Quarterly Activities/Appendix 5B Cash Flow Report

Executive Summary

Australian Rare Earths Limited (ASX: AR3) is pleased to provide an update on progress made during the quarter ended 31 December 2024.

Koppamurra Rare Earths Project

During the quarter AR3 was awarded $5 million grant under the Australian Government’s International Partnerships in Critical Minerals Program. The funding will support additional metallurgical testwork, completion of a Pre-Feasibility Study (PFS), and the construction and operation of a Demonstration Plant to advance the Koppamurra Project and significantly derisk the development pathway. AR3 will match the grant funding, bringing the total planned expenditure to $10 million spread over 2025 and 2026.

This grant funding validates the Koppamurra Project as a potential future source of rare earths, helping to create new and diversified supply chains vital to the world’s clean energy transition.

Overland Uranium Project

The Overland Uranium Project expanded to 4,000 km² following the Farm-In Agreement announced in November 2024. This region shows strong potential for In-Situ Recovery (ISR) amenable uranium deposits, with promising paleochannel sediments of the Renmark and Murray Groups.

An inaugural drilling program at the Overland Uranium Project began in October 2024. Initial drilling has provided compelling evidence supporting AR3’s initial geological model.

The five critical elements required for the formation of a sedimentary- hosted uranium deposit have been identified, including a uranium source rock, permeable sediments as migration pathways, and effective reductants acting as traps for uranium precipitation.

Financial Position

AR3 has maintained a strong cash position over the December quarter, following receipt of the first tranche of the International Partnerships in Critical Minerals grant funding from the Australian Government of $750k, received in December 2024, and the R&D incentive received in October of $707k.

This funding supports AR3's capability to continue to make material progress across its portfolio of clean energy transition metals projects.