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

Good afternoon, and welcome to the Rainbow Rare Earth Limited Investor Presentation. [Operator Instructions]. The company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions listed today and publish response if appropriate to do so. Before we begin, I'd like to [indiscernible]. I'd now like to hand you over to George Bennett, CEO. Good afternoon, sir.

Good afternoon, and welcome to everybody on this call, this is Rainbow Rare Earth Investor Feedback Call and I appreciate you taking the time to come and listen to the Rainbow story. If you haven't heard it before, or update with our current shareholders of Rainbow. Thank you. Few disclaimer. Just to reiterate to the market why we think Rainbow is a unique opportunity in the Rare Earth space. As so we've engineered the recovery of rouge or position waste residue. And the beauty about this is that there's no geological risk. Geology does not play a part in this project or in our multiple projects, nor does mining, conventional mining that we know can be risk in the difficult sort of rare earth mining project. And we believe we are locking some verbal long-term opportunities as well be apparent. We're not going through the presentation. We currently have 21 projects. We believe our -- both are in the highest end of the margin curve for mining projects and see Roth projects in the world, and we're at the lowest end of the cost spectrum as well. And it will be apparent once again, as I say, as I go through this presentation and reiterate those both the stage we've done on these projects to date echo the sentiments I've just mentioned. And so it's intending to be a strategic supplier of light and everywhere to the Western supply chain that has currently been developed at pace being driven by the U.S., and we now see companies like Japan, Australia, supporting this initiative in Europe starting to a catch up in this area. Just to -- for the audience, you might not be aware, but we're Rainbow's resource was delivered or created is from Hardrock phosphate mining, we mine hydro phosphate rock for -- which is then concentrated through a flotation process into a phosporic slurry fee. This slurry is then fed into a phosphoric acid plant. We add [ Solteria gas ] and then hear to produce phosporic acid for fertilizers. Our key ingredient will fertilize globally and it's your essential ingredient, as I said, for fertilizer. The areas in the hard rock phosphate rock, but not economic to mine just for the earth, but due to the concentration of the phosphate slurry into high-grade phosphate clarity into the phosphoric acid plant, the rivers are also concentrated in this flotation process. And the [indiscernible] don't the part with the phosphoric acid into the fragilize but there is the court with the waste residue now called phosphogypsum. And the way to residue is on cost of different stakes globally. Now notable phosphate system is the same. We've targeted some hydro componentized source of post drop because there, there is a much higher than your sedimentary the resources of [indiscernible]. So we specifically, once we realized [indiscernible]we decided to target other projects in the world and the first other project that we targeted very successfully was the [indiscernible] project in Brazil that I'll talk about. As I said, the product cost of gypsum has got the resins. And because we've added sulfuric acid and heat in the cohort acid production process, which is what you do to [indiscernible] can separate them further, the sulfuric as in the heat, which was applied in the [indiscernible] part means that we have chemical softball that's already cracked in the real sense, and this also reduces CapEx and operating costs. And basically, this ends itself straight to 3 big of the [indiscernible]. We'll slurry it, put it into a continuous counter-current each system, we will reach the res and sulfuric acid and then generate a really high-grade premium lead solution, which then goes into another step before we see that into which I can talk about just from a high-level sense of the word, repeating to continuous high exchange circuit which also once again upgraded [indiscernible] of the impurities and then we a typical solvent extraction circuit for our real separation, which is commonly used in more road projects around the world, not a project separate or projects mixes. Some projects stopped as a mix of carbonate and other projects are going further down the road into separation. Branded and were being essentially what line is the biggest reduce outside China and the West have done for the whole production market. There's lines produce separated Nearside which is at a grade that was -- that you could see directly to the midstream, which is the utilization, which will then be able to see a permanent magnet manufacturer. So liners have done their production and that produced an SEG plus, which is [indiscernible] with the heavy reverse are concentrated in this mix [indiscernible]. And that carbonate they sold for to refineries for separation in China and some in Japan. But it's only recently late last year were the commission their own heavy rotor separation plant they've decided to separate the [indiscernible] themselves. But rare earth [indiscernible] until the end of last year. [indiscernible] did not separate the heavies themselves and Rainbow are not going to separate these heavy rare earths themselves. It's very, very complicated and very expensive process on CapEx and office point of view. And we've taken the route to morat Lance said for his 12 years of the production. It's something we can look at much further down the life of [indiscernible] at this stage, we think we made the right decision. We also captured about 15% of the value of our rent basket by to the stages that we're going. So we're not giving it's not worth chasing the small amount of value you're getting for European or [indiscernible] and so forth because those rails are much, much harder to separate underlying and leads to a lot more CapEx, a lot more OpEx if we run the numbers, it's not really worth it. Just to reiterate that, simply again, typical rare earth project, you've got your mining and you have your wall in stockpile. If it's a hard rock project, you've got your crushing, milling and grinding and then you have a flotation process to produce a mix concentrate that concentrate, they have to crack clinically, as I said, the urgent that process, and you then produce a mix of carbonate. And only then when you got the next coal bat and chemical form and you go into a solvent circuit a team sold extraction is the fact old standard for separation of all projects around the world and ranks us in elected the same solvent extraction and our back in circuit as well the solving section IP tends to as of a few providers around the world. I have this, you've got people again in Australia, [indiscernible] in Spain, you've got [indiscernible] and so forth. And you'll see later in the presentation that we [indiscernible] the outperformance materials and [indiscernible] so Rainbow, far more streamlined. We just repaying the gypsum there's pretty big content loaders as I said, was serious or [indiscernible] go into multistage separation that they will highlight in the letter as well. As I mentioned, two Tier 1 projects. And at the moment, Palabora we were originally going to release a DFS that we can subsequently changed to releasing a [indiscernible] now in this quarter and the DFS in the first half of next year and will become current while we may retain slightly the [indiscernible] project has kicked off its pretested in Brazil that's going nicely. And as I said, the core opportunities we were very near term pre-year also quite near term over [indiscernible] solid platform for growth. The key about the two projects is the one project in the year is it's a fine or source of gypsum the Uberaba project is an ongoing phosphatase production facility that's being operating in Brazil, and it's grown a lot for over 30 years back among the 30 years. So we know that, that project is a very long project and key and all projects is a grade and so in [indiscernible], we've got 4,400 PPM more brewers in Gypsum, we got 5,100 in the gypsum and these grades are significantly multiples of our [indiscernible] grades and rare earth projects, so not only with nice that you see around the world, between 4x and 8x higher grade than these projects and similar because those projects have a much lower mining cost than a rock mining project but only request carry costs with some initial mining on projects, I should say. And as I said, when we compare ourselves against us, we've got very, very high grade in comparison. In fact, we've seen some hard projects with 0.5% grade 5,000 PPM, and we've got 5,100 in [indiscernible]. And so we believe very, very excreting for great on of view and the life of the project and both of these projects have significant life and 16 years is more than enough for the initial mining project and 30 years for project in Brazil with over rate is that long term, and there are further opportunities that we'll be looking at. Just to highlight the audience, you might in have seen this. The project in Palabora in South Africa is a [indiscernible] project. It's within 5 kilometers of mining ton has been in existence for over 60 years. It's two operating mines just north of our border on the old rates a copper mine could [indiscernible]. The other one is phosphoric -- sorry, the first mine in by [indiscernible] still mining [indiscernible] rock is now said and tie down to cross-modality reach in Spain, South Africa, there's no head the [indiscernible] that you see on the top left-hand side of the [indiscernible] anymore. That's all the plants. Those two stacker the gypsum tax, 35 million tonnes and the triangle to the right of that photograph the cell be living a new stack sites. This is a big environmental cleanup. We underlining that area and safety, which is the smallest that you see will be retaining first, and then we'll deposit that septum on to stats here, which is the new intake GFC standards, and then we'll start reclaiming the second stake, which we call [indiscernible] and once, as I said, Stack C at its maximum [indiscernible]. And while we're holding Stack C just maximum [indiscernible], we'll be lining the area with 6 years and the balance of [indiscernible] will go into the land area of saved [indiscernible]. So from that point of view, we've got very good support from the satin government because there's a massive cleanup of the site environmental cleanup. And very importantly, there's a real environmental fund to clean up the site. So then ranges cost. But what we are doing is effectively ending up the site, and that's why we've got massive support. And very importantly, we'll be selling the [indiscernible] into the south of the market as well. We're looking at circa 400,000 to 500-odd tonnes of tips per annum. We'll be selling into the South Region market. And the money we get for that [indiscernible] is not in our feasibility study. to sweep into the project. And when we complete our DFS, we will be able to put numbers to it and more take at renegotiating at the moment. And that's another bonus for this project. And basically, we've been able to simplify associated from the initial [indiscernible] economic assessment with in-house, we have done in our own lab over the last 18 months, almost 2 years now in a very low-cost environment, and that's enabled us to move the project ahead, even quicker than we would have been able to do so and we've been using outside [indiscernible]. As I've mentioned, we're going to be producing separated [indiscernible] and the SCG Bus Group at greater than purity. I've been asked the question as to why we've spoken about 95.5% in our previous in previous reports to the market. The reason being that in previous presentations, we are -- we will get a 0.5% purity. But when it's the August [indiscernible] and the sort [indiscernible] index that we will be passing on and that's why we've got 9% in our announcements just to clear that up for the audience just to recap, that has very, very compelling economics. These economics were updated 2 years ago in December 24. You're going to get the [indiscernible] now. as I said this year, which will have these numbers updated to current pricing to a PFS level. I must reiterate that even though it is -- we are calling in the pre as we see the ranges a couple of months ago, 75% of our associates and GFS engineering. So 75% of our cost and OpEx is at the FS level of certainty. It's only the final separation circuit separation circuit. It will be at the preps level of CapEx and OpEx. And that's why we're calling overall. But we are very confident in our final DFS number is going to be very close to our [indiscernible] and the market can take some company that pace and pretest numbers in directs. But this number that we updated 2 years ago was using spot pricing or $100 for EDPR. As you can see, a very robust economics. I must stress that the 75% of our project values in EDPR. So the fact that there's a big there was a full price negotiated with the U.S. government [indiscernible], just so happen to be the spot pricing that we use in our feasibility study. And we see this trading in China since then, anywhere between $110 and that's only $230 a case. So this seems to be an established price now going forward for [indiscernible] and we believe that trend will continue. But we haven't forecast pricing. We've always used spot pricing and no numbers. And we also have posterior relist are very sort of in the Western world at the moment and economic quantities at [indiscernible] as well as in Brazil. And we also recently announced I say recently, a year ago, announced that we have significant value of terbium in our SEG plus circa and 40 odd tonnes. And sorry, not to [indiscernible] we've got determine in our Padova project, circa 140 tonnes of [indiscernible] very sort of at the moment. We see the trim pricing softening from where it is at the moment. But if will also be abide to the project that wasn't taken into account previously. You will have seen just 2 days ago, we announced MOU with near Performance Materials, which is an offtake. In all root projects in a offtake arrangements to get financing. It's a specialty mineral. Similar to uranium, if you run a uranium project, you're going to offtake negotiations with projects on that similar. And basically, we've announced an offtake MoU with near performance and air performance have been around 35 years, they're the most established midstream and negative manufacturer in the waste that with the longest history in the west of making outperformance permanent magnets and also doing metalization and separation maybe running numerous facilities around the world, and they've also got operations in Europe. And basically, the offtake from [indiscernible] is designed to feed their facilities in Europe to be quite a recent supply chain that we've spoken about. This was the final piece of the flow sheet that we were looking to secure. We weren't charge technology provider to go with. We have a number of technology providers we could have chosen from -- but based on [indiscernible] experience, the fact that they are running plants for 25 years and the various facilities around the world and their technical team interaction with the Rainbow technical team was very, very strong. we decided to go near. We are going into a definitive agreement this year very shortly. We've already started the process. This was nonbinding, but the agreement between [indiscernible] to make this a vignette soon as possible. And the legal work on the long form has already started. So that will be a near-term announcement of the binding agreements. And we're also give some pricing metrics in that final announcement. But as I can say, the pricing for the out is at market price post premium, which we'll talk about when we announce those. And as I said, that will also be very favorable for the project economics as well. Dave, we just want to add you on the slide [indiscernible].

Yes. So we were very careful in our selection of the technology part of here. We spent some fair amount of time assessing the various options at front of us. idea really has stood out as being an outstanding option for us. What I really enjoyed that Neos they were very open and willing to share knowledge with us given prior to the MOU being all we set received tarps from us already proactively one test on that before we actually had the MOU in place. On top of that, they've also evaluated our project to come in as a lot. Have a look at our let look at the work we satisfied themselves that this is a solid project that to deliver into that, which is obviously quite important for them, too. We've sorely enjoyed the relationship with Newton. We're moving very quickly through the test program and the evaluation of that technology in terms of actually what will look like for us. We've been able to make visits to the project, so we could see their operations. It's very public to be able to see somebody actually performing the separation technology operating and we spent 5 years of experience of doing so and the sort of the sort of downstream knowledge in terms of metalization in terms of maintenance production, et cetera. So it's a very integrated knowledge base that we're tying into yet. So yes, we're very happy with the enjoying the relationship.

Yes. I think what's important that we've vetted 40% of our DPI separated in the PL production for the Permian [indiscernible] facilities and they we negotiated 65% of the SEG. As I said, all offtake agreements, companies have been we talk around the world. [indiscernible] are very, very focused on the heavies, looking for the heavies. And we are very confident that we will also be able to still. Well, we know that we'll find a want to take more DPO from us. And as I said, by the time we come to financing bakes they will look to have more of this production, the DPL production secured an offtake. But we are -- we'll be making announcements on that in due course as well. But -- and not already look take agreements, the guys are a number of guys that are dealing with facilities in France. And likewise, those guys are supplying the FX technology for [indiscernible] we will able but they're also providing SX technology. And it's no different from year-on-year antidote. And we saw that 6 technology is well established. It's -- they have it in multiple plants around the world in 35 years of experience, we felt that their technology would be the best the best cost to go in the market. And of course, we need a to be spoken for any project finance. I think what the market also would be pleased about is that we will be negotiating a toll treatment for the balance of the SCG plus the 35% that's not signed a year. And the beta about that, I feel is that -- that will enable us to then market ourselves directly as Rainbow separated dispose separated terbium and separated and that will give us what I think be very beneficial to the project in terms of final pricing for the balance of those three separated [indiscernible] it's interesting to note that when I announced that we determine in our [indiscernible] last year within Ceresoli phone call from General Electric in the States. [indiscernible] see you put item in your product. We like to negotiate with you and offtake in the prepared to give you a full price. When will you be in production? And we talk very well from each yes, we're going to be in production in early 2029. But at that stage, it would have been in an SCGs product and it would be to somebody else or separating it. The fact that I would be able to say to see now, yes, we're going to have circa 40 or 45 tonnes of separated trim, and we could negotiate that separately and not take agreement with some kind of pricing mechanism, I think, is very powerful enables be to negotiate very strongly the final pricing on this. On the balance of that ECG production in terms of the disposal in the turbine and the ships I mentioned. And as I've covered the preseason will be in this quarter and the DFS coming out next year. But once again, I just only reiterate the peak these numbers, we expect to be very, very, very strong in terms of various surprises between that and the number coming out next year. As we mentioned, the project in Brazil, is a significant project. And it's almost a carbon copy of what you see at labor. We continue to have some stack here some vitiate project in Uberaba is that it's -- once again, it's a brownfield site. It's completely free. It sits within the sugarcane both in Brazil as far as I can see, all around the [indiscernible]. And these guys sell 4.5 million tonnes [indiscernible] into the agri industry in Brazil. But [indiscernible] has been produced on-site you've got most of the permits that the site would require already in place because it's a live operating site, have got a very skilled workforce. Obviously, part of that core would will fill up and support the guys that we employed for the [indiscernible] on the same part, they've allocated a ground the pens finder of that site there. And we're fortunate that we're not pinning down Amazon rainforest or just trying push to build this facility or move any [indiscernible] on that. It's a rail site very early to have been operating for also probably 30 or 40 years in Brazil and so another 30-plus years of life, very high grade. And we -- the large economic assessment, we published this year, once again showed very strong economics, very low CapEx for the type project, and that's basically because once again, we've done mining involved. We're taking the fee stream of the process directly from nonposition on-site, fitting it into our process plants and then giving them the each year. So very, very efficient and very excited that this project preps kicked off in result and it will be a complete circuit this time next year in 2027. As I mentioned, when we published the economic assessment in March this year, once again, very, very strong financials, post-tax IRR of over 45%. Once again, in the -- this would produce EBITDA circa $20-odd million a year. EBITDA margin of over 70% post tax. That's a post-tax EBITDA margin. and capital expended to circa and $80 million, very, very low CapEx and the very low operating cost per kilogram of total [indiscernible] and once again, we've got disposing in term, and we've got a fair quantity of accents project as well. It's going to produce about 19,000 tonnes of demand presidium per annum as well, slightly more than [indiscernible] a slightly higher grade and slightly higher throughput. But yes, a very, very robust and very short last project to get into production. So we only sort of negotiating with Mosaic. In 2023, we signed one binding MOU just seen, we signed a more definitive agreement with Moshe we set out the shareholding grows 29% was 51%, and we're very pleased with the outcome of those negotiations. And as I said, this is a massive, massive project in terms of life, in terms of profitability, which has significant to rainbow in terms of NAV as well as EBITDA points in production. Just to go through the project time lines once again updated time lines. As I said, on Palabora we are now publishing a pre-feasibility study. In this quarter, that will enable us to begin the balance of the permitting required. We have done a lot of the groundwork for our permits and there's 4 and 4 studies, their mission license, [indiscernible] studies the emission license to all the maintenance, all the work the noise down for the noise study at the work done for the noise studies and so forth. Heritage evaluations and that put aside. And basically, we were just waiting for the pre-feasibility study to understand the waste streams from the [indiscernible] plant to continue our permitting process. The permitting process in South Africa is very well established. It's a very, really well-known mining jurisdictions we're all very well established. And the permitting process, fortunately is also very well set in South Africa. Once you launch your application, basically, it's between 9 and 12 months, you have the permit. It's not how long is a piece of string. Very, very defined permitting process in terms of -- it's in the stat you put in South Africa. So you they've got 9 months to come back to you, and then there will be -- there might be some questions about the permitting and within 3 months of the final permits issue. So we have a very, very clear line of sight on the permitting process in South Africa. As I said, we will be publishing the DFS next year, finalizing project finance, and we intend to start early construction at the last quarter with initial production in the early part of 2029. Once again, the prefeasibility is not led to delay in our overall time line is time line hasn't moved for over a year now and the storm enables us to meet the initial production target, which we revised some time ago as early 2029. And with the project in Brazil, we're expecting the earliest production we are targeting would be 2030. Just to take note that Brazil, as I said, we started and circa '23, we realize there's a resource there, resource in Egyptian to be production in 2030 will be 37 years, and it's a similar time line or -- so I think the is called labor. But the fact that these projects have got that time line is because of the nature of them. Most mining projects are from take years and test to get into production. So we still feel that these are very fast track projects both in South Africa and Brazil. And we'll be delivering on these time lines in terms of to be able to get them to be considered, as I said, there's phosphate projects, I believe. There are certain opportunities. This is not the end of risk for. We have two Tier 1 opportunities already secured in South Africa and Brazil. We have been approached by guys with the development projects in North America, which -- we'll see where that goes, but it's an opportunity we've had an approach in Europe as well. Another phosphate production facility that is going to be built in the next 10 years or so, and then eventually producing [indiscernible], they've already approached you start talking to us. And we are evaluating a different type of [indiscernible] that marine deposits in Morocco and Saudi Arabia. So La Rambo has got the potential to still add to this portfolio or a very, very exciting growth opportunities to other prospective and leveraging our IP that we've developed to expect grows out of cost nobody else than before. It's always been there at-scale work and papers published by various universities, you so you can expect erosion, but we've been crisis to develop an economic flow ship on the stress to extract growth from phosphates. And that's what makes Randy such a company or our view. In terms of the U.S. listing, we did announce in the market that we're evaluating U.S. listing One of the reasons we decided to change slightly and published a precise because the pre-feasibility study, a allows us to make sure the permitting stays on track. And b, it also allows us to further evaluate the time line for U.S. wise. We don't want to come out with the time line that we don't meet. And based on the pre-feasibility study, we believe that will then enable us to do a final evaluation and decide where do we go ahead with this opportunity, we think it's a great opportunity because of the ratings we see in the U.S. market for growth projects and critical mineral projects generally and the fact that there's a source of capital in the U.S. that we believe we can access at a much higher rate than we currently stand in the U.K. market, and we believe there will be a big benefit to all our shareholders to see as this is in the U.S. And once again, that needs to have the final evaluation done and our prefeasibility will allow us to come to that evaluation slightly quicker than if we grant the DFS. Also notable in our last capital raise in March earlier this year that we -- 95% of that capital that was all U.S.-based. We saw significant investments in tractors, available trader of commodities. It's a partnership with the U.S. government to be part of the $12 billion critical mineral or stockpile that the U.S. government can be building will go deltas part of that. They came in with a significant investment into Rainbow, and the rest of the money is also from high net worth family offices in the US as well as 1 of 2 planes in the U.S. So we are starting to see interest from the U.S., and we believe that's another reason it bodes well for potential listing in years. And as I mentioned, we serve valuation in any liquidity in companies to the ones markets, we also those all the [indiscernible] shareholders should we go ahead and do this. So in summary, we believe we are going to be a very key supplier of us outside of China for the rest. We've got high margin opportunities and we've got growth opportunities as well. The fact that we are going to be a low OpEx produce of these oxides means that will be resilient and pricing that's variable in the road market. We believe our IP investors opens a large addressable market, as you've already seen our complements to secure the project in [indiscernible]. And we've already seen the potential to secure other projects because of this year that we've delivered. And we've got a couple of near-term catalysts, which are important. As I mentioned, we'll be the binding agreement is year and the publication of the prices, which are both near-term catalysts in this quarter. Just to -- so thank you to the audience. Our share price performance as an intent over the last 2 years. And I think we're going in the right direction, and we will continue to do so. Thank you very much.

[Operator Instructions]. As you can see, we have received a number of questions at today's presentation. George, can I ask you to read out the questions and give response as appropriate to do so, and I'll pick up from you at the end.

I'll just move on to some of the questions have been submitted. One is that given the company's interest in the market listing can you describe how this might affect the existing listing amendment. There will be no update on the missing in London, the shares are fully tangible take between the two markets. But naturally, over time, we'd expect to see the register on the U.K. and market move across to the U.S. market, and we would expect over time in the growth of our ratios to train our use is in more than the U.K. is. any like -- is there likely to be a capital raise? Well, all development companies have to raise capital when they're construction for their projects. We've already had committed by the ESG into our construction finance for the project. We know we're going to be securing debt of the project circa [indiscernible]. So actually capital required, the equity portion for our project in Brazil -- sorry, in South Africa when we go into production is relatively small. And as I said, we expect -- that will be -- we'll only be looking to raise money much later next year some time. We believe if things go well, the ion the back of the years listing, so we'll have a better rating, which is very beneficial to shareholders because we deinvest dilution for shareholders. But yes, all projects need to raise, and we will generate when we do is if we go ahead with it. I've answered the question on permitting, I think during my presentation. There's also a question on our relationship with Neo. This is a misunderstanding by in terms of the -- I think as an answered this question, is for all intents and purposes, it appears now that Rainbow will simply be an in-ring producer and not refine separated address? Well, I'm not too sure why there's this conception it's very, very clear that Rainbow building our own sovereign extraction separation circuit desire we secured the technology agreement with that will use their in the back-end circuit to design our icon in South Africa will be separated in the PR in South Africa and producing the SEG post in South Africa, which will then ship the [indiscernible] DPL will be shipping here in the pas will be shipped to we will take a view as well. So no, and is definitely not just a memory producer. We are securing 100% of our value for the NPR will be securing 100% of the value for 35% of our heavies and the balance of 65% will be under the terms of the offtake agreements that we'll be getting with me. And basically, it was Yes, it's not affected the change now [indiscernible] as I mentioned, all projects need to have not taken somebody, and we agreed to all say good year on very favorable commercial terms, they also have offered their IP to rainbow and that people was very compelling. As I said, we were in negotiations with other potential takers mile takers will also advocate in past with SX technology, but [indiscernible]. And that's how we engineer as well as we got the technical capability. I think I've given back on the project of Mosaic in Brazil, as I said, we are in -- we've kicked up the prefeasibility study we ship material to [indiscernible]. It's on its way from Brazil, and that will be run through our pilot plants. Dave, do you add anything on Mosaic in Brazil?