Mr. Francois Motte reports

ACLARA ANNOUNCES R&D TAX REBATE FROM THE GOVERNMENT OF CHILE

REE UNO SpA, Aclara Resources Inc.'s wholly owned subsidiary that holds 100-per-cent stake in the Penco module, has received a tax rebate of approximately $2.1-million (U.S.) from the Corporacion de Fomento de la Produccion (CORFO) for research and development (R&D) expenses related to the installation and operations of the pilot plant. CORFO, which is the Chilean government institution in charge of promoting the production of goods and services and economic regional growth, has validated the pilot plant R&D expenses and determined this project to be key to the future production of the rare earths necessary for the manufacturing of permanent magnets used in wind turbines, electric vehicles and other technologies vital to the energy transition.

Francois Motte (Aclara's chief financial officer) commented:

"We are pleased to receive our second tax rebate based on R&D expenditures, which affirms our commitment to innovation and compliance with stringent environmental standards in our future operations. Our commitment to R&D continues to drive us forward, with a clear focus on enhancing production efficiency, reducing costs, optimizing capital expenditures (capex), all while upholding our exemplary environmental compliance. We want to express especial thanks to CORFO for recognizing the importance of this activity both for Chile and for our fight against climate change."

R&D scope for the tax rebate

The successful completion of the laboratory testing phase (announced on Nov. 9, 2022) gave birth to circular mineral harvesting, a unique and internationally patented process that not only results in attractive recoveries of rare earths but also minimizes the associated environmental footprint. Circular mineral harvesting, through recycling, allows 95 per cent of the water utilized by the process plant to be retained within the circuit, and 99 per cent of the main reagent (ammonium sulphate) to be recirculated, with no liquid residues being produced, thus negating the need for a tailings storage facility. In addition, the mining activities do not require the use of explosives or the crushing and milling of the ionic clay feedstock, resulting in an operation with a very low carbon footprint.

The circular mineral harvesting process was demonstrated through a pilot plant facility which (i) validated the closed-circuit flowsheet by producing a HREE concentrate at a semi-industrial scale; (ii) generated processed clays to confirm that they are chemically stable when returned to the field; (iii) confirmed the processing parameters and process flowsheet design; (iv) generated a high-purity HREE concentrate for separation trials in support of future offtake agreements; and (v) demonstrated to relevant stakeholders the environmental sustainability of the process design.

Tax rebates

The tax rebate awarded by CORFO covers the construction and operation expenses of the pilot plant for a maximum amount of 5,234,000 Chilean pesos (approximately $6-million (U.S.)). The tax rebate includes the discounting of 35 per cent (1,832,000 Chilean pesos or approximately $2.1-million (U.S.)) of such approved expenses from income tax payments once the project is in operation. This benefit comes in addition to the 27-per-cent tax shield generated over the remaining 65 per cent of such expenses (919 million Chilean pesos or approximately $1.1-million (U.S.)).

During 2021, the company received a similar tax rebate incentive related to R&D activities of 4,393,000 Chilean pesos (approximately $5-million (U.S.)), also awarded by CORFO. This tax rebate had the same structure as the one recently received.

About Aclara Resources Inc.

Aclara Resources is a development-stage company that focuses on heavy rare earth mineral resources. Its primary project is located in the Biobio region of southern Chile. The company is dedicated to developing its mineral resources through a project known as the Penco module. This module encompasses an area of approximately 600 hectares and contains ionic clays that are rich in heavy rare earth elements.

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