"The successful global transition to clean energy is reliant on a considerable increase in supply of critical materials such as NdPr, required in permanent magnet technology, and we are therefore continually exploring the best way of producing rare earths responsibly from secondary sources, which removes significant time, risk and cost from the overall project timeline," Rainbow CEO George Bennett said.

Phosphogypsum contains rare earths as a by-product of phosphoric acid production, the company noted. It is found in the by-product of the production of fertilizer from phosphate rock.

Rainbow intends for the deal, which is in the form of a master agreement, to bring synergies from the groups, including the expertise of the Moroccan groups in phosphogypsum processing and Rainbow's intellectual property on rare earths extraction and processing gained from work with K-Technologies in Florida, USA.

"The Parties intend to develop the optimal route for the extraction of rare earths from phosphogypsum, and the subsequent processing of these rare earths into separated elements," Rainbow said.

"The Parties intend to work together on the development of pilot and industrial-scale extraction of rare earths from phosphogypsum," it said.

Rainbow's share price was 11.20p (US$0.13) at market close on 22 August, having risen 2% day on day.