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Rainbow Uncommon Earths (LSE:RBW) was a penny inventory buying and selling for simply 9p again in April. Quick ahead to now, the mining share is at 17p and has a £116m market cap. Over 5 years, it’s up practically 200%!
Nevertheless, uncommon earth mining shares are presently booming as a consequence of China tightening export controls, which has led to a world scarcity. So, might Rainbow Uncommon Earth explode even increased over the subsequent few years? Let’s dig in a bit deeper.
A rainbow in South Africa and Brazil
The corporate is targeted on uncommon earth parts (REEs) which are wanted for the inexperienced power transition. Not like conventional miners although, it’s aiming to get them from industrial waste fairly than uncooked ore.
Its flagship Phalaborwa mission in South Africa intends to extract REEs from phosphogypsum, a by-product of fertiliser manufacturing. It says this mission has a base case web current worth of $611m.
And as a result of a lot decrease working price than conventional mining, Phalaborwa might be one of the worthwhile uncommon earth initiatives in growth in the present day outdoors of China. It has robust monetary backing from the US Worldwide Growth Finance Company.
In the meantime, Rainbow says its Uberaba mission in Brazil “represents an thrilling alternative to duplicate Phalaborwa at a doubtlessly bigger dimension”. It’s working with companion The Mosaic Firm to quickly full an evaluation of this phosphogypsum mission, although its appears a way away at this stage.
Bullish development
As talked about, uncommon earth shares are scorching proper now. Rainbow’s UK peer Pensana has seen it share worth shoot up 318% yr up to now!
Uncommon earths have particular magnetic properties, making them important elements in electrical autos, defence gear and throughout the semiconductor business. China has a near-monopoly on them and has been utilizing them as bargaining chips within the commerce negotiations with the US.
For sure, the West is basically prioritising uncommon earths proper now, particularly since President Trump got here to energy. So there’s a giant potential industrial alternative on the horizon for Rainbow.
There have been 4 huge booms. You had the gold increase within the nineteenth century, the oil increase within the twentieth century, within the early twenty first century you had the tech increase — and now you’ve bought the uncommon earths increase.
Tony Sage, CEO of Vital Metals, chatting with CNBC.
No gross sales
As thrilling as this all sounds, the agency isn’t but producing any income, not to mention income. So that is most undoubtedly a speculative small-cap, and there’s prone to be dilution with new share gross sales alongside the best way.
Final month, Rainbow mentioned that Phalaborwa’s definitive feasibility examine is anticipated to be finalised in 2026, with building anticipated to start out in 2027. After that, it might develop globally, with strategic partnerships in Saudi Arabia, Morocco and Canada being evaluated.
Chasing rainbows?
Personally, this share is simply too speculative for me. I keep in mind the 2020-22 increase in lithium shares, then the painful bust afterwards. Lithium shares nonetheless haven’t recovered from their peak, and I worry we would see one thing comparable with uncommon earths.
Buyers nonetheless contemplating Rainbow inventory ought to assess the dangers in addition to the rewards. It might mint a fortune, or crash and burn.
