4 October 2023

Rainbow Rare Earths Limited

("Rainbow" or "the Company")

LSE: RBW

Rainbow enters into a Letter of Intent for an offtake agreement

for Phalaborwa gypsum by-product

·    Phalaborwa project is founded on principles of circularity via the extraction of value from 'waste' products

·    Green gypsum will be available for sale to both domestic and international customers in neighbouring countries

·    Demand estimated at ca. 400 to 600 kt per annum, providing additional revenue stream to Rainbow

·    Sale of gypsum will allow for complete environmental rehabilitation of site

NEWS RELEASE

Rainbow Rare Earths is pleased to announce that it has signed a Letter of Intent to enter into an offtake agreement with NEXUS Intertrade (Pty) Ltd ("NEXUS"), under which NEXUS will acquire gypsum from the Phalaborwa project in South Africa and sell it to end users.

The Phalaborwa project is due to commence production in 2026 and operations will involve processing the existing unlined gypsum stacks in order to extract the rare earth elements. These gypsum stacks have accumulated acid water over time and Rainbow's process will neutralise the acid, rendering the water suitable for use in the process plant.

The by-product of Rainbow's process will be a cleaner, 'benign' gypsum which no longer contains any acid water residue. The benign gypsum will be stored on new stacks lined according to International Finance Corporation standards and Equator Principles.

NEXUS will work with Rainbow to establish the grade and quality of the benign gypsum at Phalaborwa, which will in turn determine the blended average sales price per tonne, as well as the available markets for its use, both in South Africa and neighbouring countries.

NEXUS currently anticipates demand from the domestic cement manufacturing industry, the domestic gypsum board and plaster manufacturing industry, the domestic agricultural industry, and from certain international export markets to which it also has access, estimated at 400 - 600 kt per annum.

An exclusive five-year offtake agreement will be concluded once Rainbow and NEXUS have agreed upon the annual tonnage of gypsum to be supplied and the market related price per annum, with the option for renewal for a further two five-year periods.

The Phalaborwa project currently has a mineral resource estimate of 30.4 million tonnes and a mine life of at least 14 years; however, the benign gypsum sales are expected to be a much longer-life operation, thereby having a positive socio-economic effect on local industry.

Furthermore, the act of selling the benign gypsum by-product will see the stacks at Phalaborwa eventually fully depleted, which will allow for a complete environmental rehabilitation of the site.

George Bennett, CEO of Rainbow, commented: "This agreement is a real win-win for Rainbow, NEXUS and our stakeholders. The Phalaborwa process is founded on the principles of circularity as we are taking a waste product, cleaning it and extracting value from it - both via the recovery of the rare earth elements and then via the sale of the benign gypsum that is produced as the by-product of the process. This will also have a positive impact on our project economics with a lower level of long-term gypsum deposition from the project than anticipated in the PEA.

It also highlights the very strong environmental credentials of this project: not only will we be neutralising the acid water currently impacting the unlined gypsum stacks and then depositing our waste material onto new lined stacks, but we will eventually be fully depleting these stacks via the sale of the benign gypsum. This will allow for a full-circle environmental rehabilitation of the site whilst delivering a 'green gypsum' product to NEXUS' domestic and international customer base.  This offtake agreement will be helpful to bolster local industry, as well as providing an additional revenue stream to Rainbow, demonstrating the benefits to all parties."

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Notes to Editors:

About Rainbow:

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 and environmental benefits.

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.