Arafura share price resets 52-week low after quarterly update

The rare earths explorer also announced the results of its share purchase plan today.

| More on:
A man looks nervous as he inflates a balloon, scared it might pop.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Arafura Resources Limited (ASX: ARU) share price reset its 52-week low on Thursday at 12 cents after the ASX rare earths developer released its December quarterly activities report.

However, Arafura shares later recovered and closed the session up 4% at 13 cents. The ASX rare earths share has lost 77% of its value over the past 12 months.

Arafura owns the Nolans Neodymium-Praseodymium (NdPr) Project in the Northern Territory. NdPr is used in electric vehicles (EVs).

Let's review the report.

Arafura share price hits new 52-week low

Let's cover some of the numbers from the report first.

Over the three months to 31 December 2023:

  • $800,000 spent on exploration and evaluation activities
  • $2.7 million spent on corporate, administration, and business development
  • $22.8 million spent on project development activities
  • Average monthly cash expenditure decreased over the quarter to $8.7 million
  • Cash reserves of $67 million as of 31 December, including institutional placement proceeds
  • Arafura declared it has 2.5 quarters of funding left.

What else happened during the quarter?

Arafura completed early construction work at Nolans during the quarter. It now has an operations program underway to prepare the site for main construction once final project funding is sorted out.

The company expects to finalise funding in the first quarter of 2024. It says there are currently no material changes to capital cost estimates for the Nolans Project.

Arafura is seeking to fund Nolans via offtake agreements, debt funding and an institutional and retail capital raise.

Last month, Arafura received a letter of interest (LoI) from Korea EXIMbank (KEXIM), otherwise known as the Export–Import Bank of Korea and the official export credit agency of South Korea. KEXIM indicated an offer of up to US$150 million of debt funding via direct lending and an untied loan guarantee.

The LoI is linked to binding offtake arrangements with Hyundai Motor Corporation and Kia Corporation. South Korea wants to secure NdPr supply to help in the electrification of its car manufacturing sector.

Arafura said all contracted offtake groups are now strategically linked to international export credit agency support via non-binding Lols or similar.

$10 million share purchase plan fails to reach target

Today, Arafura also announced the results of its share purchase plan (SPP), which closed on Monday.

The SPP provided eligible shareholders the opportunity to apply for up to $30,000 worth of new Arafura shares at 16 cents per share. At the time Arafura announced the capital raise, this was a 20% discount.

Arafura was hoping to raise $10 million but received $6.5 million (before costs) from 710 applications.

The SPP follows a fully underwritten institutional placement in December, which targeted $20 million but was upsized to $25 million due to "strong demand from leading investor groups", the company said.

Arafura share price snapshot

The Arafura share price has fallen 77% over the past year.

By comparison, the S&P/ASX All Ordinaries Index (ASX: XAO) has increased by 0.98%.

Motley Fool contributor Bronwyn Allen 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.

More on Materials Shares

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Materials Shares

Down 39% in a year, why IGO shares still look overpriced

A leading expert doesn’t believe IGO shares are out of the woods just yet.

Read more »

Man with rocket wings which have flames coming out of them.
Materials Shares

This ASX 300 stock is surging 25% on US defence deal

The announcement of a 'a pivotal milestone' is getting investors excited today.

Read more »

A happy construction worker or miner holds a fistful of Australian dollar notes.
Materials Shares

$5,000 invested in BHP shares 5 years ago is now worth…

Will its shareholders be happy with their investment? Let's find out.

Read more »

A young man punches the air in delight as he reacts to great news on his mobile phone.
Materials Shares

Guess which ASX 200 stock is ending the week with a bang thanks to Rio Tinto

This stock has won a major contract from the mining giant.

Read more »

A man wearing a hard hat and high visibility vest looks out over a vast plain where heavy mining equipment can be seen in the background.
Materials Shares

Is it time to buy ASX lithium shares?

Lithium prices continue to sink. Has this created a buying opportunity?

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Materials Shares

Mineral Resources shares sink on Onslow Iron blow

This miner is having a tough session. Let's find out why.

Read more »

A man sits in a chair hunched over a laptop and covered head to toe in frozen icicles to represent Envirosuite's trading halt
Materials Shares

MAC Copper shares in trading halt as miner flags 'potential control transaction'

MAC Copper shares are frozen while Sandfire Resources shares are the fastest risers of the ASX 200 today.

Read more »

A young man pointing up looking amazed, indicating a surging share price movement for an ASX company
Materials Shares

Bell Potter says this ASX lithium stock could rise ~50%

The broker has just put a buy rating on this lithium stock.

Read more »