Arafura 101

[John]

I’m just going to put some basic ARU points here to kick things off. Disclosure – I hold shares in ARU on the Australian Stock Exchange (ASX: ARU).

Arafura (ARU) aim to produce:

Phase 1:

• NdPr Oxide – 4,400 t/pa
• SEG/HRE Oxide – 474 t/pa
• Phosphoric Acid – 144,393 t/pa

Phase 2 (which includes Phase 1 product):

• NdPr Oxide – 11,000 t/pa

The rest is not provided, but if we pro-rata:

• SEG/HRE Oxide – 1,185 t/pa
• Phosphoric Acid – 360,983 t/pa

With Phase 1, ARU modelling suggests this will provide 4% of Global NdPr Oxide demand. I note that this modelling was done, before tariffs were introduced in USA and Europe, before the demand for robotics was envisaged.

ARU hopes to reach its Financial Investment Decision by ‘around June 2025’, according to its CEO. If this happens, it is probably the largest NdPr Oxide project since Lynas back in 2007 to begin construction. Arafura has been on the journey for 18 years! It has had several failed attempts to secure finance and begin construction. One of the main contributing factors was China’s price suppression of NdPr. This made it impossible to attract investment.

However, the world has changed in recent years. And the west has woken up to China’s dominance and potential weaponisation of rare earths. To this end, ARU changed its strategy, from just producing an NdPr Carbonate that would then be processed in China, to now ARU will process it further into an NdPr Oxide. With 90% of the NdPr Oxides processed in China, ARU producing an Oxide is key to its strategy of creating an Ex-China supply of NdPr Oxide.

And with many different Governments backing ARU (through Debt and Equity), and likely to be many tier 1 companies locking in off take by also providing equity, it looks like ARU’s strategy is about to pay off.

Other attributes for ARU

• Tier 1 mining and processing location – Australia
• Has lowest quartile operating cost of any NdPr mine to oxide project in the world
• ESG compliant
• Has all permits and approvals
• Has all pre-works done to set up construction work camp, roads in/out, water etc.
• Has Gina Rinehart (Hancock Prospecting) as a significant shareholder (She also owns shares in MP Materials, Brazilian Rare Earths and Lynas)

Given that traditionally, the best time to invest in a mine is just before FID, is now the best time to invest in ARU? What do others think?

Some other Australian mines that are also seeking to move into construction soon are:

• Iluka (ILU)
• Hastings (HAS)
• Northern Materials (NTU)
• Brazilian Rare Earths (listed on the ASX BRE)
• VHM (VHM)

Who else is there?

 

[Fundamental]

I’m just going to put some basic ARU points here to kick things off. Disclosure – I hold shares in ARU on the Australian Stock Exchange (ASX: ARU).

Arafura (ARU) aim to produce:

Phase 1:

• NdPr Oxide – 4,400 t/pa
• SEG/HRE Oxide – 474 t/pa
• Phosphoric Acid – 144,393 t/pa

Phase 2 (which includes Phase 1 product):

• NdPr Oxide – 11,000 t/pa

The rest is not provided, but if we pro-rata:

• SEG/HRE Oxide – 1,185 t/pa
• Phosphoric Acid – 360,983 t/pa

With Phase 1, ARU modelling suggests this will provide 4% of Global NdPr Oxide demand. I note that this modelling was done, before tariffs were introduced in USA and Europe, before the demand for robotics was envisaged.

ARU hopes to reach its Financial Investment Decision by ‘around June 2025’, according to its CEO. If this happens, it is probably the largest NdPr Oxide project since Lynas back in 2007 to begin construction. Arafura has been on the journey for 18 years! It has had several failed attempts to secure finance and begin construction. One of the main contributing factors was China’s price suppression of NdPr. This made it impossible to attract investment.

However, the world has changed in recent years. And the west has woken up to China’s dominance and potential weaponisation of rare earths. To this end, ARU changed its strategy, from just producing an NdPr Carbonate that would then be processed in China, to now ARU will process it further into an NdPr Oxide. With 90% of the NdPr Oxides processed in China, ARU producing an Oxide is key to its strategy of creating an Ex-China supply of NdPr Oxide.

And with many different Governments backing ARU (through Debt and Equity), and likely to be many tier 1 companies locking in off take by also providing equity, it looks like ARU’s strategy is about to pay off.

Other attributes for ARU

• Tier 1 mining and processing location – Australia
• Has lowest quartile operating cost of any NdPr mine to oxide project in the world
• ESG compliant
• Has all permits and approvals
• Has all pre-works done to set up construction work camp, roads in/out, water etc.
• Has Gina Rinehart (Hancock Prospecting) as a significant shareholder (She also owns shares in MP Materials, Brazilian Rare Earths and Lynas)

Given that traditionally, the best time to invest in a mine is just before FID, is now the best time to invest in ARU? What do others think?

Some other Australian mines that are also seeking to move into construction soon are:

• Iluka (ILU)
• Hastings (HAS)
• Northern Materials (NTU)
• Brazilian Rare Earths (listed on the ASX BRE)
• VHM (VHM)

Who else is there?

Pensana (LSERE). Mkango (LSE:MKA), Meteroic (ASX:MEI)

 

[John]

Pensana (LSERE). Mkango (LSE:MKA), Meteroic (ASX:MEI)

Pensana - They are interesting, they are going to process their carbonate in the UK yeah? I want to do more research on these guys.

Mkango - These guys are in the exploration/development phase...and feel a long long time off FID.

Meteroic - This is an interesting play. Shipping carbonate to Ucore in usa.

Hey @Fundamental .....I'll create new threads in the Mine section for these Mines/Projects. It would be aweome to get your view or any useful info on these guys.

 

[Fundamental]

DM not working ?

 

[John]

Hi @Fundamental

I believe you can direct message an Admin. But you can’t direct message other Members.

 

[WideMouthFrog]

I’m just going to put some basic ARU points here to kick things off. Disclosure – I hold shares in ARU on the Australian Stock Exchange (ASX: ARU).

Arafura (ARU) aim to produce:

Phase 1:

• NdPr Oxide – 4,400 t/pa
• SEG/HRE Oxide – 474 t/pa
• Phosphoric Acid – 144,393 t/pa

Phase 2 (which includes Phase 1 product):

• NdPr Oxide – 11,000 t/pa

The rest is not provided, but if we pro-rata:

• SEG/HRE Oxide – 1,185 t/pa
• Phosphoric Acid – 360,983 t/pa

With Phase 1, ARU modelling suggests this will provide 4% of Global NdPr Oxide demand. I note that this modelling was done, before tariffs were introduced in USA and Europe, before the demand for robotics was envisaged.

ARU hopes to reach its Financial Investment Decision by ‘around June 2025’, according to its CEO. If this happens, it is probably the largest NdPr Oxide project since Lynas back in 2007 to begin construction. Arafura has been on the journey for 18 years! It has had several failed attempts to secure finance and begin construction. One of the main contributing factors was China’s price suppression of NdPr. This made it impossible to attract investment.

However, the world has changed in recent years. And the west has woken up to China’s dominance and potential weaponisation of rare earths. To this end, ARU changed its strategy, from just producing an NdPr Carbonate that would then be processed in China, to now ARU will process it further into an NdPr Oxide. With 90% of the NdPr Oxides processed in China, ARU producing an Oxide is key to its strategy of creating an Ex-China supply of NdPr Oxide.

And with many different Governments backing ARU (through Debt and Equity), and likely to be many tier 1 companies locking in off take by also providing equity, it looks like ARU’s strategy is about to pay off.

Other attributes for ARU

• Tier 1 mining and processing location – Australia
• Has lowest quartile operating cost of any NdPr mine to oxide project in the world
• ESG compliant
• Has all permits and approvals
• Has all pre-works done to set up construction work camp, roads in/out, water etc.
• Has Gina Rinehart (Hancock Prospecting) as a significant shareholder (She also owns shares in MP Materials, Brazilian Rare Earths and Lynas)

Given that traditionally, the best time to invest in a mine is just before FID, is now the best time to invest in ARU? What do others think?

Some other Australian mines that are also seeking to move into construction soon are:

• Iluka (ILU)
• Hastings (HAS)
• Northern Materials (NTU)
• Brazilian Rare Earths (listed on the ASX BRE)
• VHM (VHM)

Who else is there?

DC, the CEO of ARU, suggested they would process product from the Notthern states of Australia. Only this month he made this statement, so this opens up a very interesting can of fish? I cannot find who or what that means. Ie HRE or NdPr (their planned processing).

 

[John]

DC, the CEO of ARU, suggested they would process product from the Notthern states of Australia. Only this month he made this statement, so this opens up a very interesting can of fish? I cannot find who or what that means. Ie HRE or NdPr (their planned processing).

Was that on one of his broadcast interviews? Be great to have the link for which one he said that.

It also lines up with the Australian Govt's commitment (on both side of the house), to take back the Port of Darwin - curently in Chinese ownership.

Which mines do you think could be processed at Nolans/Arafrua? Maybe Northern Minerals?

Also maybe you can help me @WideMouthFrog what ever happened to MinHub? I thought that they were going to put a processing hub near Darwin? (Sorry i forget the finer details about it). But is this back on?

 

[WideMouthFrog]

Was that on one of his broadcast interviews? Be great to have the link for which one he said that.

It also lines up with the Australian Govt's commitment (on both side of the house), to take back the Port of Darwin - curently in Chinese ownership.

Which mines do you think could be processed at Nolans/Arafrua? Maybe Northern Minerals?

Also maybe you can help me @WideMouthFrog what ever happened to MinHub? I thought that they were going to put a processing hub near Darwin? (Sorry i forget the finer details about it). But is this back on?

Mentioned in this interview, and also. Minhub discussions closed down last year (I recall the half year report).

 

[patarnoster]

Few months back I created an analysis combining all the info available on ARU info one post (Posted on HC) I have since been adding to it and updating it with the current working knowledge. I thought it would be a relevant time to share.

Arafura Rare Earths – Q1 2025 Project Update
​

Joint Venture Funding Option for Nolans​

Arafura Rare Earths has signaled a pivotal shift in its funding strategy by evaluating a potential joint venture (JV) structure for the Nolans Project. This alternative pathway could significantly reduce the amount of equity Arafura itself must raise to fund development . In practical terms, a JV would likely involve bringing in a strategic partner to take a direct project stake in Nolans, contributing a substantial portion of the remaining capital in exchange for an ownership share. Such an arrangement would ease the funding burden on Arafura’s balance sheet (less dilution for existing shareholders) , but it also implies Arafura might forgo a portion of its 100% project interest to the new partner.

Importantly, pursuing a JV is being weighed alongside Arafura’s existing equity-raise strategy to ensure the most value-accretive outcome for shareholders . The company cautions there is no guarantee a suitable JV deal will be reached, but multiple third-party proposals are under consideration . One immediate impact of exploring this JV route is on the project timeline: Final Investment Decision (FID) for Nolans, originally targeted by end of H1 2025, may be pushed beyond mid-2025 as negotiations progress . Arafura will update the market once a funding structure is finalized, including revised FID timing.

To accommodate this potential delay, Arafura undertook an operational expenditure review and extended its cash runway into Q1 2026 . Non-essential development activities have been scaled back to preserve cash while funding discussions continue . As a result, when FID is eventually reached, the project team will require a 4-month ramp-up period to remobilize and scale up owner’s team and contractor resources before full construction can begin . This has slightly lengthened the overall Nolans schedule – the post-FID execution timeline to first production has increased from an estimated 37 months to about 41 months . In short, a JV could materially strengthen Nolans’ financing but at the cost of some schedule slippage and a shared project ownership structure. Arafura appears willing to accept a modest delay if it means securing an optimal funding solution that maximizes long-term value for shareholders.

​

 

[patarnoster]

P2

US–China Trade Tensions and Geopolitical Tailwinds​

Escalating trade friction between the United States and China in late 2024 and early 2025 has materially shifted the rare earth industry landscape. In April 2025, the U.S. government imposed China-specific import tariffs on neodymium-iron-boron (NdFeB) permanent magnets that bring the total tariff rate to 36.1% for Chinese magnets . These hefty tariffs directly target the critical magnet supply chain (used in EV motors, wind turbines, etc.), dramatically raising the cost of Chinese-made rare earth magnets in the U.S. market. China swiftly responded by announcing plans to restrict exports of high-performance magnets and related rare earth products on national security grounds . While Beijing’s export controls did not single out any one country, they send a clear signal that China is willing to constrain the outbound supply of rare earth materials as a countermeasure in the trade dispute.

These policy moves are poised to bifurcate global rare earth pricing. Arafura notes that Chinese domestic rare earth oxide prices may no longer reflect the true market value for non-Chinese buyers . In effect, a two-tier pricing system could emerge: one price inside China (where magnets remain tariff-free and abundant) and a higher price “seaborne” outside China where tariffs and export hurdles apply . This bifurcation is bullish for ex-China rare earth developers – it creates an opportunity for non-Chinese supply to command premium pricing, decoupled from China’s internal market . In fact, Arafura expects that U.S. tariffs on magnets will “float all boats” for rare earth prices outside China, as downstream manufacturers seek alternate sources of NdPr feedstock free of tariff costs .

More broadly, the fragility of the rare earth magnet supply chain has been starkly exposed. The West’s heavy reliance on China is now seen as a strategic vulnerability, prompting a race to onshore critical mineral supply chains . This dynamic strongly favors projects like Nolans. Arafura’s Nolans Project is uniquely positioned as a fully integrated mine-to-oxide supplier in a Tier-1 jurisdiction, offering Western and allied nations a rare opportunity to bypass Chinese intermediaries. Recent geopolitical events have “galvanised support and recognition of Nolans and its value proposition as a globally strategic” project . Governments and end-users are increasingly backing non-Chinese rare earth ventures via policy support, financing, and offtake commitments. For Arafura, this translates into concrete tailwinds: witness the Australian government’s major funding commitments (detailed below) and the strong offtake interest from automakers and wind turbine manufacturers seeking diversified supply.

In summary, U.S.–China trade policies are contributing to a more favorable market environment for Arafura. Higher tariffs on Chinese magnets and potential Chinese export curbs tighten global supply and put upward pressure on NdPr prices, improving project economics for new suppliers. At the same time, these tensions are catalyzing structural support (political and financial) for rare earth supply chain diversification, in which Arafura’s Nolans Project is a cornerstone. The 12% rise in NdPr oxide pricing during Q1 2025 was an early signal of these trends, and further policy-driven price catalysts may lie ahead. All of this underlines Arafura’s strategic importance as one of the most advanced ex-China NdPr sources nearing development.

NdPr Market Trends in Q1 2025​

Neodymium-Praseodymium (NdPr) oxide prices climbed about 12% in the March quarter of 2025, finishing around US$60.97 per kilogram . This rebound in price comes after a period of weakness in late 2024, and it reflects tightening supply dynamics and improving sentiment in the rare earth market. Several factors contributed to the Q1 price rise:

• Limited Spot Availability: Chinese producers largely fulfilled their long-term contract orders during the quarter, leaving very little NdPr available on the spot market . This scarcity of prompt supply supported prices.
  
  
• Chinese Quota Uncertainty: There was significant speculation that China’s announcement of its first-half 2025 rare earth production quotas would be delayed and potentially accompanied by a more restrictive quota regime . Industry chatter suggested Beijing might overhaul its quota system to strengthen government control over rare earth output. Potential changes include counting imported rare earth feedstock against domestic refining quotas, consolidating mining/refining quotas under only two state-owned companies, and adding stricter oversight and traceability measures . This anticipation of tighter Chinese supply controls led buyers to secure material ahead of possible quota-driven shortages, lifting prices.
  
  
• Myanmar Supply Disruptions: Myanmar – a key source of heavy rare earth and supplemental NdPr supply into China – experienced further supply chain disruption. In Kachin State, the Kachin Independence Army imposed a new US$4/kg tax on rare earth concentrate exports to China, complicating the economics of those shipments . Ongoing political instability (rebel activity) in Myanmar had already been curbing output, and a large earthquake in the rare earth mining regions during the quarter threatened to curtail exports even more . China has tried to offset the falling Myanmar supply by increasing imports from alternative sources like Laos and monazite sands , but these substitutes are limited. The net effect is reduced feedstock flowing into Chinese separation plants, tightening overall NdPr availability.
  

These developments – stricter Chinese controls and declining illicit Myanmar supply – directly firm up the fundamental outlook for NdPr. Analysts now talk of a floor under NdPr prices, with upside potential if export restrictions or Western stockpiling accelerates. Indeed, Arafura highlighted that recent geopolitical moves could be a near-term price catalyst for NdPr (for example, countries may stockpile material in response to the US-China tensions discussed above). For Arafura’s Nolans Project, higher sustained NdPr prices improve projected revenues and strengthen the business case as it seeks to finalize funding. The price recovery to ~$61/kg in Q1 2025 is still below the peaks seen in 2022, but the trend has reversed upward at a crucial time for financing. If China’s new quota policies further restrict output or if global demand (from EVs, wind, defense, etc.) surprises to the upside, NdPr could see additional price appreciation. Overall, the Q1 2025 market tightening bodes well for the viability of new NdPr supply outside China, reinforcing the economic rationale for projects like Nolans.

​

 

[patarnoster]

P3

Offtake Agreements and Funding Progress​

Arafura made significant strides in de-risking the Nolans Project’s commercialization and financing through additional offtake contracts and a major equity funding commitment in Q1 2025.

Offtake Agreements: During the quarter, Arafura secured a new binding offtake agreement with Traxys Europe SA (a global commodities trading firm) for the sale of up to 300 tonnes per annum of NdPr oxide from Nolans. Under this deal, Traxys will take a minimum of 100 tpa for an initial five-year term, with Arafura having the option to supply an additional 200 tpa over that period . Because the extra volume is at Arafura’s election, the full 300 tpa is counted toward the company’s offtake target required by project financiers . This Traxys contract joins Arafura’s two previously announced cornerstone offtakes – with Hyundai & Kia and with Siemens Gamesa Renewable Energy – to bring the total binding sales commitments to ~2,320 tpa of NdPr oxide, equal to 66% of Nolans’ planned output (at 80% of capacity) . Table 1 summarizes the binding offtake portfolio:

Binding Offtake Overview

• Offtaker (Binding): Hyundai & Kia
• Location / Sector: South Korea (EV/Auto)
• NdPr Oxide Volume: 1,500 tpa
• % of Offtake Target: 43%
  
  
• Offtaker (Binding): Siemens Gamesa RE
• Location / Sector: Germany (Wind Energy)
• NdPr Oxide Volume: 520 tpa
• % of Offtake Target: 15%
  
  
• Offtaker (Binding): Traxys Europe SA
• Location / Sector: Luxembourg (Trading)
• NdPr Oxide Volume: 300 tpa
• % of Offtake Target: 8%
  

Total Binding Volume:
NdPr Oxide Volume: 2,320 tpa
% of Offtake Target: 66%

1. Offtake target is 80% of planned annual NdPr production (80% of 4,440 tpa ≈ 3,550 tpa) as required by Nolans’ project finance banks .
2. Inclusive of Arafura’s option to increase Traxys volume from 100 to 300 tpa .

With two-thirds of targeted production now locked into binding agreements, Arafura is well on the way to its goal of 80% offtake coverage prior to FID . The remaining ~14% of volume (about 550–600 tpa NdPr) is under negotiation with other parties. Notably, the company is prioritizing potential offtakers who can also bring strategic value, such as those willing to invest in Arafura’s equity or assist in regional supply chain development . This suggests any final offtake deals could be coupled with financing support, further integrating Arafura into end-user supply chains. The robust offtake interest (Arafura has offtake MOUs under discussion totaling nearly 190% of production capacity ) underscores the strong demand for Nolans’ product from non-Chinese buyers looking to secure long-term NdPr supply.

Funding Pipeline: On the financing front, Arafura achieved a milestone in Q1 2025 by securing its first cornerstone equity investment commitment. The Australian government’s newly established National Reconstruction Fund Corporation (NRFC) agreed to invest A$200 million in the Nolans Project. This commitment – announced in mid-January 2025 – will be executed via long-dated convertible notes, providing Arafura with significant capital on favorable terms . The notes carry a generous conversion premium (minimizing dilution) and rank subordinated to the project’s debt facilities, meaning they slot in as risk-tolerant funding alongside shareholder equity . The NRFC funding is truly a cornerstone: it represents public sector validation of Nolans’ strategic importance, and it brings total Australian government support for Nolans to over A$1 billion when combined with earlier commitments (such as the $840 million package of government loans and grants announced in 2022 ).

Arafura’s management indicated that this A$200M injection – the first major piece of the required equity funding – is expected to catalyze additional private investment. With the government leading, other strategic investors (possibly international industrial partners or sovereign wealth funds) have a clear signal to follow. Indeed, Arafura remains in active discussions to secure additional equity investors to complete the funding package needed for FID. The exact equity gap is not disclosed, but given Nolans’ capital cost and debt package, analysts estimate a remaining equity requirement on the order of a few hundred million dollars. The company has appointed joint lead managers (Canaccord Genuity and Barringtons) and is pursuing a dual-track funding strategy: continuing with conventional equity raising plans and evaluating the JV alternative as discussed earlier .

On the debt side, the project finance debt facilities (approx. US$1.055 billion) are largely in place, with long-tenor loans pre-approved by export credit agencies and government lenders . Documentation for these debt facilities is being progressed so that they can be executed soon after FID . Having a solid debt package and substantial offtake contracts has set a strong foundation to attract the final equity. In the words of Arafura’s Managing Director, “Nolans is the right project at the right time,” and after the initial NRF cornerstone, they are confident in securing the remaining cornerstone investments to reach FID.

In summary, as of Q1 2025 Arafura has ~66% of its product pre-sold and a cornerstone A$200M equity commitment in hand, alongside an indicative debt package and earlier government grants. The funding pipeline is well advanced, with the last piece being the balance of equity (potentially via strategic partners or a JV). This positions Nolans closer than ever to a finance close, notwithstanding the slight timing delays to optimize the funding mix.

​

 

[patarnoster]

P4

Project Delivery and Operational Readiness​

While the financing and offtake workstreams progress, Arafura has also been advancing project implementation planning and maintaining operational readiness at the Nolans site. The company’s single-minded focus is to ensure Nolans can move promptly into construction once FID is achieved . Key updates from the Q1 2025 report on project delivery include:

• Engineering & Design: Detailed engineering continued, especially on the hydrometallurgical processing plant. The engineering team has been finalizing process engineering inputs and pursuing design optimizations aimed at reducing capital costs and improving operational efficiency . This includes value-engineering of the process flow sheet and equipment to potentially lower the initial capex without compromising throughput. By end of Q1, Arafura had a solid platform of engineering deliverables ready to hand over to an EPC contractor for the next phase of detailed design and procurement .
  
  
• Power Station Solution: Reliable power is critical for an isolated mine and processing operation like Nolans. Arafura has progressed the selection and design of an on-site power station (likely a gas-fired power plant initially) to support operations . During Q1, work centered on getting more definitive cost estimates and engineering to a level sufficient for negotiating a Power Purchase Agreement (PPA) . In other words, Arafura is preparing to either build or contract a power facility and wants a firm design/cost basis to secure a power provider on favorable terms, ahead of construction.
  
  
• Gas Supply: The processing plant will require a steady supply of natural gas (both for power generation and possibly for process heat). Arafura had an earlier gas supply agreement with the Mereenie field joint venture (Central Petroleum and Macquarie), but because Nolans’ FID did not occur by the agreed date (end of Mar 2025), that contract’s condition precedent went unfulfilled . Subsequent attempts to extend the gas agreement failed to reach terms acceptable to the gas supplier . Thus, the Mereenie gas supply deal was formally terminated after March 31, 2025 . The parties remain on good terms, leaving the door open to revisit supply in future, but Arafura had anticipated this scenario and launched a broader NT gas market review in parallel . Fortuitously, new gas developments in the Northern Territory are on the horizon. In late Q1, Arafura’s subsidiary executed a non-binding Letter of Intent (LOI) with Tamboran Resources Ltd for a long-term gas supply to Nolans . Tamboran is appraising large gas reserves in the Beetaloo Basin (NT) and could supply 18–25 terajoules per day for up to 10 years to Nolans once both projects are operational . The LOI will be firmed up into a full contract subject to both Arafura and Tamboran reaching FID on their respective projects and obtaining regulatory approvals . This prospective deal with Tamboran aims to secure a reliable, long-term gas source on favorable terms , leveraging a new NT gas province. In sum, Arafura has deftly pivoted its gas strategy – replacing the lapse of the Mereenie agreement with an arguably larger-volume, longer-term supply option that aligns with Nolans’ timeline.
  
  
• Construction Camp & Site Infrastructure: Establishing accommodations for construction crews is another piece of project readiness. The initial 400-person construction camp was put in place at Nolans in 2022 under a lease contract. That contract’s initial term ends in June 2025, and during Q1 it became clear that extending it on reasonable terms would not be possible . Negotiations with the camp provider failed to reach a commercially acceptable extension, so Arafura made the decision to terminate the camp contract as of its June expiry . This resulted in a one-off termination cost of A$4.1 million (to be booked in the June quarter), of which A$2.6M were costs Arafura was liable for regardless (sunk setup costs) . Notably, the camp infrastructure currently remains on-site at Nolans at no cost to Arafura while discussions continue with the camp owner on possible post-FID arrangements . In parallel, Arafura executed a backup plan: it purchased a smaller 48-person camp unit (and associated facilities) during Q1 . This small camp, combined with other local accommodations in the region, will be sufficient to house the workforce needed for initial bulk earthworks and early construction mobilization immediately after FID . Since the full 400-person camp won’t be required until peak construction ramps up, these developments are not expected to impact the project’s early construction schedule. Arafura will either renegotiate to use the larger camp once activity scales up or deploy alternative camp solutions in parallel, ensuring that accommodation does not become a bottleneck on the critical path.
  
  
• Other Early Works and Approvals: Bulk earthworks design was advanced to tender-ready status by end of the quarter, and Arafura reports that bulk earthworks remain on the critical path for construction . Environmental and water management approvals are being kept up-to-date; for example, in March the NT authorities approved Arafura’s plan for a minor creek diversion at the site, clearing another pre-construction requirement . On-site, no major construction has commenced yet (pending FID), but Arafura continues baseline environmental monitoring and maintains site security so that the project area is ready for a quick start. The company also made progress on safety and workforce systems: a draft Operational Readiness “Safety Case” was completed in Q1 , forming the basis for detailed health and safety management plans to be finalized in the lead-up to construction. Moreover, Arafura is pursuing Workplace Health & Safety accreditation with federal authorities; an initial systems audit was completed in February 2025 with further work ongoing . These steps ensure that when construction kicks off, it will do so under robust safety and management frameworks.
  

In summary, Arafura has kept Nolans “shovel-ready” even as FID is deferred slightly. Engineering, procurement, and early-works planning are at an advanced stage. Critical auxiliary elements like power, gas, and camp accommodations are being proactively lined up, so that there will be minimal delay in moving from financing to full construction. The operational readiness activities in Q1 2025 demonstrate a prudent balancing act: continue necessary project prep work (to avoid losing momentum) but rein in expenditures on nice-to-have items until funding is secured. This approach has extended Arafura’s runway into 2026 while preserving the ability to scale up quickly post-FID.

​

 

[patarnoster]

P5

Strategic Positioning of Arafura in the Global Rare Earth Landscape​

With the Nolans Project now on the cusp of development (pending final funding), Arafura’s strategic positioning in the global rare earths sector deserves a fresh appraisal. Several factors in 2025 reinforce that Arafura is emerging as a critical piece of the non-China rare earth supply chain:

• Tier-1 Jurisdiction, Tier-1 Project: Nolans, located in Australia’s Northern Territory, offers supply chain security in a way that projects in higher-risk jurisdictions (or war-torn regions like Myanmar) cannot. As a fully permitted, construction-ready project in a stable, mining-friendly country, Nolans provides end-users with confidence in long-term supply reliability. Arafura often emphasizes that Nolans is the only significant “ore-to-oxide” rare earth project of its scale outside China that is construction-ready. Unlike some competitors, Nolans will mine and refine NdPr oxide on-site, creating a value-added product that feeds directly into magnet manufacturing. This integrated model is rare outside China and eliminates dependency on Chinese processing. In a landscape where even the largest Western rare earth mine (MP Materials in the US) still ships concentrate to China for refinement, Arafura stands out by offering a fully independent supply line from mine to refined oxide.
  
  
• Geopolitical and Policy Tailwinds: The geopolitical shifts discussed earlier (US tariffs, Chinese export controls, etc.) work strongly in Arafura’s favor. Governments in the West and Asia are rolling out policies to support critical minerals projects. In the EU, for instance, initiatives under the Critical Raw Materials Act aim to facilitate offtake and financing for projects like Nolans, and a new EU raw materials purchasing consortium could help aggregate demand . The Australian government’s direct investment via the NRFC is a tangible example of policy support aligning with Arafura’s goals. It’s likely not the last – other strategic funding (e.g. from allied nations’ export-import banks or defense stockpile funds) could follow as nations seek to secure rare earth supply. Arafura finds itself “at the right project at the right time”, with a confluence of public sector backing and private sector interest due to the urgency of supply diversification.
  
  
• Offtake Demand and Strategic Customers: Arafura’s success in signing binding offtakes covering the majority of its production speaks to Nolans’ strategic value. Its customers include a major Korean automaker consortium (Hyundai/Kia) and a European wind turbine leader (Siemens Gamesa), both of whom are anchoring their future magnet material supply chains on Nolans. These partners not only validate the project’s product (NdPr oxide quality and suitability) but also hint at broader strategic relationships – for example, Hyundai and Kia’s interest aligns with South Korea’s goal to secure non-Chinese sources of EV materials. The offtake with Traxys indicates there is also a role for established critical-materials traders to distribute Nolans’ output into wider markets (potentially to smaller magnet makers in Europe/US who need material). The fact that Arafura has interest exceeding its capacity (191% of planned volume under discussion) illustrates the deficit of alternate NdPr sources globally. If Nolans were online today, it could likely sell 100% of its output multiple times over given the supply gap.
  
  
• Competitive Position vs. Peers: In the coming years, Arafura is poised to join Lynas Rare Earths as one of the very few significant producers of separated rare earth oxides outside China. Lynas (also in Australia/Malaysia) has been the sole non-Chinese light rare earth supplier for over a decade. Nolans would not only add a second source, but its integrated Australian operation might sidestep some of the geopolitical and operational challenges Lynas faces (for example, Lynas’s processing is in Malaysia and has been subject to regulatory uncertainty). Other aspiring rare earth projects in the West (in the U.S., Canada, Africa, etc.) are generally several years behind or lack the complete financing and permitting that Nolans has. In particular, Nolans’ combination of high NdPr grade, significant scale (planned ~4,400 tpa NdPr oxide, ~10% of world demand), and advanced project execution readiness make it arguably the most advanced NdPr-focused development project globally in 2025. This gives Arafura a first-mover advantage as nations and industries look to diversify supply. Every indication is that once funded, Nolans will be a strategic asset for the supply chains of allied economies, likely with much of its output “captured” by those economies through offtake agreements and government-backed financing .
  
  
• Funding and Partnership Status: Arafura’s current funding status – with a large chunk of debt secured and a government cornerstone investor – further cements its strategic positioning. Many critical mineral projects struggle to access capital, but Arafura has deftly aligned itself with national interests to unlock over A$1 billion of support. The potential JV partner that Arafura is now considering could itself be a strategic industry player (for instance, a downstream magnet manufacturer or an end-user consortium) or even a nation-backed entity that wants to secure supply. If such a JV comes to fruition, it will likely reinforce Nolans’ place in the global rare earth ecosystem by directly linking production to a major consumer or strategic ally. Essentially, Arafura is transitioning from a junior explorer to a future mid-tier producer that is intertwined with geopolitical objectives and high-tech supply chains.
  

In conclusion, Arafura Rare Earths finds itself in an enviable position as of Q1 2025. The company has a world-class NdPr project in Nolans that aligns perfectly with the current rare earth supply paradigm shift. Geopolitical tailwinds (trade wars, resource nationalism) are elevating the urgency for projects like Nolans, and Arafura has skillfully engaged stakeholders (off takers, governments, financiers) to advance toward development. Challenges do remain – notably, closing the remaining funding and executing the project on schedule – but the overall trajectory is positive. If Nolans reaches FID and construction in the coming months, Arafura will become a linchpin in the emerging diversified rare earth supply chain, delivering Neodymium-Praseodymium from a Tier-1 jurisdiction to the global market at a time when such supply has never been more critical. The company’s latest moves, from exploring a JV to securing offtake and funding, all serve to strengthen this strategic positioning and ensure that Nolans can fulfill its role as a cornerstone of rare earth independence from China.

 

[John]

Wow. thanks @patarnoster

It is amazing to see it all written down like that.

And my overwhelming feeling is....ARU is the most progressed, at scale rare earth player in the world. And just the time and money spent on the mineraology is incredible and should massively de-risk the project. And we are sooooo close now.

Glad I am an investor.

 

[Fundamental]

Wow. thanks @patarnoster

It is amazing to see it all written down like that.

And my overwhelming feeling is....ARU is the most progressed, at scale rare earth player in the world. And just the time and money spent on the mineraology is incredible and should massively de-risk the project. And we are sooooo close now.

Glad I am an investor.

Nolans is certainly a solid project, resource wise. However, the location leaves a lot to be desired, central Australia is not the cheapest place logistically or operationally to run a mine. It will certainly be good to boost the Wests ability to counteract China's monopoly and should also contribute to Australia's economy so long as a Free Market place can be established without interference from Government or major shareholders.

 

[John]

The location is actually not too bad. Yeah it is literally in the middle of Australia. But it is close to the major highway that goes direct to Darwin port. There is also a train line there too. Water lines. And I believe a gas line.

Compared to say the Minres road….160km road! I think ours is 7km.

So the infra costs are not crazy expensive.

Aice spings is only 1 hour away. With schools and community etc.

But I do know that the costings were all done on. FIFO workforce. So not worried about that.

The capex transport costs would only be a small percentage. And opex transport costs would be tiny compared to say Lynas.

The main reason our costs are so high, are the banks/debt. They would not lend unless there were massive contingencies. They are insanely high. And I know that Lynas had big issues…and that is in the back of everyone’s mind. But there has been so much work done to de risk.

So I think that is a massive plus for ARU. If they can keep it on budget. We have plenty of spare contingency for Phase 2.

 

[Fundamental]

You're right, Swings and Roundabouts. Being an hour+ from Alice might just be enough to deter the Vandals!
I certainly hope that they can achieve their US$104/t NdPr Oxide price, as at that price everybody will be well into profit.

 

[John]

DC was talking about achieving triple the current pricing...so that would take it to about US$150 per kg. Giddy up.


Question Reader: The next question comes from Ronald Lomax and reads, Linus has been in production for many years but has never been able to pay a dividend. How long does Arafura expect to be until they be profitable and pay a dividend?

Daryl Kosubo, Managing Director and CEO, Arafura: So what so we can’t talk to exactly what’s going to happen in the future. But what what we can talk to is what we expect to happen and how we can help that happen. So the number one issue that the rare earth sector, including Linus, has been having to deal with is China’s control of pricing. That control will come to an end or be minimized when there is a when a number of things can happen. One, when a structural supply deficit happens, the pricing will naturally increase.

And we’ve seen that in the past when there’s been, short term supply disruptions. We’ve seen the pricing double to to triple. If that had have occurred on a long term, Linus would have been paying dividends, I am sure. So if you look at the forecast of demand doubling over the next ten years, and China’s ability to meet that demand, we believe and other forecasts believe there will be a structural supply deficit, and that will create a very different pricing mechanism. So that’s one trigger that will create a different pricing mechanism.

The second thing that will create a different pricing mechanism is and we’re seeing this playing out today, right, is when trade restrictions are being applied, whether that’s through restrictions or tariffs, and that creates a non China pricing index. And this is where the Australian strategic reserve can play a very important role in creating a seaborne, traded only NDPR index. What that means is China’s domestic production and, consumption of rare earth magnets is taken out of the equation, and therefore, you have a truly, functioning NDPR index that reflects true supply and demand. Argus believed that in that sort of scenario, we would see pricing, you know, close to triple long term pricing close to triple of what we’re seeing today. The third trigger of a different pricing environment is I’m and I’m gonna use EV buyers as an example here.

Most electric vehicle buyers wanna be a responsible part of the energy transition. A lot of the rare earth magnet that come out of China, it has been getting their feedstock from places like Myanmar, which have poor environmental standards, but poor poor human rights standards as well. As that becomes, you know, as awareness of that grows, I’d like to think that EV buyers will be more selective and demand that the supply of the materials that go into making electric vehicles is coming from responsible sources. So I’ve just talked through three triggers that will create a very different pricing environment that will then enable us to grow, pay dividends in the future, etcetera, etcetera. It only takes one of those three to trigger the sort of pricing environment, and we’re or already seeing the second trigger, which is trade restrictions related taking place.

So that’s why we’re confident that we will be a very profitable organization that’s able to grow and ultimately pay dividends.

 

[Fundamental]

DC was talking about achieving triple the current pricing...so that would take it to about US$150 per kg. Giddy up.


Question Reader: The next question comes from Ronald Lomax and reads, Linus has been in production for many years but has never been able to pay a dividend. How long does Arafura expect to be until they be profitable and pay a dividend?

Daryl Kosubo, Managing Director and CEO, Arafura: So what so we can’t talk to exactly what’s going to happen in the future. But what what we can talk to is what we expect to happen and how we can help that happen. So the number one issue that the rare earth sector, including Linus, has been having to deal with is China’s control of pricing. That control will come to an end or be minimized when there is a when a number of things can happen. One, when a structural supply deficit happens, the pricing will naturally increase.

And we’ve seen that in the past when there’s been, short term supply disruptions. We’ve seen the pricing double to to triple. If that had have occurred on a long term, Linus would have been paying dividends, I am sure. So if you look at the forecast of demand doubling over the next ten years, and China’s ability to meet that demand, we believe and other forecasts believe there will be a structural supply deficit, and that will create a very different pricing mechanism. So that’s one trigger that will create a different pricing mechanism.

The second thing that will create a different pricing mechanism is and we’re seeing this playing out today, right, is when trade restrictions are being applied, whether that’s through restrictions or tariffs, and that creates a non China pricing index. And this is where the Australian strategic reserve can play a very important role in creating a seaborne, traded only NDPR index. What that means is China’s domestic production and, consumption of rare earth magnets is taken out of the equation, and therefore, you have a truly, functioning NDPR index that reflects true supply and demand. Argus believed that in that sort of scenario, we would see pricing, you know, close to triple long term pricing close to triple of what we’re seeing today. The third trigger of a different pricing environment is I’m and I’m gonna use EV buyers as an example here.

Most electric vehicle buyers wanna be a responsible part of the energy transition. A lot of the rare earth magnet that come out of China, it has been getting their feedstock from places like Myanmar, which have poor environmental standards, but poor poor human rights standards as well. As that becomes, you know, as awareness of that grows, I’d like to think that EV buyers will be more selective and demand that the supply of the materials that go into making electric vehicles is coming from responsible sources. So I’ve just talked through three triggers that will create a very different pricing environment that will then enable us to grow, pay dividends in the future, etcetera, etcetera. It only takes one of those three to trigger the sort of pricing environment, and we’re or already seeing the second trigger, which is trade restrictions related taking place.

So that’s why we’re confident that we will be a very profitable organization that’s able to grow and ultimately pay dividends.

$150/kg ~ everybody who holds RE shares will be a millionaire.

 

[patarnoster]

$150/kg ~ everybody who holds RE shares will be a millionaire.

Lets hope.