Mr. Greg Andrews reports

SEARCH MINERALS INC. PROVIDES PILOT PLANT PROGRAM UPDATE

Search Minerals Inc. is providing an update on the pilot plant program which is being conducted by SGS Canada Inc. on bulk material from the company's Foxtrot deposit in southeast Labrador. The pilot plant is being financed through the Atlantic Canada Opportunities Agency and the Research & Development Corp. of Newfoundland and Labrador for up to $1.25-million of the $1.9-million program cost. The pilot plant is using the patent-pending proprietary technology breakthrough developed by the company, which has eliminated grinding, flotation, and magnetic and gravity separation from the process flow sheet. Eliminating these processes is expected to significantly reduce capital and operating costs for processing material to a mixed rare earth oxide concentrate product.

The Search direct extraction process involves several steps but can be simply described in two phases. In the first phase, a finely crushed material is treated to produce a rare earth carbonate concentrate. In the second and final phase, the carbonate concentrate is redissolved and releached to produce a high-quality mixed rare earth oxide concentrate product ready for shipping to a refinery.

Work to demonstrate the Search Minerals direct extraction process

All bench testing of the bulk sample has now been completed providing additional insight into each of the steps involved in each phase of the overall extraction process. More specifically, Search has been able to demonstrate the ability to remove/reduce the already small amounts of uranium and zinc in the rare earth material to levels acceptable to refineries. The bench-scale testing also confirmed that sulphuric acid can be used in place of hydrochloric acid in the second phase treatment of the mixed rare earth carbonate. This simplifies operations and further reduces extraction costs as sulphuric acid is less expensive than hydrochloric acid.

All these insights were carried forward and incorporated into the final pilot plant design with a view to maximizing the overall recovery of rare earths from the Foxtrot material. The company is pleased to report that the additional work at bench scale has been successfully incorporated into the first five days of continuous operation of the first phase of the pilot plant. The five-day continuous operation comprised the following steps:

• Acid and material mixing through a continuous pug mill (intensive mixing device);
• Acid and material heating through a pilot scale METSO Holoflite reactor;
• Water leaching of the acid-treated material;
• Removal of iron, aluminum and other minor impurities through precipitation;
• Filtration and washing of the leach residue and impurity precipitate (combined);
• Removal of small amounts of uranium from the leach solution using ion exchange;
• Precipitation of a mixed rare earth carbonate using sodium carbonate addition;
• Thickening, filtration and washing of the mixed rare earth carbonate precipitate.

As noted earlier, the mixed rare earth carbonate precipitate is the feed to the second phase of the Search direct extraction process. The pilot plant testing, including the second phase of the direct extraction process, will continue in January and is expected to be completed by the first week of February, with formal reporting of final results to follow thereafter.

In anticipation of questions during the Foxtrot environmental assessment process, the company has defined a program with SGS Minerals for testing and assessing the contents of the residues and barren solutions associated with the direct extraction process. These tests will be conducted during pilot plant testing and directly after it concludes. By conducting these tests at this time, Search and its stakeholders will have timely access to important decision making information as they work together to move the Foxtrot project forward in a safe, environmentally respectful manner.

Qualified person

Dr. David Dreisinger, PhD, PEng, is the company's vice-president of metallurgy and qualified person for the purposes of National Instrument 43-101. Dr. Dreisinger has reviewed and approved the technical disclosure contained in this news release as applicable. The company will endeavour to meet high standards of integrity, transparency and consistency in reporting technical content, including geological and assay (for example, rare earth elements) data.

About Search Minerals

Search is focused on finding and developing resources within the emerging Port Hope Simpson critical rare earth element (CREE) district of southeast Labrador. Exploration efforts have advanced Deepwater Fox and Fox Meadow as significant new CREE prospects very similar and in close proximity to the 100-per-cent-owned Foxtrot discovery. While the company has identified more than 20 other prospects in the district, its primary objective remains development of Foxtrot by confirming proprietary direct extraction metallurgy processing technology at the pilot plant level (in progress) and delineation of prospects that will ensure competitive-low cost production beyond the 14-year mine life contemplated in the preliminary economic assessment of Foxtrot completed in April, 2016. The Foxtrot project has a low capital cost to brig the initial project into production ($152-million), a short payback period and is scalable due to Search's proprietary processing technology.

We seek Safe Harbor.