Rainbow Rare Earths Ltd (LON:RBW) Chief Executive Officer Martin Eales caught up with DirectorsTalk for an exclusive interview to discuss their performance for the last quarter, increasing production, new financing arrangements and more mining fleet.
Q1: Martin, can you tell us how the company has performed in the last quarter?
A1: I think as we’ve announced today, the performance was broadly flat quarter on quarter, we exported 275 tonnes of our mineral concentrate which was the same as the previous quarter, albeit after an adjustment we made for timing differences. So, pretty flat but we have announced various things today with a view to increasing production going forward over the next 6-12 months.
Q2: So, what are you doing to increase production and when can we expect to see results?
A2: As we have announced over the last month or so, we did put out our maiden resource estimate in December and we’ve reaffirmed today that we intend to add additional mining sites. So, at the moment, everything is being produced from just two sites, one of which Murambi has only just come into production and will increase in this quarter.
We have committed today to opening a third and fourth mining area being Kiyenzi and Gomvyi Centre during the course of this year. I think what we’ve established is an understanding of how to mine each particular site and really our analysis shows that multiple sites will much better allow us to provide consistent flow of ore to the plant and cater to some of the initiable increases and decreases in monthly production.
Q3: What’s the market like for your product?
A3: As we’ve said today, the customer feedback, customer demand is very positive, we would love to produce more very quickly but unfortunately mining has a lead time and getting the new sites ready will take quite a few months this year. So, we don’t envisage the new sites being producing until the second half of the calendar year.
The demand is very strong, the partnership with our sales agent, the German company Thyssenkrupp, is working very well and at the moment, demand is significantly ahead of what we’re supplying.
Q4: Can you explain for us your new financing arrangements that you announced earlier in the week?
A4: On Monday this week, Rainbow Rare Earths announced that we’d entered into a funding agreement with an investor called The Lind Partners and really that enables us, on a flexible basis, to cover our financing needs during the course of this year. It caters for some of that unpredictability in production such that as differing levels of tonnages come out of the mines during the course of the year, we have flexibility on calling funding or not requiring it. So, it works for us in a number of ways.
Q5: I see that you’re also talking about buying more mining fleet, can you explain why is this?
A5: Well, two reasons, we need more fleet to increase production so as the new sites come on stream later in the year, we’ll need more machines; excavators and haul trucks, but really the economics are sound.
At the moment, we do rent a lot of mining equipment locally, but our sums have shown us that actually the payback on buying these things new is less than a year so it’s a financial no-brainer for us to buy more fleet.
So, we’re in negotiations with fleet suppliers and our local banks to finance that in the most efficient way.
Q6: Now, some people might be aware of the Australian rare earth company Lynas and some of the environmental issues they have been having in Malaysia. Does Rainbow Rare Earths have similar challenges in Burundi?
A6: We’re very small compared to Lynas, they’re the big boy in the industry, but the one thing we can say is actually our mine is virtually one of the greenest mines in the world, we don’t use explosives, we don’t use any chemicals, we simply extract ore and crush it.
So, from an environmental perspective, we cause very little harm or have impact on the local environment so strong support from the local people for our activities. We don’t have some of those environmental challenges that some mining companies face so in that respect, we have a lot of advantages.