Topic: How To Invest

Pat: What do you think about Arafura Resources?

Article Excerpt

Arafura Resources, $0.05, symbol ARU on the Australian exchange (Shares outstanding: 396.0 million; Market cap: $19.8 million; www.arultd.com), is an Australian firm with a rare earth property in the country’s Northern Territory. Rare earth elements are a group of metals with unique characteristics. They’re used in catalytic converters, magnets in motors, glass additives and glass-polishing compounds, rechargeable batteries, TV and computer screens, lighting, X-ray machines and lasers. Arafura is focused on its Nolans Rare Earths Project, home to a deposit with high concentrations of neodymium and praseodymium, which are used in high-tech magnets for applications including computer hard drives, wind-turbine generators and audio headphones. The company aims to bring the deposit into production by 2019, but it must first complete a feasibility study, which is expected at the end of 2015. It will also need at least AUD$1.4 billion ($1.3 billion Canadian) to build a mine, and that funding could be very difficult to raise. That’s why the shares trade at just $0.05. We…