London-listed Rainbow Rare Earths has announced an economic assessment for the Uberaba project, in Brazil, and says it has reached an agreement with US-based producer and marketer of concentrated phosphate and potash crop nutrients Mosaic to take the project forward.

The company explains that the Uberaba project is similar to its flagship Phalaborwa project, in Limpopo, South Africa, in that it will entail the processing of phosphogypsum – a “waste” product that is the residue from phosphoric acid production.

Uberaba will use Rainbow’s intellectual property (IP) to economically extract both light and heavy rare earth elements (REEs) from the phosphogypsum.

By recovering critical REEs from secondary sources, Rainbow says, these projects eliminate many of the costs and risks associated with traditional REE mining projects and, as such, are situated at the bottom of the industry cost curve.

Rainbow CEO George Bennett says the results of the economic assessment confirm that Uberaba represents a major opportunity to replicate Phalaborwa as an additional high-margin and near-term REE development project, situated in the lowest-cost quartile for the industry.

“We are looking forward to applying all the learnings that have been made in the development of Phalaborwa’s flowsheet, which provide the opportunity to develop Uberaba on a faster timescale,” he says.

Bennett notes that the project is based in Brazil, which he describes as a favourable jurisdiction that is emerging as an important hub for rare earths in the Americas and has been identified as a strategic partner in the development of supply chain independence by the US.

“We have enjoyed working alongside our partner Mosaic, who has provided important technical and operational expertise, as well as a willingness to innovate and make quick progress, and we are delighted to have signed the joint project development agreement with them to take the project forward.”

On completion of a positive prefeasibility study and a decision to proceed with a definitive feasibility study, the company says Rainbow and Mosaic currently intend to establish a joint venture (JV), with Mosaic holding 51% and Rainbow 49%, subject to negotiation of final heads of terms.

UBERABA ECONOMIC ASSESSMENT

The Uberaba project is located in the Minas Gerais state of Brazil where Mosaic is currently mining phosphate rock and producing phosphoric acid for use in the fertiliser industry.

The economic assessment envisages building a processing plant on-site to process the phosphogypsum waste residue at a throughput rate of about 2.7-million tonnes a year over an initial project life of 30 years.

Rainbow says there is excellent potential to extend this life due to the underlying long life of the phosphate feedstock at Uberaba.

The flowsheet that has been defined for the economic assessment uses Rainbow’s IP – developed for the Phalaborwa project – and supported by collaborative testwork between Rainbow and Mosaic.

The company says the phosphogypsum from the Uberaba phosphoric acid process facility is treated for REE extraction, with the aim of delivering separated neodymium and praseodymium (NdPr) oxide and a samarium, europium and gadolinium plus (SEG+) product that is rich in medium and heavy REE, each at greater than 99.5% purity.

The chemically processed and cleaned phosphogypsum stream is then returned to the Mosaic Uberaba process facility.

Using Rainbow’s internal 10% discount rate and rare earth pricing reported by market intelligence provider Argus Media at March 5, the Uberaba economic assessment estimates post-tax net present value at $916-million; the post-tax internal rate of return (IRR) at 45%; the average earnings before interest, taxes, depreciation and amortisation (Ebitda) at $217-million a year over a 30 year life-of-mine; and the pay-back period at 1.7 years.

Rainbow says the economic assessment does not meet the standards for a scoping study under the Joint Ore Reserves Committee- (Jorc-) Code as it is not based on a formally designated resource.

The economic assessment is based on grade information relating to the phosphogypsum feedstock stream provided by Mosaic, incorporating sampling data from the existing operations. A head grade of 0.51% total rare earth oxide (TREO) is used in the economic assessment.

The economic assessment assumes recovery of 57% based on testwork undertaken at Mosaic’s laboratory facilities at the Uberaba site.

Rainbow says capital and operating costs for the economic assessment have been developed in line with the standards adopted for a scoping study under the Jorc Code.

The company says it recognises that the assumptions upon which the economic assessment is based and, therefore, the key findings of the economic assessment may change as a result of the negotiation of the joint venture agreement and shareholders agreement for the proposed JV company.