Arafura Rare Earths Limited

Thank you for standing by and welcome to the Arafura Rare Earths Limited March 2026 quarterly investor call. All participants are in a listen only mode. There will be a presentation followed by a question and answer session. If you would like to ask a question by the phone, you'll need to press the star key followed by the number one on your telephone keypad. If you would like to ask a question by the webcast, please enter it into the ask a question box and click submit. I will now like to hand the conference over to Mr. Darryl Kizubo, Managing Director and CEO. Please go ahead.

Thanks, Darcy. And good morning, ladies and gentlemen. Thank you again for joining us for another quarterly investor briefing. It is our pleasure to provide you with an update on what has been a very busy quarter. With me, as usual, is Peter Sherrington, our CFO, and Tommy Vanderbilt, our Chief Project Officer. Similar to previous updates, what I'd like to do is just talk to a few external events that continue to shape developments in the rare earth sector. which we need to be mindful of as we work to secure the best outcomes for your company. What we'll also do is cover off on a couple of achievements during the quarter and why they are significant before turning to how we're progressing towards FID which as per the last quarter update we are still targeting to achieve FID this quarter. Keeping to that time will enable us to start construction next quarter. I'll then hand over to Peter to provide an overview of key financial events for the quarter, and then Tommy will talk about our execution readiness, and in particular the focus that we have on recruiting the right people, having well-developed plans that we're ready to execute, and making sure that we secure the most commercially competitive contracts possible when the FID flag drops. And then at that point we'll open up to Q&A. So let me just start by a few key developments in the market. So First, you might have noticed that the NDPR price has varied during the quarter between $100 to $130 a kilo on the Asian Metals Index, which is around the floor pricing that has been set by the US government and more recently by the Japanese. The Independent Benchmark Minerals Intelligence Index continues to track above the Asian Metals Index by about $10 a kilo. If you look at our website, you'll see that we track both of those indices in terms of pricing. You can get a daily update. What we're seeing around pricing gives us a level of confidence that China's control over pricing is being reduced through the introduction of floor pricing and other mechanisms. However, as a sector, we continue to believe that moving volumes to a pricing index, such as BMI, which is completely independent and transparent, and hence can be trusted by investors to reflect market fundamentals. It's also important to note that S&P Global Platts have also introduced their own Rare Earths Pricing Index for supply into the US, which is great to see. Over the quarter, we saw Linus announce a deal through which it has largely locked in its current volumes with Japan until 2038 with a floor price of $110 a kilo and a profit-sharing arrangement. above $150 a kilo. This is important because as we were negotiating our final off-takes, we were engaging with some of the same parties that Linus was. And as you can imagine, it was always going to be hard to get a well-priced off-take whenever Linus' volumes were on the table. As I said in our last investor update, securing well-priced off-take agreements that reflect the change in price dynamics will play a significant role in setting the value of your company essentially for the next decade. Hence, it's always been important to get the best possible outcome here rather than the quickest outcome. At the end of March, we saw the Australian government announce that they had passed legislation through both houses in supporting the Critical Mineral Strategic Reserve. This is providing a very wide-ranging mandate to the government export credit agency Export Finance Australia to execute agreements for the purchase of critical minerals, including rare earths, to be held as part of the reserve. The Australian government actually did this well ahead of time. So when they flagged that they would do this by the end of June, they actually did it by the end of March, which I think is a bit of an illustration of how important the Australian government sees this. And lastly, in terms of macro developments, we're seeing elevated fuel prices due to the Iranian war. and they have been a cut list in increasing demand for electric vehicles, which, as you know, is the biggest gross driver for Rare Earths over the next decade. In China, which is the largest automotive market in the world, EVs have now achieved price parity with conventional internal combustion engine vehicles and in many cases are cheaper. In fact, there's this article just last week that refers to two-thirds of EVs being cheaper than a typical internal combustion engine vehicle. Also last week, Chinese battery manufacturer CATL announced a new EV battery with a range of up to 1500 kilometres and a charging time of less than 10 minutes. Now the reason why I point these out is that you can see that these developments is going to increase the demand for EVs as economies of scale tip from internal combustion engines towards EVs. So let me now just turn to a couple of milestones that were achieved by our referrer during the quarter. So we announced our partnership with Cleantech to assess a lower cost and more effective way of separating rare earths with a particular focus on what is possible with heavy rare earths from Nolan's. We're in the middle of doing trials on this. As mentioned in previous quarters, We want to recover additional heavies from the Nolens project from the waste liquor recovery stream and process them to a separated rare earth similar to what we're doing with NDPR rather than selling heavies as part of a seg heavy rare earths combined product. The reason for this is that we will get a better pricing arrangement for bundling lights and heavies together. And that's for two reasons. So firstly, you know, we all are very aware that China is traditionally controlled about 90% of NDPR, but they're traditionally controlled about 98% of heavies. So supply risk of heavies is even greater than the supply risk for lights. But furthermore, as we see emerging magnet manufacturers outside of China, They today don't have the capability or technology equivalent to China, so they need more heavies in the mix in order to make a magnet that performs as well as a Chinese magnet. So we see demand for heavies going up and supply risk being greater. Hence why we want to increase our heavies and sell heavies as a bundled product with our lights to get the best possible pricing from the market. Now this project to produce and process heavies is separate to our phase one, and it will be subject to a different decision point, and we expect to make that decision sometime after calling FID for phase one. Assuring this value creation option, however, in parallel with phase one, is helping us secure remaining off-takes for the most favourable terms possible. During the quarter we also announced our compensation deed agreement with the partialist, who owns the land on which the NOLAZ project is situated. You'll note that the agreement involves Arafura issuing the partialist with shares, while he also saw fit to invest his own money to increase his holding in Arafura. This is a super clear demonstration of the alignment and the support that we have from the landowner, which is of course incredibly appreciated and important, particularly as we look to starting construction shortly. It also puts us on a very strong footing as we look to progress future opportunities with our pastures, such as progressing Phase 2. So now let me talk to you about FID. So as already mentioned, we continue to target this quarter for calling FID, which will enable us to start construction next quarter. Although this is in completely different in our control, we are increasingly confident that this will happen. There are two main tasks that we've previously flagged as needing to achieve in order to call fit. The first three we spoke about being fully funded. However, given we are over 90% funded and we have multiple options to close that gap, including equity from cornerstone investors and equity potentially tied to offtake, we're very comfortable in achieving this Hence, this is not the primary precursor to calling fit. The last remaining and primary precursor to calling fit is to secure one more offtake agreement so that we have a clear line of sight to satisfy the lender's requirement of having 80% of our production accounted for through offtake agreements. As we've been consistent on saying this, it is important to us that this is on an independent, and Transparent Pricing Index, where pricing reflects market fundamentals, which, as you know, are currently very strong, and we believe will get even stronger in the future. We have been having multiple engagements in relation to placing additional offtake, and we basically said to the different parties, whoever gets there first gets the offtake, and we remain steadfast in our commitment to achieve this in time to take fifth this quarter. With that said, I'm now going to hand over to Peter to talk to Progress during the quarter from a financial perspective. Thank you, Peter.

Yeah, thanks, Sarah. In March, shareholders would have noted that the company executed binding agreements with two cornerstone investors for subscriptions totaling approximately 230 million Aussie dollars. The respective investments were for 50 million euros from KFW, which manages the German Raw Materials Fund and US$100 million from Export Finance Australia. The strong support from these two state-backed funds provided another indication of the strategic importance of the NOLANS project and what we see is its critical role it's playing in facilitating diversified rare earth supply chains. The investment by the German Raw Materials Fund and EFA were done largely on similar terms and conditions, so there was significant alignment between the two investments. Both were at an issue price being at the lower of the VWAP for the 20-day trading period prior to each respective subscription agreement being executed, less a 10% discount, or at any lower price per share for shares offered to third-party investors in the lead-up to the completion of the KFW and EFA investment. The two investors have their respective conditions precedent but there is some similarities between them that must be satisfied prior to settlement. These include in the case of German Raw Materials Fund FIRB approval given that it's a foreign entity. Both investors require the project to be fully funded. execution or contractual close of the debt project finance facilities as part of that fully funded solution and then importantly shareholder approval of the facilities which is a requirement before they can be issued. Additional cornerstone investment has also been secured with the National Reconstruction Fund for a $200 million Aussie dollar convertible note facility. The terms for the convertible node have been agreed under a bindings term sheet, but we're currently in the process of advancing to a final agreement. Importantly, the final agreement, in addition to the convertible node agreement, will also require subordination deed between NRFC and the project finance lenders. It's important that the senior debt facilities do not become subordinated to the NRFC facility agreement. That subordination deed is advanced and there's largely significant agreement between the two parties around the completion of that document. Last year the company completed a capital raising of Australian $480 million, significantly de-risking the equity funding required for the Nolans project. At the 31st of March, we had a cash balance of $561 million Aussie dollars. The subscription agreements with the German Raw Materials Fund and EFA combined with the NRFC convertible note and cash represents funds on hand or binding commitments of around about Aussie $911 million. Taking into account these cash holdings and commitments and the project financing, the company requires just a further US$134 million to fully fund the project. This represents 10% of the total project funding required. The cornerstone equity commitments along with the debt financing facilities place Arafura in a strong position to achieve financial close for the project and the final investment decision in this current quarter. That's the key points from financing and project funding during the quarter. I'll hand over to Tommy who will talk about project execution.

Thank you, Peter. From my perspective, the top three priorities for the New Orleans project at this time remain, number one, getting the right people in the right roles doing the right work, the focus on project execution readiness, and ramping up the procurement process to be ready for execution after the FID announcement. Now, the establishment of a highly capable Arafura owners team and Hatch EPCM team is critical to ensure our project success. And over the last few months, solid progress has been made to identify and recruit the key owners team members. And currently, there remains only one role to be filled, so good progress there. The Hatch EPCM team has mobilized all the required key resources and have configured the project and the EPCM tools to project requirements. The focus of the team has been on developing the project execution plan and setting up for execution readiness. Key milestones achieved towards project execution readiness over the last couple of months include the acquisition of the existing 208-bed accommodation camp that's been established on site previously and managed through a rental agreement. This will substantially reduce accommodation costs and enable the efficient and timely camp readiness to support the initial construction works. The scope of work to commission the camp is underway and is part of the site reinstatement scope. Key activities for this is typically includes the recommissioning of critical site services, for example, raw water supply, potable and wastewater treatment, temporary water, sorry, power supply, etc. Then, development of a procurement strategy which builds on continuous market engagement with key equipment suppliers and constructors over the past two years. This positions the company to accelerate the execution of the competitive tendering process, right post FID, noting that some long lead and specialized items are readily available and were already secured as part of the company's early works program. And then thirdly, standardized project controls and reporting have been implemented and a project advisory committee has been established with a monthly condense. The committee has been designed to lean into the experience and megaproject expertise of key stakeholders, including members from the board, Hatch and select experts as required. So in summary, we are doing the work and implementing the systems to ensure we best position the company to safely execute the Nolens project with best commercial outcome for the business. Thank you. I'll now hand back to Darcy to close.

Thank you. If you'd like to ask a question by the phone, you'll need to press the star key followed by the number one on your telephone keypad. If you'd like to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. For the sake of time today, we kindly ask that you please limit yourself to two questions per person and then rejoin the queue if you have any further questions. And if you would like to ask a question by the webcast, please type your question to the ask a question box and click submit. Your first question today comes from Daniel Morgan from Baron Joey. Please go ahead. Hi Daryl and Tim.

Off-take discussions appear to be pretty key to next steps. Can you expand on these at all? How many parties? are left in the process. What can you say about them, if anything, i.e. are they OEMs or governments or related entities? What can you expand on after?

Yeah, look, so we have engaged with multiple parties, right? So it's obviously by going to specifics. But what I would say is, yeah, we've got off-takes into Korea, we've got off-takes into Europe. We are focused on getting an off-take into the US and engage with multiple parties to do that. and they're all progressing with some sort of competitive tension to get this done, which is why we are confident we believe we'll land it this quarter.

I just might add there, Daryl, for the European engagement, the discussion is primarily with the tier ones, with the component makers, but it's actually... coordinated engagement along with their OEMs as well so the OEMs in particular there are a number of them who want to build diversified value chains and they're encouraging their tier ones to come with some non-China solutions for magnets and so we're working along the value chain with the tier ones some coordination with the OEMs and then also engagement with the magnet makers and the tier ones to build up a value chain solution and a pricing solution that can be put to the OEMs as part of a project quote. So it probably gives you a bit of an insight as to the engagement in Europe. The U.S. is a little bit different, but as Daryl mentioned, we've probably seen some opportunities emerge there out of the activities within the U.S. that we hadn't really seen prior to this. and so we're looking to sort of capitalise on that as well alongside that European engagement.

Thank you for those perspectives. And as part of these discussions, is a final equity piece going to be linked or plan to be linked to these off-tags or is that a buried discussion?

No, so, yeah, that is definitely part of it. But, Daniel, in some cases it comes with strings attached, right? So... So we will take the equity if it's, I'm going to call it clean, but if it comes with strings attached, we actually don't need it, right? So we'd like it, but not if it comes with strings attached that make it difficult to progress the company, difficult to progress the phase two, etc. So I think we're in a good position to take the equity if it's clean.

Very clear. Thanks, Daryl and Tim.

Thank you. Once again, if you'd like to ask a question on the phone, please press star 1 and wait for your name to be announced. Your next question comes from Graeme Mazatelli, who is a private investor. Please go ahead. Hi, Graeme. The line is now live. To me, there seems to be some technical difficulties with Graeme's line. Once again, if you'd like to ask a question, please press star 1 on your telephone and wait for your name to be announced. Thank you. We have a follow-up question here from Daniel Morgan from Baron Joey. Please go ahead. Hi, Tim.

Back again. Just once we do have finance and we reach FID, what is the timeline from that moment through to execution? and how ready are you to start clearing and pouring concrete, etc.?

Yeah, so let me make a comment and then Tommy, you jump in, right? What we flagged previously was that we expect to start construction about four months after calling fit, which gives us enough time to go out and get competitive tenders on critical park items, such as the early earthworks. So we'd expect to be on site in about four months. Tommy, any other comments you'd like to make?

Yeah, just Daniel, the planning, the project execution plan has been completed very recently and it's got a pretty serious focus on procurement and how the competitive procurement process is going to work out. But we are going to focus on getting the best commercial value for our furor. And if that takes a little bit longer to get to execution, so be it. but this will be a competitive process. We will focus on capital efficiency and intensiveness and that is really the first focus. As Darryl said, construction start within four months of FID is a very reasonable target and very achievable and we're comfortable we will reach that but not at the cost of making poor deals.

Thank you. There are no further phone questions at this time. I'll now hand back over to Penelope Stargill, Chief Corporate Affairs Officer, to address any webcast questions.

Great, thank you Darcy. I'll run through the questions that have been submitted. Consistent and regular questions that are coming through, so I will group some of those together. First, we have a question from John Parkinson of Rare Earth Exchanges. Daryl, given China's impending restrictions on sulfuric acid exports, a critical reagent, as we know, for many rare earth processing flowsheets, can you please explain why the Nolans project is structurally advantaged relative to other deposits? And secondly, are you seeing customers recognise the value of this reduced exposure to reagent supply risk in their procurement decisions, especially when comparing Nolans to other ex-China producers, say, such as Linus and NP Materials?

Yeah, so John asked the question. He knows the project well. You can see that by the question. So thanks, John. Look, just for everyone on the line, so we have a software-adapted plan as part of the scope. So what that means is we import sulphur and we turn it into sulfuric acid. And we have done that for commercial reasons. That plant has a very short payback, improves our internal rate of return, hence why it's part of the CAPEX. But I think where John's question goes is if sulfuric acid is difficult to obtain, it's not going... And the pricing... is volatile. We're somewhat protected by that because we don't import sulfuric acid. We import the sulfur to make the sulfuric acid, which I think is John's point. But I think the most important thing to say here is about timing too, right? So sulfuric acid is a problem today, but it's not to say it's a problem in three, three and a half, four years' time when we're moving into production. So you just need to keep timelines... Most Investors are getting up to speed in understanding rare earths. As you know, it's quite a complicated sector. You've got projects that some go to concentrate, some go to mixed rare earths. So I would say generally, the awareness, the understanding of the rare earths sector, it's growing rapidly, but it's probably coming off a relatively low base. So to answer your question, probably don't understand sort of... implications of having a sulfuric acid plant versus not.

Great, thank you Darryl. I've got a question here. I've got a couple of questions from Heath Middleton. I will ask two and then time permitting I'll come back and ask another of his follow-up questions. So Darryl, as a long-term and sometimes suffering shareholder over the last four years and one who has participated in every share entitlement offer that has been made, We're feeling the sense, we're feeling the dilution that has been occurring over time and only just breaking even to be slightly up in investments. I'd love to understand how the board thought and decision-making on the last three share placements, so what is their process and how are they thinking about it, particularly when these were done at a significant discount, somewhere between 12.5% to 20% discount to the last prior capital raises. Why should we vote yes to this placement? If you could start with that.

Yeah, so I'm assuming that question here is really to EFA and German Raw Materials Fund coming in. And that was below the 28 cents, which I guess is your question. So just look at, and actually I'm sympathetic to where you're coming from on this. With the UFA and the German Raw Materials Fund, the terms were 20-day, they were up by 10% this year, which is actually reasonable terms. However, our share price was lower when this agreement that took many months to land finally landed compared to the share price that we're seeing today. But you kind of can't determine the timing, right? You can't determine what the share price is. is at any particular point in time, but you can determine how the offer price is determined, which is 20-day VWAP and a 10% discount, which I would argue is actually quite reasonable. But the other thing I would add here is part of the reason why share price has strengthened since the deal was done with EFA and the General Law Matures Fund is because we made that announcement. So I understand your point, but I would just look to the terms that they came in at, which I think were reasonable terms. It just so happens that the share price was lower when that agreement concluded.

And I might just add the other placement that perhaps Mr Middleton is referring to, which was done at a higher discount. that was at a point where there was a significant run across all of the market, the share prices increased significantly, and then there was a pullback as and when we did that rise capital raise, and therefore it did impact the final discount.

Yeah.

Okay. So the other question from Heathen, we'll return to his other questions at the end. With the turmoil going on around the world at the moment and talk about price rises, is this going to affect the project development budget?

Yeah, so again, it comes back to timing, right? So if the Middle East, if the Iranian war was resolved in the next few weeks, it's hard to believe that that's going to have a significant impact on a project that's for three years, and that's starting in a number of months' time. So it depends on how long this war goes on. Tommy's done some work on the impacts of diesel as an example. So diesel prices have an indirect and a direct impact. So direct being that you've got to pay more for diesel to run equipment and then indirect impact in terms of high density piping costs more if diesel prices are high. In terms of the indirect impact, that will be again influenced heavily by how how long this will go on and how structurally it impacts the long-term supply of diesel. So it's very hard to answer the indirect impact. But to give you some sort of sense on the direct impact, if diesel prices increase by 50%, that has an impact of increasing our capex in the order of 5%.

Thank you. And whilst we're on CapEx, perhaps this is one that Peter can answer for us. In the Q1 report, so this has come from Ming Sun, in the Q1 report, increase the construction cost to US dollar $1.9 billion from 1.6. Can you please clarify what the actual capital costs are and do you have guidance as to when we can expect Hatch to finalise their CapEx bills?

Yes, so without knowing the detail behind the question, I'm assuming we're talking US dollar values. So the US $1.6 billion is the total funding requirement for the project, which consists of the direct capital, which is roughly about $1.2 billion, but then includes financing costs, working capital costs during construction, and also includes our $80 million equity contribution to the cost overrun, which is matched by the lenders. So that's a total of just under $1.6 billion US. In addition to that, we have effectively contingent-type facilities that we can use during construction, which includes a US $80 million cost overrun account. And then on top of that, there's a US $200 million... Strategic Liquidity Facility, which can be drawn during construction and commissioning in the event of a cost overrun. So there's nearly 280 million US of additional facilities that are there to be drawn in addition to contingency and in addition to the 80 mil cost overrun that we have. So that gives us total funding available of up to 1.9, but bearing in mind the base case is a total of 1.6. including all of those working capital requirements. I'm hoping that answers the question.

Just maybe going to the heart of what might have been behind it. So our capex system has stayed stable. It has not increased.

And I think perhaps the second part of the question is, you know, is there a point where we have a... firm of you on CapEx as we execute the project. It's probably more of a question for Tommy or Daryl I suspect.

Yeah, your question was around when Hatch will have a more accurate, clearer picture of the CapEx and that will happen after FID, a couple of months after FID because we have to go through the competitive tendering process where we get the actual prices. that will influence and determine what our capex at that point will be. But that will be a couple of months after FID and we simply can't do it until we get those prices in for all the different aspects.

So Tommy, just to clarify then, just in terms of that timing, for the time being though, there is a high degree of confidence around that capex number that is there, noting that through the period that there's been some market testing and engagement to confirm that those numbers are still relevant. Is that correct?

Yeah, absolutely. The work has continued, the training has continued, and engagement with the market-specific key suppliers, potential business partners has continued, and it at this point definitely indicates that that approach that we have at the moment is stable.

The reason what's behind what Tommy said is we know we will get the sharpest price as possible when everyone knows this is on. So when we ask for a price, they will win or lose based on the price that we get because if we ask for a price now, It is just going to be an estimate because I know it will not lead to whether they're getting chosen or not. That's why we're doing this immediately after feed.

Thank you. The next question comes from Kim Newell. Is the technology used by Arafura similar to that of Linus or better?

Yes, so good question. So a lot of it is similar. If you look at Linus, they process a monazite. We process an apatite NA monazite. But what we've done is we've looked at the challenges Linus has had during their ramp-up and we've changed our design, we've changed some of our equipment selection. So they had a ramp up essentially of three years. We're assuming two years, even though we've funded for three years. But we're confident in two years off the back of the learnings that we've been able to learn from Linus' ramp up. It's always toughest for the one that goes first. So I would say there's lots of similarities. and nothing with our processing technology is particularly novel. The trick is how you bring it together in an integrated way and operate it in a very stable fashion. That is the challenge.

And also just adding on to that, we did not just look at lessons learned from Linus. We also looked at lessons learned from the lithium industry and other Rare Earth peers. So It has been a comprehensive focus on learning lessons from all that came before us. And it has had some significant value in how we design and how we put together our execution strategy.

Thanks Tommy. That's probably a good segue into the next question from Dave King. Firstly, I noticed that you said when the FIG flag drops and not if, but when. So thank you for that certainty. It's been a long time coming. So what, in regards to the EPC schedule, so you touched on the round-up of four months, but in terms of the actual schedule to completion of construction and commissioning, how confident are you in the commissioning efficiency? And then I think sort of where this question has been coming from is referencing, as you pointed out, Tommy, IDO taking three and a half years to ramp up to 50% of name play. You also had lines took a bit longer than anticipated. So can you elaborate on that for Dave?

Tommy, do you want to ask that? Yeah, sure. So on all our planning and all our engineering design, looking at all these lessons learned, that we got and incorporated into our plan, we're pretty confident in the construction, the way we see it at the moment, and the schedule that that will take, but also very confident in the commissioning because starting firstly with the people we have on board. The people we have on board, specifically in the hatch team, has been around the commissioning of hydromate facilities extensively. So this will not be the first time they go through this. And many of the lessons learned, these people have learned before. And because those individuals are involved, it's incorporated into the design, into the planning, into the schedule. So we're pretty confident that we're going to get the ramp up as we've planned it to way less than three years at this point.

We also have the benefit of AI and improved modelling rights. So just by way of something that Linus didn't have. So just by way of example, when you commission solvent extraction plant, it typically takes four to six weeks for every cycle. So you change your variable and you need to see the impact of that change in variable over four or six weeks. With the use of AI and improved digital models, you can start to see that trend inside a week. So there's tools available today that Lioness didn't have with their ramp up. And I'd like to think again, you know, one of the first roles that Tommy's recruiting for is a commissioning director. And now that is bizarre, right? So if you look at most projects, they don't recruit a commissioning director. Three years out from commissioning. Why are we doing it? Because we want to nail it. We will change our project schedule to bring parts of commissioning forward because we see that as the highest risk part of the ramp-up and we're planning for it, we're recruiting for it. Now...

Thanks, Tommy. Thanks, Daryl. So taking that into consideration, this question's coming from Dietrich George. When is the plant going to be operating and selling product?

Did you want to answer that Tommy?

So currently the planned construction dates, if we just take a very high level view of the schedule. So whenever FIT is called, four months after that construction will start. So the first four months is for mobilization and making sure we complete our competitive tendering process. And then the schedule is going to be around that 37-month mark. And then we're looking at commissioning, taking anywhere between that 12 and 24 months right after that with that additional 12 months of funded commission that we hope we will not need. So depending on when FID is called, if we do the maths, where does that take us? It's around 28, 29.

Thank you. Peter, this one's probably best directed to you. This is in terms of from James Frankenfeld. Looking at the specific numbers, the interest of $3.5 million for the quarter is is that satisfactory? The quakes are around 2.6%. It just seems quite right on. Would you be able to provide any comments on that?

Yeah, I think I'd have to check the numbers. I know I think the average rate that we have funds invested at was probably about 3.5% over that quarter and there's probably slightly better rates that we're achieving now. I think I'd have to Check through it. But I know on the schedule that we prepared as part of our board pack, those rates are fairly competitive that we're managing to secure.

Thank you. Next question is from Andrew Ballard. Hello, Daryl, Peter and Tommy. A question regarding the US government $300 million of support. Can you confirm the use of Phase 2 implementation, what that looks like in a way that in way of a possible secondary circuit for heavies only, or as in toll treating combination with Nolan's increased resource processing. Are management advanced in any discussions with third-party concentrate suppliers? And if so, can you provide some information regarding what the board would look like to see in phase two?

Yeah, so, Andrew, let me... Let me answer that, and Tommy P jump in, right? So there's a few things going on, right? So firstly, there's the additional heavy rare earths recovery and processing that to the heavy rare earths separated oxide. Then there is with flag phase two, and we've also flagged becoming a third-party processing hub. And those three projects are somewhat independent and there'll be different decision points on that. The most pressing one, though, is the additional heavy reverse oxides. which I mentioned because we want to get the best pricing, right, for our bundles, light and heavy rare earths. So we're doing that because we've got some commercial agency there. But the other two, we're in no rush to proceed with. They will be separate decision points. In terms of third-party feed, there's multiple sources for third-party feed, whether it's mineral sands, other rare earths projects. So I don't think there's a shortage of third-party feeds, but we haven't been engaging with any parties on that. our focus is getting this last off-take done so we can secure a fit and start constructing this thing.

In addition to that, what Darryl said does not mean we are not putting together a strategy and a plan to make sure that we position the company for a a regional processing hub or additional feed in the future. So what's happening at the moment is, as Daryl said, our focus is primarily on making sure we get FID for the NOLANS project and execute the NOLANS project. But in parallel, we are preparing shortly after FID, we will be moving on implementing a early stage study element to the project's portfolio, and that will provide the structure and the discipline to go through a traditional best practice study process to make sure that we develop the additional opportunities in phase, for example, a potential phase to a regional processing hub third party feed and how all of that fits together. We have to sit back and systemically prepare for that and then execute a proper process of studying the opportunities and make sure we find the best possible solution on how to unlock value from that.

Thanks Tommy, thanks Daryl. I'm going to apologise in advance if I get Jan's surname incorrect. but we have two questions all put together from Jan Suchiparak. Can you please comment on the general situation of Rare Earths in the current global development? Are there any major changes? And then can you please provide some comments in regards to how Arafura is received within the public space and more broadly the worldwide sort of Rare Earths space?

Yeah, so sure Jan. So just So I think in terms of developments, so firstly in the broader sector, so the pricing is a big one, right? So you can see we are getting this bifurcation in pricing. That's important. But it's important, I would say, that we don't stop there, that we ultimately move the sector onto an independent index that China doesn't control. If we get that, then it's going to be a lot easier to get these sorts of projects up. The second thing I would say is there's lots of projects out there that I guess are picking up on this Rare Earths momentum. In my view they're not well developed. They don't go to an oxide. They're putting out timelines that I would say may not be realistic. that would be short-cutting the pilot process testing, which is not what you want to do. So I think we are very, very well positioned because we took from day one an ex-China strategy. As part of that, we go to an oxide, which means you can bypass China. It means that the products that leave our site are radiation-free and we truly are construction-ready, right? So Peter's lined up the deck We've got most of the equity in place, two-thirds of the offtake in place. So the time is right, and I would argue the current circumstances has highlighted our unique strategy of going to an oxide as being the right ones, whereas all the other projects, bar one on the one, did not pursue an oxide project. So I think we're well positioned given everything that's happening.

So I think there's an increasing acknowledgement of where you see a project that's making a concentrate or a mixed rare earth carbonate and it relies on another party to recover their separated oxides. That's creating project on project risk and that's probably becoming better understood by off-takers at least, but also I think institutional investors as well. So I just probably... in terms of how Arafura is received in public. I think that's probably a nuance that perhaps 12 months ago was not well understood.

Also, in addition to that, it's not just project on project risk, but the risk of at any time, if you do not go from ore to oxide in any position in that process, you typically have to send your product to China and you break that ex-China contract. supply chain that you're trying to create and you become beholden to the China supply chain again. And that's where Arafura's competitive edge is in positioning us in the ore to oxide space which prevents that.

Thank you all. A couple of questions from Pete that I'm going to bunch together. So can you please clarify whether, I believe you've talked about previously a potential listing of ARU on the USA markets, whether that's via an ADR or OTC. Can you please update on that process and whether that's proceeding? And then separately, with now over 5 billion shares on issue, have you considered a share split or consolidation?

Yes, maybe let me talk. to those two things, no pity, jump in as well. So just in terms of the US listing, so we've obviously been able to pull in US investors, being only ASX listed. So we haven't seen it as a major barrier. However, on the assumption we secure a US off-take, that will give us a different profile in the US, and we're going to specifically reassess whether it does make sense to have a dual listing, just acknowledging that it does introduce additional burden and cost. You've got to weigh that up, but we will assess that off the back of any US offtake. Just on the second question, the share consolidation, yes, we are looking at that. I think we might have spoken to that last time. We think it probably does make sense to do that. The question is when is the right time to do that?

So on the US or dual listing, I suppose there's always catalysts for that. Probably retail investment is probably not the catalyst for it. Institutional investment is. We've found we've been able to secure US institutional investment without that dual listing, but other catalysts may be M&A activity with US assets or, as Darryl mentioned, the connection with a US customer. They're probably sort of touch points that we'll look at that might be triggers for considering that as we go.

Great. Thank you both. I'm going to pull together a couple of questions again from various shareholders.

Just before we do that, if you don't mind, Penny, we had the question about the interest and I was just quickly back calculating how that figure was calculated because I think the shareholder mentioned it looked like it was an implied rate of about 2.5%. It's actually our weighted average for funds invested is over 4.5%. I think the difference is that in the cash flow statement we're only showing interest as it's received not as it's accrued and that's why it probably looks like it's lower than than that 2.5%, right? Because it's only showing interest that is received on maturity or payment of interest on those facilities as they mature.

Okay, I'm sure that answers Frank and Phil's question well. As I was saying, I'll group a couple of questions together. It really is in regards to the final equity that's required. You have mentioned, Daryl, that you're more than 90% funded and that you have multiple pathways to the remaining equities. Can you provide some guidance as to what that may look like or as an existing shareholder what we should expect in terms of potential dilution?

Yeah, so look, there's a reason why I specifically said in the introduction that the main task for us to complete, to call fit, is the offtake. So to make sure that we get this offtake this quarter, We're pursuing multiple options that have implications on the equity. The most likely scenario is that they happen at the same time, but they may not. The equity may possibly come later. So I can't answer your question because we've got multiple options that have got different implications on the equity front, but ultimately it will go to a shareholder vote.

We've probably got time for two more questions as we head towards the 9.30 mark. Can you please provide some information in regards to renewable power plant at site and what is the company considering in this space?

Do you want to talk to that, Tommy?

Yeah, sure. So, We are definitely committed to our green energy process and also to introduce as much renewable energy into our portfolio as we can. So on the short term or in the short term, there's definitely a high focus on a solar facility. And as we move through the development of the project and as the project matures more and we start generating revenue, We're also looking at concentrated solar thermal power. We are looking at various different renewables to introduce into the power mix to make us more, to increase the green energy that we use way more. So there's definitely a plan and a strategy that will be implemented over the next couple of years starting out with solar.

And Tommy, you're well advanced on this independent power agreement, right? And that has modular power units, and you've done that right, so that you can bring in renewables. You can facilitate bringing in renewables. I think the target on day one is 10%, but I would be very surprised if we don't do better than that.

This question has come from and perhaps, Pete, you might also want to comment on this, given your connections to the market. As we all know, the current high demand for rare earths is largely due to China limiting production and processing capacity. If China suddenly decides to loosen the limitations and the market takes a dive, how would you survive such a scenario? And I think, Pete, perhaps if we look at that sort of short-term and longer-term supply demand constraints there that might be able to help drive some of that information?

So I think the China controls at the moment are really focused on heavy rare earths and that's impacting the supply that's available to the market. So there's not a lot of western supply of heavies and we're now seeing heavy rare earths for magnet feed materials like dysprosium and terbium at five to seven times prices outside of China compared to what's being charged in China. I'm not so sure if those premiums will remain at those points because whilst there is an overall supply challenge around heavies, because China has the same issues which is probably a driver for some of those export controls that have been put in place, as Western supply or processing capacity increases. There's probably the opportunity to create more supply there. So in terms of NDPR, there are not significant controls over NDPR exports at the moment. So that's not really the driver for pricing at the moment. Really, probably the pricing has been, you know, in our view, there's been policy, particularly around quotas and so on, that has kept pricing in check. What we have seen since the floor prices were introduced is the pricing has crept up to the pricing in China has moved up to more or less a line or a slight discount to that 110 floor price. That looks to be like sustainable pricing perhaps. We'll have to see. I think one of the key things to note is that on pricing, we always see that there is volatility there. We see the dominance of China in the supply chain and we've already touched on the fact that we have a phosphoric acid by-product. We've always had the clear intent to monetize that as a by-product rather than send it to waste and have to neutralize it, mainly because we know that gives us a cash cost production that is going to be lower than most of the Chinese producers, in particular the larger producers in China. So I suppose whilst it's not our preferred position, we do know we have a cost, cash cost advantage in an open market where we don't have government intervention in operations and so on. We can probably sustain a lower price for a longer period. So that's probably where we see our advantage in that we can be a lower cost producer because of that phosphoric acid product, which is a key differentiator. But in the overall scheme of things, we do see that the price of $110 a kilo is probably the pricing that's required for any new production that comes on stream, whether that be in China, outside of China, or a concentrate that's fed into China for processing. That's probably where we would see the natural point at which you need to incentivise new production.

Right. Thanks, Kate. So in short, sort of well positioned to be able to sustain any market volatility. Yeah. So with that, I'm now going to hand over to Daryl to close. But just before I do that, there are a number of questions that we haven't been able to get to. So we will look to respond directly to those post the call. But Daryl, one question that perhaps in your wrap-up you can respond to is, which has had multiple requests here, is really just reiterating on when that expectation is to be able to provide guidance on FID.

Yeah, no, we're completely aware that is the number one question. So, look, just firstly, just thank you again to everyone dialing in. and all the questions that were asked. We are, as I said, acutely aware that the number one thing you want us to achieve this quarter is calling fit. We are pursuing multiple options as hard as we can. The progress that we're making gives us a high degree of confidence that we will achieve that this quarter. So anyway, so thanks again for dialling in and thanks again for your questions. Have a great day.