Announcement PDF Australia’s next rare earths producer Annual Report 2023 ANNUAL REPORT 2023 Contents Acknowledgment of Country We acknowledge the Traditional Custodians of all the lands on which we operate and recognise their unique cultural heritage, beliefs and connection to these lands, waters and communities. We pay our respects to their Elders past, present and emerging. Corporate Information ABN 43 122 911 399 Directors Mr Charles Lew (Chairman) Mr Guy Robertson Mr Neil Hackett Mr Bruce McFadzean Mr Malcolm Randall Mr Jean Claude Steinmetz Joint Company Secretaries Mr Guy Robertson Mr Neil Hackett Registered office Bankers Level 6, 197 St Georges Terrace National Australia Bank – Perth WA Australia Perth WA 6000 Westpac – Sydney NSW 2000 Australia Telephone: +61 (8) 6117 6118 Auditors Principal place of business PricewaterhouseCoopers Level 6, 197 St Georges Terrace 125 St Georges Terrace Perth WA 6000 Australia PERTH WA 6000 Share register Website Automic Group www.hastingstechmetals.com Level 5, 191 St Georges Terrace Perth WA 6000 Securities Exchange Telephone: +61 1300 288 664 Australian Securities Exchange ASX Code: HAS Solicitors King & Wood Mallesons – Perth WA Australia Herbert Smith Freehills – Perth WA Australia About Hastings  2 Letter from the Chairman  4 Senior Leadership Team 9 Review of Operations 12 Review of Sustainability 18 Mineral Resources and Ore Reserves Statement  20 Tenement Schedule  27 Directors’ Report  29 Corporate Governance Statement  49 Auditor’s Independence Declaration  50 Consolidated Statement of Profit or Loss and Other Comprehensive Income  51 Consolidated Statement of Financial Position  52 Consolidated Statement of Changes in Equity  53 Consolidated Statement of Cash Flows  54 Notes to the Financial Statements  55 Directors’ Declaration  90 Independent Auditor’s Report  91 Additional Shareholder Information  97 ABOUT INVESTMENT With a clear focus on developing the world-class Yangibana Rare Earths Project (“Yangibana Project”), Hastings Technology Metals Limited (ASX:HAS) is wellpositioned to become Australia’s next rare earths producer. Green economy Tier 1 asset Compelling rare earths market fundamentals to grow value, driven by the global energy transition World-class rare earths deposit with globally high LOM average NdPr:TREO ratio of 37% Attractive project economics Mine to magnet ESG focus Strategic investment in TSX-listed Neo to pursue a vertically integrated rare earth to magnet strategy Strong ESG credentials verified by independent third parties; targeting 40-80% renewable energy for Yangibana Project’s power supply Hastings Located 250km north-east of Carnarvon in Western Australia’s Gascoyne region, Hastings’ flagship Yangibana Project covers a total area of 650 square kilometres and is underpinned by one of the world’s most highly valued deposits of neodymium and praseodymium (“NdPr”), with an average life of mine (“LOM”) NdPr to Total Rare Earth Oxides (“TREO”) ratio of 37% and up to 52% in some areas of the orebody. With an initial mine life of 17 years, the Yangibana Project will become a globally significant source of NdPr, a critical component in the manufacture of permanent magnets used in advanced technology products from electric vehicles (“EVs”) to renewable energy, humanoid robotics, medical applications and digital devices. Fully permitted for first rare earth concentrate (“concentrate”) production in the first half of 2025, the Yangibana Project is well-timed to meet the forecast supply gap for rare earth elements accelerated by the growth in EVs and wind turbines, both vital for the global energy transition. Hastings will develop the project in two stages with an initial focus on the construction of the Yangibana Project’s mine and beneficiation plant to produce up to 37,000 tonnes per annum of concentrate, followed by the construction of Project area 650km2 Highlights a hydrometallurgical plant in Onslow with the capacity to produce up to 15,000 tonnes per annum of mixed rare earth carbonate (“MREC”). Hastings has a strategic shareholding of 19.9% as of 30 June 2023 in TSX-listed Neo Performance Materials Inc. (“Neo”) – a leading global rare earth processing and advanced permanent magnets producer – providing the Company with the opportunity to explore the creation of a mine-to-magnet supply chain. Development ready Fully permitted for first concentrate production in Q2 2025 with $106 millions invested in early infrastructure works Hastings is committed to developing and operating the Yangibana Project in a sustainable manner. The Company’s strong Environment, Social and Governance (“ESG”) credentials have been subject to independent third-party ESG ratings including ranking in the top five per cent of companies assessed by EcoVadis and fourth out of 159 companies in the 2022 diversified metals mining subindustry category by Sustainalytics. Once developed, the world-class Yangibana Project will establish Hastings as a significant supplier in the global critical minerals sector and generate strong returns for shareholders, investors and for the Australian economy and local communities. Enhanced two-stage project delivery model enabling faster pathway to early project cashflows Average NdPr:TREO ratio 37% Life of mine 17 years First production Q2 2025 2 | Hastings Technology Metals Annual Report 2023 | 3 LETTER FROM THE Chairman lead and witness the advancement of your Company from the discovery of the amazing orebody at Yangibana as a junior explorer to where we are today, on the cusp of moving into construction of our beneficiation plant to produce a high-value concentrate by early 2025. Dear Shareholders, I trust this letter finds you in good health and spirits. As I celebrate my 10th anniversary as Executive Chairman of Hastings, I am writing to you with a sense of enthusiasm and anticipation that comes from reflecting on a decade filled with both remarkable achievements and formidable challenges. It has been a privilege to 4 | Hastings Technology Metals The world is now at a pivotal stage of the global transition away from fossil fuels towards cleaner energy sources. This energy transition is accelerating at an unprecedented pace, underpinned by an unwavering demand for critical minerals such as lithium and rare earths to power EVs and drive the renewable energy revolution as well as enabling advanced robotics of the future. According to the International Energy Agency’s inaugural Critical Minerals Market Review, the market for critical minerals has witnessed remarkable growth. Its value has doubled over the past five years, reaching an astonishing $320 billion in 2022 – this seismic shift in value is redefining the future of the mining industry and we have seen many new investments into critical minerals. Notably, governments worldwide are driving investment into critical minerals, spurred by their commitment to net zero emissions. This includes the United States’ introduction of the Inflation Reduction Act which seeks to shore up domestic critical mineral supply chains. Likewise, Australia’s Critical Minerals Strategy and the Critical Raw Materials Act by the European Union underscore the global importance of securing these resources. Driven by robust demand in the automotive sector and the emergence of humanoid robotics, the global permanent magnets market is projected to reach $92 billion by 2033, which will drive the demand for rare earths which is predicted to increase at an eight per cent compound annual growth rate by Boston Consulting Group. But where will this supply come from? With long lead times of up to 10 years or longer to bring rare earth projects from discovery to production, international market analysts and commentators envisage a serious supply shortage in the coming decade. The first drill program at the Yangibana Project was initiated in early 2014, and to date we have conducted over 300 bench scale tests, accumulated over 30 kilometres of drilling meterage and undertaken three pilot plant tests. Our ore samples have undergone lab testing by numerous rare earth producers and independent laboratories and the results have consistently confirmed the quality of our resource. The orebody at the Yangibana Project is widely recognised as possessing one of the world’s highest concentrations of NdPr:TREO, with a ratio across multiple deposits in the range of 26% to 52%. We have continued to grow our resources and reserves through ongoing exploration and metallurgy test work and last October successfully completed an extensive drilling campaign along the eight-kilometre long Bald Hill – Simon’s Find – Fraser’s trend which resulted in an increase in the Mineral Resources to 29.93 million tonnes. Subsequently, we announced in February 2023 a 25% increase in our total proved and probable ore reserves to 20.93 million tonnes, underpinning a solid 17-year mine life. The growth was based on work from the 2021-22 drilling campaign, as well as the completion of the acquisition of the 30% joint venture interest from Cadence Minerals Plc which relates to some legacy tenements. Exploration will remain a focus for Hastings as we look to continuously grow our resource and reserves. Aeromagnetic and radiometric surveys conducted in 2018 unveilled extensive areas for future drilling to extend and increase our resources from the two main deposits at Yangibana and Yangibana North, the four inferred deposits of Gossan, Hook, Lion’s Ear and Kane’s Gossan and a myriad of other exploration targets within the tenement area 100% owned and controlled by Hastings. Post COVID, the Australian mining sector has seen significant cost inflation due to labour shortages and rising interest rates. To meet this challenge, your Company adopted a proactive stance to strengthen our management team by appointing seasoned mining executive Alwyn Vorster as Interim Chief Executive Officer on a six-month contract. We also made a number of other senior appointments including Teck Lim (Chief Financial Officer), Robert Klug (General Counsel), Tim Gilbert (General Manager Operations) and Gareth Fleming (Project Director). Each of them possesses extensive domain knowledge and multiple years of experience. Annual Report 2023 | 5 Under this new management team, we undertook a comprehensive review of the capital cost and delivery model for the Yangibana Project and in May announced a two-stage development approach that prioritises the Yangibana Project’s mine and beneficiation plant, aligning with our pursuit of lower upfront capital requirements and expedited cashflows by Q2 2025. Meanwhile, ongoing studies on optimising capital and operating expenditure for the hydrometallurgy plant continues. I am pleased to report that this new approach has improved our project’s financial and operational resilience, with the Stage 1 capital cost is projected at $470 million, a figure that encompasses $106 million already invested in crucial early infrastructure works at the Yangibana Project. In addition, we are confident that we will identify more opportunities for cost savings and lower the spend as we continue to optimise the funding model for the project. To fund the procurement of critical long lead equipment for the process plants and build the mine site infrastructure, we raised $110 million last September. This was achieved through shares placement of approximately 25 million new fully paid ordinary shares at an offer price of $4.40 per share. I am pleased to report that despite the complexities of navigating extensive regulations for mining and developing a greenfield site in such a remote location, we are now ready to commence full construction of the plant following the finalisation of early works. This includes the 294-room Kurrbili Village, 20 kilometres of site access roads, a two-kilometre long airstrip and the SipHon Well Borefield with 30 kilometres of pipeline for water supply. A major milestone in our revised delivery model is the award of the Engineering, Procurement and Construction contract to GR Engineering Services on a fixed price and fixed schedule. This partnership ensures the delivery of the beneficiation plant and associated infrastructure, mitigating the potential for capital cost escalation and guaranteeing adherence to project schedules, product throughput, and plant recovery. In March, the European Union introduced the Critical Raw Materials Act to ensure that the EU has access to secure, diversified, affordable and sustainable supply of critical raw materials. This move resonates with our Europeancentric business model and aligns with our vision to feed into the supply chain for a “Made in Europe” magnet by 2030, promoted by the European Raw Materials Alliance in mid-2022. With this strategic vision in mind, your Board and management team took a decisive and opportunistic step in August last year by acquiring a 19.9% strategic investment in TSX-listed Neo. We are pleased that Wyloo Metals, who shares in our vision, provided funding for this $150 million acquisition by way of a convertible note secured entirely on Neo shares. A key term of this loan, inter alia, is that it is not secured over any Yangibana Project assets. Any project finance raised will be secured over the Yangibana Project, and the convertible notes have no security over the project assets. The convertible note that is secured entirely on the Neo shares expires in October 2025 and the equity conversion price is fixed at $5.50 per Hastings’ share. This is a long term strategic investment and gives Hastings a pivotal position and prospects of creating an integrated mine to magnet supply chain all under one single entity. It provides the potential for our Company to become a major player in the rare earth magnet supply chain emerging in Europe. In June, I had the honour of participating in the groundbreaking ceremony for Neo’s neodymium sintered magnet manufacturing facility in Narva, Estonia – the first of its kind in Europe. This event coincided with the signing of a non-binding Heads of Agreement with Neo, the purpose of which is to take another step forward to realising synergies between our companies. $320bn $92bn 8% Value of critical minerals market in 2022 Projected value of global permanent magnets market by 2033 Expected compound annual growth rate for permanent magnets between 2022 and 2035 Turning to the market, it was a tale of two halves for NdPr oxides in the 2023 financial year, with prices falling 60% from the peak in February 2022, as demand for permanent magnets in China remained weak due to the disappointing post-COVID economic rebound and rising interest rates environment. It is no surprise that our fortunes followed in tandem, with our share price at its multi-year weakest as a result of its close correlation to the commodity price, as well as the increase in capital costs for the project due to industry-wide cost escalations. of success and optimises the balance sheet gearing and light on debt covenants. Additional equity required to complement the debt quantum has been reduced significantly since we published the capex number in May - no doubt we will release the news to the market when we have closed on both the debt and equity financing. projects, most recently at Mineral Resources Limited and Fortescue Metals Group. We are confident that the forecast supply deficit from the middle of the decade will set the stage for more favourable price trends, with our targeted production start of Q2 2025 aligning perfectly with the supplydemand dynamics. Against the background of these significant developments over the past 12 months, our commitment to operating sustainably remains core to our business. In November 2022, we received our ESG rating from Sustainalytics, where Hastings ranked fourth out of 159 companies in the diversified metals mining sub-industry category. We were also awarded a gold medal by EcoVadis, ranking Hastings in the top five per cent of all companies assessed. As we look at the year ahead, our main focus now is to close on the debt financing. Multiple options were explored and we are mindful that the final choice will have the best chance 6 | Hastings Technology Metals Before concluding, I would like to extend my heartfelt condolences to the family and friends of Thin-mah Warrinyangki Tharrkari Jiwarli Elder Herbert Eagles, who passed on in May this year. I had the privilege of working with a man whom I respect for his determination and good faith in negotiations and how he cared for the interests of his community and family. In November 2017, I was proud to be able to sign our voluntary Native Title Agreement with Herbert. My fellow shareholders, the journey ahead holds both promises and challenges. Over the past decade, I have had the privilege of leading your company as Executive Chairman and invested alongside yourselves. Through a culture of meticulous planning and continuous improvement, we have laid the groundwork for a lower risk construction and commissioning phase. For this next leg of the journey, we were pleased to announce the appointment of seasoned mining executive Paul Brown to the role of Chief Executive Officer, bringing two decades of expertise across the entire mining lifecycle and successfully delivering Together with Paul, we will remain steadfast in our focus to become Australia’s next rare earths producer, while keeping our eye on our vision of building a vertically integrated mine to magnet business, creating long term value for our shareholders, stakeholders and our people. On behalf of the Board, I would like to acknowledge and thank the entire Hastings team for their continued hard work and dedication. And I extend our sincere gratitude to you, our shareholders, and to our other stakeholders for your patience as we continue to journey together. Bringing the Yangibana Project into production will positively touch the lives of many in our local communities, including our Native Title partners, the Australian economy, as well as contributing to a cleaner, greener planet for future generations. One dream, one team. Yours faithfully, Charles Lew Executive Chairman Annual Report 2023 | 7 POWERING THE SENIOR By 2032, anticipated global rare earth magnet demand is forecast to outstrip supply by the equivalent of 13 times the projected NdPr output of Yangibana. During the year, Hastings undertook a review of its organisational structure for the development phase of the Yangibana Project, with a number of senior leadership changes undertaken to ensure a strong, experienced management team is in place to deliver the Yangibana Project. Green Energy Revolution As the dominant EV motor technology, sintered NdFeB magnets (rare earth magnets) have more than 90% market share among leading automotive original equipment manufacturers. 1.8kg 3,400 tpa Amount of sintered NdFeB magnet in a passenger EV Annual NdPr production rate at Yangibana 55 million 1.2 billion tonnes Number of EVs Yangibana will potentially supply over initial 17-year mine life Potential reduction of carbon emissions by using 55 million EVs compared to internal combustion engines Leadership Team I am deeply honoured to join the Hastings team during such a transformative phase for the Company. The Yangibana Project holds immense potential, and I’m eager to apply my experience and insights to realise its full value. My passion for forward-facing commodities like battery minerals and rare earth magnets resonates deeply with the ecosystem crucial for a greener future. – Paul Brown, Chief Executive Officer 8 | Hastings Technology Metals Annual Report 2023 | 9 Interim Chief Executive Officer Alwyn Vorster was appointed in November 2022 to oversee a comprehensive review of the Yangibana Project’s delivery and funding model. Mr Vorster’s fixed-term contract ended on 31 July 2023. Other updates to the senior management team during FY23 are summarised below: • Subsequent to 30 June 2023, Paul Brown was appointed Chief Executive Officer • Teck Lim was appointed Chief Financial Officer • Robert Klug was appointed General Counsel • Gareth Fleming was appointed Project Director Paul Brown Chief Executive Officer Teck Lim Chief Financial Officer Rachael Ward-Pryce Head of People Robert Klug General Counsel Narelle Marriott GM Process Development Gareth Fleming Project Director Paul Brown was appointed Chief Executive Officer in September 2023, bringing over two decades of experience across the entire mining project lifecycle and strong track record in major project construction management, commissioning and operation. Teck Lim is a chartered accountant with 20 years’ accounting and finance experience, specialising in mining and metals project development funding. He was the lead project finance financial advisor to Hastings while at KPMG Corporate Finance and his corporate advisory and banking experience include landmark critical minerals projects and mega project financings in Australia and globally. Rachael Ward-Pryce joined Hastings in April 2021 and brings over two decades of experience across the resources sector in Australia and overseas. Robert Klug is an Australian qualified resources and corporate lawyer with over 30 years of experience in startup and operational environments, including business development, due diligence and associated risk allocation to achieve sustainable operational performance and growth. Narelle Marriott joined Hastings in late 2014, working on metallurgical process development, project engineering, research and development and project improvement. Gareth Fleming brings 20 years’ experience both in Europe and Australia, as a professional engineer, project manager, construction manager, as well as holding statutory positions as registered manager and site senior executive. Paul has held various senior roles in the mining industry, including most recently as Chief Executive – Commodities and Chief Executive – Lithium at Mineral Resources Limited. Prior to this, his career spanned general management, operational leadership, technical direction, project and studies management, business enhancement, mineral resource assessment and mine strategy, including senior roles at Fortescue Metals Group, Leighton Holdings and HWE Mining. In his career to date, Paul has successfully delivered and operated a number of significant mining projects, including Fortescue’s Solomon Hub and MinRes’ Mount Marion and Wodigna lithium projects and Wonmunna iron ore mine. He is an alumnus of Federation University in Victoria, holding a Masters in Mine Engineering (M.Eng). 10 | Hastings Technology Metals Teck’s financing experience extends to government agencies, multilaterals, commercial banks, private equity, mining funds and bond markets and has worked with strategic investors, joint venture development partners, offtakers and commodity trading houses to fund large scale mining projects from feasibility studies through to commercial operations. Prior to joining Hastings, Teck was Chief Financial Officer at Nico Resources Ltd and held various roles with ING Bank, HSBC Bank and Deloitte within their resource industry sectors. Teck holds a Bachelor of Commerce from Murdoch University, a Certificate in Mining Studies from the University of British Columbia and a Master of Business Administration from the University of Western Australia. Prior to joining Hastings, Rachael held various roles at Newmont Australia, Resolute Mining, Iluka Resources and Alcoa across all facets of human resources. She is highly experienced in shaping all aspects of people strategy and building high performing teams within the resource sector. Her experience spans across generalist and specialised roles including talent sourcing and development, employee relations, culture and inclusion and diversity. Rachael holds a Bachelor of Arts (BA) from Murdoch University and a Graduate Diploma in Human Resources Management from Curtin University. Initially trained as an auditor with KPMG Perth, Robert worked in London as a corporate lawyer after completing his law degree at Murdoch University in Perth. Upon his return to Perth, he joined Freehills’ Perth office where he worked almost exclusively with small and mid-cap resource companies. Since then, Robert has worked in legal, commercial and business development roles for a variety of resources companies, including as Chief Commercial Officer and General Counsel for Sandfire Resources. Robert holds a Bachelor of Commerce (Accounting and Finance) and a Bachelor of Laws. She is a minerals process engineering with 20 years of experience in the mining industry across multiple commodities including nickel, iron ore and rare earths. Prior to joining Hastings, Narelle worked at BHP Nickel West, Greenland Minerals and Energy, Crosslands Resources, WMC Resources across a range of roles including process flowsheet development, testwork and piloting and process improvement. Narelle holds a Bachelor of Engineering (Minerals Process) from The University of Queensland and a Graduate Diploma in Sustainability Management. He has delivered several key schemes ranging from re-development works for the 2012 London Olympics to key projects for Main Roads WA, network management for numerous WA utility companies and mining related construction works. He has experience in a vast range of delivery models including construct only with tier one contractors, design and construct, EPCM, PMC, joint delivery teams and owners self delivery with significant experience with remote construction in the Pilbara Region of WA. His most recent role prior to joining Hastings was the construction of Australia’s largest salt and potash facility at Mardie for BCI Minerals Gareth holds a Bachelor of Engineering (Hons) in Civil Engineering from the University of Strathclyde in Glasgow Annual Report 2023 | 11 REVIEW OF Operations Hastings is focused on the development of the Company’s flagship Yangibana Project. Located 250km north east from Carnarvon in Western Australia’s Upper Gascoyne region, the project is located on Gifford Creek Station which covers Thiin-Mah Warriyangka, Tharrkari and Jiwarli country. Company activities in the 2023 financial year were primarily focused on early infrastructure works at the Yangibana Project, with the project on track for the commencement of main construction in the second half of the 2023 calendar year. Project delivery and capital review During the reporting period, the Company completed a comprehensive review into the project delivery model and capital cost, confirming the Yangibana Project remains a world-class tier one project with excellent project economics. A key outcome of the review was the introduction of a staged development strategy to reduce the upfront capital requirements and project execution risks. Under this new strategy, the project will be developed in two stages: Stage 1: Stage 2: Develop the Yangibana Project’s mine and beneficiation plant to produce up to 37,000tpa of rare earth concentrate (27% REO grade) and achieve first concentrate on truck by H1 CY2025 Develop the hydrometallurgy plant at Onslow to produce up to 15,000tpa of MREC (59% REO grade) To provide greater certainty to the capital estimate and delivery schedule, Hastings has elected to adopt a fixed price Engineering, Procurement and Construction (“EPC”) contract model to reduce overall project risk. On 3 May 2023, the Company announced that it had entered into a binding term sheet with GR Engineering Services Limited (“GRES”) for the delivery of the Yangibana Project’s beneficiation plant and associated infrastructure. The long-form contract was subsequently executed on 4 September 2023. The $210 million EPC contract is lower than cost estimates for an equivalent scope of works under the former Engineering, Procurement and Construction Management (“EPCM”) model and includes: • a fixed price component of $180 million for the beneficiation plant • a provisional component of $30 million mainly for earthworks associated with the beneficiation plant and tailing storage facility. In addition, the EPC model offers additional benefits and lowers risks in multiple areas, including: • a reduction in cost and providing cost certainty • guarantees on the timeframe, with first concentrate production in Q2 CY2025 providing a pathway to early project cashflows • guarantees on time, cost and product quality. Stage 1 Key project metrics (concentrate-MREC) Total capital cost Capital incurred (at 30 June 2023) Post-tax NPV11 (ungeared) Post-tax IRR (ungeared) Average EBITDA per annum $470m $106m $538m – $1,018m* 27.5% – 50.9%* $175m – $250m* *Potential for improved economics through tolling and/or profit sharing arrangements 12 | Hastings Technology Metals Annual Report 2023 | 13 Development activities As the Company moves towards the commencement of main construction for the Yangibana Project’s mine and beneficiation plant, early infrastructure works at site, engineering design and procurement have advanced for all critical elements of project development. Strategic investment in Neo Performance Materials Enabling works at the Yangibana Project were largely completed during FY2023, including: • a 20km site access road alignment to connect the Yangibana Project’s mine site with the shire road network • works to install water infrastructure, including six bores and a 30km pipeline from the SipHon Well Borefield to supply water to the beneficiation plant, village, mine and construction works • construction of a 2km x 30m airstrip to allow for up to 70-seater aircraft • installation of a series of communication towers to allow permanent high speed communication • construction of the 294-bed Kurrbili Accommodation Village, including