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Rainbow Rare Earths files IPO prospectus, aims to raise £6.5M

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Rainbow Rare Earths files IPO prospectus, aims to raise £6.5M

Rainbow Rare Earths Ltd. is undertaking an initial public offering of up to 65,036,958 shares priced at 10 pence apiece to raise gross proceeds of £6.5 million.

The company's shares are expected to start trading Jan. 30 on the LSE under the ticker RBW, at which time it expects to have 152,025,807 shares in issue. Hannam & Partners (Advisory) LLP and Daniel Stewart & Co. Plc are acting as joint book runners for the listing, which is subject to Rainbow Rare Earths raising a minimum of £4.9 million.

According to the Rainbow Rare Earths' Jan. 25 prospectus, it will use the proceeds to purchase mining equipment and construct processing facilities to bring its past-producing Gakara rare earths property in Burundi back into operation, as well as to repay debt. Gakara is envisioned as an open pit mine producing 5,000 tonnes per annum of combined concentrates.

The company secured a 10-year off-take agreement with a ThyssenKrupp AG subsidiary in April 2015 for all 5,000 tpa of production anticipated from Gakara.

The Gakara property has an exploration target in the range of 20,000 tonnes to 80,000 tonnes, with grades of 47% total rare earth oxides to 67% TREO, according to a September 2016 technical report. The study outlined a budget of US$1.2 million for a two-phase work program focused on defining mineralization on the property.

Rainbow Rare Earths noted that CapEx to establish trial mining operations and construct a processing plant is estimated at US$2.2 million, while a 25-year mining license was granted in 2015. Trial mining will focus on the Gasagwe and Gashirwe West deposits and is expected to last for 27 months.

The company is targeting initial sales of concentrates by year-end.