Australian mineral exploration company Arafura Rare Earths has upsized its placement to A$25m ($16.4m) from A$20m, prompted by the “strong demand” from leading domestic and foreign investor groups.

The company secured firm commitments to raise A$25m through the placement of nearly 156 million new shares at A$0.16 apiece.

Furthermore, it will issue one free-attaching option for every two new shares subscribed as part of the fully underwritten institutional placement.

These new options, around 62.5 million in number, will have an exercise price of A$0.225 and expire 18 months from the date of issue.

Arafura will use the proceeds from the placement to develop its Nolans project and for general working capital requirements.

The Nolans project is located 135km from Alice Springs in Northern Territory, Australia.

It is claimed to host a significant amount of neodymium and praseodymium (NdPr), the two rare earth elements that play a crucial role in global decarbonisation.

As a globally significant and strategic project, it is expected to become a major supplier of these critical minerals needed for the permanent magnet market.

The main asset of the project is a rare earths-phosphate-uranium-thorium (REE-P-U-Th) deposit.

The mineral resources hosted within the project are estimated to be 56 million tonnes with a grade of 2.6% of total rare earth oxides and 11% phosphate (P2O5). These extend 215m below the surface.

Earlier this month, the company signed a non-binding letter of interest with the Export-Import Bank of Korea, Korea EXIMbank (KEXIM), for up to $150m in debt.

This letter is linked to a binding offtake agreement in place between the company and Korean automakers Hyundai and Kia for up to 1,500 tonnes per annum of NdPr oxide.