(Alliance News) - Rainbow Rare Earths Ltd on Wednesday said it signed a letter of intent with Nexus Intertrade Pty Ltd under which Nexus will buy gypsum by-product from the Rainbow's Phalaborwa project in South Africa.
Rainbow Rare Earths is a South Africa and east Africa-focused rare earth oxide producer. Nexus is a Sandton, South Africa-based international trade and trade enablement company specialising in true end-to-end solutions.
The exclusive five-year offtake agreement will be finalised once Rainbow and Nexus agree on the annual tonnage of gypsum supplied and the market related price per year. The companies have the option to renew the deal for a further two to five years.
Rainbow said the Phalaborwa project is due to start production in 2026 and operations will involve "processing the existing unlined gypsum stacks in order to extract the rare earth elements."
"The Phalaborwa project currently has a mineral resource estimate of 30.4 million tonnes and a mine life of at least 14 years; however, the benign gypsum sales are expected to be a much longer-life operation, thereby having a positive socio-economic effect on local industry," Rainbow explained.
Rainbow Chief Executive Officer George Bennet said: "This agreement is a real win-win for Rainbow, Nexus and our stakeholders. The Phalaborwa process is founded on the principles of circularity as we are taking a waste product, cleaning it and extracting value from it - both via the recovery of the rare earth elements and then via the sale of the benign gypsum that is produced as the by-product of the process."
On Wednesday Rainbow also said proceeds from the GBP4.5 million placing it announced last week includes GBP630,000 from shareholder Pella Ventures Ltd and GBP540,000 from TechMet Ltd. GBP3.3 million was received from "other investors" which includes GBP240,000 from Rainbow's board of directors and senior management.
Last Wednesday, Rainbow said it had raised GBP4.5 million from a placement of 30 million new shares at 15 pence each. The placing price represents a 3.2% discount to the closing mid-market share price of 15.5p per ordinary share on September 26.
"This is an exciting time for the Phalaborwa project, following the milestone production of the mixed rare earth sulphate from the front-end pilot plant in South Africa and with the production of separated rare earth oxides from our back-end pilot plant in the US expected in Q4 2023. This will be the final de-risking step in order to demonstrate the commerciality of the unique rare earth process flow sheet that Rainbow has developed with its partner K-Technologies, Inc to deliver the separated permanent magnet rare earth oxides vitally needed for the green energy transition," commented Bennett.
Shares in Rainbow were down 2.5% at 14.72 pence each in London on Wednesday afternoon.
By Sabrina Penty, Alliance News reporter
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Rainbow Rare Earths (RBW)