Rainbow Rare Earths Ltd (LSE:RBW, OTC:RBWRF) CEO George Bennett explains the good numbers behind its latest interim study for the Phalaborwa project in South Africa.
George Bennett: We had indicated to the market that we would have an interim study out before the end of the year.
So, I'm pleased to say that we have achieved that, and the interim study, I think, is very pleasing for Rainbow.
Proactive: You do say that it confirms the viability of the projects and that it remains robust despite two years of inflation since the PEA.
George Bennett: Correct. I mean, we’ve experienced over the last two years at least six percent per annum inflation.
If you compound that over two years, the purely inflated number for CapEx would be somewhere in the region of 330-odd million dollars, and we've come in below that.
This is a result of optimization and lots of work by the technical team.
We see projects all over the world blowing up massively on their CapEx numbers. And I'm pleased to say that we are, in fact, under inflation, which is a good result, I think.
Proactive: And you also reiterate, George, that with the low operating costs of the project, it will be the highest-margin rare earths project outside of China.
George Bennett: That's correct. At the initial PEA I made a statement that we think we are one of the highest-margin businesses in the rare earth market outside of China.
That has been confirmed independently by Argus Media in their report, which is part of our RNS.
With the impact of inflation on Opex, which would also be taken into account, our biggest number comes out just above $40 per kilogram.
That's obviously for the full magnet rare earths. It is just above inflation and takes into account some 34-plus percent inflation in power in South Africa.
Going forward, we're going to look to optimize the cost of our power by exploring renewable power sources, including solar power. We feel this will bring down the power part of the Opex quite a bit.
We also see optimization on the CapEx. By the time we publish the final DFS next year, improvements around plant layout, residue stacking, and one or two other small areas might help the overall economics even further.
Proactive: Not included in the economics of the interim study, is the additional revenue streams that you can get from the sale of other non-magnet rare earths, as well as from the gypsum concentrate?
George Bennett: The gypsum, clean gypsum residue. Yes. We do recognize that there'll be some revenue from the sale of the non-magnet rare earths as well as gypsum sales on the clean, benign gypsum we’ll be re-stacking.
Because we wanted to compare this economic assessment in this interim report to what was done in the PEA, we kept things the same.
But it just proves our NPV has only been marginally impacted two years later. It's in line with the PEA, which I'm pleased to say.
Going forward, if you look at our Opex over all the rare earths that we produce, it's somewhere around $12.90, I think, which we know is probably the lowest globally outside of China. So, a very, very good result.
Proactive: George, going into the new year, what should investors be looking out for? What are the next steps with the project?
George Bennett: We will be focusing on the optimization of the final separation purity levels. That work has already started in our new laboratory in South Africa.
We’ll also be running a pilot plant on the back end in South Africa.
Our pilot plant is currently on the water being shipped from Florida to South Africa.
It'll arrive in late January, and we’ll be setting it up to finalize the optimization of the purity levels in our separation process.
We’re looking forward to very positive results coming out of that optimization process being done by the in-house Rainbow team.