Arafura Secures Project Financing, But Share Price Remains Subdued

Arafura Rare Earths has successfully locked in the crucial debt financing required for its flagship Nolans project. Despite this significant milestone, the company's shares have struggled to gain momentum following a substantial equity raise, continuing to trade below the recent placement price as the market absorbs the influx of new stock. Investors are now questioning whether this solidified funding package will be sufficient to catalyze a re-rating of the equity.

The company has finalized the core components of its external debt financing, securing structured commitments exceeding USD 1 billion in senior loans and cost underwriting. The involvement of multiple export credit agencies from allied nations highlights the project's strategic importance in building alternative Western supply chains for rare earth elements.

The finalized debt package comprises commitments from four key institutions:

• Export Development Canada (EDC): A committed credit facility of USD 300 million.
• Euler Hermes (Germany): A final untied loan guarantee of USD 110 million, specifically backing German offtake agreements.
• KEXIM (South Korea): A comprehensive package worth USD 150 million, split evenly between a direct loan of USD 75 million and a loan guarantee for another USD 75 million.
• NAIF (Australia): A commitment of AUD 200 million, incorporating project debt and cost overrun protection.

With these financial pillars from Canadian, German, South Korean, and Australian institutions in place, Arafura has the foundation to formally trigger the Final Investment Decision (FID) for Nolans. Pro-forma cash balances following the recent capital raise are estimated at approximately AUD 500 million, providing a clear liquidity buffer through at least 2026.

Equity Raise Creates Overhang, Shares Trade in Narrow Band

Running parallel to the debt process, Arafura undertook a significant capital raising initiative in October 2025, generating AUD 475 million. The placement was priced at AUD 0.28 per share.

Should investors sell immediately? Or is it worth buying Arafura?

The market's immediate reaction has been tempered by the sheer volume of new stock, with roughly 1.7 billion new shares entering the market and creating a noticeable supply overhang. Currently, the stock is trading at AUD 0.26, marking a decline of about 1.9% over the past 24 hours and remaining below the placement level. The company's market capitalization stands near AUD 1.21 billion.

This dynamic has contained the share price within a tight range, fluctuating between AUD 0.25 and AUD 0.27. The AUD 0.25 level is now viewed as a key short-term support threshold, with the market's absorption of the new equity likely to dictate near-term price action until construction milestones are achieved.

Divergent Investor Sentiment: Strong Institutions, Cautious Retail

A notable positive for the long-term investment case was the strong institutional participation, particularly from Hancock Prospecting, controlled by Gina Rinehart. This involvement is seen as a major endorsement of the Nolans project's underlying quality and prospects.

In contrast, the Share Purchase Plan (SPP) offered to retail investors saw markedly softer demand, attracting only AUD 7.1 million. This divergence underscores a clear gap in risk appetite and conviction between sophisticated institutional players and the general retail investing public at this juncture.

Key Financial Data at a Glance

• Current Share Price: AUD 0.26
• October 2025 Placement Price: AUD 0.28
• Total Secured Debt Financing: > USD 1 billion
• German Euler Hermes Guarantee: USD 110 million
• South Korean KEXIM Package: USD 150 million

Market Awaits Catalysts for Re-rating

The immediate focus for the market is the official announcement of the FID, which could serve as a potential catalyst for a share price re-evaluation. However, analysts suggest the stock may remain in a consolidation phase until construction commences in earnest and clear project milestones are reached. The critical factor for the near-term trajectory will be whether support around AUD 0.25 holds firm, potentially creating a base for a move back toward the placement price of AUD 0.28.