Name of the Project
Phalaborwa Rare Earths Project.

Location
Limpopo, South Africa.

Project Owner/s
Rainbow Rare Earths (85%).

Rainbow Rare Earths signed an agreement with phosphate mining company Bosveld Phosphates in June 2023 to ensure it obtains 100% ownership of the Phalaborwa project. 

Upon completion of a definitive feasibility study (DFS), the unincorporated joint venture (JV) will be transferred into an incorporated JV company and, at Rainbow’s election, Bosveld will transfer all assets required for the project into that company. 

Project Description
A preliminary economic assessment (PEA) has confirmed Phalaborwa's significant potential as a low capital intensity, high-margin, near-term rare earth development project. The project has a total Joint Ore Reserves Committee-compliant mineral resource estimate of 30.4-million tonnes at 0.44% total rare-earth oxides contained within two phosphogypsum stacks, derived from historic phosphate hard-rock mining.

Rainbow Rare Earths will extract the rare-earth elements (REEs) using a proprietary continuous ion-exchange and continuous ion-chromatography plant process, developed in conjunction with K-Technologies, in the US.

The PEA, published in October 2022, is based on processing 2.2-million tonnes a year of phosphogypsum over a 14.2-year project life to deliver 26 208 t of separated magnet rare-earth oxides (REOs). The project will produce all four of the key REEs used to create permanent magnets (neodymium, praseodymium, dysprosium and terbium), and is believed to have the highest basket price of any rare earths project – $175.89/kg – outside of China, while the average processing cost is estimated at $33.86/kg.

Potential Job Creation
The project will create numerous employment opportunities during construction and an estimated 300 direct job opportunities, excluding contractors, suppliers, vendors and consultants. Priority will be given to the people in the Ba-Phalaborwa area who have the requisite skills and experience. Rainbow will give preference to local contractors and where contractors are imported from other areas, Rainbow will encourage the employment of local labour.

Net Present Value/Internal Rate of Return
The project has an after-tax net present value, at a 10% discount rate, of $627-million and an internal rate of return of 40%, with a payback of less than two years.

Capital Expenditure
$295.5-million.

Planned Start/End Date
Production is expected to start in 2026.

Latest Developments
Rainbow Rare Earths has signed a share placing and royalty agreement with fellow-listed Ecora Resources, raising $10-million for Rainbow to proceed with studies at the project.

Rainbow will use the proceeds to complete a DFS on the project during the first half of 2025, and for working capital until June 2025.

The funding agreement is largely nondilutive to Rainbow shareholders, compared with conventional equity funding.

This is the only revenue royalty payable for Phalaborwa, owing to the unique nature of the project, which does not normally attract royalties payable for hard-rock mining projects.

The agreement entails Ecora’s buying a 0.85% gross revenue royalty on future rare earths production from the project, as well as any other saleable products, for a cash consideration of $8.5-million.

Rainbow has also agreed to issue about 10.4-million new ordinary shares to Ecora, to raise an additional $1.5-million.
The company has warned that the royalty rate will increase to 0.95% if production does not occur before October 1, 2027, and to 1.1% if production does not occur before July 1, 2028.

Ecora CEO Marc Bishop has stated that production will be primarily weighted to REEs that are essential in the production of permanent magnets.

“The transaction provides Ecora with a counter-cyclical entry point to diversify its commodity exposure to include rare earth elements, whose end markets are forecast to see sustained demand growth over coming decades,” he has said.

A key component of the proposed DFS is the operation of a pilot plant to confirm and optimise the operating parameters for the unique flowsheet developed to deliver separated rare earth oxides from phosphogypsum stacks at Phalaborwa.

Rainbow plans to release an interim report in the second half of 2024 to update the economics of the project and reflect on optimisations delivered from pilot testwork campaigns already under way.

Following completion of a DFS, Rainbow expects to make a final investment decision during the first half of 2027.

The project is expected to produce 1 750 t/y of neodymium and praseodymium oxide, as well as 60 t/y of dysprosium oxide and 20 t/y of terbium oxide. 

Key Contracts, Suppliers and Consultants
ANSTO Minerals (plant processing testwork); K-Tech Inc (REO separation technology and partner in developing plant processing flowsheet, managing the back-end of the pilot plant at its US facility); Mintek (managing plant front-end in South Africa); and METC Engineering (production of the PEA and engineering work for the DFS).

Contact Details for Project Information
Tavistock Communications, on behalf of Rainbow Rare Earths, tel +44 20 7920 3150 or email rainbowrareearths@tavistock.co.uk.