TIDMRBW
RNS Number : 8121L
Rainbow Rare Earths Limited
24 April 2018
FOR IMMEDIATE RELEASE
24 April 2018
Rainbow Rare Earths Ltd ('Rainbow' or 'the Company') (LSE:
RBW)
Gakara Production and Operations Update for the Three Months to
31 March 2018
Rainbow, the rare earth element mining company, is pleased to
announce its first quarterly operations update from its Gakara
Project in Burundi ('Gakara') since commencing production in
December 2017. Gakara is one of the highest grade rare earth
element mining projects globally, with an estimated in situ grade
of 47-67% Total Rare Earth Oxide ('TREO'), and the Company is
targeting a production rate of 5,000tpa by the end of 2018.
Results for the Three Months to 31 March 2018
Quarter ended 31 March 2018
Concentrate tonnes produced 279
Grade TREO per tonne concentrate 62%
Realised sales price achieved (US$ per tonne) 2,357
Production cost per tonne (US$ per tonne) 2,068
Cost of sales (US$ per tonne) 646
Lost Time Injury Frequency Ratio ('LTIFR') 0.00
Martin Eales, CEO of Rainbow, said: "Following completion of our
first full quarter of production we are still on track to ramp up
operations to our target of approximately 400 tonnes per month of
rare earth concentrate by the end of the calendar year. Going
forward this increased productivity will enable us to reduce our
production costs per tonne significantly. Furthermore, I'm pleased
with the consistent exceptionally high grades of the concentrate
produced during these first months of mining at Gakara which is the
only producing rare earths mine in Africa and one of the few
outside of China.
"During this busy quarter we also embarked on our maiden
drilling campaign to explore the anomalies identified towards the
end on 2017. I look forward to providing initial drill results in
the near future."
Production update for period to 31 March 2018
As announced in December 2017, Rainbow successfully produced and
exported its first 25 tonne batch of high grade rare earth
concentrate and commenced commissioning of its gravity processing
plant.
The processing plant at Kabezi was fully commissioned and handed
over during the quarter, and the ramp-up to full production has now
begun. 279 tonnes of concentrate were produced in the three months
to 31 March 2018 following 75 tonnes produced in December 2017,
however now that construction and commissioning has been completed,
production levels are expected to increase steadily over the rest
of the year, as mining and processing methodologies are tested and
optimised.
The average grade of concentrate produced was 62% TREO, as
assessed by a third party accredited laboratory on Rainbow's
behalf. The grades were consistent during the period, reporting in
a range of 61-64%.
All run of mine ore ('ROM') processed into concentrate during
the quarter by the plant at Kabezi was sourced from the Gasagwe
pit. Rainbow is now developing highly attractive additional sources
of ROM ore within the Gakara Mining Licence area in order to reach
its target run rate of 5,000 tonnes per annum (approximately 400
tonnes per month) by the end of 2018. These areas are now expected
to be in operation in advance of Gashirwe, the originally planned
second mining area, due to their vein prospectivity and speed of
development. Further information on these new mining areas will be
provided in the quarterly report to 30 June 2018.
Production costs
Production costs (including Burundi support costs) of US$2,068
per tonne of concentrate produced were relatively high, as
expected, and will reduce significantly as production rates
increase and the element of fixed costs is spread over larger
tonnages.
Sales costs
Sales costs in the period amount to US$646 per tonne of
concentrate sold. These consisted of transport and shipment costs,
the 3.5% marketing and handling fee payable to thyssenkrupp Raw
Materials ('TK'), and government royalties of 4%.
Realised Sales Price
The average realised sales price was US$2,357 per tonne during
the period, based on 125 tonnes of concentrate sold. Rainbow sells
its concentrate to TK at port in Africa (currently Mombasa), and TK
concluded sales with two separate end customers in the quarter.
Shipment and clearance of these initial deliveries took longer
to process, as anticipated, however no problems were encountered,
and subsequent sales cycles are likely to be considerably
quicker.
The market for magnet rare earths (in particular Neodymium and
Praseodymium which make up approximately 19% of the TREO within
Rainbow's concentrate) remains buoyant, and there are strong
indications of customer demand for all of Rainbow's planned
production increases.
As previously announced, selling prices for Rainbow's
concentrate are negotiated with reference to TREO grade and
published prices for separated rare earth oxides and applying a
customer discount for processing costs. The average sales price of
concentrate realised during the Period of US$2,357 per tonne
compares with Rainbow's average 'basket price' during the quarter
of US$13,360 per tonne on a 100% TREO basis. The difference
reflects both the average TREO grade in the period (62%), and the
negotiated discount for downstream separation costs.
Rare earth oxide prices strengthened considerably during the
quarter after dipping towards the end of 2017, with Rainbow's
basket increasing 11% from US$12,270 per tonne (US$12.27/kg) as at
31 December 2017 to US$13,570 per tonne (US$13.57/kg) as at 31
March 2018.
Operational Health & Safety
Rainbow maintained a LTIFR of 0.00 during the Quarter and as at
the end of the Quarter had achieved over 750,000 man hours free
from Lost Time Injury since commencement of operations in April
2017.
Exploration
Rainbow's maiden drilling campaign commenced during the quarter,
targeting a gravity anomaly identified at Kiyenzi and a number of
magnetic anomalies identified by an airborne survey undertaken in
2017. The Company expects to announce first results from the Phase
1 drilling around the end of April.
**ENDS**
For further information, please contact:
Rainbow Rare Earths Martin Eales Tel: +44 (0)
Ltd 20 3910 4550
-------------------- ---------------- --------------
St Brides Partners Lottie Wadham Tel: +44 (0)
Ltd Susie Geliher 20 7236 1177
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Arden Partners plc Paul Shackleton Tel: +44 (0)
Benjamin Cryer 20 7614 5900
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Notes to Editors:
Rainbow's focus is the Gakara Project in Burundi, one of the
highest-grade (47%-67% Total Rare Earth Oxide) rare earths projects
globally and the only African producer.
The Company began production of rare earth concentrates in Q4
2017 and is currently ramping up to a targeted run rate of 5,000tpa
by the end of 2018 and 6,000tpa by the end of 2019. Rainbow has a
ten-year distribution and offtake agreement with multinational
thyssenkrupp Raw Materials secured for the sale of at least
5,000tpa of concentrate produced.
The Gakara basket is weighted heavily towards the magnet rare
earths, including neodymium and praseodymium, which are driving
demand and account for 70% of annual global REE sales due to their
use in vital components in motors, generators, wind turbines, and
electric vehicles.
This information is provided by RNS
The company news service from the London Stock Exchange
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