Tantalus Rare Earths AG: Exploration Progress

Tantalus Rare Earths AG ('TRE'), the German exploration company currently exploring the large near surface rare earths occurrence in north-western Madagascar (the 'TRE Project'), is pleased to provide the following update on its exploration activities.

Highlights

- Preliminary exploration of large argillaceous laterite deposits overlying TRE's three main hard rock target zones have returned potentially economic grades of rare earth elements (REE) with a high percentage of valuable heavy REEs.

- TRE's technical staff believe these argillaceous laterites are potentially comparable to the REE bearing clays mined in southern China. Early indications including a reconnaissance geochemical survey of the central part of the south-eastern intrusion, suggest that REE bearing argillaceous laterites may appear over this part of the concession, although this is still subject to much more detailed exploration.

- Drilling and metallurgical test work will commence on the zones of argillaceous laterites as a matter of priority.

- Diamond drilling has continued on the hard rock REE projects. At Target 1 - Ampasibitika, a total of 7,420 m has been drilled, of which 1,420m has been drilled since the start of March 2011.

- The results received to date indicate a good probability of continuous REE mineralisation in the top surface layer. A large number of the core samples contain multiple, mineralised intersections in the unweathered bedrock.

- Dr. Dominique Rakotomanana joined the Malagasy subsidiary on 15 April 2011. Dr. Rakotomanana holds a doctor's degree in geology by the National Polytechnic Institute of Lorraine (Nancy, France) and since 2004 has headed the Geology & Geophysics Department of the major World Bank financed program ('PGRM') which restructured the Malagasy mining sector and produced an up-to-date database on the country's geology, mineral resources and geophysics.

- As announced by the company on February 28^th and April 12^th 2011, two capital increases have, or are about to, take place. TRE has successfully raised EUR2,705,950 by issuing 117,650 new shares and expects to raise an additional EUR4,406,175of cash through the issue of 176,247 new shares in the coming weeks.

Commenting on the recent activities, Mr Jack Lifton, a member of the supervisory board of TRE said: 'The TRE Project is emerging as a potentially world-class rare earths project. Our discovery that the argillaceous laterites may also host significant rare earth mineralisation makes our project based on our current knowledge, the only known major occurrence of this type outside of those in southern China, which currently supply essentially the majority of the World's highly sought after heavy rare earth elements. This comes as a bonus to the significant hard rock potential already identified in our drilling programmes to date.

'We look forward to providing additional updates as our exploration activities accelerate in the months ahead.'

Background

The TRE Project is an exploration project located in north-western Madagascar and comprises rare earth-tantalum-niobium-zirconium-hafnium enriched dykes, sills and clays associated with the emplacement of the Ampasibitika and Tsarabariabe alkali intrusions.

Previous exploration, most notably the airborne geophysical surveys, has defined three main mineralised zones which TRE has targeted as separate prospects. These have been identified as radiometric anomalous areas as well as from surface mapping and sampling. The three prospects are:

1. Target 1 - Ampasibitika - approximately 6 km long this target is located on the north eastern coastal regions of the Ampasibitika intrusion; drilling to date has concentrated here,

2. Target 2 - Ambaliha - around 3 km long this target has three sub-parallel anomalous areas to the north west of Ampasibitika; and

3. Target 3 - Befitina - two sub-parallel, approximately 3 km long zones of minor dykes and potentially mineralised argillaceous laterites to the west and south west of the Ampasibitika intrusion.

TRE is also considering the centre of the Ampasibitika intrusion as a possible fourth target, where parent magmas may also be enriched in one or other of the target elements.

The Argillaceous Laterites

In addition to exploring the hard rock resource in Target 1, TRE is also pursuing testwork to determine the rare earth potential of the argillaceous laterites that overlay the bedrock in all four target areas. So far preliminary work on the argillaceous laterites has been undertaken in Befitina (Target 3) through trenching, pitting and geochemical soil sampling and in Target 1 by sampling the argillaceous laterites extracted from the diamond drill holes. Results received so far suggest that the argillaceous laterites are generally mineralised with REE.

Based on the preliminary work undertaken on Target 1 to date, the samples indicate an average REE grade of c. 0.1% TREO (total rare earth oxides), with the percentage of heavy rare earths oxides ('HREO') constantly around 20% of total rare earth oxides. The weathering depth may reach 20m, the average thickness is 7.60m. Another rare metal, gallium, is also generally found in the argillaceous laterites, the average grade is 38ppm. Thorium and uranium are particularly low in the argillaceous laterites, reaching 13ppm for U₃O₈ and 67ppm for ThO₂. There are also noteworthy grades of tantalum, niobium and zirconium.

Two pits of 10m and 9m depth were excavated on the Befitina target and vertically channel sampled. Each sample had a length of 50cm. Here as well, the argillaceous laterites are mineralised in rare earths and gallium, locally also in silver. The rare earths reach a maximum of 0.45% TREO and average 0.24% over 3.50m in Pit1 and 0.15% over 2.50m in Pit2. The percentage of HREO is 22% of TREO in Pit1 and 27% in Pit2. At deeper depths, the rare earth grades decrease to 200 to 600ppm. Gallium averages 61ppm in Pit1 and 55ppm in Pit2. Pit1 showed also signs of a weak silver mineralisation averaging 2 ppm over 3m. Uranium and thorium grades are again low, with 59ppm U₃O₈ and 321ppm ThO_2. in Pit 1 and 46ppm U₃O₈ and 245ppm ThO₂ in Pit2.

The Board is optimistic that these argillaceous laterites are potentially comparable to the REE bearing clays operated on in Southern China. Early indications, such as a reconnaissance geochemical survey covering 20km² in the central part of the south-eastern intrusion, suggest that REE bearing argillaceous laterites may appear over a significant part of the concession, although this is still subject to much more detailed exploration.

It is TRE's plan to undertake more extensive shallow drilling over the target areas, particularly during the dry season when access becomes easier.

As part of its longer-term strategy, the Board is currently investigating various avenues by which TRE can better understand the characteristics of the REE bearing argillaceous laterites, and potential extraction techniques thereof.

To this end, TRE has initiated mineralogical and metallurgical research to determine a commercial extraction technique, i.e. leaching, of the rare earth elements and the gallium.

Core Drilling

Diamond drilling has been continued on Target 1. Since commencement of drilling operations, a total of 97 holes and 7,420m has been drilled, with a further 1,420m having been drilled since 3 March 2011. A technical problem with one of the three drill rigs has slowed down the overall drilling progress since late March. The rig is currently being repaired and will resume operation within the next few days.

The original drill grid was 400m by 100m. The drill grid has now been narrowed with particular focus on a 200m by 50m grid over a 2,600m section of the 6,000m long (and up to 700m wide) radiometric anomaly. Based on initial results, this section appears to host the widest mineralized veins and associated skarns.

To date, assay results for 63 drill holes have been received from Alschemex, Johannesburg and Vancouver. All drill cores samples are undergoing the same procedure: the whole core is photographed and logged. Then, the supposed mineralized sections are split in half, dried for a minimum of 2h at 140 C and homogenized and crushed to -2mm in a jaw crusher. Approximately 250 to 350g are split off using a riffle splitter and sent to Alschemex, Johannesburg where the samples are dried again and then pulverized to 85% <75µm. The pulp is sent to Vancouver where 38 elements are analysed using ICP-MS after lithium tetraborate fusion and acid digestion (Alschemex code ME-MS-81). High grade samples are re-analysed using ME-MS-81h or ME-XRF10). For QA/QC, all sample batches contain 8% of check samples including blanks, a standard and doubles.

The results received to date indicate a continuous REE mineralisation in the top surface layer (see above) and many holes contain multiple, mineralised intersections in the unweathered bedrock. In some drill holes, the mineralised zones seem to be narrow. In fact, these cores are currently being re-logged and missing parts are being sent to Alschemex for assaying. The REE mineralisation is not high grade but fairly uniform. Given the mineralogy of the mineralised intersections and the composition of the host rock, TRE's technical Staff believes that this mineralisation will be amenable to conventional leaching before the remaining insoluble minerals are concentrated using gravitational and/or flotation methods. Metallurgical and process testwork will start on the mineralisation within the next few weeks.

Dr Dominique Rakotomanana

TRE is pleased to announce that Dr. Dominique Rakotomanana joined the Malagasy subsidiary on 15 April 2011. Dr. Rakotomanana holds a doctor's degree in geology by the National Polytechnic Institute of Lorraine (Nancy, France). Since 2004 he has headed the Geology & Geophysics Department of the major World Bank financed program ('PGRM'), which restructured the Malagasy mining sector and produced an excellent up-to-date database on geology, mineral resources and geophysics. Before that, Dr. Rakotomanana was for 21 years geologist at OMNIS, the state-owned company which promotes and develops the Malagasy mining and hydrocarbons sector. During his career he has worked on a very wide range of mineral commodities including the rare earth deposits of central Madagascar. He has a profound knowledge of the Malagasy geology and metallogeny and will greatly improve our exploration efforts on the Tantalus permit and possibly elsewhere.

Summary table showing the REE, gallium, uranium oxide and thorium oxide grades (uncut) of argillaceous laterites in diamond drill holes of Target 1.

Summary table showing the REE, gallium, silver, uranium oxide and thorium oxide grades of argillaceous laterites in two channel sampled pits of Target 3.

Summary table showing the REE, niobium, tantalum, zirconium, hafnium, gallium, silver, uranium oxide and thorium oxide grades from the core drilling in diamond drill holes of Target 1.