5 December 2023

Rainbow Rare Earths Limited

(“Rainbow” or “the Company”)

LSE: RBW

Proposed US$50 million TechMet investment in Phalaborwa to be funded by the U.S. International Development Finance Corporation

·    The TechMet Limited (“TechMet”) option to invest US$50 million directly in the Phalaborwa project in South Africa will be funded by the U.S. International Development Finance Corporation (“DFC”)

·    DFC US$50 million funding commitment announced at COP28, the United Nation’s Climate Change Conference, demonstrating the global effort to responsibly scale production of the metals essential for clean energy technologies

·    Phalaborwa recognised as having the potential to play a significant role in the establishment of a more diversified Western supply chain of the critical rare earths vital for electric vehicles and wind turbines, as well as many other advanced technologies

·    Rainbow’s innovative processing flowsheet will deliver separated rare earth oxides, highlighting its unique position within the pipeline

NEWS RELEASE

Rainbow Rare Earths (LSE: RBW) is pleased to announce that it has received confirmation that the DFC will be the sole source of funding for the proposed US$50 million investment by TechMet to acquire a direct equity stake in the Phalaborwa project (the “TechMet Option”, as announced on 8 November 2023).

A focus for the DFC is critical minerals, defined as those minerals that are essential to the economic or national security of the U.S. and which have a supply chain vulnerable to disruption.

The DFC addresses critical mineral investment for the U.S. via its strategic stake in TechMet, which aims to assist in the development of world-class projects across the critical minerals supply chain. The projects identified by TechMet must be operated according to high standards of environmental, social and governance criteria, as well as showing the potential for excellent economic returns.

The four rare earths that will be produced at Phalaborwa – neodymium, praseodymium, dysprosium and terbium – are all designated as critical minerals further to their important role in the transition to the green economy.

As vital components of permanent magnets, these rare earth elements are used within electric vehicles and wind turbines, as well as many other advanced technologies including those required for strategic defence purposes, such as guided missiles, drones, electronic displays, sonar and jet fighter engines.

This funding agreement for Phalaborwa follows a period of extensive due diligence by the DFC and TechMet into Rainbow and the project, including a site visit for DFC representatives and multiple layers of approval to ensure that the investment meets the strict criteria of a U.S. sovereign wealth fund.

Adonis Pouroulis, Chairman of Rainbow, commented: 

“This approval of funding from the DFC confirms that Phalaborwa offers a strategic source of the four most economically important rare earths that are vital to the green energy transition.

 

“Furthermore, Phalaborwa will use our innovative processing technique to take its material all the way through to separated rare earth oxides, unlike most rare earth projects that produce an intermediate mixed rare earth concentrate which is then sent to China for further refinement.

 

“By providing an independent and reliable source of separated rare earth oxides, Phalaborwa will help the U.S. to deliver on its goals to develop a U.S. down-stream supply-chain including specialist alloy, REE permanent magnets, drive trains, and ultimately EV/wind turbine manufacture.”