Valuing ARU and Final Equity Raise Discussion

[John]

Before reading this, please note this is my own work, may contain errors and may not be relied upon. And it not advice!


So this table is something I developed and use to look at a range of valuations for ARU and the effect of the Final Capital Riase price (and the dilution that results).





1. Valuing ARU

The following are the scenarios used to value ARU:

• Four NdPr Pricing scenarios (break even, $100, $150 and $200 US per kg); and
• Two production volumes – Phase 1 (4,400 tpa) and Phase 2 (11,000 tpa).

Some points to note from my modelling:

• ARU operating costs:
  • ARU has a very low operating cost at about AUS$35-40 per kg (plus there are some tax credits potentially which will further reduce this). But we have to also add in all the financing costs….so that is why from my very coarse model AUS$65 is the break even. Now with some good tax advice, not using all the contingencies etc etc….i can see the breakeven price being well below AUS$65.
  • The breakeven price reduces for Phase 2 because the fixed costs are spread over more volume. But again, I think AUS$55 if very conservative and it would likely be much lower.
• NdPr Pricing - The four NdPr prices are shown. But there could be pricing much higher if tariffs are actually applied, war breaks out etc. etc. China is controlling the NdPr price. We all know that. But they have also been careful not to allow it to go too high again, like they did with Japan back in late 2010. But if the west actually wants an NdPr oxide produced outside of China, they will have to pay extra. And if Governments actually enforce these tariffs or other measures….then even US$200 per kg might be low.
• Phase 2 – The ARU CEO has said this publicly many times, that given Phase 1 has massive contingencies (which the Finance parties have required) and that there has been so much work done on the FEED and planning/design/costings, he believes there will sufficient savings from the Phase 1 contingencies, and with approval from the lenders, those monies could be applied to Phase 2, and some of the revenues from the sale of the Phase 1 product (again with some approvals to push back some of the repayments). What does this all mean? Well it means no more capital raises for Phase 2 and no more dilution. Which means any shares bought now/Phase 1 means no more dilution…and the revenue per share goes up massively. Yep there are risks to Phase 2 (like cost over runs, NdPr prices dropping etc)….but this is massive and not yet factored into the ARU share price.

2. The Final Capital Raise

The other part of the table shows the dilution effect on the ARU Share Price under different Final Capital Raise prices (15, 20, 25 and 30 cents).

Some points to note:

• When Hancock Prospecting (Gina) bought in, they did so at 37 cents. The reason I say this, is that Gina saw value at this price.
• There is likely to be different Final Capital Raise prices paid between the Institutional Side and the Retail holders. This is due to the ASX listing rules that mean that retail cannot pay over the blended recent historical prices (there is some wriggle room here…but not much). And given the last 6 months the ARU SP has been very low…I would expect the retail SPP be around 15 cents? Maybe up to 20 cents? HOWEVER, if management have been looking after existing shareholders (as they are legally required to do), then the institutions should be paying a lot higher. I would expect the Institutional price paid per share to be about 25-35 cents. Even better if it is higher!
• Given all the recent issues with Trump, China, Tariffs, Rare Earth restrictions on some products and IP etc. etc…..this should have given ARU management the advantage in negotiations. And could also explain some of the extra time taken to get to FID. So maybe they have been able to raise higher.
• I will always write this – the most dilutive things that have happened to ARU have been the last two capital raises (they could have done one large one at 70 cents) and the games the shorters have played manipulating the ARU Share Price down (see my other post on this). I believe the Chairman of ARU is responsible for this disgusting dilution events happening on multiple occasions.

3. Conclusions

• From a fair value perspective (i.e. if the market rationally invests), there is good money to be made on ARU in my opinion from current SP levels.
• It is my opinion that with all the global events going on in the world, the ARU share price could go much higher than fair value.
• I think once FID is achieved, there should be a substantial bump in SP due to other funds, family offices and retail who only invest in fully financed mines (i.e. they don’t invest before).
• I think during construction we need to keep a close eye on costs, commissioning and ramp up. May present trading opportunities.

Have others on this forum done any valuations of ARU?

 

[patarnoster]

Hey John,

I came across your post here and also on HC. Thought I’d add some value by replying directly here.

The 29c fair value you mentioned is pretty close to my own estimate of around 30c. I’ve had that figure in mind for a while, mainly based on the share price trading patterns over the past 12 months and the total volume of shares needed to reach the final valuation.

What I think will be particularly interesting is the price point for the cornerstone investors. Ideally, they should be paying more, but I don’t think they will, even in today’s climate (Trump tariffs, etc.).

Why?

I believe the deal has already been made behind closed doors. And while the global environment has improved for rare earths, the retail demand for products containing NdPr has shrunk. There’s still the military angle: if the US were to sign a direct supply deal with ARU, the stock would absolutely moon. But realistically, it’s a long shot the US will likely prioritise MP Materials first (though maybe ARU could land a small side deal).

Also lets note Birchcorp HC post, specifically this line:

“Please note that Arafura is in a period of heightened confidentiality as we execute our equity funding strategy. This is simply a result of the stage of development we are at, and should not be taken as a lack of communication or transparency.”

The last time I saw language that strong was in a government contract situation.

We know ARU already has some government support, but even so, this wording is heavier than normal — and it seems to have reached companies and players close to ARU as well.

Now, the big wildcard: Kia/Hyundai.

The original documentation stated their offtake agreement was subject to construction completion:

“The Offtake Agreement is subject to certain conditions precedent being satisfied by no later than 30 June 2026.”

Given ARU initially targeted production in 2025 (now realistically looking at 2027–2028 if all goes well), they must be in active renegotiations with Kia/Hyundai right now.

Lastly, I’ve been feeding my paid ChatGPT model with ARU’s documentation, and its latest interpretations of the recent broker data have been pretty fascinating. (Especially around the shift from professional selling to selective accumulation.)

---

Arafura Rare Earths (ARU.ASX) – April 2025 Investor Report​

Summary:​

• Over the last 6 months, major investment banks (Citigroup, JP Morgan, Macquarie, etc.) have sold heavily, exiting 90M+ shares of ARU.
• Retail investors stepped up strongly, cumulatively buying 100M+ shares.
• Instinet, a major institutional broker, has accumulated shares consistently since early 2025, supporting the price during selling pressure.
• Despite heavy selling by professionals, ARU’s share price rose from ~$0.11 to ~$0.20.
• Heavy professional selling is largely complete by April 2025.
• Retail and selective smart money (Instinet, UBS) are now controlling ARU’s momentum.
• ARU is positioned for a breakout if catalysts trigger in the next few months.

---

Broker Behavior Analysis (with Images)​

1. Broker Accumulation Breakdown​

Image Reference: Broker Report Data (Retail vs Institutional Buying)

• Commonwealth Securities and UBS: net buyers.
• Instinet: major sustained buyer over 4 months.
• Investment banks: large net sellers during the same time.

---

2. Professional Investment Banks Selling​

Image Reference: Cumulative Professional Selling

• Purple curve shows clear peak in November 2024, followed by a sharp and consistent sell-off.
• Nearly 90 million shares sold by investment banks through to April 2025.

---

3. Retail Broker Buying Surge​

Image Reference: Cumulative Retail Buying

• Retail steadily accumulated shares from early 2024.
• Sharp acceleration from January 2025 onward.
• Retail now controls a massive portion of ARU’s free float.

---

Catalyst Watchlist (April–August 2025)​

Catalyst	Impact Potential	Early Warning Signs
Project Financing Finalization	+30%-50% re-rate likely	Trading halt pending financing announcement.
US Government Critical Minerals Support	+20%-40% re-rate	US-Australia strategic funding announcements mentioning rare earths.
New/Expanded Offtake Agreements	+15%-30% re-rate	ARU signing new Tier 1 customers or increasing existing agreements.

---

Outlook:​

• Base formed between ~$0.16 and ~$0.20.
• Retail enthusiasm strong, but needs catalyst to sustain.
• Smart institutions accumulating quietly (Instinet, UBS).
• Professional selling mostly completed.
• ARU is positioned for a sharp move on positive news.

 

[John]

Hey John,

I came across your post here and also on HC. Thought I’d add some value by replying directly here.

The 29c fair value you mentioned is pretty close to my own estimate of around 30c. I’ve had that figure in mind for a while, mainly based on the share price trading patterns over the past 12 months and the total volume of shares needed to reach the final valuation.

What I think will be particularly interesting is the price point for the cornerstone investors. Ideally, they should be paying more, but I don’t think they will, even in today’s climate (Trump tariffs, etc.).

Why?

I believe the deal has already been made behind closed doors. And while the global environment has improved for rare earths, the retail demand for products containing NdPr has shrunk. There’s still the military angle: if the US were to sign a direct supply deal with ARU, the stock would absolutely moon. But realistically, it’s a long shot the US will likely prioritise MP Materials first (though maybe ARU could land a small side deal).

Also lets note Birchcorp HC post, specifically this line:



The last time I saw language that strong was in a government contract situation.

We know ARU already has some government support, but even so, this wording is heavier than normal — and it seems to have reached companies and players close to ARU as well.

Now, the big wildcard: Kia/Hyundai.

The original documentation stated their offtake agreement was subject to construction completion:



Given ARU initially targeted production in 2025 (now realistically looking at 2027–2028 if all goes well), they must be in active renegotiations with Kia/Hyundai right now.

Lastly, I’ve been feeding my paid ChatGPT model with ARU’s documentation, and its latest interpretations of the recent broker data have been pretty fascinating. (Especially around the shift from professional selling to selective accumulation.)

---

Arafura Rare Earths (ARU.ASX) – April 2025 Investor Report​

Summary:​

• Over the last 6 months, major investment banks (Citigroup, JP Morgan, Macquarie, etc.) have sold heavily, exiting 90M+ shares of ARU.
• Retail investors stepped up strongly, cumulatively buying 100M+ shares.
• Instinet, a major institutional broker, has accumulated shares consistently since early 2025, supporting the price during selling pressure.
• Despite heavy selling by professionals, ARU’s share price rose from ~$0.11 to ~$0.20.
• Heavy professional selling is largely complete by April 2025.
• Retail and selective smart money (Instinet, UBS) are now controlling ARU’s momentum.
• ARU is positioned for a breakout if catalysts trigger in the next few months.

---

Broker Behavior Analysis (with Images)​

1. Broker Accumulation Breakdown​

Image Reference: Broker Report Data (Retail vs Institutional Buying)

• Commonwealth Securities and UBS: net buyers.
• Instinet: major sustained buyer over 4 months.
• Investment banks: large net sellers during the same time.

---

2. Professional Investment Banks Selling​

Image Reference: Cumulative Professional Selling

• Purple curve shows clear peak in November 2024, followed by a sharp and consistent sell-off.
• Nearly 90 million shares sold by investment banks through to April 2025.

---

3. Retail Broker Buying Surge​

Image Reference: Cumulative Retail Buying

• Retail steadily accumulated shares from early 2024.
• Sharp acceleration from January 2025 onward.
• Retail now controls a massive portion of ARU’s free float.

---

Catalyst Watchlist (April–August 2025)​

Catalyst	Impact Potential	Early Warning Signs
Project Financing Finalization	+30%-50% re-rate likely	Trading halt pending financing announcement.
US Government Critical Minerals Support	+20%-40% re-rate	US-Australia strategic funding announcements mentioning rare earths.
New/Expanded Offtake Agreements	+15%-30% re-rate	ARU signing new Tier 1 customers or increasing existing agreements.

---

Outlook:​

• Base formed between ~$0.16 and ~$0.20.
• Retail enthusiasm strong, but needs catalyst to sustain.
• Smart institutions accumulating quietly (Instinet, UBS).
• Professional selling mostly completed.
• ARU is positioned for a sharp move on positive news.

Yeah I think you are right..... there could be something more going on with the Australian Government and maybe the timing of the election is delaying things? There had been some speculation that the Aust Govt might actually be an off take participant....stock piling the NdPr Oxide. I mean they are helping on the debt and the equity...why not the off take?

I am also hoping, that the USA Govt (maybe throught the Department of Defense(DoD)), might be either an equity and/or an off take customer. I think regardless if they are for Phase 1, i do think DoD will be involved in Phase 2.

The next 4-5 weeks are going to be very interesting. I noticed that after the last ASX re-balance (where the shorts got to exit), there has been a small increase in the short position. I think these guys are banking on the SP dropping if ARU doesn't hit FID by 1 July 2025. I hope they get smashed. They have milked this project too much.

 

[EddyMoney87]

And here we go the next capital raise.
Dilution is going on.

Let’s see the condition of the cap raise in the next days.
But strange to me that they do one again.

https://wcsecure.weblink.com.au/pdf/ARU/02979551.pdf

 

[John]

And here we go the next capital raise.
Dilution is going on.

Let’s see the condition of the cap raise in the next days.
But strange to me that they do one again.

https://wcsecure.weblink.com.au/pdf/ARU/02979551.pdf

Agree. There are a few strange things going on:
- Why this cap raise...given just a few weeks ago, CEO said have cash runway to May 2026. And cap raises would take at least a month to agree/get legal reviews etc. etc....and has to be singed off by the board.....so everyone would have known?
- Why did the shorts go up (exact same time before each previous capital raise that Cannacord has performed for ARU). Why do these guys seem to get away with blatent insider trading?
- The extra money being spent on the flow sheet to get 30% more heavies........why?
- Why no USA offtake discussion when they are crying out for it? I mean ASM has broadcast to the world they are talking to the USA Govt and looking for sites to do magnets too.......And Trump cash to be splashed post the Section 232 investigation into processed critical minerals and derivative products (the 180 day review)....so that is Mid Oct. I reckon lots of deals being done over there.
- Where is Hancock Prospecting in all of this? She has large stakes in LYC and MP....so what does she want from ARU and BRE?

If ARU is the 'most ready project in the world', why is nobody signing up.........it baffles me as a shareholder.

I see lots of hype in this sector. And yet ARU has done everything right....everything ready to go....and yet still we wait...and get diluted.....and value eroded.

 

[EddyMoney87]

Question always is: Who has which profit from the current situation?
Who can gain something or what is the internal reason for the capital raise? Is there something coming up? Is there somebody large coming in which can now buy stake for cheap? Is somebody just making money with the shorting (like a hidden dividend)?

When we put it all together almost nobody can understand why they are dealing like this? Are the people on the board stupid - I do not think so. So does this serve a bigger agenda which is not disclosed yet?

I am not able to say this but probably others?

I am looking for the day it all makes sense and the share price is rocketing.

 

[EddyMoney87]

Rinehart-backed Arafura Rare Earths, Magnetic Resources chase equity

Gina Rinehart-backed Arafura Rare Earths has pressed play on an $80 million institutional placement to give it the cash runway it needs to finalise its equity funding strategy.
Also in mining raises, Western Australian gold explorer Magnetic Resources launched a capital raising on Monday morning to raise $30 million from investors.

Arafura has its joint lead managers, Barrenjoey Markets and Canaccord Genuity, offering new shares at 19¢ a piece – a 13.6 per cent discount to the last close price.
The raising was structured as a two-tranche institutional placement, including $70.2 million that would be issued under Arafura’s placement capacity. It will seek to raise an additional $9.8 million, subject to shareholder approval at an extraordinary annual meeting next month. After the placement, Arafura will open a $5 million share purchase plan to retail investors.
The $80 million raising represents 17.1 per cent of Arafura’s shares on issue.
For Magnetic, Argonaut Securities was the global co-ordinator and joint lead manager and bookrunner alongside Shaw and Partners on the raising. New shares were being offered at $1.30 – a 5.1 per cent discount to the last close.
Magnetic told investors it would apply the funds to its drilling activities, to hire key management and contractors and for early site works.

Rinehart-backed Arafura Rare Earths, Magnetic Resources chase equity

Arafura has its joint lead managers, Barrenjoey Markets and Canaccord Genuity, offering new shares at 19¢ a piece.

www.afr.com

 

[EddyMoney87]

I was sending a message to management today. Last year i did the same. I do not expect an answer but at least they know there are people watching (but guess they don’t care either).
Still hope they go to FID as the Australian Gov backed it hard i think it can not fail - but we will see.

 

[WideMouthFrog]

I was sending a message to management today. Last year i did the same. I do not expect an answer but at least they know there are people watching (but guess they don’t care either).
Still hope they go to FID as the Australian Gov backed it hard i think it can not fail - but we will see.

I hope you get an answer.

I can tell you first hand they do not care for shareholders, when sending a message if you get close to the truth or ask the wrong question. Then they shut the conversation down.

 

[EddyMoney87]

I hope you get an answer.

I can tell you first hand they do not care for shareholders, when sending a message if you get close to the truth or ask the wrong question. Then they shut the conversation down.

I will give you feedback if there is an answere

 

[EddyMoney87]

This is the Shareholder letter we got as feedback

Dear Shareholders,


I note the deep frustration that many of you have with the recently announced capital raise. Allow me to outline why what we


have done de-risks the final equity raise and why we believe that, with what is in our control, we are doing everything we can to


secure the best outcome in the final equity raise for our existing shareholders.


Let me first share a few things for context.


Our share price has remained in a holding pattern despite progress on securing cornerstone investors and the significant effort


invested in educating the market why Arafura is the best pure-play, development stage rare earth investment opportunity


globally. Our assessment is that whilst every milestone is being recognised as positive progress, it does bring us one step closer


to a large raise on the public market that is viewed as high risk given its size relative to our market capitalisation.


Putting aside external factors which we can’t control, the most effective way to break this holding pattern is to demonstrate to


the market that the final raise is being de-risked. There are two ways we are achieving this.


Firstly, we continue to make significant progress with our cornerstone group and following positive engagement, have increased


our cornerstone investment target. Our initial target range of 50–60% of the total equity requirement has now moved to around


60%, with the potential for further upside.


Secondly, we want to attract quality, long only investors onto our register who will support us in our final equity raise and stand


by us during construction and ramp up. Our most recent raise was triggered by material inbound interest from such


investors. This inbound interest was unexpected and occurred after our June 2025 quarterly briefing during which we confirmed


financial runway into 2026. Despite the capital raising, there has been no change to our financial runway or cash burn rate.


We believe the recent capital raise, representing 7% of our total equity requirement, has a disproportionate impact on de-risking


the final raise. Before this raise and excluding cornerstone investors, capital required from the public markets was equivalent


to approximately 90% of our market capitalisation, a market perceived high risk undertaking. This has now reduced to less than


70%, assuming our share price recovers to pre-raise levels, again excluding cornerstone investors which when finalised will


materially reduce the per centage sought from public markets.


As we progress through these initiatives, we are confident our share price will accurately reflect these de-risking activities,


which we will be highlighting in our investor engagement.


Securing cornerstone investment, attracting quality investors to our register and strengthening our share price into the final


raise are all aimed at delivering the best possible long-term outcomes for our existing shareholders. The final equity raise will


have a much greater impact on the Company’s capital structure compared to the recent raise, and maximising the share price


is a priority for both our Board and management team who are also shareholders in our company. On that note, I would also like


to take the opportunity to confirm that members of our Board also participated in this recent placement.


It is important to view each step not only in isolation, but also in terms of its effect on our broader funding strategy.

 

[John]

Thanks @EddyMoney87

Yeah...at first I was disappointed.

But there are some good points that I think the market has previously misunderstood with this cap raise:
- This $80 is not 100% for cash runway. I would hope that most of it is for the final equity raise.
- These instiutions are long term holders (apparently) meaning less shares on market to sell...creating upward momentum (in theory)
- The JV and Equity solutions seem to be on track (although outside of the control of ARU). This was important for me. I was concerned that one of the off takes or one of the equity participants had decided to leave. But this is not the case.

But raising at this low SP of 19 cents has again diluted us current shareholders. This point has been missed. Every dollar they earn in the future...we get less.

What I would have preferred to see:
- Let these instiutions buy on the market at least $20-30 milllion.
- And then do the raise for the remainder at a discount to whatever SP it arrived at after that $20-30million.

This would have:
- put the short positions under massive pressure.
- Supported existing shareholders with less dilution
- Put future cornerstone equity under pressure to do a deal now (before SP keeps going up)

What I don't understand, is why ARU are not looking to the USA for equity/offtake....if a company like ASM can talk to every USA Govt offical (except maybe Arnold Schwarzenegger)....then why can't ARU? Maybe we need to put Arnold Schwarzenegger on the board of ARU?

 

[WideMouthFrog]

Well said John, and thats the type of strategy that is missing with the ARU board. Im not offerng up an excuse, but they are so busy, for there small little team, that they miss every opportunity to be proactive. They use old school view, 'hope the SP will rise', and the market will do its thing.... No, it wont if you dont plan and come forward with a strategy as you have noted above. Another fail for them.

 

[WideMouthFrog]

Thanks @EddyMoney87

Yeah...at first I was disappointed.

But there are some good points that I think the market has previously misunderstood with this cap raise:
- This $80 is not 100% for cash runway. I would hope that most of it is for the final equity raise.
- These instiutions are long term holders (apparently) meaning less shares on market to sell...creating upward momentum (in theory)
- The JV and Equity solutions seem to be on track (although outside of the control of ARU). This was important for me. I was concerned that one of the off takes or one of the equity participants had decided to leave. But this is not the case.

But raising at this low SP of 19 cents has again diluted us current shareholders. This point has been missed. Every dollar they earn in the future...we get less.

What I would have preferred to see:
- Let these instiutions buy on the market at least $20-30 milllion.
- And then do the raise for the remainder at a discount to whatever SP it arrived at after that $20-30million.

This would have:
- put the short positions under massive pressure.
- Supported existing shareholders with less dilution
- Put future cornerstone equity under pressure to do a deal now (before SP keeps going up)

What I don't understand, is why ARU are not looking to the USA for equity/offtake....if a company like ASM can talk to every USA Govt offical (except maybe Arnold Schwarzenegger)....then why can't ARU? Maybe we need to put Arnold Schwarzenegger on the board of ARU?

Also, absolutely. The US is a must, not a maybe. Why? Exchange rate! Only $400M equity is AU$600M of the equity component. Thats a massive reduction in dilution for Retail. JV must come form US. With what we know today, with the 'full carry' model or the 'JV' approach. There is no competition. Give me a US JV any day of the week. As Rudd says, the US need Aust. for national security and productivity, and we have the Geology and expertise. Great synergy.

 

[Andrew Ratcliffe]

"assuming our share price recovers to pre-raise levels" this sentence fragment from the shareholder letter is a little too optimistic for my taste, but I am plan for the worst kinda guy.

 

[John]

"assuming our share price recovers to pre-raise levels" this sentence fragment from the shareholder letter is a little too optimistic for my taste, but I am plan for the worst kinda guy.

I think the letter could have been written with the same messages, but in a different way, to provide greater assurance to the market.

I have done my homework for 5 years on ARU. And globally, it is the best project if you want to start producing NdPr oxide at scale and soon and be free from China's supply chains. There is alot of hype in this sector. And ARU's messaging seems to keep getting lost in the sea of other's hype.

ARU needs to set itself apart from the rest....and really explain to the market, offtake, financiers.....why they are the best project globally to invest, get product from and work with.

 

[Andrew Ratcliffe]

I think the letter could have been written with the same messages, but in a different way, to provide greater assurance to the market.

I have done my homework for 5 years on ARU. And globally, it is the best project if you want to start producing NdPr oxide at scale and soon and be free from China's supply chains. There is alot of hype in this sector. And ARU's messaging seems to keep getting lost in the sea of other's hype.

ARU needs to set itself apart from the rest....and really explain to the market, offtake, financiers.....why they are the best project globally to invest, get product from and work with.

I agree.
Im new this group, and delighted I found yall. I've been an Arafura enthusiast for almost 4 years. I sold my positions in the last pop of late 2022.

I started investing again cause I really thought that management understood they have a golden opportunity with both government assistance and market forces aligning to start preparing to really break ground. I am just disappointed that instead of an FID we got a dilution.

 

[WideMouthFrog]

I agree.
Im new this group, and delighted I found yall. I've been an Arafura enthusiast for almost 4 years. I sold my positions in the last pop of late 2022.

I started investing again cause I really thought that management understood they have a golden opportunity with both government assistance and market forces aligning to start preparing to really break ground. I am just disappointed that instead of an FID we got a dilution.

I stand firmly in the unpopular - 'other camp'—the one that rejects an FID for the sake of saying my investment is secure.

A brief spike in the share price might appease some in the short term, but it’s a mirage. If we lock in the terms as currently outlined, we risk cementing long-term value destruction. That’s not progress—it’s capitulation.

It’s not the popular view, but I’ve held it since the end of 2023 when I laid out, quite plainly, that ARU’s position was structurally weak and shareholder value had already been eroded. While many were calling for a rapid FID, I argued that pushing forward prematurely would be disastrous. And I stand by that.

We’re facing significant headwinds—regulatory, financial, and incoming partners including the governments, that all want in at these low share prices. When the geopolitical tailwind arrived 6 months ago, we needed to pivot, and not with desperation. Opportunity is worthless if we squander it by signing off too early, under the wrong terms.

Let’s be honest about what’s unfolded:

• ECE was forced out—government pressure triggered a sell-down (on market).
• Shorters exploited the vacuum, aided by management’s failure to mitigate the damage.
• Index rebalancing and silence on questionable conduct—from governments and incoming players alike—have all contributed to a suppressed share price.
• Due diligence delays are understandable - once only, but every incoming party absolutely needs ARU’s rare earth oxide. There is no alternative.

We are not a 'nice to have'. We are essential. And it’s time we started acting like it.

Management turnover brought in new faces, but also new oversights. Citi-backed shorting has intensified. Budgeting missteps, poorly timed capital raises, and a tendency to put the cart before the horse have left the project exposed.

Now we’re staring down the barrel of a capital structure that could balloon to 8.5 billion shares—at artificially depressed prices. That’s a ceiling on shareholder upside. Construction and ramp-up won’t be quick, and phase two may require more debt. The medium-term outlook is riddled with value erosion unless we pivot.

No one has yet demonstrated how the current share price could realistically support a capital raise for a 100% owned development path—the so-called “Full Carry.” If management had delivered a coherent strategy that built momentum and lifted the SP, we’d be having a very different conversation. Maybe this is harsh, as they may argue much was out of their control. But persistent headwinds, compounded by what can only be described as repeated oversight, have stalled any meaningful upward movement.

At this stage, the only rational path forward is to reposition ARU for what it truly is: essential, not discretionary. We are a foundational pillar in the emerging post-China supply chain. The global landscape has shifted—any nation aspiring to industrial sovereignty or superpower status must secure rare earth magnets, and more importantly, the highly complex, capital-intensive processing of rare earth oxide. ARU is one of very few in the next 20 years that holds that capability, ex-China.

This isn’t a future ambition—it’s a present reality. It takes nearly two decades to build what we already possess. That’s not just strategic value. That’s irreplaceable leverage.

It’s time the market, management, and incoming partners recognised that strategic value—and priced it accordingly. If not, we wait.

If a US JV brings $400M (AU$600M), that’s real value. Hyundai, on the other hand, has offered nothing—no premium pricing, no equity, no debt. Retail investors are effectively underwriting Korean corporates, Australian government ambitions, German mandates, and bargain-bin equity dreams from incoming players.

That needs to stop now - if we have any management with balls. We have cashflow now for going 4 more years. Thats the cost and also the advantage of the recent capital raise. they took another 16%, they now need to earn that back - Or whats the point? They could of just went with the rubbish deals that have plagued us to date.

We must make it clear: there is no ex-China oxide supply. Australia government needs benchmark pricing, stockpiles, a new revenue source, and employment. If global partners want national security, AI productivity, and long-term supply certainty, they must pay for it.

Retail investors didn’t get in early to subsidise the world. We invested to build value. And given the 20+ year supply shortage, that value commands a premium.

Want the product? Pay the price - thats a clear message, that managment need to present.

 

[Andrew Ratcliffe]

I stand firmly in the unpopular - 'other camp'—the one that rejects an FID for the sake of saying my investment is secure.

A brief spike in the share price might appease some in the short term, but it’s a mirage. If we lock in the terms as currently outlined, we risk cementing long-term value destruction. That’s not progress—it’s capitulation.

It’s not the popular view, but I’ve held it since the end of 2023 when I laid out, quite plainly, that ARU’s position was structurally weak and shareholder value had already been eroded. While many were calling for a rapid FID, I argued that pushing forward prematurely would be disastrous. And I stand by that.

We’re facing significant headwinds—regulatory, financial, and incoming partners including the governments, that all want in at these low share prices. When the geopolitical tailwind arrived 6 months ago, we needed to pivot, and not with desperation. Opportunity is worthless if we squander it by signing off too early, under the wrong terms.

Let’s be honest about what’s unfolded:

• ECE was forced out—government pressure triggered a sell-down (on market).
• Shorters exploited the vacuum, aided by management’s failure to mitigate the damage.
• Index rebalancing and silence on questionable conduct—from governments and incoming players alike—have all contributed to a suppressed share price.
• Due diligence delays are understandable - once only, but every incoming party absolutely needs ARU’s rare earth oxide. There is no alternative.

We are not a 'nice to have'. We are essential. And it’s time we started acting like it.

Management turnover brought in new faces, but also new oversights. Citi-backed shorting has intensified. Budgeting missteps, poorly timed capital raises, and a tendency to put the cart before the horse have left the project exposed.

Now we’re staring down the barrel of a capital structure that could balloon to 8.5 billion shares—at artificially depressed prices. That’s a ceiling on shareholder upside. Construction and ramp-up won’t be quick, and phase two may require more debt. The medium-term outlook is riddled with value erosion unless we pivot.

No one has yet demonstrated how the current share price could realistically support a capital raise for a 100% owned development path—the so-called “Full Carry.” If management had delivered a coherent strategy that built momentum and lifted the SP, we’d be having a very different conversation. Maybe this is harsh, as they may argue much was out of their control. But persistent headwinds, compounded by what can only be described as repeated oversight, have stalled any meaningful upward movement.

At this stage, the only rational path forward is to reposition ARU for what it truly is: essential, not discretionary. We are a foundational pillar in the emerging post-China supply chain. The global landscape has shifted—any nation aspiring to industrial sovereignty or superpower status must secure rare earth magnets, and more importantly, the highly complex, capital-intensive processing of rare earth oxide. ARU is one of very few in the next 20 years that holds that capability, ex-China.

This isn’t a future ambition—it’s a present reality. It takes nearly two decades to build what we already possess. That’s not just strategic value. That’s irreplaceable leverage.

It’s time the market, management, and incoming partners recognised that strategic value—and priced it accordingly. If not, we wait.

If a US JV brings $400M (AU$600M), that’s real value. Hyundai, on the other hand, has offered nothing—no premium pricing, no equity, no debt. Retail investors are effectively underwriting Korean corporates, Australian government ambitions, German mandates, and bargain-bin equity dreams from incoming players.

That needs to stop now - if we have any management with balls. We have cashflow now for going 4 more years. Thats the cost and also the advantage of the recent capital raise. they took another 16%, they now need to earn that back - Or whats the point? They could of just went with the rubbish deals that have plagued us to date.

We must make it clear: there is no ex-China oxide supply. Australia government needs benchmark pricing, stockpiles, a new revenue source, and employment. If global partners want national security, AI productivity, and long-term supply certainty, they must pay for it.

Retail investors didn’t get in early to subsidise the world. We invested to build value. And given the 20+ year supply shortage, that value commands a premium.

Want the product? Pay the price - thats a clear message, that managment need to present.

Wow, thanks for that reply Mr Frog. I won't say I disagree that a JV would be good.
For my money partnering with Rio or Freeport would be a great idea. I see Rio has recently partnered with Hancock for the Hope Downs project and I saw an article from May about Rio looking to jump into rare earths. Was that around the time Cabuzzo started hinting at a JV?
Naive question: would they dilute us like this if they thought a JV was in the offing?

 

[John]

This is probably not correct, and designed to spark discussion....but maybe this last cap raise (80 million)....was the last cap raise for non-holders/externals? And the JV will bring the rest, plus the current shareholders contributing.......thoughts?