Mr. Eric Krafft reports

LEADING EDGE MATERIALS REPORTS QUARTERLY RESULTS TO JULY 31, 2023

Leading Edge Materials Corp. has released its third quarter results for the period ending July 31, 2023.

Highlights during and after the quarter:

• During the three months ended July 31, 2023:
  • On June 1, 2023, the company announced in situ assay results at over 30 per cent nickel (Ni) and 4.7 per cent cobalt (Co) at Bihor Sud. Additionally, surface trench assay results indicate a zone of Pb-Zn-Ag (lead-zinc-silver) mineralization.
• Subsequent to July 31, 2023:
  • On Aug. 23, 2023, the company announced the closing of the non-brokered private placement financing. Pursuant to the private placement, the company issued 21,739,130 units at a price of 11.5 cents per unit for aggregate gross proceeds of $2.5-million.

Results of operations

Three months ended July 31, 2023, compared with three months ended April 30, 2023

During the three months ended July 31, 2023 (Q3 2023), the company reported a net loss of $322,392 compared with a reported net loss of $1,235,603 for the three months ended April 30, 2023 (Q2 2023), a decrease in loss by $913,211, the decrease 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 nil in Q3 2023.

Three months ended July 31, 2023, compared with three months ended July 31, 2022

During the three months ended July 31, 2023 (2023 period), the company reported a net loss of $322,392 compared with a net loss of $609,709 for the three months ended July 31, 2022 (2022 period), a decrease in loss of $287,317, the decrease in loss mainly due to mark-to-market gain of $34,065 (2022 period loss -- $126,036), and directors and officer's compensation of $46,270 (2022 period -- $97,482).

Specific expenses of note during three months ended July 31, 2023, are as follows:

1. Incurred $46,270 (2022 -- $97,482) for directors and officer's compensation.
2. Incurred $48,829 (2022 -- $67,500) for listing and regulatory fees with respect to continuing fees for the company's listing of its common shares on the TSX Venture Exchange, Nasdaq First North and OTC exchanges.
3. Incurred a total of $37,998 (2022 -- $29,915) for accounting and audit out, of which the company incurred $14,390 (2022 -- $11,827) for accounting services of SKS Business Services, along with $7,677 (2022 -- $7,373) for bookkeeping and accounting services for subsidiary companies provided by other independent accountants.
4. Incurred research, development and general exploration expenses of $10,200 (2022 -- $26,240).
5. Incurred $34,716 (2022 -- $67,191) in costs for operations.

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 July 31, 2023, the company recorded a net loss of $322,392. As of July 31, 2023, the company had an accumulated deficit of $46,909,932 and working capital of $848,952. 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

As mentioned in the company's last quarterly update, there are numerous new political and legislative initiatives to support mining and processing of critical raw materials in the EU (European Union). Leading Edge is pleased to see the increasing political support focused on these key themes given their importance, tying together the issues of climate change, resilient supply chains for products needed to sustain way of life, decreased dependance on regions which may not share western values and future jobs. Leading Edge feels that it has an important role to play in this reality and has projects particularly well positioned to benefit from these trends.

In addition to the EU Critical Raw Materials Act, which is well in process toward becoming legislation, there are increasing suggestions for various ways the EU could stimulate direct funding of underlying projects in the short to midterm. Again, reading between the lines, the company concludes that there is a definite sense of urgency in Europe (as in the United States) to catch up with the enviable position of players in Asia.

As reported, the company did a recent private placement raising gross proceeds of $2.5-million. More than half of this was subscribed by insiders, demonstrating continued commitment and conviction in the company's prospects. The remainder was taken up by a small number of professional long-term sector investors.

Woxna graphite mine

In terms of the company's assets and the underlying materials needed for the green transition, natural graphite remains a particularly interesting commodity according to many analysts. This, because graphite is a core component in almost all lithium-ion chemistries, with extreme dependance on Asian supply chains and importance to help decarbonize battery anodes. Many analysts predict a six- to seven-fold increase in graphite demand by 2030, amongst the most severe of any commodity.

Leading Edge maintains its built and permitted Woxna graphite mine and plant on care and maintenance, while monitoring market signals to consider a restart of graphite concentrate production, as the first step to developing a downstream anode business. Despite the looming demand-supply deficit, graphite prices have remained weak to date this year.

The attractiveness of owning a built mine once the underlying commodity increases in value can not be overstated. This is why Leading Edge is confident that Woxna will offer the company a tremendous opportunity to benefit from the demand-supply imbalance.

Additionally, there are signs that bifurcated markets are developing for battery materials, those from China and those of Western origins. This stems from both ESG (environmental, social and governance) and other concerns, and may be seen in differentiated pricing. Of course, Sweden has a great opportunity as a producer, and Woxna a first-mover advantage.

Norra Karr heavy rare earth element (HREE) project

At the company's Norra Karr development project, it is progressing work with a Natura 2000 permit application. As this is done based on the new 2021 design of this project, the company is benefiting from authorities and other stakeholders evaluating the merits of the project based on recent plans that substantially reduce the potential for environmental risk. In parallel, Leading Edge has started working toward a new mining lease application, as well as evaluating the most appropriate next stages of feasibility development.

Quite a bit has been happening recently in the rare earth and permanent magnet space. Prices for the magnet metals have increased because of supply concerns in Asia. Leading Edge is told that China, being the dominant processor of concentrate and magnet producer, is actively trying to tie up supply around the world. In particular, it is the heavy rare earths which are a challenge to secure, with prices squeezing higher.

Across the Baltic Sea, the Canadian company Neo Performance Materials has broken ground on building a rare earth permanent magnet factory in Estonia. This is important as it demonstrates, as the company has said, the emergence of new Western producers of these critical products. Norra Karr, as one of the largest HREE deposits globally, and the only one in the EU, has the potential to be a cornerstone supplier to Western magnet producers.

Bihor Sud nickel-cobalt exploration project

Since having obtained permission to enter the project's underground galleries in January, this project has been advancing rapidly. Results are encouraging: in the first target gallery, G7, the company has encountered visual Co-Ni mineralization over 135 metres until a collapsed zone in mineralized rocks, which is currently being cleaned out to open another 900 m of gallery. This is important since it appears that mineralized zone continues beyond the collapsed rocks. Further extensive Co-Ni mineralization has been identified 50 m above G7 in a crosscut coming from the higher level gallery, G4.

As communicated, in situ samples from G7 gallery walls have assayed up to 30 per cent Ni and 4.7 per cent Co, while surface trench assay results indicate a zone of Pb-Zn-Ag mineralization. These results confirm the company's belief that this is a high prospective exploration project with potential for both scale and high-grade mineralization.

Line sampling of the Co-Ni mineralization in G7 and the Pb-Zn-Cu-Ag mineralization in G4 was completed, and samples sent for assaying. Results are expected shortly, and follow-up channel sampling is currently under way.

Leading Edge is working toward doing a surface drill program on 50 m to 100 m deep geophysical anomalies and to explore the depth extent of G7 Co-Ni mineralization, as well as an underground drill program from inside G4 and G7.

Financial information

The annual audited consolidated financial statements for the year ending Oct. 31, 2023, is expected to be published on or about Jan. 24, 2024.

The company also announces that in connection with the recently private placement closed on Aug. 23, 2023, the company issued 7,000 finder's warrants to an arm's-length third party as a finder fee on a portion of the private placement. Each warrant will entitle the holder to purchase one common share at a price of 22.5 cents per warrant share until the date which is two years from the closing date of the private placement.

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 nine months ended July 31, 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.