Gakara Exploration Update

Rainbow Rare Earths Limited

("Rainbow" or the "Company")

(LSE: RBW)

3 February 2021

Gakara Exploration Update: Additional high-grade rare earth targets identified

Rainbow Rare Earths Ltd is pleased to provide an exploration update from the Company's Gakara rare earths project in Burundi, where additional high-grade rare earth elements ("REE") mineralisation in exceptionally thick veins has been reported.

·    Grades of up to 50% total rare earth oxide ("TREO") have been identified at Burima and Kivungwe - two targets originally highlighted in the TECT Geological Consulting ("TECT") study announced by Rainbow on 19 May 2020.

·    An ongoing trenching programme has uncovered high-grade breccia-type zones of mineralisation with widths of between 0.6m and 1.8m - the widest high-grade zones uncovered within the 39km² licence area to date.

·    Approximately 62t of material from this trenching programme with an average grade of 44% TREO has been processed through the existing Gakara gravity separation pilot plant, generating >54% TREO concentrate suitable for direct export, further underlining the amenability of Gakara ore to simple, low-cost processing.

·    This exploration work builds on the initial review carried out by TECT in 2020, which has been reviewed as part of the ongoing exploration effort, increasing the number of confirmed large carbonatite bodies at Gakara to five.

·    The Company continues to review these new targets, alongside further high priority targets identified by TECT, and the 10 areas included in the JORC Exploration Target announced in October 2020, to define an optimal initial drilling programme for the Gakara project.  This is expected to commence in H2 2021 after the rainy season in Burundi.

George Bennett, CEO, said:  "These very positive exploration results further reinforce Gakara's significant potential as a 10,000 - 20,000 tonnes per annum concentrate producing operation. We will continue to review these two exciting targets, alongside other areas highlighted by TECT and the 10 defined JORC Exploration Targets across our licence area, to finalise an efficient and targeted drilling programme, which will represent an important step in our ability to define a large-scale resource at Gakara.

Most significantly, these targets have delivered high grade mineralisation from wide mineralised zones which continues to validate the amenability of ore sourced from across the Gakara mining licence area to a simple gravity separation process. This serves to reinforce our proven ability to deliver a low-cost, high-grade concentrate with low levels of radioactive elements, which is suitable for direct export, from Africa's only producing REE asset."

This exploration work builds upon the structural and lithological review completed by TECT Geological Consulting in March and April 2020. This confirmed the presence of three large carbonatite bodies at Gakara. The follow-up of the TECT structural targets has enabled Rainbow to confirm that the southernmost circular carbonatite is the likely the source of mineralisation within the REE-rich stockwork in the western part of the mining license area. The REE veins and breccias occurring within this carbonatite and in its immediate surroundings (a 2-3km buffer zone) are likely the results of REE-rich mineralising fluids injected in the upper crust above the carbonatite body.

Based on this model, TECT have recently completed a further analysis of the airborne magnetic and radiometric data and have identified a further two carbonatite-like signatures in the eastern part of the mining licence, thus bringing the total number of potential carbonatite intrusions associated with the Gakara REE stockwork and breccia complex to five.

The Burima target is situated 500m to the west of the Kiyenzi deposit, which is characterised by massive REE-bearing breccias.  The brecciated mineralisation uncovered at Burima is believed to be part of the same mineralisation emplacement as Kiyenzi, situated within the northern edge of the largest identified carbonatite intrusion, which has a 3km diameter. A mineralised zone with an apparent thickness of between 1.2m and 1.8m has been identified through an ongoing trenching programme. The zone has been trenched over a strike length of 12m, with the true thickness not fully defined as the foot wall has yet to be reached in many areas. Approximately 33t of ore with an estimated grade of 50% TREO has been successfully processed through the pilot plant from Burima delivering high grade concentrate with low levels of radioactive elements similar to the production from the existing trial mining operations at Gakara.

Kivungwe is the westernmost site of REE occurrences within the Rainbow mining licence. Three anomalously large REE veins have been trenched to date over a strike length of approximately 10m, with local enlargements reaching widths of 1.2m. Approximately 29t of ore with an estimated grade of 38% TREO has been successfully processed through the pilot plant from Kivungwe delivering similar results as the ore processed from Burima.

Other anomalously large REE veins have been trenched during the follow up of the TECT targets from the Gashirwe West and East prospects, situated in the eastern half of the 3km diameter carbonatite identified by TECT. These REE veins have a thickness commonly reaching 0.2m including both breccia style and massive bastnaesite/monazite facies.

**ENDS**

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Notes to Editors:

Rainbow's strategy is to become a globally-significant producer of rare earth metals.  NdPr are vital components of the strongest permanent magnets used for the motors and turbines driving the green technology revolution.  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 NdPr into deficit.

The Company's Gakara Project in Burundi, which produces one of the highest-grade concentrates in the world (typically 54% total rare earth oxide ("TREO")) through ongoing trial mining operations, is currently the only African producer of rare earths.  The Gakara basket is weighted heavily towards NdPr, which account for over approximately 19.5% of the contained TREO and 80% of the value of the concentrate.

The Phalaborwa Rare Earths Project, located in South Africa, comprises approximately 35 million tonnes of gypsum resulting from historic phosphate hard rock mining, containing rare earth elements with an estimated average in situ grade of 0.6% TREO, based on previous sampling campaigns, of which 30% comprises high-value NdPr.  The rare earths are contained in chemical form in the gypsum stacks, which is expected to deliver a higher-value rare earth carbonate, with lower operating costs than a typical rare earth mineral project.