CHAIRMAN'S STATEMENT

It has been a transformational year for Altona Rare Earths as we completed our move from the AQSE Growth Market to the LSE Main Market Standard Segment list and announced an impressive maiden resource at our flagship Monte Muambe Project.

Monte Muambe's encouraging Scoping Study, published on 18 October 2023, underpins the speed with which we are progressing and de-risking the Project, and will continue to do so as work on the Prefeasibility Study is now starting.

I am particularly pleased with the advancements we made considering the unfavourable macroeconomic conditions and general business environment we are currently navigating.

Continued global inflation, and the high interest rates that the Bank of England (and other central banks) is employing to combat it, has reduced the amount of disposable income, making it one of the main factors contributing to generally disappointing returns across the small cap resource sector this year.

To compound this general lethargy, rare earth spot prices sank to their lowest levels since 2020 on soft demand from green energy companies and a rising supply from China. I suspect this is driven by lower consumer demand which in turn has stemmed primarily from the aforementioned higher interest rates. Less consumer demand means lower need for inventory from green energy companies and lower internal demand in China leaves higher balances for export, depressing global spot prices.

But, the case for green metals and particularly rare earths remains structurally sound. The green revolution is a real thing and embedded in the government policies of nations as disparate as the UK, China, USA, France, Germany, Canada, Tanzania and Ecuador, with even petro economies like Saudi Arabia investing heavily in the post carbon economy.

The UK government remains at the forefront of the green revolution with its legal commitment to net zero emissions and we are seeing progressively more signs of this and other governments growing willingness to give meaningful assistance to nascent companies looking to be part of the solution.

At Altona Rare Earths we remain confident that we are putting in place the building blocks for a viable mining operation in Mozambique and we are excited about driving Monte Muambe forward while continuing our search for further high quality rare earths assets to add to our portfolio.

Martin Wood

Chairman

Altona Rare Earths Plc

CEO'S STATEMENT

For Altona, the Financial Year 2023 ended on a positive note, with the Company completing its long-anticipated move to the Main Market of the London Stock Exchange on 9 June 2023. The Company simultaneously raised £2 million in new funds (the "Fundraise"), to cover the completion of Monte Muambe's Phase 2 and the increase of Altona's holding in the project to 51%.

The listing process took longer than expected, and this admittedly resulted in delays in the completion of Monte Muambe's maiden mineral resource estimate ("MRE") and Scoping Study, although the Company managed to complete sufficient resource drilling at Target 1 and Target 4 by the end of November 2022 to support the MRE.

The Company, however, drawing on the experience of more advanced projects in its peer group, has developed a focused strategy to concentrate its efforts and resources on the areas of the deposit that have the highest likelihood to be viable, as opposed to "drilling for numbers". The continued implementation of this strategy through the Monte Muambe Prefeasibility Study and beyond is expected to offer opportunities to make up for these delays.

As funds became available in June 2023, the Company immediately engaged Snowden Optiro to rapidly process collected data and finalise the work on the MRE and the Scoping Study.

The maiden MRE published in late September 2023 reported 13.6 million tonnes at 2.42% total rare earth oxide ("TREO"), which included 0.31% NdPr Oxide (at a 1.5% TREO cut-off). Importantly, through the implementation of a well-designed drilling plan, Altona ensured that 58% of the tonnage was in the Indicated category, while the rest was in the Inferred category. This resource forms a solid base for a future ore reserve. The 2024 drilling campaign will be focused on increasing the MRE's tonnage, and degree of confidence to the measured and indicated categories. This will be achieved through down-dip drilling at Target 1 and Target 4, in-fill drilling and resource drilling on other targets at Monte Muambe.

On 18 October 2023, Altona published the Monte Muambe Scoping Study. The study covers an open pit mining operation considering Target 1 and Target 4 over an 18-year life of mine, and the extraction and processing of 750,000 tons of ore per year. A mixed rare earths carbonate ("MREC") will be produced through a two-step process involving comminution and flotation to produce a concentrate, followed by gangue leaching and caustic cracking.

With a NPV8 of USD 283.3 million, an IRR of 25%, and a life of mine EBIDTA of USD 1.67 billion, the Scoping Study serves as an affirmative initial validation of the potential economic viability of the Monte Muambe project ("the Project") and provides, together with the MRE, a solid foundation for the Project's subsequent progression. It also enables the Company to establish its presence amongst other prospective REE producers in Africa in a niche but critically important industry.

The completion of the Scoping Study also means the increase of Altona's holding in the Project to 51%. As at the date of this report, the contractual and administrative processes to effect this change have commenced, therefore further de-risking the project and increasing shareholder value.

Numerous avenues for increases of the Project's value proposition have been identified in the Scoping Study and will be developed in the Prefeasibility Study. These include:

· Increasing the resource base and the life of mine

· Mining, Processing, Energy Mix and Logistics optimisation

· Considering further on-site, in-country or regional separation and refining

· Responsible Sourcing systems

The market for magnet metals is projected to grow five-fold by 2040, and the existing NdPr Oxide supply deficit to grow to 90,000 tonnes by that time[1]. This growth is largely driven by the world's green energy transition, which relies on rare earths based permanent magnets as an essential component of wind turbines and electric vehicles. In addition, the current dominance of China over the rare earths supply chain is seen as a geopolitical and strategic threat by the rest of the world ("RoW") and in particular Western governments. Supported by new Critical Minerals policies and legislations, RoW supply chains are rapidly developing.

The future of the rare earths and magnet metals supply chain though, is more likely to reflect an integration of China and RoW supply chains rather than a separation. A key development that the Company anticipates, however, is the increased importance of the consumers demand for products manufactured with responsibly sourced products. It is expected that sources certified and verified as responsible will have competitive advantage as opposed to other sources. The continued development of the Project will therefore encompass responsible sourcing aspects and systems at an early stage.

As Monte Muambe enters the Prefeasibility Stage, the Company will now focus on completing exploration activities on targets other than Target 1 and Target 4, to firm up the 2024 resource upgrade drilling plan, and on extensive metallurgical testing. The objective is to define, by the end of 2024, an updated MRE with an increased tonnage and level of confidence which can be converted into an ore reserves statement as part of the Prefeasibility Study.

Monte Muambe is Altona's flagship project, and the Company will therefore continue to drive its rapid development, following its strategy focussed on viability. However, the Company, taking advantage of its position, geological knowledge and networks in Africa, will continue to assess new rare earths opportunities with a view to adding more quality projects to its portfolio. This will be done with a focus on short timelines to production, as well as diversifying the Company's exposure in terms of deposit type (ionic clays) and of rare earths basket (heavy rare earths).

We are looking forward to a busy and exciting time ahead as we continue de-risking Monte Muambe with our next deliverables: the Prefeasibility Study, a Mining Concession and our holding increased to 70%.

Dr Cédric Simonet

CEO

Altona Rare Earths Plc

OPERATIONS REVIEW

Pre-Financial Year activities

The 2022 field campaign started in February 2022, with a thorough soil sampling survey, and continued with Reverse Circulation drilling at Target 1 and Target 4 in May 2022.

Work done up to 30 June 2022 allowed the Company to:

· Identify 5 new drilling targets on the basis of soil sampling results (Targets 1E, 7, 8, 9 and 10)

· Confirm the shape, orientation and extent of Target 1 at target level, and plan appropriately additional drill holes.

· Confirm the validity of Target 4 for resource drilling

· Gain additional understanding on the characteristics of REE mineralisation at Monte Muambe, in particular with respect to the existence of two different types of ore: low grade ore, with 0.5 and 1% TREO and some Niobium, and high-grade ore, with 2.4 to 2.5% TREO in average and no Niobium, and to the geometry of the mineralised bodies.

The high-grade mineralisation, as can be seen on this cross section of Target 1, forms consistent and continuous zones from surface.

Financial Year 2023 activities

Monte Muambe licence successfully renewed and transferred to Monte Muambe Mining Limitada ("MMM")

On 26 October 2022, Prospecting Licence LPP7573L was renewed for a further 3-year term (up to 22 May 2025) and transferred to Monte Muambe Mining Limitada, the project's Special Purpose Vehicle.

Field activities

After a brief interruption to review drilling data, drilling activities at Monte Muambe resumed on 12 July 2022. Activities during the reporting year were focused on building the project's database to back a maiden Mineral Resource Estimate, with a focus on Target 1 and Target 4.

Drilling completed during the period totalled 2,201 meters (21 holes). This included 4 exploration holes at Target 9, while the rest was at Target 1.

Collar information of holes drilled during the FY 2023

In August 2022, Altona published an updated Competent Person Report including an Exploration Target estimate based on drilling results at Target 1 and Target 4 up to 5 July 2023.

The Exploration Target estimate:

· provided a first-pass estimation of the potential size of the deposit,

· confirmed the presence of high-grade zones in the mineralised system,

· helped review and confirm the drilling plan for the remainder of the year.

Drilling done after the publication of the Exploration Target estimate focused on the deeper parts of Target 1.

In November 2022, the Company commissioned a real time kinetics (RTK) system on site and undertook a complete RTK survey of all holes drilled in 2021 and 2022 as well as legacy holes.

All selected samples from the 2022 drilling campaign, as well as re-composited samples from the 2021 drilling campaign, were shipped to Intertek laboratories' facility in Johannesburg by early December 2022 for preparation, and subsequently forwarded to Intertek Perth for assay.

In addition, a batch of 20 samples was sent for mineralogical studies. XR Diffraction results for this batch were received in January 2023.

In June 2023, Altona contracted Snowden-Optiro, a reputable geological consultancy company, to prepare its maiden JORC Mineral Resource Estimate.

Post-Financial Year activities

Maiden JORC Mineral Resource Estimate

On 25 September 2023, Altona published Monte Muambe's maiden JORC Mineral Resource Estimate, reported in the Table below using a 1.5% TREO cut-off.

Notes:

· Million tonnes are rounded to one decimal place. Grades are rounded to two decimal places for % and whole numbers for ppm.

· The MRE has been reported in consideration of reasonable prospects for eventual economic extraction (RPEEE) using a pit shell based on a 1.5% TREO cut-off, revenue of 24.65 USD/kg TREO MREC and average total recovery to MREC of 48%.

· Mineral resources are reported as dry tonnes on an in-situ basis.

· Rare earth elements are inclusive of the TREO and not additional to it.

· "NdPr Oxide" is the sum of Nd2O3 and Pr6O11.

The MRE represents an increase in tonnage compared to the high-grade part of the Exploration Target estimate, consistent with the fact that additional drilling was done at Target 1 after the Exploration Target estimate was compiled.

Reconciliation between 2022 Exploration Target and 2023 MRE

The MRE's tonnage and grade compares favourably to Ore Reserve Statements of more advanced carbonatite REE-projects in Monte Muambe's peer group in Africa and in Australia.

In 2024, the Company intends to increase the tonnage and the level of confidence of the existing MRE through:

· In-fill drilling at Target 1 and Target 4 (to take the MRE on these two mineralised bodies to Measured and Indicated levels);

· Down-dip drilling at Target 1 and Target 4 (to increase the tonnage);

· A re-evaluation of the potential viability of Target 6, which has known high-grade mineralisation at a depth of 30 to 50m below the surface;

· Resource drilling at Targets 3, 9 and 11 among others.

Scoping Study

On 18 October 2023, Altona published an updated CPR including a Scoping Study (the "Study") for the Monte Muambe project.

The Study was prepared by geology and mining consultancy firm Snowden-Optiro, to assess the potential viability of an open pit mining and MREC production operation, to assess project development options, and to give sufficient confidence to the Company to advance to the Prefeasibility Study stage.

The Study is preliminary in nature and includes material assumptions outlined in the CPR, including product price assumptions. Capex estimates qualify as Class 4 estimates as per the Association for the Advancement of Cost Engineering (AACE) Recommended Practice 47R-11. The accuracy of the opex and of the initial capex estimate is assessed at +35 % to ?30 %. The base case includes an indicative life of mine extraction and production schedule, which is based on a Mineral Resource Estimate, 58% of which classified as Indicated and 42% as Inferred.

The Study takes into consideration open-pit mining of Target 1 and Target 4, at a Life of Mine ("LOM") strip ratio of 1.6, over a period of 18 years. An anticipated 750,000 tonnes of ore per annum will be extracted and processed through a beneficiation plant to produce a rare earths concentrate. The beneficiation process will include crushing, milling and flotation. The concentrate will then be processed through a hydrometallurgical plant to produce an average of about 15,000 tonnes of MREC per annum. The hydrometallurgical process will involve a weak acid gangue leach, followed by rare earths leaching and purification. The MREC product will be packaged and transported via existing road infrastructure to the port of Beira, in Mozambique, for export.

Schematic layout of the Monte Muambe project

Base Case Technical and Economic parameters are summarised in the table below:

Sensitivity Analysis

Using an NPV of US$283.3 million with an applied real discount rate of 8%, the Project is most sensitive to revenue (price, recovery, grade and exchange rates), less sensitive to opex and least sensitive to capex.

Project sensitivity analysis

The Scoping Study demonstrates the potential for Monte Muambe to become a viable mining operation.

Considerable upside potential has been identified in the Scoping Study and will be developed further in the Prefeasibility Study ("PFS"). This includes:

· Increase of the resource base, as well as of the LoM and/or ore extraction rate;

· Mining parameters optimisation;

· Processing and Metallurgy, both for the beneficiation and hydrometallurgical plants;

· Energy sources mix and logistics options;

· Evaluation of the possibility of doing further onsite, in-country or regional separation and refining;

· Setting up Responsible Sourcing systems.

Completion of Phase 2 and holding increase to 51%

On 24 October, in accordance with the Farm-Out Agreement, the Company notified the original shareholders of Monte Muambe Mining Lda of the successful completion of Phase 2 and of its intention to proceed to Phase 3.

At the date of this report the contractual and administrative processes have been initiated and completion is expected in the next few weeks.

Phase 3 activities

Progressing Monte Muambe towards PFS

As a short-term objective, the Company intends to continue de-risking the project through:

· Lodging a Mining Concession application, and an application for land-rights

· Starting the EIA Licensing process for the mining operation

· Starting Prefeasibility Study activities with a priority on:

o Grass-root exploration activities on targets other than Target 1 and Target 4 to firm up the 2024 resource upgrade drilling plan

o Extensive metallurgical testing and process flowsheet development

· Drilling aimed at producing an upgrade MRE, convertible into an Ore Reserves Statement, by Q1 2025.

New Projects

Target generation and business development activities will also continue, with the view of securing at least one new project during the course of the year.

Outlook

The robust financial forecasts of the Monte Muambe Scoping Study serve as an affirmative initial validation of the Project's economic viability, enabling the Company to establish its presence amongst other prospective REE producers in Africa. It provides, together with the MRE, a solid foundation for the Project's subsequent progression. As the Project moves into its PFS stage, the Company will continue to work towards de-risking Monte Muambe and, with its local partners, to optimise its technical, commercial and financial parameters. We believe the timing for this achievement is impeccable, at a time where the global rare earths supply chain is diversifying away from China's decades-long domination, and Western processing facilities are starting to come online.

The magnet metals present at Monte Muambe are critical components of the global green energy transition. The supply deficit for Neodymium and Praseodymium Oxide is forecast to grow to 90,000 tonnes per year by 2040 and, to allow the decarbonisation of energy sources, more magnet metals mines must come on stream in the following years.

Altona intends to play its part in supporting this crucial agenda, by working in a responsible manner to reduce the dependence on China for critical mineral supplies. As Monte Muambe progresses, the Company will continue to make the most of its knowledge of African geology, local networks, and presence on the ground to acquire and develop new projects. This will be done with a focus on short timelines to production, as well as diversifying the Company's exposure in terms of deposit type (ionic clays) and of rare earths basket (heavy rare earths).

Dr Cédric Simonet

CEO

Altona Rare Earths Plc

CORPORATE REVIEW

Financial Review

Balance sheet -investment, capital expenditure, equity placing and asset growth

The Group's total assets have increased from £1.4m to £2.7m, largely due to the £2m fundraise which the Company completed on 9 June 2023 in conjunction with its LSE admission. These proceeds were used to fund the ongoing exploration at MMM and meet corporate debts and expenditure. Total non-current assets increased by £0.4m, to give total non-current assets at year end of £1.4m. This mainly correlates to the intangible assets, such as capitalised drilling, assay studies and licence costs in relation to MMM's LPP7573L.

The cash position increased from £0.3m to £1.1m, giving the Group sufficient funds to complete the MRE and Scoping Study at MMM, and commence Phase 3 of the Farm-Out Agreement in the final quarter of 2023.

Total liabilities increased from £0.3m to £0.8m, mainly due to convertible loan note that was entered into in February 2023 to enable the Group to continue to meet its working capital obligations.

Overall, this resulted in an increase in the Group's net assets from £1.1 million as at 30 June 2022 to £1.9m at 30 June 2023.

Income Statement

The loss for the year was £1.3m as compared with a £0.8m loss in the prior year. This increase mainly corresponds to the increase in legal and professional fees of £0.2m arising from the change in exchange (from AQSE to LSE) and the Fundraise. The Company also incurred finance costs of £0.2m which arose from the £0.2m loans and £0.3m CLNs that were arranged during the year.

The Company is focused on controlling administration costs and aims to keep these to a minimum. Management use a KPI to monitor the ratio between operating costs and corporate costs and ensure that, as far as possible, it is maximised.

Liquidity and Cash Flow

The Group monitors its cash position, cash forecasts and liquidity regularly.

Net cash used in operating activities decreased from £0.8m to £0.6m, this decrease is mainly due to the increase in creditors which were all paid down post year end. Cash used in investing activities also decreased from £0.9m to £0.5m as Phase 2 was extended whilst the Company waited for further monies to be raised at the Fundraise.

During the last quarter of 2022, the Company entered into a short term loan agreement for a £0.2m loan, and this was paid back before year end. In February 2023, it also issued £0.3m of convertible loan notes with an interest rate of 15%. These will be converted into shares or paid back in full in May 2024 and have been included in the balance sheet as a short term liability.

Warrants extension

In March 2023, the Company extended the expiry date of all existing warrants to 31 March 2025 (in prior year the Company replaced all 20 pence warrants with new warrants with an exercise price of 12 pence per Ordinary Shares). This exercise was completed to recognise the value of shareholders who had previously invested in the Company and were yet to see the expected growth.

Board appointments

On 9 June 2023:

· Cédric Simonet, the Company's Chief Operating Officer, was appointed Chief Executive Officer

· Louise Adrian, the Company's Financial Controller, was appointed Chief Financial Officer and an Executive Director

· Simon Charles was appointed as an Independent Non-Executive Director.

Christian Taylor-Wilkinson stepped down as both Chief Executive Officer and Director on 9 June 2023. He remains as an employee of the Company in a Business Development capacity.

Simon Tucker resigned as a Non-Executive Director on 2 August 2022.

London Stock Exchange Listing

On 1 June 2023, the Company announced that it had raised £2.0 million via an oversubscribed placing of £1,677,300 and a subscription of £322,700 through the issue of 40 million new ordinary shares at 5 pence per share, together the "Fundraise". The Company also issued 4.9 million fee shares to various advisers and Directors.

On 9 June 2023, the Company announced the Admission of the Company's entire issued share capital to the Official List of the Financial Conduct Authority by way of a ?Standard Listing under Chapter 14 of the Listing Rules and to trading on the London Stock ?Exchange's Main Market for listed securities ("Admission"). The Company's shares are listed under the new ticker "REE".

Post Balance Sheet Events

On 25 September 2023, the Company announced the Monte Muambe Project's maiden JORC Mineral Resource Estimate, with a total of 13.6 million tonnes at 2.42% TREO at a cut-off grade of 1.5% TREO.

On 18 October 2023, the Company announced the completion of an updated Competent Person Report for Monte Muambe, including a Scoping Study. More information is given in the Operations Review.

Louise Adrian

CFO

Altona Rare Earths Plc

STATEMENT OF CONSOLIDATED PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the year ended 30 June 2023

STATEMENT OF CONSOLIDATED FINANCIAL POSITION

As at 30 June 2023

STATEMENT OF CONSOLIDATED CASH FLOWS

For the year ended 30 June 2023