Rare Earths: Rainbow Rare Earths update from Burundi

Rainbow Rare Earths anticipates an increase in Gakara’s monthly concentrate production as the company ramps up mining at Gasagwe. During Q2 2018, 275t of Gakara rare earth concentrates were produced, up slightly from 250t in the first quarter, though concentrate grade fell to 55% REO. The first 50t of concentrates exported from Burundi in December 2017 arrived in China during March 2018. To reach its targeted 400tpm by end-2018, a second resource of similar grade (48-60% TREO) mineralised veins in the Murambi area is being evaluated.

The ramp up in production at Gakara has increased the cost of production from US$2,315/t in Q1 to US$2,534/t in Q2. Including cost of sales (US$517/t) and a declining realised sales price (US$2,229/t), results in a loss of US$822/t on produced concentrate for Rainbow during the second quarter. Prices of rare earths have declined slightly over H1 2018 following a steady uptick and increased volatility in 2017. By end-June 2018, the basket value (100% payable basis) of Gakara concentrates had declined by 2.4% year-to-date to approximately US$13,270/t.

Rainbow quickly advanced the commissioning of the Gakara mine in 2017, benefitting from renewed market interests in rare earths globally. It has high-grade bastnaesite and monazite veins with between 47% and 67% TREO, compared to the next-highest-grade active mine, Mount Weld, with 10.7% TREO. Unless rare earth prices recover and drive up the realised sale price, however, Rainbow needs to reduce the cost of production by over 10% to bring concentrate production into a profitable range.