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(Alliance News) - Shares in Rainbow Rare Earths Ltd sunk on Wednesday as it reported a heavily widened loss during a challenging year for the company.
The stock was trading 12% lower at 2.60 pence each in London on Wednesday morning.
In the year ended June 30, the rare earth elements miner reported a 55% revenue rise to USD1.5 million from USD992,000. Pretax loss, however, deepened to USD12.1 million from USD2.5 million.
Rainbow recorded production costs of USD3.1 million, a depreciation expense of USD2.6 million and an impairment charge of USD3.9 million, related to its write down some of its mining operations in Burundi and Rwanda - all outgoings that it did not incur last year.
In financial 2019, its first full-year of production, Rainbow said it sold 850 tonnes of concentrate, up 79% year-on-year from 475 tonnes, at an average grade of 57% total rare earth oxides.
The company's focus is on its Gakara asset in Burundi, one of the highest grade rare earths projects in the world. Rare earth elements - like europium, neodymium and cerium - are used in products like hybrid vehicle batteries and energy efficient lights.
Chief Executive George Bennett said: "The results reflected a tough year for Rainbow. However, while production was challenging, it would be more correct to characterise our operating methods in the year as trial mining. We have been able to learn a lot about our project in the year, and are now adapting the way we operate, and while we will continue the trial mining at Gakara, we are moving to a more mechanised, efficient operation.
"This experience gained in this trial mining phase will enhance our understanding of this orebody whilst we prove that we can develop the project as a low-cost mine. We have already embarked on a programme of test work and further exploration whose aim is to define a JORC Resource sufficient to support an initial ten-year life of mine, with a first stage target production of 10,000 tonnes of concentrate a year grading at 54% to 56% total rare earth oxides."
By Eric Cunha; ericcunha@alliancenews.com
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