Mr. Adrian Smith reports

FIRST ATLANTIC NICKEL ANNOUNCES ACCEPTANCE INTO DEFENSE INDUSTRIAL BASE CONSORTIUM (DIBC) - PIPESTONE XL SMELTER-FREE NICKEL-COBALT ALLOY PROJECT ADDRESSES MIDSTREAM SMELTING BOTTLENECK IN U.S. DEFENSE SUPPLY CHAIN

First Atlantic Nickel Corp. has been accepted as a member of the United States Defense Industrial Base Consortium (the DIBC). The DIBC operates as a consortium-based contracting vehicle under the Office of the Assistant Secretary of War for Industrial Base Policy, which manages key industrial base investment authorities, including programs funded under Title III of the Defense Production Act (the DPA) and the Defense Industrial Base Fund under 10 U.S.C. Paragraph 4817. These authorities enable the Department of War (the DoW) to make direct investments designed to expand and sustain domestic industrial capacity, particularly where supply chains are fragile or overly dependent on foreign sources. Canada has been designated a domestic source under Title III of the DPA since 1992.

The DIBC aims to expand and diversify the defense industrial base, enable private-sector businesses to work in partnership with the United States government, provide financing for key contractors and gives the U.S. government access to commercial solutions for defence requirements. Through these authorities, the DoW utilizes various financing structures, including direct equity stakes, grants, offtake agreements at guaranteed price points, purchase commitments, loans and loan guarantees, to catalyze domestic mineral production and processing.

Key points

1. Nickel is the only battery metal listed among 13 defence critical minerals in the DIBC's first critical minerals request for project proposals (RPP) (RPP-CM-26-01), released Feb. 27, 2026.Awaruite addresses three areas of interest (AOI) outlined in the RPP.
2. In September, 2023, the U.S. Department of War stated that nickel is "an essential mineral input to produce high-temperature aerospace alloys, stainless steel and chemicals for lithium-ion batteries."
3. The Pipestone XL Awaruite nickel-cobalt alloy project addresses two sectors considered critical to the defence industrial base: "strategic and critical materials" and "energy storage and batteries."
4. Awaruite is a high-grade, naturally occurring magnetic nickel-iron-cobalt alloy mineral containing approximately 77 per cent nickel and 1 per cent cobalt. It is neither a sulphide nor an oxide nickel ore. Awaruite does not require smelting and can be processed at the mine site using magnetic separation and flotation to produce an approximately 60 per cent nickel concentrate, offering large-scale processing capacity that is not capped or limited by smelter availability.
5. Awaruite bypasses the midstream smelting bottleneck in North America. The United States has zero nickel smelters and only two remain in Canada, both of which are subject to capacity limitations and technical constraints relating to penalty and deleterious elements. Awaruite's approximately 60 per cent nickel concentrate can be sent for direct downstream battery chemical refining or for the manufacture of specialty alloys or stainless steel.
6. Awaruite provides a pathway to direct downstream refining of nickel sulphate in the United States, meeting the definition of qualifying nickel under Section 45X of the U.S. advanced manufacturing production credit: nickel "converted to nickel sulphate" or "purified to a minimum purity of 99 per cent nickel by mass."
7. The Carnegie Endowment for International Peace paper Securing America's Critical Minerals Supply (Oct. 8, 2025) projects U.S. nickel import reliance of negative 9,275 per cent by 2035, representing a 740,000-plus-tonne annual shortfall.

DIBC issues first critical minerals request for project proposals

On Feb. 27, 2026, the DIBC issued RPP-CM-26-01, "Domestic Processing Capabilities of Critical Minerals," its first RPP targeting critical gaps in domestic production capacity for 13 defence critical minerals: arsenic, bismuth, gadolinium, germanium, graphite, hafnium, nickel, samarium, tungsten, vanadium, ytterbium, yttrium and zirconium.

Nickel is the most critical battery metal on the list.

Pipestone XL addresses two critical defence industrial base sectors and three areas of interest

First Atlantic's Pipestone XL nickel alloy project directly addresses two sectors considered critical to the defence industrial base -- strategic and critical materials, and energy storage and batteries -- and three of the RPP's six areas of interest:

1. Raw mineral sourcing and beneficiation, including extraction, concentration and beneficiation of mineral ores;
2. Separation and processing of raw or beneficiated materials into intermediate chemical forms;
3. Metal production, metallization, refining and upscaling to achieve purified forms suitable for critical applications.

The RPP encourages innovative commercial solutions that offer capabilities across multiple stages of the value chain, as well as solutions that produce multiple minerals as co-products or byproducts.

Awaruite nickel-cobalt concentrate: direct alloy from mine to refinery without smelting

Pipestone XL represents a large-scale, onshore source of nickel and cobalt in Newfoundland positioned to supply the North American defence industrial base. Awaruite (Ni3Fe) is a naturally occurring, sulphur-free magnetic nickel-iron-cobalt alloy with nickel content of approximately 77 per cent. Its unique magnetic properties and amenability to flotation enable the production of a high-grade nickel-cobalt concentrate of approximately 60 per cent nickel that can proceed directly into downstream battery chemical refining or stainless steel and specialty alloy manufacturing.

As stated in the August, 2025, report From Rocks to Power: Strategies to Unlock Canada's Critical Minerals for Global Leadership in Energy Storage, EVs, & Beyond from the Battery Metals Association of Canada:

"Awaruite is not a sulphide nor an oxide nickel ore but a high-content native nickel-iron ore. Simple beneficiation processes after mining could provide 60 per cent Ni concentrate, ready for leaching for battery cathode purposes and would yield MHP as a byproduct. This process would bypass pyrometallurgy or early hydrometallurgy stages and be among the lowest carbon-intensive nickel production sites in the global nickel market."

Unlike conventional nickel sulphide deposits, which require pyrometallurgical smelting or laterite deposits, which rely on high-pressure acid leaching or roasting, awaruite can be processed using magnetic separation and flotation, eliminating reliance on constrained or foreign-controlled processing infrastructure.

As stated in the White House proclamation of Jan. 14, 2026, "Mining a mineral domestically does not safeguard the national security of the United States if the United States remains dependent on a foreign country for the processing of that mineral."

No domestic U.S. nickel smelting capacity -- only two nickel smelters remain in Canada

The United States has no operating domestic nickel smelters. North America has only two remaining operational pyrometallurgical nickel smelters -- Glencore's Sudbury smelter and Vale's Copper Cliff smelter and refinery, both located in Ontario. Vale's Thompson smelter in Manitoba was permanently closed in 2018, further constraining already limited processing capacity. This represents a critical vulnerability in the North American defense supply chain that awaruite's smelter-free processing pathway directly addresses.

The United States Geological Survey identified awaruite as a potential solution to nickel shortages in its 2012 annual report on nickel, stating:

"The development of awaruite deposits in other parts of Canada may help alleviate any prolonged shortage of nickel concentrate. Awaruite, a natural iron-nickel alloy, is much easier to concentrate than pentlandite, the principal sulphide of nickel."

Carnegie Endowment for International Peace projects U.S. nickel deficit at 741,987 tonnes (negative 9,275 per cent) by 2035

According to the Carnegie Endowment for International Peace paper Securing America's Critical Minerals Supply (Oct. 8, 2025), the United States could face an annual nickel supply deficit of approximately 741,987 tonnes by 2035 under the paper's scenario, with projected domestic supply of 8,000 tonnes against projected total consumption of 749,987 tonnes.

Section 45X advanced manufacturing production credit

Section 45X of the U.S. advanced manufacturing production credit defines qualifying nickel as nickel which is "converted to nickel sulphate" or "purified to a minimum purity of 99 per cent nickel by mass." Awaruite concentrate may be directly converted to nickel sulphate without intermediate smelting or roasting, positioning it favourably within this framework.

Investor information

The company's common shares trade on the TSX Venture Exchange under the symbol FAN, the American OTCQB exchange under the symbol FANCF and on several German exchanges, including Frankfurt and Tradegate, under the symbol P21.

Adrian Smith, PGeo, a director and the chief executive officer of the company, is a qualified person as defined by National Instrument 43-101. The qualified person is a member in good standing of the Professional Engineers and Geoscientists Newfoundland and Labrador (PEGNL) and is a registered professional geoscientist (PGeo). Mr. Smith has reviewed and approved the technical information disclosed herein.

About First Atlantic Nickel Corp.

First Atlantic Nickel is a critical mineral exploration company in Newfoundland and Labrador developing the Pipestone XL nickel-cobalt alloy project. The project spans the entire 30-kilometre Pipestone Ophiolite complex, where multiple zones, including RPM, Alloy Max, Super Gulp, Atlantic Lake and Chrome Pond, contain awaruite (Ni3Fe), a naturally occurring magnetic nickel-iron-cobalt alloy of approximately 77 per cent nickel with no sulphur and no sulphides, along with secondary chromium mineralization. Awaruite's sulphur-free composition removes acid mine drainage (AMD) risks, while its unique magnetic properties enable processing through magnetic separation, eliminating the electricity requirements, emissions and environmental impacts of conventional smelting, roasting or high-pressure acid leaching while reducing dependence on overseas nickel processing infrastructure.

The U.S. Geological Survey recognized awaruite's strategic importance in its 2012 annual report on nickel, noting that these deposits may help alleviate prolonged nickel concentrate shortages since the natural alloy is much easier to concentrate than typical nickel sulphides. The Pipestone XL nickel-cobalt alloy project is located near existing infrastructure with year-round road access and proximity to hydroelectric power. These features provide favourable logistics for exploration and future development, strengthening First Atlantic's role to establish a secure and reliable source of North American nickel production for the stainless steel, electric vehicle, aerospace and defence industries. This mission gained importance when the U.S. added nickel to its critical minerals list in 2022, recognizing it as a non-fuel mineral essential to economic and national security with a supply chain vulnerable to disruption.

We seek Safe Harbor.