Arafura is in a trading halt until Thursday. We take a closer look.
The post Arafura (ASX:ARU) share price frozen ahead of capital raising appeared first on The Motley Fool Australia. –
Trading in Arafura Resources Limited (ASX: ARU) shares has been halted following the announcement of a capital raise. The Arafura share price is currently frozen at Monday’s closing price of 16.5 cents.
The company’s ASX announcement yesterday did not go into any detail regarding the capital raising, but according to the Australian Financial Review (AFR), Arafura is seeking $40 million to shore up its engineering investment and provide extra capital.
The AFR report said Arafura was offering shareholders 12 cents a share — a 29% discount on the price that the company shares closed at on Monday. The company is expected to resume normal trading on Thursday.
The capital raising is in addition to Arafura’s announcement last week that it had received a letter of support from the Northern Australia Infrastructure Facility (NAIF) to a potential debt facility worth up to $100 million.
The company said the facility would be over a 15-year term and formed part of the funding package for its Nolans Rare Earth Project in the Northern Territory.
The Nolans mine is Arafura’s main project and focuses on neodymium-praseodymium (NdPr), a substance required in electric vehicles.
In an announcement in May, the company advised its feasibility study found Nolans “has a mine life of 38 years and the ability to produce 4,440 tonnes of NdPr oxide each year”. Arafura expects earnings before interest, tax, depreciation, and amortisation (EBITDA) for the Nolans project to be $354 million a year.
It was reported in the AFR that the rare earths company would be able to supply 5% to 10% of the world’s magnet supply.
Arafura share price snapshot
Arafura has had a great year. The Arafura share price is up 183% over the last 12 months while the Australian metals and mining industry is up 25% over the same period. Its share price has lifted more than 30% since January alone.
The company has a market capitalisation of $193 million.
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Frank Tzimas has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.