Phalaborwa, South Africa / Rare Earths
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Phalaborwa is a long-life, low-cost project located in the Limpopo region of South Africa. Amongst the highest quality rare earth projects globally, it is expected to generate strong cashflows throughout the commodity price cycle
Development
Rare Earths
Rainbow Rare Earths
South Africa
Royalty rate and type
0.85% GRR
Balance sheet classification
Royalty Intangible
Key facts
4
Deposit contains all 4 high value elements used in permanent magnets
16
16-year estimated mine life
35 Mt
Resource estimate at 0.44% TREO
The Group owns a 0.85% GRR over the project, which increases to 0.95% if commercial production does not occur prior to 1 October 2027, and to 1.1% if commercial production does not occur prior to 1 July 2028.
As well as the $8.5 million royalty acquisition, Ecora subscribed for 10,442,427 new ordinary shares in Rainbow Rare Earths Ltd for US$1.5 million in cash.
Phalaborwa is located in the Limpopo region of South Africa and is 85% owned by Rainbow, who have the right to acquire 100% ownership of the Project. It has a total JORC compliant MRE2of 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, critical elements used in permanent magnets, represent c. 75% of the magnet rare earth basket by value, with economic dysprosium (Dy) and terbium (Tb) oxide credits enhancing the overall value of the rare earth basket.
The project stands out as one of the lowest-cost prospective producers of rare earths outside of China. Notably, production will be principally weighted to rare earth elements essential in the production of permanent magnets, key components in renewable wind power turbines and electric vehicle motors. The royalty provides Ecora with a counter-cyclical entry point to further diversify our commodity exposure to include rare earth elements whose end markets are forecast to see sustained demand growth over the coming decades
Phalaborwa’s Preliminary Economic Assessment (“PEA”), published in October 2022, establishes a post-tax base case NPV10% of US$627 million, an IRR of 40%, an average EBITDA operating margin of 75% and a payback period of only two years. Capital costs of the project were estimated at c. US$296 million. The PEA was based on processing 2.2 million tonnes per annum of phosphogypsum over a 14-year project life (subsequently extended to 16-years to deliver 26,208 tonnes of separated magnet rare earth oxides at an average cost of US$33.86/kg.