The target, equal to 5,000t per annum, had been delayed due to Gakara's unpredictable vein stockwork deposits, such as Gasagwe, resulting in uncertainty of the likely average concentrate yields.

The company is due to start full mining production at the new Murambi area imminently and said the precise date at which it would achieve the targeted 400tpm would depend on the progress of Murambi, as well as the one or two additional mining areas it intends to bring online in the next six-to-nine months.

The market was not pleased with the news, with the miner's shares dropping 40.17% Tuesday to 5.77p (US7.35c) per share. Rainbow's stock has fallen 61.5% since the beginning of the year, reaching an intra-year low of 9.5p on October 12.  

The challenging geological environment also let to Rainbow having to increase the scale of the mining fleet at Gasagwe to increase the stripping rate, which combined with the cost of preparatory work at Murambi to escalate production costs for the September quarter by 12.5% to US$2,852 per tonne.

"As production levels increase, average costs per tonne are expected to decrease due to a large proportion of monthly costs being relatively fixed in nature," Rainbow said.

The higher output costs were partially offset by lower transportation and royalty costs, which fell 17% to $261/t on the improved efficiency of the exportation process.

On a more positive note, the company sold 350t of TREO concentrate during the three-month period at an average grade of 59% TREO/tonne, of which all was exported.

The sales volume was steady from the June quarter, although the grade was up from 55% TREO and the exported volume rose 27%.

The net sales price was $1,980/t, down from $2,027/t in the June quarter, which it attributed to a slight decline in rare earth prices, especially neodymium and praseodymium.

Rainbow CEO Martin Eales said positive EBITDA was expected to be generated once concentrate production and sales reached 250-300tpm and the company remained focused on using its existing cash and financing resources to reach that target.

He added the company was on track to deliver its maiden JORC resource for Kiyenzi before the end of the year after concluding drilling.