Modern Mining

Rainbow Rare Earths, now listed on the LSE after a US$8 million fund-raising and successful IPO in January this year, is moving swiftly to bring its Gakara rare earth project in Burundi into production. Extraction of run-of-mine ore has started on site and an EPCM contract has been signed for the processing plant.The ore will be stockpiled until the plant becomes operational later this year. Modern Mining’s Arthur Tassell recently spoke to Rainbow’s CEO, Martin Eales, to learn more about the project.

Gakara rare earth projectWork underway at the initial mining area at Gasagwe allowing stockpiling of ore prior to process plant commissioning later this year.

*Photo courtesy of Rainbow Rare Earths

Gakara is unusual on several counts. It ranks as one of the highest grade rare earth deposits in the world, the capex to get it up and running is incredibly low (at just US$2,23 million) and, once in production, it will be the only formal sector mine in Burundi (although the country does have some small scale gold, tungsten and coltan artisanal operations). Moreover, it will rank as one of the few producers of rare earths outside of China, which currently accounts for an estimated 90 % of world production.

According to Eales, the low capex reflects the phenomenally high grade of Gakara. “The estimated in-situ grade is in the range of 47 to 67 % total rare earth oxides (TREOs), with the average over the entire deposit being 57 %,” he says. “To put this in perspective, most other deposits around the world are in the region of 3 to 5 %. This means that for a specific level of production, we only have to mine and treat a fraction of the tonnages that other projects would require to get to the same point.”
The deposit also lends itself to very simple, straightforward mining. “In our first mining area, Gasagwe, we’ll be manual bench mining in 1 m ‘steps’ to expose the veins in which the mineralisation is contained. The need for mechanised equipment is minimal and in fact the entire cost of our mining fleet – essentially just some TLBs and a tractor-trailer – is budgeted at less than US$600 000. The mining will only take place from the outcrops at surface to a depth of about 30 to 50 m and no drilling and blasting will be required,” says Eales.

He adds that the second deposit to be mined – Gashirwe West – will require underground extraction. “Here again, though, the proposed method is very simple – essentially it will involve the use of up-dip, room-and-pillar manual mining with access to the mining areas being provided by relatively short hand-dug adits driven into the hillsides. No expensive infrastructure such as shafts is needed.”

The Gakara project is located in hilly terrain in Western Burundi and is roughly a 90-minute drive from the capital city, Bujumbura. The mineralisation at the site was discovered in the 1930s during the Belgian colonial era and a mine was established in 1948 which produced intermittently from a number of deposits through to 1978 when a decline in rare earth element (REE) prices rendered operations uneconomic. Most of the mining over this period was by open-pit methods although some underground mining was undertaken.

“The total production was modest by modern standards, with only around 5 000 tonnes of vein material being extracted over 30 years,” states Eales. “We’re aiming to produce roughly 5 000 tonnes a year – and ultimately twice this figure.”

An interesting point is that Gakara will be producing a high-grade concentrate rather than finished REO (rare earth oxide) products. While the market for rare earth concentrates is quite small, Rainbow already has in place a 10-year distribution and offtake agreement for exclusive sales of up to 5 000 tonnes per annum of concentrate with thyssenkrupp Raw Materials, an active worldwide metals trader with offices in Europe, North America, South America and China. The concentrate will be transported by road from Gakara to either Dar es Salaam in Tanzania or Mombasa in Kenya for shipping to overseas customers.

Rainbow has been involved with Gakara since 2011 (which is the date when the company was established). Recounting the background, Eales says that the deposit – which had lain fallow since the cessation of mining in 1978 – came to the attention of mining entrepreneur Adonis Pouroulis (who founded Petra Diamonds 20 years ago) in 2009 when he met up with a Burundian geologist in Angola while visiting one of Petra’s properties in the country. Pouroulis followed up on this information and a team from what would later be Rainbow visited the site in 2010 and also examined the historical records (most of them archived in Belgium). An application for an exploration licence was subsequently submitted and granted in 2011.

Pouroulis remains closely involved with Rainbow (he is non-executive chairman) and Rainbow, in fact, forms part of his Pellan Resources group, which has several African mining and energy projects in its portfolio.

Subsequent to being granted an exploration licence for Gakara, Rainbow carried out an extensive exploration programme including pitting and trenching, geological mapping, rock grab sampling, ground gravity and magnetic surveys and detailed geochemical sampling. Its work on site has also encompassed a bench mining exercise conducted in 2015, as well as the collection of a sample of REE vein material for mineralogical and metallurgical testwork. In addition, a conceptual mine study was completed in 2016. In all, Rainbow expended US$4,8 million on the project between 2011 and 2016.

The main objective of the geological mapping was to locate in-situ REE veins and by April 2013 nearly 800 occurrences of high-grade vein material had been identified in the project area, with 387 of these occurrences being established as in-situ veins (the balance being transported material). “This was more than enough to justify an application for a mining licence and this was awarded to Rainbow in 2015,” says Eales.

Although Gakara is now entering the mining phase, the project has no defined mineral resource. “What we have is an exploration target of 20 000 to 80 000 tonnes of vein material,” notes Eales. “As you know, this is a defined classification within the JORC code. The problem with trying to produce a defined resource is that the nature of the deposit is such that it would require – and this is the view of our Competent Person, the MSA Group – a very large amount of closely-spaced drilling to be undertaken at considerable cost. We don’t believe this is necessary, as we can see where we need to mine and are confident that we have the tonnages and grade to underpin a commercially viable mining operation.”

He adds that the initial mining phase at Gakara is technically a trial mining programme, as recommended by MSA. “Having said this, we will, from the first day, be operating on a commercial basis and we envisage a seamless transition from the trial mining programme into full production.”

The trial mining phase is expected to last 22 months, with planned production of 3 338 tonnes of ore for 2 503 tonnes of concentrate from the Gasagwe site and 1 933 tonnes of ore for 1 379 tonnes of concentrate from the Gashirwe West site. Mining starts at Gasagwe with Gashirwe starting up in month 13. Assuming successful completion of the trial mining phase, Rainbow intends ramping up production to 5 000 t/a (420 tonnes per month) of concentrate.

The process flowsheet for the beneficiation plant is based on physical gravity separation only (there is no need for hazardous chemicals) and will see the ROM ore being subjected to crushing, screening, jigging and shaking table processes to produce concentrate. The plant will have a capacity of 10 t/h but be capable of ramping up to 5 000 t/a. Rainbow has recently awarded the EPCM contract for the design, supply and construction of the plant to Obsideo Consulting of South Africa with the agreed commissioning date being in the fourth quarter of this year.

As this article was being written, preparation for mining at the first production site,
Gasagwe, was well advanced with the construction of haulage and access roads, as well as basic infrastructure, in progress and a locally recruited labour force in place and ready to start on the extraction of ROM ore from the high grade veins.
To implement the project, Rainbow has assembled a strong team which includes Braam Jankowitz as Project Manager, Gilbert Midende as General Manager, Cesare Morelli as Technical Director and Joël Ntungwanayo as Chief Geologist.
Jankowitz is a geologist (he has an MSc Geology) but is also well versed in mine management having served, prior to joining Rainbow, as GM of the New Luika gold mine in Tanzania while Midende has a doctorate in geology and has served as the Burundi Director of Geology and Mines and also as Burundi’s Minister of Mines. Morelli, also a geologist, was previously Minerals Exploration Manager for Africa with BHP Billiton while Ntungwanayo has a background with BHP Billiton and the Burundi Geological Survey.

Rainbow enjoys strong support from the Government of Burundi, which is keen to establish a formal mining industry in the country and which has a 10 % free carry in the project, and from local communities. While the mine will be relatively small in scale, the manual mining methods to be employed mean that the workforce may eventually number in the region of 200 people – a welcome number of job opportunities in an area where most people depend on subsistence farming for their livelihoods.

A strength of the project is that the Gakara ‘basket’ is weighted heavily towards the magnet rare earths, including neodymium and praseodymium which now account for 70 % of annual global REE sales due to their use in equipment such as motors, generators, wind turbines and electric vehicles. Many commentators are predicting strong growth in demand for rare earths over the coming decade, with some seeing prices quadrupling by 2025.

According to Rainbow, the contained value of Gakara concentrate samples (on a separated basis) is in the region of US$6 000/tonne as against operating costs – in the first year – of US$810/tonne and transport, marketing and royalty costs of US$280/tonne.

Gakara will almost certainly be the first of the current crop of African rare earth projects to enter operation. Most, if not all, of the others are burdened by huge capex costs (although they are many times larger in scale than Gakara) and appear to be years rather than months away from production. To give examples of the capital
expenditures required, the just released BFS on the Ngualla project of Peak Resources in Tanzania estimates the capex at US$356 million (which includes a refinery in the UK) while the 2015 PFS on the Zandkopsdrift project of Frontier Rare Earths in South Africa estimated a capex of more than half a billion dollars just for the first phase of development.

As Eales says, “Gakara is a niche project which can’t really be compared with anything else. The combination of high grade and a tiny capex make it unique. Although we’re not in a race with anyone else to be first to market, it does indeed look as though we will be the first of the African projects currently under development to enter production. We have a clear road ahead and are confident that we will achieve first sales of concentrate by the end of this year.”

Contact Modern Mining

Title: Editor
Name: Arthur Tassell
Phone: +27 11 622-4770
Fax: +27 11 615-6108

Title: Advertising Manager
Name: Bennie Venter
Phone: +27 11 622-4770
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