Mr. Matthieu Bos reports

FALCON ENERGY MATERIALS PLC ANNOUNCES LANDMARK ACQUISITION OF 49% STRATEGIC INTEREST IN ESTABLISHED GRAPHITE ANODE PRODUCER

Falcon Energy Materials PLC has taken a landmark step in the execution of its strategy to become an integrated, global supplier of critical battery materials.

Highlights:

• Falcon to acquire a 49-per-cent strategic, non-operating equity interest in Weihai Hensen New Materials Technology Co. Ltd., an established Chinese producer of natural flake graphite and synthetic graphite anode materials, for $22-million (U.S.) in cash;
• Weihai operates a modern, profitable, facility in Shandong province, China, with a full 25,000-tonne-per-annum CSPG (coated spheronized purified graphite) production circuit;
• Will provide, following closing, Falcon with an immediate strategic position in operating anode material production in China, which dominates the global graphite anode supply chain;
• A natural complement to Falcon's flagship 25,000-tonne-per-annum CSPG anode plant in Morocco;
• Fully financed from the proceeds of Falcon's upsized $34-million (Canadian) non-brokered private placement, which closed on Sept. 23, 2026;
• Closing is expected by the end of the fourth quarter of 2026, subject to customary regulatory approvals and closing conditions.

Acquisition terms

Falcon EMG Holdings Ltd., a wholly owned subsidiary of Falcon, has entered into an arm's-length definitive agreement with the sole equity holder of Weihai to acquire a 49-per-cent strategic equity interest in Weihai, an established People's Republic of China company engaged in the production of natural, synthetic and recycled graphite based anode materials. Falcon EMG has agreed to acquire its 49-per-cent equity interest in Weihai for $22-million (U.S.) payable in cash at closing.

"This acquisition is a defining milestone for Falcon," said Matthieu Bos, president and chief executive officer of Falcon. "With a 49-per-cent strategic interest in Weihai, we are stepping directly into an established graphite anode business, with both natural and synthetic graphite capabilities, at a pivotal moment for the global battery supply chain. Weihai is a natural complement to our flagship CSPG anode plant in Morocco.

"We are delivering exactly what we told our shareholders we would," Mr. Bos added. "Only weeks after closing our upsized $34-million (Canadian) private placement, we are putting that capital to work in a fully funded, all-cash transaction. Our UAE-headquartered [United Arab Emirates] platform, our anode plant in Morocco and now a strategic position in an established Chinese producer form a combination that we believe is truly unique and cannot easily be replicated. Falcon's journey to become a vertically integrated, global supplier of critical battery materials is only just beginning. We thank our shareholders for their continued confidence and support."

Weihai Hensen

Weihai Hensen is a graphite anode material producer located near the city of Weihai in Shandong province, China. Weihai was founded in 2023 and has been in commercial production since the second half of 2025. Weihai's founder and sole equityholder's family has been active in the Chinese graphite industry since the early 1980s. Weihai's modern and profitable facility hosts a full 25,000-tonne-per-annum CSPG production circuit, including spheronization, purification, coating and drying lines, alongside production lines for synthetic and recycled graphite anode materials, with current utilization below nameplate capacity providing scope for further growth. Weihai is profitable, and its core products are sold under long-term contracts to leading Chinese anode material manufacturers.

Shareholder agreement

Concurrently with the execution of the equity transfer agreement, Falcon EMG and the seller entered into a shareholder agreement, which will govern the relationship between Falcon EMG and the seller as the shareholders of Weihai and will only become effective at the closing of the acquisition. Under the shareholder agreement, Falcon EMG will be a non-operating shareholder with customary minority protections, including the right to nominate one of Weihai's three directors; unanimous shareholder approval of key matters such as the annual budget and business plan, significant capital expenditures and borrowings, mergers and acquisitions, and related party transactions; and rights of first offer and first refusal, tag-along rights, and pre-emptive rights. The seller is also bound by non-competition and non-solicitation covenants.

Closing conditions

The equity transfer agreement contains customary representations, warranties, covenants and closing conditions for a transaction of this nature. Closing of the acquisition is subject to, among other things, registration and filings with applicable regulatory authorities and receipt of required regulatory approvals, including registration of the acquisition with the competent local branch of the State Administration for Market Regulation of the People's Republic of China (AMR) and completion of foreign exchange registration with the State Administration of Foreign Exchange of the People's Republic of China (SAFE), or with a designated bank on its behalf. It is currently expected that, subject to the satisfaction or waiver of all closing conditions, the acquisition will close by the end of the fourth quarter of 2026 and in any event on or before Jan. 31, 2027.

Release of units from escrow

On Sept. 23, 2026, Falcon announced the closing of its non-brokered private placement pursuant to which it issued an aggregate of 34.24 million units of Falcon at a price of $1 per unit for gross proceeds of $34.24-million. The acquisition by AOF Trading LLC of 15 million units resulted in AOF being deemed an insider of the company. Accordingly, AOF's subscription in respect of 3.35 million units of such 15 million units closed in escrow pending clearance of the required personal information forms by the TSX Venture Exchange. Such personal information forms have now been cleared by the TSX-V and the 3.35 million units and related funds have been released from escrow.

In the event that the acquisition does not close, the proceeds from the private placement reserved for the acquisition will be distributed to the other two previously announced uses of proceeds from the private placement: (i) the company's growth plan in Morocco and internationally; and (ii) general working capital requirements.

Advisers

Norton Rose Fulbright through its Montreal, Shanghai and Dubai offices is acting as legal counsel to Falcon.

About Falcon Energy Materials PLC

Falcon Energy Materials is aiming to be the premier provider of natural coated spheronized purified graphite, a critical component for energy storage solutions. As a dedicated chemical refiner of natural graphite concentrate, Falcon is working diligently toward the development of a state-of-the-art 25,000-tonne-per-annum CSPG production facility in Morocco.

Strategically partnered with leading Chinese firms and Tier 1 Moroccan partners, Falcon benefits from key expertise, access to high-quality raw materials and chemicals, and a prime geographical location -- factors that will enable it to deliver consistent, high-quality supply to global markets.

With a clear focus on sustainable growth and innovation, Falcon aims to become the go-to producer of natural CSPG, supporting widespread adoption in energy storage and other emerging industries.

We seek Safe Harbor.