Mr. Chris Castle reports

UPDATE ON CHATHAM TERM SHEET TO ACQUIRE 15% OF CHATHAM ROCK PHOSPHATE (NZ) LIMITED

On July 4, 2025, as described in the past two management's discussion and analysis quarterly reports, Chatham Rock Phosphate Ltd. has executed a non-binding term sheet that detailed the following proposed transactions:

• The acquisition by an arm's-length party of an initial 15-per-cent interest in a newly formed entity (NewCo) whose sole asset is the wholly owned subsidiary, Chatham Rock Phosphate (N.Z.) Ltd., which holds the Chatham Rise phosphate offshore mining permit (MP55549) and related assets;
• The acquiror has an exclusive right to increase its stake to up to 75 per cent of the Chatham Rise project through an agreed earn-in program;
• The acquiror is entitled to increase its ownership in NewCo from 15 per cent to 75 per cent in a stepwise fashion, pursuant to meeting mutually agreed upon technical, financial and regulatory milestones and culminating with full project production permitting during the option period; milestones and corresponding equity tranches to be documented in the definitive agreement;
• The acquiror will be solely responsible for all future capital contributions to finance the Chatham Rise project activities unless mutually agreed upon third party investors are included in NewCo;
• Chatham Rock shall retain a 2.0-per-cent net smelter royalty on the project; the acquiror shall have the right to repurchase two-thirds of this royalty at fair market value within three years of project production; an additional royalty kicker, up to a total of 2.5 per cent, may be agreed based on spot or realized sale prices, to be defined in final documentation.;
• The executed term sheet was for discussion purposes only and did not include all the terms, conditions or other provisions relating to the proposed investment by the acquiror into the offshore mining project currently held by Chatham Rock Phosphate; no binding agreement or commitment would exist until final definitive documents have been executed;
• The proposed transactions may require, inter alia, the approval of New Zealand Petroleum & Minerals and the Toronto Stock Exchange.

Earlier disclosures

Reference to this development was included in the subsequent events note in the MD&A reports for the three-month periods ended March 31, 2025, and June 30, 2025.

"On July 4, 2025, an interested party entered into a non-binding term sheet with the group and commenced due diligence on the Chatham Rise project. The exclusivity period to finalize the transaction is six months from July 4, 2025. Upon successful completion of due diligence, the group may enter into a definitive investment agreement, which would provide an option to the interested party to acquire up-to-75-per-cent stake in the Chatham Rise project through an agreed earn-in program."

Further reference to the transaction was made in the Oct. 24, 2025, announcement relating to the current private placement of units being made by the company.

Recent developments

Since July 4, the following events have occurred:

• Four representatives of the acquiror travelled to New Zealand and were based in the company's Wellington office, where they commenced a rigorous due diligence process being briefed by its management team and meeting a wide range of stakeholders including government representatives.
• Last week, Chatham representatives met with those of the acquiror where they confirmed that their due diligence investigations are completed. The company is proceeding to negotiate binding transaction documentation. The objective is to complete the transaction documentation in calendar 2025.

Subject to agreeing the form of final, binding transaction documents, the Chatham Rock Phosphate board anticipates that the acquiror will be proceeding with the proposed transactions as outlined in the term sheet.

Chris Castle, founder president and chief executive of Chatham Rock Phosphate, said that this is potentially the most significant event in the history of the company. "At the moment, we hold 100 per cent of the Chatham Rise project, which has a granted mining permit but has for the last decade been unable to source the very substantial capital required to reapply for a marine (environmental) consent since our initial application was declined in 2015.

"If the transactions proceeds, Chatham will still hold 25 per cent of the project (and a 2-per-cent royalty) with no further capital required to be invested in the project."

We seek Safe Harbor.