare earths developer's shares are up 6% to 35.5 cents.
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Why is the Arafura share price racing higher?
Investors have been bidding the Arafura share price higher this morning after the company released an update on the funding of the Nolans Project.
According to the release, Arafura has received a letter of interest (LOI) from Canadian export credit agency Export Development Canada (EDC) for the provision of potential financing of up to US$300 million for the Nolans Project.
Management notes that the indication of support from EDC is linked to a strategic arrangement between EDC and General Electric Co (NYSE: GE) to advance the energy transition. In July 2022, Arafura and GE signed a memorandum of understanding for the supply of NdPr from Nolans for use in the manufacture of permanent magnets used in GE's offshore wind turbines.
GE has facilitated Arafura's engagement with EDC, enabling access to the financing. However, it is worth noting that EDC's indicative support is not a commitment, and its participation is subject to its standard due diligence procedures.
But if all goes to plan, things are looking good for Arafura's funding. Management notes that it aligns with in-principle letters of support from Germany's Euler Hermes for up to US$600 million and up to a combined A$350 million from Export Finance Australia and the Northern Australia Infrastructure Facility.
'We are delighted'
Arafura's managing director, Gavin Lockyer, was very pleased with the news. He said:
We are delighted to receive indicative support from Export Development Canada for the Nolans Project. This is further demonstration of the strategic significance that international governments place on the project and its capacity to provide a sustainable supply of critical NdPr to meet the needs of major businesses in key global jurisdictions. We are proud to include GE among the tier-one OEMs associated with offtake from Nolans, and welcome GE's provision of its Aero power generation technology for the Project.
