Private placement raises £7.52 million

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS DEFINED UNDER THE MARKET ABUSE REGULATION (EU) NO. 596/2014, AS AMENDED, AS IT FORMS PART OF UK LAW BY VIRTUE OF THE EUROPEAN (WITHDRAWAL) ACT 2018 ("MAR").  IT IS FOR INFORMATION PURPOSES ONLY AND IS NOT AN OFFER OF SECURITIES IN ANY JURISDICTION THIS ANNOUNCEMENT AND THE INFORMATION IN IT, IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA, NEW ZEALAND, JAPAN, THE REPUBLIC OF SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO MIGHT CONSTITUTE A VIOLATION OR BREACH OF ANY APPLICABLE LAW OR REGULATION.

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

FOR IMMEDIATE RELEASE

9 May 2023

Rainbow Rare Earths Limited

("Rainbow" or "the Company")

LSE: RBW

Private placement raises £7.52 million

Rainbow Rare Earths is pleased to announce that it has agreed conditionally to issue 72,452,846 new ordinary shares in the Company of no par value each ("Ordinary Shares") at a price of 10.377p per Ordinary Share (the "Placing Price"), thereby raising gross proceeds of £7.52 million (the "Placing").  The Placing Price represents a 28.1% premium to the closing share price of 8.1p per Ordinary Share on 5 May 2023 when the Placing Price was agreed.

The 72,452,846 Ordinary Shares to be issued at the Placing Price includes:

·    £5.54 million received from existing shareholder TechMet Limited ("TechMet"), the private investment company developing world class projects across the critical metals that form the key building blocks for the global energy transition;

·    £0.79 million received from existing shareholder Pella Ventures Limited ("Pella"), a family office with a focus on clean technologies and sustainable energy. Pella is a related party on the basis that its founder, Adonis Pouroulis, is also Non-Executive Chairman of Rainbow; and

·    £1.18 million from other investors, including £0.28 million from various members of Rainbow's Board of Directors.

Reasons for the Placing

The Placing proceeds which total US$9.5 million, in addition to the Company's cash balance of US$2.1 million as at 31 December 2022, cover the Company's financing requirements beyond the end of Q1 2024 and will allow for the completion and operation of the Phalaborwa pilot plant, the finalisation of the Phalaborwa definitive feasibility study ("DFS") and for general working capital purposes, as per the requirements set out in the Company's interim results published on 31 March 2023.

George Bennett, CEO of Rainbow, commented: "We are delighted to have received support from various strategic shareholders in Rainbow, including TechMet.  Following a rigorous independent technical and ESG due diligence process, TechMet have confirmed that they share our view that Phalaborwa is one of the most exciting rare earth development projects globally.  I am particularly pleased with the strong support at a premium to the market price from members of the Rainbow Board.

The funds raised will provide funding beyond the end of Q1 2024, thereby ensuring the delivery and operation of the Phalaborwa pilot plant and the production of the first separated rare earth oxides for testing and marketing purposes in off-take agreements with potential partners, as well as delivering the completion of the project DFS."

Brian Menell, Chairman and CEO of TechMet, commented: "Phalaborwa provides the opportunity to fast track production of the four most economically important rare earth elements, which are used to make the permanent magnets essential to wind turbines, electric vehicles and other modern day consumer products vital to the 21^st global economy. This funding will ensure the completion of the pilot plant, de-risking the Phalaborwa project and the Rainbow investment proposition. It is a validation of the Company's proprietary separation technology and its strategy to identify other secondary near-term sources of rare earths globally."

Participation of the Directors and Related Parties

The following Directors of Rainbow are participating in the Placing:

In addition to the direct participation by Pella, referred to above, Piran Resources Limited, a company which is an associate of Pella, is subscribing for 2,289,001 shares for a total investment of US$300,000 (£237,530).

Board Representation

As part of the Subscription, the Company has agreed to grant TechMet the right to nominate one Director to the Board of the Company, for so long it holds at least 10% of the issued shares in the Company.  Accordingly, it is intended that Mr Darryll Castle, TechMet's Director of Operations, will be appointed as a Non-Executive Director to the Board of Rainbow shortly after Admission and an announcement will be made on appointment.

Total voting rights and Admission

An application has been made for the 72,452,846 Ordinary Shares to be issued pursuant to the Placing (the "New Shares") to be admitted to the Official List (by way of a Standard Listing) and to trading on the London Stock Exchange Plc's Main Market for listed securities ("Admission").  It is expected that Admission will become effective and that dealing in the New Shares will commence on or around 15 May 2023.  The New Shares will rank pari passu with the existing Ordinary Shares. 

Following Admission of the New Shares, the Company will have 598,858,656 Ordinary Shares in issue and this number may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA's Disclosure, Guidance and Transparency Rules.

IMPORTANT NOTICES

This announcement includes "forward looking statements" which include all statements other than statements of historical facts, including, without limitation, those regarding the Company's financial position, business strategy, plans and objectives of management for future operations, or any statements proceeded by, followed by or that include the words "targets", "believes", "expects", "aims", "intends", "will", "may", "anticipates", "would", "could" or similar expressions or negatives thereof. Such forward looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward looking statements. Such forward looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this announcement. Except as required by the FCA, the London Stock Exchange or applicable law (including as may be required by the Listing Rules, the Prospectus Regulation, the Prospectus Rules, MAR and the Disclosure Guidance and Transparency Rules), the Company expressly disclaims any obligation or undertaking to disseminate or release publicly any updates or revisions to any forward looking statements contained in this announcement to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.

Market Abuse Regulation Disclosure

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018, as amended ("MAR"), and is disclosed in accordance with the Company's obligations under Article 17 of MAR. Market soundings, as defined in MAR, were taken in respect of the Placing, with the result that certain persons became aware of inside information, as permitted by MAR. That inside information is set out in this announcement and has been disclosed as soon as possible in accordance with paragraph 7 of article 17 of MAR. Therefore, those persons that received inside information in a market sounding are no longer in possession of inside information relating to the Company and its securities.

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Notes to Editors:

Rainbow Rare Earths aims to be a forerunner in the establishment of an independent and ethical supply chain of the rare earth elements that are driving the green energy transition. It is doing this successfully via the identification and development of secondary rare earth deposits that can be brought into production quicker and at a lower cost than traditional hard rock mining projects, with a focus on the magnet rare earth elements neodymium and praseodymium ("NdPr"), dysprosium and terbium.

The Phalaborwa Rare Earths Project, located in South Africa, comprises a total Mineral Resource Estimate of 30.4 Mt at 0.44% TREO contained within unconsolidated gypsum stacks derived from historic phosphate hard rock mining. High value NdPr oxide represents 29.0% of the total contained rare earth oxides, with economic Dysprosium and Terbium oxide credits enhancing the overall value of the rare earth basket in the stacks. Rainbow will use a proprietary separation technique developed by its partner K-Technologies, Inc. for the plant at Phalaborwa, which simplifies the process of producing separated rare earth oxides (versus traditional solvent extraction), leading to cost benefits, as well as being more environmentally friendly.

The Phalaborwa Preliminary Economic Assessment has confirmed strong base line economics for the project, which has a base case NPV₁₀ of US$627 million[1], an average EBITDA operating margin of 75% and a payback period of < two years. Pilot plant operations will commence in 2023, with the project expected to reach commercial production in 2026, just five years after work began on the project by Rainbow.