Announcement PDF AUSTRALIAN RARE EARTHS LIMITED ACN 632 645 302 OFFER BOOKLET A pro-rata non renounceable entitlement issue of up to approximately 52,996,576 fully paid ordinary shares (Shares) at an issue price of $0.068 per Share, on the basis of 1 new Share for every 3 Shares held on the record date, to raise up to approximately $3.6 million before expenses. The Company will also issue up to approximately 26,498,288 options, on the basis of 1 free attaching unlisted option for every 2 shares subscribed for, with each option having an exercise price of $0.10 and expiring on 30 March 2029 (unless accelerated) (Option) (Offer). If the Shares of the Company close at or above $0.15 for twenty (20) consecutive trading days on the ASX, then the Company may, in its absolute discretion, elect to accelerate the expiry date of the Options by issuing a news release announcing the accelerated Option term, pursuant to which the Options will expire on the 30th calendar day after the date of such news release. Further details including the timetable, the key risks and how to accept the Offer, will be set out in this Offer Booklet). The offer opens at 5:00pm on Monday, 31 March 2025 and closes at 5.00 pm (Adelaide time) on Monday, 14 April 2025. Valid acceptances must be received before that time. IMPORTANT INFORMATION Please read the instructions in this Offer Booklet and the accompanying Acceptance Form regarding the acceptance of your entitlement under the Offer. THIS IS AN IMPORTANT DOCUMENT AND REQUIRES YOUR IMMEDIATE ATTENTION. IT SHOULD BE READ IN ITS ENTIRETY. IF YOU ARE IN DOUBT ABOUT WHAT TO DO, YOU SHOULD CONSULT YOUR STOCKBROKER, ACCOUNTANT, LAWYER OR OTHER PROFESSIONAL ADVISER. This Offer Booklet is not a prospectus. It does not contain all of the information that an investor would find in a prospectus or other disclosure document and has not been lodged with ASIC. This Offer Booklet may not be released to US wire services or distributed in the United States Important notice - - This Offer Booklet has been issued by Australian Rare Earths Limited ACN 632 645 302 (AR3). This Offer Booklet is dated 31 March 2025 and relates to the Offer, which is part of the Offer by AR3. Capitalised terms in this section have the meaning given to them in Section 8 of this Offer Booklet. The Offer is made pursuant to section 708AA of the Corporations Act 2001 (Cth) (as notionally modified by ASIC Corporations (Non-Traditional Rights Issues) Instrument 2016/84 and ASIC Corporations (Disregarding Technical Relief) Instrument 2016/73) (Corporations Act) for the offer of New Shares without disclosure without disclosure to investors under a prospectus or other disclosure document. This Offer Booklet is not a prospectus, a product disclosure statement or other disclosure document under the Corporations Act and has not been lodged with ASIC or any other foreign regulator. This Offer Booklet does not contain all of the information which would be required to be disclosed in a prospectus, product disclosure statement or other disclosure document. As a result, it is important for you to read and understand the publicly available information in relation to AR3 and the Offer (e.g. the information available on AR3's website at www.ar3.com.au or on ASX’s website at www.asx.com.au) prior to deciding whether to accept your Entitlement and apply for New Shares in accordance with the terms of this Offer Booklet. The information in this Offer Booklet does not constitute financial product, legal, tax or other advice and does not take into account your personal circumstances, including your investment objectives, financial situation or other needs. Please contact your professional adviser or the Company on 1300 646 100 between 8.30am and 5.30pm (Adelaide time) on Monday to Friday if you have any questions. This Offer Booklet should be read in its entirety (including the accompanying Acceptance Form) before you decide to participate in the Offer. In particular, the investor presentation in Section 9 of this Offer Booklet details important factors and risks that could affect the financial and operating performance of AR3. Please refer to the ‘Key risks’ section of the investor presentation incorporated in Section 8 for details. When making an investment decision in connection with the Offer, it is essential that you consider these risk factors carefully in light of your individual personal circumstances, including financial and taxation issues, and obtain advice from your professional adviser. In addition to reading this Offer Booklet in conjunction with AR3's other periodic and continuous disclosure announcements including the investor presentation and AR3's announcements to ASX and on its website, you should conduct your own independent review, investigations and analysis of AR3 and the New Shares and obtain any professional advice you require to evaluate the merits and risks of an investment in AR3 before making any investment decision. By paying for your New Shares through BPAY® in accordance with the instructions on the Acceptance Form, you acknowledge that you have read this Offer Booklet, and you have acted in accordance with and agree to the terms of the Offer detailed in this Offer Booklet. Acceptance Form The Acceptance Form accompanying this Offer Booklet is important. To participate in the Offer, you must complete the Acceptance Form and pay the application money pursuant to Section 5 before 5.00 pm (Adelaide time) on the Closing Date. Please refer to the instructions in Section 4 regarding the acceptance of your Entitlement. No overseas offering This Offer Booklet and the accompanying Acceptance Form do not constitute an offer or invitation in any place in which, or to any person to whom, it would not be lawful to make such an offer or invitation. In particular, this Offer Booklet does not constitute an offer to ineligible shareholders (being shareholders of the Company who do not meet the requirements of an Eligible Shareholder). This Offer Booklet is not to be distributed in, and no offer of New Shares is to be made, in countries other than Australia, New Zealand and Canada. No action has been taken to register or qualify the Offer, the Entitlements or the New Shares, or otherwise permit the public offering of the New Shares, in any jurisdiction other than Australia, New Zealand and Canada. The distribution of this Offer Booklet (including an electronic copy) outside Australia, New Zealand and Canada, is restricted by law. If you come into possession of the information in this Offer Booklet, you should observe such restrictions, including those set forth below. Any noncompliance with these restrictions may contravene applicable securities laws. New Zealand The New Shares are not being offered to the public within New Zealand other than to existing shareholders of AR3 with registered addresses in New Zealand to whom the offer of these securities is being made in reliance on the Financial Markets Conduct (Incidental Offers) Exemption Notice 2021. This Offer Booklet has been prepared in compliance with Australian law and has not been registered, filed with or approved by any New Zealand regulatory authority under the Financial Markets Conduct Act 2013. This Offer Booklet is not a product disclosure statement under New Zealand law and is not required to, and may not, contain all the information that a product disclosure statement under New Zealand law is required to contain. United States Neither this Offer Booklet nor the accompanying Form constitutes an offer to sell, or the solicitation of an offer to buy, any securities in the United States. Neither this Offer Booklet (or any part of it), the accompanying ASX Announcements and Investor Presentation nor the accompanying Acceptance Form may be distributed, directly or indirectly, to persons in the United States. The New Shares have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (U.S. Securities Act) or the securities laws of any state or other jurisdiction of the United States. The Entitlements may not be taken up by persons in the United States, and the New Shares may not be offered or sold, directly or indirectly, in the United States, except in transactions exempt from, or not subject to, the registration requirements of the U.S. Securities Act and applicable securities laws of any state or other jurisdiction of the United States. Definitions Defined terms used in this Offer Booklet are contained in Section 8. Taxation There may be tax implications associated with participating in the Offer and receiving New Shares. AR3 recommends that you consult your professional tax adviser in connection with the Offer. Privacy AR3 collects information about each applicant for the purposes of processing an application and, if the application is successful, to administer the applicant's shareholding in AR3. By paying for your New Shares through BPAY® in accordance with the instructions on the Acceptance Form, you will be providing personal information to AR3 (directly or through the Share Registry). AR3 collects, holds and will use that information to assess your application. AR3 collects your personal information to process and administer your shareholding in AR3 and to provide related services to you. AR3 may disclose your personal information for purposes related to your shareholding in AR3, including to the Share Registry, AR3's related bodies corporate, agents, contractors and third-party service providers, including mailing houses and professional advisers, and to ASX and regulatory bodies. You can obtain access to personal information that AR3 holds about you. To make a request for access to your personal information held by (or on behalf of) AR3, please contact AR3 through the Share Registry. Governing law This Offer Booklet, the Offer and the contracts formed on acceptance of the applications are governed by the law of South Australia, Australia. Each applicant submits to the exclusive jurisdiction of the courts of South Australia, Australia. No representations No person is authorised to give any information or to make any representation in connection with the Offer that is not contained in this Offer Booklet. Any information or representation in connection with the Offer not contained in the Offer Booklet may not be relied upon as having been authorised by AR3 or any of its officers. Past performance Investors should note that AR3's past performance, including past share price performance, cannot be relied upon as an indicator of (and provides no guarantee or guidance as to) AR3's future performance including AR3's future financial position or share price performance. Future performance This Offer Booklet contains certain forward-looking statements with respect to the financial performance and position, results of operations, projects and business of AR3 and certain plans and objectives of the management of AR3. Forward-looking statements include those containing words such as 'anticipate', 'believe', 'expect', 'estimate', 'should', 'will', 'plan', 'could', 'may', 'intends', 'guidance', 'project', 'forecast', 'target', 'likely' and other similar expressions, and include, but are not limited to, statements regarding the outcome and effects of the Offer. Any forward-looking statements, opinions and estimates provided in this Offer Booklet are based on assumptions and contingencies which are subject to change without notice and involve known and unknown risks and uncertainties and other factors that are beyond the control of AR3. This includes any statements about market and industry trends, which are based on interpretations of current market conditions. Forwardlooking statements may include projections, guidance on future revenues, earnings, dividends and estimates. Disclaimer Determination of eligibility of investors for the purposes of this Offer is determined by reference to a number of matters, including legal and regulatory requirements, logistical and registry constraints and the discretion of AR3. To the maximum extent permitted by law, AR3 disclaims any duty or liability (including for negligence) in respect of that determination and the exercise or otherwise of that discretion. All representations, warranties and disclaimers (or other limitations of liability) contained in this Offer Booklet is given or included (as applicable) to the maximum extent permitted by law, and only to that extent. Risks Refer to the ‘Key risks’ section of the investor presentation included in Section 8 of this Offer Booklet for a summary of general and specific risk factors that may affect AR3. You should consider these risks carefully in light of your personal circumstances, including financial and taxation issues, before making an investment decision in connection with the Offer. No cooling off Cooling off rights do not apply to an investment in New Shares. You cannot withdraw an application once it has been accepted. Times and dates Times and dates in this Offer Booklet are indicative only and subject to change. All times and dates refer to Adelaide time. Refer to the timetable in Section 1 of this Retail Offer Booklet for more details. Currency Unless otherwise stated, all dollar values in this Offer Booklet are in Australian dollars ($ or A$). These forward-looking statements contained in this Offer Booklet involve known and unknown risks, uncertainties and other factors which are subject to change without notice and may involve significant elements of subjective judgement and assumptions as to future events which may or may not be correct. Rounding You are strongly cautioned not to place undue reliance on forwardlooking statements. Trading New Shares Forward-looking statements are provided as a general guide only and there can be no assurance that actual outcomes will not differ materially from these statements. Neither AR3, nor any other person, gives any representation, warranty, assurance or guarantee (express or implied) that the occurrence of the events expressed or implied in any forward-looking statement will actually occur. A number of important factors could cause actual results or performance to differ materially from the forward-looking statements. Investors should consider the forward-looking statements contained in this Offer Booklet in light of those disclosures. The forward-looking statements are based on information available to AR3 as at the date of this Offer Booklet. Except as required by law or regulation (including the ASX Listing Rules), AR3 is under no obligation to provide any additional or updated information whether as a result of new information, future events or results or otherwise. Any discrepancies between totals and sums and components in tables contained in this Offer Booklet are due to rounding. AR3 will have no responsibility and disclaims all liability (to the maximum extent permitted by law and only to that extent) to persons who trade New Shares they believe will be issued to them before they receive their holding statements, whether on the basis of confirmation of the allocation provided by AR3 or the Share Registry or otherwise, or who otherwise trade or purport to trade New Shares in error or which they do not hold or are not entitled to. No Entitlements trading Entitlements are non-renounceable and cannot be traded on ASX or any other exchange, nor can they be privately transferred. Disclaimer of representations No person is authorised to give any information, or to make any representation, in connection with the Offer that is not contained in this Offer Booklet. To the maximum extent permitted by law, and only to that extent, any information or representation that is not in this Offer Booklet may not be relied on as having been authorised by AR3, its officers or its related bodies corporate in connection with the Offer. If you are in any doubt as to these matters, you should first consult with your stockbroker, lawyer, accountant or other professional adviser. 1. Chairmans Letter 1 2. Summary & key dates 4 2.1 Summary of the Offer 4 2.2 Key Dates 4 2.3 Enquiries 5 3. Summary of alternatives available to you 5 4. Overview of the Offer 6 4.1 Offer 6 4.2 Eligibility to participate 7 4.3 Rights to apply for New Shares are non-renounceable 7 4.4 Price of Offer 8 4.5 Timing 8 4.6 Top-Up Facility – Application for Additional Shares 8 4.7 Top-Up Facility – Scale back 8 4.8 Top-Up Facility – Shortfall 9 4.9 Allocation policy 9 5. 6. 7. 8. How to apply 9 5.1 Effect of Acceptance Form 10 5.2 Rights attached to the New Shares 11 5.3 Rights attached to the Options 11 5.4 Statements 12 5.5 United States 12 Control implications & capital structure 13 6.1 Change in Control 13 Additional information 13 7.1 Continuous Disclosure Obligations 13 7.2 Dispute resolution 13 7.3 Notices 14 7.4 Waiver, amendment, suspension and termination 14 Investment risks 14 8.1 Risks specific to the Offer 14 8.2 Risks specific to the Company 15 9. Definitions 17 10. Corporate information 19 11. Appendix: Investor presentation 20 1. Chairmans Letter Dear Shareholder, AUSTRALIAN RARE EARTHS LIMITED NON-RENOUNCEABLE RIGHTS ISSUE OFFER On behalf of Australian Rare Earths Limited (ASX: AR3) I am pleased to invite shareholders to invest in a non-renounceable rights issue, providing an opportunity for you to participate in our growth story at a pivotal time. Over the past two years, AR3 has strategically expanded its portfolio and achieved significant milestones, demonstrating our commitment to becoming a supplier of critical minerals for the global clean energy transition. Why Invest in AR3? AR3 has transformed itself from a single-project company to a diversified critical minerals developer and explorer with attractive growth prospects and government recognition. Our key investment points include: Early success in a frontier uranium play: Our Overland Uranium Project covers approximately 4,000 km² of tenements highly prospective for uranium in South Australia one of only two jurisdictions in Australia to allow uranium mining. Drilling in late 2024 and early 2025 at the Overland Project has already demonstrated its potential for both near surface, calcrete-hosted uranium and deeper, ISR-amenable deposits, emphasising the value of the Company's vast 4,000km² exploration land package in a frontier uranium play. We have an active follow-up drilling program planned for this year. Rare earths project advancing with Government recognition and support: AR3 has been awarded a $5 million grant from the Australian Government's International Partnerships in Critical Minerals Program, highlighting the strategic importance of our Koppamurra Rare Earth Project. Our grant application was supported by longstanding AR3 cornerstone shareholder and global advanced industrial materials manufacturer, Neo Performance Materials, which has over 30 years of international rare earth magnetics experience. With this grant, and our existing cash reserves, Koppamurra is now largely funded to deliver a Pre-Feasibility Study and build and operate a demonstration facility during the later part of 2025 and 2026. As we progress Koppamurra over 2025/26, every dollar AR3 invests can unlock more – multiplied by grant co-funding from the Australian Government for the Pre-Feasibility Studies and planned Demonstration Facility and further boosted by cash rebates from the Research and Development Tax Incentive (RDTI) on eligible activities. Advancing Koppamurra will help create new and diversified rare earth supply chains vital to the world’s clean energy transition. Positioned for the future: Our two commodity focus areas capitalise on a growing uranium market underpinned by new reactor builds and restarts, and a global rare earth market eager for new secure and reliable supply options. Invitation to Participate We invite our current shareholders to continue their support in this exciting phase of AR3’s development. This rights issue will enable us to accelerate our uranium exploration program at the Overland Project while we progress our Koppamurra rare earths project with the benefit of Australian Government support. 1 The Offer The Company offers eligible shareholders the opportunity to participate in a pro-rata nonrenounceable entitlement issue of up to approximately 52,996,576 fully paid ordinary shares (Shares) at an issue price of $0.068 per Share, on the basis of 1 new Share for every 3 Shares held on the record date, to raise up to approximately $3.6 million before expenses. The Company will also issue up to approximately 26,498,288 options, on the basis of 1 free attaching unlisted option for every 2 shares subscribed for, with each option having an exercise price of $0.10 and expiring on 30 March 2029 (unless accelerated) (Option) (Offer). The acceleration provisions of the options are as follows: If the Shares of the Company close at or above$0.15 (a 50% premium to the option exercise price) for twenty (20) consecutive trading days on the ASX, then the Company may, in its absolute discretion, elect to accelerate the expiry date of the Options by issuing a news release announcing the accelerated Option term, pursuant to which the Options will expire on the 30th calendar day after the date of such news release. Shareholders can exercise their options up until any such new expiry date, by completing the relevant option exercise form, and making payment of the option exercise price to the Company. A full explanation of the rights attaching to the shares and options will be set out in the Offer Booklet detailing the terms of the offer. The rights issue price represents a discount of: • 17.1% to the Company’s last closing price of $0.082 on the ASX prior to announcement of the Offer; and • 20.0% to the Company’s 30-day VWAP prior to the announcement of the Offer of $0.085 Funds raised under the Offer will be used: • to fund uranium exploration at Overland and potentially elsewhere; • to progress the development of the Company’s flagship Australian rare earths project at Koppamurra through the next study phase; • in support of business development activities and the potential acquisition of possible new projects (if identified); • for general corporate activity and general working capital; and • for expenses associated with the Offer. The Rights Issue is open to registered holder of Shares at 5pm (Adelaide time) on the Record Date with a registered address in Australia (and its external territories), New Zealand or Canada. Any entitlement not taken up (Shortfall Shares) will be offered under a top-up facility, allowing eligible shareholders who have fully subscribed to their entitlement under the Offer (excluding Listing Rule 10.11) to apply for additional Shares. If demand for additional Shares exceeds the available Shortfall Shares, the Company may scale back allocations in its complete discretion (in accordance with the Corporations Act, the ASX Listing Rules and any other applicable laws and regulations). New Shares issued under the Offer will rank equally in all respects with existing Shares on issue. Information about how eligible shareholders can accept their entitlement will be set out in the offer booklet, and letter to eligible shareholders. Eligible shareholders should consider the offer booklet in deciding whether to subscribe for Shares under the Rights Issue. The Offer is not underwritten. The Directors intend to participate in the Offer and take up their entitlements in full. 2 The offer to participate in the Offer will open on 31 March 2025 and will remain open until 5pm (Adelaide time) on 14 April 2025 (Closing Date). The Company reserves the right to extend the Closing Date. Participation in Offer The number of Shares for which you are entitled to apply for under the Offer is shown on your personalised Acceptance Form. Fractional Entitlements will be rounded up to the nearest whole number. Any Entitlement not taken up pursuant to the Offer will form the shortfall. Eligible Shareholders who wish to subscribe for additional Shares above their entitlement are invited to apply for top-up by making payment for such top-up in accordance with section 4 of the Offer Booklet. Allocation of the Top-Up Facility will be at the discretion of the Board. Applications Your acceptance of Shares under the Offer must be made following the instructions on your personalised Acceptance Form (which is available online) and paying the application monies electronically by Bpay or EFT in accordance with the instructions of the Acceptance Form. If you are unable to access https://investor.automic.com.au/#/loginsah, then you can obtain a copy of the Offer Booklet and your Acceptance From by contacting Automic at 1300 288 644 (within Australia) or +61 2 9698 5414 (international) between 5:30am to 5:00pm (AWST), Monday to Friday or email corporate.actions@automicgroup.com.au and asking them to mail a paper copy of the Offer Booklet and your Acceptance Form to you free of charge. Actions required of Eligible Shareholders There are a number of actions you can take: • accept your full entitlement. • accept your full entitlement and apply for additional Shares as part of the Top-Up Facility. • take up a proportion of your Entitlement and allow the balance to lapse; or • if you don’t wish to accept all or part of your Entitlement, you are not obliged to do anything. Full details of the Offer and how to participate are contained in the Terms and Conditions accompanying this letter, which shareholders are strongly encouraged to read and consider carefully. For the avoidance of doubt, the Terms and Conditions accompanying this letter form part of the Offer and are binding on Eligible Shareholders who accept the Offer. For any questions in relation to the Offer, please contact Noel Whitcher, Company Secretary at noel@ar3.com.au or Automic. Thank you for your continued support of the Company. Yours sincerely, Angus Barker Chairman Australian Rare Earths Limited 3 2. Summary & key dates 2.1 Summary of the Offer Offer Offer 1 New Share for every 3 Existing Shares Offer Price $0.068 Number of Shares 52,996,576 (approximately) Gross Proceeds $3.6 Million (if taken up in full) Offer 1 Option for every 2 New Shares Strike Price $0.10 Number of Options 26,498,288 (approximately) Gross Proceeds $2.6 Million (if all Options exercised) 2.2 Key Dates Activity Date Announcement of issue 25 March 2025 ASX Lodgements 25 March 2025 Ex Date 27 March 2025 Record date 28 March 2025 Offer Opens 31 March 2025 Latest date to extend 9 April 2025 Closing date 14 April 2025 Settlement 15 April 2025 Announcement of results 17 April 2025 Lodge 2A (new shares trade) 22 April 2025 This timetable is indicative only and may change. AR3 reserves the right to amend any or all of these dates and times subject to the Corporations Act, the ASX Listing Rules and other applicable laws. In particular, AR3 reserves the right to extend the closing date for the Offer, to accept late applications under the Offer (either generally or in particular cases) and to withdraw the Offer without prior notice. Any extension of the closing date will have a consequential effect on the allotment date of New Shares. AR3 also reserves the right not to proceed with the Offer in whole or in part at any time prior to allotment and issue of the New Shares. In that event, the relevant application money (without interest) paid pursuant to clause 5 will be returned in full to the relevant applicants. 4 2.3 Enquiries For enquiries, please call 1300 646 100 between 8.30am and 5.30pm (Adelaide time) on Monday to Friday, before the Offer closes at 5.00pm (Adelaide time) on 14 April 2025 (unless extended). Alternatively, please contact your stockbroker, lawyer, accountant or other appropriately qualified professional adviser. 3. Summary of alternatives available to you If you are an Eligible Shareholder, you may take one of the following actions: 1. take up all of your Entitlement only; 2. take up all of your Entitlement and also apply for additional New Shares under the Top-Up Facility; 3. take up part of your Entitlement and allow the balance to lapse; or 4. do nothing, in which case your entire Entitlement will lapse, and you will receive no value for those lapsed Entitlements. The Offer closes at 5.00pm (Adelaide time) on 14 April 2025. Options available to you Key considerations Further information Take up all of your Entitlement • You may elect to purchase New Shares at the Offer Price for your full Entitlement (see Section 4 for instructions on how to take up your Entitlement). Section 4 • The New Shares will rank equally in all respects with Existing Shares. • Your percentage shareholding in the Company will not be diluted. Take up all of your Entitlement and also apply for additional New Shares in excess of your Entitlement under the Top- Up Facility • If you take up all of your Entitlement, you may also apply for additional New Shares under the Top-Up Facility at the Offer Price. There is no guarantee that you will be allocated any additional New Shares under the Top-Up Facility. Take up part of your Entitlement You may elect to purchase some New Shares at the Offer Price, being less than your full Entitlement. If you do not take up your Entitlement in full: Section 4.2 • Your percentage shareholding in the Company will not be diluted. Sections 4.3 and 4.5 • those Entitlements not taken up will lapse and you will not receive any payment or value for them. Your Entitlement to participate in the Offer is non-renounceable, which means your Entitlements that are not taken up are nontransferrable and cannot be sold, traded on ASX or any other exchange, nor can they be privately tran