Mr. Eric Krafft reports

LEADING EDGE MATERIALS REPORTS FISCAL 2023 RESULTS

Leading Edge Materials Corp. has released results for the fiscal year ending Oct. 31, 2023.

Highlights during and after fiscal 2023

During the fiscal year ended Oct. 31, 2023, the company:

• On Jan. 23, 2023, the company announced that it is ahead of schedule in exploration of its exclusive and 100-per-cent-owned Bihor Sud licence in the Apuseni Mountains of central-western Romania. Furthermore, extensive nickel (Ni) and cobalt (Co) mineralization has been visually identified over 100 metres (m) in the first of the recently opened historic galleries on the property.
• On March 1, 2023, the company announced it identified extensive Co-Ni-mineralization 50 metres above the previously reported Gallery 7 at its Bihor Sud project in Romania.
• On April 26, 2023, the company granted stock options to directors, officers and consultants of the company to purchase an aggregate of 4.7 million common shares of the company, at exercise price of 19.5 cents per optioned share, expiring on the date that is five years from the date of grant for directors and officers and three years from the date of grant for consultants. The options will vest 33 per cent on the date of the grant, 33 per cent one year after the date of grant and 34 per cent two years after the date of grant. The options were issued pursuant to the terms of the company's option plan.
• 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.
• On Aug. 23, 2023, the company completed a private placement financing of 21,739,130 units at a price of 11.5 cents per unit for gross proceeds of $2.5-million. Each unit consisted of one common share and one common share purchase warrant. Each warrant is exercisable by the holder to acquire one additional common share at an exercise price of 22.5 cents per share, expiring Aug. 23, 2027. The company paid finders' fees of $20,930 cash and issued 7,000 finder's warrants.
• On Oct. 25, 2023, the company announced receiving high grade cobalt-nickel results from systematic gallery chip sampling at its Bihor Sud project, Romania. Results confirm in situ high-grade Co-Ni-Au and Cu-Zn-Pb-Ag mineralization within over 150 m and 350 m gallery segments in G7 and G4 respectively. G7 highlights include 3.5 per cent Cobalt , 29.7 per cent nickel and 15.65 g/t Au. G4 highlights include 11.7 per cent Copper, 11.7 per cent lead and 18.7 per cent zinc.

After the fiscal year ended Oct. 31, 2023, the company:

• On Dec. 14, 2023, the company announced it has received further positive assay results for Co-Ni-Au from Gallery 7. This second batch of 104 samples prolongate the zone of Co-Ni-Au-occurrences by about 250 m to a total length of roughly 400 m NNW-SSE, and constitute the central-southern part of G7 at the Bihor Sud project in Romania. Highlights include 6.7 per cent Co, 13.0 per cent Ni, 7.5 g/t Au.

Results of operations

Three months ended Oct. 31, 2023, compared with three months ended July 31, 2023

During the three months ended Oct. 31, 2023, the company reported a net loss of $387,343 compared with a reported net loss of $322,392 for the three months ended July 31, 2023, an increase in loss of $64,951, Major movements are in shares based compensation booked during Q4 2023 of $46,683 compared with nil in Q3 2023 , Accretion of provision for site restoration booked during Q4 2023 of $74,428 compared with $10,200 in Q3 2023, which is offset by foreign exchange gain booked during Q4 2023 of $125,700 compared with loss of $51,554 in Q3 2023 and interest booked during Q4 2023 of $26,959 compared with $9,047 in Q3 2023.

Year ended Oct. 31, 2023, compared with year ended Oct. 31, 2022 (restated)

During the year ended Oct. 31, 2023, the company reported a net loss of $2,582,473

Compared with a net loss of $3,163,557 for the year ended Oct. 31, 2022, a decrease in loss of $581,084. The decrease in loss was primarily attributed to directors and officer's compensation of $182,341 in fiscal year 2023 compared with $443,700 in fiscal year 2022, shares based compensation during fiscal year 2023 of $854,275 compared with $974,462 in fiscal year 2022 and foreign exchange loss of $137,529 in fiscal year 2023 compared with gain of $151,206 in fiscal year 2022.

Selected financial data

The attached 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 year ended Oct. 31, 2023, the company recorded a net loss of $2,582,473 and, as of Oct. 31, 2023, the company had an accumulated deficit of $46,850,300 and working capital of $2,713,098. 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

The last 12 months have been characterized by two major trends which directly impact the company's business. Firstly, the increasing adoption and sales volumes of EVs. And secondly, the more urgently accommodating legislative environment in the EU to support local extractive industries.

The latter actually taking shape as industrial policy, hardly seen in the western world since WW2. We have in previous quarterly notes followed how this has developed through the Critical Raw Materials Act and the Net-Zero Industry Act, and keep getting continuously encouraged by speed and magnitude of actions from Brussels and member states.

European Commission president Ursula von der Leyen, in her recent annual State of the Union address offers many highlights. "Next phase of European green deal" is in fact broad industrial policy using climate agenda to improve competitiveness. Concerns are voiced at Asian supply chains outcompeting, as well as U.S. green subsidy schemes undercutting European businesses. It all starts with access to raw materials and process technologies of these.

The company remains convinced that it is in the right place with the right assets to play its part in combatting the threat of a European deindustrialization.

Woxna graphite mine

In terms of its assets and the underlying materials needed for the green transition, natural graphite remains a particularly interesting commodity according to many analyzts. This is 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 sixfold to sevenfold increase in graphite demand by 2030, amongst the most severe of any commodity.

The company 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 flake graphite prices have remained weak to date this year. Increased capacity in Chinese synthetic graphite production has been an important factor. It is estimated that China accounts for 92 per cent of global anode production. This is important as it leads to constraints and impairs competitiveness for European auto industry. Additionally, Chinese initiatives in December to restrict exports of graphite have stimulated western cell manufacturers to reconsider resilience of their supply chains.

Of course, this offers Sweden a great opportunity as a producer and Woxna a first mover advantage to help address this.

Norra Karr heavy rare earth project

At its Norra Karr development project, it has during the last year been progressing work with a Natura 2000 permit application. To its benefit, the Swedish government signal legislative changes which positively impact it, as it believes that the requirement for a Natura 2000 permit will be shifted further along the process. To that end, it is pleased to now proceed with full focus on its mining lease application. The Natura 2000 permit being deferred, to be resumed later on when it applies for the environmental permit without losing benefit of work having been done to date.

This is a direct consequence of the government initiative to ensure more pragmatic permitting process.

As this is done based on the new 2021 design of this project, the company is benefitting 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, it has started working towards a new mining lease application, as well as evaluating the most appropriate next stages of feasibility development.

In the meantime, it is pleased to follow beneficial developments in the rare earth and permanent magnet space. Prices for the magnet metals have increased because of supply concerns in Asia. It 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. Dysprosium is turning out to be a crucial bottleneck, noteworthy is that of REE projects globally, Norra Karr is one of the absolute best in terms dysprosium potential.

Last year, the Canadian company Neo Performance Materials had broken ground on building a rare earth permanent magnet factory in Estonia11. 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 producers12.

Bihor Sud nickel-cobalt exploration project

Since having obtained permission to enter its underground galleries last year, this project has been advancing rapidly. 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.

In October, the company reported receiving high-grade cobalt-nickel results from systematic gallery chip sampling. Results confirm in situ high grade Co-Ni-Au and Cu-Zn-Pb-Ag mineralization within over 150 m and 350 m gallery segments in G7 and G4 respectively. G7 highlights include 3.5 per cent cobalt , 29.7 per cent nickel and 15.65 g/t Au. G4 highlights include 11.7 per cent copper, 11.7 per cent lead and 18.7 per cent zinc.

In December, the company released further positive assay results for Co-Ni-Au from Gallery 7. This second batch of 104 samples prolongate the zone of Co-Ni-Au-occurrences by about 250 m to a total length of roughly 400 m NNW-SSE, and constitute the central-southern part of G7 at the Bihor Sud project in Romania. Highlights include 6.7 per cent Co, 13.0 per cent Ni, 7.5 g/t Au.

Further extensive Co-Ni mineralization has been identified 50 m above G7 in a cross cut coming from the higher-level gallery G4. These results confirm the company's belief that this is a high prospective exploration project with potential for both scale and high-grade mineralization.

It is are working toward doing a surface drill program on 50-100 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.

Additionally, it has recently entered its next target, Gallery 2, which it has started mapping and for which it has high expectations.

Financial information

The report for three months ending Jan. 31, 2024, is expected to be published on or about March 22, 2024.

About Leading Edge Materials Corp.

Leading Edge Materials 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 HREE project (Sweden) and the 51-per-cent-owned Bihor Sud nickel-cobalt exploration alliance (Romania).

We seek Safe Harbor.