Arafura share price halted ahead of blockbuster funding news

This rare earths developer could be about to sign a game-changing funding package.

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The Arafura Rare Earths Ltd (ASX: ARU) share price is expected to be out of action on Thursday.

That's because yesterday the rare earths developer requested a trading halt until the market open on Friday.

Why is the Arafura share price halted?

The company requested the trading halt so that it could prepare an announcement relating to debt funding for the Nolans Project in the Northern Territory. Its request states:

The Company is seeking a trading halt pending an announcement to the market regarding debt financing support; b) The Company requests the trading halt remain in place until the earlier of the Company releasing an announcement in relation to debt financing support or the commencement of trading on Friday 15 March 2024.

What's going on?

While the details of the debt funding have not been released to the market yet, there are reports claiming that Arafura is about to get a huge cash injection from the government.

According to the AFR, the Albanese government is expected to announce an $840 million package of loans and grants to support the development of the Nolans Project.

This will be the Labor government's largest single financial commitment in the critical minerals sector and brings taxpayers' exposure to rare earths mining and processing to over $2 billion. Previously the government has supported the development of the Eneabba project owned by Iluka Resources Limited (ASX: ILU) in Western Australia.

Arafura's funding reportedly includes approximately $495 million in loans from the Critical Minerals Facility, $200 million from the revamped Northern Australia Infrastructure Facility, and upwards of $115 million in federal export financing.

Prime Minister, Anthony Albanese, is quoted saying:

This will create local jobs and economic opportunities, helping Australian and Territory companies and workers capture more value from the game-changing critical minerals deposits we have here.

The Arafura share price is down 72% over the last 12 months.

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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