27 November 2020

Rainbow Rare Earths Limited

("Rainbow" or the "Company") (LSE: RBW)

Placing of new Ordinary Shares raises £2.56 million at 6p per share

Rainbow, the high-grade rare earth producer, is pleased to announce that it has conditionally issued 42,700,000 new ordinary shares in the Company of no par value each ("Ordinary Shares") at a price of 6p per Ordinary Share (the "Placing Price"), thereby raising gross proceeds of £2.56 million (the "Placing").  The Placing Price represents a 5% discount to the closing share price of 6.3p per Ordinary Share on 25 November 2020 when the Placing Price was agreed.

Reasons for the Placing

The Placing proceeds will be used for general working capital purposes including:

·      The initial US$0.25 million consideration payable under the Phalaborwa Rare Earths Project earn-in agreement.

·    Drilling at Phalaborwa, commencing in December 2020, to demonstrate continuity of the expected grades to inferred resource classification.

·     Initial confirmatory metallurgical test-work at Phalaborwa to investigate the optimal processing options for recovery of the rare earths from the gypsum stacks.

·   Capital additions to the Company's trial mining fleet and pilot processing plant at the Gakara Rare Earth Project in Burundi to support further development of the trial mining operations, better utilising the capacity of the existing pilot plant.

George Bennett, Chief Executive Officer of Rainbow, said:

"We are very encouraged by the strong support we have received from both existing and new institutional shareholders in the placing, which was significantly over-subscribed.  We believe that demand for permanent magnet rare earths is poised for significant growth, as evidenced by the significant increases in the price of both Neodymium and Praseodymium oxide in November 2020 to date.  With the Phalaborwa and Gakara assets, Rainbow is uniquely positioned to deliver into this growing market, with both project and country risk diversification.

With this capital I anticipate that we can quickly define the route to commercial production from the Phalaborwa project, where we continue to review the wealth of data available from the historical pilot plant operations.  At Gakara, the additional investment will allow us to extend the areas of our trial mining operations to demonstrate that the simple minerology and high-grade nature of the mineralised veins continues across our defined mineralised target areas."

As a result of the Placing, the US$275,000 bridge loans received from the Company's Directors and Senior management in October 2020 will be repaid.  The US$925,000 interest-free loan originally received from the Company's CEO in February 2020 via Pipestone Capital Inc will not be repaid from the Placing proceeds and remains due for repayment on 31 December 2021.

Total voting rights and Admission

An application has been made for the 42,700,000 Ordinary Shares issued pursuant to the Placing to be admitted to the Official List (by way of a Standard Listing) and to trading on the London Stock Exchange Plc's Main Market for listed securities ("Admission") and it is expected that Admission will become effective and that dealing in the Placing Shares will commence on or around 3 December 2020.  The Placing Shares will rank pari passu with the existing Ordinary Shares.

Following Admission, the Company will have 464,681,551 Ordinary Shares in issue.

The above figure of 464,681,551  Ordinary Shares may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company under the FCA's Disclosure, Guidance and Transparency Rules.

27 November 2020