Arafura Rare Earths plans $250 million share sale backed by Australia’s richest person

By Rajasik Mukherjee, Kumar Tanishk and Jasmeen Ara Islam Shaikh

May 22 (Reuters) – Australia’s Arafura Rare Earths said on Friday it plans to raise about A$350 million ($249.83 million) in a share placement backed by Gina Rinehart’s Hancock Prospecting, to help fund its Nolans project.

The share placement plan comes a day after the miner approved the development of its $1.6 billion project in the Northern Territory, set to be Australia’s third-biggest rare earths operation by decade-end.

Arafura will issue shares worth about A$175.5 million at A$0.260 apiece in the initial tranche, representing a 16.1% discount to the stock’s last close on Thursday. A second tranche worth A$174.5 million is subject to shareholder approval.

“It’s a real positive and shows how serious investors and governments are about derisking global supply chains from Chinese control of rare earths,” said David Tuckwell, CIO at ETF Shares.

“The discount is effectively the cost of securing significant capital quickly with execution certainty.”

Hancock Prospecting, owned by Australia’s richest person Gina Rinehart and also Arafura’s largest shareholder, has committed to investing about A$85 million in the raising.

Upon completion of the fundraising, Hancock’s stake in Arafura will rise to roughly 17.5% from 15.5% at present.

Arafura said proceeds from the placement will fully fund the equity component required to develop the Nolans project.

The miner has secured financing commitments from export credit agencies in the United States, Canada, Germany and South Korea, among others, amid efforts by Western countries to diversify away from China.

The swift and seamless capital raise signals broad market confidence and marks a rare instance of the stock exchange minting a new mid‑tier miner, Tuckwell said, expecting the project to become one of the few large-scale rare earths operations outside China.

Arafura has now secured about 93% of its binding offtake target for neodymium-praseodymium (NdPr) oxide from the project, following recent supply agreements and support from export credit agencies.

Shares of the firm were on a trading halt. 

($1 = 1.4010 Australian dollars)

(Reporting by Rajasik Mukherjee, Kumar Tanishk and Jasmeen Ara Islam Shaikh in Bengaluru; Editing by Subhranshu Sahu)