The process also produces calcium sulphate (gypsum), a potential saleable product into various end applications.

Dr Steve Ward, Arafura’s managing director and CEO, said “The successful completion of this demonstration program highlights Arafura’s commitment to the Nolans Project and its efforts to de-risk key technological aspects.

"This is important for potential financiers and provides valuable technical and operating experience for Arafura. The successful completion of this work is another major step forward for us.”

The company now plans to incorporate the logistical and economic benefits of Hydrochloric acid regeneration and gypsum production into the Bankable Feasibility Study (BFS) for Nolans.

Arafura has begun engineering design for the overall flowsheet, and said that customers are being further engaged for evaluation of the gypsum product for potential offtake.

AMMTEC successfully operated the demonstration plant on a continuous basis at its facility in Perth, Western Australia, with involvement from experts from the University of Montreal, Canada, and Arafura’s Technology team.

The demonstration facility has successfully achieved:

• Production of 32% Hydrochloric acid from a simulated recycle stream similar to the Phosphate circuit waste liquors, with a recycle efficiency of at least 97.5%;

• Production of crystalline gypsum with filtration characteristics suitable for processing via commercially available filters;

• Production of Dihydrate gypsum. Feedback from one major gypsum user indicates that this material has potential for future commercial use;

• Provision of detailed design and operating data for the Bankable Feasibility Study.

The company is advancing towards delivering a BFS for Nolans, and remains well funded after the A$90 million capital raising towards the end of 2010.

On March 21 Arafura's Nolans rare earths mix leaped above $US120 a kilogram, more than three times the 2010 average of US$34 a kilogram, indicating the continuing strong global demand for rare earths.

To put this price into perspective, it is more than three times the 2010 average of US$34 a kilogram.

What is important is Steve Ward, managing director, has reiterated that Arafura remains on track to deliver the first production in 2013 of an annualised 20,000 tonnes of rare earth oxides from the Nolans Project.

“We are one of only a few potential rare earth producers which can meet growing non-Chinese demand in the short to medium term."

Arafura is currently in detailed discussions with non-Chinese major users around the world.

The company continues to quickly advance towards delivering a Bankable Feasibility Study, and remains well funded after the A$90 million capital raising towards the end of 2010.

Consideration for the deal includes A$1.5 million in cash, and 7.5 million Global shares, along with 7.5 million options exercisable at $0.25.

Global is expected to list on the ASX in mid-2011.

Mt Porter has a 34,200 gold ounce JORC Indicated and Inferred resource, with gold exploration and development rights over several adjacent licences in the Frances Creek region, which is in the Northern Territory.

Steve Ward, Arafura managing director & CEO, said, “We are very pleased with this outcome.

"It enables Arafura to realize value from one of our non-core assets in the near term as we focus on rare earths and our world class Nolans Project."

Arafura said further refinement, separation and value adding work will continue in the first quarter of 2011.

The company is now well placed to benefit from the global rare earth demand, with China reducing rare earth export quotas in the first half of 2011.

To progress these oxides to a potential sale stage, Arafura said it is conducting ongoing discussions with end users.

This will ensure products produced will meet the industry specifications and market requirements.

Arafura added planning is underway to process the bulk sample collected under the 'Big Bertha' program through a sulphation demonstration route, which will produce commercial quantities of separated oxides for key customer assessment.

The company remains well funded to continue development following the receipt of the tranche 2 A$37.6 million capital raising, approved by shareholders in December 2010.

The company is now well funded to progress Nolans to the project financing stage, including completion of the bankable feasibility study and securing all regulatory approvals, and completion of the technology demonstration work program.

Arafura will also conduct definition drilling targeted at increasing the resource, while identifying if there is expansion potential.

The decision by Arafura’s largest shareholder East China Exploration and Development Bureau to vote against Resolution 1 resulted in it not being passed, and therefore the company would require shareholder approval for any share placements prior to October 2011.

Steve Ward, managing director of Arafura, said "Given these circumstances, we are surprised and disappointed that Resolution 1 was voted down by ECE.

“This has no effect on the capital raising approved today under Resolution 2 and we continue to move forward on our fast track program to bring Nolans into production by 2013. Today’s result is a reflection of continued shareholder support, including ECE, for the Nolans Project.”

Arafura said it has no intention to raise further capital until the project financing stage.

Nolans comprises operations at two sites within Australia, the Nolans Bore Mine in the Northern Territory and the Whyalla Rare Earths Complex in South Australia.

Rare earths are in demand worldwide for use in lasers, computer and television screens, fibre-optic cables and mobile phones.

They are also essential for developing green technologies such as low energy light bulbs, wind turbines, rechargeable motor vehicle batteries and high-strength magnets.

Tranche 1 consists of 43.7 million shares at $1.20 to raise $52.4 million, with traunche 2 consisting of 31.3 million shares at the same price to raise $37.6 million, which will be put to sharesholders in early December.

The market has supported the $90 million capital raising, with Arafura shares last trading at $1.32, a 9% premium to the placement price.

The major shareholder, East China Exploration & Development Bureau (ECE), has declined the offer of a pro-rata placement, with its shareholding in Arafura to be diluted to 17.59% from 22.17%.

The placement will fund the Nolan's Project through to project financing, which in September 2010 successfully produced a commercial quality of separated rare earth oxides, with the separation one of the key technology work streams in progress for the Nolans Project Feasibility Study.

Given the recent increases in rare earth prices, the value of 1k of Nolans Rare Earths Mix would be approximately US$43, a 255% increase since December 2009, and at these prices annual sales revenue from rare earths alone at Nolans would be US$860 million.

Arafura's major shareholder, East China Exploration & Development Bureau (ECE), will be invited to maintain its pro-rata shareholding, currently at 22.17%, at the placement price.

A further $25.9 million would be raised if ECE elects and is able to maintain its current pro-rata shareholding, although any investment will require Australian and Chinese regulatory approvals, as well as Arafura shareholder approval.

The placement will consist of two tranches.

Tranche one will comprise 43.7 million shares to raise $52.4 million, and will be allocated immediately, with Arafura saying it received significant support for the placement.

Tranche two will comprise 31.3 million shares to raise $37.6 million, is subject to shareholder approval at an EGM to be held in early December 2010.

Steve Ward, managing director, said “We have made significant progress with our Nolans Project in recent months.

"It (the new funds) also enables us to assess production expansion potential from the Nolans resource."

The placement will bring some new shareholders onto the Arafura register, including both international and domestic institutions.

Funds raised will also move to completion the technology demonstration work program.

The placement was jointly managed by BBY Limited and Bell Potter Securities Limited.

Article Highlight:

The Nolans Project has taken another major step towards rare earth oxide production from 2013, with sufficient funding in place to progress to the project financing stage.

Arafura has successfully produced a commercial quality separated rare earth oxides, with the separation of these oxides a key technology in progress for the Nolans Project Feasibility Study.

Arafura shares last traded at $1.42.

These new prices have pushed the value of 1Kg of Nolans Rare Earth mix past the US$50 level to US$50.03.
This represents a stunning 313% increase since December 2009 and continues to the trend of historical highs.

Rare Earths prices have significantly increased following the announcement by China in July 2010 of reductions in Rare Earth export quotas for the second half of 2010.

Prices of all Rare Earths have increased. Most recently, the prices of the lighter Rare Earths, Lanthanum, Praseodymium and Neodymium, have increased markedly as demand has remained strong while exports of these from China have been reduced.

Dr Steve Ward Arafura’s managing director and CEO said the continuing trend of higher prices due to shortages outside of China underlines the importance of new supply sources and in particular the company's own Nolans Project.

The company has ticked off major milestones at Nolans toward first production in 2013.

At current Rare Earth prices annual sales revenue from Rare Earths alone would be US$1 billion for Arafura.

Steve Ward, managing director, said he welcomed the South Australian Government’s announcement which recognises that the Rare Earths Complex is considered to be of major economic, social or environmental importance to the State.

“Arafura’s Whyalla Rare Earths Complex is consistent with the SA Government’s objective to develop mineral processing industries in the area."

"Attaining Major Project status will be another significant step for us.”

“We have been very pleased with the positive reaction we have received to our announcement regarding the Whyalla location from both the SA Government and the local community."

"Site selection is another major milestone in the history of the Company."

"We are now in a position to move forward at pace with all our Nolans Project work programs as we progress towards production in 2013.”

Rare Earth Oxide separation is one of the key technology work streams in progress for the Nolans Project Feasibility Study.

Separated middle rare earth oxides (MREE1) and heavy rare earth oxides (HREE2) have now been produced at the laboratories of the Australian Nuclear Science and Technology Organisation (ANSTO) in Sydney.

Following initial laboratory work a fully integrated mini-plant representing the MREE and HREE production circuit was successfully operated continuously for 62 hours, resulting in commercial quality MREE and HREE products.

The deal allows Arafura immediate access to site to progress detailed engineering and environmental studies, and marks a major milestone in the planned development of the 100% owned Nolans Project

Steve Ward, managing director and chief executive officer, said the site selection decision follows a comprehensive review of potential sites Australia-wide.

“This marks a great step forward for Arafura in delivering the Nolans Project."

“This will truly be a value-adding project in Australia where our mineral resources are upgraded prior to sale."

"Whyalla will be Arafura’s - and Australia’s - gateway to global rare earths markets."

The final decision to proceed with construction of the Rare Earths Complex will be made following completion of a Bankable Feasibility Study and project finance is secured.

“The signing of this Deed is further evidence that Arafura is committed to delivering on its stated objective to be the recognised leading supplier of rare earths to users worldwide from 2013,” said Ward.

Rare Earth Oxide separation is one of the key technology work streams in progress for the Nolans Project Feasibility Study.

Separated middle rare earth oxides (MREE1) and heavy rare earth oxides (HREE2) have now been produced at the laboratories of the Australian Nuclear Science and Technology Organisation (ANSTO) in Sydney.

Following initial laboratory work a fully integrated mini-plant representing the MREE and HREE production circuit was successfully operated continuously for 62 hours, resulting in commercial quality MREE and HREE products.

Laboratory-scale separation of individual light rare earth oxide (LREE3) fractions (La, Ce and Nd/Pr) is now in progress.

“The production of separated Rare Earth Oxides presents Arafura with the opportunity to extract maximum value from the Nolans Project,” Arafura’s Managing Director & CEO, Dr Steve Ward, said.

“This is a very substantial milestone on our Company’s path to becoming the pre-eminent supplier of Rare Earth Oxides to the world from operations wholly within Australia.”

A pilot plant to produce commercial quality samples of all separated REO products – La, Ce, Nd/Pr, MREE and HREE – for customer assessment is planned to follow successful completion of LREE test work.

Given recent increases in the prices of Rare Earths, the value of 1k of Nolans Rare Earths Mix would be approximately US$43, a 255% increase since December 2009. At these prices, annual sales revenue from rare earths alone at Nolans would be US$860 million.

Prices have moved upwards significantly since China announced reductions in Rare Earth export quotas for the second half of 2010. Prices of all rare earths have increased. In particular, the prices of the lighter Rare Earths, Lanthanum and Cerium, have increased markedly as exports of these from China have been reduced.

John Ganser has been appointed to the position of General Manager Projects and will join Arafura in September. He brings an extensive background in Project Management to Arafura and an involvement in several significant, large scale and successful projects.  He will report to Arafura’s managing director and CEO Dr Steve Ward and will be a member of the executive management team.

Ganser will be responsible for all project matters with specific focus on delivering the Nolans Project as Arafura moves towards full operation in 2013.

Arafura’s Managing Director and CEO, Dr Steve Ward, said "John brings the project management and delivery skills that we now require as we move ahead with the Nolans Project."

"We recognize the critical importance of building the right combination of skills in Arafura to ensure we make the Nolans Project a success and John’s appointment is a key part of this. Our executive team is now well equipped and positioned to drive the company forward and build on the excellent progress we have made this year to date.”

Pricing has increased further to new industry high levels since 7th July when the China Ministry of Commerce announced Rare Earths export quotas for the 2nd half of 2010.The new export quotas represent a 70% reduction in volumes available for users outside of China.

China currently supplies approximately 95% of the worlds needs for these strategic metals which are critical to high tech industries including electric vehicles, rechargeable batteries, energy efficient lights and i-pods, and there are limited alternate sources.

As rare earths constitute only a small portion of the cost of finished products the impact of higher prices is not significant. More price rises are thought likely if China continues to restrict exports in the interests of preserving resources for domestic manufacturing.

Events of recent weeks demonstrate that Arafura Resources is well placed to secure sales at superior prices for their rare earths products in this climate of ever- tightening supply with increasing demand.

Nolans rare earths-phosphate-uranium project is in Australia’s Northern Territory. Rare earths metals are essential components to products with significant growth potential in the markets associated with the electronics and technology industries, energy efficiency and greenhouse gas reduction.

To advance site feasibility and project optimisation studies Arafura Resources Ltd (ASX: ARU) has appointed technical project consultants, following a successful capital raising programme.

A mix of capital raisings and rights issues to shareholders, when completed, could raise a total of A$35.3 million (US$32.5 million).

Chief executive Steve Ward said the company expects to have a mine site optimisation study completed late in 2010.

Apart from the standard requirements for pit design, cut-off grade strategies and capital demands, this study would also take in blending criteria for various ore and mineral types, the processing path calibrations and product mix and specification.

The deposit is at Nolans Bore, 135 kilometres north of Alice Springs.

Arafura has a resource from the measured to inferred categories of 30.3 million tonnes that contains 850,000 tonnes of rare earths (REO) at a grade of 2.8% REO, 3.9 Mt of phosphate pentoxide grading 12.9% P205, and 13.3 M lbs of uranium grading 0.44 lb/t U308.

The company said the development blueprint takes in a rare earths processing plant. Test work has provided "significant progress" in the definition of the flow sheet required for engineering a plant that would recover rare earths, phosphate and uranium and a by-product of calcium chloride.