Announcement PDF Koppamurra Rare Earths Project, South Australia May 16, 2023 Highly successful metallurgical tests point to significantly lower processing costs Breakthrough testwork shows that removing larger ore particles before processing increases head grade significantly for little reduction in total recovered rare earths Australian Rare Earths Limited (ASX: AR3) is pleased to announce pivotal metallurgical test results which highlight the potential to significantly reduce capital and production costs at its Koppamurra rare earths project. The tests demonstrated that the vast majority of the valuable rare earths occur in the smaller particles. By separating the ore through simple beneficiation, the larger particles could be removed from the downstream process. This resulted in 90 per cent of the magnet rare earths being contained in 64 percent of the ore. The results are considered transformational as they demonstrate the potential to reduce re-agent consumption, simplify materials handling, reduce the volume of the leach vessels and therefore reduce capital and operating costs significantly. Acting Managing Director Rick Pobjoy welcomed the results: “These latest tests by industry experts ANSTO demonstrate that more than 90 per cent of the important magnetic rare earths can be captured in less than two thirds of the mass during primary processing when the maximum feed size is restricted to less than 75 microns. “This means we could substantially reduce the amount of ore we process substantially, while still maintaining 90 per cent of the valuable rare earths. The potential impact on processing costs and therefore the overall economics of the project and shareholder returns are extremely substantial. “Further work is underway on this approach in parallel with our drive to continue growing the Koppamurra Resource”. Assay by size – Testwork Outline ANSTO Minerals (ANSTO) has completed a number of work programs for Australian Rare Earths (AR3) relating to the recovery of rare earths from the Koppamurra deposit. This latest testwork explores the potential for screening the mineralised clay to remove a portion of the overall material while retaining the majority of the REEs and increasing the REE grade. A scope of work to screen a representative composite sample of the Koppamurra mineral resource and leach the oversize and undersize fractions was prepared by ANSTO. Initial screening work was conducted at 38 µm, with diagnostic leach tests conducted on the oversize and undersize fractions. The oversize fraction was screened further at 45, 75 and 106 µm. Assessment of the screened fractions led to further screening and leaching of a <75 µm fraction. Figure 1 - A composite of five composite samples (CP003, CP004, CP006, CP009 & CP010) representative of the current Koppamurra Mineral Resource were used in this testwork. The initial screen at 38 µm upgraded the total rare earth + Y oxide (TREYO) in the <38 µm fraction by 37%, with only 60% of the mass. The TREYO grade improved from 1133 ppm in the head to 1557 ppm. Further screening of the >38 µm fraction showed 43% of the remaining REs were present in the <75 µm fractions, with only 14% of the mass. Following assessment of these results, an additional screening test was conducted at 75 µm. The Magnet REE upgrade to the <75 µm fraction was 41%. Diagnostic leaches were performed on the size fractions generated through this testwork. The leaches were used to identify any bias of rare earth recovery toward one size fraction or other. Diagnostic leaches are conducted at pH 4 and pH 1 and at low solids volumes, establishing baseline rare-earth extraction characteristics of the samples. Follow up testing from these test results will include repeating the screening at 75 µm across a number of other samples and to test leaching at full slurry density (25 wt%), including optimisation of leach pH as reported previously (ASX: 19/09/2022). This is required to validate the diagnostic results presented here and gather more information on the resulting acid consumption, leach liquor composition and slurry handling at the finer particle size. Further testwork will also include an investigation of the impact of the addition of MgSO4 to the test lixiviant at various points from pH 1 to pH 4. The results here indicate a positive impact on RE recovery. Conditions Sample ID Reagent pH Time (h) ARE <38 µm ARE <38 µm ARE >38 µm ARE >38 µm ARE <75 µm ARE <75 µm ARE <75 µm 0.3 M MgSO4 (pH 4) H2SO4 (pH 1) 0.3 M MgSO4 (pH 4) H2SO4 (pH 1) 0.3 M MgSO4 0.3 M MgSO4 H2SO4 (pH 1) 4.0 1.0 4.0 1.0 4.0 1.0 1.0 0.5 2.0 0.5 2.0 0.5 2.0 2.0 Pr % 13 42 26 57 18 59 50 Nd % 14 45 26 57 20 62 52 Tb % 15 39 24 50 20 52 45 Dy % 14 33 16 37 19 53 45 LRE % 7 27 14 68 11 39 38 HRE Magnet REE TREY TREY-Ce % % % % 15 14 10 15 35 43 29 39 17 25 15 22 39 54 58 45 20 20 14 20 54 60 42 55 45 50 39 46 Table 1 - Magnet Rare Earth recovery (%) at various size fractions and test conditions The announcement has been authorised for release the by the Board of AR3 Limited. For further information please contact: AR3 Limited Rick Pobjoy Acting Managing Director T: 1 300 646 100 Media Enquiries Nicholas Read / Paul Armstrong Read Corporate T: 08 9388 1474 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 – Metallurgy of Wallbridge Gilbert Aztec and a Member of the Australian Institute of Mining and Metallurgy (M 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. Listing Rule 5.23 disclosure The Company confirms that it is not aware of any new information or data that materially affects the Exploration Results and/or the estimates of Mineral Resources in this release, and in respect of the estimates of Mineral Resources reported, that all material assumptions and technical parameters underpinning the estimates continue to apply and have not changed. 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 South Australia and 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. The Company is focused on executing a growth strategy that will ensure AR3 is positioned to become an independent and sustainable source of rare earths, playing a pivotal role in the global transition to a green economy. Appendix I JORC Table 1 – Section 2, Reporting of Exploration Results Criteria Mineral tenement and land tenure status Section 2 Reporting of Exploration Results Explanation Comment Type, reference Koppamurra Project comprises of a granted name/number, location South Australian Exploration Licences (EL), and ownership including EL6509, EL6613, EL6690 and EL6691, along agreements or material with Victorian EL007254 covering a combined issues with third parties area of ~4,000 km2 which is in good standing. such as joint ventures, EL6509 is within 100m of a Glen Roy partnerships, overriding Conservation Park and the Naracoorte Caves royalties, native title National Park, the latter of which is excised interests, historical sites, from the tenement. The License area wilderness or national contains several small Extractive Mineral park and environmental Leases (EML) held by others, Native settings. Vegetation Heritage Agreement areas, as well The security of the tenure as the Deadman’s Swamp Wetlands which held at the time of are wetlands of national importance. reporting along with any known impediments to A Native Title Claim by the First Nations of the obtaining a licence to South East #1 has been registered but is yet operate in the area. to be determined. The claim area includes the areas covered by EL’s 6509, 6613, 6690 and 6691. The exploration work was completed on the tenements (EL 6509 and EL6613) in South Australia and EL007254 which are 100% owned by the company Australian Rare Earths Ltd. The Exploration License EL6509 original date of grant was 15/09/2020 with an expiry date of 14/09/2022. The Exploration License EL6613 original date of grant was 07/07/2021 with an expiry date of 06/07/2027. The Exploration License EL007254 original date of grant was 29/04/2021 with an expiry date of 28/04/2024. Details regarding royalties are discussed in chapter 3.4 of Australian Rare Earths Prospectus dated 7 May 2021. Exploration done by other parties Acknowledgment and appraisal of exploration by other parties. Exploration activities by other exploration companies in the area have not previously targeted or identified REE mineralisation. Historical exploration activities in the vicinity of Koppamurra include investigations for coal, gold and base metals, uranium, and heavy mineral sands. Historical exploration by other parties is detailed in Chapter 7 of Australian Rare Earths Prospectus dated 7 May 2021. Geology Deposit type, geological setting and style of mineralisation. The ionic clay hosted REE mineralisation at Koppamurra is hosted by clayey sediments interpreted to have been deposited onto a limestone base (Gambier Limestone) and accumulated in an interdunal, lagoonal or estuarine environment which has been extensively mapped east of the Kanawinka fault in SE SA. A dedicated post-doctoral research program investigating the source of the REE at Koppamurra is ongoing, with no definitive source of the REE confirmed to date although preliminary results of this study have ruled out the alkali volcanics in southeastern Australia which was originally considered. Mineralogical test work conducted on clay samples from the project area established that the dominant clay minerals are smectite and kaolin, and that the few REE-rich minerals detected during the scanning electron microscope (SEM) investigation were not considered inconsistent with the suggestion that a significant proportion of REE are distributed in the material as adsorbed elements on clay and iron oxide surfaces. Drill hole Information A summary of all information material to the understanding of the exploration results including a tabulation of the following information for all Material drill holes: - easting and northing of the drill hole collar - elevation or RL (Reduced Level – elevation above sea level in metres) of the drill hole collar - dip and azimuth of the hole - down hole length and interception depth - hole length. If the exclusion of this information is justified on the basis that the information is not Material and this exclusion does not detract from the understanding of the report, the Competent Person should clearly explain why this is the case. The material information for drill holes relating to this report are contained within Appendices of this release. Data aggregation methods In reporting Exploration Results, weighting averaging techniques, maximum and/or minimum grade truncations (eg cutting of high grades) and cutoff grades are usually Material and should be stated. Where aggregate intercepts incorporate short lengths of high grade results and longer lengths of low grade results, the procedure used for such aggregation should be stated and some typical examples of such aggregations should be shown in detail. No metal equivalents or data aggregation methods have been used. Relationship between mineralisation widths and intercept lengths Diagrams Balanced reporting The assumptions used for any reporting of metal equivalent values should be clearly stated. These relationships are particularly important in the reporting of Exploration Results. If the geometry of the mineralisation with respect to the drill hole angle is known, its nature should be reported. If it is not known and only the down hole lengths are reported, there should be a clear statement to this effect (eg ‘down hole length, true width not known’). Appropriate maps and sections (with scales) and tabulations of intercepts should be included for any significant discovery being reported These should include, but not be limited to a plan view of drill hole collar locations and appropriate sectional views. Where comprehensive reporting of all Exploration Results is not practicable, representative reporting of both low and high grades and/or widths should be practiced to avoid misleading reporting of Exploration Results. All intercepts reported are down hole lengths. The mineralisation is interpreted to be flat lying. Morphology of the mineralised unit is influenced by the morphology of the undulating limestone basement below. Drilling is vertical perpendicular to mineralisation. Any internal variations to REE distribution within the horizontal layering was not defined, therefore the true width is considered not known. Diagrams are included in the body of this release. This release contains all drilling results that are consistent with the JORC guidelines. Where data may have been excluded, it is considered not material. Other substantive exploration data Further work Other exploration data, if meaningful and material, should be reported including (but not limited to): geological observations; geophysical survey results; geochemical survey results; bulk samples – size and method of treatment; metallurgical test results; bulk density, groundwater, geotechnical and rock characteristics; potential deleterious or contaminating substances. The nature and scale of planned further work (eg tests for lateral extensions or depth extensions or largescale step-out drilling). Diagrams clearly highlighting the areas of possible extensions, including the main geological interpretations and future drilling areas, provided this information is not commercially sensitive. All known relevant exploration data has been reported in this release. AR3 intend to continue to define the Koppamurra resource during 2023. This will include (but not limited to) drilling, assay, ground based geophysical surveys and further metallurgical testwork. Appendix II Aircore Drillhole Collars contributing to material provided for metallurgical test work Hole_ID East North RL 493793 5885320 KM1198 KM1199 493895 5885317 KM1200 493995 5885317 KM1202 493891 5885218 KM1204 493797 5885117 KM1205 493894 5885116 KM1209 493799 5885019 KM1418 495827 5883287 KM1419 495736 5883291 KM1423 495350 5883395 KM1427 495746 5883397 KM1430 495747 5883493 KM1445 495756 5883600 KM1446 495864 5883592 KM1591 495443 5884516 KM1594 495143 5884513 KM1595 495046 5884515 KM1597 495250 5884415 KM1598 495347 5884421 KM1600 495447 5884320 KM1601 495349 5884320 KM1602 495265 5884317 KM1608 496253 5882694 KM1609 496351 5882689 KM1610 496376 5882796 KM1611 496245 5882792 KM1622 496284 5882591 KM1623 496375 5882593 KM1672 494380 5882815 KM1674 494378 5883015 KM1690 494080 5883007 KM1691 494280 5883112 KM1693 494181 5883019 KM1694 494281 5882916 KM1695 494178 5882914 KM1696 494081 5882916 Drill MethoDown Hole Width (mm) Total Depth EOH (m) Azim 96.7 Air-Core 76 8 97.3 Air-Core 76 12 94.9 Air-Core 76 18 98.2 Air-Core 76 9 98 Air-Core 76 6 98.1 Air-Core 76 9 97.8 Air-Core 76 6 110.4 Air-Core 76 6 109.5 Air-Core 76 6 104.3 Air-Core 76 6 107.3 Air-Core 76 6 105.9 Air-Core 76 9 108.8 Air-Core 76 6 111.4 Air-Core 76 9 105.6 Air-Core 76 12 101.9 Air-Core 76 8 101.4 Air-Core 76 11 101.3 Air-Core 76 9 100.4 Air-Core 76 18 105.8 Air-Core 76 6 103.3 Air-Core 76 6 103.4 Air-Core 76 6 111.2 Air-Core 76 12 110.9 Air-Core 76 9 109.5 Air-Core 76 15 112 Air-Core 76 12 111.3 Air-Core 76 9 111.6 Air-Core 76 9 102.8 Air-Core 76 6 99.4 Air-Core 76 6 101.2 Air-Core 76 5 99.9 Air-Core 76 6 100.6 Air-Core 76 6 99.6 Air-Core 76 6 99.6 Air-Core 76 6 99.8 Air-Core 76 3 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Dip -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 -90 Appendix III Drillhole intervals used for the material provided for metallurgical test work CP_# CP003 CP003 CP003 CP003 CP003 CP003 CP003 CP003 CP003 CP003 CP003 CP003 CP004 CP004 CP004 CP004 CP004 CP004 CP004 CP004 CP004 CP004 CP006 CP006 CP006 CP006 CP006 CP006 CP006 CP006 CP006 CP006 CP009 CP009 Hole_ID Sample_ID Depth_From Depth_To KM1198 671503 2 3 KM1198 671504 3 4 KM1198 671505 4 5 KM1198 671506 5 6 KM1199 671510 1 2 KM1200 671525 4 5 KM1202 671548 0 1 KM1204 671564 1 2 KM1204 671565 2 3 KM1205 671570 1 2 KM1205 671571 2 3 KM1209 671613 4 5 KM1672 676211 2 3 KM1674 676223 2 3 KM1690 676349 2 3 KM1691 676353 1 2 KM1691 676354 2 3 KM1693 676366 2 3 KM1694 676372 2 3 KM1695 676378 2 3 KM1695 676379 3 4 KM1696 676382 0 1 KM1418 673808 2 3 KM1418 673809 3 4 KM1419 673814 2 3 KM1423 673847 2 3 KM1427 673875 4 5 KM1430 673896 4 5 KM1430 673897 5 6 KM1445 674028 2 3 KM1446 674036 4 5 KM1446 674037 5 6 KM1591 675513 7 8 KM1594 675537 4 5 CP009 CP009 CP009 CP009 CP009 CP009 CP009 CP009 CP009 CP009 CP009 CP010 CP010 CP010 CP010 CP010 CP010 CP010 CP010 CP010 CP010 CP010 CP010 CP010 KM1595 KM1595 KM1597 KM1598 KM1598 KM1598 KM1598 KM1600 KM1600 KM1601 KM1602 KM1608 KM1608 KM1609 KM1609 KM1610 KM1610 KM1610 KM1611 KM1611 KM1611 KM1622 KM1623 KM1623 675546 675547 675560 675572 675573 675574 675575 675591 675592 675595 675601 675648 675649 675657 675658 675668 675669 675670 675683 675684 675685 675812 675820 675821 5 6 5 8 9 10 11 3 4 1 1 7 8 4 5 6 7 8 6 7 8 7 6 6 6 7 6 9 10 11 12 4 5 2 2 8 9 5 6 7 8 9 7 8 9 8 7 7