TechMet Set To Invest $50 Million Into Rainbow’s Phalaborwa Project In South Africa
TechMet Set To Invest $50 Million Into Rainbow’s Phalaborwa Project In South Africa. Rainbow Rare Earths is pleased to announce that it has entered into an option agreement with TechMet, whereby TechMet has the right to invest US$50 million to fund a substantial part of the equity component required for the project financing for Rainbow’s Phalaborwa project in South Africa.
Under the terms of the TechMet Option the US$50 million investment will, depending on final project economics, give TechMet between a 15% and 33% direct equity interest in the project, underpinning a valuation of the project equity at between US$151.5 million and US$333.3 million. Given the de-risking that the TechMet Option will bring to the overall funding requirement to develop Phalaborwa, Rainbow sees this as a significant validation of the robust economics of Phalaborwa.
The TechMet Option agreement follows a period of extensive due diligence, as required by its own internal processes and as part of its commitments to the DFC and other shareholders. TechMet’s mandate is to identify world-class projects across the critical minerals space, which are operated according to high standards of environmental, social and governance criteria, as well as showing the potential for excellent economic returns. The overall capital expenditure for the project set out in the Preliminary Economic Assessment released in October 2022 was US$295 million, which is expected to be financed predominantly via debt.
George Bennett, CEO of Rainbow, commented: “We are delighted with the confidence shown by our long-term strategic investor, TechMet, following their due diligence on Phalaborwa. We believe that the TechMet Option is a significant de-risking for the financing requirements. This validates the Company’s focus on the development of rare earths from secondary sources, as well as supporting the Company’s belief that Phalaborwa is a strong and unique project. We expect Phalaborwa to continue to attract funding, especially from US-sources of capital, due to the focus on the critical role of these rare earth metals in the technology-driven industrial and clean energy age.”
Brian Menell, Chairman and CEO of TechMet, said: “Phalaborwa has the potential to become one of the most environmentally friendly and lowest-cost rare earth projects anywhere in the world. Thanks to Rainbow’s proprietary separation technology, Phalaborwa provides a significant opportunity to fast-track production of the four most economically important rare earth elements which are essential for future supply chains for electric vehicles, wind turbines and other products vital to the energy transition and the global economy. TechMet, is excited to be able to continue to support this outstanding project, which will produce rare earths in the most responsible manner possible.”
