Rainbow Rare Earths Share Discussion Threads

[napoleon 14th] 23/4/2024 12:08

Thanks, john.

[vatnabrekk] 21/4/2024 22:36

"...the short-term view of western markets.”
Indeed. Is that likely to ever change?

[odsjp] 21/4/2024 21:23

I don't subscribe to the FT but can read the article so it must be outside their paywall and available to everyone.

Great article, well done FT and George. Seems to hit the nail on the head...

Harry Dempsey in Phalaborwa 16 HOURS AGO
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A site close to Kruger National Park in South Africa is becoming a testing ground for US attempts to fight China’s global dominance in critical minerals.

Washington has committed to finance a little-known London-listed miner hoping to extract rare earths — a set of 17 minerals key to clean energy technologies — from the chalky stacks outside the safari park, as the US seeks to challenge China’s runaway lead in accessing the metals globally.

But a 63 per cent drop in rare earth prices since the start of 2022 has called into question the project’s ability to raise funding. The fate of the $300mn mine at Phalaborwa may echo that of others aiming to extract critical minerals for the west, and raises the question of whether US support is sufficient to build up a counterweight to Beijing.

The project, whose site is visited by kudus, springboks and buffaloes, is close to completing a feasibility study on the economics of extracting minerals from gypsum waste generated by old phosphate mines — but it still needs to raise another $250mn.

“The question is ‘given the basket price for rare earths, does it make sense to move ahead?’,”; said Andrew Breichmanas, analyst at Stifel.


For the White House, tackling Chinese dominance is a strategic priority: China is home to 70 per cent of rare earths mining and 90 per cent of processing capacity, according to the International Energy Agency.

That gives Beijing a near-monopoly on permanent magnets used in electric vehicles, wind turbines and fighter jets. China also controls the supply of other clean energy resources such as graphite, cobalt and nickel.

Washington has been seeking to invest in its own future supply. The US International Development Finance Corporation (DFC) has invested $105mn into TechMet, a $1bn critical minerals fund, which has pledged $50mn of equity for Rainbow Rare Earths, the company behind the mine, when it is ready to start raising finance to build the plant later this year.

Nisha Biswal, DFC deputy chief executive, said the state entity expected to increase investments in African critical minerals, with this year’s total likely to exceed last year’s $700mn. “This is just the start,” she added.

A key element of that is financing projects such as the Lobito Corridor railway to connect a port in Angola with copper mines in the region. And beyond the DFC, Washington is providing incentives for the construction of US processing plants through the Inflation Reduction Act.

Yet recent price slumps in lithium, cobalt, nickel and graphite — all ingredients in electric vehicle batteries — have prompted western producers to shut mines, cut production and reduce expansion plans. Among major miners, BHP is considering closing Nickel West in Western Australia; Albemarle, the world’s largest lithium producer, has cut back spending plans; and Glencore is reducing cobalt output.

Analysts say these projects are at risk from price fluctuations because western efforts to support the sector remain piecemeal and flawed against China’s multi-decade lead.


Rainbow Rare Earths says projects such as its own will be vital to western energy security © Rainbow Rare Earths
Chinese producers are often integrated with industrial activities or receive state-backed financing, enabling them to power ahead even in commodity downturns.

Rainbow Rare Earths argues projects such as its own will be crucial to western energy security. “Your green energy, wind turbines, electric cars, drones and handheld cell phones all have rare earth elements in them,” said George Bennett, chief executive. “Sources outside of China to give the west some kind of independence are very important.”

Amos Hochstein, the US government’s chief energy security adviser, said the future energy market could fall into similar traps to those seen with fossil fuels.

“My concern is that the worst of the 20th-century energy architecture will be repeated in the 21st century,” Hochstein said. “It would maybe be worse because, instead of a group of countries that control the supply, there’ll be a single point of failure or a single point of ability to manipulate global supply and prices.”


In particular, investors fear China may flood the rare earths market as it has done periodically since the 1980s. Beijing influences supply and prices through tax policies, quota systems and export restrictions, but denies exerting control to damage competitors.

Beijing’s foreign ministry said: “The so-called claim that China controls market prices through dumping and other means is completely unfounded. In the era of globalisation, the interests of various countries are deeply integrated.”

It added that global supply chains reflected the “functioning of economic laws” while China “always adheres to the principles of openness, co-ordination, and sharing, playing a positive role in the security and stability of the global critical mineral resources production and supply chain”.

Still, prices have been volatile. Prices for neodymium-praseodymium oxide, a compound of two of the most important rare earths for permanent magnets — for which China is both the largest supplier and consumer — are hovering just above $53,000 per tonne, after hitting the lowest level in more than three years in March, according to Argus, a data provider.

Such pricing “seriously jeopardises non-Chinese producers and exploration projects”, said Ellie Saklatvala, head of non-ferrous pricing at Argus.

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Rainbow’s Bennett argues Washington needs to consider stockpiling rare earths and other critical minerals by guaranteeing a minimum price for producers through long-term supply contracts. He would be willing to sign such a deal despite it also placing a ceiling on the prices that the mine could receive.

Some other western miners have secured supply purchase deals with companies: Australia’s Lynas, which received concessional financing from Japanese government entities, reached one with Japan’s Sojitz conglomerate, while MP Materials in the US signed a deal with General Motors.

This month Gina Rinehart, Australia’s richest person, revealed she had taken minority stakes in Lynas and MP Materials, fuelling speculation that merger talks between the two largest rare earth groups outside China, which ended in February, could be rekindled.


Stifel’s Breichmanas said the Phalaborwa project “warrants̶1; development but “supply purchase agreements are going to be really, really important”.

“The US government needs to become the buyer of last resort,” said Bennett. “It’s a chicken and egg [problem]. You can’t build [manufacturing] capability because you don’t have reliable supply. You can’t create a reliable supply unless you’ve got a buyer of it.”

That would also solve another strategic problem for the US, Bennett said. The country has no rare earth alloy producers or magnet manufacturers, but any downstream producers would need reliable supplies of affordable material to secure their own funding.


The US International Development Finance Corporation has invested $105mn into TechMet, which has pledged $50mn of equity for Rainbow Rare Earths © Rainbow Rare Earths
For its part, Beijing is no stranger to stockpiling during market gluts, making record purchases of cobalt last year for its strategic reserve.

The US Department of Defense stores critical minerals in the National Defense Stockpile, but its value has dropped from $9bn in 1989 to less than $1bn, or below 0.3 per cent of annual demand globally, as of March 2023.

“For the American and European supply chains to be built, you need a surety built by the government,” said Matthew Ashley, senior cobalt trader at Traxys, a Luxembourg-based trading house.

Brian Menell, chief executive of TechMet, said that despite the efforts of funds like his, “the problem of future shortages and Chinese control is growing day by day”.

He added: “It’s the product of manipulation and the short-term view of western markets.”

Additional reporting by Wenjie Ding

[john covenant] 21/4/2024 16:15

N14 - pm sent

[napoleon 14th] 21/4/2024 14:29

Added a few more instead of HUM, my other consideration.
HUM's opperational problems are one (repetitive) thing but also their mines
are in an area where anti-white sentiment is high, so a negative
political environment.
RBW's Pouroulis has added, & Uberaba news very welcome, both for project size
and political diversity, so a no-brainer really.

A C&P of the FT article would be much appreciated.
IMO Mosaic are big enough to fund Uberaba without US gov't help, which would mean they can sell product to whomsoever they decide.

I'm still itching for China to stop REE exports in response to US sanctions provocations! US/NATO policies gone completely haywire IMO.

[john covenant] 21/4/2024 09:48

TMH - pm sent

[themaxhunter] 21/4/2024 07:51

There appears to be something in the FT today if anyone subscribes?

The rare earths mine becoming a bellwether for US minerals policy
Future of South Africa’s Phalaborwa site may depend on strength of Washington’s support

APRIL 21, 2024

[monet] 18/4/2024 16:05

Director/PDMR Shareholding

Rainbow Rare Earths Ltd announces that Adonis Pouroulis, a Director and Person Discharging Managerial Responsibility ('PDMR') of the Company, has bought 1,144,501 shares in the Company from Piran Resources Limited ('Piran').

[napoleon 14th] 05/4/2024 10:46

Quite so, PC. The issue is not the company so much as "investors'" attitudes.
2026 is when the rewards should come for those who know how to LTBH, not the
instant gratification the consumer society has been programed to expect.
I'm here because, fundamentally, George Bennett has done it before with MDM & others,
and is highly likely to do it again. If he does, the rewards will be exceptional.

GLA.

[archie222] 04/4/2024 10:44

For those who havn't seen yesterdays Investors Meet presentation on Interims.

[perfect choice] 03/4/2024 22:01

Just listened to recording of presentation which you can see if you registered for the event (but I couldn't attend today), not sure if available elsewhere yet other than from the Investor Meet Company.

Agree Napoleon 14th, all solid progress and going in the right direction. First stage is effectively done at Mintek and several optimisation activities identified and completed, to be announced not too far away it seems. All OK on 2nd stage with K-Tech as well. Still in "work in progress" stage, anticipated re-rate was mentioned a couple of times. Expect that to be achieved at key milestone achievements on the way. Other useful snippets raised as well, notable comment made about independently auditing each stage of the pilot process via a third party (mentioned in video but cannot recall right now) which means its taken a little longer on the pilot work but helps the DFS timescales and subsequent financing, so reason being done. So check out the video when more widely available as it should be in a few days.

[mw16] 03/4/2024 18:19

REE price irrelevant until producing and selling the stuff and that's supposed to be 2026, if you believe the lies.Until then the company is worthless.

[errol the ponce] 03/4/2024 16:13

I posted on the 9th January that the chart looked awful and fair value was around 4p. Even a 30 million market cap for an operation that smacks of maybe jam tomorrow, on AIM, is hefty. One to avoid.

[napoleon 14th] 03/4/2024 13:42

Apart from gold, loads of minerals have dropped in value.
Of course, if there's a debt crisis (possible) or black swan how much is anything
worth? I remember the '08 crash - my Sibir energy went from 800p to 40p, and six
months latter were bought up for 500p/share.
REE are 80% supplied by China. It is strategically critical. US concern is about
China not supplying any more in this, in resonse for examlpe to US sanctions.
RBW's future is influenced by world economic events, for sure.

IMO Techmet will step up to the plate.

[swanvesta] 03/4/2024 12:54

I think the incoming fundraise will be the biggest concern. Hopefully Techmet will step up again with a premium.

[timnicebutdim] 03/4/2024 12:35

isn't the price of REE's a concern? Hopefully they will rally, but boy have they dropped over the past 12 months

[napoleon 14th] 03/4/2024 12:15

All good. Great presentation. No difficulty in believing in RBW's prospects.
Never mind share price noise. Meeting will be available as a recording - usually takes a day or two.

[napoleon 14th] 03/4/2024 10:46

We could be getting an update here:

This is a reminder that RAINBOW RARE EARTHS LIMITED will be holding the meeting Interim Results today at 11:00am. You'll be able to enter the meeting up to 15 minutes before the scheduled start time.
Meeting Date 3rd Apr 2024 at 11:00am BST, Duration 1 hour
Webinar ID 64c9bc1cc72a
Dial-in available (listen only)
Tel: [phone]

We have 15 minutes to log on via hxxps://presentations.investormeetcompany.com/investor-meet-company/RAINBOW-RARE-EARTHS-LIMITED-Interim-Results-42e53abd1a06b7ef74c01e9a?bmid=6eef1ba85f08
_________
I'm hoping, principally, for a positive update on the points raised by archie above
and, who knows?, some idea about how the REE-hungry US are going to help
with the financing of the main production unit at Phala.

[archie222] 28/3/2024 13:18

To be fair GB has flagged the need to raise more working capital in his many previous video comms to investors - so no surprises there. The big(ish) dilution will come when raising the 1/6th equity for the $300m needed to put Pb into production.

Still looking more, or less on track for me - albeit with one or two delays which shouldn’t be too surprising given what the company is trying to do.

[addendum]

Two big things remain though.

1. The need to nail the production of REOs in Q2 as advertised and at the 99.5% purity specified.

2. The ability to scale up to realistic volumes so as to meet PEA profitability expectations [SP Angels gripe].

[perfect choice] 28/3/2024 12:58

As with any non-revenue generating company, equity raising will occur as required until the Company is revenue earning. That $9.2M for for next 15 months (presumably to get to project finance) plus additional funds for progressing Uberaba (but I'm expecting that to be a 50/50 share so not the same as Phalaborwa), I would agree would probably be at 2 stages and likelihood the price will be at a premium against today's price for sure as has been repeatedly achieved before. The last was was actually at a small 3% discount, see Corporate section where this was mentioned. That last raise was on the 27th September 2023 at 15p versus a mid price of 15.5p. The previous raise before that was on the 9th May 23 at 10.377p and a 28% premium. So against 10p buy today I definitely expect a premium for the next one and it to be tied to an announcement like the 99.5% purity for RE Oxide being achieved which is a major viability milestone and i suspect would unlock USA investor interest as confirmation 2nd stage is viable and to be base din the USA so the interest..

One other factor today could just be timescales. I note the Phalaborwa DFS is stated for completion "last quarter of 2024/early 2025". I would have to check other announcement to be sure of this as not done, but thought it was still end 2024 before, so some slight movement into 2025 there. RBW/K-Tech and partners are developing a novel process here, its not an exact science and always chance timescales cannot be absolutely certain.

However the recent interviews do confirm the case is even more compelling for RBW's prospects, not just Phalaborwa but the "excitement" on Uberaba (looking forward to that PEA being published). But as always, a case off actually getting the results out with those RNS statements and its all work in progress for RBW right now. Little more patience required IMHO

Will be interested to see what GB says on specifics on the Interim Results presentation on the 3rd April at 11am (mentioned at bottom of RNS and you can register). I will not be able to make that so hopefully I will be able to catch up afterwards on what is said.

[ashkv] 28/3/2024 11:52

Indeed concur archie222 given morose Rare Earth pricing and slow progress - it appears another equity raise is around the corner with USD 4mn cash at Year End 2023 plus USD 3mn Annual Administrative Costs plus other costs.

Would have appreciated a current cash update!!!

Hopefully next raise is at a premium - if I recall the most recent raise was at a small premium?

[archie222] 28/3/2024 11:25

Perhaps?

"Based on management's reasonably plausible downside scenario outlined above, the Group will need to raise additional finance of at least US$9.2 million for the period ending 30 June 2025, along with any funds required to progress the Uberaba opportunity in Brazil.

Based on the robust economic prospects for the Phalaborwa project, the Board is confident that additional funding will be secured as required. However, the Board accepts that these circumstances indicate the existence of a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business. The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern."

[vatnabrekk] 28/3/2024 11:12

So why is the share price dropping so much?

[goodday1] 28/3/2024 07:05

From today RNsGeorge Bennett, CEO, commented: "Phalaborwa is a unique project in the rare earths space. Due to the fact that it is focused on the reprocessing of phosphogypsum stacks to recover rare earths, it has a fundamentally different cost profile to traditional mining projects and it is therefore expected to be the highest margin rare earth project in development today. Its potential to offer exceptional financial returns, its ability to go further down the supply chain to produce separated rare earth oxides, and its strong environmental credentials have seen the project backed by the U.S. Government during the Period, with a US$50 million funding commitment from the DFC announced at COP28, to be invested via TechMet.We are also excited about the prospects for the Uberaba phosphogypsum project in Brazil, which is being developed in partnership with Mosaic. Initial test-work to date has been encouraging and the project is of a significantly larger scale than Phalaborwa. Furthermore, the addition of Uberaba adds geographical diversification to our portfolio and is in line with our aspiration 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."Gl all