American Rare Earths: Project Quarterly Activity Report

Key Chapter Title List

1. Key Highlights
2. Why It Matters: The Halleck Creek Rare Earths Project – A Wyoming Solution for Diversifying and De-risking the U.S. Upstream Rare Earth Supply Chain
3. Project Development and Permitting Milestones
4. Outlook
5. Strong Cash Position
6. Appendix 5B: Quarterly Cash Flow Report for Mining Exploration Entities
7. Cash Flow Summary Table
8. Estimate of Cash Available for Future Operating Activities
9. Compliance Statement

Document Introduction

This report is the quarterly activities report for the period ending September 30, 2025, released by American Rare Earths Limited (ASX: ARR), with a core focus on its flagship project – the Halleck Creek Rare Earths Project in Wyoming. The report is issued at a time when the Western "mine-to-magnet" industry is undergoing significant macroeconomic and geopolitical realignment. The report clearly points out that currently, there is only one operating rare earth mine (Mountain Pass) in the United States, creating a single point of supply failure. This exposes the rapidly growing domestic magnet industry, incentivized by U.S. government policies, to supply chain vulnerability risks due to the high concentration of global upstream rare earth mining and refining capacity in China. The Halleck Creek project is positioned as a long-term, strategic solution aimed at providing the light and heavy rare earth raw materials needed for the U.S. and its allies' rare earth magnet industry for over 100 years into the future, thereby achieving supply chain diversification and de-risking.

The report details the substantive progress made during the quarter in project development, technical testing, and permitting, which has significantly reduced the project's development risk. Key technical milestones include: the successful completion of impurity removal and neutralization tests for allanite rare earth ore. This breakthrough historically addresses the technical and economic challenges posed by gypsum and silica gel by-products in processing such ores, indicating lower capital and operating expenditures and higher rare earth recovery rates. Furthermore, extensive leaching test results show that under optimal conditions, leaching recovery rates for Praseodymium (Pr) and Neodymium (Nd) reached 85% and 84% respectively, while recovery rates for the critical heavy rare earths Terbium (Tb) and Dysprosium (Dy) reached 52% and 46% respectively. Impurity levels such as iron and aluminum were also significantly lower than data from previous scoping studies. The project has selected atmospheric tank leaching as the preferred leaching method due to its greater energy efficiency and cost-effectiveness.

At the project operations level, the company has safely completed trial mining and primary crushing of approximately 3,080 tonnes of ore at the "Cowboy State Mine," with samples being shipped to multiple countries for beneficiation optimization testing. Environmental permitting work is progressing concurrently, with groundwater pumping tests completed to provide baseline data for the mining permit application to be submitted to the Wyoming Department of Environmental Quality. The company's financial position is robust, with cash holdings of A$21.2 million at the end of the quarter. Funding for planned activities over the next 18-24 months has been secured through share placements and option exercises. Approximately A$8.8 million remains available from the company's matching grant awarded by the State of Wyoming.

The report outlines the focus for the next quarter, which includes integrating optimization test results into the Pre-Feasibility Study and beneficiation demonstration plant design, and continuing to advance environmental modeling and preparation for the mining permit application. At the corporate and strategic level, American Rare Earths Limited will continue to progress the CEO recruitment process and strengthen engagement with U.S. federal and state agencies involved in critical minerals strategy and funding programs. The ultimate goal is to develop Halleck Creek into the next producing rare earth mine in the United States to support the rapidly growing magnet industry.

This report includes detailed appendices listing the company's mineral tenure holdings at Halleck Creek, Beaver Creek, and other locations, and provides a complete quarterly cash flow report compliant with ASX requirements, ensuring transparency and compliance. All technical information in the report has been reviewed and approved by Competent Persons, providing authoritative endorsement for the company's claimed resource potential and project progress.