Arafura raises A$10m from largest shareholder
Rare earths miner Arafura Resources has secured a further A$9.9-million in funding from its largest shareholder ECE Nolans Investment Company.
ECE has subscribed for more than 45.26-million additional shares in Arafura, at 22c a share. The price represented a 10% premium over Arafura’s last trading price and a 15-day volume-weighted average price of 20c a share.
Under the subscription agreement, ECE would increase its shareholding in Arafura to 24.85%, and take its total investment in the company, to date, to over A$32-million.
“For some time now, the company has been seeking further funding to progress its feasibility study for the Nolans project to final feasibility status, and we are delighted with the support shown by our largest shareholder,” said Arafura chairperson Ian Kowalick.
“Global markets have been disrupted by the euro crisis and we thank shareholders for their support this year,” he added.
ECE chairperson Shao Yi said that the financial support reflected the good faith that existed between the two companies, and ECE’s positive view regarding the Nolans project.
Meanwhile, under a separate memorandum of understanding (MoU), ECE would reduce the number of its nominee directors on the Arafura board from two to one. ECE could elect to increase its directorship in proportion to its shareholding at any time that the number of directors on the company’s board reached seven.
Shao said that the MoU was executed in the hope of making it clear that ECE had no desire to exert control over Arafura, but wished to act in the best interest of all shareholders.
Arafura has previously pushed back the completion date of its bankable feasibility study until at least the third quarter of 2013, reducing the work rate on the project until additional capital could be secured.
Subject to the availability of funding, the company still had to complete a number of critical work streams, including the delivery of an updated resource mode, beneficiation testwork, a rare earths demonstration plant, laboratory work for the simplification of the phosphate circuit and the production of a solid phosphate project, as well as rare-earth oxide separation of cerium and lanthanum.
It said on Monday that while in China, company representatives had also executed a number of confidentiality agreements with Chinese rare-earth experts who will be providing independent technical reviews of the Nolans flow sheet.
This work would be combined with Arafura’s own efforts and was expected to identify potential efficiencies and cost savings.
Discussions were also held with other possible Chinese investors.
“This investment by ECE will encourage others to consider investing in Arafura. Our recent meetings with ECE confirm our intentions to work together to forge strong, long-term relationships with our key investors,” said Kowalick.
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