TIDMRBW
RNS Number : 1038E
Rainbow Rare Earths Limited
28 June 2023
28 June 2023
Rainbow Rare Earths Limited
("Rainbow" or "the Company")
LSE: RBW
Rainbow Confirms Agreement to Allow 100% Ownership of Phalaborwa
Project
Rainbow Rare Earths is pleased to announce that it has signed an
agreement with Bosveld Phosphates (Pty) Limited ("Bosveld") to
allow 100% ownership of the Phalaborwa Project in South Africa.
Under the terms of the agreement, Rainbow will receive an
immediate 85% interest in the unincorporated joint venture that
holds the rights to Phalaborwa, with Bosveld holding the remaining
15%. This updates the original Project Co-Development Agreement,
which envisaged Rainbow earning a 70% interest in Phalaborwa
further to the completion of a pre-feasibility study on the
project. Under the terms of the agreement, Rainbow will pay Bosveld
US$5 million in cash in July 2023.
Under the agreement Rainbow is also being granted a call option
to acquire the remaining 15% of the joint venture owned by Bosveld,
in return for US$7 million of equity in the Company, at any time
from 31 October 2023 until 31 December 2025. Rainbow shares issued
pursuant to the call option will be subject to a 24-month
lock-up.
On completion of a definitive feasibility study ("DFS") the
unincorporated joint venture will be transferred into an
incorporated joint venture company and, at Rainbow's election,
Bosveld will transfer all assets required for the project into that
company.
Next steps for Phalaborwa
The consolidation of project ownership has been completed as
activity for Phalaborwa is increasing to de-risk the project and
deliver a DFS.
As previously announced, front end pilot plant operations have
commenced in South Africa and are on track to produce first
high-value mixed rare earth sulphate in Q3 2023. The pilot plant
back end is being constructed in Florida, USA, and will be
commissioned in good time to receive the first batch of mixed rare
earth sulphate to produce high purity separated magnet rare earth
oxides.
Other key workstreams to deliver the DFS are progressing in
parallel, which will underpin Phalaborwa as a near term solution to
the need for a diversified western supply of permanent rare earth
magnets required for the energy transition.
George Bennett, CEO, commented: "We have always wanted to
consolidate our interest in the Phalaborwa project, given the
exceptional economics highlighted by our preliminary economic
assessment that confirmed an NPV(10) of US$627m based on spot rare
earth prices at the time of publication. We are therefore delighted
to reach this agreement with Bosveld which offers a clear path to
Rainbow owning 100% of the project.
This is an exciting time for Rainbow and Phalaborwa, with the
front end of the pilot plant operational in South Africa and the
back end being constructed in USA. I look forward to announcing the
results from the front end pilot testing, confirming we are able to
extract the rare earths and produce a saleable mixed rare earth
sulphate. The fact that we will have achieved this within three
years of signing the initial Phalaborwa earn-in agreement is
testament to the combined strength, delivery capabilities and rare
earth experience of our technical team."
Further Details of the transaction
The US$7 million equity to be issued if the Company exercises
its call option to acquire the remaining 15% of the joint venture
company from Bosveld will be priced based on the Rainbow share
price in October 2023. In addition to the call option held by
Rainbow, Bosveld have been granted a put option to sell their 15%
stake to Rainbow on the same terms, amongst other things, once the
assets required for the project have been transferred into the
joint venture company as it is the intention of both parties that
Rainbow will be the 100% owner of the project prior to
construction. The long stop date for the exercise of the options is
31 December 2025.
In addition to the gypsum stacks, the assets to be transferred
into the joint venture company include a long-term notarial lease
for the land required for the project, which will be located away
from the historic phosphoric acid production facility located on
the Bosveld site, and the rights to tie into existing
infrastructure for power and water. On transfer, the joint venture
company will take responsibility for the day-to-day management of
the leased area including the gypsum stacks. Bosveld will provide a
contractual indemnity against the historic environmental
liabilities for the leased area, which has an existing
environmental rehabilitation fund in place that is currently
managed by Sasol Limited, the historic owner of the site, and
Bosveld.
For further information, please contact:
Rainbow Rare Earths Ltd Company George Bennett +27 82 652
8526
Pete Gardner
Cathy Malins (IR)
+44 7876 796 629 cathym@rainbowrareearths.com
Berenberg Broker Matthew Armitt
Jennifer Lee
+44 20 3207 7800
Tavistock Communications PR/IR Charles Vivian
Tara Vivian-Neal +44 (0) 20 7920 3150 rainbowrareearths@tavistock.co.uk
Notes to Editors:
Rainbow Rare Earths aims to be a forerunner in the establishment
of an independent and ethical supply chain of the rare earth
elements that are driving the green energy transition. It is doing
this successfully via the identification and development of
secondary rare earth deposits that can be brought into production
quicker and at a lower cost than traditional hard rock mining
projects, with a focus on the magnet rare earth elements neodymium
and praseodymium ("NdPr"), dysprosium and terbium.
The Phalaborwa Rare Earths Project, located in South Africa,
comprises a total Mineral Resource Estimate of 30.4 Mt at 0.44%
TREO contained within unconsolidated gypsum stacks derived from
historic phosphate hard rock mining. High value NdPr oxide
represents 29.0% 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. Rainbow will use a
proprietary separation technique developed by its partner
K-Technologies, Inc. for the plant at Phalaborwa, which simplifies
the process of producing separated rare earth oxides (versus
traditional solvent extraction), leading to cost benefits, as well
as being more environmentally friendly.
The Phalaborwa Preliminary Economic Assessment has confirmed
strong base line economics for the project, which has a base case
NPV(10) of US$627 million [1] , an average EBITDA operating margin
of 75% and a payback period of less than two years. Pilot plant
operations will commence in 2023, with the project expected to
reach commercial production in 2026, just five years after work
began on the project by Rainbow. More information on the company is
available at www.rainbowrareearths.com .
[1] Net present value using a 10% forward discount rate
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
AGRBLGDLXBDDGXR
(END) Dow Jones Newswires
June 28, 2023 02:00 ET (06:00 GMT)
Rainbow Rare Earths (LSE:RBW)
Gráfica de Acción Histórica
De Abr 2024 a May 2024
Rainbow Rare Earths (LSE:RBW)
Gráfica de Acción Histórica
De May 2023 a May 2024