Mr. Tony Budden reports

PSYENCE PRODUCTION EXPANDS CAPABILITY

Psyence Group Inc. has provided the following update on Psyence Production. Psyence Production is a division of Psyence that oversees its psilocybin cultivation and production facility.

Psyence operates one of the first government-licensed commercial psilocybin production facilities in the world. Its cultivation and production facility, located in Southern Africa, is ISO22000 certified. Psyence is licensed to cultivate and export nature-derived psilocybin mushrooms for the legal, global medical market and commercial medical research market.

Extraction capability expanded

Psyence recently designed a new laboratory at the facility in order to expand its extraction capabilities. The building of the laboratory has since commenced and is expected to be completed in Q4 2023. The expansion fits under the existing building footprint and, once completed, new state-of-the-art extraction equipment will be installed to enhance its current extraction capabilities. There are multiple potential benefits to on-site extraction, including increased product shelf life, a more stabilized format for export and reduced transport costs.

The extraction equipment is being manufactured and supplied by Eden Labs LLC. Eden Labs is a product development and extraction technology company based in Seattle, Wash.; the supply of the equipment is part of Psyence and Eden Labs' previously announced collaboration agreement. The equipment will enable the on-site extraction and processing of Psyence's nature-derived psilocybin-producing mushrooms prior to the product being exported to Psyence's extraction partners and contract research organizations or CROs. These partners can then process this stabilized input material into an active pharmaceutical ingredient (API).

"It is Psyence's aim to become a leading supplier of psilocybin mushroom and products for the legal, global medical and commercial medical research market," said Tony Budden, chief strategy officer, Psyence Group. "By enhancing our extraction capabilities, we are able to meet our objectives of ramping up the production of our psilocybin and psilocin extracts as we look to supply a range of quality-certified psychoactive ingredients from Psyence's facility in the future."

Successful audit of the facility

Psyence's ISO2200-certified cultivation and production facility was successfully audited by MGC Pharmaceuticals Ltd. in July, 2023. MGC is a European-based bio-pharma company developing and supplying affordable standardized phyto-cannabinoid derived medicines to patients globally.

The audit followed EU-GMP (European Union good manufacturing practice) standards and assessed whether Psyence's facility meets the standards necessary to export Psyence's nature-derived psilocybin mushrooms to MGC's European facilities. The Psyence Production facility was found to be fully compliant. MGC was granted the import approval to import Psyence's raw mushroom materials to their facility in Slovenia with a view that MGC will assist Psyence in doing analysis and stability testing on its mushrooms and to help identify future markets for Psyence's products.

Investment received for the facility expansion

Further, Psyence has received a second round of investments of $162,697, from existing private investors including Brandon Kerzner and Cody Futeran. The proceeds of the investment are intended to be allocated toward the facility expansion project and the company has issued 1,355,810 common shares at a price of 12 cents per common share in relation to the investment. The company also issued 2,467 common shares at a price of 12 cents per common share as payment of a finder's fee of $296. A portion of the financing will be allocated toward hiring a chromatography expert to join Psyence's Production team.

Issuing of shares to Eden Labs

The company has previously announced its partnership with Eden Labs which demonstrated its commitment to the future success of the joint production venture and the future of the company by having a portion of the purchase price of the equipment supplied to the company settled in company shares upon delivery of such equipment to the company. Accordingly, the company has issued 2,297,051 common shares at a price of 12 cents per common share in relation to such commitment.

At the issue date, the securities referred to above will be subject to a four-month hold period under securities laws. The securities issued to Eden Labs will be subject to further transfer restrictions whereby the securities issued to them will be released for transfer in four tranches as follows: 25 per cent at Feb. 29, 2024, 25 per cent at March 3, 2024, 25 per cent at Sept. 3, 2024, and the remaining 25 per cent at March 3, 2025.

About Psyence Group Inc.

Psyence is a life science biotechnology company listed on the Canadian Securities Exchange, with a focus on natural psychedelics. Psyence works with nature-derived psilocybin products for the healing of psychological trauma and its mental health consequences in the context of palliative care.

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