Rainbow Rare Earths Sign Royalty Agreement with Ecora & Raises $10m

1st July 2024

Rainbow Rare Earths has entered into a binding agreement with Ecora Resources PLC whereby Ecora will purchase a 0.85% Gross Revenue Royalty on future rare earths production from the Company’s rare earthsPhalaborwa project in South Africa, plus any other saleable products, for a cash consideration of US$8.5m.

Rainbow has also agreed to issue 10,442,427 new ordinary shares in the Company of no par value each (“Ordinary Shares”) at a price of 11.3652p (based on a 20 day volume weighted average price) to Ecora to raise an additional US$1.5 million via an equity subscription.

The Royalty financing and share subscription agreements therefore provide Rainbow with a total of US$10 million, being substantial funding on terms that are considerably less dilutionary than conventional equity funding.

George Bennett, CEO of Rainbow, commented: “We are delighted to have concluded this royalty agreement with Ecora which allows us to take the Phalaborwa project all the way through to a completed DFS, without causing any significant dilution to shareholders. This investment confirms Phalaborwa’s status as a strategic and near-term source of all four of the magnet rare earths separated oxides so critical to the green energy transition. It is also a validation of the robust economics of the project, with its comparatively low capital and operating costs giving it resilience against rare earth pricing fluctuations. The Ecora DD process encompassed detailed reviews of all aspects of the project covering technical, environmental and legal. We look forward to working with Ecora as strong project partners going forward.”

News in full

We caught up with CEO George Bennett at  the Mining Indaba conference in Cape Town. He provided an update on Rainbow’s operations, but also tells about the many uses of rare earths and why they are so important in the global energy transition