TIDMRBW
RNS Number : 5858O
Rainbow Rare Earths Limited
04 October 2023
4 October 2023
Rainbow Rare Earths Limited
("Rainbow" or "the Company")
LSE: RBW
Rainbow enters into a Letter of Intent for an offtake
agreement
for Phalaborwa gypsum by-product
-- Phalaborwa project is founded on principles of circularity
via the extraction of value from 'waste' products
-- Green gypsum will be available for sale to both domestic and
international customers in neighbouring countries
-- Demand estimated at ca. 400 to 600 kt per annum, providing
additional revenue stream to Rainbow
-- Sale of gypsum will allow for complete environmental rehabilitation of site
NEWS RELEASE
Rainbow Rare Earths is pleased to announce that it has signed a
Letter of Intent to enter into an offtake agreement with NEXUS
Intertrade (Pty) Ltd ("NEXUS"), under which NEXUS will acquire
gypsum from the Phalaborwa project in South Africa and sell it to
end users.
The Phalaborwa project is due to commence production in 2026 and
operations will involve processing the existing unlined gypsum
stacks in order to extract the rare earth elements. These gypsum
stacks have accumulated acid water over time and Rainbow's process
will neutralise the acid, rendering the water suitable for use in
the process plant.
The by-product of Rainbow's process will be a cleaner, 'benign'
gypsum which no longer contains any acid water residue. The benign
gypsum will be stored on new stacks lined according to
International Finance Corporation standards and Equator
Principles.
NEXUS will work with Rainbow to establish the grade and quality
of the benign gypsum at Phalaborwa, which will in turn determine
the blended average sales price per tonne, as well as the available
markets for its use, both in South Africa and neighbouring
countries.
NEXUS currently anticipates demand from the domestic cement
manufacturing industry, the domestic gypsum board and plaster
manufacturing industry, the domestic agricultural industry, and
from certain international export markets to which it also has
access, estimated at 400 - 600 kt per annum.
An exclusive five-year offtake agreement will be concluded once
Rainbow and NEXUS have agreed upon the annual tonnage of gypsum to
be supplied and the market related price per annum, with the option
for renewal for a further two five-year periods.
The Phalaborwa project currently has a mineral resource estimate
of 30.4 million tonnes and a mine life of at least 14 years;
however, the benign gypsum sales are expected to be a much
longer-life operation, thereby having a positive socio-economic
effect on local industry.
Furthermore, the act of selling the benign gypsum by-product
will see the stacks at Phalaborwa eventually fully depleted, which
will allow for a complete environmental rehabilitation of the
site.
George Bennett, CEO of Rainbow, commented: "This agreement is a
real win-win for Rainbow, NEXUS and our stakeholders. The
Phalaborwa process is founded on the principles of circularity as
we are taking a waste product, cleaning it and extracting value
from it - both via the recovery of the rare earth elements and then
via the sale of the benign gypsum that is produced as the
by-product of the process. This will also have a positive impact on
our project economics with a lower level of long-term gypsum
deposition from the project than anticipated in the PEA.
It also highlights the very strong environmental credentials of
this project: not only will we be neutralising the acid water
currently impacting the unlined gypsum stacks and then depositing
our waste material onto new lined stacks, but we will eventually be
fully depleting these stacks via the sale of the benign gypsum.
This will allow for a full-circle environmental rehabilitation of
the site whilst delivering a 'green gypsum' product to NEXUS'
domestic and international customer base. This offtake agreement
will be helpful to bolster local industry, as well as providing an
additional revenue stream to Rainbow, demonstrating the benefits to
all parties."
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 +44 20 3207 7800
Jennifer Lee
Tavistock Communications PR/IR Charles Vivian +44 (0) 20 7920 3150
Tara Vivian-Neal rainbowrareearths@tavistock.co.uk
Notes to Editors:
About Rainbow:
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 permanent magnet rare earth elements
neodymium and praseodymium, dysprosium and terbium.
The Company is focused on the development of the Phalaborwa Rare
Earths Project in South Africa and the earlier stage Uberaba
Project in Brazil. Both projects entail the recovery of rare earths
from phosphogypsum stacks that occur as the by-product of
phosphoric acid production, with the original source rock for both
deposits being a hardrock carbonatite. Rainbow will use a
proprietary separation technique developed by and in conjunction
with its partner K-Technologies, Inc., which simplifies the process
of producing separated rare earth oxides (versus traditional
solvent extraction), leading to cost and environmental
benefits.
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 < two years. Pilot plant
operations commenced 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
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