Ann: Consistently high grade returned from recent drilling, page-29

Thanks for your comments re. the leaching and potential problems with excess calcium. I (and I'm sure most others) wasn't aware of the seriousness of this issue in potentially derailing the project.

I checked the prospectus and looks like you hit the nail on the head re. calcium/extraction issues.
Below is the text from the prospectus and I have highlighted the sections which I consider to be significant.

Based on your comments above and the test work by the company below, it looks that the high calcium content might be a serious issue for this project.

Any further thoughts appreciated.
Cheers

10.1ANSTO Characterisation and Leach of Ionic Clay Samples 2020
In May 2020, Australian Rare Earths sent 12 samples collected from six (6) historical drill holes to ANSTO Minerals
(ANSTO) for characterisation and preliminary leach test work. Two (2) samples were received already pulverised for
assay and the remaining ten were crushed and pulverised prior to analysis. Each sample was analysed by XRF and
digest/ICP-MS.
Several digest methods were tested in this program. Initially a standard peroxide fusion digest method was used
however, the detection limits for the rare earth elements were too high (<20 ppm) and interference of zirconium
from the crucible produced elevated scandium results. An alternative method using a mixed acid/ammonium
fluoride digest produced lower detection limits (typically <2.5 ppm) for the REEs and scandium and was used for the
remainder of the program for the majority of the samples.
The total REO content (including yttrium) of the samples varied between 518 and 1900 ppm across the drill holes,
dominated by the light rare earth elements (La, Ce and Nd).
Four scoping leach tests were conducted to assess the amenability of the samples for rare earth extraction. Typical
conditions for REE extraction from ionic clay samples are relatively mild, with a sodium chloride lixiviant at room
temperature selected for these tests. Samples were leached for 2 hours at ambient conditions in a 25 wt% slurry
density with 1.5M NaCl.
Two of the leach tests were completed on samples as received (2974461 and 2979571) and two composites were
prepared by combining 2979557 + 2979558 (Comp_KI010), and 2974445 + 2974446 (Comp_KI006). For the first 3
tests, the initial test pH was 4.2, with the NaCl solution adjusted to target pH with HCl. However, after adding the
ore, the pH increased to >7, with all acidity immediately consumed. This was attributed to the high calcium content,
presumably present as calcite.
The final liquor only was assayed by ICP-OES for gangue elements and ICP-MS for REEs. After filtration, the solids
were washed on the filter with DI water and the solids dried in an oven overnight (100 °C). There was no scope for
analysis of wash liquors. The final solid was digested and assayed by ICP-MS only for REEs. Due to dilution of the
leach liquors because of acid addition, coupled with low extractions in some cases, many of the REEs were below
detection limit by ICP-MS.
Further tests were undertaken to determine whether further recovery was possible through repeated contacts with
NaCl solution. Each wash liquor was assayed ICP-MS only for REEs and liquor analysis showed further recovery of
REEs from all of the residues. The overall process recoveries from the original ore head samples were determined
based on liquor analysis. Many of the REEs of interest remained below detection limits by ICP-MS. The breakdown
in overall recovery for each rare earth element indicates that the LREs lanthanum, praseodymium and neodymium
contributed to the majority of the extraction, with cerium only extracting from two of the four samples (higher
grade). Higher recovery of LREs is typical for ionic clay deposits as the HREs are more strongly adsorbed.
The following conclusions were made by ANSTO (ANSTO 2020a):
•Modest extraction (<10%) of REEs was obtained from leaching a high-grade TREO sample under the chosen
leach conditions (1.5 M NaCl, pH 4.2, room temp.)
•Recovery of REEs was significantly increased by repeated washing with NaCl solution (at pH 4.2), and with
optimisation of the leach and wash conditions, there is scope to further improve the overall REE recovery
•Extraction was low from intermediate grade TREO samples, with most rare earth elements at less than
detection limits in solution, exacerbated by dilution due to acid consumption in leach. Difficulties in maintaining the preferred leach conditions could have negatively impacted REE extraction from these samples
•Increasing the acidity (pH 1) improved REE extraction from a high-grade TREO sample to a considerable
33%, and with further washing, recovery was improved to 51%; and
•The chosen leach conditions did not achieve high recovery of REEs. The increased REE recovery at higher
acidity suggests that all of the REEs may not have been adsorbed on clay minerals, which is not uncommon
for ionic clay deposits.

10.2ANSTO Optimisation Leach Study
In November 2020, Australian Rare Earths sent a 25 kg of composite sample (631416) to ANSTO for further testing
to optimise the leach parameters and further investigation of the wash conditions for improved overall REE recovery,
and to explore the application of ion-exchange for improved REE recovery.
To date a total of six leach tests of two (2) hour duration conducted at room temperature under varying pH
conditions, three each in two different lixiviants (0.5 M (NH4)2SO4 and 0.3 M MgSO4) at 25 wt% slurry, have been
carried out on a wet cake (200 g, dry equivalent) of the composite sample (ANSTO 2021a)
The following comments regarding results received to date were made by ANSTO (ANSTO 2021a):
•Preliminary REE extraction results from the six leach tests illustrates that irrespective of the nature of
lixiviants, extraction of the REEs was enhanced significantly with a decrease in test pH. This observation is
also applicable to extraction of most of the individual REEs.
•Extension of the leach duration at low pH also had a positive impact on REE extraction, particularly at pH 1.
•The leach residues were re-pulp washed once with the lixiviant at test pH (1:1 wash ratio) followed by one
displacement wash with DI water (1:1 wash ratio). Previously reported testwork on wash conditions
indicated that REE recovery may be improved with additional washing steps.
•The liquor analysis by ICP-MS showed that a number of the elements remained below detection limits (<1
ppm) and therefore showed no result. However, the trend of increased extraction with lower pH is clear.
•The acid addition in kg/t, as expected, increased with decrease in pH and was significantly higher at pH 1.
Additional leach testwork is still underway and includes the following:
•Additional washing phases of the leached material
•Variation (of ‘ore’ material) testwork using an optimised leach chemistry and process on 22 individual
samples from nine (9) drillholes (Figure 20).
•Resin in pulp testwork – aimed at maximising the recovery given the very rapid kinetics of the desorption
process.
Results from six (6) of the 22 samples submitted for variation leach testwork have been received. These leach tests
were performed at a pH of 1 based on the positive impact on REE extraction identified from the optimisation work
completed to date. Results demonstrated TREO (excluding Ce) recoveries of between 50 and 70% within the Red
Tail Prospect area (Table 12).
Results of the remainder of the leach test optimisation program are pending.