Why is the Arafura share price surging 7% today?

Arafura shares had a strong session on Tuesday.

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The Arafura Rare Earths Ltd (ASX: ARU) share price was on form on Tuesday.

The rare earths developer's shares were up as much as 7.5% to 31.7 cents before closing the day 3.5% higher at 30.5 cents.

Why did the Arafura share price shoot higher?

There may have been a few catalysts for the strong showing from the Arafura share price today.

The first is a strong session for the resources sector amid optimism over Chinese stimulus plans. This led to the S&P/ASX 200 Resources index rising 2.6% on Tuesday.

Also potentially giving its shares a boost today was the release of a presentation ahead of the company's appearance at the Developing Northern Australia Conference in Darwin.

At the event, Arafura's managing director, Gavin Lockyer, presented on the topic "The Nolans Project- Establishing a rare earths supply chain for a changing world."

This may have caught the eye of a few investors that were in attendance.

Anything else?

A third potential catalyst for its rise today was the recent broker note out of Bell Potter that we touched on here yesterday.

According to the note, the broker has a speculative buy rating and 72 cents price target on its shares. This suggests that the Arafura share price could more than double in value over the next 12 months.

Bell Potter notes that "ARU is a rare earths developer advancing its Nolans project, a complete ore to oxide solution in Australia's Northern Territory."

It believes the company is well-placed to benefit from growing demand for rare earths. It highlights that "rare earths, in particular Neodymium (Nd), Praseodymium (Pr), Dysprosium (Dy) and Terbium (Tb), are critical minerals in a de-carbonised economy as they are crucial in the production of permanent magnets for EVs and wind turbines."

Motley Fool contributor James Mickleboro 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 Scott Phillips.

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