5 September 2023

Rainbow Rare Earths Limited

("Rainbow" or "the Company")

LSE: RBW

Rainbow's Process Flow Sheet successfully produces mixed rare earth sulphate

at the Phalaborwa front-end pilot plant in South Africa

·    First production of mixed rare earth sulphate achieved at Phalaborwa front-end pilot plant

·    Validates Rainbow's successful development of a process flow sheet to recover rare earths from phosphogypsum

·    Mixed rare earth sulphate is of expected purity and grade and includes all four of the critical 'magnet' rare earths, including Neodymium and Praseodymium (together "NdPr") and the heavies Dysprosium ("Dy") and Terbium ("Tb"); it is a commercial product that could be a standalone revenue stream for Rainbow

·    Front-end pilot plant reagent consumption and overall recoveries of ca. 65% are in line with the expectations of the Preliminary Economic Assessment

·    Mixed rare earth sulphate will be used as feed for the back-end pilot plant built at K-Tech facilities in Florida for final processing into separated rare earth oxides

·    Front-end pilot plant will run for an additional quarter to further optimise recoveries and cost-base

NEWS RELEASE

Rainbow Rare Earths is pleased to announce that the front end of the Phalaborwa pilot plant in South Africa has successfully produced its first batch of mixed rare earth sulphate, totalling ca. 3 kg.

This major milestone has been achieved on time and within the expectations of the Preliminary Economic Assessment ("PEA") in terms of reagent consumption/costs and recoveries.

The front-end pilot plant has produced a 58% mixed rare earth sulphate product with a ca. 65% overall recovery in line with the PEA.  The final sulphate includes all four of the most economically important rare earth elements (NdPr, Dy and Tb) in economic quantities in line with the Phalaborwa mineral resource. These are known as the "magnet rare earths" as they are used to make the permanent magnets essential to decarbonisation via their use in electric vehicles and wind turbines.

Photos of the mixed rare earth sulphate can be viewed at https://www.rainbowrareearths.com/projects/gallery/

The mixed rare earth sulphate produced by the Phalaborwa pilot plant is a commercial product that could be a standalone revenue stream for Rainbow, with an estimated ca. 60% payability of the global price for the contained separated rare earth oxides.

The Phalaborwa front-end pilot plant 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 is running for ca. four months treating ca. 35t of phosphogypsum feed from the Phalaborwa project stacks to produce ca. 350kg of mixed rare earth sulphate.  During this period, further optimisation of recoveries and reagent consumptions/costs are expected to be achieved.

The first batch of mixed rare earth sulphate will be shipped to the back-end pilot plant, situated at K-Technologies, Inc. ("K-Tech") in Lakeland, Florida, USA, for separation into rare earth oxides, with the first batch of separated rare earth oxides expected early in Q4 2023.

As previously announced, Rainbow is currently exploring the option of establishing its back-end rare earth oxide separation process in the USA and has identified a potential site for a commercial scale plant. This would establish the Company as one of the only producers of the four permanent magnet separated rare earth oxides in the USA.

Rainbow, through its proprietary flow sheet, expects to be able to produce separated rare earth oxide products at >99.5% purity that can be sold directly to metal and alloy manufacturing capacity (which in turn feed permanent magnet manufacturing plants) currently being developed in the USA and aligned countries, highlighting Rainbow's unique position within the magnet rare earth supply chain.

George Bennett, CEO, commented: "The production of mixed rare earth sulphate from the front-end pilot plant is a major milestone for the Phalaborwa project and validates Rainbow's strategy to recover rare earth elements from phosphogypsum stacks. This achievement not only de-risks Phalaborwa, it also opens up exciting opportunities for the Company to apply the proprietary technology to other similar phosphogypsum resources globally, including at the Mosaic Uberaba stack in Brazil.

We look forward to our final de-risking step, producing separated rare earth oxides in early Q4 2023 at the back-end pilot plant situated at K-Tech's facilities in the USA. This will enable Rainbow to capture the full uplift in value by taking our product all the way through to separated rare earth oxides, with the overall positive impact on the Company's future revenue streams and profitability.

Given the importance of Phalaborwa, we are delighted to have recently increased our stake in the project to 85% and have a clear path to owning 100% in the near-term, as we believe this will be highly value accretive to shareholders over time.

The USA and aligned countries are looking to establish an independent and ethical supply chain of the rare earth elements that are essential to decarbonisation, defence and other strategic products vital to the 21^st century global economy, and we are expecting Rainbow to be able to play a significant role in meeting that objective."

For further information, please contact:

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 permanent magnet rare earth elements neodymium and praseodymium, dysprosium and terbium.

The Company is focused on the development of the Phalaborwa Rare Earths Project in South Africa and the earlier stage Uberaba Project in Brazil. Both projects entail the recovery of rare earths from phosphogypsum stacks that occur as the by-product of phosphoric acid production, with the original source rock for both deposits being a hardrock carbonatite. Rainbow will use a proprietary separation technique developed by and in conjunction with its partner K-Technologies, Inc., 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 commenced in 2023, with the project expected to reach commercial production in 2026, just five years after work began on the project by Rainbow.

More information on the company is available at www.rainbowrareearths.com.