Rainbow Rare Earths sets groundwork for taking 100% of Phalaborwa Project

RAINBOW Rare Earths has agreed a new ownership structure with partner Bosveld Phosphates in which it stands to take a 100% in the Phalaborwa project in South Africa.

In terms of the agreement, Rainbow Rare Earths will own 85% of a newly created unincorporated joint venture with Bosveld Phosphate holding the balance. This updates the current structure in which Rainbow Rare Earths has a 70% stake in the project.

Rainbow Rare Earths will pay Bosveld $5m and has the option of paying a further $7m in shares to Bosveld – subject to a 24 month lockup – for the remainder of the project. The option can be exercised between October – when Phalaborwa Project starts to produce its first minerals – to end-2025.

On completion of a definitive feasibility study, the unincorporated joint venture will be converted to an incorporated joint venture.

“We have always wanted to consolidate our interest in the Phalaborwa project, given the exceptional economics highlighted by our preliminary economic assessment,” said George Bennett, CEO of Rainbow Rare Earths.

The first rare earth sulphate is due to be produced from a pilot plant in the third quarter. Back-end of the pilot plant is currently being constructed in the US. It would be commissioned “in good time” to receive the first batch of mixed rare earth sulphate that will be processed to produce high purity magnet rare earth oxides.

In May, Rainbow Rare Earths announced it had raised £7.52m through the issue of shares to “strategic shareholders” that will fund it through to the first quarter of 2024.

In 2021, Rainbow Rare Earths published a maiden inferred mineral resource estimate of 38.3 million tons at 0.43% TREO (total rare earth oxides). The resource is contained in gypsum stacks built up from some 50 years of hard rock phosphate mining.

The project will produce Neodymium (Nd) and Praseodymium (Pr) among other rare earths which are essential metals for the manufacture of permanent magnets which are used in motors and turbines.