“The mantra this year has been that we are aiming for first sales by the end of December,” says Martin Eales of Rainbow Rare Earths (LON:RBW).
“I’m pleased to say we’re on track.”
Rainbow has spent the last eight months or so since it listed in January, pushing on with development work at the Gakara rare earth project in Burundi.
In order to hit the year-end production target, says Eales, the company has had to develop both mine and processing plant at the same time.
Both undertakings now nearing completion
Indeed, mining of ore has already commenced at the Gasagwe site, following on from a pre-stripping operation which began back in April.
The main vein has now been exposed to a depth of between three and five metres along 90 metres of strike, and the ore that’s now being mined from it will be stockpiled pending the start-up of the plant within the next two months.
Plant and mine are not immediately adjacent, as the plant has been situated in a location where the ground is more generally level and where there is easier access to wider infrastructure networks.
Company to issue new guidance on 4 October
Exactly how much ore and concentrate the company will produce in the current financial year will become clearer on 4th October when the company issues new guidance alongside preliminary results.
But even ahead of that, it’s clear Rainbow Rare Earths is sitting in a very strong position.
For a start, the basket price of the rare earths that it will be selling has increased by 80% in the year to date.
So far as anyone can tell, Gakara is the highest grade rare earth deposit in the world. Typically hard rock rare earths deposits run at grades of between 3% and 6%.
“Ours is an average of 57%,” says Eales. “The main vein at Gasagwe tested at grades of 62%, so our grade is incredibly high.”
That in turn allows for a fairly simple operation.
“We’re simply selling crushed rock. We’re not taking it any further,” says Eales.
It’s helpful, of course, that customers have already been lined up through a partnership with thyssenkrupp Raw Materials, which is handling the trading of Rainbow’s concentrate.
At this stage the plan is to achieve a near-term run rate of 5,000 tonnes per year by the end of next year.
But watch for further updates. These are exciting times for Rainbow and a share price which has been broadly range-bound in recent months may shortly be due a re-rating.