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Highlights:
- Enhanced Confidence Parameters: The Interim Study incorporates high-confidence data from large-scale pilot testwork for REE recovery.
- Strong Financial Metrics: Despite current market challenges, the project shows potential for annual profits of $63 million.
- Potential Expansion: Further separation of additional rare earth oxides (REOs) could improve project economics.
Rainbow Rare Earths Ltd (LSE:RBW, OTC:RBWRF) has published an Interim Study for its Phalaborwa Project in South Africa, showcasing improved parameters and strong economic potential even amidst depressed rare earth element (REE) prices. The study reflects advancements from large-scale pilot testing, reinforcing the company’s confidence in the project’s viability.
Improved Confidence Through Advanced Testwork
The Interim Study incorporates data from extensive pilot testwork aimed at recovering rare earth elements from phosphogypsum to produce a high-grade intermediate product. This marks a significant step forward from the original Preliminary Economic Assessment (PEA), with more robust and reliable results shaping the updated projections.
The study assumes the same basket price used in the PEA, yielding a net present value (NPV10, post-tax) of $611 million, compared to the previous $627 million. Despite price pressures in the REE market, the project is still expected to generate underlying annual profits of $63 million.
Broader Potential in Rare Earth Oxides
The study focuses on the recovery of key REOs but notes that additional value could be unlocked by separating out other light rare earth elements (LREEs) such as SEG oxides. This potential expansion has not yet been factored into the project’s current economic model, presenting an opportunity for future growth and enhanced returns.
Ongoing work on refining the separation process for rare earth oxides could further strengthen the project's attractiveness and align it with rising global demand for these critical materials.
Market Reaction and Outlook
Shares in Rainbow Rare Earths rose by 2% to 12.25p following the release of the Interim Study, reflecting market optimism about the project’s progress. Analysts from SP Angel highlighted the enhanced confidence in the updated parameters and the project’s resilience against current market challenges.
The Phalaborwa Project continues to position itself as a strategic player in the rare earths sector, with a clear focus on leveraging its resource potential to meet the growing demand for REEs used in advanced technologies, green energy, and defense applications. As work on separating additional REOs progresses, the project’s economics may see further enhancement, setting a strong foundation for long-term success.
