One of the world’s richest rare earth deposits continues towards resolution of issues with Burundi partner

Rainbow Rare Earths’ production in Africa to be expanded through extraction from South African mine tailings.

When it comes to rare earths it is important to identify the most valuable ones. Rare Earth permanent magnet production accounted for 91% of the total monetary value of rare earth consumption in 2019, and neodymium and praseodymium (NdPr) are the two key rare earth elements used in permanent magnets, particularly neodymium. This explains why most rare earth miners target NdPr. They are simply the most in demand and are highly valuable.

Rainbow Rare Earths Limited (LON: RBW) (“Rainbow”) is a rare earths miner targeting NdPr production at their two African rare earth projects. Rainbow’s strategy is to become a globally significant producer of magnet rare earths. Rainbow has two African-sited projects, each of which has a special attribute leading to potentially lower cost mining. Rainbow also has exclusive rights, across the SADC region of Africa, to privately owned American specialty chemical engineering company’s (KTech) rare earths continuous ion chromatography separation technology. The K-Tech process targets individual separation of rare earth from natural mixtures in fewer stages with more flexibility than traditionally used solvent extraction thereby saving on upfront CapEx and ongoing OpEx and potentially producing a higher end-value separated oxide rather than a carbonate. Testing is ongoing.

Rainbow’s two rare earths projects are:

The Phalaborwa Project (70% earn-in agreement)

The Phalaborwa Project comprises an Inferred Mineral Resource estimate of 38.3Mt at 0.43% Total Rare Earth Oxides (TREO) contained within gypsum ‘tailings’ stacked in unconsolidated dumps derived from historic phosphate fertilizer hard rock mining. Being a tailings resource eliminates the need for hard rock mining, which is expected to lead to lower operational costs. The Resource has a high-value NdPr content representing 29.1% of the total contained rare earths, measured as oxides, with economic dysprosium and terbium, key rare earths for high temperature operation of permanent magnets, as valuable by-product credits. The Project has 5-10 times higher grade NdPr than a typical ionic clay style rare earth deposit (see table below). It also has low levels of radioactive elements which means easier processing and lower costs.

Being on the site of a past mining operation, the Phalaborwa Project has excellent infrastructure and transport logistics. The Project is largely permitted and positioned in an established mining region.

Rainbow Rare Earths’ two projects have good grade NdPr, especially Gakara

Source: Rainbow Rare Earths company presentation

The Gakara Project (90% interest)

Rainbow states that “the Gakara Rare Earth Project is one of the world’s richest rare earth deposits.” Rainbow has a 90% interest in the Gakara Project with a non-dilutable 10% owned by the Burundi State. The mining permit covers a large area of over 39km2 and has a 25-year mining license that began in March 2015.

Gakara was placed on care and maintenance in June 2021 at the request of the Government of Burundi. Primary concerns of the Burundi Government are understood to relate to the pricing of the mineral concentrate currently sold under a long-term offtake agreement with a German company’s (ThyssenKrupp), trading arm. Rainbow states: “Rainbow continues to engage constructively with stakeholders to resolve the issue and allow trial mining to recommence as soon as possible.”

Highlights of the Gakara Rare Earth Project

Source: Rainbow Rare Earths website

Closing remarks

Rainbow has two exciting African rare earth projects.

The Phalaborwa Project has several advantages including:

  1. An ore tailings source, so no need for hard rock mining, crushing, or milling and hence lower production costs.
  2. High-value Nd and Pr oxide content representing 29.1% of the total contained rare earth oxides, with low levels of radioactive elements, and 
  3. An existing mining site with great infrastructure and logistics available.

The Gakara Project has outstanding NdPr grades in visible “veins” and is amenable to simple physical separation of minerals from waste rock to produce a high value rare earth concentrate. This makes for a low OpEx project. The Project is currently on care and maintenance pending the expected resolution of certain legal issues with the government of Burundi.

Risks are typical of those for junior rare earths miners including funding risk and in this case, sovereign risk in Africa.

Rainbow Rare Earths Limited trades on a market cap of £ 78 million (~US$105 million). One to follow with great interest.