Mr. Dan Blondal reports

NANO ONE PROVIDES SHAREHOLDER UPDATE

Nano One Materials Corp. has provided commentary from its chair, Anthony Tse, and an update from its chief executive officer, Dan Blondal, on the company's progress toward its long-term objectives.

Chairman's statement

Dear shareholders,

I am pleased to share with you some perspectives on the state and outlook of the market and where I believe Nano One has a key role to play as the battery material sector experiences unprecedented growth.

The global market for battery demand experienced robust growth in 2024, supported by increases in both the electric vehicle segment and the energy storage system sectors. According to Rho Motion, 2024 global EV sales reported strong year-over-year growth -- with a 25-per-cent increase totalling 17.1 million unit sales. Regional sales were led by China, which reported 40-per-cent growth, followed by rest of the world markets with a 27-per-cent increase -- growth in the North American market slowed to a 9-per-cent increase, while the United Kingdom/European markets contracted by 3 per cent for the year.

Global ESS installations also reported strong growth for the year, with a 53-per-cent year-over-year increase, representing a total of 205-gigawatt-hour installed capacity worldwide. China led regional growth, commanding a share over 67 per cent of all ESS deployments globally, followed by North America as the next largest market. By category, grid applications represent over 78 per cent of global deployment, and, importantly, of those energy storage systems deployed, over 98 per cent were based on lithium-ion-battery technologies.

In terms of chemistry mix, lithium iron phosphate chemistries continued its strong growth momentum and now represents a 39-per-cent share of the EV battery market (Benchmark Minerals Intelligence) on a global basis. In the ESS segment, across both the grid and behind-the-meter applications, LFP is the dominant chemistry, accounting for over 95 per cent of installed capacity (Rho Motion). According to Benchmark, LFP now represents over 56 per cent of the global cathode market, a trend expected to continue due to the advantages of LFP chemistries in safety and cost-competitiveness, at both cell and systems levels. Its dominance in the storage segment means that this chemistry is poised for further growth in demand through 2025 and beyond, with currently an estimated 400-plus gigawatt-hours of installations planned in the grid project pipeline.

Nano One and its technology are well positioned to capture the increasing growth in demand for LFP in markets outside of China, as the company continues to progress on its patented One-Pot process and expand its production capabilities at the Candiac facility in Quebec, Canada. At the same, the company is focused on evaluating and advancing opportunities to deploy its technology in other future cathode operations through partnerships globally.

Following my appointment as chair last year, I have been working closely with the management team on refining the strategy and execution plan, as Nano One progresses initiatives to commercialize its process technology. The goal is to deliver scalable, efficient and sustainable cathode material solutions to meet the growing demand from the lithium-ion-battery sector and thereby unlock shareholder value.

Thank you all for your continued support.

Anthony Tse,

Chairman

Message from the company's CEO

Dear shareholders,

Two thousand twenty-four was a year of meaningful progress and execution for Nano One. We continued to deliver on the strategic goals we set, strengthening our foundation as we transition to commercial production and licensing.

Key highlights include:

• Secured $18-million in funding from the Quebec government, reinforcing our role in Quebec's strategy to build a complete LFP battery supply chain;
• Granted $12.9-million (U.S.) from the U.S. Department of Defence, supporting the expansion of North American LFP production at our Candiac facility;
• Awarded $2.8-million from Next Generation Manufacturing Canada to support joint development of One-Pot reactors and kiln components;
• Added $5-million in non-dilutive working capital from sale of vacant land;
• Initiated and advanced a partnership with Worley to jointly design, market and license modular LFP production plants aimed at unlocking cost and permitting advantages with our One-Pot process;
• Cost comparison study with Worley showcased that One-Pot delivers:
  • 30-per-cent savings in capital and operating costs;
  • 80-per-cent reduction in energy and water use;
  • 50-per-cent-fewer greenhouse gas emissions;
  • The complete elimination of waste water.
• Expanded its intellectual property portfolio with 11 new patents in 2024, totalling 48 globally, with more than 56 pending.

The global demand for LFP cathode materials continues to surge, driven by growing adoption in EVs, energy storage systems and artificial intelligence data centres. China, which dominates approximately 95 per cent of global LFP production capacity (International Energy Agency global EV outlook 2024), recently proposed export restrictions which cover processing technology and operational know-how used in the production of LFP cathode material, precursors and raw material inputs. A move that came just after Mr. Trump's 2024 day-one tariff threats (which were subsequently postponed). This demonstrates the strategic importance of LFP and is a wake-up call for the rest of the world to localize materials processing to ensure energy security, especially as North America and Europe enter a phase of unprecedented growth in the demand for energy. According to Rho Motion, the United States and European Union have emerged as the second-fastest-growing markets for energy storage systems, supported by expanding grid infrastructure.

Nano One has long anticipated these challenges and is uniquely positioned to meet demand, with our One-Pot-enabled LFP cathode production facilities, designed for easy permitting, modular deployment and rapid adoption. Our technology is homegrown, and our team has 20 years of experience making LFP. In other words, we are decoupled from China. We are serving a global market by enabling flexible feedstocks and cost-competitive production for waste-free and easy-to-permit plants that transcend borders.

With a diverse set of emerging clients that serve Europe, the Indo-Pacific and the United States, Nano One can elect where it sells its LFP and to whom it licenses its technology -- enabling us to navigate emerging markets, tariffs and trade restrictions with agility. This flexibility is bolstered by strong government support, world-class strategic partners and clearly defined near-, mid and long-term revenue pathways through production and licensing -- bringing us closer than ever to delivering on our vision.

Our 2025 catalysts include:

• Finance: begin drawing down $40-million in government reimbursements to accelerate production, scaling and commercial LFP sales;
• Increase non-dilutive financing: add further working capital from government programs and other sources;
• Capacity expansion: complete Candiac engineering and launch 1,000-plus-tonne-per-year LFP capacity project;
• LFP sales: sampling and sales of initial Candiac production volumes to support advancement toward multiyear contracts;
• CAM package: finalize 25,000-tonne-per-year LFP CAM plant engineering design with Worley for licensing/joint venture;
• Licensing: market LFP presales and detailed CAM package to secure letter of intent/memorandum of understanding agreements;
• One-Pot equipment: design reactor and kiln components with Worley Chemetics and develop partnerships with other equipment providers;
• supply chain: diversify region-specific raw material supply base to support licensee growth;
• Innovation: advancing M2CAM (metals direct to cathode materials) across all chemistries with partners while expanding our patent portfolio, production know-how and product specification.

I am inspired by our team's commitment and proud of our accomplishments. By continually achieving key milestones, we are steadfast in our commitment and creating long-term value for our shareholders.

Thank you for your continued trust in the team at Nano One.

Dan Blondal,

Chief executive officer

About Nano One Materials Corp.

Nano One is a clean technology company changing how the world makes cathode active materials for lithium-ion batteries. Applications include electric vehicles, stationary energy storage systems and consumer electronics. The company's patented One-Pot process reduces costs, carbon intensity (lower greenhouse gas emissions), environmental footprint and reliance on problematic supply chains. Scalability is proved and being demonstrated at Nano One's LFP pilot production plant in Quebec -- the only facility and expertise of its kind outside of Asia. Strategic collaborations and partnerships with international companies like Sumitomo Metal Mining, Rio Tinto and Worley are supporting a global growth strategy through technology licensing and joint ventures. Nano One has received funding from the government of Canada, the government of the United States, the government of Quebec and the government of British Columbia. The company is leveraging deep industry expertise and plans to license and deploy cleaner cathode manufacturing plant design packages -- delivering cost-competitive and faster-to-market battery material solutions worldwide.

We seek Safe Harbor.