Snow Lake Resources (LITM) Risk Factors

Lithium mining has occurred at the Tanco mine located north east of Winnipeg, but the mining and processing of lithium ore has not previously been undertaken in or near the Snow Lake region of Manitoba. Locating the necessary experts and work force that are familiar with and trained in this particular mining process may be a challenge and our success may be hindered by the lack of historical familiarity with the processes and challenges faced in lithium mining and production.

Exploration and mining operations generally involve a degree of risk. Our operations are subject to all of the hazards and risks normally encountered in the exploration, development and production of lithium and uranium, including, without limitation, unusual and unexpected geologic formations, seismic activity, rock bursts, cave-ins, flooding and other conditions involved in the drilling and removal of material, any of which could result in damage to, or destruction of, mines and other producing facilities, personal injury or loss of life and damage to property and environmental damage, all of which may result in possible legal liability. Although we expect that adequate precautions to minimize risk will be taken, mining operations are subject to hazards such as fire, rock falls, geo-mechanical issues, equipment failure or failure of retaining dams around tailings disposal areas which may result in environmental pollution and consequent liability. The occurrence of any of these events could result in a prolonged interruption of our operations that would have a material adverse effect on our business, financial condition, results of operations and prospects. The exploration for and development of mineral deposits involves significant risks, which even a combination of careful evaluation, experience and knowledge may not eliminate. While the discovery of a mineral deposit may result in substantial rewards, few properties that are explored are ultimately developed into producing mines. Major expenses may be required to locate and establish mineral resources and reserves, to develop metallurgical processes and to construct mining and processing facilities and infrastructure at a particular site. It is impossible to ensure that the exploration or development programs planned by us will result in a profitable commercial mining operation. Whether a mineral deposit will be commercially viable depends on a number of factors, some of which are: the particular attributes of the deposit, such as size, grade and proximity to infrastructure, metal prices that are highly cyclical, and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted, but the combination of these factors may result in our company not receiving an adequate return on invested capital. There is no certainty that the expenditures made towards the search and evaluation of mineral deposits will result in the discovery of mineral resources or the development of commercial quantities of mineral reserves. Our exploration projects have no operating history upon which to base estimates of future capital and operating costs. Mineral resource and reserve estimates and estimates of capital and operating costs are, to a large extent, based upon the interpretation of geologic data obtained from drill holes and other sampling techniques, and feasibility studies, which derive estimates of capital and operating costs based upon anticipated tonnage and grades to be mined and processed, ground conditions, the configuration of the deposit, expected recovery rates of minerals from ore, estimated operating costs, and other factors. As a result, actual production, cash operating costs and economic returns could differ significantly from those estimated.

We are an exploration stage company and we have no history of mining mineral products from any of our properties. As such, any future revenues and profits are uncertain. There can be no assurance that any of our Projects will be successfully placed into production, produce minerals in commercial quantities or otherwise generate operating earnings. Advancing projects from the exploration stage into development and commercial production requires significant capital and time and will be subject to further technical studies, permitting requirements and construction of mines, processing plants, roads and related works and infrastructure. We will continue to incur losses until mining-related operations successfully reach commercial production levels and generate sufficient revenue to fund continuing operations. There is no certainty that we will generate revenue from any source, operate profitably or provide a return on investment in the future.

All of our operations are at the exploration stage and there is no guarantee that any such activity will result in commercial production of mineral ore or deposits. We do not consider any of our Projects material at this time. In July 2023, we completed an S-K 1300 Technical Report Summary of Initial Assessment, or the PEA, for the Snow Lake Lithium™ Project, which considered a mine plan consisting of underground mining on both deposits, with an initial open pit on the Grass River deposit. However, as a result of a drop in lithium prices, after a stratospheric rise in 2022, followed by a precipitous 80% drop during 2023, demand for lithium continues to be weak, prices continue to decline, and a number of major global lithium producers continue to curtail production until the lithium market and lithium prices recover. At the present time, given the current state of the lithium market, we intend to limit additional exploratory drilling at the Snow Lake Lithium™ Project. The exploration for mineral deposits involves significant risks which even a combination of careful evaluation, experience and knowledge may not eliminate. While the discovery of an ore body may result in substantial rewards, few properties which are explored are ultimately developed into producing mines. Major expenses may be required to locate and establish proven mineral reserves, to develop metallurgical processes and to construct mining and processing facilities at a particular site. It is impossible to ensure that the exploration programs planned by us or any future development programs will result in a profitable commercial mining operation. There is no assurance that our mineral exploration activities will result in any discoveries of commercial quantities of uranium or lithium. There is also no assurance that, even if commercial quantities of ore are discovered, a mineral property will be brought into commercial production. Whether a mineral deposit will be commercially viable depends on a number of factors, including, but not limited to: the particular attributes of the deposit, such as size, grade and proximity to infrastructure; metal prices which are highly cyclical; and government regulations, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection. The exact effect of these factors cannot be accurately predicted. Our long-term profitability will be in part directly related to the cost and success of our exploration programs and any subsequent development programs.

The nuclear incident that occurred in Japan in March 2011 had significant and adverse effects on both the nuclear and uranium industries. If another nuclear incident were to occur, it may have further adverse effects for both industries. Public opinion of nuclear power as a source of electricity generation may be adversely affected, which may cause governments of certain countries to further increase regulation for the nuclear industry, reduce or abandon current reliance on nuclear power or reduce or abandon existing plans for nuclear power expansion. Any one of these occurrences has the potential to reduce current and/or future demand for nuclear power, resulting in lower demand for uranium and lower market prices for uranium, adversely affecting the Company's operations and prospects. Furthermore, the growth of the nuclear and uranium industries is dependent on continuing and growing public support of nuclear power as a viable source of electricity generation.

We have no history of uranium extraction and generating revenue. If we are unable to directly develop existing uranium projects, such as our Black Lake Uranium Project or our Engo Valley Uranium Project, into uranium mines from which we can commence uranium extraction, it will negatively impact our ability to generate revenues. Any one or more of these occurrences may adversely affect our financial condition and operating results.

Land reclamation requirements are generally imposed on companies with mining operations or mineral exploration companies in order to minimize long term effects of land disturbance. Reclamation may include requirements to control dispersion of potentially deleterious effluents or reasonably re-establish pre-disturbance landforms and vegetation. In order to carry out reclamation obligations imposed on us in connection with exploration, potential development and production activities, we must allocate financial resources that might otherwise be spent on exploration and development programs. If we are required to carry out unanticipated reclamation work, our financial position could be adversely affected.

Until recently, the Snow Lake Lithium™ Project constituted our sole material property. The development of our Snow Lake Lithium™ Project and our Shatford Lake Project is dependent on the continued growth of the lithium market, and the continued increased demand for lithium chemicals by emerging producers of EVs and other users of lithium-ion batteries. These producers and the related technologies are still under development and a continued sustained increase in demand is not certain. The lithium market is currently depressed.  Lithium prices continue to remain low after a stratospheric rise in 2022, followed by a precipitous 80% drop during 2023.  Demand for lithium continues to be weak, and a number of major global lithium producers continue to curtail production until the lithium market and lithium prices recover. When the PEA on the Snow Lake Lithium™ Project was prepared in July 2023, the price of lithium concentrate was approximately USD$3,500 per tonne. Recently, prices have hovered around the USD$800 per tonne. The dramatic drop in lithium concentrate prices has had a significant negative effect on the project economics of the Snow Lake Lithium™ Project. Project economics are affected by a number of internal and external factors. Internal factors include the size, grade, throughput, cut-off grade, mine plan, infrastructure, permitting and project debt capacity of the project.  External factors include the lithium market, lithium prices, supply and demand for lithium, current lithium producers, lithium development projects, and availability of exploration, development and construction financing. In reviewing the Snow Lake Lithium™ Project, we considered the following adverse internal factors: - the scale of the project is relatively small, and it does not enjoy the economies of scale of a larger, higher-grade project;- the mineral resource estimate is relatively small, when calculated at historical lithium prices, and would become smaller if calculated at current lithium prices;- the grade is relatively low;- the project is relatively remote and will require extensive infrastructure to support development and operations, including power, water, highway and rail transportation, at significant cost;- the net present value and internal rate of return, at current lithium prices, will be reduced from those at previous lithium prices; and - overall project economics at current lithium prices will be reduced to the point where the project will probably not generate a net present value and rate of return that would be attractive to investors, and as such would not support further exploration, development and/or construction financing. In reviewing the Snow Lake Lithium™ Project, we considered the following adverse external factors: - the lithium market is currently depressed, and industry experts do not forecast a recovery in the near term;- lithium prices suffered an 80% drop in 2023, have continued to drop in 2024, and have not yet shown any signs of a sustained recovery;- In response to these lower prices, some lithium supply has already been curtailed as major global lithium producers have scaled back production until lithium prices recover;- lithium demand remains weaker than has been previously forecast, with recovery in demand in the near term to be driven by recovery of growth in the EV market;- competition amongst lithium exploration and development companies for projects, personnel and financing is intense; and - financing will be provided to those companies whose projects have size, scale, grade, infrastructure, and project economics that are superior to others. There is considerable uncertainty as to when demand and prices will recover. Competition amongst lithium exploration and development companies, particularly in Canada, is intense and few projects will ultimately proceed through development, permitting, financing, construction and into commercial production.  At current lithium prices, only a few lithium development projects would have the size and scale such that they can be considered economic, and as a result, only a few, will be able to secure the financing necessary to be explored, developed and placed into production. One of the principal drivers of lithium demand is the EV market.  While the EV market remains strong in China, uptake of EVs has slowed in North America and major North American original equipment manufacturers, or OEMs, have slowed, curtailed or abandoned EV programs, as the demand for EVs remains lower than has been previously forecast.  North American OEMs are continuing to add hybrid vehicles to their product offerings, as the demand for pure EVs remains low.  In addition, both North America and Europe are applying tariffs to foreign produced EVs. As a non-revenue generating company, we are dependent upon the capital markets to raise financing to fund our exploration activities.  At the present time, given the current state of the lithium market, and the state of the EV transition in North America, we believe there is little investor interest in lithium projects, and hence, little to no ability to raise financing to explore lithium projects.

We are in the exploration stage and our planned principal operations have not commenced. There is currently no commercial production on any of our Projects. In July 2023, we completed the PEA for the Snow Lake LithiumTM Project, which considered a mine plan consisting of underground mining on both deposits, with an initial open pit on the Grass River deposit. The PEA is preliminary in nature and is intended to provide an initial, high-level review of the Snow Lake Lithium™ Project's economic potential and design options.  The projected economic results include numerous assumptions and are based on measured, indicated and inferred mineral resource estimates for the Snow Lake Lithium™ Project, as specified in the PEA. Inferred resources are considered to be too speculative geologically to have economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA will be realized.  Unlike mineral reserves, mineral resource estimates do not have demonstrated economic viability. Due to a number of factors, including the current state of the lithium market and warmer than normal winter weather conditions in Northern Manitoba during early 2024, we did not undertake a planned winter drilling campaign. During 2024, we will complete our second year of environmental baseline data collection. Additional exploration, including additional infill drilling, and drilling of the open extensions of both the Thompson Brothers and Grass River deposits, will be limited during 2024 due the factors described above. We are of the view that the Snow Lake Lithium™ Project does not have the scale, size, grade or project economics to make it an attractive exploration project at the present time given the current lithium pricing environment. While we do not intend to abandon the Snow Lake Lithium TM  Project, further exploration activities have been limited until such time as the lithium market recovers, lithium prices recover, investor interest in the lithium sector returns, and capital once again becomes available to fund exploration and development of lithium projects. Even if we prove reserves on the Snow Lake Lithium™ Project in the future, we cannot guarantee that we will be able to develop and market them, or that such production will be profitable. The estimation of lithium reserves is not an exact science and depends upon a number of subjective factors. Any measured, indicated or inferred resource figures presented in this Annual Report are estimates from the written reports of technical personnel and mining consultants who were contracted to assess the mining prospects. Resource estimates are a function of geological and engineering analyses that require us to forecast production costs, recoveries, and metals prices. The accuracy of such estimates depends on the quality of available data and of engineering and geological interpretation, judgment, and experience. Estimated indicated or inferred lithium resources may not be upgraded to measured or indicated, or to probable or proved reserves, and any reserves may not be realized in actual production and our operating results may be negatively affected by inaccurate estimates.

The price of our securities will be sensitive to fluctuations in the price of uranium. Historically, fluctuations in the price of uranium have been, and are expected to continue to be, affected by numerous factors which are beyond our control. Such factors include, without limitation, demand for nuclear power, political and economic conditions in uranium producing and consuming countries, public and political response to a nuclear accident, improvements in nuclear reactor efficiencies, reprocessing of used reactor fuel and the re-enrichment of depleted uranium tails, sales of excess inventories by governments and industry participants, and production levels and production costs in key uranium producing countries. In addition, nuclear energy competes with other sources of energy like oil, natural gas, coal and hydroelectricity. These sources are somewhat interchangeable with nuclear energy, particularly over the longer term. If lower prices of oil, natural gas, coal and hydroelectricity are sustained over time, it may result in lower demand for uranium concentrates and uranium conversion services, which, among other things, could lead to lower uranium prices. Growth of the uranium and nuclear power industry will also depend on continuing and growing public support for nuclear technology to generate electricity. Unique political, technological and environmental factors affect the nuclear industry, exposing it to the risk of public opinion, which could have a negative effect on the demand for nuclear power and increase the regulation of the nuclear power industry. An accident at a nuclear reactor anywhere in the world could affect acceptance of nuclear energy and the future prospects for nuclear generation. All of the above factors could have a material and adverse effect on our ability to obtain the required financing in the future or to obtain such financing on terms acceptable to us, resulting in material and adverse effects on our exploration programs, our uranium projects and our financial condition.

In the ordinary course of business, we will be required to obtain and renew governmental licenses or permits for exploration, development, construction and commencement of mining at our Projects. Obtaining or renewing the necessary governmental licenses or permits is a complex and time-consuming process involving public hearings and costly undertakings on our part. The duration and success of our efforts to obtain and renew licenses or permits are contingent upon many variables not within our control, including the interpretation of applicable requirements implemented by the licensing and/or permitting authorities. We may not be able to obtain or renew licenses or permits that are necessary to our operations, including, without limitation, an exploitation or mining license, or the cost to obtain or renew a license or permit may exceed what we believe we can recover from a specific Project. Any unexpected delays or costs associated with the licensing or permitting process could delay the development or impede the operation of a mine, which could adversely impact our operations and profitability.

Uranium exploration and pre-extraction programs and mining activities are subject to numerous stringent laws, regulations and standards at the international, federal, state and local levels governing permitting, pre-extraction, extraction, exports, taxes, labor standards, occupational health, waste disposal, protection and reclamation of the environment, protection of endangered and protected species, mine safety, hazardous substances and other matters. Our compliance with these requirements requires significant financial and personnel resources. The laws, regulations, policies or current administrative practices of any government body, organization or regulatory agency in the jurisdictions in which we operate, may change or be applied or interpreted in a manner which may also have a material adverse effect on our operations. The actions, policies or regulations, or changes thereto, of any government body or regulatory agency or special interest group may also have a material adverse effect on our operations. Uranium exploration and pre-extraction programs and mining activities are also subject to stringent environmental protection laws and regulations at the international, federal, state and local levels. These laws and regulations include permitting and reclamation requirements, and regulate emissions, water storage and discharges and disposal of hazardous wastes. Uranium mining activities are also subject to laws and regulations which seek to maintain health and safety standards by regulating the design and use of mining methods. Various permits from governmental and regulatory bodies are required for mining to commence or continue, and no assurance can be provided that required permits will be received in a timely manner. Furthermore, environmental protection laws and regulations may become more stringent in the future, and compliance with such changes may require capital outlays in excess of those anticipated or cause substantial delays, which would have a material adverse effect on our operations. Regulatory and environmental standards may also change over time to address global climate change, which could further increase these costs. To the best of our knowledge, our operations are currently in compliance, in all material respects, with all applicable laws, regulations and standards. If we become subject to liability for any violations, we may not be able or may elect not to insure against such risk due to high insurance premiums or other reasons. Where coverage is available and not prohibitively expensive relative to the perceived risk, we will maintain insurance against such risk, subject to exclusions and limitations. However, we cannot provide any assurance that such insurance will continue to be available at reasonable premiums or that such insurance will be adequate to cover any resulting liability.

The outcome of litigation and other legal proceedings that the Company may be involved in the future, is difficult to assess or quantify. Defense and settlement costs can be substantial, even with respect to claims that have no merit. Due to the inherent uncertainty of the litigation process, the litigation process could take away from the time and effort of the Company's management and could force the Company to pay substantial legal fees. Any conclusion of these matters in a manner adverse to us could have a material adverse effect on our business, results of operation, financial condition and cash flows. For example, we may be required to pay substantial damages, incur payments of fines and penalties, suffer a significant adverse impact on our reputation, and management's attention and resources may be diverted from other priorities, including the execution of business plans and strategies that are important to our ability to grow our business, any of which could have a material adverse effect on our business. If we do not have sufficient funds to settle or pay any damages and costs with respect to any lawsuits, this would have a material adverse effect on our business, financial condition and results of operation.

We may be subject to potential conflicts of interests, as certain directors of our company are, and may continue to be, engaged in the mining industry through their participation in corporations, partnerships or joint ventures, which are potential competitors of our company. Situations may arise in connection with potential acquisitions in investments where the other interests of these directors and officers may conflict with the interests of our company. Our directors and officers with conflicts of interest will be subject to the procedures set out in the related Canadian law and regulations.

We are incorporated in the Province of Manitoba, Canada under the MCA. We conduct our operations outside the United States and substantially all of our assets are located outside the United States. In addition, a majority of our directors and executive officers and the experts named in this Annual Report reside outside the United States, and a significant amount of their assets are located outside the United States. As a result, service of process upon such persons may be difficult or impossible to effect within the United States. Furthermore, because a substantial portion of our assets, and substantially all the assets of our directors and officers and the Canadian experts named herein, are located outside of the United States, any judgment obtained in the United States, including a judgment based upon the civil liability provisions of United States federal securities laws, against us or any of such persons may not be collectible within the United States. In Canada, provincial and territorial reciprocal enforcement of judgments legislation sets out the procedure for registering foreign judgments and this procedure varies depending on the province or territory of the enforcing court. If a foreign judgment originates from a jurisdiction not captured by the applicable provincial or territorial reciprocal enforcement of judgments or enforcement of foreign judgments legislation, the foreign judgment may be capable of enforcement at common law and the party seeking to enforce the foreign judgment must commence new proceedings in the domestic or enforcing court.