London-listed Rainbow Rare Earths has signed a memorandum of understanding (MoU) with Toronto-listed Neo Performance Materials for technical support and design input for Rainbow's final solvent extraction separation circuit.

Neo has started with testwork of Rainbow's high-grade rare earths solution at its facilities in Estonia.

Once completed, Neo will assist with running a confirmatory integrated pilot-scale separation plant in Johannesburg to support the Phalaborwa project's definitive feasibility study (DFS).

In return for the use of Neo's rare earth separation technology, Rainbow will grant offtake rights to Neo covering 40% of planned neodymium and praseodymium (NdPr) production, and 65% of heavy rare earths production - including samarium, europium and gadolinium - from the Phalaborwa rare earths project, in South Africa.

Rainbow says working with Neo will enable the release of a prefeasibility study (PFS) on Phalaborwa during the fourth quarter, ahead of a DFS by the first half of 2027.

The final separation circuit of Phalaborwa is expected to deliver separated NdPr oxide at 99% purity and a mixed heavy rare earth carbonate containing dysprosium and terbium, suitable for further separation at Neo's facilities.

Rainbow CEO George Bennett says finalising a technology partner for the solvent extraction separation process was the remaining step required to complete the definition of the company's process to extract rare earths from phosphogypsum waste.

"We are delighted that Neo has agreed to partner with us - their deep understanding and experience in rare earth separation and magnet materials is invaluable. That they have taken the decision to partner with Rainbow is in line with an aligned strategy to secure a vital, verifiable source of the permanent magnet elements required to satisfy demand for a reliable, secure supply of rare earths," he adds.

Rainbow's decision to release a PFS will enable key project development activities to be initiated in earnest to support the overall timeline to production. It also supports Rainbow in evaluating the opportunity to list in the US.

"This partnership with Rainbow advances Neo's strategy to build a secure and resilient rare earth magnet supply chain supported by diverse, secondary sources of rare earth feedstock. Rainbow's Phalaborwa project is a distinctive opportunity with the potential to reach the market in a relatively short timeframe. Owing to the phosphogypsum already being at surface, it requires no new mining and provides for a lower development risk profile than many greenfield projects," explains Neo president and CEO Rahim Suleman.

Suleman concludes that by combining Rainbow's expertise in recovering rare earths from phosphogypsum with Neo's decades of experience in rare earth separation, processing and magnet manufacturing allows both teams to jointly optimise the process from recovery through final separation, while providing customers with the secure, traceable supply chains that critical minerals markets increasingly demand.