Mr. Eric Krafft reports

LEADING EDGE MATERIALS REPORTS QUARTERLY RESULTS TO APRIL 30, 2023

Leading Edge Materials Corp. has released its second quarter results for the period ending April 30, 2023.

Highlights during and after the quarter:

• During the three months ended April 30, 2023:
  • On March 1, 2023, the company announced it identified extensive cobalt-nickel (Co-Ni) mineralization 50 metres above the previously reported Gallery 7 at its Bihor Sud project in Romania.
• Subsequent to April 30, 2023:
  • On June 1, 2023, the company announced in situ assay results at over 30 per cent nickel and 4.7 per cent cobalt at Bihor Sud. Additionally, surface trench assay results indicate a zone of lead-zinc-silver (Pb-Zn-Ag) mineralization.

Results of operations

Three months ended April 30, 2023, compared with three months ended Jan. 31, 2023

During the three months ended April 30, 2023 (Q2 2023) the company reported a net loss of $1,235,603 compared with a reported net loss of $637,135 for the three months ended Jan. 31, 2023 (Q1 2023), an increase in loss by $598,468, the increase in loss mainly due to share-based compensation related to granting of stock options under the company's stock option plan of $710,563 in Q2 2023, compared with share-based compensation of $97,029 in Q1 2023.

Three months ended April 30, 2023, compared with three months ended April 30, 2022

During the three months ended April 30, 2023 (2023 period), the company reported a net loss of $1,235,603 compared with a net loss of $790,120 for the three months ended April 30, 2022 (2022 period), an increase in loss of $445,483, the increase in loss mainly due to share-based compensation of $710,563 (2022 period -- nil), foreign exchange loss of $187,455 (2022 period -- $4,483), mark to market loss of $22,178 (2022 period -- $357,800).

Selected financial data

The following selected financial information is derived from the unaudited condensed consolidated interim financial statements of the company prepared in accordance with IFRS (international financial reporting standards).

Financial condition/capital resources

During the three months ended April 30, 2023, the company recorded a net loss of $1,235,603. As of April 30, 2023, the company had an accumulated deficit of $46,587,540 and working capital of $1,344,044. The company is maintaining its Woxna graphite mine on a production-ready basis to minimize costs, and is conducting continuing research and development to produce higher-value specialty products. The company is also evaluating a potential restart of production at the Woxna graphite mine. The company anticipates that it has sufficient financing to meet anticipated levels of corporate administration and overheads for the ensuing 12 months, however, it will need additional capital to provide working capital and recommence operations at the Woxna graphite mine, establish a production facility for the Anode project, to finance future development of the Norra Karr property, or to complete exploration activities in Romania. There is no assurance such additional capital will be available to the company on acceptable terms or at all. In the longer term, the recoverability of the carrying value of the company's long-lived assets is dependent upon the company's ability to preserve its interest in the underlying mineral property interests, the discovery of economically recoverable reserves, the achievement of profitable operations, and the ability of the company to obtain financing to support its continuing exploration programs and mining operations.

Outlook

Since the company's last quarterly update, it is pleased to see additional momentum on political and legislative levels in the European Union. These initiatives are, of course, all tied to themes around climate change, risk assessment of supply chains, dependance on other countries et cetera. All of which are directly relevant to the company's activities, and where we feel we have an important role to play. Leading Edge's decision to focus the company on critical raw materials within the EU feels opportune.

Regarding the EU Critical Raw Materials Act, which was proposed this spring, the company hears informal feedback from various sources that it is largely considered a sensible proposal. Leading Edge can only agree, preferring free market mechanisms rather than making companies dependent on direct subsidies and such. As a reminder, the proposed legislation will require at least 10 per cent of such designated critical raw materials to have been mined in the EU, and for member states to guarantee 24 months permitting process for projects deemed of strategic importance, all within very tight timelines.

Additionally, there are numerous other initiatives also highly relevant to the company, for example:

• The EU parliament has adopted new rules for the design, manufacture and recycling of all types of batteries sold in the EU. The background to the content of the regulation are the proposals for mandatory sustainability criteria for batteries. This is relevant to the company's Woxna graphite mine (only one in the EU), where Leading Edge conducted a life cycle analysis to demonstrate its capacity to be an order of magnitude lower GHG (greenhouse gas) emitter as a Swedish anode producer compared with most current Asian alternatives, presented in the company's 2021 PEA (preliminary economic assessment).
• Proposals to beef up the European Net-Zero Industry Act. This is relevant to the European wind power industry. The company's Norra Karr project potentially plays a vital role in possibly making Europe self sufficient for some of the critical rare earth elements, without which one can not manufacture the permanent magnets which go into wind turbine generators and electric motors. China has a near full control of these materials today.
• The German government plans to set up a state fund worth up to two billion euros ($2.2-billion) that will support mining of raw materials critical to the nation's green transition, with the aim of securing access and cutting reliance on China.
• Along with the multibillion France 2030 plan, the company has to conclude that there appears to be several alternatives emerging for European companies like Leading Edge to access financing to develop and build projects.

Politicians, supported by European citizens, certainly appear to walk the talk in terms of aligning with stated policy aims. What has surprised the company is the speed with which these proposals are suggested and rapidly debated to get implemented in short order. It seems everyone is aware and committed to deal with the multiple crises the company find itself in the middle of: climate change, war in Europe, energy crisis, dependance on Asian supply chains et cetera.

Leading Edge is pleased that its has managed to position the company at the point where these trends converge, providing a convex exposure to events taking place around it.

The company's built and permitted Woxna graphite mine and plant continues to be meticulously kept on care and maintenance. As reported, the company is evaluating a restart of the mine to initially produce graphite concentrate, as the first step to developing a downstream anode business. Market signals are obviously important to guide the company as to when to restart.

The massive forecast demand-supply imbalance of graphite appears one of the most attractive investment cases of any of the battery materials. However, natural flake graphite prices have so far (along with many other commodities) come down over 20 per cent this year. This suggests that the company is not yet at the point where relatively inelastic demand from nascent giga factories meets the tight current supply. With economic slowdown in China, graphite demand as refractory material has also decreased. Leading Edge is, of course, monitoring this with interest, bearing in mind price action in cobalt a few years ago, or lithium last year.

The company believes having a built and permitted graphite mine, in an excellent jurisdiction with proximity to infrastructure, and the many new giga factories gradually coming on-line is the most compelling exposure one can have set to benefit from this imbalance. Given the EU Critical Raw Materials Act and the numerous other initiatives, the strategic importance, value and scarcity of Woxna is enhanced, in the company's opinion.

For the Norra Karr project, Leading Edge took the decision to initiate a Natura 2000 permit application process. By doing this based on the new design of the Norra Karr project, the company will benefit from authorities and other stakeholders evaluating the merits of the project based on the most recent plans that substantially reduce the potential for environmental risk. In parallel, through the various environmental and metallurgical studies that may be required to support the Natura 2000 permit application, the company can further progress the Norra Karr project toward its next stages of feasibility development. The company will continue to adapt its path should the legal framework evolve going forward. Aspects of the proposed EUCRMA appear particularly relevant to this project.

As reported, continued work at the company's Bihor Sud Ni-Co exploration project in Romania has been progressing very encouragingly. Since having received permission to enter underground galleries in January, this has been advancing rapidly. Results have been encouraging: in the first target gallery G7, the company has encountered visual Co-Ni mineralization over 135 metres. Additionally, further extensive Co-Ni mineralization has been identified in G4, 50 m above, and in the crosscut and raise connecting these two galleries. This indicates that the company is potentially encountering sizable systems with good potential.

High levels of radon gas readings resulted in time needing to be taken to design, order and have a ventilation system installed. While this was done, the company took the opportunity to dig and sample five exploration trenches. As communicated, in situ samples from gallery walls reported 30 per cent Ni and 4.7 per cent Co. And the trenches have yielded very encouraging results with apparently important Pb-Zn-Ag mineralization continuously over a one-kilometre strike. Basically, the company is reassured that these latest results continue to confirm its prior-stated beliefs and that this truly is an incredible exploration project with scale and high-grade potential.

Now that ventilation has been successfully installed in G4, additional ventilation will be added to G7. The company can now engage in its planned underground channel sampling program and follow up on planning an underground drilling program.

Financial information

The report for three months ending July 31, 2023, is expected to be published on or about Sept. 20, 2023.

About Leading Edge Materials Corp.

Leading Edge is a Canadian public company focused on developing a portfolio of critical raw material projects located in the European Union. Critical raw materials are determined as such by the European Union based on their economic importance and supply risk. They are directly linked to high-growth technologies such as batteries for electromobility and energy storage and permanent magnets for electric motors and wind power that underpin the clean energy transition toward climate neutrality. The portfolio of projects includes the 100-per-cent-owned Woxna graphite mine (Sweden), Norra Karr heavy rare earth element project (Sweden) and the 51-per-cent-owned Bihor Sud nickel-cobalt exploration alliance (Romania).

Additional information

The company's unaudited consolidated financial statements for the six months ended April 30, 2023, and related management's discussion and analysis are available on the company's website or under its profile on SEDAR.

We seek Safe Harbor.