Announcement PDF Heavy Rare Earths Limited ACN 648 991 039 Supporting a cleaner and sustainable future through critical minerals ASX: HRE July 2023 HRE IMPORTANT NOTICE AND DISCLAIMER The information contained in this document (“Document”) has been prepared by Heavy Rare Earths Limited (referred to as “HRE Limited” or “the Company”). The purpose of this Document is to provide background information to assist readers in obtaining a general understanding of the Company's proposals and objectives. It is not and should not be considered as an offer or invitation to apply for or purchase any securities of the Company or as a recommendation or inducement to make an offer or invitation in respect of securities in the Company. No agreement to subscribe for securities will be entered into on the basis of this Document or any information contained in this Document. The Company has authorised the distribution of this Document to recipients (“Recipients”), subject to the terms of this Important Notice and Disclaimer, to assist them in deciding whether they wish to proceed with a further investigation of the Company. However, the information in this Document is not intended to form the basis of any investment decision in relation to the Company or its assets and should not be considered as a recommendation to the Recipient to invest in the Company or acquire the Company’s assets. This Document is not a prospectus, product disclosure document or other offering document under Australian law or under the law of another jurisdiction. The Recipient should carry out and should rely on their own independent review, investigation, analysis and due diligence of HRE Limited and its operations, business and assets. The information in this Document, which is selective and does not purport to contain all the information that the Recipient may require to evaluate the opportunity, has not been independently verified by the Company or any other person. The Company releases material information as announcements to the ASX (ASX:HRE). Recipients seeking further information in respect of the Company should review the Company’s announcements as released to the ASX from time to time. 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COMPETENT PERSONS STATEMENT The Exploration Results and Mineral Resources contained in this Document have been extracted from the Independent Geologist’s Report included in the Company’s IPO Prospectus, a copy of which was lodged with ASIC on 5 July 2022, and from an ASX release dated 12 July 2023. The Company confirms that it is not aware of any new information or data that materially affects the Exploration Results or Mineral Resources as contained in the Company’s IPO Prospectus or in the 12 July 2023 ASX release. All material assumptions and technical parameters underpinning the Mineral Resources in the Company’s IPO Prospectus continue to apply and have not materially changed. Heavy Rare Earths Limited 2 HRE Value Proposition Rare Earths: Ongoing supply side issues and forecast demand side strength in e-mobility and wind power supports a high rare earth price environment Key Project: Cowalinya clay-hosted rare earth project in Western Australia, one of the world’s premier mining jurisdictions Maiden Resource1: Shallow Inferred Resource of 28 Mt @ 625 ppm TREO with magnet rare earths Pr, Nd, Tb and Dy comprising 25% of the mix Resource Expansion: New Mineral Resources for Cowalinya in Q3 2023 Focused Metallurgy: Results justify accelerating metallurgical program with increased attention on downstream development Discovery Upside: Maiden Exploration Target for Cowalinya and first-pass exploration at Duke in Q3 2023 Strong Team: Richard Brescianini – 15 years’ rare earths experience at Arafura Rare Earths (ASX: ARU); supported by key technical and operational consultants David Ross, Andy Wilde and Gavin Beer. John Byrne – development, 45 years’ experience bringing mines into production. 1 See pp 109 of the Independent Geologist’s Report contained in HRE’s IPO Prospectus. Heavy Rare Earths Limited 3 HRE Corporate Snapshot Capital Structure ASX: HRE Shares on Issue 68.3 million Market Capitalisation (@ $0.10) ~$7 million Cash (@ 31/03/23) ~$2.6 million Debt Nil Enterprise Value ~$4.4 million Top 20 Holders ~42% Non-Executive Chairman – John Byrne Mr Byrne has 40 years’ experience in the natural resource industry as a financial analyst, investor and mine developer. John has been Chairman and CEO of numerous successful resource companies, including Western Coal Corp which was capitalised at less than C$1 million when he joined, and was sold for C$3.3 billion in 2010. Executive Director – Richard Brescianini Mr Brescianini is a qualified geoscientist with an Honours degree from the University of Tasmania and is a member of the Australian Institute of Geoscientists and Australian Society of Exploration Geophysicists. Richard commenced his career in mineral exploration with BHP Minerals in 1987 working in teams focused on the discovery of base and precious metal deposits across Australia and North America. More recent experience includes Director of the Northern Territory Government’s Geological Survey and working for rare earths developer, Arafura Rare Earths, in the executive management team. Non-Executive Director – Ryan Skeen Mr Skeen has a background in financial and economic markets, with expertise in providing investment and strategic advice to emerging companies. Ryan is largely focused on exploration in gold, rare earths and base metals. He is currently Chief Executive Officer of a junior gold and base metals explorer with projects in Victoria and Western Australia. Company Secretary & Chief Financial Officer – Justin Mouchacca Mr Mouchacca is a Chartered Accountant and Fellow of the Governance Institute of Australia with over 15 years' experience in public company responsibilities including statutory, corporate governance and financial reporting requirements. Since July 2019, Mr Mouchacca has been principal of JM Corporate Services and is Company Secretary and Financial Officer for a number of ASX-listed entities and unlisted public companies. Heavy Rare Earths Limited 4 HRE Clay-Hosted Project – Cowalinya WA • The Cowalinya clay-hosted rare earth project is 100 per cent-owned by HRE and comprises three granted exploration licenses covering 250 km2 • Cowalinya is on unallocated crown land 70 kilometres south-east of Norseman, 45 kilometres east of the Coolgardie-Esperance Highway and rail line, and 110 kilometres north-east of the Port of Esperance • The mineralisation being investigated is shallow, flat-lying, supergene concentrations of rare earths in saprolite, similar in style to the southern Chinese ion adsorption clay deposits, the world’s main supply source of heavy rare earths • Drilling at Cowalinya by HRE in 2021 established the project’s maiden Inferred Mineral Resource of 28 million tonnes @ 625 ppm TREO1 • Drilling by HRE in 2022 discovered extensive new developments of rare earth mineralisation2 • Metallurgical test work in 2022 and 2023 on rare earths mineralisation from Cowalinya has delivered excellent results3 30 km 1 See pp 109 of the Independent Geologist’s Report contained in HRE’s IPO Prospectus. 2 Refer to HRE ASX announcements 01/12/22, 03/01/23, 31/01/23, 01/03/23, 29/03/23, 12/04/23, 01/05/23. 3 Refer to HRE ASX announcements 13/12/22, 12/07/23. Heavy Rare Earths Limited 5 HRE Cowalinya Drilling – establishing project capacity and longevity • HRE completed a 441-hole, 12,569-metre exploration and resource expansion drilling program on E63/1972 in Q3-Q4 2022 • Drilling discovered substantial new Western Zone of rare earth mineralisation adjacent to existing resource • Significant mineralised drill intercepts1 include: • • 19 metres @ 3190 ppm TREO including 8 metres @ 5382 ppm TREO (AC225) • 10 metres @ 1580 ppm TREO including 4 metres @ 2486 ppm TREO (AC279) • 14 metres @ 1278 ppm TREO including 4 metres @ 3040 ppm TREO (AC440) • 26 metres @ 1201 ppm TREO including 8 metres @ 3057 ppm TREO (AC360) New mineralised drill intercepts up to 14 kilometres from Western Zone2 include: • 12 metres @ 1690 ppm TREO including 2 metres @ 5192 ppm TREO (AC487) • 10 metres @ 1286 ppm TREO (AC471) • HRE anticipates a material increase in Mineral Resources in Q3 2023 • Maiden Exploration Target for project also expected in Q3 2023 1 Refer to HRE ASX announcements 01/12/22, 03/01/23, 31/01/23, 01/03/23, 29/03/23, 12/04/23. 2 Refer to HRE ASX announcement 01/05/23. Heavy Rare Earths Limited 6 HRE Cowalinya Metallurgy – the key to technical and commercial viability COMPOSITE HEAD ASSAY (ppm TREO) FINES (-25µm) ASSAY 1 (ppm TREO) UPGRADE 1 FINES MASS 1 (% of total mass) MAGNET RARE EARTHS RECOVERY TO FINES 1 SM01 1045 2050 2.0 37.8% 81.1% 86.3% 15.2 SM02 750 1270 1.7 51.6% 91.7% 84.5% 3.8 SM03 1383 3674 2.7 27.0% 68.1% 91.3% 13.6 SM04 1280 1575 1.2 59.9% 91.6% 84.5% 12.8 SM06 754 1929 2.6 29.4% 79.5% 83.8% 37.8 SM07 938 1662 1.8 43.6% 87.4% 75.6% 15.8 SM12 1376 2642 1.9 46.6% 86.9% 81.7% 20.0 SM13 1326 2140 1.6 41.1% 67.5% 75.3% 26.0 1.9 42.1% 81.7% 82.9% 18.1 AVERAGE HYDROCHLORIC ACID MAGNET RARE CONSUMPTION 2 EARTHS EXTRACTION (kg/t) TO LEACH 2 • Excellent progress being made on metallurgical program by Strategic Metallurgy • Simple screening recovers 81.7% (max. 91.7%) of magnet rare earths in 42.1% (min. 27.0%) of feed mass with 1.9x (max. 2.7x) grade uplift • Diagnostic leaching extracts 82.9% (max. 91.3%) of magnet rare earths consuming 18.1 kg/t (min. 3.8 kg/t) of hydrochloric acid • Strong results justify accelerating metallurgical program to produce Mixed Rare Earth Carbonate product samples for customer assessment in Q4 2023 TREO = La2O3 + CeO2 + Pr6O11 + Nd2O3 + Sm2O3 + Eu2O3 + Gd2O3 + Tb4O7 + Dy2O3 + Ho2O3 + Er2O3 + Tm2O3 + Yb2O3 + Lu2O3 + Y2O3. MAGNET RARE EARTHS = Pr + Nd + Tb + Dy. ACID COMSUMPTION expressed in kilograms of hydrochloric acid per tonne of fines (-25µm) fraction. AVERAGE calculated on composites identified as preferred material types (SM01, SM02, SM03, SM04, SM06, SM07, SM12, SM13). 1 Refer to HRE ASX announcement 13/12/22. 2 Refer to HRE ASX announcement 12/07/23. Heavy Rare Earths Limited 7 HRE Rare Earth Market Overview • Rare earths are featured in the official Australian, U.S., European Union and Canadian critical minerals lists • According to Roskill and the Department of Industry, Science, Energy and Resources in 2021: • • • The global rare earths market was valued at US$2bn in 2020 and is forecast to grow to $12bn by 2030 • Global mine supply is projected to grow by 1.5% p.a. over 10 years to 2030, and refined production of rare earths is projected to grow by 4.6% p.a. to 2030 • Global consumption of rare earths is projected to grow at 4.0% p.a. to 2030, with rare earth permanent magnet consumption to grow by 6.2% p.a. driven by the strong takeup of low carbon emissions technologies In 2022 Adamas Intelligence forecast that: • Global production of the magnet rare earths Pr, Nd, Tb and Dy will collectively grow at 5.4% p.a. during 2022 to 2035 • Global demand for rare earth permanent magnets will increase at a compound annual growth rate of 8.6% over the same period, following an 18.1% jump in consumption in 2021 The Australian Government actively encourages the development of Australia’s rare earths and has provided $1.74bn in grants and loans to domestic rare earth projects via critical minerals initiatives All graphics from Australian Government Department of Industry, Science, Energy and Resources, Office of the Chief Economist (2021): Outlook for Selected Critical Minerals. Heavy Rare Earths Limited 8 info@hreltd.com.au +61 3 8630 3321