Peak and Shenghe Sign a Binding Offtake Agreement and a Non-Binding Strategic EPC and Funding MOU for Ngualla

Peak Rare Earths Limited ( ASX: PEK) (“Peak” or the “Company”) is pleased to announce that on 8 August 2023 it executed a binding offtake agreement with Shenghe Resources (Singapore) Pte. Ltd. (“Shenghe Singapore”), a wholly owned subsidiary of global rare earths company, Shenghe Resources Holding Co., Ltd. (“Shenghe”). The Company also signed a non-binding Memorandum of Understanding (“MOU”) with Shenghe, which sets out the basis of the parties’ cooperation on assessing an integrated Engineering, Procurement and Construction (“EPC”) and project funding solution for the Ngualla Rare Earth Project (“Ngualla Project”). 1

• Peak and Shenghe have executed a binding offtake agreement for the Ngualla Rare Earth Project and signed a non-binding memorandum of understanding (MOU) for cooperation on delivering an EPC and funding solution
• Binding offtake agreement terms include:
  • 100% of rare earth concentrate
  • Minimum of 50% of intermediate and final rare earth products
  • An initial term of 7 years
  • Conditional, including subject to Peak shareholder approval
• Non-binding MOU supports an integrated development and funding solution:
  • Shenghe to arrange and provide a fixed price and turnkey Engineering, Procurement and Construction (“EPC") solution and project funding solution
  • Peak and Shenghe to collaborate around opportunities to reduce capital and operating costs, expedite construction and further optimise Ngualla
  • Potential for Shenghe to subscribe for a significant non-controlling equity interest in the Ngualla Project (via a 100% Peak owned subsidiary) which would substantially lower Peak’s funding requirements
• The target Ngualla Project development timeline has been updated to reflect a shift from an EPCM to a fixed price and turnkey EPC approach:
  • Final Investment Decision and start of construction by the end of May 2024
  • Completion of construction and development by early 2026
• Positions Ngualla as one of the world’s most attractive and advanced undeveloped rare earth projects, with a:
  • High-grade REE/NdPr deposit with exploration upside
  • Completed Bankable Feasibility Study Update1
  • Binding Framework Agreement with the Government of Tanzania
  • Special Mining Licence for the Ngualla Project
  • Binding offtake agreement for all concentrate production
  • Supportive and technically proficient major shareholder, Shenghe
  • Pathway to a development and funding solution

• Products – 100% of rare earth concentrate and, subject to entering into subsequent binding offtake agreements, a minimum of 50% of any intermediate rare earth products (such as a future Mixed Rare Earth Carbonate) or final separated rare earth oxides;
• Take-or-Pay –Shenghe Singapore is obligated to pay for and take delivery of all agreed products;
• Pricing – market-based pricing formula based on the value of contained rare earth oxides (as quoted by Asianmetal.com) within the product less deductions relating to VAT, trading fees as well as refining recoveries, charges and margins;
• Term – an initial period of 7 years which may be extended further by mutual agreement;
• Shipping – sale of concentrate is based on Cost, Insurance and Freight (“CIF”) discharge to designated Chinese ports; I
• Invoicing – at the election of Peak, the payment of 90% of the Provisional Invoice by delivery of a Letter of Credit prior to the loading of a shipment or the payment of 80% of the Provisional Invoice by telegraphic transfer within five business days of shipping documents being delivered, with the balance of payments to be made within 30 days of Chinese customs clearance;
• Conditions precedents –the agreement is conditional upon Peak shareholder approval (50% resolution), the approval of the board and/or shareholders of Shenghe, the approval of the Board of Directors of Mamba Minerals Corporation Limited and Mamba Refinery Corporation Limited and the subsequent novation of the Offtake Agreement to Mamba Minerals Corporation Limited 2 , the provision of a parent performance guarantee by Shenghe, the achievement of Financial Close with respect to project funding and approval by the Tanzanian Mining Commission; and
• Termination – termination rights where an event of default is not remedied within 30 days or Financial Close on a project funding solution has not been achieved within 6 months from the finalisation of a Front-End Engineering and Design (“FEED”) study.

Under the offtake agreement, the net payability for concentrate, being the price received for concentrate divided by the basket value of contained rare earth elements, will vary with the grade of Ngualla Project’s concentrate and the underlying price of rare earth elements. Peak is targeting to produce concentrate with a TREO grade of greater than 45% over the life of the Offtake Agreement. Based on current spot prices, over 92% of the value of Ngualla concentrate is attributable to contained NdPr Oxide3 .

Net payabilities for different grades and prices are set out in the table below.

_{aBased on a LaCe Carbonate price of US$0.5/kg and a SEG concentrate price of US$33.43/kg. Assumes Ngualla concentrate specifications of 22.3% NdPr, 44.2% Ce, 30.1% La and 2.9% SEG Heavy (LOM averages). Payabilities are inclusive of a VAT deduction (e.g., based on a final price payable to Peak).}

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