E3 Lithium Ltd. — Interim / Quarterly Report 2026

May 22, 2026

E3 LITHIUM

Management's Discussion and Analysis

As at and for the three months ended March 31, 2026

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E3 LITHIUM

PRESIDENT'S MESSAGE

Dear Shareholders,

The first quarter of 2026 marked a pivotal period for E3 Lithium, defined by tangible progress across our development, commercialization, and strategic partnership priorities.

During the quarter, E3 successfully produced and delivered battery-grade lithium carbonate from our Demonstration Facility to global partners and prospective off-take customers. This milestone validates our technology and demonstrates our ability to convert Alberta brines into high-purity lithium carbonate that meets stringent industry specifications, an important step in building long-term commercial relationships.

We also advanced our Clearwater Project with the submission of our Directive 056 facility licence application. This submission reflects extensive technical, environmental, and engineering work completed by our team and moves us closer to construction readiness. We remain committed to working collaboratively with regulators and stakeholders as we progress through the approval process.

In parallel, we are proud to have been conditionally awarded $36.5 million in funding through the Government of Canada's Global Partnerships Initiative (GPI). This support highlights the strategic importance of E3's technology and project to Canada's critical minerals strategy and accelerates our commercialization efforts.

Strategic partnerships continue to be a cornerstone of our growth. Subsequent to the quarter, E3 entered into a teaming agreement with Germany's TKMS, a leading provider of naval ships and submarines. This collaboration is a strong step toward leveraging Canada's lithium resources to create sustainable economic value, advance technology transfer, and strengthen industrial ties with Germany and allied nations.

Operationally, we are also materially advancing development at our Demonstration Facility. Phase 2 operations are set to commence shortly, focused on acquiring necessary engineering data for our Clearwater Project's Feasibility Study. In addition, we are working on Phase 3, which is the final phase of the facility, focused on providing real-world proof concept for brine to battery-grade lithium carbonate production. This final phase will be a critical component to secure project financing for the construction of our Clearwater Project's first phase which will produce 12,000 tonnes of lithium carbonate per year.

Taken together, these achievements reflect a quarter of meaningful execution and forward momentum. E3 is transitioning from proof-of-concept toward commercial readiness, supported by strong partnerships, government backing, and continued technical success.

I would like to thank our employees, partners, shareholders, and stakeholders for their continued support and confidence. We remain focused on delivering long-term value while contributing to a secure and sustainable lithium supply for North America and beyond.

Sincerely,

Chris Doornbos
President & CEO
E3 Lithium Ltd.

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E3 LITHIUM

MANAGEMENT'S DISCUSSION AND ANALYSIS

The following Management's Discussion and Analysis ("MD&A") has been prepared by management as of May 21, 2026 and provides a summary of the activities, results of operations, and financial condition of E3 Lithium Ltd. ("E3 Lithium" or the "Company") and should be read in conjunction with the audited consolidated financial statements for the years ended December 31, 2025 and 2024 and related notes thereto, which are prepared in accordance with International Financial Reporting Standards ("IFRS"). All amounts are stated in thousands of Canadian Dollars unless otherwise indicated. The MD&A should also be read in conjunction with "Forward-Looking Statements" below. Additional information about E3 Lithium is available on E3 Lithium's website www.e3lithium.ca and SEDAR+ at www.sedarplus.ca, including the Company's most recently filed Annual Information Form.

BUSINESS OVERVIEW

E3 Lithium is a lithium resource company with a focus on the commercial development of lithium extraction from brines contained within its mineral properties in Alberta, Canada. E3 Lithium's shares are listed on the TSX Venture Exchange under the symbol ETL, the OTCQX Exchange under the symbol EEMMF and on the Frankfurt Stock Exchange under the symbol OW3.

E3 LITHIUM'S UNIQUE VALUE PROPOSITION

E3 Lithium's primary focus is on its Clearwater Project located in central Alberta. The project location offers several key advantages: scale and size of resource, access to existing infrastructure, advanced technologies, leading environmental stewardship and a well-established regulatory framework. All of this provides a clear pathway to commercialization as E3 Lithium aims to be one of the first battery-quality lithium projects to market in North America.

Q1 2026 HIGHLIGHTS

E3 Lithium Delivered Battery-Grade Lithium Carbonate to Global Partners and Off-takers

• In January 2026, the Company started delivering battery-grade lithium carbonate to multiple parties as part of its engagement with targeted offtake and strategic partners.
• The lithium carbonate was produced from the Company's demonstration facility and marked an important milestone as E3 advanced customer qualification and strategic partnership dialogue, reinforcing the Company's emerging role in the global lithium market

The Company Submitted Directive 056 Facility Licence Application

• In January 2026, E3 formally submitted an application to the Alberta Energy Regulator ("AER") in accordance with Directive 056: Energy Development Applications and Schedules ("D56"), for its Clearwater Project's Central Processing Facility ("CPF").
• An approved D56 license demonstrates that the CPF meets Alberta's safety, environmental, and land-use standards, and that E3 Lithium has completed meaningful engagement with stakeholders.
• The D56 along with EPEA which was submitted in late 2025, mark two key permits required by the provincial government authority to construct and operate the CPF.

E3 Lithium Received Conditional Approval for up to $36.5 million in Federal Government Funding to Accelerate its Clearwater Project

• In March 2026, the Company received conditional approval for up to $36.5 million in non-repayable funding through the Government of Canada's Global Partnerships Initiative (GPI) to accelerate the development of its Clearwater Project.

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E3 LITHIUM

• This funding will support 75% of the Company's forecasted budget to complete E3's final phase of its Demonstration Facility and its Feasibility Study. The funding will enable the ongoing production of battery-grade lithium carbonate at an increased scale, de-risk E3's Direct Lithium Extraction (DLE) technology and finalize Clearwater Project's engineering to enable a Final Investment Decision (FID).

KEY EVENTS SUBSEQUENT TO Q1 2026

E3 Lithium Signed Teaming Agreement with Germany's TKMS to Support Critical Minerals Supply

• In April 2026, the Company signed a teaming agreement with Germany's TKMS, a leading provider of naval vessels, surface ships and submarines.
• The agreement sets the stage for collaboration on research, technology transfer and investment to support lithium resources into strategic applications. It establishes strategic framework for cooperation supporting Canadian Patrol Submarine Project (CPSP).
• This agreement and partnership also reflect potential financial contribution to E3 aligned with Canada's Industrial and Technological Benefits (ITB) policy.

E3 Lithium Set to Begin Operations for Phase 2 of the Demonstration Facility

• In April 2026, E3 announced it had completed well development and pump installation and was ready to begin operations for Phase 2 of its Demonstration Facility. This will collect the final data required for the completion of the Clearwater Project's Feasibility Study.
• In parallel with Phase 2 operations, the team will be setting up for Phase 3, which is the final phase of the Demonstration Facility, focusing on the Direct Lithium Extraction (DLE) technology. This phase will provide real-world proof of concept for brine to battery-grade lithium carbonate production and will form a critical component to secure project financing for the construction of the Clearwater Project's first phase which will produce 12,000 tonnes of lithium carbonate per year.

OUTLOOK

The global lithium market is expected to move toward a more balanced supply-demand environment in 2026 following the oversupply and price correction experienced in 2025. Long-term demand fundamentals remain strong, driven primarily by electric vehicles and increasingly by battery energy storage systems. Bloomberg has highlighted energy storage as an emerging "next meaningful pillar of demand," supporting market rebalancing. Benchmark Mineral Intelligence and other industry analysts continue to forecast sustained lithium demand growth, supported by global electrification trends and policy support. S&P Global estimates supply growth of approximately 10% in 2026; however, execution risks, capital discipline, and geopolitical factors may constrain the pace of new production.

Lithium prices, which declined sharply through 2025, have rebounded into early 2026. Overall, 2026 is expected to represent a transition year for lithium markets, with strengthening demand, moderating supply growth, and a more constructive pricing environment supporting the sector outlook.

The improving outlook for lithium markets is supportive of E3 Lithium's strategy and timing as the Company advances toward commercialization.

Strengthening demand, driven by EVs and energy storage, reinforces the need for new, scalable sources of lithium supply in North America. As markets move toward balance and potential tightening, projects with strong fundamentals, secure jurisdictions, and clear paths to production are expected to be increasingly valued by customers and partners. This positions E3 favorably as it advances the Clearwater Project.

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E3 LITHIUM

SUMMARY OF OPERATIONS

(CAD$ thousands, except share amounts and where noted)

Exploration Expenses

	Three months ended March 31
	2026	2025	% Change
Exploration expenses	8	-	100%

Exploration evaluation expenses include costs incurred to identify and assess mineral resources, such as geological work, sampling, drilling and related technical studies to evaluate the potential viability of the Company's properties and other prospective areas. Exploration expenses were $0.08 million for the three months March 31, 2026, as a result of continued exploration and evaluation activities undertaken during the period.

Business Development and Marketing

	Three months ended March 31
	2026	2025	% Change
Business development and marketing	580	348	67%

Business development expenditure primarily consists of costs related to establishing strategic relationships and evaluating potential offtake partnership opportunities. Marketing expenditure refers primarily to the costs of advertising, conferences, and external consulting fees incurred for brand development and strategic positioning. For the three months ended March 31, 2026, business development and marketing expenses were $0.6 million, compared to $0.3 million in the prior year, as the Company continues to enhance its marketing and external engagement activities to support ongoing growth and commercialization efforts.

General and Administrative

	Three months ended March 31
	2026	2025	% Change
General and administrative	1,575	1,642	(4%)

General and administrative expenses were $1.6 million for the three months ended March 31, 2026, which remained relatively consistent with the same period in the prior year.

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Share-Based Compensation

	Three months ended March 31
	2026	2025	% Change
Share-based compensation	599	911	(34%)

Share-based compensation refers to compensation expenses resulting from the issuance and vesting of equity-based awards. Share-based compensation may fluctuate due to changes in the expected achievement of milestone-based performance share units ("PSUs"), the vesting of existing awards, the issuance of new awards under the Company's equity incentive plans, and the Company's share price at the date of grant.

For the three months ended March 31, 2026, share-based compensation was $0.6 million, which is a decrease from $0.9 million in the prior year; primarily due to the repricing of the stock options in the same period of the prior year.

Stock Options

	Stock Options	Weighted Average Exercise Price ($)
Balance, January 1, 2025	6,761,750	2.05
Granted	2,091,000	0.84
Exercised	(203,437)	0.81
Forfeited/expired	(1,621,560)	1.91
Balance, December 31, 2025	7,027,753	1.50
Granted	50,000	1.18
Exercised	(151,750)	0.81
Forfeited/expired	(100,000)	1.47
Balance, March 31, 2026	6,826,003	1.51

RSUs

	Restricted Share Units	Weighted Average Fair Value per Award ($)
Balance, January 1, 2025	422,000	1.54
Granted	648,000	0.82
Released	(233,000)	1.48
Forfeited/expired	(32,000)	0.81
Balance, December 31, 2025	805,000	1.01
Granted	738,000	1.18
Released	(457,000)	0.98
Balance, March 31, 2026	1,086,000	1.14

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PSUs

	Performance Share Units	Weighted Average Fair Value per Award ($)
Balance, January 1, 2025	-	-
Granted	861,600	0.84
Released	(128,000)	0.81
Balance December 31, 2025	733,600	0.84
Granted	427,000	1.18
Released	(183,480)	0.81
Balance, March 31, 2026	977,120	1.00

More information about incentive securities can be found in note 11 of the financial statements.

Finance Expenses

	Three months ended March 31
	2026	2025	% Change
Interest on leases	14	17	(18%)
Accretion	6	3	100%

Financing expenses relate to interest expense from the Company's vehicle, head office, and laboratory leases as well as accretion on its decommissioning obligations from its evaluation wells and field pilot plant.

Depreciation

	Three months ended March 31
	2026	2025	% Change
Depreciation	83	112	(26%)

Depreciation for the three months ended March 31, 2026, decreased from the same period in the prior year as in 2025 primarily due to a change in depreciation methodology implemented in early 2025, and certain assets becoming fully depreciated.

Other Income

	Three months ended March 31
	2026	2025	% Change
Interest income	78	137	(43%)

Interest income decreased slightly compared to the same period in 2025. Interest income is earned on the Company's cash balances held in interest-bearing accounts and regulatory deposits. The decrease is due to lower average cash balances during the period, as well as a decline in benchmark interest rates relative to the prior year.

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E3 LITHIUM

Net Income/Loss

The Company incurred a net loss of $2.8 million and $0.03 per common share during the three months ended March 31, 2026, compared to a net loss of $2.9 million and $0.04 per common share in the prior year period.

CAPITAL EXPENDITURES

The Company has three main sources of capital expenditure:

• Exploration and evaluation ("E&E") assets – the acquisition of mineral permits and licenses and costs related to the development of the Company's lithium resources
• Property and equipment ("P&E") – corporate assets such as leasehold improvements, computer equipment and software
• Intangible assets – costs incurred to further the Company's proprietary DLE technology

	Three months ended March 31
	2026	2025	% Change
E&E expenditures	5,972	1,715	>100%
P&E expenditures	2	3	(33%)
Intangible asset expenditures	7	-	100%
Total capital expenditures	5,981	1,718	>100%

E&E

E&E expenditures were $6.0 million during the three months ended March 31, 2026, compared to $1.7 million in the same period of the prior year.

During the three months ended March 31, 2026, expenditures increased relative to prior year due to the continued advancement of the Company's Phase 2 demonstration program; this includes the cost of completion for the wells drilled in the prior year.

Intangibles

Intangibles expenditures include patent costs for the Company's developed DLE technology and process.

P&E

P&E expenditures are primarily relate to corporate assets, including office equipment and furniture. P&E expenditures remain relatively consistent year over year.

Impairment Analysis

As at March 31, 2026, there were no indicators of impairment, and the Company does not consider its exploration and evaluation or intangible assets to be impaired.

OFF-BALANCE SHEET ARRANGEMENTS

The Company does not have any off-balance sheet arrangements as at March 31, 2026.

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E3 LITHIUM

LIQUIDITY AND CAPITAL RESOURCES

The Company reported working capital of $8.3 million at March 31, 2026 (December 31, 2025 - $13.8 million). During the three months ended March 31, 2026, the Company:

• used $3.7 million (2025 – $1.5 million) with operating activities remaining relatively consistent with prior year offset by changes in non-cash working capital;
• invested $4.5 million (2025 – $3.2 million) in investing activities primarily due to well completions;
• generated $2.3 million in financing activities (2025 – used $2.6 million) primarily due to the deferral of the Company's annual mineral license rental payment as well as the receipt of government grants.

As at March 31, 2026, the Company had net cash on hand of $10.5 million compared to cash on hand of $16.3 million at December 31, 2025.

Credit Facility

In February 2026, the Company entered into a operating loan facility with a Canadian financial institution with borrowing capacity of $2 million primarily to support letter of credit issuance. The Facility may be drawn at either Prime or CORRA based rates to support general corporate purposes of the Company.

Prime loans, CORRA loans, or letters of credit, and is available for general corporate purposes of the Company.

Borrowings under the facility bear interest at Prime + 2.75% or CORRA + 2.75%. The facility is repayable on demand and is secured by a general security agreement over the Company's assets. In February 2026, the Company issued an irrevocable letter of credit for $0.8 million to support project development costs. At March 31, 2026, the Company had $0.8 million in outstanding letters of credit, reducing the amount of the facility available to be drawn.

Government Grants

Completed

Alberta Innovates ("AI")

On April 6, 2022, the Company was awarded a $1.8 million grant to assist in the scale up and development of its field pilot plant. The Company has received the full amount of this grant as the final payment was received in 2024 upon completion of the field pilot plant.

Natural Resources Canada's ("NRCan") Critical Minerals Research, Development, and Demonstration ("CMRDD")

On March 7, 2023, the Company announced it was awarded $3.5 million in funding through NRCan's CMRDD program. The funds are non-dilutive and non-repayable. The funds were used to support the construction and operation of the Company's field pilot plant. The Company has submitted and been reimbursed for eligible expenses throughout the term of the agreement. The Company has received the full amount of this grant as the final payment was received in 2024 upon completion of the field pilot plant.

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In Progress

Strategic Response Fund ("SRF")

On November 28, 2022, the Company was awarded a $27 million grant from the Government of Canada's Innovation, Science and Economic Development's SRF to support several aspects of the Company's resource and technology development up until commercial production. Eligible costs under the agreement are reimbursed at 33.94% to a maximum of $27 million.

Contingent on the Company's success and reaching commercial lithium production, the grant becomes repayable at 1.4 times the amount disbursed from the SRF grant. The repayment period begins the second-year post project completion at a rate of 1% of annual gross business revenues over a 20-year period. Currently, it is possible but not probable whether the Company will realize an outflow of benefits to settle the contingent obligation as the Company has not yet achieved commercial production. The Company has not recognized a provision at March 31, 2026 (December 31, 2025 – nil).

As at March 31, 2026, life-to-date claims under the SRF grant are $16.2 million (December 31, 2025 - $13.9 million) and the contingent obligation related to SRF is estimated to be $22.7 million (December 31, 2025 - $19.4 million). As at March 31, 2026, there is $4.7 million in accounts receivable related to SRF grants (December 31, 2025 - $3.0 million).

Emissions Reduction Alberta ("ERA")

On August 15, 2024, ERA announced a $5 million investment to support E3 Lithium's path to commercialization. The funds are non-dilutive and non-repayable and are reported on a milestone basis. The Company plans to use the funds towards its integrated Lithium Brine Demonstration Facility with the goal to produce lithium carbonate from brines within the Leduc reservoir in Alberta.

As at March 31, 2026, there have been no claims submitted to date.

Critical Minerals Infrastructure Fund ("CMIF")

On March 20, 2025, CMIF announced $4.4 million in non-repayable funding to support E3 Lithium's path to commercialization. The Company plans to use the funds to undertake preconstruction work on the necessary transportation and energy infrastructure to develop the Clearwater Project. This includes facilitating electrical connection and substation power studies, transportation assessments, and the associated engagement initiatives, which are key deliverables for supporting the Demonstration Facility and Feasibility Study.

As at March 31, 2026, life-to-date claims under the CMIF grant are $0.6 million (December 31, 2025 - $0.4 million), and as at March 31, 2026, there is $0.5 million (December 31, 2025 - $0.4 million) in accounts receivable relates to CMIF grants.

Global Partnerships Initiative ("GPI")

On March 2, 2026, the Company received conditional approval for up to $36.5 million of non-repayable funding through the Government of Canada's GPI, to accelerate the development of its Clearwater Project. With the funding, the Company will accelerate and expand the scope of its Demonstration Facility and the Company's Front End Engineering Design.

As at March 31, 2026, there have been no claims submitted to date.

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Share Capital

The table below summarizes the change in share capital:

Number of Shares	March 31, 2026	December 31, 2025
Balance, beginning of period	86,855,834	75,269,397
Share issuance	-	11,150,000
Exercise of stock options	151,750	203,437
Release of restricted share units	457,000	233,000
Release of performance share units	183,480	-
Balance, end of period	87,648,064	86,855,834

2026

During the three months ended March 31, 2026, the Company issued 0.2 million common shares from the exercise of stock options with an exercise price of $0.81, 0.5 million common shares through the release of restricted share units with a release price of $1.17, and 0.2 million common shares through the release of performance share units with a release price of $1.18. Total proceeds received were $0.1 million year to date.

2025

During the year ended December 31, 2025, the Company issued 0.2 million common shares through the release of restricted share units with a release price of $0.84, and 0.2 million common shares from the exercise of stock options with an exercise price of $0.81. Total proceeds received were $0.2 million.

In October 2025, the Company closed an equity offering (the "October offering") for gross proceeds of $13.4 million, including a partial over-allotment for additional proceeds of $1.3 million. Share issuance costs in relation to the October Offering were $1.2 million comprised of cash commissions and closing costs. Under the October Offering, the Company issued 11.2 million common shares and 5.8 million warrants (note 11). Each warrant entitles the holder to acquire one additional common share at an exercise price of $1.50 until the expiry date of October 14, 2028. Utilizing the residual value method, the fair value of common shares was recorded at $11.2 million, and the warrants were recorded at $1.0 million, respectively, net of issuance costs.

At May 21, 2026, there were 87,683,064 common shares in the capital of E3 Lithium issued and outstanding.

Warrants

The following table summarizes the change in warrants:

	Warrant (units)	Weighted Average Exercise Price ($)
Balance, January 1, 2025	3,752,416	0.32
Warrant issuance	5,836,250	0.26
Warrant repurchase^{1}	(3,413,979)	-
Forfeited/expired	(338,437)	3.50
Balance, December 31, 2025	5,836,250	0.26
Balance, March 31, 2026	5,836,250	0.26

(1) In 2022, the Company received a prepayment of $6.4 million from Imperial Oil Limited ("IOL") for warrants issued at an exercise price of $1.86 per warrant; the warrants could be exercised at no further cost to IOL. In 2025, these warrants were repurchased from IOL and cancelled by the Company.

In the prior year, on February 28, 2025, the Company and IOL entered into a Project Completion Agreement to finalize the rights and lease agreements for the freehold mineral tenure held by IOL for the Company's use in its Clearwater Project. The strategic agreement provided a mineral lease for 110 sections of the IOL freehold interest

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in the Clearwater Project Area with a primary term and renewable 10-year term on the mineral title. The Project Completion Agreement included the cancellation of 3,413,979 warrants granted to IOL upon the payment of $4.2 million, which was paid over the first three quarters of 2025.

Stock Options

See “Share-Based Compensation” above for summary of changes.

Commitments

The following is a summary of the Company’s estimated commitments as at March 31, 2026:

As at March 31,	2026	2027	2028	2029	2030	Thereafter	Total
Office leases^{1}	227	305	234	129	-	-	895
Mineral license fees	3,610	1,805	6,961	1,805	1,805	12,635	28,621
Freehold license fees	-	100	100	100	100	500	900
Power distribution fees	37	58	108	108	108	323	742
Total	3,874	2,268	7,403	2,142	2,013	13,458	31,158

(1) Represents undiscounted estimated operating costs payments for office and lab leases.

In December 2022, amendments to the Metallic and Industrial Minerals Tenure regulation were approved by the Province of Alberta and effective January 1, 2023. Under the new regulation, brine-hosted mineral rights are granted through new agreements: brine-hosted minerals license and brine-hosted minerals lease. Brine-hosted mineral licenses are available for a 5-year, non-renewable term. Holders of brine-hosted mineral licenses have exclusive rights to apply from brine-hosted mineral leases with 10-year primary terms and indefinite continuation.

During the quarter, Company received approval from the Government of Alberta for a one-year deferral of its annual mineral license rental payment, with interest accruing on the deferred amount. The amount has been classified as a financial liability at amortized cost.

MATERIAL ACCOUNTING ESTIMATES

The Company’s material accounting estimates are based on notes 3 and 4 of the Annual Consolidated Financial Statements. In preparation of the Annual Consolidated Financial Statements, estimates may be necessary to make a determination of the carrying value of certain assets or liabilities. Management believes such estimates have been based on careful judgments and have been properly reflected in the Annual Consolidated Financial Statements. Management regularly reviews assumptions used for estimates. Additionally, management maintains a system of internal controls to provide reasonable assurances that the Company’s assets are safeguarded and to facilitate the preparation of relevant and timely information.

E3 Lithium’s critical accounting estimates that may impact financial and operating results include:

• Estimates regarding the evaluation of progress towards establishing the technical feasibility and commercial viability of E&E assets and intangible assets;
• Estimates of share-based compensation and inputs into the Black-Scholes Option Pricing Model including risk-free interest rate, expected stock price volatility, expected life, expected dividend yields, and the fair value per option granted;
• Estimated values of decommissioning obligations include the expected amount and timing of future cash flows and discount rate used;
• Estimates of deferred income taxes incorporating management’s interpretation of tax regulations and legislation in various tax jurisdictions.

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FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

Cash and cash equivalents, trade and other receivables, and trade and other payables, are initially recognized at fair value and subsequently measured at amortized cost. The Company's financial derivative instruments are classified as financial assets or liabilities at fair value through profit or loss and are reported at fair value with changes in fair value recorded in net income or loss. The carrying value of the Company's financial instruments approximate their fair value due to the relatively short periods to maturity of the instruments.

Credit Risk

Credit risk is the risk that the counterparty to a financial instrument will fail to discharge an obligation and cause the Company to incur a financial loss. The Company is exposed to credit risk with respect to its carrying balances of accounts receivable.

Accounts receivable outstanding as at March 31, 2026, relate to government grants (note 13) and refundable tax credits which have minimal credit risk.

Currency Risk

The Company's exposure to foreign currency risk is not considered to be material as it transacts primarily in the Canadian dollar.

Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's objective is to maintain sufficient and readily available cash-on-hand in order to meet its liquidity requirements at any point in time.

As at March 31, 2026, the Company had positive working capital of $8.3 million (December 31, 2025 - $13.8 million).

RISK FACTORS

Liquidity and Capital Resources

The Company's development and exploration activities may depend upon the Company's ability to obtain financing through equity financing, debt financing, joint ventures or other means. Historically, capital requirements have been primarily funded through the sale of securities of the Company. Factors that could affect the availability of financing include the progress and results of ongoing exploration at the Company's mineral properties, the state of international debt and equity markets, perceptions of investors and potential joint venture partners and expectations of the global market for lithium and its derivatives. There can be no assurance that such financing will be available in the amount required at any time or for any period or, if available, that it can be obtained on terms satisfactory to the Company. Based on the amount of funding raised, the Company's planned exploration or other work programs may be postponed, or otherwise revised, as necessary.

Development of the Clearwater Lithium Project

The Company's business strategy depends in large part on developing the Clearwater Lithium Project. The capital expenditures and time required to develop the Clearwater Lithium Project are significant and the Company has not yet secured funding that it believes will be sufficient to cover its share of capital expenditure obligations for the development of the Clearwater Lithium Project. If the Company is unable to develop all or any of its projects, its business and financial condition will be materially adversely affected.

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The Company believes that one of the key elements to the successful development of a feasible project in the future is the use of DLE. There is no guarantee that the Company will be successful in developing a commercial lithium production facility or obtaining funding related to these activities within the timeframes indicated or at all. There is no guarantee that the Company will be successful in developing DLE or utilizing others DLE, and its business and financial condition could be materially adversely affected.

Negative Operating Cash Flows

Given that the Company has yet to enter commercial production and generate cash flow, the Company had negative operating cash flow for its financial year ended December 31, 2025. To the extent that the Company has negative cash flow in future periods, the Company may need to deploy a portion of its cash reserves or a portion of the proceeds of any offering of securities to fund such negative cash flow. The Company's ability to progress the Clearwater Project is dependent upon its ability to raise capital through equity financing, debt financing, joint ventures or other means in order to meet its milestones, conduct its planned exploration programs and to continue exploration and development on its properties.

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SUMMARY OF QUARTERLY INFORMATION

	Q1 2026	Q4 2025	Q3 2025	Q2 2025
Net income/(loss)	(2,787)	1,296	(2,364)	(2,233)
Net gain/(loss) per share	(0.03)	0.02	(0.03)	(0.03)
Total assets	62,710	63,347	44,618	45,754
Total liabilities	9,214	7,772	3,316	2,651
Common shares outstanding	87,648,064	86,855,834	75,673,834	75,459,397
	Q1 2025	Q4 2024	Q3 2024	Q2 2024
Net loss	(2,896)	(2,295)	(2,602)	(2,434)
Net loss per share	(0.04)	(0.03)	(0.03)	(0.03)
Total assets	48,672	54,968	55,308	55,994
Total liabilities	3,984	4,240	2,874	1,686
Common shares outstanding	75,307,374	75,269,397	75,269,397	75,269,397

SELECTED ANNUAL INFORMATION

	2025	2024	2023
Net loss	(6,197)	(9,700)	(9,044)
Loss per share	(0.08)	(0.13)	(0.13)
Total assets	63,347	54,968	61,987
Total liabilities	7,772	4,240	4,835
Capital expenditures	15,117	10,023	15,622

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E3 LITHIUM

FORWARD-LOOKING STATEMENTS

Except for statements of historical fact relating to the Company, certain information included in this MD&A may constitute forward-looking statements. Generally, forward-looking statements can be identified by the use of forward-looking language such as "plans", "expects", "budgets", "schedules", "estimates", "forecasts", "intends", "anticipates", "believes", "proposed", "potential" or variations of such words and phrases, and statements that certain actions, events or results "may", "could", "would", "might", "will be taken", "will occur" or "will be achieved". Statements concerning "mineral resource" or "mineral reserve" estimates (within the meaning of NI 43-101) may also be deemed to be forward-looking information to the extent that they involve estimates of mineralization. Forward-looking statements are based on the opinions and estimates of E3 Lithium as of the date such statements are made. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of E3 Lithium to be materially different from those expressed or implied by such forward-looking statements, including, but not limited to, risks related to: the Company's ability to effectively implement its planned exploration programs; unexpected events and delays in the course of its exploration and drilling programs; the ability of the Company to raise capital through equity financing, debt financing, joint ventures or other means in order to meet its milestones, conduct its planned exploration programs and to continue exploration and development on its properties; the failure to discover any significant amounts of lithium or other minerals on any of the Company's properties; the fact that the Company's properties are in the exploration stage and exploration and development of mineral properties involves a high degree of risk and few properties which are explored are ultimately developed into producing mineral properties; the fact that the mineral industry is highly competitive and E3 Lithium will be competing against competitors that may be larger and better capitalized, have access to more efficient technology, and have access to reserves of minerals that are cheaper to extract and process; the fluctuations in the price of minerals and the future prices of minerals; the fact that if the price of minerals deceases significantly, any minerals discovered on any of the Company's properties may become uneconomical to extract; the continued demand for minerals and lithium; that fact that resource figures for minerals are estimates only and no assurances can be given that any estimated levels of minerals will actually be produced; governmental regulation of mining activities and oil and gas in Alberta and elsewhere, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals, and environmental protection; environmental regulation, which mandate, among other things, the maintenance of air and water quality standards and land reclamation, limitations on the general, transportation, storage and disposal of solid and hazardous waste; environmental hazards which may exist on the properties which are unknown to E3 Lithium at present and which have been caused by previous or existing owners or operators of the properties; reclamation costs which are uncertain; the fact that commercial quantities of minerals may not be discovered on current properties or other future properties and even if commercial quantities of minerals are discovered, that such properties can be brought to a stage where such mineral resources can profitably be produced therefrom; the failure of plant or equipment processes to operate as anticipated; the inability to obtain the necessary approvals for the further exploration and development of all or any of the Company's properties; risks inherent in the mineral exploration and development business; the uncertainty of the requirements demanded by environmental agencies; the Company's ability to hire and retain qualified employees and consultants necessary for the exploration and development of any of E3 Lithium's properties and for the operation of its business; and other risks related to mining activities that are beyond the Company's control as well as the risks discussed in the annual information form of the Company ("AIF") under the heading "Risk Factors". The risks discussed in this MD&A and in the AIF are not exhaustive of the factors that may affect any of the forward-looking statements.

Forward-looking statements contained herein are made as of the date of this MD&A, and the Company disclaims any obligation to update any forward-looking statements, except as required by law, whether as a result of new information, future events or results, or otherwise. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

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investor@e3lithium.ca
e3lithium.ca
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E3 LITHIUM