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 majorly coming out of US and Korea, and the magnet is the roadblock. Given DC's comments on thanking AL recently, it suggesting he has been given some guidance on what to shortcut in this industry.

As LYC have a magnet focus, I'm guessing ARU's magnet focus will be the JV from US - the 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. I feel they have lost their way given all this available opportunity in the west. Like you say John, the money is and always will be in the US.

 

[WideMouthFrog]

Whats missing here - apart from my speculation on the Orion/US JV? 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.....

 

[WideMouthFrog]

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.....

That's all good, but critically as shareholders, we are looking to capitalise on our investment, therefore management must ensure the value of the capital stack and subsequent restructure is favourable for us, not the incoming partners.

This project will be financed and that is not the issue. In this climate, a street post will get this project financed.

The major concern I have. Do they sell us out to the government, Gina, or GRMF.

ARU executive have historically have been very poor on strategy and looking after our value, and to expect they will look after us is placing the cart before the horse.

In other words, there is no sense in looking at staffing, construction costs etc, if your shareholding has lost its value due to poor structuring/negotiating of the incoming partners by the ARU executive.

Its now or never, and that's how this has to be approached. The timing or talk of when this will get done is the distraction, and the structural consideration is the only important topic. The SP increase can be all but eroded if they get it wrong.

As a start, I believe they should place the government (Aust. and German) equity (some or all) in the SPV (JV) - to preserve existing shareholder value in the primary entity.

 

[EddyMoney87]

Donald Trump ‘aggressively’ pivoting towards Australian critical minerals to shut down China monopoly​

Arafura Rare Earths managing director Darryl Cuzzubbo said it was no secret the US was trying to rapidly secure its supply of critical minerals and rare earths.
“Up until recently, they’ve been close to 100 per cent dependent on China,” he told The West.
“It was evident that they see Australia as a reliable ally, as a strong mining jurisdiction with quite advanced projects to meet that need.”
Arafura’s rare earths projects is close to securing the final equity needed and has been backed by financing from Australian Government sources.

US ‘aggressively’ pivoting towards Aussie critical minerals

The United States is eyeing investments in Australian critical minerals as it aggressively steps up its timetable to reduce America’s reliance on China.

thenightly.com.au

 

[John]

I think the next few weeks will be massive for ARU and some other Aussie RE miners. Glad i have my position built in ARU.

 

[EddyMoney87]

Today we see what the FOMO can do for us.
I built my position too. Startet 2021.
Long time waiting - for me at least!

 

[John]

Lets go!!!

I will just note...that this has happened before...pump and then dump.

However, it does feel like everything is almost lined up. Lets warm up those pens...and get it all signed.

And get those shovels ready....actually, they have been ready for a while!!!

 

[EddyMoney87]

Anthony Albanese will offer priority access to Australia’s critical minerals and rare earths to Donald Trump

Anthony Albanese will offer Donald Trump priority access to Australia’s critical minerals and rare earths when they meet this month so the US Defence industry isn’t reliant on China for the vital supplies.

The US and the UK will be given the chance to become preferred buyers for Australia’s rare earths after weeks of talks between the Prime Minister and strategic partners, The West understands.

With a JV Partner from America it should not work out - or it will never happen

Trump-Albanese meeting key to critical minerals stockpile

Anthony Albanese is going to offer Donald Trump priority access for America to buy Australia’s critical minerals and rare earths when they meet this month, so the US Defence industry isn’t reliant on China.

thewest.com.au