Rainbow Rare Earths (LSE:RBW) bounced 4.6pc to 5.1p after releasing the first-ever JORC mineral resource estimate for its Gakara rare earths project. Gakara has a total resource of more than 1.2MMts of ore covering a small fraction of total acreage.
Rainbow said three areas of the project – Gasagwe, Murambi South, and Gomvyi Centre - are very high-grade vein stockwork deposits. The sites total 12,491ts of total mineral resource at an average total rare earth oxide grade (TREO) of 55pc. This compares to an average rare earth project grade of between 1-4pc TREO.
The work defined another area called Kiyenzi as a substantial, lower grade deposit with a mineral resource of nearly 1.2MMts. It has an average grade of 2.2pc TREO employing a cut-off of 1pc TREO.
Rainbow has been producing from Gasagwe since December last year. It plans to bring Gomvyi Centre and Kiyenzi in production next year. Gakara is based in Burundi, North Africa, and is the continent’s only producing rare earth mine. It holds more than 1,000 rare earth discoveries with a basket weighted heavily (c.20pc) towards magnet rare earths.
Today’s resource uses just four of 28 mineralised prospects across the entire mining licence. Rainbow said this indicates significant further upside for future exploration.
The JORC resource follows a great deal of work undertaken by Rainbow at Gakara over recent years. This has included greenfield and brownfield exploration, drilling, mining, ore processing testwork, modelling, and ore processing and concentrate production.
Martin Eales, CEO of Rainbow, said: ‘We are pleased to announce the maiden JORC-compliant Mineral Resource Estimate for the Gakara project, on time and on budget. The Mineral Resource, which is based on only four out of the 28 identified targets within our licence, shows over 1.2 million tonnes of ore, a considerable deposit in its own right, and provides further evidence that the Gakara deposit is a world-class source of rare earth oxides.
‘Three of the areas are high-grade vein stockworks, and include 12,491 tonnes of ore Resource at 55% TREO. These alone will provide over two years' head feed for our planned ramp-up to 5,000t concentrate, and we will of course continue to explore these deposits further.
‘The Kiyenzi deposit has been confirmed as a very large, lower grade deposit, which ties in with the airborne and ground gravity results previously announced. The currently modelled deposit amounts to nearly 1.2 million tonnes of ore at 2.2% TREO, and may well be related to a carbonatite source. This deposit is open in all directions and is an extremely exciting prospect as it presents a new opportunity for Rainbow to further develop its mining and processing capabilities.
‘These results will provide us with confidence in our ability to obtain near and medium-term sources of ore, but more importantly point to the existence of a truly unique deposit, which we will continue to explore in the future.’
Until recently, Rainbow hoped to ramp up production to 5,000tpa or 400t a month by the end of 2018. However, this target was delayed in October until 2019.
Rainbow put this down to a challenging geological environment and uncertain average yields at Murambi. Compounding this, the business has also suffered lower production rates from Gasagwe in recent months. This has resulted from unpredictable vein structures.
Rainbow said the precise date at which it hits its target production rate will depend on progress at Murambi. It will also hang on one or two more mining areas that it plans to bring online over the next nine months. It plans to release upgraded production guidance for the 12 months to June 2019 early next year.
Author: Daniel Flynn
Disclosure: The author of this piece does not own shares in any of the companies mentioned