Rainbow Rare Earths Regulatory News (RBW)

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED UNDER THE MARKET ABUSE REGULATION (EU) NO. 596/2014, AS AMENDED (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PURPOSES ONLY AND IS NOT AN OFFER OF SECURITIES IN ANY JURISDICTION THIS ANNOUNCEMENT AND THE INFORMATION IN IT, IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, NEW ZEALAND, JAPAN, THE REPUBLIC OF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.

FOR IMMEDIATE RELEASE

27 November 2020

Rainbow Rare Earths Limited

("Rainbow" or the "Company") (LSE: RBW)

Placing of new Ordinary Shares raises £2.56 million at 6p per share

Rainbow, the high-grade rare earth producer, is pleased to announce that it has conditionally issued 42,700,000 new ordinary shares in the Company of no par value each ("Ordinary Shares") at a price of 6p per Ordinary Share (the "Placing Price"), thereby raising gross proceeds of £2.56 million (the "Placing"). The Placing Price represents a 5% discount to the closing share price of 6.3p per Ordinary Share on 25 November 2020 when the Placing Price was agreed.

Reasons for the Placing

The Placing proceeds will be used for general working capital purposes including:

· The initial US$0.25 million consideration payable under the Phalaborwa Rare Earths Project earn-in agreement.

· Drilling at Phalaborwa, commencing in December 2020, to demonstrate continuity of the expected grades to inferred resource classification.

· Initial confirmatory metallurgical test-work at Phalaborwa to investigate the optimal processing options for recovery of the rare earths from the gypsum stacks.

· Capital additions to the Company's trial mining fleet and pilot processing plant at the Gakara Rare Earth Project in Burundi to support further development of the trial mining operations, better utilising the capacity of the existing pilot plant.

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. We believe that demand for permanent magnet rare earths is poised for significant growth, as evidenced by the significant increases in the price of both Neodymium and Praseodymium oxide in November 2020 to date. With the Phalaborwa and Gakara assets, Rainbow is uniquely positioned to deliver into this growing market, with both project and country risk diversification.

With this capital I anticipate that we can quickly define the route to commercial production from the Phalaborwa project, where we continue to review the wealth of data available from the historical pilot plant operations. At Gakara, the additional investment will allow us to extend the areas of our trial mining operations to demonstrate that the simple minerology and high-grade nature of the mineralised veins continues across our defined mineralised target areas."

As a result of the Placing, the US$275,000 bridge loans received from the Company's Directors and Senior management in October 2020 will be repaid. The US$925,000 interest-free loan originally received from the Company's CEO in February 2020 via Pipestone Capital Inc will not be repaid from the Placing proceeds and remains due for repayment on 31 December 2021.

Total voting rights and Admission

An application has been made for the 42,700,000 Ordinary Shares issued pursuant to the Placing 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 ("Admission") and it is expected that Admission will become effective and that dealing in the Placing Shares will commence on or around 3 December 2020. The Placing Shares will rank pari passu with the existing Ordinary Shares.

Following Admission, the Company will have 464,681,551 Ordinary Shares in issue.

The above figure of 464,681,551 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. NdPr 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 NdPr into deficit.

The Company's Gakara Project in Burundi, which produces one of the highest-grade concentrates in the world (typically 54% total rare earth oxide ("TREO")) through ongoing trial mining operations, is currently the only African producer of rare earths. The Gakara basket is weighted heavily towards NdPr, which account for over approximately 19.5% of the contained TREO and 80% of the value of the concentrate.

The Phalaborwa Rare Earths Project, located in South Africa, comprises approximately 35 million tonnes of gypsum resulting from historic phosphate hard rock mining, containing rare earth elements with an estimated average in situ grade of 0.6% TREO, based on previous sampling campaigns, of which 30% comprises high-value NdPr. The rare earths are contained in chemical form in the gypsum stacks, which is expected to deliver a higher-value rare earth carbonate, with lower operating costs than a typical rare earth mineral project.