Arafura Raises A$475 Million at A$0.28 per Share Backed by Hancock Prospecting
Arafura Rare Earths has successfully raised A$475 million through a two-tranche institutional placement, backed by major investors including Hancock Prospecting, to fund the development of its Nolans Project.
- A$475 million raised via two-tranche institutional placement at A$0.28 per share
- Hancock Prospecting commits ~A$125 million, increasing stake to ~15.7%
- Tranche two and share purchase plan subject to shareholder approval at December EGM
- Share purchase plan targeting up to A$70 million at same offer price
- Funds to support final investment decision and construction commencement early 2026
Capital Raising Success
Arafura Rare Earths Limited (ASX, ARU) has announced a significant milestone in its funding journey, securing commitments for a A$475 million institutional placement. The placement, priced at A$0.28 per new share, will be executed in two tranches, with the first tranche raising approximately A$123.4 million and the second tranche, subject to shareholder approval, expected to raise around A$351.6 million.
This capital injection is a strong endorsement from the investment community, including both new and existing institutional investors. Notably, Hancock Prospecting Pty Ltd, Arafura’s largest shareholder, has committed approximately A$125 million, which will increase its holding in the company to about 15.7% post-placement.
Strategic Importance of the Funding
The funds raised are earmarked to underpin the development of Arafura’s flagship Nolans Project, a rare earths mining and processing operation positioned to play a critical role in the global supply chain for these essential materials. The capital raising supports the company’s plan to make a final investment decision early next year and to commence construction shortly thereafter.
Managing Director and CEO Darryl Cuzzubbo highlighted the strong demand for the placement as a clear validation of Arafura’s strategic position. He emphasized the company’s commitment to delivering a project of global significance that will contribute to a diversified and secure supply of rare earth elements.
Share Purchase Plan and Next Steps
In addition to the placement, Arafura is launching a share purchase plan (SPP) targeting approximately A$50 million, with the potential to accept oversubscriptions up to A$20 million. The SPP will offer shares at the same price as the placement and is also subject to shareholder approval at an extraordinary general meeting (EGM) scheduled for 5 December 2025.
The timetable for the capital raising is well-defined, with tranche one shares expected to settle and commence trading in early November, while tranche two and the SPP await shareholder approval and subsequent settlement in December. This structured approach provides clarity to investors and stakeholders on the company’s path forward.
Market and Investor Implications
The successful placement and planned SPP reflect strong investor confidence in Arafura’s growth prospects and the strategic importance of the Nolans Project. However, the reliance on shareholder approval for the second tranche and the SPP introduces some execution risk. Market participants will be watching closely for the EGM outcomes and the level of participation in the SPP as indicators of ongoing support.
Overall, this capital raising positions Arafura Rare Earths to advance a project that could become a cornerstone of Australia’s rare earths industry, with potential ripple effects across the global supply chain for critical minerals.
Bottom Line?
Arafura’s capital raise sets the stage for a pivotal year ahead, with shareholder approval and project execution now in focus.
Questions in the middle?
- Will shareholders approve the second tranche and share purchase plan at the December EGM?
- How will the market respond to the increased share count and dilution from the placement?
- What are the key milestones and risks ahead for the Nolans Project’s final investment decision and construction?
