Nolans Project Funding Hinges on Shareholder Approval and CMSR Support

A$375 Million Capital Raise Positions Nolans for Construction

Arafura Rare Earths (ASX:ARU) has launched a sizeable capital raise, combining a two-tranche institutional placement of approximately A$350 million with a share purchase plan (SPP) aiming to raise up to A$25 million. The placement price of A$0.260 per share represents a roughly 16% discount to recent trading levels, reflecting the urgency to lock in funding ahead of the Nolans Rare Earths Project construction phase targeted for September 2026.

The company’s largest shareholder, Hancock Prospecting, has committed around A$85 million to the placement, which will boost its stake to about 17.5%. Apart from Hancock’s commitment, the raise is fully underwritten, providing Arafura with strong financial certainty. Upon settlement of the first tranche, the company expects a pro forma cash balance of approximately A$911 million, a significant war chest for the project’s equity component.

Funding Completes Equity Puzzle for Nolans

Arafura’s capital raise comes on the heels of a string of binding equity commitments and convertible note agreements, including A$430 million from the German Raw Materials Fund, Export Finance Australia (EFA), and the National Reconstruction Fund Corporation (NRFC). Combined with the recent A$481 million equity raise in late 2025, these funds ensure the company has fully covered the equity tranche required to advance the Nolans Project; Australia’s first fully integrated ore-to-oxide rare earths operation. This milestone follows the company’s recent binding cornerstone equity agreements and the Final Investment Decision announcement.

Offtake Agreements and Strategic Support Strengthen Position

The capital raise also reinforces Arafura’s strong market positioning, with about 93% of its binding offtake target secured. This includes a binding term sheet with Traxys North America for 500 tonnes per annum of NdPr oxide, underpinning the project’s revenue base. The company continues to negotiate with customers and government bodies to place an additional 250 tonnes per annum into Germany and Europe, a key strategic market. This builds on the recent binding offtake term sheet with Traxys and the non-binding Letter of Support from EFA under the Critical Minerals Strategic Reserve.

Shareholder Approval and SPP Details

The placement is split into two tranches, with the second tranche of approximately A$174.5 million subject to shareholder approval at an Extraordinary General Meeting expected in early July 2026. The SPP offers eligible shareholders the chance to subscribe at the same discounted price, capped at A$30,000 per investor, though it is not underwritten and may raise less than the targeted A$25 million. Directors’ participation in the SPP also requires shareholder approval, adding a layer of governance scrutiny.

The proceeds are earmarked primarily for construction and development of the Nolans Project, alongside provisions for cost overruns and corporate expenses. The company’s leadership emphasises the strategic importance of the project, with CEO Darryl Cuzzubbo highlighting the backing from government and cornerstone investors as critical to moving towards construction commencement.

Hancock’s Executive Chairman Gina Rinehart reiterated the significance of the investment, framing the Nolans Bore project as a vital link in the global critical minerals supply chain and a boost to Northern Territory development.