Rainbow Rare Earths Regulatory News (RBW)

1 December 2023

Rainbow Rare Earths Limited

("Rainbow" or "the Company")

LSE: RBW

Rainbow's partner K-Technologies, Inc. invited to present at a U.S. Congressional Hearing on:

The Role of Federal Research in Establishing

a Robust U.S. Supply Chain of Critical Minerals and Materials

· K-Technologies, Inc.'s ("K-Tech") innovative technology can play a part in the development of an independent Western supply of the rare earths vital for decarbonisation, via their use in electric vehicles and wind turbines, and many advanced and strategic technologies

· Rainbow has worked alongside K-Tech to jointly develop a unique process that offers the potential to recover critical rare earths from phosphogypsum, as is being applied at the Phalaborwa project in South Africa

· K-Tech is a homegrown U.S. company based in Florida with extensive expertise in the development of specialist chemical processing applications

NEWS RELEASE

Rainbow Rare Earths is pleased to announce that Mr. Thomas E. Baroody, the President and CEO of its technical partner K-Tech, was invited to provide a written and oral testimony at a U.S. Congressional Hearing on "The Role of Federal Research in Establishing a Robust U.S. Supply Chain of Critical Minerals and Materials" on Thursday 30 November 2023. K-Tech specialises in developing and bringing-to-market chemical and processing applications to extract desirable, commercial grade elements and other materials. 

The U.S. has identified the development of an independent supply chain as of strategic importance, both via the securement of reliable and ethical supply of rare earth elements, as well as via the development of a U.S. down-stream supply-chain including specialist alloy, rare earth permanent magnets, drive trains, and ultimately electric vehicle and wind turbine manufacture. K-Tech's inclusion in the U.S. Congressional Hearing demonstrates the role that its technology can play in furthering these aims.

Rainbow has worked alongside K-Tech to jointly develop a unique process flowsheet to recover economic quantities of rare earths from phosphogypsum material, thereby opening up the opportunity to develop an independent Western supply of the rare earths critical to decarbonisation and other strategic areas of national importance, such as defence.

Rainbow will also be using the K-Tech proprietary continuous ion exchange and continuous ion chromatography separation technology at its Phalaborwa rare earth development project, which will allow for the material to be processed into separated rare earth oxides of 99.95% purity. This separation technique replaces traditional solvent extraction technology, which uses toxic and flammable solvents and diluents and requires many different stages, thereby delivering a process that is safer and more environmentally responsible, as well as reduced capital and operating costs due to a simplified flowsheet.

A U.S. Congressional Hearing is the principle formal method by which U.S. congressional committees collect and analyse information which goes on to shape legislative policymaking and decisions. K-Tech was included in the critical minerals event alongside representatives from the U.S. Department of Energy, Stanford University, GreenMet and San Jose State University.

Mr Baroody of K-Tech's written testimony is below:

"The Role of Federal Research in Establishing a Robust U.S. Supply Chain

of Critical Minerals and Materials"

U.S. House of Representatives

Committee on Science, Space and Technology

November 30, 2023

Testimony of Thomas E. Baroody

President and Chief Executive Officer

K-Technologies, Inc.

Lakeland, Florida

INTRODUCTION

Good morning, Chairman Lucas, Ranking Member Lofgren, and members of the Committee. I want to thank you for the invitation to be on this excellent panel today. As one of the representatives of the private sector today, it is my hope that I can provide you all with information and perspective as you consider the vital topic of federal research and prudent taxpayer spending married with private sector initiatives and risk-taking. Taken together, I believe we are building a more robust and diverse U.S. supply chain of critical minerals and materials. Time is of the essence and the task is urgent. 

RARE EARTH ELEMENTS AND THE HISTORIC CHALLENGE OF PROCESSING

Rare Earth Elements (REE) are available from multiple sources such as mineral ores (generally higher grade), ionic clays (generally lower grade, bulk tonnage) and waste materials (phosphogypsum (PG), phosphoric acid sludges, coal mining tailings, end-of-life magnets). Each of these sources require different methods to liberate the contained REE, such as gravity concentration, flotation, hydrometallurgical, and pyrometallurgical processes.

For practical and economic purposes these initial processes must be undertaken at the source location. Intermediate products are then exported (predominantly to China) as a mineral concentrate, typically 40% to 60% contained Rare Earth Oxides (REO) or as a precipitate such as Mixed Rare Earths Carbonate (MREC). These concentrates and MREC intermediate products are then processed to produce separated and purified REO which feed the metal and alloy manufacturers who in turn supply the magnet manufacturers.

Historically, and presently, the final stage of separating and purifying the REE is performed by a highly inefficient, and environmentally unfriendly, Solvent Extraction (SX) process which is independent of the REE source. This SX process requires hundreds of mixer-settlers and virtually all of the world's REE are produced this way in China.

K-TECH AND THE COMMERICAL INDUSTRIAL PROCESS

I would like to talk today about some of the successful business projects K-Tech is engaged in and what we are doing to advance the goal of bringing critical minerals into the U.S.

Over the past 15 years, K-Tech has specialized in developing and bringing-to-market chemical and processing applications to extract desirable, commercial grade elements and other materials. Several alternative technologies to SX are being researched and developed in the West and by K-Tech. The most prospective of these technologies, for early adoption, is Continuous Ion Exchange and Continuous Ion Chromatography (CIX/CIC). This technology has been applied in production facilities for a variety of industries around the world for decades and has been the focus for technology development at K-Tech since 1987, including for REE.

K-Tech has been researching and developing CIX/CIC for application to REE separation and purification for several years and has demonstrated the ability to separate REE with its CIX/CIC process as a result of this research.

The CIX/CIC process has numerous advantages over the conventional SX route in terms of economics, safety, environmental impact, and size of plant, with much lower capital and operating cost intensity.

Over the past several years the REE markets and supply chain have seen some rather dramatic movements, and the global market now realizes that REE from other sources, both from a feedstock (i.e.; mining, waste tailing stacks, or recycled scrap) and geographical standpoint, are needed. As such, there has been a significant increase in REE sourcing assessments and evaluation of alternate feedstock sources.

It is worth emphasizing that often we are utilizing ore from waste by-products of other mining or processing projects from years ago. By using mining waste as a feedstock, we are in a win-win situation whereby critical minerals are being extracted at a lower, commercially viable cost at a benefit to the environment.

It is well known that many phosphate rock sources contain some level of REE, but the concentrations tend to be low, i.e., in the parts/million to hundreds of parts/million. It is also known that during the phosphate rock digestion process to produce phosphoric acid, the majority of the REE is not dissolved, but remains in the phosphogypsum waste. However, some percentage of available REE does dissolve into phosphoric acid and this is where K-Tech had initially focused its recovery efforts.

As an example, in the production of wet process phosphoric acid, elements such as uranium, rare earths, yttrium, vanadium, cadmium, fluorides, and silica are usually present in small quantities. K-Tech's extraction technologies can treat large volumes of intermediate process streams like phosphoric acid in a continuous manner, and isolate and recover certain desired target elements in a highly concentrated low volume solution. This solution in turn can then be treated separately to produce one or more target elements as marketable products.

THE EXAMPLE OF RAINBOW RARE EARTHS

Rainbow Rare Earths Limited (Rainbow) is in the business of establishing an independent and ethical supply chain of the rare earth elements that are driving the green energy transition and the most advanced defense articles and systems. They have a focus on the permanent magnet rare earth elements neodymium, praseodymium, dysprosium and terbium. All four of these elements are categorized by the U.S. Government as being vital in both the short term and medium term.

I note that Rainbow, traded on the London Stock Exchange, desires to have its products processed and used in the U.S., North America, or allied European markets. 

Their corporate strategy meshes well with the Department of Energy's critical mineral strategy detailed in the department's July 2023 "Critical Materials Assessment". That strategy document focuses on diversifying and expanding U.S. supplies, developing alternative manufacturing processes, enhancing material and manufacturing efficiency to reduce waste, and assisting in stockpiling and international engagements to benefit the U.S. (https://www.energy.gov/sites/default/files/2023-07/doe-critical-material-assessment_07312023.pdf)

Rainbow is developing its Phalaborwa REE project in South Africa to recover REE from phosphogypsum and has opted for the CIX/CIC process with K-Tech for the separation and purification of the REE to produce the selected REO products. This presents a unique opportunity for K-Tech to utilize its process allowing separated REO to be produced, independently from China, for sale to the U.S. and allowing development of a U.S. down-stream supply-chain including specialist alloy, REE permanent magnets, drive trains, and ultimately EV/wind turbine manufacture. From a national defense standpoint, magnets are a driving force behind continuous innovation in defense technology such as precision-guided munitions, tank navigation systems, and electronic countermeasures equipment. Without guaranteed independent supply these investments could not be made in the US. 

The Rainbow process to produce rare earths from historic industrial waste, cleans up legacy environmental issues and delivers a true circular economy benefit - not just producing REE from waste, also allowing the cleaned gypsum residue to be sold for agricultural/construction purposes.

Rainbow is also focusing on other global opportunities, including recovery of REE from PG waste from Mosaic Fertilizantes' Uberaba operation in Brazil owned by The Mosaic Company, a New York Stock Exchange listed U.S. multinational. That project is at an earlier stage of development, but the Brazilian undertaking is currently operating and would involve processing a great deal more PG over a much longer life than in South Africa.

The overall process is split into two major parts:

1) Front-end - production of a mixed REE product from the PG, along with restacking of the cleaned-up benign PG into the new lined stack for sale;

2) Back-end - processing of the mixed REE product through K-Tech's propriety CIX/CIC system to produce the four target REE oxides.

If Rainbow is successful in developing a Brazilian operation like it plans in South Africa, the back-end of the processing facility (K-Tech's CIX/CIC system) could logically be located in the U.S. I understand that Rainbow is starting the process to consider potential sites for a commercial plant in the U.S. If so, this would greatly benefit U.S. production of critical rare earth materials.

K-Tech is currently concluding a bench scale test program on the Phalaborwa material and has assembled a CIX/CIC pilot plant for Rainbow at its Lakeland, Florida facility. This pilot plant will commence operation shortly on samples of MREC shipped from Rainbow's pilot plant operation in South Africa, to demonstrate the production of on-specification separated REO for the alloy and magnet industry. The process in Lakeland will, for the first time, allow for the production of separated REE battery metal oxides on a commercial basis in the U.S. That represents a major step forward in bringing this type of supply into the U.S.

I would also like to stress that by both public financing, private capital, and U.S. research we are doing something else that makes the U.S. unique-developing significant intellectual property that ensures our nation is the technological leader for decades to come. At K-Tech, my colleague Wes Berry (CTO of K-Tech), the company, and I hold eight patents (soon to be nine as one is scheduled to be issued in December 2023), of which three have been sold to a third party. Also, our CTO was the inventor of the CIX/CIC process, and holds some thirty other patents. The Rainbow and K-Tech process teams have developed an innovative process to recover REE from PG which has the potential to unlock the vast resource of this material worldwide with a significant environmental benefit for these polluted sites. Rainbow and K-Tech are jointly progressing a patent application for the process to be lodged in the U.S.

ROLE OF FEDERAL GOVERNMENT

K-Tech is highly supportive of the federal government's efforts to support domestic and foreign sourcing and processing, research, and project funding to diversify a secure and sustainable supply chain for minerals that are vital to our national defense and the global economy. Programs undertaken by the Departments of Energy, Defense, and Commerce and the U.S. International Development Finance Corporation (DFC) are playing a key role in unlocking capital to fund promising opportunities in mining and processing of REEs and other critical minerals. 

I understand that Rainbow has entered into an option agreement whereby TechMet has the right to invest US$50 million to fund a substantial part of the equity component for Rainbow's project in South Africa. The DFC is an important shareholder in TechMet.

At the state government level, we work closely with the Florida Industrial and Phosphate Research Institute (FIPR) affiliated with the Florida Polytechnic University. K-Tech, FIPR, and Pacific Northwest National Laboratory (PNNL) are currently cooperating on a joint submission to DOE for funding to examine the extraction of REE from phosphoric acid sludges. Also, in 2014-15, K-Tech worked with Texas Mineral Resources Corp. (TMRC) on a DOE grant to successfully recover several targeted high purity REE from TMRC's Round Top rhyolite orebody in West Texas. K-Tech also participated with TMRC, and two other entities, in recovering REE from coal fly ash waste from a Pennsylvania coal mine under a DOE grant in 2017-18.

CONCLUSION

Science at its essence is about trial and error-experimentation based on systematic methodology based on evidence. The U.S. has always led the world in the field of science. At K-Tech we are devoted to furthering science that leads to better and practical outcomes in the area of critical minerals.

I would like to thank the Committee for the opportunity to provide you with testimony today. This Committee and all the other Congressional committees with jurisdiction over the federal government's role in shaping policy on science and technology, national security, foreign relations, and appropriations must continue to be well-versed on the rapidly changing environment on critical minerals.

For further information, please contact:

Notes to Editors:

About Rainbow:

Rainbow Rare Earths aims to be a forerunner in the establishment of an independent and ethical supply chain of the rare earth elements that are driving the green energy transition. It is doing this successfully via the identification and development of secondary rare earth deposits that can be brought into production quicker and at a lower cost than traditional hard rock mining projects, with a focus on the permanent magnet rare earth elements neodymium and praseodymium, dysprosium and terbium.

The Company is focused on the development of the Phalaborwa Rare Earths Project in South Africa and the earlier stage Uberaba Project in Brazil. Both projects entail the recovery of rare earths from phosphogypsum stacks that occur as the by-product of phosphoric acid production, with the original source rock for both deposits being a hardrock carbonatite. Rainbow intends to use a proprietary separation technique developed by and in conjunction with its partner K-Technologies, Inc., which simplifies the process of producing separated rare earth oxides (versus traditional solvent extraction), leading to cost and environmental benefits.

The Phalaborwa Preliminary Economic Assessment has confirmed strong base line economics for the project, which has a base case NPV10 of US$627 million, an average EBITDA operating margin of 75% and a payback period of < two years. Pilot plant operations commenced in 2023, with the project expected to reach commercial production in 2026, just five years after work began on the project by Rainbow.

More information is available at www.rainbowrareearths.com.

About K-Tech

K-Tech specializes in the development of process technologies that require unique recovery and/or component separation demands, especially those related to continuous separation methodologies. These can be accomplished internally or in conjunction with its clients.

In particular, the company has focused on various separation processes involving continuous ion exchange, continuous chromatography and advanced sorption techniques as they apply to a variety of chemical and environmental applications. K-Tech also has extensive knowhow and experience related to various solvent extraction processes and methods, as well as knowledge of a variety of separation techniques as adjuncts to its core methodologies, e.g. reverse osmosis, distillation, crystallization, and the like.

More information is available at www.ktech-inc.com.