Arafura Resources Limited (ASX:ARU) has appointed two leading mining project finance institutions –as the initial Mandated Lead Arrangers and Bookrunners (MLAs) to arrange the debt financing facility for the development of the company’s wholly owned Nolans rare earths Project in Australia’s Northern Territory.
With a 38- year mine life, the Nolans Neodymium Praseodymium (NdPr) project is Australia’s only fully permitted rare earth project including end to end waste management to meet best practice ESG and supply chain standards.
The two initial MLAs, Societe Generale and National Australia Bank – have been engaged 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 of a separate cost overrun facility. The MLAs, subject to the terms of the mandate letter, will seek to arrange limited recourse debt finance of approximately US$510 million (inclusive of 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.
The financing will be conditional on completion of a successful due diligence process, agreement of terms and conditions, entry into binding facility agreements and credit approval.
The terms of the MLAs’ engagement (including fee arrangements) are customary for a greenfield project financing of this nature. In addition to the targeted US$510 million financing, the company 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$30m 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.
“The appointment of the MLAs represents an important milestone in the Company’s progress towards a final investment decision this year,” Managing Director, Mr Lockyer said.
“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.”
For further information please visit: https://www.arultd.com/
