Ms. Penny White reports

LANCASTER RESOURCES TO SPIN-OFF NELSON LAKE THROUGH PLAN OF ARRANGEMENT

Further to the spinoff agreement announced on Jan. 2, 2024, Lancaster Resources Inc. has entered into an arrangement agreement dated Jan. 29, 2024, which outlines the terms and procedures for a plan of arrangement with its wholly owned subsidiary Nelson Lake Copper Corp. whereby the company intends to spin off the majority of its holdings in Nelson Lake by issuing a stock dividend of Nelson Lake common shares to Lancaster shareholders.

The transaction will be carried out by way of a statutory plan of arrangement pursuant to the Business Corporations Act (British Columbia). Through the spinoff, shareholders of the company will receive a stock dividend of Nelson Lake shares at a ratio of 0.02 Nelson Lake shares for every Lancaster share owned (the stock dividend) as of the record date of Feb. 5, 2024 (the record date).

There will be no change in Lancaster secuityholders' ownership in Lancaster securities as a result of the spinoff. Holders of warrants, options or other convertible securities in Lancaster will not be entitled to receive the stock dividend. Only holders of common shares of Lancaster as of the record date will be eligible to receive the stock dividend.

The proposed spinoff will be subject to the terms of the arrangement agreement and the approval of Lancaster shareholders at an annual general and special meeting of shareholders on March 15, 2024. The spinoff will also require the approval of the British Columbia Supreme Court. Full details of the spinoff, Nelson Lake, and the Nelson Lake copper project will be included in an information circular which will be distributed to Lancaster shareholders in advance of the meeting.

Following the spinoff, Nelson Lake will be an unlisted reporting issuer in British Columbia, Alberta and Saskatchewan, and will seek to raise financing and look for potential merger or acquisition targets to strengthen its business and potentially seek a listing on a stock exchange. Immediately after the spinoff, the company will continue to own approximately 750,000 shares of Nelson Lake, which will be approximately 43 per cent of the outstanding shares of Nelson Lake.

Alkali Flat lithium brine project

The Alkali Flat lithium brine project, being the company's main focus, has made significant progress in identifying optimal drilling locations. Through the meticulous interpretation of magnetotelluric data, Lancaster's experts have pinpointed target areas for drilling, which are expected to yield concentrated lithium brines. These preliminary sites were chosen based on two highly conductive features discovered in a magnetotellurics survey. The company expects to complete its first exploratory well in this project this spring, with the first test results on lithium brine concentration expected to be available in early April, 2024. Lancaster has been engaged in discussions with companies who own various lithium extraction (DLE) technologies to provide them with brine samples to determine economic models for using DLE as an extraction method at the Alkali Flat project in New Mexico.

CEO's statement

"We are always looking for innovative ways to deliver value to our shareholders. The spinoff aims to enhance shareholder value, offering stakes in two potentially growing sectors. Shareholders will retain all of their Lancaster shares and receive a stock dividend consisting of Nelson Lake shares, allowing shareholders to benefit from successes and value appreciation in both companies," says Lancaster's chief executive officer and president, Penny White.

Plan of arrangement details

Pursuant to the arrangement agreement, the parties have agreed to 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 1.65 million Nelson Lake shares at a deemed value of two cents each. Approximately one million common shares of Nelson Lake (the dividend shares) will be distributed to Lancaster shareholders at the transaction's closing. 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. Besides issuing 300,000 options to its directors and officers, Nelson Lake has not issued any convertible securities.

At the meeting, Lancaster shareholders will be asked, among other things, to consider and to vote to approve a special resolution to approve the plan of arrangement. To be effective, the arrangement resolution must be approved by at least two-thirds of the votes cast in respect of the arrangement resolution by Lancaster shareholders present in person or represented by proxy at the meeting on the basis of one vote per Lancaster share.

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 (the record date). 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.

The Lancaster board of directors reserves the right to terminate the arrangement agreement and withdraw the plan of arrangement at any point, whether before or after the meeting, and regardless of whether the final order has been granted, without requiring additional approval from the Lancaster shareholders.

The spinoff 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 Corp. in addition to shares held in Lancaster.

Completion of the spinoff is expected to occur on or about March 22, 2024; however, it is possible that completion may be delayed beyond this date if the conditions to completion of the arrangement cannot be met on a timely basis.

Andrew Watson, PEng, a qualified person for the purposes of National Instrument 43-101 -- Standards of Disclosure for Mineral Projects, has reviewed and approved the scientific and technical information contained in this news release. Mr. Watson is the company's vice-president, engineering and operations.

About Lancaster Resources Inc.

Lancaster Resources is engaged in exploring critical minerals to take advantage of the global shift toward decarbonization and electrification. Lancaster has rights to acquire 100 per cent of the Alkali Flat lithium project, near Lordsburg, N.M., United States, a set of claims approximately 5,200 acres (8.1 square miles) in size that Lancaster is exploring for concentrated subsurface lithium brine deposits. Lancaster's vision is to produce net zero lithium using direct lithium extraction technology powered by solar or geothermal energy.

Lancaster also holds the rights to a 100-per-cent interest in the Trans-Taiga lithium property located within the James Bay lithium district of Quebec and lying on the same geological trend as significant lithium discoveries, including Patriot Metals' Corvette property. Lancaster plans to conduct exploration activities with a holistic view of stakeholder interests. Guiding Lancaster Resources' journey is a skilled management and technical team with collective involvement in over 15 commercial mineral discoveries, and endowed with extensive experience in the creation of lithium brine targets, and the exploration and development of lithium projects across Canada, the American West, Mexico and South America.

We seek Safe Harbor.