one of the world’s richest producing rare earth deposits€¦ · in china (source: argus) with...

ONE OF THE WORLD’S RICHEST

PRODUCING RARE EARTH DEPOSITS

LOW COST PRODUCTION IN EAST AFRICA

Proactive Investors Forum 22 March 2018

Rainbow Rare Earths Ltd.

DISCLAIMER

These Presentation Materials are for information purposes only and must not be used or relied upon for the purpose of making anyinvestment decision or engaging in any investment activity and should not be construed as, an offer for sale or subscription of, orsolicitation of any offer to buy or subscribe for, any securities of Rainbow Rare Earths Limited (the “Company”). Whilst the information

contained herein has been prepared in good faith, neither the Company, its subsidiaries (together, the “Group”) nor any of the Group’sdirectors, officers, employees, agents or advisers makes any representation or warranty in respect of the fairness, accuracy or

completeness of the information or opinions contained in this presentation and no responsibility or liability will be accepted in connectionwith the same. The information contained herein is provided as at the date of this presentation and is subject to updating, completion,revision, verification and further amendment without notice.

These Presentation Materials contain forward-looking statements in relation to the Group. By its very nature, such forward-looking

information requires the Company to make assumptions that may not materialise or that may not be accurate. Such forward-lookingstatements involve known and unknown risks, uncertainties and other important factors beyond the control of the Company that couldcause the actual performance or achievements of the Company to be materially different from any future results, performance or

achievements expressed or implied by such forward-looking statements. Nothing in this presentation should be construed as a profitforecast.Past share performance cannot be relied on as a guide to future performance.

The graphs and data on page 6 (as labelled) is copyright ©2017 Argus Media Group. All rights reserved. All intellectual property rightsin the above extract are the exclusive property of Argus and/or its licensors and may only be used under licence from Argus. No liability

is accepted to any person in relation to the distribution or possession of this extract. Argus makes no warranties, express or implied, asto the accuracy, adequacy, timeliness, reliability or completeness of the extract above or its fitness for any particular purpose. Argusshall not be liable for any loss or damage arising from any party’s reliance on the extract above and disclaims any and all liability related

to or arising out of use,possession or distribution of the extract above to the fullest extent permissible bylaw.

1


WHAT IS RAINBOW RARE EARTHS?

2

AN INDEPENDENT SUPPLIER OF HIGH-GRADE CONCENTRATE TO THE GLOBAL RARE EARTH MARKET

USPs

the highest grade rare earths

mine globally

90% owner of Gakara:

in Africa(one of a handful

outside of China)

Gakara is the only producing rare earths mine

(47 - 67% TREO)

containing both Nd and Pr

High value basket

(magnet rare earths)

which are driving

demand

with multinational

thyssenkrupp Raw

Materials

10yr offtake agreement


2017 – A YEAR OF DELIVERY

FROM IPO IN JANUARY TO FIRST PRODUCTION AND

EXPORTATION ON TIME AND ON BUDGET

All targets achieved

Long term debt repaid

Gasagwe mine developed and producing

Kabezi plant constructed and operational

Exploration success - 4 large anomalies identified

First tonnes of high grade concentrate produced and exported

US$8M initial funding secured from IPO on LSE

Raised US$3.75M for exploration upside and acceleration of production

3


89

1011121314151617181920

KEY DATA

4

TICKER MARKET MARKET CAP SHARE PRICESHARES IN ISSUE

JOINT BROKERS

RBW.L LSE £31.00m 17.75p 174.63mHANNAM & PARTNERS

ARDEN PARTNERS

SHARE PRICE GRAPH

As at 19.03.18

SIGNIFICANT SHAREHOLDERS

SHAREHOLDER HOLDING

Adonis Pouroulis 25.97%

Other Board &

Management8.50%

Legal & General PLC 5.98%

Miton Asset Management 5.07%

Shawn McCormick 4.90%

Rainbow’s IPO Price

IPO PRICE – 10.00p


THE “TECHNOLOGY METALS”

5

ND & PR REPRESENT THE MOST SIGNIFICANT ELEMENTS IN THE LANTHANIDE GROUP BY VALUE

Electric vehicles: Forecast demand growth for NdPr is

primarily driven by the anticipated

uptake of EVs as well as growth in all

electric motor usage

Smart phones :Neodymium gives your phone the

power to vibrate. 2.87 billion

smartphone users worldwide

predicted by 2020

Wind turbines:

NdFeB magnets have allowed wind

turbines to reduce costs and

increase efficiencies

Magnet Rare Earths are critical in these key booming markets amongst others

An

nu

al

Glo

bal L

igh

t D

uty

Veh

icle

Sa

les

Source: Bloomberg New Energy Finance

Million c

ars

per

year ► Global sales of Electric Vehicles (EV) increased

63% yoy in 2017, and are expected to continue to climb

► By 2040 it is estimated that 34% of the cars on the road will be EVs – 530 million in total and 54% of all new cars sold will be electric (Source: BNEF)


RARE EARTHS

6

GAKARA IS ONE OF THE ONLY FEW RARE EARTH PRODUCERS OUTSIDE OF CHINA

Ra

re e

art

h p

rod

uc

tio

n –

20

16

► Global rare earth production in 2016 was estimated at

160,000-170,000 metric tonnes, with 93% of it produced in China (source: Argus)

► With 6,000t p/a run rate target during 2019 Rainbow has the potential to make Burundi the third largest producer

of rare earths, after China and Australia

► China has made strides to crackdown in illegal mining,

which is estimated to make up 1/3 of the global supply► Lynas Corp is the only significant non-Chinese

supplier of rare earths

► China dominates supply and large part of demand, but

global demand is also growing and seeking non-Chinese sources of supply

► The estimated value of rare-earth compounds and metals imported by the United States in 2017 was $150

million, a significant 27% increase from the $118 million imported in 2016.

Source: Argus Media Group – 2017

Glo

bal R

are

Eart

h P

rod

uc

tio

n 2

00

8-1

6

Source: Argus Media

China-basedproduction

Non-Chineseproduction


ELECTRIC VEHICLE REVOLUTION

► Market currently driven by increasing demand for powerfulmagnets used in electric motors and generators – rare earthmagnets are the strongest and lightest

► Governments of UK, India, Germany, France, Norway andChina have announced plans to ban petrol and diesel cars inthe future

► All new models from Volvo will be electric or hybrid from 2019

► General Motors committed to all electric, zero emissions fleet with plans to release 20 electric cars by 2023

► Volkswagen unveiled plans to invest a colossal €34 billion into EVs, over the next five years, and make electric versions of all 300 models, in the group’s 12-brand line up

► With the global shift to EVs lithium-ion battery demand will grow to 1,300 GWh in 2030 from 21GWh in 2016 (Source: BNEF)

7

2017 MARKED LANDMARK COMMITMENTS FROM AUTOMAKERS AND ACCELERATED ADOPTION OF EVs

Annual Global Light Duty Vehicle Sales

Source: Bloomberg New Energy Finance

Million c

ars

on th

e r

oad

Tesla introducing NdPr permanent magnet motor

(Model 3)

Rainbow Rare Earths Ltd. 8

THE GAKARA RARE EARTHS PROJECT

Source: Company’s aerial photo of Gasagw e operation


PROJECT OVERVIEW

9

PRODUCTION OF HIGH-GRADE RARE EARTH CONCENTRATE FROM THE ONLY PRODUCING RARE EARTHS MINE IN AFRICA

Key Facts

Production Rate

Targeting run rate of 5,000tpa by

the end of 2018 and 6,000tpa in

2019

Processing

Simple eff icient gravity separation

processing facility – 5tph

throughput (theoretical processing

capability of plant up to 42ktpa)

First Sales

Q4 2017

Offtake Partner

10-year offtake agreement signed

w ith thyssenKruup Raw Materials

for 5ktpa of concentrate, and right

of f irst refusal for additional 5ktpa

Exploration upside

4 large, shallow and highly

prospective anomalies detected

w hich may be the source for

Gakara’s rare earth veining

Location

Mining Areas: 35km by road from

Bujumbura, Burundi’s capital city

Processing Plant: 13km South of

Bujumbura by road

Interest

90% w ith a non-dilutable 10%

ow ned by the Republic of Burundi

Mining Licence

Granted March 2015; valid for 25

years and renew able thereafter

Infrastructure

Good road links to Dar es

Salaam, Tanzania and Mombasa,

Kenya

Product

High Grade Rare Earth Minerals

Concentrate (47-67% TREO)


GAKARA PROJECT: LICENCE AREAS

10

MINE PLAN AIMS TO BRING ADDITIONAL

AREAS INTO PRODUCTION


RAINBOW IN SUMMARY - MINING

11

FIRST AREA OF MINING OPERATIONS A SUCCESS

► High grade ore being mined and processed

► Grades consistent from surface to depth

► Scheduled to be operational for up to two years

► Current production forecast is targeting 5ktpa run rate pre-end 2018 following ramp-up

Initial mining area at Gasagwe

successfully in operation


RAINBOW IN SUMMARY – PROCESSING

12

KABEZI PROCESSING PLANT – A SIMPLE EFFICIENT 5TPH GRAVITY SEPARATION PROCESSING FACILITY

Fully operational on time and within budget

Capacity available to increase production

throughput without further

Capex

Located next to asphalt road providing ease of access for

container trucks

First tonnes successfully exported in December 2017


CONCENTRATE PRODUCTION

► Production of first batch of high grade concentrate completed on time and budget within 11

months of IPO

► All material sampled, recorded and exported in line with all applicable Burundi regulations

► First royalty payment made to Government of Burundi prior to export

► Bulk of revenue from thyssenkrupp Raw Materials received by Rainbow upon delivery at port for

each export. First cash payment received in Jan 2018 just after period end

► Production and exports scheduled to ramp up during 2018 in order to reach target run rate of

400tpm (5,000tpa). Exports in Jan 2018 and Feb 18 increasing consistently

13

PRE 2017 YEAR END TARGET ACHIEVED FOR FIRST PRODUCTION

Concentrate in production Final Concentrate Concentrate loaded and ready for export


7.5

10

12.5

15

17.5

20

Rainbow -Basketprice Rainbow forecast

RAINBOW – SALES AND MARKETING

14

ORE VALUE STRONGLY WEIGHTED TOWARDS MAGNET RARE EARTHS

Value in Nd and PrBasket composition

31%

48%

4%

15%

2%

Lanthanum Cerium Praseodymium Neodymium Other

Ba

sed

on

ave

rag

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rad

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f R

EOs

wit

hin

Ga

sag

we

in s

itu

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am

ple

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nd

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pri

ces

of

pu

rifi

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► Gasagwe: Based on average samples, magnetREEs account for approximately 19% of the

contained REOs within the ore, representing an

average of over 80% of the contained value of

REOs at current market prices

► Marketing successfully undertaken by

thyssenkrupp Raw Materials and initial contract

negotiated

► First tonnes of concentrate successfullyexported in December 2017 and payment

received January 2018

► Current basket price US$14.06/kg (as at

19/3/18) up from US$12.27/kg at 31/12/17

Rainbow Basket Price 2017 - 2018


RAINBOW IN SUMMARY – EXPLORATION SUCCESSES

15

HIGHLY PROSPECTIVE DISCOVERIES WARRANT

FURTHER INVESTIGATION

Consider photos here

Analy tical Signal map showing f our selected anomalies and

mapped major geological structures

► Four large and highly prospective anomalies defined by

airborne magnetic survey undertaken in Q4 2017

► Potential for a carbonatite source for Gakara's rare earth

veins providing significant exploration upside potential

► Anomalies from 300m to 2,700m in diameter with modelled starting depths of 20m to 67m

► New targets further complement the ground based gravity survey conducted at the Kiyenzi prospect where large

boulders at surface contain high grade rare earth material

► Results of the Kiyenzi gravity survey suggest the presence of

a further anomaly, which has been modelled as a sill-like oval structure potentially 22m thick and 80m x 100m in size

► Drilling now underway – first results expected April 2018

Note: Analy sis of airborne and ground grav ity surv eys undertaken by Rainbow internal geologists and

not independently v erif ied


2018 EXPLORATION PROGRAMME

16

PROPORTION OF FUNDS RAISED IN DECEMBER 2017 EARMARKED TO UNLOCK FURTHER

VALUE AT GAKARA

Initial

campaign

Initial campaign will

include ~1,000m diamond drilling of

the potential carbonatites and the

Kiyenzi anomaly

during Q1 2018

Further

drilling

Subject to results

further drilling would be undertaken in Q2

& Q3 2018 with the objective of defining

a JORC resource

later in 2018

Drilling

contractors

Appointed and

work now underway

First

results

News from initial

drill campaign scheduled Q2

2018


FUTURE STRATEGY UNDERPINNED

17

NEAR-TERM OPTIONS INTENDED TO DRIVE VALUE FOR SHAREHOLDERS FOLLOWING INITIAL SUCCESS

New production

target of 6,000tpa

during 2019

Expanded

exploration strategy

and drilling

campaign

Target maiden

JORC Resource


KEY STRENGTHS

18

Highest grade globally: 47-67% TREO

The only African REE producer

Attractive rare earth mix

Low capex operation

Simple processing route

Fully permitted

Distribution partner established

Supportive government

Team to deliver

EV transformational demand drive

Significant exploration upside to

ramp up production

Delivered on production & sales in 11

months


CONTACT

Martin Eales

Rainbow Rare Earths

29 Lincoln’s Inn Fields

London, WC2A 3EG

[email protected]

T +44 (0) 20 3910 4550

19Rainbow Rare Earths Ltd.


BOARD

20

• Mining engineer: an entrepreneur w hose expertise lies in the discovery, exploration and

development of natural resources across Africa including diamonds, precious/base metals, coal and

oil and gas.

• Founder and Chairman of Petra Diamonds (LSE:PDL); Founder and Director of Chariot Oil & Gas

(AIM:CHAR) and Founder of Pella Resources Limited

• 15 years’ broking and investment banking expertise specialising in the resources sector

• Previously Managing Director at RBC Capital Markets in London. Was long-term adviser to

numerous London-listed resource companies

• Qualif ied Chartered Accountant

• International affairs specialist

• Over 25 years of political and extractive industries sector experience having served in The White

House as Director for African Affairs on the National Security Council (Washington)

• Previously Political Affairs Director of BP (London) and VP of TNK-BP (Moscow)

• Chartered Accountant with over 38 years’ experience in finance & accountancy

• Managing Director of Artemis Trustees Limited

• Fellow of the Institute of Chartered Accountants in England and Wales

Adonis PouroulisNon-Executive

Chairman

Martin EalesCEO

Shawn McCormickNon-Executive Director

Robert SinclairNon-Executive Director

A BLEND OF CORPORATE, AFRICAN, RARE EARTH & PROJECT DEVELOPMENT EXPERIENCE

• Investment banker w ith 13 years’ experience and previous director roles at Deutsche Bank and RBS

• Co-founder of Telemark Capital LLP

• Signif icant market experience: IPOs and primary and secondary equity offerings

Alexander LowrieNon-Executive Director

Atul BaliNon-Executive Director • Corporate CEO w ith extensive experience in tech, government contracting and regulated industries

• Currently Non-Executive Director of Gaming Realms Plc and Chairman of Meridian Gaming

• Previously held divisional CEO or President positions w ith IGT (NYSE), Aristocrat (ASX), and Real

Netw orks (NASDAQ), as w ell as a venture capital f irm


RARE EARTH ELEMENTS AND THEIR USES

21

APPLICATION RARE EARTHS DEMAND DRIVERS

MagnetsNd, Pr, Sm, Tb,

Dy

Autom otive, Wind tur bines , Drives for computers, m obile

phones , mp3 pl ayers, cameras, Voice coil motors.

Hybrid and Electric vehicles, Cordl ess pow er tools,

Sensors, Medical imaging (MRIs)

LaNiH

BatteriesLa, Ce, Pr, Nd

Hybrid vehicle batteries. Hydrogen absorption alloys for

re-chargeable batteries

PhosphorsEu, Y, Tb, La, Dy , Ce,

Pr, Gd

LCDs, PDPs, LEDs. Energy efficient

fluorescent lights/lamps

Fluid

Cracking

Catalysts

La, Ce, Pr, NdPetroleum produc tion – greater consumption by ‘ heavy’

oils and tar sands

Polishing

PowdersCe, La, Nd

Mechano-chemical polishing powders for TVs, monitors,

tablets, mirrors and (in nano- particul ate form) silicon

chips

Auto

CatalystsCe, La, Nd

Tighter NOx and SO2 standards – plati num is re-cycled,

but for rare

earths it is not economic

Glass

AdditiveCe, La, Nd, Er

Cerium cuts dow n transmission of UV li ght. La incr eases

glass refractive

index for digital camera lens

Fibre Optics Er, Y, Tb, Eu Signal amplification

Scandium (Sc) Europium (Eu)

Yttrium (Y) Gadolinium (Gd)

Lanthanum (La) Terbium (Tb)

Cerium (Ce) Dysprosium (Dy)

Praseodymium (Pr) Holmium (Ho)

Neodymium (Nd) Erbium (Er)

Promethium (Pm) Thulium (Tm)

Samarium (Sm) Ytterbium (Yb)

Lutetium (Lu)

Rainbow Rare Earths Ltd. 22

OVERVIEW OF FINANCIALS

Source: Company’s photo of Gasagw e mine site


SIX MONTHS TO 31 DEC 2017 – SUMMARY P&L AND BALANCE SHEET

23

US$’000 6 mths to 31 Dec 2017(unaudited)

6 mths to 31 Dec 2016(unaudited)

Administrative expenses (601) (168)

Share based payments (461) -

Net finance cost (9) (255)

Total loss in period (1,071) (423)

US$’000 31 Dec 2017(unaudited)

30 June 2017(audited)

Non-current assets 8,748 5,973

Cash 2,724 3,198

Other current assets 837 22

Loans (298) (20)

Other payables (365) (429)

Net assets 11,646 8,744

INCOME STATEMENT

BALANCE SHEET

▶ Administrative expenses reflect increased activity in period – prior to IPO in Jan 2017, activity was kept deliberately low

▶ Share based payments include options awarded during 2017

▶ Finance costs in period relate to Finbank overdraft – those prior period relate to Pala loan, settled in Jan 2017

▶ Fixed assets of US$8.7M relate to Gakara project

▶ Other current assets includes US$0.3M of share placing proceeds received in January, US$0.4M of ore/concentrate stockpiles, and US$0.2M of prepayments

▶ Loans includes US$0.3M Finbank overdraft

▶ Other payables mainly trade creditors associated with the Gakara project


SIX MONTHS TO 31 DEC 2017– SUMMARY CASHFLOW

24

US$’000 6 mths to 31 Dec 2017(unaudited)

6 mths to 31 Dec 2016(unaudited)

Net cash used in operating activities (1,126) (103)

Exploration spend - (123)

Capex (2,812) -

Other borrowings 268 247

Proceeds of equity raising 3,421 -

Costs of IPO/share issuance (222) (86)

FX (3) -

Net cashflow after FX (474) (65)

Opening cash 3,198 70

Closing cash 2,724 5

CASHFLOW STATEMENT

▶ Cash outflow from operating activities includes US$0.6M administrative expenses and US$0.4M mining costs capitalised in inventory stockpiles

▶ Capex of US$2.8M reflects construction activity at Gakara

▶ Other borrowings includes US$0.3M raised from Finbank overdraft in period

▶ Equity placement raised net US$3.2M in period

▶ Cash balance at 31 December was US$2.7M (US$2.4M net of borrowings)

one of the world’s richest producing rare earth deposits€¦ · in china (source: argus) with...

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