5E Advanced Materials Inc

SUMMARY RISK FACTORS

The following is a summary of the material risks and uncertainties we have identified, which should be read in conjunction with the more detailed description of each risk factor contained below.

Risks Related to Our Business

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We will need to obtain additional financing to continue as a going concern and advance our development and operations.

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We have incurred significant net operating losses since our inception and anticipate the same for the foreseeable future.

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Our future performance is difficult to evaluate because we have no or only a limited operating history.

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If we do not obtain additional financing and maintain sufficient funds our business may be at risk.

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Our inability to successfully operate the SSF or complete further technical and economic studies may impact the Project.

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We have invested and plan to continue to invest significant amounts of capital in the Project.

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We have no history of mineral production.

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We may be unable to develop or acquire certain intellectual property required to implement our business strategy.

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Third parties may claim that we infringe on their proprietary intellectual property rights.

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All of our business activities are now in the exploration stage.

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We are an exploration stage company with no known Proven or Probable Mineral Reserves.

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Estimates relating to the development of the Project and mine plan are uncertain.

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We depend on a single mining project.

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Our long-term success will depend ultimately on our ability to achieve and maintain profitability.

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Our growth depends upon the continued growth in demand for end use for borates, lithium, and related minerals.

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Changes in technology or other developments could adversely affect demand for lithium.

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Our growth depends upon the continued growth in demand for electric vehicles.

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Our long-term success will depend on our ability to enter into and deliver product under supply agreements.

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If the estimates and assumptions we use for planning are inaccurate, our future growth rate may be adversely affected.

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The cost and availability of electricity and natural gas are subject to volatile market conditions.

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Uncertain global economic conditions could have a material adverse effect on our business.

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Our business could be affected by macroeconomic risks.

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Government efforts to combat inflation could lead to higher financing and Project completion costs.

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We are subject to strict laws governing business practices and non-compliance with such laws may be costly.

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Inadequate infrastructure may constrain our future mining operations.

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Title to mineral properties and related water rights is complex and there is a risk our properties may have title deficiencies.

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Restrictions on our ability to obtain, recycle and dispose of water may impact our ability to execute our operations.

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We are subject to various environmental, operational and land-use regulations that could affect our ability to grow.

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The mining industry is historically a cyclical industry and market fluctuations could adversely affect our business.

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Fluctuations in the value of the United States dollar relative to other currencies may adversely affect our business.

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We face risks relating to mining, exploration, and mine construction.

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Mineral exploration and development, such as our proposed operations, are subject to extraordinary risks.

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Our proposed facilities or operations could be adversely affected by natural or human causes outside of our control.

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A shortage of skilled technicians and engineers may further increase our operating costs.

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A shortage of equipment or disruption in our supply chain could adversely affect our ability to operate our business.

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Disruptions in production at our proposed facilities may have a material adverse impact on our business.

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Failure by our vendors or suppliers to use legal or ethical business practices may adversely affect our proposed business.

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Competition with and new production of borates, lithium, and other minerals could adversely affect our business.

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Industry consolidation may result in increased competition.

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We are subject to significant environmental and government regulations and compliance costs are significant.

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We may face increased costs and be subject to liability resulting from the generation and disposal of certain wastes.

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Land reclamation requirements may be burdensome on our financial position.

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The physical consequences of climate change could have a material adverse effect on our properties and operations.

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New climate-related disclosure obligations could result in additional costs of compliance, litigation or reputational risk.

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We are required to obtain, maintain, and renew governmental permits which is often costly and time-consuming.

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Litigation or arbitration proceedings may be commenced against us and adverse rulings may adversely affect our business.

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We are vulnerable to the risks associated with operating in a single geographic region.

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The operation or development of our facilities could be adversely affected by other parties.

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We plan to invest significant amounts of capital in a variety of exploration activities, which involve risk and uncertainty.

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Our future success depends on the continuing efforts of our management and key employees.

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We will need to increase the size of our organization and we may be unable to manage our growth effectively.

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Our directors and officers may in the future be in a position of a conflict of interest.

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The transition to new Chief Executive and Chief Financial Officers will be critical to our success and our business.

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We have experienced significant turnover in our senior management team.

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We may acquire additional businesses or assets, form joint ventures or make investments in other companies.

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Global economic instability, supply chain issues, inflation and fuel and energy costs may affect our business.

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We could be subject to information technology system failures, network disruptions, and breaches in data security.

Risks Relating to Our Common Stock and CDIs

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The market price and trading volume of our Common Stock and CDIs may be volatile.

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We incur significant costs as a result of being publicly traded in the United States and Australia.

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We incur increased costs and effort as a result of operating as a U.S. listed public company.

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An active trading market for our Common Stock and CDIs may not be sustained.

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We do not anticipate paying dividends and capital appreciation, if any, will be your sole source of gain.

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Securities or industry analysts may or may not publish research about our business, which may impact our trading value.

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We are an “emerging growth company” and “smaller reporting company” and have reduced disclosure requirements.

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Internal controls may not be designed correctly or fail affecting investor confidence in us.

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Our Certificate of Incorporation and Bylaws may contain provisions unfavorable to our Common Stock and CDI holders.

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Raising additional capital could adversely affect the voting power or value of our Common Stock and CDIs.

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Nasdaq may de-list our securities from its exchange if we fail to comply with the continued listing standards, including as related to the price of our Common Stock.

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Sales by our existing shareholders can reduce the market price of our Common Stock and CDIs.

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We are a holding company and depend on our subsidiaries to generate cash to fund our operations and expenses.

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Our Bylaws restrict the forum in which shareholders may obtain a favorable judicial forum for disputes.

Risks Related to the Convertible Notes

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There are risks associated with our Convertible Notes that could adversely affect our business and financial condition.

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Servicing our debt requires a significant amount of cash.

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Our Convertible Notes are secured by a security interest in substantially all of our assets.

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Conversion of the Convertible Notes will dilute the ownership interest of our existing stockholders.

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We may require additional financing to sustain or grow our operations.

Risks Relating to our Reorganization

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CAUTIONARY NOTE REGARDING RESERVES

Unless otherwise indicated, all mineral resource and reserve estimates included in this report have been prepared in accordance with, and are based on the relevant definitions set forth in, the SEC’s Mining Disclosure Rules and Regulation S-K 1300 (each as defined below). Mining disclosure in the United States was previously required to comply with SEC Industry Guide 7 (the “SEC Industry Guide 7”) under the Exchange Act. In accordance with the SEC’s Final Rule 13-10570, Modernization of Property Disclosure for Mining Registrant, the SEC has adopted final rules, effective February 25, 2019, to replace SEC Industry Guide 7 with new mining disclosure rules (the “Mining Disclosure Rules”) under sub-part 1300 (Title 17, Part 229, Items 601 and 1300 until 1305) of Regulation S-K (“Regulation S-K 1300”) of the Securities Act. Regulation S-K 1300 replaces the historical property disclosure requirements included in SEC Industry Guide 7. Regulation S-K 1300 uses the Committee for Mineral Reserves International Reporting Standards (“CRIRSCO”)-based classification system for mineral resources and mineral reserves and accordingly, under Regulation S-K 1300, the SEC now recognizes estimates of “Measured Mineral Resources,” “Indicated Mineral Resources” and “Inferred Mineral Resources,” and require SEC-registered mining companies to disclose in their SEC filings specified information concerning their mineral resources, in addition to mineral reserves. In addition, the SEC has amended its definitions of “Proven Mineral Reserves” and “Probable Mineral Reserves” to be substantially similar to international standards. The SEC Mining Disclosure Rules more closely align SEC disclosure requirements and policies for mining properties with current industry and global regulatory practices and standards, including the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, referred to as the “JORC Code.” While the SEC now recognizes “Measured Mineral Resources,” “Indicated Mineral Resources” and “Inferred Mineral Resources” under the SEC Mining Disclosure Rules, investors should not assume that any part or all of the mineral deposits in these categories will be converted into a higher category of mineral resources or into mineral reserves. Investors are also cautioned not to assume that any measured mineral resources, indicated mineral resources, or inferred mineral resources are guarantees of actual resource amounts or that such amounts will be economically or legally mineable.

The following terms, as defined in Regulation S-K 1300, apply within this report:

Incorporated by reference as Exhibit 96.1 to this filing is an amended and restated technical report, with a revised report date of February 2, 2024, report date of May 11, 2023, and report effective date of April 1, 2023 (the “Amended Initial Assessment Report”). The purpose of the Amended Initial Assessment Report is to support the disclosure of mineral resource estimates for the Project, which is further described in the Business and Properties item of this report. The Amended Initial Assessment Reports was prepared in accordance with the SEC’s Mining Disclosure Rules and Regulation S-K Subpart 1300 and Item 601(b)(96) (technical report summary).

UNLESS OTHERWISE EXPRESSLY STATED, NOTHING CONTAINED IN THIS FILING IS, NOR DOES IT PURPORT TO BE, A TECHNICAL REPORT SUMMARY PREPARED BY A QUALIFIED PERSON PURSUANT TO AND IN ACCORDANCE WITH THE REQUIREMENTS OF SUBPART 1300 OF SECURITIES EXCHANGE COMMISSION REGULATION S-K.

CAUTIONARY NOTE REGARDING EXPLORATION STAGE COMPANIES

We are an exploration stage company and do not currently have any known mineral reserves and cannot expect to have known mineral reserves unless and until an appropriate technical and economic study is completed for Fort Cady or any of our other properties that shows Proven or Probable Mineral Reserves as defined by Regulation S-K 1300. We currently do not have any Proven or Probable Mineral Reserves. There can be no assurance that Fort Cady or any of our other properties contains or will contain any such SEC-compliant Proven or Probable Mineral Reserves or that, even if such reserves are found, the quantities of any such reserves warrant continued operations or that we will be successful in economically recovering them.

CAUTIONARY NOTE REGARDING INDUSTRY AND MARKET DATA

This filing includes information concerning our industry and the markets in which we will operate that is based on information from various sources including public filings, internal company sources, various third-party sources and management estimates. Our management estimates regarding our position, share and industry size are derived from publicly available information and its internal research and are based on a number of key assumptions made upon reviewing such data and our knowledge of such industry and markets, which we believe to be reasonable. While we believe the industry, market and competitive position data included in this report is reliable and is based on reasonable assumptions, such data is necessarily subject to a high degree of uncertainty and risk and is subject to change due to a variety of factors, including those described in “Cautionary Note Regarding Forward-Looking Statements,” “Summary Risk Factors,” “Risk Factors” and elsewhere in this filing. These and other factors could cause results to differ materially from those expressed in the estimates included herein. We have not independently verified any data obtained from third-party sources and cannot assure you of the accuracy or completeness of such data.

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