Rainbow Rare Earths Ltd (LSE:RBW, OTC:RBWRF) chief executive George Bennett has described the company’s Phalaborwa project as “unique in the rare earths space”, with the project showing what he says is a fundamentally different cost profile to traditional mining projects.
Phalaborwa, in in South Africa, sees the recovery of rare earths from ‘phosphogypsum stacks’ – features that are created as byproducts in the production of phosphoric acid.
Reprocessing these stacks is seen to be highly cash-generative, even against a backdrop of lower rare earth prices.
A pilot plant began production in 2023 and the project is slated to ramp up to commercial production scale by 2026.
“It [Phalaborwa] is expected to be the highest margin rare earth project in development today,” Bennett said in the AIM-quoted firm’s interim results statement.
He added: “Its potential to offer exceptional financial returns, its ability to go further down the supply chain to produce separated rare earth oxides, and its strong environmental credentials have seen the project backed by the U.S. Government during the Period, with a US$50 million funding commitment from the DFC announced at COP28, to be invested via TechMet.”
As well as Phalaborwa, the company’s earlier stage but potentially larger Brazilian project also promises similarly exciting potential according to Bennett.
“We are excited about the prospects for the Uberaba phosphogypsum project in Brazil, which is being developed in partnership with Mosaic,” he said.
“Initial test-work to date has been encouraging and the project is of a significantly larger scale than Phalaborwa.
“Furthermore, the addition of Uberaba adds geographical diversification to our portfolio and is in line with our aspiration 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."
In terms of financials, the pre-revenue growth company reported $8.5 million of costs that were capitalised for Phalaborwa. The company reported a net loss of $1.5 million for the six month period, ended 31 December. It had $4 million of cash at the end of the half.
As well as the US funding agreement, the company also entered into a letter of intent for a potential offtake agreement for Phalaborwa and a separate strategic supply agreement was entered into with a rare earth metal and alloy facility in the UK - which can potentially add further financial security to the venture.