PERTH (miningweekly.com) – German export credit agency Euler Hermes Aktiengesellschaft has provided rare earths developer Arafura Rare Earths a non-binding letter of in-principle support for an untied loan guarantee of up to $600-million to support the Nolans project, in the Northern Territory.

The untied loan guarantee of $600-million is non-binding, indicative only and if approved, the guarantee will be conditional on Arafura entering into offtake agreements with Germany-based companies, and the corresponding quantities of neodymium praseodymium (NdPr) products ultimately being processed in Germany into permanent magnets or powertrains.

Any final guarantee amount will be determined with reference to the offtake volume processed in Germany, final offtake structures with German companies and NdPr market conditions at the time.

Arafura told shareholders on Wednesday that if the Euler Hermes and Northern Australia Infrastructure Facility (NAIF) facilities were formalised and implemented, they would form a meaningful component of the broader debt facilities being progressed with Export Finance Australia (EFA), commercial banks and other international export credit agencies in relation to Nolans.

“The Nolans project closely aligns with global customers’ critical raw material diversification plans and their environmental and social governance priorities. Support from Australian and international export credit agencies is a direct reflection of the value this represents,” said Arafura MD Gavin Lockyer.

“We look forward to close ongoing relationships with Euler Hermes, EFA and NAIF as we continue to progress offtake negotiations and the project moves through its next critical phases toward full funding, construction and first production.”

Capital costs to develop Nolans have been estimated at A$1.39-billion pre-production, and a A$196-million contingency, with the project expected to produce 4 440 t of NdPr oxide over a mine life of 38 years.

Operating costs have been estimated at A$61.60/kg of NdPr.