Rainbow Rare Earths Regulatory News (RBW)

6 June 2023

Rainbow Rare Earths Limited

("Rainbow" or "the Company")

LSE: RBW

Phalaborwa pilot plant commences operations

Rainbow Rare Earths is pleased to announce an update with regards to progress on the pilot plant for the Phalaborwa project in South Africa.

Highlights

· Pilot plant front end has commenced operations and is on track to produce the first high-value mixed rare earth sulphate in Q3 2023

· Will confirm Phalaborwa's status as a near-term producer of magnet rare earths, capable of being commercialised on a standalone basis, materially de-risking the project

· Pilot plant back end, to produce separated magnet rare earth oxides, is well advanced in terms of its construction, with commissioning due Q3 2023

· The Company is exploring the option to permanently establish its back-end process in the USA, which would establish it as one of the first producers of separated rare earth oxides in the country

As previously announced, the pilot plant is split into two phases. Phase one comprises a front end where material from the historic gypsum stacks at the Phalaborwa site will be consolidated into a rare earth sulphate, containing economic quantities of the four most important rare earth elements, which are used to make permanent magnets, being neodymium and praseodymium ("NdPr"), dysprosium and terbium.

The front-end process is situated at the Johannesburg facilities of the Council for Mineral Technology ("Mintek"), a global leader in mineral processing, extractive metallurgy, and related fields, and commissioning of the first stage is complete, in line with Rainbow's project development timetable and budget. A video of the front end of the pilot plant in operation can be viewed at https://www.rainbowrareearths.com/news-media/media/.

The front-end process incorporates the front-end gypsum washing, acid leach, fluoride removal via continuous ion-exchange ("CIX"), rare earth precipitation and a sulphuric acid agitated bake ("SAAB") to produce a high-value mixed rare earth sulphate. This will subsequently be shipped to Rainbow's rare earth separation plant situated at K-Technologies, Inc. ("K-Tech") in Lakeland, Florida, USA, for separation into rare earth oxides.

The front end will produce its first mixed rare earth sulphate solids in Q3 2023, thereby confirming Phalaborwa's status as a near-term producer of magnet rare earths. It is important to note that most rare earth mining projects produce a mixed rare earth mineral concentrate, a mixed rare earth sulphate, a mixed rare earth oxide or a mixed rare earth carbonate as their end product.

This milestone will therefore establish Phalaborwa as an economically viable producer of mixed rare earth sulphates on a standalone basis. Rainbow has established that there is a high demand in favourable jurisdictions for a mixed rare earth sulphate product ahead of the final beneficiation step that will be undertaken using the K-Tech process.

The mixed rare earth sulphate solids produced by the pilot plant front end at Mintek will be shipped to the USA to undergo further downstream processing in the pilot plant back end, in order to deliver separated magnet rare earth oxides.

Phase two of the pilot plant comprises the back end situated at K-Tech, which will water leach the mixed rare earth sulphate into a pregnant leach solution ("PLS"), perform a cerium rejection step to minimise flows downstream (thereby further reducing operating costs and capital expenditure) into the CIX circuit for loading onto the cation resin before stripping and going into the final continuous ion chromatography ("CIC") step, which will produce the separated rare earth oxides using K-Tech's patented CIX/CIC technology.

The ability to produce separated rare earth oxides highlights Rainbow's unique position within the magnet rare earth supply chain, as it expects to be able to produce a separated rare earth oxide product at 99.95% purity that can be sold directly to permanent magnet manufacturing capacity currently being developed in the USA and aligned countries.

The back end of the pilot plant is currently well advanced in terms of its construction at K-Tech's facility in Lakeland, with commissioning due to start in Q3 2023. Photos of the pilot plant can be found at https://www.rainbowrareearths.com/projects/gallery/.

Rainbow is currently exploring the option of permanently establishing its back-end rare earth oxide separation process in the USA and has identified a potential site for a commercial scale plant.

George Bennett, CEO of Rainbow, commented: "Work has continued apace on the Phalaborwa pilot plant and the production of the first mixed rare earth sulphate is expected shortly. This will affirm Phalaborwa as a strategic and near-term supply of the magnet rare earths needed to power the green economy."

"The back end of the plant is also progressing well, and we are exploring the possibility of establishing this commercial final separation process permanently in the USA, as we see it adding huge value to Rainbow. This would position the Company as one of the first producers of separated rare earth oxides within the USA, which is urgently trying to establish a domestic rare earths supply chain, given the importance of rare earths to decarbonisation, defence and other strategic products vital to the 21st century global economy."

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Notes to Editors:

Rainbow Rare Earths aims to be a forerunner in the establishment of an independent and ethical supply chain of the rare earth elements that are driving the green energy transition. It is doing this successfully via the identification and development of secondary rare earth deposits that can be brought into production quicker and at a lower cost than traditional hard rock mining projects, with a focus on the magnet rare earth elements neodymium and praseodymium ("NdPr"), dysprosium and terbium.

The Phalaborwa Rare Earths Project, located in South Africa, comprises a total Mineral Resource Estimate of 30.4 Mt at 0.44% TREO contained within unconsolidated gypsum stacks derived from historic phosphate hard rock mining. High value NdPr oxide represents 29.0% of the total contained rare earth oxides, with economic Dysprosium and Terbium oxide credits enhancing the overall value of the rare earth basket in the stacks. Rainbow will use a proprietary separation technique developed by its partner K-Technologies, Inc. for the plant at Phalaborwa, which simplifies the process of producing separated rare earth oxides (versus traditional solvent extraction), leading to cost benefits, as well as being more environmentally friendly.

The Phalaborwa Preliminary Economic Assessment has confirmed strong base line economics for the project, which has a base case NPV10 of US$627 million[1], an average EBITDA operating margin of 75% and a payback period of < two years. Pilot plant operations will commence in 2023, with the project expected to reach commercial production in 2026, just five years after work began on the project by Rainbow.