Arafura Rare Earths Limited

ASX:ARU

Arafura Rare Earths Limited

ASX:ARU
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$0.335 (-9.5%)
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Forum Topics ARU ARU The Aussie Govt Buys In....mor

Pinned straw:
Parko5
Added one year ago

https://www.mining.com/web/arafura-rare-earths-gets-124-million-in-funding-from-australia/

Announcement to come today from Govt and on the ASX.

So ARU have convinced the Australian Govt through the Australian National Reconstruction Fund to invest AUS $200m as a convertbile note.

So the equity book build would look something like this:

  • $200m ANRF
  • $200m Hancock (Corner Stone)
  • $200m POsCO (Hyundai maybe in the mix) (Cornerstone)
  • $200m 2-4 Funds (Guessing one is Australian Super)
  • $200m Retail (Underwritten by XXXX)


Australian Govt. seems to be willing to do anything in this sector to get it moving. Look at the recent investment in ILU and other smaller investments.


I was recently a buyer in my super for more of ARU at 11 cents.

I expect the SP to move up today. But we have been heavily manipulated for months. So it should be interesting. I don't expect any short squeeze. They made their exit at the last Cap Raise (helped by our Chairman Mark S.....this guy is useless and I believe has links with some of our equity arrangers...likely Canncord).

The recent gas supply contract extentions were made to 4 Feb 2025. This is a strange date (given the annoucements were made in Decemeber 2024). This is what got me investing more last time they extended....so that date could be nothing.

But If I was the arranger...i would be getting Aust Govt to commit first....then cornerstone shortly after.....then a club of Funds....then annoucment of the SPP for retail. This could be all done in the next 2-3 months. More likely 6 months. But at each step the SP should increase (assuming no manipulation).


FYI - I have been heavily targeted by Chinese paid operatives/AI bots on hotcopper. They have even managed to get some others banned for a month or two for exposing them. HC does nothing (they like the traffic it brings). But it is clear what their agenda is. And just makes ARU even more likely to go ahead. The Aust Govt knows this....and will make it go ahead....and at almost any cost.

As Kim Beazely (former Labor leader) said....Aust is better to fund a few Rare Earth Mines...then buy/build a few frigates for the Navy. This is the best way to maintain our security for Aust and our allies.



Parko5
Added one year ago

I was just on the call with CEO/CFO

Here are my notes for those interested



ARU - 15 Jan 2025 - A$200 MILLION INVESTMENT COMMITMENT FROM THE NATIONAL RECONSTRUCTION FUND CORPORATION


Introduction by DC

 - Aust Govt is a cornerstone as said by DC - CEO

 - 50% of equity by cornerstone. (So that means we can expect cornerstone to have $300m more)

 - We have more demand for off take than we have product. 


Explanation of the Convertible Note (CN) by PS - CFO

 - No cash payment for the CN (ie the interest just keeps building up)…so this is great. It frees it up cash flow for Phase 2.

 - Reconfirmed FID first half of 2025

 - CN means no dividends (unless I assume they convert to equity). 

 - PS said they had been negotiating with National Reconstruction Fund Corporation (NRFC) for “months”….so I am guessing around Q3 2024 it started. 


Questions from JP Morgan

 - Q - debt equity 50/50…..is the CN debt or equity? 

 - A - PS - ARU considers CN to be part of equity. The converting….deferred dilution and higher price…so better for dilution. If going good…converts to equity…if not going good….considered debt (subordinated)

 - Q - Update on off take - good run locking them in. What are the sticking points? 

 - A - PS - Siemens And Hyundai….critical to debt funding…through their credit export agencies…looking to lock in equity from these off takers…..so that is why not announced yet. Those two activities are linked together.

 - Q - How the NdPr pricing for off take looking?

 - A - Challenging due to low commodity prices…but looking at policy in USA will help push prices up during negotiations. 

 - Q - ASX:ILU is in the market for staff. How will ARU staff up…is there limited expertise? 

 - A - DC - def a risk attracting right talent. ARU processes are proven. Market we are tapping into downstream oil and gas/manufacturing…so large pool…..need 300 people (not iron ore in the 1000s). 


Questions from Barren Joey

 - Q - Lots of Govt funding worldwide for the debt…any chance ARU will secure more CNs from Germany or Korea Government back entities (words something like that)?

 - A - PS - He danced around this question and I was the answer was not clear. But he said something like…..we have some more cornerstone equity to announce (soonish)….that is likely not to be in a CN form…but rather equity…but we are in discussions with these other “state backed groups”. Announced. [My question on reflection - does this mean the Credit Export Agencies will put in this equity or the business. Ie Hyundai or Korea Export Credit Agency?]

 - Q - Will the Aust Govt provide Off take price floor for ARU?

 - A - PS - No. (This was quite firm which surprised me…..guess Aust Govt set up all these large funds…and just want to throw money around as debt or equity funding) 

 - Q - We are late in the Australian election cycle - What are the effects if change in Govt.

 - A - DC - Both sides support this type of project. “We enjoy the support of both parties.” (This is good. Peter Dutton had been critical of the debt package…but obviously changed his views?)


Questions from the fu@kers at Canaccord Genuity

 - The guy started with “g’day Darryl and Pete!” Best buddies. Probably counting all the shorting profits he made playing both side (chinese walls are not acceptable...Canaccord should not be able to trade ARU if they are our Equity Arrangers). If anyone can tell me...do they have two boards? If not.....it is illegal.

 - Q - How are the Rare Earth markets in terms of pricing. 

 - A - PS - Weaker NdPr price driven by supply (ie China). Current Price sits below cost price. Supply/demand continues to grow. Some catalysts will create more demand (better charging infra etc.). 

 - A - DC - China beefing imports of additional ndpr ore….this supply matching demand. China can’t meet the demand that is coming. Bias to their own industry. Av price of EV is $55k and ndpr price is $55 per EV. So EV manufacturer don’t care…just want certainty. No ore to oxide mines coming on in next 10 years. Put all together…medium term pricing will be very different to now….maybe three times it is today. Also USA 2026 tariffs will play a big part. 

 - Q - Development timelines….if FID mid 2025…..

 - A - DC - three years of construction….two year planned ramp up. 


Questions from Fairmaven Investments

 - Q - Can you give us an idea of the current and near future burn rates… and can you rule out another cap raise before FID.

 - DC - Burn rate $3m a month….when completed the last cap raise, state they had runway into Q3…this remains the same. 


More questions from JP Morgan

 - Q - Are we likely to get updated economics? 

 - A - PS - If numbers change materially in the economic work that the ARu board use to make their FID decision, ARU will update the market. 


Summary by DC

 - Today is significant

 - Oz govt support pulls in other cornerstone investors.

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lowway
Added one year ago

Very cool summary @Parko5 thanks for the effort!!

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