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17th February 2012

HEAVY RARE EARTH TARGETS IDENTIFIED

MALILONGUE - MOZAMBIQUE

KEY POINTS Multiple high-priority heavy rare earth (HREO) targets identified.

Large “Vundu” prospect defined striking for over 3km.

ASTER satellite data reveals coincident vegetation anomaly.

Immediate ground follow-up planned for end of current wet season (March).

The Company is pleased to announce the identification of multiple heavy rare earth oxide (HREO) exploration targets at its 40% owned1 Malilongue Project in Mozambique. The project has not previously been subjected to systematic mineral exploration in any form. High resolution aeromagnetic/radiometric data flown in 2008 by KRE’s project joint venture partner2 has been acquired and reprocessed to reveal considerable heavy rare earth (HREO) potential within the project tenure. The radiometric data (a proven geophysical technique for the discovery of rare earth deposits) in particular have highlighted a number of high priority targets that warrant immediate ground-based follow-up. These radiometric anomalies are clustered around the perimeter of the circular Malilongue granite as shown below in Figure 1.

1 KRE interest does not include gemstone rights. 2 Great Western Mining Lda.

ASX ANNOUNCEMENT

ASX:KRE Kimberley Rare Earths Limited ABN 20 147 678 779 Directors Ian Macpherson – Chairman & NED Tim Dobson – Managing Director Allan Trench – NED Jon Parker – NED Management Tim Dobson – Managing Director Geoff Collis – GM Exploration Michael Chan – GM Project Dev. Darren Crawte – Company Secretary Head Office Suite 1, 83 Havelock St West Perth WA 6005 Telephone: +61 8 9486 4326 Facsimile: +61 8 9486 4327 Website www.kimberleyrareearths.com.au Capital Structure 126.6m shares 6.0m 25c, 2014 unlisted options 3.5m 30c, 2014 unlisted options 0.75m 30c, 2015 unlisted options Cash at 31 January 2012 $13.4 million Market Cap at 15 February 2012 $11.4 million For further information, please contact: TIM DOBSON Managing Director info@kimberleyrareearths.com.au Tel: +61 8 9486 4326 F

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Figure 1: Radiometric image of the Malilongue tenements with significant targets highlighted. Vundu prospect identified and named The largest and highest priority target has been named the Vundu prospect and measures 3km in strike with total count activity levels that peak at eight times background. The size and location of this anomaly are considered geologically significant being located on the margins of the intrusion where pegmatite-hosted HREO mineralisation is expected to occur. No previous exploration has been conducted over this area and KRE intend to conduct ground radiometric surveys, soil geochemistry and geological mapping programs to define targets for RC drill testing as soon as access to the area is achieved after the current wet season. This is expected to be in March. Some of the lower priority radiometric targets identified in Figure 1 above have been verified using criteria from other regional data sets.

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Comparison with Strange Lake deposit (Quest Rare Minerals) KRE notes strong similarities between the Malilongue project and the Strange Lake pegmatite-hosted deposit owned by TSX-listed Quest Rare Minerals in northern Quebec. The diagram below in Figure 2 is produced at approximately the same scale as that in Figure 1 and clearly shows the location of the Strange Lake REO resource (B Zone – solid red) along the northern margins of a circular alkali-granite intrusion. The dark red hatched area represents the initial high priority radiometric anomaly that lead to the discovery of the Strange Lake deposit.

Figure 2: Geological plan showing the location of Quest Rare Minerals’ Strange Lake REO deposit.

Quest Rare Minerals quote a 43-101 Indicated Resource of 51Mt at 1.16% TREO within a total Inferred Resource of 230Mt at 1.00% TREO. Malilongue geophysical data The aeromagnetic survey of the Malilogue leases was flown in 2008 by UTS Geophysics (now Aerodata) using 100 metre spaced flight lines orientated east-west. A total of 2,664 line kilometres were flown at an altitude of 30 metres. The total magnetic intensity data was reduced to the pole before being subjected to various algorithms to enhance identification of the main geological units such as the granite intrusion and to define the different structural relationships. Figure 3 clearly identifies the circular Malilongue granite intrusion which appears to demonstrate significant internal magnetic zonation. This zonation may be a significant factor in targeting further HREO exploration. All existing artisanal pegmatite workings occur along the eastern margin of the granite intrusion and appear to be related to a strong WNW trending structural fabric. Prominent N-S trending structures are also evident and the occurrence of pegmatites is interpreted to occur around the intersections of these two main structural trends. This observation will aid targeting of further HREO-bearing pegmatites along the margins of the granite intrusion.

Deposit foot print

High priority radiometric

anomaly

Strange Lake Alkali-Granite

Intrusive complex

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Figure 3: Aeromagnetic image (1VD-RDP-TMI-CYM) of the Malilongue granite showing strong NNW structural fabric (not all structures shown) thought to control pegmatite emplacement.

Satellite imagery supports exploration targeting Landsat and ASTER satellite thermal emission and reflectance data were acquired over the project area and manipulated in an attempt to enhance various alteration products potentially associated with pegmatite emplacement. Strong vegetation cover over most of the project area resulted in a subdued response to many of the alteration ratios however a marked vegetation anomaly was detected along the northern margins of the granite intrusion and coincident with the Vundu radiometric anomaly in particular. Figure 4 below clearly shows the vegetation anomaly which is possibly due to bedrock geological variations associated with large pegmatite occurrences. The coincidence of strong radiometric anomalies with changes in vegetation considerably enhances the prospectivity of this northern margin of the Malilongue granite.

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Figure 4: ASTER image (RGB 321) of the Malilongue granite demonstrating the vegetation cover (red colouration) and showing the strong northern vegetation anomaly.

Kimberley Rare Earths’ Managing Director, Tim Dobson welcomed the early identification of multiple high-priority HREO targets, stating; “Malilongue has already revealed surface mineralisation with significant xenotime-hosted critical heavy rare earth oxides. The recently acquired airborne geophysical and satellite data have considerably enhanced our views on the potential for Malilongue to host significant heavy rare earth deposits. We are particularly excited by the Vundu prospect, which has never previously been explored for any minerals, let alone rare earths. We plan to mobilise field crews as soon as weather permits.”

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About Kimberley Rare Earths Kimberley Rare Earths Limited listed on the Australian Securities Exchange (ASX:KRE) on 18 May 2011, having raised $18.2m under an oversubscribed Initial Public Offering. KRE is a specialist rare earths company and holds a 25% interest in the Cummins Range Project in Western Australia. KRE has the right to earn up to 80% of the project by funding exploration and development through to delivery of a bankable feasibility study. KRE’s first target is to spend $10m within four years to increase its interest to 55%. The Cummins Range project comprises 1 granted exploration license (80/2232) in the East Kimberley within which is contained a JORC compliant Inferred Resource of 4.90 Mt at 1.74% TREO (total rare earth oxide), 11.2% P2O5 and 145 ppm U3O8 (using a 1% TREO cut off). The Cummins Range project is one of only a few Australian rare earths projects with a Resource reported under the JORC Code. KRE has also entered an agreement to earn up to a 90% interest in a pegmatite-hosted rare earth project in Mozambique with significant exploration potential, including for xenotime-hosted yttrium, dysprosium and erbium. Competent Person Statement

Information in this ASX release that relates to exploration or exploration results is based on information compiled by Mr. Geoff Collis, who is a member of the Australasian Institute of Mining and Metallurgy and has sufficient exploration experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activities which are being undertaken to qualify as a Competent Person as defined in the 2004 Edition of the “Australian Code for Reporting of Mineral Resources and Ore Reserves”. Mr Collis consents to the inclusion of these estimates in the form and context in which they appear.

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

systematic way.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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