Arafura Rare Earths Secures $200M Investment Commitment from National Reconstruction Fund Corporation

2 min read | January 15, 2025 11:15 AM AEDT | By Team Kalkine Media

Arafura Rare Earths Secures $200M Investment Commitment from National Reconstruction Fund Corporation — Image source: shutterstock

Details of the Investment

The NRFC’s $200 million investment will be facilitated through the issuance of unsecured convertible notes (Convertible Notes) with the following key terms:

Value and Term: Convertible Notes will have a face value of $200 million and a maturity period of 15 years.
Conversion Period: The seven-year conversion period includes a non-convertible period of two years.
Interest Rate: The notes will accrue interest at 3-month Bank Bill Swap Yield (BBSY) + 3.0% per annum, payable quarterly through the issuance of new shares or capitalization into the Face Value. No cash interest will be required during the conversion period.
Conversion to Shares: During the conversion period, the notes can be converted into fully paid ordinary shares at a fixed conversion price, set at a 40% premium to the reference price determined by an upcoming equity raise.

If the Convertible Notes are not converted, the interest margin will increase to BBSY + 6.0% per annum. At maturity, the Face Value and accrued interest will be redeemable in cash, subject to project financing terms.

Equity Financing and Key Conditions

The Convertible Notes are contingent upon several conditions, including:

Finalization of long-form documentation with NRFC.
Shareholder approvals under ASX Listing Rule 7.1.
Completion of equity financing to fully fund and develop the Nolans Project.
Securing key offtake agreements.

Arafura expects to announce its equity financing in conjunction with the Final Investment Decision (FID) for Nolans.

Market Response and Outlook

Following the announcement, Arafura’s share price surged by 19%, reaching 13.8 cents during trading on January 15, 2025.

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