Why is the Arafura Rare Earths share price on hold today?

The Arafura Rare Earths Ltd (ASX: ARU) share price isn’t going anywhere this morning.

The stock has been placed in the freezer as the company prepares to release news of a capital raise.

The Arafura Rare Earths share price closed Thursday’s session at 44 cents, where it will stay for the near future.

Let’s take a closer look at what’s going on – or, not going on – with the rare earths stock on Friday.

Why is the Arafura Rare Earths share price frozen today?

Arafura Rare Earths shares have been put in the freezer this morning. They’re not expected to be removed until the company reveals more details of a “material” capital raise or the market opens on Tuesday, whichever comes first.

Interestingly, it’s only been four months since the market last learned of a capital raise by the company. It underwent a $41.5 million placement in August, with the funds earmarked for the development of the Nolans Project in the Northern Territory.

Construction on the project is expected to begin in 2023. A recent update found the project’s pre-production capital costs are expected to be around $1.4 billion, with an additional $196 million contingency.

The project is expected to bring in as much as $912 million of earnings before interest, tax, depreciation, and amortisation (EBITDA) on average over a 38-year life of mine.

Arafura Rare Earths ended the September quarter with a $49 million cash position.

The last time the stock exited a trading halt with news of a capital raise, its share price dumped 12.5%. Since then, it has gained 57%.

The last capital raise undergone by the company saw new shares on offer for 26.5 cents apiece ­– representing a 17.2% discount to its then-previous close.

Today, a 17.2% discount on the Arafura Rare Earths share price would come to around 36.4 cents.

The post Why is the Arafura Rare Earths share price on hold today? appeared first on The Motley Fool Australia.

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

• Why is the Arafura share price crashing 9% today?
• 3 ASX All Ords shares that had a cracking run on Friday
• Why Arafura, Nanosonics, NextDC, and OZ Minerals shares are rising today
• Why is the Arafura Rare Earths share price rocketing 16% on Wednesday?
• Why Arafura, Nufarm, Pilbara Minerals, and Whitehaven Coal are charging higher

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/0sL97mr