TIDMRBW
RNS Number : 6402V
Rainbow Rare Earths Limited
05 December 2023
5 December 2023
Rainbow Rare Earths Limited
("Rainbow" or "the Company")
LSE: RBW
Proposed US$50 million TechMet investment in Phalaborwa to be
funded by
the U.S. International Development Finance Corporation
-- The TechMet Limited ("TechMet") option to invest US$50
million directly in the Phalaborwa project in South Africa will be
funded by the U.S. International Development Finance Corporation
("DFC")
-- DFC US$50 million funding commitment announced at COP28, the
United Nation's Climate Change Conference, demonstrating the global
effort to responsibly scale production of the metals essential for
clean energy technologies
-- Phalaborwa recognised as having the potential to play a
significant role in the establishment of a more diversified Western
supply chain of the critical rare earths vital for electric
vehicles and wind turbines, as well as many other advanced
technologies
-- Rainbow's innovative processing flowsheet will deliver
separated rare earth oxides, highlighting its unique position
within the pipeline
NEWS RELEASE
Rainbow Rare Earths is pleased to announce that it has received
confirmation that the DFC will be the sole source of funding for
the proposed US$50 million investment by TechMet to acquire a
direct equity stake in the Phalaborwa project (the "TechMet Option
", as announced on 8 November 2023 ).
A focus for the DFC is critical minerals, defined as those
minerals that are essential to the economic or national security of
the U.S. and which have a supply chain vulnerable to disruption.
The DFC addresses critical mineral investment for the U.S. via its
strategic stake in TechMet, which aims to assist in the development
of world-class projects across the critical minerals supply chain.
The projects identified by TechMet must be operated according to
high standards of environmental, social and governance criteria, as
well as showing the potential for excellent economic returns.
The four rare earths that will be produced at Phalaborwa -
neodymium, praseodymium, dysprosium and terbium - are all
designated as critical minerals further to their important role in
the transition to the green economy. As vital components of
permanent magnets, these rare earth elements are used within
electric vehicles and wind turbines, as well as many other advanced
technologies including those required for strategic defence
purposes, such as guided missiles, drones, electronic displays,
sonar and jet fighter engines.
This funding agreement for Phalaborwa follows a period of
extensive due diligence by the DFC and TechMet into Rainbow and the
project, including a site visit for DFC representatives and
multiple layers of approval to ensure that the investment meets the
strict criteria of a U.S. sovereign wealth fund.
Adonis Pouroulis, Chairman of Rainbow, commented: "This approval
of funding from the DFC confirms that Phalaborwa offers a strategic
source of the four most economically important rare earths that are
vital to the green energy transition. Furthermore, Phalaborwa will
use our innovative processing technique to take its material all
the way through to separated rare earth oxides, unlike most rare
earth projects that produce an intermediate mixed rare earth
concentrate which is then sent to China for further refinement. By
providing an independent and reliable source of separated rare
earth oxides, Phalaborwa will help the U.S. to deliver on its goals
to develop a U.S. down-stream supply-chain including specialist
alloy, REE permanent magnets, drive trains, and ultimately EV/wind
turbine manufacture."
Scott Nathan, CEO of the DFC, commented: "The Phalaborwa Rare
Earths Project being developed by Rainbow Rare Earths represents a
compelling opportunity to extract and refine four critical minerals
essential to both the green energy transition and economic
security. DFC is pleased to be able to support this project which
will remediate the effects of legacy mining activities, boost local
economic growth, and diversify the critical minerals supply
chain."
Brian Menell, Chairman and CEO of TechMet, said : "Rainbow's
Phalaborwa Project has an immensely exciting future and this
funding gives it the potential to become one of the world's most
environmentally friendly and low-cost rare earth projects
anywhere.
"We congratulate Chairman Adonis Pouroulis and CEO George
Bennett for the fantastic progress that the Rainbow team has made.
TechMet looks forward to continuing our partnership and bringing
the project to fruition. Rainbow's proprietary separation
technology provides a terrific opportunity to fast-track production
of the four most economically important rare earth elements
essential for future supply chains for electric vehicles, wind
turbines and other products vital to the energy transition."
About the Phalaborwa project
The Phalaborwa project in South Africa represents an exciting,
near-term production opportunity of all four of the permanent
magnet rare earths required for the green energy transition. The
operation will involve the processing of phosphogypsum stacks,
which are the byproduct of historic phosphoric acid production on
the site, which ceased in 2014. This resource sits at surface,
thereby eliminating the cost and risk of traditional mining
projects.
Rainbow will be using proprietary separation technology
developed by, and in conjunction with, its partner K-Technologies,
Inc., which will allow for the material to be processed into
separated rare earth oxides of 99.95% purity. This separation
technique replaces traditional solvent extraction technology, which
uses toxic and flammable solvents and diluents and requires many
different stages, thereby delivering a process that is safer and
more environmentally responsible, as well as reduced capital and
operating costs due to a simplified flowsheet.
The project also has exceptional sustainability related
opportunities as it is founded on the principles of circularity.
Rainbow will be taking a waste product (the existing phosphogypsum
stacks), cleaning it and extracting value from it - both via the
recovery of the rare earth elements and then via the sale of the
benign gypsum that is produced as the by-product of the process.
Rainbow's operations will see the clean-up of the legacy
environmental issues, namely the acid water on site, and will fully
deplete the gypsum stacks over time, thereby allowing for a full
circle environmental rehabilitation of the site.
The Phalaborwa Preliminary Economic Assessment confirmed strong
base line economics for the project, which has a base case NPV(10)
of US$627 million [1] , an average EBITDA operating margin of 75%
and a payback period of < two years. Due to its comparatively
low operating cost and high EBITDA margin, the project is expected
to be highly cash generative across the rare earth pricing
cycle.
TechMet Option - Key Terms
TechMet has been granted an option to invest US$50 million as
part of the equity funding component for the Phalaborwa capital
cost, which will see TechMet take a direct ownership stake at
project level. The TechMet stake will be dependent on the net
present value set out in the definitive feasibility study for the
project. Based on the agreed formula, the equity stake will be
within a range of 15-33%, underpinning a valuation of the project
equity at between US$151.5 million and US$333.3 million.
The TechMet Option is executable for three months following
receipt of a credit approved term sheet for construction debt,
which will define the total equity requirement for the project
development.
As part of the TechMet Option agreement, Rainbow has also
granted TechMet a put option to exchange the direct stake in the
project for shares in the listed entity at the fair market value of
the underlying Phalaborwa stake for a period of two years from the
commercial completion of the Phalaborwa project, or at any time in
the event of a change in control of Rainbow.
For further information, please contact:
Rainbow Rare Earths George Bennett
Ltd Company Pete Gardner +27 82 652 8526
IR Cathy Malins +44 7876 796 629
cathym@rainbowrareearths.com
Matthew Armitt
Jennifer Lee
Berenberg Broker Detlir Elezi +44 (0) 20 3207 7800
Tavistock Communications PR/IR Charles Vivian +44 (0) 20 7920 3150
Tara Vivian-Neal rainbowrareearths@tavistock.co.uk
Notes to Editors:
About Rainbow:
Rainbow Rare Earths aims to be a forerunner in the establishment
of an independent and ethical supply chain of the rare earth
elements that are driving the green energy transition. It is doing
this successfully via the identification and development of
secondary rare earth deposits that can be brought into production
quicker and at a lower cost than traditional hard rock mining
projects, with a focus on the permanent magnet rare earth elements
neodymium and praseodymium, dysprosium and terbium.
The Company is focused on the development of the Phalaborwa Rare
Earths Project in South Africa and the earlier stage Uberaba
Project in Brazil. Both projects entail the recovery of rare earths
from phosphogypsum stacks that occur as the by-product of
phosphoric acid production, with the original source rock for both
deposits being a hardrock carbonatite. Rainbow intends to use a
proprietary separation technique developed by and in conjunction
with its partner K-Technologies, Inc., which simplifies the process
of producing separated rare earth oxides (versus traditional
solvent extraction), leading to cost and environmental
benefits.
The Phalaborwa Preliminary Economic Assessment has confirmed
strong base line economics for the project, which has a base case
NPV(10) of US$627 million [2] , an average EBITDA operating margin
of 75% and a payback period of < two years. Pilot plant
operations commenced in 2023, with the project expected to reach
commercial production in 2026, just five years after work began on
the project by Rainbow.
More information is available at www.rainbowrareearths.com .
About the DFC
The U.S. International Development Finance Corporation (DFC) is
U.S. Government's development finance institution. DFC partners
with the private sector to finance solutions to the most critical
challenges facing the developing world today. We invest across
sectors including energy, healthcare, infrastructure, agriculture,
and small business, and financial services. DFC investments adhere
to high standards and respect the environment, human rights, and
worker rights.
About TechMet
TechMet Limited is a leading technology metals investment
company with a portfolio of assets that responsibly produce,
process, and recycle the metals that are critical to the global
energy transition and the electric vehicle revolution. Current
assets in the TechMet portfolio include lithium extraction from
both brine and hard rock sources, nickel and cobalt hydroxide
production from laterite ores, vanadium chemical production from
industrial waste feedstocks, rare earth production and processing,
tin and tungsten mining, lithium-ion battery recycling, and
high-performance cathode manufacturing. TechMet's major
shareholders include the U.S. International Development Finance
Corporation (DFC) and the global energy and commodity group
Mercuria.
More information is available at www.techmet.com .
[1] Net present value using a 10% forward discount rate
[2] Net present value using a 10% forward discount rate
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END
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December 05, 2023 02:00 ET (07:00 GMT)
Rainbow Rare Earths (LSE:RBW)
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