Rare earths specialist Arafura Resources Ltd has raised $90 million to advance its Nolans project in the Northern Territory.

Arafura said it had placed 75 million shares at $1.20 each.

The company's shares have been trading above $1.70 in recent weeks, but fell sharply on Thursday after the deal was announced.

During the day they regained ground to close down two cents at $1.40.

Money raised by the company in the offering will be used to progress the Nolans rare earths play, planned to begin production in 2013.