Arafura Rare Earths receives LOI for potential US$300 million financing support for Nolans Project, Northern Territory

Arafura Rare Earths (ASX:ARU) has received a letter of interest (LOI) from Canadian export credit agency Export Development Canada (EDC) to potentially provide up to US$300 million to support the Nolans Project in the Northern Territory.

The company reports the indication of support from EDC is linked to a strategic arrangement between EDC and General Electric Company (NYSE:GE) to advance the ‘energy transition’. GE has facilitated Arafura’s engagement with EDC, which enables access to financing through EDC based on GE’s support of Nolans.

Arafura and GE signed a Memorandum of Understanding (MoU) in 2022 for the supply of neodymium-praseodymium from Nolans for use in the manufacture of permanent magnets for GE’s offshore wind turbines. Arafura and GE are in the process of negotiating a long-term sales agreement.

The company reports EDC’s indicative support is not a commitment, and its participation is subject to standard due diligence procedures.

The indicative support from EDC aligns with Arafura’s debt-led funding strategy for Nolans. It follows the receipt of in-principle letters of support from German trade credit insurance firm Euler Hermes for up to US$600 million in untied loan guarantees in relation to offtake by German companies and up to a combined $350 million from Export Finance Australia, as well as the Northern Australia Infrastructure Facility.

The company says the potential funding from EDC could also reduce the proposed US$510 million debt financing facility targeted by the mandated lead arrangers and bookrunners (MLAs).

Additionally, Arafura reports it has mutually agreed to terminate National Australia Bank’s (ASX:NAB) role as MLA under a mandate letter, while Société Generale and KfW-IPEX Bank will continue as MLAs.

Commenting on the LOI, Arafura Rare Earths Managing Director Gavin Lockyer says: “We are delighted to receive indicative support from Export Development Canada for the Nolans Project.

This is further demonstration of the strategic significance that international governments place on the project…”

This is further demonstration of the strategic significance that international governments place on the project and its capacity to provide a sustainable supply of critical Nd-Pr to meet the needs of major businesses in key global jurisdictions. We are proud to include GE among the tier-one OEMs associated with offtake from Nolans and welcome GE’s provision of its Aero power generation technology for the project.”

Arafura Rare Earths is a Perth-based explorer focused on developing its Nolans Rare Earths project, 135km north of Alice Springs in the Northern Territory. 

The primary rare earth products from Nolans are used in catalytic converters in automobiles, consumer electronics, energy-efficient lighting, optics, super alloys, advanced ceramics, and high-strength permanent magnets that enable e-mobility and renewable energy applications.

Export Development Canada is a financial Crown corporation dedicated to helping Canadian businesses enter new markets, reduce financial risk, and grow their business from a local to a global scale.

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Images: Arafura Rare Earths Ltd
Written By Harry Mulholland
Hailing from the Central Coast region of NSW, Harry is a passionate journalist with a background in print, radio and ESG news. When not bashing away on his keyboard, he can be found brewing a coffee or playing with his dog.