Australian Rare Earths : Highest Koppamurra Grades Discovered and Trial Pit Planned

ASX ANNOUNCEMENT

21 February 2022

For personal use only

Highest Koppamurra Grades Discovered

and Trial Pit Planned

Highlights

• Koppamurra continues to deliver with results from 79 push tube core drillholes completed in the proposed Trial Pit test area adjacent to the Red Tail Resource, yielding the highest grades seen at Koppamurra to date.
• • Grades as high as 9,244ppm Total Rare Earth Oxides (TREO) have been identified in push tube core samples
  • 16 of the push tube core drillholes completed in the Trial Pit area are showing significant intersections with average TREO contents greater than 1,500ppm
• Assays received from air-core drilling in the Comaum area show potential for a 6km extension of the existing Red Tail resource to the North. Assays results received to date from the October to December 2021 drilling programme have indicated 3 and 4m thickness with grades exceeding 1,000ppm TREO
• • KM0574, 3m @ 2,165ppm TREO from 6m with 22.9% combined Neodymium / Praseodymium (Nd/Pr) and 3.0% Dysprosium (Dy)
  • KM0655, 4m @ 1,166ppm TREO from 8m with 18.0% combined Nd/Pr and 2.6% Dy
  • KM0706, 3m @ 1,313ppm TREO from 1m with 20.0% combined Nd/Pr and 2.7% Dy
  • KM0718, 3m @ 1,576ppm TREO from 3m with 22.2% combined Nd/Pr and 2.7% Dy
  • KM0607, 4m @ 1,006ppm TREO from 8m with 24.7% combined Nd/Pr and 2.3% Dy
• Work completed on density determinations of push tube core material indicate dry bulk densities of mineralised material of 1.8 g/cm3, a ~30% increase on the density value used in the Red Tail and Yellow Tail Resource estimations (1.4 g/cm3).
• Resource Estimation consultants, IHC Mining, through their Geological Services division, have been engaged to undertake an update of the Red Tail and Yellow Tail Resource Estimate.
• Drilling has commenced on a further 10,000m programme aimed at continuing to build resources at Red Tail and Yellow Tail.

Australian Rare Earths Limited	Phone: [phone]	ASX Code: AR3
ABN 73 632 645 302	Email:[e-mail]
Level 10, 111 Gawler Place	Website:www.ar3.com.au
Adelaide, SA 5000

For personal use only

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.

Trial Pit

As part of AR3's development of the Koppamurra Project, a Trial Pit is in planning in an area of prospective mineralisation on private land adjacent the existing Red Tail resource area. The trial is expected to provide several beneficial outcomes in advancing the Project. It will,

• allow for significant bulk sample collection for larger scale metallurgical testwork;
• provide access to the mineralised zone over a wide area to progress AR3s understanding of the geological system at micro and macro scale; and
• allow AR3 to demonstrate the shallow nature of the deposit and the potential for rapid rehabilitation of disturbed areas to stakeholders and the broader community.

Figure 1 - Geology Model of Trial Pit Area, showing limestone base (red), silty clays (yellow), clayey sands (blue), clay (light blue), sandy clay (green), and topsoil (brown)

The location for the proposed Trial Pit was identified through a combination of access availability and previous drilling results. Two previous push tube core holes 180m apart pointed to the viability of this location for shallow, clay hosted rare earth mineralisation. These drill holes delivered the following previously reported results.

• KMC0114, 4.3m thick from 0.6m with an average grade of 824ppm TREO
• KMC0140, 1.5m thick from 1.3m with an average grade of 1,175ppm TREO

Drilling on the proposed Pit area, roughly 200m long by 40m wide, using the push tube core method, on a nominally 10m x 10m grid, provided detailed geological input to the planning of the Trial Pit.

Assays from this targeted drilling generated 82 significant intersections, using a 350ppm TREO cut-off from 58 drillholes, with an average grade of 755ppm TREO, and an average thickness of 2.1m, which is consistent with the broader Red Tail resource. Importantly, this detailed drill spacing identified high-grade portions of the deposit with grades for individual intervals reaching as high as 9,244ppm TREO.

Australian Rare Earths Limited	Phone: [phone]	ASX Code: AR3
ABN 73 632 645 302	Email:[e-mail]
Level 10, 111 Gawler Place	Website:www.ar3.com.au
Adelaide, SA 5000

The following table highlights assays received from this drilling programme.

For personal use only

		Koppamurra - Trial Pit - Drilling Program Highlights - February 2022
Drill Hole	Depth	Depth	Thick	TREO				Magnet Rare Earths
					Praseodymium	Neodymium	Terbium	Dysprosium
	From	To			Pr6O11	Nd2O3	Tb4O7	Dy2O3
	(m)	(m)	(m)	(ppm)	(ppm)	% TREO	(ppm)	% TREO	(ppm)	% TREO	(ppm)	% TREO
KMC0191	3.8	7	3.2	1499	68	4.3	271	16.9	9	0.6	52	3.4
Including	5.3	5.9	0.6	3332	178	5.3	705	21.1	20	0.6	123.0	3.7
KMC0213	5.3	7	1.7	4168	232	4.9	793	17.3	11	0.4	50	1.9
Including	5.9	6.5	0.6	9244	524	5.7	1773	19.2	21	0.2	88.6	1.0
KMC0233	2.7	5	2.3	1861	91	4.6	344	17.3	9	0.5	49	2.9
Including	3.3	4	0.7	3228	180	5.6	677	21.0	13	0.4	68.7	2.1
KMC0198	2.8	5	2.2	3253	188	5.3	754	21.2	16	0.5	83	3.0
Including	3.7	4.6	0.9	6230	361	5.8	1446	23.2	29	0.5	153.0	2.5
KMC0192	2.5	4.8	2.3	1663	74	4.4	297	17.6	9	0.5	48	2.9
KMC0204	1.3	2.2	0.9	1379	91	6.6	338	24.3	6	0.4	30	2.1
KMC0211	2.7	5	2.3	1549	77	4.7	304	18.7	9	0.6	48	3.2
KMC0218	1.3	1.9	0.6	1300	64	4.9	230	17.7	6	0.5	33	2.6
KMC0219	1.1	1.8	0.7	1125	59	5.2	201	17.8	5	0.5	27	2.4
KMC0221	1.2	3.6	2.4	1096	51	4.7	189	17.7	6	0.5	30	2.8
KMC0230	3	5	2	1401	62	4.4	223	16.2	6	0.5	33	2.8
KMC0233	2.7	5	2.3	1861	91	4.6	344	17.3	9	0.5	49	2.9
KMC0252	1.3	2.4	1.1	1744	90	4.9	319	17.7	8	0.5	44	2.6
KMC0253	1.6	2.4	0.8	1155	61	5.1	216	18.6	6	0.5	32	2.7
KMC0258	3.8	4.4	0.6	1205	49	4.1	208	17.2	8	0.6	45	3.8
KMC0259	2.2	3	0.8	1647	71	4.3	243	15.1	7	0.4	38	2.3

Table 1: A selection of results from Trial Pit - Push Tube Drilling EL6509 (Comaum) using downhole sample length weighted averages and a lower cut-off grade of 350 ppm TREO

During January 2022, contractor In-Depth Drilling completed a short program of Push Tube Core Drilling (drillholes KMC183 - KMC261 (79 holes,) over a four-day period focussing on the proposed Trial Pit area. The low cost and speed advantage of push tube drilling has proven to be highly effective and produces generally good quality core samples, representative of the intervals intersected. The target clay zone produced excellent samples and the push tube technique efficiently penetrated through unconsolidated and highly weathered intervals.

This drilling technique reaches a maximum depth of ~7m which occasionally intersected weathered limestone. Following the removal of each drill tube, samples were placed in core trays as shown in Figure 2. The core trays have five channels of 1m, representing individual metres from the drillhole. As such, each tray can accommodate a core capacity of up to 5m. Progressively smaller diameter drill tubes are used to push the drillhole to depth, resulting in a decreasing core diameter with downhole depth.

Australian Rare Earths Limited	Phone: [phone]	ASX Code: AR3
ABN 73 632 645 302	Email:[e-mail]
Level 10, 111 Gawler Place	Website:www.ar3.com.au
Adelaide, SA 5000

For personal use only

Figure 2 - Push Tube Core drillhole KMC0192 (Trial Pit)

Resource Extension Drilling

Drilling has recently commenced 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 programme is a continuation of a similar size programme 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 TREO grades and thickness to existing resources, at ~6km along strike.

The location of drilling and the assays received are illustrated in Figure 3. A total of 285 drillholes and 2,823m was completed since the program commenced on 2 February 2022. The average depth for the drillholes is 9.9m.

This current drilling program is being undertaken predominantly on private land holdings where AR3 has negotiated access agreements. The location of the planned drilling is also illustrated in Figure 3.

Australian Rare Earths Limited	Phone: [phone]	ASX Code: AR3
ABN 73 632 645 302	Email:[e-mail]
Level 10, 111 Gawler Place	Website:www.ar3.com.au
Adelaide, SA 5000

For personal use only

Figure 3 - Recent AR3 drillhole locations on EL6509 (Comaum)

Australian Rare Earths Limited	Phone: [phone]	ASX Code: AR3
ABN 73 632 645 302	Email:[e-mail]
Level 10, 111 Gawler Place	Website:www.ar3.com.au
Adelaide, SA 5000