A significant shareholder has reduced its stake in Arafura Rare Earths, marking a notable change in the company’s investor base. This move occurs as the Australian firm progresses with its flagship Nolans project and a substantial, multi-sourced financing package, against a backdrop of strong yearly share price performance.
A Key Shareholder Drops Below Reporting Threshold
Mitsubishi UFJ Financial Group is no longer classified as a substantial shareholder in Arafura Rare Earths. According to an ASX announcement released yesterday, the voting power of the Japanese financial conglomerate has fallen below the relevant 5% threshold.
This change was triggered by a series of transactions on December 17, executed by entities controlled by Morgan Stanley. The activities involved several share purchases, but were dominated by significantly larger sales of fully paid ordinary shares, coupled with the return of approximately 19.4 million borrowed shares.
Notably, Mitsubishi UFJ had only briefly crossed the reporting threshold on December 16, with a voting interest of 5.03%, equating to roughly 234 million shares. This interest was held indirectly, as Mitsubishi UFJ owns more than 20% of Morgan Stanley.
Key Details of the Exit:
– Cessation of substantial holder status: December 19
– Triggering transactions executed: December 17
– Primary activity: Extensive sales by Morgan Stanley-controlled units
– Additional action: Return of ~19.4 million borrowed shares
Robust Trading and Impressive Year-to-Date Gains
The shift in the share register has been accompanied by consistently high trading volumes, with daily turnover recently exceeding 57 million shares.
Despite periods of volatility, particularly surrounding a capital raise in October, Arafura’s stock has advanced more than 117% since the start of the year. This performance solidifies its position as one of the more prominent equities within the rare earths sector.
Should investors sell immediately? Or is it worth buying Arafura?
Nolans Project Nears Final Investment Decision
The shareholder changes come as Arafura advances toward a Final Investment Decision (FID) for its cornerstone Nolans project, currently targeted for the first quarter of 2026.
Located about 135 kilometers north of Alice Springs, Nolans is designed as an integrated “ore-to-oxide” rare earths processing facility. The plan outlines annual production of 4,440 tonnes of neodymium-praseodymium (NdPr) oxide over a projected 38-year mine life, aiming to supply approximately 4% of global demand for magnet materials used in electric vehicles and wind turbines.
Multi-Billion Dollar, Cross-Border Financing Package
To fund the Nolans development, Arafura has assembled a comprehensive, international financing structure valued at over A$1.35 billion.
- US EXIM Bank: Potential direct loan of up to $300 million
- Export Development Canada: Committed $300 million in senior debt
- Euler Hermes (Germany): $115 million in conditional loan guarantees
- Northern Australia Infrastructure Facility (NAIF): A$200 million commitment
- National Reconstruction Fund: A$200 million equity investment
Furthermore, an institutional placement completed in October 2025 raised an additional A$475 million at A$0.28 per share. This capital raise was led by Hancock Prospecting and involved the issuance of roughly 1.7 billion new shares, resulting in a 35–40% dilution for existing shareholders. The transaction significantly strengthened the company’s balance sheet.
Strategic Context and Forthcoming Catalysts
The withdrawal of Mitsubishi UFJ does not alter the global strategic imperative to secure supply chains for critical minerals, particularly as nations seek alternatives to Chinese dominance. Binding offtake agreements with Hyundai, Kia, and Siemens Gamesa for over 66% of Nolans’ planned output underscore the project’s strategic relevance.
In a show of confidence, company directors recently participated in the share purchase plan, acquiring stock at A$0.28 per share—a price approximately 30% above the prevailing market rate at the time.
Looking ahead, a near-term catalyst is the conversion of the US EXIM Bank’s “Letter of Interest” into a binding financial commitment. This milestone, alongside the pending FID, is expected to serve as the next critical test for Arafura’s equity trajectory.
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