Interim Economic Study confirms Phalaborwa as one of the highest margin rare earth projects in development today

• Post tax NPV10 of US$611 million, vs comparable NPV10 of US$627 million in the Preliminary Economic Assessment (“PEA”) published in October 2022.
• Project economics remain robust despite two years of inflation totalling ca. 12% since publication of the PEA and modifications to the flowsheet.
• Project remains resilient to the rare earth element (“REE”) price cycle, with average production cost of US$40.83/kg magnet rare earth oxides (“REO”), versus US$33.86/kg magnet REO in the PEA primarily reflecting inflationary impacts. This equates to an operating cost of US$12.91/kg total separated REO (“TREO”) including non-magnet REE for which revenue is currently excluded from the economic assessment.
• The low operating cost establishes Phalaborwa as the highest margin REE project in development today outside of China, using data compiled by industry consultants Argus Limited (“Argus”).
• Updated up-front capital cost of US$326.1 million is lower than the PEA capex of US$295.5 million, adjusted for inflation.
• The Interim Economic Study represents a much higher level of confidence in both the processing flowsheet prior to separation and capital and operating cost estimates than the PEA.
• Further opportunities for operating and capital cost optimisation will be explored in H1 2025 alongside separation test work.
• Additional revenue streams from the sale of other, non-magnet, REE and final gypsum residue are expected to further enhance economics, but are not included in the current study.

NEWS RELEASE

Rainbow announces the key outcomes of an updated economic analysis (the “Interim Study”) carried out in H2 2024. The aim of the Interim Study was to update the economics of the project further to changes to the primary flowsheet to recover REE from the phosphogypsum stacks at Phalaborwa, as well as updating to current market pricing for all key areas of capital and operating costs.

The Interim Study, carried out in conjunction with independent consultants METC Engineering in South Africa, is at a much higher level of confidence than the original PEA. The large-scale pilot test work conducted on the primary flowsheet has demonstrated robust recovery of REE from the Phalaborwa phosphogypsum to deliver a high-grade intermediate product. The improved definition of the primary flowsheet has allowed the Interim Study economics to be prepared to a much higher level of economic accuracy than the PEA, with updated market prices from multiple suppliers used for the majority of the finalised major mechanical equipment, key reagents and other supplies.

In addition to confirming the robust economics of Phalaborwa, the Interim Study has highlighted a number of areas for further operating and capital cost optimisation, which will be done in parallel with the ongoing rare earth separation test work.

George Bennett, CEO of Rainbow, commented:

“The findings of the Interim Study confirm the exceptional economics of Phalaborwa first published in the PEA, after two years of significant inflationary pressure. The capital and operating cost estimates, now at a much higher level of economic confidence than at the PEA stage, confirm that Phalaborwa remains the highest margin rare earth project in development today outside of China. This is testament to the incredible contribution of the technical team at Rainbow over the past two years.

This update reaffirms that Phalaborwa is extremely well positioned to contribute to the establishment of an independent and resilient supply chain for the REE critical to decarbonisation, defence and emerging technologies.

Going into the New Year, we now look forward to focusing on opportunities to drive further optimisation of our capital and operating costs, and to completing the separation test work.”

News in full

We caught up with CEO George Bennett at the 2024 Mining Indaba conference in Cape Town. He provided an update on Rainbow’s operations, but also told us about the many uses of rare earths and why they are so important in the global energy transition.