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Rainbow Rare Earths set to become one of the world’s largest producers of neodymium and praseodymium, following latest deal

Rainbow now has two high grade rare earth projects

Rainbow Rare Earths Limited -

Rainbow Rare Earths (LON:RBW) is to acquire a major brownfields rare earth project in South Africa called Phalaborwa Rare Earths project

Combined with future output from Rainbow’s existing project at Gakara in Burundi, production from Phalaborwa will make Rainbow one of the largest producers of neodymium and praseodymium in the world.

Rainbow’s chief executive George Bennett estimates that the company’s combined total production from both projects could amount to around 4,000 tonnes of neodymium and praseodymium per year.

But they key point, both with Gakara and with Phalaborwa, is that the capital intensity is likely to be low.

And central to that story is grade. It’s been well-known that grades in and around the Gakara deposit are exceptionally high.

With Phalaborwa, it’s a slightly different story. There is around 35mln tonnes of gypsum containing valuable rare earth mineralization in two stacks resulting from the production of phosphoric acid. 

Initially Foskor mined a hard rock phosphate deposit, with the rare earths initially concentrated through a floatation process before being sent next door to Sasol’s PhosAcid plant from which the gypsum and associated rare earths were deposited onto the stacks.   In essence, much of the waste rock that would originally have been associated with the ore has already been discarded, and the resulting rare earth mineralization has been altered into a chemical form, effectively cracked such that the onward processing requirements will be much simpler.  

What’s more, Sasol also set up a pilot plant to test the viability of extraction, and ended up producing three tonnes of high grade mixed rare earth carbonate. It was only when a competition ruling went against it and rare earth prices dropped that the project was shelved.

But there’s still 35mln tonnes of gypsum  left on those stacks, containing an estimated 210,000 tonnes of rare earths, an estimate based on a grade of 0.6% TREO from Sasol’s grab sample assays, which has the highest percentage of neodymium-praseodymium  in the rare earth basket in the world, at around 30%.

It will now be up to Rainbow to prove up the quality of that resource, which it intends to do with an auger drilling campaign which will be initiated shortly.

“This project now comes into its own,” says Bennett. “We plan to drill these gypsum stacks and get them to inferred and then measured and indicated, and possibly even a reserve, within 12 months.”

He added that the company has the funding plan in place to carry out the work, and that it had already had expressions of interest in relation to project finance further down the line.

Rare earths are much in demand from European and North American investors at the moment, as supply chains have been under increasing scrutiny as a result of the US-China trade war and coronavirus.

“There’s huge interest globally in rare earths at the moment,” says Bennett. “Neodymium and praseodymium are the key rare earths  used in permanent magnets required in EV’s, direct drive wind turbines, and other technology, underpinning the green revolution.”

Quick facts: Rainbow Rare Earths Limited

Price: 9.425 GBX

LSE:RBW
Market: LSE
Market Cap: £39.24 m
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