TIDMRBW
RNS Number : 7477N
Rainbow Rare Earths Limited
27 September 2023
27 September 2023
Rainbow Rare Earths Limited
("Rainbow" or "the Company")
LSE: RBW
PRIVATE PLACEMENT RAISES GBP4.5 MILLION
Rainbow Rare Earths is pleased to announce that it has agreed
conditionally to issue 30 million new ordinary shares in the
Company of no par value each ("Ordinary Shares") at a price of 15p
per Ordinary Share (the "Placing Price"), thereby raising gross
proceeds of GBP4.50 million (the "Placing").
The Placing Price represents a 3.2% discount to the closing
mid-market share price of 15.5p per Ordinary Share on 26 September
2023.
The Placing proceeds include:
-- GBP0.54 million received from existing shareholder Pella
Ventures Limited ("Pella"), a family office with a focus on clean
technologies and sustainable energy. Pella is a related party on
the basis that its founder, Adonis Pouroulis, is also Non-Executive
Chairman of Rainbow;
-- GBP0.63 million received from existing shareholder TechMet
Limited ("TechMet"), the private investment company developing
world class projects across the critical metals that form the key
building blocks for the global energy transition; and
-- GBP3.33 million received from other investors, including
GBP0.24 million from other members of Rainbow's Board of Directors
and Senior Management.
Of the 30 million Ordinary Shares issued under the Placing, the
Ordinary Shares to be issued to Pella are subject to the approval
of shareholders at the AGM to be held in November 2023 as set out
in more detail below ("Shareholder Approval").
Reasons for the Placing
The Placing proceeds, which total approximately US$5.5 million,
replace the US$5.0 million paid to Bosveld Phosphates (Pty) Limited
("Bosveld") in July 2023, plus associated fees, to secure an
immediate 85% ownership in the Group's flagship Phalaborwa rare
earths project, with an option to acquire the remaining 15%, as
announced on 28 June 2023. In addition to the Company's cash
balance of US$1.3 million as at 31 August 2023, the Placing
proceeds cover the Company's financing requirements beyond the end
of Q1 2024 and will allow for the completion of the Phalaborwa
pilot plant operation, which is expected to deliver separated rare
earth oxides in Q4 2023, together with general working capital
requirements.
George Bennett, CEO, commented: "This is an exciting time for
the Phalaborwa project, following the milestone production of the
mixed rare earth sulphate from the front-end pilot plant in South
Africa and with the production of separated rare earth oxides from
our back-end pilot plant in the US expected in Q4 2023. This will
be the final de-risking step in order to demonstrate the
commerciality of the unique rare earth process flow sheet that
Rainbow has developed with its partner K-Technologies, Inc
("K-Tech") to deliver the separated permanent magnet rare earth
oxides vitally needed for the green energy transition. It will also
open up the opportunity to apply this intellectual property to
other phosphogypsum projects globally, starting with the Uberaba
project in Brazil."
Participation of the Directors
The following Directors and Senior Management of Rainbow are
participating in the Placing:
Name No. of Ordinary No. of New No. of Ordinary % interest
Shares held Shares subscribed Shares held in Ordinary
as at date for in the immediately Shares immediately
of this announcement Placing following following
Admission Admission
(1) (1)
Adonis Pouroulis 84,108,869 4,213,459 88,322,329 14.04%
---------------------- ------------------- ---------------- --------------------
George Bennett 36,799,683 547,615 37,347,298 5.94%
---------------------- ------------------- ---------------- --------------------
Darryll Castle - 821,422 821,422 0.13%
---------------------- ------------------- ---------------- --------------------
Pete Gardner 400,000 218,522 618,522 0.10%
---------------------- ------------------- ---------------- --------------------
1. Calculation includes shares issued to Pella Ventures Limited,
beneficially owned by Adonis Pouroulis, which are subject to
Shareholder Approval.
Corporate Update
Following its announcement of a private placement on 9 May 2023,
the Company signed an agreement with Bosveld, to allow 100%
ownership of the Phalaborwa Project in South Africa, as announced
on 28 June 2023. Under the terms of the agreement, Rainbow received
an immediate 85% interest in the unincorporated joint venture that
holds the rights to Phalaborwa in return for a payment of US$5m
that was made in July 2023. This updated the original Project
Co-Development Agreement, which envisaged Rainbow earning a 70%
interest in Phalaborwa further to the completion of a
pre-feasibility study on the project.
As a result, the Company requires additional financing in order
to complete the workstreams to advance the project to DFS,
publication of which is expected in H1 2024. A key part of the DFS
workstreams is the operation of the pilot plant, consisting of a
front-end situated at the Johannesburg facilities of the Council
for Mineral Technology ("Mintek") a global leader in mineral
processing, extractive metallurgy, and related fields, and a
back-end situated at the Lakeland, USA facilities of K-Technologies
Inc ("K-Tech").
The unique and innovative rare earths processing flowsheet
designed for the Phalaborwa project, which uses continuous ion
exchange ("CIX") and continuous ion chromatography ("CIC")
technology to deliver separated rare earth oxides, has been
developed in collaboration with K-Tech. The K-Tech proprietary
CIX/CIC process replaces traditional solvent extraction technology
for the separation of rare earth oxides, which can be a convoluted
process associated with environmental risks. The CIX/CIC method is
therefore safer and more environmentally responsible, as well as
coming at a significantly reduced capital and operating cost.
First production of mixed rare earth sulphate at the Phalaborwa
front-end pilot plant was announced on 5 September 2023 and
validated Rainbow's successful development of a process flow sheet
to recover rare earths from phosphogypsum. The mixed rare earth
sulphate produced was of the expected purity and grade, with
recoveries in line with Rainbow's Preliminary Economic Assessment
published in October 2022. The mixed rare earth sulphate includes
all four of the critical 'magnet' rare earths, neodymium and
praseodymium ("NdPr"), dysprosium ("Dy") and terbium ("Tb"), and is
capable of being sold to generate a standalone revenue stream for
Rainbow.
The mixed rare earth sulphate will be shipped to the back-end
pilot plant at K-Tech's facility in the USA for separation into
rare earth oxides. The back-end pilot plant has commenced
commissioning and first production of separated rare earth oxides
is expected in Q4 2023. The pilot plant operation as a whole (both
front and back ends) will continue to operate for approximately
four months in order to produce sufficient quantities of separated
permanent magnet rare earth oxides for testing and marketing
purposes.
Other key workstreams for the DFS have commenced and are
progressing well. METC Engineering has commenced work on the DFS
and is managing the inputs from the various specialist consultants.
Paragon Tailings is advising on reclamation of the existing gypsum
stacks. Ardaman, a leading global gypsum expert, is conducting test
and design work for the new gypsum stacks. A drilling programme is
underway to update the Phalaborwa resource and environmental work,
including full ESIA workstreams are underway by WSP Golder for the
purpose of both the DFS and permitting.
The Placing proceeds will be used primarily for the Phalaborwa
project, reflecting the re-focus of the Company's business to
secondary sources of rare earth elements where the Directors
consider higher returns are available compared to primary hosted
ore bodies such as the Company's Gakara project in Burundi. The
fact that the Directors do not envisage investing significant
amounts in Burundi to develop a formal mineral resource is
considered to be an indicator of impairment under IFRS 6 and,
accordingly, for the 30 June 2023 annual report a formal impairment
review for the Gakara project will be undertaken. Based on an
assessment of both the legal and political position in Burundi the
Directors were unable to foresee a date when the operations at the
project would be able to restart and accordingly it is likely that
the carrying value of the exploration and evaluation assets in
Burundi and the associated tangible fixed assets, which had a
combined net book value of US$9.7 million at 30 June 2022, will be
fully impaired.
As disclosed in the interim results announced on 31 March 2023
Rainbow engaged the services of a related party, Magna Capital
(Guernsey) Limited ("Magna"), in which Adonis Pouroulis, the
Non-Executive Chairman of the Board of Directors, has a beneficial
interest, to assist in the negotiation and execution of the
transaction to allow 100% consolidation of the Phalaborwa asset.
During the year ended 30 June 2023, a total of GBP60k was paid to
Magna and a further GBP500k success fee was paid in July 2023 in
relation to the successful completion of that transaction. This
related party contract has now finished with no further work
planned between the Company and Magna.
Total voting rights and Admission
An application has been made for the initial 26,412,257 Ordinary
Shares to be issued pursuant to the Placing (the "Unconditional
Shares") to be admitted to the Official List (by way of a Standard
Listing) and to trading on the London Stock Exchange Plc's Main
Market for listed securities ("First Admission"). It is expected
that First Admission will become effective and that dealing in the
Unconditional Shares will commence on or around 6 October 2023. The
Unconditional Shares will rank pari passu with the existing
Ordinary Shares. Following Admission of the Unconditional Shares,
the Company will have 625,270,912 Ordinary Shares in issue.
The issue of a further 3,587,743 Ordinary Shares to Pella (the
"Conditional Shares") is subject to Shareholder Approval. It is
expected that admission of the Conditional Shares will become
effective and that dealing in the Conditional Shares will commence
on or around 4 December 2023 ("Second Admission") following the
AGM. The Conditional Shares will rank pari passu with the existing
Ordinary Shares.
Following the First Admission and prior to the AGM and the issue
of the Conditional Shares, the above figures of 625,270,912
Ordinary Shares may be used by shareholders as the denominator for
the calculations by which they will determine if they are required
to notify their interest in, or a change to their interest in, the
Company under the FCA's Disclosure, Guidance and Transparency
Rules.
IMPORTANT NOTICES
This announcement includes "forward looking statements" which
include all statements other than statements of historical facts,
including, without limitation, those regarding the Company's
financial position, business strategy, plans and objectives of
management for future operations, or any statements proceeded by,
followed by or that include the words "targets", "believes",
"expects", "aims", "intends", "will", "may", "anticipates",
"would", "could" or similar expressions or negatives thereof. Such
forward looking statements involve known and unknown risks,
uncertainties and other important factors beyond the Company's
control that could cause the actual results, performance or
achievements of the Company to be materially different from future
results, performance or achievements expressed or implied by such
forward looking statements. Such forward looking statements are
based on numerous assumptions regarding the Company's present and
future business strategies and the environment in which the Company
will operate in the future. These forward-looking statements speak
only as at the date of this announcement. Except as required by the
FCA, the London Stock Exchange or applicable law (including as may
be required by the Listing Rules, the Prospectus Regulation, the
Prospectus Rules, MAR and the Disclosure Guidance and Transparency
Rules), the Company expressly disclaims any obligation or
undertaking to disseminate or release publicly any updates or
revisions to any forward looking statements contained in this
announcement to reflect any change in the Company's expectations
with regard thereto or any change in events, conditions or
circumstances on which any such statements are based.
Market Abuse Regulation Disclosure
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018, as amended ("MAR"), and is disclosed in
accordance with the Company's obligations under Article 17 of MAR.
Market soundings, as defined in MAR, were taken in respect of the
Placing, with the result that certain persons became aware of
inside information, as permitted by MAR. That inside information is
set out in this announcement and has been disclosed as soon as
possible in accordance with paragraph 7 of article 17 of MAR.
Therefore, those persons that received inside information in a
market sounding are no longer in possession of inside information
relating to the Company and its securities.
For further information, please contact:
Rainbow Rare Earths George Bennett
Ltd Company Pete Gardner +27 82 652 8526
IR Cathy Malins +44 7876 796 629
cathym@rainbowrareearths.com
Matthew Armitt
Jennifer Lee
Berenberg Broker Detlir Elezi +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 Rainbow:
Rainbow Rare Earths aims to be a forerunner in the establishment
of an independent and ethical 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 less than two years. Pilot
plant operations will commence in 2023, with the project expected
to reach commercial production in 2026, just five years after work
began on the project by Rainbow.
[1] Net present value using a 10% forward discount rate
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
MSCBIGDCBGDDGXL
(END) Dow Jones Newswires
September 27, 2023 02:00 ET (06:00 GMT)
Rainbow Rare Earths (LSE:RBW)
Historical Stock Chart
From Sep 2024 to Oct 2024
Rainbow Rare Earths (LSE:RBW)
Historical Stock Chart
From Oct 2023 to Oct 2024