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Impressive newsflow and the strong economics of its Nolans definitive feasibility study (DFS) are paying off for emerging rare earths producer Arafura Resources (ASX:ARU).

On Tuesday the Perth-based company announced a successful $3 million share placement to Australian and overseas institutions, and sophisticated investors.

The injection of capital will be principally used by Arafura to advance its Nolans Neodymium‐Praseodymium (NdPr) Project in Northern Territory, on which a DFS was completed in February.

Placement funds will also be used towards Arafura’s contribution to exploration drilling at the Bonya tungsten project in the Northern Territory, where the company holds a 60% interest in a joint venture with Thor Mining PLC.

Completed at a price of A$0.05 per share, the placement was managed by Perth-based broker Patersons Securities

Arafura Managing Director Gavin Lockyer said: “Having recently confirmed the technical and economic viability of the Nolans Project through the definitive feasibility study, together with the earlier obtained Territory and Commonwealth environmental approvals, the company is now working towards project commitment.”

Several of Arafura’s key Nolans work streams are already in full swing. They include the company’s continued negotiation of the mining agreement with the Native Title holders (the final regulatory condition prior to the granting of the initial 25‐year term Mineral Leases by the Northern Territory Government), and interrelated programs to secure offtake for final NdPr, other rare earth and phosphoric acid products and fund project capital requirements.

Arafura plans to commence “execution readiness” in the second half of 2019 – a transition that includes the tendering of engineering and construction contracts for the Nolans Project.

“These project development activities are critical as they will enable the company to efficiently transition to final engineering design and construction once project funding has been secured,” Lockyer added. 

Nolans Outlook

Much of Arafura’s 2019 newsflow has been built around the impressive economics showcased in the Nolans DFS.

Released in February, the DFS estimates post ramp-up annual production for the operation of 4,357 tonnes of NdPr oxide, 606 tonnes of SEG/HRE carbonate and 8,383 tonnes of cerium hydroxide over the course of the operation’s initial 23-year life.

Nolans will also produce 135,808 tonnes of by-product merchant grade phosphoric acid on an annual basis.

The DFS has paved the way for Arafura to escalate discussions with new and existing offtake and financing partners.

The NdPr oxide product alone is forecast to provide 96 percent of the project’s rare earth sales revenue, estimated at $539 million per annum.

This content is produced by Star Investing in commercial partnership with Arafura Resource. This content does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.