Arafura Rare Earths FID taken and Aus government on board, but we remain cautious on ramp-up - retain Netural

Research evidence excerpt

Arafura Rare Earths FID taken and Aus government on board, but we remain cautious on ramp-up - retain Netural

gan India Private Limited

construction start, but leave first production unchanged at Sep-30. ARU’s Zane Guo

capex forecast is unchanged (US$1.2bn) and our forecast stays at ~A$2.1bn (61-3) 9633-4020

(US$1.5bn, +25%). ARU notes FID has been made on the basis that the Board zane.guo@jpmorgan.com

is confident remaining milestones can be achieved, including debt and equity J.P. Morgan Securities Australia Limited

financing. ARU still needs to finalise funding arrangements, seek shareholder

approvals at an EGM expected in July, and tender construction contracts. We Key Changes (FYE Jun)

view the announcement as supportive, but not full funding / construction de- Prev Cur Δ

risking. Net debt/EBITDA - 27E 13.2 7.0 -6.2x

• Export Finance Australia (EFA) support improves offtake coverage, but Half Yearly Forecasts (FYE Jun)

is non-binding. EFA has issued a non-binding Letter of Support under the

Revenue (A$ mn)

Critical Minerals Strategic Reserve for potential support of up to 500tpa NdPr 2025A 2026E 2027E

oxide. Including this support, ARU says it is now at 93% of its binding offtake H1 0 0A 0

target, with a further 250tpa targeted into Germany / Europe. Binding H2 0 0 0

FY 0 0 0

agreements alone remain at ~79% of the target. This improves demand and

funding confidence, but the EFA support remains subject to due diligence, Style Exposure

government approvals and shareholder approval, so we do not treat it the same

as binding offtake.

• No change to PT; retain Neutral. The only change we make today is updating

construction start to Sep-26. We leave first production unchanged at Sep-30,

which means no change to our valuation. We make no change to capex (~A