Arafura Rare Earths has successfully raised approximately A$80 million through a two-tranche institutional placement and launched a A$5 million share purchase plan, strengthening its cash position ahead of the Nolans project final investment decision.
- A$80 million two-tranche institutional placement at A$0.19 per share
- A$5 million non-underwritten share purchase plan for existing shareholders
- Strong support from domestic and international institutional investors including Hancock Prospecting
- Cash balance to reach ~A$107 million before costs post-settlement
- Second tranche placement subject to shareholder approval at upcoming EGM
Capital Raising Success
Arafura Rare Earths Limited has announced the successful completion of a significant capital raising effort, securing firm commitments for an approximately A$80 million two-tranche institutional placement priced at A$0.19 per share. This placement, combined with a newly launched A$5 million share purchase plan (SPP) for existing shareholders, is designed to bolster the company's financial position as it advances the development of its flagship Nolans Rare Earth Project.
The first tranche of the placement, raising around A$70.2 million, will be settled imminently without the need for shareholder approval, while the second tranche, expected to raise approximately A$9.8 million, awaits approval at an Extraordinary General Meeting scheduled for late September 2025.
Investor Confidence and Strategic Support
The placement attracted strong interest from a mix of high-quality domestic and international institutional investors, including Arafura’s largest shareholder, Hancock Prospecting. This broad support underscores confidence in the Nolans project’s potential and the company’s progress in de-risking its development pathway.
Further underpinning Arafura’s equity funding strategy are commitments and ongoing discussions with key strategic partners such as Australia’s National Reconstruction Fund Corporation, which has pledged A$200 million in equity-linked funding, and the German Raw Materials Fund, currently in appraisal for a potential investment of up to €100 million. Export Finance Australia has also expressed interest through a non-binding letter of intent, signaling substantial potential support.
Use of Funds and Project Outlook
Following settlement of the placement, Arafura expects to hold a cash balance of approximately A$107 million before costs. The proceeds will primarily be allocated to corporate and working capital needs, with a significant portion earmarked to accelerate main construction activities at Nolans upon reaching the final investment decision (FID).
Managing Director Darryl Cuzzubbo highlighted that the capital raising not only strengthens the balance sheet but also enhances the company’s negotiating position with potential strategic equity partners. He emphasized the positive market dynamics for Western rare earth supply, referencing recent partnerships such as MP Materials’ collaboration with the U.S. Department of Defense, which bolster Arafura’s confidence in timely and attractive equity funding completion.
Share Purchase Plan Details
In addition to the institutional placement, Arafura has launched a non-underwritten SPP targeting approximately A$5 million. Eligible shareholders in Australia and New Zealand can subscribe for up to A$30,000 worth of new shares at the same price as the placement, A$0.19 per share. The SPP offers a cost-effective opportunity for existing investors to increase their holdings, though the final amount raised may vary depending on subscription levels and potential scale-backs.
The SPP is scheduled to open on 27 August 2025, with applications closing on 3 October 2025. New shares issued under the SPP will rank equally with existing shares and commence trading shortly thereafter.
Looking Ahead
Arafura’s successful capital raising marks a pivotal step in advancing the Nolans Rare Earth Project, positioning the company with a robust financial foundation as it moves toward FID. The upcoming shareholder vote on the second tranche and the SPP subscription outcomes will be closely watched by investors eager to gauge the company’s momentum and strategic partnerships in the competitive rare earths sector.
Bottom Line?
Arafura’s strengthened balance sheet sets the stage for critical next steps in Nolans’ development and strategic equity partnerships.
Questions in the middle?
- Will shareholders approve the second tranche placement at the upcoming EGM?
- How will the final subscription level of the SPP impact Arafura’s funding runway?
- What are the timelines and terms for potential investments from strategic partners like the German Raw Materials Fund?