Neo's European Separation Facility Named a Strategic Project Under EU Critical Raw Materials Act

Modernized facility is expected to triple capacity, expand heavy rare earth separation and allow for the processing of new and higher value feedstock sources

TORONTO, Oct. 13, 2026 /CNW/ -- Neo Performance Materials Inc. ("Neo" or the "Company") (TSX: NEO) (OTCQX: NOPMF) today announced that the European Commission has designated "Silmet 2.0", the modernization program for Neo's rare earth separation facility in Sillamäe, Estonia, as a Strategic Project under the European Union's Critical Raw Materials Act ("CRMA"). The Commission selected Silmet 2.0 as one of 46 projects in 16 Member States, and it is the only rare earth processing project in this selection.

Rare earth permanent magnets are essential to Europe's clean energy and mobility industries, powering EV motors, wind turbines, robotics and advanced electronics. As Europe relies almost entirely on imports for these materials, building a secure domestic supply chain is now a strategic priority. In designating Silmet 2.0 as a Strategic Project, the European Commission recognized its contribution to the EU's supply of rare earth elements, including rare earths for magnets. The designation brings priority administrative treatment and accelerated permitting, and eases access to current and future EU funding and financing. Since 2025, the CRMA and RESourceEU have together committed close to €2 billion through the Innovation Fund, State aid and the European Investment Bank. These measures support the EU's 2030 benchmark of processing capacity covering at least 40% of annual strategic raw material consumption. The Net-Zero Industry Act adds to this with its own 2030 target: EU manufacturing capacity covering at least 40% of annual clean technology deployment needs. Together, these frameworks strengthen Silmet's role in securing Europe's rare earth supply.

Silmet 2.0 is expected to modernize the existing Silmet facility across the following areas:

• New and higher value feedstock sources: new infrastructure is expected to triple the production capacity of the facility to process rare earth feedstock from new and multiple sources with different chemical and physical characteristics, including previously disclosed offtake agreements, such as Carester and Rainbow Rare Earth, as well as other potential higher value feedstock sources. Neo also anticipates deploying selected technologies to help miners and mixed rare earth carbonate producers deliver feedstocks optimized to Silmet's processing.

• Energy efficiency and competitiveness: new process technologies and chemistry will be introduced that are expected to reduce the energy and steam consumption of an equivalent-sized existing facility by up to 30%, lowering its operating costs and cutting its CO₂ emissions.

• Product expansion: a wider range of separated, higher-value rare earth products are expected to be produced at Silmet 2.0, building on the facility's experience in light and heavy rare earth separation and Neo's specialty heavy rare earth oxide capabilities. New additions to the Silmet portfolio are expected to range from magnetic-grade, medical-grade and electronic-grade purity levels for target elements such as dysprosium, terbium, samarium, yttrium and gadolinium, using technologies previously developed at Neo's Singapore rare earth laboratory with Neo's existing customer base.

• Process validation: This year Neo commissioned its small-scale heavy rare earth separation line at Silmet, a key milestone, in the scale up process as part of Silmet 2.0. The line proved the new chemistry and processes needed to separate dysprosium and terbium. In addition, this small-scale line serves as a testbed for new automation and process-control logic, giving operators hands-on experience before the new facility is built.

• Digital and AI-based process control: Silmet plans to integrate digital and AI tools into its automated solvent extraction process, drawing on years of operating history and real-world production data to improve process control, cost, recovery rates and product consistency.

"Being named a Strategic Project recognizes that Silmet is one of Europe's few commercial-scale rare earth separation plants," said Rahim Suleman, President and Chief Executive Officer of Neo. "Silmet 2.0 prepares the plant for the next generation of supply. It will be more efficient, produce a broader range of products, including more heavy rare earths, and process feedstock from new sources. That gives European customers a secure, local source of rare earths for decades to come. It also paves the way for vertical integration between Silmet and our European permanent magnet facility, which serves the highest-growth end market for rare earths and rare earth magnets. I want to thank the European Union and the Government of Estonia for their continued support and for this important recognition."

Neo is advancing engineering design, environmental assessments and advanced permitting preparations for Silmet 2.0 and will announce the total investment and timeline in due course. In the meantime, Neo will make adjustments to scheduling with production slow-downs and intermittent stoppages in Silmet's existing light rare earth separation operations to begin modernizing the site's infrastructure and lay other groundwork ahead of full expansion, including upgrading near-term capability to its existing production line to receive additional, varied and higher-valued feedstocks. As part of Neo's preparations for Silmet 2.0, the facility is ending its current feedstock arrangement and will transition to new suppliers.

The transition will not affect Silmet's rare metals, water treatment and small-scale heavy rare earth separation businesses, which will continue to operate as normal. The interim reconfigured hydrometallurgical and downstream finishing facility will use digital and AI-based process controls to improve operating efficiency, reduce energy use and enable seamless integration with the broader Silmet 2.0 production platform.

Subject to a final investment decision, Silmet 2.0 is expected to triple the facility's total separation capacity, including capacity dedicated to the new commercial-scale heavy rare earth separation platform. Operating with additional chemistry and process flowsheets to the existing Silmet circuits, the new platform is expected to significantly expand the site's product portfolio and strategic importance within the European rare earth value chain. The project builds on Neo's decades of rare earth processing experience and its recent commissioning of new automation-driven facilities in Europe and Asia. The project continues to position Neo as one of the most integrated rare earth magnet producers in the world with operating scale and experience in separation, metallization and magnetics manufacturing.

About Neo Performance Materials

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 & Oxides and Rare Metals. Neo is headquartered in Toronto, Ontario, Canada; with corporate offices in Greenwood Village, Colorado, United States; Singapore; and Beijing, China. Neo has a global platform that includes manufacturing facilities located in Canada, Estonia, China, Germany, Thailand and the United Kingdom, as well as a dedicated research and development center in Singapore.

For more information, please visit www.neomaterials.com.

Cautionary Statements Regarding Forward-Looking Statements

This news release contains "forward-looking information", within the meaning of applicable securities laws in Canada. Forward-looking information may relate to future events or future performance of Neo. All statements in this news release, other than statements of historical facts, with respect to Neo's objectives and goals, as well as statements with respect to its beliefs, plans, objectives, expectations, anticipations, estimates, and intentions are forward-looking information. Often, but not always, forward-looking information can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "continues", "forecasts", "projects", "predicts", "intends", "anticipates" or "believes", or variations of, or the negatives of, such words and phrases, or state that certain actions, events or results "may", "could", "would", "should", "might" or "will" be taken, occur or be achieved. This information involves risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. Neo believes the expectations reflected in such forward-looking information are reasonable, but no assurance can be given that these expectations will prove to be correct and such forward-looking information included in this discussion and analysis should not be unduly relied upon. Information contained in forward-looking statements in this news release is provided as of the date hereof and Neo disclaims any obligation to update any forward-looking information, whether as a result of new information or future events or results, except to the extent required by applicable securities laws.

For more information on Neo, investors should review Neo's continuous disclosure filings that are available under Neo's profile at www.sedarplus.ca.

Website: www.neomaterials.com

SOURCE Neo Performance Materials, Inc.

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