This ASX rare earths stock is halted after a monster 12-month run

Investors will have to wait until next week to see where Arafura Rare Earths Ltd (ASX: ARU) shares trade next.

The ASX rare earths stock was placed in a trading halt on Friday after unveiling a major funding update for its Nolans project in the Northern Territory.

Arafura shares last changed hands at 31 cents, leaving the stock up around 15% in 2026 and almost 90% over the past year.

After such a strong run, investors now have a major capital raising to weigh up.

Let’s take a closer look.

A big raise at a discount

According to the release, Arafura has launched a $350 million institutional placement and a $25 million share purchase plan (SPP).

The placement will be priced at 26 cents per new share.

That is a 16.1% discount to the company’s last closing price of 31 cents and a 15.5% discount to its 5-day volume weighted average price.

The placement will be split into 2 tranches. The first is expected to raise $175.5 million, while the second is expected to raise $174.5 million.

Existing eligible shareholders will also be able to apply through the SPP at the same 26 cents price.

Arafura’s largest shareholder, Hancock Prospecting, has committed to subscribe for about $85 million under the placement.

After the raising, Hancock is expected to hold around 17.5% of the company.

What the money is funding

The money is aimed at pushing the Nolans Project in the Northern Territory closer to construction.

Arafura says the placement, together with existing cash and other funding commitments, will fully fund the equity component needed for the project.

Once the placement is settled, the company expects to have a pro forma cash balance of about $911 million.

The update follows Arafura’s final investment decision (FID) on Nolans, which the company describes as the world’s third fully integrated rare earth ore-to-oxide operation outside mainland China.

Rare earths are used in electric vehicles, wind turbines, defence, robotics, phones, medical imaging, and other technology.

Arafura says Nolans is construction-ready, has approvals in place, and has a mine life of more than 38 years.

The company is targeting the start of construction around September 2026.

Funding support takes shape

Arafura says the raising will also help satisfy equity conditions linked to government-backed funding support in Australia and Germany.

The company also pointed to further progress with offtake, saying it has now secured about 93% of its binding offtake target.

This includes agreements and support involving customers and agencies across Europe, Korea, Australia, and the United States.

Still, Nolans is a big project to deliver.

It will require major capital spending, careful construction, and higher rare earths prices that support development.

The post This ASX rare earths stock is halted after a monster 12-month run appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras 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.