ARU's Offtake/Funding Strategy

[John]

I was thinking about how Arafura will progress Nolans in two stages (Phase 1 at 4,400 tpa NdPr oxide, scaling up to 11,000 tpa in Phase 2). And that led me to think about how this ties into their broader global positioning – especially in the U.S.

There is clear demand from USA defense and wider USA industry and Washington is looking to de-risk from China.

And Gina Rinehart has been vocal about aligning Australia’s critical minerals strategy to where the long-term leverage and returns lie, often with a very pragmatic, global perspective. ie focus on USA.

So I have been thinking:

• More Korea - The work that ARU managment have done with Korea has been very good. And the Koreans seem to be willing to commit and they are positioning themselves as a major ex-china supplier to USA (Star/POSCO etc.). Is there a way ARU can get more from these deals?
• Less Euro - All the European off take parties seem to be so slow and unresponsive. Yes they talk big regarding all the energy transition etc...but when it comes time to commit...things just take ages. I'm not a fan of ARU management spending much more time with Europe. They just seem like time wasters. Much like the European Union.
• Go hard for USA - I think it make sense for Arafura to build a strong U.S. customer base (DoD, automakers, magnet makers), given this is where long term higher returns are likely to be. Plus there is Trump cash about to be splashed.......

What do others think?

 

[patarnoster]

I have always wondered about the Second Phase, it came out of nowhere and it felt like it complicated things, but at the same time yeah cool thats awesome, but why? I assume someone wants in on this second phase and with the murmurs of a JV, I think the JV was tied to Phase 2.

USA is making the big moves, ARU positining to fill in some gaps there makes sense.

I'm thinkin gKorea is cornerstone, Europe is a gap fill, and USA is the big fish.

 

[WideMouthFrog]

LYC are saying plenty of incoming magnet processing coming out of US and Korea, and the magnet is the roadblock. Given DC's comments on thanking AL, it suggesting he has been given some guidance on what to shortcut in this world.

As LYC have a magnet focus, guessingb ARU's magnet focus will be the JV from US - tha land with big pockets ready for the ARU phase 2.

LYC's issue to processing higher volumes is their reliance on China. Yet they still pivot over to Malaysia.

 

[WideMouthFrog]

Whats missing here? If the JV doesnt bring US$325M, then surely this shortfall could be found from Gina, Australian Super or Hyundai.

Does that mean the last capital raise at 19c, was the final capital raise?

 

[John]

I think it was very telling, in DC's letter, that the last Cap raise was not for extra 'cash runway', but rather it was part of the equity stack....

I am hopeful for other news this side of x-mas.

This project will be financed....and then the next problem is how to ramp up the staff! They have given themselves 3 months to ramp up. It is going to be an amazing place to work. All these financing questions will be history. And the focus will be on staffing, construction, costs etc. That will be fun. And attention will naturally turn to Phase 2....and also any tolling they might do for othr projects...and of course....acquisitions!!!

The more I have looked at every other project...the more I like the ARU story and strategy.....