STRATEGIC REPORT

Our stated objective is to become the premier producer of organic rock phosphate fertilizer products in the United States ("US"). This remains our firm objective having Increased our ownership of Falcon Isle to 100% on 30 March 2022, putting us in sole control of how we achieve our objective in the rock phosphate sector of the organic fertilizer market in the US. 2023 was a challenging year, with an unusually long winter leading to a late spring planting season impacting our primary markets in the western states of the US specifically the Central Valley of California. Mining operations were also impacted as the Diamond Creek Mine remained covered in snow into June. Despite this slow start to the year we were pleased to grow our sales from 4,276t during 2022 to 4,606t during 2023, a marginal improvement, however given the conditions we were not unhappy with that outcome.

From a strategic point of view, relying on sales growth of our milled dry products alone would not deliver the material sales and profitability growth goals set by the Company. The longstanding commitment to deliver our granulator plant remained a key objective to grow sales volumes and diversify our product range and as previously noted we've been in discussions with two organic fertilizer blending customers to produce a granulate with our rock phosphate being the key ingredient. After receiving consistent orders from PhoSul LLC ("PhoSul"), a specialist organic fertilizer producer based out of Sugar City Idaho, during Q4 of 2023, we commenced negotiating agreements towards the formation of a joint venture ("JV") to produce PhoSul^®, a trademarked organic granulated fertilizer blend with extensive laboratory and field tests demonstrating the growth and yield benefits of the product by enhancing the availability of P₂O₅ which has typically been a challenge in the organic fertilizer space. PhoSul is a subsidiary of Propeat LLC which produces a range of potash/peat based products through its pan granulator plant in Idaho. Given the demand for Propeat granulates, plant capacity constraints led PhoSul to search for a strategic partner which initiated discussions with Falcon Isle knowing that we possessed an as-yet unconstructed granulator plant, as well as high-grade rock phosphate ore, an 80% constituent of the PhoSul® product.

In the course of finalising the PhoSul Utah LLC ("PhoSul Utah") JV agreements it became clear to us that there was a risk that the Spanish Fork property may be rezoned to residential/commercial status and at some point in the future potentially putting a 5 year JV agreement at risk. This catalysed our need to find a new property without these limitations and we succeeded in finding a property outside of the town of Delta which provided for all the requirements of the PhoSul Utah JV as well as for our own crushing & milling operations, and with space for expansion of the business in the future. The JV and Delta property acquisition were announced on 22 January 2024, involving the dismantling of FIR's Spanish Fork high pressure grinding rolls ("HPGR") milling plant and transport and reconstruction of both the HPGR milling plant and the granulator plant ("Integrated Plant") to the new Delta facility which commenced end-January 2024. Construction of the Integrated Plant commenced immediately with commissioning in June, and production of material for sale by the JV has now commenced.

FIR expects to supply the JV with a steadily increasing tonnage of Diamond Creek's high grade, 50 mesh organic PhosAgri product during the course of 2024 and into 2025 as we expand operations at the Integrated Plant to continuous operations to an estimated 10,500 tons of PhosAgri annually when the JV is expected to be fully operational in Q1 2025, which will be priced at a marginal discount to FIR's normal selling price. Post commissioning, 2024 will remain a building phase as we refine the production of PhoSul^®, however the specific intention of entering into the PhoSul Utah LLC JV is to more than double FIR's annual turnover at steady-state operations, and in addition FIR will be entitled to 50% of the profits of the JV.

Our short- to medium-term strategy is therefore to continue milling our crushed run of mine ("ROM") ore through the mobile Prosizer horizontal impact milling and screening unit, and more importantly to optimise the operation of the Integrated Plant at our new Delta facility. Falcon Isle will retain the marketing & logistics functions of our own dry milled products (10, 50, and 350 mesh), with marketing of the PhoSul® product being handled by PhoSul LLC with our assistance on the logistics fronts.

In addition, we will continue to pursue the potential presented by liquid products, through the solubilising and/or microbial/bacterial digestion of our finer 100 mesh or 350 mesh products for use in liquid blends in fertigation (drip fed irrigation) and hydroponic applications. The application of liquid organic products at higher available phosphate (P₂O₅) (results from testwork conducted with industry experts Agrothrive LLC suggests potential for >20% available P₂O₅from our micronized 350 mesh product) ensures quicker absorption, provides for tighter quality control, reduces losses in the application processes and provides us with access to a rapidly growing indoor controlled environment agricultural ('CEA') sector.

In addition to organic expansion we are actively pursuing new phosphate leases which will enable capacity growth in the organic space but also the potential production of purified phosphoric acid ("PPA") for downstream application in the production of lithium iron phosphate ("LFP") battery cathodes. Energy intensive extraction methods used to date are being replaced with significantly lower energy consumption processes to produce equivalent grade PPA. LFP batteries are very much part of the carbon-neutral drive of our planet and phosphorous will play an important role in developments in this space.

Togo

As previously announced, we disposed of our intellectual knowledge including all exploration and feasibility work completed on the project, as well as the detailed results of the 10,000 tonne bulk sample completed from the Nayéga Project in June 2019 to the Togolese State. Under the disposal agreement Keras will be paid a 1.5% advisory services fee for a 3-year period from first sales, as well as a 6% brokerage services on gross revenue generated from the Nayéga Mine for the lesser of 3.5 years or 900,000 (nine hundred thousand) tonnes of beneficiated manganese ore produced and sold from Nayéga. As set out in the Chairman's Statement, steps have now been taken to commence the re-commissioning of the mine, and we expect to see cash flows from the advisory and brokerage services provided to the newly established Société Togolaise de Manganèse ("STM"), the State owned entity which will operate the Nayéga Mine.

In the interim, the Group disposed of its 85% shareholding in Société Général des Mines ("SGM") for a nominal consideration prior to the close of FY2023, so that Keras no longer holds any assets in Togo other than through the advisory and brokerage fee agreements referred to above.

From the Company's point of view, disposing of our interest in SGM allows us to concentrate our efforts in the US.

Mining projects

United States

Keras acquired a 51% interest in Falcon Isle, holder of the Diamond Creek phosphate mine and associated processing facilities, in December 2020 and subsequently acquired the outstanding 49% in March 2022. The mine is situated approximately 80km SSE of Salt Lake City, Utah. Diamond Creek is a fully permitted, high-grade direct shipping ore ('DSO'), low capex organic phosphate mine, which has significant historical estimated in-situ tonnage (these estimates have not been classified according to modern International Reporting Standards but have been based on sampling of surface outcrops) with sufficient phosphate ore exposed in-situ to provide for the 2024 mining season before any overburden stripping is required. The phosphate mineralisation is concentrated in the sedimentary shale beds at the base of the Meade Peak Member of the Phosphoria Formation. The mineralised zone is approximately 2.5m thick and averages 23% total P₂O₅with guaranteed available P₂O₅of 12%. Historic reports vary with "surface mineable resources" ranging from 3.10Mt to 4.60Mt. At an internally estimated peak production rate of 23.5ktpa, the opencast resources alone represent a significant mine life.

The 2023 mining campaign was completed in October 2023 with a total of 3,000 ore tons extracted from the pit. Primary crushing during the reporting period was undertaken using a contractor-operated mobile jaw crusher at the mine laydown site, with downstream processing conducted through a combination of contractor toll-milling (Prosizer producing 10mesh and -50mesh products) and Falcon Isle owned HPGR milling plant comprising front-end feed, primary crush, milling, ultra-fine dust extraction, 50lb and 1ton bagging circuits to produce -100 mesh and -350 mesh powders. As noted previously FIR's granulation plant has now been relocated to our newly acquired Delta Processing Facility where construction is nearing completion in collaboration with our JV partner PhoSul.

It was our initial intention to construct the granulator plant in a building adjacent to our former milling plant in Spanish Fork, however as we've established ourselves in the organic agricultural sector it became apparent that we could extract greater value from a blended granulate incorporating additional critical elements proven to improve growth and yields across a range of agricultural crops. The PhoSul® product is trademarked and has been subjected to extensive laboratory and field trials to demonstrate its efficacy at improving the availability of P₂O₅ from Falcon Isle's rock phosphate.

Our internal rock phosphate products have received Organic Certification by all three key certification agencies in the USA - California ('CDFA'), Washington State ('WSDA') and the federal Organic Materials Review Institute ('OMRI'), as well as Registration in Oregon. As a Direct Shipping Ore ('DSO') it requires no chemical/synthetic upgrade processes which is the basis for our organic certification. Our rock phosphate contains acceptable heavy metal impurities, significantly higher available P₂O₅than any other organic rock phosphate in North America, and a calcium content of >25%. PhoSul^®, which we will commence producing during Q2 of 2024 is similarly being certified through the key state and federal agencies to enable organic sales country-wide.

Sustainability

Keras is committed to responsible mining and upholding ESG best practice across our business. We are similarly committed to our stakeholders and are focused on looking to create value and benefits for all whilst seeking to manage and mitigate the potential impacts that our operations may have. We are focussed on mining an essential resource that can contribute to a more sustainable future and importantly sustainable and regenerative agriculture. With the Diamond Creek mine, we are now moving towards running a more lucrative operation including production of granulated fertilizer through the PhoSul Utah JV. Our own business model involving only crushing & milling remains relatively straightforward and we remain focused on meeting our commitments across the ESG space and will continue to be proactive in this area as we look to develop and sustain a positive legacy.

Risk Management

The Board regularly reviews the risks to which the Group is exposed and ensures through its meetings and regular reporting that these risks are minimised as far as possible. The principal risks and uncertainties facing the Group at this stage in its development are:

Market Risk

Unlike marketing globally traded, indexed commodities into international markets, growing market share within the niche organic fertiliser market within North America presents risk in terms of pricing and volume.

The business has a broad range of existing customers, three of which are anchor clients having provided commitments to purchase a pleasing base load of our planned annual production. Our marketing strategy rollout will include presence at industry trade exhibitions and conferences, as well as regular regional direct contact visits with a comprehensive schedule of contacts within the wholesale and distribution segments of the organic fertiliser market. Our business model will largely be driven by uptake from co-operative clients with wide distribution networks, rather than selling directly to farmers themselves.

Exploration Risk

The Group's business has been primarily mineral exploration and evaluation which are speculative activities and whilst the Directors are satisfied that good progress is being made, there is no certainty that the Group will be successful in the definition of economic mineral resources, nor that it will proceed to the development of any of its projects or otherwise realise their value.

The Group aims to mitigate this risk when evaluating new business opportunities by targeting areas of potential where there is at least some reliable historical sampling, drilling or more detailed geological data available.

Resource Risk

All mineral projects carry risk associated with defined grade and continuity. Mineral resources and reserves are calculated by the Group in accordance with accepted industry standards and codes but are always subject to uncertainties in the underlying assumptions which include geological projection and commodity price assumptions. The Group reports exploration targets, mineral resources and ore reserves in accordance with internationally approved codes where our operations/projects are located, which set minimum standards for public reporting of mineral exploration results, mineral resources and ore reserves.

Development Risk

Delays in permitting, financing and commissioning a project may result in delays to the Group meeting development and/or production targets. Changes in commodity prices can affect the economic viability of mining projects and affect decisions on continuing exploration activity.

Mining and Processing Technical Risk

Notwithstanding the completion of metallurgical testwork, trial mining and pilot studies indicating the technical viability of a mining operation, variations in mineralogy, mineral continuity, ground stability, ground water conditions and other geological conditions may still render a mining and processing operation economically or technically non-viable. The Group has a small team of mining professionals experienced in geological evaluation, exploration, financing and development of mining projects. To mitigate development risk, the Group supplements this from time to time with engagement of external expert consultants and contractors.

Environmental Risk

Exploration and development of a project can be adversely affected by environmental legislation and the unforeseen results of environmental studies carried out during evaluation of a project. Once a project is in production unforeseen events can give rise to environmental liabilities.

As Keras undertakes mining operations, any disturbance to the environment during this phase is required to be rehabilitated, with specific requirements for closure and closure funding in accordance with prevailing regulations of the countries in which we operate as well as to international best-practice. Given the Group's size and scale it is not considered practical or cost effective to collect and report data on carbon emissions.

Financing & Liquidity Risk

The Group has had an ongoing requirement to fund its activities through the equity markets and may in future need obtain finance for further project development. There is no certainty such funds will be available when needed. To date, Keras has managed to raise funds through both debt and equity placements despite the very difficult markets that currently exist for raising funding in the junior mining industry.

Political Risk

All countries carry political risk that can lead to interruption of activity. Politically stable countries can have enhanced environmental and social permitting risks, risks of strikes and changes to taxation whereas less developed countries can have, in addition, risks associated with changes to the legal framework, civil unrest and government expropriation of assets.

Partner Risk

Whilst there has been no past evidence of this, the Group can be adversely affected if joint venture or equity partners are unable or unwilling to perform their obligations or fund their share of future developments. Keras currently operates PhoSul Utah LLC as a 50/50 joint venture with PhoSul LLC which we regard as mutually beneficial.

Bribery Risk

The Group has adopted an anti-corruption and bribery policy and whistle blowing policy under the Bribery Act 2010. Notwithstanding this, the Group may be held liable for offences under that Act committed by its employees or subcontractors, whether or not the Group or the Directors had knowledge of the commission of such offences.

Financial Instruments

Details of risks associated with the Group's financial instruments are given in Note 29 to the financial statements. Keras does not utilise any complex or derivative financial instruments.

COVID-19

Travel and shipping restrictions in place globally during 2021 had a direct impact on timing and cost of delivery of plant and equipment to the USA. However, given recent developments the Directors do not believe that Covid 19 will have a material effect on the Company or its operations going forward.

Insurance Coverage

The Group maintains a suite of insurance coverage that is appropriate for the Group and Company. This is arranged via a specialist mining insurance broker and coverage includes public and products liability, travel, property and medical coverage and assistance while Group employees and consultants are travelling on Group business. This is reviewed at least annually and adapted as the Group's scale and nature of activities changes. Keras also has Directors and Officers insurance in place.

Internal Controls and Risk Management

The Directors are responsible for the Group's system of internal financial control. Although no system of internal financial control can provide absolute assurance against material misstatement or loss, the Group's system is designed to provide reasonable assurance that problems are identified on a timely basis and dealt with appropriately. In carrying out their responsibilities, the Directors have put in place a framework of controls to ensure as far as possible that ongoing financial performance is monitored in a timely manner, that corrective action is taken and that risk is identified as early as practically possible. The Directors review the effectiveness of internal financial control at least annually.

The Board, subject to delegated authority, reviews capital investment, property sales and purchases, additional borrowing facilities, guarantees and insurance arrangements.

The Board takes account of the significance of social, environmental and ethical matters affecting the business of the Group. At this stage in the Group's development the Board has not adopted a specific policy on Corporate Social Responsibility as it has a limited pool of stakeholders other than its shareholders. Rather, the Board seeks to protect the interests of Keras' stakeholders through individual policies and through ethical and transparent actions. The Group has adopted an anti-corruption and bribery policy and a whistle blowing policy as stated previously.

Shareholders

The Directors are always prepared, where practicable and subject to confidentiality under the AIM Rules, to enter into dialogue with shareholders to promote a mutual understanding of objectives. The Annual General Meeting provides the Board with an opportunity to informally meet and communicate directly with investors.

Employees

The Group operates primarily through contractors. Notwithstanding this, the Group engages its contract employees to understand all aspects of the Group's business and seeks to remunerate them fairly, being flexible where practicable. The Group gives full and fair consideration to applications for employment received regardless of age, gender, colour, ethnicity, disability, nationality, religious beliefs, transgender status or sexual orientation. The Group takes account of employees' interests when making decisions and welcomes suggestions from employees aimed at improving the Group's performance.

The Group currently operates exclusively in the USA but with agreements with the Togolese State to provide advisory and brokerage services in Togo. It recruits locally as many of its employees and contractors as practicable. The Company has four directors, three male and one female.

Suppliers and Contractors

The Group recognises that the goodwill of its contractors, consultants and suppliers is important to its business success and seeks to build and maintain this goodwill through fair dealings. The Group has a prompt payment policy and seeks to settle all agreed liabilities within the terms agreed with suppliers. Contractors are appointed based on a detailed assessment of their capabilities, capacity and track record. Over time, as the Company grows its understanding of the various aspects of its operations in-sourcing of certain operational components may be considered as a means to reduce costs.

Health and Safety

The Board recognises that it has a responsibility to provide strategic leadership and direction in the development of the Group's health and safety strategy in order to protect all of its stakeholders. The Group does not have a formal health and safety policy at this time. This is re-evaluated as and when the Group's nature and scale of activities expand.

Section 172 statement

The Directors believe they have acted in the way most likely to promote the success of the Company for the benefit of its members as a whole, as required by s172 of the Companies Act 2006.

The requirements of S172 are for the Directors to:

•     Consider the likely consequences of any decision in the long-term;

•     Act fairly between the members of the Company;

•     Maintain a reputation for high standards of business conduct;

•     Consider the interests of the Company's employees;

•     Foster the Company's relationships with suppliers, customers and others; and

•     Consider the impact of the Company's operations on the community and the environment.

The Company's operations and strategic aims are set out throughout the Strategic Report and in the Chairman's Statement, and relationships with stakeholders are also dealt with in the Corporate Governance Statement.

Graham Stacey

Director

This Strategic Report was approved by the Board of Directors on 26 June 2024.