Michael Walters tip Part 314 Jan 2021 10:23
Production of ~2mtpa of gypsum should realise ~10,000tpa of mixed rare earth carbonate a year. This is expected to realise around 3,100tpa of Neodymium and Praseodymium equivalent metal oxide over 17 years. …
The Phalaborwa plant could, in theory, generate around US$153m of sales a year assuming current NdPr prices, that there is sufficient demand to maintain these price levels and there are minimal losses in the plant.’
Meyer’s conclusions are remarkable. Obviously there is much to do yet, but Rainbow is pushing ahead fast. The old tailings plant last ran in 2010, but if all goes well it could be re-started within the next 18 months, generating income and the finance to create a new plant. Hopefully there will be further news in the weeks ahead confirming some grades and their consistency at Phalaborwa.
At some stage fairly soon it looks as if Rainbow will require more cash to develop the opportunities which are opening up. In November the company raised £2.56m at 6p, but the pace of development is quickening and with the NdPr price pushing up, there should be no shortage of support for another funding as feasibility studies push ahead.
While Rainbow must rank as speculative, it has an added attraction in that the boom in rare earth prices looks certain to continue as the world shifts away from fossil fuels to other forms of power. Short-term market uncertainties can be shrugged aside if you are in the business of supplying the materials for the permanent magnets paying such a fast-growing part of so many of the clean, green technology innovations.
A market capitalisation of pounds 63m and a run up from a low of 1.45p over the past year might suggest Rainbow has already caught a few eyes, but it is still an unknown to most investors. The Phalaborwa opportunity, with the possibility (possibility, not guarantee) of annual revenues of over $150m, is relatively new and little understood. Gakara, one of the rare rare earth producers actually in production outside China, could contain substantial reserves at a high grade which would withstand any competition.
Buying shares in Rainbow must rank as a risk by conventional standards, but while some might fight shy of the geography, in industrial terms it is in the right places at the right time, with two assets of potentially enormous value. The companies are worlds apart, but look at M P Materials, the only producer in America, not that long rescued out of bankruptcy and valued at $5.5bn in the market. It produces around 36,000 tonnes of rare earths annually, perhaps 15% of the world market. Rainbow is a laughable distance from that at this stage, and defining what is what in the rare earths market is confusing – but even a little piece of the action can be very valuable.
No guarantees and fingers crossed, but aside from the unlikely collapse of NdPr prices in a market which almost everyone thinks is bound for the heavens, maybe the risks in Rainbow are not so
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