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(Alliance News) - Rainbow Rare Earths Ltd on Wednesday said it intends to raise a minimum of USD5 million through a share placing.
The high-grade rare earth producer will issue shares to new and existing investors at a price of not less than 3 pence each. Rainbow shares were trading 20% lower on Wednesday in London at 3.04p each, giving it a market capitalisation of GBP6.8 million.
The placing will allow the company to invest in increasing production at its Gakara rare earth project in Burundi, it said, through the opening of new mining sites.
Arden Partners and Turner Pope are acting as joint brokers in connection with the placing.
Back in May, Rainbow reported production from the existing two mining areas, Gasagwe and Murambi, during the first part of the year was "disappointing" and principally caused by issues related to poor quality locally-rented machinery which proved incapable of operating efficiently in wet conditions.
In July and August, the company said it intends to focus on completion of a backlog of waste removal before Gasagwe and Murambi can be returned to normal production levels.
Total concentrate production in the year to the end of June was 800 tonnes, as forecast in early May. As at Wednesday, the reference price for Rainbow's concentrate was estimated to be USD11.83 per kilogramme, which has increased 14% since May.