Highlights

• Hancock Prospecting, controlled by Gina Rinehart, increased its stake in Arafura from 10.01% to 15.60%, providing strategic cornerstone backing as the Nolans Project approaches final investment decision.
• Arafura completed a A$481.4M capital raise through institutional placement and SPP, but attracted only A$7M of a targeted A$50M retail raise, leaving approximately A$43M in unresolved equity funding needs.
• The company reset executive incentives by cancelling 36.3M performance rights and issuing 41.3M new ones aligned with construction and operational milestones, including 10.6M rights to CEO Darryl Cuzzubbo.

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Arafura Rare Earths Ltd. (ASX: ARU) has disclosed a series of capital markets, ownership, and incentive-plan updates that materially reshape its shareholder register and internal alignment as the company advances toward a final investment decision (FID) on the Nolans Project in Australia’s Northern Territory. 2026 should be a big year for the Australian rare earth mining company.

Hancock Prospecting Strengthens Cornerstone Position

The most consequential disclosure is a Form 604 notice confirming that Hancock Prospecting Pty Ltd (HPPL)—controlled by Gina Rinehart—has increased its voting power in Arafura from 10.01% to 15.60%, representing 726,487,213 fully paid ordinary shares.

The increase reflects HPPL’s repeated participation in equity placements over time, culminating in a 392,857,143-share subscription at A$0.28 per share on 12 December 2025, aligned with Arafura’s most recent institutional financing. The result is a substantially larger cornerstone position by one of Australia’s most financially capable resource investors, reinforcing long-term strategic backing as Nolans moves closer to execution.

Share Purchase Plan Completed

Arafura also confirmed the completion of its Share Purchase Plan (SPP), which attracted 748 applications totaling A$7.1 million. Approximately A$0.7 million of applications from ineligible shareholders were rejected, resulting in the issuance of 23,119,844 new ordinary shares at A$0.28 per share. The SPP shares were subsequently quoted on the ASX.

Importantly, the company confirmed it will not place any SPP shortfall, signaling confidence in its funding pathway and a preference to avoid incremental retail dilution. Combined with the earlier institutional placement, total funds raised under the placement and SPP reached A$481.4 million (before costs), positioning Arafura with substantial capital coverage as it works toward FID.

Unresolved Funding Questions

Notably, the SPP also highlights an unresolved funding question. While Arafura structured the SPP to raise up to A$50 million from retail investors, it attracted only around A$7 million, leaving an effective A$43 million gap relative to the company’s original retail funding ambition, even if not formally described as a shortfall.

Does this gap introduce any uncertainty around how the remaining equity will ultimately be sourced?

One possibility is further participation from Hancock Prospecting, which can increase its stake to just under 20% under Australian takeover rules before triggering a mandatory bid. However, any additional equity could require pricing at or below the recent A$0.28 placement, particularly with the share price now hovering near A$0.22, despite Hancock having previously invested at A$0.37 and A$0.28.

The funding overhang may help explain the current short interest and share-price weakness, as Arafura must still secure roughly A$43 million to fully bridge its equity requirements. Additional debt from the German-backed lender appears constrained absent incremental offtake, which itself seems limited, leaving open the prospect of another discounted capital raise, a new strategic investor, or—given Nolans’ strategic importance—potential intervention by the Australian or U.S. government to help carry the project into execution.

Incentive Reset: Performance Rights Cancelled and Reissued

Alongside the equity raises, Arafura executed a meaningful reset of executive and employee incentives. The company cancelled 36,285,574 performance rights on 15 December 2025, comprising rights cancelled by agreement and a smaller tranche that lapsed after conditions were not satisfied. This was followed by the issue of 41,305,519 new performance rights on 11 December 2025, after shareholder approval at the October 2025AGM.

Key management personnel received significant allocations, including CEO Darryl Cuzzubbo (10,638,510 performance rights), reflecting a refreshed incentive framework aligned with construction, financing, and operational milestones. On a net basis, the reset results in a modest increase of roughly five million performance rights while resetting vesting conditions and timelines.

What This Means for Investors

Taken together, these disclosures point to a capital structure transitioning from project-financing mode toward execution readiness. HPPL’s enlarged position enhances register stability and strategic alignment, while the completion of the SPP without placing a formal shortfall reduces immediate retail dilution uncertainty—even as broader funding questions remain. The incentive reset further aligns management with the next phase of value creation as Nolans approaches its most capital-intensive and operationally complex stage.

Whether these structural improvements translate into timely delivery at Nolans remains the critical test. That said, ownership concentration, funding visibility, and governance alignment have clearly tightened, marking an important inflection point for Arafura as a major rare earths developer moving toward production.

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