Mr. Ali Mahdavi reports

NEO ANNOUNCES OPERATIONAL TRANSFORMATION AT ESTONIA RARE METALS FACILITY

Neo Performance Materials Inc. has provided an update on its manufacturing strategy execution with respect to rare metal operations at the NPM Silmet OU plant in Sillamae, Estonia. This shift in focus away from mid-stream toward downstream operations is expected to diversify feedstock supply, reduce working capital requirements, and reduce volatility by lowering inventory volumes and holding times.

Beginning this week, NPM Silmet is updating its manufacturing processing of niobium and tantalum to improve business performance of its high-purity rare metals production. NPM Silmet will shift further downstream in its value-add operation by halting the energy-intensive hydrometallurgical processing of niobium-bearing and tantalum-bearing ores. Going forward, future products will be derived from oxides and recycled materials. Neo has completed testing of these purchased oxides and has entered into numerous sourcing agreements for these input materials.

This focus is expected to enable Neo to improve return on capital employed while better aligning material purchases with underlying customer demand for higher-value products. In addition, it is expected to deliver the following benefits:

• Increase supplier base and sourcing optionality;
• Reduce working capital requirements and inventory on hand;
• Decrease price volatility;
• Simplify the manufacturing process;
• Improve environmental footprint from reduced energy consumption and waste water generation.

It is anticipated that the rare metal unit's operational transformation will result in streamlined business processes. In connection with this production realignment, Neo anticipates taking a charge to its fourth quarter net income (loss), including approximately $2-million (U.S.) to $3-million (U.S.) non-cash charge for impairment of assets and less than $1.5-million (U.S.) of employee restructuring costs. In addition, savings from working capital reductions are expected to offset the restructuring and transition cash costs in less than a year with operating income improvements delivered on a continuing basis.

"We are continuing to execute on our new manufacturing strategy to improve the return on capital employed, reduce dependency on concentrated supply arrangements and better control volatility in earnings," said Rahim Suleman, president and chief executive officer of Neo.

About Neo Performance Materials Inc.

Neo manufactures the building blocks of many modern technologies that enhance efficiency and sustainability. Neo's advanced industrial materials -- magnetic powders and magnets, specialty chemicals, metals, and alloys -- are critical to the performance of many everyday products and emerging technologies. Neo's products help to deliver the technologies of tomorrow to consumers today. The business of Neo is organized along three segments: Magnequench, chemicals and oxides, and rare metals. Neo is headquartered in Toronto, Ont., Canada, with corporate offices in Greenwood Village, Colo., United States; Singapore; and Beijing, China. Neo has a global platform that includes 10 manufacturing facilities located in China, the United States, Germany, Canada, Estonia, Thailand and the United Kingdom as well as one dedicated research and development centre in Singapore.

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