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Quarterly ReportSeptember 2012

DEVELOPING A NEW RARE EARTH DISCOVERY

Peak Resources Limited Level 2, 46 Ord Street, West Perth, Western Australia 6005. PO Box 603, West Perth, Western Australia 6872. ASX: PEK OTCQX: PKRLY ACN 112 546 700 Telephone: +61 8 9200 5360 [email protected] www.peakresources.com.au

Non-Executive Chairman: Alastair Hunter Managing Director: Richard Beazley Technical Director: Dave Hammond Non-Executive Director: Jonathan Murray Company Secretary: Farlee Walker

HighlightsPeak Resources Limited (Peak; ASX: PEK; OTCQX: PKRLY), is developing its Ngualla Rare Earth Project discovery into a

potentially low cost, long term producer. Ngualla in Tanzania is the world’s fifth largest rare earth deposit outside of China.

Activity highlights this Quarter include:

• Asignificantmilestonereachedaheadofschedulewithmetallurgical‘ProofofConcept’successusingthe

selectedsulphuricacidleachprocessonsamplesofweatheredbastnaesitemineralisationfromthecoreofthe

SouthernRareEarthZone(SREZ).

• Arareearthcarbonateconcentratewasproducedgrading50.3%REOatanoverallprocessrecoveryof87%.

• Theconcentrateisahighqualityproductwithverylowuraniumandthoriumcontentsofjust7ppmand12ppm

respectively.

• ThesehighlyencouragingresultssupporttheCompany’sviewthatthisnearsurface,highgradestyleof

mineralisationwithinthelargerNguallaDepositholdsthebestpotentialfortheinitialandrapiddevelopmentofa

lowcostrareearthmine.

• TheScopingStudy,whichwillincludeapreliminaryeconomicassessmentoftherareearthproject,isonbudget

andscheduleforcompletioninDecember2012.

• TheStudywillalsoincludeestimatesforasolventextraction(SX)separationplanttoproducearangeofhigh

purityrareearthoxideproducts.

• Peakhascommencedpreliminarydiscussionswithanumberofinterestedpartiesregardingpotentialofftake

agreements.

• Highgraderareearthmineralisedintersectionshavebeenreturnedfromthemajorinfilldrillingprogramin

progressintheSREZandinclude:

NRC168: 151m at 5.15%REO from surface to end of hole





NRC220: 95m at 5.44%REO from surface and 15m at 5.98%REO from 98m to end of hole

*REO = Total Rare Earth Oxide. See Table 3 for drill intersection details and Table 2 for individual rare earth distribution.

These wide intersections confirm the continuity and consistency of the outcropping rare earth mineralisation in the heart of the

deposit targeted for first development and production. The latest results include the highest grades and the deepest zones of

weathering and enriched rare earth mineralisation from the project to date. Mineralisation still remains open at depth and to

the south.

• The Company had $8.35 million cash on hand at the end of the Quarter.

2

Quarterly Report September 2012

Figure 2: Maiden Mineral Resource block model coloured by REO % grade and drill holes (as at maiden Mineral Resource, 29th February 2012) on satellite image draped over topography, Ngualla Carbonatite.

NGUALLA RARE EARTH PROJECT, TANZANIA

Rare Earths, Niobium – Tantalum, Phosphate. Peak Resources – 100%

BackgroundThe Ngualla Rare Earth Project is a recent discovery with the first intersections in the

Southern Rare Earth Zone (SREZ) reported in September 2010. The maiden Mineral

Resource of 170 million tonnes at 2.24% REO* was announced just 18 months later on

29th February 2012 and ranks as the fifth largest rare earth deposit in the world outside

of China.

The total resource includes a higher grade, near surface zone of:

40milliontonnes at 4.07%REO for 1.6milliontonnesofcontainedREO.

(*REO = total rare earth oxides including yttrium. See Table 1 for Mineral Resource classification details)

Ngualla has several fundamental geological aspects that offer distinct advantages for development over other rare earth

projects. These include the large size of the deposit, the outcropping, high grade mineralisation amenable to open cut mining

with low strip ratios, favourable mineralogy for processing and the lowest uranium and thorium levels of any major rare earth

deposit in the world.

Peak continues to make rapid progress towards developing Ngualla into a low cost rare earth producer by early 2016.

Metallurgical Process DevelopmentIn early August 2012 Peak announced the successful demonstration of a simple metallurgical flow sheet resulting in a high grade,

high purity rare earth carbonate product from samples of weathered bastnaesite mineralisation from the SREZ at Ngualla (Figure

2). A simple sulphuric acid leaching process on a composite sample returned an overall process recovery of 87% and a high grade

(50.3% REO), high purity rare earth carbonate product containing just 7ppm uranium and 12ppm thorium.

Figure 1: Location of Peaks 100% owned Ngualla Project in Tanzania

!Mbeya

Dar Es Salaam

UGANDA

KENYA

ZAMBIA

MALAWI

Lake Victoria

Indian Ocean

Lake Rukwa

Ngualla Project

Lake Nyasa

T A N Z A N I A

N

400km0 100 200

Block Model REO%

A 1 to 2%

A 2 to 3%

A >3%

! Drill holes A Bastnaesite Zone

OPEN OPEN

OPEN

Perim

eter

of Carbonatite

Northern Zone

South West Alluvials

550m

Mt Mapuma

Bastnaesite Zone Southern Rare Earth Zone

Perim

eter

of C

arbo

natite

3


During the test work it was possible to selectively remove some of the cerium

at an early stage, producing a separate high grade concentrate of 65% cerium

oxide (Figure 3). Subsequent processing of the remaining sample produced a

cerium depleted (and therefore potentially higher value) rare earth carbonate

product grading 50.3% REO (see Photo right) with an overall total process

recovery from feed to rare earth product of 87%.

The removal of the majority of lower value cerium at the early stage provides

additional options in terms of products for further processing or sale and reduces

the size of plant required for later stages of the hydrometallurgical process.

These highly encouraging results support the Company’s view that this near

surface, high grade style of mineralisation within the larger Ngualla Deposit

holds the best potential for the initial and rapid development of a low cost rare

earth mine. The Company is progressing further metallurgical test work to

be completed by December 2012 to further optimise the rare earth recovery,

whilst minimising, sulphuric acid and other reagent consumption. This work

is generating valuable data for the current Scoping Study and future project

feasibility studies.

65% cerium oxide concentrate.

50.3% REO high grade rare earth carbonate .

Photographs of the high grade rare earth concentrates produced by the “Proof of Concept” metallurgical test work

SimplifiedSulphuricAcidLeachProcessandSXSeparation

LeachFeed

4.3% REO

5 High Purity

Oxide Products

Cerium Oxide65%

Sulphuric Acid Leach

Primary Precipitation

Carbonate Precipitation

Cerium Removal Purification

Oxidation

SX Separation

Rare Earth Carbonate Product

50% REO

Lanthanum Oxide

Cerium Oxide

Didymium Oxide

SEG Oxide

Heavy Rare Earth Oxide

Figure 3: Simplified process route for Ngualla bastnaesite mineralisation into three product streams: a) 5 refined high purity REO products b) mixed rare earth carbonate and c) cerium concentrate

A 1.6 tonne bulk composite sample of rare earth mineralisation from the bastnaesite core of the SREZ has been despatched

from site to Australia. Processing is now underway via the established flow sheet to provide feed stock for the next phase of

test work – separation via solvent extraction (SX) into five high purity concentrate products:

Lanthanum Oxide

Cerium Oxide

Didymium Oxide (praseodymium and neodymium)

SEG Oxide (samarium, europium and gadolinium)

Heavy Rare Earth Oxide (residual HREO including yttrium)

The successful production of these five high purity rare earth oxide products (Figure 3) will provide the company with further

benefits to the mixed carbonate concentrate already produced in terms of product value and available markets. Work

commenced on the preparation of a concentrate as a feed for this SX program in October 2012 and the five purified rare earth

oxide products will be produced by the end of the June Quarter 2013.

4


Sufficient quantities of each of the five purified products, as well as a mixed rare earth carbonate will be manufactured for

assessment by potential off take customers.

An additional five tonnes of weathered bastnaesite mineralisation will be despatched to Australian test laboratories in November,

before the end of the current field season, as feed material for a sulphuric acid leach pilot plant. The pilot plant will provide

detailed engineering data for input into project feasibility studies as well as demonstrating the robustness of the process over

extended periods of operation. Design of the pilot plant will commence in October with commissioning scheduled for Quarter

2 of 2013.

A metallurgical variability test program is currently in progress on an additional 111 samples of high grade weathered

mineralisation. This will further verify and quantify the leach efficiency of the selected sulphuric acid process from a range of

mineralogical styles across the SREZ. The results, expected in October 2012, will allow a predictive geometallurgical model

to be constructed based on geology and assay results. Previous samples of weathered mineralisation from within the central

bastnaesite zone, which extends over a 750m x 700m area (Figure 2), returned an average of 87% leach extraction using

sulphuric acid.

Scoping StudyPeak commenced the Ngualla Project Scoping Study in May 2012 with the appointment of engineer Lucas Stanfield as

Chief Development Officer, Perth based Emerson Stewart Consulting Group as infrastructure and environmental engineering

consultants, Hatch as process engineering consultants and Orelogy Pty Ltd as mining consultants to the study. The study is

to determine the optimum pathway to rare earth production and provide a preliminary economic assessment of the Project.

The base case for the Scoping Study assumes a range of rare earth products containing a total of 10,000 tonnes of REO

equivalent will be produced from an estimated 300,000 tonnes of ore at an average grade of approximately 4.3% REO annually

over an initial mine life of 25 years. The Mineral Resource has potential to support a significant increase to this base case

production rate should off take customers for additional product be secured.

ROM ORE

PRIMARY/SECONDARYORE CRUSHING

CRUSHED ROM ORE

RESIDUE FILTRATION

DS PRECIPITATIONCERIUM OXIDATION &CAUSTIC CONVERSIONACID DISSOLUTIONPURIFICATIONRARE EARTH CARBONATE

PRECIPITATION

IRON PRECIPITATIONWASTE

CERIUM SULPHATECONCENTRATE


BAGGING

TO RESIDUE STORAGE FACILITY

(BY TRUCK)

SODIUM SULPHATESOLUTION

SODIUM HYDROXIDE SOLUTION

HYDROCHLORIC ACIDSODIUM HYDROXIDE SOLUTIONSODIUM CARBONATE SOLUTION

AIR

ACID P LANTSULPHUR

AIR

DEMINERALISEDWATER

SULPHURIC ACID

POWER G

STEAM

STEAMTURB INE

GENERATOR

CONDENSATE

TO RESIDUE STORAGE

RARE EARTH CARBONATE DRYING

RARE EARTH CARBONATE PACKAGING

DIESEL

RARE EARTH CARBONATE FILTRATION

SULPHATION LEACH

SULPHURIC ACID

MILLING

OVERSIZE AND/ORLOW GRADE

Bene�ciationProcess

Figure 4: Overall process flowsheet: Rare earth carbonate option.

5


The positive results from the ‘Proof of Concept’ sulphuric acid leach process has now lead the Scoping Study to identify that

the optimum approach for Ngualla is to focus initial production from the highest grade, near surface weathered bastnaesite

mineralisation within the core of the SREZ (Figure 2).

The Study will evaluate processing of this mineralisation via the sulphuric acid and precipitation route (Figure 4) into a mixed,

cerium depleted rare earth carbonate concentrate as one standalone option.

The study will also include estimates for a solvent extraction (SX) separation plant to produce a range of higher value, high

purity rare earth products in order to determine costs and benefits of different production pathways to best commercialise the

Ngualla Rare Earth Project.

The SX process flow sheet (Figure 5) is designed to produce five purified rare earth oxide products:

Lanthanum Oxide

Cerium Oxide

Didymium Oxide

SEG Oxide

Heavy Rare Earth Oxide

The Scoping Study is progressing well with the engineering design of both flow sheet options completed (Figures 4 to 5), and

the site infrastructure layout and designs (Figure 6) advanced.

ROM ORE

PRIMARY/SECONDARYORE CRUSHING

CRUSHED ROM ORE

RESIDUE FILTRATION

DS PRECIPITATIONCERIUM OXIDATION &CAUSTIC CONVERSIONACID DISSOLUTIONPURIFICATION

IRON PRECIPITATIONWASTE



BAGGING

TO RESIDUE STORAGE FACILITY

(BY TRUCK)

SODIUM SULPHATESOLUTION

SODIUM HYDROXIDE SOLUTION

HYDROCHLORIC ACIDSODIUM HYDROXIDE SOLUTION

AIR

ACID P LANTSULPHUR

AIR

DEMINERALISEDWATER

SULPHURIC ACID

POWER G

STEAM

STEAMTURB INE

GENERATOR

CONDENSATE

TO RESIDUE STORAGE

SULPHATION LEACH

SULPHURIC ACID

MILLING

OVERSIZE AND/ORLOW GRADE

Bene�ciationProcess

PRECIPITATIONPRODUCT 1 - SEG OXIDE(Samarium, Europium, Gadolinium)

PRODUCT 2 - HRE OXIDE(Terbium, Dypsrosium, Holmium, Erbium)

PRODUCT 3 - PT, Nd OXIDE(Praseodymium, Neodymium)

PRODUCT 4 - Ce OXIDE(Cerium)

PRODUCT 5 - La OXIDE(Lanthanides)

WASTE SOLUTION TO TREATMENT

SX EXTRACTION & STRIP

SX MIXER/SETTLERSTAGES

RARE EARTH SEPARATION PLANT (GENERALISED PROCESS FOR EACH PRODUCT)

FILTRA TION

CALCINATION

FILTRATE

Figure 5: Overall process flowsheet: Rare earth separation – 5 purified REO products option.

6


Figure 6: Ngualla on site processing plant design for Scoping Study, for production of a rare earth carbonate concentrate.

A number of site visits have been completed including communication with Tanzanian Government Departments, potential

suppliers, consultants and contractors and the Scoping Study is on track for completion on schedule and budget in December

2012.

Development scheduleThe Company has an accelerated development schedule for Ngualla compared to many other rare earth projects with first

production of rare earth concentrate product planned for early 2016. Key indicative milestones include:

Indicative Development Schedule

Completion of Scoping Study December 2012

Construction of Pilot Plant completed February 2013

Updated Mineral Resource estimate March 2013

Commence Pre-Feasibility Study Quarter 1 2013

Commence Definitive Feasibility Study Quarter 1 2014

Commence mine and processing plant construction 2015

First production Early 2016

7


Off take PartnersThe Company has commenced discussions with a number of interested parties regarding potential off take agreements for

rare earth concentrate products from Ngualla. Several organisations have expressed in principle interest during early stage

discussions. The Company will keep the market informed of developments.

Ngualla Drilling Program 2012A series of high grade rare earth mineralised intersections were received during the Quarter from the drilling program in

progress at Ngualla that commenced after the end of the rainy season, on 24th May 2012.

Drilling operations are continuing on site to infill the area of the SREZ targeted for first rare earth production. An estimated

14,000m is planned during 2012 to provide information and samples to support the metallurgical test work currently in progress

and feasibility studies due to commence in 2013.

The objectives of the drilling program are to:

• define high grade weathered bastnaesite rare earth mineralisation in the SREZ sufficiently for the ‘Measured’ Mineral

Resource JORC category through infill drilling.

• quantify the amount of highly weathered, low carbonate, low phosphate bastnaesite rare earth mineralisation in the central

SREZ that is amenable to mineral processing by the sulphuric acid route.

• provide diamond core and RC samples for further beneficiation and detailed hydrometallurgical test work

• increase the current rare earth Mineral Resource through potential extensions to the SREZ mineralisation

Additional exploration drilling was initially planned for 2012 to investigate the Northern Zone (Figure 2), where extensive areas of

niobium – tantalum, phosphate and rare earth mineralisation was identified by two wide spaced reconnaissance drill traverses

completed in 2011. This drilling has been postponed to the 2013 field season to allow for the identification of a suitable

beneficiation and metallurgical processing route for this second style of mineralisation at Ngualla. It also allows the Company

to direct funds and resources towards the rapid development of the SREZ.

At the end of the September Quarter, a total of 95 holes for 9,750m metres of RC drilling and 4 diamond drill holes for 680m

had been completed. The program is on track for completion in November, prior to the onset of the rains.

Ngualla Rare Earth Project Development Schedule

Mile

ston

esRE

Exp

lora

tion

&

Reso

urce

Dril

ling

Pote

ntia

l Pat

hway

to

RE

Prod

uctio

n

EXPLORER MINERDEVELOPER

2010 2011 2012 2013 2014

Commenced Metallurgical Characterisation Discovery Supply Agreements Zari JV Aquisition

Maiden Resource Statement Production Start up Metallurgical Flow Sheet Development

Pilot Plant Trials commencing

Completion of acid leach test work Completion of separation test work

Exploration Drilling

Resource Definition & Extension

Scoping Study

Pre-Feasibility Study

Definitive Feasibility Study

Maiden Resource Drilling

Geotech - Extension

2015 2016

Commence Construction

8


Assay results received from infill drilling within the SREZ during the September Quarter define the highest grade intersections

returned from the project to date including:

DRiLLhOLE iNtERSECtiON




NRC183: 127m at5.15%REO from surface to end of hole

NRC195: 160m at5.25%REO from surface to end of hole

NRC220: 95m at 5.44%REO from surface and

15mat5.98%REO from 98m to end of hole

*REO = Total Rare Earth Oxide. See Table 3 for drill intersection details and Table 2 for individual rare earth distribution.

Drill hole NRC220 ended in weathered mineralisation grading 8.02% REO at 113m. High grade mineralisation in the above

drill holes extends from surface within highly weathered carbonatite composed predominantly of barite and iron oxide, original

carbonate minerals having been removed during the weathering process.

9147

500

mN

9148

000

mN

9148

500

mN

482500 mE482000 mE

750m

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Southern Rare Earth Zone

South West Alluvial Zone

OPEN

OPEN

OPENOPEN

250m0 100

NDrill holes max REO %:

! 0 to 1

! 1 to 2

! 2 to 3

! 3 to 5

! >5

2012 Drill Program

Ö Completed hole, results awaited

Block Model REO%: A 3 to 4%A > 4%

Bastnaesite rare earth zone

Bastnaesite rare earth zone

NRC205NRC204

NRC176

NRC183

NRC180

NRC195

NRC214

NRC168

NRC220NRC209

102m @ 5.51% from surface to EOH

95m @ 5.44% from surface, and

15m @ 5.98% from 98m to EOH





SOUTHERN RARE EARTH ZONEOCT 2012

Figure 7: Plan of rare earth intersection highlights September Quarter 2012 and drilling completed to 15th October 2012, coloured by maximum down hole REO% over Ngualla Mineral Resource block model (+3% REO). Intersection highlights for all new holes labelled with an ID are shown in Table 3.

9


Included within the +1% REO intersections (page 8) are several discrete higher grade zones of significant width:

DRiLLhOLE iNtERSECtiON

NRC195: 24mat 7.15%REO from 76m and

20m at 7.27% REO from 108m

NRC204: 12mat7.13%REO rom 4m

NRC205: 18m at 7.21%REO from 8m

NRC209: 30m at 7.14%REO from 48m

NRC220: 42mat7.86%REO from 48m

Higher grade intervals using a 4% REO lower grade cut and maximum of 2m internal dilution. Intersection details and grades at 1% REO lower grade cut-off are included in Table 3.

The new results also identify the deepest developed weathered zone of high grade mineralisation to date, with mineralisation

remaining open at a depth of 160m below surface:

NRC214: 66mat3.06%REO from surface and

36mat 3.87%REO from 72m and

73m at 4.51%REO from 112m to end of hole

These wide, high grade intersections confirm the continuity and consistency of the rare earth mineralisation from surface in the

heart of the deposit targeted for first development and production. Mineralisation still remains open at depth and to the south.

The Company will continue to provide regular updates regarding the progress of the SREZ drilling and assay results as they

are received. An updated Mineral Resource estimate will be completed according to the JORC Code and Guidelines by the

end of the first quarter 2013.

Mt Mapuma Soil SamplingThe Mt Mapuma area is located within the Ngualla carbonatite two kilometres to the north west of the Southern Rare Earth Zone

(Figure 2). Previous sparse reconnaissance soil and rock sampling in this area has identified rare earth mineralisation up to

3.39% REO in ankeritic carbonatite, the rock type that hosts mineralisation in the Southern Rare Earth Zone.

A detailed soil sampling program over a 1.4km x 900m area was completed over the Mount Mapuma area in June 2012. A

coherent high tenor rare earth anomaly extending over an area of 550m x 500m at +2% REO was defined by the soil sampling

with soil samples containing up to 6.27% REO.

Follow up rock sampling confirmed rare earth mineralisation in outcropping ankeritic carbonatite within a 330m x 90m area with

highest assay results of 3.43% REO. Further rock sampling is planned to define the extent of the bedrock target area prior to

initial drill testing.

Community ResponsibilityPeak Resources is committed to improving the communities in which it operates whilst

maintaining best practice environmental management. Through provisions of employment

opportunities, training, purchase of local products and funding for local building and

education projects, win-win relationships are being forged with the local community.

Peak Resources has funded the building of two new classrooms and made improvements

to 4 existing classrooms at the local Ngualla Primary School. New floors and desks have

been installed and the classrooms repainted. In addition, the company has assisted with

maintenance of the Ngualla village water system, the new village airstrip and access road.

Projects during the current year include the building of two teacher’s houses in Ngualla

village, and the provision of school books for three primary schools in the region.

Above: Project Manager Patrick Ochieng and Logistics Manager Ismail Hassan handing over school books outside the new classrooms built by Peak at the Ngualla Primary School, August 2012.

10


CORPORATE

Equity Issues

On 27 July 2012 the company announced that it was undertaking a placement of 32.3 million shares at $0.17 to sophisticated

investors and clients of Shaw Corporate Finance Pty Ltd and Blue Ocean Equities Pty Ltd raising $5.5 million before costs.

Subscribers to the placement were issued to 1 free option for every share allotted.

The placement was completed in two tranches. Tranche 1 was completed on 6 August 2012 and 15,529 822 shares and

15,529,822 options have been allotted to raise $2.64 million before costs. The shares were issued under the Peak’s 15%

capacity rule Tranche 2 of 16,823,120 million shares and 16,823,120 million options was issued following shareholder approval

at a General Meeting of the company on 10 September 2012 to raise approximately $2.86 million. Tranche 1 was ratified at this

same meeting.

The company also offered to existing shareholders an opportunity to participate in a Share Purchase Plan (SPP) where

shareholders were able to subscribe up to $15,000 worth of shares at 17 cents with a free attaching listed option to raise $2

million before costs. The SPP was approved by shareholders at the General Meeting. Applications were received from a total

of 279 shareholders for a total of 15,306,309 shares to raise a total of $2.6 million. Given the high level of support for the SPP,

the Company decided to increase the Plan to cater for all applications rather than scale back applications.

The options (ASX:PEKO) are listed and are exercisable at $0.25 on or before 31 July 2014.

Corporate Structure and Cash on Hand

The current corporate structure as at the 30th September 2012 was:

ASX: PEK

OTCQX: PKRLY

Ordinary Shares on Issue: 254.7 million

Cash at hand: $8.35 million

52 week range: $0.15 - $0.62*

Market Cap: $40.8 million (at $0.16)

Listed Options outstanding: 47.7 million

Unlisted Options outstanding: 11.2 million

Liquidity: 0.5 million shares per day (av. over 3 mths**)

* From 01-Oct-11 to 30-Sep-12

** Average from 01-Jul-12 to 30-Sep-12

Richard Beazley Managing Director

The information in this report that relates to Exploration Results is based on information compiled and/or reviewed by Dave Hammond who is a Member of The Australasian Institute of Mining and Metallurgy. Dave Hammond is the Technical Director of the Company. He has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Dave Hammond consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The information in this report that relates to Mineral Resources is based on information compiled by Rob Spiers, who is a member of The Australasian Institute of Geoscientists. Rob Spiers is an employee of geological consultants Hellman and Schofield Pty Ltd. Rob Spiers has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Rob Spiers consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

11


Appendix:

Table 1: Classification of Mineral Resources for the Ngualla Rare Earth Project, 1.0% and 3.0% REO cut-off grades.

Lower cut – off grade

Resource Category

Tonnage (Mt)

REO (%)*

Contained REO tonnes

1.0%REO

Measured 29 2.61 750,000

Indicated 69 2.43 1,700,000

Inferred 72 1.92 1,400,000

tOtAL 170 2.24 3,800,000

3.0%REO

Measured 11 3.99 430,000

Indicated 21 4.09 850,000

Inferred 8.7 4.11 360,000

tOtAL 40 4.07 1,600,000

*REO (%) includes all the lanthanide elements plus yttrium oxides. Figures above may not sum precisely due to rounding. The number of significant figures does not imply an added level of precision.

Table 2: Relative components of individual REO’s (including yttrium) as a percentage of total REO at Ngualla SREZ (> 1% REO) compared to other large rare earth deposits.

RAREEARthSCONtENt(%OftOtALREO)

NGUALLA SREZ*

%NOLANS BORE

%MOUNTAIN PASS

%BAIYUNEBO (CHINA) %

MT WELD CLD %

Ligh

t RE

Lanthanum 27.5 19.1 33.2 27.1 23.9

Cerium 48.3 48.7 49.1 49.9 47.6

Praseodymium 4.72 5.93 4.34 5.15 5.16

• Neodymium 16.1 20.5 12.0 15.4 18.1

Samarium 1.59 2.30 0.80 1.15 2.44

• Europium 0.32 0.39 0.12 0.19 0.53

Hea

vy R

E

Gadolinium 0.73 0.99 0.17 0.40 1.09

• Terbium 0.06 0.08 - - 0.09

• Dysprosium 0.14 0.32 - 0.30 0.25

Other 0.10 0.21 0.16 0.03 0.12

Other • Yttrium 0.40 1.35 0.10 0.20 0.76

total% 100 100 100 100 100

Source: Arafura Website and *= Ngualla SREZ Mineral Resource >1% REO.

The blue markers denote the five “Critical Rare Earths”, which are predicted to be in undersupply in the years ahead and therefore to

command significantly higher value than other rare earths. (US DoE, ‘Critical Materials Strategy’ report, December 2011).

The critical rare earths contribute the majority of the value from Ngualla at 56% of the total in-ground value. Of these, neodymium

is the main single driver, contributing 34%, (relative rare earth oxide prices: Metal Pages, 11th September 2012).

12


Table 3: Drill hole and intersection details for intersection highlights September Quarter 2012, Southern Rare Earth Zone – rare earth RC drill intersections +1 % REO

Selected intersections + 2% REO in italics

Hole ID East North Hole Depth (m) From (m) To (m) Interval (m) REO %

NRC168 482,278 9,147,995 151 0 151 151* 5.15NRC176 482,200 9,147,947 140 0 140 140* 5.21NRC180 482,240 9,147,961 102 0 102 102* 5.51NRC183 482,359 9,148,053 127 0 127 127* 5.15NRC195# 482,253 9,147,957 160 0 160 160* 5.25NRC204 482,403 9,147,852 120 0 52 52 4.84

62 70 8 1.2874 88 14 1.04

NRC205 482,438 9,147,851 120 0 100 100 3.56(incl. 0 54 54 5.36)

108 118 10 1.47NRC209 482,078 9,147,700 120 0 112 112 4.78

(incl. 0 88 88 5.52)NRC214 482,201 9,147,741 185 0 66 66 3.06

72 108 36 3.87112 185 73* 4.51

NRC220 482,122 9,147,691 113 0 95 95 5.4498 113 15* 5.98

Note: REO = total rare earth oxides including yttrium. See Table 2 for relative distribution of individual rare earth oxides. Samples are 2m composites from angled -60° west RC drilling except for #NRC195 – which is drilled to north. Intersections calculated using 1% REO lower cut and a maximum of 2m internal dilution. Analysis by SGS laboratory, Perth, by 4 acid digest and ICP or XRF. Co-ordinate system is Arc 1960 UTM zone 36S. * = hole ended in mineralisation.

13


Appendix 5B Mining exploration entity quarterly report

+ See chapter 19 for defined terms.

30/9/2001 Appendix 5B Page 1

Rule 5.3

Appendix 5BMining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001, 01/06/10.

Name of entity Peak Resources Limited

ABN Quarter ended (“current quarter”) 72 112 546 700 September 2012

Consolidated statement of cash flows

Cash flows related to operating activities Current quarter

$A’000Year to date (3 months)

$A’000

1.1 Receipts from product sales and related debtors

1.2 Payments for (a) exploration & evaluation (b) development (c) production (d) administration

(1,952)

(1,104)

(1,952)

(1,104)1.3 Dividends received 1.4 Interest and other items of a similar nature

received 42 42

1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Other (provide details if material)

Net Operating Cash Flows(3,014) (3,014)

Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects

(b) equity investments (c) other fixed assets (4) (4)

1.9 Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets

1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other (provide details if material)

Net investing cash flows(4) (4)

1.13 Total operating and investing cash flows (carried forward)

(3,018) (3,018)

14




Appendix 5B Page 2 30/9/2001

1.13 Total operating and investing cash flows (brought forward)

(3,018) (3,018)

Cash flows related to financing activities1.14 Proceeds from issues of shares, options,

etc. 8,102 8,102

1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other (provide details if material) (280) (280)

Net financing cash flows 7,822 7,822

Net increase (decrease) in cash held 4,804 4,804

1.20 Cash at beginning of quarter/year to date 3,545 3,5451.21 Exchange rate adjustments to item 1.20

1.22 Cash at end of quarter 8,349 8,349

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

Current quarter $A'000

1.23 Aggregate amount of payments to the parties included in item 1.2 180

1.24 Aggregate amount of loans to the parties included in item 1.10

1.25 Explanation necessary for an understanding of the transactions

1.23 includes gross salaries including superannuation and fees to directors and legal fees paid to Steinepreis Paganin Lawyers & Consultants, an entity related to Jonathan Murray

Non-cash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on

consolidated assets and liabilities but did not involve cash flows

15





2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest

Financing facilities available Add notes as necessary for an understanding of the position.

Amount available $A’000

Amount used $A’000

3.1 Loan facilities

3.2 Credit standby arrangements

Estimated cash outflows for next quarter $A’000 4.1 Exploration and evaluation 1,685

4.2 Development 465

4.3 Production

4.4 Administration 767

Total2,917

Reconciliation of cash Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.

Current quarter $A’000

Previous quarter $A’000

5.1 Cash on hand and at bank 5,695 1,091

5.2 Deposits at call 2,654 2,454

5.3 Bank overdraft

5.4 Other (provide details)

Total: cash at end of quarter (item 1.22) 8,349 3,545

16





Changes in interests in mining tenements

Tenement reference

Nature of interest (note (2))

Interest at beginning of quarter

Interest at end of quarter

6.1 Interests in mining tenements relinquished, reduced or lapsed

6.2 Interests in mining tenements acquired or increased

17





Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rights together with prices and dates.

Total number Number quoted Issue price per security (see note 3) (cents)

Amount paid up per security (see note 3) (cents)

7.1 Preference +securities (description)

7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions

7.3 +Ordinary securities

254,723,553 254,723,553 Fully Paid

7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs

47,659,251 47,659,251 $0.17 Fully Paid

7.5 +Convertible debt securities (description)

7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted

7.7 Options (description and conversion factor)

500,000500,000

1,000,000750,000750,000750,000

6,250,000541,667150,000

47,659,251

- - - - - - - - -

47,659,251

Exercise price $0.60 $1.00 $1.50 $0.60 $0.90 $1.20 $0.55 $0.75 $0.55 $0.25

Expiry date 16 May 2013 26 May 2013 26 May 2014 16 May 2015 16 May 2015 16 May 2015

20 February 2017 24 February 2014

3 March 2018 31 July 2014

7.8 Issued during quarter

47,659,251 47,659,251 $0.25 31 July 2014

7.9 Exercised during quarter

18





7.10 Expired during quarter

7.11 Debentures(totals only)

7.12 Unsecured notes (totals only)

Compliance statement 1 This statement has been prepared under accounting policies which comply with

accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 5).

2 This statement does give a true and fair view of the matters disclosed.

Sign here: Date: 25 October 2012

(CFO/Company Secretary)

Print name: Farlee Walker

Notes

1 The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.

4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.

5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

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