Rainbow Rare Earths (RR1) Q2 2026 Earnings Report

The call presents multiple strong positives: attractive project economics (high EBITDA, high IRR, low CapEx), successful pilot results and process optimizations, solid strategic partnerships (DFC, Mosaic, TechMet, Traxys), recent capital raise and clear ESG benefits from recovering rare earths from phosphogypsum. Key negatives are a ~1-year schedule delay caused by a failed external technology partner and the subsequent pivot, dependence on project financing and commodity price sensitivity. On balance the highlights are substantial and materially outweigh the lowlights, with management portraying a de-risked, lower-cost pathway to production backed by pilot data and strategic partners.

Management guidance summarized: management expects to complete the Phalaborwa DFS by end‑2026, target FID end Q3 2027, start construction in 2028 and first production late‑2028/early‑2029 (Uberaba targeted for 2030); published project metrics use a 10% discount (DFC agreed 9.5%), with Phalaborwa CapEx ~USD 320M, 16‑year life and ~USD 181M EBITDA pa (NdPr benchmark $110/kg; spot hit $140/kg earlier), and Uberaba CapEx ~USD 280M, >30‑year life, ~USD 217M EBITDA pa, NPV ~USD 1bn and IRR >45% (EBITDA margins >70%); resource grades ~4,400 ppm TREO (Phalaborwa) and ~5,100 ppm TREO (Uberaba), stacked gypsum volumes ~35Mt ×2 (Phalaborwa) and >85Mt (Brazil) with ~4.5Mtpa gypsum production in Brazil; pilot plant is continuous (24/7) producing ~1 kg/day mixed rare earth hydroxide >75% TREO, pilot PLS flow reduced from ~340 to 40–50 m3/h after CIX and to ~3–4 m3/h into SX, leach stages cut from 3→2 and resin contact time from 32h→8h, conservative resin replacement assumed every 5 years; financing update: raised USD 14.6M at 20p (90% US), current cash burn ~USD 400k/month (~35 months runway), plan project finance ~2/3 debt : 1/3 equity, Rainbow to issue 38M shares to buy remaining 15% Phalaborwa and holds 49% of Uberaba (Mosaic 51%); payability assumptions: MREC ~65–70% (high‑grade ~70%), separated NdPr ~100% payability (≈75% of basket under Chinese pricing).