Announcement PDF ASX ANNOUNCEMENT Heavy Rare Earths Limited (ASX: HRE) 3 October 2023 FIVE-FOLD INCREASE IN MINERAL RESOURCES TO 159 Mt @ 870 ppm TOTAL RARE EARTH OXIDES AT COWALINYA PROJECT IN WESTERN AUSTRALIA • JORC (2012 Edition) Inferred Mineral Resources for the Cowalinya rare earth project now estimated to be 159 million tonnes @ 870 ppm TREO at a cut-off grade of 400 ppm TREO-CeO2 • This result represents an increase of: o 468% in resource tonnes o 39% in grade o 690% in contained rare earths on the project’s maiden 2022 Mineral Resources of 28 million tonnes @ 625 ppm TREO at the lower cut-off grade of 300 ppm TREO-CeO2 • Total contained rare earths of 138,290 tonnes (on a TREO basis) • Significantly, the valuable magnet rare earth component of Cowalinya has increased from 25% to 28% • Resource upgrade achieved by grid drilling 14,438 metres in 509 holes on 19% of HRE’s total land position • Resource excludes multiple rare earths-rich drill intercepts up to 14 kilometres from the resource • Maiden Exploration Target for Cowalinya in advanced preparation • Downstream metallurgical flowsheet development in progress to produce Mixed Rare Earth Carbonate (MREC) product samples for customer engagement Heavy Rare Earths Limited (“HRE” or “the Company”) is pleased to report a very substantial growth in Mineral Resources at its 100 per cent-owned Cowalinya rare earth project in the Norseman-Esperance region of Western Australia. Table 1: Estimate of Mineral Resources for Cowalinya Rare Earth Project. JORC RESOURCE CLASS TONNES (Mt) TREO (ppm) MAGNET REOs (ppm) MAGNET REOs/TREO Sc2O3 (ppm) Inferred 159 870 242 28% 32 TREO = La2O3+CeO2+Pr6O11+Nd2O3+Sm2O3+Eu2O3+Gd2O3+Tb4O7+Dy2O3+Ho2O3+Er2O3+Tm2O3+Yb2O3+Lu2O3+Y2O3 Magnet REOs = Pr6O11+Nd2O3+Tb4O7+Dy2O3 Reported above a cut-off grade of 400 ppm TREO-CeO2 Heavy Rare Earths Limited (ASX:HRE) ACN 648 991 039 Level 21, 459 Collins Street, Melbourne, VIC 3000 www.hreltd.com.au 1 HRE Executive Director, Richard Brescianini, said, “Today we have delivered the first key milestone for our Cowalinya rare earth project, just 13 months since Heavy Rare Earths listed on the ASX. “Mineral Resources for Cowalinya now stand at 159 million tonnes, and pleasingly we have seen a 39% grade increase to 870 parts per million of rare earth oxides. This has been achieved on just 19% of our total land position. We have also intersected thick rare earthrich horizons in drilling up to 14 kilometres from our resource zone1 and very much look forward to presenting the project’s maiden Exploration Target in the near future. “I also note a material increase in the valuable magnet rare earth component of the resource to 28%. This is best in class amongst clay-hosted resources in Australia. “Today’s exceptional result sets a solid foundation in demonstrating the potential for a longlife rare earth development project at Cowalinya.” Figure 1: HRE’s Cowalinya project tenements showing drill hole locations and Mineral Resources zone. Background image: Google Earth. 1 Refer to ASX announcement 1 May 2023: New high-grade assays at Cowalinya show potential to add 14 kilometres of mineralised strike. Heavy Rare Earths Limited (ASX:HRE) ACN 648 991 039 Level 21, 459 Collins Street, Melbourne, VIC 3000 www.hreltd.com.au 2 Figure 2: Cowalinya Mineral Resources zone showing TREO grade-thickness of saprolite-hosted rare earth mineralisation in ppm-metres. Figure 3: Cowalinya grade/tonnage curve. Heavy Rare Earths Limited (ASX:HRE) ACN 648 991 039 Level 21, 459 Collins Street, Melbourne, VIC 3000 www.hreltd.com.au 3 Table 2: Cowalinya grade/tonnage figures. LAYER JORC RESOURCE CLASS CUT-OFF TREO-CeO2 (ppm) TONNES (Mt) TREO (ppm) All Inferred 100 645 501 All Inferred 200 459 602 All Inferred 300 285 722 All Inferred 400 159 870 All Inferred 500 93 1021 All Inferred 600 56 1180 All Inferred 700 37 1335 All Inferred 800 26 1470 All Inferred 1000 13 1769 All Inferred 1200 8 2031 TREO = La2O3+CeO2+Pr6O11+Nd2O3+Sm2O3+Eu2O3+Gd2O3+Tb4O7+Dy2O3+Ho2O3+Er2O3+Tm2O3+Yb2O3+Lu2O3+Y2O3 The following information is reproduced from a report entitled Cowalinya –2023 JORC REO Resources Summary, dated 30 September 2023. The report’s author is Mr Robin Rankin (MAusIMM), Principal Consulting Geologist at GeoRes. Mr Rankin is referred to as “the Consultant” in the below and is the Competent Person (CP) for these Mineral Resources. Introduction: HRE’s Cowalinya Rare Earth Element (REE) Project (the Project) is mineral exploration for REEs in shallow (±50 m deep) REE-enriched weathered saprolitic regolith developed above granitic rock in southern Western Australia (WA). Resources for REE deposits are reported for their commercial product Rare Earth Oxide (REO) equivalents (hence REO Resources). The Project is operated within WA mineral exploration adjacent tenements E63/1972, E63/2144 and E63/2145 (Figure 1). This 2023 Resource estimate includes new data from a large 441-hole air core (AC) drilling program completed since HRE’s 2022 announcement of maiden REO Resources estimated from its initial 109-hole AC drilling in 2021. Background: HRE has operated the Cowalinya Project since 2021 when it undertook a drilling program. Resources estimated from that drilling data (by Mr John Tyrrell of JMCT Consulting) were published in a June 2022 Independent Geologist’s Report (IGR) on HRE’s exploration projects by Mr Robin Rankin for GeoRes. HRE undertook a further large drilling program in 2022 in a greatly expanded area. Assaying in 2022 included finer compositing (from 4 to 2 metres) and re-assaying of the 2021 samples. GeoRes was re-engaged in early 2023 to re-estimate Cowalinya Resources from new drilling data. Mr Rankin (as the CP) visited the Project site in late July 2023, a due diligence visit which confirmed all assumptions underpinning the estimation work. Cowalinya tenements: HRE owns 100% of the Cowalinya Project tenement E63/1972 (granted in 2020 for 5 years). This 80-block tenement is large enough (232 km2) to easily host an “Ion-Adsorption Clay” (IAC) REE deposit of mineable size and has enough time Heavy Rare Earths Limited (ASX:HRE) ACN 648 991 039 Level 21, 459 Collins Street, Melbourne, VIC 3000 www.hreltd.com.au 4 before expiry (January 2025) to allow it to be fully explored. HRE purchased two additional immediately adjacent (on the SW boundary of E63/1972) smaller tenements E63/2144 and E63/2145 in December 2022. HRE’s tenements are surrounded by other active tenements also apparently being explored for REEs in the saprolitic regolith. Project: The Cowalinya REE Project concerns near-surface mineral exploration for lateritic REEs in south central WA within tenements E63/1972, E63/2144 and E63/2145. The partially-explored Project targets shallow secondary lateritic REE-enrichment deposits in supergene in-situ saprolitic clays weathered from immediately underlying granitic rocks – termed IAC REE deposits. Geography: Regionally Cowalinya is located in the far south of WA ~70 km south-east (SE) of Norseman and ~110 km north-north-east (NNE) of the port of Esperance (Figure 4). Locally the Project is situated on vacant Crown Land characterised as thick native bush land with very low relief (rising very gently to the NE – Figure 5). Low-lying areas are occasionally wet salt flats, often adjacent to ancient sand dune fields. Access is on unsealed roads off the N/S oriented sealed Coolgardie / Esperance Highway, the principal road from the village of Salmon Gums on the highway ~50 km due west of the Project. Local bush tracks are sandy but easily navigable. Figure 4: Location of HRE’s Cowalinya tenement holdings on unallocated crown land near Salmon Gums in the Esperance region of Western Australia. Background image: Landgate aerial imagery. Heavy Rare Earths Limited (ASX:HRE) ACN 648 991 039 Level 21, 459 Collins Street, Melbourne, VIC 3000 www.hreltd.com.au 5 Figure 5: Cleared drill line at Cowalinya looking east, showing typical low relief vegetated landscape. Regional geology: Regionally the Project is located on the south-eastern margin of the very old Eastern Goldfields Super-terrane (EGS) of the Yilgarn Craton and within the SWtrending younger Albany–Fraser Orogen (AFO). The Yilgarn Craton is the major western part of the WA Craton occupying most of Western Australia. Yilgarn Craton rocks are granites and greenstones; AFO Orogen rocks are variably igneous and high-grade metamorphic (the Orogen is essentially meta-granitic). The Cowalinya Project lies within the AFO. To the east of the AFO rocks are younger sediments of the Eucla Basin. AFO rocks along or close to the margin with the Yilgarn Craton were extensively re-worked as it was a collisional suture zone between two cratons. AFO rocks are characterised by high-grade gneisses and granitic rocks (orthogneiss, paragneiss, migmatite and granitoid) but also contain large sheets of meta-gabbro, remnants of mafic dykes, and widespread low to medium-grade metasedimentary rocks. The AFO is split into two NE-trending components – the Foreland component (in the NW and probably a re-worked edge portion of the Yilgarn Craton) and the Basement component (in the SE). The crystalline Basement is split into 3 fault-bounded zones – the Biranup Zone (in the NW and hosting Cowalinya), the Fraser Zone and Nornalup Zone (in the SE). These NEtrending components represent SE-dipping thrust sheets ascribed to NW low-angle thrusting (continent collision). Biranup (underlying the Project) is a 60 km wide SW/NE belt containing rocks which are strongly deformed. Those rocks are meta-granitic and granulite-facies gneissic-dominant, locally with mafic amphibolite lenses, and may include remnants of Archean rocks. The zone is isoclinally folded and tectonically interleaved by thrusting with layered mafic intrusions of the Fraser Zone, and may also have formed by modification of the Yilgarn Craton. Heavy Rare Earths Limited (ASX:HRE) ACN 648 991 039 Level 21, 459 Collins Street, Melbourne, VIC 3000 www.hreltd.com.au 6 Local geology: Locally bedrock outcrops are rare (and are mostly granitic) and the weathered bedrock is covered by a thin veneer of predominantly Quaternary aeolian sand cover. Local development of deeper Tertiary palaeo-channels is common, containing sand, silt and clayey sediments, with overlying carbonaceous clays and lignite in deeper channels. Quaternary and Tertiary sediments are generally less than 10 m thick, but extend to over 60 m (maybe ~100 m) in palaeo-channels. Local geology within the tenement is relatively poorly known with limited fine scale mapping available. GSWA 1:250,000 scale mapping indicates the great proportion of the tenement area surface as eolian deposits (Qqs), created by wind action. At surface this colluvium/alluvium material is partly unconsolidated or loose. Very limited solid outcrops through the sand are ferruginous and siliceous cemented residual and reworked rocks (Ttf). These would either represent concretions of the eolian deposits or residual highly weathered caps of the granitic basement just below. A very small outcrop of granite is mapped on the northern boundary of the Project. It is likely that detailed mapping within the tenement could reveal more outcrop. Past drilling on the tenement showed bedrock to consist mainly of medium to coarse grained granitic gneisses, including monzonites and tonalites, along with subordinate amphibolites after dolerite. Deposit type: HRE’s Cowalinya Project targets shallow secondary lateritic REE-enrichment in supergene in-situ saprolitic clays weathered from immediately underlying basement granites and granitic gneisses (the primary source of the REEs). This style of REE mineralisation is termed an “Ion-Adsorption Clay” (IAC) REE deposit. These are similar to extensive southern Chinese deposits which are dominant REE producers. Chinese IAC REE deposits are often enriched in the more valuable “heavy” REEs (HREEs). IAC REE deposits exist in shallow soft weathered material they are therefore inexpensive to mine, allowing for extraction of relatively low grades. REE extraction from those ores is typically though inexpensive and effective acid-leaching. These economics mean IAC REE deposits typically have low grade cut-offs (~300 ppm TREO quoted for Chinese deposits). IAC REE deposits require stable (in order that they not be eroded after formation) subtropical (with enough regular rainfall to create sustained lateritisation) conditions to form above granitic source rocks – conditions which appear well suited to Cowalinya’s ancient low-relief topography above granitic rocks. Weathering in a periodically wet sub-tropical environment compresses and concentrates the granite profile at surface (by dissolution and mechanical weathering). Percolating groundwaters eventually deplete pre-existing REEs in the upper part of the weathered profile and secondarily concentrates them in clays in the lower parts. IAC REE-enriched deposits generally form a thin (~5-10 m) laterally extensive sub-horizontal REE-enriched layer. In comparison to hard rock REE deposits regolith-hosted IAC REE deposits are predominantly low-grade, typically containing 0.05-0.30 wt.% extractable Rare Earth Oxide (REO). Historical exploration: Other explorers in the immediate area since 2009 were looking for gold, base metals or uranium. Luckily a few assayed partially for REEs thus supporting the project. That exploration was within the eastern parts of the tenement area (AngloGold Ashanti Australia Ltd (AngloGold); Great Southern Gold Pty Ltd (Great Southern); and Buxton Resources); nearby to the south (eMetals Limited); further to the SE (Salazar Gold Pty Ltd (Salazar) and Mt Ridley Mines Limited); and to the west (Salmon Gums Minerals Pty Ltd). Most exploration comprised initial surface soil/calcrete sampling (<2 m deep) followed by shallow (<60 m deep) AC drilling of the weathered zone, both mostly on E/W oriented lines. Salazar’s metallurgical test-work proved that local REEs could be successfully acidHeavy Rare Earths Limited (ASX:HRE) ACN 648 991 039 Level 21, 459 Collins Street, Melbourne, VIC 3000 www.hreltd.com.au 7 leached. The area possesses reasonable airborne geophysical coverage with magnetics and electromagnetics (EM) being of principal interest. Within the SE part of the tenement E63/1972 Great Southern’s AC drilling roughly defined the Night Watch REE prospect and AngloGold defined the Double Tank REE prospect ~2 km to the NW (these prospects roughly became the areas for HRE’s 2021 drilling and Resources). Although initially targeted from their shallow surface calcrete sampling it is very likely that the surface REE samples were not linked to REE samples from the B Zone of the weathered saprolite above the fresh granite bedrock. HRE’s previous 2021 exploration: HRE completed a comprehensive 109-hole AC drilling program (for 3,089 m) in 2021 with depth in the vertical holes averaging ~29 m. HRE’s drilling built on the two previously delineated prospects, calling them Areas 1 (Night Watch) and 2 (Double Tank). The Areas were separated from each other in a roughly NW/SE orientation (Area 1 to the SE and Area 2 to the NW) and existed within a 6*4 km enclosing area although each prospect was much smaller and they were not adjacent. Subsequent Resource estimate work referred to Area 1 as the “South Area” or “Cowalinya South”, and Area 2 as the “North Area” or “Cowalinya North”. AC drilling employed on the Project was considered highly applicable because of its efficient sample recovery in the loose and/or soft material found in the Project area. Sampling was well performed, was continuous down-hole, with the 1 m individual primary samples variously composited to 4 m for assaying. 827 samples (2,481 m) were assayed for REEs, 60% being 4 m composites. Samples were assayed for all REEs using a 4-acid digestion process. The drill-hole spacing (~100*250/400 m) appeared suitable for first-pass exploration as correlation of mineralisation and geological layers was clearly possible between multiple adjacent drill-holes in the E/W drill sections. HRE’s previous resource estimate: Rare earth Resources were independently estimated in February 2022 from HRE’s 2021 drilling data. Estimation was performed by Mr John Tyrrell (the CP) of JMCT Consulting. Block grades were estimated using Ordinary Kriging for each individual REE within geologically layered upper and lower saprolite models. Sample scan distances were interpreted from variographic range interpretations for the different saprolite layers and were very long (~450-865 m) and generally omni-directional. Input sample lengths were composited to 4 m and all REEs were top-cut to a degree. Total Inferred Mineral Resources of 28 Mt @ 625 ppm TREO were reported above a 300 ppm TREO-CeO2 (Total REO minus Cerium oxide) grade cut-off using a default dry density of 1.63 t/m3. The South Area contained 75% of the Resources, and the lower saprolite contained a slightly greater proportion than the upper saprolite. HRE’s new 2022 exploration: HRE completed a second very extensive vertical 441-hole (for 12,569 m) AC drilling program in late 2022 (Figures 6 and 7). The program covered the whole SE protrusion of the tenement and surrounded the previous drilling areas. Drilling was predominantly at 200 m spacing along E/W lines spaced 400 m apart. Holes were sampled in continuous 1 m intervals and composited to 2 m for assaying. All samples from the previous 2021 drilling were re-composited to the same 2 m and re-assayed. Assaying by LabWest Minerals Analysis in Perth used Lithium Metaborate Fusion / ICP-MS. Heavy Rare Earths Limited (ASX:HRE) ACN 648 991 039 Level 21, 459 Collins Street, Melbourne, VIC 3000 www.hreltd.com.au 8 Figure 6: Drilling of hole AC198 Cowalinya project on 12/10/2022. Location: 6358205N 429402E. Total depth 46 metres. Figure 7: Drill hole AC313 Cowalinya project. Location: 6358603N 431600E. Total depth 26 metres. Drilled on 18/11/2022. Heavy Rare Earths Limited (ASX:HRE) ACN 648 991 039 Level 21, 459 Collins Street, Melbourne, VIC 3000 www.hreltd.com.au 9 Sampling & assaying QA/QC: HRE’s sampling and assaying QA/QC in 2022 was assessed independently by Dr Andy Wilde of Wilde Geoscience and reported in June 2023. Assay QC involved submitting sample standards (Certified Reference Materials (CRMs)), blanks and duplicates every 20th sample. The Consultant considers that Wilde’s overall assessment of Project sample QA/QC was very positive. Wilde concluded that HRE’s QC measures (CRMs/blanks/duplicates) represented effective quality control; that there was close agreement between certified and analysed values for field CRMs for the REEs (<2 STD); approximately 80 % of field duplicate pairs returned analytical values for REE within 20%; REE analyses of the 127 pulps (plus 12 QC samples) sent to Intertek for umpire analysis were generally within 5% of LabWest’s analysis (with a few outliers); and no evidence of sample contamination or errors in sample labelling was detected. Data: Input data for the 2023 Resource re-estimation by GeoRes comprised HRE’s combined 2021 and 2022 drill hole location and assay data, geological logging data, density data and surface topography data. All data was in MGA94 (Zone 51) coordinates. 2023 Resource estimation process: Steps in the resource estimation including modelling surface topography as a DTM surface; databasing all drill hole data (and converting REE values to oxides (REO)); geologically interpreting and modelling the base of weathering (top of fresh bedrock) surface; geologically interpreting the REE mineralisation intercepts as a series of three stacked layers; modelling the layers with DTM surfaces constrained within a “Resource area” containing the dense drilling; geostatistically analysing layer assays to determine grade continuity directions and distances; creating block models within the layers; estimating block grades using an un-folding model to guide search directions sub-parallel to layering; and reporting TREO Resources. Geological interpretation: Close inspection of the drill logs and assays enabled the interpretation of a layered stratigraphic model comprising transported sediments at surface (soil, alluvium and laterite), a thick underlying regolith layer of in-situ weathered granite (an upper and a lower saprolite and basal saprock), and a basal fresh rock (BR) interface. Bedrock would not form any part of the resource. REE-mineralised layer interpretation & modelling: Mineralisation interpretation was aimed at defining REE-mineralised zone(s) within the weathered saprolite layer overlying the fresh granite bedrock – in order to separate mineralisation from low grade waste. It was expected that contiguous REE-mineralised zones in each drill hole would correlate with similar ones in adjacent drill holes – forming a layer (REE mineralisation occurred above a natural cut-off at ~300 ppm TREO). This proved the case and 3 principal mineralised layers were interpreted in the weathered saprolite material (upper, middle and lower saprolite mineralisation (SUM, SMM and SLM respectively, orange green and blue in the below 10* vertically exaggerated E/W cross-section – Figure 8) in all drill holes. A fourth saprolite mineralised layer (S1M) existed sporadically above the SUM and another (TM) in the transported material at surface – neither of which were modelled due to insufficient support. REE-mineralised layers were modelled by interpolating upper and lower bounding surfaces from the interpreted drill hole layer intercepts. Surfaces were modelled over the whole drilling area as 25 * 25 m mesh DTMs using a growth technique. The 25 m mesh size was ~25% of the closest drill hole spacing. Heavy Rare Earths Limited (ASX:HRE) ACN 648 991 039 Level 21, 459 Collins Street, Melbourne, VIC 3000 www.hreltd.com.au 10 Figure 8: Portion of line 6357800N (holes AC354-AC366) showing principal mineralised layers in weathered saprolite: SUM (orange), SMM (green), SLM (blue) and bedrock surface (purple). Subsequently layer models were constrained within a Resource area containing only the densely drill holes (outside dimensions 13.1 * 8.5 km, actual area 48.7 km2). Average thicknesses of the modelled layers within that area were 3.8 m for SUM layer, 4.7 m for SMM layer, and 6.1 m for SLM layer (average total thickness was 14.6 m). SLM thickness is contoured within the Resource area in the plan view below (Figure 9). Figure 9: Thickness of lower saprolite layer mineralisation SLM in metres. The maximum vertical range of the 3 layers was 63 m. Overburden thickness between the upper layer SUM and surface averaged 12.7 m with a range between 0 and 24.6 m. Heavy Rare Earths Limited (ASX:HRE) ACN 648 991 039 Level 21, 459 Collins Street, Melbourne, VIC 3000 www.hreltd.com.au 11 Relatively thin (up to ~5 m) interburden existed between layers in places, in other areas the layers abutted. The base of layer SLM lay on the fresh bedrock interface in places and in others it was well above. Layer lateral extent was curtailed to the area of dense drilling by a boundary drawn ~300 m outside the boundary drill holes in the NW and by the tenement boundaries in the SE. Average vertical composite TREO grades increased downwards with the uppermost layer SUM averaging 235 ppm, the central layer SMM 465 ppm and the lowest layer SML 522 ppm. Maximum grades were similar in each layer and averaged ~4,500 ppm. Thicknessweighted average TREO grade is contoured for all layers in the plan view below (Figure 10) and approximately half of the area would contain grades >400 ppm (yellow to red). Figure 10: Thickness-weighted average TREO grade in ppm. Statistical analysis: Simple drill hole sample statistics and histogram plots were studied by layer for the REO assay totals to provide insight into value distributions and limits to use in subsequent geostatistical analysis. All elements were log normally distributed. Differences between statistics from the 2021 and the 2022 drilling were studied briefly – with very little difference in the SMM layer but with values in the SLM layer lower in the 2022 drilling. Geostatistical analysis: Variography was performed individually and by layer for CeO2, the LREOs and the HREOs. Overall, for both TLREO and THREO in layers SMM and SLM the ranges (distance of longest continuity) were at least ~400 to 550 m – considered fairly long and thus a good result by the Consultant. Ranges of the single oxide CeO2 were similar in the SMM layer – probably indicating that all of the REOs may have similar ranges. These ranges could be taken as isotropic. Longest ranges for TLREO and THREO were ~750-830 m in the SMM layer – considered very long and similarly a good result. Clear anisotropy was evident in layer SMM with the longer ranges oriented ~E/W. In this the TLREO and THREO Heavy Rare Earths Limited (ASX:HRE) ACN 648 991 039 Level 21, 459 Collins Street, Melbourne, VIC 3000 www.hreltd.com.au 12 anisotropy direction differed slightly by ~30° with TLREO being slightly north of east (075°) and THREO slightly south of east (105°). Variography was considered good in layer SMM – as was expected given its clear sub-horizontal layering with minimal thickness variability. However, variography was surprisingly poor in lower layer SLM, partly caused by many holes stopping short of basement. The shortest ~400-550 m continuity distance in both principal REO-mineralised layers would cover at least 3 consecutive holes at the current 200 m E/W drill hole spacing and 2 holes at the current 400 m N/S spacing. In other words, the spacing between the great proportion of existing drill holes was well within the shortest range distance and thus they were supportive of each other. And the nearly double ~800 m range in the ~E/W direction in layer SMM further reinforced long continuity and the adequacy of current E/W drill hole spacing. Un-folding block modelling: An un-folding block model was created within the layers, and all drill hole samples were domained by layer (domains 2,3 and 4 for layers SUM, SMM and SLM respectively). Un-folding block models aim to trend horizontal data search directions (in variography and block grade estimation) parallel to layering. As the mineralised layers were sub-horizontal the block model was built without any axis rotations (0°). X and Y block origin and extents were adapted to the dense drilling project 48.7 km2 Resource area and the Z extent to the 63 m vertical range of the layers. X and Y block size was set at 50 * 100 m – roughly 25% of the drill hole spacing. Z block size would be variable as blocks followed the layers but aimed to be 0.5 m. Grade block modelling: Grades for each element were estimated individually using an Inverse Distance squared (ID2) algorithm with vertical distances weighted by a factor of 2 and lateral XY searches trended along the layers by using the un-folding block model control. Normal block model: A normal orthogonal-shaped block model was built from the unfolding block model and loaded with the individually estimated grades. X and Y blocks sizes were regularised at 50 m and the Z block sized was fixed at 1 m. Totals for the various common divisions of REOs (total (TREO), light (TLREO), heavy (THREO) and magnet (MREO)) were created from the individually estimated block grades. Colour-coded TREO blocks are displayed in the (10* vertically exaggerated) E/W cross-section below (Figure 11), which illustrates the grade continuity following layering. Dry density: HRE’s raw dry density determinations (326) were processed by compositing them by mineralised layer in each drill hole and then averaged. This produced average values of 1.49 t/m3 for the SUM and SMM layers and 1.52 t/m3 for the SLM layer. These densities were lower than the 1.63 t/m3 used in the 2022 Resource estimate but very close to typical densities being currently used in similar REE deposits elsewhere. Heavy Rare Earths Limited (ASX:HRE) ACN 648 991 039 Level 21, 459 Collins Street, Melbourne, VIC 3000 www.hreltd.com.au 13 Figure 11: Cross section illustrating TREO grade continuity following layering. Cross section extent corresponds to Figure 8. Mining & extraction assumptions: Fundamental assumptions behind the Resources, Resource estimation and JORC classifications, are centred on the Consultant’s expectations of IAC REE Resource mining economics. Positive REE economics are based firstly on ‘cheap’ shallow open-cut mining – allowed by shallow mineralisation (top of predominant mineralisation lies ~15 m below surface); weathered composition (partly-clayey and structurally weak material) allowing ‘relatively inexpensive’ free-dig mining; and layered deposition allowing mechanised broad-scale excavation with equipment such as scrapers or continuous miners. Positive REE economics secondarily rest on the nature of IAC mineralisation allowing relatively in-expensive and efficient extraction by leaching in pads (proven elsewhere in similar deposits). Dilution would be expected to be minimised by the mining and extraction methods. Resource JORC classification: The Consultant considered that all of these 2023 Cowalinya Mineral Resources should be classified as Inferred according to JORC (2012 Edition) principles. The Consultant agreed with Tyrrell’s Inferred classification for the 2022 Resources. He found that the large surrounding areas newly drilled contained very similar data, geology, REE grade concentrations and distributions. The new data was effectively identical in setting to the old data and simply represented extensions of the same deposit. After studying the distribution of average sample distances (D) used in computing individual block grades the Consultant considered that only those blocks with D < 450 m (shaded orange and red in Figure 12 below the below plan view of b