Condensed Consolidated Statement of Cash Flows for the period ended 31 December 2025

Notes to the Financial Statements for the period ended 31 December 2025

1. General

Harena Rare Earths PLC (the "Company") is a public limited company, on the London Stock Exchange, limited by shares incorporated and registered in England and Wales on 15 April 2020, with a registered company number 12557958. The registered office is 167-169 Great Portland Street, Fifth Floor, London, W1W 5PF.

On 18 November 2025, the Company listed on the OTCQB Venture Market in the United States thereby giving United States investors the opportunity to invest in the Company.

The Consolidated Interim Financial Statements of the Company for the six-month period ended 31 December 2025 comprise the financial statements of the Company and its subsidiaries (together referred to as the "Group").

The figures for the six months ended 31 December 2025 and 31 December 2024 are unaudited and do not constitute full accounts. The comparative figures for the year ended 30 June 2025 are extracts from the annual report.

2. Accounting Policies

2,1 Basis of preparation

The condensed consolidated financial statements for the six months ended 31 December 2025 have been prepared in accordance with UK-adopted IAS 34 Interim Financial Reporting, are unaudited, and do not include all of the information required for full annual financial statements.

They should be read in conjunction with the Company's annual financial statements for the year ended 30 June 2025.  The principal accounting policies applied in the preparation of the condensed consolidated financial statements are consistent with those contained in the Group's last Annual Report for the year ended 30 June 2025. These policies have been consistently applied to each of the periods presented.

The financial information of the Group is presented in British Pound Sterling ("£"), which is the Company's functional currency.  All amounts have been rounded to the nearest pound, unless otherwise stated.

2.2 Basis of Consolidation

The condensed consolidated interim financial statements comprise the financial statements of the Company and its subsidiaries. For accounting purposes, Harena Resources Pty Ltd is deemed to have acquired the Company, as described in note 2.3.

All intra-group balances, transactions, income and expenses, profits and losses, and unrealised profits and losses resulting from intra-group transactions, are eliminated in full.

Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. See note 3 for information on the consolidation of Harena Rare Earths PLC.

2.3 Comparative figures

In accordance with the reverse acquisition accounting policy, whereby Harena Resources Pty Ltd is treated as the accounting acquirer, the comparative figures for 31 December 2024 are those of the Harena Resources Pty Ltd group and, being prior to the reverse acquisition, do not include the results of the Company. The 12-month comparative figures are those for the audited 12-month year to 30 June 2025, comprising Harena Resources Pty Limited to the date of the reverse acquisition and the consolidated figures of the Company and Harena Resources Pty Ltd thereafter.

The Harena Resources Pty Ltd financial statements have been translated to Pound Sterling in accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates. This standard requires assets and liabilities to be translated using the exchange rate at period end, and income, expenses and cash flow items are translated using the rate that approximates the exchange rates at the dates of the transactions (i.e. the average rate for the period). The foreign exchange differences on translation of Harena Resources Pty Ltd are recognised in other comprehensive income.

2.4 Changes in accounting policies and disclosures

The accounting policies adopted are consistent with those included in the Annual Report for the year ended 30 June 2025. New standards and amendments to UK-adopted International Accounting Standards effective for the financial reporting period have been reviewed by the Group, and there has been no material impact on the financial statements as a result of these standards and amendments. The Group has not early adopted any amendment, standard or interpretation that has been issued but is not yet effective.

2.5 Going concern

The Directors have prepared a cash flow forecast for the period to 31 March 2028.

The Group is pre-revenue and relies on external funding to finance operations and development activities. At 31 December 2025, the Group held cash of £599,567. During the period the Group raised £1,231,500 in August 2025 and a further £450,000 through a subscription from RAB Capital in October 2025 (shares issued January 2026). Post period end, in February 2026 the Group raised a further £2,000,000 through a subscription from a prominent international investor.

The forecast indicates that additional funding may be required in late 2026 or early 2027 to meet ongoing liabilities as they fall due and to continue planned development activities. The Directors are pursuing funding initiatives including Project Development Funding from the DFC (the US International Development Finance Corporation) and have demonstrated the Group's ability to raise capital through multiple successful fundraisings since completion of the RTO in March 2025. Should funding not be secured as anticipated, mitigating actions including cost reductions and expenditure deferrals have been identified.

The forecast considers expected corporate administration and listing costs, planned development activities in Madagascar, and known obligations including the loan note liability (outstanding principal and accrued interest of £779,682 at 31 December 2025).

Positive developments supporting the Directors' assessment include: completion of the Pre-Feasibility Study (January 2026, post-period) demonstrating strong project economics; the RAB Capital investment and February 2026 subscription evidencing continued investor support; appointment of Marex and SP Angel as advisers (January 2026); and the lifting of Madagascar's mining permit moratorium (January 2026).

While these matters represent a material uncertainty that may cast significant doubt on the Group's and the Company's ability to continue as a going concern, the Directors have a reasonable expectation that the Company and the Group will secure the necessary funding for the foreseeable future and will be able to meet their ongoing liabilities as they fall due for at least twelve months from the date of approval of these Consolidated Interim Financial Statements. The Directors have therefore concluded that it is appropriate to prepare the interim financial statements on a going concern basis.

2.6 Future changes in accounting policies

The Directors have reviewed the IFRS standards in issue which are effective for annual accounting periods ending on or after the stated effective date. In their view, none of these standards would have a material impact on the financial reporting of the Group.

2.7 Segment reporting and cyclicality

A business segment is a group of assets and operations engaged in providing products or services that are subject to risks and returns that are different from those of other business segments. A geographical segment is engaged in providing products or services within a particular economic environment that are subject to risks and returns that are different from those of segments operating in other economic environments.

The Directors are of the opinion that the Group is engaged in a single segment of business being the development of the 100% owned Ampasindava Rare Earth Element (REE) Project (the "Project") in Northern Madagascar.

The interim results for the six months ended 31 December 2025 are not necessarily indicative of the results to be expected for the full year ending 30 June 2026. Due to the nature of the entity, the operations are not affected by seasonal variations at this stage.

3. Critical accounting estimates and judgments

In preparing the condensed consolidated interim financial statements, the Directors are required to make judgements, estimates and assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Accounting estimates and assumptions are made concerning the future and, by their nature, may not accurately reflect the related actual outcome. There are no key assumptions and other sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

3.1 Going concern

In their assessment of going concern, the Directors have reviewed the Group's ongoing activities including its future intentions in respect of capital fund raising and the risks involved in the development of the Project. The Directors were required to make estimates and judgements over future cash flows and funding. For further information about the Group's going concern, please see note 2.5.

3.2 Impairment of non-current assets - exploration and evaluation costs

Exploration and evaluation costs have a carrying value as at 31 December 2025 of £1,659,037 (2024: £1,821,553). The Directors have assessed the asset for impairment in accordance with IFRS 6 Exploration for and Evaluation of Mineral Resources and concluded that no impairment is required. No indicators of impairment have been identified.

The Ampasindava Project's exploration licence remains valid and is in the process of being converted to an exploitation licence. The Group has detailed plans for continued development expenditure including the Pre-Feasibility Study (completed January 2026, post-period) and a planned Proof of Concept demonstration plant.

The PFS confirmed strong project economics with a post-tax NPV of US$249.6 million, demonstrating that the carrying amount is recoverable. An updated JORC 2012 compliant Mineral Resource Estimate supports the Project's technical viability.

3.3 Share-based payments

During the period the Company issued warrants. The valuation of these involved making a number of critical estimates relating to the price volatility, expected life of the warrants and options, and interest rates.

The expense charged to the Condensed Consolidated Statement of Comprehensive Income during the period was £2,301,900 and relates to:

i)              warrants expense of £467,548 (2024: £Nil);

ii)             share options expense of £123,459 (2024: £Nil);

iii)            the fair value expense of the performance fees, to be issued on the success of converting the exploration licence to an exploitation licence, of £981,333 (2024: £Nil); and

iv)            the fair value expense of the 66,666,666 performance shares, issued for the successful acquisition of 100% ownership of the Ampasindava Project, of £729,560 (2024: £Nil).

As at 31 December 2025, 66,666,666 performance shares remain unissued. These are conditional upon the conversion of the existing exploration license to an exploitation licence and have been recognised as a share-based payment expense in accordance with IFRS 2 based on their estimated fair value expense and probability of vesting.

4. Administrative fee and other expenses

The share based payment expense includes:

i)              £179,548 for the fair value expense of the 40,000,000 performance warrants issued to Ivan Murphy and Paul Richards at 31 December 2025;

ii)             £288,000 for the fair value expense of the 40,000,000 fee warrants issued to Ivan Murphy and Paul Richards for their services during the successful placing in early August 2025;

iii)            £729,560 expense for the 66,666,666 performance shares issued as a result of obtaining 100% ownership of the Ampasindava Project; and

iv)            £981,333 for the fair value expense of the remaining 66,666,666 performance shares to be issued once the exploitation licence has been obtained.

5. Directors' remuneration

1. Cameron Pearce, Daniel Rootes and Winton Willesee's  directors' fees relate to their directorships in Harena Rare Earths PLC for the six-month period ended 31 December 2024. They were not directors of Harena Resources Pty Ltd, and therefore make up the difference from note 4.

2. The figures reported in the period ended 30 June 2025 column represent director's remuneration for the Harena Rare Earths PLC's 14-month reporting period and Harena Australia Pty Ltd.'s 12-month reporting period. The Directors consider that this presentation provides the most meaningful comparison across the periods presented.

During the period ended 31 December 2025, Paul Richards and Ivan Murphy were issued 12,000,000 and 28,000,000 fee warrants, respectively, for their services contributing to the successful fund raising during the share placing in early August 2025. £86,400 and £201,600, respectively, has been recognised in share based payments for the value of these warrants.

Cameron Pearce and Sam Quinn's directors' fees for the period are made up of the below:

6. Other intangible assets

For the period ended 31 December 2025 intangible assets represent capitalised costs associated with the exploration, and evaluation of mineral resources of the Ampasindava Ionic Clay Rare Earth Project, the Group's only project.

The exploration and evaluation assets included above are in respect of the Ampasindava Project only.

7. Loss per share

The calculation of the basic and diluted loss per share is based on the following data:

Fully diluted share capital

The Company has issued the following Warrants, Options and Performance Shares which may dilute the shareholders in the future. Due to the loss in the period the share warrants, share options and performance shares are anti-dilutive.

8. Trade and other receivables

9. Trade and other payables

The cash received in advance figure represents £450,000 invested by RAB Capital Limited for the subscription of 30,000,000 ordinary shares at £0.015 per share, subject to the following conditions:

i)             the Prospectus Instrument 2025 (FCA 2025/30) and resulting revocation of the Prospectus Regulation Rules sourcebook and implementation of the Prospectus Rules: Admission to Trading on a Regulated Market sourcebook; and

ii)            the shareholders of the Company passing the necessary resolution to grant the Directors sufficient authority to allot the subscription shares. This resolution was passed at the AGM on 3 December 2025.

These shares were issued to RAB Capital in January 2026.

10. Non-current liabilities

Interest payable and accrued on the loan note liability for the period ended 31 December 2025 was £24,950 (2024: £Nil) and line fees payable and accrued on the loan note liability for the period ended 31 December 2025 was £12,230 (2024: £Nil).

The actual interest and line fee repaid during the period ended 31 December 2025 was £62,038 (2024: £Nil).

11. Share capital

The total number of shares the Company is authorised to issue is 1,064,639,282.

During the six-month period ended 31 December 2025, the Company issued 82,100,000 ordinary shares at £0.015 in a placement issue in early August 2025, resulting in a capital raise of £1,231,500. At the end of August 2025, the Company obtained 100% ownership of the Ampasindava Project resulting in the issue of 66,666,666 performance shares at £0.03.

All expenses debited to the share premium account are related to expenses and commission on the issue of shares.

12. Prior period restatement

During the period ended 31 December 2025, the Company identified an error in the presentation of equity arising from the reverse acquisition completed in March 2025 and reported in the year ended 30 June 2025 financial statements. The error arose because the premium on issue of the consideration shares, issued in connection with the acquisition of Harena Resources Pty Ltd, were incorrectly classified as share premium. Under section 612 of the Companies Act 2006, the premium arising on the issue of consideration shares, in a reverse acquisition, must be recorded in a separate merger reserve, not in share premium.

The error resulted in an overstatement of share premium and a corresponding understatement of the merger reserve. This correction affects only the presentation within equity and does not impact total equity, profit for the year, loss per share, or cash flows.

In accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors, the Company has restated comparative information retrospectively by reallocating £8,333,333 from share premium to the merger reserve.

Impact on Consolidated Statement of Financial Position and Consolidated Statement of Changes in Equity:

A third Consolidated Balance Sheet is not required under IAS 1: Presentation of Financial Statements because the correction does not affect the financial year ended 31 December 2024 opening balance sheet.

13. Related party transactions

Details of Director's remuneration transactions are disclosed in note 5.

Included in the six-month period ended 31 December 2025 trade and other payables balance, were the following outstanding amounts due to related parties:

14. Events after the reporting date

The following events occurred after 31 December 2025:

Appointments (8 January 2026): The Company appointed Jack Allardyce as Interim CFO, Marex Financial Limited as Corporate Adviser, and SP Angel Corporate Finance LLP as Joint Broker.

Completion of RAB Capital Investment (16 January 2026): Following the new Prospectus Rules coming into effect the Company issued the shares associated with the £450,000 investment from RAB Capital. This increased RAB Capital's shareholding to approximately 9.8% of the Company's issued share capital.

Completion of Pre-Feasibility Study ("PFS") (26 January 2026): The Company announced completion of the PFS with post-tax Net Present Value at 10% discount rate of US$249.6 million, post-tax IRR of 30%, and 4-year payback period, confirming robust project economics.

Mining Permit Moratorium Lifted (30 January 2026): The Government of Madagascar lifted its 16-year moratorium on mining permits.

Conditional Subscription to raise £2,000,000 (18 February 2026): The Company raised gross proceeds of £2,000,000 through a direct subscription for 90,909,090 new ordinary shares at £0.022 per share, which completed on 24 February 2026.

Exclusivity Agreement to Acquire U.S. Rare Earth and Uranium Permits (16 March 2026): The Company entered into an Exclusivity Agreement to evaluate the acquisition of a 100% interest in Paradigm Critical Minerals Limited, the owner of heavy rare earth and uranium exploration assets. At this stage there is no certainty that the Company will enter into a definitive agreement as the transaction remains subject to satisfactory completion of due diligence, internal approvals and the negotiation and execution of definitive documentation.