Gakara feasibility Study

Rainbow Rare Earths Limited

("Rainbow" or the "Company")

(LSE: RBW)

23 February 2021

Feasibility of 10,000tpa Gakara Down-Stream Processing Plant Confirmed

Rainbow Rare Earths Ltd is pleased to provide an update on the feasibility of a processing facility to produce a high-purity cerium-depleted mixed rare earth carbonate from the Company's Gakara Rare Earths Project ("Gakara").

Metallurgical Engineering Technology and Construction (Pty) Ltd ("METC") was engaged by Rainbow to re-validate and update a preliminary economic assessment ("PEA") conducted in 2015 by SGS Lakefield Canada Inc ("SGS"), providing an optimised scoping study ("the study").

Highlights

·    The study has confirmed the feasibility of a 10,000tpa rare earths element ("REE") cracking plant (the "plant"), doubling its capacity from 5,000tpa, originally proposed in the SGS PEA, based on the Strong Acid Agitated Bake ("SAAB") process developed from the test work completed by SGS;

·    METC optimised the process, incorporating newer technologies, to deliver a flowsheet capable of producing a high-grade cerium-depleted mixed rare earth carbonate, containing approximately 39% neodymium and praseodymium ("NdPr"), the critical input materials for permanent magnets required for electric vehicle ("EV") and wind turbine technology;

·    The 2020 capital cost of US$35.2 million, estimated by METC, for a 10,000tpa plant (US$3,522 per tpa) compares favourably to the SGS 2015 estimate of US$22.3 million for a 5,000tpa plant (US$4,456 per tpa). The operating cost estimate produced by METC is US$1,279/t, compared to the original SGS estimate of US$1,654/t. This represents a 21% reduction in capital intensity and 23% in operating cost, providing an expected resilience to the project economics, even in the event of a volatile pricing environment; and

·    The proposed plant location in South Africa would provide strong synergies with Rainbow's other rare earths project at Phalaborwa, contribute to the local economy and facilitate a sustainable, transparent rare earths supply chain.

George Bennett, CEO, said: "The validation of the feasibility of a 10,000tpa down-stream processing plant provides Rainbow with the opportunity to deliver a significantly higher share of the total contained metal value of the Gakara project for our shareholders. The estimated capital and operating costs of this plant would likely be some of the lowest in the industry and therefore viable even in the event of volatile rare earths prices. This confirms our belief that Gakara has the potential be a low capital intensity project.

Dave Dodd, Rainbow's Technical Director, commented: "The ability to produce a high-purity NdPr-rich, cerium-depleted, mixed rare earth carbonate product at low capital and operating costs demonstrates the potential of the robust, long-term economics of our Gakara project.

We already operate Africa's only producing rare earths operation at Gakara, via the current trial mining operations, which employ a simple, reagent-free, low capital and operating cost gravity concentration process. By further processing the concentrate, we have the potential to participate in a greater proportion of the value chain, producing the rare earth elements required to accelerate the global green energy transition. These factors combined serve to further strengthen our determination to confidently progress through to commercial scale production at Gakara."

SGS originally successfully tested five process routes and developed a flowsheet based on a SAAB process to produce a cerium-depleted mixed rare earth carbonate from a 5,000tpa plant with a capital cost of US$23 million.

In December 2020, METC updated and optimised the scoping study, by reviewing and analysing the process design criteria from the SGS PEA. As a result, METC upgraded the processing capacity of the rare earths elements cracking plant from the originally proposed 5,000tpa to 10,000tpa. Based on the work carried out to date, the plant demonstrates low capital intensity of US$35.2 million and operating costs of US$1,279/t.

By integrating the downstream processing of the Gakara rare earths concentrate into a cerium-depleted mixed rare earths carbonate into Rainbow's business model, the Company has the potential to participate in a larger segment of the overall value chain.

The study identified South Africa as an optimal location for the processing plant. This would facilitate significant synergies for the Company, given the location of its Phalaborwa Rare Earths Project, near Pretoria in South Africa. By locating the processing plant within the industrial hub of Johannesburg, the study confirmed that Rainbow would realise cost efficiencies in the areas of reagents, power and transport. Whilst power consumption is not expected constitute a significant proportion of the overall operating costs, the use of renewable energy would be considered, in line with Rainbow's commitments as an environmentally responsible producer.

**ENDS**

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Notes to Editors:

Rainbow's strategy is to become a globally-significant producer of rare earth metals. NdPr are vital components of the strongest permanent magnets used for the motors and turbines driving the green technology revolution. Analysts are predicting demand for magnet rare earth oxides will grow substantially over the coming years, driven by increasing adoption of green technology, pushing the overall market for NdPr into deficit.

The Company's Gakara Project in Burundi, which produces one of the highest-grade concentrates in the world (typically 54% total rare earths oxides ("TREO")) through ongoing trial mining operations, is currently the only African producer of rare earths.  The Gakara basket is weighted heavily towards NdPr, which account for over approximately 19.5% of the contained TREO and 85% of the value of the concentrate.

The Phalaborwa Rare Earths Project, located in South Africa, comprises approximately 35 million tonnes of gypsum tailings stacked in unconsolidated dumps derived from historic phosphate hard rock mining, containing rare earth elements with an initial estimated average in situ grade of 0.6% TREO, based on previous sampling campaigns, of which +/- 30% comprises high-value NdPr. The rare earths are contained in chemical form in the gypsum dumps, which is expected to deliver a higher-value rare earth carbonate, with lower operating costs than a typical rare earth mineral project.