ONE OF THE WORLD’S RICHEST PRODUCING RARE EARTH …rainbowrareearths.com/wp-content/uploads/2018/02/... · 31 Dec 2016 (unaudited) Net cash used in operating activities (1,126)

ONE OF THE WORLD’S RICHEST

PRODUCING RARE EARTH DEPOSITS

LOW COST PRODUCTION IN EAST AFRICA

Interim Results to 31/12/17

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 any

investment decision or engaging in any investment activity and should not be construed as, an offer for sale or subscription of, or

solicitation 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’s

directors, 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 connection

with 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-looking

statements involve known and unknown risks, uncertainties and other important factors beyond the control of the Company that could

cause 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 profit

forecast. Past share performance cannot be relied on as a guide to future performance.

The graphs and data on page 18 (as labelled) is copyright ©2017 Argus Media Group. All rights reserved. All intellectual property

rights in 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, as to the accuracy, adequacy, timeliness, reliability or completeness of the extract above or its fitness for any particular

purpose. Argus shall 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 by law.

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


8

9

10

11

12

13

14

15

16

17

18

KEY DATA

4

TICKER MARKET MARKET CAP SHARE PRICESHARES

IN ISSUEJOINT BROKERS

RBW.L LSE £24.22m 13.875p 174.63mHANNAM & PARTNERS

ARDEN PARTNERS

SHARE PRICE GRAPH

As at 19.02.18

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

Rainbow Rare Earths Ltd. 5

OVERVIEW OF FINANCIALS

Source: Company’s photo of Gasagwe mine site


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

6

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

7

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)

Rainbow Rare Earths Ltd. 8

THE GAKARA RARE EARTHS PROJECT

Source: Company’s aerial photo of Gasagwe operation


RAINBOW IN SUMMARY - MINING

9

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

► Limited production commencing in 2018

► Mine plan ready, access road already demarcated,

compensation discussions underway

Initial mining area at Gasagwe

successfully in operation

Gashirwe identified as

second mining area


RAINBOW IN SUMMARY – PROCESSING

10

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


FIRST 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

11

PRE 2017 YEAR END TARGET ACHIEVED FOR FIRST PRODUCTION

Concentrate in production Final Concentrate Concentrate loaded and ready for export


7.50

10.00

12.50

15.00

17.50

20.00

RAINBOW – SALES AND MARKETING

12

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

vei

n s

am

ple

s a

nd

ma

rket

pri

ces

of

pu

rifi

ed

REO

s o

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hin

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OB

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► Gasagwe: Based on average samples, magnet

REEs 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 successfully

exported in December 2017 and payment

received January 2018

► Current basket price US$13.24/kg up from

US$12.27/kg at 31/12/17

Rainbow Basket Price 2017 - 2018


RAINBOW IN SUMMARY – EXPLORATION SUCCESSES

13

HIGHLY PROSPECTIVE DISCOVERIES WARRANT

FURTHER INVESTIGATION

Consider photos here

Analytical Signal map showing four 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: Analysis of airborne and ground gravity surveys undertaken by Rainbow internal geologists and

not independently verified


2018 EXPLORATION PROGRAMME

14

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

15

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

16

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

17Rainbow Rare Earths Ltd.


RARE EARTHS

18

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

Rare

eart

h p

rod

ucti

on

–2016

► 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

Source: Argus Media Group – 2017

Glo

bal

Rare

Eart

h P

rod

ucti

on

2008

-16

Source: Argus Media

China-basedproduction

Non-Chineseproduction


THE “TECHNOLOGY METALS”

19

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

Lig

ht

Du

ty V

eh

icle

Sale

s

Source: Bloomberg New Energy Finance

Millio

n c

ars

pe

r ye

ar ► 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)


PROJECT OVERVIEW

20

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

Key Facts

Processing

Simple efficient 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 with

thyssenKruup Raw Materials for 5ktpa

of concentrate, and right of first refusal

for additional 5ktpa

Exploration upside

4 large, shallow and highly prospective

anomalies detected which 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% with a non-dilutable 10% owned

by the Republic of Burundi

Mining Licence

Granted March 2015; valid for 25 years

and renewable thereafter

Infrastructure

Good road links to Dar es Salaam,

Tanzania and Mombasa, Kenya

Product

High Grade Rare Earth Minerals

Concentrate (47-67% TREO)

Production Rate

Targeting run rate of 5,000tpa by the

end of 2018 and 6,000tpa in 2019


GAKARA PROJECT: LICENCE AREAS

21

MINE PLAN AIMS TO BRING ADDITIONAL

AREAS INTO PRODUCTION


BOARD

22

• Mining engineer: an entrepreneur whose 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

• Qualified 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 with 13 years’ experience and previous director roles at Deutsche Bank and RBS

• Co-founder of Telemark Capital LLP

• Significant market experience: IPOs and primary and secondary equity offerings

Alexander LowrieNon-Executive Director

Atul BaliNon-Executive Director • Corporate CEO with 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 with IGT (NYSE), Aristocrat (ASX), and Real

Networks (NASDAQ), as well as a venture capital firm


RARE EARTH ELEMENTS AND THEIR USES

23

APPLICATION RARE EARTHS DEMAND DRIVERS

MagnetsNd, Pr, Sm, Tb,

Dy

Automotive, Wind turbines, Drives for computers, mobile

phones, mp3 players, cameras, Voice coil motors.

Hybrid and Electric vehicles, Cordless power 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 production – greater consumption by ‘heavy’

oils and tar sands

Polishing

PowdersCe, La, Nd

Mechano-chemical polishing powders for TVs, monitors,

tablets, mirrors and (in nano-particulate form) silicon

chips

Auto

CatalystsCe, La, Nd

Tighter NOx and SO2 standards – platinum is re-cycled,

but for rare

earths it is not economic

Glass

AdditiveCe, La, Nd, Er

Cerium cuts down transmission of UV light. La increases

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)


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)

24

2017 MARKED LANDMARK COMMITMENTS FROM AUTOMAKERS AND ACCELERATED ADOPTION OF EVs

Annual Global Light Duty Vehicle Sales

Source: Bloomberg New Energy Finance

Millio

n c

ars

on

th

e r

oa

d

Tesla introducing NdPr permanent magnet motor

(Model 3)

Documents

ONE OF THE WORLD’S RICHEST PRODUCING RARE EARTH …rainbowrareearths.com/wp-content/uploads/2018/02/... · 31 Dec 2016 (unaudited) Net cash used in operating activities (1,126)