Arafura Rare Earths, a mining company headquartered in Perth, Western Australia, has received conditional approval for a US$150 million debt financing from the Export-Import Bank of Korea (Kexim).

The financing comprises a US$75.1 million direct loan facility and a US$74.9 million loan guarantee. Both facilities have a tenor of up to 10 years.

According to Arafura, the Kexim loan guarantee supports the credit approval process for commercial lenders, and brings the miner closer to its targeted US$775 million senior debt funding required for the Nolans Project.

The rare earths project in the Northern Territory aims to become a significant supplier of neodymium and praseodymium (NdPr) to South Korea’s automotive manufacturing sector.

Australian Securities Exchange-listed Arafura entered into cornerstone binding offtake agreements with Hyundai Motor and Kia Corporation for the supply of up to 1,500 tonnes per annum of NdPr oxide, once the project achieves nameplate production capacity. A final investment decision is expected this year.

Arafura says it continues to work with commercial lenders, including Kexim Global (Singapore), for credit approval to participate under the export credit agency (ECA) covered tranches and other senior debt facilities. The loan documentation, including the common terms deed, is being advanced with the lenders in conjunction with the credit approval work programmes.