Rainbow Rare Earths Limited

("Rainbow" or the "Company")

(LSE: RBW)

19 January 2021

Issue of Share Options

Rainbow Rare Earths Ltd announces that the board of directors, on the recommendation of the Remuneration Committee, has approved a new Long Term Incentive Plan ("LTIP") for management.  The LTIP has been implemented to align the interests of management and shareholders more closely.  The key elements of the new LTIP scheme are as follows:

·    Conditional nil cost options will be awarded, under the existing share option scheme, to management and key personnel, minimising dilution from the issue of share based incentives

·    Options will vest over a period of 3 years subject to specific and measurable targets set by the board

The initial tranche of share awards have been awarded as follows:

·    George Bennett, CEO: 1,458,000 nil cost options

·    Pete Gardner, CFO: 1,000,000 nil cost options

·    Dave Dodd, Technical Director, 1,250,000 nil cost options

The options will vest in three equal tranches: one third after 12 months, one third after 24 months and one third after 36 months subject to the following performance conditions:

·    The 30 day volume weighted average share price being above 12 pence per share

·    The total shareholder return in the financial years ending 30 June 2021, 2022 and 2023 being above average compared to a basket of comparable investments comprising the FTSE 350 Mining Index, the FTSE SmallCap Index, and the specific rare earth stocks: Pensana Rare Earths plc, Lynas Corporation Ltd, Mkango Resources Ltd, Hastings Technology Metals Ltd and Peak Resources Limited

Prior to the issue of these awards under the new LTIP none of the recipients held any options under the existing share option plans.  The last share-based remuneration issued by the Company was provided in 2017.  George Bennett, through Pipestone Capital Inc, has an interest in 2 million warrants issued in lieu of interest on a US$1 million bridge loan provided in February 2020.

In addition, the following share options have been granted to the Non-Executive directors under the existing share option plan with an exercise price of 12 pence per share, representing a 37% discount to the 60-day volume weighted average share price prior to the issue of the options:

·    Adonis Pouroulis, Chairman:           500,000 options

·    Atul Bali:                                          500,000 options

·    Alex Lowrie:                                     500,000 options

·    Shawn McCormick:                         500,000 options

·    Robert Sinclair:                                500,000 options

The options will vest in a single tranche subject to the 30 day volume weighted average share price being above 12 pence per share.

In aggregate the proposed options, including the awards under the LTIP scheme, represent 1.33% of the existing issued share capital of the Company.  Prior to this award the Company had 5,941,000 share options in issue under the existing share option scheme, representing 1.17% of the existing issued share capital of the Company, with a weighted average exercise price of 12.28 pence per share.

Notification and public disclosure of transactions by persons discharging managerial responsibilities and persons closely associated with them

Notification and public disclosure of transactions by persons discharging managerial responsibilities and persons closely associated with them

Notification and public disclosure of transactions by persons discharging managerial responsibilities and persons closely associated with them

Notification and public disclosure of transactions by persons discharging managerial responsibilities and persons closely associated with them

Notification and public disclosure of transactions by persons discharging managerial responsibilities and persons closely associated with them

Notification and public disclosure of transactions by persons discharging managerial responsibilities and persons closely associated with them

Notification and public disclosure of transactions by persons discharging managerial responsibilities and persons closely associated with them

Notification and public disclosure of transactions by persons discharging managerial responsibilities and persons closely associated with them

**ENDS**

For further information, please contact

Notes to Editors:

Rainbow's strategy is to become a globally-significant producer of rare earth metals.  NdPr are vital components of the strongest permanent magnets used for the motors and turbines driving the green technology revolution.  Analysts are predicting demand for magnet rare earth oxides will grow substantially over the coming years, driven by increasing adoption of green technology, pushing the overall market for NdPr into deficit.

The Company's Gakara Project in Burundi, which produces one of the highest-grade concentrates in the world (typically 54% total rare earth oxide ("TREO")) through ongoing trial mining operations, is currently the only African producer of rare earths.  The Gakara basket is weighted heavily towards NdPr, which account for over approximately 19.5% of the contained TREO and 80% of the value of the concentrate.

The Phalaborwa Rare Earths Project, located in South Africa, comprises approximately 35 million tonnes of gypsum resulting from historic phosphate hard rock mining, containing rare earth elements with an estimated average in situ grade of 0.6% TREO, based on previous sampling campaigns, of which 30% comprises high-value NdPr.  The rare earths are contained in chemical form in the gypsum stacks, which is expected to deliver a higher-value rare earth carbonate, with lower operating costs than a typical rare earth mineral project.