Rainbow Rare Earths Ltd (LON:RBW) has secured a new funding agreement with its major shareholder, Pella Ventures.
Pella has given Rainbow an unsecured 12-month 15% loan of US$700,000 to support the rare earth element mining company’s development and operations.
The company said it expects to achieve cash-flow break-even in the second quarter of the next financial year, which runs to June 2020.
Rainbow Rare Earths" CEO believes plan in place take miner"s financial performance to break-even and beyond - Proactive Investors UK https://t.co/N8ry4Kxjuk— Arthur Harrington (@ArthurHarringt) May 5, 2019
In addition, Rainbow has agreed with The Lind Partners to suspend any further tranches under the existing equity drawdown facility first announced on 28 January 2019.
"The funding agreement with Pella provides working capital whilst the company finalises its short term plans to finance the company's planned investment for growth. Pella is the company's founder and largest shareholder and is committed to supporting the company to achieve its long term aims,” said Martin Eales, the chief executive officer of Rainbow.
On the operational side of things, the company said production at its Gakara Project in Burundi in the first three months of 2019 remained challenging.
Rainfall during the period disrupted mining operations as the locally-rented haul trucks available proved incapable of performing in wet conditions, which limited waste stripping and dumping. The replacement of the inadequate rented machines with newer more suitable models is a critical component in Rainbow's plans to address mining performance issues, the company said.
During the quarter, 347 tonnes of run of mine ore were mined, down from 371 tonnes in the final three months of 2018. Due to the timing of concentrate batches being completed, only 100 tonnes of concentrate were exported and sold in the quarter, compared with 300 tonnes exported in the quarter to preceding quarter.
Gross sales price per tonne achieved in the quarter was roughly 9% below the preceding quarter at US$1,780 per tonne (t).
Rare earth prices remained relatively flat in Jan-March quarter, with the company's indicative basket price average increasing slightly from US$11.33/kg to US$11.41/kg during the period.