Mr. Rahim Suleman reports

NEO COMPLETES SALE OF MAJORITY EQUITY INTEREST OF CHINA RARE EARTH SEPARATION ASSETS

Neo Performance Materials Inc. has completed the sale to an affiliate of Shenghe Resources Holding Co. Ltd. of: (i) 86 per cent of the equity interest in Jiangyin Jiahua Advanced Material Resources Co. Ltd. (JAMR) for $24.6-million (U.S.) in cash; and (ii) 88 per cent of the equity in Zibo Jiahua Advanced Material Resources Co. Ltd. (ZAMR) for $3.4-million (U.S.) in cash, amended from the original agreement to sell 98 per cent of the equity interests of ZAMR. JAMR sales proceeds represent a 10.6 times multiple on average trailing five-year earnings before interest, taxes, depreciation and amortization for the facility. The ZAMR facility was valued using an asset-based approach, as the facility was closed in the second quarter of 2024.

The completion of the sale of its majority equity interests in JAMR and ZAMR marks another key milestone in Neo's operational transformation, as the company continues to streamline its business globally and optimize its asset portfolio to support its long-term scale and growth ambitions.

"The sale of our majority interest in JAMR and ZAMR contributes to the streamlining of our business, while ensuring that our clients continue to benefit from this strategic partnership. Shenghe is a rare earth industry leader and has a record of commercial excellence by driving value from mid-stream assets. Shenghe's established global sourcing platform allows for continued growth of JAMR and ZAMR while we shift Neo's focus to downstream high-margin products," said Rahim Suleman, president and chief executive officer of Neo.

"We look forward to building on Neo's growth of JAMR and ZAMR. Both will be integrated into our existing mid-stream assets in China and will play a vital role in our global platform. We look forward to continuing to work with Neo on their downstream needs and growth of both companies," said Huang Ping, the acting deputy chairman of Shenghe.

Neo retains a 9-per-cent equity interest in JAMR and a 10-per-cent equity interest in ZAMR, and has executed an agreement securing the exclusive right to distribute JAMR's heavy rare earth products outside of China for an initial term of five years. This is expected to provide Neo's customers outside of China with continuity of supply for premium products like dysprosium for multilayer ceramic capacitors and medical-grade gadolinium.

Shenghe is a leading rare earth company, with over 20 years of experience. Through its strong supply chain relationships both inside and outside of China, Shenghe has the capability to expand JAMR's access to raw materials. Shenghe is also expected to integrate ZAMR's remaining assets and employees into its operations.

JAMR has been a continuously operating asset of the company's portfolio for three decades, earning its reputation as a leading producer of specialty heavy rare earth products for global markets. JAMR's leadership team has made valuable contributions to the development and success of the company and the rare earth industry at large.

Sale aligns with strategic transformation initiatives

The sale of Neo's majority equity interest in JAMR and ZAMR aligns with the company's continuous operational excellence strategy to:

• Improve return on capital employed and free up working capital to further pursue the company's downstream strategy;
• Reduce earnings volatility, as rare earth separation is the process step with the highest exposure to underlying rare earth price volatility.

Neo remains committed to transformation through a simplification of operations and a clear focus on high-margin downstream areas. The company will continue its mid-stream rare earth separation operations in Estonia (European Union).

About Neo Performance Materials Inc.

Neo manufactures the building blocks of many modern technologies that enhance efficiency and sustainability. Neo's advanced industrial materials -- magnetic powders, rare earth magnets, magnetic assemblies, specialty chemicals, metals and alloys -- are critical to the performance of many everyday products and emerging technologies. Neo's products fast-forward technologies for the net-zero transition. The business of Neo is organized along three segments: Magnequench, chemicals and oxides, and rare metals. Neo is headquartered in Toronto, Ont., Canada, with corporate offices in Greenwood Village, Colo., United States; Singapore; and Beijing, China. Neo has a global platform that includes manufacturing facilities located in China, Germany, Canada, Estonia, Thailand and the United Kingdom, as well as a dedicated research and development centre in Singapore.

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