Arafura Resources Ltd (ASX: ARU) has taken another step in the development of the Nolans Rare Earth project in the Northern Territory of Australia with two major mining project finance institutions appointed to set up the debt financing facility .
Societe Generale and National Australia Bank will act as initial lead managers and bookrunners (MLA) for the wholly owned neodymium praseodymium (NdPr) project located 135 kilometers north of Alice Springs.
With a 38-year mine life, Nolans is the only fully licensed rare earths project in Australia, including end-to-end waste management to meet ESG best practices and supply chain standards .
It is Australia’s first vertically integrated rare earths operation with its mining and processing operations on one site to provide a secure and traceable supply chain to meet national and international economic and security interests. and the ESG needs of global clients.
Chief Executive Gavin Lockyer said: “The appointment of the MEPs represents an important milestone in the company’s progress towards a final investment decision this year.
“MPs have significant international and domestic expertise in funding natural resource projects and our ability to attract them reflects the quality of the underlying Nolans project.”
Targeting debt financing
ARU has engaged the initial MLAs to arrange and syndicate a financing facility targeting debt financing in the range of 60% of the total estimated development cost of the project, including working capital and other credit facilities.
The proposed funding envelope will also include 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 financing of approximately US$510 million, including the cost overrun facility.
The limited recourse debt financing is intended to include:
- US$150 million to be provided by initial MLAs (to the extent possible);
- Financing of export credit agencies; and
- To the extent necessary, additional funding through additional MLA banks and/or through a syndication process.
This will be conditional on passing due diligence, agreeing terms and conditions, entering into binding facility agreements and being credit approved.
Letters of support
In addition to targeted financing of US$510 million, ARU has received letters of support from Export Finance Australia and the Northern Australia Infrastructure Facility for senior credit facilities of up to US$200 million and US$100 million. Australian dollars respectively for a maximum term of 15 years. .
The company also recently received a $30 million Australian grant from the federal government’s Modern Manufacturing Initiative, which will help fund 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 legal counsel for the financing of the project.