Trial Mining Update

7 October 2020

Rainbow Rare Earths Limited

("Rainbow" or the "Company")

(LSE: RBW)

Trial Mining Update

Rainbow Rare Earths Ltd, the Rare Earth ("RE") producer, is pleased to provide an update on the trial mining and processing operations currently ongoing at the Gakara Project in Burundi ("Gakara").

·   Trial mining operations at Gakara continue to strengthen, with concentrate production increasing from an average of 31.7t per month between October 2019 and May 2020, to an average of 59.9t per month from June to September 2020

·    Further increases in the trial mining fleet planned to allow growth in trial mining production to 100t per month concentrate, better utilising capacity of existing pilot processing plant

·    Concentrate shipments expected to grow, with 100t of concentrate shipped Monday 5^th October 2020 and a further 210t of concentrate in stock at 30 September 2020 being prepared for shipment

·   Growing volumes being delivered into an improving RE pricing environment, with NdPr oxide strengthening 30% from US$36,850/t in April 2020 to US$48,050/t on 30 September 2020

George Bennett, CEO, said: "The ongoing strengthening of the trial mining and processing operations at Gakara is an important element of Rainbow's long-term strategy to develop a large-scale commercial mine.  The expanded trial mining fleet will allow us to open new areas, increasing our understanding of the mineralisation in parallel with our planned exploration activities.

We continue to demonstrate the amenability of ore sourced from across the mining licence area to a simple gravity process to deliver a high-grade concentrate with low levels of radioactive elements, suitable for export.  No reagents are used to produce Rainbow's concentrate, delivering both a low environmental impact and a low processing cost, compared to more complex rare earth processing requirements.  Using the full capacity of the existing pilot plant will generate additional revenue to off-set the costs of ongoing exploration and evaluation activities ahead of full-scale commercial development."

The trial mining operations at Gakara have continued to strengthen, focused on the Murambi South area, since the last update provided in April 2020.  Operations continue to be unaffected by the Covid-19 pandemic.  In Q2 and Q3 2020 a total of 3,108t of ore have been processed through the Gakara pilot plant sourced from across the licence area producing 313t of rare earth concentrate.  Production averaged 45.0t per month in Q2 2020 and 59.5t per month in Q3 2020, compared to an average of 30.0t per month concentrate produced in Q4 2019/Q1 2020.

On 5^th October 2020 Rainbow shipped a further 100t of concentrate, with a further 210t being prepared for export at 30 September 2020.  Shipments are expected to be delivered into a rising price environment for both Neodymium (Nd) oxide and Praseodymium (Pr) oxide, with NdPr oxide strengthening 30% from US$36,850/t in April 2020 to US$48,050/t on 30 September 2020, reversing price weakness seen since July 2019.

The five new trucks delivered to site in April 2020 have performed well, reducing the costs associated with the previous rented vehicle fleet and improving availability due to better mechanical performance.  This has allowed waste trial mining volumes to increase significantly, from an average of 26kt per month from October 2019 to April 2020, to an average of 68kt per month from May 2020 to September 2020.  This has enabled significantly higher volumes of ore to be accessed and mined, driving the strengthened performance.

In October 2020 Rainbow intends to further increase the mining fleet to increase capacity of the trial mining operations, allowing the full 5t per hour capacity of the current pilot processing plant to be utilised.  A new 34t excavator has been ordered to supplement the existing 20t excavator used for waste and smaller TLB excavators used for selective mechanical mining of ore.  Two further trucks will also be sourced to fully utilise the new excavator capacity once financing is available.

With this new trial mining capacity Rainbow intends to extend the areas of trial mining, initially to the Gasenyi area to the north of the Murambi site, generating an improved detailed geological knowledge across a wider area of the mining licence.  This is expected to allow 100t per month of high-grade rare earth concentrate to be produced from the current pilot plant.

**ENDS**

For further information, please contact

Notes to Editors:

Rainbow's focus is the Gakara Project in Burundi, which produces one of the highest-grade concentrates in the world (typically 54% Total Rare Earth Oxide) and is the only African producer of rare earths through the ongoing trial mining operations.  The Gakara basket is weighted heavily towards neodymium (Nd) and praseodymium (Pr), which account for over 80% of the value of the Gakara concentrate.

Nd and Pr are vital components of the strongest permanent magnets used for the motors and turbines driving the green technology evolution.  Analysts are predicting demand for magnet rare earth oxides will grow substantially over the coming years, driven by increasing adoption of green technology, pushing the overall market for Nd and Pr into deficit.