Arafura Resources (ARU) AI Stock Analysis

• Market Cap: $468.22M
• Dividend Yield: N/A
• Average Volume (3M): 6.25M
• Price to Earnings (P/E): ―
• Beta (1Y): 0.12
• Revenue Growth: N/A
• EPS Growth: 65.19%
• Country: AU
• Employees: 19
• Sector: Basic Materials
• Sector Strength: 63
• Industry: Industrial Materials
• EPS (TTM): >-0.01
• Shares Outstanding: 2,464,328,600
• 10 Day Avg. Volume: 6,477,714
• 30 Day Avg. Volume: 6,246,405
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $0.15
• Price Target Upside: -14.48% Downside
• Rating Consensus: Moderate Sell
• Number of Analyst Covering: 2

Arafura Resources Limited has a challenging financial performance with ongoing losses and cash flow issues, which significantly impact its overall score. The earnings call presents some optimism with funding progress and demand for offtake agreements, but challenges remain in securing the necessary equity. Technical analysis shows some positive momentum, yet the absence of key indicators limits its impact. Valuation is weak due to negative profitability and lack of dividends.

Arafura Resources Business Overview & Revenue Model

Company Description

Arafura Rare Earths Limited explores for and develops mineral properties in Australia. It focuses on the production of rare earth products, such as neodymium-praseodymium and mixed middle-heavy rare earths oxides. The company's principal property is the Nolans project, a rare earths-phosphate-uranium-thorium deposit that supplies neodymium and praseodymium products located in Northern Territory, Australia. It also engages in mining and associated infrastructure, and social and environmental feasibility evaluations. The company was formerly known as Arafura Resources Limited and changed its name to Arafura Rare Earths Limited in October 2022. Arafura Rare Earths Limited was incorporated in 1997 and is based in Perth, Australia.

How the Company Makes Money

Arafura Resources Limited generates revenue primarily through the development and sale of rare earth elements, specifically neodymium and praseodymium. These elements are in high demand for their use in permanent magnets, which are critical components in electric motors and generators. The company's revenue model is centered around the successful extraction, processing, and commercialization of these rare earth materials from its Nolans Project. Additionally, Arafura may engage in strategic partnerships and off-take agreements with manufacturers and technology companies to secure long-term supply contracts, thereby stabilizing its income streams and expanding its market reach.

Arafura Resources Financial Statement Overview

Summary

Arafura Resources Limited is facing significant financial challenges, with no revenue generation and consistent losses affecting profitability metrics. The balance sheet shows some strength in equity but is overshadowed by poor returns and high cash flow deficits. Continued reliance on external financing poses a risk to financial sustainability.

Income Statement

Arafura Resources Limited has consistently reported zero revenue over the past years, indicating a lack of income-generating operations. The net profit margin is negative, reflecting ongoing losses. Although EBITDA and EBIT margins are not accurately calculable due to zero revenue, the negative figures further emphasize operational challenges.

Balance Sheet

The company maintains a relatively low debt-to-equity ratio, highlighting conservative leverage practices. However, the negative net income results in a negative return on equity, indicating inefficiency in generating profit from shareholders' equity. The equity ratio remains strong, suggesting a solid capital structure with a high proportion of equity financing.

Cash Flow

Operating cash flows are significantly negative, indicating an inability to generate cash from operational activities. Free cash flow is also negative and deteriorating, suggesting potential liquidity issues. The company relies heavily on financing activities for cash inflows, which may not be sustainable.

Breakdown
Jun 2024	Jun 2023	Jun 2022	Jun 2021	Jun 2020
Income Statement		Total Revenue
0.00	0.00	0.00	0.00	0.00
	Gross Profit
-77.90K	-577.03K	-318.57K	-280.40K	-97.75K
	EBIT
―	-99.65M	-35.72M	-6.77M	-5.40M
	EBITDA
-92.51M	-95.80M	-35.23M	-6.25M	-4.94M
	Net Income Common Stockholders
-100.97K	-96.38M	-35.56M	-6.48M	-4.81M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
42.17M	128.85M	24.68M	10.79M	22.77M
	Total Assets
170.09M	259.53M	143.32M	125.53M	131.38M
	Total Debt
749.53K	1.64M	474.22K	190.90K	421.21K
	Net Debt
-41.42M	-127.21M	-24.21M	-10.60M	-22.35M
	Total Liabilities
25.98M	44.63M	10.95M	3.51M	2.92M
	Stockholders Equity
144.11M	214.90M	132.37M	122.02M	128.46M
Cash Flow		Free Cash Flow
-112.06M	-71.70M	-31.46M	-12.90M	-12.07M
	Operating Cash Flow
-109.04M	-69.40M	-27.16M	-5.27M	-4.58M
	Investing Cash Flow
-3.82M	-4.05M	-3.91M	-6.82M	-6.24M
	Financing Cash Flow
26.35M	177.56M	44.96M	105.11K	28.19M

Arafura Resources Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 0.18
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:ARU, the sentiment is Positive. The current price of 0.18 is below the 20-day moving average (MA) of 0.19, above the 50-day MA of 0.18, and above the 200-day MA of 0.15, indicating a bullish trend. The MACD of <0.01 indicates Positive momentum. The RSI at 55.62 is Neutral, neither overbought nor oversold. The STOCH value of 31.48 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AU:ARU.

Arafura Resources Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ASM	50 Neutral	AU$128.75M	―	-15.33%	―	-52.53%	-27.29%
Sector *	49 Neutral	$1.96B	-1.23	-21.20%	3.72%	0.95%	-28.96%
ARU	46 Neutral	$468.22M	―	-33.33%	―	―	65.19%
RNU	46 Neutral	AU$175.47M	98.57	1.05%	―	―	―

Arafura Resources Corporate Events

Arafura Secures Major Investment for Nolans Project Amid Geopolitical Tensions

Arafura Rare Earths Limited has achieved a key milestone in its equity funding strategy for the Nolans Project with a A$200 million investment from the National Reconstruction Fund Corporation. The company has also secured a binding offtake agreement with Traxys Europe SA for NdPr oxide and is negotiating a long-term natural gas supply with Tamboran Resources Ltd. These developments position Nolans as a crucial player in diversifying global rare earth supply chains amid escalating geopolitical tensions and trade wars, particularly between the US and China. The project is strategically important as it offers a construction-ready, non-China supply chain solution, aligning with global efforts to secure critical mineral resources.

Arafura Rare Earths Announces New Joint Company Secretaries

Arafura Rare Earths Limited has announced a change in its company secretary position as Ms. Catherine Huynh steps down for maternity leave. In her place, Mr. Lewis Lowe and Mr. Matthew Foy have been appointed as Joint Company Secretaries. Mr. Foy brings over 17 years of experience in public company compliance, while Mr. Lowe, who has been with Arafura since 2019, will continue his role as Financial Controller. This transition is expected to ensure continued compliance and effective communication with the ASX, maintaining the company’s operational stability.

Arafura Rare Earths Schedules Investor Call to Discuss Quarterly Activities

Arafura Rare Earths Limited announced an upcoming investor call to discuss its quarterly activities report for the period ending March 31, 2025. This call, hosted by the company’s Managing Director and CEO, Darryl Cuzzubbo, along with CFO Peter Sherrington, aims to provide insights into the company’s recent operations and strategic direction, potentially impacting its market positioning and stakeholder engagement.

Arafura Rare Earths Highlights Role in Electrification at PDAC 2025

Arafura Rare Earths Limited presented at the 2025 Prospectors & Developers Association of Canada (PDAC) Convention, highlighting its role in the electrification economy. This presentation underscores the company’s strategic positioning in the rare earths market, which is pivotal for stakeholders involved in the growing demand for electrification technologies.

Arafura Resources Limited Releases Interim Financial Report for December 2024

Arafura Resources Limited released its consolidated interim financial report for the half-year ended December 31, 2024. The report includes detailed financial statements and notes, highlighting the company’s financial position, profit or loss, and cash flow for the period. This announcement provides stakeholders with important insights into the financial health and operational status of the company during the specified period, which is crucial for assessing its ongoing performance and strategic direction.