ARU - Quarterly - 30 June 2025

[John]

https://wcsecure.weblink.com.au/pdf/ARU/02971898.pdf

Some intriguing updates in this quarter for anyone tracking ex-China HREEs and project readiness:


HREE in Waste Streams - Potentially More Revenue:
Arafura is reviving the opportunity to recover Dy/Tb from its waste liquor streams, long overlooked in the DFS:

“A significant portion of the SEG/HRE... are not currently recovered into final products and are contained in the waste liquor from acid purification… The Company has decided to advance this recovery opportunity and is currently progressing an initial program of test work with a local laboratory.”

Per the 2022 DFS, HREE output was ~474 tpa. This new work could meaningfully lift recovery of dysprosium and terbium, especially relevant given:

“Recent China export restrictions on heavy rare earths have increased the focus on the strategic importance of Dy and Tb.”

Radiation Plan Approved - Doubters Take Note
For those who questioned licensing progress:

“Subsequent to the end of the quarter on 11 July 2025, Arafura received confirmation that the RPRWMP had been approved by the delegate of the Minister for the Environment and Water.”

This clears another regulatory hurdle and adds confidence to the project’s construction-readiness.


Cash Runway Holding Steady

Lots of people talking crap on HotCopper on this topic. And ARU management have stuck to what they said in March 2025....

“The Company continues to maintain financial runway through to at least the first quarter of 2026 calendar year.”

Lots of people with lots of agendas on HotCopper. Notice how they don't dare come comment on here?


Lets see what else is said tmrw at the meeting.


I'm looking for management doing some buying on market. Their blackout period has finished now.

 

[Szalva]

Yes, Management buying shares would benanninteresting Signal-as Long as the buy for a significant amount

 

[patarnoster]

Thanks mate, i missed the RPRWMP & HREE update, this is good to hear, quite forward thinking, lets hope its not all bubbles.

The other thing I noted was the metals note for NDPR Oxide, this points to a German downstream magnet maker, which would be interesting especially since it is tied to an offtake for the 100m equity. Making it into a metal would need a partner, maybe a JV partner.

Few other pick ups.

Power Station
Negotiations between the Company and the power station solutions provider for the development of a power-
purchase agreement progressed with drafting of the legal documentation underway.

Then check this out,

OEM Wind/Auto, Tier 1 & Trading and Where is the above 100% gone, where is the 191%... Thats not alot to go around for trading + Wind / Auto plus Tier 1? I dont quite get this one.

 

[John]

Interesting @patarnoster

this will be my question tmrw:

In ‘Table1: Offtake Overview’, the 730 tpa allocation to 'OEM Wind/Auto, Tier 1 & Trading' is the largest outstanding segment. Is this tied to a single advanced strategic partner, and is it fair to say that finalising this agreement is the last hurdle to reaching FID?

 

[Szalva]

Interesting @patarnoster

this will be my question tmrw:

In ‘Table1: Offtake Overview’, the 730 tpa allocation to 'OEM Wind/Auto, Tier 1 & Trading' is the largest outstanding segment. Is this tied to a single advanced strategic partner, and is it fair to say that finalising this agreement is the last hurdle to reaching FID?

GE has also been „Advanced offtake negotiations“ for a long period and then Dissappeared silently….hopefully this would not be the case this time with the advanced….

 

[John]

GE has also been „Advanced offtake negotiations“ for a long period and then Dissappeared silently….hopefully this would not be the case this time with the advanced….

From what I understand, GE were all ready to sign to binding, then the big shake up at GE happened, where they were spilitting the business up. And the GE senior management didn't want to have any large binding committments whilst they restructure.

GE were also in a rebuild phase. They were stream lining their products in the wind division...they used to have lots of different models...and lots of those had warrenty issues/liabilities....so they then focused on the good models.....and were gearing up to persue that business model...and then the spiltting of GE in to the three parts.

Its a shame...lots of work on both ARU and GE to get to that point. I think it was very unlucky for ARU.

 

[Szalva]

From what I understand, GE were all ready to sign to binding, then the big shake up at GE happened, where they were spilitting the business up. And the GE senior management didn't want to have any large binding committments whilst they restructure.

GE were also in a rebuild phase. They were stream lining their products in the wind division...they used to have lots of different models...and lots of those had warrenty issues/liabilities....so they then focused on the good models.....and were gearing up to persue that business model...and then the spiltting of GE in to the three parts.

Its a shame...lots of work on both ARU and GE to get to that point. I think it was very unlucky for ARU.

Yes that I can imagine. GE had serious troubles. I once was working at one of their major suppliers for the wind turbines. Nevertheless, GEs businesses are very successful and also successful at the stock market. So is there was a need for arafuras supply, do you think that would stop any division management at GE to pursue this opportunity? I don’t think so and it also does not reflect my experience having worked in a very similar conglomerate. They do not “just lose track” because of organizational changes. Arafura should start beeing honest to themselves. It did not work out, they were not convincing, or the numbers didn’t match.
Maybe they are again talking, no one now’s. Would be great to hear something about GE and Arafura again.
Having a deal with Siemens Gamesa at the same time for sure is not a problem. GE also sourced the majority of their gearboxes from a former Siemens entity (now owned by private equity).

 

[John]

Thank you to the ARU team for anwering our questions today.

So today there were many small things said that could give us hints at what is going on behind the scenes at ARU. But they were very subtle. And the big question everyone has….who will the JV party be?

So…that is why my first question related to the Heavy Rare Earth Elements (HREE). Because it was strange that ARU are doing this work. Yes, China has halted/restricted supply. But given ARU has a limited cash runway…why spend money on this now?

My question was, ”What is the expected timeline for the Dy/Tb recovery test work? And could a successful pilot lead to a near-term CAPEX-light revenue stream or integrated into Phase 1 ramp-up?”

ARU had the following answer:

• Not about large revenues but it is about locking in OEMs.
• It will take 6 months of flow sheet development.
• 30-40% increase in HREE for a modest increase in capital ($10-15 million).
• After the 6 months, it will then take 6-9 more months for engineering.
• Aim to have this change to the HREE processing into Phase 1.

So that will take the HREE to about 600 tpa.

So why do this now? It is either an offtake partner or the JV. And would ARU spend the money on an offtake partner? I’m not sure. But for a JV…I think the answer is yes.

So who wants these heavies?

Well USA Department of Defence (DoD). And they have signed up MP Materials. But we all know that MP does not have much heavies. And there are not many projects around the world, with heavies, ready to move into construction fast. Iluka is supposed to process Northern Minerals product which will yield a decent amount of HREE. But for some reason they have not…lots of Conditions Precedent in their deal….and even with ILU into construction…it is not a certainity that ILU will produce an Oxide or process NTU’s product. So lots of questions hang over that source of HREE.

So has ARU managed to get MP/DoD to agree to doing an equity deal, for supply of NdPr and some HREE…..

It also ties in with

• all the USA talk
• all Due Diligence talk…taking 6 months…(and the ARU Flow Sheet work).
• all with the whispers coming out of Washington about more rare earth money about to flow into the sector.
• what Peter and Darryl said about magnet manufacturers…that their margins are too thin and hard for them to raise capital and not somewhere ARU can find accretive value to their ore to oxide strategy.

And when Peter was talking about how he won’t answer ‘Richard’s question about the JV because he can’t. He did say “JV Parties”….plural…which would match MP/DoD.

Further, when “Gerome” asked about the comment made by Darryl at the end of the REEx interview, about spending more time in the USA, Darryl said that ARU are engaging with the USA with multiple pathways. We are engaged with manufacturing and Government.

So yes it could be a magnet producer and some other Govt agency. But If I was a betting man…it ties in nicely with MP/DoD.

So my educated (debatable?) guess is that ARU is weighing up a JV with MP Materials/DoD, where the value to them is securing HREE fast.


Other interesting moments from the meeting:

• Management have been blocked out from buying on the market. Presumably, now the 'end of year' stuff is over, we start to see some purchases.
• Ex-China pricing being used in new Offtake agreements. And existing ones that were binding (like Kia), have provisions for when the China pricing is not representative, which the off take parties seem to be agreeing. So likely to see that change also. So to all those doubters out there, China pricing is going to fade out. And quickly
• Lots of talk about setting up an ex-China pricing index. They mentioned BMI. I have my doubts they can do much more than what SME do, which is ring around their mates, and get an average price. Also talk about the Aust Govt also setting something up. Using their Strategic Stockpile.
• The German fund DD will go to the end of the year….which is annoying. But that is the reality due to the reasons they stated (German elections, time setting it up etc.). But they are also working with other Govt funds including France and Spain (I think it was Spain).
• All the Debt is continuously kept in the loop, and agreed to extend their dates etc. And they have good sight of what is happening on the offtake and equity. So no issues there.
• Same with the binding offtake, they have good visibility, and happy to extend.
• No capital raise. Have cash runway till about May 2026.

Some might be annoyed that there is no annoucement coming quick...but that is the reality. And if you look at what is building in the background with a potential JV with MP/DoD.....it could be very good for shareholder.

But only if there is no more dilution from a cap raise. That would be a killer.

 

[Szalva]

Hi John thank you!!

I think the German raw materials fund and the Long period he mentioned was last year to January when election was. The fund was set up 2024 and yes, political troubles in Germany might be a reason for the delay last year and beginning this year.

But since April we have a functioning parliament which already decided some weeks after election that they put 500billion in military and infrastructure through a special debt fund. Plus it was decided by nato members to have a 5%quota on GDP for military and infrastructure. So having said that, significant decisions taken. No reason for delays in the decision of GRMF. They are working on it. Hopefully successful.

The projects are pre-selected by KfW in cooperation with the German raw materials agency Deutsche Rohstoffagentur (you remember, the one that recently issued the long report that specifically applauded iluka and Lynas). The decision on the follow-up of a submitted project (appraisal phase) is carried out exclusively by the Federal Government.

Anyhow, they need offtake partners other ways it stays with the 50mil€ (better than nothing) for the Siemens offtake. One prerequisite: “

• There are specific offtake agreements for production sites in Germany or elsewhere in the EU for at least five years with an extension option. The acquiring companies have their registered office in the EU and at least one subsidiary, branch, permanent establishment or office in Germany, and make the (processed) raw materials primarily available to German/EU industry.”

So guess it’s not due diligence taking so long, they need to convince another offtake partners other ways for 500ton! In den Germany der Could be my table company in need for REE or REO. Front row: automotive. But they might let the 1st tier /2nd tier suppliers deal with that (e.g. Bosch, ZF, Continental, …)


Referring to other funds in Europe: (besides I did not find Peter’s reaction very appreciating), the funds are France and Italy. Both have a broad industrial base, and we now that France already funded Carester (together with Japan government 110 mil €)
So yes, highly appreciated that they are working “with every fund you can Think of”
, but it would be a lot better to be more specific, how much millions are we talking?.

What is the funnel?

Understand they can’t tell confidential info, but the more specific the more credibility….

Interesting times ahead, again thank you for your summary!!

 

[Szalva]

Where did you hear “

• Management have been blocked out from buying on the market. Presumably, now the 'end of year' stuff is over, we start to see some purchases.”

I think what Darryl said in the meeting was (and he was very insecure when answering and just stumbled something): “management has been buying in the past. Management holds positions. So yes, management has been buying”.

And I immediately asked myself, when was the last announcement, somebody from management bought?

Not much. Most of the retail investors have more shares than Darryl and BOD. That’s the sad truth.
Peter Sherrington has more shares, actually quite a lot, also true. But also did not spent much of his own money, significant portion was awarded. No problem with that anyhow.

 

[John]

On the ASX there are rules for management and Directors. And they just got out of a blockout period.




ASX Director & Management Blackout Rules – Quick Summary

• Not mandated by ASX rules, but most companies follow the ASX Corporate Governance Principles, which recommend having a trading policy.
• Companies typically impose blackout periods of around 30 days before financial results or other material announcements.
• Trading is usually only allowed after results are released, and often requires pre-approval.
• Insider trading laws apply at all times – trading while in possession of material non-public information is illegal under the Corporations Act.
• Directors must disclose any trades to the ASX within 5 business days.

 

[JVP73]

Thank you to the ARU team for anwering our questions today.

So today there were many small things said that could give us hints at what is going on behind the scenes at ARU. But they were very subtle. And the big question everyone has….who will the JV party be?

So…that is why my first question related to the Heavy Rare Earth Elements (HREE). Because it was strange that ARU are doing this work. Yes, China has halted/restricted supply. But given ARU has a limited cash runway…why spend money on this now?

My question was, ”What is the expected timeline for the Dy/Tb recovery test work? And could a successful pilot lead to a near-term CAPEX-light revenue stream or integrated into Phase 1 ramp-up?”

ARU had the following answer:

• Not about large revenues but it is about locking in OEMs.
• It will take 6 months of flow sheet development.
• 30-40% increase in HREE for a modest increase in capital ($10-15 million).
• After the 6 months, it will then take 6-9 more months for engineering.
• Aim to have this change to the HREE processing into Phase 1.

So that will take the HREE to about 600 tpa.

So why do this now? It is either an offtake partner or the JV. And would ARU spend the money on an offtake partner? I’m not sure. But for a JV…I think the answer is yes.

So who wants these heavies?

Well USA Department of Defence (DoD). And they have signed up MP Materials. But we all know that MP does not have much heavies. And there are not many projects around the world, with heavies, ready to move into construction fast. Iluka is supposed to process Northern Minerals product which will yield a decent amount of HREE. But for some reason they have not…lots of Conditions Precedent in their deal….and even with ILU into construction…it is not a certainity that ILU will produce an Oxide or process NTU’s product. So lots of questions hang over that source of HREE.

So has ARU managed to get MP/DoD to agree to doing an equity deal, for supply of NdPr and some HREE…..

It also ties in with

• all the USA talk
• all Due Diligence talk…taking 6 months…(and the ARU Flow Sheet work).
• all with the whispers coming out of Washington about more rare earth money about to flow into the sector.
• what Peter and Darryl said about magnet manufacturers…that their margins are too thin and hard for them to raise capital and not somewhere ARU can find accretive value to their ore to oxide strategy.

And when Peter was talking about how he won’t answer ‘Richard’s question about the JV because he can’t. He did say “JV Parties”….plural…which would match MP/DoD.

Further, when “Gerome” asked about the comment made by Darryl at the end of the REEx interview, about spending more time in the USA, Darryl said that ARU are engaging with the USA with multiple pathways. We are engaged with manufacturing and Government.

So yes it could be a magnet producer and some other Govt agency. But If I was a betting man…it ties in nicely with MP/DoD.

So my educated (debatable?) guess is that ARU is weighing up a JV with MP Materials/DoD, where the value to them is securing HREE fast.


Other interesting moments from the meeting:

• Management have been blocked out from buying on the market. Presumably, now the 'end of year' stuff is over, we start to see some purchases.
• Ex-China pricing being used in new Offtake agreements. And existing ones that were binding (like Kia), have provisions for when the China pricing is not representative, which the off take parties seem to be agreeing. So likely to see that change also. So to all those doubters out there, China pricing is going to fade out. And quickly
• Lots of talk about setting up an ex-China pricing index. They mentioned BMI. I have my doubts they can do much more than what SME do, which is ring around their mates, and get an average price. Also talk about the Aust Govt also setting something up. Using their Strategic Stockpile.
• The German fund DD will go to the end of the year….which is annoying. But that is the reality due to the reasons they stated (German elections, time setting it up etc.). But they are also working with other Govt funds including France and Spain (I think it was Spain).
• All the Debt is continuously kept in the loop, and agreed to extend their dates etc. And they have good sight of what is happening on the offtake and equity. So no issues there.
• Same with the binding offtake, they have good visibility, and happy to extend.
• No capital raise. Have cash runway till about May 2026.

Some might be annoyed that there is no annoucement coming quick...but that is the reality. And if you look at what is building in the background with a potential JV with MP/DoD.....it could be very good for shareholder.

But only if there is no more dilution from a cap raise. That would be a killer.

I am leaning to MP also following DC's answer to my question. The Gina link would make this even more plausible.

 

[Szalva]

On the ASX there are rules for management and Directors. And they just got out of a blockout period.




ASX Director & Management Blackout Rules – Quick Summary

• Not mandated by ASX rules, but most companies follow the ASX Corporate Governance Principles, which recommend having a trading policy.
• Companies typically impose blackout periods of around 30 days before financial results or other material announcements.
• Trading is usually only allowed after results are released, and often requires pre-approval.
• Insider trading laws apply at all times – trading while in possession of material non-public information is illegal under the Corporations Act.
• Directors must disclose any trades to the ASX within 5 business days.

This is clear John. But i think that applies to all stock markets here and there a bit stricter or not. Most CEO’s purchase into the company even right after starting. Sometimes minimum holdings are expected in the amount of a certain share of their overall salary. Even if we don’t have that here with Arafura.
Darryl is ceo since feb 2024, plenty of time to buy into the company he runs.
I never had doubts about Gavin’s exposure here, but it really speaks volumes Darryl hasn’t invested much in the company, not more than 20k aus$ which is less than a month’ salary after tax .
Not my cup of tea what he does with his money, but if I go out selling equity of a company I myself have no shares in - doesn’t look very self confident .

Lots of other interesting points about Arafura. But this one doesn’t look good.

 

[John]

This is clear John. But i think that applies to all stock markets here and there a bit stricter or not. Most CEO’s purchase into the company even right after starting. Sometimes minimum holdings are expected in the amount of a certain share of their overall salary. Even if we don’t have that here with Arafura.
Darryl is ceo since feb 2024, plenty of time to buy into the company he runs.
I never had doubts about Gavin’s exposure here, but it really speaks volumes Darryl hasn’t invested much in the company, not more than 20k aus$ which is less than a month’ salary after tax .
Not my cup of tea what he does with his money, but if I go out selling equity of a company I myself have no shares in - doesn’t look very self confident .

Lots of other interesting points about Arafura. But this one doesn’t look good.

Hopefully they get the message.

 

[WideMouthFrog]

One matter worth revisiting, Szalva, is the long-term incentive (LTI) scheme initially proposed for DC—approximately 25 million shares tied to milestone-based performance. That proposal was expected to go to vote last year but has since gone quiet. If elements of it are still active or under review, it would explain a reluctance to purchase shares on market.


The issue lies in its structure. I raised concerns directly with the Chair on multiple occasions. The plan was internally crafted without independent advice—or rather, advice was sought but overridden—which led to a framework that actively discouraged the share price from rising above 20 cents. In my view, it lacked both shareholder alignment and financial rigour.


If this scheme is to be reintroduced, it must reflect genuine shareholder value creation. Incentives should be linked to strategic milestones, project momentum, and—crucially—a rising share price. Options should be struck at 40 cents and above. If the goal isn’t SP appreciation and dilution protection, then what exactly is being incentivised?


When DC joined ARU, shareholders were already being diluted heavily. Yet his incentive package granted him 25 million shares upon achieving operational milestones, regardless of share price performance. Worse, the scheme actually reduced his share entitlement if the SP increased beyond 20 cents—raising serious concerns about misaligned motivation.


I'm not accusing anyone of intentional delay, but structurally, the plan rewarded stagnation. Milestones could be hit while the SP remained flat, leaving shareholder value eroded yet the executive fully rewarded. DC’s counterargument—that expansion and future upside would ultimately benefit holders—is noted. But it ignores the present-day reality of dilution, inertia, and a registry that could exceed 10 billion shares without pricing traction.


At 20 cents, those 25 million shares equate to a $5 million windfall—independent of shareholder financial outcomes. That’s not alignment. That’s asymmetry.


Last night, I sent another note highlighting the absence of any coherent strategy to drive share price momentum. Everyone understands the fundamentals: if you don’t deliver momentum or strategic discipline, dilution accelerates. You can’t claim the asset is worth $2 billion if it’s buried beneath 10 billion undervalued shares.


The company must now act. That means enacting a strategy to halt the bleeding SP, minimise dilution, and create incentive structures that reward shareholder-aligned outcomes. I absolutely support rewarding management—well, in fact—if it reflects true value creation. Not speculative potential. Not unearned upside. Real wins, tied to real growth. That’s alignment. We win, they win. Clean. Fair. Strategic.


The current approach is directionless. Incoming equity partners aren’t incentivised to finalise commitments. Every delay drives the SP lower, and they acquire more of ARU at our expense. This mirrors the same flaw I flagged directly with DC in May 2024—no strategy to prevent delay-driven dilution. No incentive for urgency. And here we are, over 12 months later, with no visible plan and no compelling reason for the market to re-rate the stock.


Equity pricing floors and built-in premiums for tardiness are not radical concepts. They’re basic tools of value protection. Yet ARU seems reluctant to deploy them.


The original LTI proposal was, frankly, deeply misaligned. Understandingly, I pressed back. I would’ve welcomed their view of the advice if it was independent, in the end, ARU claims it came from the Chair, after they ignored independent advice saying it was non compliant, yet when I asked whether they pursued a refund for “non-compliant advice,” they refused to answer. That’s not transparency. That’s dismissiveness. If it quacks…


Meanwhile, Peter continues to benefit from his own incentive structure, while shareholders absorb the fallout from delays, overruns, and dilution. If our capital is at risk, so should theirs be. At present, it’s not. That’s not alignment.


Geopolitics are tailwind-positive right now. The question is: will management capitalise, or miss the opportunity again? Time has certainly not been lacking.


Notably, once I raised these remuneration concerns, responses from ARU became evasive. Coincidence? Possibly. But patterns don’t lie. Raise a legitimate issue, and suddenly, you're left on the bench.


Even Darryl’s handling of my question at the quarterly was telling. The wording was altered. The response dismissive. Tone and body language matter—and it underscored what’s at stake.


Ultimately, their incentive structure, and current plan fosters no urgency, no growth, and no strategic traction. Equity partners remain unmotivated. Management remains unaccountable. And shareholders remain diluted and at risk of loss of value.


We don’t need optics. We need options—at meaningful strike prices. We need effort aligned with performance—not tenure.


Raise issues, and you’re met with obfuscation. That’s my experience. But it’s not going to silence the argument.


We deserve a management structure that rewards performance—not presence.