ONE OF THE WORLD’S RICHEST PRODUCING RARE EARTH...
Transcript of ONE OF THE WORLD’S RICHEST PRODUCING RARE EARTH...
ONE OF THE WORLD’S RICHEST
PRODUCING RARE EARTH DEPOSITS
LOW COST PRODUCTION IN EAST AFRICA
Interim Results to 31/12/17
Rainbow Rare Earths Ltd.
DISCLAIMER
These Presentation Materials are for information purposes only and must not be used or relied upon for the purpose of making any
investment decision or engaging in any investment activity and should not be construed as, an offer for sale or subscription of, or
solicitation of any offer to buy or subscribe for, any securities of Rainbow Rare Earths Limited (the “Company”). Whilst the information
contained herein has been prepared in good faith, neither the Company, its subsidiaries (together, the “Group”) nor any of the Group’s
directors, officers, employees, agents or advisers makes any representation or warranty in respect of the fairness, accuracy or
completeness of the information or opinions contained in this presentation and no responsibility or liability will be accepted in connection
with the same. The information contained herein is provided as at the date of this presentation and is subject to updating, completion,
revision, verification and further amendment without notice.
These Presentation Materials contain forward-looking statements in relation to the Group. By its very nature, such forward-looking
information requires the Company to make assumptions that may not materialise or that may not be accurate. Such forward-looking
statements involve known and unknown risks, uncertainties and other important factors beyond the control of the Company that could
cause the actual performance or achievements of the Company to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Nothing in this presentation should be construed as a profit
forecast. Past share performance cannot be relied on as a guide to future performance.
The graphs and data on page 18 (as labelled) is copyright ©2017 Argus Media Group. All rights reserved. All intellectual property
rights in the above extract are the exclusive property of Argus and/or its licensors and may only be used under licence from Argus. No
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Rainbow Rare Earths Ltd.
WHAT IS RAINBOW RARE EARTHS?
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AN INDEPENDENT SUPPLIER OF HIGH-GRADE CONCENTRATE TO THE GLOBAL RARE EARTH MARKET
USPs
the highest grade rare earths
mine globally
90% owner of Gakara:
in Africa(one of a handful
outside of China)
Gakara is the only producing rare earths mine
(47 - 67% TREO)
containing both Nd and Pr
High value basket
(magnet rare earths)
which are driving
demand
with multinational
thyssenkrupp Raw
Materials
10yr offtake agreement
Rainbow Rare Earths Ltd.
2017 – A YEAR OF DELIVERY
FROM IPO IN JANUARY TO FIRST PRODUCTION AND
EXPORTATION ON TIME AND ON BUDGET
All targets achieved
Long term debt repaid
Gasagwe mine developed and producing
Kabezi plant constructed and operational
Exploration success - 4 large anomalies identified
First tonnes of high grade concentrate produced and exported
US$8m initial funding secured from IPO on LSE
Raised US$3.75M for exploration upside and acceleration of production
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Rainbow Rare Earths Ltd.
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KEY DATA
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TICKER MARKET MARKET CAP SHARE PRICESHARES
IN ISSUEJOINT BROKERS
RBW.L LSE £24.22m 13.875p 174.63mHANNAM & PARTNERS
ARDEN PARTNERS
SHARE PRICE GRAPH
As at 19.02.18
SIGNIFICANT SHAREHOLDERS
SHAREHOLDER HOLDING
Adonis Pouroulis 25.97%
Other Board &
Management8.50%
Legal & General PLC 5.98%
Miton Asset Management 5.07%
Shawn McCormick 4.90%
Rainbow’s IPO Price
IPO PRICE – 10.00p
Rainbow Rare Earths Ltd. 5
OVERVIEW OF FINANCIALS
Source: Company’s photo of Gasagwe mine site
Rainbow Rare Earths Ltd.
SIX MONTHS TO 31 DEC 2017 – SUMMARY P&L AND BALANCE SHEET
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US$’000 6 mths to 31 Dec 2017(unaudited)
6 mths to 31 Dec 2016(unaudited)
Administrative expenses (601) (168)
Share based payments (461) -
Net finance cost (9) (255)
Total loss in period (1,071) (423)
US$’000 31 Dec 2017(unaudited)
30 June 2017(audited)
Non-current assets 8,748 5,973
Cash 2,724 3,198
Other current assets 837 22
Loans (298) (20)
Other payables (365) (429)
Net assets 11,646 8,744
INCOME STATEMENT
BALANCE SHEET
▶ Administrative expenses reflect increased activity in period – prior to IPO in Jan 2017, activity was kept deliberately low
▶ Share based payments include options awarded during 2017
▶ Finance costs in period relate to Finbank overdraft – those prior period relate to Pala loan, settled in Jan 2017
▶ Fixed assets of US$8.7M relate to Gakara project
▶ Other current assets includes US$0.3M of share placing proceeds received in January, US$0.4M of ore/concentrate stockpiles, and US$0.2M of prepayments
▶ Loans includes US$0.3M Finbank overdraft
▶ Other payables mainly trade creditors associated with the Gakara project
Rainbow Rare Earths Ltd.
SIX MONTHS TO 31 DEC 2017– SUMMARY CASHFLOW
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US$’000 6 mths to 31 Dec 2017(unaudited)
6 mths to 31 Dec 2016(unaudited)
Net cash used in operating activities (1,126) (103)
Exploration spend - (123)
Capex (2,812) -
Other borrowings 268 247
Proceeds of equity raising 3,421 -
Costs of IPO/share issuance (222) (86)
FX (3) -
Net cashflow after FX (474) (65)
Opening cash 3,198 70
Closing cash 2,724 5
CASHFLOW STATEMENT
▶ Cash outflow from operating activities includes US$0.6M administrative expenses and US$0.4M mining costs capitalised in inventory stockpiles
▶ Capex of US$2.8M reflects construction activity at Gakara
▶ Other borrowings includes US$0.3M raised from Finbank overdraft in period
▶ Equity placement raised net US$3.2M in period
▶ Cash balance at 31 December was US$2.7M (US$2.4M net of borrowings)
Rainbow Rare Earths Ltd. 8
THE GAKARA RARE EARTHS PROJECT
Source: Company’s aerial photo of Gasagwe operation
Rainbow Rare Earths Ltd.
RAINBOW IN SUMMARY - MINING
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FIRST AREA OF MINING OPERATIONS A SUCCESS
► High grade ore being mined and processed
► Grades consistent from surface to depth
► Scheduled to be operational for up to two years
► Current production forecast is targeting 5ktpa run rate
pre-end 2018 following ramp-up
► Limited production commencing in 2018
► Mine plan ready, access road already demarcated,
compensation discussions underway
Initial mining area at Gasagwe
successfully in operation
Gashirwe identified as
second mining area
Rainbow Rare Earths Ltd.
RAINBOW IN SUMMARY – PROCESSING
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KABEZI PROCESSING PLANT – A SIMPLE EFFICIENT 5TPH GRAVITY SEPARATION PROCESSING FACILITY
Fully operational on time and
within budget
Capacity available to
increase production
throughput without further
Capex
Located next to asphalt road
providing ease of access for
container trucks
First tonnes successfully
exported in December 2017
Rainbow Rare Earths Ltd.
FIRST CONCENTRATE PRODUCTION
► Production of first batch of high grade concentrate completed on time and budget within 11
months of IPO
► All material sampled, recorded and exported in line with all applicable Burundi regulations
► First royalty payment made to Government of Burundi prior to export
► Bulk of revenue from thyssenkrupp Raw Materials received by Rainbow upon delivery at port for
each export. First cash payment received in Jan 2018 just after period end
► Production and exports scheduled to ramp up during 2018 in order to reach target run rate of
400tpm (5,000tpa). Exports in Jan 2018 and Feb 18 increasing consistently
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PRE 2017 YEAR END TARGET ACHIEVED FOR FIRST PRODUCTION
Concentrate in production Final Concentrate Concentrate loaded and ready for export
Rainbow Rare Earths Ltd.
7.50
10.00
12.50
15.00
17.50
20.00
RAINBOW – SALES AND MARKETING
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ORE VALUE STRONGLY WEIGHTED TOWARDS MAGNET RARE EARTHS
Value in Nd and PrBasket composition
31%
48%
4%
15%
2%
Lanthanum Cerium Praseodymium Neodymium Other
Ba
sed
on
ave
rag
e g
rad
es o
f R
EOs
wit
hin
Ga
sag
we
in s
itu
vei
n s
am
ple
s a
nd
ma
rket
pri
ces
of
pu
rifi
ed
REO
s o
n C
hin
a F
OB
ba
sis
as
at
By R
EO
Co
nte
nt
► Gasagwe: Based on average samples, magnet
REEs account for approximately 19% of the
contained REOs within the ore, representing an
average of over 80% of the contained value of
REOs at current market prices
► Marketing successfully undertaken by
thyssenkrupp Raw Materials and initial contract
negotiated
► First tonnes of concentrate successfully
exported in December 2017 and payment
received January 2018
► Current basket price US$13.24/kg up from
US$12.27/kg at 31/12/17
Rainbow Basket Price 2017 - 2018
Rainbow Rare Earths Ltd.
RAINBOW IN SUMMARY – EXPLORATION SUCCESSES
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HIGHLY PROSPECTIVE DISCOVERIES WARRANT
FURTHER INVESTIGATION
Consider photos here
Analytical Signal map showing four selected anomalies and
mapped major geological structures
► Four large and highly prospective anomalies defined by
airborne magnetic survey undertaken in Q4 2017
► Potential for a carbonatite source for Gakara's rare earth
veins providing significant exploration upside potential
► Anomalies from 300m to 2,700m in diameter with modelled
starting depths of 20m to 67m
► New targets further complement the ground based gravity
survey conducted at the Kiyenzi prospect where large
boulders at surface contain high grade rare earth material
► Results of the Kiyenzi gravity survey suggest the presence of
a further anomaly, which has been modelled as a sill-like oval
structure potentially 22m thick and 80m x 100m in size
► Drilling now underway – first results expected April 2018
Note: Analysis of airborne and ground gravity surveys undertaken by Rainbow internal geologists and
not independently verified
Rainbow Rare Earths Ltd.
2018 EXPLORATION PROGRAMME
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PROPORTION OF FUNDS RAISED IN DECEMBER 2017 EARMARKED TO UNLOCK FURTHER
VALUE AT GAKARA
Initial
campaign
Initial campaign will
include ~1,000m
diamond drilling of
the potential
carbonatites and the
Kiyenzi anomaly
during Q1 2018
Further
drilling
Subject to results
further drilling would
be undertaken in Q2
& Q3 2018 with the
objective of defining
a JORC resource
later in 2018
Drilling
contractors
Appointed and
work now
underway
First
results
News from initial
drill campaign
scheduled Q2
2018
Rainbow Rare Earths Ltd.
FUTURE STRATEGY UNDERPINNED
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NEAR-TERM OPTIONS INTENDED TO DRIVE VALUE FOR SHAREHOLDERS FOLLOWING INITIAL SUCCESS
New production
target of 6,000tpa
during 2019
Expanded
exploration strategy
and drilling
campaign
Target maiden
JORC Resource
Rainbow Rare Earths Ltd.
KEY STRENGTHS
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Highest grade globally: 47-67% TREO
The only African REE producer
Attractive rare earth mix
Low capex operation
Simple processing route
Fully permitted
Distribution partner established
Supportive government
Team to deliver
EV transformational demand drive
Significant exploration upside to
ramp up production
Delivered on production & sales in 11
months
Rainbow Rare Earths Ltd.
CONTACT
Martin Eales
Rainbow Rare Earths
29 Lincoln’s Inn Fields
London, WC2A 3EG
T +44 (0) 20 3910 4550
17Rainbow Rare Earths Ltd.
Rainbow Rare Earths Ltd.
RARE EARTHS
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GAKARA IS ONE OF THE ONLY FEW RARE EARTH PRODUCERS OUTSIDE OF CHINA
Rare
eart
h p
rod
ucti
on
–2016
► Global rare earth production in 2016 was estimated at
160,000-170,000 metric tonnes, with 93% of it produced
in China (source: Argus)
► With 6,000t p/a run rate target during 2019 Rainbow has
the potential to make Burundi the third largest producer
of rare earths, after China and Australia
► China has made strides to crackdown in illegal mining,
which is estimated to make up 1/3 of the global supply
► Lynas Corp is the only significant non-Chinese
supplier of rare earths
► China dominates supply and large part of demand, but
global demand is also growing and seeking non-Chinese
sources of supply
Source: Argus Media Group – 2017
Glo
bal
Rare
Eart
h P
rod
ucti
on
2008
-16
Source: Argus Media
China-basedproduction
Non-Chineseproduction
Rainbow Rare Earths Ltd.
THE “TECHNOLOGY METALS”
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ND & PR REPRESENT THE MOST SIGNIFICANT ELEMENTS IN THE LANTHANIDE GROUP BY VALUE
Electric vehicles: Forecast demand growth for NdPr is
primarily driven by the anticipated
uptake of EVs as well as growth in all
electric motor usage
Smart phones :Neodymium gives your phone the
power to vibrate. 2.87 billion
smartphone users worldwide
predicted by 2020
Wind turbines:
NdFeB magnets have allowed wind
turbines to reduce costs and
increase efficiencies
Magnet Rare Earths are critical in these key booming markets amongst others
An
nu
al
Glo
bal
Lig
ht
Du
ty V
eh
icle
Sale
s
Source: Bloomberg New Energy Finance
Millio
n c
ars
pe
r ye
ar ► Global sales of Electric Vehicles (EV) increased
63% yoy in 2017, and are expected to continue to climb
► By 2040 it is estimated that 34% of the cars on the road will be EVs – 530 million in total and 54% of all new cars sold will be electric (Source: BNEF)
Rainbow Rare Earths Ltd.
PROJECT OVERVIEW
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PRODUCTION OF HIGH-GRADE RARE EARTH CONCENTRATE FROM THE ONLY PRODUCING RARE EARTHS MINE IN AFRICA
Key Facts
Processing
Simple efficient gravity separation
processing facility – 5tph throughput
(theoretical processing capability of
plant up to 42ktpa)
First Sales
Q4 2017
Offtake Partner
10-year offtake agreement signed with
thyssenKruup Raw Materials for 5ktpa
of concentrate, and right of first refusal
for additional 5ktpa
Exploration upside
4 large, shallow and highly prospective
anomalies detected which may be the
source for Gakara’s rare earth veining
Location
Mining Areas: 35km by road from
Bujumbura, Burundi’s capital city
Processing Plant: 13km South of
Bujumbura by road
Interest
90% with a non-dilutable 10% owned
by the Republic of Burundi
Mining Licence
Granted March 2015; valid for 25 years
and renewable thereafter
Infrastructure
Good road links to Dar es Salaam,
Tanzania and Mombasa, Kenya
Product
High Grade Rare Earth Minerals
Concentrate (47-67% TREO)
Production Rate
Targeting run rate of 5,000tpa by the
end of 2018 and 6,000tpa in 2019
Rainbow Rare Earths Ltd.
GAKARA PROJECT: LICENCE AREAS
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MINE PLAN AIMS TO BRING ADDITIONAL
AREAS INTO PRODUCTION
Rainbow Rare Earths Ltd.
BOARD
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• Mining engineer: an entrepreneur whose expertise lies in the discovery, exploration and
development of natural resources across Africa including diamonds, precious/base metals, coal and
oil and gas.
• Founder and Chairman of Petra Diamonds (LSE:PDL); Founder and Director of Chariot Oil & Gas
(AIM:CHAR) and Founder of Pella Resources Limited
• 15 years’ broking and investment banking expertise specialising in the resources sector
• Previously Managing Director at RBC Capital Markets in London. Was long-term adviser to
numerous London-listed resource companies
• Qualified Chartered Accountant
• International affairs specialist
• Over 25 years of political and extractive industries sector experience having served in The White
House as Director for African Affairs on the National Security Council (Washington)
• Previously Political Affairs Director of BP (London) and VP of TNK-BP (Moscow)
• Chartered Accountant with over 38 years’ experience in finance & accountancy
• Managing Director of Artemis Trustees Limited
• Fellow of the Institute of Chartered Accountants in England and Wales
Adonis PouroulisNon-Executive
Chairman
Martin EalesCEO
Shawn
McCormickNon-Executive Director
Robert SinclairNon-Executive Director
A BLEND OF CORPORATE, AFRICAN, RARE EARTH & PROJECT DEVELOPMENT EXPERIENCE
• Investment banker with 13 years’ experience and previous director roles at Deutsche Bank and RBS
• Co-founder of Telemark Capital LLP
• Significant market experience: IPOs and primary and secondary equity offerings
Alexander LowrieNon-Executive Director
Atul BaliNon-Executive Director • Corporate CEO with extensive experience in tech, government contracting and regulated industries
• Currently Non-Executive Director of Gaming Realms Plc and Chairman of Meridian Gaming
• Previously held divisional CEO or President positions with IGT (NYSE), Aristocrat (ASX), and Real
Networks (NASDAQ), as well as a venture capital firm
Rainbow Rare Earths Ltd.
RARE EARTH ELEMENTS AND THEIR USES
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APPLICATION RARE EARTHS DEMAND DRIVERS
MagnetsNd, Pr, Sm, Tb,
Dy
Automotive, Wind turbines, Drives for computers, mobile
phones, mp3 players, cameras, Voice coil motors.
Hybrid and Electric vehicles, Cordless power tools,
Sensors, Medical imaging (MRIs)
LaNiH
BatteriesLa, Ce, Pr, Nd
Hybrid vehicle batteries. Hydrogen absorption alloys for
re-chargeable batteries
PhosphorsEu, Y, Tb, La, Dy, Ce,
Pr, Gd
LCDs, PDPs, LEDs. Energy efficient
fluorescent lights/lamps
Fluid
Cracking
Catalysts
La, Ce, Pr, NdPetroleum production – greater consumption by ‘heavy’
oils and tar sands
Polishing
PowdersCe, La, Nd
Mechano-chemical polishing powders for TVs, monitors,
tablets, mirrors and (in nano-particulate form) silicon
chips
Auto
CatalystsCe, La, Nd
Tighter NOx and SO2 standards – platinum is re-cycled,
but for rare
earths it is not economic
Glass
AdditiveCe, La, Nd, Er
Cerium cuts down transmission of UV light. La increases
glass refractive
index for digital camera lens
Fibre Optics Er, Y, Tb, Eu Signal amplification
Scandium (Sc) Europium (Eu)
Yttrium (Y) Gadolinium (Gd)
Lanthanum (La) Terbium (Tb)
Cerium (Ce) Dysprosium (Dy)
Praseodymium (Pr) Holmium (Ho)
Neodymium (Nd) Erbium (Er)
Promethium (Pm) Thulium (Tm)
Samarium (Sm) Ytterbium (Yb)
Lutetium (Lu)
Rainbow Rare Earths Ltd.
ELECTRIC VEHICLE REVOLUTION
► Market currently driven by increasing demand for powerfulmagnets used in electric motors and generators – rare earthmagnets are the strongest and lightest
► Governments of UK, India, Germany, France, Norway andChina have announced plans to ban petrol and diesel cars inthe future
► All new models from Volvo will be electric or hybrid from 2019
► General Motors committed to all electric, zero emissions fleet with plans to release 20 electric cars by 2023
► Volkswagen unveiled plans to invest a colossal €34 billion into EVs, over the next five years, and make electric versions of all 300 models, in the group’s 12-brand line up
► With the global shift to EVs lithium-ion battery demand will grow to 1,300 GWh in 2030 from 21GWh in 2016 (Source: BNEF)
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2017 MARKED LANDMARK COMMITMENTS FROM AUTOMAKERS AND ACCELERATED ADOPTION OF EVs
Annual Global Light Duty Vehicle Sales
Source: Bloomberg New Energy Finance
Millio
n c
ars
on
th
e r
oa
d
Tesla introducing NdPr permanent magnet motor
(Model 3)