LONDON (ShareCast) - (Sharecast News) - High-grade rare earth producer Rainbow Rare Earths announced a proposed placing by way of an accelerated bookbuild to raise a minimum of $5m net of expenses on Wednesday.
The London-listed firm said it intended to raise a minimum of $5m through the proposed placing of new ordinary shares, arranged by Arden Partners and Turner Pope Investments, with new and existing investors at a price of no less than 3p each.

It said the placing would allow it to invest in increasing production growth at its fully-operational Gakara Rare Earth Project in Burundi, through the opening of new mining sites.

Funding would also strengthen the group's balance sheet, by providing additional stability during the ramp-up of production from the new mining areas over the coming months, the board explained.

It said the minimum net proceeds would be used for the purchase of a new mining fleet to replace locally-rented equipment, the development and opening of two new mining areas, and for providing working capital prior to additional mining areas delivering production.

Excessive demand for placing shares would then be used for an additional drilling campaign focusing on the larger-scale, lower grade Kiyenzi area, alongside metallurgical testwork focused on efficient processing of that ore, as well as for strengthening the balance sheet.

Rainbow said its largest shareholder, Pella Ventures - in which its chairman Adonis Pouroulis had a beneficial interest - was converting its $0.7m loan, as announced on 7 May, at the placing price.

Its board and management had agreed that a total of £145,789 in fees and deferred cash bonuses, which were outstanding as at 30 June, would be satisfied by the issue to them of new ordinary shares, determined by reference to the placing price, as well as directly subscribing for at least a further £10,000 of ordinary shares.

"Completion of the placing remains subject to a number of conditions, inter alia, publication of a prospectus and the approval by shareholders of a special resolution to authorise the issue of new ordinary shares, which will be sought at an extraordinary general meeting of the company to be convened for that purpose," the Rainbow Rare Earths board said in its statement.

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