The United States Department of Defense Awards Multi-Million-Dollar Grant to South Star Battery Metals to Support the Accelerated Expansion of U.S. Domestic Battery Graphite Production Within the Contiguous United States of America - Seite 2

South Star's Santa Cruz Graphite Mine ("Santa Cruz") in Brazil is currently finalizing Phase-1 construction and will commence commercial concentrate production in January of 2024. While the BamaStar graphite mine is being developed, South Star intends to initially commence commercial operations at the Company's planned U.S. downstream battery-graphite manufacturing facility utilizing premium graphite concentrate supplied from Santa Cruz. In addition to the assurance of security of supply of graphite concentrate to feed the U.S. downstream plant, the strategic and enduring competitive advantages of this integrated approach mitigates the risks of probable long-term supply/demand imbalance and probable price increases globally for graphite concentrate beginning in the near future. This integrated approach of a diversified portfolio of scalable facilities allows for an accelerated U.S. downstream production of critical battery grade anode materials, while BamaStar is developed and built in parallel. South Star intends for the Company's U.S. downstream facilities to scale over time and be ready to process the entirety of the BamaStar graphite mine's concentrate feedstock.

The DoD will contribute funding to the BamaStar FS on a cost-share basis. As part of the agreement, the DoD will provide US$3,179,999 and South Star will contribute US$3,772,499 in matching funding on a cost-share basis over a period of 18 months, and after the successful delivery by the Company of a National Instrument 43-101 Preliminary Economic Assessment, which is scheduled for completion at the end of Q1 2024.

Graphite is classified by the US Department of Energy as critical and high risk in both the short and medium term. It is an essential material for many applications, including transportation, communications, defense, microprocessors, high-tech, graphene, etc. The U.S. currently produces no graphite concentrates or downstream battery-grade anode materials.

"South Star is strategically bringing the first new graphite production in the Americas online in January 2024 at Santa Cruz. Provenance of material and security of supply of graphite and other critical metals is increasingly important in the current global macro and geopolitical environment. South Star is uniquely positioned to quickly bring commercial production to the markets with a diversified portfolio of near-term, integrated graphite production," stated South Star President and Chief Executive Officer, Richard Pearce.