George Bennett, Rainbow Rare Earths' chief executive, explains to Proactive the royalty agreement with Ecora Resources and the accompanying fundraise.
George Bennett: We are very delighted with this transaction. We raised a total of $10 million, $8.5 million at a 0.85% royalty stream that Phalaborwa would pay Ecora, and then $1.5 million in equity based on the 20-day view out.
So it's quite a big premium to the current share price today. We think this is a positive endorsement of the project and the fact that Ecora is taking equity.
They see Rainbow as being undervalued with upside in the share price as well. But it's largely undilutive to shareholders, which I'm very pleased about.
Proactive: So an endorsement of Phalaborwa as a standout rare earths project and I presume that Ecora took a very close look at the project.
George Bennett: Ecora did extensive due diligence on the project using third-party consultants and we obviously passed the due diligence with flying colours, confirming that they are very happy with our technology as well as our pilot plant results and the project's economics.
I must point out that this is the third independent third-party validation of Rainbow and our technology, the same process we incurred when the DFC came into Rainbow last year.
So I'm very pleased that we've done two sets of validation on Rainbow, confirming what an outstanding project this is.
Proactive: How will the funds help you progress the project?
George Bennett: It will allow us to complete the workstreams to complete the DFS, scheduled for the first half of next year, and obviously to fund that right through until June next year.
So I'm very pleased that there's no pressure on the share price, and we should hopefully see a rerating of Rainbow.
Proactive: What's happening on the ground at Phalaborwa?
George Bennett: We announced two weeks ago, we've had very good optimisation results from the frontend pilot work, resulting in a huge amount of positive optimization opportunities that will flow into the DFS.
Likewise, we also announced positive results out of the pilot plant work being done in Florida on our second search operation.
We've achieved up to 97% purity of separated oxides. We are targeting 99.5% purity, and we're still on track to achieve this.