LONDON (Alliance News) - Rainbow Rare Earths Ltd on Tuesday reported new funding with a shareholder, as Gakara production remains challenging.
Major shareholder Pella Ventures Ltd has agreed to provide Rainbow with a USD700,000 unsecured loan to support current operations.
The term loan is for 12 months, at 15% interest.
"The funding agreement with Pella provides working capital whilst the company finalises its short term plans to finance the company's planned investment for growth," said Rainbow Chief Executive Martin Eales.
"Pella is the company's founder and largest shareholder and is committed to supporting the company to achieve its long term aims."
Rainbow has thus agreed with Lind Partners LLC to suspend any further tranches under an existing equity drawdown facility. It has so far drawn USD300,000.
On the production front, Rainbow achieved 347 tonnes of run-of-mine production at Burundi's Gakara in the three months to March, Rainbow's third quarter.
This compares to 371 tonnes the prior quarter.
However, concentrate sold fell to 100 tonnes from 300 tonnes.
"Production at the company's Gakara project in Burundi in the three months to March remained challenging. Rainfall during the period disrupted mining operations as the locally-rented haul trucks available proved incapable of performing in wet conditions which limited waste stripping and dumping," said Rainbow.
"The replacement of the inadequate rented machines with newer more suitable models is a critical component in Rainbow's plans to address mining performance issues."
The gross sales price during the quarter fell 9% on the second quarter to USD1,780 per tonne, due to a fall in rare earth oxide prices.
Shares were 3.6% lower on Tuesday shortly before midday at 2.29 pence each.
Rainbow Rare Earths (RBW)