🕐17.02.10 - 01:54 Uhr

Arafura announces A$17.5M Placement and A$17.8M Rights Issue to advance Nolans Project



ASX: ARU ASX ANNOUNCEMENT 17 February 2010 Arafura announces A$17.5M Placement and A$17.8M Rights Issue to advance Nolans Project to meet world Rare Earths demand
The Directors of Arafura Resources Limited (ASX: ARU) ("Arafura" or "the Company") are pleased to announce a capital raising comprising: - a Placement to accredited institutional investors and sophisticated investors who have committed to subscribe for 28.2 million shares at A$0.62 per share to raise A$17.5 million before issue costs.

This placement was approved by Shareholders at the Companys AGM in November 2009; and - a 1 for 10 pro-rata renounceable Rights Issue ("Rights Issue") to eligible Shareholders at A$0.62 per share to raise up to A$17.8 million before issue costs The Rights Issue will not be underwritten.

Major Shareholder East China Exploration & Development Bureau ("ECE") has been invited to maintain its pro-rata shareholding (24.86%) at the Placement price.

Any investment by ECE will require Australian and Chinese regulatory approvals.

In the event that timing of regulatory approvals prevents ECE from participating in the Rights Issue, additional shares will be made available to enable it to maintain current pro-rata shareholding if it elects to do so, and subject to regulatory approval.

If ECE elects and is able to maintain its current pro-rata shareholding and it is by way of Placement, only a further A$11.7m would be raised.

If ECE achieves its pro-rata shareholding in full or part by way of the Rights Issue then the amount of additional capital raised will be less.

The funds raised, together with Arafuras existing cash reserves, will be used for: - ongoing drilling and exploration activity with the aim to define the full extent of the Nolans resource; - progressing activities of the Nolans Projects Bankable Feasibility Study and the Environmental Study; and - corporate and offer costs as well as working capital requirements.

Arafura Managing Director, Dr Steve Ward said "The capital raising has been structured to both attract new institutional Shareholders and, importantly, to encourage maximum participation by our existing Shareholders." "The Boards decision to include a pro-rata Rights Issue to existing Shareholders is in recognition of their long-term support of Arafura throughout the development of its key asset, the wholly-owned Nolans Rare Earth Project, and provides further opportunity to participate in the Companys future growth," Dr Ward said. "The new funds will enable Arafura to move forward at full pace with the Nolans Project and with other related work programs." Nolans Project Strategic Importance Demand for rare earths continues to grow underpinned by new technology and clean energy applications.

Industry commentators all note that suppliers will struggle to keep pace with future demand, with shortfalls likely.

Historically, China has supplied approximately 95% of the global rare earth needs.

In the past few months, China has indicated its intention to reduce and regulate exports to meet its increasing domestic needs.

This will further tighten global rare earth markets..

Dr Ward said Arafuras 100%-owned Nolans Project contains a world-class rare earths deposit capable of supporting a 20-year mine life and the Company is targeting production of 20,000 tonnes of Rare Earth Oxide (REO) per annum from 2013. "The fact that Arafura is one of the few near-term rare earths producers outside China capable of supplying customers in markets throughout the world makes the Company attractive to all global rare earth users." To download the full ASX Announcement click here: For more information contact: http://esp.gewru.com/download/files/12414/1084018/20100217%20-%20Arafura%20announces%20Placement%20and%20Rights%20Issue%20to%20raise.pdf Steve Ward Managing Director Arafura Resources Limited T: +61 (8) 6210 7666 Gavin Lockyer Chief Financial Officer Arafura Resources Limited T: +61 (8) 6210 7666 Felicity Nuttall Professional Public Relations T: +61 (8) 9388 0944 M: +61 (0)430 184 599 Ends For more information contact: Alistair Stephens Managing Director Arafura Resources Limited T: 0421 612 573 Gavin Lockyer Chief Financial Officer Arafura Resources Limited T: 0419 914 072 Felicity Nuttall Professional Public Relations T: 08 9388 0944
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