TIDMRBW
RNS Number : 9349L
Rainbow Rare Earths Limited
11 September 2023
11 September 2023
Rainbow Rare Earths Limited
("Rainbow" or "the Company")
LSE: RBW
Rainbow enters into strategic supply agreement with UK-based
Less Common Metals to develop a responsible Western supply chain
for rare earth elements
-- Rainbow will supply LCM with rare earth elements designated
as critical minerals due to their essential role in the green
energy transition
-- LCM is the only rare earth metal and alloy manufacturing
facility in the UK and one of the only facilities in the Western
world
-- Both Rainbow and LCM are aligned in their values and their
ambitions to play a part in the establishment of a Western supply
chain for critical rare earth elements
NEWS RELEASE
Rainbow Rare Earths is pleased to announce that it has entered
into a strategic supply agreement with Less Common Metals Ltd
("LCM") to be a supplier of the magnet separated rare earth oxides
neodymium and praseodymium ("NdPr"), dysprosium ("Dy") and terbium
("Tb"). These are the most economically important rare earth
elements as they are used to make the permanent magnets essential
to decarbonisation, via their use in electric vehicles and wind
turbines, as well as to defence and other high-tech products.
These elements are also designated as 'critical minerals' in the
UK's Critical Minerals Strategy as they are defined as having a
high criticality for the UK, according to the economic
vulnerability and supply risk criteria used for the assessment.
LCM is a world leader in the manufacture and supply of complex
alloy systems and metals. The separated rare earth oxides supplied
by Rainbow will be used for manufacturing into metal in order to
create an alloy, which is then supplied to permanent magnet
manufacturers in the EU and the USA.
LCM is based in Ellesmere Port, Cheshire; it is currently the
only rare earth metal and alloy manufacturing facility in the UK
and one of the only facilities in the Western world. Its location
is of strategic importance to Rainbow as the Company's aim is to
play a part in the establishment of a Western supply chain for
critical rare earth elements outside of Chinese control.
This is in alignment with LCM's ambitions, which is currently in
discussions to invest in expanded capacity in North America, the EU
and Asia.
LCM has been looking to partner with a supplier with similar
values in order to secure ethical supply of the feedstock required
for their business and it has chosen Rainbow after a lengthy
evaluation process of the various rare earth development companies
globally. This decision was based on Rainbow's capability to take
its rare earth material further downstream to the separated rare
oxide stage, using the proprietary technology developed by, and in
conjunction with, its partner K-Technologies, Inc.
George Bennett, CEO of Rainbow, commented: "Securing a buyer of
our separated rare earth oxides that shares our values and
aspirations was of strategic importance to Rainbow. We are
dedicated to establishing an independent, responsible and ethical
supply chain of the rare earth elements that are driving the green
energy transition.
With over 30 years of experience in the manufacture and supply
of metals and alloys to the permanent magnet industry, LCM is a
fantastic partner for Rainbow. Using its expertise to expand in the
USA and the EU, LCM will be instrumental in meeting the huge and
growing demand for permanent magnets."
Albert Slot, Managing Director of LCM, commented: "LCM occupies
a unique position in the rare earth pipeline as it is the only
company in the Western world commercially producing both t he
highly specialised strip-cast alloys and all of the required rare
earth metals needed for the production of the highest-performance
neodymium iron boron magnets. Furthermore, LCM's expertise in the
commercial production of neodymium metal and neodymium praseodymium
alloy is unique in the Western world.
Given the concentration of the rare earth supply chain, a
relationship with Rainbow offers the opportunity for LCM to secure
ethical supply of all four of the magnet rare earth oxides vital
for our business. This partnership will therefore ensure that
together we can continue to develop a responsible and independent
supply chain of rare earth elements to the benefit of the Western
world."
Rainbow's Phalaborwa project is estimated to have one of the
lowest costs of production of Western producers, as it will involve
the processing of gypsum waste residue stacks, hence removing the
cost and risk of mining. This low production cost gives the project
resilience against rare earth pricing volatility in all plausible
pricing scenarios, an important consideration for LCM based upon
its 32 year history in the rare earth magnet chain.
Crucially, Rainbow expects to be able to supply all four of the
permanent magnet rare earth elements, including the 'heavy' rare
earths Dy and Tb, which are essential for improving the performance
of neodymium magnets. LCM only recently expanded its metal making
capabilities to include Dy and Tb and Rainbow will be one of the
only producers of these oxides outside of Asia.
A framework will be set out in due course for Rainbow and LCM to
negotiate a binding offtake agreement for separated rare earth
oxides from Phalaborwa, with the ultimate customer of the rare
earth permanent magnets being clearly defined and in alignment with
both LCM's existing customer base and the positioning of both
companies in an expanding Western supply chain.
Volumes will be driven by LCM's requirements for its expanded
facilities, constrained by Phalaborwa's total productive capacity,
and pricing will be as per published rare earth oxide prices at
that point in time. Any surplus production from Phalaborwa not
required for LCM's facilities will be sold on the open market to
third parties.
For further information, please contact:
Rainbow Rare Earths George Bennett
Ltd Company Pete Gardner +27 82 652 8526
Cathy Malins +44 7876 796 629
(IR) cathym@rainbowrareearths.com
Matthew Armitt
Berenberg Broker Jennifer Lee +44 (0) 20 3207 7800
Tavistock Communications PR/IR Charles Vivian +44 (0) 20 7920 3150
Tara Vivian-Neal rainbowrareearths@tavistock.co.uk
Notes to Editors:
About LCM:
Less Common Metals is a world leader in the manufacture and
supply of complex alloy systems and metals, and are specialists in
those based on rare earth elements. With over 30 years of
experience in the production of materials to tight compositional
tolerances and controlled microstructures, LCM offers an innovative
and highly flexible approach to a wide range of material
requirements.
Since 2017, LCM has been making neodymium (Nd) and neodymium
praseodymium (NdPr) metal on their premises in the UK commercially
at +120 tons per annum. More recently (April 2023), the company
expanded metal making production to dysprosium iron (DyFe),
dysprosium (Dy) and terbium (Tb) to further enhance their expertise
as a complementary supply chain alternative.
More information can be found at www.lesscommonmetals.com .
About Rainbow:
Rainbow Rare Earths aims to be a forerunner in the establishment
of an independent and responsible supply chain of the rare earth
elements that are driving the green energy transition. It is doing
this successfully via the identification and development of
secondary rare earth deposits that can be brought into production
quicker and at a lower cost than traditional hard rock mining
projects, with a focus on the permanent magnet rare earth elements
neodymium and praseodymium, dysprosium and terbium.
The Company is focused on the development of the Phalaborwa Rare
Earths Project in South Africa and the earlier stage Uberaba
Project in Brazil. Both projects entail the recovery of rare earths
from phosphogypsum stacks that occur as the by-product of
phosphoric acid production, with the original source rock for both
deposits being a hardrock carbonatite. Rainbow will use a
proprietary separation technique developed by and in conjunction
with its partner K-Technologies, Inc., which simplifies the process
of producing separated rare earth oxides (versus traditional
solvent extraction), leading to cost and environmental
benefits.
The Phalaborwa Preliminary Economic Assessment has confirmed
strong base line economics for the project, which has a base case
NPV(10) of US$627 million [1] , an average EBITDA operating margin
of 75% and a payback period of < two years. Pilot plant
operations commenced in 2023, with the project expected to reach
commercial production in 2026, just five years after work began on
the project by Rainbow. More information on the company is
available at www.rainbowrareearths.com .
[1] Net present value using a 10% forward discount rate
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END
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