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Burundi: Rainbow Rare Earths Ltd (‘Rainbow’ or ‘the Company’) Admission to Trading on the London Stock Exchange (30.01.2017)

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Shareholders in the Rainbow Company:

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ICG – (Africa Briefing N°111, 29 May 2015) – Burundi: Peace Sacrificed?

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Burundi – Under the Rainbow

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There isn’t everyday are Rare Earth Mineral site get a different companies from all over the globe into action. This didn’t happen today. Still it’s worth researching and doing background checking. I wish I had all the pieces to the puzzle. I miss the contract or agreement between the Government of Burundi (GoB) and Rainbow Rare Earth Limited. Not that had seen the one between Southern Crown and GoB. This story will be what I have had the ability to uncover at this point. Hope you will enjoy.

Pre-Rainbow:

In 2011 February update from the Australian based mining company was awaiting cabinet approving in the Burundian Parliament, even with being approved by the minister at the time. The Australian company was Southern Crown. The license was to be for the area called Garaka Project in the Garaka and Karonge. The area is a area filled with REE (Rare-Earth Minerals). By the 2010 prices they estimated that the Ore in the area with carbonated REE was valued up to $5169M (Southern Crown). Two years later on the same company Southern Crown did release on 27. April 2012 they shut down the Garaka Project because of cooling of the rare earth market and also funding (Southern Crown2).

So this happen and the business on the ground of Garak Project went sour when Southern Crown went through with business in mining in Zambia instead of Burundi. To give an issue on how business deals are set in Burundi. After that I will tell you the timeline for the new companies on the ground. Look under timeline:

International Crisis Group reported in March 2012 how the agreements were between companies and the Burundian government:

“The allocation of mining and oil concessions also poses a problem. Under previous regimes, consideration of applications for mining exploration permits was entrusted to experts and an inter-ministerial committee, which reported to the Council of Ministers. However, this committee has not met since the CNDD-FDD came to power. The contract to exploit the rich nickel deposits in Musongati in eastern Burundi,71 which could amount to 5 per cent of world reserves, was negotiated at the highest level and in the greatest secrecy.72 Permits have since been granted in a non-transparent way: although licenses are granted by presidential decree on the proposal of the appropriate ministry, as in many countries, applications for exploration and exploitation are handled by a committee restricted to the presidency before being presented to the Council of Ministers” (International Crisis Group).

Timeline – Under the Rainbow:

President Pierre Nkurunziza was the Chairman under the Cabinet Meeting the 25th February 2015 where this was the outcome on the matter:

“The Rainbow Company has received the exploration permit for REE and related ores in May 2011 on Gakara perimeter and that permit was renewed in July 2014. After three and a half years of research, the company filed a feasibility study containing the entire technical and economic requirements for the exploitation of reserves located in an area of 39 square kilometers contained in its prospect perimeter measuring 135 square kilometers” (…)“The exploitation agreement was the result of a consensus between the Burundian technicians and those of Rainbow. The company plans to produce 5,000 tons of rare earth ores per year, with an investment of 7.7 million US dollars” (Council of Ministers).

On the 8th April Rainbow Rare Earths Ltd. could announce that they got funding from Pala Investment Limited to do develop the Gakara project. The financing they got to was up to $12M. The first stage of the project is use $6M in a 6 month period to get the trial mining starting. Second stage is to get the capital and get more effective mining. The Pala Investment Limited has an option if the phasing up more loan to another $6M to build and facilitate infrastructure on the site of Gakara Project. Martin Eales commented on this saying: “We are very pleased to have secured this investment from Pala, who will provide both financial and technical advice and will be a valued partner going forward. Their detailed due diligence and subsequent participation provides significant third party endorsement of the potential and quality of our project.” (…)“With the recent approval of the Mining Licence and Mining Convention from the Burundian government, we can now make rapid progress, and I look forward to reporting on further developments in due course” (Rainbow Rare Earths Limited).

If you wonder where the monies for the loan is from it’s from the independent London based Chrystal Capital Limited Liability Partnership (LLP). “The financing agreement is for an investment of up to US$12m, subject to the completion of certain milestones, which will fund the project through to full production” (Chrystal Capital).

So for you who can read can see that the funding from Chrystal Capital Partners is the initial loaner of $12M who will be used on the 2 first phase, that supposed to be spent by Pala Investment Company. Pala Investment Company is financing Rainbow Rare Earth Limited who also happens to be a subsidiary of Pella Resources Limited, who also happens to be a subsidiary of Pella Resources Limited, who is actually the mining-company on the Gakara Project. So the Monies are going from London (Chrystal Capital) – Switzerland (Pala) – Guernsey, UK (Pella Resources Ltd) who happens to run the subsidiary Guernsey, UK (Rainbow Rare Earth Limited). Well this story has not ended.

On 14th April 2015 the German Company of ThyssenKrupp Metallurgical Products signed an agreement with Rainbow Rare Earth Limited to sell their resources and future production to the German counterparts. Kai-Norman Knötsch who is a Chairman in the Management Board of the company commented: “We look forward to successful cooperation with Rainbow Rare Earths. As the exclusive marketer of these high-quality products, we will have the opportunity to strengthen our customer relationships long term and gain further market share around the world” (ThyssenKrupp). This will secure the economic and the future of the Garaka Project. Since the Germans will buy the RRE from Rainbow (Pella) who then can pay the loans for the funding to Pala and Chrystal Capital. Do you follow me?

This is how it is so far. I wonder how it will go and how reports on the ground will be. And if the agreement between Rainbow Rare Earth Limited and the Government of Burundi will ever surface and come into light again. If so a brother wants to read that one. In the meantime we have to wait on reports on the earnings on the mining and how that will be spent in the country. That can be exiting read as well. Peace.  

Reference:

ThyssenKrupp – ‘ThyssenKrupp Metallurgical Products signs offtake agreement for rare earth elements’ (14.04.2015) Link:  https://www.thyssenkrupp.com/en/presse/art_detail.html&eid=TKBase_1428993710593_117572636

Chrystal Capital – ‘Chrystal Capital raises $12 million for Rainbow Rare Earths’ Link: http://www.chrystalcapital.com/chrystal-capital-raises-12-million-for-rainbow-rare-earths/

Rainbow Rare Earths Limited – ‘Funding secured for the development of the Gakara Rare Earth Project in Burundi’ (08.03.2015) Link: http://www.pala.com/images/media/44_Funding%20agreement%20with%20Pala%20-%20Final%20-%2008.04.15.pdf

Republic of Burundi-Council of Ministers – ‘MEDIA RELEASE CONSECUTIVE TO THE CABINET MEETING HELD ON WEDNESDAY 25TH OF FEBRUARY 2015’ (26.02.2015) Link: http://www.burundi-gov.bi/IMG/pdf/cabinet_meeting_three-1.pdf

Southern Crown – ‘February Company Update’ (02.2010) Link: http://southerncrown.com.au/joomla/images/announcements/pp.pdf

Southern Crown – ‘MARCH 2012 QUARTERLY ACTIVITIES REPORT’ (27.04.2012) Link:  http://www.infomine.com/index/pr/PB503217.PDF

International Crisis Group – ‘Burundi: A Deepening Corruption Crisis ‘(21.03.2012) Link: http://www.crisisgroup.org/~/media/Files/africa/central-africa/burundi/185-burundi-la-crise-de-corruption-english.pdf

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