Rainbow Rare Earths (LON:RBWR) Ltd (LSE:RBW, OTC:RBWRF) said a new study of the Phalaborwa project in South Africa had reinforced the ‘exceptional economics’ first identified in the initial PEA.
George Bennett, Rainbow’s chief executive, said: “The capital and operating cost estimates, now at a much higher level of economic confidence than at the PEA stage, confirm that Phalaborwa remains the highest margin rare earth project in development today outside of China.”
Updated numbers for Phalaborwa indicated a post-tax net present value (10%) of US$611 million versus US$627 million, which reflects two years of input costs inflation of 12%, said the statement.
Power costs, for example, had risen by 34% over the past two years, said Rainbow.
Production costs were US$40,83/kg rare earth magnet oxides v US$33.86/kg, or an operating cost of US$12.91/kg including non-magnet REE.
Phalaborwa's operating cost is considerably lower than traditional rare earth projects, said the statement, as the phosphogypsum material is already sitting at surface in a chemically cracked form, which eliminates the cost and risk of mining, hauling, crushing, grinding, flotation, and cracking.
Capital or build costs are now estimated at US$326.1 million, which Rainbow said comes below the initial PEA estimate of US$295.5 million if adjusted for inflation.
The latest study was based on a project life of 16 years, or two years longer than the PEA, processing an average of 2.2 Mt of phosphogypsum per annum.
Even though REE prices have weakened recently, the longer-term outlook for REE pricing is supportive, Rainbow added.
Bennett commented: “ This update reaffirms that Phalaborwa is extremely well positioned to contribute to the establishment of an independent and resilient supply chain for the REE critical to decarbonisation, defence and emerging technologies. “