Galileo signs a Heads of Agreement with REI

For immediate release 25 July 2012

                             Galileo Resources Plc                             

                         ("Galileo" or the "Company")                          

Galileo Signs a Heads of Agreement with Rare Earth International to Earn-in to 
              Rare Earth Opportunities in Zambia and Mozambique.               

The Board of Galileo Resources Plc ("Galileo"), the AIM-quoted emerging African
Rare Earth exploration company, is pleased to announce that it has signed a
Heads of Agreement (HoA) with Rare Earth International (REI) to earn-in to
interests in three rare earth projects (the Earn-In) in Zambia, Mozambique and
Spain (the Projects). REI holds certain rights to explore and to acquire
interests in these Projects which are outlined in separate agreements with
various holders of the projects' prospecting licence or mining concessions.

The AIM-quoted African Consolidated Resources plc ("ACR") is the 100% holder
through its Zambian subsidiary of the prospecting licence to the rare earth
project in Zambia.

Under the terms of this HoA, the Company has been granted 30 days to conduct
title due diligence on the Projects; this being the only condition on which
this HoA may be terminated. Should the Company receive sufficient results to
this due diligence the HoA will be unconditional and the Farm-In will come into
force.

Highlights:

  * Galileo enters into an agreement with REI to earn-in to three rare earth 
    projects located in Zambia, Mozambique and Spain.
   
  * Two boreholes historically drilled on Zambia's "Nkombwa" project (Nkombwa) 
    intersected 4 to 6 metres thick intervals, with elevated REEs, which on
    re-assaying by REI (2010) revealed 5% and 8% total rare earth oxides
    (TREO).
   
  * Drill targets identified on Nkombwa following extensive surface sampling
    during 2011: the highest priority being a 25 to 50 metre wide zonewhere
    samples consistently reported more than 3% TREO,including a high proportion
    assaying 5% to 10% TREO over a sampling strike length of 350 metres.
   
  * Further samples scattered along a broad zone south east of the main rare
    earth mineralisiation assayed greater than 5% TREOincluding one outcrop
    sample assaying 23.6% TREO.
   
  * "Xiluvo" project in Mozambique has a gross amount of 1.1 million tonnesJORC
    compliant indicated resource (mainly soils) assaying 2.05% TREO(@ cut off
    1% TREO) and 4.4% phosphate (P2O5).
   
  * "Galineiro" project in Spain is a potential greenfield exploration target
    with heavy rare earth element ("HREE") potential.
   
The Nkombwa project shows significant potential for development as a large
easily extractable deposit while the Xiluvo project of lower priority has a
defined resource estimate, which although relatively small, is largely in the
form of soils and so potentially easily mined and processed.

Colin Bird, Chairman and Chief Executive Officer of Galileo, commented: "This
earn-in agreement is a significant step in the consolidation and the
development of Galileo. Should this complete, the Company will have an
attractive portfolio of REE projects at varying stages of development. We are
pleased to be partnering with REI and ACR. ACR has an enviable record of
acquiring potentially world-class exploration projects in southern Africa and
we look forward to our working association."

Andrew Cranswick, Chief Executive Officer of ACR, said: "We are pleased to have
Galileo Resources earning into our highly prospective Rare Earth Project in the
new and dynamic Muchinga Province of Zambia. The Galileo team brings additional
specialist REE expertise, coupled with Colin Bird's individual reputation for
fast tracking exploration success stories in Zambian projects such as Kalumbila
through Kiwara Resources. This is good news for all, especially the people of
Muchinga, considering what it means for employment, community participation,
economic growth and infrastructural development."

REI holds the right to:

  * earn up to a 50% interest in the Nkombwa project in accordance with the
    terms of an agreement between REI and ACR and its wholly owned Zambian
    subsidiary Fisherman Mining Limited, which holds the prospecting licence in
    accordance with the terms outlined below;
   
  * earn in an 85% interest in the Xiluvo project by spending a total US$1
    million in terms of a joint venture agreement with Promac, a
    Mozambique-registered construction company, which holds a 100% mining
    concession to mine aggregate over some or all of the licence, which has
    rare earth potential and for which it has the option to apply for an
    exploration licence or mining concession for rare earths; and
   
  * 100% of the Galineiro project, for which the owners are in the process of
    acquiring exploration rights.
   
Summary of the key terms of the HoA include:

Nkombwa Project

 a. Galileo to provide funding to REI of a minimum amount of US$1.2 million and
    to complete the Nkombwa Exploration to earn an effective 35% interest in
    the Project.
   
 b. Further funding in respect of the Project, including funding to acquire a
    further interest in the Project in excess of the effective 35% to be
    provided by the Parties pro rata to their interest, REI to have the option
    to elect that the Company funds REI's pro rata share (the "Election"),
    including and up to the construction of a mine at the project, on a loan
    basis (the Loan).
   
 c. The Loan will bear interest at a rate of LIBOR plus 2%, and will be
    repayable by REI to Galileo from future cash flows by applying a minimum of
    80% of any dividends earned by REI from the Project.
   
 d. Following the completion of the earn in, REI will have the option to sell
    its remaining interest in the Project to Galileo for a further US$2 million
    to be paid in cash or Galileo shares. Such option is to expire on 31
    December 2013.
   
 e. Following the completion of a bankable feasibility study ("BFS") in respect
    of the Project, Galileo will have the option to acquire REI's remaining
    interest at a price determined as follows:
   
 f.
     i. In the event that REI has made the Election, at a valuation of the
        Project of the net present value of the project as determined by the
        BFS less 40%, subject to a minimum purchase price of US$2 million; or
       
    ii. In the event that REI has not made the Election, at a valuation of the
        Project of the net present value of the project as determined by the
        BFS.
       
Xiluvo Project

 a. Galileo undertakes to do such work as is in their opinion necessary to
    define the project's ongoing rare earth potential.
   
 b. If Galileo elects to advance the project then it will be granted an 80%
    interest in the Xiluvo Interest and REI a 20% interest which is free
    carried by Galileo to the completion of a bankable feasibility study.
   
 c. If the project were to be developed then REI would carry its pro rata
    portion of ongoing expenditure or be financed by Galileo on a loan basis
    (the "Xiluvo Loan"). The Xiluvo Loan will bear interest at a rate of LIBOR
    plus 2% and will be repaid by REI to Galileo from future cash flows by
    applying a minimum of 80% of any dividends earned by REI from the Xiluvo
    Project.
   
 d. REI can elect to have the 20% carry converted to a Net Smelter Return ("NSR
    ") of 2% of which 50% could be compulsorily purchased by the Company at
    US$100,000 per 0.1% of NSR.
   
 e. Galileo will be the operator of the Xiluvo Project.
   
 f. If Galileo has not committed to a reasonable expenditure programme to
    advance this project by 30 June 2013, then REI will have the option to
    elect to cancel Galileo's interest at no cost to REI.
   
 g. Should Galileo elect to cease further advancement of the Xiluvo Project at
    a time when it has already incurred cost to do so, then:
   
 h.
     i. In the event that Galileo has spent less than US$200,000 on the
        development of the project, then REI will have the option to purchase
        Galileo's full interest in the Xiluvo Project at 1.2 times the cost
        incurred up to that point in time; or
       
    ii. In the event that Galileo has spent more than US$200,000 on the
        development of the Project, then REI willl have the option to purchase
        Galileo's full interest in the Project in exchange for 1% NSR, 50% of
        which could be compulsorily purchased by REI at US$100,000 per 0.1%
        NSR.
       
Galineiro Project

 a. A shareholder in REI is actively pursuing acquisition of exploration rights
    in the area (Galineiro Rights). Should this acqusition succeed, REI agrees
    that that these rights shall form part of the HoA.
   
 b. On signing the HoA Galileo will assume responsibility for further
    acquisition and technical control of the Project should it be advanced.
   
 c. Should Galileo elect to explore and possibly develop the project, it will
    be granted an 80% interest in the Galineiro rights with REI retaining a 20%
    interest.
   
 d. If the project were to be developed then REI would either carry its pro
    rata portion of ongoing expenditure or be financed by Galileo on a loan
    basis. The loan will bear interest at a rate of LIBOR plus 2% and will be
    repaid by REI to Galileo from future cash flows by applying a minimum of
    80% of any dividends earned by REI from the Project.
   
 e. REI can elect to have the 20% carry converted to a Nets Smelter Return
    (NSR) royalty of 2%, of which 50% could be compulsory purchased by Galileo
    at US$100,000 per 0.1% of NSR royalty.
   
General

 a. The consideration for the Earn-In is the issue of 5.25 million Ordinary
    Shares in Galileo (the "Settlement Shares") to REI at the price at the date
    of signing the HoA. Should the Company complete the Earn-In the Settlement
    Shares will be issued and a separate announcement made at that time.
   
 b. Under the terms of the HoA, no placement will be permitted of any of the 
    Settlement Shares for a period of six months from signing the HoA and
    limited by the following lock in arrangement.
   
  * After six months REI may sell 2 million Settlement Shares.
   
  * After one year REI may sell a further 2 million Settlement Shares.
   
  * After eighteen months REI may sell the remainder of the Settlement Shares.
   
  * 
     a. Galileo will have 30 days to conduct title due diligence, which will be
        the only condition on which the HoA may be terminated.
       
    Summary Project Descriptions
   
    The Nkombwa project is located in the north-east of Zambia, 22 kilometres
    east of the major T2 paved national road. The project includes the
    prominent Nkonbwa Hilll REE, niobium, phosphate enriched carbonatite
    intrusion.
   
    Documented results from two boreholes drilled in 1968/1969 on the project
    reportedly intersected numerous wide mineralised intervals assaying more
    than 4% lanthanum and cerium oxides. Recent reassaying of these mineralised
    intervals reportedly confirmed high total rare earth oxides (TREO) of 5 to
    8% and revealed that some of the intervals intersected stopped in grade
    i.e. REE mineralisation potentially continues at depth.
   
    The Xiluvo project is located 100 kilometres noth-west of the major port of
    Beira in Mozambique. This project is a prominent hill, which includes a
    rare-earth niobium-enriched carbonatite complex intrusion. A 25-year mining
    permit is in place for an extant quarry on the project, the REE rights to
    which REI has signed farm-in agreements with the mining permit owners.
   
    The project has drill-ready targets: a primary REE-enriched carbonatite and
    a secondary light REE (LREE) unconsolidated soil horizon at the base of the
    hill.
   
    Technical Sign-Off
   
    Andrew Sarosi, Technical Director of Galileo, who holds a B.Sc. Metallurgy
    and M.Sc. Engineering, University of Witwatersrand and is a member of The
    Institute of Materials, Minerals and Mining, is a 'qualified person' as
    defined under the AIM Rules for Companies and a competent person under the
    reporting standards. The technical parts of this announcement have been
    prepared under Andrew Sarosi's supervision and he has approved the release
    of this announcement.
   
    Editor's Note:
   
    Galileo, is a natural resource exploration company. Its flagship property
    is the Glenover Phosphate RE project, a joint venture with Fer-Min-Ore
    (Pty) Ltd and Black Economic Empowered entities. The property produced
    phosphate for many years. Phosphate however, is now subordinated to Rare
    Earth Elements (REEs), which the recent independently commissioned
    compliant resource estimate has shown to be present in the stockpiles from
    the previous operation and in the defunct open pit.
   
    For further information, please contact:
   
    Colin Bird                                   Tel [phone]
    Chairman & CEO
   
    Andrew Sarosi                                Tel [phone]
    Technical and Financial Director
   
    Beaumont Cornish Limited,                    Tel [phone]
    Nominated Advisor and Broker
   
    Roland Cornish/James Biddle
    Shore Capital Stockbrokers Limited           Tel [phone]
   
    Joint Broker
    Jerry Keen/Toby Gibbs
   
    Bishopsgate Communications                   Tel [phone]
    Nick Rome/Anna Michniewicz/Ivana Petkova
   
    Technical Glossary
   
    Carbonatite: an igneous rock consisting of greater than 50% carbonate
    minerals mainly calcium carbonate (limestone) and lesser magnesium
    carbonate (dolomite)
   
    Complex: a body of rock forming a discrete and recognisable unit of
    reasonable homogeneity, defined solely on the basis of its macroscopic
    features such as texture or petrology (study of rocks).
   
    Intrusion: applied to a body of rock usually igneous i.e.derived from
    molten or semi molten rock that has intruded or been emplaced within pre
    existing rock.  
   
    Niobium (Nb2O5): an oxide of Niobium, a metal whose uses include alloying
    and coatings with other metals to improve welding properties (stainless
    steel), impart resistance to chemical attack (zirconium, molten lithium and
    sodium), corrosion resistance in harsh chloride-containing solutions
    (coated copper anodes) and corrosion resistance at red hot temperatures
    (rocket nozzles)
   
    Phosphate (P2O5): an oxide of phosphorus - also used to describe phosphate
    rock
   
    Rare earth elements: a set of fifteen chemical elements in the periodic
    table specifically
   
    (REE) the lanthanides and by convention categorised as light REE (the first
    seven elements plus yttrium) and heavy REE (the other eight lanthanides)
   
    REO (rare earth oxide): the oxide form of the rare earth element
   
    TREO: total rare earth oxides
   
    Unconsolidated applied to particles that are loose and not cemented
    together
   
    Soil horizon a horizontal layer of soil that can be distinguished from the
    layers above and below it
   
    Ce: Cerium Uses include cathode ray tube glass to prevent age
    discoloration, in auto catalytic converters, rich red colour pigments, low
    energy light bulbs, film studio carbon-arc lighting and minor use in self
    cleaning ovens
   
    La: Lanthanum Uses include carbon-arc lighting, additive to glass for
    lenses and new treatment for bone disease (osteodysrophy). Potential use
    for hydrogen (H) storage for H-fuelled vehicles: being able to absorb
    hydrogen as much as 400 times its volume