REG - Rainbow Rare Earths - Supply Agreement with UK-based Less Common Metals

Rainbow Rare EarthsAnnouncement

11/09/2023 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230911:nRSK9349La&default-theme=true

RNS Number : 9349L  Rainbow Rare Earths Limited  11 September 2023

11 September 2023

Rainbow Rare Earths Limited

("Rainbow" or "the Company")

LSE: RBW

 

Rainbow enters into strategic supply agreement with UK-based Less Common
Metals to develop a responsible Western supply chain for rare earth elements

·    Rainbow will supply LCM with rare earth elements designated as
critical minerals due to their essential role in the green energy transition

·    LCM is the only rare earth metal and alloy manufacturing facility in
the UK and one of the only facilities in the Western world

·    Both Rainbow and LCM are aligned in their values and their ambitions
to play a part in the establishment of a Western supply chain for critical
rare earth elements

NEWS RELEASE

Rainbow Rare Earths is pleased to announce that it has entered into a
strategic supply agreement with Less Common Metals Ltd ("LCM") to be a
supplier of the magnet separated rare earth oxides neodymium and praseodymium
("NdPr"), dysprosium ("Dy") and terbium ("Tb"). These are the most
economically important rare earth elements as they are used to make the
permanent magnets essential to decarbonisation, via their use in electric
vehicles and wind turbines, as well as to defence and other high-tech
products.

These elements are also designated as 'critical minerals' in the UK's Critical
Minerals Strategy as they are defined as having a high criticality for the UK,
according to the economic vulnerability and supply risk criteria used for the
assessment.

LCM is a world leader in the manufacture and supply of complex alloy systems
and metals. The separated rare earth oxides supplied by Rainbow will be used
for manufacturing into metal in order to create an alloy, which is then
supplied to permanent magnet manufacturers in the EU and the USA.

LCM is based in Ellesmere Port, Cheshire; it is currently the only rare earth
metal and alloy manufacturing facility in the UK and one of the only
facilities in the Western world. Its location is of strategic importance to
Rainbow as the Company's aim is to play a part in the establishment of a
Western supply chain for critical rare earth elements outside of Chinese
control.

This is in alignment with LCM's ambitions, which is currently in discussions
to invest in expanded capacity in North America, the EU and Asia.

LCM has been looking to partner with a supplier with similar values in order
to secure ethical supply of the feedstock required for their business and it
has chosen Rainbow after a lengthy evaluation process of the various rare
earth development companies globally. This decision was based on Rainbow's
capability to take its rare earth material further downstream to the separated
rare oxide stage, using the proprietary technology developed by, and in
conjunction with, its partner K-Technologies, Inc.

George Bennett, CEO of Rainbow, commented: "Securing a buyer of our separated
rare earth oxides that shares our values and aspirations was of strategic
importance to Rainbow. We are dedicated to establishing an independent,
responsible and ethical supply chain of the rare earth elements that are
driving the green energy transition.

With over 30 years of experience in the manufacture and supply of metals and
alloys to the permanent magnet industry, LCM is a fantastic partner for
Rainbow. Using its expertise to expand in the USA and the EU, LCM will be
instrumental in meeting the huge and growing demand for permanent magnets."

Albert Slot, Managing Director of LCM, commented: "LCM occupies a unique
position in the rare earth pipeline as it is the only company in the Western
world commercially producing both the highly specialised strip-cast alloys and
all of the required rare earth metals needed for the production of the
highest-performance neodymium iron boron magnets. Furthermore, LCM's expertise
in the commercial production of neodymium metal and neodymium praseodymium
alloy is unique in the Western world.

Given the concentration of the rare earth supply chain, a relationship with
Rainbow offers the opportunity for LCM to secure ethical supply of all four of
the magnet rare earth oxides vital for our business. This partnership will
therefore ensure that together we can continue to develop a responsible and
independent supply chain of rare earth elements to the benefit of the Western
world."

Rainbow's Phalaborwa project is estimated to have one of the lowest costs of
production of Western producers, as it will involve the processing of gypsum
waste residue stacks, hence removing the cost and risk of mining. This low
production cost gives the project resilience against rare earth pricing
volatility in all plausible pricing scenarios, an important consideration for
LCM based upon its 32 year history in the rare earth magnet chain.

Crucially, Rainbow expects to be able to supply all four of the permanent
magnet rare earth elements, including the 'heavy' rare earths Dy and Tb, which
are essential for improving the performance of neodymium magnets. LCM only
recently expanded its metal making capabilities to include Dy and Tb and
Rainbow will be one of the only producers of these oxides outside of Asia.

A framework will be set out in due course for Rainbow and LCM to negotiate a
binding offtake agreement for separated rare earth oxides from Phalaborwa,
with the ultimate customer of the rare earth permanent magnets being clearly
defined and in alignment with both LCM's existing customer base and the
positioning of both companies in an expanding Western supply chain.

Volumes will be driven by LCM's requirements for its expanded facilities,
constrained by Phalaborwa's total productive capacity, and pricing will be as
per published rare earth oxide prices at that point in time.  Any surplus
production from Phalaborwa not required for LCM's facilities will be sold on
the open market to third parties.

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

 

Notes to Editors:

About LCM:

Less Common Metals is a world leader in the manufacture and supply of complex
alloy systems and metals, and are specialists in those based on rare earth
elements. With over 30 years of experience in the production of materials to
tight compositional tolerances and controlled microstructures, LCM offers an
innovative and highly flexible approach to a wide range of material
requirements.

 

Since 2017, LCM has been making neodymium (Nd) and neodymium praseodymium
(NdPr) metal on their premises in the UK commercially at +120 tons per annum.
More recently (April 2023), the company expanded metal making production to
dysprosium iron (DyFe), dysprosium (Dy) and terbium (Tb) to further enhance
their expertise as a complementary supply chain alternative.

 

More information can be found at www.lesscommonmetals.com.

 

About Rainbow:

Rainbow Rare Earths aims to be a forerunner in the establishment of an
independent and responsible 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 will 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 1 
(#_ftn1) , 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 on the company is available
at www.rainbowrareearths.com (http://www.rainbowrareearths.com/) .

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

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  UPDEAPNEFAADEFA