REG - Rainbow Rare Earths - Private placement raises £7.52 million

Rainbow Rare EarthsAnnouncement

09/05/2023 07:15

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RNS Number : 7152Y  Rainbow Rare Earths Limited  09 May 2023

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED UNDER THE MARKET
ABUSE REGULATION (EU) NO. 596/2014, AS AMENDED, AS IT FORMS PART OF UK LAW BY
VIRTUE OF THE EUROPEAN (WITHDRAWAL) ACT 2018 ("MAR").  IT IS FOR INFORMATION
PURPOSES ONLY AND IS NOT AN OFFER OF SECURITIES IN ANY JURISDICTION THIS
ANNOUNCEMENT AND THE INFORMATION IN IT, IS NOT FOR PUBLICATION, RELEASE OR
DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE
UNITED STATES, AUSTRALIA, CANADA, NEW ZEALAND, JAPAN, THE REPUBLIC OF SOUTH
AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION
OR BREACH OF ANY APPLICABLE LAW OR REGULATION.

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION
IN THE UNITED STATES.

FOR IMMEDIATE RELEASE

 

9 May 2023

Rainbow Rare Earths Limited

("Rainbow" or "the Company")

LSE: RBW

 

Private placement raises £7.52 million

Rainbow Rare Earths is pleased to announce that it has agreed conditionally to
issue 72,452,846 new ordinary shares in the Company of no par value each
("Ordinary Shares") at a price of 10.377p per Ordinary Share (the "Placing
Price"), thereby raising gross proceeds of £7.52 million (the "Placing").
The Placing Price represents a 28.1% premium to the closing share price of
8.1p per Ordinary Share on 5 May 2023 when the Placing Price was agreed.

The 72,452,846 Ordinary Shares to be issued at the Placing Price includes:

·    £5.54 million received from existing shareholder TechMet Limited
("TechMet"), the private investment company developing world class projects
across the critical metals that form the key building blocks for the global
energy transition;

·    £0.79 million received from existing shareholder Pella Ventures
Limited ("Pella"), a family office with a focus on clean technologies and
sustainable energy. Pella is a related party on the basis that its founder,
Adonis Pouroulis, is also Non-Executive Chairman of Rainbow; and

·    £1.18 million from other investors, including £0.28 million from
various members of Rainbow's Board of Directors.

Reasons for the Placing

The Placing proceeds which total US$9.5 million, in addition to the Company's
cash balance of US$2.1 million as at 31 December 2022, cover the Company's
financing requirements beyond the end of Q1 2024 and will allow for the
completion and operation of the Phalaborwa pilot plant, the finalisation of
the Phalaborwa definitive feasibility study ("DFS") and for general working
capital purposes, as per the requirements set out in the Company's interim
results published on 31 March 2023.

George Bennett, CEO of Rainbow, commented: "We are delighted to have received
support from various strategic shareholders in Rainbow, including TechMet.
Following a rigorous independent technical and ESG due diligence process,
TechMet have confirmed that they share our view that Phalaborwa is one of the
most exciting rare earth development projects globally.  I am particularly
pleased with the strong support at a premium to the market price from members
of the Rainbow Board.

The funds raised will provide funding beyond the end of Q1 2024, thereby
ensuring the delivery and operation of the Phalaborwa pilot plant and the
production of the first separated rare earth oxides for testing and marketing
purposes in off-take agreements with potential partners, as well as delivering
the completion of the project DFS."

Brian Menell, Chairman and CEO of TechMet, commented: "Phalaborwa provides the
opportunity to fast track production of the four most economically important
rare earth elements, which are used to make the permanent magnets essential to
wind turbines, electric vehicles and other modern day consumer products vital
to the 21(st) global economy. This funding will ensure the completion of the
pilot plant, de-risking the Phalaborwa project and the Rainbow investment
proposition. It is a validation of the Company's proprietary separation
technology and its strategy to identify other secondary near-term sources of
rare earths globally."

Participation of the Directors and Related Parties

The following Directors of Rainbow are participating in the Placing:

 Name              No. of Ordinary Shares held as at date of this announcement  No. of New Shares subscribed for in the Placing  No. of Ordinary Shares held immediately following Admission  % interest in Ordinary Shares immediately following Admission
 Adonis Pouroulis  76,478,864                                                   7,630,005                                        84,108,869                                                   14.1%
 George Bennett    36,036,683                                                   763,000                                          36,799,683                                                   6.1%
 Alex Lowrie       6,075,124                                                    763,000                                          6,838,124                                                    1.1%
 Atul Bali         3,657,992                                                    763,000                                          4,420,992                                                    0.7%
 J Peter Pham      250,000                                                      381,500                                          631,500                                                      0.1%

 

In addition to the direct participation by Pella, referred to above, Piran
Resources Limited, a company which is an associate of Pella, is subscribing
for 2,289,001 shares for a total investment of US$300,000 (£237,530).

Board Representation

As part of the Subscription, the Company has agreed to grant TechMet the right
to nominate one Director to the Board of the Company, for so long it holds at
least 10% of the issued shares in the Company.  Accordingly, it is intended
that Mr Darryll Castle, TechMet's Director of Operations, will be appointed as
a Non-Executive Director to the Board of Rainbow shortly after Admission and
an announcement will be made on appointment.

Total voting rights and Admission

An application has been made for the 72,452,846 Ordinary Shares to be issued
pursuant to the Placing (the "New Shares") to be admitted to the Official List
(by way of a Standard Listing) and to trading on the London Stock Exchange
Plc's Main Market for listed securities ("Admission").  It is expected that
Admission will become effective and that dealing in the New Shares will
commence on or around 15 May 2023.  The New Shares will rank pari passu with
the existing Ordinary Shares.

Following Admission of the New Shares, the Company will have 598,858,656
Ordinary Shares in issue and this number may be used by shareholders as the
denominator for the calculations by which they will determine if they are
required to notify their interest in, or a change to their interest in, the
Company under the FCA's Disclosure, Guidance and Transparency Rules.

IMPORTANT NOTICES

This announcement includes "forward looking statements" which include all
statements other than statements of historical facts, including, without
limitation, those regarding the Company's financial position, business
strategy, plans and objectives of management for future operations, or any
statements proceeded by, followed by or that include the words "targets",
"believes", "expects", "aims", "intends", "will", "may", "anticipates",
"would", "could" or similar expressions or negatives thereof. Such forward
looking statements involve known and unknown risks, uncertainties and other
important factors beyond the Company's control that could cause the actual
results, performance or achievements of the Company to be materially different
from future results, performance or achievements expressed or implied by such
forward looking statements. Such forward looking statements are based on
numerous assumptions regarding the Company's present and future business
strategies and the environment in which the Company will operate in the
future. These forward-looking statements speak only as at the date of this
announcement. Except as required by the FCA, the London Stock Exchange or
applicable law (including as may be required by the Listing Rules, the
Prospectus Regulation, the Prospectus Rules, MAR and the Disclosure Guidance
and Transparency Rules), the Company expressly disclaims any obligation or
undertaking to disseminate or release publicly any updates or revisions to any
forward looking statements contained in this announcement to reflect any
change in the Company's expectations with regard thereto or any change in
events, conditions or circumstances on which any such statements are based.

Market Abuse Regulation 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, as amended ("MAR"), and
is disclosed in accordance with the Company's obligations under Article 17 of
MAR. Market soundings, as defined in MAR, were taken in respect of the
Placing, with the result that certain persons became aware of inside
information, as permitted by MAR. That inside information is set out in this
announcement and has been disclosed as soon as possible in accordance with
paragraph 7 of article 17 of MAR. Therefore, those persons that received
inside information in a market sounding are no longer in possession of inside
information relating to the Company and its securities.

 

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

 Berenberg                 Broker   Matthew Armitt     +44 20 3207 7800
                                    Jennifer Lee

 Tavistock Communications  PR/IR    Charles Vivian     +44 (0) 20 7920 3150
                                    Tara Vivian-Neal   rainbowrareearths@tavistock.co.uk

 

 

Notes to Editors:

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 magnet rare earth elements neodymium and
praseodymium ("NdPr"), dysprosium and terbium.

The Phalaborwa Rare Earths Project, located in South Africa, comprises a total
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. Rainbow will use a
proprietary separation technique developed by its partner K-Technologies, Inc.
for the plant at Phalaborwa, which simplifies the process of producing
separated rare earth oxides (versus traditional solvent extraction), leading
to cost benefits, as well as being more environmentally friendly.

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 1 ,
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  Net present value using a 10% forward discount rate

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