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Phalaborwa Rare Earths Project, South Africa – update

Aerial view of the Phalaborwa rare earths project

Photo by Rainbow Rare Earths

8th September 2023

By: Sheila Barradas

Creamer Media Research Coordinator & Senior Deputy Editor

     

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Name of the Project
Phalaborwa Rare Earths Project.

Location
Limpopo, South Africa.

Project Owner/s
Rainbow Rare Earths has signed an agreement with phosphate mining company Bosveld Phosphates to ensure it obtains 100% ownership of the Phalaborwa project. 

Under the terms of the agreement, Rainbow will receive an immediate 85% interest in the unincorporated joint venture (JV) that holds the rights to Phalaborwa, with Bosveld holding the remaining 15%.  

This updates the original project co-development agreement, which envisaged Rainbow earning a 70% interest in Phalaborwa further to the completion of a prefeasibility study on the project. 

Under the terms of the updated agreement, Rainbow will pay Bosveld $5-million in cash in July 2023. 

Rainbow is also being granted a call option to acquire the remaining 15% of the JV owned by Bosveld, in return for $7-million of equity in the company, at any time from October 31 to December 31. Rainbow shares issued pursuant to the call option will be subject to a 24-month lock-up. 

Upon completion of a definitive feasibility study (DFS), the unincorporated 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 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 rare-earth elements 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 achieved successful first production of mixed rare-earth sulphate at the Phalaborwa pilot plant.

This validates Rainbow’s process flow sheet to recover rare earths from phosphogypsum.

The 3 kg of mixed rare-earth sulphate that Rainbow produced is of expected purity and grade and includes all four of the critical magnet rare earths – neodymium, praseodymium, dysprosium and terbium.

These rare earths are used to make the permanent magnets essential to decarbonisation through their use in electric vehicles and wind turbines.

The sulphate is a commercial product that could be a standalone revenue stream for the company, with an estimated 60% of payability of the global price for the contained separated REOs.

Alternatively, it can also be used as feed for the back-end pilot plant built at K-Technologies’ facilities, in Florida, in the US, for final processing into separated REOs.

Rainbow plans to have a first batch of separated REOs early in the next quarter.

Moreover, the front-end pilot plant reagent consumption and overall recovery rate of 65% are in line with the expectations of the PEA on the Phalaborwa project.

Rainbow will now run the front-end pilot plant for an additional quarter to further optimise recoveries and costs.

In terms of the back-end REO separation process, Rainbow is exploring the option of establishing a commercial-scale plant in the US, which would establish the company as one of the only producers of four permanent magnet separated REOs in the US.

The company aims through its proprietary flowsheet to produce separated REO products at 99.5% or higher purity that can be sold directly to metal and alloy manufacturing customers, which, in turn, feed permanent magnet manufacturing customers.

CEO George Bennet has said that the production of mixed rare-earth sulphate from the front-end pilot plant is a major milestone for the Phalaborwa project and validates Rainbow’s strategy to recover rare-earth elements from phosphogypsum stacks.

By producing separated REOs by early next quarter, Rainbow will further derisk the Phalaborwa project and will be able to capture the full uplift in value by taking its product all the way through to separated REOs, which should bode well for future revenue and profitability.

Meanwhile, Rainbow is working to secure 100% ownership of the Phalaborwa project, up from its current 85% stake

Key Contracts, Suppliers and Consultants
ANSTO Minerals (plant processing testwork); K-Technologies Inc (REO separation technology and partner in developing plant processing flowsheet; managing back end of pilot plant at its facility in the US); Mintek (managing plant front-end in South Africa); 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.

 

Edited by Creamer Media Reporter

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