Mining company Rainbow Rare Earths (LSE:RBW) saw its shares dip 3.6pc to 17.6p today despite confirming strong results from a recent exploration drill at it 90pc-owned Gakara Project in Burundi. It said laboratory results carried out on 90 drill core samples from site’s Kiyenzi prospect confirmed the presence of multiple intersections of high-grade rare earth elements within areas of breccia mineralisation.
As a result of the positive results, the firm will now begin the second phase of its exploration programme at the site with the aim of delivering a code-compliant resource by the end of 2018. Phase 2 will comprise around 750m of further core drilling at Kiyenzi and additional trenching and terracing at the site.
According to Rainbow, Gakara is one of the highest-grade rare earth element (REE) mining projects globally, with an estimated in-situ grade of 47-67pc total rare earth oxide. The basket of minerals produced at the site weights heavily towards magnet rare earths such as neodymium and praseodymium. These account for 70pc of annual REE sales due to their use in components in motors, generators, wind turbines, and electric vehicles. Other rare earths are used in the production of fluorescent lights, polishing powders, fibre optics, magnets and glass additives.
Rainbow began production of rare earth concentrates from Gakara in Q4 last year from a site called Gasagwe, making it the only producing rare earths mine in African and just one of a handful outside China. It is now ramping up to a targeted run rate of 5,000tpa by end-2018 and 6,000tpa by the end of 2019. It also has a ten-year distribution and offtake agreement secured at the site for the sale of at least 5,000tpa of concentrate produced.
Global rare earth production in 2016 came in at an estimated 160,000-170,000 metric tonnes, with 93pc of this coming from China. With its 6,000tpa run rate, Rainbow said it has the potential to make Burundi, where Gakara is based, the third largest producer of rare earths in the world.
Martin Eales, chief executive at Rainbow, said: ‘We were anticipating some exciting mineralisation at Kiyenzi following our original field testing, and these laboratory results now confirm it. The thickness of the breccia deposit is likely to add many more tonnes to our code-compliant resource, targeted for this year, and should also be better suited to mechanised mining.
‘Phase 2 drilling starts within the next month at Kiyenzi and we look forward to incorporating these results, as well as other areas within the Gakara project, into our targeted maiden resource later this year with a view of further ramping up our production of REE concentrate in the near-term to achieve our 6,000tpa run rate target by the end of 2019.’