TIDMRBW
RNS Number : 4539B
Rainbow Rare Earths Limited
03 October 2022
3 October 2022
Rainbow Rare Earths Limited
("Rainbow" or "the Company")
LSE: RBW
Preliminary Economic Assessment Confirms Robust Economics for
Phalaborwa Rare Earths Project
Rainbow Rare Earths announces the results of the Preliminary
Economic Assessment ("PEA") [1] for the Company's Phalaborwa Rare
Earths Project in South Africa, marking an important milestone in
the project's development. The PEA demonstrates a long life and
financially robust opportunity for Phalaborwa to become a
significant supplier of high purity rare earth oxides to the
rapidly expanding permanent magnet market, to support global
decarbonisation and the growing demand for electric vehicles and
offshore wind turbines. The PEA was conducted by METC Engineering,
the minerals processing engineering company based in Johannesburg,
with key contributions from independent consultants as
required.
Key highlights, an overview, and the executive summary are
provided below, with the report available on the Company's website
at
www.rainbowrareearths.com/investors/results-reports-presentations/
. An investor presentation will be held on 5 October to discuss
results of the PEA, see further details below.
PEA highlights
-- Total production of 26,208 tonnes of separated magnet rare
earth oxides [2] with a weighted average sales value of
US$137.92/kg [3] generating US$3.6 billion of revenue over 14.2
years.
-- Under the base case scenario, [4] the 2.2 million tonne per
annum processing operation underscores the very robust project
economics:
o Post tax NPV(10) of US$627 million. [5]
o Post tax IRR of 40%.
o Average annual revenue of US$254.8 million; US$117.91 per
tonne of gypsum processed.
o Operating costs averaging US$33.86/kg of separated magnet rare
earth oxides are expected to be one of the lowest of all Western
rare-earth projects and current producers.
o Average EBITDA of US$192.2 million per annum, delivering an
EBITDA operating margin of 75%. [6]
o Capital expenditure of US$295.5 million, with payback period
of 2 years; significantly below that of a traditional hard rock
rare earth mining project.
-- Using 2022 year to date ("YTD") average rare earth prices
(28% higher than base case), the PEA delivers an:
o EBITDA operating margin over 80%
o NPV(10) of US$934 million and a payback of 1.7 years.
-- Using long-term rare earth price forecasts provided by Argus
Media Group ("Argus"), underpinned by compelling supply/demand
fundamentals, the PEA delivers an NPV(10) over US$1 billion.
-- The positive results of the PEA support the continued
development of Phalaborwa, with the next steps including the
publication of a resource update and the definition of a work
programme for a feasibility study.
Rainbow Rare Earths CEO, George Bennett, commented:
"Establishing a base case NPV(10) of US$627 million, an IRR of 40%,
an average EBITDA operating margin of 75%, and a payback period of
only 2 years, this PEA corroborates our long-held view of
Phalaborwa's enormous potential as a low capital intensity, high
margin, near-term rare earth development project. The base case
financial model presents a robust project with low sensitivity to
costs, which is particularly relevant in the current inflationary
environment, and which can generate strong returns in any
foreseeable rare earth oxide pricing environment.
At 2022 year-to-date average prices (which are around 28% higher
than the base case), the economics are exceptionally strong with an
NPV of US$934 million and a payback of 1.7 years.
As a brownfield site, the development of Phalaborwa provides us
with a significant opportunity to make positive environmental,
social and economic impacts.
The successful completion of this PEA represents not only a
breakthrough step in the development of Phalaborwa, demonstrating
the viability of this opportunity, but also underscores the broader
potential to use our unique IP and technology to extract separated
rare earth oxides from other phosphogypsum sources on a global
scale.
Leveraging the expertise we have built up at Phalaborwa, we aim
to accelerate the shift in our business model to processing rare
earths from secondary sources. At a time when governments around
the world are designating rare earths as critical minerals, with
the EU stating an anticipated fivefold increase in demand by 2030,
our strategy aims to facilitate near-term access to these elements
which are so fundamental to global decarbonisation. Our focus on
phosphogypsum as a source of magnet rare earths importantly
differentiates Rainbow from a risk perspective when compared with
traditional hard rock rare earth mining companies.
I believe Phalaborwa's PEA accurately reflects the rigour and
expertise we apply to project assessment. As we progress to a
feasibility study at Phalaborwa, I am confident that we have the
right team, skills, and technology to unlock this valuable source
and contribute to a responsible, independent, Western rare earths
supply chain."
Investor presentation
Rainbow will host a live presentation via the Investor Meet
Company platform on Wednesday 5 October 2022 at 10:00am BST to
discuss the PEA. The presentation is open to all existing and
potential shareholders. Questions can be submitted pre-event via
your Investor Meet Company dashboard up until 9am the day before
the meeting or at any time during the live presentation.
Investors can sign up to Investor Meet Company for free and add
to meet RAINBOW RARE EARTHS LIMITED via:
https://www.investormeetcompany.com/rainbow-rare-earths-limited/register-investor
. Investors who already follow RAINBOW RARE EARTHS LIMITED on the
Investor Meet Company platform will automatically be invited.
Rainbow's CEO, George Bennett, will also be presenting on the
London South East Investor Webinar on Tuesday 4 October 2022. The
webinar will run from 18:00 - 20:00 BST. Following the
presentation, attendees will have the opportunity to ask questions.
Please use the Zoom link below to register for this webinar:
https://us02web.zoom.us/webinar/register/6316644539142/WN_RNi7eUm2SHSgYwXQ5F332g
PEA overview
The PEA was based on processing 2.2 million tonnes per annum of
phosphogypsum over a 14.2-year project life to deliver 26,208
tonnes of separated magnet rare earth oxides at an average cost of
US$33.86/kg. This delivers an exceptional 75% EBITDA operating
margin at the base case basket price of US$137.92 per kg, with
first production assumed for 2026, established on near term
forecasts well below both 2022 YTD average prices and long-term
market forecasts.
Using 2022 YTD average rare earth prices or long-term rare earth
price forecasts provided by Argus delivers stronger returns.
Phalaborwa's strong margins are underpinned by a low operating cost
base, with a very low sensitivity to changes in costs.
Rare earth price sensitivity
The sensitivity to rare earth prices has been calculated by
reference to a number of rare earth price scenarios. The key
financial metrics of the Phalaborwa Project under these different
scenarios are set out below:
Long
2022 term
Base 2021 Q3 2022 YTD average forecast
case +10% -10% average average [7] [8]
---------------------- ------- ------- -------- --------- --------- ------------- ----------
Basket
price US$/kg 137.92 151.71 124.13 122.33 144.11 175.89 199.30
----------- ---------- ------- ------- -------- --------- --------- ------------- ----------
US$
NPV million 627.0 738.4 515.4 500.8 677.0 933.7 1,027.6
----------- ---------- ------- ------- -------- --------- --------- ------------- ----------
IRR % 40% 44% 35% 35% 42% 51% 44%
----------- ---------- ------- ------- -------- --------- --------- ------------- ----------
Operating
margin % 75% 78% 73% 72% 77% 81% 83%
----------- ---------- ------- ------- -------- --------- --------- ------------- ----------
Payback Years 2.0 1.9 2.3 2.3 2.0 1.7 2.4
----------- ---------- ------- ------- -------- --------- --------- ------------- ----------
Change
in US$
NPV million - 111.4 (111.6) (126.2) 50.0 306.7 400.6
----------- ---------- ------- ------- -------- --------- --------- ------------- ----------
Applying the 2022 YTD average rare earth oxide prices to the
project delivers an NPV of US$933.7 million with an IRR of 51% and
a payback period of 1.7 years. Long-term price forecasts received
from Argus, underpinned by robust magnet rare earths supply and
demand fundamentals, suggest a higher long-term basket price,
demonstrating that the project can be expected to generate strong
returns in a market supported by strong demand growth for the
separated magnet rare earth oxides produced.
The sensitivities also show that using a lower average rare
earth oxide price, such as the average prices from 2021, deliver a
robust project with solid operating margins and a fast payback
period. This demonstrates that the Phalaborwa Project can be
expected to generate strong returns in any foreseeable rare earth
oxide pricing environment.
Cost sensitivity
The sensitivity of the project economics to cost have been
modelled to understand the sensitivity of the project economics to
energy costs, overall operating costs, capital costs and the
ZAR:US$ exchange rate. The key financial metrics of the Phalaborwa
Project under these different scenarios are set out below:
+10% +10% -10% -10% +10% ZAR: ZAR:
energy opex opex capex capex US$ FX US$ FX
costs rate rate
15.5 17.5
------------------ ------------- -------- ------- ------- ------- ------- -------- --------
Basket price US$/kg 137.92 137.92 137.92 137.92 137.92 137.92 137.92
------------------ ------------- -------- ------- ------- ------- ------- -------- --------
NPV US$ million 621.2 599.0 655.0 643.5 610.4 601.7 652.2
------------------ ------------- -------- ------- ------- ------- ------- -------- --------
IRR % 40% 39% 41% 42% 37% 38% 42%
------------------ ------------- -------- ------- ------- ------- ------- -------- --------
Operating margin % 75% 73% 78% 75% 75% 74% 77%
------------------ ------------- -------- ------- ------- ------- ------- -------- --------
Payback Years 2.1 2.1 2.0 1.9 2.2 2.2 2.0
------------------ ------------- -------- ------- ------- ------- ------- -------- --------
Change in NPV
(1) US$ million (5.8) (28.0) 28.0 16.6 (16.6) (25.3) 25.2
------------------ ------------- -------- ------- ------- ------- ------- -------- --------
1. Compared to base case scenario set out above
With reasons detailed below, the project is less capital
intensive than many global rare earth development projects. In
addition to this, the strong margins generated by Phalaborwa are
underpinned by a low operating cost base. This is possible due to
the unique nature of the project, which excludes many of the usual
energy intensive steps associated with a traditional hard rock
mining project (thereby limiting energy costs to 21% of overall
operating costs).
-- There is no requirement for hard rock mining, including waste
stripping, which usually represents a large proportion of the cost
base for a traditional hard rock mine. The cost of hydraulic
reclamation of the gypsum stacks is instead comparable to the cost
of feeding a processing plant from an ore stockpile.
-- There is no cost associated with crushing and grinding ore,
which normally forms a substantial part of the energy use and
processing costs for a traditional hard rock mine.
-- The rare earth minerals contained in the gypsum stacks have
been chemically cracked by the historic phosphoric acid production
process. This allows the Phalaborwa Project to produce separated
rare earth oxides in a single processing plant instead of producing
a mineral concentrate which requires chemical cracking in a
dedicated plant before feeding into a separation plant.
As detailed in the PEA, the phosphogypsum contained in the two
stacks at Phalaborwa can be reclaimed using conventional
high-pressure monitoring techniques as commonly used on reclamation
projects in South Africa. A viable flowsheet for economic
extraction and purification with an unoptimised recovery of 65% of
the rare earth elements can be implemented.
This process flowsheet utilises a pre-treatment process to
control impurities, which can then be recovered for re-use later,
recycling any dissolved rare earths back into the process.
Pre-treated phosphogypsum and solution are forwarded to a
counter-current rare earth acid leach designed to extract maximum
rare earths from the phosphogypsum solids before the residue is
thickened, filtered, and disposed of by dry stacking. The pregnant
solution from the rare earth leach is treated in a rapid
consolidation process that delivers a highly concentrated rare
earth solution to the refining section, where it is treated in a
continuous, bulk rare earth ion-exchange process, followed by the
separation of target rare earth elements by continuous ion
chromatography, nanofiltration, precipitation, and calcining.
In addition to delivering a product into the increasingly
important green economy, the PEA has demonstrated the project's
crucial role in environmental remediation. It also highlights the
potential for significant social and economic benefits to the town
of Phalaborwa and the surrounding communities. Studies at
Phalaborwa have highlighted the environmental advantages of the
project, which include very low levels of radioactivity (exempting
Phalaborwa from radioactivity regulation) and the ability to
neutralise the existing water from the stacks for re-use in a
closed circuit as plant process water. In processing material from
the existing gypsum stacks at Phalaborwa, the aim is to remove
existing environmental liabilities and redeposit benign gypsum on a
new stack, built according to International Finance Corporation
("IFC") Performance Standards and Equator Principles. The PEA
highlights Phalaborwa's excellent existing infrastructure, both in
terms of physical facilities at site which can be updated, but also
access to power, local production of key reagents and a skilled
workforce.
Following the publication of the PEA Rainbow intends to advance
the project to feasibility study, identify all permits required for
the Project to be developed, engage with the relevant authorities
to expedite permitting and undertake further process optimisation
tests culminating in an extensive process pilot plant operation . A
resource update is also expected for Phalaborwa following drilling
work undertaken in June 2022.
Market Abuse Regulation ("MAR") Disclosure
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
For further information, please contact:
Rainbow Rare Earths George Bennett
Ltd Company Pete Gardner +27 82 652 8526
SP Angel Corporate Ewan Leggat
Finance LLP Broker Charlie Bouverat +44 (0) 20 3470 0470
Matthew Armitt
Berenberg Broker Jennifer Lee +44 (0) 20 3207 7800
Tavistock Communications PR/IR Charles Vivian +44 (0) 20 7920 3150
Tara Vivian-Neal rainbowrareearths@tavistock.co.uk
Notes to Editors:
Rainbow's strategy is to identify near-term, secondary rare
earths production opportunities. Meeting escalating demand for
critical minerals needed for global decarbonisation, we are focused
on producing the magnet rare earth metals neodymium and
praseodymium ("NdPr"), dysprosium and terbium. With our strong
operating experience, proven project development experience, unique
intellectual property and diversified portfolio, Rainbow will
develop a responsible rare earths supply chain to drive the green
energy transition.
The Phalaborwa Rare Earths Project, located in South Africa,
comprises an Inferred Mineral Resource Estimate of 30.7Mt at 0.43%
TREO contained within unconsolidated gypsum stacks derived from
historic phosphate hard rock mining. High value NdPr oxide
represents 29.1% of the total contained rare earth oxides, with
economic Dysprosium and Terbium oxide credits enhancing the overall
value of the rare earth basket in the stacks. The rare earths are
contained in chemical form in the gypsum stacks, which allows
high-value separated rare earth oxides to be produced in a single
processing plant at site with lower operating costs than a typical
rare earth mineral project.
PEA Executive Summary
1. Introduction
The Phalaborwa Rare Earths Project (the Project) offers a long
life, and financially robust, opportunity to become a significant
supplier of high purity rare earth oxides to the rapidly expanding
permanent magnet market.
Apart from delivering a product into the increasingly important
green economy, the Project has strong environmental credentials in
terms of reducing legacy risks (from previous operations on site)
to an environmentally sensitive area. The Project development will
be undertaken fully in line with International Finance Corporation
Performance Standards and the Equator Principles.
The Project's rare earths resource is contained in two
phosphogypsum stacks which are the waste from historic phosphoric
acid production on the site, which ceased in 2014. The Project is
located on an industrial site adjacent to the mining town of
Phalaborwa in South Africa and benefits from excellent national,
regional, local and site-specific infrastructure. The industrial
nature of the Project provides considerable advantages over similar
mining projects with the ability to produce rare earth oxides
directly from the large resource in a single process. Rainbow Rare
Earths Limited (Rainbow) has developed a process to extract the
rare earths from the host phosphogypsum through an extensive
process test work program conducted at highly regarded
international laboratories, unlocking the value of the Project.
Following the publication of the Preliminary Economic Assessment
(PEA) Rainbow intends to advance the Project to feasibility study,
identify all permits required for the Project to be developed,
engage with the relevant authorities to expedite permitting and
undertake further process optimisation tests culminating in an
extensive process pilot plant operation. The PEA envisages first
production in 2026.
2. Key Economic Parameters
The key economic parameters for the Project base case are
presented in Table 1.
Table 1: Summary of Base Case Project Economic Parameters
Parameter Units Value
------------------------------- -------- -------
Treatment Rate Mtpa 2.2
------------------------------- -------- -------
Production NdPr, Dy, Tb
Oxides tpa 1,848
------------------------------- -------- -------
Life of Operation years 14.2
------------------------------- -------- -------
Capital Cost US$M 295.5
------------------------------- -------- -------
Operating Cost per Tonne
Treated US$/t 28.95
------------------------------- -------- -------
Operating Cost per kg Product US$/kg 33.86
------------------------------- -------- -------
Revenue per Tonne Treated US$/t 117.91
------------------------------- -------- -------
Payback Period (post tax) years 2.0
------------------------------- -------- -------
NPV(10) (post tax) US$M 627.0
------------------------------- -------- -------
IRR (post tax) % 40
------------------------------- -------- -------
Average base-case revenue
per annum US$M 254.8
------------------------------- -------- -------
Average EBITDA [9] per annum US$M 192.2
------------------------------- -------- -------
EBITDA margin % 75
=============================== ======== =======
The base case uses the projected rare earth oxides price for
2023, lower than the average price for 2022 to date or long-term
forecast prices received from Argus as set out in the table
below:
Table 2: Rare Earth Oxide Prices Used
Base 2022 Forecast
case YTD [11]
[10]
-------------- -------- --------------- --------------- ---------------
Neodymium
oxide US$/kg 110.00 146.36 128.82
-------------- -------- --------------- --------------- ---------------
Praseodymium
oxide US$/kg 112.50 140.25 204.51
-------------- -------- --------------- --------------- ---------------
Dysprosium
oxide US$/kg 340.00 403.70 489.08
-------------- -------- --------------- --------------- ---------------
Terbium
oxide US$/kg 1,875.00 2,117.56 4,068.07
-------------- -------- --------------- --------------- ---------------
Basket
price US$/kg 137.92 175.89 199.30
============== ======== =============== =============== ===============
The majority of the capital and operating costs are incurred in
South African Rands (ZAR). These have been converted in the base
case at an exchange rate of US$1.00 : ZAR16.50. A corporate tax of
27% has been allowed for in the economic analysis.
Sensitivity analyses for variations in rare earth prices have
been calculated by reference to both historical and forecast
prices. The results demonstrate that the project can be expected to
generate strong returns in a market underpinned by strong demand
growth for the separated magnet rare earth oxides that will be
produced. The sensitivity of the economics to capital cost,
operating cost, and US$:ZAR exchange rate have also been modelled,
demonstrating that the Project is not sensitive to changes in costs
due to the strong EBITDA margins generated. The results of the
sensitivity analysis is set out in the table below:
Table 3: Sensitivity Analysis
Price sensitivities Cost sensitivities
----------------- ------ ---------------------------- ----------------------------- ----------------------------
Base case 2022 YTD Forecast +10% opex +10% capex US$1:
[12] [13] ZAR17.5
----------------- ------ ------------- ------------- -------------- ------------- ------------- -------------
Basket price US$/kg 137.92 175.89 199.30 137.92 137.92 137.92
----------------- ------ ------------- ------------- -------------- ------------- ------------- -------------
NPV US$M 627.0 933.7 1,027.6 599.0 610.4 652.2
----------------- ------ ------------- ------------- -------------- ------------- ------------- -------------
IRR % 40% 51% 44% 39% 37% 42%
----------------- ------ ------------- ------------- -------------- ------------- ------------- -------------
Operating margin % 75% 81% 83% 73% 75% 77%
----------------- ------ ------------- ------------- -------------- ------------- ------------- -------------
Payback Years 2.0 1.7 2.4 2.1 2.2 2.0
----------------- ------ ------------- ------------- -------------- ------------- ------------- -------------
Change in NPV US$M N/A 306.7 400.6 (28.0) (16.6) 25.2
================= ====== ============= ============= ============== ============= ============= =============
3. Project Location and Infrastructure
The Phalaborwa Rare Earths Project is located within the
jurisdiction of the Ba-Phalaborwa Local Municipality in the Limpopo
Province of the Republic of South Africa. Phalaborwa is a
significant mining and industrial centre located approximately 500
km or 5 hours' drive from Johannesburg's OR Tambo airport on
high-quality bitumen roads. The location of the Project is shown in
Figure 1.
Figure 1: Location of the Project
The project benefits from the advanced national infrastructure
such as road, rail and air links with two local airports.
Phalaborwa town has significant support services of use to the
Project, including engineering and technical services. The site has
a full suite of infrastructure that will service the Project
including: access control, offices, stores, workshops, laboratory,
power and water supply.
4. Mineral Resource
The phosphogypsum residue resource to be processed at the
Project is contained in two separate stacks, Stack A and Stack B as
shown in Figure 2.
Figure 2: Google images of the Bosveld stacks. Right: the
position of the stacks in relation to the Phalaborwa mining complex
and town. Left: close-up of the stacks annotated as A and B
Rainbow completed a drilling program on the stacks in December
2020 consisting of 1,056m over 72 holes which produced 702 samples
that were analysed at SGS Laboratories in Johannesburg. The results
from this are the basis for the mineral resource estimate presented
in Table 4.
The mineral resource estimate for the Bosveld phosphogypsum REE
Stacks A and B is presented in Table 4. The resource has been
estimated by the independent Competent Person and is classified as
an Inferred Resource based on the guidelines defined in JORC 2012.
The in-situ dry bulk density has been re-assessed following further
drilling carried out in 2022 and the overall tonnage set out in
Table 4 has been amended compared to the resource initially
reported in June 2021.
Table 4: Mineral Resource Estimate for the Bosveld Phosphogypsum
Stacks
JORC 2012 Stack Tonnes TREO % NdPr Nd Pr Dy Tb LREO HREO CREO Th U In
Classification Name (Mt) Prop % Prop % Prop % Prop % Prop % Prop % Prop % Prop % ppm ppm Situ
dry
BD
--------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ---- --- ----
Stack
Inferred A 21.9 0.42 29.0 23.3 5.7 1.0 0.4 92.1 7.9 27.8 49.0 1.8 1.20
--------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ---- --- ----
Stack B 8.7 0.46 29.4 23.6 5.7 1.0 0.3 92.6 7.4 27.8 44.1 2.0 1.20
---------------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ---- --- ----
Total Inferred 30.7 0.43 29.1 23.4 5.7 1.0 0.3 92.2 7.8 27.8 47.6 1.8 1.20
----------------------- ------ ------ ------ ------ ------ ------ ------ ------ ------ ------ ---- --- ----
Reported at 0.2% TREO cut-off grade. No constraining shell
required as stacks above ground level. Adequate processing test
work completed to satisfy RPEEE.
5. Process Development and Test Work
The recovery of rare earths from phosphogypsum arising as a
residue from phosphoric acid production has been the subject of
international research for many years. The extraction and recovery
of rare earths (REEs) at Phalaborwa has been investigated since the
early 1980's by Fedmis, Mintek and later, briefly, by Bosveld
Phosphates.
Rainbow acquired access to the Phalaborwa phosphogypsum stacks
in 2020 and initiated a test work program to support a technically
and economically feasible flow sheet for rare earths
extraction.
The test work program was established and managed by Rainbow and
conducted at: ANSTO Minerals in Sydney Australia, SGS Laboratories
in Johannesburg South Africa and K-Tech's laboratory in Florida
USA.
The test program culminated in a technically and economically
feasible flowsheet which is the basis of this PEA.
6. Reclamation, Processing and Stacking of Phosphogypsum
Phosphogypsum residue is hydraulically reclaimed from the stacks
and pumped to the process plant for trash and coarse waste removal
delivering a feed to the process plant of 2.2 Mt/a dry solids
equivalent. The screened slurry is thickened and filtered, with the
reclaimed water being neutralised and recycled as process
water.
The dewatered solids are treated to remove impurities.
The phosphogypsum is then delivered to a counter current leach
circuit for extraction of rare earth elements using sulfuric acid.
The filtered leach residue is conveyed to one of two new, HDPE
lined residue disposal stacks.
The pregnant leach solution for the rare earth leach is pumped
to a rapid consolidation circuit for primary rare earth
concentration, prior to the refinery section, and acid recovery to
the counter-current leach circuit.
The rare earth refining circuit combines ion exchange,
chromatography, nanofiltration, precipitation and calcining to
produce three saleable separated rare earth oxide products:
neodymium/praseodymium oxide, dysprosium oxide, and terbium oxide
at an average production rate of 1,848 t/a. The remainder of the
rare earth basket is stored for future consideration as an
intermediate salt.
A simplified block flow diagram (BFD) is shown in Figure
1.3.
Figure 1.3: Simplified Process Block Flow Diagram
7. Environmental & Social Impact
The Project will be constructed on an existing industrialised
site without impacting land use. No new infrastructure is required
outside of the existing property. Rehabilitation of some previously
disturbed land will be accelerated during the project.
The Project will play a crucial role in environmental
remediation and improvement as well as providing economic and
social benefits:
-- Polluted water on the existing stacks, in the existing ponds
and in the groundwater will be neutralised and used as process
water.
-- Seepage of polluted water from the unlined existing stacks will be eliminated and the residue phosphogypsum from the process will be placed on new lined stacks.
-- It is anticipated that a significant proportion of the
residual phosphogypsum will be sold for agricultural and industrial
use and removed from site. The beneficial economic impact of this
has not been included in the PEA.
Rainbow will work closely with previous owners of the property
to accelerate the rehabilitation of unused areas in accordance with
the closure plans and funding already in place.
The project will create numerous employment opportunities during
construction and c. 300 direct job opportunities (excluding
contractors, suppliers, vendors, consultants etc.). Priority will
be given to the people in the Ba-Phalaborwa area with the requisite
skills and experience for these jobs.
Rainbow will give preference to local contractors and where
contractors are imported from other areas, Rainbow will encourage
the employment of local labour.
8. Rare Earths Market
The project will be a significant producer of separated
Neodymium/Praseodymium, Dysprosium, and Terbium oxides which are
expected to represent 98% of the total rare earth market value by
2030, up from 92% in 2020.
The demand for these four magnet rare earth metals, which are
required in electric vehicles and offshore wind turbines, is
forecast to grow as global pressure to decarbonise increases.
Growth in electric vehicle demand is expected to increase by 22.4%
per annum between 2020 and 2030, from a 1.5% passenger vehicle
market penetration in 2020 to 45% by 2040. Global demand for direct
drive wind turbines is expected to grow at approximately 25% per
annum between 2020 and 2030, further driving the demand for rare
earth metals.
As a result, Argus is forecasting strong compound annual growth
rates for the Magnet Rare Earth Metals over the next decade (Nd
6.4%, Pr 6.7%, Dy 7.4% and Tb 33.4%) as shown below:
Highlighting the urgency for near-term production of rare earths
from new sources, Argus is forecasting a 25% supply deficit by 2030
from existing projects. Analysts are forecasting that this supply
deficit will drive strengthening prices for the magnet rare earth
oxides over the next decade.
Argus undertook a market review for Rainbow in January 2022 and
provided price forecasts for individual rare earth oxide products,
which Rainbow has converted into a weighted average basket price
for Phalaborwa. Price forecasts have indicated that the Phalaborwa
product basket price will increase from around US$139/kg in 2022 to
US$227/kg in 2030.
[1] Under the terms of the earn-in agreement between Bosveld
Phosphates (Pty) Ltd and Rainbow, Rainbow is earning a 70% interest
in the Phalaborwa Project by delivering a pre-feasibility study.
The results of the PEA are presented on a 100% basis assuming that
the project is 100% equity funded
[2] Neodymium (" Nd"), Praseodymium ("Pr"), Dysprosium("Dy") and
Terbium ("Tb")
[3] Based on near term price forecasts: Nd US$110/kg; Pr
US$112.50/kg; Dy US$340/kg; Tb US$1,875/kg
[4] Base case financial model outputs - see PEA for details on
assumptions used
[5] Net present value using a 10% forward discount rate
[6] Earnings before interest, tax, depreciation and
amortisation
[7] Derived from weekly data collated by Rainbow from price
reporting agencies up to 23 September 2022
[8] Based on the long-term price forecasts received from Argus,
with the first year of production assumed to occur in 2026 and
prices assumed to remain constant from 2031 to the end of the
project life
[9] Earnings Before Interest, Tax, Depreciation and
Amortisation
[10] Derived from weekly data collated by Rainbow from price
reporting agencies up to 23 September 2022
[11] Based on the long-term price forecasts received from Argus,
with the first year of production assumed to occur in 2026 and
prices assumed to remain constant from 2031 to the end of the
project life
[12] Derived from weekly data collated by Rainbow from price
reporting agencies up to 23 September 2022
[13] Based on the long-term price forecasts received from Argus,
with the first year of production assumed to occur in 2026 and
prices assumed to remain constant from 2031 to the end of the
project life
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END
DRLFSSFUEEESEDS
(END) Dow Jones Newswires
October 03, 2022 02:00 ET (06:00 GMT)
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