LSE-listed miner Rainbow Rare Earths’ Gakara mine, in Burundi, produced 350 t of exported concentrate in the quarter ended September 30 – a 27% increase on the 275 t produced in the June quarter.

Sales for the quarter were maintained at 350 t.

The average grade increased to 59% total rare earths oxide (TREO), from 55% TREO in the previous quarter.

CEO Martin Eales on Tuesday said a lot of positive progress had been made during the reporting period, especially with regard to an increase in exported tonnes and total ore mined from Gasagwe.

The company is developing its next mining area – Murambi – and is also concluding a drilling programme at its Kiyenzi project, which means it is still on track to deliver its maiden Joint Ore Reserves Committee-compliant resource before the end of 2018.

"While initiatives have been put in place to allow for more predictable extraction going forward, the geological environment has been challenging more recently. In view of these uncertainties and the limited lead time to start up Murambi, the company believes the targeted 400 t a month run rate will be delayed into 2019, dependent on further mining areas being opened.”

A slight decline in rare earth prices, particularly for neodymium and praseodymium, during the quarter led to a reduction of 3.6% in the realised sales price, which fell from $2 229/t to $2 147/t. 

For reference, Rainbow's indicative basket price fell by 7% from $12.87/kg to $11.91/kg during the quarter.

Production costs per exported tonne increased compared with the previous quarter, which reflected an increase in the scale of the mining fleet in particular, both at Gasagwe, where the rate of stripping was increased on the previous quarter to counter instances of geological inconsistency, and at the new site Murambi, where preparatory work had to be undertaken in advance of first production in the coming quarter, and was expensed rather than capitalised.

As production levels increase, average costs per tonne are expected to decrease, owing to a large proportion of monthly costs being relatively fixed in nature.

Given the imminent start of full mining production at Murambi and current uncertainty over the likely average concentrate yields, as well as the unpredictable nature of the Gakara project's vein stockwork deposits, as reflected by recent experience at Gasagwe, the attainment of the target run-rate of 400 t a month – equivalent to 5 000 t/y – is now expected to be delayed into calendar year 2019.

“The precise date at which this will be achieved will depend on the progress of Murambi, as well as the one to two additional mining areas which Rainbow intends to bring online in the next six to nine months,” said Eales.

Production guidance for the full year to June 30, 2019 will be updated early in 2019.

The company expects to generate positive earnings before interest, taxes, depreciation and amortisation when concentrate production and sales reach between 250 t and 300 t a month.