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Rainbow Rare Earth Ltd

Rainbow Rare Earths Ltd Q&A with CEO Martin Eales (LON:RBW)

Rainbow Rare Earths Ltd (LON:RBW) Chief Executive Officer Martin Eales caught up with DirectorsTalk for an exclusive interview to discuss their unaudited results for the six months ended 31 December 2017

 

Q1: The focus for the past year has been on achieving first production, now that that milestone is out of the way, what is Rainbow Rare Earths primary focus?

A1: Well, yes, we were delighted to announce in September 2017 that we had achieved first production of rare earth concentrate and achieved our first export of the product from Burundi and that was, of course, our main focus for last year following the IPO in January 2017.

We’re only a couple of months on from that major milestone so not a lot has changed but we’re focussing now on increasing production on a month by month basis, ramping up to a target concentrate export figure of 5,000 tonnes run rate, that’s approximately 400 tonnes a month which is where we’d like to be by the end of 2018.

 

Q2: Talking about the ramp-up, can you give us an indication of how things have progressed since December and how long it’ll take before a run rate of 5,000 tonnes per annum is achieved?

A2: Everything is progressing very well, as we’ve announced this morning in the interim results, commissioning of our process plant is now fully completed and it’s running to design capacity which is great news.

We sold our first 50 tonnes in December, we exported 75 tonnes in January and February is going to be higher still so it’s a nice sensible incline in production and exports we’re seeing every month at the moment.

We said we want Rainbow Rare Earths to be at that 5,000 tonnes run rate by the end of the year, I can’t pinpoint the exact month but that’s still very much in our sights.

 

Q3: With a total of 1,168 REE occurrences now found at Gakara, do you believe that all of these can be exploited and what needs to be done to achieve this?

A3: It is incredible that we and the exploration team I should say of Rainbow have found so many hundreds of rare earth veins and occurrences across the project. Now, it would be slightly optimistic to assume that every single one of those veins is economically capable of mining and extraction for various reasons, whether due to size, accessibility or even just its location.

So, it would be unwise to assume that every single vein that we found is capable of mining but what we do know is that we’ve always said there are many many tonnes of high grade rare earth material across our deposit and we do expect to be mining there for many years to come.

 

Q4: The exploration programme currently underway at Gakara should give us a better sense of size and scale of the project, when do you think you’ll be able to declare a JORC resource and do you think this will prompt a re-rating of the share price?

A4: There’s three parts to that question, we announced at the start of this year, based on the funds we raised in December, that we were going to embark on our maiden drilling campaign and I’m pleased to say that is now underway, the drill is turning as we speak.

We have said in our previous announcements that depending on the results of the first phase drilling campaign i.e. if one of the areas we drill contains indications of the mineralisation we expect then we’ll move to phase 2. There’s every reason to expect we could declare a JORC resource by the end of 2018 so we’re saying second half 2018 for a potential JORC resource.

Of course, I would very much hope that that would prompt a re-rating for the share price. Don’t forget, we’ve got this far as a company without drilling a single hole and without a JORC resource and that’s frankly unique and that’s frankly unique in junior mining circles. So, we’re very different to the normal company, not least that we’re also in production and earning revenue.

 

Q5: Now, China is said to be capping their rare earths production at 140,000 MT yet the demand for NdPr is increasing significantly really. How will global supply make up the shortfall?

A5: Well, don’t forget that if you’re a believer of the electric vehicle story, and lots of people are at the moment focussing on the battery materials like lithium and cobalt and nickel, the very same demand drivers affect Neodymium (Nd) and Praseodymium (Pr), the 2 rare earth elements that go into the magnets that are in electric motors.

We are strong believers in that demand curve escalating in the short term, there isn’t a lot of new supply of rare earths in the market, Rainbow Rare Earths are the only producing mine in Africa, as you know, there are a number of projects in development, but they are typically all needing financing to get built and they’re going to be some years off adding to the supply of rare earth materials.

So, we think that the fundamentals are set fair in the short term for a demand-led price squeeze, we think pricing fundamentals are set fair for us.