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Rainbow Rare Earths Plc

CEO Q&A with Martin Eales at Rainbow Rare Earths Ltd (LON:RBW)

Rainbow Rare Earths Ltd (LON:RBW) Chief Executive Officer Martin Eales caught up with DirectorsTalk for an exclusive interview to discuss their interim results, the plan for 2019, strong customer demand and rare earth prices.

 

Q1: Martin, interim results out today, what are the key points that we should take away from those?

A1: Well, I think we had previously announced the main production statistics in our quarterly update that came out a few weeks ago, at the end of January so there’s not a lot of new news in here.

Obviously, the full interim financials statements are contained in the announcement, but I think it’s a reiteration from us of the expansion plans we have over the course of 2019 to get multiple pits into operation, don’t forget we opened the second pit, Murambi, only in December and we’d like to open another two during the course of 2019. Really, it’s that movement to increase scale and benefit from those economies of scale that will lead us, we expect to breakeven in profitability in the second half of calendar 2019.

 

Q2: So, what is the plan for 2019 now?

A2: I was just building on top of that, we want to ramp up pit number two, Murambi, to full operational capacity and we’re working on opening both the Kiyenzi kit and the Gomvyi pit, those new pits, as we’ve learned from Murambi, takes about 6-9 months to get each new site ready.

That’s a process of developing the model for the veins that exist before mining in each pit, getting the necessary environmental compliance approved, development work which is often the infrastructure i.e. cutting access roads and preparing waste dumps and importantly, making sure local land owners are compensated when we move onto the land.

So, it’s a process we’re now relatively experienced in as we’ve done it twice and we expect to get more efficient as we move forward with the new pits.

 

Q3: You talk about customer demand being strong, can you expand on this a little for us?

A3: Yes, I think obviously with some of our slower than earlier anticipated ramp up, it’s easy to lose sight of the fact that when we started this, many many people didn’t think we could produce a product that would sell and I’m pleased to say that not only is our product selling well, the customers are strongly demanding more.

Our relationship with thyssenkrupp is working very well, the feedback from the customers is very positive and that’s really behind our decision to increase the rate of mining as quickly as we are because we know we’ve got a ready and captive market there for the product.

 

Q4: I suppose the other important thing is the rare earth prices, what’s the outlook like for that?

A4: Well, it’s funny, we often say that with virtually every other commodity, you have by definition people who are slightly more positive and slightly more negative, and the commodity price is somewhere in the middle.

It seems with rare earth that with every forecast you see out there is predicting strong price rises for rare earth, simply because people can see increased demand coming and relatively scarcity of new supply.

So, we’re firmly bullish based on our understanding of the market and those forecasts so in recent months, as we noted today, our price has remained fairly flat, over the 6 months it fell slightly but we’re still 10-15% up from the point we IPO’d a couple of years.

So, it’s positive in the long-term perspective but we believe, and most of the forecasters believe, that there’s a lot of strength still to come in rare earth prices.

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Disclaimer: Statements in this article should not be considered investment advice, which is best sought directly from a qualified professional.