Why has the Arafura share price just been halted?

The Arafura Rare Earths Ltd (ASX: ARU) share price won’t be going anywhere on Thursday.

That’s because, this morning the rare earths developer requested that its shares be placed into a trading halt pending the release of an announcement.

Due to the Easter break, Arafura Rare Earths has asked for its shares to remain halted until Tuesday 11 April.

That’s unless it makes its announcement today. If that were to occur before the market close, the company’s shares would return to trade later this session.

What is the announcement?

It can be quite nerve-wracking when a company requests a trading halt. Will it be good news or will it be bad news?

Pleasingly, Arafura Rare Earths has provided just enough information for us to know that a positive announcement is coming. This may bode well for the Arafura share price when it returns to trade.

Here is what the company said in its request for a trading halt:

The Company is seeking a trading halt pending an announcement to the market regarding the execution of a binding offtake agreement.

An offtake agreement is an agreement between two parties for one of them to buy a portion of the other’s production.

Prior to today, the company had binding offtake agreements in place with Hyundai and Kia for 1,500 tonnes per annum (tpa) of NdPr Oxide from its Nolans Project.

In addition, it was in contract negotiations with end users in Japan and Europe for 2,375 tpa and advanced offtake discussions with end users in Europe and the United States for 2,600 tpa.  One of these parties is GE according to a recent presentation.

Investors will have to sit tight and wait for further information either later today or after Easter. But, whatever is announced, it looks likely to be great news for Arafura shareholders.

The post Why has the Arafura share price just been halted? appeared first on The Motley Fool Australia.

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More reading

• Arafura stock sell-off continues, broker tips 35% upside
• Why Atlantic Lithium, Arafura, Brainchip, and Core Lithium shares are falling
• Tesla-induced sell-off of ASX rare earths shares like Lynas overblown: experts
• Why Arafura, Myer, Volpara, and Xero shares are zooming higher
• Are Arafura shares still a buy if Tesla ditches rare earths?

Motley Fool contributor James Mickleboro 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.

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