Mr. Matthieu Bos reports

FALCON ANNOUNCES STRATEGIC PARTNERSHIP WITH SHANSHAN TO DEVELOP CUSTOMER BASE AND MARKET ANODE PLANT PRODUCTION

Falcon Energy Materials PLC and Shanghai Shanshan New Material Co. Ltd. have signed a term sheet for a strategic partnership to develop the customer base for Falcon's coated spherical purified graphite (CSPG) anode production facility in Morocco. Shanshan is a global leader in lithium-ion battery anode materials, producing both natural graphite anode materials as well as synthetic graphite anode materials. Shanshan was the world's largest producer of synthetic graphite anode materials in 2024, with a 21-per-cent market share, and has an industry-leading research and development department near Shanghai, China.

Highlights:

• The partnership with Shanshan, alongside previously announced technical partner, Hensen, rounds out key partnerships required to derisk and accelerate the development of Falcon's anode plant in Morocco.
• Shanshan brings synthetic CSPG production capabilities and an established customer base in Asia and Europe and will support Falcon in qualifying its CSPG product to meet end-user specifications.
• Construction of Falcon's pilot plant in Morocco, with a production capacity of 100 kilograms of CSPG per day, will commence in Q2 2025, and the pilot plant is expected to be operational by the second half of 2025.
• Following the successful commissioning of the anode plant, Shanshan will collaborate with Falcon to secure a binding offtake agreement, followed by a formal marketing agreement.

"We are very pleased to welcome Shanshan to our consortium. Following our redomicile to Abu Dhabi completed last year, we have created a unique platform, headquartered in the UAE [United Arab Emirates], while maintaining an open mind to partnerships with industry leaders such as Shanshan," commented Matthieu Bos, chief executive officer of Falcon. "The addition of Shanshan to Falcon's partnership framework will firmly establish us in the CSPG supply chain at this important time in history. Falcon's strategy and structure are truly unique and cannot be replicated by anyone in the short to medium term."

Details

Key addition to Falcon's partnership framework

Falcon's partnership framework, which was announced in Q3 2024, identified the requirement for two key partners to derisk and accelerate the development of the anode plant. Shanshan, as the commercial partner, will be responsible for the integration of Falcon within the complex battery supply chain, including working closely with Falcon on the qualification of its CSPG product to end-user specifications. The company believes that aligning with a commercial partner that has existing synthetic CSPG production and an established list of clients both in Asia and Europe is strategically important. The majority of commercially available graphite anodes consist of a blend between synthetic and natural graphite. This alignment between Falcon and Shanshan will firmly establish Falcon in the highly complex anode material supply chain.

In addition, Hensen Graphite & Carbon Corp. was previously announced as the technical partner providing engineering, procurement, qualification and construction expertise to produce CSPG. Hensen brings years of operational expertise from its successful synthetic and natural graphite anode plants in China and has collaborated with Shanshan in the past.

Construction of pilot plant to develop customer base

Falcon and Hensen will start the construction of a pilot plant in Morocco in Q2 2025. The pilot plant will have a daily production capacity of approximately 100 kilograms of CSPG. Products from the pilot plant, which is expected to be operational in the second half of 2025, will be shared with Shanshan's existing clients as well as potential new customers to facilitate the development of the anode plant customer base and qualify Falcon's CSPG to end-user specifications.

Marketing agreement and potential investment

As part of the non-binding term sheet and following the successful qualification of CSPG from the pilot plant, Shanshan will assist Falcon to secure a binding offtake agreement with an international offtaker using the Shanshan brand. In return for securing the binding offtake agreement, Shanshan will enter into a marketing agreement with Falcon. Key provisions of the marketing agreement will include a gross revenue royalty payment to Shanshan for the first phase of production from the anode plant as well as a second, reduced, gross revenue royalty payment for all subsequent anode plant production phases. The marketing agreement will remain in force for an initial period of five years from the commencement of the anode plant production and can be extended by mutual consent. In addition, Shanshan and Falcon have started discussions about a potential investment in the anode plant or in Falcon by Shanshan.

About Falcon Energy Materials PLC

Falcon aims to become a fully integrated supplier of battery anode material. The integrated business model would result in the creation of a mine-to-market active anode material producer, hosting a large high-purity graphite production mine in the Republic of Guinea, and a value-added, coated spherical purified graphite conversion facility in Morocco.

With attractive operating costs, proximity to European end markets and strong ESG (environmental, social and governance) credentials, the company is poised to become a reliable supplier while promoting sustainability and supply chain transparency. Falcon is committed to generating sustainable, long-term benefits that are shared with the host countries and communities where it operates.

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