ASX  ANNOUNCEMENT    

1      

=                  

29  June  2012  

 Malilongue  Project:  Significant  rare  earth  anomalism  confirmed    

 KEY  POINTS    

Ø Vundu  significant  rare  earth  anomalism  confirmed  

– Soil  values  peak  at  over  1,100ppm  TREO  

– Soil  anomalism  exceeds  5  times  background  

– TREO  anomalism  strongly  correlates  with  radiometric  highs  

– HREO:TREO  average  ratio  27%  Ø Second  target  identified  4km  east  of  Vundu  

Ø Strong  neodymium  anomalism  observed  at  Vundu.    Kimberley   Rare   Earths   Limited   (ASX:KRE,   the   Company),   is   pleased   to  provide  an  exploration  update  for  its  Malilongue1  heavy  rare  earths  oxide  (HREO)  project  located  in  Mozambique  (Appendix  1).    The  Company  began  exploration  activities  at  Malilongue   in  March  2012.  Objectives   were   to:   discover   HREO   mineralisation   within   pegmatites  located   around   the   margin   of   the   Malilongue   granite;   investigate   the  potential   for   HREO   mineralisation   of   the   large   Vundu   radiometric  anomaly;   and   locate   the   source   of   alluvial/eluvial   xenotime   (an   HREO  mineral)  commonly  found  within  the  tenement  area.    Assay  results  from  the  extensive  soil  sampling  campaign  are  now  coming  to   hand;   early   indications   are   of   significant   rare   earth   anomalism  associated  with  the  Vundu  radiometric  target.      “These   initial   assay   results   confirm   our   view   that   Malilongue   is   highly  prospective   for   heavy   rare   earths   and  we   look   forward   to   receiving   the  remaining  geochemical  results,”  Managing  Director,  Mr  Tim  Dobson  said.  

   

                                                                                                               1  The  Company  has  a  right  to  earn  up  to  90%  of  the  mineral  rights,  excluding  gemstones,  in  the  Malilongue  project.  

 

 

ASX:KRE    Kimberley  Rare  Earths  Limited  ABN  20  147  678  779    Directors  Ian  Macpherson  –  Chairman  &  NED  Tim  Dobson  –  Managing  Director  Jon  Parker  –  Deputy  Chairman  &  NED  Allan  Trench  –  NED      Management  Tim  Dobson  –  Managing  Director  Geoff  Collis  –  GM  Exploration  Michael  Chan  –  GM  Project  Dev.  Darren  Crawte  –  Company  Secretary    Head  Office  Suite  1,  83  Havelock  St  West  Perth  WA  6005  Telephone:  +61  8  9486  4326        Facsimile:  +61  8  9486  4327    Website  www.kimberleyrareearths.com.au    Capital  Structure  126.6m  shares    6.0m  25c,  2014  unlisted  options  3.5m  30c,  2014  unlisted  options  0.75m  30c,  2015  unlisted  options    Cash  at  31  May  2012  $12.2  million    Market  Cap  at  28  June  2012  $7.85  million          For  further  information,    please  contact:    TIM  DOBSON  Managing  Director    info@kimberleyrareearths.com.au    Tel:  +61  8  9486  4326        F

or p

erso

nal u

se o

nly

ASX  ANNOUNCEMENT    

2      

Soil  geochemical  results  at  Vundu  confirm  prospectivity  A  total  of  661  soil  samples  have  now  been  collected  over  the  extended  Vundu  radiometric  target  using  a  systematic  triangular  pattern  and  a  sample  spacing  of  150m  x  150m.    Approximately  30  per  cent  of  the  samples  have  been  prioritised  for  assay  to  ensure  a  rapid  assessment  of  the  target.    Results  from  the  remaining  70  per  cent  are  expected  by  the  end  of  July.    Significant  TREO  anomalism  has  been  identified  which  correlates  strongly  with  the  Vundu  radiometric  anomaly   as   shown   in   Figure   1.     Values   peak   at   over   1,100   ppm  TREO   and   regularly   exceed   5   times  background  over  the  Vundu  target.        

 

Figure  1:    Initial  TREO  soil  geochemical  results  over  the  Vundu  extended  grid.    On   average,   the   ratio   of   HREO   to   TREO   within   the   soil   is   27   per   cent.   This   is   consistent   with   that  expected  from  pegmatite-­‐hosted  REE  deposits  such  as  the  Strange  Lake  HREO  deposit  identified  as  an  analog  to  Malilongue  in  the  Company’s  17  February  2012  ASX  announcement2.    Geological   mapping   at   Vundu   shows   limited   outcropping,   though   sufficient   to   indicate   that   Vundu  occurs  within  the  contact  metamorphic  aureole  of  the  Malilongue  granite.    The  prospect  is  associated  with  a  coarser-­‐grained,  more  alkali-­‐rich  zone  which  is  consistent  with  the  anticipated  geological  model.                                                                                                                  2     Owned   by   Quest   Rare   Minerals,   the   Strange   Lake   deposit   was   discovered   by   ground-­‐based   follow-­‐up   of   an   airborne   radiometric  anomaly.     The   consequent   total   Inferred   Resource   is   currently   quoted   as   230Mt   at   0.91%   TREO,   with   a   very   high   HREO   ratio   (41%  HREO/TREO).    

For

per

sona

l use

onl

y

ASX  ANNOUNCEMENT    

3      

 Second  target  identified  on  Vundu  extended  grid  Further   significant   surface   TREO  anomalism  has  been   identified   4km  east   of  Vundu   (Figure   1).     This  anomaly  is  located  on  the  NE  quadrant  of  the  Malilongue  Granite  within  an  area  exhibiting  a  relatively  quiet  radiometric  signature.    The  area’s  highest   levels  of  anomalism  are  directly  associated  with  the  granite  contact  as  defined  by  the  aeromagnetic  data.    The  data  shows  an  area  of  considerable  structural  complexity  which  may  be  indicative  of  pegmatite  emplacement  or  development.        Strong  neodymium  anomalism  observed  at  Vundu  Of  particular  economic  importance  is  neodymium  anomalism  (Figure  2).    Values  regularly  exceed  100  ppm  Nd2O3  and  peak  at  183  ppm.    Neodymium  is  a  non-­‐substitutable,  critical  rare  earth  element  used  in  the  manufacture  of  high-­‐powered  permanent  magnets,  and  is  one  of  five  consistently  identified  rare  earths  in  terms  of  strategic  importance  and  supply  risk.      

 

Figure  2:    Neodymium  anomalism  over  the  Vundu  soil  geochemical  grid.          

For

per

sona

l use

onl

y

ASX  ANNOUNCEMENT    

4      

Soil  geochemical  coverage  extends  to  80%  of  the  granite  margin  A  total  of  1,847  soil  samples  have  been  collected  from  around  the  margins  of  the  Malilongue  Granite  according   to   four   individual  GPS-­‐based   grid   systems   (Figure   3).     Table   1   provides   a   summary   of   the  sampling  details.        

 

Figure  3:    Soil  geochemical  coverage  around  the  margins  of  the  Malilongue  Granite.      

Grid  name   Samples  collected   Grid  spacing  Eastern  Pegmatite  Field   621   200m  x  100m  Southern  Pegmatite  Field   336   100m  x  100m  Vundu   661   150m  x  150m  Western  Margin   229   400m  x  100m  

Table  1:    Summary  of  soil  samples  collected.    Much  of  the  area  covered  by  the  four  grids  occurs  over  residual  soils  that  are  amenable  to  standard  soil   sampling   techniques.     All   samples   are   being   analysed   for   the   full   suite   of   rare   earth   elements,  precious  and  base  metals,  and  other  selected  metals.    The  geological  environment  is  conducive  to  the  discovery  of  many  deposit  types  including  those  for  tin,  tungsten,  niobium,  molybdenum,  lithium  and  gold.    As  no  previous  exploration  has  been  conducted  at  the  site,  prospectivity  remains  wide  open.        

For

per

sona

l use

onl

y

ASX  ANNOUNCEMENT    

5      

Follow  up  exploration  to  commence  immediately  Given  the  shallow  regolith  over  the  extended  Vundu  prospect  area,  a  campaign  of  trenching  is  planned  as  a  low-­‐cost  and  effective  follow  up  test  of  the  soil  anomalism.    An  excavator  is  available  at  the  site  and  is  being  mobilised  to  the  Vundu  prospect.    An   RC   drill   rig   has   also   been   sourced   locally   and   is   available   to   commence   a   drilling   program   once  targets  have  been  identified  following  receipt  of  the  remaining  soil  geochemical  assays.    

 

Figure  4:    Soil  samples  being  dried  at  Malilongue  in  preparation  for  assay.    About  Kimberley  Rare  Earths  Kimberley  Rare  Earths  Limited  listed  on  the  Australian  Securities  Exchange  (ASX:KRE)  on  18  May  2011,  having  raised  $18.2m  under  an  oversubscribed  Initial  Public  Offering.    KRE  is  a  specialist  rare  earths  company  and  holds  a  25%  interest  in  the  Cummins  Range  Project  in  Western  Australia.    KRE  has  the  right  to  earn  up  to  80%  of  the  project  by  funding  exploration  and  development  through  to  delivery  of  a  bankable  feasibility  study.    KRE’s  first  target  is  to  spend  $10m  within  four  years  to  increase  its  interest  to  55%.    The  Cummins  Range  project  comprises  1  granted  exploration  license  (80/2232)  in  the  East  Kimberley  within  which  is  contained  a  JORC  compliant  Inferred  Resource  of  4.90  Mt  at  1.74%  TREO  (total  rare  earth  oxide),  11.2%  P2O5  and  145  ppm  U3O8  (using  a  1%  TREO  cut  off).    The  Cummins  Range  project   is  one  of  only  a  few  Australian  rare  earths  projects  with  a  Resource  reported  under  the  JORC  Code.    KRE  has  also  entered  an  agreement  to  earn  up  to  a  90%  interest  in  a  pegmatite-­‐hosted  rare  earth  project  in  Mozambique  with  significant  exploration  potential,  including  for  xenotime-­‐hosted  yttrium,  dysprosium  and  erbium.    Competent  Person  Statement  Information   in   this  ASX  release   that   relates   to  exploration  or  exploration  results   is  based  on   information  compiled  by  Mr.  Geoff   Collis,   who   is   a   member   of   the   Australasian   Institute   of   Mining   and   Metallurgy   and   has   sufficient   exploration  experience  which   is   relevant   to   the   style   of  mineralisation   and   type   of   deposit   under   consideration   and   to   the   activities  which  are  being  undertaken   to  qualify  as  a  Competent  Person  as  defined   in   the  2004  Edition  of   the  “Australian  Code   for  Reporting  of  Mineral  Resources  and  Ore  Reserves”.    Mr  Collis  consents  to  the  inclusion  of  these  estimates  in  the  form  and  context  in  which  they  appear.    

For

per

sona

l use

onl

y

ASX  ANNOUNCEMENT    

6      

Appendix  1  –  Malilongue  Project  location  map                

MALILONGUE PROJECT

For

per

sona

l use

onl

y

ASX  ANNOUNCEMENT    

7      

Glossary    Aeromagnetic     Airborne   geophysical   technique   where   the   intensity   of   the   earth’s   magnetic   field   is   measured   in   a  

systematic  way.  

Alluvium   Loose  unconsolidated  soil  or  sediment  eroded  and  deposited  by  water.  

Amazonite   A  bright  green  mineral  of  limited  occurrence  that  can  be  cut  and  used  as  a  gemstone.    

ASTER   Advanced  Spaceborne  Thermal  Emission  and  Reflection  Radiometer  –  a  remote  sensory  device  on  board  the  Terra  satellite,  launched  by  NASA  in  1999,  that  provides  high-­‐resolution  images  of  the  planet  Earth  in  15  different  electromagnetic  spectrum  bands  ranging  from  visible  to  thermal  infrared  light  

Carbonatites     Intrusive  igneous  rocks  with  a  composition  of  greater  than  50%  carbonate  minerals.    

Diamond  Drilling     (or  Core  Drilling)  A  drilling   technique  which  uses  a  diamond-­‐set  drill  bit   to  produce  a  cylindrical  core  of  rock.    

Dykes   Igneous  rocks  that  intrude  the  geological  sequence  at  a  high  angle  to  the  geological  layering    

Eluvium     Loose   unconsolidated   soil   or   sediment   deposited   under   gravitational   weathering   and   accumulation  processes.  

Flotation   Or  froth  flotation.    A  mineral  processing  technique  used  to  separate  chemically  different  particles  (ground  and  suspended  in  a  water-­‐based  slurry)  by  selectively  floating  particles  into  a  surface  froth  (concentrate),  leaving  other  particles  in  the  slurry  (tailing).    

Gemstones     In  the  Heads  of  Agreement  signed  with  GWM  covering  farm-­‐in  rights  to  the  Malilongue  heavy  rare  earths  project  in  Mozambique,  gemstones  is  defined  as  topaz,  aqua-­‐marine  and  amazonite.  

HREO     Heavy  rare  earth  oxides.  The  oxides  of  the  9  heavy  rare  earth  elements  Europium  (Eu),  Gadolinium  (Gd),  Terbium  (Tb),  Dysprosium  (Dy),  Holmium  (Ho),  Erbium  (Er),  Thulium  (Tm),  Ytterbium  (Yb),   Lutetium  (Lu)  plus  Yttrium  (Y).  

LREO     Light   rare   earth   oxides.   The   oxides   of   the   5   light   rare   earth   elements;   Lanthanum   (La),   Cerium   (Ce),  Praseodymium   (Pr),   Neodymium   (Nd),   Samarium   (Sm).     Note,   excludes   Promethium   (Pm)   due   to   its  transient  (radioactive)  nature.  

Pegmatite     A  very  coarse  grained  igneous  intrusive  rock  composed  predominantly  of  quartz,  feldspar  and  mica.  

Pipe     Cylindrical  intrusion  of  younger  igneous  rocks  into  an  older  geological  terrain.  

ppm   Parts  per  million  by  weight  (10,000ppm  equals  1.00%).    

Pyroxenite     Ultramafic  igneous  rock  comprising  predominantly  minerals  of  the  pyroxene  group.    

RAB     Rotary  air  blast,  a  cost-­‐effective  drilling  technique  used  to  sample  weathered  rock.    

RC     Reverse   circulation,   a  drilling   technique   that   is  used   to   return  uncontaminated  pulverised   rock   samples  through   a   central   annulus   inside   the   drill   pipes.   RC   samples   can   be   used   in   industry-­‐standard  Mineral  Resource  statements.    

REO     The  oxides  of  the  14  rare  earth  elements;  Lanthanum  (La),  Cerium  (Ce),  Praseodymium  (Pr),  Neodymium  (Nd),   Samarium   (Sm),   Europium   (Eu),   Gadolinium   (Gd),   Terbium   (Tb),   Dysprosium   (Dy),   Holmium   (Ho),  Erbium  (Er),  Thulium  (Tm),  Ytterbium  (Yb),  Lutetium  (Lu)  plus  Yttrium  (Y)  but  excluding  Promethium  (Pm).  

Sills   Igneous  rocks  that  intrude  the  geological  sequence  at  a  low  angle  or  sub-­‐parallel  to  the  geological  layering  

Thermal  Mapper  (TM7)   Remote   sensory   device   on   board   the   LANDSAT-­‐7   satellite,   launched   by   NASA   in   1999,   that   provides  imagery  of  the  planet  Earth  with  high  image  resolution,  sharp  spectral  separation  and  geometric  fidelity,  and  strong  radiometric  accuracy  and  resolution.  

TREO     The  sum  total  of   the  14  rare  earth  oxides,  Lanthanum  to  Lutetium  plus  Yttrium  as  defined  above  under  REO.  

WHIMS   Wet   High   Intensity   Magnetic   Separation.     A   mineral   processing   technology   used   to   separate   weakly  magnetic  particles  from  non-­‐magnetic  particles.  

Xenotime     A  rare  earth  phosphate  mineral  comprising  predominantly  yttrium  phosphate  (YPO4).  Dysprosium,  erbium  and  terbium  can  substitute  for  yttrium.  

 

For

per

sona

l use

onl

y