Projects

The Phalaborwa Rare Earths Project, located in South Africa, has a total JORC compliant mineral resource (“MRE”) estimate of 30.4Mt at 0.44% TREO contained within phosphogypsum in two unconsolidated stacks derived from historic phosphate hard rock mining. High value neodymium and praseodymium (“NdPr”) oxide, a critical building block for the global energy transition, represents 29% of the total contained rare earth oxides, with economic dysprosium and terbium oxide credits enhancing the overall value of the rare earth basket.

Phalaborwa’s preliminary economic assessment, published in October 2022 establishes a base case NPV10 of US$627 million, an IRR of 40%, an average EBITDA operating margin of 75% and a payback period of only 2 years. The PEA was based on processing 2.2 million tonnes per annum of phosphogypsum over a 15-year project life to deliver 26,208 tonnes of separated magnet rare earth oxides at an average cost of US$33.86/kg.

A process flowsheet to extract rare earth elements efficiently from the phosphogypsum stacks has been developed in collaboration with K-Technologies, Inc., USA (“K-Tech”), following extensive test work carried out at ANSTO Minerals, Australia, and at K-Tech’s facilities in Florida, U.S.A.

Preliminary economic assessment demonstrates robust economics

The strong margins shown in the preliminary economic assessment are underpinned by a low operating cost base. The project is also less capital intensive than many global rare earth development projects. This is possible due to the unique nature of the project, which excludes many of the usual energy intensive steps associated with a traditional hard rock mining project, including:

• There is no requirement for hard rock mining, including waste stripping, which usually represents a large proportion of the cost base for a traditional hard rock mine.
• The cost of hydraulic reclamation of the gypsum stacks is instead comparable to the cost of feeding a processing plant from an ore stockpile.
• There is no cost associated with crushing and grinding ore, which normally forms a substantial part of the energy use and processing costs for a traditional hard rock mine.
• The rare earth minerals contained in the gypsum stacks have been chemically cracked by the historic phosphoric acid production process. This allows the Phalaborwa Project to produce separated rare earth oxides in a single processing plant instead of producing a mineral concentrate which requires chemical cracking in a dedicated plant before feeding into a separation plant.

Base case project economics

Life of operation	Years	15
Phosphogypsum processing	Mtpa	2.2
Production of separated rare earths oxides	t	26,208
Average operating costs	US$/kg	33.86
Average EBITDA operating margin	%	75%
Capital costs	US$m	295.5
Post-tax NPV10	US$m	627.4
Post-tax IRR	%	40
Payback period	Years	2.0

Using 2022 year-to-date average rare earth prices (i.e. January – September 2022), the PEA delivers an EBITDA operating margin over 80%, an NPV₁₀ of US$934 million and a payback of 1.7 years. Under long-term rare earth price forecasts provided by Argus Media, the PEA delivers an NPV₁₀ over US$1 billion.

The positive results of the PEA support the continued development of Phalaborwa, with the next steps including the set up of the pilot processing plant and the definition of a work programme for a feasibility study.

Simple processing with strong recoveries expected to drive project economics

With a substantially higher NdPr grade than a typical low-cost ionic clay rare earth project, Phalaborwa’s grade is closer to that of traditional hard rock style deposits, which tend to have a greater cost base for mining, crushing, grinding and metallurgical recovery.

Project	Style	Owner	TREO 3 %	NdPr ppm	Uranium ppm	Thorium ppm
Phalaborwa 1	Gypsum stacks	Rainbow Rare Earths	0.44%	1.257	2	47
Round Top 2	Ionic Clay	US Rare Earths/TMRC	0.063%	39	45	179
La Paz 2	Ionic Clay	American Rare Earths	0.047%	80	1	7
Makuutu 2	Ionic Clay	Ionic Rare Earths	0.08%	232	10	30
Mount Weld 2	Hard rock	Lynas Rare Earths	7.90%	18,833	30	750
Bear Lodge 2	Hard rock	Rare Element Resources	3.08%	7,059	113	472
Longonjo 2	Hard rock	Pensana plc	1.43%	3,170	29	967
Nolan’s Bore 2	Hard rock	Arafura Resources	2.60%	6,859	191	2,700
Norra Karr 2	Hard rock	Leading Edge Materials	0.50%	701	8	16
Lofdal 2	Hard rock	Namibia Critical Metals	0.32%	181	18	350

Footnotes
1.  Based on Mineral Resource Estimate announced on 20 March 2023
2. Based on public disclosure from owner
3. TREO includes Y₂O₃

Historical processing at Phalaborwa, including initial flotation by Foskor followed by further processing in Sasol’s phosphoric acid plant, deposited a gypsum residue with upgraded rare earth elements in chemical form in stacks. With the rare earth elements already in chemical form, the Company has now developed a flowsheet to deliver high-purity separated oxides of the target magnet rare earths, namely neodymium, praseodymium, dysprosium and terbium. With fewer stages and greater flexibility in the flowsheet, it delivers significant capital and operating expenditure savings when compared to traditional technology.

The K-Tech purification and separation desktop study has confirmed the ability to deliver separated rare earths with over 99% purity oxides from the leach solution. Phalaborwa will be unique in producing separated neodymium and praseodymium oxide, dysprosium oxide and terbium oxide on site.  This will allow the full value of the rare earths to be realised, representing a 47% increase in revenue over the expected sales price for a mixed rare earth carbonate.

Process flow sheet development and confirmation

Historically, the extraction of rare earths from phosphogypsum has proven technically, environmentally and economically challenging. However, Rainbow and K-Tech have developed a process flowsheet at Phalaborwa, underpinned by comprehensive test work, which successfully delivers an overall recovery of between 65% to 70% of the contained rare earths. This compares very favourably to the overall recovery of separated rare earth oxides via standard processes. Importantly, the process employs standard, proven equipment and readily available reagents in a novel combination. Rainbow and K-Tech will jointly patent the process with a view to applying this to further rare earths projects.

Following leaching of the phosphogypsum with sulphuric acid and subsequent rapid concentration of the rare earths in the pregnant leach solution, the concentrated rare earths solution is upgraded in K-Tech’s proprietary continuous ion exchange (“CIX”) and continuous ion chromatography (“CIC”) process to deliver high-purity oxides of the target magnet rare earths, namely neodymium, praseodymium, dysprosium and terbium.

CIX and CIC have both been applied commercially in multiple applications since their development in the 1980s. These processes are now found globally in the food, biotech, chemical, water treatment, pharmaceutical and mining industries. Several of these industrial installations are found in South Africa.

The CIX/CIC process has several economic and environmental advantages over the conventional solvent extraction route, which include:

• Nine process stages are required for the CIC separation, versus hundreds of stages in the solvent extraction (“SX”) method depending on the desired product mix;
• No hazardous or toxic solvents are required, whereas they are integral to the SX process;
• Capital and operating costs are significantly lower for CIX/CIC compared to SX; and
• Working capital requirements for CIX/CIC are minimised when compared to SX, due to the shorter time required for the production and delivery of saleable product.

See further detail on the processing flow sheet development.

Typical unit processes	Typical rare earths project	Phalaborwa
Hard rock mining and hauling	✓
Hydraulic transport to plant		✓
ROM stockpile	✓
Crushing and milling (energy)	✓
Multi-stage flotation (energy and reagents)	✓
Concentrate filtration	✓
Gangue acid leaching at some projects (reagents)	✓
Cracking (energy and reagents)	✓
Rare earth dissolution (leaching)	✓	✓
Thorium and uranium removal	✓
Impurity removal and intermediate products	✓	✓

An environmentally sound opportunity

Phalaborwa has very low levels of radioactive elements, setting it apart from typical rare earth development projects, which require complex processing to remove higher levels of radioactive elements. Significantly below the International Atomic Energy Agency (“IAEA”) guidelines, Phalaborwa will be exempt from regulation pertaining to radioactivity.

By re-processing “waste” material at Phalaborwa, Rainbow has the opportunity to significantly reduce environmental liabilities by redepositing clean, benign gypsum on a new stack, in line with IFC / Equator Principles standards. Water neutralisation test work has confirmed the ability to treat the existing water from the stacks and reuse it in a closed circuit as plant process water. This not only reduces the substantial legacy issue of acid water from historic work (prior to the Company’s involvement) but will also reduce overall freshwater usage in the flowsheet.

The K-Tech process also eliminates the use of the toxic and highly flammable solvents and diluents required for solvent extraction with significant environmental and safety advantages for the project.

Read more about our environmental commitments.

An ideal location for a new operation, with excellent infrastructure

Phalaborwa is located on a brownfield site near an established mining town in South Africa, benefitting from all the associated skilled labour availability and supporting industry in place (such as the local production of sulphuric acid, which will likely be a key reagent for the project). Sasol’s pilot plant remains on site alongside the associated infrastructure of the phosphoric acid plant, with space for new processing equipment within the current project footprint. Phalaborwa is well situated from a transportation perspective, with strong rail links for the import of any specialist reagents and the export of the final product to market, as well as a local airport within a five-minute drive of the Project.

Existing infrastructure includes a high voltage switchyard (providing access to Eskom grid power), equipped machine shops, workshops, laboratory buildings, administration offices, acid storage and ammonia tanks, boilers and rail sidings.

JORC compliant inferred mineral resource estimate

				Contribution of TREO by oxide						Grade
	Tonnes Mt	TREO %		Nd %	Pr %	Dy %	Tb %	Other %		Th ppm	U ppm
Stack A	20.2	0.43		23.4	5.6	1.0	0.3	69.7		50	2
Stack B	10.2	0.45		23.3	5.8	1.0	0.3	69.6		43	2
Total	30.4	0.44		23.4	5.6	1.0	0.3	69.7		48	2