It's been a shaky start to this Tuesday's trading for the All Ordinaries Index (ASX: XAO) and most ASX All Ords shares so far. At the time of writing, the All Ords has slipped by 0.07%. But let's talk about what's happening with the Arafura Rare Earths Ltd (ASX: ARU) share price.
The Arafura share price is on fire today. The rare earths developer closed at 12 cents each yesterday afternoon. But this morning, Arafura climbed all the way up to 14.3 cents, a gain worth a stonking 13.6% at the time. Since then, the company has cooled off a little but is presently still up a healthy 8% at 13.5 cents apiece.
So what on rare earth is going on here?
How has this All Ords stock rocketed 13% today?
Well, it seems to be a consequence of the announcement that the company made yesterday after market close.
Arafura revealed that it has signed a new gas supply agreement. This agreement has been reached with the Mereenie joint venture, which is made up of Central Petroleum Limited (ASX: CTP), Cue Energy Resources Limited (ASX: CUE), Macquarie Mereenie and New Zealand Oil & Gas Ltd (ASX: NZO).
Under the agreement, the joint venture will supply Arafura's Nolans Project with up to 27.41 petajoules of natural gas for a three-year term, beginning in 2026. This term also has an option for a two-year extension.
Macquarie Mereenie will supply most of the gas, contributing 13.7 petajoules. 6.85 petajoules will come from Central Petroleum, 4.8 from New Zealand Oil & Gas, and 2.06 from Cue Energy.
This deal reportedly includes "take-or-pay provisions and fixed pricing, with allowances for escalation in line with the consumer price index".
It also hinges on a few conditions that are to be satisfied before 30 June 2024. These include the "execution of a gas transport agreement", the "execution of a power purchase agreement", approvals, permits and licenses being granted, and the "finalisation of debt financing".
Here's some of what Arafura's managing director Darryl Cuzzubbo had to say:
We are pleased to confirm the terms of gas supply for Nolans. Ensuring access to local natural gas is a positive step in the development of this major project, which will see critical rare earth minerals from the Northern Territory delivered to customers around the world in support of energy transition initiatives.
Arafura Rare Earths share price snapshot
Despite today's strong rise (investors evidently approve of today's announcement), the Arafura share price has had a tough year.
The company remains down almost 78% over the past 12 months, as well as down more than 20% in just 2024 to date.
The shares are also a lot closer today to the 52-week low of 12 cents that we've seen just this week than its 52-week high of 70 cents a share.
