Arafura Rare Earths Admits ASX Breach Over $200m NRFC Investment Disclosure
Arafura Rare Earths Limited has acknowledged a breach of ASX Listing Rule 15.7 following premature media disclosure of a $200 million investment commitment from the National Reconstruction Fund Corporation. The company outlines corrective steps to prevent future compliance lapses.
- Arafura received a A$200 million convertible note investment from NRFC for Nolans Project
- Premature media disclosure led to breach of ASX Listing Rule 15.7
- Company provided embargoed ASX announcement to journalist before official release
- Arafura commits to stricter disclosure controls and policy enforcement
- Board approved response and outlined measures to avoid future breaches
Background on the Investment
Arafura Rare Earths Limited recently secured a significant A$200 million convertible note investment commitment from the National Reconstruction Fund Corporation (NRFC). This funding is earmarked to support the development of the Nolans Project, which aims to establish Australia's first ore-to-oxide rare earths processing operation. The investment marks a key milestone in Arafura's staged equity strategy, potentially catalysing further equity funding.
The Compliance Issue
However, the announcement of this investment became the subject of regulatory scrutiny after an article titled "Labor boosts backing of Rinehart-backed Arafura to $1b" appeared in the Australian Financial Review before Arafura's official ASX announcement. The article was published shortly after midnight on 15 January 2025, preceding the company's formal market disclosure at 8:23 AM AEDT.
Arafura admitted to providing its ASX announcement to a journalist on an embargoed basis prior to the official release on the ASX platform. This was done in response to an embargoed media release from NRFC, which had been shared with the Australian Financial Review. The company’s media adviser engaged with the journalist to ensure accurate reporting and to prevent misinformation, particularly concerns that the investment might be misconstrued as a government grant rather than a commercial convertible note.
Acknowledgement and Explanation
In its formal response to ASX queries, Arafura acknowledged that this action was not compliant with Listing Rule 15.7, which prohibits releasing market-sensitive information to any party before it is released on the ASX platform and acknowledged by ASX. The company explained that the unusual circumstances, including the embargoed NRFC release and the risk of misleading market perception, compelled it to share the information with the media adviser and journalist ahead of the official announcement.
Steps to Strengthen Compliance
To prevent recurrence, Arafura committed to refraining from releasing material on an embargoed basis to the media or any third party. The company will also enhance communication with counterparties to ensure alignment on disclosure timing and obligations. What's more, Arafura will reinforce its Disclosure Policy internally and externally, emphasizing strict adherence to ASX Listing Rules and relevant guidance notes, particularly regarding after-hours disclosures.
The company’s Board has authorised and approved the response, underscoring the seriousness with which it treats continuous disclosure obligations.
Implications for Market and Investors
This incident highlights the delicate balance companies must maintain between managing media relations and complying with stringent market disclosure rules. While the investment itself is a positive development for Arafura and the Australian rare earths sector, the compliance breach may raise questions about the company’s governance and communication protocols. Investors will be watching closely to see how effectively Arafura implements its promised controls and whether any regulatory penalties or further scrutiny arise.
Bottom Line?
Arafura’s $200m NRFC investment is a major boost, but the ASX breach signals a need for tighter disclosure discipline.
Questions in the middle?
- Will ASX impose penalties or further sanctions on Arafura for the Listing Rule breach?
- How will Arafura’s stricter disclosure policies affect future communications and investor confidence?
- Could this incident impact the timing or success of subsequent equity funding rounds for the Nolans Project?
