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Arafura Rare Earths has secured almost $900 million in debt funding for its Nolans project from a German export credit agency Euler Hermes Aktiengesellschaft.

The Nolans project is located outside Alice Springs in the NT, and will include a mine, process plant and related infrastructure. The project is aimed at mining the rare earth elements neodymium and praseodymium (NdPr), two highly sought-after magnet materials.

The loan is currently in the form of a non-binding letter of in-principle support for an untied loan guarantee. Wordy as that is, it essentially means that the German creditor needs to be satisfied of a few things before parting with the $900 million.

Specifically, the guarantee is conditional on Arafura entering into offtake agreements with German-based companies, and the corresponding quantities of neodymium praseodymium (NdPr) products ultimately being processed in Germany into permanent magnets or powertrains.

To secure the indicative offer, Arafura provided Euler Hermes with an overview of offtake engagement in Germany, potential supply chains, as well as historic NdPr pricing. In order to properly ink the deal, the company will also need to file an application with the German Government.

Additionally, Northern Australia Infrastructure Facility (NAIF) has provided a non-binding offer to increase its tranche of project finance from $100 million to $150 million for the Nolans project.

The agreement is dependent upon a final investment decision by NAIF’s board, as well as relevant legal obligations.

Arafura is working with Export Finance Australia to progress additional deby facilities.

“We warmly welcome the support of Euler Hermes and ongoing engagement with EFA and NAIF,” Arafura managing director, Gavin Lockyer, said.

“The Nolans Project closely aligns with global customers’ critical raw material diversification plans and their environment, social and governance (ESG) priorities. Support from Australian and international export credit agencies is a direct reflection of the value this represents.

“We look forward to close ongoing relationships with Euler Hermes, EFA and NAIF as we continue to progress offtake negotiations and the project moves through its next critical phases toward full funding, construction and first production.”