Mr. Ramon Barua reports

ACLARA DELIVERS A POSITIVE PEA FOR ITS CARINA PROJECT IN GOIAS, BRAZIL

Aclara Resources Inc. has released the results of a preliminary economic analysis (the PEA) on its regolith-hosted ion adsorption clay project located in the state of Goias, Brazil, known as the Carina module.

The technical report titled "Preliminary Economic Assessment -- Carina Rare Earth Element Project -- Nova Roma, Goias, Brazil" and dated Jan. 12, 2024, was prepared in accordance with National Instrument 43-101 -- Standards of Disclosure for Mineral Projects by G21 Consultoria Mineral (GE21), a specialized, independent mineral consulting company located in Belo Horizonte, Brazil. The report, which has an effective date of Nov. 3, 2023, supports the disclosure made by Aclara in its Dec. 12, 2023, press release announcing the maiden mineral resources estimate (MRE) for the project. There are no material differences in the mineral resources or results of the preliminary economic assessment as described in the report and the results disclosed in the December, 2023, press release. The report has been filed, and can be found under the company's profile, on SEDAR+ and on Aclara's website.

Highlights:

• Robust economics:
  • After-tax net present value of approximately $1.2-billion (U.S.) using an 8-per-cent discount rate;
  • 29-per-cent internal rate of return over the 17-year life of mine;
  • Low initial capital costs of $576-million (U.S.) with a payback period of 3.6 years;
  • Average annual net revenue and EBITDA (earnings before interest, taxes, depreciation and amortization) of $474-million (U.S.) and $340-million (U.S.), respectively;
  • Low average production cost of $13.1 (U.S.) per tonne;
  • Long-term rare earth price forecasts provided by Argus Media and Adamas Intelligence, underpinned by compelling supply/demand fundamentals.
• Significant production of magnetic rare earth elements:
  • Average annual production of 208 tonnes DyTb (dysprosium-terbium) representing approximately 13.7 per cent of China's 2023 official production;
  • Average annual production of 1,190 tonnes NdPr (neodymium-praseodymium) contributing to a balanced mix of light and heavy REEs in the final product.
• High product quality:
  • Concentration of REEs in the mixed carbonate of 91.9 per cent;
  • Very high content of DyTb and NdPr at 4.7 per cent and 26.4 per cent, respectively;
  • High-purity product facilitates further separation and recoveries.
• Low environmental impact:
  • Process designed to minimize environmental impact; it does not use explosives; there is no crushing nor milling; approximately 95 per cent of the water used is recirculated; the main reagent is a common fertilizer; no liquid residue is produced, negating the need of a tailings dam;
  • Minimal carbon dioxide footprint is supported by a combination of low energy consumption and a high percentage of renewable energy within the Goias power grid.
• Expedited path to early production:
  • The pilot plant, currently in operation, derisks metallurgical recoveries;
  • The State of Goias has fully approved another ionic clay REE producer (Serra Verde), thereby establishing a significant precedent that provides a positive permitting background for new projects in this state;
  • Commissioning estimated to commence in 2029.
• Upside potential:
  • Drilling campaign under way to increase mineral resources;
  • Metallurgical optimizations have been identified.

Aclara chief executive officer Ramon Barua commented:

"We extend our gratitude to our dedicated team for the swift progress achieved in bringing the Carina project to this pivotal stage. As a company committed to making a lasting impact in the rare earths market, our strategic focus on sustainability and responsible production aligns with the success seen in the project PEA. The positive results of the Carina Module PEA showcase a robust economic profile with an after-tax NPV of $1.2-billion (U.S.) and an IRR of 29 per cent, setting a strong foundation for the module's future development.

"We recognize the importance of minimizing environmental impact. The project design emphasizes ecofriendly practices, avoiding explosives and milling, maximizing water recirculation, and employing a common fertilizer as the main reagent. With a process designed to minimize its CO2 footprint, we are dedicated to ensuring that our operations align with sustainable practices and global environmental standards.

"As we embark on an ambitious drilling campaign and identify metallurgical optimizations, our sights are set on maximizing the upside potential of the project. Permitting, a key aspect to be addressed in our expedited path to production, is expected to be well supported by our patented flowsheet, our focus on social development and maintaining a close relationship with the forward-looking State of Goias. With commissioning estimated by 2029, we are confident that the project will play a pivotal role in meeting the growing demand for high-quality rare earths, further solidifying our position as a key supplier of these critical elements."

On Tuesday, Jan. 23, 2024, Aclara will host a conference call to discuss the Carina module PEA. The call will include remarks from Aclara Resources' CEO Mr. Barua, and other members of the company's management team. It will also feature a question-and-answer session.

Date: Tuesday, Jan. 23, 2023

Time: 11 a.m. Eastern Time/8 a.m. Pacific Time

A replay of the call, together with supporting presentation slides, will be made available on Aclara's website. After registering, you will receive a confirmation e-mail containing information about joining the webinar.

Sensitivity analysis

A sensitivity analysis was undertaken to evaluate the impact on NPV by varying the following attributes:

• Basket list price;
• Discount rate;
• Capex;
• Opex;
• Metallurgical recoveries.

The discount rate was evaluated by varying its value from 4 to 12 per cent while the remaining attributes were evaluated by varying their values from 80 to 120 per cent.

Mineral resource statement

The mineral resource has been estimated using the results obtained from 201 auger drill holes (1,630 m) and 1,418 samples. At a $7.4 (U.S.)/t NSR cut-off, the mineral resource is estimated to contain 168.1 million tonnes (Mt) in the inferred category at 1,510 parts per million total rare earth oxides containing an average Dy and Tb grade of 42.1 ppm and 6.9 ppm, respectively. The mineral resource is reported in accordance with the requirements of NI 43-101.

Project description

The project is based on standard open pit extraction techniques using conventional hydraulic excavators and 44-tonne payload haulage trucks to extract and deliver the clays to the process plant. The process plant has been located close to the centre of mass of the mining operation to minimize the total haulage distance over the life of the mine. Given the friable nature of the clays and the shallow depth of the extraction zones, no aggressive nor energy-intensive techniques such as drilling and blasting are required to extract the clays from the pits.

Once the clay is delivered to the process plant, it will be washed using an ammonium sulphate solution to extract the REEs from the clay surfaces. No crushing, grinding nor milling is needed to free the REEs from the clays as they are extracted through a non-invasive ion-exchange reaction process whereby ammonium sulphate ions replace REE ions on the surface of the clay, thereby liberating the REEs into solution. The REEs in solution are then removed through a pH-adjusted precipitation process and then passed through a high-pressure filter to remove any remaining liquids, resulting in the production of a high-purity REE carbonate ready for shipment to a separation facility. The process plant will have an average production rate of 4,498 t/year of REO within the concentrates.

Any unwanted impurities such as aluminum and calcium that have been extracted from the clays during the ion exchange process are similarly removed through a precipitation process and then recombined with the washed clays before being transported to a dry stacking storage facility for the first five years of the life of mine. Beginning in year 6, the washed clays will be backfilled to the mined-out extraction zones to initiate the mine closure process.

A water recovery system integrated into the process plant cleans and regenerates the remaining process liquors such that they can be reintroduced into the feed. The treated water is reused in a closed circuit to reduce water consumption, thereby preventing the release of process water into the environment. This allows the process plant to operate with the minimum of makeup water and allows the main reagents to be regenerated and reused within the process plant.

Before the barren clays exit the process plant, they are washed with clean water within standard plate-and-frame filter presses. This will remove any residual ammonium sulphate from the clays before they are returned to either a dry stacking facility or used to backfill the extraction zones to be safely used during revegetation.

The project includes the necessary infrastructure to provide makeup water for the process plant, supply power to the site and provide a road network to service the operation, amongst others.

Electrical power for the processing plant, truck shop, administration offices and other facilities will be supplied by the national power utility through overhead power transmission lines from a substation located approximately 90 kilometres from the project site.

REE market outlook

Vehicle electrification, wind turbines and the transition to renewable energy sources will continue to drive demand for REEs in terms of volume and, especially, value. This will primarily affect the REEs used in alloys to fabricate permanent magnets: Dy, Nd, Pr and Tb. The supply of clean heavy REEs, especially Dy, has become problematic because few projects target heavy REE deposits. For the medium term, the market will continue to rely on China and Myanmar for heavy REE feedstocks.

The near-term forecast is for further price gains and the average prices of permanent magnet REEs are expected to be 15 to 25 per cent higher in 2024 than 2023. In the medium to long term, Argus Media expects permanent magnet REE prices to increase steadily for the remainder of the decade, with the possibility that they could pick up more quickly in the early 2030s without more supply from new projects. Dy prices are expected to continue to outperform the general permanent magnet REE market due to a significant supply/demand imbalance in the early 2030s.

Two external factors could affect future REE prices, both with the potential to push prices upwards: so-called green premiums; and critical material policies (especially in Europe and the United States). While there is currently no system or regulation for green premiums in the REE sector, Europe's Carbon Border Adjustment Mechanism (CBAM) is pointing the way in terms of carbon emissions. There will be a gradual phase-in of the CBAM from 2026 to 2034, the effect of which can already been seen in steel pricing forecasts.

Perhaps even more relevant to future REE prices are the critical materials policies/regulations being enacted globally, specifically the EU Critical Raw Materials Act and the U.S. Inflation Reduction Act. These regulations/legislations are focused on creating raw material supply chains that are not reliant on China, which should provide advantages to non-Chinese suppliers of REEs in terms of market access and, potentially, pricing premiums. In May, 2023, the U.S. Department of Energy identified Dy as the most critical mineral in terms of its importance to the energy sector and the risks of supply chain disruption.

Targeted development timeline

The permitting process is already under way and the technical development of the project will continue with a bankable feasibility study scheduled to be delivered in 2026 and the commencement of operations in 2030.

Proposed next steps:

• Q1 2024: produce REE carbonate samples by processing the project's ionic clays at Aclara's pilot plant in Chile;
• Q1 2024: initiate environmental baseline, radiography, archeological, speleological (cave) and hydrogeological studies;
• Q2 2024: commence prefeasibility study;
• Q2 2024: complete a 9,090-metre reverse circulation drilling campaign across the project's mineral resource to test the extension of the mineralization at depth. Currently, 1,374 metres within 52 drill holes have already been executed with an average saprolite mineralization depth of 22 metre.

Qualified persons

The technical information in this press release has been reviewed and approved by geologist Fabio Xavier and mining engineer Porfirio Cabaleiro Rodriguez, both associated with GE21 Consultoria Mineral, as well as chemical engineer Stuart J. Saich of Promet101 Consulting Pty. Ltd. GE21 is a specialized, independent mineral consulting company based in Belo Horizonte, Brazil, and Promet101 is an independent process engineering consulting company based in Santiago, Chile.

Mr. Xavier is a member of Australian Institute of Geoscientists (MAIG No. 5179) and is a qualified person as defined under NI 43-101. He is responsible for the mineral resource estimate and has reviewed and approved the scientific and technical information related to the mineral resource estimate contained in this press release.

Mr. Rodriguez is a fellow of the Australian Institute of Geoscientists (FAIG No. 3708) and is a qualified person as defined under NI 43-101. He has more than 40 years of experience in mineral resource/reserve estimation and is the leader of the project acting as overall supervisor with respect to the objectives of the report.

Mr. Rodriguez and Mr. Xavier visited the project from Aug. 16 to Aug. 18, 2023, during the execution of the auger drilling campaign conducted by the GE21 team under the co-ordination of geologist Andre Costa (FAIG No. 7967). The visit was supported by Aclara's exploration manager, Luiz Jorge Frutuoso.

Mr. Saich is a professional chemical engineer with more than 37 years relevant experience in metallurgy and process design development. He is a member of the Australian Institute of Mining and Metallurgy (FAUSIMM No. 222028), the Canadian Institute of Mining (CIM No. 631368), and the Society for Mining, Exploration & Metallurgy (SME No. 04101270), and is a qualified person as defined under NI 43-101.

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. The company currently has two projects under development: the Penco module in the Bio-Bio region of Chile, and the Carina project in the state of Goias, Brazil.

We seek Safe Harbor.