PEAK RESOURCES LIMITED (ASX: PEK) Major Rare Earth Project advancing rapidly

22 July 2013 Peak Resources has defined a world class Rare Earth project that we think has outstanding strategic appeal. Rare Earths are critical metals Recommendation in modern technology and China dominates world supply. There has been a scramble around the world to develop new independent Spec. BUY suppliers. We believe Peak‘s Ngualla project in Tanzania is one of the standout projects currently identified.

Major Rare Earth discovery just gets better Company Data The Ngualla deposit has a total resource reported of 195 million tonnes Market Cap $38m grading 2.26%REO with a high grade core zone of 42 million tonnes grading Shares on issue 275.6m 4.19% REO. Ngualla has become progressively better since the first holes were drilled in mid-2010. The identification of a large resource was a good start. Price $0.14 Then the high grade zone with low uranium and content suggested Sector Materials real commercial potential. More recently the definition of a central high grade 12mth Price Range $0.25-$0.11 oxide cap of 21.6 million tonnes grading 4.54%REO, which is acid leachable and could be easily mined in a modest open pit, confirms this project as a standout. Scoping Study highly encouraging Extensive metallurgical testing and flow sheet development demonstrated that Analyst Rex Adams the mineralisation can be beneficiated by flotation and magnetic separation, Authorisation Brent Potts before a simple low temperature, atmospheric pressure sulphuric acid leach to produce an intermediate Rare Earth carbonate or progressing to separation of

a number of high purity RE products.

The updated Scoping Study in May 2013, evaluated an annual production of 10,000 tpa of REO’s with a capital cost of $U373 million and operating costs averaging $US 10.18/kg. Using October 2012 prices the study suggested a pre-

tax IRR of 60% and an NPV of $US1.7 billion. This looks like a robust project even if recent lower prices are assumed. PEK Shareprice Ongoing optimisation has improved the beneficiation circuit and a pilot plant at ANSTO Minerals has confirmed the leaching process and has demonstrated production of ultra- high purity oxides of the high value Rare Earths. Attractive Risk/Reward potential Peak Resources is capitalized at $A38 million and yet has one of the potentially most economically viable, undeveloped Rare Earth deposits outside of China. The metallurgy looks straightforward, capital and operating cost estimates suggest a robust project and Peak is seeking potential partners. A partnership/funding agreement would be a price catalyst and a successful development should see a share price at multiples of its current level.

Peak Resources Limited (PEK) – May 2013 Contents

Ngualla Rare Earth Resource ...... 4

Metallurgical Testing ...... 7

The Market for Rare Earths ...... 8

Commercialising the Project ...... 9

Scoping Study...... 10

Pilot Plant Studies ...... 13

Scoping Study Economics ...... 14

Valuation and Funding ...... 16

Conclusions ...... 18

Board and Management ...... 19

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Peak Resources Limited (PEK) – May 2013

Major Rare Earth project with focus now on high grade core zone Peak Resources have confirmed the discovery of a world class Rare Earth deposit at its 100 % owned Ngualla project in Tanzania. The broad resource independently calculated by H&S Consulting is: 195 million tonnes @ 2.26% REO containing 4.4million tonnes REO with a higher grade core zone of 42million tonnes @ 4.19% REO containing 1.8 million tonnes REO. Recent infill drilling has defined a central high grade oxide cap of bastnasite mineralization of 21.6 million tonnes grading 4.54% REO. This zone is acid leachable and could be mined in a modest sized open pit. This is one of the largest and highest grade undeveloped REO resources outside of China. Chemical composition compares well The mix of Rare Earths is similar to other developing projects such as Mt Weld (Lynas Corp). Uranium and thorium levels are very low which is of critical importance in product acceptance. Located in a mining country The project is located in East Africa in Tanzania, a country with an established mining industry, being the fourth largest gold producer in Africa. Ngualla is located 150 km from airport, road and rail links to the port of Dar es Salaam, some 750 km away. Metallurgy is better than most Rare Earth deposits Comprehensive metallurgical testing has demonstrated that the exciting potential is in the oxidized high grade core zone where it has shown sulphuric acid leaching extracts 70-90% of the contained Rare Earths. Beneficiation by magnetic separation and flotation upgrades the feed before the acid leach circuit which then produces intermediate RE concentrates on site. These could be sold at this stage or refined into individual RE products. Scoping Study highly encouraging Peak moved quickly to a scoping study conducted using respected consultants, and supported by extensive metallurgical testing and flow sheet development which was released in Dec 2012 and updated in May 2013. This study focused on mining in the central high grade core, with an initial production of 10,000 tpa REO as a base case. Capital cost was estimated at $US373 M and operating costs at US 10.18/kg over the mine life. An estimated 60% IRR and an NPV of $US 1.7 B at late 2012 REO price levels, looks very attractive. Even at recent, lower REO prices this project would still be very robust. Process Optimisation and Pilot plant Optimisation of the beneficiation circuit improves mass rejection giving a higher grade concentrate, potentially reducing the size of the leach plant with lower operating costs. A pilot plant at ANSTO Minerals commissioned to confirm the recovery process and provide refined product samples is already improving on the scoping study and has demonstrated that high purity intermediate RE carbonates and ultra high purity RE oxides can be readily produced. Should become a significant Rare Earth producer The Ngualla project Scoping Study envisages shallow open pit mining at 330,000 tpa ROM grading about 5.35% REO to produce about 10,000 tpa REO in concentrate, with an initial mine life of >50 years. The latest upgrade of the central high grade resource suggests ample scope for future expansion. Peak Resources is planning for a project development timetable which could see production commencing by 2016. We believe there is only room in the small Rare Earth market for a handfull of new projects but the Ngualla project should be at the forefront. Funding a critical task Peak Resources, like most explorers has funded its development via equity issues. The project has now reached the point where substantial spending is required on project engineering and Feasibility Studies to advance towards development. The company has begun talking to potential end users and strategic investors who may wish to be involved in the project development.

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Peak Resources Limited (PEK) – May 2013 Ngualla Rare Earth Resource

The Ngualla project is located in western Tanzania about 750 km WSW of the port of Dar es Salaam and some 150 km north of the city of Mbeya with access via 100 km of paved roads and 56 km of gravel road. Peak Resources owns 100% of the exploration tenement covering the Ngualla discovery after acquiring 20% partner Zari exploration in February 2012. The Ngualla deposit is part of a complex which are unusual carbonate rich alkaline igneous rocks often occurring as sub-volcanic plugs along regions of continental rifting. The Ngualla carbonatite is roughly oval in shape 3.5 km by 2.5 km, Proterozoic in age and intruding older Pre-Cambrian gneisses, quartzites and volcanics. This carbonatite is fairly typical showing an overall circular zoning pattern. It has a central core of ferro carbonatite (mostly iron rich dolomite) enriched in Rare Earths, surrounded by a calcite carbonatite with associated phosphate. Ngualla is unusually rich in Rare Earth elements particularly in the designated Southern Rare Earth core zone where drilling has been focused. This higher grade zone has been overprinted by weathering giving a central, high grade enriched cap zone, which is depleted in carbonates and relatively enriched in Rare Earths. This is the immediate focus of the project.

Source: Peak Resources presentation

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Peak Resources Limited (PEK) – May 2013

Schematic Section through Southern Rare Earth Zone

Source Peak Resources company releases Resource Estimate In April 2013 Peak reported its upgraded resource statement which was estimated by independent resource consultants H&S Consulting Pty Ltd. Total Resource: 195 million t @ 2.26% REO containing 4.40 million t REO (at 1% REO cutoff) High Grade resource 42 million t @ 4.19% REO containing 1.80 million t REO (at 3.0% REO cutoff) The High Grade resource is a central core zone within the broader mineralized envelope. The Total resource includes an “alluvial” zone of 24 million t @1.77% REO within unconsolidated ferruginous gravels on the south west flank of the main body. Peak also reported after infill drilling of the high grade weathered zone a “Bastnaesite Zone” of 21.6 million tonnes grading 4.54% REO. The Bastnaesite zone is well drilled with 86 % classified as “Measured” and 13.6%% as Indicated” resources.

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Peak Resources Limited (PEK) – May 2013

The main Rare Earth mineral in the central core is reported as bastnaesite (a rare earth-carbonate- fluoride mineral) with some monazite recorded in peripheral zones. Grades in the primary zone at depth range from 1 to 2 % REO while the enriched cap which is up to 150 m thick ranges typically between 3 and 6 % REO in drill intersections. The Rare earth composition is as follows with comparatives.

Ngualla Mt Weld Mountain Bayenebo Oxide HGAverage (Aust) % Pass (US)% (China) % % La2O3 27.6 23.88 33.2 27.1 CeO2 48.2 47.55 49.1 49.86 Pr6O11 4.73 5.16 4.34 5.15 Nd2O3 16.6 18.13 12.0 15.4 Sm2O3 1.60 2.44 0.8 1.15 Eu2O3 0.30 0.53 0.12 0.19 Gd2O3 0.61 1.09 0.17 0.4 Tb4O7 0.05 0.09 - - Dy2O3 0.08 0.25 - - Holmium Ho2O3 0.01 0.03 - - Er2O3 0.03 0.06 - - Tm2O3 0.00 0.01 - - Yb2O3 0.02 0.01 - - Lu2O3 0.00 0.00 - - Y2O3 0.52 0.20 0.1 0.2 Total 100.00 100.00 100.00 100.00 Source:Peak Resources and other company releases

The Ngualla REO composition is quite similar to Lynas’Mt Weld and at March Qtr 2013 REO prices the value of Mt Weld REO mix was around $US36/kg which would translate to $US 30.45/ kg for Ngualla ( assuming the Cerium is sold at lower than market as per scoping study).

Uranium and Thorium levels in the Bastnaesite Zone (14 ppm and 42ppm respectively) are very low, which is of critical importance, as high levels of uranium and thorium can create significant issues in either processing or in product acceptability with customers. At these levels the material mined would have a non-radioactive classification.

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Peak Resources Limited (PEK) – May 2013

Northern Zone Within the Ngualla carbonatite complex on the northern side there is a zone of iron rich -apatite rock which has economic potential. Phosphate values range 15-25% with associated Nb2O5 of 0.25% to 1.5% and Ta2O5 100-250ppm. Rare Earth grades are 1.0 to 2.5%.

This may have future potential to be the basis of an entirely different project producing phosphate, and tantalum with perhaps a Rare Earth by-product. However it is not currently the focus of the company although some further exploratory holes may be drilled in the next year. Metallurgical Testing

Preliminary metallurgical testing suggests that the primary fresh rock mineralization will respond to conventional concentration methods such as screening/gravity/flotation to produce a bastnaesite rich concentrate. However the main focus has been on the high grade weathered cap.

The oxide zone has been extensively tested with sulphuric acid leaching. This gave a range of REO extraction from only 8% in ferruginous gravels up to 88% in a composite sample from several holes in the core zone. Detailed leaching tests focusing on the central bastnaesite zone showed leach extraction rates above 75% in 21 of 31 samples and averaging 86% . The 11 peripheral samples gave lower extraction rates which were found to contain some monazite, a RE phosphate, which does not leach as well as bastnaesite. Leach recoveries in samples from the peripheral zones averaged 45%, however acid baking at 250⁰ C gave over 90% extraction.

Source: Peak Resources Presentation

Acid leaching offers a promising route to lower costs, processing at site through to a Rare Earth concentrate, an intermediate product which could then be either exported in small volumes to refineries located nearer the end customers, or perhaps more likely be processed in the projects own refinery at site or on the coast. This testwork has now been confirmed in pilot plant leaching.

One of the most important achievements of the scoping study was the establishment of a processing flow sheet which is being pilot tested during the pre feasibility study.

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Peak Resources Limited (PEK) – May 2013 The Market for Rare Earths

The term Rare Earths refers to a group of 15 elements known as the Lanthanide series on the periodic table. They are actually reasonably abundant in the earth’s crust but rarely occur in economic concentrations. When they form high concentrations they occur as a mixture of the series of Rare Earths within several minerals.

Most of the Rare Earth elements have multiple applications in modern high technology industries. The critical ones are neodymium /praseodymium with escalating use in high intensity rare earth magnets which are key to powerful lightweight electric motors in disk drives, motor vehicles and especially electric/hybrid cars and many other applications including wind turbines. Similarly dysprosium in high temperature magnets, and samarium in other types of rare earth magnets.

Europium is essential for the vivid blue and red colours on modern TV/computer screens. Terbium gives a brilliant green-yellow colour. A combination of europium and terbium gives a brilliant white phosphor used in the manufacture of modern high efficiency light bulbs and fluorescent tubes. Rare earths, particularly lanthanum are essential in Nickel metal hydride batteries which have application in hybrid cars. Cerium is used in catalytic converters in auto exhausts and as a catalyst in oil refining. They are used in dozens of applications usually in small quantities but are essential for modern civilization. China totally dominates world supply of Rare Earth oxides producing 97% of current 140,000 tpa supply.

Source : Peak Resources presentation

China is restricting exports and may shortly consume most of its production. Demand is forecast to exceed supply sometime in the next several years with some commentators predicting demand to approach 200,000 tpa by the end of the decade. Many manufacturers around the world are increasingly concerned about security of supply. There is room in the market for the projects currently in development; Mountain Pass in California, US and Mt Weld in Australia/Malaysia, and perhaps only a few others with strong potential for development in the near term. These potential developments are only likely to go ahead with the support of partners linked to the consumer groups, providing them with supply security.

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Peak Resources Limited (PEK) – May 2013

With Chinese export restrictions, prices of most Rare Earths spiked by more than 600% in 2010- 2011 but have since been retreating, having more than halved from the top prices. This is demonstrated below in data published by Lynas Corp for its Mt Weld project.

Source: Lynas Corp presentation (China FOB prices are the international prices charged by Chinese exporters including export taxes and VAT) The Ngualla basket would sell at 15-20% discount to Mt Weld

Rare Earths are not freely traded like the LME metals, rather it is a small not very transparent market between the Chinese sellers and a fairly disparate group of buyers. Indicative prices are posted on a few specialist websites.

The dramatic spike in Rare Earth prices had a negative effect on demand on top of the general slowing in demand caused by the GFC. Consumers found ways to substitute or economize in the use of Rare Earths. It is clear that demand is elastic. Demand will only rise to the potential levels projected by some studies if price is acceptable to the consumers. We think prices are now stabilising although could drift a little lower as the new supply from Lynas and Molycorp enters the market over the next year. New projects will need to be robust at current or lower price levels. Commercialising the Project

Now that a potentially commercial resource has been established, and the scoping study completed, the key future task is to meet with a range of potential customers and buyers of the Rare Earth products to determine product requirements and specification, and potential partnership relationships. The Rare Earth market is quite small at 140,000 tpa REO but growing strongly, however new projects will only be developed with the support of customers. Clearly with China dominating the world supply and restricting exports, many customers are looking for secure sources outside China. This has seen the development of Mt Weld in Western Australia (Lynas) and the re-development of Mountain Pass (Molycorp) which have both struck problems and delays. Several other projects are in feasibility studies around the world but most are quite low grade, some may have issues with uranium and thorium, and some have some metallurgical recovery issues. Ngualla stands out from most competing projects as superior on grade and size and, we would suggest it stands out on metallurgy , lower capital costs and low end operating costs.

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Peak Resources Limited (PEK) – May 2013 Scoping Study

The Scoping Study focussed on the central high grade portion of the Southern Rare Earth zone which is more than large enough for a long life open pit operation of significant scale. This overall Resource is reported as 40 million t @4.07% REO. Mining In particular, by applying a minimum 3% REO cutoff combined with a maximum limit on acid consuming contaminants of 0.3% Ca, 0.3% Mg and 0.5% P, a high grade core of 8.2 million tonnes @ 4.35% REO was initially defined for the first scoping study. But this was upgraded in April 2013 after infill drilling, to 21.6 million tonnes at 4.54% REO. This is the most acid leachable, mineable resource as a basis for a substantial open pit operation which would contain almost 1 million tonnes of REO’s. It was assumed for the study that everything outside the above cutoff parameters was waste, of zero value, although it is quite obvious that much of this material contains acid leach recoverable REO. The broader resource would only need to be considered at some very distant future time after the high grade was exhausted or if major expansion was required.

The study envisages a simple low strip ratio open pit mine (<1:1 waste to ore) producing about 330,000 tpa ROM grading about 5.35% REO, producing about 10,000 tpa REO product. The first few years would be higher than average grade. This gives a mine life of over 50 years to the initial project.

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Peak Resources Limited (PEK) – May 2013

Source : Peak Resources Scoping Study May 2013 Upside Case The updated scoping study also considered an expanded case producing 20,000 tpa REO product which would still have a mine life of 25 years. This increases capital cost to $US671 million, boosts IRR to 77% and project NPV to $US3.8 B. This suggests future expansions could be highly value enhancing. However we believe that the base case startup at 10,000 tpa REO has a better chance of sufficient customers and fitting into the market. Processing Conceptually the processing route would be in three components: 1. Beneficiation: a conventional concentrator crush/screen/grind/magnetic separation/flotation has been demonstrated to produce a Rare Earth concentrate, primarily a bastnaesite concentrate. The initial scoping study was based on a recovery of 86 % of REO and rejecting 53% of the mass. Thus reducing the size of the leach plant and lowering acid requirement.

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Peak Resources Limited (PEK) – May 2013

Because of the ample resource base further studies undertaken at Nagrom Laboratories and directed by IMO Consultants, demonstrated that optimisation of the beneficiation circuit gives a rejection of up to 78% of the feed mass giving an upgrade to 16.9% REO going through to the acid leach circuit. This reduces recovery to 70% but reduces the mass input to the leach circuit by 43%. This substantially reduces the size of the acid leach circuit, reduces the acid consumption and size of the acid plant which had a significant benefit to both capital cost and operating costs.

Source: Peak Resources Scoping Study May2013

2. Rare Earth Recovery plant: a sulphuric acid leach plant and carbonate precipitation circuit to produce an intermediate RE carbonate. A modest sized acid plant would produce sulphuric acid from imported sulphur and generate a significant part of power required. About 75% of the Cerium content would be precipitated early as a separate cerium oxide concentrate, reducing the size of the subsequent circuit. Then a separate purification and carbonate precipitation circuit would produce a high value Rare Earth carbonate (50%REO) which could be sold to third parties, but more likely processed by a dedicated refining plant. Overall leach plant recovery is estimated at an average 82%.

Source: Peak Resources Scoping Study May 2013

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Peak Resources Limited (PEK) – May 2013

3. Rare Earth Separation Circuit: a Rare Earth refinery processing the RE carbonates into four high purity separated Rare Earth Oxide products for sale to various industrial users. This plant is more likely to be located on the coast, or could be located closer to markets, and could be either company owned or operated in Joint Venture with a consumer group.

Source: Peak Resources Scoping Study May 2013

The overall metallurgical recoveries are of the order of 60% which gives an initial production rate of about 10,409 tpa of contained Rare Earth Oxides. This would comprise 3762 tonnes of Cerium oxide in intermediate concentrate and 6347 tonnes of high value Rare Earth Oxides. Feasibility studies may well determine that the logistically lower risk development option is to have the Rare Earth recovery plant and Separation Plant at the port or offshore and simply operate a mine and concentrator at site. Pilot Plant Studies

Peak has commissioned a pilot plant at ANSTO Minerals (Australian Nuclear Science and Technology Organisation) at Lucas Heights in Sydney to conduct optimisation of the leaching and separation flow sheet. A representative bulk sample of 1.3 tonnes of high grade Rare Earth mineralisation from 16 drill holes has been delivered. The first stage acid leach has been completed ready for separation into high purity products. The bulk sample gave 83% recovery of REO’s into solution confirming earlier scoping study work. Incidentally Lynas’ Mt Weld project and Arafura’s Nolans Bore project also had pilot plant and process development work conducted at ANSTO Minerals.

This work has confirmed early precipitation of a Cerium carbonate product with the aim of recovering most of the Cerium in this intermediate product, further reducing the size of the separation plant and producing only a small quantity of refined Ce Oxide product from the separation plant. Again this benefits capital and operating costs while only slightly reducing revenue. Recent releases report that the early precipitation of Cerium has improved to 95% (vs 75% in scoping study). The pilot study will:  confirm recoveries and grades  confirm the high purity product specifications  provide physical product for potential customers to evaluate  Provide data for engineering design of key equipment

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Peak Resources Limited (PEK) – May 2013

The ANSTO pilot plant has replicated and confirmed the earlier work completed at Nagrom Laboratories in August 2012 but on a larger scale. However ANSTO brings leading edge experience to the solvent extraction separation process. The Solvent Extraction Pilot Plant will produce four targeted products each of greater than 99% purity:  Heavy/mid REO mix (Samarium, Europeum, Gadolineum, Terbium, Dysprosium, Holmium, Erbium, Thulium, Ytterbium , Lutetium and Yttrium)  Didymium mix Oxide ( Praseodymium and Neodymium Oxide)  Cerium Oxide  Lanthanum Oxide They have also demonstrated that a high purity RE carbonate can be precipitated from the RE chloride solution which feeds the RE Solvent Extraction plant. This carbonate has a > 99% purity and contains 56%REO with no U or Th. This could potentially be shipped as an intermediate product.

The ANSTO pilot work has already produced the Heavy/Mid REO product at a surprising ultra-high purity of 99.94 % REO.

The most recent company release reports that the “Didymium mix“ has also been produced as another ultra-high purity product as Praseodymium-Neodymium oxide at 99.9% REO.

It is highly encouraging that the highest value REO’s representing 75% of revenue have been separated into ultra-high purity products. Work continues on the extraction of lower value Cerium and Lanthanum oxides. Scoping Study Economics

The Scoping Study assumes a refinery will be built to separate the REO carbonate into 4 purified products for sale to individual end users. The Ce Oxide concentrate is assumed to be sold at 50% of contained value as it requires further processing. Operating costs are estimated at $US 10.18/kg for the life of mine and around $US 9.90/kg in the early years. The implied annual operating cost is about $US102 million. About 62% of operating cost is in beneficiation and acid leach/ leach recovery circuit. In particular 53% of cost is in the acid leach/recovery plant with acid being a major cost input. The company breaks down the costs as follows:

Capital Cost

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Peak Resources Limited (PEK) – May 2013

The company breaks down capital cost estimates as follows:

Total around $373m, but could be more. No contingency has been added to these numbers. Revenue : The study assumed prices from October 2012 which gave a price of of $US 52.34/kg for the high value REO’s and $US8/kg for the CeO in concentrate. This translates back to $US 36.47/kg for the overall product mix (compared to Mt Weld about $US42/kg at that time). The annual revenues at these prices would average $US 361 million. This would see an average annual cash operating margin of $US 250 million before royalties and taxes. The updated study estimated a pre royalties and tax IRR of 60% and an NPV at 10% discount rate of $US 1.768 billion. Royalties would be 4 % of sales value and the corporate tax rate in Tanzania is 30%. There is some suggestion in this new mood of resource nationalism, that the Tanzanian Government may want to participate in the project although it has previously had no equity in the gold mines operating in Tanzania. Indications of around 10% Government equity have been floated but the question of how this would be funded is unknown. This may have to be negotiated as feasibility studies progress. Clearly this would be a robust project with an estimated payback period of about 2 years from commencement of production. Even at the lower March Quarter 2013 average REO prices we estimate the overall product mix would be priced at $US 30.45/kg (cf Mt Weld $US 36.00/kg). This suggests that at those prices the project would have an annual revenue of $US 305 million and an operating cash flow of about $US203 m pa, still very robust. With a payback from startup of well under 3 years, for a very long life mine implies a very robust project and would still be highly attractive even at REO prices down to the low $US20’s/kg level. It also has future expansion potential if market demand for Rare Earths grows to the level anticipated by many commentators.

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Peak Resources Limited (PEK) – May 2013 Valuation and Funding

The key issue is going to be, who the ultimate buyers of the products are, and how Peak may be able to obtain project funding through offtake and partnership arrangements. There is substantial capital to be spent and Peak will want to minimize dilution for shareholders by bringing partners into the project. What are the shares worth? For the moment we will use the Scoping Study as the basis for valuation. Discounting the NPV for taxes and lower prices it would be roughly $US 750 million. Assuming an unrealistically optimistic case, that the project could be entirely debt funded and Peak retains 100% ownership, you could reasonably estimate a future value towards $2.00/share post successful start-up. Taking a much more negative view that the project would have to be largely equity funded over time, at not much better than current share price, you could see the value diluted to as little as $0.40/share. So roughly $0.40 to $2.00/share is the potential value range on successful project delivery, and the reality will likely be towards the middle. How well can Peak negotiate a partnership/funding arrangement? Only time will tell but we are confident this is one of the best projects available in the Rare Earth space. Whatever the structure that leads towards project development, there should be substantial value for Peak Resources which is now only capitalized at only $38 million. A successful development should see Peak Resources valued at multiples of its current share price.

Comparable Rare Earth companies

Company Market Cap Project Resource Location $US M

Molycorp US 1133 Mountain Pass 16.6 m t @7.98%REO California USA

Australia WA Lynas Corporation Aust 704 Mt Weld 14.9 m t @ 9.8% REO and Malaysia 73.2 m t @0.89% REO + Alkane Resources Aust 115 Dubbo Australia NSW Zr, Nb, Ta Rare Element 82 Bear Lodge 38.2 m t @3.0% REO Wyoming USA Resources US Greenland Resources 861 m t @1.07% REO 98 Kvanefjeld Greenland Aust + 0.59lb/t U3O8

Avalon Rare Metals Can 73 Nechalacho 66 m t @ 1.58% REO Canada NWT

Quest Rare Minerals Canada 30 Strange Lake 490 m t @0.91% REO Can Labrador

Tasman Metals Can 33 Norra Karr 60 m t @0.54% REO Sweden

47 m t @2.6% REO Arafura Resources Aust 33 Nolans Bore Australia NT + 0.41lb/t U3O8 Frontier Rare Earths 43 mt @ 2.2% REO 48 Zandkopsdrift South Africa Can Incl 12.4mt @3.6% REO Ngualla bulk: 195 m t@ 2.26% REO Peak Resources Aust 38 Tanzania High Grade: 42 mt @ 4.19% REO

Source: Individual company reports

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Peak Resources Limited (PEK) – May 2013

We believe there is only room in the rather small Rare Earth market for a handful of new players out of literally dozens of potential Rare Earth projects in multiple countries. Most are too low grade, or mineralogically complex or have deleterious levels of uranium and thorium or other elements, any of which make metallurgy complex and very expensive. Both Lynas Corporation and Molycorp are commissioning new projects but have suffered significant delays for differing reasons. Rare Earth prices have retreated a long way from the heady levels of 2011 at least partly in anticipation of these new supplies. We believe any other new projects need to be competitive on production costs and capital costs. That means operating costs down around $US10/kg and low end capital costs. Many projects are looking at capital costs well over $US1 billion and some need to become producers of uranium as a by-product to get reasonable operating costs, with all the permitting complexity that brings.

The comparison of capital cost estimates below for a number of advanced Rare Earth projects highlights the potential capital cost advantage of the Ngualla project.

Source: Peak Resources presentation.

In our view a robust project should have attractive economics at even lower prices than recent depressed levels, say another 25% lower, and should not entail great complexity in processing or permitting.

We think Peak’s Ngualla project stands out from the pack. Mining and metallurgy look relatively straightforward but there are likely to be major challenges involving the logistics of operating in East Africa.

Key Risks for Peak

Geological: Very low as discovery has been well drilled and its size and grade is far larger than needed for development. Sovereign Risk : probably moderate with an established mining industry and mining law in Tanzania but some question as to whether government may want project equity. Metallurgy : Moderate and reducing as pilot plant testing continues to confirm process. Will need further bulk testing during Feasibility Studies. Rare Earth prices: Prices have fallen a long way from 2011 but could fall further in the short term. Funding : The major risk and remains so until a clear partnership/funding structure is established. Location : With the deposit located 750 km from the coast the logistics of developing a mine are likely to be challenging even though there is an airport, main highway and railway within 150 km of the site. Risk could be reduced by locating the RE Recovery and refining plants at the coast. Page | 17

Peak Resources Limited (PEK) – May 2013

Conclusions

Peak’s Ngualla project may be at a slightly earlier stage than some comparable companies but the project has caught up rapidly. The deposit has some more attractive attributes than many competing projects. Ongoing pilot plant studies have been achieving excellent results and should confirm it is one of the top candidates for development.

Ngualla has straightforward processing and recovery routes, and the ore is classified as non- radioactive. Peak has rapidly demonstrated that the Ngualla resource is world class in size and grade and conducted extensive metallurgical testing. Peak has maintained pace with pilot plant studies currently establishing refined product specifications, which will allow the company to undertake commercial discussions with potential partners and customers during CY2013.

As Peak advances along the development pathway we expect the stock to catch up on some of its peers and trade at multiples of its present share price.

Future programme and development timetable A Pre-Feasibilty study is underway and planned for completion by the end of Q3 2013. Key work components include: 1. Metallurgical testing, in particular Pilot Plant operations to establish product specifications of separated Rare Earth products. 2. Market analysis and discussions with potential customers and partners. 3. Resource drilling to closely define the area of High Grade resources that will be the focus of mining operations and provide further geotechnical data for mine design.

Assuming continued success Peak Resources anticipates a development programme as follows: CY2013 Pre-Feasibility study including Pilot Plant trials and initial design work, commercial negotiations. Expect PFS by late 2013. CY2014 Complete Definitive Feasibility Study by mid-2014, then detailed design and completion of commercial agreements relating to partnerships, supply agreements and financing. CY2015 Project construction CY 2016 Complete construction and commission project June Half CY2016 Financial Peak Resources is an exploration company which funds its expenditure by raising new capital to undertake each phase of work. It has no significant debt and its assets on the balance sheet are essentially its cash holdings and its exploration tenements. Cash balance at end March 2013 was $A2.25million and in May raised $A 2.5 million. Clearly Peak will need to enter a partnership agreement to introduce funding or it will need to raise further equity in the second half of CY2013 to maintain progress on the project.

Peak has announced an MOU with an un-named group with a view to progressively fund the PFS, DFS and potentially fund the project in return for earning equity in the Ngualla project. We await developments.

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Peak Resources Limited (PEK) – May 2013

Board and Management

Management Peak Resources began life as a small exploration company with management skills focussed on prospecting, exploration and discovery. With a major discovery the company has been adding skills to the management team and engaging consultants with more of a project development focus.

Executive Chairman: Alistair Hunter With 38 years experience in prospecting and exploration Mr Hunter has played a significant role in a number of gold and base metal discoveries. He is a former director of Peninsular Minerals and former managing director of Matlock Mining and Anglo Resources NL. He was instrumental in taking Peak Resources into exploration in Tanzania and the acquisition of the Ngualla project.

Technical Director: Dave Hammond A geologist with an MSc from Royal School of Mines, London, Mr Hammond has over 23 years technical and management experience. He previously held positions as Exploration Manager with De Grey Mining and Sons of Gwalia, as well as Project Geologist with Billiton in South Africa and Zambia.

Non Executive Director: Jonathon Murray Partner in Perth legal firm Steinpreis Paganin. Mr Murray has extensive experience in equity raisings, acquisition and divestments and corporate governance.

CFO and Company Secretary: Jeff Dawkins Mr Dawkins is an Australian Chartered accountant with more than 20 years experience in professional and corporate roles in Perth, London and Singapore. Mr Dawkins holds a Bachelor of Business Degree from Curtin University and a Graduate diploma in Applied Finance and Investment. He has a strong background in mining and has worked with various mining companies involved with gold, copper, rare earths and iron ore. Chief Development Officer: Lucas Stanfield Mr Stanfield is a mining engineer with 15 years’ experience and a very strong background in project management. holds a degree in mining engineering from UNSW and a diploma in law from University of Sydney. Commencing in the NSW coalfields Mr Stanfield then moved to the UK to be involved in the rail network maintenance and construction, EPC in public buildings, recycling and treatment facilities and a number of infrastructure projects throughout the country. In more recent years he has moved back to Australia to be instrumental in a number of resources projects managing various studies and construction projects in copper, manganese, iron ore, oil and gas and port infrastructure.

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Peak Resources Limited (PEK) – May 2013

Key Consultants

Specialist Rare Earth Metallurgist Gavin Beer Mr Beer has been retained to manage the development of the Ngualla process flow sheet. He is a consultant metallurgist with 25 years’ experience in the minerals industry. Most recently he was Manager Metallurgy with Arafura Resources for the Nolan’s Bore Rare Earth project, where he played a key role in developing the metallurgical flow sheet and oversaw the implementation of a demonstration plant.

Resource consultants H&S Consultants

Mine engineering Orelogy

Metallurgical and mineral processing Engineering Hatch

Scoping Study management Emerson Stewart Consulting

Beneficiation and Metallurgical Test Work Nagrom

Beneficiation process design and test work Independent Metallurgical Operations (IMO)

Beneficiation and hydromet flow sheet studies Met-Chem Consulting

Solvent Extraction Pilot Plant ANSTO Minerals

Mineral Processing test laboratory Amdel

Consulting Geologist Dr Wally Witt

Consulting Mineralogist Dr Roger Townend

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Peak Resources Limited (PEK) – May 2013

Analyst Rex Adams Executive Director, Blue Ocean Equities Authorisation Brent Potts Executive Chairman, Blue Ocean Equities

Blue Ocean Equities Contact List Rex Adams Brent Potts Richard Granger Executive Director Executive Chairman Executive Director Phone. +61 2 80722905 Phone. +61 2 80722988 Phone. +61 2 80722903 Email. [email protected] Email. [email protected] Email. [email protected] Peter Gray Paul McCarthy David O’Halloran Executive Director Executive Director Executive Director Phone. +61 2 80722902 Phone. +61 2 80722908 Phone. +61 2 80722904 Email. [email protected] Email. [email protected] Email. [email protected] Trent Allen Philip Pepe Gregg Taylor Senior Research Analyst Senior Research Analyst Senior Research Analyst Phone. +61 2 80722909 Phone. +61 2 80722921 Phone. +61 2 807229219 Email. [email protected] Email. [email protected] Email. [email protected] Tim Potts Adam Stratton Greg Yeatman (UK) Institutional/HNW Dealing Institutional Dealing Consultant Phone. +61 280722906 Phone. +61 2 80722913 Email. [email protected] Email. [email protected] Email. [email protected] Administration Settlements Blue Ocean Equities Pty Ltd Lisa Piefke Melissa Waller AFSL No. 412765 Phone. +61 2 80722907 Phone. +61 2 80722911 Email. [email protected]. 53 151186935 Email. [email protected] Email. [email protected] L39, 88 Phillip St Sydney NSW 2000 T. +61 2 8072 2988 E. [email protected] www.blueoceanequities.com.au General Advice Warning: This document is a private communication to clients and is not intended for public circulation or for the use of any third party, without the prior approval of Blue Ocean Equities Pty Limited. This is general investment advice only and does not constitute personal advice to any person. Because this document has been prepared without consideration of any specific client’s financial situation, particular needs and investment objectives you should consult your own investment adviser before any investment decision is made on the basis of this document. While this document is based on information from sources which are considered reliable, Blue Ocean Equities Pty Limited has not verified independently the information contained in the document and Blue Ocean Equities Limited and its directors, employees and consultants do not represent, warrant or guarantee, expressly or by implication, that the information contained in this document is complete or accurate. Nor does Blue Ocean Equities Limited accept any responsibility for updating any advice, views opinions, or recommendations contained in this document or for correcting any error or omission which may become apparent after the document has been issued. Except insofar as liability under any statute cannot be excluded. Blue Ocean Equities Pty Limited and its directors, employees and consultants do not accept any liability (whether arising in contract, in tort or negligence or otherwise) for any error or omission in this document or for any resulting loss or damage (whether direct, indirect, consequential or otherwise) suffered by the recipient of this document or any other person. Disclosure of interest: Blue Ocean Equities Pty Limited, its employees, consultants and its associates within the meaning of Chapter 7 of the Corporations Law may receive commissions, underwriting and management fees from transactions involving securities referred to in this document, and may from time to time hold interests in the securities referred to in this document. Blue Ocean Equities Pty Limited and associates hold 8,213,549 shares and 3,402,059 options in Peak Resources Limited at the date of this report and this position may change at any time without notice. Blue Ocean Equities Pty Limited provides corporate advice to Peak Resources Limited from time to time and receives fees for those services. In May 2013 Blue Ocean Equities was joint lead manager of a $2.5 million placement of new shares at $0.12 per share and was paid fees for that service. Analyst disclosure of interest: The author of this report has a beneficial interest in 802,701 shares in Peak Resources Limited. Brent Potts has a beneficial interest in 1,525,000 shares and 1,625,000 options in Peak Resources Limited.

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