Leading Edge Materials Corp. — Management Reports 2024

Mar 27, 2024

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LEADING EDGE MATERIALS CORP.

14[th] Floor, 1040 West Georgia Street, Vancouver, BC, V6E 4H1 info@leadingedgematerials.com | www.leadingedgematerials.com TSX.V: LEM | Nasdaq First North: LEMSE | OTCQB: LEMIF | FRA: 7FL

March 26, 2024

LEADING EDGE MATERIALS CEO’S REPORT TO THE SHAREHOLDERS

The past twelve months have been characterized by two major trends which directly impact our business. Firstly, the increasing adoption and sales volumes of EV’s. And secondly, the more urgently accommodating legislative environment in the EU to support local extractive industries.

The latter taking shape as industrial policy, hardly seen in the western world since WW2. We have in previous notes followed how this has developed via the Critical Raw Materials Act and the NetZero Industry Act, and keep getting continuously encouraged by speed and magnitude of actions from Brussels and member states.

European Commission President Ursula von der Leyen, in her recent annual State of the Union address offers many highlights[1] . “Next phase of European Green Deal” is in fact broad industrial policy using the climate agenda to improve competitiveness. Concerns are voiced at Asian supply chains outcompeting as well as US green subsidy schemes undercutting European businesses. And it all starts with access to raw materials and process technologies of these.

We remain convinced that we are in the right place with the right assets to play our part in combatting the threat of a European de-industrialization.

Woxna Graphite Mine

In terms of our assets and the underlying materials needed for the green transition, natural graphite remains a particularly interesting commodity according to many analysts[2] . This because graphite is a core component in almost all lithium-ion chemistries, with extreme dependance on Asian supply chains and importance to help decarbonize battery anodes. Many analysts predict a six- to sevenfold increase in graphite demand by 2030[3] , amongst the most severe of any commodity.

We maintain our built and permitted Woxna graphite mine and plant on care and maintenance, while monitoring market signals to consider a restart of graphite concentrate production, as the first step to developing a downstream anode business. Despite the looming demand-supply deficit flake graphite prices have remained weak to date this past year.[4] Increased capacity in Chinese synthetic graphite production has been an important factor[5] . It is estimated that China accounts for 92% of global anode production[6] . This is important as it leads to constraints and impairs competitiveness

1 https://www.euractiv.com/section/energy-environment/news/von-der-leyen-outlines-next-phase-of-european-green-deal-with-heavyindustry-focus/

2 https://www.fastmarkets.com/insights/graphite-market-outlook-five-key-factors-to-watch

3 https://www.economist.com/finance-and-economics/2023/09/11/how-to-avoid-a-green-metals-crunch

4 https://source.benchmarkminerals.com/article/why-battery-material-prices-slumped-under-pressure-in-the-first-half-of 2023?mc_cid=1c25ba3e5d&mc_eid=33b1527344 5 https://source.benchmarkminerals.com/article/natural-graphite-market-dominated-by-oversupply-2023-inreview?mc_cid=2a16054797&mc_eid=33b1527344 6 https://source.benchmarkminerals.com/article/in-charts-why-decoupling-from-chinas-anode-market-could-be-difficult-for-thewest?mc_cid=b3fbca6cc2&mc_eid=33b1527344

for European auto industry. Additionally, Chinese initiatives in December to restrict exports[7] of graphite have stimulated western cell manufacturers to reconsider resilience of their supply chains.

Of course, this offers Sweden a great opportunity as a producer, and Woxna a first mover advantage to help address this.

Norra Kärr Heavy Rare Earth Project

At our Norra Kärr development project, we have until December last year been progressing work with a Natura 2000 permit application. To our benefit, the Swedish government signaled legislative changes which impact us: we believe that the requirement for a Natura 2000 permit will be shifted further along the process. To that end we are pleased to now proceed with fully focused on our mining lease application. We aim to have this submitted within 12 months from now. The Natura 2000 permit being parked, to be resumed later on when we apply for the environmental permit without losing benefit of work having been done to date.

This is a direct consequence of the government initiatives to ensure a more pragmatic permitting process.

As this is done based on the new 2021 design of this project, we are benefitting from authorities and other stakeholders evaluating the merits of the project based on recent plans that substantially reduce the potential for environmental risk. During this year we also plan to establish an office near site from which this work and the important initiatives around social license and stakeholder engagement will be carried out.

In the meantime, we are pleased to follow beneficial developments in the rare earth and permanent magnet space. Prices for the magnet metals have increased[8] because of supply concerns in Asia. We are told that China, being the dominant processor of concentrate and magnet producer, is actively trying to tie up supply around the world. In particular, it is the heavy rare earths which are a challenge to secure, with prices squeezing higher[9] . Dysprosium is turning out to be a crucial bottleneck[10] , noteworthy is that of REE projects globally, Norra Kärr is one of the absolute best in terms Dysprosium potential.

Last year, the Canadian company Neo Performance Materials have broken ground on building a rare earth permanent magnet factory in Estonia[11] . This is important as it demonstrates, as we have said, the emergence of new Western producers of these critical products. Norra Kärr, as one of the largest HREE deposits globally, and the most advanced one in the EU, has the potential to be a cornerstone supplier to Western magnet producers[12] .

Additionally, with Sweden recently having joined NATO, we feel the importance of Norra Kärr may become more pronounced also outside the EU.

7 https://asia.nikkei.com/Spotlight/Supply-Chain/China-s-graphite-export-curbs-take-effect-with-uncertainty-forEVs#:~:text=BEIJING%20%2D%2D%20China%20on%20Friday,curbs%20targeting%20China's%20tech%20sector.

8 https://www.reuters.com/markets/commodities/chinese-rare-earth-prices-hit-20-month-high-myanmar-supply-worry-2023-09-07/ 9 http://news.chinatungsten.com/en/component/content/article/14-tungsten-news-en/tungsten-product-news/158697-tpn-12740.html 10 https://pubs.acs.org/doi/full/10.1021/acs.est.3c01327 11 https://energydigital.com/articles/neo-produces-specialised-magnets-for-clean-energy-tech

12 https://www.fastmarkets.com/insights/rare-earth-magnet-production-outside-asia-gearing-up-2024-preview/

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Bihor Sud Nickel-Cobalt Exploration Project

Since having obtained permission to enter our underground galleries last year, this project has been advancing rapidly. As communicated, in situ samples from G7 gallery walls have assayed up to 30% Ni and 4.7% Co while surface trench assay results indicate a zone of Pb-Zn-Ag mineralization.

In October we reported receiving high grade Cobalt-Nickel results from systematic gallery chip sampling. Results confirm in-situ high grade Co-Ni-Au and Cu-Zn-Pb-Ag mineralization within +150 m and 350 m gallery segments in G7 and G4 respectively. G7 highlights include 3.5% Cobalt , 29.7% Nickel and 15.65 g/t Au. G4 highlights include 11.7% Copper, 11.7% Lead and 18.7% Zinc.

In December we announced further positive assay results for Co-Ni-Au from Gallery 7. This second batch of 104 samples prolongate the zone of Co-Ni-Au-occurrences by about 250 m to a total length of roughly 400 m NNW-SSE, and constitute the central-southern part of G7 at the Bihor Sud project in Romania. Highlights include 6.7% Co, 13.0% Ni, 7.5 g/t Au.

Further extensive Co-Ni mineralization has been identified 50 m above G7 in a cross cut coming from the higher level gallery G4. These results confirm our belief that this is a high prospective exploration project with potential for both scale and high-grade mineralization.

We have retained possession of an underground drill, which is being prepared to be put to work in areas from the inside of the G4 and G7 galleries. During spring we plan a surface drill program on 50-100 m deep geophysical anomalies and to explore the depth extent of G7 Co-Ni-mineralization. Additionally, we have recently entered our next target, Gallery 2, which we have started mapping and for which we have high expectations.

As far as exploration projects go, we feel that this is an exceptional one, and we are hopeful for plenty of news flow during the coming quarters.

We are grateful for the continued support of all our shareholders, particularly given disappointing share price evolution in the past year. In developing our assets we are confident in the enormous potential to unlock and make visible value.

On behalf of the Board of Directors, Leading Edge Materials Corp.

Eric Krafft, Interim CEO

For further information, please contact the Company at:

info@leadingedgematerials.com www.leadingedgematerials.com

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