Ms. Penny White reports

LANCASTER RESOURCES ANNOUNCES CORPORATE UPDATE AND RECORD DATE CHANGE FOR SPIN-OFF

Lancaster Resources Inc. has provided an update on the significant progress of the Alkali Flat lithium brine project in Lordsburg, N.M., and the strategic steps being taken to explore this flagship property. Also, through an amendment to the spinoff agreement signed between Lancaster and Nelson Lake, the record date for the spinoff transaction has been set for Feb. 5, 2024.

Chief executive officer's statement:

"Our unwavering commitment is towards the Alkali Flat project. The strategic acquisition of the Nelson Lake Copper project and the subsequent spinoff are pivotal in funding our lithium exploration in New Mexico," says Lancaster's chief executive officer and president Penny White.

Key highlights and upcoming milestones:

• Geophysics plus geology study (July, 2023): Following a comprehensive internal evaluation, Lancaster successfully built upon its existing internal geological data geological datasets. This included initial findings from an aerial drone geophysics program and geochemical studies over the playa, laying the groundwork for its completed MT geophysics program and impending drilling operations.
• Magnetotelluric (MT survey) (August, 2023): After reviewing several qualified companies, Lancaster selected KLM Geophysics, a leading geophysics firm with significant experience in lithium brine exploration, to conduct its MT survey so Lancaster would have the best dataset to supplement its geology and inform its drilling locations. Lancaster received the results from its MT program in September, 2023.
• MT interpretation and drilling locations (September, 2023): Lancaster's experts interpreted magnetotelluric data to pinpoint optimal drilling locations, maximizing its chances of successfully finding subsurface concentrated lithium brines. Preliminary locations have been selected based on two highly conductive subsurface features found in the MT survey. Proposed locations have been used in support of both the BLM plan of operations application and the EMNRD Drilling application.
• Drilling and access regulatory applications submitted (September, 2023): Lancaster formally submitted its drilling application to the New Mexico EMNRD.
• Drilling bids (September to December, 2023): Lancaster invited estimates from reputable drilling companies, emphasizing safety, efficiency and environmental stewardship, and selected the drilling company to conduct its exploratory well drill program.

Upcoming milestones:

• Regulatory approvals: On Nov. 14, 2023, Lancaster completed a site visit at the Alkali Flat property and had a follow-up call in mid-December, 2023, with representatives from both the New Mexico EMNRD and BLM to finalize obtaining the required approvals for its initial drill program. Lancaster aims to obtain all necessary drilling approvals in early 2024, with plans to commence drilling operations in February, 2024.
• Maiden drill program (February, 2024, target): Lancaster aims to complete its first exploratory well efficiently and safely, adhering to the highest industry standards with minimal/zero impact on all stakeholders.
• Samples collected and analysis under way (February, 2024, target): During the drilling process, Lancaster will collect samples and submit them for mineral and fluid analysis to confirm lithium concentration within reservoir brine and drill cuttings.
• DLE technology bidding and sample dispatch (March, 2024, target): Engagements with leading direct lithium extraction (DLE) technology providers are under way to ensure the lithium extraction process is both efficient, cost-effective and environmentally responsible. Discussions are in progress with various DLE companies to secure sufficient brine samples for testing, aimed at determining the compatibility of DLE technologies with successfully extracted lithium brine from Alkali Flats.
• Sample results and National Instrument 43-101 (Q2 2024): Upon receiving the sample analysis results, Lancaster plans to update its NI 43-101 report, ensuring stakeholders can access the most current and precise information.
• Anticipated DLE results (2024): Lancaster expects to receive the outcomes of future DLE technology trials, which will inform its extraction strategy and affirm its commitment to employing the most economical, effective and sustainable lithium extraction practices.

Strategic spinoff and share distribution

In a strategic move, Lancaster created a subsidiary, Nelson Lake Copper Corp., and staked a copper prospective claim in Saskatchewan, Canada. Its plan is to complete a plan of arrangement with Nelson Lake and spin off about two-thirds of its ownership stake in Nelson Lake to Lancaster shareholders and later sell its remaining stake in Nelson Lake to generate finances to expand its exploration and development activities at Alkali Flat.

The strategic separation of Nelson Lake as an independent entity is a significant benefit to Lancaster Resources, its parent company. This move allows Lancaster to concentrate resources and management attention on its core lithium exploration projects, like the Alkali Flat lithium brine project, ensuring efficient capital use and focused operational efforts. It diversifies business risks, as challenges in the copper exploration sector will not directly impact Lancaster's main operations. Financially, it provides Lancaster with non-dilutive financing options, maintaining shareholder value without diluting equity. Additionally, each entity can attract market-specific partnerships and investments, leading to potentially higher valuations and strategic growth opportunities. Over all, this separation enhances Lancaster's operational efficiency, financial stability and shareholder value, while allowing for a more agile and focused corporate strategy.

Spinoff distribution details

Pursuant to the spinoff agreement, the parties have agreed to enter into an arrangement agreement and a plan of arrangement whereby Lancaster will issue 550,000 Lancaster common shares with a deemed value of six cents each to Nelson Lake in exchange for 1.6 million Nelson Lake shares at a deemed value of two cents each. Approximately one million common shares of Nelson Lake will be distributed to Lancaster shareholders at the closing of the transaction. Currently, there are 100,000 common shares outstanding in Nelson Lake which were issued to Lancaster Resources for nominal consideration as founders' shares on Dec. 15, 2023. There are no options, warrants or other derivative securities currently outstanding in Nelson Lake.

A shareholder meeting to vote on the transaction will occur on March 15, 2024. The record date to determine entitlement to receive dividend shares and the right to vote at the meeting is Feb. 5, 2024. Holders of Lancaster shares as of Feb. 5, 2024, will be eligible to receive dividend shares at a distribution ratio of one dividend share for every 50 Lancaster common shares held. The ex dividend date will be on Feb. 1, 2024, so shares in Lancaster purchased in the market after the close of trading on Jan. 30, 2024 (to allow two days to settle electronic trades), will not be eligible to receive dividend shares or to vote at the meeting.

Completion of the transaction is conditional upon the parties entering into an arrangement agreement and a plan of arrangement, completing an audit of the financial statements of Nelson Lake for its year ended Dec. 31, 2023, completing an NI 43-101-compliant technical report of the Nelson Lake Copper property and obtaining approvals of the British Columbia Supreme Court and of the shareholders of Lancaster. The transaction will not affect the shareholdings of Lancaster common shares and there will be no change in the corporate structure of Lancaster. Lancaster shareholders holding shares as of the record date will receive shares in Nelson Lake Copper, in addition to shares held in Lancaster Resources.

About Lancaster Resources Inc.

Lancaster Resources is engaged in exploring battery and critical metals to take advantage of the global shift toward decarbonization and electrification.

We seek Safe Harbor.