Broker SP Angel has raised its valuation for Rainbow Rare Earths Ltd (LSE:RBW, OTC:RBWRF) to 60p from 51p, following the recent release of a new study into the economic potential of the company’s Phalaborwa rare earths project in South Africa.
“We have revised our valuation to 60p from 51p to reflect today’s significant lift in value for the Phalaborwa project to US$627mln,” the broker wrote in a new research note.
“We have applied a hefty discount to this to reflect the need to develop a full feasibility study for bank or other financing, though finance for critical REE materials is expected to come from multilateral and development funding groups.”
The broker highlighted how Rainbow’s skilled team of metallurgical experts had demonstrated the positive economics of rare earth oxide extraction using a new, clean, efficient, and environmentally beneficial extraction process.
“The proposed plant uses existing hydrometallurgical processes to concentrate, clean and separate critical rare earths from gypsum residues,” said SP Angel.
“The process is simple, elegant, low cost and above all, is so much cleaner than existing REE extraction processes around the world. The use of CIX ‘Continuous Ion Exchange’ and CIC ‘Continuous ion Chromatography’, processes used in many industries, including food and mineral processing provides the key to a clean and low cost REE metal separation.”
The broker also took note of the value of the Gakara rare earths project in Burundi, though this project is currently stalled pending approval from the Burundi Minister of Mines.
“It’s not often that we say that the majors should sit up and take notice of a process technology,” continued the broker.
“But then, it’s not so often that we get to see the demonstration of a new ‘breakthrough’ technology. Reunion Mining demonstrated the power of hydrometallurgical processing at the Skorpion zinc project in Namibia which was later bought and successfully developed by Anglo American. Rainbow’s technical director was also responsible for the Skorpion project process breakthrough at MDM Ferroman, the forerunner of MDM Engineering (AIM:MDM).”
But, added SP Angel, this new process is “calculably more valuable and strategically important”.