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Rainbow sees positive outcomes in FY18

19th September 2018

By: Simone Liedtke

Creamer Media Social Media Editor & Senior Writer

     

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Following years of planning and preparation, LSE-listed Rainbow Rare Earths’ Gakara project, in Burundi, entered production in the 2018 financial year, ended June 30, and exported 575 t of rare earths concentrate.

In a market dominated by Chinese producers, Rainbow chairperson Adonis Pouroulis noted that Rainbow is now one of only two listed rare earth mine producers outside China.

With rare earths used in the production of rare earth magnets, and used extensively in electric vehicles, smartphones, wind turbines and generators, as well as electronics, Pouroulis said global rare earth production faces a number of challenges if it is to meet this growth in demand.

Many existing mines are mature and having to improve environmental standards or invest heavily in order to stay in operation, he explained, highlighting that, at the same time, many projects currently under development typically have low grades of total rare earths oxide (TREO) at between 1% and 5%.

Additionally, mines require significant funding to start construction, he added.

These challenges, says Pouroulis, are what makes Gakara unique.

With TREO levels of between 47% and 67%, its grades are higher than the industry norms, which means production can be selective and capital expenditure (capex) can be kept low.

To date, just over $10-million has been spent on the project, which has a significant deposit in which over 1 000 instances of rare earth mineralisation have been discovered over a 39 km2 area.

Since first production was announced in December 2017, the mine has begun to ramp up its output of rare earth concentrate, and has a run rate of 5 000 t/y firmly in its sights by the end of this year.

During the current financial year and beyond, Rainbow’s strategy is to expand production by operating multiple mining areas in parallel.

“In addition, the company has plans to develop a downstream separation capability, in order to capture more of the value of our concentrate. The cooperation agreement with TechMet, announced in August, will bring real impetus to this key element of Rainbow’s growth strategy,” Pouroulis elaborated.

Under the terms of this agreement, TechMet will lead the work to complete a definitive feasibility study (DFS) for a separation process, which is intended to be owned as a joint venture (JV) between the two companies. 

The DFS will be funded exclusively by TechMet on a reimbursable carry basis.

Meanwhile, following Rainbow’s rapid development during 2017, the company was able to raise gross proceeds of £2.8-million in December 2017 at 14p a share, representing a 40% premium to the initial public offering (IPO) price.

These funds, CEO Martin Eales said on Wednesday, allowed the company to invest in exploration and an extensive drilling campaign in 2018, as well as in advancing production.

OPERATIONS REVIEW

All of the ore production in the financial year was derived from Gasagwe and, as the year progressed, the company’s understanding of the deposit and most efficient mining techniques improved significantly, Eales said.

This, he elaborated, resulted in Rainbow’s monthly record ore production being achieved in June, the final month of the financial year.

“The nature of the vein stockwork at Gasagwe is such that we continue to reveal new veins as production continues and it is likely operations will continue there for longer than the approximate time scale of two years as estimated at the time of the IPO.”

In July, just after the financial year-end, Rainbow announced that its second mining area at Murambi was expected to start operating in the fourth quarter of calendar year 2018, subject to final environmental approvals.

Murambi has some very similar physical characteristics to Gasagwe in terms of the vein structure, mineralogy and high TREO grades.

“It has always been part of the company’s strategy to be operating multiple mining faces and Murambi will be a very important source of additional ore to Gasagwe, as well as reducing the reliance on just one area to supply all of our ore,” Eales explained.

In terms of processing, commisioning started on Rainbow’s processing plant at Kabezi, and the first tonnes of high-grade concentrate had been produced and exported from Burundi.

The Kabezi plant is located some 20 km from the mining areas and about 13 km south of Burundi’s capital city, Bujumbura.

This site is advantageous to Rainbow, Eales explained, especially as it is relatively flat because of its location near Lake Tanganyika, and owing to its proximity to a main asphalt road, which provides good transportation links for the export of concentrate.

Ore from the mining areas is crushed and screened into different size fractions before gravity separation via a jig or shaking tables is used to concentrate the feed into high-grade TREO material. A final crushing circuit ensures that the concentrate to be exported is of a uniform size.

Additionally, Eales said the company has deliberately built in a relatively large amount of volume capacity within the processing plant design, which should enable Rainbow to comfortably increase yearly production of concentrate in years to come without any significant capital expenditure when new mining areas come on stream.

In terms of exports and sales, the first 25 t of Rainbow’s high-grade rare earth concentrate was produced and exported in December 2017 and by the end of the financial year, the company had produced and exported a total of 575 t.

By June 30, 475 t of this was sold to two cornerstone customers, who have the potential for much higher levels of demand as Rainbow’s production levels increase.

With regard to Rainbow’s future focus, Eales noted that the 2019 financial year will continue to see the company increase production on a monthly basis as it targets a concentrate production run rate of about 400 t/m by the end of the 2018 calender year.

In the next few months, Rainbow is expecting its second mining area, at Murambi, to be delivering ore alongside Gasagwe and to see the publication of Rainbow’s maiden code-compliant resource calculation following the Phase 2 drilling at Kiyenzi, which will consist of about 750 m of further core drilling at the Kiyenzi prospect.

The Phase 2 drilling campaign will be complemented by further trenching and terracing at Kiyenzi, particularly of the shallow intersections, together with mineralogical and metallurgical testing of the breccia material.

Rainbow’s Phase 1 drilling campaign took place over the first half of the financial year and targeted the current production site at Gasagwe, also at its Gakara project; the Kiyenzi prospect, where a high-priority gravity anomaly had been found; and a number of anomalies revealed by the airborne magnetic survey conducted in the fourth quarter of 2017.

Rare earth prices, meanwhile, have remained relatively stable so far this year, according to Eales, who believes the market dynamics are such that prices may be driven significantly upwards at any time.

“As a company, we look forward to delivering our high-quality product into that market.”

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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