Inaugural Constituent Note

1. Summary

The RareEarth Index launches with fourteen constituents on May 1, 2026. The inaugural composition was constructed against the v2.0 methodology, anchored to closing data of April 30, 2026.

The eligible universe is below the methodology’s target range of 25 to 35 constituents. This is a finding, not a failure. The investable rare earth equity universe accessible to international investors is genuinely concentrated, dominated by a small number of integrated producers, processors, and magnet manufacturers, with a development pipeline of pre-revenue explorers and refinery builders. The index reflects that universe as it exists, without relaxing eligibility criteria to reach a target count.

This note documents the inaugural composition, the methodology compliance, the borderline adjudications, and the reconstitution roadmap. It is published alongside the index inception so that readers can verify the construction process and challenge any individual call.

2. Inaugural composition

Weights are computed under §5.2 modified market capitalization weighting using free-float market capitalization, with a 10% single-name cap and iterative pro-rata redistribution. Cap-bound constituents are highlighted; their natural uncapped weights are noted in Section 6 of this document and in the constituent profiles published at RareEarthIndex.com.

Highlighted rows indicate constituents at the 10% single-name cap. Five of fourteen constituents are cap-bound; the aggregate cap-bound weight is 50.0%, leaving 50.0% spread across the remaining nine constituents.

3. Universe construction process

The inaugural constituent universe was constructed through two parallel research processes, each working independently from the v2.0 methodology document and a structured operational brief. Calculation Date for both processes was locked to April 30, 2026.

3.1 Primary research

The primary research process pulled trailing-window market data from Financial Modeling Prep (US-listed names) and supplementary public sources (international listings), computed 30-day average market capitalization and 90-day average daily traded value for each candidate, and applied the methodology’s six-screen eligibility framework in order: activity, exclusion, listing, market cap, liquidity, and reporting standard.

The candidate universe — approximately sixty companies before screening — was constructed from U.S. Department of Energy critical minerals classifications, exchange sector listings (ASX, LSE, TSX, TSXV, NYSE, NASDAQ, HKEX), recent industry research from Adamas Intelligence and similar analysts, government supply chain reports, and reference holdings from the existing VanEck REMX ETF (verified independently against this methodology rather than accepted on inclusion in another product).

3.2 Independent verification

A second research process worked from the same methodology document and operational brief, without access to the primary research output. The two processes converged on six core constituents — MP Materials, Lynas, Arafura, Neo Performance Materials, Pensana, and Meteoric — and overlapped substantially elsewhere. Where the deliverables diverged, divergences were resolved by reference to (a) measured trailing-window data from the primary process, (b) explicit clarification answers given to both processes, and (c) the methodology as written.

The independent verification surfaced one candidate not identified by the primary research (St George Mining), which was investigated separately via dedicated verification research and resolved against the methodology.

3.3 Free-float adjustment

After the eligible constituent set was finalized, a third research pass collected free-float share counts for each constituent. Strategic and restricted holdings — insiders, founders, government and sovereign wealth holdings, cross-shareholdings, and any single shareholder above 5% disclosed as a strategic block — were excluded from free-float in accordance with the methodology’s modified market capitalization weighting.

The aggregate free-float ratio across the inaugural index is 71.4%. Approximately 29% of constituent total market capitalization is held in strategic blocks not freely tradable. Free-float adjustment is most material for JL Mag Rare-Earth (29.5% free-float, primarily founder and employee-LP holdings on the A-share line), Aclara Resources (33.7% free-float, dominated by Hochschild Mining and CAP S.A.), and Critical Metals Corp (32.6% free-float, dominated by the European Lithium cornerstone block pending acquisition).

4. Universe findings

The methodology’s eligibility screens were applied without modification or relaxation. The fourteen-constituent inaugural composition reflects the genuine size of the investable rare earth equity universe accessible to international investors.

4.1 Why the universe is small

Three structural facts produce the small-universe finding.

First, a substantial portion of global rare earth production is controlled by Chinese state-linked enterprises listed exclusively on Shanghai or Shenzhen exchanges. The methodology excludes these venues for international accessibility reasons, in keeping with §11 (Geographic Scope). Names such as China Northern Rare Earth Group (600111.SS), Shenghe Resources (600392.SS), and several major Chinese magnet manufacturers are out of scope on this basis. The index does not capture the full economic landscape of the rare earth industry as a result, and this limitation is acknowledged in §13 of the methodology.

Second, the activity screen — requiring rare earth activity to represent the majority of enterprise value — excludes diversified miners and chemical companies whose rare earth operations are material but not primary. Solvay (separation and recycling), Energy Fuels (uranium-primary with growing REE separation), and Iluka Resources (mineral sands primary, REE refinery in construction) all fall in this category. Including them would have inflated the constituent count but would have introduced thesis dilution — readers tracking the index would receive return contributions from non-REE business activity.

Third, the liquidity floor — USD 500,000 average daily traded value over the trailing 90 days, with a USD 1,000,000 floor for TSXV listings — eliminates a number of pure-play rare earth juniors that meet the activity screen but lack sustained tradability. Rare Earths Norway, American Rare Earths, Northern Minerals, Hastings Technology Metals, Defense Metals, and Leading Edge Materials are each documented in the audit trail with their specific liquidity shortfall. The floor exists to ensure index constituents are practically investable; pure-play status does not substitute for actual market liquidity.

4.2 Sector coverage

The five-sector framework defined in §6 of the methodology produced the following inaugural distribution:

• REE Mining & Extraction: 1 constituent (MP Materials), 10.0% weight
• Processing & Separation: 2 constituents (Lynas, Ucore), 18.0% weight
• Magnet & Alloy Manufacturing: 4 constituents (JL Mag, USA Rare Earth, Neo Performance Materials, Australian Strategic Materials), 33.1% weight
• Recycling & Urban Mining: 0 constituents
• Exploration Stage: 7 constituents (Arafura, Critical Metals, Lindian, Pensana, Meteoric, Aclara, Mkango), 38.9% weight

Recycling & Urban Mining is unrepresented in the inaugural index. The sub-sector contains only small, early-stage operators not meeting the liquidity floor at this time. The sector is monitored for inclusion at subsequent reconstitution.

5. Borderline adjudications

Five borderline cases required administrator adjudication under §10 of the methodology. The dispositions are recorded here so that the reasoning is documented at the time of decision rather than reconstructed afterward.

5.1 Aclara Resources Inc — Tab 1 (included)

90-day average daily traded value of USD 487,000, against the USD 500,000 liquidity floor. Threshold proximity of 2.6% places Aclara within the §10.3 administrator-adjudication zone for below-floor constituents. Activity screen passes cleanly: Aclara is a pure-play rare earth developer focused on ionic adsorption clay deposits in Chile and Brazil, with the REE projects representing the company’s primary corporate asset. Administrator’s call: include in the inaugural index, with an explicit note in the constituent profile that liquidity is threshold-proximate and will be reviewed at the next quarterly rebalance. If 90-day ADTV remains below floor at the September 2026 rebalance, the constituent will be flagged for reconstitution review.

5.2 Iluka Resources Limited — Tab 3 (excluded)

Iluka is currently a mineral sands producer; rare earths do not represent the majority of enterprise value as of April 30, 2026. The Eneabba refinery — Australia’s first commercial-scale rare earth separation facility, partially funded by the Australian government — is in construction with commissioning expected in late 2026 and full production in 2027. Strict reading of §10.1 excludes companies in transition: the methodology does not anticipate future activity. Iluka is excluded from the inaugural index and added to the reconstitution watch list. The semiannual reconstitution at December 2026 will reassess Iluka against the activity screen as Eneabba production data becomes available.

5.3 Brazilian Rare Earths Limited — Tab 3 (excluded)

Brazilian Rare Earths has been actively drilling rare earth projects in the Rocha da Rocha Province since its 2023 IPO, has signed a ten-year offtake and partnership agreement with Carester (REE separation specialist), and has announced plans to demerge its Amargosa bauxite-gallium project to refocus the parent company on rare earths. Strategic intent is unambiguously REE-focused. However, as of April 30, 2026, no JORC-compliant rare earth resource estimate has been published on any of the company’s REE projects; the maiden resource is targeted for mid-2026. The company’s only published JORC-compliant resource is for the Amargosa bauxite-gallium asset (non-REE). Strict reading of §9 anti-greenwashing requirement excludes the company: documented exposure is required, not strategic intent. The semiannual reconstitution at December 2026 will reassess Brazilian Rare Earths once the maiden REE resource is published.

5.4 Vital Metals Limited — Tab 3 (excluded)

Vital Metals nominally meets the activity screen on paper — Nechalacho is a rare earth project — but the company has been in operational and corporate distress, with market capitalization of approximately USD 12.5 million (75% below the USD 50 million floor) and 90-day average daily traded value of approximately USD 11,000 (98% below the USD 500,000 floor). The company is excluded from the inaugural index on financial-screen grounds, with the operational situation noted in the audit trail. Reconstitution candidate if financial recovery materializes.

5.5 St George Mining Limited — Tab 3 (excluded)

St George Mining’s Araxá Project carries a JORC-compliant resource of 70.91 million tonnes at 4.06% TREO and 0.62% Nb₂O₅ — a dual-commodity deposit that is genuinely material on both rare earth and niobium dimensions. Contained-metal-value triangulation suggests TREO contained value exceeds niobium contained value by a factor of approximately two to three at typical 2025-2026 basket pricing. However, the only published economic study on Araxá (a 2012 Preliminary Economic Assessment with NPV10 of USD 967 million for a standalone niobium operation) values niobium standalone, and the active scoping study underway is also niobium-only with rare earths treated as upside. No published economics establish rare earths as the majority of project enterprise value. Strict reading of §4.1 excludes: published economic documentation is required, not contained-metal triangulation. The semiannual reconstitution will reassess Araxá when combined niobium-plus-rare-earth economics are published. Both financial-screen floors clear comfortably (30-day average market cap USD 243 million; 90-day average daily traded value USD 1.84 million); the activity screen is the deciding factor.

6. Cap binding disclosure

The 10% single-name cap binds significantly in the inaugural composition. Five constituents are at the cap; their natural uncapped free-float weights would have been substantially higher. The cap exists to prevent any single constituent from dominating the index value, and its binding here reflects the genuine concentration of investable rare earth equity in a small number of large names.

Natural FF Weight is the constituent’s free-float market capitalization as a proportion of aggregate free-float market capitalization, before cap redistribution. Natural Total Weight is the equivalent figure using total (unadjusted) market capitalization, shown for reference only — the index uses free-float weighting per §5.2.

Two observations on the cap binding pattern:

Lynas, MP Materials, and JL Mag Rare-Earth represent the three largest free-float market capitalizations in the eligible universe. Lynas and MP would each carry weights above 30% without the cap; JL Mag’s natural free-float weight is moderate but it is pushed to the cap by iterative redistribution from Lynas and MP.

USA Rare Earth and Neo Performance Materials reach the cap solely through iterative redistribution. Their natural free-float weights of 6.18% and 2.07% respectively would not breach the cap on their own; cap excess from the top three names redistributes pro-rata across remaining constituents and pushes them above the threshold. This is the methodology’s iterative pro-rata redistribution working as designed.

7. Methodology compliance

The inaugural composition is computed in full compliance with v2.0 of the RareEarth Index methodology. The following parameters governed construction:

• Constituent count target: 25-35 (actual: 14, below target floor; published as-is per §5.3 with no relaxation of eligibility criteria)
• Weighting: modified market capitalization using free-float, with 10% single-name cap and iterative pro-rata redistribution (§5.2)
• Tiebreaker: 30-day average market cap (§5.3) — not invoked, as the eligible universe was below the 35-name overflow threshold
• Currency: USD-equivalent, FX from daily close per §5.4
• Eligible exchanges: NYSE, NASDAQ, TSX, TSXV (with USD 1M liquidity waiver), ASX, LSE Main, LSE AIM, Oslo Børs, Euronext, HKEX, SGX (§4.3)
• Calculation Date: April 30, 2026, locked across all metrics for both data collection and free-float research
• Rebalance cycle: quarterly at end of March, June, September, December
• Reconstitution cycle: semiannual at end of June and December

The first regular quarterly rebalance occurs at the end of June 2026. The first semiannual reconstitution occurs at the end of December 2026. Methodology amendments under consideration for v2.1 are documented in Section 8 below.

8. Methodology refinements queued for v2.1

The inaugural research process surfaced several methodology refinements worth incorporating into a future v2.1 revision. These are recorded here so the v2.0 baseline is the published basis of the inaugural index, and any subsequent amendments are explicit and announced with the methodology’s standard 30-day notice.

8.1 NYSE American as eligible exchange

Section 4.3 currently names “NYSE” without specifying whether NYSE American (the small-cap tier) is included. NYSE American is a distinct venue under the same parent. Energy Fuels (UUUU) is listed on NYSE American and would have been eligible by exchange but was excluded on activity-screen grounds in any case. v2.1 will add explicit treatment of NYSE American (and corresponding NASDAQ tier specifications) to remove the ambiguity.

8.2 Symmetric application of §10.3 threshold proximity

Section 10.3 currently flags threshold-proximate constituents for adjudication but does not specify whether proximity applies symmetrically (above-floor and below-floor) or asymmetrically (below-floor only). The inaugural construction applied the rule asymmetrically: below-floor proximity flags for inclusion adjudication; above-floor proximity does not flag. v2.1 will codify this asymmetric reading explicitly.

8.3 A/H dual-listed market capitalization convention

Section 11 establishes that A/H dual-listed Chinese companies are eligible via their HKEX listing. The inaugural construction applied a specific convention for market cap computation (full-company shares × HKEX H-share USD-converted close, with ADTV computed on the H-share line only) and free-float adjustment (excluding A-share strategic blocks). v2.1 will codify this convention in the methodology so future research does not reinterpret it.

8.4 Magnet manufacturer activity screen specificity

Section 4.1 establishes magnet manufacturing as eligible activity “as a primary product line.” The inaugural construction applied the screen to rare-earth-bearing magnet and alloy revenue specifically, excluding ferrite magnets and non-REE specialty alloys. v2.1 will tighten the section’s wording to make this REE-content focus explicit.

8.5 Eligible exchange list expansion

The eligible exchange list in §4.3 currently excludes Tokyo Stock Exchange and Korea Exchange. Several Japanese and Korean companies operating in the rare earth space (Proterial, Shin-Etsu Chemical, TDK, Sungeel HiTech) are excluded by venue rather than by methodology screen. v2.1 will reassess whether these exchanges should be added to the eligible list, with the trade-off being broader geographic coverage versus the methodology’s existing commitment to a defined enumerated list of accessible venues.

8.6 Other queued items

Three additional items are noted for future review without immediate v2.1 amendment: the resource-category bar for advanced-stage exploration (currently Inferred is sufficient; v2.1 may consider whether Indicated or Measured should be required); the cutoff for pro-forma treatment of mid-window corporate actions; and the sector classification tiebreaker for pre-revenue mine-to-magnet developers operating across multiple sectors.

9. Reconstitution roadmap

The next milestones for the index are:

Methodology amendments queued for v2.1 (Section 8) will be published with the standard 30-day notice in advance of taking effect. The current expectation is that v2.1 will be published before the December 2026 reconstitution and will apply at that reconstitution.

10. Audit trail

The full audit trail of excluded names, with documented reasoning for each exclusion, is published at RareEarthIndex.com/audit-trail. This document covers the principal industry-coverage names whose absence from the inaugural index might reasonably prompt question. Specific exclusion categories include:

• Exchange-excluded: companies listed exclusively on Shanghai or Shenzhen (China Northern Rare Earth, Shenghe Resources) or other venues outside §4.3 (Tokyo-listed Japanese magnet manufacturers, Korea Exchange-listed names) per §4.3
• Activity-screen excluded: diversified miners, chemical companies, and royalty/streaming holders where REE represents a minority of enterprise value (Solvay, Energy Fuels, Iluka Resources, several others)
• Liquidity-floor excluded: pure-play REE companies failing the USD 500K (or USD 1M for TSXV) ADTV threshold (Rare Earths Norway, Hastings, Northern Minerals, American Rare Earths, Defense Metals, Leading Edge Materials, others)
• Market-cap-floor excluded: small-cap explorers and developers below the USD 50M threshold (Altona, Harena, Search Minerals, others)
• Anti-greenwashing excluded: companies with REE strategic intent but no published JORC or NI 43-101 compliant resource as of the calculation date, per §9 (Brazilian Rare Earths)
• Trading suspension excluded: companies with trading suspended for more than ten consecutive trading days per §4.2 (Peak Rare Earths)

Forty-five names are documented in the audit trail. Readers wishing to challenge or query any specific exclusion may do so via the contact page at clayindices.com.

11. About the Clay Indices family

The RareEarth Index is part of the Clay Indices family, which publishes methodologies, definitions, and equity indices. The family is administered by George Clay.

Clay Indices treats methodology as a product. Every index publishes a complete, versioned methodology document. Every methodology is rules-based, with no discretionary overrides outside the §10 dispute framework. The boundary of what each index measures is part of the claim, not a footnote to it.

Other published members of the family include the Climate50 Index (US/Canada clean energy equities), the Total Market Index (unweighted registry of US exchange-listed common stocks), the TrueCost Index (physical-unit measurement of true cost), and the Greek Index Series (Lambda for liquidity, Theta for time decay, Rho for interest rate sensitivity). The full family is at clayindices.com.

© 2026 RareEarthIndex.com · Inaugural Constituent Note · Methodology v2.0. This document is published for informational purposes only and does not constitute investment advice.