Announcement PDF 8 July 2024 Latest Testwork Affirms Low Capex Development for Koppamurra Highlights: • Consistent Recoveries Across Varied Conditions: Ongoing heap leach testwork shows consistent recoveries for Magnet Rare Earths (MRE), ranging from 29% to 74% across various ore conditions and locations within the Koppamurra Project (the Project) area. • Accelerated Recovery Time: Achieving these consistent results in significantly shorter periods than traditional heap leaching boosts confidence in employing short-term heaps near the mine pit, facilitating rapid site rehabilitation. • Scalable Commercial Potential: Positive physical and chemical characteristics from a 4-meter column test suggest potential for scaling up heap heights to commercially viable geometries. • Economic Sustainability: The low ratio of gangue/impurities to rare earth content in the solution supports the heap leach method as a cost-effective and sustainable development strategy. • Click here to watch a short video on this from our MD, Travis Beinke, or ask us any questions. Australian Rare Earths Limited (ASX: AR3) is pleased to announce significant progress in the metallurgical testwork for its Koppamurra rare earths project in South Australia. These new results have boosted confidence in the proposed development pathway involving progressive heap leaching and rapid rehabilitation. The completion of four additional heap leach column tests on high-grade mineralised clays from Koppamurra has demonstrated consistent physical and metallurgical responses across various ore types, and spatially diverse source locations within the Project area. This validation strengthens the improved approach for efficient extraction of MRE’s, with short-term heap leach positioned adjacent to the mine pit. The Australian Nuclear Science and Technology Organisation (ANSTO), Australia’s leading laboratory in ionic clay leaching, is assisting AR3 with its ongoing process flowsheet development. AR3 Chief Executive Travis Beinke said: "I am pleased to report an update on the significant progress our team has made in the first half of this year regarding the metallurgical testwork for the Koppamurra project. Building on the initial heap leach testwork, the latest results have continued to demonstrate impressive recoveries of Magnet Rare Earths (MRE), with results ranging from 29% to 74% across a variety of ore conditions and locations. These consistent results, achieved in significantly shorter periods compared to traditional heap leaching, provide us with increased confidence in the viability of using short-term heaps near the mine pit. We've identified several potential advantages of a progressive heap leach development approach. These include potentially lower initial capital and operating costs, and improvements to the project’s environmental credentials, including reduced water and power consumption. Importantly, this approach is also expected to enhance the clay’s handling characteristics, consistent with sustainable, rapid, and progressive rehabilitation of the land after mining to return it to its former use. The positive physical and chemical characteristics observed in our recent 4-meter column test indicate strong potential for scaling up to commercial heap geometries. This is a critical milestone, as it paves the way for the development of economically viable and scalable extraction processes. Additionally, the low ratio of gangue and impurities to rare earth content in our solutions further supports the heap leach method as a cost-effective and sustainable approach for the Koppamurra project. These results are extremely encouraging as they are unoptimised. Future testwork will focus on work to further optimise the process and understand the optimal conditions to maximise recoveries while minimising impurities with the aim to increase the value of the Project. These achievements are a testament to the dedication and expertise of our team, and they mark a significant step forward in our journey towards efficient and sustainable rare earth extraction. We remain committed to advancing our development pathway and unlocking the full potential of the Koppamurra project." ANSTO Metallurgical Column Leach Testwork Metallurgical column leach testwork commenced at ANSTO in December 2023. The Koppamurra ore material generated from the Bulk Sample Pit operations 1 and from composite ‘variability’ samples responded positively to agglomeration and percolation techniques. Both techniques could be applied at larger scales in a progressive heap leach application and taken forward as a development pathway for the environmentally and economically sustainable multi-generational production of rare earths from the Koppamurra rare earths province. The material, after column leaching, has shown favorable geochemical and geotechnical characteristics for the rapid and sustainable progressive rehabilitation techniques planned for Koppamurra rare earth production. Detailed materials handling and geochemical stability assessments are being made of the material from these current tests. 1 Refer to ASX release 11 April 2022 “Mining Trial Commences at Koppamurra” Since the initiation of metallurgical column leach testwork undertaken at ANSTO in December 2023, six distinct Koppamurra ore samples have been tested in ten column heap leach tests. The samples, sourced from Bulk Sample Pit operations and diverse 'variability' composites across the Project area, have consistently demonstrated suitability for agglomeration and heap leaching. This success has been crucial in demonstrating the uniform physical characteristics and metallurgical recoveries of the Koppamurra ore using the progressive heap leach approach. Past ore variability testing in slurry leach by AR3 has shown a strong correlation between acid consumption, gangue dissolution, rare earth recovery, and calcium content. With the current program, we are progressing to establish a similar correlation for heap leaching, alongside commencing investigation into the optimal operating conditions. In this initial phase of heap leach column test work, both the physical characteristics and metallurgical recoveries of the ore were evaluated over a range of operating conditions, ore characteristics, and spatially diverse locations within the Project area, as follows: Operating Conditions: • • • Acid added in Agglomeration – A low acid addition rate of ~25 kg/t H2SO4 in the ore agglomeration was applied in Column 3 compared to the average rate of ~44 kg/t H2SO4 applied to the nine other columns. Irrigation solution pH – A low lixiviant irrigation solution pH of 1.5 was applied to Column 1, compared to a pH 2.2 solution applied to the nine other columns. Heap Stack Height – Column 10 was stacked to a height of 4 m compared to the 2 m height of the nine other columns. Ore Characteristics and Spatial Diversity: • • Columns 1, 2, 3 and 10 utilised ore from the 2023 Bulk Sample Pit operations. Columns 4, 5, 6, 7, 8 and 9 utilised ‘variability’ composite samples, of varying lithology and grade, derived from 1 m drill hole intervals. Each column was subjected to the same operating conditions. Composite drill hole cuttings masses totaled as follows: CP3a CP4a CP5a CP6a CP10a CP10b 100kg 40kg 70kg 30kg 40kg 20kg The individual samples making up the Composites, CP’s 3a, 4a, 5a, 6a and 10a/10b are listed in Appendix II. The CP locations are illustrated in Figure 1 with respect to the Mineral Resource categories and AR3’s proposed Mine Lease Application boundary. Figure 1: Composite sample locations for Column leach test work, with Column ID’s C1 through C6 (blue) Testwork Results The results from the recently completed columns 3, 7, 8, 9, and 10 have demonstrated consistent recoveries of MRE, ranging from 29% to 74%, across various ore conditions and spatially diverse locations within the project area. Additionally, these columns exhibited uniformity in achieving consistent MRE recoveries in significantly shorter time frames compared to traditional heap leach operations. The duration of irrigation spanned from as short as 22 days for Column 8, up to 72 days for Column 3 where a low acid addition rate was applied in the ore agglomeration stage. This enhances confidence in using heap leach to facilitate rapid MRE recovery and rehabilitation of the utilised land. The heap leach Pregnant Liquor Solution (PLS) has consistently shown low gangue/impurity profiles compared to slurry leach operations. This suggests the potential for more economically sustainable downstream processing conditions to produce a rare earth product. Figure 2: Rare earth recoveries for Columns 3, 7, 8, 9 and 10, showing gangue dissolution characteristics (Al / Fe / Si) with respect to ore variability at constant pH. Notable here is the decreased extraction for C7 ore which had greater calcium concentration, aiding in understanding the target ore characteristics for mining A notable achievement from the recent additional tests was the heap leach column test conducted at a lift height of 4 m, which resulted in positive physical and chemical performance akin to columns 1, 2 and 3 which utilised the same ore sample material. As illustrated in Table 1, the bulk density and porosity of the leached ore, prior to washing, is very similar for the 4 m column (Column 10) compared to the average of the four 2 m columns (columns 3, 7, 8 and 9). This indicated that despite the added height the ore had not compacted during the irrigation period. This success has provided an early indication of the feasibility of increasing the heap height to potential commercial geometries, which could result in reduced heap footprint and capital costs. Table 1: Basic hydrodynamic data for columns 3, 7, 8, 9, 10 on last day of draining after lixiviant irrigation. A key insight from the continued operation of Column 3 (previously reported as at day 32 2) is the impact of applying a low acid addition rate during the ore agglomeration phase on the gangue profile of the PLS. Column 3 received approximately half the acid during agglomeration compared to both Column 1 and Column 2, all of which utilised the same feed ore sample material. Column 3 was subsequently irrigated with a pH 2.2 lixiviant solution until day 40, at which point the lixiviant pH was decreased to 1.0. As a result, the ratio of aluminum dissolution to rare earths was significantly lower compared to both Column 1 and Column 2. Additionally, the ratio of iron dissolution to rare earths was lower in Column 3 compared to Column 1, and similar to Column 2. Despite this low acid addition rate in agglomeration and lower gangue dissolution, Column 3 still impressively achieved approximately 4% greater MRE recoveries than both Column 1 and Column 2. This was achieved while applying a lower total acid addition than Column 1 and a similar total acid addition to Column 2. Figure 3: ANSTO Facilities, Column C10 at 4m height, and displaying positive agglomeration and ‘heaping’ characteristics These additional tests have also enabled the collection of substantial volumes of liquors extracted from the columns for evaluating membrane filtration technology. The membrane filtration evaluation aims to capture and treat both leach reagents and water for reuse in the heap leach process. This has the potential to offer significant operating cost savings and capital cost savings by reducing the volumes of downstream processing. Importantly, this also has the potential to reduce water and reagent use. The significant volumes of liquor obtained through the heap leach testwork will also facilitate impurity removal tests and the preparation of additional mixed rare earth carbonate (MREC) for customer assessment. AR3 continues to work closely with NEO Performance Materials Inc. (“Neo”), a world-leader in the production of rare earth permanent magnets and other rare earth products and whom with AR3 has a non-binding Memorandum of Understanding that provides for an offtake agreement for initial production of a MREC from Koppamurra. Importantly, Neo operates several rare earth production facilities around the world, and is one of the few western separation plants that 2 Refer to ASX release 2 April 2024 “Flowsheet Update for Koppamurra” source MREC from third-party producers. Neo’s experience in providing input to MREC supply continues to be invaluable to AR3. The material, after column heap leach, has shown favourable geochemical and geotechnical characteristics for the environmentally sustainable, rapid, progressive rehabilitation techniques planned for Koppamurra rare earth production. Various heap washing regimes were trialed across columns C7 through C9, with washing currently continuing on C10. The trialed washing regimes provided positive first pass results for understanding wash impact on neutrality and remaining free acid. Detailed heap leach washing, materials handling and geochemical stability assessments are planned for subsequent tests to ensure an environmentally sustainable operation at Koppamurra can be achieved. Table 2: Column Leach Summary (1) Methylene Blue Surface Area - assuming all smectite dominating methylene blue surface area is in the <45 micron fraction [m2/g < 45 micron basis] Next Steps Water Treatment/Recycling Water treatment processes applied to the leach solutions and for the recycle of water and reagents is being assessed at desktop level and will ultimately be tested through the application of reverse osmosis, nano filtration and ultra filtration in a comprehensive test work program to evaluate and select a process for the economic recovery of rare earth elements from the clay hosted deposit at Koppamurra. Impurity Removal Following the leaching program, impurity removal optimisations will be performed to improve the rejection of deleterious elements such as aluminium, iron, silica, whilst maximising the recovery of the rare earths. The testwork will aim to evaluate impurity removal conditions including pH, alkali type, temperature, and residence time. Previous successful impurity removal testwork undertaken by AR3 will now be applied to the much higher-grade rare earths in solution derived from the column leaches which also have lower impurity to REE in solution ratios. Impurity removal steps in the production of marketable mixed rare earth concentrates are further enhanced by lower gangue/REE ratios and can generate lower REE loses through that process. Rare Earth Precipitation Following the impurity removal program, rare earth precipitation tests will be performed to generate a saleable rare earth product. The testwork will evaluate the type of precipitation agent, pH, temperature, residence time, % solids and solid liquid separation performance. Progressive heap leach, high grade rare earths pathway Additional drilling, assay results 3 and resources modelling undertaken at Koppamurra have allowed for the identification of a high-grade rare earth subset of the broader Koppamurra resources. These high-grade ore zones, and the application of temporary heap leaching production pathways, will allow for scalable, efficient production of rare earths with staged satellite developments enhancing the favorable environmental outcomes from a development of this type. A conceptual project process flowsheet is provided at Figure 4. Some of the design features and resulting advantages for the Koppamurra project with a progressive heap leach pathway compared to a slurry leach are as follows: Design Features: • • • High-grade satellite mine sites with temporary heap pads located at the edge of the satellite mine void; Top soil and overburden material temporarily set aside ready to be placed back in the mine void after rare earths have been harvested from the clay and the clay has been washed allowing for rapid and progressive rehabilitation of the land; Water treatment equipment located proximate to the temporary heap pads to facilitate recycling and reuse of water and reagents. Design advantages include: • • • • Potential for a significantly lower capital cost and reduced operating cost project; Opportunity to easily expand and scale up production over time across the multigenerational province; Enables improved environmentally sustainable characteristics with; o Very low water consumption o Reduced power consumption o Materials handling characteristics enabling environmentally sustainable, rapid, progressive rehabilitation techniques Testwork also indicates lower gangue/impurity profile with higher rare earth in solution characteristics through column leach resulting in lower capital and operating cost. 3 Refer to ASX release 30 January 2024 “Additional high grade, shallow mineralisation at Koppamurra” and ASX release 26 February 2024 “High-Grade mineralisation discovered North of Koppamurra MRE” Figure 4: Koppamurra conceptual project flow sheet The announcement has been authorised for release by the Board of Australian Rare Earths Limited. For further information please contact: Australian Rare Earths Limited Travis Beinke Managing Director T: 1 300 646 100 Media Enquiries Jessica Fertig Tau Media E: jessica@taumedia.com.au Engage and Contribute at the AR3 investor hub: https://investorhub.ar3.com.au/ Competent Person’s Statement The information in this report that relates to metallurgical results is based on information compiled by Australian Rare Earths Limited and reviewed by Mr Jon Weir who is the Technical Director of Wallbridge Gilbert Aztec and a member of the Australian Institute of Mining and Metallurgy (AusIMM). Mr. Weir has sufficient experience that is relevant to the metallurgical testing which was undertaken to qualify as a Competent Person as defined in the 2012 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Weir consents to the inclusion in this report of the matters based on this information in the form and context in which it appears. The information in this report that relates to Exploration results is based on information compiled by Australian Rare Earths Limited and reviewed by Mr Rick Pobjoy who is the Chief Technical Officer of the Company and a member of the Australian Institute of Mining and Metallurgy (AusIMM). Mr Pobjoy has sufficient experience that is relevant to the style of mineralisation, the type of deposit under consideration and to the activities undertaken to qualify as a Competent person as defined in the 2012 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Pobjoy consents to the inclusion in this report of the matters based on this information in the form and context in which it appears. About Australian Rare Earths Limited Australian Rare Earths is committed to the timely exploration and development of its 100% owned, flagship Koppamurra Project, located in the new Koppamurra rare earths Province in southeastern South Australia and western Victoria. Koppamurra is a prospective ionic clay hosted rare earth deposit, uniquely rich in all the elements required in the manufacture of rare earth permanent magnets which are essential components in electric vehicles, wind turbines and domestic appliances. In addition, AR3 is actively reviewing other potential prospective areas which may also host uranium and ionic clay hosted rare earth deposits throughout Australia. The Company is focused on executing a growth strategy that will ensure AR3 is positioned to become an independent and sustainable source of energy transition metals, playing a pivotal role in the global transition to a green economy. https://investorhub.ar3.com.au/link/aP3kwP APPENDIX I – JORC TABLE 1 & 2 JORC Table 1 – Section 1 Criteria Sampling techniques Section 1 Sampling Techniques and Data Explanation Comment Nature and quality of RC Aircore drilling methods were used obtain sampling (e.g., cut channels, samples from the October-December 2021, random chips, or specific February-April 2022, September-December 2022 specialised industry standard February- June 2023, and October-December 2023 measurement tools drilling programs. appropriate to the minerals under investigation, such as The following information covers the sampling process: down hole gamma sondes, or • All air core samples were collected from the handheld XRF instruments, rotary splitter mounted at the bottom of the etc). These examples should cyclone using a pre-numbered calico bag and not be taken as limiting the plastic UV sample bag. The samples were broad meaning of sampling. geologically logged at 1 m intervals using the Include reference to marked calico sample which averaged ~1.5 measures taken to ensure kg in mass. sample representivity and • A handheld Olympus Vanta XFR Analyser was the appropriate calibration used to assess the geochemistry of the air of any measurement tools or core samples in the field. The XRF analysis systems used. Aspects of the provided a full suite of mineral elements for determination of characterising the lithological units. mineralisation that are • XRF readings were downloaded from the XRF Material to the Public Report. In cases where Analyser at the end of each day and uploaded ‘industry standard’ work has to the Australian Rare Earths Azure Data been done this would be Studio database. relatively simple (e.g., • Field duplicates were taken at a rate of ‘reverse circulation drilling was • ~1:34 and inserted blindly into the sample used to obtain 1 m samples batches. from which 3 kg was pulverised to produce a 30 g charge for fire • At the laboratory, the samples were oven dried at 105 degrees for a minimum of 24 assay’). In other cases, more hours and secondary crushed to 3 mm explanation may be required, fraction and then pulverised to 90% passing such as where there is coarse 75 µm. Excess residue was maintained for gold that has inherent sampling storage while the rest of the sample placed in problems. Unusual commodities 8x4 packets and sent to the central weighing or mineralisation types (e.g., laboratory. The samples were submitted for submarine nodules) may warrant disclosure analysis using XRF-ICP-MS method. of detailed information. • A laboratory repeat was taken at ~ 1 in 21 samples; • Commercially obtained standards were inserted by the laboratory at a rate of ~ 1 in 9 into the sample sequence. Mechanical excavation techniques were applied to the recovery of samples from the area of AR3’s Trial Pit. Trial Pit samples were taken from a number of discrete locations within the pit, nominally 1m wide x 1m long x 0.5m deep. Material from these locations were loaded into a dump truck by an excavator and taken to a laydown site for assessment. APPENDIX I – JORC TABLE 1 & 2 Criteria Section 1 Sampling Techniques and Data Explanation Comment Up to 5 x dump truck piles of material from each discrete location were dumped on the laydown. Up to 12 x bulka bags were filled from those (up to) 5 x piles of material and each was provided a unique Bulka Bag # which referenced a Location and sample pile number. Eg C2L1aP3 (C2 - cut bench 2, L1a – location 1a, P3 – pile 3). Samples provided for column leach testwork were sourced from Trial Pit Locations; C2L1aP3, Bulka Bag #146 C2L3P2, Bulka Bag #121 C4L4P5, Bulka Bag #410 C4L4P2, Bulka Bag #345 Samples were collected from the Bulka bags and placed into 20 litre buckets for transfer to ANSTO for testwork. APPENDIX I – JORC TABLE 1 & 2 Criteria Drilling techniques Explanation Drill type (e.g., core, reverse circulation, open- hole hammer, rotary air blast, auger, Bangka, sonic, etc) and details (e.g., core diameter, triple or standard tube, depth of diamond tails, facesampling bit, or other type, whether core is oriented and if so, by what method, etc). Comment • Drilling was completed using a Mcleod or Wallis air ore drill rig (Landcruiser 6x6 or similar) for the drilling. • Aircore drilling is a form of reverse circulation drilling where the sample is collected at the face and returned inside the inner tube. The drill cuttings are removed by injection of compressed air into the hole via the annular area between the inner tube and the drill rod. • Aircore drill rods used were 3 m long. • NQ diameter (76 mm) drill bits and rods were used. • All aircore drill holes were vertical with depths varying between 2 m and 36 m. Drill sample recovery Method of recording and • assessing core and chip sample recoveries and results assessed. Measures taken to maximise sample recovery and ensure representative nature of the samples. • Whether a relationship exists between sample recovery and grade and whether sample bias may have occurred due to preferential loss/gain of fine/coarse material. • • • • • Drill sample recovery for aircore is monitored by recording sample condition descriptions where ‘Poor’ to ‘Very Poor’ were used to identify any samples recovered which were potentially not representative of the interval drilled. A comment was included where water injection was required to recover the sample from a particular interval. The use of water injection can potentially bias a sample and very little water injection was required during this drilling program. No significant loses of samples were observed due to the shallow drilling depths (<36 m). The rotary splitter was set to an approximate 20% split, which produced approximately 1.5 kg sample for each meter interval. The 1.5 kg sample was collected in a prenumbered calico bags and the remaining 80% (5 kg to 8 kg) was collected in plastic UV bags labelled with the hole number and sample interval. At the end of each drill rod, the drill string is cleaned by blowing down with air to remove any clay and silt potentially built up in the sample pipes and cyclone. No relationship exists between sample recovery and grade. APPENDIX I – JORC TABLE 1 & 2 Criteria Logging Explanation Comment Whether core and chip • All aircore samples collected in calico bags samples have been were logged for lithology, colour, cement geologically and type, hardness, percentage rock estimate, geotechnically logged to a sorting, and any relevant comments such as level of detail to support moisture, sample condition, or vegetation. appropriate Mineral Resource • Geological logging data for all drill holes was estimation, mining studies qualitatively logged onto Microsoft Excel and metallurgical studies. spreadsheet using a Panasonic Toughbook Whether logging is qualitative with validation rules built into the or quantitative in nature. Core spreadsheet including specific drop- down (or costean, channel, etc) menus for each variable. The data was photography. uploaded to the Australian Rare Earths Azure The total length and percentage Data Studio database. of the relevant intersections logged. • Every drill hole was logged in full and logging was undertaken with reference to a drilling template with codes prescribed and guidance to ensure consistent and systematic data collection. Subsampling techniques and sample preparation If core, whether cut or sawn and whether quarter, half or all cores taken. If non-core, whether riffled, tube sampled, rotary split, etc and whether sampled wet or dry. For all sample types, the nature, quality, and appropriateness of the sample preparation technique. Quality control procedures adopted for all sub-sampling stages to maximise representivity of samples. Measures taken to ensure that the sampling is representative of the in- situ material collected, including for instance results for field duplicate/second-half sampling. Whether sample sizes are appropriate to the grain size of the material being sampled. • 1 m aircore sample interval were homogenised within the cyclone and the rotary splitter was set to an approximate 20% split producing around 1.5 kg sample for each metre interval. • The 1.5 kg sample was collected in a prenumbered calico bag and the 80% (5 kg to 8 kg) portion was collected in plastic UV bags labelled with hole identity and interval. • Duplicates were generally taken within the clay lithologies above the basement as this is the likely zone of REE enrichment. These duplicate samples were normally collected by using a second calico bag and placing it under the rotary splitter collecting a 20% split but due to the difficulties of placing a second calico bag under the rotary splitter during sample collection, some duplicates were collected by hand from the plastic UV bags which captured the other 80% of the material recovered from any particular interval. • The material in the plastic UV bags was mixed up and every attempt to take as representative sample of the material as possible by hand was made and then placed in a pre-numbered calico bag. • The 1.5 kg sample collected in the calico bag was logged by the geologist onsite. The logged samples were placed in polyweave bags and sent to Naracoorte base at the end of each day. The polyweave bags were then placed on pallets and dispatched to Bureau Veritas laboratory in Adelaide in Bulka Bags. APPENDIX I – JORC TABLE 1 & 2 Criteria Explanation Comment • The remaining 80% split from the aircore interval was stored for future reference. • Field duplicates of all the samples were completed at a frequency of ~1 in 34 samples. Field standards were inserted into the sample sequence at a frequency of ~1:57. Standard reference Material (SRM) samples were inserted into the sample batches at a frequency rate of 1 per 10 samples by the laboratory and a repeat sample was taken at a rate of 1 per 21 samples. • A rig geologist oversaw the sampling and logging process while a second geologist selected samples for analysis based on the logging descriptions and pXRF analysis. Clay rich sample and those adjacent to the limestone basement contact were selected for assay. REEs are known to be contained within the clay component of the sediment package based on analysis of XRF data