NEO Battery Acquires Expansion Site to Scale Korea-Made Drone & Robotics Battery Cell Manufacturing

• Acquired 3.2-acre expansion site for commercial-scale battery cell manufacturing for drones, robotics, and physical AI
• Strategically initiate with pouch-cell installations to service drone manufacturers and government/military seeking non-Chinese battery sourcing
• Planned production capacity of 500 MWh to supply 66,000 small ISR drones or 315,000 loitering munitions annually
• Aim to exclusively source battery inputs outside of PRC and FEOC for NDAA-compliance and defense procurement eligibility

TORONTO, March 3, 2026 /CNW/ - NEO Battery Materials Ltd. ("NEO" or the "Company") (TSXV: NBM) (OTC: NBMFF), a low-cost, silicon-enhanced battery developer that enables longer-running, rapid-charging batteries for drones, robotics, and physical AI, is pleased to announce the closing of the 3.2-acre expansion site for commercial-scale drone and robotics battery cell manufacturing and the scale-up of silicon anode production (the "Expansion Facility") previously announced (see news release dated on October 9, 2025).

NEO's Expansion Facility will house commercial-scale cell assembly equipment required to mass-produce high-performance, customized battery solutions for drones and robotics. The Company will strategically initiate by installing pouch-cell¹ capacities to fulfill the demand for pouch-cells from drone manufacturers and governments seeking non-Chinese supply chains. Subsequently, the originally planned cylindrical² and prismatic-cell³ manufacturing lines will be established based on downstream needs and internal operating priorities. Subject to process optimization, project financing, and demand forecasts, the targeted annual capacity is approximately 500 megawatt-hours (MWh), equating to supplying 66,000 small ISR drone⁴ packs or 315,000 loitering munition⁵ packs, based on internal operating assumptions.

"With developing geopolitical conflict and security concerns, Western and Western-allied governments and militaries have explicitly and implicitly ordered the phase-out or banning of Chinese-sourced batteries in defense procurement," commented Mr. Spencer Huh, President & CEO of NEO. "Consequently, a global battery supply deficit is projected due to the heavy concentration of Chinese manufacturing and weak Western supply chains. NEO's Expansion Facility will accommodate the commercial volume interest for Korean-sourced battery cells from downstream manufacturers in the United States, Taiwan, Ukraine, Israel, South Korea, and Japan."

To comply with updated defense procurement regulations, prominently Section 842 of the United States Fiscal Year 2026 National Defense Authorization Act⁶, NEO aims to exclusively source raw materials and components outside of the People's Republic of China (PRC) and other foreign entities of concern (FEOC) as defined under 10 U.S. Code 4872⁷. The Expansion Facility is expected to be complete by Q4 2026, with timelines dependent on equipment lead times, utility/infrastructure construction, permitting approvals, strategic partnerships, and other relevant timing factors. Until commissioning is complete, NEO will produce and supply initial pouch-cell orders at its operational battery components factory (the "First Facility") in Gimje, South Korea.

NEO concurrently plans to scale up its proprietary silicon anode materials technology, NBMSiDE^®, to 20 tons per year. The Company will integrate its silicon products into various drone battery applications based on performance needs. NBMSiDE-P200 anodes will be purposed for loitering munitions due to their ultra-high capacity (~2,600 mAh/g or 7 times that of traditional graphite anodes) and short cycle life, and P300N anodes will be deployed in payload and ISR drones that require high capacity and extended duration.

Mr. Huh added, "To increase market presence and visibility, NEO will heavily target the distribution of its high-performance batteries into South Korea's Ministry of National Defense, starting with training programs to full-scale commercial deployment. Korean military integration and performance validation will serve as a credible, robust use case for the United States, extended Asia-Pacific governments, and NATO countries. We hope to deliver and execute phase-by-phase growth and expansion of the Company's Korea-made batteries."

Drone and UAS applications represent a key catalyst segment within the global lithium-ion battery market, which was estimated at approximately US $9.1 billion in 2025 and is projected to exceed US $29 billion by 2032⁸. As defense, industrial, and consumer UAV (unmanned aerial vehicle) usage scales, battery technology must evolve to meet rigorous performance requirements. Concurrently, advances in faster-charging architecture and complex BMS are broadening the drone/UAS market, enabling longer, safer operations and more efficient energy utilization. As a result, the synergy between drone platform advancement and battery innovation will be a major driver of sustained growth across both markets.

¹Pouch-Cell: Lithium-ion battery cell format enclosed in a flexible aluminum-laminated pouch rather than a rigid metal casing. Pouch-cells offer high energy, lighter weight, and design flexibility, making the format appropriate for volume- and weight-sensitive applications such as drones and robotics.

²Cylindrical-Cell: Lithium-ion battery cell format manufactured in a rigid, cylindrical metal can (e.g., 18650 or 21700 formats). Cylindrical cells provide mechanical stability and standardized manufacturing processes, making them suitable for power tools, robotics, and electronics.

³Prismatic-Cell: Lithium-ion battery cell format enclosed in a rigid, rectangular metal casing. Prismatic cells enable efficient space utilization and are deployed mainly in electric vehicles and energy storage applications.

⁴Small ISR Drone: A 2 to 25 kilogram weight-class unmanned aerial system (UAS) designed for Intelligence, Surveillance, and Reconnaissance (ISR) missions.

⁵Loitering Munition (LM): Self-destructive UAS equipped with built-in, precision-guided warheads.

⁶Fiscal Year 2026 National Defense Authorization Act (NDAA): https://www.congress.gov/119/crec/2025/12/10/171/208/CREC-2025-12-10-pt1-PgH5136-3.pdf 

⁷Title 10 U.S. Code 4872: https://www.govinfo.gov/content/pkg/USCODE-2024-title10/pdf/USCODE-2024-title10-subtitleA-partV-subpartI-chap385-subchapIII-sec4872.pdf 

⁸Source: Global Market Insights: Drone Battery Market Size – By Battery, Capacity, Drone Type, Application & Forecast, 2026 – 2032 (https://www.gminsights.com/industry-analysis/drone-battery-market).

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 ultra-fast 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. For more information, please visit the Company's website at: https://www.neobatterymaterials.com/.

On Behalf of the Board of Directors
Spencer Huh
Director, President, and CEO

This news release includes certain forward-looking statements as well as management's objectives, strategies, beliefs and intentions. All information contained herein that is not clearly historical in nature may constitute forward-looking information. Generally, such forward-looking information can be identified notably by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: volatile stock prices; the general global markets and economic conditions; the possibility of write-downs and impairments; the risk associated with the research and development of battery-related technologies; the risk associated with the effectiveness and feasibility of battery material, electrode, and cell technologies that have not yet been tested or proven on commercial scale or under real-world operating conditions; the risks associated with battery-related manufacturing process scale-up, including maintaining consistent material, component, and cell quality, production yields, and process reproducibility at a pilot, semi-commercial, or commercial scale; the risks associated with compatibility of existing battery chemistries, formulations, components, or designs; unforeseen risks associated with entering into and maintaining collaborations, joint ventures, partnerships, or commercial contracts with battery cell manufacturers, original equipment manufacturers, and various companies in the global battery and downstream end-user supply chain; the risks associated with the failure to develop and produce commercially viable battery-related products or that technical goals may not be achieved within expected timelines or budgets under a joint development or collaboration; the risks associated with the Company's technologies and products not meeting performance requirements or customer specifications; the risks that prototype and pilot-scale products do not advance into commercially produced products or translate into commercial orders; the risk associated with battery components and cell purchase orders and offtake supply that may not be fulfilled in full, on time, or at all as actual revenue realization depends on delivery schedules, achievement of technical milestones, and customer acceptance and validation; the risk associated with losing official vendor registration or status with existing customers; counterparty risk upon delivery of prototype and commercial products; the risks associated with constructing, completing, securing, and financing pilot, semi-commercial, and commercial battery materials, components, and cell manufacturing facilities including the Canadian and South Korean facilities; the risks associated with potential delays or increased costs with site preparation, equipment procurement and installation, and facility commissioning; the risks associated with integrating silicon anode material production, electrode manufacturing, and cell assembly within a single operational cluster or the Company's business portfolio; the risks associated with supply chain disruptions or cost fluctuations in raw materials, processing chemicals, and additive prices, impacting production costs and commercial viability; the risks associated with uninsurable risks arising during the course of research, development and production; competition faced by the Company in securing experienced personnel, contracts and sales, and financing; access to adequate infrastructure and resources to support battery materials, components, and cell research and development activities; the risks associated with changes in the technology regulatory regime governing the Company; the risks associated with the timely execution of the Company's strategies and business plans; the risks associated with the lithium-ion battery industry and end-users' demand and adoption of the Company's silicon anode technology and battery products; market adoption and integration challenges, including the difficulty of incorporating silicon anodes and silicon battery products within battery manufacturers and OEMs' systems; the risks associated with the various environmental and political regulations the Company is subject to; risks related to regulatory and permitting delays; the reliance on key personnel; liquidity risks; the risk of litigation; risk management; and other risk factors as identified in the Company's recent Financial Statements and MD&A and in recent securities filings for the Company which are available on www.sedarplus.ca. Forward-looking information is based on assumptions management believes to be reasonable at the time such statements are made, including but not limited to, continued R&D and commercialization activities, no material adverse change in precursor, raw material, equipment, and relevant cost prices, development and commercialization plans to proceed in accordance with plans and such plans to achieve their stated expected outcomes, receipt of required regulatory approvals, and such other assumptions and factors as set out herein. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in the forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such forward-looking information. Such forward-looking information has been provided for the purpose of assisting investors in understanding the Company's business, operations, research and development, and commercialization plans and may not be appropriate for other purposes. Accordingly, readers should not place undue reliance on forward-looking information. Forward-looking information is made as of the date of this presentation, and the Company does not undertake to update such forward-looking information except in accordance with applicable securities laws.

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SOURCE NEO Battery Materials Ltd.

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