Rainbow Rare Earths Ltd (LSE:RBW, OTC:RBWRF, FRA:RR1) this week highlighted the potential of its Uberaba project in Brazil, after a recent economic assessment indicated the development could replicate the success of the company’s Phalaborwa rare earths operation.
Chief executive George Bennett said the project stands out because it avoids many of the challenges associated with conventional rare earth mining. Instead of extracting material from hard rock or clay deposits, the company plans to recover rare earth elements from phosphogypsum residue produced during phosphoric acid manufacturing.
Bennett explained that the material is generated as part of ongoing fertilizer production, creating what he described as a “live feed” source of feedstock that could support operations for more than three decades. The residue also contains rare earth grades above 0.5% total rare earth oxides (TREO), which he noted compares favourably with many ionic clay deposits.
According to Bennett, the absence of traditional mining activities removes a number of risks typically associated with rare earth developments.
Bennett joined the Proactive studio about the economic assessment, here we take a closer look at what was said.
Proactive: George, very good to speak with you. Your shares hitting an all time high this morning after that economic assessment suggested Uberaba could replicate the success of Phalaborwa. What makes this project so attractive from a cost and margin perspective?
George Bennett: Well, thanks for having me this morning, Stephen. Yes, I'm very pleased to see our shares hitting an all-time high. And yes, definitely the Uberaba project — not could, but it will replicate the success that we see at Phalaborwa. Similar to Phalaborwa, we are extracting rare earths from waste residue called phosphogypsum as a result of phosphoric acid production in Brazil.
The beauty about this project is that it's a live feed. In other words, the phosphoric acid production facilities are still ongoing for another 30 plus years. So this is a very long-life project, with the average grade of the rare earths in the phosphogypsum at above 0.5% TREO.
When you compare that to ionic clay projects it is a significantly higher grade, with very easy processing and effectively no mining costs. We don’t have to drill and blast, haul, crush or mill ore. This material comes straight from the phosphoric acid plant feed into our rare earth processing extraction plant.
Proactive: How does that change the economics and the risks then, George, compared with traditional rare earth mining?
George Bennett: Most traditional rare earth mining projects have geological risk and mining risk, and then a whole series of processes before you even begin extracting rare earths.
Rainbow starts with a direct acid leach, then goes into a continuous ion exchange circuit and finally solvent extraction, similar to what we are doing at Phalaborwa. Because we avoid the mining stage, many of the typical risks are removed.
That’s what allows our EBITDA margin to sit at around 69–70%, with very low operating costs compared to other rare earth projects.
Proactive: George, you're partnering with Mosaic, a major global fertilizer producer. What does their involvement bring in terms of expertise, infrastructure and speed to development?
George Bennett: I'm very proud that we are partnering with a global fertilizer business. Mosaic is the number two fertilizer company in the world and a multi-billion-dollar business.
The project will move into a pre-feasibility stage and then into a joint venture following a positive outcome. The proposed structure would see Mosaic holding 51% and Rainbow 49%.
Mosaic brings an established site in the sugarcane belt of Brazil. It is a brownfield location with existing infrastructure and many reagents already permitted. The site is already fenced and prepared, similar to Phalaborwa, and that greatly shortens the permitting timeline.
Proactive: How do you see Brazil emerging as a rare earths producer?
George Bennett: Over the last 12 months Brazil has been recognised as a potentially significant supplier of rare earth metals to western markets. The United States has shown interest in aligning with Brazil to help develop an independent rare earth supply chain outside China.
Brazil is emerging as a reliable supplier of these materials for western supply chains.
Proactive: You mentioned the next step is a pre-feasibility study. What milestones should investors watch for?
George Bennett: The next milestone will be the start of the pre-feasibility study, which the teams at Mosaic and Rainbow have already begun preparing for following the economic assessment.
We’ll announce the formal start shortly, followed by the results of the pre-feasibility study and any further process improvements for the Uberaba project.
Proactive: Well I hope to continue to keep us updated with your progress.