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Date : 07/11/2022

Arafura Resources Shares Decline as the Company releases Quarterly Update

Arafura Resources Limited (ASX: ARU) is an Australian rare earth elements mining exploration company listed on the Australian Securities Exchange. The Company’s history began in 1997, with IPO in 2003. It has its headquarters in Perth, Western Australia. The Nolans Rare Earth Project, situated in the northern part of Australia, is the Company’s most important undertaking.

As the trading session ended on Friday, Arafura Resources share price (ASX: ARU) fell by more than 6%. After the stock market had closed on Thursday, the corporation went ahead. It published its updates for the quarter that ended on 30 September 2022.

Arafura Resources Shares: Quarterly Updates

Arafura Resources shares were trading at $0.30 and declined by 3% as company releases quarterly updates. The market cap of the Company is approximately 500.54 Million AUD.

ASX ARU Shares news & analysis

  1. The amount of net cash that was utilised for operational operations was $14.17 million.
  2. The Company spends 1.06 million dollars in net cash on investment activities.
  3. At the conclusion of the quarter, there was a total of $49 million in cash and cash equivalents.
  4. It is estimated that there will be 3.2 quarters worth of funds available.
  5. Arafura Resources share price has increased by around 40% this year. That is a significant improvement compared to the performance of the S&P/ASX 200 Index (ASX: XJO), which decreased by over 9% during the same period.

What was reported by Arafura?

During the quarter, Arafura made headway on the FEED (front-end engineering and design) for its Nolans project. The Company completed the final process design documentation for its hydrometallurgical plant. It began bidding for its on-site power station.

Additionally, the organisation discussed the macro climate in Australia and abroad. The National Reconstruction Fund has allocated $1 billion to “move Australia further up mineral value chains” via mineral processing development, which is expected to increase focus on neodymium-praseodymium oxide (NdPr) production.

Arafura Resources anticipates that China’s growing hostility against Taiwan will trigger the world to seek an alternative to China for NdPr manufacturing, which may play in Arafura’s favour. This is something that Arafura expects to happen on a global basis.

It also noted that Australian mineral miners might gain from the US Inflation Reduction Act of 2022 because of that law’s large sum of money set aside for energy security and climate change mitigation.

What else did the Company Say?

Over the last three months, the spot price of NdPr has decreased by 32%, from US$139 per kilogram to US$94 per kg, as reported by Arafura. This was supposedly caused by weaker demand in China, especially for magnets utilised in China’s internal economy.

However, in the not-too-distant future, projections suggest that the prognosis for magnet demand will improve, with growth to 300,000 tonnes expected by 2023. This figure was characterised by Arafura as being “far greater” than the demand that was seen in 2022.

The Company predicts that the demand for NdPr will remain relatively constant thanks to the growth of the renewable energy and e-mobility sectors.

What Next?

Arafura Resources is optimistic about the NdPr price as well as the decrease of reliance of the world on Chinese NdPr. The Company anticipates that neodymium-praseodymium oxide will get greater attention on a national and worldwide scale. The world’s search for alternatives to China as a materials supplier may indirectly assist Australian companies due to China’s hostility against Taiwan. In conclusion, anticipation continues for Arafura Resources shares, along with the steady demand for its products.


Arafura Resources News and Insights:

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