Royalty Agreement and associated share placing signed with Ecora Resources PLC raising a total of US$10 million

• Agreement endorses Phalaborwa as a stand-out rare earths opportunity, expected to be one of the highest margin rare earth projects in development globally
• Funds raised will allow for completion of the Definitive Feasibility Study (“DFS”) and will cover the Company’s financing requirements up to June 2025
• Funding agreement is largely non-dilutive to Rainbow shareholders compared with conventional equity funding
• This royalty is the only revenue royalty payable for Phalaborwa due to the unique nature of the project, which does not attract royalties typically payable for hard rock mining projects

Rainbow is pleased to announce that it has entered into a binding agreement with Ecora Resources PLC (“Ecora”) whereby Ecora will purchase a 0.85% Gross Revenue Royalty (the “Royalty”) on future rare earths production from the Company’s flagship Phalaborwa project in South Africa, plus any other saleable products, for a cash consideration of US$8.5 million.

Rainbow has also agreed to issue 10,442,427 new ordinary shares in the Company of no par value each (“Ordinary Shares”) at a price of 11.3652p (based on a 20 day volume weighted average price) to Ecora to raise an additional US$1.5 million via an equity subscription.

The Royalty financing and share subscription agreements therefore provide Rainbow with a total of US$10 million, being substantial funding on terms that are considerably less dilutionary than conventional equity funding.

The funds will be used to:

1. deliver the completion of the DFS on the Phalaborwa project in H1 2025; and

2. cover all other Company financing requirements up to June 2025.

George Bennett, CEO of Rainbow, commented: “We are delighted to have concluded this royalty agreement with Ecora which allows us to take the Phalaborwa project all the way through to a completed DFS, without causing any significant dilution to shareholders. This investment confirms Phalaborwa’s status as a strategic and near-term source of all four of the magnet rare earths separated oxides so critical to the green energy transition. It is also a validation of the robust economics of the project, with its comparatively low capital and operating costs giving it resilience against rare earth pricing fluctuations. The Ecora DD process encompassed detailed reviews of all aspects of the project covering technical, environmental and legal. We look forward to working with Ecora as strong project partners going forward.”

Marc Bishop Lafleche, CEO of Ecora, commented: “We are excited to announce our partnership with the Rainbow Rare Earths team on the Phalaborwa project. This project stands out as one of the lowest-cost prospective producers of rare earths outside of China. Notably, production will be principally weighted to rare earth elements essential in the production of permanent magnets, key components in renewable wind power turbines and electric vehicle motors. The transaction provides Ecora with a counter-cyclical entry point to further diversify our commodity exposure to include rare earth elements, whose end markets are forecast to see sustained demand growth over the coming decades.”

News in full

We caught up with CEO George Bennett at  the Mining Indaba conference in Cape Town. He provided an update on Rainbow’s operations, but also tells about the many uses of rare earths and why they are so important in the global energy transition