Shares in Arafura Rare Earths Ltd (ASX: ARU) are trading higher after the company announced two major equity investments, which will raise $230 million in new capital.
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Government agencies taking a stake
In a statement lodged with the ASX on Wednesday, the company said that Export Finance Australia would subscribe for US$100 million in new equity in Arafura, which is developing the Nolans Rare Earths Project in the Northern Territory.
The German Raw Materials Fund (GRMF) would also subscribe for about $84 million in new equity.
Arafura said the new equity funding built on a "transformational" $481 million equity raising completed in the fourth quarter of 2025, and a binding term sheet signed with Australia's National Reconstruction Fund Corporation for $200m of convertible notes.
The company said further:
The execution of these binding cornerstone agreements is consistent with Arafura's previously announced equity funding strategy, targeting cornerstone investment from government-seeded critical minerals funds, customers and other strategic investors, and follows the previous announcement of non-binding arrangements with the German Raw Materials Fund and Export Finance Australia. This strategy, together with the binding $200 million commitment from the National Reconstruction Fund Corporation (NRFC), significantly de-risks the equity funding required for the development of the Nolans Rare Earths Project.
The company said the new and existing funding commitments came to a total of $911 million.
New supply chains critical
Arafura said in its statement to the ASX that the investment from the German fund showed the strategic importance of countries diversifying their critical minerals supply.
Arafura added:
The Nolans Project has demonstrated clear alignment with the GRMF's objectives through its binding offtake agreement with Siemens Gamesa Renewable Energy for the supply of NdPr to be used in the manufacture of permanent magnets for offshore wind turbines assembled at their Cuxhaven facility in Germany. Arafura continues to engage with prospective European offtake partners regarding securing an additional 500tpa.
Arafura will call a general meeting of shareholders to ratify the new equity issuance.
Arafura Managing Director Darryl Cuzzubbo said regarding the new developments:
Today marks a transformational milestone for Arafura and the Nolans Project. The execution of binding equity subscriptions from these two government agencies is a powerful endorsement of the strategic importance of Nolans to western supply chains. This outcome is consistent with our long-stated equity funding strategy of partnering with government-seeded critical minerals funds, customers and strategic investors who share our vision for developing a reliable, and diversified source of rare earth supply. With the support of our shareholders and incoming cornerstone partners, we are now firmly positioned to finalise our equity funding package and deliver Australia's first fully integrated ore-to-oxide rare earths operation.
The issue price of the new equity will be 24.47 cents per share.
Arafura shares were 3.5% higher in early trade at 29 cents. The company is valued at $1.31 billion.
