Aim-listed Rainbow Rare Earths has entered into a cooperation agreement with TechMet to fund a definitive feasibility study (DFS) into downstream rare earths separation.
Subject to the completion of an initial scoping exercise, Rainbow and TechMet will form a joint venture to commission and produce a DFS in respect of a downstream rare earths processing and separation business capable of treating concentrate from Rainbow's Gakara project, in Burundi.
"We are extremely pleased to have entered into this cooperation agreement, recognising the potential positive financial impact it may have on the company, given the much higher selling prices for processed rare earths, compared with the mixed concentrate that Rainbow currently sells.
“A fully funded DFS is very much in line with our strategy to extend our operations downstream,” CEO Martin Eales said.
TechMet will fund all of the costs of the DFS on a reimbursable carry basis of up to $3-million.
Following the initial DFS scoping exercise, TechMet and Rainbow expect to commence formation of the joint venture and the work programme for the DFS within six months.
Meanwhile, TechMet has also agreed to subscribe for $500 000 worth of Rainbow shares, alongside a proposed placing by Rainbow, by way of an accelerated bookbuild, to raise about £1.6-million.
Rainbow will use the proceeds of the combined capital raising to develop the Murambi mining area at its Gakara project. The mining area is due to commence production in the fourth quarter of this year.