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Rainbow Rare Earths - US$1.0 million Unsecured Loan from CEO

RNS Number : 9739D
Rainbow Rare Earths Limited
25 February 2020
 

FOR IMMEDIATE RELEASE

25 February 2020

 

Rainbow Rare Earths Ltd ('Rainbow' or 'the Company') (LSE: RBW)

Unsecured Loan of US$1.0 million from an affiliate of the CEO George Bennett

 

Rainbow, the rare earth mining company, is pleased to announce a new funding agreement with one of its largest shareholders, Pipestone Capital Inc ("Pipestone"), of which George Bennett (Rainbow's CEO) is the ultimate beneficiary.

 

The funding comprises an unsecured loan of US$1.0 million to support Rainbow's development and operations. The funding is intended to finance ongoing exploration, operations, working capital and other general requirements.

 

The facility underlines the confidence placed in the Gakara project by the CEO, George Bennett, who already holds an interest in 8.6% of the Company's issued share capital. Since his appointment in August 2019, George has set out a revised strategy for the Company based around turning Gakara into a major strategic source of rare earths, with the aim of producing at least 20,000 tonnes per annum of concentrate. The latest corporate presentation can be found at www.rainbowrareearths.com 

 

The loan carries no interest, however includes warrants over 2,000,000 new Ordinary Shares of no par value ("Ordinary Share"), at a strike price of 4.55 pence per Ordinary Share, and a life to expiry of 4 years. The strike price represents a premium of 30% to the 20-day volume weighted average price of the shares prior to the date of the agreement.

 

It is intended that the loan be repaid out of the proceeds of any future fundraise; however Pipestone may elect to convert a portion of the loan into equity on the same terms as those offered to investors at that time.

 

Loan Amount:

US$1,000,000

Loan Term:

12 months

Interest:

Nil

Warrants:

Over 2 million shares at 4.55 pence, valid for a period of 48 months

 

Repayment:

In full out of the proceeds of any subsequent fundraise, or partial conversion into equity (on the same terms as available to participants in that event)

 

Purpose:

To be applied towards general working capital purposes.

 

The loan and its commercial terms were considered fair and reasonable, and approved by Directors who have no interest in the proposed transaction.

 

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

 

**ENDS**

 

For further information, please contact:

 

Rainbow Rare Earths Ltd

Company

George Bennett

Jim Wynn

+27 82 652 8526

+44 (0) 20 3910 4551

SP Angel Corporate Finance LLP

Joint Broker

Ewan Leggat

Charlie Bouverat

+44 (0) 20 3470 0470

Turner Pope Investments

Joint Broker

Andy Thacker

Zoe Alexander

+44 (0) 20 3657 0050

 

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 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 news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.
 
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Quick facts: Rainbow Rare Earths Limited

Price: 2.7

Market: LSE
Market Cap: £10.27 m
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