Red Mountain Mining : Mt Mansbridge Project - HREE Market Update (Amended)

ASX ANNOUNCEMENT

RED MOUNTAIN MINING LTD

29th March 2022

Mt Mansbridge Project - Heavy Rare Earth Market Update

• • Diversification of global critical mineral supply chain has become a priority for governments as Prime Minister, Scott Morrison unveils $243.6M in support for critical minerals projects

• • Heavy REE critical for permanent magnets and the new energy transition

• • Remaining assay results received from Mt Mansbridge October 2021 drilling program, where 2 out of the 3 Solo Prospect drill holes intersected HREE

Red Mountain Mining Limited (RMX, the Company) (ASX: RMX) is pleased to provide an update for its Mt Mansbridge Project located in the Eastern Kimberley region of Western Australia.

On Wednesday 16th March 2022, the Prime Minister announced a package of measures including an investment of $243.6M under the Modern Manufacturing Initiative, which recognises the importance of developing Australia's abundant critical minerals projects. The measures, which are part of the 2022-23 Budget, also include a $200 million Accelerator grants program, $50 million to support research and development and an updated industry strategy.

Prime Minister Scott Morrison said "Australia's resources companies were leading the world in developing new critical minerals markets. The world is becoming a more uncertain place and we want to secure Australia as a reliable partner for local and global businesses that need the critical minerals we have right here.We'll dig them up right here. We'll refine them right here. We'll look to make the products that use them right here.As the global economy changes, there are exciting new growth opportunities emerging in areas such as rare earths and critical minerals that ultimately mean we can deliver a stronger economy for Australia and secure a stronger future."

Permanent Magnets Critical for Energy Transition

Increasing global efforts to decarbonise and with governments committing to net zero by 2050, rare earths are critical for green energy transition. Adamas Intelligence, Rare Earth Magnet Outlook to 2030, forecasts REE oxides for permanent magnet market to increase by five-fold from US $2.98 billion in 2020 to US $15.65 billion by 2030.

Permanent magnets are vital to the energy revolution, in particular Neodymium (NdFeB) magnets are the strongest type of magnets commercially available which have the maximum energy output per volume. These magnets have revolutionised many size and weight sensitive applications that have changed the world we live in.

Permanent magnets are critical for the new world and clean energy transition. They are essential for electric vehicle traction motors, providing greater efficiency and range by reducing energy consumption as electric motors with permanent magnets require less energy to create same magnetic field. Permanent magnets used in wind turbine generators to reduce weight, cost of components, maintenance costs and improves reliability and efficiency. Permanent magnets are used in fin actuators in missile guidance and control systems, satellite communications, radar and sonar technology (Figure 1).

Figure 1 - Permanent magnets required for clean energy and military applications

Heavy Rare Earths Critical for Permanent Magnets

Heavy Rare Earths Elements are required to complement Light Rare Earth Elements neodymium (Nd) and praseodymium (Pr) in NdFeB permanent magnets. The addition of dysprosium (Dy) and terbium (Tb) to NdFeB magnets allows the magnet's (coercive) strength to remain and improves the magnet's resistance to demagnetisation at higher temperatures. This allows for higher working temperatures for electric vehicle motors which vary from 180°C to 240°C, compared to 60°C for those magnets without the addition of Dy and Tb as illustrated in figure 2.

Figure 2 - Addition of HREEs improving the magnets resistance to demagnetisation

Dysprosium Production and Demand Scenario

Constrained by a lack of primary and secondary supply of Dysprosium oxide from 2022 onwards, Adamas Intelligence forecast a global shortages of Dysprosium oxide will rise to 1,850 tonnes by 2030, which is roughly equal to the current global annual mine production.

With Dysprosium making up 3%-5% of the rare earth mix in a typical heavy rare earth deposit, Adamas Intelligence estimates that industry will need to produce an additional 35,000 to 60,000 tons of annual total heavy rare earth oxides by 2030 to avoid shortages.

Figure 3 - Forecast global production and demand for dysprosium oxide (Adamas Intelligence Market Outlook 2030)

Global HREE Supply and Refining Capacity Dominated by China

From 2022 to 2023, China (which includes HREE from Myanmar) will continue to be the main producer of Dysprosium Oxide by a large margin. China's dominance is even more pronounced when it comes to refining capacity and with exception to small capacity in Vietnam, China is the only existing heavy rare earth separator in the World. There are other separation and refining plants under consideration, but with no commitment to construction timelines.

It is expected that China will continue to dominate every aspect of the HREE supply chain from 2022 to 2030 with exception to minor global diversification. China's outsized role in these critical raw materials and with very few alternative sources of heavy rare earth production, have forced OECD countries to seek alternative sources of supply.

With very few significant heavy rare earth resources outside China along with the global diversification away from Chinese has resulted in a favorable outlook for heavy rare earths and an excellent opportunity for Red Mountain to explore and develop new sources of heavy rare earths at its Mt Mansbridge Project.

Mt Mansbridge - High Value Strategic REE Basket

With about two-thirds yttrium and largely a source of heavy lanthanide metals, the Mt Mansbridge Project has high concentration of dysprosium and terbium, giving it a higher basket content of high value heavy rare earths (Table 1).

REE Oxide Prices	REE	Mt Mansbridge REO Basket %	US$/kg	Application and Use
Terbium	HREE	0.97%	$2,230	Permanent magnets for high temperature applications
Lutetium	HREE	0.39%	$804	Medical and petroleum refining
Dysprosium	HREE	5.65%	$463	Permanent magnets for high temperature applications
Thulium	HREE	0.45%	$850	Medical and laser
Holmium	HREE	1.04%	$298	Permanent magnets, nuclear energy, microwave applications
Gadolinium	HREE	5.25%	$98.0	Nuclear energy, fiber optics, glass
Erbium	HREE	3.04%	$60	Nuclear energy, medical, ceramics
Europium	HREE	0.80%	$30	Optical fiber, display panels, phosphors
Ytterbium	HREE	2.92%	$21	Medical, stainless steel
Yttrium	HREE	43.15%	$21	Phosphors, metal alloys, polishing powders, catalytic converters, ceramics
Neodymium	LREE	10.46%	$178	NdFeB magnets, metal alloys, polishing powders, auto catalysts, glass additives, ceramics
Praseodymium	LREE	2.43%	$164	NdFeB magnets, metal alloys, polishing powders, auto catalysts, glass additives, ceramics
Samarium	LREE	2.95%	$4.8	Magnets, medical, ceramics
Lanthanum	LREE	5.45%	$1.3	Metal alloys, polishing powders, auto catalysts, glass additives, ceramics
Cerium	LREE	15.03%	$1.3	Metal alloys, polishing powders, auto catalysts, glass additives, ceramics

Table 1 - March REO prices and REE uses (Shanghai Metals Market, Adamas Intelligence Market Outlook 2030)

Non-Executive Chairman Mr. Flannery commented "The March 16th 2022 announcement by Prime Minister, Scott Morrison for the Commonwealth funding of $243M under the Modern Manufacturing Initiative is significant for the Australian rare earth sector and recognises the importance of developing Australia's critical minerals industry. With very few significant heavy rare earth resources outside China and the global diversification away from Chinese supply chain represent an excellent opportunity for RMX to explore and develop new sources of heavy rare earths outside of China."

Remining Mt Mansbridge RC Drilling Results

The final assay results from the October 2021 RC drilling program have recently been received from the laboratory. Significant results include hole MMRC003 from the Solo Prospect returning a zone of 2m (72-74m) @ 0.102% TREO.

The Solo Prospect consist of a structurally controlled 200m long zone of outcropping REE mineralisation within the Proterozoic aged prospective Killi-Killi Formation. Three holes were drilled by RMX into mineralized zone with hole

MMRC002 returning the previously announced assay results (refer RMX ASX Announcement 6 January 2022).

Further RC drilling is planned for the upcoming field season to test the heavy rare earth mineralized zone at depth.

Figure 4 - Solo Prospect - October 2021 RC Drilling

Rare Earth Oxide	%
CeO2	0.034
La2O3	0.011
Nd2O3	0.022
Pr6O11	0.005
LREO Total %	0.071
Dy2O3	0.003
Er2O3	0.002
Eu2O3	0.001
Gd2O3	0.003
Ho2O3	0.001
Lu2O3	0.000
Sm2O3	0.005
Tb4O7	0.000
Tm2O3	0.000
Y2O3	0.015
Yb2O3	0.002
HREO Total %	0.031
TREO %	0.102

Table 2 - MMRC003 - 72-74m - Rare Earth Oxide Summary

• • LREO - Light Rare Earth Oxides = CeO2, La2O3, Nd2O3, Pr6O11

• • HREO - Heavy Rare Earth Oxides = Dy2O3, Er2O3, Eu2O3, Gd2O3, Ho2O3, Lu2O3, Sm2O3, Tb4O7, Tm2O3, Y2O3,

Yb2O3

• • TREO - Total Rare Earth Oxides = HREO + LREO

Table 3 - Drill collar table