Medallion Resources Ltd. announced it has entered into a definitive agreement with ACDC Metals Ltd. (“ACDC”) whereby ACDC has the right to use Medallion's proprietary monazite processing technology, the Medallion Monazite Process (“MMP”) to extract rare earth elements (“REE”) from monazite sourced as a by-product of heavy mineral sand production. ACDC has secured rights to acquire interests in four heavy mineral sand properties in Victoria, Australia, three of which have historical mineral resources which are not compliant with the JORC Code or National Instrument 43-101. ACDC's business plan includes drilling the properties with the objective of establishing resources that comply with JORC and establishing a pilot processing facility to demonstrate the MMP and produce sample materials for evaluation by potential customers.

This will be funded from the proceeds from an Initial Public Offering (“IPO”) of ACDC's shares on the Australian Stock Exchange (“ASX”) anticipated before the end of 2022. Medallion currently owns 4.8 million shares of ACDC, or approximately 15% of ACDC's issued capital before the IPO. Upon successful completion of the pilot plant utilizing MMP, Medallion will receive an additional 2.5 million shares of ACDC by converting performance shares issued to Medallion at the time of the IPO.

Upon commercial production, Medallion will be entitled to convert other performance rights into an additional 750,000 shares of ACDC. Upon full conversion, Medallion would own 8.05 million shares of ACDC. Medallion has the right to purchase or place up to 20% of the ACDC shares issued in the IPO subject To Approve the lead underwriter and Medallion's diluted ownership including shares owned and the conversion of all its performance rights not exceeding 19.9% of ACDC's issued share capital.

Medallion will receive a 2% royalty on the sale of mixed REE compounds and other minerals produced by ACDC and processed using MMP. Demand for rare earth elements is driven by the essential role high strength REE permanent magnets (neo magnets) play in a wide range of consumer goods, industrial, and defense applications. Demand growth is led by the clean energy transition including electric vehicles and wind turbines.

Industry analysts ADAMAS Intelligence estimates that the rare earth elements used in permanent magnets, comprising neodymium, praseodymium, dysprosium, and terbium (magnet REEs) represented approximately 95% of the value of global production of REEs in 2021. Medallion believes that extracting REEs as by-products from processing other minerals will be an important part of meeting anticipated demand, which is one of the biggest challenges facing the REE industry. Medallion developed the proprietary Medallion Monazite Process to extract REEs from monazite, which is a by-product of heavy mineral sand processing as well as a primary ore at Lynas Corp's Mt Weld mine and elsewhere.

Medallion believes MMP has competitive advantages compared with other processes including a high degree of automation, lower energy consumption, better health and safety standards, potential for zero-liquid discharge, and low-cost separation of cerium (a low-value REE that is in oversupply) and radionuclides. MMP has been tested extensively at the Australian Nuclear Science and Technology Organization (“ANSTO”) and other recognized facilities. On July 14, 2021 Medallion reported summary results of an independent Techno-Economic Assessment (“TEA”) of the MMP by process engineering and simulation specialists Simulus Engineering (Australia).

Based on a different monazite feedstock which may not be representative of the ACDC feedstock, the TEA predicted that a 7,000 tonnes per annum facility would produce approximately 910kg of Mag-REOs in a mixed rare earth compound with a contained value of approximately USD 150 million based on average REO prices in the first nine months of 2022. Medallion estimates that mixed rare earth compounds typically sell for approximately half the contained value of the REOs. Medallion and ACDC have also agreed to collaborate on advancing a rare earth refinery to process mixed REE compounds to produce separated rare earth oxides (REOs) using the Ligand Assisted Displacement (“LAD”) Chromatography process.

The LAD Chromatography process was developed by Purdue University, and Medallion has exclusively licensed this technology from Purdue Research Foundation to separate REEs from all raw material feed stocks excluding coal sources and excluding recycled materials from manufacturing wastes and recyclates from battery and magnet sources. Medallion believes that LAD Chromatography, which targets individual elements in contrast to conventional multi-stage group separation of elements, will have environmental, health, financial, and operational advantages over established liquid-liquid or alternative liquid-solid processes.