Mr. Adrian Hobkirk reports

LITHIUM SOUTH AGSM UPDATE

Further to Lithium South Development Corp.'s news releases of July 30, 2025, Aug. 7, 2025, Sept. 22, 2025, Nov. 12, 2025, Nov. 20, 2025, and Dec. 8, 2025, the notice of meeting, management information circular and related documents in connection with the annual and special meeting of holders of common shares, option and warrants of the company have been mailed to the securityholders on Jan. 29, 2026, and can be accessed on the company's SEDAR+ profile.

Among other things, at the meeting, (i) shareholders will be asked to consider and vote on a special resolution approving the arm's-length sale (the sale of subsidiary) by the company of all of the issued and outstanding shares of NRG Metals Argentina S.A., a wholly owned subsidiary of the company, to POSCO Argentina SAU as per 99 per cent and POSCO Holdings Inc. as to 1 per cent, for total consideration of $65-million (U.S.), payable in cash (as more particularly described in the circular); and if the sale of subsidiary is approved by the shareholders, then, the securityholders will be asked to consider and vote on a special resolution approving the going private arrangement of the company pursuant to which the company will distribute the net proceeds of the sale of the subsidiary to its securityholders.

If you hold your securities through a broker, trustee, financial institution or other intermediary, you are a non-registered shareholder and you will receive instructions from such intermediary, or Broadridge Financial Solutions Inc. on the intermediary's behalf, on how to vote your securities. The company has been informed by some securityholders that such meeting materials have been received in their spam or junk e-mail folders. The company wishes to remind securityholders to check their spam or junk e-mail folders and vote their shares.

In addition to electronic voting, shareholders may directly instruct their broker or financial institution to vote their securities. The company encourages non-registered shareholders to contact their brokerage for more information on how to vote their securities. For further assistance, contact the company at 855-415-8100.

In addition, as of the record date of Jan. 5, 2026, the company had 127,315,312 common shares issued and outstanding.

Since acquiring the HMN project in 2017, the company has advanced the asset through exploration and development despite significant market fluctuations. The HMN project is currently at the preliminary economic assessment (PEA) stage, and advancing it to a full feasibility study and construction-ready status would require substantial additional capital; an option the board determined would entail considerable execution risk and significant shareholder dilution to attract capital given prevailing market conditions.

The board, after careful consideration of all available alternatives, including continued project development and further financing, unanimously concluded that the negotiated transaction with POSCO represents the most attractive and certain path to maximize shareholder value. The sale of subsidiary provides immediate liquidity and value certainty at an attractive valuation, avoids the risks and dilution associated with further development financing, and reflects the culmination of a thorough, multiyear strategic review process. To date, no competing offers have been received.

In anticipation of a positive outcome at the meeting, the company is working with Posco Argentina SAU, on certain closing documents to expedite closing of the sale of subsidiary to ensure that securityholders will receive their respective consideration pursuant to the going private arrangement as quickly as possible after the meeting.

If the sale of subsidiary and the going private arrangement are not approved at the meeting, the company will be required to complete a corporate restructuring which may include a share consolidation and/or further shareholder dilution in the form of private placement or debt offering to finance the project to the next level of development.

We seek Safe Harbor.