Interview with Gavin Lockyer, Managing Director of Arafura Resources (ASX:ARU)
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Lockyer is developing the Nolans mine in North Australia. They have NdPr used to to make magnets in car battery. The company was listed in 2003 but the DFS has been released in Feb 2019. They have spent $200M to this point and have a $120M market cap. Currently the company is trying to unlock the potential by working out how to finance the CAPEX of over A$1B. That's a lot of money and market seems unsure as to how they are going to do that. We ask Lockyer where they are in the process and indeed how he sees the process unfolding. They will need binding off take agreements, possibly a strategy partner from either China or Europe and the help of one or more Export Credit Agencies. Tough but doable. And until the let the market know the plan the share price is unlikely to move the dial much.
The project has scale and is low-cost.
1:27 - Company Overview
2:19 - 17yrs, $200M Spent: The Journey & The Present, What Have They Achieved?
6:33 - The Main Issue: Securing Financing of AUS $1Bn
10:44 - China VS Australia Affecting Business: Discussions & Negotiations
13:45 - Process of Financing: Taking Control & Plan B
21:11 - Impact of the EV Revolution: More of Wait & See?
25:23 - Other Delays for Progress: Gold Soaring & US Elections
27:11 - Limited Attractiveness of 17% IRR, 5yr Payback: Cost of Financing
31:01 - Telling the Story & Timeline for Getting Over the Line
32:10 - Reasoning & Hindsight: Asking for Too Much Too Quickly?
Company page: https://www.arultd.com/
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