Peak Rare Earths : Monthly Activities/Appendix 5B Cash Flow Report

Quarterly Activities Report and Appendix 5B

March 2022

Quarterly Activities Report and Appendix 5B

March 2022 Quarter

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HIGHLIGHTS

Peak Rare Earths Limited ("Peak" or the "Company") continues to progress the development of its integrated Ngualla - Teesside Rare Earth Project ("Project") with the following events occurring during the March Quarter:

• • Framework Agreement negotiations with the Tanzanian Government are close to being finalised

• • Senior Tanzanian Government delegation attends Ngualla site visit

• • Advancement of marketing offtake MOUs

• • Completion of the Ngualla Roadworks

• • Significant progress on Bankable Feasibility Update

• • Renewed commitment to a non-Chinese aligned strategy and approach

• • Appointment of a Financial Adviser

• • Further capital raised via the exercise of listed and unlisted options

• • Increasingly attractive market outlook

• Framework Agreement Update

• • Expectations of increasing market tightness

During the March Quarter Peak and the Government of the United Republic of Tanzania ("Tanzanian Government") have been progressing negotiations on a Framework Agreement for the Ngualla Rare Earth Project ("Ngualla Project") towards completion.

The Managing Director of Peak, Bardin Davis, arrived in Tanzania in mid-February and spent the following 10 weeks in-country supporting the Company's on-the-ground team in engaging with the Tanzanian Government. During this period Peak and the Tanzanian Government have made substantial progress in negotiating a Framework Agreement that meets Peak's strategic and financial objectives and the Tanzanian Government's objectives to maximise value-addition and financial benefits to the country.

Having regard to the Tanzanian Government's strategy of developing in-country refining, Peak is seeking the right to export beneficiated rare earth concentrate, subject to the following conditions:

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Quarterly Activities Report and Appendix 5B

March 2022

• • Peak funding a future independent technical assessment of the technical, economic and environmental feasibility of constructing a refinery in Tanzania;

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• • If a feasibility study determines that a refinery is feasible (from a technical, economic and environmental perspective), Peak would be required to construct a rare earth refinery in Tanzania once the Teesside Refinery capital and funding costs have been re-couped;

• • If a feasibility study determines that a refinery is infeasible (from a technical, economic or environmental perspective), Peak would not be required to construct a refinery in Tanzania;

• • A higher royalty being payable to the Tanzanian Government for any Tanzanian sourced concentrate refined offshore; and

• • Peak seeking to provide employment and training opportunities for Tanzanian nationals at the Teesside Refinery.

If Peak is required to construct a rare earth refinery in Tanzania, potential strategic options in relation to the Teesside Refinery include:

• • Repurposing the Teesside Refinery to process third-party concentrate; and

• • Peak acquiring and/or developing other rare earth deposits that could utilise the Teesside Refinery.

Another potential option would be to develop a Tanzanian rare earth refinery focussed on processing unweathered bastnaesite, monazite and heavy rare earths that are contained within the Ngualla Deposit, but not yet reflected in the current mine plan. Subject to further engagement with the Tanzanian Government this could enable the Teesside Refinery to continue to process the weathered bastnaesite currently within the mine plan.

Whilst Peak is pleased with the progress of negotiations with the Tanzanian Government and is hopeful that they are nearing completion, there is a risk that a final agreement may be further delayed.

Senior Government Site Visit

As part of its ongoing engagement with the Tanzanian Government, Peak was delighted to host a delegation from the Tanzanian Government to the Ngualla Rare Earths Project on 10 March 2022. Senior members of the delegation included the Hon. Dr Stephen Kiruswa - Deputy Minister for Minerals, Hon. Phillip Mulugo - Member of Parliament for the Songwe Region and Mr. Simon Simalenga - Songwe District Commissioner.

The Deputy Minister for Minerals, Hon. Dr Stephen Kiruswa, praised Peak's community initiatives and delivered strong messages of government support for the Ngualla Rare Earth Project. In addressing a meeting with the local community, the Deputy Minister for Minerals noted that the project agreements were being reviewed and that a licence would be issued shortly.

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Quarterly Activities Report and Appendix 5B

March 2022

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Government Site Visit Delegation - Peak Country Manager (Ismail Diwani), Peak Managing Director (Bardin Davis), Songwe MP (Hon. Phillip Mulugo), District Commissioner (Simon Simalenga), Deputy Mayor of Songwe District, Deputy Minister for Minerals (Hon. Dr Stephen Kiruswa), CCM District Chair (Hamad Ali), Representative of Mining Commission (Theresia Ntuke)

Marketing and Offtake Progress

During the March Quarter Peak continued to make strong progress with respect to its "go-to-market strategy" with offtake arrangements advancing with key target customers in Japan, Korea and Europe.

Memorandum of Understanding ("MOU") negotiations covering approximately 70% of Peak's annual projected NdPr Oxide production are in the final stages of discussion with key commercial terms such as pricing formula, volume and tenor well advanced.

These MOU's will provide the framework for ongoing collaboration and binding Offtake and Supply Agreements, which are scheduled to be finalised prior to a Final Investment Decision by the end of December 2022.

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Quarterly Activities Report and Appendix 5B

March 2022

Completion of Ngualla Access Roadworks

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A major upgrade of the Southern Access Road was completed during the March Quarter over a 48 km length from the village of Kininga to the Ngualla Project.

The road upgrade has enabled all year access to site. Key aspects of the works included the addition of five new major waterway crossings, repairs to heavily eroded sections of the road, the addition of rock and other aggregates to the roadbed, clearing of trees to widen and improve overall safety of the road with increased visibility.

This work was completed without any HSE incidents and with over 50% of the workforce being hired directly from local communities.

Bankable Feasibility Study Update

Substantial progress has been made on the Bankable Feasibility Study Update over the March Quarter.

Key activities undertaken during the March Quarter included:

• • Completion of geotechnical studies on the Southern Access and the Plant Access Roads;

• • Progressing detailed engineering of the Ngualla mine, mill and concentrator and the Teesside Refinery to support a throughput capacity of 800ktpa;

• • Plant layouts redesigned to support improved operability, maintenance and fire safety;

• • Updating of mine plan to support the increased throughput capacity of 800ktpa (a ~28% increase over the 2017 Bankable Feasibility Study average capacity of 624ktpa);

• • Development of constructability plans for the Ngualla Project and the Teesside Refinery;

• • Commissioning of a detailed transportation and logistics study;

• • Redesign of the Ngualla Tailings Storage Facility to allow for higher mine throughput and the optimisation of retention structures;

• • Beneficiation plant testwork programs;

• • Collection of bulk ore samples from the Ngualla Project for an upcoming beneficiation pilot plant campaign;

• • Progressing technical and external reviews of the Teesside Refinery;

• • Finalisation of process design criteria for the purposes of the Bankable Feasibility Study Update; and

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Quarterly Activities Report and Appendix 5B

March 2022

• • Identifying opportunities to mitigate broader inflationary pressures associated with higher shipping rates, commodity input prices and labour rates.

It is expected that the Bankable Feasibility Study Update will be finalised during July 2022.

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Renewed Commitment to an Independent and Non-Chinese Aligned Strategy

On 14 February 2022 Peak was informed that Shenghe Resources Holding Co Ltd ("Shenghe"), a Chinese rare earth company, had agreed to acquire a 19.9% interest in Peak from Appian Pinnacle Holdco Limited ("Appian") at A$0.99 per share.

Whilst Peak was not consulted or involved in any discussions or negotiations between Appian and Shenghe, it views the investment as a strong endorsement of the world-class nature and strategic value of the Ngualla-Teesside project.

Shenghe is not entitled to Appian's previous shareholder rights, which included director nomination rights. Peak has also confirmed that it is not entertaining any changes to its board, governance or management structure as a result of Shenghe's interest.

Peak believes that the interests of the Company and its shareholders as a whole are best served by continuing to position itself as an Australian-managed independent source of rare earth oxide production.

The strategic importance of rare earths to economies and national security, continues to drive an appetite for diversity of supply and production outside of China. China accounts for approximately 85-90% of global production of NdPr Oxide, which is the key element in high strength permanent magnets used in electric vehicles and wind turbines.

Chinese market dominance is being further strengthened through centrally coordinated consolidation initiatives, which include the recent formation of China Rare Earth Group through the merger of Ganzhou Rare Earth Group with the rare earth operations of major Chinese State-Owned Enterprises, Chinalco and Minmetals.

Peak believes its position as an independent source of production is important to offtakers, financiers and other stakeholders.

Financial Adviser Appointment

Following Shenghe's acquisition of its stake in Peak and broader strategic interest in the rare earths and critical minerals sectors, Macquarie Capital has been appointed by Peak to provide advice on takeover response planning and strategic options to unlock shareholder value.

Capital Raising via the Exercise of Listed Options

During the March Quarter 4.746 million listed PEKOD options and 0.365 million unquoted options were exercised, which resulted in a capital inflow of A$1. 602 million. After the end

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