Nolans Project Binds 66% NdPr Offtake, Extends Financial Runway to Q1 2026

Funding Milestone and Strategic Offtake Agreements

Arafura Rare Earths Limited (ASX: ARU) has taken a significant step forward in advancing its Nolans Project with the receipt of a A$200 million cornerstone investment commitment from the National Reconstruction Fund Corporation (NRFC). This injection of capital is a critical component of Arafura’s equity funding strategy, designed to underpin the final investment decision (FID) for the project.

Complementing this funding milestone, Arafura secured a binding offtake agreement with Traxys Europe SA for up to 300 tonnes per annum (tpa) of neodymium-praseodymium (NdPr) oxide, representing 66% of the company’s binding offtake target. This agreement not only solidifies demand for Nolans’ output but also enhances the project’s appeal to financiers by demonstrating strong market support.

Geopolitical Dynamics Boost Rare Earths Market

The quarter was marked by escalating geopolitical tensions, particularly between the US and China, which have intensified focus on rare earth supply chain security. Tariff impositions and export restrictions have exposed vulnerabilities in the global rare earths market, elevating the strategic importance of projects like Nolans that offer a near-term, non-Chinese source of critical minerals.

These developments have contributed to a 12% increase in NdPr oxide prices during the quarter, closing at approximately US$60.97 per kilogram. The market anticipates further price catalysts as regulatory changes in China tighten control over rare earth quotas and traceability.

Operational and Financial Management

In response to the evolving funding timeline and market conditions, Arafura has completed an operational expenditure review aimed at rationalising development resources and overheads. This initiative has successfully extended the company’s financial runway to the first quarter of 2026, providing additional flexibility to secure remaining funding and finalize project plans.

Cash reserves stood at A$37.2 million as of 31 March 2025, down from A$44.9 million at the end of 2024, reflecting ongoing investment in engineering, project management, and corporate activities. The company also navigated the termination of its Nolans construction camp contract, incurring one-off costs of A$4.1 million but securing alternative accommodation arrangements to avoid construction delays.

Gas Supply and Project Schedule Considerations

While the previously anticipated gas supply agreement with the Mereenie Joint Venture lapsed due to unmet conditions precedent, Arafura signed a non-binding letter of intent with Tamboran Resources Ltd for long-term natural gas supply. This agreement is subject to further negotiation and regulatory approvals but signals proactive efforts to secure critical infrastructure inputs.

Given the ongoing evaluation of a potential joint venture structure to reduce equity funding requirements, Arafura has indicated that the timing of the FID may extend beyond the first half of 2025. The company plans to provide more definitive guidance on FID timing as funding solutions crystallize.

Sustainability and Regulatory Progress

Arafura continues to advance environmental and social governance commitments, including the delivery of an Environmental and Social Action Plan aligned with lender requirements and ongoing environmental monitoring at the Nolans site. Regulatory submissions related to radiation protection, mine management, and waterway diversion have progressed without risk to project schedules.

The company remains committed to sustainable development, publishing a pathway to achieve net zero emissions by 2050 and engaging with government mechanisms to mitigate environmental impacts ahead of commercial production.