ABx : Quarterly Activities/Appendix 5B Cash Flow Report

Quarterly Activities Report March 2022

Report dated 28 April 2022

ASX: ABX

Quarterly report and activity statement,

3 months to 31 March 2022

Highlights

Corporate

Group available cash at quarter end was $5.72 million and is currently about $5.32 million

Rare earth elements: additional discoveries in northern Tasmania

Three new rare earth discoveries, meaning that ABx now has four rare earth discoveries in Northern Tasmania.

The highest grade results are 3,943 ppm total rare earths oxide (TREO) at the Deep Leads discovery and 4,800 ppm TREO at the Portrush discovery

Exploration licence EL10/2021 granted which, in combination with the four discoveries, confirms that ABx now controls a rare earth province that is at least 52 km wide.

Alcore (Production of aluminium fluoride from aluminium smelter waste): pilot plant program continuing

Alcore continued construction and commissioning of its pilot plant facility to recover fluorine from 'excess bath', an aluminium smelter waste

Bauxite Operations: Sunrise Bauxite Project joint venture signed

A joint venture agreement was signed with Alumin Pty Ltd for the development of the Sunrise Bauxite Project, comprising a bauxite mine at Binjour plateau and port operations at Bundaberg in Queensland.

ABx Group (ASX:ABX) is a uniquely positioned, high-tech Australian company at the cutting-edge of creating new sources and technologies for strategic minerals and chemicals.

Corporate

• • ABx securities now total 223,590,814 ordinary shares and 78,820,500 quoted options

Rare Earth Elements (REE) Exploration: three new discoveries

• • ABx has made three new rare earth discoveries, meaning that ABx now has four rare earth discoveries in Northern Tasmania:

  • 1. Deep Leads (ASX releases 10 & 14 February 2022)

  • 2. Rubble Mound located 6 km southeast of Deep Leads (ASX release 16 March 2022)

  • 3. Wind Break, located 16 km northeast of Deep Leads (ASX releases 10 & 14 February 2022)

  • 4. Portrush, located 52 km east of Deep Leads (ASX releases 10 & 14 February 2022)

ABx Group Limited

Level 5 52 Phillip Street Sydney NSW 2000

ABN 14 139 494 885

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Quarterly report to 31 March 2022 page 2

• • These latest assay results confirm that ABx has discovered a province that contains several prospects which are strongly enriched in clay-hosted rare earth mineralisation

• • The highest grade from the Deep Leads discovery is 3,943 ppm total rare earths oxide (TREO), part of 3 metres averaging 2,992 ppm TREO. The highest grade from the Portrush discovery, located 52km to the east of Deep Leads, is 4,800 ppm TREO

• • ABx's newly granted exploration licence EL10/2021 gives ABx control of its rare earth province that is at least 52 km wide, especially the 6 km long line of lode trend between Deep Leads and Rubble Mound, which are geologically similar (Figures 1 & 2)

• • ABx has introduced new drilling technology to drill through the entire rare earth mineralised horizon to confirm its thickness, grades and other important geological features. ABx's current drilling campaign is extending the drill coverage a considerable distance outside the area that has been drilled at the Deep Leads project and this may allow ABx to undertake its maiden resource estimation later this year

• • The current drilling campaign will also start testing the 6 km long line of lode trend between the Deep Leads and Rubble Mound discoveries (see Figures 1 & 2).

ABx Rare Earths Strategy

Rare earths have many applications in a wide variety of industries. Permanent magnets are the most valuable application, representing over 90% of the total value of rare earths consumption. Permanent magnets are used in electric vehicles, wind turbines, smart phones and military applications. The four most important rare earths for permanent magnets are neodymium, praseodymium, dysprosium and terbium. Furthermore, the demand for these four 'supermagnet' rare earths is predicted to grow faster than for other rare earths. Prices for these rare earths have risen significantly in the last 12 months (Figure 3).

Globally, most rare earths are sourced from hard-rock mines. These typically require large, costly processing plants and a significant lead time to reach production.

A less common source of rare earths is ionic adsorption clay (IAC) deposits. Historically, these have only been mined in southern China. A major advantage of IAC deposits is that the rare earths can be extracted from the clay via a simple leaching process, enabling a project to be developed rapidly and at lower cost. A second advantage of IAC deposits is that they are relatively richer in the four main rare earths needed for permanent magnets.

For these reasons, ABx has explored for IAC rare earth deposits, and we have discovered rare earth accumulations within our bauxite tenements in northern Tasmania. This type of deposit is rare: ABx has been advised that it is one of only three publicly-listed companies in the world that is focussed on these IAC deposits. ABx is the first company to discover rare earths in Tasmania. ABx will conduct exploration on several other target areas within its tenements that have the geological features that ABx considers to be prospective for rare earths.

The ABx strategy is to produce an intermediate rare earth concentrate that can be sold to existing processing plants to increase their production. ABx's rare earths are low in radioactive elements and so our concentrates will be attractive to many rare earth processing plants.

Figure 1: ABx leases in the 52km wide REE province. Note that the Deep Leads REE trend may extend 6km towards Rubble Mound (yellow dashes)

Figure 2: Deep Leads drilled REE grades as total rare earth oxide (TREO). The line of lode geology is prospective for REE mineralisation over a distance of at least 6km from Deep Leads to Rubble Mound.

This prospective ground is now secured by the recently granted tenement EL10/2021 (see Figure 1).

Praseodymium (Pr6O11)

$300,000

$250,000

Price(US$/tonne)

$200,000

$150,000

$100,000

$50,000

$0

Mar-16

Mar-17

Mar-18

Mar-19

Mar-20

Mar-21

Mar-22

Neodymium (Nd2O3)

$300,000

$250,000

Price(US$/tonne)

$200,000

$150,000

$100,000

$50,000

$0

Mar-16

Mar-17

Mar-18

Mar-19

Mar-20

Mar-21

Mar-22

Dysprosium (Dy2O3)

$900,000

$800,000

Price(US$/tonne)

$700,000

$600,000

$500,000

$400,000

$300,000

$200,000

$100,000

$0

Mar-16

Mar-17

Mar-18

Mar-19

Mar-20

Mar-21

Mar-22

Terbium (Tb4O7)

$4,500,000

$4,000,000

Price(US$/tonne)

$3,500,000

$3,000,000

$2,500,000

$2,000,000

$1,500,000

$1,000,000

$500,000

$0

Mar-16

Mar-17

Mar-18

Mar-19

Mar-20

Mar-21

Mar-22

Figure 3: Market prices for permanent magnet rare earths have increased significantly in last 12 months

(83%-owned by ABx): Pilot plant program continuing

• • A section of the Alcore Research Centre in Berkeley Vale, NSW is being upgraded to allow pilot plant operations. The main feature is the installation of hydrogen fluoride safety systems equivalent to those previously established in the laboratory

• • A pilot plant has been commissioned to produce precursor chemicals required for the recovery of fluorine from excess 'aluminium smelter bath', an aluminium smelter waste (Figure 4)

• • A customised reactor was purchased from an international specialist manufacturer to conduct further testing of the recovery of fluorine from aluminium smelter bath. Some modifications were made in-house and the majority of commissioning was completed. This reactor allows a greater range of process conditions to be investigated with a higher degree of control (Figure 5)

Quarterly report to 31 March 2022 page 5

• • Alcore and its engineering partner, BFluor Chemicals, have significantly advanced the design of the pilot plant to reactor to recover fluorine from aluminium smelter bath. The pilot plant is intended to process 10 kg/h of bath. The design will be finalised using data from tests on the smaller, customised reactor.

Alcore Strategy

Aluminium fluoride is a strategically important mineral that is an essential ingredient for aluminium smelting and is being investigated for advanced lithium-ion batteries. Australia is the largest producer of primary aluminium metal without its own domestic aluminium fluoride production, so Australian aluminium smelters rely entirely on imported aluminium fluoride. This is typically more than 70% from China, but this proportion has reduced by more than 50% in 2021, illustrating the supply risks (Figure 5). The reduced supply from China is believed to be a contributing factor to the recent higher prices for aluminium fluoride, now over US$1,750/t (Figure 6).

Most modern aluminium smelters produce excess bath, for which the only meaningful market is new smelters, which require bath to commence operations. Aluminium industry forecasts suggest that the global bath market will increasingly be in surplus, because far fewer new smelters are being constructed. All of the major global aluminium producers are eager for alternative applications for bath, to avoid the unpalatable options of on-site storage or landfill.

Alcore has developed a world-first process to recover fluorine from aluminium smelter bath. This is combined with aluminium hydroxide to produce aluminium fluoride. Alcore is also investigating the use of dross (another aluminium smelter waste) and bauxite as alternatives to aluminium hydroxide as the source of aluminium. The use of dross or bauxite would further lower the production cost.

Alcore intends to construct a commercial aluminium fluoride plant in Bell Bay, Tasmania. The aluminium source for the initial production is likely to be aluminium hydroxide, as this is less risk and allows a faster path to production. Subsequent production may use aluminium from dross or bauxite to further improve the financial and environmental outcomes.