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Rare upside for Arafura

t has been a long and at times frustrat- that this might be a sector worth investing way and that is to have your product moved
Iing journey for the team behind Arafura in. We’re constantly on the hunt for those through the supply chain – in our case
Resources Ltd, but their dedication to the types of investors and we’d certainly wel- through Chinese magnet manufacturing –
Nolans rare earths project could soon be come large industrial companies coming because that’s where most of the world’s
rewarded. into Arafura, either at the corporate or the permanent magnets, around 85-90%,
Arafura has worked on Nolans, about project level, to help us reduce the risk of come from.
135km north of Alice Springs, for more than project funding.” “As far as we’re concerned, the pathway
a decade. Despite rare earths prices nose- Six weeks before Wesfarmers made its is through Chinese magnet manufacturing
diving as quickly as they spiked in 2011, the unexpected move on Lynas, Arafura pub- into western world manufacturing. There-
company’s focus has remained steadfast. lished a DFS which indicated Nolans would fore, the debt component of our finance is
When Wesfarmers Ltd made its ultimate- be a lowest-quartile producer of NdPr for to be procured through export credit agen-
ly failed takeover bid for Lynas Corporation $US25.94/kg. cies and government guaranteed loans into
Ltd earlier this year, interest in advanced Capital of just over $1 billion is required those jurisdictions that rely on access to
developers such as Arafura surged and to build an operation that is forecast to pro- magnets and, of course, the raw materials
the company was only too happy to ride the duce 4,357 tpa NdPr oxide, based on the that go into those magnets.”
coattails. current reserve which supports 23 years of The MoUs with JingCi and Tianhe repre-
Arafura general manager exploration mining. sent 41% of the proposed NdPr production
and development Richard Brescianini de- Arafura has signed two MoUs with two from Nolans. In turn, NdPr will contribute
scribed the attempted $1.5 billion takeover leading Chinese magnet manufacturers for about 85% of the projected revenue from
the operation.
Brescianini said the company would seek
to convert those MoUs into binding agree-
ments over the coming months.
Arafura was in the midst of a nine-hole
diamond drilling programme aimed at ex-
tending the mine life at Nolans beyond the
current 23 years. Five holes will be drilled
across the southeast zone into shallow
resources where there is limited or no drill
core currently available.
The remaining four holes will target deep
extensions of NdPr mineralisation beneath
the final mining pit in the north and south-
east zones. An updated resource could be
calculated as early as next month.
“In our feasibility study we highlighted
that there was around 8.7mt of stockpiled,
non-preferred material that is actually
mined at the same time as our 19.2mt ore
reserve…so potentially we could be adding
arafura’s offtake agreements have been underpinned by multiple rounds of piloting and up to around 8.7mt on top of our 19.2mt ore
metallurgical test work reserve,” Brescianini said.
“It would be a nice outcome if we can
of Lynas – the only non-Chinese producer the individual offtake of up to 900 tpa NdPr convert just about all of that material. That
of key magnet metals neodymium and pra- oxide. The latest of those was announced will certainly put us out beyond 23 years,
seodymium (NdPr) – as a “game changer” in late September with Baotou Tianhe Mag- potentially beyond 30 years, and that re-
for the rare earths industry. netics Technology Co Ltd. JingCi Material ally sends a strong statement to the market
“It put more pairs of eyes on companies Science Co Ltd previously signed up in Oc- about the strategic nature of our resource
like ours and that was welcomed from tober 2018. that I think will only add to the significance
Arafura’s perspective in so far as more vis- Brescianini said the company was pre- of the project globally.”
ibility around rare earths,” Brescianini told paring an overall project financing package With environmental approvals for No-
Paydirt. for Nolans which would be linked to offtake. lans locked away, Arafura is also hoping to
“Now that was a failed bid as its turned “In an ideal world, our offtake would be finalise a Native Title agreement with the
out, nevertheless, it told the market this is directly with the customers of those mag- Central Land Council before year’s end so
a sector that you really need to take notice net manufacturers because we believe that its submission for a mineral lease, which
of because the major industrials like Wes- the best path to market for us is to procure paves the way for construction and mining
farmers think the thematic around the elec- the debt funding from outside China but activities, can be competed.
trification of transport and the clean energy enabled by engagement with export credit “We’re within nine months of getting
sector is really solid. agencies in Europe, Korea, Japan and the the final mining approvals for this project,”
“And they’re not the only ones thinking US,” he said. Brescianini said.
that way. There are other large industrials “So, ideally our offtake would be with a
who have flagged in one way or the other European automaker, but there is another – Michael Washbourne

aUSTRaLIa’S PaYDIRT NOVeMBeR 2019 Page 57