RARE earths developer Arafura Resources has been flagged as a strong buy by brokers who see plenty of upside in the company's Nolans project in the Territory.

Arafura is finalising a bankable feasibility study, which is expected to be finished late next year.

The company aims to mine rare earth oxides, phosphate, gypsum and uranium at the mine and transport them to a $1 billion processing plant to be built at Whyalla in South Australia.

Rare earths, while not actually rare, are difficult to find in economic quantities.

They are used in high-technology applications such as green energy technologies, iPods and flat-screen televisions.

Resource Capital Research has calculated the project is worth $3.82 per share to the company, even after factoring in its assumption Arafura will need to raise $60 million at 50c a share to fund the feasibility study.

It also has done the sums using the long-term rare earth oxide price of $US40/kg, compared with present prices of about $US150/kg.

RCR said the "powerful force" supporting the Nolans development would continue to be increasing rare earth oxide demand - growing at 7-9 per cent per year - over the next five years against a background of export restrictions imposed by the main supplier China.

It is upbeat despite the fact Nolans is not expected to go into full production until at least 2014.

"These market dynamics suggest that Arafura will not miss the boat," RCR said.

"The valuation metrics make Arafura look highly undervalued. The imminent BFS equity raising should provide an excellent entry point for investors seeking to capitalise on that."

BBY has a more conservative, but still bullish, target price of $2.60 on the stock.

"The current equity market turmoil, and fears of recession, makes life more difficult, but these are not fatal to Arafura's ambitions, due to its strategic importance, and the value gap between it and near production companies like Lynas," BBY senior resources analyst Mike Harrowell said.

"Our price target is based on our estimates of the flow sheet reappraisal under way."

Arafura shares were trading about the 62c mark by late last week.