Rainbow Rare Earths Ltd (LON:RBW), the rare earth mining company, has today announced a new funding agreement with one of its largest shareholders, Pipestone Capital Inc, 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
Rainbow Rare Earths state that the loan carries no interest, however includes warrants over 2,000,000 new Ordinary Shares of no par value, 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.