Rainbow Rare Earths Limited (RBW) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen, and welcome to the Rainbow Rare Earths Limited Investor Presentation. [Operator Instructions] The company may not be in a position to answer every question it receives during the meeting itself. However, the company can review all questions submitted today, and we'll publish those responses where it's appropriate to do so on the Investor Meet Company platform. Before we begin, I would just like to submit the following poll. And if you'd give that your kind attention. I'm sure the company would be most grateful. And I would now like to hand you over to the executive management team from Rainbow Rare Earths Limited. George, good morning sir.

Good morning, and thanks for hosting Rainbow once again. It's been I think, 6 months since our last update. So it's appropriate, especially on the back of our interims. So I'll go straight away into the presentation. As you can see, hopefully, on the slide in front of you. And we will go to the usual disclaimer, and I can get on to the presentation per se. Once again, many of you have seen this slide before, it just footprints are economics based on the preliminary economic assessment we published in October '22. I start to point out once again that we only started working on this project in January '21. So we achieved a major milestone on a very fast-track basis by getting out a very positive PEA, in October '22, highlighting the strong and robust economics of the project based on spot pricing at the time. And unfortunately, rate prices have come off considerably since then, which we'll talk about later. But one key point on this slide I'd like to indicate is that the CapEx of the project, some $295 odd million. We are quite comfortable as a Rainbow team that we will be more or less in line with this CapEx number. And because of the optimization, we've seen through a pilot plant running that we've been doing in Phalaborwa -- sorry, on the Phalaborwa material at Mintek and what we're seeing in Florida is that we are quite comfortable that we are in the same realm of CapEx, which is a key point for the investors to note. Just going on to the rapid progress that we've made. This is a new slide for most of the audience, and I would like to just spend a bit of time on this slide. As you know, the pilot plant that we've been running at Mintek in South Africa has achieved some major milestones and [ medals ] that we have proven to be a successful producer of rare earths in the form of a mixed rare earth carbonates, which we have been shipping to the back-end pilot plant that we're running currently at K-Tech in Florida. So the back-end pilot plant is ongoing, and we've produced some 35 kilograms of mix rare earth carbonate which is feeding the back-end pilot plant. And I'll go into this further in the presentation. We also announced that the initial separation work in Florida, I think it was in late January had -- has achieved very good results in the sense that neodymium, praseodymium as a group and the continuous ion chromatography process had achieved some 68% purity on its initial separation. And we are, therefore, working on getting that purity up to 99.5% in the next 2 stages through the CIC circuit, which is expected in the next quarter in 2024. We also acknowledge that this work is taking a bit longer than anticipated. But one of the key reasons for this is that we are having independent assays done to verify the assays by the laboratory and [indiscernible]. FIPR stands for the Florida Industrial and Phosphate Research laboratory. And basically, at each stage of the process, we are taking some sampling and getting it independently verified. Due to the workload on this laboratory, what should have been a 2 to 3-day turnaround in our timetable is taking some 2 to 3 weeks for this independent verification. But it's key in terms of getting a sign-off form the pilot plant which is integral for the integrity of the DFS. As I've said, it's very important for us to get the sign-off because we want independent oversight to make sure that Idea phase is bankable, when we publish it, and we have the project finance banks having a look at the DFS and making sure that they are happy with the technical liability of our process from start to finish. As said we would rather do something right the first time around, and it takes a bit longer as this will be much more efficient and much more cost-effective for the project in the longer term. So in summary, while it's taking a little bit longer than the original timetable, the back-end process where it remains on track, results have been achieved in line with expectations. And also at this point, I want to point out that it doesn't impact our overall -- and we're reaching first production by the end of 2026. In terms of funding on this slide, I think what's happened, which is key over the period that we're reporting on is that we've been identified as a strategic near-term source of ROS by the U.S. government, and this is why the DFC, which has made a commitment to fund $50 million into [ Project co. ] and which was announced at COP28 through current strategic shareholder TechMet. And this derisks the Phalaborwa CapEx funding that we require, as I've mentioned, that we're still comfortable that we'll be circa the $295 million, $300 million of CapEx. Just to continue to talk about funding interims recently highlighted that Rainbow will have additional funding requirements in order to take the project to FID stage. But this has been earmarked before and it should not be news to the market. We are in the process of evaluating a number of options for this, the Chairman, the CEO and the Board or major shareholders of the company, and we're highly cognizant of managing shareholder dilution. We're, therefore, looking for the right option. And I also want to point out that our track record of raising money over the last few years has been, I would say, very good in terms that we've always received strong backing in the market, as well as some of the directors of the business, and we have generally raised money either at a premium or at market pricing, over the last number of years. And that we would expect this track record to remain in place. To move on, we've also had a resource update, where we did some more drilling on these stacks. With the input from [ Adamant ] in the U.S., you are doing our stack design [ Adamant ] or the global gypsum stack -- phosphogypsum stack experts. And with on the back of there revise both density calculations. We've seen that the project life will increase by some 2-odd million -- 2-odd years as we've seen a 5 million tonne increase in our reported tonnage in the resource, which is obviously very positive for the project. We've also announced strategic supply chain agreement with Less Common Metals in the U.K. Less Common Metals are the only rare earths metal and alloy manufacturing facility in the U.K. you're expanding in the U.S. and they need separated rare earths oxide. So this is a positive step for Rainbow. The reason why they signed this MOU with Rainbow because they therefore, saw Rainbow as a development project that is going to go into production, and we will be one of the lowest cost producers of separated rare earths oxides, and we would be able to go into production at current pricing. The other key sort of new milestone that we've achieved in the last 6 months is that we signed a letter of intent for phosphogypsum offtake. We intend selling between 400,000 and 600,000 tonnes of gypsum per annum into the SA domestic market, as well as the surrounding markets. And this, over the length of the project will eventually fully deplete these gypsum stack. So it's a very, very good ongoing ESG story. And as I've mentioned, that this will also slightly reduce our CapEx and OpEx, which it wasn't taken into account in our PEA. And then lastly, what's key on this slide is the diversification of Rainbow that we've achieved. You sign an MOU with Mosaic with regards to Uberaba phosphogypsum project in Brazil that our own -- exciting opportunity. We've announced some initial results, and we are, as I said, answered by the large scale of this project, but it's a much longer life than Phalaborwa, much, much longer life, and there's a far bigger opportunity. So very important. And on the right-hand side, you can see further graphs of mixture of carbonate that we successfully produced at the pilot plant in South Africa. This is also a new slide for the audience. This is an independent verification by Argus Media, that Rainbow is probably got the best operating margin any development project in the world right now. As you can see on the right-hand side, that's Rainbow the green bars, Rainbow confirms the higher margin per kilogram of rare earth oxides produced. As you can see, the light gray slide on the left is the U.S. producer and the other light gray slide is an Australian producer, and the rest are development projects around the world be Australia, South America or North America and Argus comps are higher margin is that we've always said we thought we were one of the best margin businesses development projects in the business, and this is a confirmation by Argus Media. And also in terms of global average lead time from discovery to production, the average is between 15 to even 25 years, and Rainbow have achieved rapid progress in literally 2 odd years, and we are looking to be commissioning our plants and going into production in circa 5 to 6 years. So a very, very short timeline to your traditional development project, which we think is also a significant plus for Rainbow. Now, in terms of this slide, we've seen rare earths pricing slide since the October '22 PEA. Rare earths prices are down some 70% since the peak in 2022. But even at this low pricing environment, because of our EBITDA, we still are in a pricing environment at these low levels that would see Rainbow still making some $80 million of EBITDA per annum. On the very left-hand side of that left-hand chart there, our Bosveld price of $78.46 is the current rate Bosveld price for Rainbow, including our dysprosium, terbium credit to our Bosveld, and that's based on $60 a kg for NDPR. I would like to point out that currently in NDPR sitting at about $51, $52 a kg. So it's not too far away. This has come off below some 10% last month where we saw NDPR pricing getting as low as -- sort of $47 a kg. So since the beginning of April, we've seen a 10% improvement, as I said, NRE pricing and forecasts are that rare earths prices will strengthen towards the end of 2024 and into 2025, and we should see rare earths pricing for NDPR around about [ $80 ] to even possibly $100 a kg again. So time will tell, but what's important to note now that Rainbow is very resilient even in the historically very low rare earths pricing [ scenario ] and we're one of the few projects, we think, in the world that even at this very low pricing would have positive EBITDA and it's quite substantial in Rainbows case. Moving on to our next slide. Once again, the slide reiterates the longer-term supply and demand fundamentals remain compelling and in place since 2017 to 2022, we saw a doubling of permanent magnet demand because of the various uses of permanent magnet's increasing and the forecasts are over the next 8 to 10 years, we'll see a doubling of demand again. So the macro is still very strong. We see the electrification of the transport system continuing, we see wind turbine continue to be rolled out wind turbine power due to renewable energy. The one for renewable energy increasing to meet net 0 targets in 2050, and we see continued uses in consumer electronics still continuing to increase. And of course, we have the very strategic rare earths in defense, the strategic nature of rare earths in defense continuing with an F35 fighter jet requiring some 420 kilograms per jet. We see Arleigh Burke missile destroyer requiring some 2,300 kilograms. So there's [ 2.3 ] tonnes of rare earths per destroyer and Virginia Class Submarine requires 4,200 kilograms of rare earths, it's so [ 4.2 ] tonnes of rare earths. So the strategic nature of rare earths is not lost on the U.S. government and we'll talk about that later. Moving on to -- as you know, that this slide confirms that is imperative for sources of rare earth supply chain to be rolled out outside of China. We -- it's not healthy for anywhere in the world to have one dominant producer like we see in China. And Myanmar combined and also very dominant in the downstream processing of separated rare -- to separate rare earths oxides into metal and alloy and also into permanent magnets. We've seen a spike of investments announced recently by the U.S. government, by the Department of Energy, export, import bank, EXIM Bank and The Department of Defense, as well as Australian government to address these gaps in the supply chain and try to increase independents -- try and build an independent supply chain outside of China. And as I said, we've seen the DFC's investments in Phalaborwa as part of this concentrated and concerted effort and recognizes the project's role as a strategic source of responsible rare earth, which will be sourced outside of China and it will be -- so short-term productions timelines makes this very attractive for the U.S. government. Hence, the commitment by the DFC of $50 million into the Rainbow Phalaborwa project in South Africa. Once again, many of you have seen this slide we have experienced team from Chairman all the way through to our technical team, with a long track record of delivery of mining projects, mineral processing plant design, and this is a mineral metallurgical chemical process plant, that we're designing at Phalaborwa because we have no mining per se. But as I said, a very experienced team that can bring this project to fruition and increase value for shareholders. Just looking at Slide 10, most of the audience, I think you've seen have seen this slide. Once again, these are the phosphogypsum stacks at Phalaborwa that were the results of phosphoric acid production, produced in the phosphoric acid plant that's mothballed in the top right-hand side of your photograph there. This was previously run by Sasol, the big chemical [ conglomerate ] in South Africa. And they ran a pilot plant in 2012, which successfully extracted some 3 tonnes of a mixture of carbonate from these -- from the phosphogypsum at Phalaborwa and that made Rainbow's team realized that these rare earths were extractable and gave us the confidence to go into this project as we have done. Just looking at the targeted production volumes on the bottom of that slide. Once again, we will be some 30% of Lynas' NDPR production, current production when we come into production. And so -- but a very, very much lower OpEx. We know that, therefore, our profitability will be much higher per tonne of oxide produced. And I would like to point out that Lynas' market CapEx circa is [ $3.5 ] billion compared to our Rainbow asset, at the moment, and we will be 1/3 of their size in terms of production, but far-far higher profitability. So that once again indicates the potential rerating of Rainbow going forward. Slide 13 is also -- sorry, yes, so this is a Slide 11, sorry not Slide 13. We -- just once again, I want to highlight what is helping Rainbow achieve such low OpEx and CapEx numbers compared to a typical rare earths project in some of our peers. This is a brownfield site. It's already fenced, as you can see, which has been fenced for 60 years by that red fence line, you can see fence of this nature normally cost many, millions of dollars for a large project site, the blue dotted line there or the overhead power lines that are in place that we don't have to spend money on bringing overhead power line from a power source. We've got a high-voltage switch yard at the base of the one stacked, Stack A, as you can see, which is the largest stack. The phosphoric acid plant, the top left-hand side of your photograph has been mothballed and it would be operated again. In fact, it's currently been taken down by Bosveld Phosphates. Who still have 15% of the project, but we have a call option to take our ownership to 100% of the stacks during the course of the next 18 months, which we will do so and that's subject to an announcement last year. So we will have 100% of the site. Once again, in the PEA, we had a pilot plant -- sorry, we had our plant sitting on the side of the mothballed phosphoric acid plant, but we are now moving it to the base of Stack A. This will require less pumping and because the original site was some way uphill. We will save on these pump costs on these -- on pipeline costs in our final project CapEx. And the size of the Stack C, the new Stack site is on the rights of Stack B, and that is also slightly down-hill, so it will reduce our deposition costs as well, with having it on the revised -- revised footprint there. Originally Stack C was on the left of Stack A, but it's now going to be on the right of Stack B, further reducing cost for the project and keeping our OpEx with the net range that you see of the of the PEA. This one slide, once again, highlight Rainbow's unique position in the magnet supply chain. We don't have the cost of mining. In other words, we don't have hard rock drilling, blasting and so forth. We don't have to produce a mix, we have a concentrate. We don't even have to crack it because the gypsum stacks are chemically cracked already. We can go straight into separation. And as I said, that makes Rainbow quite unique because we are extracting rare earths from the secondary source and that's driving our economics and our project CapEx. On Slide 13, it's -- basically, we're talking to Rainbow's green credentials once again. We think it's incredibly important going forward. And certainly, for lots of investors, they are looking at the green credentials of projects more and more. And we're also looking at the OEMs, we are looking at the source of the -- from the OEMs or having responsibly source the components for the EV manufacturers and so forth. We're seeing the market starting to consider responsibly source materials should be valued differently. And this is happening across other commodities including steel, nickel and copper. You've seen that Benchmark Minerals have just launched a green nickel price yesterday, where there will be coating a green nickel price. We've seen commentators calling for the LME to have 2 prices of copper, responsibly produce copper commanding a premium price to proper DMTB sourced from unresponsible projects and countries. And we also seen that it is a premium for green steel. For example, out of Finland, we believe that green steel source in Finland currently is achieving a 10% to 15% premium by German EV manufacturers. So that puts Rainbow in a very strong position where we believe this is one of the greenest, most responsibly sourced of rare earth, magnet material separated. And one side magnet material of any project at the moment. As I said, it's a brownfield site. We're doing a cleanup of the legacy phosphogypsum stacks we are neutralizing all the asset water associated with the stacks and we'll be acquiring sulfuric acid from Phalaborwa Mining Company, the copper mining company, just a couple of kilometers away from us next door, which is keeping our price of sulfuric acid at a very, very low, low price in our OpEx. And to give you an example, in our PEA, the sulfuric acid price we use of $95 a KG because it was being given to us by our PMC next door. They have 10,000 tonnes of waste sulfuric acid to get rid of every single month. And at the time in the Congo, Glencore, we're paying $450 a tonne for sulfuric acid. So that's just a footprint, our key that source of rare earths is. We're also going to be selling the phosphate gypsum into this African Gypsum market, which means that over an extended period of time, we will completely level those stacks. It will be a complete rehabilitation of that site, which not many projects can claim. So we think the ESG credentials of the Phalaborwa project are extremely strong. And as I say, when the OEMs are looking to source of reliable ethical and traceable supply of rare earths, Rainbow will very easily fit into that category in terms of being, we believe, a Tier 1 supplier. And we've really seeing this with commence offtake discussions already with a couple of OEMs, and they are more focused on supply than price because the price of a permanent magnet in EV is less than 1% of the cost of the vehicle. So they are more worried about security of supply than actual pricing of the permanent magnets themselves. And we've entered into negotiations with 2 large OEMs already. Just to talk a little bit about our process that we've embarked on. I say most of you guys listening and noted that we've gone through for continuous ion exchange and continuous ion chromatography technology over traditional solvent extraction. On the left-hand side, you can see solvent extraction requires hundreds and hundreds of mixes of settlers, compared to the units on the right-hand side which is a continuous ion chromatography unit, which will be the final separation for Rainbow. We only need 3 of these units to get our purity. And this technology is already being used by REEtec in Norway, to separate its rare earth and to separate it's oxide. So we know we're using the right technology. It's also a technology that you use in various industries on larger scale than what we require at Phalaborwa. So it's a proven technology in other industries, and we are just proving it on the separated rare earths that we are busy going to produce in the back end in Florida. The Rainbow prices also has far fewer prices, as we've spoken about, which is one of the reasons why we continue to see this project in a low capital intensity environment and obviously, a very low OpEx. These are a couple of photographs over the last 6 months of what we've been able to achieve. Once again is that we've completed the pilot plant run at Mintek in South Africa. Mintek has a very established R&D approach in South Africa when the key laboraties in the world. We ran a completely integrated circuit for 24 hours, 7 days a week, for 3 weeks in March, and this has had very successful results. Which we'll be reporting on shortly. But as we've already announced that we produced some 35 kilograms of mixed rare earth carbonate, which we've been continuously shipping to the back-end pilot plant in Florida. And we've also -- in the front end, we've identified a number of optimization opportunities, which is why we are confident that we'll be keeping that capital number and more or less in line with the PEA. And we'll be announcing those optimization results shortly. And then we announced that Lakeland in Florida, we have actually started processing our mixed rare earth carbonate. Now they've got over 40 years of pioneering continuous ion exchange that we see is used in the uranium plants worldwide and CIC technology. The back-end pilot plant has commenced operations towards the end of last year. And basically, in January, we announced the first successful separation of rare earths into the various groups on the continuous ion chromatography stage. Initially grading some 68% purity. And we are now -- and we also saw a successful separation of what's known as the SEG Group, also 63% purity already, that's samarium, europium and gadolinium, which we weren't even counting in our PEA And then we started seeing the initial successful separation of dysprosium and terbium which will come at -- so we're expecting final stage purity at our target parity of 99.5% in the next quarter with the dysprosium and terbium to follow. And we're also hoping to have an update on the SEG group, which which would feed into Idea phase because there's an excellent market for this that we weren't anticipating, which will add to the project economics of Rainbow's project at Phalaborwa. And likewise, you sell a phosphogypsum is not in our PEA revenue model that will come into the DFS now, which will have a positive impact on the DFS. And we would expect to make the Rainbow project even better than what we initially reported. As mentioned, the U.S. government announced at the COP28 conference in Dubai in December -- December 2023, the commitment by the DFC into the Rainbow Rare Earth project via TechMet, Here's a quote from the CEO, as you can see and you can download this presentation at your leisure. But basically, we see the U.S. government at multiple levels, and it's a very bipartisan engagement because within 2 weeks of that announcement, we had a site visit by congressional delegation to Phalaborwa, which was both Democrats and Republicans. And we are very encouraged that this is a bipartisan sort of focus of the U.S. government. And even if there is a change of government in the next election in the U.S., we don't see any focus changing on critical minerals strategy of the U.S. government. As I said, this is totally bipartisan. Once again, as I reiterated, our timeline to production is still on stage at this stage. The pilot plant operations of farm underway, and we have optimized [ strength ] in flow sheet, and we will expect to see some optimization out of the final separation taking place at K-Tech. [ METC ] Engineering have already started on various parts of the definitive feasibility study, which we are expecting to be completed at the end of this year or early in the next quarter -- sorry, in the first quarter of 2025. Paragon are being -- are one of the companies that are looking at in the reclaim of these gypsum stacks, they've got extensive experience in reclaiming, mining, tailings throughout projects in Africa, and they are in a successful pilot plant in January and February at Phalaborwa. And basically, as I said, we will announce those results shortly. We have the leading global design of phosphogypsum stacks, Ardaman started working on the design for the DFS, and that's on track. We also have a resource update expected in 2024-- second quarter of 2024. And we've really announced the increase of the life from the drill program we did late last year, which is positive. The environmental work is also been done by Tier 1 WSP Golder, the Tier 1 global EIA consultants. And their work is very, very far advance, and we will be submitting all updates and permits. And the new permit for the new stack site shortly, and that's on track as well. And once again, we also signed a letter of intent with NEXUS for the sale of the gypsum byproduct. And these negotiations with them have gone very well in terms of they're already coming to us with further sampling from our pilot plant to confirm that they will be able to sell the tonnage at be envisaging, once we're in production. We also want to highlight to the audience the multi-asset nature of the company. As mentioned earlier, we've signed the MOU with LCM in the U.K., who are expanding in the U.S., and they need separated [ RE oxides ] ex-China, and they're focused on Rainbow as being one of the key sources of separated [ RE oxides ] for the expansion they're doing in China -- sorry, in the U.S., which is hitting the General Motors a new EV military vehicle plant that they're rolling out in Texas. So that's very positive for Rainbow. And then we signed the MOU with the -- with Mosaic in Brazil. I'll talk about that shortly, and then we have the MOU with Morocco -- OCP in Morocco. Once again, to talk a bit more about Brazil, which we're very excited about. We signed the MOU with Mosaic, a global phosphogypsum producer, they're circa $15 billion market cap business. We're very proud that Rainbow could sign the MOU with a company of this nature. We were looking at 50-50 project to develop the extraction of the [ rare earths ] out of the phosphogypsum stacks and at the phosphogypsum plant -- sorry, the phosphoric acid plant in Brazil. This is a far, far longer lasting than the Phalaborwa Project, and it's a far, far bigger volume, and we expect to be making further announcements on this opportunity shortly. As I've mentioned, the initial results we've published, where the rare earths grade in the stack is some 20% to 30%, even higher grade in the Phalaborwa project, which is very exciting, the [indiscernible] percentage of rare earths in the basket at some 25% is also extremely high for most projects worldwide, and we have dysprosium and terbium, the 2 other magnet rare earths we are chasing at Phalaborwa, are also in the Mosaic phosphogypsum stacks and the new feedstock. So very encouraged by the initial assays. And we will be -- and we are undertaking further work, which we'll be announcing results on shortly. But once again, it gives Rainbow project diversification and also country risk diversification, which few rare earths projects in the world can claim, I believe. Just to finish off, why Rainbow? Once again, we believe it offers a unique opportunity. This slide basically is the upside forecast for when Rainbow comes into production. We're expecting at forecast rare earths prices when Rainbow would be in production in end of '26, 2027 that within NPV well over $1 billion, we'll be generating some [ $300 million ] of EBITDA per annum on the [ $300 million ] CapEx. And we see our EBITDA margin north of 80%. So very compelling numbers for forecast numbers, and we think this makes rare earths a compelling investment case, as I've been saying for some time now. Thank you once again for your time and listening to me. And hopefully, you will be satisfied with some of the answers. I'm sure I'm going to be [ honest ]. Thanks to the audience again.

[Operator Instructions] I would like to remind you that a recording of this presentation, along with a copy of the slides and the published Q&A, can be accessed via your Investor dashboard. George, we obviously received a number of pretty pre-submitted questions ahead of today's event. So perhaps if we look to take these first and then move on to the questions that have been submitted throughout your presentation this morning, that would be great. The first question that we have here reads as follows. Are you able to give further assurances on the allocation of the licenses required? Is this likely to be problematic for the project at Phalaborwa?

No, we don't believe it would be problematic at all. Permitting risk is included in our standards of risk disclosure for the project. But we're currently working in a new environmental and social impact assessment for the new stack site. The work streams are all well advanced to [ upend ] applications to take place and be lodged shortly in 2024. The project will also require some updated licenses for -- in other words, [indiscernible] licenses, waste management license and air emission licenses. Bearing in mind, this is a brownfield site, so it already has these licenses, but we are making amendments to these licenses. Or the work for these amendments is also well, well progressed, and we basically saw circa 80% to 90% through these -- for the work required. As I mentioned, that we will [ be doing ] the submission shortly and we're on track to have the licenses awarded to us in time for sort of construction. As I said, it's difficult to predict the exact time frame. But luckily in South Africa, it is a statutory process that once your applications are in, there's a statutory process, which means you then have quite a firm timeline. And as I said, we're quite confident that we'll have these licenses awarded within the timelines that are stipulated by the government. And the fact that we are cleaning up the legacy environmental issues at the site and we're treating asset water currently associated with the underlying gypsum stats, and we'll be restacking the processed gypsum on new line stacks designed in accordance with IFC standards and the [ equated ] principles, as well as creating important jobs in the area. We don't see any reason why these revised and the new EIA license for the new stack site would be withheld. It's super beneficial to the area as well as to the existing stack site. And we -- so we're very confident that the relevant licenses will be issued.

The next question that we have here asks what, if any, were the outcomes of the presentations in South Africa and more recently in Switzerland?

We've attended 3 investor conferences in the first quarter of 2024. And at each conference, we've had very, very busy schedules, including the BMO, Bank of Montreal Conference in Miami. At all of these conferences, we had a very busy meeting schedule. We've seen a lot of interest coming from big strategic investors and private equity groups. We have a focus on energy transition, and these groups tend to take a longer-term view. And we also have seen engagement from OEMs looking for [ off-back ] agreements and as I mentioned, also private clients and family offices. They tend to take a long-term view similar to the [ PEA ] groups. We've been highlighting to these investors the various catalysts that we see coming up in 2024. And the project continues its development pipeline. And we believe this will drive a re-rating of our stock in the short to medium term. Thank you.

That's great. Just turning to the next question that we have here. In your experience, what is likely to be the biggest pain points in the next couple of years in the run-up to production?

Well, we probably see financing of the project could be seen as a major challenge, but I might point out that the funding commitment of $50 million into [ ProjectCo ] from the DFC Washington via TechMet has considerably derisked this issue. We -- given that we envisage the equity portion being $100 million with debt covering remaining $200 million, that means Rainbow will only need to come to the market for the remaining $50 million in construction equity, which we believe will be achievable for a company of our size, especially as we consider the robust economics anticipated for the project, once we publish our DFS and -- which will also be published in a higher-pricing environment we believe and forecast pricing environment, I might add. So we see us able to raise this money quite comfortably. And given that we also would anticipate a re-rating of the stock after achieving the milestones we've set ourselves in 2024. Also, with the DFC already committed to $50 million of equity into the project, they have indicated that they will be -- they'd like to be a cornerstone in the debt. And that would make it far simpler to bring on other debt providers when they have the U.S. government as their cornerstone. So therefore, we're keeping our timetable on track. It is also challenging as there are certain aspects that are permitting at the debt financing that we can't control 100%. But as mentioned earlier, we believe these are well in hand. And we're confident that with the -- also the aspects of the [ bull ] period in terms of this being a 12- to 15-month period and due to the team's extensive experience in this area, we don't believe that this will present problems for the team to deliver on the [ bull ] period that we set out in our schedule. Thank you.

Perfect. The next question that we have here asks, imagine Rainbow Rare Earths in the year 2030. Do you imagine the company involved in a bigger part of the supply chain? Or will your focus always be on raw material supply?

Well, Rainbow is already going further down the supply chain than the majority of our peer group. And the sense that we are not just supplying raw material, most -- we will be basically 3 steps away from this. For example, most projects initially produced a mixture of a concentrate, when they might go into a mixture of carbonates. And finally, very few projects are going into separated rare earths oxides. Rainbow is going all the way through to separated rare earths oxides, as we've mentioned, so quite far down the supply chain in terms of beneficiation. And that's once again supported by MOU signed with LCM in the U.K. that we're going to surprise separate [ore oxides ] to the metal. And metal plants in the U.S. and in the U.K., as I say, they produce alloy -- [ synthetic ] alloy to the magnet producers like [indiscernible], the German permanent magnet manufacturer and [indiscernible] magnets in the U.S. So we have gone quite a long way down the strategic supply chain. The big opportunity for Rainbow is how we can apply [indiscernible] phosphogypsum deposits globally. And we started this process with the Palabora project in Brazil. which is the most similar project we have found in terms of the nature of the original ore body. In other words, it's a hard rock carbonate types. And it also has a phosphogypsum state that's been created by the byproduct of phosphoric acid production. But over the longer term, we're also evaluating how to apply [ other ] sources of phosphogypsum, which has resulted in our MOU with Morocco and OCP, which will be a far slower process, but we have still seen by OCP as having the IP that could possibly unlock some rare earths in the phosphogypsum stacks, going forward. So we're very encouraged by this. But as I say, our focus is on Brazil at the moment. which we see is a fast track project similar to the Palabora project and which will give Rainbow a huge country derisking and diversification, project diversification. Thank you.

Perfect. And perhaps the final pre-submitted question that we have here before we then move to those that have been submitted live. On Page 4 of your most recent presentation, it shows that [ Argos ] expects Palabora to have the highest operating margin per kilogram of REO production. Could you explain in dollar terms the cost differential versus traditional mines?

Thank you. Once again, I have reiterated at this point in the presentation, and we're very pleased about that. And just to footprint this, Canaccord recently produced a study that said the average peer group has NAV breakdown price of $80 per kg for NdPr. But excellent set of price, encouraged financing of these projects will be at over USD 100 per kg or NdPr. This compares with Rainbow's operating cost of some [ $34 ] per kg of separated rare earth oxides, and that's a full [ maintenance ] separated rare earths oxides. And this is due to the fact then we've got none of the costs associated with traditional mining projects. We also hear from various industry commentators that Chinese costs of separated [ RE oxides ] are around $40 per kg for NdPr. So they'll [ lose money money or modulate ] at current prices, and this is for separated [ RE ] oxides. And this is what we hear. And as I said, this has also been supported by people like [ Benchmark ], who also have put out a recent study, indicating that at these prices, the Chinese producers are marginal or losing money as well, we believe. So we know in a good space, even in current trade pricing, our project would be making significant EBITDA margin and EBITDA, as I say, at current pricing. So we are very confident that by the time we're in production, we're going to see higher pricing, which is -- bodes very well for our project. And as I said, the market needs higher pricing, even the Chinese producers. So we believe higher pricing will be on its way, and we've hopefully seen a bottoming of these rare earths prices with the recent 10% increase in pricing that I alluded to earlier in this presentation. Thank you very much.

Perfect. And George, as you can see there in the Q&A [ set ], we have received a number of questions throughout your presentation this morning. And thank you to all of those on the call for taking the time to submit their questions. But George, at this point, if I may, sir, just hand back to you just to read out those questions and give your responses where it's appropriate to do so, and then I'll pick up from you at the end.

To be honest, for some reason, I can't see these questions on my screen. I know we've had a problem with bandwidth in South Africa at the moment, which is why I'm not on video, but could you just maybe -- I'm not seeing these questions Please just try and get them through to me.

Yes, George, on the right-hand side, there will be a Q&A panel. Or if not, I'll be more than happy to continue reading out the questions to you, sir.

Okay. Okay, I found it. Sorry about that. So has K-Tech and CIC technology being used to extract uranium on a scale similar to that's needed to meet the levels of rare earths production foreseen in the Phalaborwa PEA? The answer to that is yes. We've seen OCP in Morocco actually bought the IP from K-Tech a number of years ago, and they're using it to successfully extract uranium and thorium from the phosphogypsum in Morocco. OCP are the biggest producers of phosphate -- or phosphoric acid for the fertilizer industry in the world. And they're the biggest producers of phosphogypsum in the world as well. So the fact that this is successfully applied in Morocco, we are more than confident that it's of scale, large enough to deal with the volumes that we're dealing at a Phalaborwa, which are [ nowhere ] near the volumes at OCP are doing in Morocco. Does the proposed $50 million buying of the DFC to Phalaborwa related to both the front-end and the back-end processing of rare earths? That's another question. And yes, this $50 million commitment by the DFC is for the full process plant that we will be building, taking us all the way through to separated rare earth oxides using the -- also using the CIX, CIC technology. So another question, have we found any bottlenecks in Rainbow's processing flow sheet that might impact scalability? I can honestly answer this. 100% there's no bottlenecks that we've seen. At the moment, as I said, the front-end pilot plant has successfully produced 35 kilograms of mixture of carbonate. The pilot plant, I might add, at [ Francine ] pilot plant was treating 20 kilograms per hour of feed. Now a typical mineral processing pilot plant would treat 2 to 3 kilograms per hour of feed. So the Mintek pilot plant that we built there is 6 to 10x larger in scale than a typical mineral processing pilot plant. And also very importantly, we ran this on a continuous 24/7 operation for over a 3-week period. We ran various sections of the pilot plants over a 6-month period and in the final 24/7 operation for 3 weeks and most pilot plants on a continuous basis on for 6 or 7 days. So once again, far longer than the typical pilot plant. So we -- this is just to prove that we've got no bottlenecks, and we're very confident in the scalability of the project. Are there any elements that need removing after the RE extraction before they can sell the gypsum back into the market? That's another question. I can answer this by saying the phosphogypsum that we well redeposit on the new stack site will be a cleaner, benign phosphogypsum, and there will be nothing further needed to sell it into the [ South African ] market. And so the sale of, say, 400,000 to 600,000 tonnes per annum into the SA market is very positive for [ Ambu ] because at current gypsum process, this will add circa $7 million to $8 million to the bottom line of Rainbow, which is not taken into account into [ RPEA ]. So -- and of course, it's always dependent on current gypsum pricing. But the current on pricing, that's the number we're looking at. So I think very, very positive for the project going forward. Another question is, at what point you envisaged acquiring the remaining 15% stake in the project? I think I mentioned this in the presentation, it will be later this year or early 2025. William [ Diess ], what confirmation do you have that Palabora will supply Rainbow with sulfuric acid? We've had a number of conversations with Palabora Mining Company. And then all these conversations with their marketing department, they've confirmed that they want us to be the -- an offtake partner for the excess sulfuric acid. So we have no issues in terms of securing a final supply agreement. The reason why we haven't entered into the final supply agreement is that we need the final, final consumption numbers from the definitive feasibility study. Once we have those, then we will be able to firm offtake with Palabora. But remember, they need to get rid of some 10,000 tonnes per annum -- sorry, per month of sulfuric acid, and we require circa 5,000 tonnes per month. So they will still have excess sulfuric acid to get rid of. And the more they can sell to us, the better for them. Is the front-end pilot plants still running and working on optimization of the process, was the job done? Now the front-end pilot plant is complete, we've seen numerous optimizations of our flow sheet, which have all been positive, I might add. And now this will be subject to an announcement shortly, where more detail will follow on these optimization -- on the positive optimization. But yes, this is complete now. For the next 6 months, also the challenges risks or obstacles for the next -- to the 12-month timeline? Probably the key challenges is the -- I'm trying to think. Well, as I said, permitting is on target. The components of the DFS are on target. As I said, we're looking at the end of this year or the first quarter of next year at the latest at the moment, what might affect that timeline is if there's any further delay in achieving final separation, which we don't envisage, or is there any delay to possibly permitting, but we don't see any problems there. So to be honest with you, we don't see any real obstacles. We see that we are on track, and we will hopefully, as I say, we're on track to meet those time lines. Can you talk to the present level of prices and what's driving into the short term? Well, as I mentioned, we've seen rare earths pricing come off 70% since the peak in 2022, and what we believe on a number of reasons, we've seen a slowdown in EV take-up over the last year, that is 2023, what led to reduced sort of the demand in the short term for permanent [ maintenance ]. We also saw a slowdown of a wind turbine rollout. But you all know that legislation is driving these sectors where we see an uptick in EV demand both in China and the rest of the world, as well as an uptick in sustainable energy in the form of wind turbines being rolled out and that pace growing or the pace increasing that we've currently seen in the rollout of wind turbine power generation. We also saw a big collapse in the Chinese construction sector, which meant that air conditioning units are not being fitted into new construction projects. Now I'm not sure the audience is aware, but some 2-odd years ago or with 3 years ago, China gazetted that every single day, an conditioner in China has to have permanent magnet motors. This is to reduce emissions. That means they could have more efficient motors that would require less electricity to drive, and that meant improvement in emissions. And with the collapse in the construction industry in China, we've seen a reduction in the number of air conditioners requiring permanent magnets been rolled out. And then lastly, we have probably seen some Chinese manipulation. There's -- last year from Myanmar, there was an increased flood of stockpiled material coming on to the market. And this is -- this also put pressure on prices, but that has now been abated as far as we understand. So that's why, as I said, we believe that the recent lows we've seen in rare earths pricing last month have probably -- those were the lows we believe and all the forecasts are for a recovery in pricing. And hopefully, we've seen that recovery start, as I mentioned before. Why do you think the value of a rare earths [indiscernible] ? I've just answered that question. So we have CapEx of USD 295 million to build your mine over a competitor with a greenfield project. And Africa [ claim ], they can build their mine for USD [ 200 ] million to produce NdPr. And we were the competitor you're talking about, I don't want to mention that other than [ them ], they are not going all the way through to separated [ RE ] oxides. I think their project stops at the first stage of mixture of concentrate. And obviously, that's a much, much lower level of CapEx required. That's all I can say there. And I think those are all the questions that I see.

Perfect. George. Perfect. That's great. Thank you very much indeed for answering all of those questions that came in for investors. And of course, if there are any further questions that do come through, we'll make these available to you immediately after the presentation has ended, just for you to review, and to then add any additional responses, of course, where it's appropriate to do so, and we'll publish all those responses out on the platform. But George, perhaps before really just looking to redirect those on the call to provide you of their feedback, which I know is particularly important to yourself and the company, if I could please just ask you for a few closing comments to wrap up with, that would be great.

I suppose closing comments are that yes, it's been a difficult market in terms of rare earths pricing for the last 14 to 18-odd months. But as I say, we see this has bottomed out. And that means the forecast project economics for Rainbow remain very, very encouraging. We've been -- we've had fantastic results of the from the front-end pilot plant producing a mixture of carbonate, which in itself is a salable product, lots of projects stop at this stage. So Rainbow is largely derisked by the production of successful production of mix of carbonate. But as I said, we're not stopping there. We are going all the way through to separated derivative oxides, which we've been -- we're very positive with the results we've seen to date. And we believe that final derisking step in the next quarter will be significant rerating for Rainbow, and we're very encouraged by the support we've seen in the market, from approaches by OEMs to where you're looking for now talking to rainbow for strategic offtake or strategic supply of these separated derivative oxides that we will be producing because I believe Rainbow is a real project that they will go into production. So all in all, we are very excited about the next 12 months. And as I said, we hope to see a rerating of the project based on positive results coming out on a number of fronts for Rainbow. Thank you very much.

George, that's great. Thank you once again for updating investors this morning. [Operator Instructions] On behalf of the management team of Rainbow Rare Earths Limited, we would like to thank you for attending today's presentation. That now concludes today's session. So good afternoon to you all.