Rainbow Rare Earths Regulatory News (RBW)

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED UNDER THE MARKET ABUSE REGULATION (EU) NO. 596/2014, AS AMENDED AS IT FORMS PART OF UK LAW BY VIRTUE OF THE EUROPEAN (WITHDRAWAL) ACT 2018, (MAR), IS FOR INFORMATION PURPOSES ONLY AND IS NOT AN OFFER OF SECURITIES IN ANY JURISDICTION THIS ANNOUNCEMENT AND THE INFORMATION IN IT, IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, NEW ZEALAND, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OR BREACH OF ANY APPLICABLE LAW OR REGULATION.

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

FOR IMMEDIATE RELEASE

Rainbow Rare Earths Limited

("Rainbow" or the "Company")

(LSE: RBW)

13 October 2021

Placing of new Ordinary Shares raises £6.435 million at 15p per share

Rainbow is pleased to announce that it has agreed to conditionally issue 42,900,000 new ordinary shares in the Company of no par value each ("Ordinary Shares") at a price of 15p per Ordinary Share (the "Placing Price"), thereby raising gross proceeds of £6.435 million (the "Placing"). The Placing Price represents a 3.4% premium to the closing mid-market share price of 14.5p per Ordinary Share on 11 October 2021 when the Placing Price was agreed.

The 42,900,000 Ordinary Shares to be issued at the Placing Price includes:

· £2.250 million received from TechMet Limited ("TechMet") via a direct subscription with the Company ("TechMet Subscription"). TechMet is a private industrial company that is building strategic positions in world-class projects across the technology metals supply chain. The U.S. International Development Finance Corporation, an agency of the U.S. government that invests in overseas development projects, is a major investor in TechMet.

· £4.185 million received from other investors, including global institutional investors.

Reasons for the Placing

The Placing proceeds, which total approximately US$8.5 million, net of estimated costs totalling US$0.3 million, will be used as follows:

· US$0.5 million to complete work for the Phalaborwa preliminary economic assessment ("PEA"), expected in H2 2021.

· US$3.0 million for further technical work at Phalaborwa beyond the PEA to work towards a bankable feasibility study, excluding on site pilot testing of the final processing flowsheet.

· Up to US$1.0 million for the Gakara Project in Burundi. Subject to the approval of the Government of Burundi, concentrate with an estimated sale value of US$1.3 million is available to fund the recommencement of trial mining and processing operations at Gakara, and there is therefore no intention to keep the operation on care and maintenance. However, a maximum of US$1.0 million of the Placing proceeds will be used for working capital to maintain Gakara on care and maintenance until December 2022, if required.

· US$1.0 million to allow repayment of the balance of an unsecured loan, including accrued interest of US$0.1 million, received in February 2020 from Pipestone Capital Inc ("Pipestone"), of which George Bennett (Rainbow's CEO) is the ultimate beneficiary. Under the terms of the Pipestone loan agreement, the loan is repayable following the Placing and it is anticipated that repayment will occur in November 2021 following receipt of the proceeds of the Placing and the renewal of the Company's authorisation to issue new Ordinary Shares at its Annual General Meeting to be held on 17 November 2021 ("AGM"). Pipestone can elect, at its sole discretion, to require all or part of the loan to be settled in Ordinary Shares at the Placing Price, which may require the Company to issue up to 5.2 million additional shares after the AGM.

· US$3.0 million for general working capital purposes.

Of the 42,900,000 Ordinary Shares issued under the Placing, 10,000,000 Ordinary Shares to be issued to TechMet under the TechMet Subscription are subject to the approval of shareholders at the AGM to be held on 17 November 2021 as set out in more detail below ("Shareholder Approval").

George Bennett, Chief Executive Officer of Rainbow, said:

"We are very encouraged by the strong support we have received from both existing and new institutional shareholders in the Placing, which was significantly over-subscribed. With its stringent investment criteria and its goal to secure the critical metals for the global technology revolution, we welcome the substantial investment by TechMet, which counts the U.S. government as a major investor.

We believe that demand for rare earths required in permanent magnets is poised for continued strong growth, as evidenced by the 85% increase in the price of both Neodymium and Praseodymium oxide between November 2020 and September 2021. With our diversified asset portfolio, which includes the exciting near-term growth opportunity presented by the Phalaborwa Project in South Africa, Rainbow is uniquely positioned to deliver into this growing market. The preliminary economic assessment at Phalaborwa is expected to be completed shortly and we believe it will serve to demonstrate the exceptional quality and favourable characteristics of this rare earths project."

Participation of the Directors

At 13 October 2021 the Company remains in a closed period ahead of publication of the Annual Report for the year ended 30 June 2021, expected to be announced in October 2021. Accordingly, the Company's Directors have not been permitted to participate in the Placing.

Total voting rights and Admission

An application has been made for the initial 32,900,000 Ordinary Shares issued pursuant to the Placing (the "Unconditional Shares") to be admitted to the Official List (by way of a Standard Listing) and to trading on the London Stock Exchange Plc's Main Market for listed securities ("First Admission"). It is expected that First Admission will become effective and that dealing in the Unconditional Shares will commence on or around 18 October 2021. The Unconditional Shares will rank pari passu with the existing Ordinary Shares. Following Admission of the Unconditional Shares, the Company will have 511,811,434 Ordinary Shares in issue.

The issue of a further 10,000,000 Ordinary Shares pursuant to the TechMet Subscription (the "Conditional Shares") is subject to Shareholder Approval. It is expected that admission of the Conditional Shares will become effective and that dealing in the Conditional Shares will commence on or around 22 November 2021 ("Second Admission") following the AGM. The Conditional Shares will rank pari passu with the existing Ordinary Shares.

Following the First Admission and prior to the AGM and the issue of the Conditional Shares, the above figures of 511,811,434 Ordinary Shares may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA's Disclosure, Guidance and Transparency Rules.

IMPORTANT NOTICES

This announcement includes "forward looking statements" which include all statements other than statements of historical facts, including, without limitation, those regarding the Company's financial position, business strategy, plans and objectives of management for future operations, or any statements proceeded by, followed by or that include the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would", "could" or similar expressions or negatives thereof. Such forward looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward looking statements. Such forward looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this announcement. Except as required by the FCA, the London Stock Exchange or applicable law (including as may be required by the Listing Rules, the Prospectus Regulation, the Prospectus Rules, MAR and the Disclosure Guidance and Transparency Rules), the Company expressly disclaims any obligation or undertaking to disseminate or release publicly any updates or revisions to any forward looking statements contained in this announcement to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

MARKET ABUSE REGULATION

Market soundings, as defined in MAR, were taken in respect of the Placing, with the result that certain persons became aware of inside information, as permitted by MAR. That inside information is set out in this announcement and has been disclosed as soon as possible in accordance with paragraph 7 of article 17 of MAR. Therefore, those persons that received inside information in a market sounding are no longer in possession of inside information relating to the Company and its securities.

**ENDS**

For further information, please contact

Notes to Editors:

Rainbow's strategy is to become a globally-significant producer of rare earth metals. Nd/Pr are vital components of the strongest permanent magnets used for the motors and turbines driving the green technology revolution. Analysts are predicting demand for magnet rare earth oxides will grow substantially over the coming years, driven by increasing adoption of green technology, pushing the overall market for Nd/Pr into deficit.

The Phalaborwa Rare Earths Project, located in South Africa, comprises an Inferred Mineral Resource Estimate of 38.3Mt at 0.43% total rare earths oxides ("TREO") contained within gypsum tailings stacked in unconsolidated dumps derived from historic phosphate hard rock mining. High value Nd/Pr oxide represent 29.1% of the total contained rare earth oxides, with economic Dysprosium and Terbium oxide credits enhancing the overall value of the rare earth basket contained in the stacks. The rare earths are contained in chemical form in the gypsum dumps, which is expected to deliver a higher-value rare earth carbonate, with lower operating costs than a typical rare earth mineral project.

The Company's Gakara Project in Burundi has produced one of the highest-grade concentrates in the world (typically 54% TREO) through trial mining operations. The Gakara basket is weighted heavily towards Nd/Pr, which account for over approximately 19.5% of the contained TREO and 85% of the value of the concentrate.