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Arafura Resources welcomes growing demand for critical minerals in December quarter

Published: 17:07 20 Jan 2022 AEDT

Arafura Resources Ltd - Arafura Resources welcomes growing demand for critical minerals in December quarter

Arafura Resources Ltd (ASX:ARU) is buoyed by growing, global demand for critical minerals as it heads into the new year. 

The project developer, which is advancing the Nolans rare earths and neodymium-praseodymium (NdPr) asset in the Northern Territory, hopes to keep engaging European and South Korean customers on the hunt for a long-term strategic supply of NdPr. 

Notably, the price of NdPr jumped 45% over the December quarter to US$133 per kilogram, while the September quarter also recorded a 26% increase as demand for electric vehicles and clean energy infrastructure continues to rise as supply chain security risks increase. 

Moving into the new year, Arafura has $41.7 million in the bank to fund its future operations. 

Work at Nolans

During the December quarter, Arafura drilled four diamond holes and 772.2 metres in the Nolans borefield as part of a site investigation.

Front-end engineering and design works (FEED) also continued during the quarter across multiple fronts, devised to progress Nolans’ design activities.

Arafura has since engaged engineering and construction firms Clough and UGL to provide constructability and design inputs on the NdPr asset.

They’ll provide their insight at a series of workshops at the 30% and 60% design maturity levels.

In the meantime, Arafura is preparing for project execution across a number of key areas:

➢ The logistics strategy for construction has been finalised and a shortlist developed for tender;

➢ Planning has commenced, following a range of meetings with various departments within the NT Government and industry support bodies, for industry presentations in Alice Springs and Darwin to provide updates on the project to potential contractors and help identify local and indigenous businesses, who can assist with project delivery;

➢ A project management system is being applied, with final implementation commencing this month;

➢ A project risk management plan is being applied;

➢ Engaging with operational logistics contractors to provide input into the scope of work and develop a tender list; and

➢ Investigating the operational management systems required for construction and operations.

As a result, Arafura has made further headway during the quarter and remains on track for production towards the end of 2024.

Specifically, the overall schedule for the project has not materially changed since the feasibility study update, which was released in May 2021.

The next key dates are:

  • Completion of FEED and tendering in May 2022, followed by a final investment decision (FID) in August 2022; and
  • A  construction period of 26 months from FID, with first ore processing in October 2024 and first production towards the end of 2024.

Corporate activities

The past three months were also busy on the corporate front for the Nolans developer.

Arafura released its updated sustainability report in November, outlining the company’s sustainability aspirations in line with the UN Sustainable Development Goals and other key targets for FY22.

Some of the report’s main strategies include:

➢ Implementing a sustainable procurement strategy for the Nolans Project;

➢ Setting Indigenous employment targets for the construction and operations phases of the Nolans Project;

➢ Establishing a local (Central Australian) employment target for Nolans’ construction phase;

➢ Reaching net-zero greenhouse gas emissions by 2050, with SBTi emissions targets for 2030 and 2040 to be set during FY22; and

➢ Completing a water consumption reduction study and setting reduction targets during the current financial year.

Following the sustainability report, an action plan is being developed to meet the targets and goals it had set out.

On the financial front, Arafura spent roughly $0.8 million on exploration and evaluation activities, around $1.6 million on corporate, administration and business development costs and roughly $5 million on project development activities related to FEED.

Finally, the ASX-lister also appointed a new non-executive director.

Darryl Cuzzubbo joined the team in November, bringing with him a wealth of knowledge and experience across the resources and manufacturing sectors.

Cuzzubbo has run major operational assets and led the development and execution of significant breakthrough strategies to deliver major projects.

His appointment came at a critical time for the company as it transitions from development to construction and into production.

As offtake and project finance discussions reach a critical stage, Peter Sherrington has stepped down as joint company secretary but remains as chief financial officer.

In this position, he will oversee both the finance and marketing functions of the business to fast-track development in these areas.

Catherine Huynh has taken on the full responsibility of company secretary.

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