Rainbow Rare Earths Ltd (LSE:RBW, OTC:RBWRF) confirmed it had begun talks with potential end users of the product from the Phalaborwa project in South Africa.
Securing customers, known as 'off-takers' in the industry parlance, is an important part of the jigsaw as management looks to secure project finance for the operation, which is slated to open in 2027.
The update was shared alongside annual results, highlighting a year of significant progress.
During this period, the company received a $50 million investment proposal from the US International Development Corporation.
Shortly after the year-end, it secured a royalty and placement agreement with the mining fund Ecora, further strengthening its financial position.
Rainbow posted a $4.3 million loss for the 12 months ended June 30, which is to be expected from a business investing in mine development. More importantly, it has available cash resources of a healthy $9.7 million.
The Phalaborwa Rare Earths Project is host to 35 million tonnes of mineral resources with a concentration of 0.44% total rare earth oxides (TREO).
These valuable materials are found in two large stacks of phosphogypsum, a byproduct of historic phosphate mining.
The discovery includes high concentrations of neodymium and praseodymium, crucial components for green energy technologies like electric vehicles and wind turbines, accounting for 29% of the rare earth content.
Additionally, economically valuable dysprosium and terbium further boost the site's potential, making Phalaborwa a key player in supporting the global shift towards renewable energy.
Pilot operations have successfully produced two valuable products: a mixed rare earth carbonate and separated neodymium and praseodymium oxide, with a purity of around 96%.
This marks the first commercial recovery of rare earth elements from phosphogypsum.
After refining the process for separating neodymium and praseodymium, the next step will be to focus on extracting other rare earths, specifically dysprosium and terbium.
The market for rare earth permanent magnets has almost doubled between 2020 and 2024, with demand expected to keep rising by about 7% annually over the next decade, according to Argus Media. This growth is driven by the global shift towards green energy and transportation.