Mr. Ramon Barua reports

ACLARA ANNOUNCES THE DISCOVERY OF A NEW HEAVY RARE EARTHS DEPOSIT HOSTED IN ION-ADSORPTION CLAYS IN BRAZIL

Aclara Resources Inc. has provided an update on its exploration activities in Brazil by providing details of its new heavy rare earth element (HREE) ionic clays project, Carina Module, located in the state of Goias, Brazil. The results of its initial auger drilling campaign, which comprised 1,693 metres of drilling within 236 drill holes, demonstrate the discovery of a new HREE deposit hosted in ionic clays. While the initial auger drilling campaign was shallow, with an average depth of 7.2 metres, it has unveiled a potential for expansion, both laterally and at depth, accompanied by the prospect of enhancing HREE grades.

Highlights:

• Size potential: The mineralized area of the Carina Module spans approximately 1,400 hectares, with potential for lateral expansion. In contrast, the mineralized area of the company's Penco Module in Chile covers approximately 140 hectares.
• Prospective grades: The drilling results shows the potential for high total rare earth oxides (TREO) with average grades at 1,229 ppm (parts per million). From an average drilling depth of 7.2 metres, 71.2 per cent of the drill holes include 5.7 metres with TREO average grades at 1,367 ppm and desorbable rare earth oxides (DREO) at 449 ppm.
• Rich in HREE and LREE: The desorbable results demonstrate an outstanding distribution of HREE and light rare earth elements (LREE). In particular, 71.2 per cent of drill holes reveal desorbable dysprosium (Dy2O3 D) and terbium (Tb4O7 D) grades at 18.1 ppm (equal to 4.1 per cent of the rare earths basket distribution) and 3.1 ppm (equal to 0.7 per cent within the rare earths basket distribution), respectively. In addition, desorbable neodymium oxide (Nd2O3 D) and praseodymium oxide (Pr2O3 D) grades show a summed value of 123 ppm (equal to 27.5 per cent of the rare earths basket distribution).
• Metallurgical compatibility: The metallurgy of the Penco Module, which utilizes an ammonium sulphate leaching solution, is well suited for the Carina Module's ionic clays. Of the drill holes, 71.2 per cent show an average exchangeable fraction for TREO of 36.6 per cent, with the highest value recorded at 78 per cent; total dysprosium oxide (Dy2O3 T) exhibits an average exchangeable fraction of 46 per cent, with the highest value at 78 per cent, and terbium oxide (Tb4O7 D) exhibits an average exchangeable fraction of 52 per cent, with a peak at 91 per cent.
• Depth potential: The average drill depth of the auger drilling campaign was 7.2 metres, which did not allow the company to consistently reach the bottom limits of the lower pedolith and saprolite. However, over 70 per cent of drill holes indicate a high anomalous exchangeable fraction in the last interval, suggesting that the deposit remains open at depth.

Ramon Barua, chief executive officer, commented:

"The Carina Module's initial exploration results mark an important milestone in our journey to establish Aclara as a leading multicountry and multimodular HREE company. The Carina Module is located in Goias, a state that promotes responsible mining endeavours and has a well-established track record and expertise in evaluating projects of this nature. The results validate our growth strategy and provide the company with geopolitical diversification whilst we continue to advance the permitting on our Penco Module in Chile. Like the Penco Module, the Carina Module deposit shows potential to contain significant amounts of dysprosium and terbium, which are scarce and critical to establishing a Western-based, high-performance magnet supply chain necessary for electric vehicles and wind turbines.

"As we progress, the results are expected to validate the effectiveness of our in-house-developed exploration model in finding HREE-enriched ionic clay deposits. Although the initial auger drilling campaign was relatively shallow, the results are expected to support a solid maiden mineral resource. Our forward-looking plan includes conducting deeper drilling campaigns to fully assess the asset's potential. Concurrently, we will diligently work on estimating our maiden resource statement and conducting a preliminary economic assessment to expedite engineering processes, with the ultimate goal of achieving production in the earliest possible time frame."

Initial auger drilling campaign summary

A total of 1,731 metres of drilling within 238 auger drill holes was carried out from February to August, 2023, as part of a scouting drilling campaign covering approximately 1,400 hectares within the area defined as the Carina Module. The primary objectives of the drilling initiative were to:

1. Contribute to the definition of a maiden resource estimate of a size necessary to support a new production module;
2. Provide guidance for future reverse circulation drilling campaigns, needed to fully assess the asset's potential both laterally and at depth;
3. Establish the metallurgical compatibility of the ionic clays found in the Carina Module with the metallurgical process developed for the Penco Module.

The drilling campaign used manually operated augers ideally suited for a scouting campaign requiring shallow drill depths and easy and quick access to drill sites and varying terrains.

General project description

The Carina Module is located in the northeastern part of the state of Goias, in central Brazil. The site can be accessed via paved roads from Goiania (the capital of the Goias state) or Brasilia (the national capital of Brazil). Both Goiania and Brasilia are major cities with modern infrastructure and services and offering commercial airports for domestic and international flights. From a district perspective, access to the site is via a 50-kilometre gravel road and the supply of electricity, water and sanitation is provided by the Brazilian government utilities. At the site, domestic water is obtained from wells, and electrical supply can be obtained from an electrical substation located 90 km from the project.

The state of Goias is also the home of the ion-adsorption clay project managed by Mineracao Serra Verde, which has successfully obtained the required environmental and operating permits needed to construct and operate its mine and processing facility and which recently commenced commercial production. This demonstrates that the Goias state has a positive record in evaluating projects of this nature and could play an important role in the potential development of the Carina Module.

Next steps

The results from the initial auger campaign have provided the company with a basis to further pursue the project, which is expected to include the following activities:

• The issuance of a maiden mineral resource estimate during Q4 2023;
• The issuance of a National Instrument 43-101 preliminary economic assessment during Q1 2024;
• The execution of a 1,500-metre reverse circulation drill campaign to confirm the mineralized potential at depth. The campaign is expected to start at the end of October, 2023, and is the initial phase of a reverse circulation campaign of 7,590 metres within 253 drill holes to convert the full potential of the deposit to an inferred mineral resource category;
• The execution of a pilot test campaign during Q1 2024 in the company's fully owned pilot plant in Chile, utilizing a 25-ton sample of clay extracted from the project area. This campaign will aim to demonstrate on a semi-industrial scale the feasibility of processing the ionic clays extracted from the Carina Module. Additionally, it will serve the purpose of producing commercial samples and further enhancing the value chain development efforts that were initiated with the Penco Module samples.

Geological overview

The dominant lithologies of the project are pink porphyritic monzogranite composed of quartz, oligoclase, microcline and annite as essential minerals. Leucosienogranite is the secondary lithology, characterized by quartz, albite and microcline. Using the historical and present auger drilling results, a thick regolith development has been interpreted ranging from 45 to 60 metres in thickness. This hypothesis will be tested with the execution of the upcoming reverse circulation drill campaign.

All the lithologies recognized in the project have shown evidence of thick regolith profiles, secondary minerals such as the ionic clays, and the release of interesting REE fractions such Nd, Pr, Dy and Tb. As part of the initial auger drilling campaign, the bottom limits of the lower pedolith and saprolite were not reached; however, the last intervals of the drill holes show exchangeable REE fractions open to depth.

Sampling and assay protocols

The 238 auger drill holes were sampled at intervals of 0.5 metre to two metres, for a total of 1,344 samples, which were sent for total REE analysis (REY T) to the ALS laboratory in Lima, Peru, and desorption (REY D) analysis to AGS laboratory in La Serena, Chile. The same sampling and analytical protocols were followed as indicated in the company's amended and restated NI 43-101 technical report, preliminary economic assessment for Penco Module project, prepared by Ausenco Engineering Chile Ltda. with an effective date of Sept. 15, 2021. The quality assurance/quality control program indicates high levels of accuracy for Dy, Tb, Nd, Pr and Lu. Over all, the database for total grades similarly shows high accuracy. The company contracted the services of GeoAnsata to review the data quality and QA/QC protocols.

Comparison: Carina Module versus Penco Module

Size: The mineralized footprint of the Carina Module covers approximately 1,400 hectares, which is an area 10 times larger than the Penco Module mineralized area.

Grades: TREO grades are lower than at the Penco Module; however, the focus needs to be set in the desorbable grades (DREO), which represent the recoverable fraction from TREO. Applying the same metallurgical process as employed by the Penco Module (ammonium sulphate leaching), the Carina Module's DREO grades are slightly lower than those found in the Penco Module mineralized area. It is important to note, however, that the Carina Module mineralization has only been tested to a depth of approximately 5.7 metres whereas the Penco Module has an average depth of approximately 24 metres. This has prompted the decision to initiate a deeper drilling campaign to determine the full potential of the Carina Module mineralization with regard to both size and grades. The mineralized area remains open at depth.

Metallurgy: The metallurgical process used to determine the DREO grades at the Carina Module is the same as that used on the Penco Module, which has previously been successfully validated through a semi-industrial-scale pilot plant operation. This metallurgical methodology represents a proven concept with positive environmental attributes and cost-effectiveness. The company remains optimistic that further enhancements can be made to the metallurgical process which will improve recoveries and, to this end, plans to conduct a research and development program to optimize the metallurgical formula for the Carina Module clays.

REE content: The Carina Module shows attractive REE contents, with an NdPr to DyTb ratio of approximately 5.8. This positions the asset as a potential net contributor of heavy rare earths essential for manufacturing high-performance permanent magnets, especially those needed for electric vehicles (EVs). For further insights, please refer to the rare earth market section below.

Barry Murphy, chief operating officer, commented:

"We're excited about the results from the initial round of drilling at the Carina Module. The deposit identified through this initial drilling looks promising in terms of its size, the amount of contained dysprosium and terbium, and how compatible the clays are to the application of our demonstrated metallurgical flowsheet. While it's still early days for the Carina Module, the company has a detailed exploration and metallurgical development plan over the following nine months aimed at confirming its full potential."

Concessions and land ownership

On Feb. 27, 2023, the company entered into an earn-in agreement with a Brazilian mining company that provides the company the right to acquire up to 100 per cent of the 8,490 hectares of mining concessions over the target area of the project.

Qualified person

The technical information in this news release, including the information related to geology, drilling and mineralization, has been reviewed and approved by Luiz Jorge Frutuoso, current Aclara exploration manager, with more than 20 years of relevant experience. Mr. Frutuoso is a fellow of the Australasian Institute of Mining and Metallurgy (AusIMM) and fellow of Australian Institute of Geoscientists (AIG) and is a qualified person (QP) as defined by National Instrument 43-101 -- Standards of Disclosure for Mineral Projects.

Mr. Frutuoso confirms that he visited the project area on May 24, 2023, and was supported by the chief of geology at Aclara, Juan Pablo Navarro, who reviewed and analyzed the relevant project information. Carlos Santos, database and QA/QC geologist of the company, provided an analysis of the QA/QC work over the Carina Module.

Rare earths market

The global transition to clean energy has helped to drive an expanding market for REE due to their valuable properties. Dysprosium and terbium, which are HREE, and neodymium and praseodymium, which are LREE, have magnetic attributes and are critical components in the production of high-performance permanent magnets. Neodymium-based permanent magnets (Nd magnets) offer superior performance as they are lighter and stronger compared with other type of magnets and have the ability to be engineered into any shape or size. The predominant uses of Nd magnets are in the EV industry and in wind turbines. In EVs, permanent magnets result in increased range autonomy, better use of space, lower weight and lower battery costs, the latter as a result of reduced lithium, cobalt and nickel content. Neodymium permanent magnet motors offer the best performance and optimization potential in electric motors, with approximately 90 per cent of EV models using them as part of their drivetrain.

Incorporation of dysprosium and terbium into neodymium magnets delivers enhanced operating performance by enabling them to operate at higher temperatures (magnets with HREE can operate up to 240 degrees as compared with approximately 80 degrees for magnets without HREE), without losing their magnetic properties (high coercivity). An average Nd magnet contains approximately 30 per cent NdPr, 3 per cent DyTb, 1 per cent boron (B) and 66 per cent iron (Fe). The desired ratio between NdPr and DyTb is 10:1; however, most deposits in the world offer ratios that are over 100:1.

Supply of HREE is currently dominated by China, which, in 2022, was estimated by the U.S. Geological Survey to contribute 70 per cent of global TREO production. Furthermore, it is estimated that China imported 100 per cent of REO produced from Myanmar's ionic clay production facilities, increasing its supply control of dysprosium and terbium to approximately 90 per cent. The remaining 30 per cent of global TREO production comes primarily from two operations, one of which is located in the United States and the other one in Australia, which mainly produce LREE. In May, 2023, the U.S. Department of Energy evidenced this by established dysprosium as the most important element for the energy transition, and suggested securing its sourcing is at its highest risk.

About Aclara Resources Inc.

Aclara Resources is a development-stage company that focuses on heavy rare earth mineral resources hosted in ion-adsorption clay deposits. Its primary project is known as the Penco Module and is located in the BioBio region of southern Chile. The company is also evaluating a second module, the Carina Module, located in the state of Goias in central Brazil.

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