Arafura Resources Ltd (ASX:ARU) has taken another step towards developing the Nolans Rare Earth Project in Australia’s Northern Territory with two leading mining project finance institutions appointed to arrange the debt financing facility.
Societe Generale and National Australia Bank will serve as initial mandated lead arrangers and bookrunners (MLAs) for the wholly-owned neodymium praseodymium (NdPr) project which is 135 kilometres north of Alice Springs.
With a 38-year mine life, Nolans is Australia's only fully permitted rare earth project including end to end waste management to meet best practice ESG and supply chain standards.
It is set to be Australia’s first vertically integrated rare earths operation with its single site mining and processing operations to provide a secure and traceable supply chain to meet domestic and international economic and security interests and the ESG needs of global customers.
“Important milestone”
Managing director Gavin Lockyer said, “The appointment of the MLAs represents an important milestone in the company’s progress towards a final investment decision this year.
“The MLAs have significant international and domestic expertise in natural resources project financing and our ability to attract them reflects the quality of the underlying Nolans Project.”
Targeting debt funding
ARU has engaged the initial MLAs to arrange and syndicate a finance facility targeting debt funding in the order of 60% of the estimated total development cost of the project, including working capital and other credit facilities.
The proposed funding package will also comprise a separate cost overrun facility.
Societe Generale and National Australia Bank will, subject to the terms of the mandate letter, seek to arrange limited recourse debt finance of approximately US$510 million inclusive of the cost overrun facility.
The limited recourse debt financing package is intended to comprise of:
- US$150 million to be provided by the initial MLAs (on a best-efforts basis);
- Export credit agency finance; and
- To the extent required, further financing through additional MLA bank(s) and/or via a syndication process.
This will be conditional on completion of successful due diligence, agreement of terms and conditions, entry into binding facility agreements and credit approval.
Letters of support
In addition to the targeted US$510 million financing, ARU has received letters of support from Export Finance Australia and the Northern Australia Infrastructure Facility for senior debt facilities of up to A$200 million and A$100 million respectively for up to a 15-year facility term.
The company has also recently been awarded grant funding of A$30 million under the Federal Government’s Modern Manufacturing Initiative which will contribute to the funding of the construction of its rare earth separation plant.
London-based HCF International Advisers Limited and Grant Thornton Australia are advising Arafura on the debt financing of the project and Arafura has appointed international law firm Ashurst as its legal counsel in respect of project financing.