Rare Earths Co-Development Project in South Africa

3 November 2020

Rainbow Rare Earths Limited

("Rainbow" or the "Company")

(LSE: RBW)

Rare Earths Co-Development Project in South Africa

Rainbow Rare Earths is pleased to announce the signing of a binding Agreement for Co-Development (the "Agreement") of the Phalaborwa Rare Earths Project (the "Project"), located in South Africa, with Bosveld Phosphates (Pty) Ltd ("Bosveld"). The Project comprises approximately 35 million tonnes of gypsum resulting from historic phosphate hard rock mining, containing rare earth elements ("REE") with an estimated average in situ grade of 0.6% Total Rare Earth Oxides ("TREO"), based on previous sampling campaigns.

Project highlights

· Rainbow and Bosveld intend to jointly develop and process rare earth elements from the gypsum contained in two stacks at the Project site (the "Gypsum Stacks").

· Initial grab sample assays from the c. 35 million tonnes Gypsum Stacks indicate 0.6% TREO, indicating c. 210,000 tonnes of contained TREOs, with Neodymium (Nd) and Praseodymium (Pr) (together "NdPr") anticipated to constitute c. 30% of the TREO basket.

· The unique nature of these Gypsum Stacks results from the historic concentration of REEs during Foskor's flotation process, followed by further upgrading in Sasol's PhosAcid Plant, leading to REE concentration in chemical (rather than mineral) form, which enables simpler onward processing.

· Sasol developed a comprehensive process flowsheet to extract the rare earths from the gypsum, which resulted in a successful pilot plant operation, producing c. 3 tonnes of mixed rare earth carbonate at c. 80% recoveries.

· Initial reports suggest low levels of radioactive elements, similar to those seen at Rainbow's Gakara Project, in Burundi.

· The Project is fully permitted, with an Environmental Impact Assessment completed.

· The re-processing of these Gypsum Stacks carries significant environmental benefits in that it will redeposit clean, benign gypsum, which then has the potential for further use in the building and fertiliser industries.

Key terms of the Agreement

· A total consideration of US$750,000, in a combination of cash and shares (priced based on the prevailing Rainbow share price on date of issue), shall be paid by Rainbow to Bosveld in three equal tranches over twelve months, with the first tranche being payable after completion of an initial due diligence process. The due diligence process is expected to last up to 35 days and a further announcement will be made on completion of the due diligence process.

· On completion of the pre-feasibility study ("PFS"), 70% of the Project will held by Rainbow and 30% by Bosveld, with a mechanism included to allow for Rainbow's Joint Venture ownership to vary from 60% to 85%, dependent on results of the PFS.

George Bennett, CEO, said: "This Joint Venture represents an important and exciting step in Rainbow's strategy to benefit from the expected growth in global demand for rare earth metals. The considerable amounts of historical test work carried out to date, together with positive initial assays and successful pilot plant operations, indicate that this opportunity, in conjunction with the Company's high-grade Gakara Project, will enable Rainbow to become a very significant producer of NdPr, to power the green revolution.

This Joint Venture positions Rainbow as the only REE producer with both country and project diversification."

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

For further information, please contact:

Company Rainbow Rare Earths Ltd

George Bennett +27 82 652 8526

Pete Gardner

Broker SP Angel Corporate Finance LLP

Ewan Leggat +44 (0) 20 3470 0470

Charlie Bouverat

Notes to Editors

Rainbow's strategy is to become a globally-significant producer of rare earth metals. Nd and Pr are vital components of the strongest permanent magnets used for the motors and turbines driving the green technology evolution. 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 and Pr into deficit.

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

Background on the Bosveld Project

Bosveld, a South African company, acquired the Sasol Phosphoric Acid Plant (the "PhosAcid Plant") in the Limpopo Province of South Africa in c. 2012, following a competition ruling on Sasol's monopoly in the market. A hard rock foskorite and pyroxenite deposit was mined over a period of c. 50 years by Foskor. The mined ore was concentrated in a flotation process and subsequently processed by Sasol, resulting in a total of c. 35 million tonnes of gypsum being deposited in two stacks.

Phosphate rock, the raw material of phosphoric acid production, is known as a secondary source of low-grade REE. Low in-situ concentrations of REEs were contained within the original Foskor orebody. Various stages in the processing upgraded these concentrations to what are expected to be economic levels, as a result of:

· initial concentration by flotation at the Foskor plant;

· further concentration during the sulphuric acid leaching process ("cracking") at Sasol's PhosAcid Plant to produce phosphoric acid, at which stage, the REEs were solubilised; and

· gypsum was formed during the phosphoric acid production, which was discharged to the stacks with the REEs.