JUNE 2016

Quarterly Activities Report and Appendix 5B

Highlights:

Solid progress on Ngualla Project Bankable Feasibility Study engineering

f Detailed engineering studies are well advanced with Tier 1 specialist international consultants led by lead project engineer AMEC Foster Wheeler.

f The Bankable Feasibility Study (BFS) is on track for completion first Quarter 2017.

Final Pilot Plant commissioned

f The final Pilot Plant of the three stage process developed by Peak for Ngualla's high grade bastnaesite mineralisation has been successfully commissioned at ANSTO's dedicated piloting facility and is expected to be completed next Quarter.

f The selective leach process being piloted is a key factor in Ngualla's low operating and capital costs and also aligns the final products to the high demand magnet metal rare earth market.

European Rare Earth refinery sites identified

f Commercial negotiations are in progress on potential sites and associated services identified in Europe for a rare earth refinery.

Project permitting advances

f Peak made further progress with the permitting of the Ngualla Rare Earth Project during the June Quarter and the next stage ESIA Draft Report is now ready to be submitted to the National Environmental Management Council in Tanzania in the coming Quarter.

Engagement with potential European offtake customers

f The Company has increased engagement with potential offtake customers in Europe, with seven meetings held with industrial entities in June. Non-disclosure agreements have been signed and discussions continue on ways Peak and potential offtake partners can work together.

f The unique technical merits and low operating and capital costs of project were presented and well received by the parties engaged.

f Meetings with potential offtake customers and strategic partners in Japan, China and the USA will proceed in the coming Quarter.

Company funded to complete BFS

f Peak announced a restructure funding strategy during the Quarter that will fully fund Peak's share to the completion of the BFS and also importantly will result in Peak retaining 75% of Peak African Minerals (PAM) rather than the original envisaged 62.5%.

f The new funding consists of:

f A$1.0 million placement to sophisticated and institutional investors completed in May

f A rights issue and associated shortfall placement to current shareholders for A$1.81 million

f Long term loan from Appian Pinnacle Holdco Limited for A$4.2 million

f International Finance Corporation (IFC) agrees to increase its share ownership in Peak from 2.31% to 5.35%

f Tanzania regulatory approval was received post Quarter end, allowing the completion of the Stage 2 investment and making an additional ~A$3.1 million project funding into PAM from Appian and IFC available.

Strategic Interest - Ngualla Rare Earth Project

f During the Quarter non-binding early stage discussions were held with a potential new strategic investor. Potential synergies being explored relate to possible investment at a project and/or Peak level.

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Developing the Ngualla Project into an

• ethically sustainable

• long term

• high quality

supplier of choice to the global high technology rare earth market

DIRECTORS

Non-executive Chairman: Peter Harold

Managing Director: Darren Townsend

Technical Director: Dave Hammond

Non-Executive Directors: Robin Mills

Jonathan Murray John Jetter

Company Secretary: Graeme Scott

CORPORATE DETAILS AS AT 30 JUNE 2016:

Ordinary Shares on issue: 454.5million

52 week range: 4.2c - 9.5c

Market Cap:

$21.8m (at 4.8c) ASX: PEK

PEAK RESOURCES LIMITED

Ground Floor, 5 Ord St

West Perth, WA 6005. ACN 112 546 700

Tel: +61 8 9200 5360

[email protected] www.peakresources.com.au

QUARTERLY ACTIVITIES REPORT JUNE 2016

Bankable Feasibility Study engineering

Detailed engineering studies for the Ngualla Rare Earth Project BFS are now well advanced and on track for completion in the first Quarter of 2017.

Appointed Lead Engineer AMEC Foster Wheeler is leading the studies, together with a group of other Tier One specialist international consultants. The engineering design follows the metallurgical flow sheet improvements and pilot plant work summarised in the Project Update of March 2016 and ASX announcement "Ngualla Study delivers substantial Capex and Opex savings" dated 16 March 2016.

Knight Piésold Consulting have completed the geotechnical surveys and studies for the Ngualla site with no issues identified. The design of the tailings storage facility and water supply hydrogeology studies, also under the auspices of Knight Piésold, are nearing completion. Open pit geotechnical and hydrogeological studies have been successfully completed by Golder and Associates.

AMEC Foster Wheeler are advancing the design of the processing plants with South African based subsidiary MDM Engineering, who are also leading the site infrastructure planning at Ngualla.

Tanzania based engineering company COWI Tanzania Ltd have completed route selection in association with Peak for the Ngualla site access road, together with geotechnical sampling and hydrology field surveys. Results of laboratory analysis will allow the design of the final road surface to be completed in the coming Quarter.

Final Pilot Plant commissioned

The final Pilot Plant of Peak's three stage process was successfully commissioned during the Quarter at ANSTO Minerals (ANSTO) near Sydney.

The Leach Recovery Pilot Plant will complete the demonstration of the three stage process flowsheet (Figure 1) that takes Ngualla's unique bastnaesite mineralisation through to high purity separated rare earth products. The operation will provide vital operating and design parameters for incorporating into the BFS.

Run of Mine Feed

Piloted Pilot Underway Piloted

Beneficiation Leach Recovery Separation

Rare Earth Oxide and Carbonate Products

Figure 1: Pilot Plant status of the three stage process developed by Peak for Ngualla's rare earth mineralisation.

The Pilot Plant at ANSTO's dedicated piloting facility (Figure 2) will treat two tonnes of concentrate with a grade of >40% rare earth oxide (REO) produced from the successful Beneficiation Pilot Plant completed at the end of 2015, using the selective leach process developed by Peak. The Pilot Plant is expected to be competed by the end of the next Quarter.

The selective leach process is a key factor in Ngualla's low operating and capital costs and in aligning the final products to the high demand magnet metal rare earth market. The process effectively minimises the dissolution of impurities and low value cerium whilst maximising the recovery of the high value magnet metals neodymium and praseodymium (Figure 3).

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QUARTERLY ACTIVITIES REPORT JUNE 2016

Figure 2: The acid leach section portion of the Leach Recovery Pilot Plant at ANSTO, showing the 4 leach tanks (mid-right) and thickener (left).

Concentrate

Roast and Water Wash

HCI selective leach

Solution Purification

Rare Earth Chloride Solution

Separation Plant

- Fluorine removal

• Cerium rejection

• Insoluble gangue

- Iron removal

Figure 3: Simplified overview of Peak's Leach Recovery flowsheet being piloted at ANSTO.

Advantages of the new leach recovery flowsheet compared to PFS:

f Significant reduction in processing stages

f Reduced plant capital cost through a smaller plant of modular designed polymer plastic tanks for leach and purification

f Uses a simple dilute and selective acid leach process

f Lower operating costs due to reduced reagent consumption

f Early rejection of the majority of low value cerium and deleterious iron without consuming additional acid

f Cerium rejection reduces the size and operating cost of the downstream separation plant

f Focus on the extraction and recovery of the high value magnetic metals neodymium and praseodymium

f Minimises the extraction of deleterious elements thereby simplifying the purification stage

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QUARTERLY ACTIVITIES REPORT JUNE 2016

European Rare Earth refinery sites identified

Substantive site investigation and preliminary engineering work has been completed for a number of potential sites for the planned rare earth refinery in Europe.

Priority options have been identified and commercial negotiations are in progress on potential sites and associated services.

The refinery must be located close to transport infrastructure, services and bulk reagent supply, and will use the selective leach recovery and separation processes developed and demonstrated by Peak to further refine the processed high grade concentrate to be produced on site at Ngualla to high purity separated rare earth products.

In addition to a refinery in Europe, Peak is also investigating supplementary marketing strategies including the direct sale of the high grade processed concentrate from Tanzania and the toll treating of the product at existing rare earth refineries around the world (Figure 4).

The Company looks forward to providing further details on the location of the Site 2 refinery on conclusion of commercial negotiations.

USA Europe

China Japan

South Korea

Rare earth refining centres and markets

Ngualla Project

Figure 4: Global rare earth refining centres and markets, and the Ngualla Rare Earth Project in Tanzania.

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