London-listed Rainbow Rare Earths has raised £6.44-million, or about $8.5-million, through the issue of 42.9-million shares.

The proceeds will be used to advance work at its Phalaborwa project, in South Africa, and its Gakara project, in Burundi, as well as for working capital purposes.

Rainbow received £2.25-million in funding from TechMet through a direct subscription. TechMet is a private industrial company that is building strategic positions in world-class projects across the technology metals supply chain. 

A further £4.19-million was received from other investors, including global institutional investors.

"We are very encouraged by the strong support we have received from both existing and new institutional shareholders in the placing, which was significantly oversubscribed.  

"With its stringent investment criteria and its goal to secure the critical metals for the global technology revolution, we welcome the substantial investment by TechMet, which counts the US government as a major investor," comments Rainbow CEO George Bennett.

Rainbow will $500 000 of the proceeds to complete work for the Phalaborwa preliminary economic assessment (PEA), which is expected to be concluded in the second half of this year.

It will also spend $3-million on further technical work at Phalaborwa beyond the PEA to work towards a bankable feasibility study, excluding on-site pilot testing of the final processing flowsheet.

"We believe demand for rare earths required in permanent magnets is poised for continued strong growth, as evidenced by the 85% increase in the price of both neodymium and praseodymium oxide between November 2020 and September 2021. With our diversified asset portfolio, which includes the exciting near-term growth opportunity presented by the Phalaborwa project, Rainbow is uniquely positioned to deliver into this growing market.  

"The PEA at Phalaborwa is expected to be completed shortly and we believe it will serve to demonstrate the exceptional quality and favourable characteristics of this rare earths project," says Bennett.

Rainbow plans to spend up to $1-million for working capital to maintain the Gakara project on care and maintenance until December 2022, if needed.

Subject to the approval of the government of Burundi, concentrate with an estimated sales value of $1.3-million is available to fund the recommencement of trial mining and processing operations at Gakara. Rainbow, therefore, does not intend to keep the operation on care and maintenance.

A further $1-million will be used to repa the balance of an unsecured loan, including accrued interest of $100 000 received in February 2020 from Pipestone Capital, of which  Bennett is the ultimate beneficiary. 

Under the terms of the Pipestone loan agreement, the loan is repayable following the placing and it is anticipated that repayment will occur in November.

Rainbow will use the remaining $3-million in funds for general working capital purposes.