Peak Rare Earths : Quarterly Activities Report and Appendix 5B - June 2022 Qtr

For personal use only

Quarterly Activities Report and Appendix 5B

June 2022

Quarterly Activities Report and Appendix 5B

June 2022 Quarter

HIGHLIGHTS

Peak Rare Earths Limited ("Peak" or the "Company") continues to progress the development of its integrated Ngualla - Teesside Rare Earth Project ("Project") with the following events occurring during the June Quarter:

• Russell Scrimshaw to be appointed Executive Chairman
• Progress on finalising the Framework Agreement
• BFS Update nearing completion
• Continued progress on marketing and offtake
• Active engagement with financiers and prospective strategic partners
• Development of a Peak Purpose and Values statement
• Futureproof engaged to develop an ESG strategic roadmap and reporting framework
• European ban on new Internal Combustion Vehicles from 2035

Appointment of Executive Chairman

On 11 July 2022, Peak announced that Mr Russell Scrimshaw would be appointed Executive Chairman from 15 August 2022.

Mr Scrimshaw is a distinguished corporate executive and company director with experience in large scale mining project development and operations, product marketing, finance, business development and technology. Mr

Scrimshaw was a founding director of Fortescue Metals Russell Scrimshaw Group ("Fortescue") and served in executive roles including

Deputy CEO and Executive Director. He was a key part of the management team that developed Fortescue's mining, port and rail operations and was instrumental in establishing Fortescue's strong relationships with large steel mill groups across a vast Asian customer base.

ENABLING LOW CARBON TECHNOLOGIES

1

For personal use only

Quarterly Activities Report and Appendix 5B

June 2022

More recently Mr Scrimshaw was Chairman of UK-listed Sirius Minerals PLC (acquired by Anglo American in 2020), which is developing a large Polyhalite fertilizer project in North

Yorkshire, in close proximity to Peak's Teesside refinery site. He has also held senior executive

positions at the Commonwealth Bank of Australia and Optus. Mr Scrimshaw is currently Chairman of the Garvan Research Foundation, a non-Executive Director of the Garvan Institute of Medical Research and Vice Chairman of Ignition Wealth.

Mr Scrimshaw's appointment is an exciting development for Peak. There has been a

substantial amount of work done within the business over the last twelve months and his appointment comes at an exciting time for the Company. The timing of his appointment means Mr Scrimshaw will be able to make a significant contribution to the continuing efforts to unlock long term shareholder value.

Commenting on his appointment as incoming Executive Chairman, Russell Scrimshaw said:

"Peak has a tremendous opportunity to advance into one of the world's few independent

integrated rare earth producers. I am excited to be joining the business at this time as we look to finalise the Framework Agreement for Ngualla, complete the Bankable Feasibility Study Update and execute offtake agreements to support project financing, and move into

the project development phase."

With effect from Mr Scrimshaw's appointment, Peak's existing Non-Executive Chairman

Tony Pearson will continue as Deputy Chairman and Managing Director Bardin Davis will now assume the role of Chief Executive Officer, stepping down from the Board to focus on his executive duties.

Framework Agreement Update

Framework Agreement negotiations with the Government of the United Republic of Tanzania in relation to the Ngualla Rare Earth Project are well advanced. As referenced in the Company's March Quarterly Activities Report, Peak has been progressing a refining solution for the Ngualla Project with the Tanzanian Government that seeks to meet Peak's strategic and financial objectives and the Tanzanian Government's objectives to maximise value-addition and financial benefits to the country.

Peak is preparing for an upcoming meeting with the Special Presidential Government Negotiating Committee and is hopeful that finalisation and signing of the Framework Agreement will occur shortly thereafter.

ENABLING LOW CARBON TECHNOLOGIES

2

For personal use only

Quarterly Activities Report and Appendix 5B

June 2022

Bankable Feasibility Study Update

Significant progress has been made on the Bankable Feasibility Study Update during the June Quarter.

Key activities progressed during the Quarter included the following:

• Process Flow Diagrams (PFDs) and mass balances;
• Commissioning an independent market study for NdPr Oxide by leading intelligence provider Adamas;
• A solar-battery-diesel hybrid power plant design concept at Ngualla;
• A renewable energy study at Teesside;
• Completion of an updated Environmental and Social Impact Assessment (ESIA) at
  Ngualla and subsequent renewal of Peak's Environmental Certificate by the National
  Environmental Management Council within Tanzania; and
• Hazard Identification Studies (HazID) for both the Ngualla Rare Earth and Teesside Refinery projects.

Given inflationary pressures that are impacting the global mining sector, Peak is continuing to evaluate various cost optimisation opportunities to assist in mitigating capital expenditure and operating cost pressures.

It is expected that the Bankable Feasibility Study Update will be finalised and released to the market in the second half of August 2022.

Marketing and Offtake Progress

Peak is continuing to make strong progress with respect to its "go-to-market strategy" with offtake arrangements advancing with key target customers in Japan, South Korea and Europe.

Peak has received strong expressions of interest from offtake customers and is progressing Memorandum of Understanding ("MOU") negotiations that cover approximately 70% of the annual projected NdPr Oxide production from Peak's Ngualla project.

Discussions have also commenced on one major binding offtake agreement covering approximately one-third of Peak's expected annual NdPr Oxide production.

Offtake MOU's will provide the framework for ongoing collaboration and further binding Offtake and Supply Agreements, which are scheduled to be finalised prior to a Final Investment Decision.

ENABLING LOW CARBON TECHNOLOGIES

3

For personal use only

Quarterly Activities Report and Appendix 5B

June 2022

Financing and strategic partnerships

Peak with the assistance of its debt adviser, Waterborne Capital, is continuing to engage with a broad suite of developments banks, export credit agencies and commercial banks on project and export financing appetite and structures. Prospective financiers have been provided with an Information Memorandum, Financial Model and access to a Virtual Data Room.

In conjunction with project and debt financing initiatives, Peak has also been engaging with several strategic parties that have expressed interest in securing a project level investment in the Ngualla Rare Earth Project and/or Teesside Refinery. Such investments could be used

to limit Peak's equity funding requirements.

Engagement of ESG reporting adviser

Futureproof Sustainability has been engaged by Peak to provide advice on the development of an Environmental, Social and Governance ("ESG") strategic roadmap and reporting framework.

An outline of this ESG framework will be included in the Company's 2022 Annual Report with a standalone Sustainability Report planned for 2023.

Peak's purpose and values

The Peak Team completed a set of workshops during the quarter to develop and agree a set of principles to govern our purpose, our decision making and the ways that we deal with each other, our communities and other external stakeholders.

The resulting Purpose and Values Statements and set of Values are set out below.

Purpose Statement:

"To develop and operate world-class and sustainable rare earth projects that support global decarbonisation, local communities and shareholder value creation. "

Values Statement:

"At Peak Rare Earths, we act with Integrity to achieve our Purpose and to ensure the Safety, Health and Wellbeing of our people and communities.

We are Accountable to our shareholders, employees and stakeholders to deliver and operate our assets by employing a Sustainability ethos and a Progressive mindset. "

Values:

1. Integrity - speaks to ethics, transparency & adherence to ABC
2. Safety, Health & Wellbeing - speaks to commitment to safety best practice and the health and wellbeing of the team
3. Accountability - speaks to reliability, trust and responsibility

ENABLING LOW CARBON TECHNOLOGIES

4

For personal use only

Quarterly Activities Report and Appendix 5B

June 2022

1. Sustainability - speaks to long-term sustainability ethos
2. Progressive - speaks to innovation, diversity, new technologies, commitment to continuous improvement, empowerment, and speaking-up

We believe that these concepts are well captured in the Swahili phrase "Kazi Wajibu Utu", which reflects the themes of "Work, Responsibility and Humanity".

Electric Vehicle Sales

Global EV production continued to grow strongly through the June Quarter of 2022. Adamas Intelligence estimates that between May 2022 and the corresponding month in 2021 that global passenger EV sales increased by 34%, global motor power deployed in all newly sold passenger EVs increased by 50% and NdFeB consumption in passenger EV traction motors and generators increased by around 51%.

During the quarter the European Parliament also voted to ban new Internal Combustion Engine ("ICE") vehicles from 2035 onwards. Over 30 countries as well as dozens of states and cities have now committed to the complete phasing-out the sale of new ICEs by this date. The growing global shift towards green energy and decarbonisation continues to underpin strong demand for NdPr Oxide.

On 21 July 2022 Ford Motor Company confirmed its commitment to a sales target of 600,000 EVs by 2023 and 2 million EVs by 2026. It also announced projections of an EV compound annual growth rate of more than 90% through to 2026.

Each NEV unit represents an additional +1kg of incremental demand for NdPr Oxide.

Peak's proposition is well positioned to help meet this increasing demand

Pricing Update

NdPr Oxide prices decreased over the June Quarter finishing the quarter at US$139.33/kg, having started the quarter at US$152.17/kg. Prices have decreased since the end of the June Quarter and closed at US$120.63 /kg on 22 July 2022. As at this date calendar year-to-date average NdPr Oxide price was US$145.16/kg.

ENABLING LOW CARBON TECHNOLOGIES

5