Mr. Spencer Huh reports

NEO BATTERY PARTNERS WITH MAJOR KOREAN DRONE MAKER FOR TECH DEVELOPMENT & JOINT ENTRY INTO CANADIAN MARKET

Neo Battery Materials Ltd. has entered into a joint development agreement (JDA) with major South Korean drone systems and components manufacturer Preneu Co., Ltd. to develop high-energy batteries optimized for Preneu's drone platforms. The parties have also executed a letter of intent (LOI) to collaborate on market entry and business expansion in Canada.

Following Preneu's custom drone battery purchase order announced on July 30, 2026, Neo and Preneu have agreed to pursue a formal, strategic partnership framework to actively advance and supply a domestically manufactured unified drone and battery solution for public safety, industrial and defence applications in the Korean and international markets. Because both parties view the battery as a critical component that determines mission capability, national defence security and supply chain resiliency, Neo and Preneu have also arranged to pre-emptively integrate and expand into overseas markets starting with Canada.

Established in 2017, Preneu is one of South Korea's largest stand-alone drone manufacturers by revenue, developing airframes, flight controllers, integrated modular avionics and artificial-intelligence-based autonomous flight technologies as a full-stack solution. By 2028, Preneu targets producing 10,000 drones annually and has recently been awarded with a supply contract from South Korea's Ministry of National Defence as part of the "500,000 Drone Warrior Force" policy.

Under the JDA, the initial collaborative work will prioritize Preneu's training drone product and additional models will be subsequently added within the same framework to optimize each aircraft's mission requirements. With an emphasis on improving energy density, the parties aim to balance airframe weight, payload tolerance, flight time, power output and safety. Upon the developed products meeting the agreed performance and quality metrics, Neo and Preneu will negotiate and enter into long-term offtake agreements to initiate mass production and fulfill supply targets.

Under the LOI, Neo and Preneu will jointly propose and market drone-battery systems to Canada's public safety, infrastructure management, environmental monitoring and defence/security sectors. The parties will analyze Canadian technical requirements, mission profiles for Arctic-climate conditions and procurement protocols to optimize product specifications on a project-by-project basis. Neo and Preneu will also co-operate to secure local customers, wholesalers and system integrators, and pursue government contracts from various agencies.

"This strategic collaboration will serve as an opportunity to raise the standards for localizing core drone components manufacturing and establishing technical benchmarks for Korean-made drones," stated Jong-Kyung Lee, chief executive officer of Preneu. "Utilizing highly robust drone systems grounded on Korean technology, Neo and Preneu aim to expand the competitiveness of Korean-made drone components and systems in international markets."

Closing of Korean operating subsidiary share purchase agreement

Neo also announces the closing of the strategic stock purchase agreement of its operating subsidiary, Neo Battery Materials Korea Co., Ltd. (NBM Korea), with Automobile & PCB Inc. (A&P) pursuant to TSX Venture Exchange Policy 5.3 -- Acquisitions and Dispositions of Non-Cash Assets on conditional acceptance.

As announced on June 29, 2026, Neo has acquired 120,786 common shares of NBM Korea from A&P for an aggregate purchase price of KRW 715,542,466 ($662,539) to strengthen Neo's ownership of its key operating asset. As of the closing, Neo directly owns 1,156,102 common shares of NBM Korea, representing approximately 90 per cent of the issued and outstanding common shares. Pursuant to TSX Venture Exchange Policy 1.1, A&P is considered a non-arm's-length party with a board member in NBM Korea and continues to hold 138,042 common shares of NBM Korea.

The transaction is not subject to disinterested shareholder approval and the company has not issued any shares, warrants or securities as finders' fees. The transaction was subject to TSX-V Policy 5.9 and Multilateral Instrument 61-101 -- Protection of Minority Security Holders in Special transactions and the company relied upon exemptions from the formal valuation requirements pursuant to Section 5.5(a) of MI 61-101 and the securityholder approval requirements pursuant to Section 5.7(a) of MI 61-101. Final acceptance of the transaction is subject to the company fulfilling certain conditions required by the TSX-V.

About Preneu Co., Ltd.

Preneu is a South Korean drone and unmanned aerial vehicle (UAV) manufacturer and develops proprietary software for flight control and system operations, specializing in various drone platforms including multicopter, helicopter, and vertical take-off and landing systems.

About Neo Battery Materials Ltd.

Neo Battery Materials is a Canadian-South Korean battery technology company focused on developing and producing silicon-enhanced lithium-ion batteries in drones, robotics, physical AI, electric vehicles and energy storage systems. With a patent-protected, low-cost silicon manufacturing process, Neo Battery enables longer-running and ultrafast charging properties and provides end-to-end battery solutions from materials selection, cell architecture and process optimization. The company aims to be a globally leading producer of high-performance lithium-ion batteries and materials, building a secure, robust battery supply chain for Western manufacturers.

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