Aclara Resources Inc. — Management Reports 2025

Aug 6, 2025

aclara

ACLARA RESOURCES INC.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management's discussion and analysis ("MD&A") has been prepared as of August 6, 2025, and is intended to assist readers in understanding the operational performance and financial condition of Aclara Resources Inc. (hereinafter, the "Company" or "Aclara"). The Company is, and will remain, a holding company and the only business of the Company is that of the business of its subsidiaries. The Company's material assets consist of interests in: (i) Aclara Resources Mineracao Ltda. ("Aclara Brazil"), a wholly-owned Brazilian subsidiary that holds the Carina Project (as defined below) and performs exploration activities in Brazil; (ii) REE Uno SpA ("REE Uno"), a majority-owned Chilean subsidiary that holds the Penco Module (as defined below); (iii) Aclara Technologies Inc. ("Aclara Technologies"), a wholly-owned U.S. subsidiary with the objective of developing a project for the separation of mixed rare earth carbonates ("MREC") from the Carina Project and the Penco Module into individual rare earth oxides ("REO"); (iv) Aclara Metals SpA ("Aclara Metals") and Aclara Metals Inc. ("Aclara Metals Inc."), 50%-owned Chilean and U.S. subsidiaries, respectively, both established with the objective of developing a project for the conversion of individual REOs to metals and alloys for the manufacture of rare earth permanent magnets; (v) Prospecciones Greenfield SpA ("Prospecciones"), a majority-owned indirect Chilean subsidiary that holds other exploration concessions located in Chile; (vi) Fundacion de Beneficencia Publica, Medioambiental, Cientifica, Cultural y Social Queule ("Fundacion"), a majority-owned indirect Chilean subsidiary that performs charitable work through implementing, promoting and supporting initiatives and projects pertaining to environmental conservation and heritage rescue, as well as Chilean cultural, social and scientific development; (vii) Polaris Creek LLC ("Polaris"), a wholly-owned indirect U.S. subsidiary that performs exploration activities in the United States; and (viii) Aclara Resources Peru S.A.C. ("Aclara Peru"), a wholly-owned Peruvian subsidiary that provides administrative services to Aclara and performs exploration activities in Peru.

This MD&A provides information concerning the Company's interim consolidated financial condition and results of operations for the three (3) and six (6) months ended June 30, 2025 and June 30, 2024. This MD&A should be read in conjunction with the Company's interim unaudited consolidated financial statements and the notes thereto for the three (3) and six (6) months ended June 30, 2025, and June 30, 2024 (collectively, the "Interim Unaudited Consolidated Financial Statements"). The Interim Unaudited Consolidated Financial Statements were prepared in accordance with IAS 34 "Interim Financial Reporting", International Financial Reporting Standards ("IFRS") and its interpretations adopted by the International Accounting Standards Board ("IASB").

As used in this MD&A, references to "Q1", "Q2", "Q3" and "Q4" are to the three months ended March 31, June 30, September 30, and December 31, respectively, of the applicable fiscal year, references to "H1" and "H2" are to the six months ended June 30 and six months ended December 31, respectively, of the applicable fiscal year, and references to "FY" are to the 12 months ended December 31 of the applicable fiscal year. Unless otherwise specified, the financial information contained in this MD&A is reported in United States dollars ("$" or "US$"). Certain totals, subtotals and percentages throughout this MD&A may not reconcile due to rounding. Additional cautionary statements regarding forward-looking information and mineral reserves and mineral resources can be found under the section of this MD&A entitled "Cautionary Statements and Reader Advisories".

COMPANY OVERVIEW

Aclara is a company focused on the development of a vertically integrated supply chain for rare earths alloys used in permanent magnets, and it is listed on the Toronto Stock Exchange ("TSX") under the ticker symbol "ARA".

---

Aclara's business strategy is supported by its ion-absorption clay ("ionic clay") deposits in Brazil and Chile, which feature large concentrations of heavy rare earths ("HREE"), which provides the Company with unique access to a reliable, long-term source of these critical minerals. Aclara has also developed and patented an innovative technology to extract rare earths from ionic clay deposits through recycling and circular economy processes, which results in low water consumption and minimal carbon emissions.

Aclara's flagship project is its Carina project, a 9,863-hectare HREE ionic clay project located in Nova Roma, Goiás, Brazil (the "Carina Project"). The Company is also advancing the Penco Module project, a 600-hectare HREE ionic clay project located in Biobío, Chile (the "Penco Module"). The Company has successfully completed the preliminary economic assessment ("PEA") for the Carina Project and Penco Module, the results of which are respectively detailed in the following technical reports:

• "NI 43-101 Technical Report – Preliminary Economic Assessment Update for Carina Rare Earth Element Project", dated effective May 3, 2024 (the "Carina Project Technical Report"); and
• "Amended and Restated NI 43-101 Technical Report – Preliminary Economic Assessment for Penco Module Project", dated effective September 15, 2021 (the "Penco Module Technical Report").

The Company holds an aggregate of approximately: (i) 83,185 hectares of mining rights in Chile, distributed in the regions of Maule, Ñuble and Biobío; and (ii) 48,564 hectares of mining rights in Brazil, distributed in the states of Goiás, Bahia, Minas Gerais and Paraná. The Company aims to identify additional opportunities to enhance potential future HREE production through its greenfield exploration programs in Chile and Brazil, alongside the development of further project "modules" within its mining concessions.

Aclara, through its wholly-owned U.S.-based subsidiary, Aclara Technologies, is focused on enhancing product value through the development of a rare earths separation plant in the United States. Aclara Technologies aims to source high purity MREC from Aclara's mining projects to further refine and separate it into individual REOs. Additionally, Aclara is developing rare earths alloy-making capabilities to convert refined oxides into the alloys needed for fabricating permanent magnets. The Company's vertical integration strategy seeks to address the demand for a geopolitically independent supply chain of permanent magnets, focused on traceability, high environmental standards throughout the value chain, cost-competitiveness and expedited access to market. Aclara is well-positioned to become the first vertically integrated HREE company outside of Asia.

BUSINESS DEVELOPMENT AND OVERALL PERFORMANCE HIGHLIGHTS

Mining Projects Development

During Q2 2025, the Company continued to advance the development of the Penco Module and the Carina Project and made consistent investments in respect of evaluation and exploration assets ("E&E") and property, plant and equipment assets ("PP&E").

In Q2 2025, the Company invested $9.95 million in E&E and $0.07 million in PP&E. In comparison, investments in Q2 2024 totaled $3.45 million for E&E and $0.06 million for PP&E. In H1 2025 the cumulative investment in E&E and PP&E totaled $15.62 million and $0.13 million, respectively, compared to $6.75 million and $0.09 million in H1 2024. Aggregate expenditure for E&E and PP&E in FY 2024 totaled $19.29 million and $0.3 million, respectively.

Carina Project and Future Outlook

On September 5, 2024, the Company delivered an updated PEA for the Carina Project, reporting robust economic feasibility including the following: (i) net present value at an 8% discount rate of ~$1.5 billion; (ii) estimated internal return rate of 27% over the 22-year life-of-mine and payback period of 4.2 years; (iii) average annual net revenue and EBITDA of $505 million and $366 million, respectively (excluding the first year of ramp-up and last year of ramp-down); and (iv) average net smelter return of $52.0 per tonne processed, compared to an average production cost of $13.6 per tonne processed.

Following the positive results obtained at the Carina Project, and in an effort to move the Carina Project towards an investment decision, the Company has advanced or is advancing the following activities in parallel:

---

• Drilling Campaigns. During Q2 2025, the Company completed Phase 2 of its drilling campaign, which included areas within the new mining rights adjacent to the Carina Project. Its primary objective was to convert the reported inferred mineral resources into the measured and indicated categories. In total, Phase 2 comprised 25,990 meters of drilling across 1,823 drill holes.

• Metallurgical Tests. The Company is currently conducting metallurgical tests on samples obtained from the Carina Project during H1 2025. Sample collections were obtained through a sonic drilling campaign completed during H1 2025, and sent to SGS Geosol for mineralogical and recovery characterization, which will serve as an input for the pre-feasibility study ("Carina PFS"), as well as form the basis for the semi-industrial scale piloting operation currently underway (the "Pilot Test Campaign"). The sonic drilling campaign resulted in a total of 1,257 meters of drilling from 86 drill holes. This total includes 940 meters from 59 drill holes completed in 2024 and 317 meters from 27 drill holes completed in 2025.

• Pilot Test Campaign. In Q2 2025, the Company commenced its semi-industrial scale pilot operation, following the relocation of the pilot plant facility from Concepción, Chile to Aparecida de Goiania, Brazil in Q3 2024. The pilot campaign will run continuously, incorporating the optimized configuration of the Company's proprietary Circular Mineral Harvesting ("CMH") process. The objectives of the campaign include: (i) confirming the processing parameters and final process flowsheet design for the Carina PFS and feasibility study ("Carina FS"); (ii) producing high purity MREC for separation trials in support of future off-take agreements; and (iii) demonstrating the environmental sustainability of the process design to relevant stakeholders. The pilot operation is expected to last approximately four (4) months.

• Technical Development. The Company is conducting Carina PFS-related activities and expects to deliver a technical report pursuant to National Instrument 43-101 Standard of Disclosure for Mineral Projects ("NI 43-101") during Q3 2025. 3D model of the processing facility was completed to substantiate a stronger engineering estimate in the PFS report.

• Environmental Baselines and EIA Development. The Company has successfully completed all baseline studies for the Carina Project in Q1 2025, and submitted the environmental impact assessment ("EIA", or "Preliminary License") in May 2025 to the Secretariat of the Environment and Sustainable Development ("SEMAD") of the State of Goiás, Brazil. The Company anticipates receiving approval for the EIA by Q4 2025.

• Commercial Efforts. The Company is developing a separation project in the United States to refine the Carina Project's MREC into individual rare earth oxides. Additionally, in partnership with CAP S.A. ("CAP"), the Company is advancing a metals and alloys project to produce the alloys needed for high-performance permanent magnets. As part of this strategy, the Company is engaged in commercial discussions with potential counterparties regarding offtake agreements, offering flexibility in product options including MREC, individual rare earth oxides and metals and alloys derived from the Carina Project and the Penco Module.

• Carina Project Schedule. The Company has updated its previously announced short-term milestones and/or targets in respect of the Carina Project as follows:

• Complete Pilot Test Campaign Q3 2025

• Complete Carina PFS Q3 2025
• Receive EIA Approval Q4 2025
• Complete Carina FS H1 2026

On August 16, 2024, Aclara signed a Memorandum of Understanding ("MoU") with the state of Goiás and the municipality of Nova Roma, recognizing the strategic nature of the Carina Project. This strategic relationship aims to accelerate the analysis and evaluation of the permitting process and support the execution, implementation and development of the Carina Project. The Company has also committed to hiring and developing the local workforce, as well as local suppliers. As a result of these efforts, the Company will reinforce its positive impact on the social

---

and economic development of Nova Roma and Goiás regions, further positioning Brazil as a key player in the sustainable supply of critical minerals.

On August 9, 2024, the Company announced an updated mineral resource estimate for the Carina Project, which reported an increase to inferred mineral resources of 77%, from 168 million tonnes (“Mt”) to 298 Mt, and an extension to the life-of-mine from 17 years to 22 years. The update also highlighted a 69% increase in key magnetic elements (Dysprosium (“Dy”), Terbium (“Tb”), Neodymium and Praseodymium) as compared to the previously announced mineral resource statement in 2023.

Penco Module and Future Outlook

• EIA Application. During Q3 2023, the Company revised its permitting strategy with the primary aim of addressing concerns related to native forests located within the Penco Module project site, while minimizing substantial impacts to the Penco Module’s development timeline. To effectively implement the revised permitting strategy, the Company decided to prepare and submit two (2) EIAs, which will collectively cover the full life-of-mine of the Penco Module. On June 10, 2024, the Company filed the first EIA (“EIA 1”), which encompasses the first six (6) years of the full life-of-mine of the Penco Module. The evaluation of EIA 1 by the Environmental Assessment Service (the “SEA”) is expected to take approximately between 18 and 24 months. During H2 2024, the Company received the consolidated clarification report (“Technical ICSARA”) and the citizen consolidated clarification report, both of which were duly addressed and filed through an Addendum on March 28, 2025. Thereafter, the SEA published a complementary Technical ICSARA on May 14, 2025 (the “Complementary ICSARA”), incorporating additional observations and requiring an update to the citizen participation responses. The Company expects to address and file a second addendum in Q3 2025.

• Social License. The Company will continue maintaining efforts to strengthen its relationship with the local community through continuous engagement at “Casa Aclara”, (a community center located in the central Penco community), and through several social initiatives including education, technical training, development of local suppliers, reforestation and sports programs. The Company will maintain open dialogue and incorporating community feedback into its plans for the Penco Module.

• Technical Development. In light of the revised permitting strategy for the Penco Module, the Company postponed the completion of the Penco Module feasibility study technical report (“Penco FS”) pursuant to the requirements of NI 43-101. The Company will use the additional time to further optimize the engineering design of the Penco Module by incorporating technical enhancements identified through ongoing piloting activities and research and development initiatives. These enhancements are expected to result in a reconfiguration of operating and capital cost estimates, with a particular emphasis on improving overall operational efficiency. The Company expects to resume work on the Penco FS during H2 2025.

• Commercial Efforts. The Company is pursuing the same commercial strategy for the Penco Module as with the Carina Project, as described above under “Mining Projects Development – Carina Project and Future Outlook – Commercial Efforts”. In parallel, the Company has shipped high-purity MREC samples produced in the Company’s pilot plant in Chile to more than 15 separation firms located within the United States, Europe and Asia, in an effort to validate product specifications and assess potential partnerships.

• Updated Penco Module Schedule. As a result of its updated permitting and development strategy, the Company is working to achieve the following proposed milestones and/or targets in respect of the Penco Module:

• Receive EIA 1 Approval Q4 2025

• Complete Penco FS H1 2026

---

Separation of MREC to Individual Oxides and Future Outlook

The Company has begun advancing the following activities as part of the next stage of development of its separation project:

• Metallurgical Testing and Optimization. Execution of bench scale and mini-pilot testing to optimize the separation flowsheet, CAPEX and OPEX.
• Location Study. Analysis within the United States to identify an optimal site for the contemplated industrial separation facility, with the goal of maximizing efficiency and minimizing cost and development timeline.
• Pilot Operation. Construction and operation of a pilot plant expected for H2 2025.

In May 2025, the Company became a member of Securing America's Future Energy ("SAFE"), a leading nonpartisan organization focused on strengthening U.S. supply chains for critical minerals. This strategic alignment supports the Company's objective of establishing a fully integrated and independent rare earths supply chain for advanced technologies. Through its Energy Security Leadership Council and the Center for Critical Minerals Strategy, SAFE plays a pivotal role in shaping U.S. policy and fostering public-private collaboration in the critical minerals sector.

On October 15, 2024, the Company completed an initial conceptual engineering study for its rare earths separation project. The separation conceptual flowsheet, based on solvent extraction technology, was developed in collaboration with the Saskatchewan Research Council ("SRC") and supported a Class 5-AACE CAPEX and OPEX estimate developed by Hatch Ltd. ("Hatch Canada"). Hatch Canada also incorporated robust environmental features such as significant waste reduction and zero liquid discharge.

On April 3, 2024, following the announcement of the CAP Investment Agreement (as defined below), the Company announced that it had incorporated a wholly-owned U.S.-based subsidiary, Aclara Technologies, to develop its rare earths separation capabilities in the United States. The Company's efforts through Aclara Technologies are intended to better position the Company and develop the necessary expertise required to carry out all stages of processing leading up to the production of rare earth alloys for high performance permanent magnets. Aclara Technologies is expected to source high purity MREC from the Company's extraction projects in Chile and Brazil. These carbonates will then be converted into individual rare earths oxides in the U.S.-based separation facility.

Greenfield Exploration and Future Outlook

During Q2 2025, the Company continued to advance its greenfield exploration activities in order to identify REE mineralization and potential new modules for further development. The Company incurred total expenses of $0.79 million in Q2 2025, as compared to $0.12 million incurred in Q2 2024. In H1 2025, cumulative exploration expenses totaled $0.98 million, as compared to $0.21 million incurred in H1 2024.

Additionally, in July 2025, the Company entered into a long-term Letter of Intent ("LOI") with Stanford University's Mineral-X initiative, a leading research program focused on applying artificial intelligence to critical minerals. Pursuant to the LOI, the parties aim to develop predictive AI models to enhance the exploration of ionic clay-hosted rare earth elements and to promote academic and technical exchange. This collaboration supports the Company's strategy to build a resilient and sustainable HREE supply chain and provides the framework for future joint research and pilot initiatives.

The Company intends to continue advancing its greenfield exploration strategy and objectives, which have been expanded to include additional exploration targets in Brazil. This expansion aligns with the Company's overarching objective of accelerating the development of additional project modules to achieve future growth of the Company.

Commercial Update

During Q2 2025, the Company hosted a series of visits to its pilot plant facility in Goiânia, Brazil, as part of the commercial engagement strategy. Attendees included representatives from magnet manufacturers, government-related development agencies and other industry stakeholders. The visits provided an opportunity to demonstrate

---

the Company's proprietary CMH technology under operational conditions and to highlight the environmental and technical attributes of the Carina Project.

On July 9, 2024, the Company announced that it has signed a MoU with VACUUMSCHMELZE GmbH & Co. KG ("VAC"), which establishes a preliminary agreement to jointly approach potential clients as a "mine-to-magnets" solution for the production of ESG compliant permanent magnets. VAC is considered the largest producer of rare earths magnets outside of Asia, with more than 40 years' experience in magnet-making technology. VAC, whose main permanent magnet facility is located in Hanau, Germany, recently executed a contract with General Motors ("GM") to supply GM with permanent magnets by building a new magnet plant in the state of South Carolina, United States. Pursuant to the MoU, each of the parties will engage in collaborative efforts, through a preferred supplier-purchaser relationship with cooperative marketing, customer relations and related matters.

Corporate Development

On June 16, 2025, the Company appointed Hugh Broadhurst as Chief Operating Officer. Based in the United States, Mr. Broadhurst assumed technical leadership over the Company's upstream projects, including the Carina Project and the Penco Module, as well as its U.S. downstream initiatives in rare earth separation, metals and alloys.

On December 23, 2024, the Company announced a non-brokered private placement financing of 51,303,573 common shares of the Company for aggregate gross proceeds of $25 million at a price of C$0.70 per common share (the "Private Placement") which closed on February 20, 2025. As a result of the Private Placement, the total number of issued and outstanding common shares of the Company increased from 166,409,223 to 217,712,796. Additionally, each of CAP, HM Holdings and New Hartsdale respectively hold 22,163,143, 42,787,104 and 80,340,876 common shares, representing approximately 10.18%, 19.65% and 36.90% of the issued and outstanding common shares of the Company.

On March 12, 2024, the Company entered into a strategic investment agreement (the "CAP Investment Agreement") with CAP, a publicly listed company on the Chilean Stock Exchange, providing for, amongst other things: (i) a $29.1 million capital contribution to be made by CAP in REE Uno in exchange for a 20% equity ownership interest, payable in three tranches upon closing and subsequently in January 2025 and January 2026; (ii) the grant of an option to invest an additional $50 million by CAP in REE Uno for an additional 20% equity ownership interest upon the Company obtaining the requisite environmental permit in respect of the Penco Module; (iii) the grant of an option exercisable by CAP to acquire up to 19.9% of the outstanding common shares of the Company in any private placement or public offering of common shares made by the Company within the 36 month period following the effective date of the CAP Investment Agreement, including a residual top-up right to maintain pro-rata voting rights; (iv) a demand subscription right for up to an aggregate of 19.9% of the outstanding common shares of the Company exercisable upon the satisfaction of certain conditions and continuing for a maximum period of 18 months beginning on the third anniversary of the CAP Investment Agreement; and (v) the terms on which CAP and the Company will form a joint venture to develop metals and alloys for the rare earths permanent magnet industry and contemplates an investment of $3 million in consideration for 50% of the ownership interests in such joint venture entity. On April 17, 2024, the Company announced the successful closing of the acquisition by CAP and receipt by the Company of the initial payment of approximately $9.7 million in connection with such acquisition. Subsequently, in January 2025, the Company reported the receipt of the second payment, amounting to approximately $12.5 million.

Cash Balance and General Administrative Expenses

Cash Balance

As at Q2 2025, the Company's consolidated cash balance was $39.81 million, consisting of $18.20 million from the Company, $3.36 million from its wholly-owned subsidiaries (Aclara Brazil, Aclara Technologies, Polaris Creek and Aclara Peru) and $18.25 million from its majority-owned Chilean subsidiaries (REE Uno, Prospecciones and Fundación). Comparatively, as at Q2 2024, the Company's consolidated cash and cash equivalents were $31.25 million. In addition, as at Q2 2025, the cash balance of the Company's joint venture Aclara Metals was $0.27 million. In June 2025, the Company, through its subsidiary REE Uno, received a cash value-added tax ("VAT") refund of $6.9 million under Chile's export VAT regime.

---

General Administrative Expenses

In Q2 2025, the Company incurred $2.26 million in administrative expenses, which was primarily comprised of: (i) management compensation; (ii) continuous public disclosure and marketing activities; and (iii) ancillary activities undertaken for the development of the Penco Module, the Carina Project and vertical integration projects. In comparison, in Q2 2024, the Company incurred $2.30 million in administrative expenses.

Estimated Budget for 2025

The Company's budget for FY 2025 is $43.3 million, which is comprised of estimated costs relating to the development of the Penco Module, development of the Carina Project, development of the U.S. separation project, development of metals and alloys project and exploration activities aimed at identifying potential new modules. Key aspects of the FY 2025 budget include, among others: (i) $12.4 million in expenses related to the development of the Penco Module, which is comprised of permitting and community relations expenses ($2.8 million), purchase of surface land ($1.3 million), engineering activities ($2.4 million), expenses related to the maintenance of concessions ($0.2 million), administrative and personnel expenses ($5.7 million); (ii) $25.7 million in expenses related to the development of the Carina Project, which is comprised of mineral resource drilling work ($6.3 million), contracts related to surface land ($2.1 million), engineering activities and piloting works ($10.4 million), permitting and community relations expenses ($1.7 million), maintenance of mining concessions ($0.1 million), administrative and personnel expenses ($5.1 million); (iii) $0.8 million in mining concession maintenance costs and exploration in new areas; (iv) $0.6 million in activities and studies related to the separation of rare earths; (v) 3.1 million in administrative expenses, personnel and for general corporate and working capital purposes; and (vi) $0.7 million for the metals and alloys project expenses.

DISCUSSION OF RESULTS AND OPERATIONS UPDATE

Exploration Activities

Infill Drilling - Carina Project

Based on the initial auger drilling campaign results, the Company planned a two-phased RC drilling campaign at greater depths, aimed at increasing the inferred mineral resources and then converting them into a measured and indicated category.

During Q2 2025, the Company completed Phase 2 of its RC and auger drilling campaign, with 11,152 meters drilled across 708 RC drill holes and 1,770 meters drilled across 266 auger drill holes. Additionally, in June 2025, the Company drilled 317 meters across 27 sonic drill holes as part of its geometallurgical drilling activities. The cumulative Phase 2 drilling campaign totaled 25,990 meters across 1,823 drill holes, comprised of 15,281 meters from 928 RC drill holes and 2,892 meters from 460 auger drill holes completed during 2025, and 7,817 meters from 435 RC drill holes completed during 2024. Phase 2 drilling activities represent a substantial increase in exploration efforts compared to Phase 1, which comprised 4,134 meters of drilling and served as the basis for the initial PEA.

Comparatively, during Q2 2024, the Phase 2 RC drilling campaign comprised a total of 579 meters drilled across 29 holes.

Greenfield Exploration - Brazil

During Q2 2025, the Company continued executing its greenfield exploration strategy, focusing on community screening and environmental assessments to evaluate the baseline conditions for future drilling campaigns. Furthermore, initial scout drilling was carried out within the Company's mineral rights concessions, aiming to gather geological and environmental data to support the planning of subsequent exploration stages. A total of 550 meters were completed from 55 auger drill holes, out of a planned 85 holes. The remaining 30 holes, corresponding to approximately 221 meters, are expected to be executed during H2 2025.

Comparatively, during Q2 2024, the Company advanced its greenfield exploration activities in other high-priority areas within the states of Goiás, Bahia and Tocantins, aiming to enhance its understanding of regional geology and

---

lithological variations to refine its exploration methodology.

Brownfield Exploration - Penco Module

During H1 2025 and H1 2024, the Company did not report any brownfield exploration activities within the Penco Module.

Greenfield Exploration - Chile

During H1 2025 and H1 2024, the Company did not report any greenfield exploration activities in Chile.

Project Development Activities

Carina Project

General Engineering

During Q2 2025, the Company advanced the consolidation of operating and capital cost estimates for the Carina Project PFS, in collaboration with Hatch do Brasil Ltda ("Hatch Brazil"), the Brazilian branch of Hatch Canada. These efforts focused on incorporating process improvements validated through the ongoing semi-industrial pilot campaign in Goiás, Brazil. Concurrently, the Company achieved significant milestones in the Carina PFS engineering work, including the completion of the 3D model of the process plant and the basic engineering design of the associated transmission line. These developments are expected to support future permitting activities and increase the accuracy of material take-off estimations.

Comparatively, during Q2 2024, the Company focused its efforts on initiating the Carina Project PEA, which included site visits by Hatch Brazil to review potential locations for the processing plant and disposition zones, as well as potential water and power supply intakes and the completion of a trade-off analysis for the dry stacking facility.

Mining Study

During Q2 2025, the Company advanced several technical workstreams in support of the Carina PFS. Key activities included integrating recent drilling data into the updated geological model, supported by preliminary quality assurance and quality control ("QA/QC") reviews, and performing comprehensive data validation procedures and compositing analyses. These efforts enabled the initiation of an updated mineral resource estimation. In parallel, the Company conducted a benchmarking analysis of operating cost assumptions set forth in the Carina Project PEA, which confirmed their continued relevance and also identified potential areas for optimization. Additionally, the Company implemented a cloud-based geospatial data platform to centralize technical datasets and enhance support for both exploration and development activities.

Comparatively, during Q2 2024, the Company, in coordination with Hatch Brazil and as part of its site visit, assessed alternative mine design configurations, including volumetric calculations for prospective infill in the northern area of the Carina Project pit. The Company also received the final report from its second field campaign evaluating subsurface soil moisture conditions.

Process Design

During Q2 2025, following the successful commissioning and startup of its pilot plant in Goiânia, the Company advanced into steady-state operations, processing approximately 50 tonnes of clay and producing 30 kilograms of MREC. The pilot campaign is expected to continue through August 2025, generating critical operational data to support the Carina FS.

The Company also achieved significant progress in estimating metallurgical recoveries using representative samples obtained from prior sonic drilling campaigns. These samples yielded reliable particle size distribution data and enabled improved definition of geometallurgical units. The same materials supported industrial-scale material handling tests conducted by selected vendors, contributing to the design of efficient logistics and storage systems.

8

---

Comparatively, during Q2 2024, the Company conducted compatibility tests of its proprietary CMH process, originally developed for the Penco Module, using ionic clay sample from the Carina Project. These tests were successfully completed and resulted in the production of a MREC with a purity exceeding 92%, underscoring advancements in impurity control and process compatibility.

Penco Module

General Engineering

During Q2 2025, the Company completed a pre-feasibility study for the Neptune deposition zone design, leading to the identification and prioritization of potential deposition areas.

Comparatively, during Q2 2024, the Company conducted follow-up discussions with Essbio S.A., the recycled water supplier for the Penco Module, to ensure the timely completion of both the detailed engineering study for the intake water source and the associated permitting study.

Mining Study

During Q2 2025, the Company resumed mining studies for the Penco Module, with a focus on advancing technical workstreams to support the development of a base case scenario for the Penco FS. As part of this initiative, the Company convened a multidisciplinary technical workshop where it gathered specialists with experience in high-precipitation environments to evaluate operational strategies for clay extraction under rainy conditions. In parallel, the Company advanced key technical activities during Q2 2025 including the development of preliminary mine drainage and closure concepts, updates to operating cost estimates, productivity modeling through discrete-event simulation, geotechnical assessments and mine planning initiatives. Additionally, the Company conducted a hydrogeological field campaign in June 2025 to evaluate groundwater dynamics during the rainy season. The results of this campaign are expected to inform ongoing permitting efforts and support the design of long-term water management strategies.

Comparatively, during Q2 2024, the Company completed conceptual designs for the Neptune deposition zone, and established a medium-term mining schedule.

Process Design

During Q2 2025, the Company developed an updated mass balance for the Penco Module, integrating process enhancements demonstrated during the Carina Project's pilot campaign. This initiative aimed to optimize plant throughput in alignment with the revised mine plan and projected operational requirements.

Comparatively, during Q2 2024, secondary screening tests confirmed the engineering design parameters for the Penco Module. In parallel, the Company validated moisture content levels and efficiencies assumptions for the prior mass balance through testing conducted at laboratories in Buffalo, U.S. Improvements to vibration capacity enhanced screen performance and addressed previously-identified operational challenges. Furthermore, spent clay filtration test achieved a reduction in moisture content with a notable improvement over previous preliminary results.

Aclara Technologies - Separation

During Q2 2025, the Company advanced the design of its rare earth separation pilot plant and auxiliary facilities. As part of this effort, the Company leased a laboratory facility at the Corporate Research Center located on the Virginia Tech University campus, where its installation will take place. Concurrently, the Company began procuring critical equipment for the pilot plant.

The Company also progressed pre-feasibility engineering activities for the separation project during Q2 2025, reaching approximately 50% completion and incorporating design optimizations proposed by the supplier L3 Process as a result of bench-scale testing conducted at its laboratories in Trois-Rivières, Canada. These improvements are aimed at enhancing the efficiency and cost-effectiveness of the solvent extraction process.

9

---

The Company is also in the process of finalizing the site location for the future industrial separation facility, with a decision expected by Q3 2025. Current evaluations are focused on locations in Texas, Louisiana, Alabama, South Carolina and West Virginia. As part of this assessment, the Company is engaging with regional chemical companies to enable direct reagent supply via pipeline infrastructure, a strategy expected to reduce logistics costs and minimize the associated environmental footprint.

Comparatively, during Q2 2024, the Company advanced the development of its rare earth separation project with a conceptual engineering study encompassing the definition of the flowsheet process, recovery estimations, the design of a full water recirculation system and the estimation of a Class 5-AACE CAPEX and OPEX.

Environmental, Social and Governance

Penco Module

Environment and Permits

On May 14, 2025, the SEA issued the Complementary ICSARA for EIA 1, incorporating 205 additional technical observations, including a formal instruction to revise the 1,400 citizen comments previously addressed in the addendum filed in March 2025. The Company is advancing the answers to the Complementary ICSARA and expects to file a second addendum in Q3 2025.

Comparatively, in Q2 2024, the Company submitted EIA 1 to the SEA, which subsequently confirmed its admissibility for formal evaluation.

Social License

During Q2 2025, the Company strengthened its institutional and community engagement efforts through holding a total of 25 meetings with certain government agencies, public officials and technical representatives to provide updates on the Penco Module's progress and ongoing technical evaluations. The Company continued to maintain its open-door policy, facilitating site visits and thematic presentations, while launching several new initiatives designed to address the community needs, including a dental health campaign, a local tourism development project and a public safety program.

In July 2025, the Company expanded its local engagement efforts by hosting its first supplier event in the Biobío Region. The event convened over 150 participants, including existing and potential suppliers, and served as a platform to present the Company's local procurement strategy. The session reinforced the Company's voluntary commitment to regional development and outlined the forthcoming process for supplier registration and engagement. Additionally, the event fostered connection among attendees, helping to strengthen the regional supplier ecosystem and promote greater collaboration across the Company's local value chain.

Comparatively, during Q2 2024, the Company completed the "Early Citizen Participation" process recommended by the Chilean authorities, which was a vital step in designing a project reflective of community feedback. The participatory process involved direct engagement with local communities and the collection of public input regarding the Penco Module. Furthermore, the Company advanced its relationship with national and regional authorities, incorporating feedback from 87 regulatory authorities to better align with Chile's national policies on decarbonization, regional development and environmental and social governance.

Carina Project

Environment and Permits

During Q2 2025, the Company submitted the EIA to the SEMAD, with approval anticipated in Q4 2025. In parallel, baseline and permitting studies were initiated for the Carina Project's associated transmission line. The Company also progressed studies across environmental, social, permitting, land acquisition and resettlement components, aiming to support future licensing and implementation phases.

10

---

Comparatively, during Q2 2024, the Company continued advancing environmental baseline studies in support of its application for the EIA.

Social License

During Q2 2025, the Company continued to advance workforce development and supplier capacity-building initiatives in Nova Roma and neighboring municipalities. These efforts are part of the Company's broader strategy to foster inclusive regional development in alignment with the Carina Project's long-term implementation.

The Company also advanced the execution of its social communication plan. A series of four (4) meetings were held with rural communities to provide updates on the Carina Project's progress, introduce new members of the community relations team and share information regarding future employment and business opportunities. In parallel, the Company hosted multiple stakeholder visits to its pilot plant facility in Goiânia and offered a firsthand view of Aclara's CMH technology in operation. Attendees included government officials, industry analysts, potential customers, journalists and financial institutions from the U.S., Japan, South Korea, South America, United Kingdom, Canada and Brazil.

In June 2025, the Company implemented a vocational training initiative in partnership with the Brazilian National Service for Industrial Training, offering 100 seats across two (2) technical courses: industrial electricity and heavy machinery mechanics. Additionally, the Company continued supporting local suppliers by presenting the final results of a diagnostic assessment and a corresponding development plan to over 250 participants during sessions held in Nova Roma and the neighboring city of Posse.

Comparatively, during Q2 2024, the Company carried out a series of environmental and socioeconomic baseline studies for the Carina Project, while maintaining active community engagement through events and workshops focused on its development. In parallel, formal agreements were signed to deliver training programs aimed at supporting future employment opportunities during the construction and operational phases of the Carina Project.

Occupational Health and Safety

During Q2 2025, the Company continued to enhance safety protocols and strengthen its occupational health and safety culture, through the ongoing use of its performance indicator management system and expansion of benchmarking efforts. In parallel, the Company established a dedicated asset protection department at the Carina Project, implementing 24/7 site security and access control systems aligned with industry best practices.

The Company recorded one (1) lost time injury incident in Q2 2025 and no incidents resulting in lost workdays in Q2 2024. Following the incident, an internal investigation was conducted, and preventive measures were implemented to mitigate similar risks and the risk of recurrence.

OPERATIONAL PERFORMANCE

Unless otherwise specified, the financial information contained in this section of the MD&A entitled "Operational Performance", and the subsections thereunder, is reported in thousands of United States dollars.

As at Q2 2025, the Company's expenditures in respect of exploration, technical development, environmental, social and governance and administration activities were $13.08 million, which were partially offset by a VAT recovery of $6.92 million, totaling a net cash outflow of $6.16 million and a total cash balance of $39.81 million. Comparatively, as at the end of Q2 2024, the Company's net cash outflow was $1.99 million, and the total cash balance was $31.25 million.

Overview of Operating Expenditure and Costs

The Company incurred an aggregate of $2.83 million in losses from continuing operations before income tax during Q2 2025, as compared to an aggregate of $2.10 million in losses during Q2 2024.

(in thousands of US $)	Three months ended June 30		Six months ended June 30
	2025	2024	2025	2024

---

12

Exploration expenses	789	118	980	213
Administration expenses	2.259	2.304	3.963	4.112
Other (expenses) income	-	-	-	(135)
Share of loss of a joint venture	132	10	190	10
Financial costs	33	14	90	30
Financial income	(283)	(350)	(475)	(846)
Exchange differences	(92)	5	(111)	80
Loss from continuing operations before income tax	2,838	2,101	4,637	3,464
Attributable to:
Equity shareholders of the Parent	2,797	2,055	4,559	3,418
Non-controlling interests	41	46	78	46

Exploration Expenses

The breakdown of exploration expenses incurred by the Company for the three (3) and six (6) months ended June 30, 2025 and 2024 are as follows:

(in thousands of US $)	Three months ended June 30		Six months ended June 30
	2025	2024	2025	2024
Personnel expenses	37	41	83	41
Professional fees	537	-	575	3
Mining rights	90	-	90	-
Rental	9	36	22	86
Repair and maintenance	-	-	-	4
Studies	54	-	56	4
Technology and system	-	-	11	-
Contractors and services	-	7	2	16
Travel expenses	41	12	97	23
Freight	-	-	-	13
Laboratory supplies and materials	3	2	6	2
Other	18	20	38	21
Total	789	118	980	213

Exploration expenses comprise all activities related to and arising from greenfield exploration. The purpose of greenfield exploration is to identify additional resources that may support new development and operation modules. Greenfield activities include surface mapping works, geophysics and topographic studies, among others.

During Q2 2025, the Company conducted superficial mapping and soil sampling, resulting in personnel expenses of $37, nil in technology and system expenses, costs related to renting of geology equipment of $9, mining rights of $90 and other study-related expenses of $54. Additionally, the Company incurred costs of $537 for legal, technical, and analytical advisory services, which included hydrogeological assessments and mineral title analysis in support of potential land acquisition evaluations in the United States. Comparatively, during Q2 2024, the Company incurred nil in professional fees, personnel expenses of $41 and costs related to renting geology equipment of $36. In addition, the Company incurred travel expenses of $41, laboratory supplies and other related expenses of $21, as compared to $34 in Q2 2024.

In Q2 2025, the Company incurred nil expenses for contractors and services, as compared to $7 in Q2 2024, comprised of warehouse expenses.

Other Income (Expenses)

The breakdown of other income (expenses) incurred by the Company for the three (3) and six (6) months ended June 30, 2025 and 2024 are as follows:

(in thousands of US $)	Three months ended June 30		Six months ended June 30
	2025	2024	2025	2024
Contractors and services	-	-	-	(135)
Total	-	-	-	(135)

---

As of H1 2024, the Company incurred other income (expenses) due to a reversal of an exploration expense provision of $135 in 2023. The provision included expenses related to contractors and services such as equipment leasing, drilling and topography which were overestimated at the time of provisioning the expenses.

Administration Expenses

The breakdown of administration expenses incurred by the Company for the three (3) and six (6) months ended June 30, 2025 and 2024 are as follows:

(in thousands of US $)	Three months ended June 30		Six months ended June 30
	2025	2024	2025	2024
Personnel expenses	869	1,153	1,607	1,866
Professional fees	410	403	740	674
Depreciation and amortization	187	265	363	669
Contractors and services	548	239	734	404
Travel expenses	110	132	239	266
Marketing expenses	99	79	195	141
Other expenses	36	33	85	92
Total	2,259	2,304	3,963	4,112

In Q2 2025, the Company incurred personnel expenses of $869 as compared to $1,153 in Q2 2024. These expenses were incurred by the Company to support its management and administration team.

Professional fees of $410 incurred during Q2 2025 comprised accounting, tax and legal expenses for the Company's annual tax and legal processes, as compared to professional fees rendered for a similar purpose of $403 incurred by the Company in Q2 2024. In addition, during Q2 2025, the Company incurred travel expenses of $110, marketing expenses of $99 and other expenses of $36, as compared to $132 in travel expenses, marketing expenses of $79 and subscriptions and other expenses of $33 incurred in Q2 2024.

In Q2 2025, the Company incurred depreciation and amortization expenses of $187, as compared to $265 in Q2 2024. In addition, during Q2 2025, the Company incurred contractor and services expenses of $548, primarily driven by Board expenses, as compared to $239 in Q2 2024.

Financial Income and Costs

In Q2 2025, the Company's net financial income and costs amounted to $250 and were associated with the Company's investments in short-term deposits, interest-bearing bank accounts and bank commissions, as compared to net financial income and costs of $336 in Q2 2024.

	Three months ended June 30		Six months ended June 30
(in thousands of US $)	2025	2024	2025	2024
Financial costs	33	14	90	30
Loss from continuing operations before income tax	33	14	90	30
	Three months ended June 30		Six months ended June 30
---	---	---	---	---
(in thousands of US $)	2025	2024	2025	2024
Financial income	(283)	(350)	(475)	(846)
Loss from continuing operations before income tax	(283)	(350)	(475)	(846)

During Q2 2025, the Company incurred an increase in interest and bank commission expenses related to the administration of its bank accounts, resulting in such expenses of $33 as compared to $14 during Q2 2024. In addition, in Q2 2025, financial income decreased to $283 as compared to $350 in Q2 2024, primarily due to a decrease in interest earned on investments in short-term deposits and a reduced cash and cash equivalents.

13

---

Evaluation and Exploration Assets

In accordance with IFRS accounting principles regarding capitalization of E&E assets, costs of mineral properties are capitalized on a project-by-project basis. As at the end of Q2 2025, the Company's principal business included the development of the Penco Module and Carina Project. The Company capitalizes expenses related to brownfield exploration and infill drilling, metallurgical testing and process design, engineering of the mine, processing plant and project infrastructure, permitting and administration activities and services. The following table sets out an overview of the Company's capitalized E&E asset balance:

(in thousands of US $)	Total
Balance at January 1, 2024	95,152
Additions	6,746
Foreign exchange effect	(6,803)
Balance at June 30, 2024	95,095
Additions	12,548
Foreign exchange effect	(5,419)
Balance at December 31, 2024	102,224
Additions	15,621
Disposals	(90)
Foreign exchange effect	8,331
Balance as at June 30, 2025	126,086
Accumulated amortization and impairment
Balance at January 1, 2024	1,111
Additions	167
Foreign exchange effect	(81)
Balance at June 30, 2024	1,197
Additions	602
Foreign exchange effect	(87)
Balance at December 31, 2024	1,712
Additions	214
Foreign exchange effect	97
Balance as at June 30, 2025	2,023
Net book value as at June 30, 2024	93,898
Net book value as at December 31, 2024	100,512
Net book value as at June 30, 2025	124,063

The total investments in the Carina Project and the Penco Module capitalized as E&E as at the end of Q2 2025, Q2 2024 and FY 2024 are as follows:

	Six months ended June 30		Year ended December 31
(in thousands of US $)	2025	2024	2024
Personnel expenses	3,059	2,158	4,593
Professional fees	3,754	1,339	3,059
Environmental impact study	1,388	606	1,367
Drilling services	2,152	-	-
Engineering services	40	-	-
Mining rights	364	391	2,858
Rent building, vehicles, others	1,281	397	1,086
Analysis & technical	1,276	841	1,590
Contractors and Services	1,343	399	3,256
Other	964	615	1,485
Total	15,621	6,746	19,294

In the six (6) months ended June 30, 2025, the Company incurred personnel expenses of $3,059, as compared to the same period in 2024, in which the Company incurred personnel expenses of $2,158. The increase in personnel expenses is primarily due to the growth in headcount in Brazil to support the development of the Carina Project.

---

For purposes of calculating the Company's personnel expenses under its E&E asset balance sheet, the Company's employee headcount as at the end of Q2 2025 was 81, as compared to 66 as at the end of Q2 2024.

Each category of the Company's costs in relation to its investment in the Penco Module and Carina Project in Q2 2025 has been discussed elsewhere in this MD&A. During the three (3) and six (6) months ended June 30, 2025 and 2024, expenses related to the technical development of the Penco Module and Carina Project were comprised of costs related to engineering services, feasibility studies, professional fees, rent building and vehicle expenses, analysis and technical, contractor services and other related expenses, each of which are discussed under the sections of this MD&A entitled "Project Development Activities" and "Exploration Activities" above.

In the six (6) months ended June 30, 2025, expenses relating to permit-related activities were comprised of costs associated with the environmental impact study and are described in greater detail under the section entitled "Environmental, Social and Governance" above. The environmental impact study expenses incurred by the Company totaled $1,388 as at the end of Q2 2025, as compared to the same period in 2024, in which the Company incurred environmental impact study expenses of $606.

Expenses related to mining rights, which consisted of costs relating to exploration and exploitation of the Company's concessions, totaled $364 as at the end of Q2 2025 as compared to $391 incurred as at the end of Q2 2024. As at the end of Q2 2025, the Company's concessions were comprised of 83,185 hectares in respect of the Penco Module and 48,564 hectares in respect of the Carina Project, as compared to the end of Q2 2024, in which the Company's concessions were comprised of 84,185 hectares in respect of the Penco Module, 65,956 hectares in the Carina Project and 30,300 hectares related to other concessions.

Properties, Plants and Equipment

The breakdown of PP&E capitalized by the Company as at the end of Q2 2025 and FY 2024 are as follows:

(in thousands of US $)	Land	Plant and equipment	Total
Balance at January 1, 2024	9,234	2,877	12,111
Additions	-	394	394
Disposals	-	-	-
Foreign exchange effect	(1,106)	(85)	(1,191)
Balance at December 31, 2024	8,128	3,186	11,314
Additions	-	130	130
Foreign exchange effect	549	178	727
Balance as at June 30, 2025	8,677	3,494	12,171
Accumulated amortization and impairment
Balance at January 1, 2024	-	821	821
Additions	-	619	619
Foreign exchange effect	-	(46)	(46)
Balance at December 31, 2024	-	1,394	1,394
Additions	-	169	169
Foreign exchange effect	-	19	19
Balance as at June 30, 2025	-	1,582	1,582
Net book value as at December 31, 2024	8,128	1,792	9,920
Net book value as at June 30, 2025	8,677	1,912	10,589

During H1 2025, the Company incurred expenses of $130 due to equipment purchases, compared to $394 incurred during the FY 2024.

---

SUMMARY OF QUARTERLY RESULTS

	June 30	March 31	December 31	September 30
	2025	2025	2024	2024
(in thousands of US $)	US$000	US$000	US$000	US$000
Revenues	-	-	-	-
Net income (loss) from continuing operations	(2,838)	(1,799)	(2,003)	(1,947)
Net income (loss) and comprehensive income (loss)	(2,838)	(1,799)	(2,003)	(1,947)
Basic and diluted net income (loss) (per share)	(0.01)	(0.01)	(0.01)	(0.01)
	June 30	March 31	December 31	September 30
	2024	2024	2023	2023
	US$000	US$000	US$000	US$000
Revenues	-	-	-	-
Net income (loss) from continuing operations	(2,101)	(1,363)	(6,015)	(1,442)
Net income (loss) and comprehensive income (loss)	(2,101)	(1,363)	(6,015)	(1,442)
Basic and diluted net income (loss) (per share)	(0.01)	(0.01)	(0.04)	(0.01)

During Q2 2025, the Company incurred higher net losses from continuing operations as compared to Q1 2025, primarily due to an increase in administrative expenses of $555, an increase in exploration expenses of $598, a decrease in exchange rate expenses of $73, an increase in financial income of $91, an increase in share of loss of a joint venture of $74 and a decrease in financial costs of $24. The increase in administrative expenses was mainly explained by higher personnel expenses of $410, resulting from performance bonuses and severance payments made to the former Chief Operating Officer, along with increased consulting and professional expenses of $80, and contractor-related services of $82. These increases were partially offset by lower travel and other expenses of $17. The increase in exploration expenses was primarily due to technical and fieldwork activities conducted in Brazil and the United States, including geological mapping, environmental assessments, drill site preparation and technical reviews of mineral titles, which led to higher technical and analysis services of $573 and other related expenses of $25.

During Q1 2025, the Company incurred lower net losses from continuing operations as compared to Q4 2024, primarily due to a decrease in administrative expenses of $75, a decrease in exchange rate expenses of $161, a decrease in financial income of $134, a decrease in share of loss of a joint venture of $26 and an increase in financial costs of $32. The impacts were partially offset by a decrease in exploration expenses of $108, primarily due to lower travel, rentals and studies expenses.

During Q4 2024, the Company incurred higher net losses from continuing operations as compared to Q3 2024, primarily due to an increase in exploration expenses of $217, an increase in exchange rate expenses of $171, a decrease in financial income of $159, an increase in share of loss of a joint venture of $63 and an increase in financial costs of $15. The impacts were partially offset by a decrease in administrative expenses of $569, primarily due to lower Board related costs associated with restricted share unit compensation.

During Q3 2024, the Company incurred lower net losses from continuing operations compared to Q2 2024, primarily due to a decrease in exploration expenses of $36, an increase in financial income of $135, a decrease in exchange rate expenses of $32, an increase in share of loss of a joint venture of $10, a decrease in financial costs of $4, partially offset by an increase in administrative expenses of $44, primarily due to higher personnel expenses.

During Q2 2024, the Company incurred higher net losses from continuing operations compared to Q1 2024, primarily due to an increase in administrative expenses of $496, a decrease in financial income of $146, a decrease in exchange rate expenses of $69, an increase in exploration expenses of $24, and an increase in share of loss of a joint venture of $10, partially offset by a decrease in other (expenses) income of $135 and a decrease in financial costs of $2. The increase in administrative expenses was as a result of higher personnel expenses of $440, higher legal and professional expenses of $132 and other expenses of $63, partially offset by lower depreciation and amortization expenses of $139.

16

---

During Q1 2024, the Company incurred lower net losses from continuing operations compared to Q4 2023, primarily due to a decrease in administrative expenses of $952, a decrease in exploration expenses of $3,517, an increase in exchange rate expenses of $136, an increase in other (expenses) income of $135, a decrease in other income of $24 and an increase in financial income of $208. The decrease in administrative expenses was as a result of lower legal and professional expenses of $32, personnel expenses of $487, permit expenses of $369, depreciation expenses of $211 and marketing expenses of $77. The decrease in exploration expenses was as a result of the capitalization of expenses related to the Carina Project, resulting in lower chemical assays and drilling services of $2,802, personnel expenses of $529, travel expenses of $120, and other expenses of $67.

During Q4 2023, the Company incurred higher net losses from continuing operations compared to Q3 2023, primarily due to an increase in administrative expenses of $1,619, exploration expenses of $2,814, financial cost of $26, other income of $22, and a decrease in financial income of $262 and lower exchange rate expenses of $126. The increase in administrative expenses was primarily as a result of expenses related to the exploration in the Carina Project and the incorporation of the local administrative team to support operations carried out in Brazil, resulting in higher legal and professional expenses of $165, personnel expenses of $698, concessions and related permit expenses of $474, marketing expenses of $139 and depreciation and amortization expenses of $314. In addition, the decrease in administrative expenses was as a result of travel expenses of $29, contractor services expenses of $91 and other expenses of $51. The increase in exploration expenses relates to additional exploration works in the regions of Minas Gerais and Goiás, Brazil, and the preparation of preliminary economic assessments, which resulted in higher chemical assays of $246, personnel expenses of $260, geophysical and topographic studies, laboratory and related services of $1,602, travel expenses of $85, legal and professional expenses of $267, rental expenses of $303 which includes vehicles for transporting staff, warehouses and offices, and other expenses of $51.

During Q3 2023, the Company incurred lower net losses from continuing operations compared to Q2 2023, primarily due to a decrease in administrative expenses of $680, a decrease in exploration expenses of $659, an increase in exchange rate expenses of $140 and a decrease in financial income of $122. The decrease in administrative expenses was as a result of lower legal and professional expenses of $222, personnel expenses of $270, permit expenses of $101 and other expenses of $87. The decrease in exploration expenses was as a result of the capitalization of expenses related to the Carina Project, resulting in lower chemical assays and drilling services of $492, travel expenses of $116, and other expenses of $51.

The Company is in the development phase of both the Penco Module and Carina Project, which includes conducting exploration, feasibility and technical studies, as discussed in greater detail under the sections of this MD&A entitled "Development Activities" and "Exploration Activities" above. The Company has not generated any operating income as at Q2 2025.

FINANCIAL INSTRUMENTS

Nature and Extent

The Company's consolidated financial instruments consist of cash and cash equivalents. Cash and cash equivalents are included in current assets due to their short-term nature. The fair value of cash and cash equivalents approximates their book value.

The Company's consolidated financial instruments for Q2 2025, Q2 2024 and FY 2024 are as follows:

	2025	Three months ended June 30 2024	Year ended December 31 2024
Cash and cash equivalents
Current demand deposit accounts	39,813	31,251	15,375
Total Cash and cash equivalents	39,813	31,251	15,375

---

18

Financial Instrument Risks

The Company manages risks to minimize potential losses by investing cash in the short term to reduce inflationary risks. The terms of the Company's short-term financial instruments are on arm's length terms and entered into with banks and institutional lenders. The primary objective is to ensure that the risks are properly identified and that the capital base is adequate in relation to those risks. The Company's risk exposure in respect of its financial instruments is summarized below.

Foreign Currency Risk

The Company is a development-stage mineral resources company and, accordingly, no income or operating costs have been recorded. The principal disbursements are denominated in Chilean pesos and Brazilian reals. The Company has deposits, trade and other payables and account payables to related parties stated in United States dollars.

Credit Risk

Credit risk relates to the Company's inability to make payment of their obligations as they become due. The Company is not exposed to credit risk as it does not currently engage in commercial activities.

Liquidity Risk

Liquidity risks relate to the Company's inability to obtain funds required to comply with its commitments, including the inability to sell a financial asset quickly enough and at a price close to its fair value. Management regularly monitors the Company's level of short- and medium-term liquidity and access to credit lines, in order to ensure appropriate financing is available for its operations. As of the date of this MD&A, the Company has not opened, or been provided access to, any lines of credit.

LIQUIDITY AND CAPITAL RESOURCES

Working Capital Requirements

The Company has working capital requirements of $2.47 million as at the end of Q2 2025, and the Company's cash and cash equivalent position as at the end of Q2 2025 was $39.81 million.

Off-Balance Sheet Commitments

A summary of the Company's contractual obligations that must be satisfied with cash, and their approximate timing of payment, is as follows:

(in thousands of US $)	Q3 & Q4 2025	FY 2026	FY 2027	FY 2028	FY 2029	FY 2030	After 2031
Operating Leases (1)	23	-	-	-	-	-	-
Other Obligations (2)	1,300	1,300	-	-	-	-	-
Total Contractual Obligations	1,323	1,300	-	-	-	-	-

(1) Operating leases include office, warehouse, and vehicle leases.
(2) Other obligations include land acquisitions.

Cash and Liquidity

The Company did not have any commercial debt as at the end of Q2 2025. As at the end of Q2 2025, the Company had a cash and cash equivalent balance of $39.81 million. On January 15, 2025, the Company received the second tranche payment of $12.5 million from CAP's strategic investment in REE Uno. To date, CAP has deposited two (2) of the three (3) tranches owed pursuant to the CAP Investment Agreement, totaling $22.2 million. The final tranche of $6.9 million is scheduled for deposit in January 2026. On February 19, 2025, the Company received $25 million

---

from its Private Placement. These funds, along with the cash balance from its wholly-owned subsidiaries, will finance planned capital and operating expenditures for the Carina Project throughout 2025. Additionally, the Company received a VAT refund of $6.92 million in cash during Q2 2025, related to a VAT tax benefit for the Penco Module project expenses. The Company's present cash resources are sufficient to meet all its current liabilities and administrative and overhead expenses for the next 18 months.

Capital Resources

The Company's focus in FY 2025 is the continued advancement and development of the Penco Module, the Carina Project and any potential future modules located in the concessions beneficially held by the Company.

The primary uses of capital resources in 2025 are expected to include:

(in thousands of US $)	2025
Activities in connection with the Penco Module	12,372
Permitting and community engagement expenditures	2,787
Engineering activities	2,422
Surface land purchase and mining concessions	1,505
Administrative and personnel expenses	5,658
Activities in connection with the Carina Project	25,669
Drilling and related exploration expenses	6,307
Engineering and piloting	10,357
Permitting and community engagement expenditures	1,656
Surface land purchase and mining concessions	2,249
Administrative and personnel expenses	5,100
Separation of Rare Earths Project	570
Aclara Metals Project	766
Maintenance of mining concessions and exploration activities in connection with potential new modules	809
Administrative expenses and general corporate purposes	3,099
TOTAL	43,284

As the Company does not currently generate cash flow from operating activities, the Company will be relying on further equity and/or debt financing, or a strategic partnership, as the most likely sources of additional funds for the development of the Penco Module, the Carina Project and any potential future modules, to the extent necessary.

RELATED PARTY TRANSACTIONS

Key Management Compensation

Key management personnel include those persons having authority and responsibility for planning, directing, and controlling the activities of the Company.

In H2 2025, the remuneration of the Company's key management totaled $3.19 million, as compared to the same period in 2024 in which remuneration of the Company's key management totaled $2.69 million. The increase in the Company's key management remuneration is a result of the appointment of a new Executive Vice President in June 2024, with compensation in H1 2025 corresponding to six (6) months of employment compared to one (1) month in H1 2024.

	Six months ended June 30
(in thousands of US $)	2025	2024
Shared-based payments (1)	190	579
Short-term employee benefits	3,000	2,117
Total compensation paid to key management personnel	3,190	2,696

(1) Amortized share-based payment expenses due to restricted share units granted to management.

---

20

Related Party Transactions

The Company was subject to the following related-party balances and transactions as at six months ended June Q2 2025, Q2 2024 and FY 2024:

Accounts payable
	Six months ended June 30		Year ended December 31
(in thousands of US $)	2025	2024	2024
Compañia Minera Ares S.A.C.	-	3	19
CAP	-	-	6
Total	-	3	25
Accounts receivable
	Six months ended June 30		Year ended December 31
(in thousands of US $)	2025	2024	2024
Aclara Metals - Joint venture	-	8	17
CAP	6,937	19,417	19,418
Total	6,937	19,425	19,435

Compañia Minera Ares S.A.C., as a member of Hochschild Mining PLC, is a related party and provides intercompany administrative services pursuant to the terms of a transition services agreement that continues to date.

CAP, a related party and investor in REE Uno, has made a capital contribution to REE Uno in exchange for 20% of the issued and outstanding share capital of REE Uno. As a result, the Company has an accounts receivable for two (2) of the three (3) installments of this contribution.

Accounts payable with Compañia Minera Ares S.A.C. amounted to nil as at June 2025, compared to accounts payable of $8 as at June 2024.

Accounts receivable with CAP amounted to $6.93 as at June 2025, compared to accounts receivable of $19.42 as at June 2024. This decrease was primarily due to paying the second installment in relation to the capital contribution made by CAP.

OUTSTANDING SHARE DATA

As of the date of this MD&A, the Company's issued and outstanding share capital is comprised of an aggregate of 219,985,221 common shares and 3,977,216 restricted share units, which were issued in accordance with the terms of the Company's long-term incentive plan.

SIGNIFICANT ACCOUNTING POLICIES

The Company's accounting policies are described in Note 2 to the Financial Statements.

SIGNIFICANT EQUITY INVESTEE

Disclosure related to the Company's significant equity investee is provided under Notes 2 and 18 to the Financial Statements.

---

21

CAUTIONARY STATEMENTS AND READER ADVISORIES

Cautionary Note Regarding Forward-Looking Information

This MD&A includes “forward-looking information” and "forward-looking statements" within the meaning of applicable securities legislation (collectively referred to herein as “forward-looking statements”) that is based on the opinions and estimates of management and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. In some cases, forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “targets”, “expects” or “does not expect”, “is expected”, “an opportunity exists”, “budget”, “scheduled”, “estimates”, “outlook”, “forecasts”, “projection”, “prospects”, “strategy”, “intends”, “anticipates”, “does not anticipate”, “believes”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might”, “will”, “will be ‘taken’, “will occur” or “will be achieved”. All statements other than statements of historical fact are forward-looking statements and, in particular, any statements that refer to expectations, intentions, estimations, projections or other characterizations of future events or circumstances contain forward-looking information. Statements containing forward-looking information are not historical facts but instead represent management’s expectations, estimates and projections regarding future events or circumstances and similar words suggesting future outcomes or statements regarding an outlook. All statements in this MD&A that address events or developments that the Company expects to occur in the future are forward-looking statements.

Forward-looking statements are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. Such risks and uncertainties include, but are not limited to: operating in a foreign jurisdiction (including local political and socioeconomic issues); continued compliance with applicable laws and regulations; failure to obtain necessary permits and licenses or to renew them; timing and requirements of permits and third-party consents (as may be required); impact of social and environmental activism; relations and agreements with local communities; government regulation of mining operations; environmental compliance; actual production, capital and operating costs differing from those anticipated; price volatility of rare earth elements; statements regarding anticipated exploration, drilling, development, construction, permitting and other activities or achievements of Aclara; expectations, strategies and plans for the Penco Module and the Carina Project, including in relation to geology, metallurgy, engineering, title, and environmental matters; expected costs and timing of development of the Penco Module and Carina Project; costs, location and timing of potential future exploration and drilling and the uncertain nature of such exploration and drilling activities; the impact of competition and applicable laws and regulations on the Company's operations and results; environmental risks and hazards; future objectives of the Company and growth and other strategies to achieve those objectives; future financial or operating performance of the Company; global markets for the demand and supply of rare earth elements; continued availability of required expertise and manpower; continued access to capital markets; future trends that may affect the Company's business and results of operations; possible emergence of new global pandemics and their impact on Aclara's operations; continued qualification for listing on the TSX; Aclara having further potential through exploration at the Penco Module and the Carina Project, and those risks associated with the mining industry, including delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of resource estimates; the uncertainty of estimates and projections in relation to production, costs and expenses and health, safety and environmental risks; the risk of commodity price and foreign exchange rate fluctuations; as well as other factors identified and described in more detail in Aclara's most recent annual information form and its other filings with securities and regulatory authorities, which are available on SEDAR+ at www.sedarplus.ca.

Readers are cautioned that the foregoing list of risks, uncertainties and other factors is not exhaustive. The forward-looking statements contained in this document are made as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking statements or those in any other documents filed with Canadian securities regulatory authorities, whether as a result of new information, future events or otherwise, except in accordance with applicable securities laws. The forward-looking statements are expressly qualified by this cautionary statement.

Cautionary Note Regarding Mineral Reserves and Mineral Resources

This M&DA was prepared in accordance with Canadian standards for reporting of mineral resource estimates and the requirements of the securities laws in effect in Canada. In particular, and without limiting the generality of the

---

foregoing, the terms "mineral reserve", "proven mineral reserve", "probable mineral reserve", "mineral resource", "measured mineral resource", "indicated mineral resource" and "inferred mineral resource" as may be used or referenced in this MD&A are Canadian mineral disclosure terms as defined in accordance with NI 43-101 and the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM") Standards on Mineral Resources and Mineral Reserves (the "CIM Standards"), adopted by the CIM Council, as amended. Such terms used but not otherwise defined herein have the meanings ascribed to them in the CIM Standards.

The mineral resource estimates noted in this MD&A are preliminary in nature and include inferred mineral resources that at present are considered too geologically speculative in nature to enable categorization as mineral reserves. There is no certainty that such preliminary economic assessments will be realized.

APPROVAL

The Board of Directors of Aclara has approved the disclosure contained in this MD&A.

ADDITIONAL INFORMATION

Additional information relating to the Company and its other continuous disclosure materials, including the annual information form, annual management's discussion and analysis and audited annual financial statements, consolidated financial statements, and notice of annual meeting of shareholders and management information circular is available on Aclara's website at www.aclara-re.com and on SEDAR+ at www.sedarplus.ca.

22