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Highlights:
- Arafura inked its first binding offtake agreement with Hyundai Motor Company and Kia Corporation.
- Under the offtake agreement, the company will supply NdPr over a term of seven years.
- Arafura’s share price gained 12.13% on the ASX at 1:13 PM AEDT.
The share price of Arafura Rare Earths Ltd (ASX:ARU) registered a significant gain on the ASX on Monday (7 November 2022) after the company announced that it had signed its first binding offtake agreement with Hyundai Motor Company and Kia Corporation.
Arafura’s shares were spotted trading 12.13% higher, at AU$0.34 apiece, at 1:13 PM AEDT. With this, the share price has increased by 17.93% in the last five trading sessions. In one year, the share price has increased by 36.80%, and on a year-to-date basis, it has surged by 48.70%.
Meanwhile, the benchmark index, ASX 200 Materials (INDEXASX:XMJ), was up 3.14% to 16,107.50 points.
Details of Arafura’s first offtake agreement
Under the binding offtake agreement with the South Korea-based company Hyundai Motor, Arafura will supply NdPr (neodymium-praseodymium) over a seven-year term from its Nolans Project. The agreement can be extended for an additional five years via mutual agreement.
The company shared that
Arafura said that as per the agreement, the buyer could choose to buy NdPr oxide or its equivalent NdPr metal. The yearly contract volumes for NdPr oxide are 600 tpa (tonnes per annum). The contract volumes will increase to 1,500 tpa in four to seven years.
In the calendar year 2025, the company expects to kick off the supply of NdPr. The estimate is subject to project financing, project commissioning, and development and construction completion.
Worth mentioning here is that the agreement is subject to the satisfaction of certain precedent conditions by no later than 30 June 2026.
What else?
Today, Arafura shared that it had also signed a non-binding heads of agreement with Hyundai, under which the company will begin discussions regarding strategic investment with Hyundai and its affiliates.
Arafura said that any subscription funds would be invested in funding a part of the equity component required for the development funding of the project. As reported, the potential investment is not finalised yet.
About Nolans Project
The Nolans Project encompasses a processing plant, a mine, and related infrastructure in the Northern Territory of Australia. The first production of NdPr oxide is anticipated in 2025. The annual production from the project is expected to increase to around 4,400 tpa in 2027.
