Good morning, and welcome to the 2026 Annual General Meeting of Arafura Rare Earths Limited, which is being held as a hybrid meeting with shareholders joining us both online and in the room here today. It is now 11:00 A.M. Western Standard Time, the appointed time for holding the meeting. I am advised that necessary quorum is present. I therefore declare the annual general meeting open. My name is Mark Southey, and I am the Chair of Arafura. Firstly, I would like to introduce you to the rare earths board. Here on my right-hand side, we have Cathy Moises, Non-Executive Director. Mike Spreadborough, Non-Executive Director. Roger Higgins, Non-Executive Director. Ian Murray, Non-Executive Director. Darryl Cuzzubbo, Managing Director. Catherine Huynh, Company Secretary. Present with me today are also the senior management team and representatives from our company lawyers, JWS. The company's auditors, BDO.
The company share registry, MUFG Corporate Markets. Before we proceed with the meeting, I have a couple of quick housekeeping points. I would appreciate if all mobile phones could be turned to silent mode. Recording devices and cameras must not be used during the meeting. In the event of an emergency, please follow the emergency exit signs and the instructions of the venue staff. At the conclusion of the formal meeting, our Managing Director and Chief Executive Officer, Darryl Cuzzubbo, will address the meeting. There will be an opportunity for questions following his presentation. I do ask that any questions not relating to the resolutions being presented at this time. Before we move to the formal part of the meeting, I would like to take the opportunity to address all shareholders here today. The last financial year has been a defining year for Arafura.
Let me recap some of the highlights from the past year. We secured a AUD 200 million investment with the National Reconstruction Fund. We secured a EUR 50 million investment from the German Raw Materials Fund. We secured a $100 million investment from Export Finance Australia. We were recognized as a priority project by the federal government in October last year at the time of signing the historic U.S.-Australia Critical Minerals Framework. Importantly, we were the very first offtake agreement to be considered under the Australian Critical Minerals Strategic Reserve. The culmination of these factors underpinned our announcement of reaching a final investment decision in May this year. Subsequently, we were announced as the first significant project under the Northern Territory Coordinator Act.
In addition, we advanced our customer offtake agreements, resulting in more than 80% of our nameplate production now committed through binding offtake and term sheets with customers spanning the globe. Following FID, we swiftly transitioned into ramp-up to support the September 2026 commencement of construction. Indeed, last month, we commenced construction, starting with site access works and the restatement and commissioning of camp facilities. Just two weeks ago, together with the Anmatjere community, federal and territory government, and representatives of stakeholders, we recognized the collective achievements of our company over the years with a formal groundbreaking ceremony. It has been a very productive year. Arafura could not have reached these milestones had we not remained disciplined in our approach, believed in our strategy, and set about strengthening the platform that would allow Nolans to move from development towards delivery.
It's also important to acknowledge the support Arafura's received from the federal government, the Northern Territory government, and the longstanding partnership with the traditional owners. With all that in place, we've now started creating a physical asset that will operate for at least 38 years and beyond, and one that creates an enduring legacy. It will be a nation-building asset for Australia, the Northern Territory, and Central Australia, and of course, for Australia's role in the global rare earths industry. At a macro level, the global strategic importance of Nolans continues to be reinforced. Export controls and interventions by major governments over the past 12 months continue to underline the risks of concentrated supply and sustained policy focus on critical minerals.
In recent months, geopolitical attention has been diverted away from some of the most pressing and critical supply chain issues which we've seen translate into lower share market valuations across the board in the critical minerals sector. We believe this is a temporary phenomenon, as NdPr prices have held remarkably firm, well above those underpinning the Nolans business case. Arafura's successful move to non-Asian market pricing through strategic offtake agreements will be an industry game changer and challenge the existing opaque pricing mechanisms undermining rare earths production in the past. In the early 2000s, Arafura's early pioneers had the conviction to explore and the patience to persist and the vision to believe that one day Nolans would be a major player. That determination lives on. We recognize that we operate in an evolving sector, and we need to be agile and adaptable.
That continued value creation lies in innovation and growth optionality. Arafura will deliver on both. We're building a scalable asset with a flexible process design that has the potential to position Nolans as a central processing hub for other Australian rare earth producers, and we're continuing ongoing studies that target the increased recovery of heavy rare earths, heavies, and their separation. To our shareholders, we acknowledge the trust you placed in the board and the organization. Our long-term shareholders have supported this company through the highs and lows of a very volatile sector and kept faith in the long-term opportunity. Whilst we cannot control the macroeconomic environment in which we operate, an environment that's equally impacted our share price and that of our peers, we can remain laser-focused in execution discipline, deepening strategic partnerships, and progressing the safe delivery of Nolans.
Much of the value creation opportunity now lies ahead for shareholders rather than behind us. With only two other ore-to-oxide projects developed over the past 30 years outside of China, the major inflection point for value realization is the creation of the Nolans asset itself. As I close out my tenure with Arafura, I feel it poignant to reflect on how far we've come as an organization, on the challenges we've had to face, on the resilience and persistence required to establish the foundations on which we now transition into construction. As I reflect on my time, I do so with pride and excitement for the future of this organization, and most importantly, with gratitude to my fellow board members and the Arafura team. It's been an absolute privilege to navigate these challenges and conclude my tenure with what has been a truly transformational year.
As announced earlier today, it's my pleasure to welcome Ian Murray to the role as your new chair. I'll invite Ian to introduce himself in a moment when I finish my address. With Ian's experience, I'm confident that together with Darryl and the board, they will lead and support the Arafura team through the complex work ahead. I say that with confidence, knowing that together we've built a capable organization that has a clear plan for value creation. Nolans is a multigenerational operation that will deliver tangible social, cultural, and economic benefits. That's what comes next, the delivery. Turning that vision into reality and creating long-term value. Thank you again for the opportunity and the privilege to serve as your chair. It has been an honor. Ian, would you like to say a few words?
Thank you, Mark. Thank you for allowing me to talk, Mark. It's with great honor and responsibility that I assume the role of chairman at such a pivotal time in the company's journey. I would like to start by acknowledging Mark's leadership over the past eight years and the commitment he has carried to the vision and foresight of the pioneers before him. Collectively, you have established a solid foundation on which we continue to grow this company. As incoming chair, I'm committed to seeing this project successfully through construction and commissioning and safely into operation. I will focus on ensuring the board works effectively, collectively, and constructively, providing strong oversight and clear strategic direction to support the outcomes in the interest of all of our stakeholders.
I bring with me the experiences learned across multiple jurisdictions and commodities, and most recently, steering Gold Road Resources through its transformation into a major gold producer. I understand how important all our stakeholders are. The deep appreciation for the importance of the country and the communities in which we operate. Developing a project of this scale in a remote location is never easy. There will be logistical, technical, and commercial challenges all along the way. Challenges that we will approach with discipline, careful decision-making, and resolve. The board recognizes that many shareholders have supported Arafura for years and are understandably eager to see that this commitment translates into value for you. I thank you for your patience and your continued support. While we cannot control the market forces affecting our sector, we can control how we execute.
Our responsibility is to remain focused on the delivery and the decision that will strengthen the company over the long term. As stewards of your capital, we will maintain discipline across safety, cost, and schedule. Responsibly delivering against our commitments is the most effective way to create enduring shareholder value. There's much work ahead, but our priorities are clear. Deliver Nolans safely, responsibly, and efficiently. Maintain strong governance and financial discipline, and respect and preserve the strategic relationships and partnerships that have enabled us to reach the final investment decisions and commence construction. Building on the vision and foundations established by our outgoing chair, we must bring the same discipline, tenacity, and spirit of partnership in turning this opportunity into a successful operation. I look forward to continuing working with you alongside our people, our traditional owners, and other partners as we turn this vision into reality.
Thank you very much, Mark, and I look forward to catching up with you all after the end of formal proceedings. Thank you.
Thank you, Ian. We will now proceed with the formal business of the meeting. I need to go through some procedural information here. The notice of meeting dated 21st of September 2026, together with an explanatory memorandum, is circulated to shareholders and contains certain resolutions. Unless there are any objections, I propose to take the notice of meeting as being read. Before moving to the various resolutions to be considered today, I now briefly outline the procedures for today's meeting.
When you registered for today's meeting, you should have been given either a yellow, blue, or red attendee card. If you have not received this card, then please go to the registration desk outside the meeting. If you have a yellow voting card, you are a voting shareholder, proxy holder, or corporate representative. You have chosen to vote using a paper voting card. You are entitled to speak at this meeting.
If you have a blue card, you are a non-voting shareholder. While you are entitled to ask questions and make comments, you are not entitled to vote at this meeting. If you have a red card, you are a visitor and not entitled to speak or vote at this meeting. If anyone with a yellow or blue card wishes to speak, identify yourself to me at the appropriate time before asking me your question. Shareholders were encouraged to submit their questions before the meeting. For those who have submitted their questions, I will read these out at the relevant resolution and answer them where appropriate. For those shareholders attending via the online platform today, if we experience any technical issues today, a short recess or an adjournment may be required, depending on the number of shareholders affected. If this occurs, we will advise you accordingly.
For those shareholders attending the meeting online, please follow the virtual meeting online guide via the link on your screen to, A, register for a voting card to cast your votes online. To vote via the web, click on the Get A Voting Card button at the top of your screen in the following box. B, ask the question or make comments on the company. Out of fairness to everyone present, I ask that you limit your questions to one at a time and also restrict your questions and comments to the resolutions being considered. I reserve the right as chair to rule questions not pertaining to the AGM in or out of order. There are some shareholders present at the meeting today who have not submitted their votes by proxy, and as a matter of good corporate governance, the company will conduct a poll for all resolutions.
Voting the resolutions by poll will provide transparency to ensure the intentions of those attending the meeting, as well as those who have voted by proxy, are reflected in the result for each resolution. The result of the polls will be declared and released to the ASX later today. I will read out each resolution and then ask shareholders whether they have any questions in relation to each resolution. If you have a question, please state your name in full and affiliation, and put your question to me as chairperson. Please note that only shareholders that have a yellow voting card or blue non-voting card are able to ask questions at this meeting. I may ask the appropriate person to respond to your question. We will present the proxy results for each resolution.
At the conclusion of the process, I will ask the Company Secretary to provide instructions for the conduct of the poll for all seven resolutions presented in the notice of meeting. We will discuss each resolution in turn. Please keep questions about specific resolutions until the time we consider the resolution. At the conclusion of the resolutions being discussed and the tabling of proxy votes, all resolutions will be put to the poll. We have received a number of questions for the AGM. For those that are directly related to the proposed resolutions, we will address them with the related resolutions. The others will be addressed in the Managing Director's presentation, which we will defer this to the conclusion of the AGM. Just moving on. Financial report. Although not formally required as a resolution, it is customary to present at the AGM of the company's financial report.
The 2026 annual report contains the financial report, Directors' Report, and Independent Auditors' Report. A copy of the annual report is available on the company's website, and a hard copy was sent to those shareholders who requested it. The financial statements have been approved by the Directors and auditors. I will take the reports as received and as read. Questions may be asked of the auditors in relation to the conduct of the audit, conduct of the audit report, accounting policies adopted by the company, and the independent auditor in carrying out the audit. Are there any questions regarding the company's financial report? So there being no questions, I will move on to first resolution. Resolution one, the remuneration report. The resolution and summary of proxies received is displayed on the screen. I propose the motion from specific proxies that I hold as the Chair of the meeting.
Is there any discussion in respect of the motion?
Rob McGinley, shareholder. Mr. Chairman, referencing annex C of the notice of the meeting regarding the vesting conditions for the Managing Director's performance rights. I note that 100% of the 3.7 million is based solely on the relative total shareholder return against a peer group. There is no operational milestone attached to this package. If the whole rare earth sector crashes further, but we crash less, these rights can still vest even if the project is severely delayed. Why hasn't the board linked these rewards to actual project milestones like first production, so leadership only gets rewarded when the mine is actually worked?
Yeah. If you read through the remuneration report, we're in that transition away from kind of remunerating the executive teams we've done in the past to going forwards from FY 2027. You'll see the structure is changing to a short-term incentive program that we'll set every year based on milestones for that year, which will move as the project moves. Then behind that, we're putting in place a long-term incentive, which is based on shareholder relative value. So we're really putting the pressure on the executive team to grow value in the shareholding of Arafura in line with the general market. We want to see our performance outdo other peers in the organization. So that's all laid out in the remuneration report.
You also see in the remuneration report the basket of companies that we put in there, and you'll also see that we've split that relative between a peer group, and we've also used an index case to really push executive remuneration focused on long-term shareholder value. So if we don't perform as well as our peers, the executive team lose out its long-term incentives. We think that's the best structure, and we've used, as you've read in the remuneration report, independent consultants, Godfrey, to help us with our-
I'd just add just a little bit to your question as well. You said the project's not delivered. If you look at the short-term incentive, it is 100% focused on delivering hard outcomes that unlock shareholder value. So if you look at the scheme, there's both. We've got to perform well to our peers, and we've got to deliver. To your question, if we don't deliver, we will not perform well with our peers, and we don't get short-term. This is not just for me; this is for the team. I think if you look at it holistically, we very deliberately made sure that it's linked to shareholder value.
Are there any other questions from the floor regarding this resolution? Catherine, are there any other questions online, Company Secretary ?
We've received none online, but we did receive a question prior to the meeting. The question comes from shareholder Gavin Lockyer in relation to the remuneration report. It basically says, "What justification does the remuneration committee have for the salary and incentive schemes that have been awarded to management?" This question should go to Mike Spreadborough as chair of the People, Remuneration and Nomination Committee.
It's a very similar response to some of the questions, some of the answers we've talked about. Coming back, the first thing to really note is we have used Godfrey Remuneration Group to do an independent review of our benchmarks and executive remuneration. That's really important for the board to set that independent group, particularly given the business has now got a different scale and complexity going forward. As you've seen in the remuneration report, we did change the remuneration approach using those benchmarks, and it's important that the remuneration approach is focused on our strategic objectives going forwards. We've had that external guidance, as we've just talked about. It is consistent with our industry peers, so that's important. We see that program moving forwards.
If you recall the previous program, the Nolans Success Plan, we've moved away from that because the business is very different and we're very deliberately, as we just talked about, moving to a contemporary short-term, long-term incentive programs for our executive teams. That's important to us because we can link those incentives, as Darryl talked about, to the business outcomes of the year in the short-term incentive and in the long-term incentives based on shareholder value. It's worth mentioning that each year when we set those short-term incentives, we award the performance based on achieving the objectives. Even in FY 2026, if you read the remuneration report, you'll see the executive team didn't receive 100% of their short-term incentives because some of the milestones were missed. The board is very focused on being disciplined.
I think that's really important, linking the shareholder performance in the long-term and short-term incentives. I hope that answers the question and actually extends a little bit more on the question we've just had.
Thank you, Mike. Are there any further questions, Catherine?
No.
On that subject. There being no further discussion, I put the resolution to a poll, which will be taken once all resolutions have been tabled at the meet. Now move on to resolution 2, the issue of shares to Export Finance Australia. The resolution and summary of proxies received is displayed on the screen. Is there any discussion in respect to the motion? Any questions around the resolution in the room? Anything submitted online, Catherine?
Nothing submitted prior and nothing online.
So there being no further discussion, I put the resolution to a poll which will be taken once all the resolutions have been tabled at the meeting. Resolution 3, the issue of shares to Kreditanstalt für Wiederaufbau, otherwise known as KfW. Resolution and summary of proxies received is displayed on the screen. I propose the motion from specific proxies that I hold as Chair of the meeting. Is there any discussion in respect to the motion? Are there any questions regarding the resolution as well? Catherine, anything submitted online?
Nothing received prior and nothing online.
Okay. So there being no further discussion, I put the resolution to a poll which will be taken once all resolutions have been tabled at the meeting. That brings us to resolution 4, the issue of a convertible note to the National Reconstruction Fund Corporation. The resolution and summary of proxies received is displayed on the screen. I propose the motion from specific proxies that I hold as Chair of the meeting. Is there any discussion in respect to the motion?
Yeah, Mr. Chair, again, Ronald Finley, shareholder. Referencing the explanatory memorandum for resolutions 2, 3 and 4 regarding the certainty of funding. If we approve these items today, we are authorizing the potential issuance of over 1.3 billion new shares to sovereign entities. The memorandum states that this package is expected to be sufficient. Given the history of multimillion-dollar cost blowouts in the sector, what specific percentage contingency buffer is built into this AUD 429 million capital package? Can the board look us in the eye today and guarantee that this is the final equity dilution event required to reach nameplate production?
Thank you for your question.
Yeah. Part of your question goes to the resolution, part of your question is probably better answered if I can by giving you the update. Let me just answer the part that relates to the resolution, but your broader question is a question that many shareholders absolutely must ask simply. But to, as it pertains to resolution. We had a very robust capital estimate. It was based on many years of engineering and testing the market, et cetera. This resolution with the National Reconstruction Fund is an important part of getting to a fully funded solution. Passing this resolution enables us to get to that fully resolution. If you look at the pricing and the convertible price, we think it is quite attractive terms, recognizing that we want to minimize shareholder dilution. If you look at the convertible note terms, I think it is AUD 0.46 .
AUD 0.476.
AUD 0.476 . You can see that is well above where the share price has been during the day. I would like to think this is recognizing our push to get a fully funded solution that minimizes dilution to shareholders. In terms of that CapEx question and charges, I will talk to that in my presentation.
Are there any other questions from the floor? Any online, Catherine, with that resolution?
Nothing prior and nothing online.
There being no further discussion, I put the resolution to a poll which will be taken once all resolutions have been tabled at the meeting. Next resolution 5, is the re-election of Michael Spreadborough as the director. The resolution and summary of proxies received is displayed on the screen. I propose the motion from specific proxies that I hold as chair of the meeting. Is there any discussion in respect of this motion? Are there any questions regarding the resolution in the room? Catherine, is there anything submitted online?
Nothing.
There being no further discussion, I put the resolution to a poll, which will be taken once all the resolutions have been taken at the meeting. Brings us to resolution 6, renewed approval to issue securities under the incentive plan. The resolution and summary of proxies received is displayed on the screen. I propose the motion from specific proxies that I hold as the chair of the meeting. Is there any discussion in respect of the motion? Are there any questions regarding the resolution in the room? Catherine?
There are no questions virtually, prior and nothing online, yes.
There being no further discussion, I put the resolution to a poll, which will be taken once all resolutions have been tabled at the meeting. This brings us to resolution 7, issue of performance rights to Mr. Darryl Cuzzubbo. The resolution and summary of proxies received is displayed on the screen. I propose the motion from specific proxies that I hold as chair of the meeting. Is there any discussion in respect of the motion? Are there any questions regarding the resolution in the room?
Thank you again, Mr. Chair. Robin Ginn, shareholder. Let's call a spade a spade. Under your relative TSR scheme, if the rare earth sector crashes by 50% but Arafura crashes by 40%, the Managing Director technically outperforms his peers. This means that his 3.7 million performance rights will vest, and he will receive a multimillion-dollar stock bonus while we shareholders lose half our money and the mine isn't even built. To follow up my question to the board is simple: How can you legally and morally define outperforming a crashing market as a success worthy of a bonus before a single earner? I am voting my shares firmly against resolution 7, and I urge every independent holder in this room to do exactly the same.
This is a good question. Well, I can start. Here we have an issue is that we cannot control the macroeconomic environment that we live in, but we can control the performance of Arafura and in support of our shareholders that are invested in Arafura. So as an investor in that sector, if the performance is from a relative TSR point of view, exactly that, performance of other companies in general, that would be preferential. We believe that would be preferential for our shareholder position than to be penalized by the performance of that sector. As such, to drive that performance of Arafura amongst its peers to be the best it can be amongst its peers, we believe is on the guidance we've also had from external review and support from our REM review partners there.
We believe that in a complex world where we do not always understand the macro environment, this is the best way to deal with this risk.
Two things. The peer group, as we talked about before, has been specifically chosen to match that complexity and the type of business we have with Arafura. If you look at that things, there's other complex lithium producers, et cetera, in the peers. So we tried to make for like. The other one quite clearly outlined in the thing is the board has discretion at the end of the day on how we award the incentives. You also see in the remuneration report, we've actually incorporated some clawback mechanisms that provides us that opportunity should we award something and something happens, we've got some opportunities. So this is really, go back to the previous comment. We've spent a lot of time to build a contemporary, modern incentive program, short-term, long-term, with all of those mechanisms that people would like to see.
It's really, as Mark said, related to that performance on our peers. We think that's you're investing in Arafura to outdo your peers in that sector.
Are there any other questions from the floor?
Harry Anstee, shareholder. It is a point of clarification, perhaps more so than relating to the specific resolution. There has been a lot of questions today about the dilution of our shareholding and
Harry Anstee, can I just stop you there? You will have an opportunity to ask questions that are non-specific to the resolution.
It is the absence of a resolution 8, which is the usual renewal of Listing Rule 7.1, which is of concern. Does this mean that the board recognize the concerns of shareholders by not seeking renewal of that right, or does it mean that that has been swept under the carpet, so it is not a contentious issue today?
Okay. Look, I think we will need to come back to talk to that because we are talking about a resolution that does not appear.
Understood.
But we will not forget your question. Yeah.
No, because it may influence our voting.
So your question's in relation to the 15% that you can-
Yes.
Yeah. Okay.
It doesn't require a shareholder vote.
We will address that once we close the formal part of the meeting for resolutions. I understand your question.
Because you've left shareholders with no option.
Okay. Are there any other questions from the floor related to this resolution? Nothing? Questions online?
Nothing online and nothing.
Okay. There being no further discussion, I will put the resolution to a poll, which will now be taken. The procedure for the poll, I direct that a poll be taken in respect of all resolutions. Persons entitled to vote on this poll are all shareholders, representatives, and attorneys, and attorneys of shareholders and proxy holders who hold the yellow voting card. If you appear in one or more of those capacities, you will be issued with many yellow voting cards as you have separate capacities. If there are any aspects regarding the voting on which you are uncertain, please do not hesitate to ask the share registry staff who are circulating the ballot boxes. Shareholders and proxy holders are now asked to complete the ballot paper. A representative from the share registry will then collect the papers and will be verified against the register of voters.
You please indicate by raising your hand if you require more time to complete and lodge your voting paper. Have all the persons intending to vote, voted? Any other voting intentions left in the room? Okay, it appears that is now completed. I will therefore declare the poll closed, and the results of the poll will be announced to the ASX following the meeting. Ladies and gentlemen, that brings us to the end of the formal business of the meeting. Thank you for your attendance today, and thank you for your support as a shareholder. I now declare this meeting closed at 11:39 A.M. Now, here is your opportunity. Darryl Cuzzubbo will now provide an update to shareholders on the company's activities.
Firstly, again, thank you for everyone that has been here in person, and online, and thank you again for your long-term support. I am going to give you a bit of an update, and normally we give you a bit of an update at our AGM and also at our quarterly. We are going to release our quarterly next week, so we are going to give you a bit more of a comprehensive update given that. But before I do, I just want to recognize and thank Mark Southey, who has been our chair for eight years. When Mark became chair, the value of the company was AUD 30 million. It is one-thirtieth of what it is today. We did not really have a differentiation strategy. We did not have a funding strategy. Mark very methodically sought out to strengthen the board, strengthen the management team.
Not only did he perform as a chair, but Mark with his project expertise also not just helped get us to a fit, but helped make sure that from a project execution perspective, we are ready to deliver what is a complex and large project. Mark, I just want to thank you on behalf of the board, on behalf of the company, but also personally. Mark has always been available.
Yes
And has offered a lot of counsel. We will miss you, and we wish you the very, very best.
Thank you.
Also want to thank Peter Sherrington. Peter has been our CFO for nearly 18 years. If you look globally, we are different to pretty much every other rare earths project because we have gone all to oxide. You have got to ask the question, why have the others not done that? The others have not done that because it is very difficult to get funding all the way to an oxide. Normally, the CFOs stop you from doing that.
Peter not only stopped us from doing that, he came up with a strategy to do it, and he has delivered on that strategy. Thank you, Peter, for the strategic insight. This has also come at a personal cost as well. Something like this just does not happen because it is a great idea. If you are in on a Friday night, who do you see in the office? Peter.
If you are in on a weekend, who do you see in the office? Peter. Peter is the guy that is also doing late-night calls into Europe. This did not just happen because it is a great idea and there was commitment. It came with commitment and sacrifice. Peter, I just want to recognize you for that. We would not be here today if it was not for Peter's, I sometimes say tenacity, sometimes I say stubbornness. I would like to welcome Ian. Since Ian has come on the board, Ian has spent a lot of time understanding the company, understanding the rare earth sector. It says something about the strength of the board, the bench strength of the board when you go internally and externally for a very critical period for this organization, and the best candidate is Ian.
Ian, thank you and very much looking forward to working with you in your new capacity. Let me jump into a bit of an update. Please note our standard disclaimer slide. The last 12 months has felt like three years. Let us just quickly go through what has been achieved. We secured AUD 200 million with the National Reconstruction Fund. We were only the second project to have secured funding since the creation of the NRF, and we are the most significant. We secured EUR 50 million through the German Raw Materials Fund, and again, we were the second project to have secured that, with the first being a German project. We secured $100 million with Export Finance Australia, the first project to ever secure equity from EFA.
When you are the first or the second, again, this just does not happen except with a lot of effort. As you know, we got a $300 million letter of interest from the U.S. Ex-Im Bank of debt, and that is on top of the debt stack that we need as part of our fully funded solution. Last October, we were designated as a priority project, one of two under the U.S.-Australia Critical Minerals Framework. That just does not happen. We are the first project to be declared a significant project with the Northern Territory. From an offtake perspective, we need to have 80% of our offtakes locked in by the time the debt draw down to about 12 months. You can see, if you add up the numbers, we are actually above 80%, so we are in a very, very good place.
Just mindful that we are switching volumes as much as we can from the Asian Metal Index to the independent and transparent Seaborne Index that was only created 12 months ago. 12 months ago, we will end up somewhere between 45% and 55% of our volumes on this new index. No way in the world did I think we would be able to get that far on a new index that was only created 12 months ago. More recently in May, we were mentioned as part of the Australian Critical Minerals Strategic Reserve, and again, the first to receive an offtake under the Australian government's new strategic reserve. That then gave us the confidence to call FID on the 21st of May. We said we would start construction four months later, and we started construction in September. It really has been an incredible year.
If I just move on to the next slide. We recently had our groundbreaking that Mark referred to a couple of weeks ago. What was very prevalent was the amount of support that we have and the significance. So from the traditional owners. Our traditional owners are the Anmatjere people. Nearly 500 people asked to turn out. 60 people turned up. They have been long waiting for this project to get up as well. We very much appreciate their support, and we do not take it for granted. We had federal members turn up, including the Resource Minister King, and we had the Tourism and Trade Minister and Senator Don Farrell turn up as well. We had quite a contingent from the Northern Territory government. We had the Chief Minister, Lia Finocchiaro, turn up, the Mining Minister, as well as the Treasurer.
It is very well-supported. Over 120 people came to what was quite a remote site, with one of our customers traveling 35 hours one way to get there. The support was very, very evident at groundbreaking. What was also recognized, this is a project. This is the largest mining investment ever in the NT. It is Australia's first ore-to-oxide project, and it is of global significance, where we will be feeding rare earths into four of the five manufacturing global powerhouses outside of China. Just move to the next slide. Now, construction. We announced FID, as I mentioned, on the 21st of May. The first thing that we did was just reestablish the site, get the camp facilities up and running, recommission the water pipeline, et cetera. The first construction was getting site access off the Stuart Highway.
The first main contract that we will be awarding in a matter of weeks is the bulk earthworks, and you need to bring heavy equipment off the Stuart Highway on site. That is why that was the first works. We have put out to tender over AUD 700 million. We have done that, and Ron, this goes a little bit to your question, but I will answer it better later. We said over a year ago that we would go out to competitive tender, and that is why there is a four-month gap between announcing FID and starting construction. We have put out over AUD 700 million of tender to get competitive pricing, but you always need time to negotiate. That is why we are pushing this out rapidly to get the best possible pricing for both our equipment and services.
We have also secured long lead items as part of early works, and we are awarding in a matter of weeks some additional long lead items to protect our schedule. I will just move to the next slide. I mentioned it previously. If you look at the last 18 months, we have gone from a management team, a study team, to an experienced execution team. From a board perspective, we have bolstered the board in terms of operational and project expertise. We are ready. Late last year, we appointed Hatch to our EPCM. Two reasons. Their knowledge around the hydromet circuit, I think, is second to none. We also, there is a continuity of accountability and ownership by giving them the EPCM when they own the engineering. We have got accountability all the way from engineering, all the way into commissioning. Just next slide.
Just some pictures. The top two pictures on the top there to the left is the works around the Stuart Highway. Again, that safe access to site of the Stuart Highway. Then you can see we've got camp facilities for around 250 people that have been raised. We actually got people in those facilities today. That's all great. So much has been achieved in the last 12 months. We finally got into construction, but you don't see it in our share price, and this has been frustrating to us, as it has no doubt to many of you. If you look at the graph, and we are the light blue line on the graph. We have moved with the general rare earth sector.
Market attention has come off the rare earth sector, which has hurt us and has hurt others in the rare earth sector, including the producers, Mountain Pass, Lynas as well. The two exceptions that you can see on the graph there is, one, Lindian that's moving to the concentrate production at the end of this calendar year. Then the second one is Meteoric that is subject to a takeover from Lynas. We've moved with the rest of this sector. It doesn't make sense given that the structural challenges of having a reliable source of rare earth is the same today as it was a year ago, as it was two years ago. We would like to think that disconnect in the market will be corrected. However, what can we do about that? There are three things that we are doing and will continue to do.
One, as already mentioned, delivering this project. That is the thing that will deliver more shareholder value than anything else. As Ian said, this is a difficult project in a remote area. It requires 100% of our focus to pull it off. This is our number one priority. This is the number one way we deliver long-term shareholder value. Second thing that we are doing is getting in front of new and existing investors and just reminding why we're different. We're an alternative supply chain because we produce oxide. We sit on a very large ore body and at the bottom of the cost curve, and we're the only ore-to-oxide project globally that is in construction. As attention turns back to the market, that will be driven by some macroeconomic catalyst, we get a disproportionate benefit from that.
The third thing is, whilst Nolans phase one has to be our primary focus, the value of the company is more than Nolans phase one. We've got growth options that I will talk to later that we've previously shared. We share your frustration. We think it is a disconnect in the market. Our market cap equals the amount of money we've got in the bank, which is, I'm going to say ridiculous. I need to say I'm not your financial advisor, so this is as a person speaking here, but clearly, there is a disconnect. Supply issues in the market have not been addressed. It will take years to address them. You can see that there will have to be some catalyst that will bring market attention back. Let me move on.
When the market reacts, why does it react so strongly when the market sees that there is a potential supply disruption? This slide shows that. You cannot make electronics, EVs, wind turbines, robotics, military equipment without rare earths. You look at the demand drivers for rare earths, they are strong for at least the next three decades. What other commodity can you say that about? I would argue there is another emerging theme here. You get different supply-demand curves from different companies, and they are very hard to predict. What is easy to predict is the signs of a structural supply deficit. If you look at the demand drivers, so EVs and robotics as an example, the demand on those thematics is increasing. Robotics particularly is not a linear demand curve. It is exponential. That tends to lead to an under-representation of a growth in demand.
You look at the supply side. The supply side is based on projects coming online in time frames that have never been delivered historically. If the supply is not going to come online as quickly and demand is increasing and continues to increase, this is why we think there are signs of a supply structural deficit. Then you say, "Well, what happens then?" We will move into a very different pricing regime. Why do I say that? You look at the biggest driver of rare earths demand, it is currently EVs, will ultimately become robotics. What is the alternative to a rare earth magnet in EVs? It is a synchronous or induction motor. If you go with that, you need a battery that is 15% to 20% bigger. That is at least another $1,000 per car to give you the range.
How much does rare earths cost for electric vehicles and a traction motor? About $110. You can see from a substitution risk, there is a lot of headroom on the current pricing before you have commercial substitution risk on the primary rare earths driver. Let me move to the next slide. Many of you have supported us for many years, but you are not alone. If you look at all the rare earths projects globally, I would contend there is none that have the same amount of multi-government support that we have got. If you look at the debt side, the export credit agency support, we have got debt from Australia, Canada, Korea, Germany, U.S. In terms of equity, we have got equity from the German government, from the Australian government. We are dealing with allied countries that have bilateral policies.
In terms of offtake, we have got offtake under the Australian Critical Minerals Strategic Reserve. We have got offtake going into Korea, Germany, actually Europe, U.S., and more recently, India. If you look at the producers, the two producers, Mountain Pass are largely locked into the U.S. If you look at Lynas, it is largely locked into Japan. We have got supply going into four out of the five global manufacturing powerhouses outside of China. No one else has that. We have got a lot of support to progress us through execution. This is the price curve. Again, we talked about the share price. The share price has been a disconnect to the NdPr price. Normally, the two are correlated, and you would expect that.
Since the U.S. government put in support for Mountain Pass with a floor price of $110 , you can see that the Asian Metal Index pricing has been somewhat range-bound between $100 and $120. What the U.S. has done has been a very effective tool that has essentially approximately doubled the price of NdPr. The other curve here in the light bluey-gray is the Seaborne independent transparent index of Benchmark Mineral Intelligence, which we see very deliberately putting our volumes on. You can see that the two have tended to move within $10 a kilo of each other. But the reason we are pushing to get as much volumes onto this independent index is so that investors, yourselves, can be confident that pricing will only be driven by market fundamentals. That is why it is so important to us. Let me move on.
I know there has been quite a few questions from shareholders about funding. When does the funding become available? Are we truly fully funded? Let me talk to that for a minute. On the right-hand side of this curve, you can see that we have got funding for the capital we need to build the plant and the mine, capital to run it until first net cash flow, but also financing costs. When we talk about funding, it has got everything that gets us to a net cash flow position with some completion support. If you look on the left-hand side, how funding becomes available. Today, in U.S. dollar terms, we have just under $600 million sitting in the bank. This is at the end of June. That has enabled us to start construction. When we get contractual close.
Contractual close, in layman's speak, is when we have our nine lenders sign on the dotted line and the agreements become binding. When that happens, that allows us to pull in funding from EFA, German Raw Materials Fund, and the National Reconstruction Fund, which is just under $300 million. In terms of contractual close, this is a very important market indicator.
Whilst we do not need the money today, all of our lenders bar one are ready to go, and with the one that is not there yet, we are working through the two matters, which is going through their internal corporate process. We like to think we are relatively close to getting closed. In terms of the debt, the $775 million, we will only draw that down when we have used the equity and the convertible note. Obvious reasons, we do not want to incur interest until we need to.
We expect to get to that point at towards the back end of next calendar year. That debt has conditions precedent, but those conditions precedent are customary. There is nothing peculiar or different to what you typically expect for that debt. At contractual close, we also get access to the cost overrun facility, and then as we move into ramp up, we get access to the standby liquidity facility of $200 million. This is how the funding unravels, and we are on track to unlock that debt as we expect to and as we need to. Let me just close. Let me just talk on the growth optionality. We sit on a very large ore body, low cost, and the reality is it is not fully discovered.
We've only drilled down to 400 meters, and it goes beyond 400 meters, and the first 200 meters gives us a 38-year mine life. NdPr pricing you've seen has doubled over the last 18 months or so. The pricing for heavy rare earths has increased even more so. Consequently, we've had a study underway to look at additional recovery of heavy rare earths and some NdPr in the waste stream. As mentioned previously, we've also been doing pilot studies in ion exchange. Those pilot studies have still got some time to be complete. Look forward to sharing with you in half 1 of next year the results of those studies. But to date, they have looked very promising. We've previously spoken about a central processing hub, and we were originally going to do that as part of phase 2, but we are bringing that forward.
That gives us an additional growth trajectory, but it also helps unlock other rare earths projects because they only need a fraction of the capital that we've needed. We've also previously spoken about phase 2. As we get phase 1 underway, we will progress with engineering and approvals for phase 2, and phase 2 is up to 10,000 tonnes per annum. Just to put that into scale, if you look at Liontown's production to date, it's in the order of 7,000 tonnes per annum. We are globally significant with phase 1, but we build on that for phase 2. Let me just conclude with a bit of a summary. Again, we're the only project globally, ore-to-oxide, that is in construction that can provide an alternative source of rare earths oxide. Sitting on a very large, high-grade, low-cost ore body.
The reason it's low cost, we produce phosphoric acid as a net by-product credit. We've got strong ESG credentials, and it's an important part of the debt requirements. We are fully funded, subject to meeting customary CPs. Strategic project. We feed offtake into four out of five global manufacturing powerhouses. As we do those things, we would like to think that the value build, as we've pushed through the funding risk, and now as we've pushed through the project execution risk, that should lead to a re-rating. You don't have to be a rocket scientist to look at the sort of key multiples that the producers are getting to what we should get as we push through the project execution risk. Let me stop there. What I'd like to do, there's two questions that we didn't address fully in the formal part of the meeting.
Let me address them, and then I'm going to hand over to Catherine for any questions. Ron, you asked a question about a further dilution. As we showed you in the graph, we have a fully funded solution based on our CapEx estimate, based on working capital, et cetera. The million-dollar question is CapEx pressures, right? Projects like this have CapEx pressures. The question is: what are we doing about those CapEx pressures? We have set ourselves up for the last 18 months to give us the best chance to contain those CapEx pressures. We said more than a year ago, before we release contracts, we would go out to competitive tender, which we have and are doing. We have looked at our engineering specs and made sure that we're not doing any that reduces our competitive tender.
We've looked at the scope of the work, and we've carved it up to get the most competition in responses, and we're going broadly. Globally, to all the different, I'm going to call it, low-cost countries to get the best possible outcome. We've gone out early. If you look at the Hatch team, they've done, I think, a remarkable job of ramping up the engineering and the procurement effort, and we've gone out early so that if we get responses that we don't like, we've got time to negotiate and get the price down. I feel like we're doing everything we can at this point to contain CapEx pressures. I forgot your name, sorry. Harry. Sorry. Your question was around, and this is the layman's non-finance person speaking, really around the replenish capacity of the 15%.
Let me make a couple of comments, but then I might throw the ball to Peter. When we had the EGM. Two points. When we had the EGM back in May, we replenished that 15% capacity that applies for this period. With the resolutions today around KfW, EFA, National Reconstruction Fund, they don't come out of that capacity because the resolution's being passed today. As it exists today, we've got that capacity. Peter, do you have any other comments to make on that?
No. I think that's probably what I would've said. I'm not sure if we've understood the question correctly, but that's how I would've responded.
Did we understand your question correctly, Harry?
Yes. But the issue of further dilution
Yeah
is unanswered.
Yeah. Which is, I think, a little bit back to Ron's
Exactly
Ron's question. Look, let me make two comments. Just to reiterate the point, we're very conscious of CapEx pressures, and I think we've set ourselves up in the last 18 months to mitigate that as best we can, and I've shared that. The second thing I just want to remind you of, and this is just to indicate that this is top of mind for us, right? We work for the owners of the company, which is the shareholders. If you look at the funding structure, we maxed out on debt. We went as far as we could on debt. Do you know why we did that, Harry? To minimize dilution. The problem or the choice that we have We went with an ore-to-oxide strategy. This differentiates us to everyone else. What's the downside of it is you need more funding.
We can be an alternative source of rare earth oxide to China. Others that do not go to oxide do not have that ability. They are depending on someone else. We are not dependent on anyone else. That is why we have got so much government support. The problem with that strategy is you need more money. That means we needed to raise equity, but what we have done is we have maxed out on debt in order to minimize the equity. This is an essential part of the strategy which I would like to think, as we deliver on it, you will see in time how that differentiates us against other rare earth projects. The downside is we needed to raise more money.
I said I got two questions. I will come back afterwards.
Are there any other questions? I am looking at you, Catherine. Am I following the right process here?
Yeah.
Go on.
Yeah, we do have other questions.
Yeah.
We are ready to move on. I will first read out the questions that we received prior to the meeting. A lot of it we have actually addressed in the MD presentation, but there are still a few that we have left to address separately. The first one comes from Diane McKenvery. It reads, "Given the scale of dilution associated with financing Nolans, has the board considered mechanisms to protect the economic participation of existing shareholders such as loyalty rights, warrants, options or preferential participation in future raisings while ensuring their existing ordinary shares retain full exposure to any future increase in our inherent value?
Yeah. I would answer that by commenting on two things. Firstly, we need to minimize dilution, right? Hence why I spoke at some length about how we are mitigating CapEx pressures. The second bit is if you look at the capital raises that we have done, that we have needed to do to get to a fully funded solution. If you look at when they were done, they were done deliberately to minimize dilution. Secondly, I will just turn that off. Secondly, every one of them, as we brought in new investors, we made sure that existing shareholders had the ability to participate on the same terms. Now, if you start to provide better terms for existing shareholders, you lose the ability to bring in new investors. Then once they are on, they then want to create the same precedent.
We have made a point in every raise that we have done to make sure that existing shareholders can participate on essentially the same terms.
The next one is. Well, actually, there is four from Heath Middleton. Some you have answered as part of your presentation, but the remaining one reads, "What does the board identify as the primary drivers behind our stock trading at such a steep discount relative to our peers with value despite being fully funded, under active construction and the only ore-to- oxide rare earth mine outside China that is coming on stream over the next three years? Why are not our long-term cornerstone investors considering going into the market, support our share price and increasing their holding and averaging their purchase price down while attracting new long-term investments at this severely discounted level as the majority of them bought in at AUD 0.28 and AUD 0.26 capital raises?" To summarize the other questions. "What proactive steps are we taking to call that value?
Okay. Let me try to remember all those questions Heath said. Firstly, the cornerstone investors and Heath correctly pointed out they have come in at a share price that is much higher than where we are today. They would not have done that if they did not think that long-term value was beyond that. With the cornerstone investors that we have pulled in, we want quality investors that do not trade, right? That come in and stick with us. They are not the type to buy and sell on market. You should take some level of confidence that because they have come in at a higher level, because they have done their homework and their due diligence, you should take some confidence that they have come in at a higher level. Heath, you made the comment that we have dropped in value compared to our peers.
I showed a graph that is actually not the case. We have actually dropped very similar to our peers, including Mountain Pass and the last two only producers. This is happening across the sector. There are things that we can and are doing, and that is making sure with existing and new investors, when the attention turns to the market, they do see us as differentiated. They do see us as having the funding risk behind us, and we are actively working with investors both here and overseas to realize that. The reality is they will generally only kick in when the market attention comes back. Have I
Just one other area that you did not cover is what are we doing to unlock that value? The best way for a company in our state is to build the project.
That's what we did. We've got the money, we've got the team. Build the project, hit the milestones.
Deliver production, and that's where you get your re-rate. You look at all companies that have gone through the construction phase, you get that revaluation as you deliver on your key milestones. Okay. I just want to show something that reinforces Ian's point. Let's go back to the share price slide. Do you mind, Peter? You see Ian's point. I've talked about Lindian, which is the top green line here. So they've come down recently, but they're in construction. As they hit their construction timelines, you see that reflected in their share price. That's why we've got to keep the main thing the main thing. The main thing is delivering phase one. It's going to require everything that we've got. It's not a simple project.
The other question from Heath that we haven't quite addressed is around consolidation. We mentioned a few times over the past two years where the board has said they're looking at it. Why not do it? We now have nearly 7 billion shares on issue, which places it in the hands of more of a short-term trade, which itself-
Yeah. It's a good question. Firstly, there's been a group of investors come in, which always makes it a little bit difficult. Like I said before, this is an open question for us. There is no decision. To do it, there needs to be a material reason to do it. It could be a number. I just want to share one example, is our volumes into the U.S. have increased. We're now supplying 850 tons into the U.S. and into what they call Project Vault, which is really something that the U.S. has set up to, I'm going to call it, stockpile our critical minerals. To my knowledge, we're the first supplier into that. So we're becoming more and more relevant to the U.S. We want to get more long-quality U.S. investors on our register.
With some institutions, they require the stock price to be able, equivalent over $1 . That has not been a barrier to date, but if that were to become a barrier to bring in long-only quality U.S. investors, that would be a great example of why we would do the consolidation. Just coming back to Heath Middleton's question, Catherine Huynh. It is an open question, but we will only do it if it actually unlocks shareholder value. Just Harry Anstee, I am mindful we have taken a few questions from Heath Middleton, and I took the first one from you. You said you had two more?
Yes. The first one was addressed in the questions you answered. The second one was you indicated that you have got AUD 700 million there for construction. You have got quotes coming in and you are giving yourself time.
Are those quotes within the range that you had, or are you having to look at using contingency to meet those commitments? That is the reassurance we need. Those numbers are in the right ballpark. It has been prepared some time ago of what has happened, so we need to see that. The other question that came out of those aspects was in relation to, in the future, you are obviously going to need further funds for phase 2, and that is when the opportunity arises for the board then to recognize the long-term shareholders.
And perhaps do as has been suggested, to come in with some preferential arrangement for those shareholders who have been long-term.
Yeah.
That's sort of the second question extended from one of your answers that you've already addressed.
Just on your first one, I just want to clarify. We have in the bank just under $600 million. We've put out tenders for 700. Some of them start closing in a few weeks. Often you've got to provide anywhere up to eight weeks for these tenders. It's early days.
Yes.
I can't really answer your question on any indications at this point. All I can say at this point, at this very early phase, is what we're doing to maximize pressure to contain CapEx. On your second question around phase 2. Our intention is with phase 2, not to start constructing phase 2 when we've got phase 1 up and running and we understand how to debottleneck phase 1 to get the best out of it, which then gives us capital efficiencies that we can factor into phase 2. If you look at the pricing of NdPr, if you look at our expected cost of production, net of by-product credits, like AUD 32 a kilo. It's a very high-margin business. If we do phase 2, and things can always change. If we do phase 2, and we intend to, I don't see us needing to raise equity.
Once this thing is up and running, it generates significant cash flow. Catherine, any other questions in this broader room?
Yes. Yeah. Darryl. Just the skyrocketing diesel prices. Has that been factored in, too?
Yeah. The real world is a peculiar place. We've done a sensitivity on that. If diesel prices increased by 50%, that adds about 5% to our total CapEx. That kind of, if you like, quantifies, I think, the question you're asking. But we're about sort of ballpark that flex. And what's the significant cost driver at bulk earthworks, which is diesel. But in total project terms, I think it's not significant, but it's something that is very marginal. Yeah.
Is the chemistry and chemical engineering well-proven? And do we have the capability in Australia compared to ionic clay production?
Yeah. I would say, you made the comparison to ionic clay. And ionic clay is simpler, but I wouldn't say it's proven, right? They've still got to do further pilot testing to prove it. We've spent 15 years doing tests on the pilot plant, looking at different parts of the ore body. If you look at each step of the process, it is not new. Each step is not new, and we have thoroughly tested it. We've got very strong internal expertise in this space. In fact, one of our longest-term employees, Dr. Alex Elliott, has been all over this for nearly 20 years. We've got Hatch. That gives us a lot of confidence. A lot of the complexity in our process is in the hydromet circuit, and this is where Hatch are particularly strong. I like to think we've got strong capability and capacity here.
Right, South Australian Olympic Dam. Olympic Dam is probably more similar to what we're building than any other mining processing plant in Australia. The challenge is not managing each part of the process plant as a silo. It's how you bring it all together. There's a few things that we have to get right, and there's one of those few things that we've got a natural advantage over Lynas. Firstly, Lynas went through this. It took them three years. We've looked at what did and didn't work. We've factored that into our flow sheet and our equipment design. The three things they didn't nail, one is around maintenance. Predictive maintenance. You can't have a stable plant if it's breaking down. Sounds pretty basic. If you look at the last 10 years, predictive maintenance with AI has just improved remarkably.
The second thing is getting the right team capability and culture, where the team can solve complex problems together. When you have a problem on a complex plant, no one person can solve it. You need people of different disciplines to work together to solve it. That's really important. The third thing is the operating technologies. How you integrate the whole plant, how you speed up the learning curve. In the past, the pace of learning was based on how you transfer knowledge from one shift to another. Now with digital twins, AI, you can speed that up. Just as an example, solvent extraction typically takes six weeks to do a cycle. With AI, you can bring that down to less than two weeks.
Investing in this AI, this digital twin, and how we stepped ourselves up from our operating technology, I would like to think, de-risks and brings our ramp-up forward. This is something that our predecessors didn't have a benefit from. The thing I shared that with you, right? At the end of the day, I'm an engineer. I would argue, if you look at us as an organization, we're more an engineering organization than a marketing, which is exactly what we need for the phase that we're in. Any other questions or comments?
We have another one. How many fully paid securities has the newly appointed Chair, Ian Murray, purchased on-market? That's for you.
Thank you, Catherine.
You have 748,000 roughly, per the change of directors' interest notice on July 14. Ian has actually bought on market and also participated in all our SPP to date, even the last one where the SPP price was higher than market price.
Thanks.
Are there any other ones from the room? We have more detailed questions that we have received. Some people have covered a whole range in your presentation already, and there are some more detailed ones.
We will reply directly back to the shareholders. Is there anything else from the room? We have probably got five minutes before we need to vacate the room.
There is quite a few more questions this time around.
I think.
Yeah.
And more complex.
Yeah. All right.
Okay. I think that is it.
I think that is it.
Thank you, everyone, for their attendance. Thank you.
Thank you.