Rainbow to allow 100% ownership of the Phalaborwa REE project in SA
Rainbow Rare Earths (LSE: RBW) announced on Wednesday that it has signed an agreement with Bosveld Phosphates to allow 100% ownership of the Phalaborwa rare earths (REE) project in South Africa.
The company said that under the terms of the agreement, Rainbow will receive an immediate 85% interest in the unincorporated joint venture that holds the rights to Phalaborwa, with Bosveld holding the remaining 15%.
“This updates 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,” it added.
Under the terms of the agreement, Rainbow will pay Bosveld US$5 million in cash in July 2023.
Rainbow noted that under the agreement, the company is also being granted a call option to acquire the remaining 15% of the joint venture owned by Bosveld, in return for US$7 million of equity in the company, at any time from 31 October 2023 until 31 December 2025.
The Phalaborwa REE project, located in South Africa, comprises a total mineral resource estimate of 30.4 Mt at 0.44% TREO contained within unconsolidated gypsum stacks derived from historic phosphate hard rock mining.
The company said that the Phalaborwa preliminary economic assessment has confirmed strong base line economics for the project, which has a base case NPV10% of US$627 million, an average EBITDA operating margin of 75% and a payback period of less than two years.
According to a press release, pilot plant operations will commence in 2023, with the project expected to reach commercial production in 2026.
