Hyperion Testwork Confirms High Value Heavy Rare Earths

• Testwork results confirm the potential for a high-value mixed heavy and light rare earth product to be produced from monazite and xenotime minerals at Hyperion’s Titan Project in Tennessee
• Monazite typically has a valuable distribution of the light rare earths Nd+Pr (neodymium and praseodymium), and xenotime has a superior distribution of the highly valuable heavy rare earths Tb+Dy (terbium and dysprosium)
• Analysis undertaken on a composite sample has highlighted excellent results, indicating that:

• Rare earths make up to 58.7% of the monazite and xenotime sample
• Nd+Pr are 21.2% of the rare earth oxides and the heavy rare earths Tb+Dy are 2.4%
• At current spot pricing, the potential basket price of the rare earth oxide products is ~US$38,000 per tonne

• As a comparison, MP Materials' (NYSE: MP) bastnaesite ore contains only 16.3% of Nd+Pr and negligible amounts of the heavy rare earths Tb+Dy
• Compared with light rare earths, heavy rare earths such as Dy+Tb are less common and more valuable, and they are critical inputs into the defense, EV and clean energy sectors
• There is only minor production of heavy rare earths outside of China, and minor production in the USA
• The excellent results are an important step in progressing the technical evaluation of Hyperion’s rare earth products under its MOU with Energy Fuels, aiming to establish a fully integrated, low-cost U.S rare earth element supply chain using Energy Fuels’ existing White Mesa processing plant in Utah
• The results confirm the importance of the Titan Project to potentially be a critical part of an All-American rare earth supply chain – and the only significant domestic production source for heavy rare earths
• The Titan Project can also replace carbon intensive imports and re-shore the domestic production of low carbon titanium and zircon minerals for critical American industries

Anastasios (Taso) Arima, CEO and Managing Director of Hyperion Metals said:

“Current rare earth market prices mean that most of the value is driven by just four rare earths – neodymium, praseodymium, terbium and dysprosium. These test results show that Hyperion’s rare earth concentrate has an excellent ratio of these highly valuable rare earth elements.

Importantly, the USA does not have significant production of the highly valuable heavy rare earths terbium and dysprosium and these results highlight the potential for Hyperion to play an important role in the U.S. rare earth supply chain for critical industries including the defense sector.

We look forward to incorporating these results into a scoping study for the Titan Project and working with Energy Fuels to establish an all-American rare earth supply chain for critical U.S. industries”

Hyperion Metals Limited (“Hyperion”) (ASX: HYM) is pleased to announce that metallurgical testwork has highlighted the potential for a high-value rare earth product to be produced at Hyperion’s Titan Project, Tennessee. The rare earths are contained within the minerals monazite and xenotime, and are planned to be produced at the Titan Project as a component of its heavy mineral sand concentrate product portfolio.

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Figure 1: Rare earths usage in U.S. defense applications3 (Graphic: Business Wire)

When pricing for the various rare earth oxides found within the rare earth fraction of the mineral is applied, a “basket price” for a combined rare earth oxide can be estimated. The high proportion of Nd+Pr and Tb+Dy identified in Hyperion’s monazite and xenotime sample is highly favorable when compared to major western-based rare earth producers, including MP Materials and Lynas Rare Earths, and highlights the potential for the Titan Project to be a strategic domestic source of highly valuable heavy rare earth feedstocks in a low risk, tier 1 jurisdiction.

Table 1: Rare earth basket and basket price for various rare earth producers and explorers^1,2

Monazite typically has a valuable distribution of the light rare earths Nd+Pr (neodymium and praseodymium), and xenotime has a superior distribution of the highly valuable heavy rare earths Tb+Dy (terbium and dysprosium).

Rare earths are found in various geological settings around the world, including in the mineral bastnaesite (MP Materials’ Mountain Pass operation, California), Monazite (Lynas Rare Earths’ Mount Weld operation, Western Australia) and laterite / clay (various Chinese producers, Jiangxi province).

Strategic importance to U.S.

Rare earths are critical metals to the U.S. and are essential to manufacturing strategic products including electric motors, airplanes and defense equipment. China currently controls approximately 55% of the global rare earths mining capacity and approximately 85% percent of the global rare earths refining capacity. Importantly, this strategic imbalance is more acute for heavy rare earths with China producing over 95% of heavy rare earths.

Rare earths are essential for U.S. defense applications, primarily in targeting and weapons systems, including smart bombs and missiles, as well as for their use in compact and powerful electric motors in air, sea and subsea weapons platforms.

The U.S. Government is making a concerted effort to secure reliable and sustainable supplies of rare earths to ensure resilience across U.S. manufacturing and defense needs in a manner consistent with America’s labor, environmental, equity and other values. This is evidenced through actions including the recently published Supply Chain Disruptions Task Force to Address Short-Term Supply Chain Discontinuities by the Biden administration.

Hyperion’s rare earth testwork results identify the potential to produce a high-value rare earth co-product from a simple concentration and separation process with no requirement for acids or digestion, and confirm the importance of the Titan Project as having the potential to rapidly become an important supplier of rare earths in the U.S. - and the only significant U.S. supplier of heavy rare earths - critical to the nation’s defense capabilities.

Rare earth elements

Rare earth elements are used in many applications including battery alloys, catalysts, ceramics and metal alloys. However, it is the increasing demand for rare earths used in high strength permanent magnets found in power dense electric motors used in electric vehicles and wind turbines that makes up the majority of global consumption, accounting for ~90% of the global market by value in 2019 and expected to grow rapidly along with growth in EV and wind turbine production.

In particular, the heavy rare earths dysprosium and terbium are essential for the production of DyNdFeB (dysprosium neodymium iron- boron) magnets used in clean energy, military and high technology solutions. There is only minor production of dysprosium and terbium outside of China, and only minor production within the USA, and the potential production of these heavy rare earths within the USA is strategic and highly valuable to the country’s leading defense, EV and clean energy sectors.

The rare earths market, and particularly demand for Nd+Pr+Dy+Tb, has seen significant growth in demand in recent years primarily due to the rapid growth of electric vehicles and construction of wind turbines. It is anticipated that a step change in growth in demand driven by the need for rare earth permanent magnets will far outpace supply, potentially leading to large supply deficits in heavy rare earths Dy+Tb and the light rare earths Nd+Pr.

The significant proportions of Nd+Pr and Tb+Dy identified within Hyperion’s monazite and xenotime sample highlights the potential for a highly valuable rare earth product. Based on current pricing for rare earth oxides, the theoretical basket price of Hyperion’s product at the separated oxide stage is approximately US$38/kg, or US$38,000/tonne.

Potential low cost, rapid entry to the U.S. rare earths market

In April 2021, Hyperion and Energy Fuels Inc. ("Energy Fuels") (NYSE: UUUU) executed a memorandum of understanding (“MOU”) to evaluate the supply of rare earth minerals from the Titan Project to Energy Fuels’ White Mesa Mill in Utah, as well as evaluating a potential collaboration to establish a fully integrated, “mine to market” U.S. rare earth supply chain for the electric vehicle and renewable energy sectors.

Importantly, the MOU allows the potential for rapid and low capex entry to the U.S. rare earth supply chain by utilizing Energy Fuels’ existing White Mesa mill in Utah.

The MOU highlights the importance of Hyperion’s Titan Project as a potentially important source of high value U.S. rare earth minerals, and in particular heavy rare earths, that are expected to be crucial in rebuilding sustainable American transportation, energy and defense sectors.

Testwork program

Inductively coupled plasma mass spectrometry (ICP-MS) analysis was undertaken on a composite taken from the lower McNairy Zone at Hyperion’s Titan Project within a 1 tonne bulk sample to determine the proportion of individual rare earths elements within monazite and xenotime minerals. The sample was subject to conventional physical processing by way of wet gravity separation, high tension separation, floatation and single pass wet high intensity magnetic separation.

The results highlighted excellent results, indicating that rare earths make up a total of 58.7% of the monazite and xenotime minerals. Within the rare earth fraction, Nd+Pr makes up 21.2% of rare earths⁵, and the highly valuable Tb+Dy make up 2.4% of rare earths⁶.

Further rare earths testwork will be undertaken by Hyperion in the coming months as part of its technical studies to understand the distribution of monazite and xenotime across the broader Titan Project area.

Table 2: Element analysis of Titan Project rare earth concentrate, highlighting the rare earth oxide component

Forward Looking Statements

Information included in this release constitutes forward-looking statements. Often, but not always, forward looking statements can generally be identified by the use of forward-looking words such as “may”, “will”, “expect”, “intend”, “plan”, “estimate”, “anticipate”, “continue”, and “guidance”, or other similar words and may include, without limitation, statements regarding plans, strategies and objectives of management, anticipated production or construction commencement dates and expected costs or production outputs.

Forward looking statements inherently involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance, and achievements to differ materially from any future results, performance, or achievements. Relevant factors may include, but are not limited to, changes in commodity prices, foreign exchange fluctuations and general economic conditions, increased costs and demand for production inputs, the speculative nature of exploration and project development, including the risks of obtaining necessary licenses and permits and diminishing quantities or grades of reserves, political and social risks, changes to the regulatory framework within which the company operates or may in the future operate, environmental conditions including extreme weather conditions, recruitment and retention of personnel, industrial relations issues and litigation.

Forward looking statements are based on the Company and its management’s good faith assumptions relating to the financial, market, regulatory and other relevant environments that will exist and affect the Company’s business and operations in the future. The Company does not give any assurance that the assumptions on which forward looking statements are based will prove to be correct, or that the Company’s business or operations will not be affected in any material manner by these or other factors not foreseen or foreseeable by the Company or management or beyond the Company’s control.

Although the Company attempts and has attempted to identify factors that would cause actual actions, events or results to differ materially from those disclosed in forward looking statements, there may be other factors that could cause actual results, performance, achievements, or events not to be as anticipated, estimated or intended, and many events are beyond the reasonable control of the Company. Accordingly, readers are cautioned not to place undue reliance on forward looking statements. Forward looking statements in these materials speak only at the date of issue. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, in providing this information the company does not undertake any obligation to publicly update or revise any of the forward-looking statements or to advise of any change in events, conditions or circumstances on which any such statement is based.

¹ MP Materials – Molycorp Form 10K for year ended December 31, 2014, Lynas Rare Earths – Ore reserve statement, August 6, 2018, Pensana – Longonjo PFS, November 15, 2019, Ionic Rare Earths – Makuutu Mineral Resource Estimate, March 3, 2021.

²Spot pricing – metal.com, July 30, 2021.

³ MP Materials presentation, July 15, 2020.

⁴ Adamas Intelligence, Q2 2021

⁵ (2.6% Pr₂O₃ + 9.86% Nd₂O₃) / 58.71%

⁶ (0.20% Tb₂O₃ + 1.19% Dy₂O₃) / 58.71%

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