Arafura 101

Looks like a decent correction in the SP, and I see a lot of chatter on HC about the JV. In regards to the JV, I had an email exchange with ARU surrounding a few questions off the back of the recent quarterly.

Specifically asking the question 'is the JV real or just a delay tactic' (Bluntly) below was their response to said questions.

"While we can't provide too much specific information at the moment, I will say that the opportunity is real enough for us to have made an initial disclosure in our quarterly report (i.e. If we did not believe this presented a genuine opportunity, we would not have made note of it)."

Followed by the classic 'we cannot provide absolute certainty' as per page 10 notes.

So, my take away is that the JV is a genuine alternative, however it still does not help the market see the light at the end of the tunnel.

Now, the fun part, wondering who the JV could be with, my initial thought is, it has to be with an Australian entity, Govt backing sort of means that (thougths?)

Couple of ideas:
  • A REE mine with no processsing facility but funing
  • A non-REE miner wanting exposure to REE
  • A Gina led company, (Providing funding without needing to buy shares on market, while getting upside)
  • One of the big Miners who are looking to park their cash, and provide miner services
  • Then, bit more out there - USA?
 

Example JV Structure: “Nolans Rare Earth Partnership”​


1.​

  • Arafura Rare Earths Ltd (ARU) – project owner and operator
  • Strategic Partner Co. (e.g. MP Materials, POSCO International, or a magnet/automotive consortium)
  • Optionally: Australian Government via existing NRF/NAIF funding (non-voting equity)


2.​

  • A new special-purpose vehicle (SPV) is created: Nolans RE JV Pty Ltd
  • ARU transfers the Nolans Project mining leases, permits, and IP into the JV
  • The JV owns and operates all aspects of the project: mine, processing plant, and output


3.​

  • Arafura: 51%
  • Strategic Partner: 49% (could increase to 50% depending on final capital contribution)

This structure gives ARU operational control while allowing near-equal say on key decisions.



4.​

  • Project cost: A$1.5 billion (example)
  • ARU contribution: A$400 million (already covered by grants, NRF, NAIF, and equity raised)
  • Partner contribution: A$1.1 billion, paid in tranches aligned to project milestones

Capital can be split as:

  • 70% equity contribution to the JV
  • 30% subordinated loan from the partner to the JV (repayable post-production)


5.​

  • Partner receives up to 40% of NdPr production at market-indexed price, with priority allocation
  • Optional: long-term exclusive rights to magnet-grade NdPr from Nolans for use in EV or wind markets
  • Partner has the right of first refusal to purchase additional output at market terms


6.​

  • 4 board members:
    • 2 appointed by ARU
    • 2 appointed by the partner
  • All major decisions (capex overruns, offtake changes, expansion plans) require unanimous consent
  • Daily operations managed by ARU’s executive team under a JV management agreement


7.​

  • After 5 years of production, partner may:
    • Convert its stake into a royalty stream
    • Exit via trade sale to another approved strategic buyer
    • Negotiate IPO of the JV for shared liquidity


8.​


For ARU:

  • Gains the full funding needed to develop Nolans without issuing more dilutive equity
  • Retains majority control and long-term upside
  • Unlocks early production with guaranteed offtake

For Partner:

  • Secures supply of NdPr from a Tier-1 jurisdiction
  • Gains partial project ownership and profit share
  • Enhances ESG and supply chain credibility vs. Chinese sources
 
Nomad said:
I find the following statement very interseting, it is amongst Trumps DPA executive order.

More so than the supply of raw minerals, the United States needs the refined products from these minerals that are ready to use in electronics, defense systems, and batteries.

https://www.zerohedge.com/markets/trump-use-emergency-powers-boost-us-critical-minerals-industry
Click to expand...
Does anyone know if this paper to be released next Wednesday is to suggest specific investments in companies or like, or simply policy shift and future national goals in regard to Rare Earth.

ARU obviously have a line in the sand moment in the future, the more I read, the more I believe the US is somehow mixed up in the decision making.

The phase 2, for mine, reiterates this point. I recall back in Feb 2024, DC clearly stating all energy focused on phase 1. Then the next quarter everything flipped on its head including that DD that was being undertaken at the time. None of that made sense, his attitude backflip and the DD at the last moment.

We went from the monthly advert promoting What Japan is to LYC, Korea is to ARU - To complete silence…or more accurately promoting the supply shortfall.

Anyone else feel delays to ARU decision is US related?
 
Nomad said:
I find the following statement very interseting, it is amongst Trumps DPA executive order.

More so than the supply of raw minerals, the United States needs the refined products from these minerals that are ready to use in electronics, defense systems, and batteries.

https://www.zerohedge.com/markets/trump-use-emergency-powers-boost-us-critical-minerals-industry
Click to expand...
I have seen this written elsewhere as well...but in the actual fact sheet...there is no mention of this.

But I think his people understand that they do need to not just mine...but also process and make the end products...the whole supply chain.

https://www.whitehouse.gov/fact-she...trengthen-our-national-and-economic-security/
 
WideMouthFrog said:
Does anyone know if this paper to be released next Wednesday is to suggest specific investments in companies or like, or simply policy shift and future national goals in regard to Rare Earth.

ARU obviously have a line in the sand moment in the future, the more I read, the more I believe the US is somehow mixed up in the decision making.

The phase 2, for mine, reiterates this point. I recall back in Feb 2024, DC clearly stating all energy focused on phase 1. Then the next quarter everything flipped on its head including that DD that was being undertaken at the time. None of that made sense, his attitude backflip and the DD at the last moment.

We went from the monthly advert promoting What Japan is to LYC, Korea is to ARU - To complete silence…or more accurately promoting the supply shortfall.

Anyone else feel delays to ARU decision is US related?
Click to expand...

Yep....and I think ARU could be doing a JV with a downstream magnet manufacturer. That way they can access the cash from Exec Order 14241. The money has to be spent on domestic players. There are some work arounds....and the easiest would be for a USA company to do a JV with ARU...and then USA Govt gives that entity the cash....

Possible parties include:
- VAC (USA)
- MP Materials
- GE /Seiemens
- GM
- Tesla
- Raytheon/Lockheed/Northrop
- Textron
- Anduril Industries

Anyone done a deep dive on these?
 
John said:
Yep....and I think ARU could be doing a JV with a downstream magnet manufacturer. That way they can access the cash from Exec Order 14241. The money has to be spent on domestic players. There are some work arounds....and the easiest would be for a USA company to do a JV with ARU...and then USA Govt gives that entity the cash....

Possible parties include:
- VAC (USA)
- MP Materials
- GE /Seiemens
- GM
- Tesla
- Raytheon/Lockheed/Northrop
- Textron
- Anduril Industries

Anyone done a deep dive on these?
Click to expand...
So this throws an interesting spin on the entire Korean piece. Notably ARU have stopped all the extensive ‘partying’ with the officials at every function between both countries.

Also, the recent Australia government equity injection into ARU of $200m announced by MK, focused on the Australian contribution to AUKUS. So this is how we can support our US partners in return for national security. I believe it’s a small price to pay for national security, and lines up with why both sides of politics were agreeable in this support prior to the election.

Do you think Korea are off the table altogether, or just the additional parties such as Posco missing out? (I understand Posco did do DD at Nolan’s) Assuming now, the balance of what has not been signed off and what we know goes to US, with stage 2 going entirely the way of US - hence the delays at our end last year for this stage 2 planning.

Peter was near MP, Gina is connected to MP, just all too coincidental.

All very interesting!
 
Last edited:
patarnoster said:
Looks like a decent correction in the SP, and I see a lot of chatter on HC about the JV. In regards to the JV, I had an email exchange with ARU surrounding a few questions off the back of the recent quarterly.

Specifically asking the question 'is the JV real or just a delay tactic' (Bluntly) below was their response to said questions.

"While we can't provide too much specific information at the moment, I will say that the opportunity is real enough for us to have made an initial disclosure in our quarterly report (i.e. If we did not believe this presented a genuine opportunity, we would not have made note of it)."

Followed by the classic 'we cannot provide absolute certainty' as per page 10 notes.

So, my take away is that the JV is a genuine alternative, however it still does not help the market see the light at the end of the tunnel.

Now, the fun part, wondering who the JV could be with, my initial thought is, it has to be with an Australian entity, Govt backing sort of means that (thougths?)

Couple of ideas:
  • A REE mine with no processsing facility but funing
  • A non-REE miner wanting exposure to REE
  • A Gina led company, (Providing funding without needing to buy shares on market, while getting upside)
  • One of the big Miners who are looking to park their cash, and provide miner services
  • Then, bit more out there - USA?
Click to expand...
maybe not but would be WHC?? after all they owns 7% of BRE :) but i doubt it
 
WideMouthFrog said:
So this throws an interesting spin on the entire Korean piece. Notably ARU have stopped all the extensive ‘partying’ with the officials at every function between both countries.

Also, the recent Australia government equity injection into ARU of $200m announced by MK, focused on the Australian contribution to AUKUS. So this is how we can support our US partners in return for national security. I believe it’s a small price to pay for national security, and lines up with why both sides of politics were agreeable in this support prior to the election.

Do you think Korea are off the table altogether, or just the additional parties such as Posco missing out? (I understand Posco did do DD at Nolan’s) Assuming now, the balance of what has not been signed off and what we know goes to US, with stage 2 going entirely the way of US - hence the delays at our end last year for this stage 2 planning.

Peter was near MP, Gina is connected to MP, just all too coincidental.

All very interesting!
Click to expand...
I would imagine ARU have told Posco...ARU are still willing to do a deal (the deal they have been working on for years now)....sign here....but they have also been approached by this new JV partner...and looking at that.

But I'm sure that if Posco said the original deal is ok now...and sign...they would just take it. "Speed and Certainity!" haha.

The board of ARU would have to consider this, "Is it better to sign the Posco equity deal now, which provides certainity and the ability to start constructon or do they wait to see what happens with the JV process". So they would weigh up what is best for current shareholders. And likely reccomend take the deal on the table...because the JV process might go nowhere (even though it could be better for shareholders long term). And then it would all go to a vote.

But seriously, what is Posco doing. And do we want them. Will they be the best 'strategic equity' partner given how Trump is likley to protect the USA supply chains. Maybe a USA JV partner would be worth waiting for.

I just hope that in the next few weeks, ARU can disclose who the JV party is. Surely it is good fo the JV party to be made public (for both of them and ARU). It would show the world, who ever they are, they are getting serious, by JVing with the next, at scale, NdPr project about to begin construction.
 
banana1234 said:
maybe not but would be WHC?? after all they owns 7% of BRE :) but i doubt it
Click to expand...
White Haven Coal....hmmmmm...interesting. Well their largest shareholder is Australian Super. And I have always thought they might buy into ARU (probably after FID)....
 
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