Half Yearly Report

26 September 2013

Rare Earths Global Limited

("REG" or the "Company")

Interim Results

For the period ended 30 June 2013

Rare Earths Global Limited (AIM: REG), a leading mining services group focused on the extraction, separation, refinement and trading of rare earth elements, oxides and other related products, is pleased to announce its interim results for the period ended 30 June 2013.

Highlights

- Production on hold with revenue limited to RMB0.24million (H1 2012: RMB52.8million );

- Net loss RMB3.4million (H1 2012: 29.4million)

- Significant slowdown in the Chinese rare earth market due to the impact of new legislation;

- No production / export quota granted for 2013 but expected in late 2013/early 2014.

Commenting on the results, Simon Ong, Chief Executive of REG said, "Trading for H1 2013 was exceptionally difficult as increased regulation by the Chinese Government has restricted production and created much uncertainty among all market participants. The Board's prime focus is now to consider a number of options to help secure the appropriate production licences and quotas as soon as possible so we might return to normal trading."

* All amounts are in RMB unless otherwise stated

- Ends -

For further information:

Business Review

Trading in the rare earth industry in China continues to be extremely difficult. As set out in the statement of our Annual Results announced on 1 July 2013, the Board appointed consultants to work with local and national government in order to secure ongoing production quota's and provide guidance on the Ministry of Industry and Information Technology ("MIIT") requirements. We further announced that this would result in a material reduction in revenues as the Sanxie plant would cease production. As expected, our revenues are materially down as the rare earth industry in China has slowed considerably whilst the Chinese Government begins to implement its White Paper on Rare Earth and follow up on statements made by MIIT. Furthermore, as previously announced, in August 2012 the MIIT released a statement which recommended that mixed rare earth mines in China will have to produce a minimum of 20,000 metric tonnes a year and smelters will have to ensure annual output of 2,000 tonnes.  In doing this the Chinese Government is seeking to limit the number of market participants, prevent illegal smuggling and help underpin falling rare earth prices.The Companies rare earth smelting and separation plant has a maximum production capacity of circa 800 tonnes and therefore does not met these new criteria. In addition to the above, the new Chinese Government took office in April creating even more uncertainty among market participants as they await the appointment of the officials responsible for the rare earth industry and ultimately what their policy will entail.

The Board continues to focus on securing compliance with the White Paper (i.e. increase production capacity at Sanxie to 3,000 tonnes+). In achieving this, as mentioned above, we have employed third party consultants to assist expedite securing production and export quotas for the separation plant at Sanxie In addition the Board continue their dialogue with state owned businesses and Chinese nationals who are well placed within the mining and resources industry to assist the Board in achieving this strategy. The Board also continues to monitor the international landscape as aggressive pricing presents corporate opportunities in the global rare earth market. We hope to update shareholders on our progress with these discussions in due course.

Separation & Smelting

As further explained in our Annual Results and above, it has become increasingly difficult to secure meaningful production quotas in the rare earth industry in China. There continue to be delays from the Government in providing production quotas for a number of separation and smelting plants including REG despite our plant at Sanxie being fully operational and all relevant documentation having been filed with the authorities. As the production quota has still yet to be granted for 2013 this has meant that although the plant is operational no production is taking place as we await the regulatory approval which is expected in late 2013/early 2014.

Mining Services and Trading Divisions

As a result of the above many of the operating rare earth mines in China have ceased production until official quota's have been released. This has meant that although the Company's mining services division retains its agreements with its ongoing partners these have been put on hold as many asset owners are experiencing similar issues to the Company in achieving production quota's. In addition, as no export quota has been granted in 2013 the Company has been unable to make use of its trading licence during the period under review.

Outlook

In the short term the Company has no option but to continue to aggressively pursue its objectives in the methods as set out above and whilst managing its cost base as prudently as possible. The second half of 2013 will see trading on the same level as the first half until production quotas and licences are secured. The Board remain optimistic for the long term outlook for the rare earth industry, especially for heavy rare earths, as demand continues to rise both in China and internationally. We look forward to updating shareholders on our progress in securing the relevant licences and quota's and any third party agreements in due course.

Financial Review

Revenues for the six months ended 30 June 2013 were RMB0.24 million, as compared to RMB52.8 million for the six months ended 30 June 2012, reflecting a decrease of 99.5%. Gross losses amounted to RMB1.02 million (H1 2012: gross profit of RMB11.3 million). The decrease reflected the deteriorating operating environment in the rare earth industry as outlined above. Net loss for the six months ended 30 June 2013 improved 88.3% to RMB3.4 million (H1 2012: Net loss of RMB29.4 million).

Total operating expenses for the six months ended 30 June 2013 decreased to RMB8.7 million (H1 2012: RMB36 million). Administrative expenses decreased to RMB3.9 million as compared to RMB12.1million for the period ended 30 June 2012. Share based payment expenses were RMB4.7million for current period as compared to RMB23.1 million for the same comparative period last year.

In period under review, Mr. Tong Man Tak, a shareholder of the Company granted an extension to the interest- free amount due to him to 31 March 2015. As a result of the modification of the agreement, RMB7.2million was recoginsed as interest income for the period ended 30 June 2013.

Decrease in the Company's net basic and diluted losses per share for the six months ended 30 June 2013 of RMB5.1 cents as compared to RMB49 cents basic and diluted losses per share for the six months ended 30 June 2012.

On behalf of the Board of Directors

Simon Ong, Chief Executive Officer

26 September 2013

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE SIX MONTHS ENDED 30 JUNE 2013

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AT 30 JUNE 2013

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED 30 JUNE 2013

Attributable to equity holders of the Company

Attributable to equity holders of the Company

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2013

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the SIX months ended 30 JUNE 2013

1. GENERAL INFORMATION

Rare Earths Global Limited (the "Company") is an exempted company incorporated in the Cayman Islands with limited liability on 8 February 2012. The Company's registered address is Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-1111, Cayman Island. The Company's shares were traded on the AIM Market of the London Stock Exchange Plc.

The Company together with its subsidiaries (collectively referred to as the "Group") is principally engaged in the production, separation and refining of rare earth products and provisions of mining management services.

This condensed consolidated interim financial information has not been audited.

2. THE REORGANISATION AND BASIS OF PREPARATION

The reorganisation

Rare Earths Global Limited (the "Company") was incorporated in the Cayman Islands on 8 February 2012. In preparation for the listing of the Company's shares on the London Stock Exchange's market for smaller and growing companies ("AIM") in March 2012, the Group executed the following restructuring transaction (the "Restructuring"). The Company became the holding company of Dressport Limited ("Dressport") and its subsidiaries pursuant to a share exchange agreement relating to the sale and purchase of shares in Dressport dated 7 March 2012 (the "Share Exchange Agreement"). The Company acquired the entire equity interest in Dressport from its shareholders by means of share exchange whereby 60,994,790 ordinary shares of the Company were issued to the shareholders of Dressport, at par credited as fully paid, in exchange for all the outstanding ordinary shares (50,829) of Dressport. The share exchange was conducted with a ratio of 1,200 shares of the Company to one share of Dressport on a pro-rata basis. Thereafter, the Company has become the holding company of Dressport and its subsidiaries.

The consolidated financial statements of the Group have been prepared using the principles of the merger accounting involving Dressport and its subsidiaries, as if the group structure under the Restructuring have been in existence since their respective dates of incorporation.

The shares of the Company were listed on AIM with effect from 30 March 2012.

Basis of Preparation

This interim report, which incorporates the financial information of the Company has been prepared on the historical cost basis except for certain financial instruments that are measured at fair values, as appropriate; using accounting policies which are consistent with those set out in the Company's consolidated financial statement for the year ended 31 December 2012 except for adoption of new standards and interpretations effective 1 January 2013 as described in note 3 below

The unaudited condensed consolidated financial statements are presented on a condensed basis as permitted by IAS 34 'Interim Financial Reporting' and therefore do not include all disclosures that would otherwise be required in a full set of financial statements and should be read in conjunction with the 2012 annual consolidated financial statements .

This interim financial information for the six months ended 30 June 2013, was prepared in accordance with IAS 34 and thereby International Financial Reporting Standards ("IFRS"), as issued by the International Accounting Standards Board ("IASB"); and was approved by the Board of Directors on 25 September 2013.

3. IMPACT OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING STANDARDS

The adoption of these new and revised IFRSs had no significant financial effect on the interim result of the Group.

4. REVENUE AND SEGMENT INFORMATION

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Operating Decision Maker ("CODM") of the Group to allocate resources to the segments to assess their performance.

The Group determines its operating segments based on the report reviewed by the directors of the Group, who are also the CODM, to make strategic decisions.

Information reported to the Group's CODM for the purposes of resource allocation and performance assessment focuses specifically on the separation and sales rare earth products, the mining management services, and the trading of rare earth products. Accordingly, the Group categorizes its business into three operating segments, namely (i) separation and sales of rare earth products; (ii) mining management services; and (iii) trading of rare earth product

Separation of rare earth products - production and sales of rare earth products .

Mining management services - provides mining management servicesand technical supportto PRC rare earth mining companies and factories in the PRC.

Trading of rare earths products - trading of rare earth products in the PRC and overseas.

The Group's CODM make decisions according to the operating results of each segment.

Information of segment assets and liabilities is not part of the regular reports provided to the Group's CODM for the purpose of resources allocation and performance assessment. Accordingly, only segment results are presented.

Segment result represents the gross profit earned by each segment based on internal management reports prepared in accordance with accounting policies similar to the accounting rules and financial regulations applicable to enterprises in the PRC, without allocation of other income, changes in fair values of financial assets at fair value through profit or loss, selling and distribution costs, administrative expenses and finance costs. This is the measure reported to the chief operating decision makers for the purposes of resource allocation and assessment of segment performance.

For the six months ended 30 June 2013

For the six months ended 30 June 2012

For the six months ended 30 June 2013

Reconciliation of segment revenue and segment results of the Group

Other segment information

For the six months ended 30 June 2012

Other segment information

5. INCOME TAX EXPENSE

The provision for PRC current income tax is based on a statutory rate of 25% (six months ended 30 June 2012: 25%) of the assessable profit of the entities comprising the Group as determined in accordance with the relevant income tax rules and regulations of the PRC.

6. DIVIDENDS

No dividend was paid or proposed during the period presented, nor has any dividend has been proposed since the end of the reporting period.

7. EARNINGS PER SHARE

The calculation of the basic and diluted earnings per share attributable to the owners of the Company is based on the following data:

At the end of the period, the Company had in issue 2,861,442 (2012: 2,861,442) share options which have not been included in the calculation of the diluted loss per share because their effects are anti-dilutive although these share options could be dilutive in the future.

8. TRADE AND OTHER RECEIVABLES AND PREPAYMENTS

Note: In April 2012, Huangshan (Quansheng) Mineral Products Sales Co., Ltd ("Quansheng"), a subsidiary of the Company, entered into a contract with an inventory supplier to purchase mineral products with a fixed quantities, prices and types of goods for an aggregated amount of RMB 40,000,000, of which prepayment with the gross amount of RMB 20,000,000 was paid. On 25 April 2013, Quansheng and the supplier entered into a supplemental agreement, under which the quantities and units of mineral products were re-negotiated for lower fixed prices and the total purchase amount was changed to RMB 17,000,000. As of the date of this report, the supplier returned RMB 1,000,000 to Quansheng. Another RMB 2,000,000 is past due. The Group management is closely monitoring the situation and considers the past due amounts are collectable. The Company made no provision on the contract (2012: RMB3,895,000) in current period.

The Group allows an average credit period of 60 days to its trade customers. The following is an aged analysis of trade receivables presented based on the invoice dates at the end of the reporting period, which approximated the respective revenue recognition dates:

9. MOVEMENTS IN PROPERTY, PLANT AND EQUIPMENT

During the six months ended 30 June 2013, the Group spent approximately RMB241,723 on acquisition of property, plant and equipment in order to upgrade its operating capacities.

10. TRADE AND OTHER PAYABLES AND ACCRUALS

In general, the Group is required to make full advance payments to suppliers for the purchases of its major raw materials, rare earth. Suppliers of raw materials other than rare earth generally allow the Group a credit period of 60 to 90 days.

11. AMOUNTS DUE FROM/TO RELATED PARTIES

12. SHARE CAPITAL OF THE COMPANY

The balance at 1 January 2012 represented the amount of share capital of Dressport contributed by its equity holders. The share capital of Dressport does not have any par value.

The balance at 30 June 2013 represented the issued and fully paid capital of the Company.

Notes:

(a) Upon incorporation, the authorised capital of the Company was US$100,000 divided into 10,000,000 ordinary shares of US$0.01 each, of which one subscriber share was allotted and issued at par to Citywell Group Limited, a company wholly owned by Mr. Ong.

(b) Pursuant to an ordinary resolution passed by the sole member of the Company on 20 February 2012, each of the authorised and issued shares of the Company were subdivided into 10 shares of US$0.001 each.

(c) On 7 March 2012, the Company repurchased all issued share capital for a consideration of US$0.01.

(d) Pursuant to a share exchange agreement dated 7 March 2012, the Company acquired the entire equity interest in Dressport from its shareholders by means of share exchange whereby 60,994,790 ordinary shares of the Company were issued to the shareholders of Dressport at par credited as fully paid, in exchange for all the outstanding ordinary shares of Dressport.

(e) On 29 March 2012, 2,592,891 ordinary shares of US$0.001 each were issued at a price of GBP247 pence per share under the placement on AIM, 2,541,448 of these shares were issued to three individual investors and the rest to other public investors. The proceeds of GBP1,625 (equivalent to US$2,587 and RMB16,372) representing the par value, were credited to the Company's share capital. The remaining proceeds of GBP6,278,650 (equivalent to RMB63,420,959), after the issuing expenses, were credited to the share premium account. The new shares rank pari passu with the existing shares in all respect.

(f) On 14 July 2012, 4,000,000 ordinary shares of US$0.001 each were issued as part of the consideration for the acquisition of the remaining 39% equity interest in Sanxie. The par value of US$4,000 (equivalent to RMB25,480) was credited to the Company's share capital. The new shares rank pari passu with the existing shares in all respect.

There were no movements in share capital during the six months period ended 30 June 2013.

13. RELATED PARTY DISCLOSURES

(a) Except for transactions and balances disclosed elsewhere in the condensed consolidated financial statements, the Group has no other significant transactions and balances with its related parties during the six months ended 30 June 2013.

(b) During the period, the Group granted share options of nil (30 June 2012: 2,861,462) to Directors and advisors of the Group with exercise price of GBP 247 pence.

(c) Compensation of key management personnel of the Group

14. CAPITAL COMMITMENTS

15. EVENTS AFTER THE REPORTING PERIOD

There were no significant events after the reporting period.