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 cash flows throughout the commodity price cycle.

Stage

Development

Commodity

Rare Earths

Operator

Rainbow Rare Earths

Location

South Africa

Royalty rate and type
0.85% GRR

Balance sheet classification Royalty financial instrument

Key facts

16

Year mine life

15%

Increase in Mineral Resource Estimate

Ecora 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 $8.5m royalty acquisition, Ecora subscribed for 10,442,427 new ordinary shares in Rainbow Rare Earths Ltd for $1.5m 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 Phalaborwa 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.

  • In September, Rainbow announced a 15% increase in the Mineral Resource Estimate for Phalaborwa, taking the total resource tonnage to 35Mt and increasing the project life by two years.
  • In December Rainbow released an Interim Economic Study confirming the project as one of the highest margin rare earths projects globally outside of China.
  • Rainbow is focused on preparing a Definitive Feasibility Study (“DFS”) for the project.
  • Post the DFS, the focus will switch to completing financing and commencing construction.