Arafura Rare Earths Boosts Cash to A$571m with Major Equity and Government Support

Strong Capital Raise and Government Support

Arafura Rare Earths Limited (ASX, ARU) has reported a significant capital injection during the December 2025 quarter, raising a combined A$481.4 million before costs through a two-tranche placement and an upsized share purchase plan. This equity boost has propelled the company's cash reserves to A$571 million, a substantial increase from A$90 million at the end of September 2025.

Complementing this private capital, Arafura has secured conditional equity investments from key government-backed entities. Export Finance Australia (EFA) has granted conditional approval for an equity investment of up to US$100 million, while the German Raw Materials Fund (GRMF) is advancing a €50 million investment linked to binding offtake agreements with Siemens Gamesa Renewable Energy. These endorsements underscore the strategic importance of the Nolans Project within the global critical minerals landscape.

Project Execution and Offtake Progress

To bolster project delivery capabilities, Arafura appointed Hatch Ltd as the preferred Engineering, Procurement and Construction Management (EPCM) provider. This move is expected to enhance execution readiness and reduce delivery risks ahead of the anticipated final investment decision (FID) targeted for the second half of fiscal 2026.

On the commercial front, the company has secured binding offtake agreements representing 66% of its planned neodymium-praseodymium (NdPr) oxide production, with major partners including Hyundai & Kia, Siemens Gamesa, and Traxys Europe. The geopolitical tensions and tightened Chinese export controls on rare earths have intensified global demand for diversified supply chains, positioning Arafura favourably to negotiate the remaining offtake volumes.

Geopolitical Context and Market Dynamics

The report highlights escalating trade tensions between China and the United States, with China imposing stricter export controls on medium-to-heavy rare earth elements. This has driven NdPr oxide prices from US$70 to over US$100 per kilogram within months, reflecting a premium for non-Chinese supply. The US and Australia’s bilateral Critical Minerals Framework has identified Arafura’s Nolans Project as a priority, further cementing its role in securing resilient supply chains for critical minerals.

Additionally, the European Union’s REsourceEU Action Plan and Critical Raw Materials Act aim to reduce dependency on single-country suppliers, creating further demand for projects like Nolans that can supply rare earths to Europe.

Operational and Sustainability Readiness

Arafura is advancing operational readiness with a focus on business integration and risk mitigation as it transitions from exploration to construction. The company is embedding environmental and social management plans, with over 90% of corrective actions completed under its Environmental and Social Action Plan. Sustainability efforts include a pathway to net zero greenhouse gas emissions by 2050, with ongoing evaluations of renewable energy options such as concentrated solar thermal integration.

Stakeholder engagement remains robust, involving Traditional Owners, local communities, and government agencies, reinforcing social licence to operate.

Funding and Financial Position

Alongside equity, Arafura continues to engage with an international consortium of Export Credit Agencies and commercial lenders for debt financing. Export Development Canada recently extended a US$300 million credit approval, and the company is working to maintain all credit approvals ahead of FID. The total funding requirement for Nolans is estimated at approximately US$1.9 billion, with less than 10% outstanding, reflecting strong progress towards full project funding.

Cash outflows increased modestly as the company commenced construction and operational readiness activities, but the strong cash position provides a comfortable runway.