REG - Rainbow Rare Earths - Phalaborwa Development and Resource Update

Rainbow Rare EarthsAnnouncement

20/03/2023 07:00

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RNS Number : 4428T  Rainbow Rare Earths Limited  20 March 2023

 

20 March 2023

Rainbow Rare Earths Limited

("Rainbow" or "the Company")

LSE: RBW

 

Phalaborwa Development and Resource Update

Rainbow Rare Earths is pleased to announce the following update on the
development of the Phalaborwa rare earths project in South Africa.

Highlights

·    Key workstreams have commenced to advance Phalaborwa to the
definitive feasibility study ("DFS") stage.

·  The pilot plant design and setup are progressing in line with
expectations, with commissioning to commence in Q2 2023. Work has started with
Mintek (South Africa's national, ISO-accredited mineral research organisation)
in Johannesburg to design and fabricate the front end of the plant, which will
produce a high-value mixed rare earth sulphate.  The required back-end
separation process continuous ion-exchange ("CIX")/continuous ion
chromatography ("CIC") units have been delivered to K-Technologies Inc.'s
("K-Tech") Lakeland facility for setup and testing.

·    The Company is today announcing an updated JORC compliant Mineral
Resource Estimate ("MRE") for the project, increasing confidence from the
previous Inferred Resource to deliver 24% Measured and 53% Indicated Resource.

·    The overall size of the MRE is confirmed at 30.4 Mt, comprising 0.44%
total rare earth oxides ("TREO").  High-value magnet rare earths Neodymium
("Nd") and Praseodymium ("Pr") represent 29% of the TREO in the rare earths
basket, with economic quantities of Dysprosium ("Dy") and Terbium ("Tb"), in
line with the previous Inferred Resource.

·    As part of the DFS, the Company will undertake additional drilling to
upgrade the MRE further. Rainbow expects that more accurate density
measurements below the water table of the gypsum stacks at Phalaborwa will
provide an opportunity to increase the total tonnage contained in the
resource.

·    The project remains on track to reach production in 2026 - five years
after initial work commenced on site in 2021.

·    Continued progress in ongoing discussions with global strategic
funding partners.

 

George Bennett, CEO, commented: "Workstreams for Phalaborwa's DFS have
commenced according to plan and the pilot plant is on track to commence
operations this year, producing separated rare earth oxides, as part of the
overall project timetable which envisages commercial production from 2026.
This is a remarkable fast-track for any rare earths development project
globally, considering we commenced work at Phalaborwa in 2021.

 

Successful operation of the pilot plant will give further confidence to our
plans to leverage our proprietary technology, with the aim of targeting
opportunities to produce rare earths from historic phosphogypsum stacks, or as
a by-product of phosphoric acid production, on a global scale.

Today's resource upgrade is the result of infill drilling which has confirmed
our expectations that the project's two phosphogypsum stacks are homogenous
and consistent in grade.

The potential for Rainbow to provide an environmentally responsible, near-term
source of the magnet minerals critical for global decarbonisation has
attracted interest from strategic global investors and discussions with
funding partners are progressing well."

Development update

The Phalaborwa preliminary economic assessment ("PEA") released in October
2022 confirmed the strong economics of the project, which has a base case
NPV(10) of US$627 million 1  (#_ftn1) , an average EBITDA operating margin of
75% and a payback period of less than two years.

Rainbow is currently working to advance the project to DFS and a key part of
this is the implementation of a pilot plant operation, which will commence
commissioning in Q2 2023. It will produce sufficient quantities of separated
permanent magnet rare earth oxides for testing and marketing purposes in
off-take discussions with potential partners.

The Company continues to make good progress in discussions with strategic
global funding partners to finance the balance of the pilot plant operation at
Phalaborwa and further progress the DFS.

Pilot plant

The unique and innovative rare earths processing flowsheet designed for the
Phalaborwa project, which will use CIX/CIC technology to deliver separated
magnet rare earth oxides, has been developed in collaboration with Rainbow's
partner K-Tech. This proprietary CIX/CIC process replaces traditional solvent
extraction technology for the separation of rare earth oxides, which can be a
convoluted process and also associated with environmental risks. The CIX/CIC
method is therefore safer and more environmentally responsible, as well as
coming at a significantly reduced capital and operating cost due to a
simplified flowsheet, which can be accommodated by a single hydrometallurgical
processing plant.

The key workstreams for the DFS and pilot plant have commenced and are
progressing well:

Work has started on the front end of the pilot plant, which will comprise the
main phosphogypsum handling circuit that will produce a mixed rare earth
sulphate intermediate solid material. An initial bench-scale programme is in
progress to confirm the pilot testing parameters. The front end of the plant
will be executed at Mintek in Johannesburg, which is one of the world's
leading technology organisations specialising in mineral processing and
extractive metallurgy.

The back-end CIX/CIC separation circuit, which will be piloted at the K-Tech
facility in Lakeland, will produce marketable separated rare earth oxides.

By separating the pilot process between two different centres of minerals
processing excellence, we expect to benefit from:

·     cost and time efficiencies as a result of removing the logistics
involved in transporting pilot-scale equipment from the USA, where it is
designed, fabricated, and tested, to South Africa, where it would have to be
reassembled and commissioned. It will be more efficient to transport the mixed
rare earth sulphate intermediate solid material produced by the front end,
which is a low-volume but high-value product that is readily transportable;
and

·    key K-Tech personnel being present throughout the running of the
pilot, with the ability to oversee and optimise the CIX/CIC process in real
time.

The metallurgical testing for the CIX/CIC processes required in the back end
of the plant has already been undertaken by K-tech and the required CIX/CIC
pilot units have been delivered to its Lakeland facility for setup and
testing.

Progress with DFS

METC Engineering, the minerals processing engineering firm and one of the key
authors of Phalaborwa's PEA, has been engaged to work alongside the Rainbow
team to fully define the required engineering scope for the DFS.

US-based global gypsum experts Ardaman and Associates, Inc., a Tetra Tech
Company ("Ardaman") have been engaged to conduct test and initial design work
for the new stacks upon which the benign gypsum will be deposited.

Resource update

The Company is today announcing an updated JORC compliant MRE for Phalaborwa.
An updated technical resource report will be published on Rainbow's website
within 30 days. This MRE has confirmed a Measured and Indicated ("M&I")
Resource of 30.4 Mt at 0.44% TREO, with the high-value, permanent magnet
elements Nd and Pr representing 29% of the TREO in the rare earths basket, as
well as economic quantities of Dy and Tb. The MRE is reported at a 0.2% TREO
cut-off grade.

Today's MRE update demonstrates increased confidence by upgrading the Inferred
Resource to M&I, which is a key requirement for the DFS 2  (#_ftn2) .

23% of the MRE is Inferred as a result of surface water ponds in the centre of
the gypsum stacks. This material requires a specialised drilling campaign to
confirm the continuity of the grade below the water table. This work will be
completed to convert the MRE to Reserves as part of the DFS.

The technical team is currently focused on evaluation of the density at depth
of the stacks and the Company has sought advice on this matter from Ardaman.
It is probable, based on the Ardaman techniques used to evaluate the resource
of similar phosphogypsum stacks, that the in-situ dry density for the stacks
below the water table is higher than that for the upper dry material. This may
result in an increase in the MRE.

MRE overview

                                          Contribution of TREO by oxide           Grade

                                          %                                       ppm
                            Tonnes  TREO  Nd      Pr      Dy      Tb      Other   Th   U
                            Mt      %
 Stack A                    20.2    0.43  23.4    5.6     1.0     0.3     69.7    50   2
 Stack B                    10.2    0.45  23.3    5.8     1.0     0.3     69.6    43   2
 Total                      30.4    0.44  23.4    5.6     1.0     0.3     69.7    48   2

                                          Contribution of TREO by oxide           Grade

                                          %                                       ppm
                            Tonnes  TREO  Nd      Pr      Dy      Tb      Other   Th   U
                            Mt      %
 Measured                   7.3     0.47  23.5    5.9     1.0     0.3     69.3    47   2
 Indicated                  16.1    0.44  23.5    5.6     1.0     0.3     69.6    49   2
 Inferred                   7.0     0.42  23.1    5.5     1.0     0.3     70.1    45   2
 Total                      30.4    0.44  23.4    5.6     1.0     0.3     69.7    48   2
 October 2022 PEA resource  30.7    0.43  23.4    5.7     1.0     0.3     69.6    48   2
 Variance %                 (0.3)   0.01  0.0     (0.1)   0.0     0.0     0.1     0    0

1.     The MRE is reported at a 0.2% TREO cut-off grade.

2.     The MRE has been estimated by independent consultant Malcolm Titley
of Maja Mining Limited.

3.     Mineral resources are not mineral reserves and do not have
demonstrated economic viability.

Using our unique rare earths processing technology developed in collaboration
with K-Tech, a viable process flowsheet has been designed for economic
extraction and purification leading to an unoptimised recovery of >65% of
the rare earth elements.

Competent Persons Statement

The Mineral Resource Statement presented herein has been compiled by Malcolm
Titley, a Competent Person who is a Member of The Australasian Institute of
Mining and Metallurgy and the Australian Institute of Geoscientists. Mr Titley
is employed by Maja Mining Limited, an independent consulting company. Mr
Titley has sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the activity
which he is undertaking to qualify as a Competent Person as defined in the
2012 Edition of the 'Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves'.  Mr Titley is responsible for the
preparation of the Mineral Resource Estimate and takes overall responsibility
for the resource estimation work and resulting Mineral Resource Statement and
consents to the inclusion in this announcement of the matters based on their
information in the form and context in which it appears.

 

Appendix

"Indicated Mineral Resource" is that part of a Mineral Resource for which
quantity, grade or quality, densities, shape and physical characteristics are
estimated with sufficient confidence to allow the application of mining,
processing, metallurgical, infrastructure, economic, marketing, legal,
environmental, social and governmental factors to support mine planning and
evaluation of the economic viability of the deposit. Geological evidence is
derived from adequately detailed and reliable exploration, sampling and
testing and is sufficient to assume geological and grade or quality continuity
between points of observation. An Indicated Mineral Resource has a lower level
of confidence than that applying to a Measured Mineral Resource and may only
be converted to a probable mineral reserve.

"Inferred Mineral Resource" is that part of a Mineral Resource for which
quantity and grade or quality are estimated on the basis of limited geological
evidence and sampling. Geological evidence is sufficient to imply but not
verify geological and grade or quality continuity. An Inferred Mineral
Resource has a lower level of confidence than that applying to an Indicated
Mineral Resource and must not be converted to a mineral reserve. It is
reasonably expected that the majority of Inferred Mineral Resources could be
upgraded to Indicated Mineral Resources with continued exploration. An
Inferred Mineral Resource is based on limited information and sampling
gathered through appropriate techniques from locations such as outcrops,
trenches, pits, workings and drill holes.

"JORC Code" means the 2012 edition of the Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves prepared by the Joint
Ore Reserves Committee of the Australasian Institute of Mining and
Metallurgy, Australian Institute of Geoscientists and Minerals Council of
Australia. The JORC Code is an acceptable foreign code for purposes of NI
43-101.

"Mt" means million tonnes

"Dy" means Dysprosium

"TREO" means Total Rare Earth Oxides

"TB" means Terbium

"Nd" means Neodymium

"Pr" means Praseodymium

Market Abuse Regulation ("MAR") Disclosure

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR.

For further information, please contact:

 

 Rainbow Rare Earths Ltd   Company  George Bennett     +27 82 652 8526

                                    Pete Gardner
                                    Cathy Malins (IR)  +44 7876 796 629

                                                       cathym@rainbowrareearths.com (mailto:cathym@rainbowrareearths.com)
 Berenberg                 Broker   Matthew Armitt     +44 (0) 20 3207 7800

                                    Jennifer Lee
 Tavistock Communications  PR/IR    Charles Vivian     +44 (0) 20 7920 3150

                                    Tara Vivian-Neal   rainbowrareearths@tavistock.co.uk (mailto:rainbowrareearths@tavistock.co.uk)

 

Notes to Editors:

Rainbow's strategy is to identify near-term, secondary rare earths production
opportunities. Meeting escalating demand for critical minerals needed for
global decarbonisation, we are focused on producing the magnet rare earth
metals neodymium and praseodymium ("NdPr"), dysprosium and terbium. With our
strong operating experience, proven project development experience, unique
intellectual property and diversified portfolio, Rainbow will develop a
responsible rare earths supply chain to drive the green energy transition.

The Phalaborwa Rare Earths Project, located in South Africa, comprises a
Measured and Indicated Mineral Resource Estimate of 30.4 Mt at 0.44% TREO
contained within unconsolidated gypsum stacks derived from historic phosphate
hard rock mining. High value NdPr oxide represents 29.0% of the total
contained rare earth oxides, with economic Dysprosium and Terbium oxide
credits enhancing the overall value of the rare earth basket in the stacks.
The rare earths are contained in chemical form in the gypsum stacks, which
allows high value separated rare earth oxides to be produced in a single
processing plant at site with lower operating costs than a typical rare earth
mineral project.

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 3 
(#_ftn3) , an average EBITDA operating margin of 75% and a payback period of
< two years. Pilot plant operations will commence in 2023, with the project
expected to reach commercial production in 2026, just five years after work
began on the project by Rainbow.

 1  (#_ftnref1) Net present value using a 10% forward discount rate

 2  (#_ftnref2) See Appendix for JORC classifications

 3  (#_ftnref3) Net present value using a 10% forward discount rate

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