London-listed rare earths producer Rainbow Rare Earths has conditionally issued about 43-million new ordinary shares at a price of 6p apiece, thereby raising gross proceeds of £2.56-million.

The company will use the proceeds for general working capital purposes, including an initial $250 000 payable under its Phalaborwa project earn-in agreement, drilling at the same project starting in December, and initial confirmatory metallurgical testwork at Phalaborwa, in South Africa.

The drilling is aimed at demonstrating the continuity of the expected grades to inferred resource classification and the testwork will investigate the optimal processing options for recovery of the rare earths from the gypsum stacks.

Moreover, Rainbow will use some of the remaining proceeds towards its trial mining fleet and pilot processing plant at the Gakara rare earths project, in Burundi, to support further development of the trial mining operations and pilot plant. 

CEO George Bennett says he is encouraged by the strong support the company has received from both existing and new institutional shareholders in the placing, which was significantly oversubscribed. 

“We believe demand for permanent magnet rare earths is poised for significant growth, as evidenced by the significant increases in the price of both neodymium and praseodymium oxide in November to date. With the Phalaborwa and Gakara assets, Rainbow is uniquely positioned to deliver into this growing market, with both project and country risk diversification.

“With this capital, I anticipate that we can quickly define the route to commercial production from the Phalaborwa project, where we continue to review the wealth of data available from the historical pilot plant operations. 

“At Gakara, the additional investment will allow us to extend the areas of our trial mining operations to demonstrate that the simple minerology and high-grade nature of the mineralised veins continues across our defined mineralised target areas."