Arafura Secures Critical Funding as Major Investors Back Rare Earths Venture

Arafura Rare Earths has captured significant market attention following a substantial broker upgrade and the successful closure of a major capital raise. The company's pivotal Nolans Project now faces a markedly reduced financing risk, bolstered by increased stakes from several institutional heavyweights. This convergence of analyst confidence and fresh capital raises a pivotal question: is the firm now positioned to make its final investment decision?

In a decisive shift, Canaccord Genuity has removed Arafura Rare Earths from its "Under Review" status and upgraded the stock to "Speculative Buy" from a previous "Hold" recommendation. The broker's price target has surged by 75%, moving from AUD 0.20 to AUD 0.35 per share.

This optimistic reassessment is primarily driven by a recently completed capital initiative that substantially de-risks the financing plan for the Nolans Project. Canaccord's analysts point to several key financial milestones:

• A placement raising AUD 482 million at AUD 0.28 per share dedicated to the Nolans development.
• Pro-forma liquidity of approximately AUD 570 million.
• Commitments for senior debt facilities totaling USD 775 million.
• Total debt-side commitments exceeding USD 1 billion.

The analysts estimate the total capital requirement for Nolans at USD 1.9 billion. Following the secured commitments, an equity funding gap of around USD 500 million remains. This shortfall is expected to be covered through conditional anchor investments and potential financing from the US Export-Import Bank (US EXIM).

Institutional Shareholders Deepen Their Commitment

The shareholder register is consolidating, with multiple large financial institutions crossing the threshold for substantial holdings. Regulatory filings from December 16 reveal the following positions:

• Mitsubishi UFJ Financial Group (MUFG) now reports a voting interest of 5.03%.
• Morgan Stanley holds a 5.03% stake through 234,371,879 shares.
• Hancock Prospecting has increased its holding to 15.6%, reinforcing its role as the cornerstone investor.

The near-simultaneous accumulation of shares by these entities is viewed by the market as a strong endorsement of the company's strategy and the project's advancing status.

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

Capital Initiatives Finalized, Path to Production Clear

Arafura concluded its planned Share Purchase Plan (SPP) on December 9, raising AUD 7.1 million from 748 applications. Combined with the earlier placement, total new equity raised amounts to AUD 481.4 million. This process is expected to result in the issuance of approximately 23.1 million new shares.

This strengthened financial foundation paves the way for a Final Investment Decision (FID), which is targeted for the first quarter of 2026.

Located roughly 135 kilometers north of Alice Springs in the Northern Territory, the Nolans Project is considered shovel-ready. Construction is anticipated to take approximately three years, targeting the commencement of production by late 2029.

The operation is designed to produce neodymium-praseodymium (NdPr) oxide, a critical raw material for permanent magnets used in electric vehicles and wind turbines. It will also yield a concentrate of medium and heavy rare earths.

Sector Tailwinds Support Project Rationale

Arafura's share price has staged a notable recovery this year, gaining approximately 117% since January. This performance places the company's current market capitalization at about AUD 1.16 billion.

The broader rare earths sector continues to benefit from geopolitical tensions and a concerted push by Western nations to diversify supply chains away from Chinese dominance. Projects like Nolans, which aim to establish reliable non-Chinese supply, operate within a fundamentally supportive macro environment.