The Arafura Rare Earths Ltd (ASX: ARU) share price is charging higher today.
Shares in the S&P/ASX 300 Index (ASX: XKO) rare earths miner closed yesterday trading for 19 cents. In late morning trade on Tuesday, shares are swapping hands for 19.5 cents apiece, up 2.6%.
For some context, the ASX 300 is up 0.5% at this same time.
Here's what's piquing investor interest today.
Arafura share price lifts on major debt funding success
Investors are bidding up the Arafura share price after the company reported it has reached several major milestones towards a final investment decision (FID) for its Nolans Project.
Located in the Northern Territory, Nolans is on track to be one of Australia's first ore-to-oxide rare earths processing facilities, representing an important source of rare earths including neodymium and praseodymium (NdPr) outside of China.
Today Arafura confirmed its debt funding is completed, having now secured the remaining conditional approvals from commercial lenders for the US$775 million of senior debt facilities and an US$80 million Cost Overrun Facility (COF).
The debt package totals more than US$1 billion (AU$1.5 billion). This figure includes project completion support provided by a US$80 million cost overrun facility and a subordinated standby liquidity facility of US$200 million.
The Arafura share price could also be getting a boost after the company said preliminary studies show the potential to expand production capacity at Nolans and the ability to process third-party feedstock as a downstream processing hub.
The project's total funding requirements include:
- Pre-production capital costs (including escalation and contingency) of US$1,226 million
- Working capital over the construction period and initial stage of operational ramp-up of US$66 million
- Financing costs over the construction period and initial stage of operational ramp-up of US$168 million
What did management say?
Commenting on the funding success boosting the Arafura share price today, CEO Darryl Cuzzubbo said, "Securing conditional approval for more than US$1 billion of debt funding and completion support is an incredible result and one that reinforces the value of Nolans in diversifying a global NdPr supply chain."
Cuzzubbo added:
The Australian government has led the way in debt funding through EFA and NAIF, which unlocked international support from export credit agencies in Korea, Canada and Germany.
The cost overrun facility and standby liquidity facility have further derisked the Project for commercial lenders and investors.
Looking ahead, Cuzzubbo said, "We continue to make monumental leaps toward reaching FID at Nolans, and today is a very significant milestone… Our next major milestone is securing equity funding and reaching FID at Nolans in 2024."
With today's intraday gains factored in, the Arafura share price is up 15% so far in 2024.
