LSE-listed rare earth element mining company Rainbow Rare Earths is targeting a production rate of about 400 t/m, or 5 000 t/y, for its Gakara project, based in Burundi, by the end of this year.

According to CEO Martin Eales, the 180% year-on-year increase in tonnes of concentrate sold in the second quarter of this year is “a clear indication” that there is a strong demand for concentrate from Gakara.

"Having implemented an upgraded mine plan at Gasagwe towards the end of the quarter we saw mining rates improve significantly in June, and we anticipate seeing an increase in concentrate production by between 50% and 100% on a monthly basis over the next quarter.

“As a result, production costs will fall considerably in the next six months as we approach our target of 400 t/m by the end of the year,” he said on Tuesday.

Eales further pointed out that it has been a highly active quarter on the ground, which he noted is evidenced by the miner’s expansion initiatives.

Phase 1 of Rainbow’s exploration drill campaign was successfully completed during the period and, with Phase 2 already under way, the miner looks forward to delivering a code-compliant resource by the end of the year.

Additionally, Rainbow has advanced its second mining area, Murambi, which lies about 3 km south-east from Gasagwe. The company states that Murambi mirrors Gasagwe's mineralogy and exceptionally high grades with almost double the strike length.

Rainbow plans to start mining operations at Murambi early in the fourth quarter.

The vein stockwork structure as well as the mineralogy of the veins at Murambi are very similar to that at Gasagwe, the miner said on Tuesday, adding that independent laboratory testing has confirmed consistently high grades of between 48% and 60% total rare earth oxide for all veins sampled.

The mining approach at Murambi will also be similar to that employed at Gasagwe, using machinery to shift overburden and waste material before manual extraction of the high-grade vein material for processing.

Management expects mining operations to start at Murambi early in the fourth quarter of this year following final permitting and approvals.

The planned production from Murambi alongside the upgraded Gasagwe operation should be capable of generating sufficient ore for the company's run rate target of 400 t/m of concentrate at the end of this year.

"I am also proud to report that, in June, we reached the milestone of one-million lost time injury-free man hours since operations started at Gakara in March 2017, which is testament to our fantastic team on the ground,” Eales averred.

PRODUCTION UPDATE

Meanwhile, 350 t of concentrate were sold in the quarter to June 30, a 180% increase from the 125 t sold during the previous quarter.

All sales were through thyssenkrupp Materials Trading, under the terms of the company's offtake agreement, and were delivered to two cornerstone customers.

Initial feedback from customers is positive, the miner said and pointed out that it remains confident that there is strong demand for all forecast production.

During the quarter, 275 t of concentrate was produced and exported, an increase of 10% compared with the previous quarter.

According to Rainbow, both the mine and concentrate production were impacted slightly in the quarter, partly by some heavier-than-average rainfall in April, which, at times, diverted mining fleet and manpower to repair local roads to assist transportation access for Rainbow and the local population, and partly the result of operating teams being temporarily stood down as a precautionary measure around the referendum in Burundi on May 17, which proceeded without major incident.

Mining rates at Gasagwe improved significantly in June, following implementation of an upgraded mine plan and monthly concentrate production is now expected to increase by between 50% and 100% above the levels achieved in the first six months of this year.

Production costs increased slightly in the period to $2 534/t, as a result of an increase in the size of the mining fleet and a lag in the production of concentrate tonnes following the increased rate of mining activity at Gasagwe.

Production costs per tonne are expected to fall considerably in subsequent quarters, as production increases to the target of 400 t/m, the miner said on Tuesday.

The realised sales price decreased by 5% compared with the previous quarter to $2 229/t, mainly owing to a fall of 4% in the average basket price for the quarter from $13 359/t to $12 868/t and lower average grade in the period.

Cost of sales, which includes transportation, handling, marketing and government royalties, reduced to $517/t, compared with $664/t in the previous quarter, reflecting the fact that a greater number of tonnes were sold than were exported in the quarter.