Australian mineral exploration company Arafura Rare Earths has secured conditional approval for up to $300m in debt finance from Export Development Canada (EDC), for its Nolans project.

The 12-year debt facility is a result of a geostrategic partnership between Arafura and EDC, facilitated by GE Vernova, recognising the significance of the Nolans project.

EDC supports the project under a non-binding Memorandum of Understanding with GE Renewable Energy and supply contracts from Canadian companies.

Terms for the EDC senior debt facility, including interest rates and conditions precedent to financial close, are expected to be standard for such agreements.

Under the proposed common terms deed, the EDC will obtain the debt facility contingent upon Arafura meeting an 80% binding offtake target.

The target has been revised down from the previously stated 85% of nameplate capacity post-ramp-up, following an agreement in principle with the lenders.

Arafura’s Managing Director Darryl Cuzzubbo said: “Debt financing from EDC signifies the increasing geostrategic importance of the Nolans Project and securing global diversity in the NdPr supply chain.

“EDC has responded strongly to Nolans as a strategic opportunity that will underpin the electrification economy. NdPr is critical in electrical vehicles, wind turbines and robotics.

“We are thrilled to be working with EDC and remain impressed with their innovative thinking and commitment to accelerating a lower carbon future. This announcement today brings us closer to a final investment decision on the Nolans Project.”

Arafura said that its commitment to energy transition and supply chain diversification enabled several export credit agencies (ECAs) and government bodies support the Nolans Project.

The proposed debt facilities, totalling $775m, comprise direct loans from ECAs and government agencies, along with a commercial bank portion backed by ECA debt guarantees.

In March this year, Arafura initiated a request for proposals to secure limited-recourse project finance from several commercial banks.

The company is in talks with a select group of international and domestic banks to finalise the remaining project financing and associated banking services.

Furthermore, it has already completed a comprehensive due diligence process with financiers and is in advanced negotiations for offtake with potential counterparties.