Australian Rare Earths : Drilling Indicates Strong Potential for Larger Resource

ASX ANNOUNCEMENT

29 April 2022

Koppamurra Drilling Program Indicates Strong Potential for Larger Resource

Highlights

• • Koppamurra project's second major drilling program which ran between February and April 2022 successfully identified extensive, shallow, rare-earth mineralisation adjacent to the Red Tail and Yellow Tail resource deposits, with thicknesses and grades consistent with those previously found in these areas.

• • The intensive resource definition drilling program, undertaken over an area equivalent in size to the Red Tail and Yellow Tail maiden resource footprint, consisted of 1,158 holes and 11,480m at 100m x 100m spacing to supplement the previous drilling of 899 holes and 9,920m in late 2021

• • Additional density determinations across a wide area of the closely spaced drilling supports a 30% dry bulk density increase to be applied in the updated resource estimate

• • These results provide a high level of confidence that the mineralised clays remain shallow, low cost to mine and consistently thick up to ~8km north of Red Tail and Yellow Tail.

• • The three-fold increase in meters drilled at tighter spacing will form the basis for a planned mineral resource update scheduled for June 2022. This will be the first major update since the maiden resource of 39.9Mt reported in April 2021.

Australian Rare Earths Limited(ASX:AR3)('AR3' or the Company) is pleased to announce the following update on exploration activities on its 100% owned, flagship Koppamurra Project, located in South Australia and Victoria.

Resource Definition Drilling

Drilling has recently concluded on a second 10,000m drilling program aimed at the delineation of additional JORC compliant mineral resources adjacent to and extending from the existing Red Tail and Yellow Tail maiden resource announced in April 2021. The program is a continuation of a similar size program completed between October and December 2021, where promising assays were received, showing the potential for extensions to both Red Tail and Yellow Tail of shallow mineralised clay sediments with at least comparable Total Rare Earth Oxide (TREO) grades and thickness to existing resources, at ~6km along strike to the north.

The location of drilling and the assays received are illustrated in Figure 1. A total of 1,158 drillholes and 11,480m were completed during the program which commenced on 2 February and concluded on 13 April 2022. The average depth for the drillholes was 9.9m.

The program successfully identified extensive, shallow, rare-earth mineralisation adjacent to Red Tail and Yellow Tail, with thicknesses and grades in many instances exceeding those from within Red Tail and Yellow Tail. The results from this drilling will support an updated mineral resource estimate due to be completed in June 2022. The areas recently drilled were at 100m x 100m spacing to support resource definition, and

Australian Rare Earths Limited	Phone: [phone]
ABN 73 632 645 302	Email:[e-mail]
Level 10, 111 Gawler Place	Website:www.ar3.com.au
Adelaide, SA 5000

together with the areas already defined for Red Tail and Yellow Tail, forms the basis for an updated resource estimate planned for June 2022.

Assays have been received from 467 drill holes (KM0749 through KM1215). From these, 376 drill holes or 81% returned a weighted average grade of 769ppm TREO, using a 350ppm cut-off. Alternative cut-off grades indicate the following results:

• • 70% of holes returned an average grade of 947ppm TREO at 500ppm cut-off, and

• • 34% of holes returned an average grade of 1,556ppm TREO at 1,000ppm cut-off.

Assays will continue to be completed over the next 6 weeks to support an updated mineral resource estimate scheduled for June 2022.

Notable intersections are as follows:

• • KM0884, 9m @ 908ppm TREO from 1m with 22.5% combined Neodymium/Praseodymium (Nd/Pr) and 2.4% Dysprosium (Dy)

• • KM1198, 7m @ 1,001ppm TREO from 1m with 20.7% combined Nd/Pr and 2.7% Dy

• • KM0976, 8m @ 1,072ppm TREO from 6m with 24.2% combined Nd/Pr and 2.4% Dy

• • KM0762, 7m @ 872ppm TREO from 12m with 21.5% combined Nd/Pr and 2.8% Dy

• • KM0895, 8m @ 566ppm TREO from 1m with 23.9% combined Nd/Pr and 2.7% Dy

• • KM0879, 3m @ 1,610ppm TREO from 1m with 23.9% combined Nd/Pr and 1.9% Dy

• • KM1079, 3m @ 1,428ppm TREO from 4m with 22.9% combined Nd/Pr and 2.0% Dy

• • KM0951, 3m @ 1,403ppm TREO from 5m with 20.8% combined Nd/Pr and 2.5% Dy

• • KM0769, 3m @ 1,367ppm TREO from 2m with 18.6% combined Nd/Pr and 2.2% Dy

• • KM0933, 3m @ 1,545ppm TREO from 5m with 21.7% combined Nd/Pr and 2.0% Dy

• • KM1014, 2m @ 1,542ppm TREO from 4m with 25.8% combined Nd/Pr and 2.2% Dy

The program was undertaken predominantly on private land holdings where AR3 has established access agreements. AR3 continues to have positive engagement with local landowners across its exploration tenure and is working collaboratively to increase the area available for subsequent drilling programs planned for 2022.

Australian Rare Earths Limited	Phone: [phone]
ABN 73 632 645 302	Email:[e-mail]
Level 10, 111 Gawler Place	Website:www.ar3.com.au
Adelaide, SA 5000

Figure 1 - AR3 drillhole locations on EL6509 (Comaum), with Section Locations identified

Five cross sections from the recent drilling adjacent to Red Tail and Yellow Tail illustrates the shallow, extensive, nature of the mineralisation. Most notably, thicker than average intersections have been observed, some up to 9m thick with high grades. The rare earth mineralisation continues to be found accumulated in the clayey sediments overlying the Gambier Limestone. Figure 1 identifies the location of the following five cross sections, with significant intersections detailed in Table 1.

Figure 2 - Cross Section 1

Figure 3 - Cross Section 2

Australian Rare Earths Limited	Phone: [phone]
ABN 73 632 645 302	Email:[e-mail]
Level 10, 111 Gawler Place	Website:www.ar3.com.au
Adelaide, SA 5000

Figure 4 - Cross Section 3

Figure 5 - Cross Section 4