The federal government is backing another rare earths business, this time the Gina Rinehart-supported Arafura Rare Earths group (ASX:ARU), with its Nolans Northern Territory mine and refinery.
Shares in Arafura were halted on Wednesday ahead of an expected announcement on a new debt funding package.
This package, valued at a huge $840 million, comes from the federal government.
Following the $1.25 billion support for the Iluka rare earths project in WA and smaller funding deals with Lynas, as well as the established Mount Weld project and associated processing operations, the total support package exceeds $2 billion.
The Nolans project, located 138 kilometers from Alice Springs, has an estimated life of at least 38 years.
The company last month signed a long-term gas supply deal with central Australian gas companies, including New Zealand Oil & Gas (NZOG), which owns part of the Mereenie oil and gas field in the Northern Territory through a joint venture agreement.
Under the agreement, NZOG will supply up to 4.8 petajoules (PJ) of gas to Nolans over the next five years.
Arafura's funding includes approximately $495 million in loans from the Critical Minerals Facility, $200 million from the revamped Northern Australia Infrastructure Facility, and nearly $115 million in federal export financing, which is helping fund the $550 million debt package with Liontown Resources.
Arafura shares have fallen by 72% in the past year, closing at 14.5 cents earlier in the week, valuing the company at nearly $341 million. Therefore, the funding package far exceeds the value investors think Arafura is worth.
