IperionX : Annual Report for Fiscal Year Ending June 30, 2025 (Form 20-F)

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion and analysis should be read in conjunction with our financial statements and related notes included elsewhere in this annual report on Form 20-F. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause or contribute to these differences include those discussed below and elsewhere in this annual report on Form 20-F, particularly those in the section of this annual report on Form 20-F entitled "Risk Factors." The consolidated general purpose financial statements of the consolidated Company have been prepared in accordance with IFRS as issued by the IASB.

Critical accounting policies adopted in the preparation of this financial report are presented below and have been consistently applied unless otherwise stated.

Our financial statements for fiscal 2025 are presented in U.S. dollars and have been prepared in accordance with IFRS.

This annual report includes consolidated financial statements for the years ended June 30, 2025, 2024, and 2023. However, as permitted by Instruction 6 to Item 5 of Form 20-F, a discussion of the year ended June 30, 2024 and 2023 has been omitted because such discussion was already included in Item 5 of IperionX's annual report on Form 20-F for the year ended June 30, 2024.

Business Strategy

IperionX is set to be a leading American titanium metal and critical materials company - using patented titanium technologies to produce high performance titanium alloys, from titanium minerals or scrap titanium, at lower energy, cost and carbon emissions.

IperionX's award-winning patented technology portfolio enables high strength forged titanium alloy products at low cost, with class-leading sustainability and superior process energy efficiencies when compared to current industry methods such as the Kroll process.

Using its technologies, IperionX has now transitioned to be a commercial producer of titanium metal products in the United States.

IperionX produces low-cost and high-quality angular and spherical titanium powder, which is used to produce near-net-shape and final titanium parts through powder metallurgy or additive manufacturing. These technologies provide IperionX with a sustainable competitive advantage and significant value uplift from upgrading raw titanium materials through to finished high-performance titanium products when compared to traditional titanium industry supply chains.We plan to effect our business plan as described in "Item 4B. Information on the Company - Strategies."

A.Operating Results

Financial Overview of IperionX

The following discussion relates to our consolidated results of operations, financial condition and capital resources. You should read this discussion in conjunction with our consolidated financial statements and the notes thereto incorporated by reference in this annual report.

			Year ended June 30, 2025						Year ended June 30, 2024
			US$						US$
Continuing operations
Research and development costs			(12,748,973)						(8,712,610)
Exploration and evaluation expenses			(2,894,369)						(1,950,583)
Corporate and administrative expenses			(10,686,376)						(4,516,393)
Business development expenses			(3,373,992)						(3,646,141)
Share-based payment expenses			(9,568,191)						(3,791,541)
Finance income			3,550,633						546,029
Finance costs			(306,250)						(187,119)
Other income and expenses			678,843						414,712
Loss before income tax			(35,348,675)						(21,843,646)

Year Ended June 30, 2025 Compared to Year Ended June 30, 2024

Research and development expenses

Research and development, or R&D expenses encompass expenditures incurred by the Company in connection with the research and development of the Company's titanium processing technologies, including salaries and related personnel expenses, subcontractor expenses, patent registration expenses, materials, and other related research and development expenses associated with processing operations.

Research and development expenses increased by$4.0million from $8.7million for fiscal 2024 to$12.7 million for fiscal 2025 principally due to (i) increased staff costs and overheads to support our increased processing operations at our IPF in Utah and our new TPF and AMC in Virginia.

Exploration and evaluation expenses

Exploration and evaluation expenses encompasses expenditures incurred by the Company in connection with the exploration for and evaluation of mineral resources before the technical feasibility and commercial viability of extracting a mineral resource are demonstrable (other than costs associated with acquiring our exploration properties, which are capitalized), including drilling and sampling costs, technical and engineering studies, permitting costs and overhead costs associated with maintaining our exploration headquarters.

Exploration and evaluation expenses increased by $0.9million from $2.0million for fiscal 2024 to $2.9million for fiscal 2025 principally due to an increase in technical and engineering work associated with the Titan Project.

Corporate and administrative expenses

Corporate and administrative expenses encompass overhead costs, such as maintaining our corporate headquarters, public company costs, audit and other fees for professional services, IT licenses and legal compliance.

Corporate and administrative expenses increased by $6.2million from $4.5million for fiscal 2024 to $10.7million for fiscal 2025, principally due to increased staff costs and overheads to support our continued growth, system implementation and compliance requirements.

Business development expenses

Business development expenses encompass costs of our customer engagement expenses, our secondary listing on Nasdaq, our investor relations expenses, including costs for press releases, maintenance of the Company's website and our other investor marketing and information initiatives, and other fees for corporate advisory services.

Business development expenses decreased by $0.3 million from $3.6million for fiscal 2024 to $3.4million for fiscal 2025. The nature and level of business development expenses remained largely consistent between both financial periods.

Share-based payment expense

Share-based payment expense encompasses expenses incurred by the Company in connection with ordinary shares, Restricted Stock Units, Unlisted Options and Performance Rights granted by the Company to officers, employees, consultants and other key advisors as part of remuneration and incentive arrangements.

Share-based payment expenses from such remuneration arrangements increased by $5.8 millionfrom $3.8 millionfor fiscal 2024 to $9.6 millionfor fiscal 2025, principally due to the ongoing expensing of existing equity awards over their vesting period and the decision to grant approximately 10.2 millionadditional equity awards during fiscal 2025 to secure the services of directors, employees and consultants to support our continued growth.

Finance income

Finance income encompasses interest income and foreign exchange gains.

Finance income increased by $3.0 million from $0.5 million for fiscal 2024 to $3.6 million for fiscal 2025, principally due to an increased of interest income of $1.7 million due to our increased cash balances and investing strategies as well as an increase of $1.3 million in foreign exchange gain related to transactions denominated in currencies other than the functional currency for each of our subsidiaries. We expect our foreign currency exchange gains and losses to continue to fluctuate in the future as foreign currency exchange rates change.

Finance costs

Finance costs encompass interest expenses and foreign exchange losses.

Finance costs increased by $0.1 millionfrom $0.2 millionfor fiscal 2024 to $0.3 million for fiscal 2025, principally due to the result of increasing lease liabilities held by the Company.

Other income and expenses

For fiscal 2025, we had $0.9 millionin grant income from the U.S. DoW for reimbursements for expenditures related to the Titan Project definitive feasibility study in conjunction with the IBAS agreement. See Note 1(aa) to our audited consolidated financial statements for fiscal 2025, included in this annual report.The grant incomewas offset by a loss of $0.3 millionrelating to certain property, plant and equipment. For fiscal 2024, we had other income of $0.6 millionprincipally from a research contract which was offset by an impairment loss of $0.2 millionrelating to certain plant and equipment.

B.Liquidity and Capital Resources

The liquidity and capital resources discussion that follows contains certain estimates as of the date of this annual report of our estimated future sources and uses of liquidity (including estimated future capital resources and capital expenditures) and future financial and operating results. These estimates reflect numerous assumptions made by us with respect to general business, economic, regulatory, market and financial conditions, industry conditions and other future events, and matters specific to our businesses, all of which are difficult or impossible to predict and many of which are beyond our control. Please carefully read the risks discussed in "Risk Factors" contained in this annual report which describe significant risks and uncertainties that may affect us and our financial conditions.

Sources and Uses of Liquidity

We have not yet commenced significant commercial production at any of our facilities or properties and expect to continue to incur losses during the research and development of our metals technologies, the commissioning and scale-up of our metals production facilities, and the exploration and evaluation of our mineral properties. Our operations have been financed by proceeds from issuances of ordinary shares and government funding.

At June 30, 2025, we had cash reserves of $54.8 millionand net assets of $92.4 million. Our primary use of cash currently comprises the research and development of our metals technologies, the commissioning and scale-up of our metals production facilities, the exploration and evaluation expenditures relating to our mineral properties in the United States and administrative and corporate costs.

OnJuly 29, 2025, the Company completed the first tranche of a placement of 14,000,000new fully paid ordinary shares at A$5.00per share, to raise gross proceeds of $46 million(approximately A$70 million) before costs.

We incurred net losses of $35.3 millionand $21.8 millionfor fiscal 2025 and fiscal 2024, respectively. We incurred net cash outflows from operating and investing activities of$46.1 million and $25.1 millionfor fiscal 2025 and fiscal 2024, respectively. We believe that we will continue to incur net losses until such time as we commence commercial scale production of titanium metals and/or critical minerals.

If we decide to expand the capacity of our Titanium manufacturing Campus, this might require significant additional funds, which would require future debt or equity financings. Similarly, if we ultimately make a decision to develop the Titan Project, this will require significant additional funds, which might require future debt or equity financings.

We may decide to pursue additional financing activities to facilitate development activities at the Titan Project and to fund working capital and expansion projects. We expect that such financing would result in additional sales or issuances of our ordinary shares or ADSs, but we also may engage in debt financing.

If we decide to raise capital by issuing equity securities, the issuance of additional ordinary shares or ADSs would result in dilution to our existing shareholders. We cannot assure you that we will be successful in completing any financings or that any such equity or debt financing will be available to us if and when required or on satisfactory terms.

Funding Requirements and Capital Expenditures

The Company's capital expenditures amounted to $17.6 million for fiscal 2025 and $8.1 millionfor fiscal 2024 which represents the purchase of property, plant, and equipment and exploration and evaluation properties.

Using its technologies, IperionX has now transitioned to be a commercial producer of titanium metal products in the United States. Titanium powder production commenced in 2024 and, by 2025, nameplate capacity has increased by 60% from 125 metric tons per year (tpa) to 200 tpa, driven by operational and technology process improvements with no additional capex.

During fiscal 2024, the U.S. DoW contracted to award the Company $12.7 millionin funding under the DPA Title III authorities. This funding has been or will be applied towards the Titanium manufacturing Campus to reach its initial Phase I production capacity of 125 tpa. Title to all assets purchased by IperionX with funds from the U.S. government vests with the U.S. government during the term of the technology investment agreement. At the end of the agreement, title may be transferred back to the Company subject to certain conditions.

The Company can acquire equipment or real property and designate the related purchase price as reflecting the U.S. government's share of funding or the Company's share of funding. To the extent designated as the U.S. government's share, the Company is entitled to request reimbursement from time to time of the cost to purchase. Title to all equipment and real property acquired with federal funds vests with the U.S. government throughout the agreement. The U.S. government can elect to, but is not obliged to, transfer such title to all or a portion of the equipment or real property to the Company at the end of the agreement, which is scheduled to terminate on January 30, 2027, if the Company's performance is satisfactory and provided that (a) the Company has used the equipment or real property for the authorized purposes of the project funding until funding for the project ceases, (b) the Company has not encumbered the equipment or real property without approval of the U.S. government, and (c) the Company has otherwise complied with the terms of the agreement. All equipment acquired with federal funds is tagged and segregated from equipment acquired with Company funds using a Property Control List that tracks all equipment purchased under the agreement. The Property Control List is

submitted quarterly to the U.S. government and includes a description of the equipment, an asset number, manufacturer's serial number, ordered date, received date, installed date, location of the asset, and disposition date (if applicable). When the equipment arrives at our Virginia facility, it is tagged with an identification tag marked "Property of the Government of the United States" and which also included the serial number, asset number, and date received.

Through June 30, 2025, the Company has used government funds primarily to acquire equipment used to produce titanium powder from recycled sources of scrap at the construction site. The assets acquired are designed to establish, outfit and operationalize the TPF in accordance with the Statement of Work included in the DPA agreement. Although these assets are integral to the operation of the TPF, in the scenario in which the U.S. government does not relinquish these assets to the Company at the end of the agreement, the Company would seek to acquire or lease such equipment from the U.S. government, replace such equipment with new equipment using the Company's existing cash reserves, or consider other options. See "Item 3. Key Information - D. Risk Factors - Risks Related to Our Business - Some of our assets used in the TPF are acquired with federal government funds. The U.S. government holds the title with respect to such assets."

In February 2025, the Company was awarded up to $47.1 million by the U.S. DoW to strengthen the U.S. Defense Industrial Base by accelerating the scale-up of a resilient, low-cost, and fully-integrated U.S. mineral-to-metal titanium supply chain. The grant will be matched with $23.6 million in funding by IperionX, for a total funding amount of $70.7 million. As part of the initial phase, the DoW has obligated $5.0 million, and IperionX will contribute $1.0 million, to expedite the Titan Critical Minerals Project in Tennessee to 'shovel-ready' status, an important milestone in securing a new domestic source of titanium, rare earths and zircon critical minerals. Subsequent to year end, the DoW obligated an additional $12.5 million in August of 2025, and another $25.0 million in September of 2025, through the IBAS program to purchase orders for long-lead, major capital equipment required for the next stage of capacity scale-up to over 1,400 metric tons per year at the Virginia Titanium Manufacturing Campus. Total obligations now stand at $42.5 million, with the remaining $4.6 million expected to be obligated by the DoW over the contract term. The matching funding by IperionX increased to $48.1 million for a total funding amount of $95.2 million as of the date of this filing. Government reimbursements provided as grants are subject to conditional funding provisions. Grants for the initial phase are recognized as "Other income and expenses" in the consolidated statements of profit and loss and other comprehensive income, once all conditions for reimbursement are met.

We retain optionality to expand the capacity of the TPF to above 1,400 tpa of angular titanium powder. Comprehensive engineering, commercial, and financial studies are underway to review potential product mix, production scale, and associated capital and operational expenditures at higher production levels. If we ultimately decide to expand the capacity of the TPF to above 1,400 tpa, this will require additional funds, which may require future debt, government or equity financings.

If we make a Final Investment Decision to develop the Titan Project, this will require substantial additional funding, which may require future debt or equity financings or joint venture partnership.

Cash Flows

The following table summarizes our sources and uses of cash for the years ended June 30, 2025 and 2024:

						Year ended June 30, 2025									Year ended June 30, 2024
						US$									US$
Net cash provided by (used in):
Operating activities						(21,797,685)									(18,607,063)
Investing activities						(24,277,010)									(6,529,569)
Financing activities						67,991,632									46,592,163
Net increase in cash and cash equivalents						21,916,937									21,455,531

Operating Activities

For fiscal 2025, net cash used in operating activities was $21.8 million($18.6 million for 2024). Net cash used in operating activities represents payments to suppliers and employees and interest paid and received.

Investing Activities

For fiscal 2025, net cash used in investing activities was $24.3 million ($6.5 million for 2024). Net cash used in investing activities represents the purchase of exploration and evaluation properties, the purchase of property, plant and equipment, and payments related to the IP acquisition.

Financing Activities

For fiscal 2025, net cash provided by financing activities was $68.0 million ($46.6 million for 2024). Net cash provided by financing activities primarily represents proceeds and costs from the issuance of ordinary shares, and payment of the principal portion of lease liabilities.

Off-balance sheet arrangements

During fiscal 2025 and 2024, we did not have any off-balance sheet arrangements.

C.Research and Development, Patents and Licenses

IperionX's R&D policies are focused on optimizing its R&D resources relating to human talent, infrastructure, and working with select partners including leading academic institutions to bring specific, high-level skills to its core R&D projects. These projects include the commercialization of patented technologies to produce low-cost, low-carbon titanium products and powders, as well as recycled scrap. The core technologies behind IperionX's products were discovered by researchers at the University of Utah. IperionX acquired and holds the exclusive rights to commercialize these technologies. IperionX's R&D activities may also extend to its Titan Project in Tennessee, which will incorporate surface mining activities and mineral processing activities at a nearby Wet Concentrator Plant and dry Mineral Separation Plant.

D.Trend Information

Not applicable, as the Company is commencing its activities in Virginia and still in the exploration stage in Tennessee, and therefore has no material trends in production, sales or inventory.

E.Critical Accounting Policies and Estimates

See Note 1 to our audited consolidated financial statements for fiscal 2025, included in this annual report.