The Arafura Rare Earths Ltd (ASX: ARU) share price has returned from its trading halt with a bang.
In morning trade, the rare earths developerâs shares are up 11% to 53.5 cents.
Why is the Arafura share price racing higher?
Investors have been bidding the Arafura share price higher today after the company announced a major offtake agreement for its Nolans project.
According to the release, the company has signed a binding offtake agreement with Siemens Gamesa Renewable Energy for up to 400 tonnes per annum (tpa) of neodymium and praseodymium (NdPr) metal.
Siemens Gamesa is a pioneer and leader of the wind industry with 27,000 employees.
The deal
The deal is for five years (with an option to extend for two more) and will see offtake volumes start at 200tpa in 2026 before increasing to 360tpa in 2027 and then 400tpa for the following three years. This is in line with the ramp up of the Nolans project.
Management notes that this is the second offtake agreement to be signed, with approximately 53% of its targeted 85% annual production now secured under long-term sale arrangements.
In addition, the company highlights that this offtake agreement will support its ongoing discussions with Germany’s ECA Euler Hermes for an untied loan guarantee of up to US$600 million to support the project.
Arafuraâs Managing Director, Gavin Lockyer, commented:
We are delighted to have concluded negotiations for our second offtake agreement. Siemens Gamesa is the worldâs leading manufacturer of offshore wind turbines, and this agreement compliments our strategy to create supply diversification into the renewable & E-mobility sectors.
The Arafura share price is now up 52% since this time last year.
The post Here’s why the Arafura share price is racing 11% higher appeared first on The Motley Fool Australia.
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More reading
- Why has the Arafura share price just been halted?
- Arafura stock sell-off continues, broker tips 35% upside
- Why Atlantic Lithium, Arafura, Brainchip, and Core Lithium shares are falling
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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