Why has ASX 300 rare earths stock Arafura rocketed 40% in 2023?

The first six weeks of 2023 have been big for the Arafura Rare Earths Ltd (ASX: ARU) share price. The S&P/ASX 300 Index (ASX: XKO) rare earths stock has soared 40.5% in that time to trade at 63.25 cents today.

And that’s not even its peak of this year so far. It rocketed to a new 52-week high of 66 cents earlier today – at which point it was nearly 47% higher than it started the year.

For comparison, the ASX 300 has gained 7% since the start of 2023. Meanwhile, shares in Arafura’s biggest rare earths peers have also outperformed, but not to the same extent.

• The Lynas Rare Earths Ltd (ASX: LYC) share price has gained 16% year to date to reach $8.90
• While that of Illuka Resources Limited (ASX: ILU) has lifted 16% to trade at $10.96

So, what’s been going so right for Arafura shares in 2023? Let’s take a look.

What’s sent Arafura stock soaring 40% this year?

 There have been three price-sensitive announcements from the ASX 300 rare earths stock in 2023.

First, it announced the appointment of KfW IPEX-Bank as an additional mandated lead arranger and bookrunner.

Within that same release, it also revealed it had received indicative support from Export Finance Australia and the Northern Australia Infrastructure Facility for debt facilities worth a combined $300 million. It also announced it had been granted $30 million under the Federal Government’s Modern Manufacturing Initiative.

The company also revealed its planned pathway to see the Nolans Project achieving net zero emissions by 2050.

However, one of the biggest gains of the last six weeks came on the back of the company’s quarterly results. Commenting on the period, managing director Gavin Lockyer said:

[It] was one of the most outstanding quarters in terms of business changing achievements that Arafura has ever had.

Each of [the company’s] achievements, from the cornerstone binding offtake agreement signed with Hyundai Motor Company and Kia Corporation, through to the recent very successful share placement and share purchase plan result, confirms Nolans as an exceptionally valuable world-class NdPr rare earths project.

Insider buying

Speaking of the company’s recent share purchase plan, four Arafura directors took part in the oversubscribed capital raising activity.

Lockyer, chair Mark Southey, and directors Cathy Moises and Chris Tonkin each snapped up 21,420 new shares through the plan, paying 37 cents per stock.

The participation by those in the know at the company may have bolstered sentiment for Arafura’s stock. After all, investing great Peter Lynch is widely quoted as saying:

Insiders might sell their shares for any number of reasons, but they buy them for only one: they think the price will rise.

The post Why has ASX 300 rare earths stock Arafura rocketed 40% in 2023? appeared first on The Motley Fool Australia.

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• Why is the Arafura share price surging 12% to an 11-year high?
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• The Arafura share price exploded 120% in 2022. What now?

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.

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