AMERICAN BATTERY TECHNOLOGY Co (ABAT) FY 2024 MD&A

ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS.

Forward-Looking
Statements

You
should read the following discussion of our financial condition and results of operations in conjunction with the consolidated financial
statements and the notes thereto included elsewhere in this Form 10-K. The information in this discussion contains forward-looking statements
and information within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. These forward-looking statements
include, but are not limited to, statements concerning our strategy, future operations, future financial position, future revenues, projected
costs, prospects and plans and objectives of management. The words “anticipates,” “believes,” “estimates,”
“expects,” “intends,” “may,” “plans,” “projects,” “will,” “would”
and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these
identifying words. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and
you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially from the plans,
intentions and expectations disclosed in the forward-looking statements that we make. These forward-looking statements involve risks
and uncertainties that could cause our actual results to differ materially from those in the forward-looking statements, including, without
limitation, the risks set forth in our filings with the SEC. The forward-looking statements are applicable only as of the date on which
they are made, and we do not assume any obligation to update any forward-looking statements except as required by applicable securities
laws.

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Overview

American
Battery Technology Company (the “Company”) is a relatively new entrant in the lithium–ion battery industry that is
working to increase the domestic U.S. production of battery materials, such as lithium, nickel, cobalt, and manganese through its
exploration of new domestic-United States primary resources of battery metals, development and commercialization of new technologies for the
extraction of these battery metals from primary resources, and commercialization of an internally developed integrated process for
the recycling of lithium–ion batteries. Through this three–pronged approach the Company is working to both increase the
domestic production of these battery materials, and to ensure spent batteries have their elemental battery metals returned to the
domestic manufacturing supply chain in an economical, environmentally-conscious, closed–loop fashion.

To
implement this business strategy, the Company has constructed its first integrated lithium–ion battery recycling facility,
which takes in waste and end–of–life battery materials from the electric vehicle, stationary storage, and consumer
electronics industries. The ramp-up and operations of this facility are of the highest priority to the Company, and as such it has
significantly increased the resources devoted to its execution including the further internal hiring of technical staff, expansion
of laboratory facilities, and purchasing of equipment which led to the Company’s first revenue generation in the fourth quarter of fiscal 2024. The Company has been awarded a competitively bid grant from the U.S.
Advanced Battery Consortium to support a $2 million project to accelerate the development and demonstration of the technologies
within this integrated lithium–ion battery recycling facility. The Company has also been awarded an additional grant from the
U.S. Department of Energy (“DOE”) to support a $20 million project under the Bipartisan Infrastructure Law to validate,
test, and deploy three next-generation disruptive advanced separation and processing recycling technologies.

Additionally,
the Company is accelerating the demonstration and commercialization of its internally developed low–cost and low–environmental
impact processing train for the manufacturing of battery grade lithium hydroxide from Nevada–based sedimentary claystone resources.
The Company has been awarded a grant cooperative agreement from the DOE’s Advanced Manufacturing and Materials
Technologies Office through the Critical Materials Innovation program to support a $4.5 million project for the construction and operation
of a multi–ton per day integrated continuous demonstration system to support the scale–up and commercialization of these
technologies. The Company has also been awarded an additional grant award under the Bipartisan Infrastructure Law to support a $115 million
project to design, construct, and commission a first-of-kind commercial-scale refinery to produce 30,000 MT of battery-grade lithium
hydroxide per year from this resource.

The Company
has completed the construction and commissioning of its lithium hydroxide (LiOH) pilot plant, marking a significant milestone in the
commercialization of its internally-developed processes to access an unrealized domestic primary lithium resource. The construction
and commissioning of this pilot plant enables the Company to demonstrate its technologies for accessing the lithium housed in its
unconventional resource, Tonopah Lithium Flats Project (“TLFP”), in an integrated and continuous system, and to generate large amounts of
battery grade lithium hydroxide for delivery to customers for qualifications and evaluation. The construction and operation of this
pilot demonstration plant are supported by a competitively awarded grant from the DOE for this $4.5
million effort. Product from the pilot plant is being sent for analysis to confirm and validate the resource.

The Company
has filed an Amended IA for its TFLP. The TFLP is one of the largest identified lithium
resources in the United States, and while initial pit designs and economic analyses in previous assessments evaluated the full resource, this
updated Initial Assessment utilizes a commercialization pathway with a more rigorous mine plan that contemplates utilization of only
Measured and Indicated Mineral Resources, and excludes Inferred Mineral Resources, to supply the planned commercial-scale lithium hydroxide
monohydrate (“LHM”) refinery. This commercialization pathway allows for an engineered phased development, with improved access to the higher
quality portions of the resource, and improved project economics.

On
March 28, 2024, the Company was selected for an approximately $19.5 million tax credit through the Qualifying Advanced Energy Project
Credits program (the “48C program”). This tax credit was granted by the U.S. Department of Treasury Internal Revenue
Service following a highly competitive technical and economic review process performed by the DOE, which
evaluated the feasibility of applicant facilities to advance America’s buildout of globally competitive critical material
recycling, processing, and refining infrastructure. This $19.5 million tax credit can be utilized both for the reimbursement of
capital expenditures spent to date, and also for equipment and infrastructure for additional value-add operations at the Company’s
battery recycling facility in the Tahoe-Reno Industrial Center (TRIC) near Reno, Nevada. As of June 30, 2024, the Company has incurred qualifying expenditures for this tax credit but
will not recognize any amounts until it has reasonable assurance of compliance with the relevant standards.

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Also
on March 28, 2024, the Company has been selected for an additional $40.5 million tax credit through the 48C
program to support the design and construction of a new, next-generation, commercial battery recycling facility to be located in
the United States. As with the Company’s initial $19.5 million tax credit under the 48C program supporting the construction and buildout
of its battery recycling facility in Nevada, this additional award was granted by the U.S. Department of Treasury Internal Revenue Service
following a highly competitive technical and economic review process performed by the DOE, which evaluated
the feasibility of applicant facilities to advance America’s buildout of globally competitive critical material recycling, processing,
and refining infrastructure. As of June 30, 2024, the Company has not incurred any qualifying expenditures towards this tax credit.

2024
Financial Highlights:

Components
of Statements of Operations

Revenue

During
the year ended June 30, 2024, our net sales were $0.3 million. These sales related to our Black Mass product resulting from
recycling operations and were the initial revenue generated by the Company. The materials were sold to a customer who took delivery
at our plant and the materials will remain at our plant to be further processed when phase two of the plant is complete.

Cost
of Goods Sold

Cost
of goods sold during the year ended June 30, 2024 was $3.3 million, well above the value of the related revenue. The high cost of
goods sold is related to the in-service date and depreciation of the recycling facility fixed assets, which is time based, and the
finalization of the production process. We expect these costs to continue to rise but will be reduced as a percentage of revenue as
we scale our production and gain efficiencies in the process.

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Operating
Expenses

During
the fiscal year ended June 30, 2024, the Company incurred $44.8 million of operating expenses compared to $22.4 million of operating
expenses during the fiscal year ended June 30, 2023. The increase is primarily due to the items described below:

General
and administrative expenses consist of personnel, legal, finance, recruiting, business development, public relations, and general
facility expenses. For the fiscal year ended June 30, 2024 and 2023, general and administrative expenses were $16.1 million and
$12.8 million, respectively. The increase of $3.3 million is primarily related to increases in
employee stock-based compensation, compliance and insurance costs.

Research
and development expenses consist primarily of personnel, laboratory leases, and supplies. Research and development expenses for the
fiscal year ended June 30, 2024, and 2023, were $14.3 million and $7.6 million, respectively. The increase of $6.8 million is
primarily due to increased employee headcount, stock-based compensation, insurance and facility costs. These costs are partially offset by federal grant funds for awards that the Company
has contracted with various United States federal agencies. The Company recognized an offset to its research and development costs
of $3.3 million and $0.9 million related to these awards for the fiscal year ended June 30, 2024, and 2023, respectively.

Exploration
costs consist primarily of personnel, drilling, assay, claim fees, office and warehouse costs,
travel, and other costs related to exploration of claims in central Nevada. Exploration expenses totaled $4.1 million for the fiscal
year ended June 30, 2024, compared to $2.0 million during the prior year. The increase year-over-year resulted
principally from increased drilling, assaying and engineering costs to further define and potentially upgrade the geological
classification of the mineral rights.

An
impairment loss on assets held-for-sale was recorded in the year ended June 30, 2024 and is related to certain assets, primarily to land and a building, at
the Fernley, Nevada location the Company has decided to sell. Upon this decision, the Company performed a valuation analysis to
determine the potential realizable value of these and that estimated amount was $10.2 million less than the carrying value of the
assets. These assets have a carrying value of $8.4 million at June 30, 2024 and are subject to further impairment, if warranted,
until the assets are sold.

Other
(Expense) Income

Other expense was $4.7 million in the year ended June 30, 2024 versus other income of $0.2 million in the prior year. The increase of $4.9 million is primarily due to the accretion
of financing costs of $4.2 million and the change in fair value of derivative liability of $0.3 million. During the fiscal year ended
June 30, 2024, the Company reported a correction of prior periods related to the derivative liability (see Note 3 of the consolidated financial statements for further detail).

Net
Loss

During
the fiscal year ended June 30, 2024, the Company incurred a net loss of $52.5 million or $1.02 loss per share compared to a net loss
of $22.2 million or $0.51 loss per share during the fiscal year ended June 30, 2023.

Liquidity
and Capital Resources

At
June 30, 2024, the Company had cash of $7.0 million and total assets of $77.7 million compared to cash of $2.3 million and total
assets of $74.7 million at June 30, 2023. The increase in cash is primarily due to utilization of the common stock purchase
agreement with Tysadco and ATM agreement with Virtu offset by many uses of cash for the continued build out of our production process during the year.

The
Company had total current liabilities of $15.8 million at June 30, 2024, compared to $13.7 million at June 30, 2023. The increase is
primarily related to an increase in accounts payable and accrued liabilities which include the full amount of $1.8 million related
to the settlement of Mercuria Marketing Agreement.

As
of June 30, 2024 the Company had positive working capital of $2.2 million compared to a working capital deficiency of $9.0 million
at June 30, 2023. The positive working capital is related to the current classification of $8.4 million of held-for-sale assets at
June 30, 2024. Absent this classification, we would have a working capital deficiency of $5.8 million compared to a deficiency of
$9.0 million in the prior year. The working capital deficiency is largely attributed to the current classification of all of the convertible notes, as well as acquisitions of property and equipment and cash used in operating
activities.

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Going
Concern

The
continuation of the Company as a going concern is dependent upon generating profit from its operations and its ability to obtain debt
or equity financing. There is no assurance that the Company will be able to generate sufficient profits, obtain such financings, or obtain
them on favorable terms, which could limit its operations. Any such financing activities are subject to market conditions. These uncertainties
cause substantial doubt about the Company’s ability to continue as a going concern for 12 months from issuance of these financial
statements. These consolidated financial statements do not include any adjustments to the recoverability and classification
of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going
concern. These adjustments could be material.

The
going concern assessment excludes the Company’s at-the-market (“ATM”) offering, which could provide a source
of liquidity.

On April 3, 2024, the Company entered into an ATM sales agreement with Virtu Americas LLC, pursuant to which the Company
may offer and sell, from time to time through the sales agent, shares (the “Shares”) of the Company’s common stock, par value $0.001
per share, having an aggregate offering price of up to $50,000,000, subject to the terms and conditions of the Sales Agreement. During
the period, the Company sold 9,109,573 common shares for total proceeds of $12.1 million.

Based
on our current operating plan, unless we generate income from the operations of our facilities and receipt of cash from United
States Government grant awards, raise additional capital (debt or equity), it is possible that we will be unable to maintain our financial covenants under our existing Note agreement, which, if such violation is not waived, could
result in an event of default, causing an acceleration of the outstanding balances. If we do raise additional capital through public
or private equity offerings, as opposed to debt or additional Note issuances, the ownership interest of our existing stockholders
may be diluted.

Grant
Awards

On
January 20, 2021, the US DOE announced that the Company had been selected for award negotiation for a three-year project with a total
budget of $4.5 million for the field demonstration of its selective leaching, targeted purification, and electro-chemical production
of battery grade lithium hydroxide from domestic claystone resources technology. Through this grant award the Company is eligible to
receive reimbursement of up to 50% of eligible expenditures, or up to $2.3 million. The prime agreement contract for this grant (“AMO
grant”) was issued with a project start date of October 1, 2021. The Company began receiving funds related to this award during
the fiscal year ended June 30, 2022. As of June 30, 2024, the cumulative funds invoiced for this grant totaled $1.7 million, which
represents 73% of the total eligible reimbursements.

On
August 16, 2021, the Company received a contract award for a 30-month project with a total budget of $2.0 million from the US Advanced
Battery Consortium (the “USABC grant”) as part of a competitively bid project, through which the Company will receive reimbursement
for up to $500,000 of eligible expenditures. The objective of the contract award is for the commercial-scale development and demonstration
of an integrated lithium-ion battery recycling system, the production of battery cathode grade metal products, the synthesis of high
energy density active cathode material from these recycled battery metals, and the fabrication of large format automotive battery cells
from these recycled materials and the testing of these cells against otherwise identical cells made from virgin sourced metals. The Company
began receiving funds related to this award during the fiscal year ended June 30, 2022. As of June 30, 2024, the cumulative funds invoiced
for this grant totaled $0.5 million, which represents 97% of the total eligible reimbursements.

On
October 21, 2022, the US DOE announced that the Company has been selected for award negotiation for a five-year project with a total
budget of $115.5 million to expand domestic manufacturing of battery grade lithium hydroxide for lithium-ion batteries for electric
vehicles, a focus on domestic processing of materials and components that are currently imported from foreign countries. Through
this grant award the Company is eligible to receive reimbursement of up to 50% of eligible expenditures, or up to $57.7 million. The
prime agreement contract for this grant was issued with a project start date of September 1, 2023. The Company began receiving funds
related to this award in fiscal 2024. As of June 30, 2024, the cumulative funds invoiced for this grant totaled $1.7 million, which represents 3% of the total eligible reimbursements.

On
November 17, 2022, the US DOE announced that the Company has been selected for award negotiation for a three-year project with a total
budget of $20.0 million to demonstrate and commercialize next generation techniques for its lithium-ion battery recycling processes to
produce low-cost and low-environmental impact domestic battery materials. Through this grant award the Company is eligible to receive
reimbursement of up to 50% of eligible expenditures, or up to $10.0 million. The Company is expected to begin receiving funds associated
with this during the fiscal year ended June 30, 2024. As of June 30, 2024, the cumulative funds invoiced for this grant totaled $0.6 million, which represents 6% of the
total eligible reimbursements.

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Cash
Flows

For
the fiscal years ended June 30:

Cash
from Operating Activities.

During
the fiscal year ended June 30, 2024, the Company used $16.7 million of cash for operating activities as compared to $13.4 million
used during the fiscal year ended June 30, 2023. The increase is mainly due to non-cash items related to the write down loss on
held-for-sale assets of $10.3 million, stock-based compensation expense of $14.6 million, and accretion of financing costs of $4.2
million. The change in operating assets was mainly driven by costs for engineering and research and development as well as increased
exploration expenses. Increased engineering and research and development costs were to support the development of the
Company’s process for the recycling of lithium-ion batteries and for the extraction of lithium from the Company’s
lithium claystone mining claims. The Company has also incurred a steady increase in exploration activity expenses as it continues to
evaluate its claims in the Tonopah, Nevada region. General and administrative
expenses have increased to further support the Company’s business objectives.

Cash
from Investing Activities

During
the fiscal year ended June 30, 2024, the Company used cash for investing activities of $12.9 million, consisting primarily of $11.4
million related to property and equipment for its recycling facilities. This is in comparison to cash used for investing activities
of $36.7 million for the fiscal year ended June 30, 2023, including $28.6 million of acquisition costs associated with property and
equipment for its recycling facilities and $8.1 million for mineral rights acquired in Tonopah, Nevada.

As
of June 30, 2024, the Company had total non-current assets of $59.3 million compared to $69.9 million at June 30, 2023. The Company will
continue to see an increase in investing activities as it continues to invest heavily in its recycling and primary resource extraction
activities.

Cash
from Financing Activities

During
the year ended June 30, 2024, the Company had net cash provided by financing activities of $34.4 million compared to $23.4 million
for the fiscal year ended June 30, 2023. The increase is due to the use of share purchase agreements.

During
the period, the Company issued 17.3 million shares of common stock pursuant to purchase agreements for net proceeds of $38.1 million
and the Company issued convertible notes for net proceeds of $20.3 million. These were partially offset by repayment of notes payable during the period totaling $24 million.

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Off-Balance
Sheet Arrangements

As
of June 30, 2024 and 2023, we had no off-balance sheet arrangements.

Working
Capital

Future
Financings

We
will continue to rely on sales of our common shares, debt, or other financing to fund our business operations. Issuance of additional
shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the securities
or arrange for debt or other financing to fund planned operating activities, acquisitions and exploration activities.

Critical
Accounting Estimates and Judgments

Our
consolidated financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in
the United States of America. These accounting principles require us to make estimates, judgments and assumptions that affect the reported
amounts of revenues, expenses, assets, liabilities, and contingencies. All significant estimates, judgments and assumptions are developed
based on the best information available to us at the time made and are regularly reviewed and updated when necessary. Actual results
could differ from these estimates. Changes in estimates are reflected in our financial statements in the period of change based upon
on-going actual experience, trends, or subsequent realization depending on the nature and predictability of the estimates and contingencies.

Certain
accounting estimates, including those concerning revenue recognition, share based compensation, impairments of long-lived assets, assets
held-for-sale, and accounting for income taxes, are considered to be critical in evaluating and understanding our financial results because
they involve inherently uncertain matters and their application requires the most difficult and complex judgments and estimates. These
are described below. For further information on our accounting policies, see Note 3 to our consolidated financial statements.

Fair
Value Measurements

Recurring
Valuations. The Company’s recurring fair value measurements include the valuation of the derivative liability for the bifurcated
notes payable freestanding call option. In making these fair value determinations, we were required to make assumptions that affected
the recorded amounts, including volatility, risk free rates, and duration of time. Our estimates of fair value are based upon assumptions
we believe to be reasonable, but which are inherently uncertain.

Nonrecurring
Valuations. The Company’s nonrecurring fair value measurements include the valuation of assets held-for-sale. In making these
fair value determinations, we were required to make assumptions that affected the recorded amounts, including estimates related to construction
work, comparable market listings for similar assets and current market conditions. Our estimates of fair value are based upon assumptions
we believe to be reasonable, but which are inherently uncertain.

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Revenue
Recognition

Revenue
recognition requires judgment and the use of estimates, especially in identifying and evaluating the various non-standard terms and conditions
in our contracts with customers as to their effect on reported revenue.

We
account for revenue in accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers (“ASC
606”). The core principle of ASC 606 is to recognize revenue upon the transfer of services or products to customers in
an amount that reflects the consideration we expect to be entitled to in exchange for those services or products. We apply a five-step
framework to recognize revenue as described in our Revenue Recognition policy included in Note 3 of our consolidated financial statements
included in this Annual Report on Form 10-K.

Generally,
we recognize revenue related to sales of our products upon shipment, when persuasive evidence of an arrangement exists, delivery has
occurred or services have been rendered, the fee is fixed or determinable, and collectability is reasonably assured. The Company has
limited revenue recognition history. There are no provisions for payment discounts, product return allowances and uncollectable accounts
at this time.

Bill
and Hold Transactions

The
majority of revenue is derived from a bill and hold arrangement. In this case, at the customer’s request, we enter into bill-and-hold
transaction whereby title transfers to the customer, but the product does not ship until a specified later date. We recognize revenue
associated with bill-and-hold arrangements when the product is complete and ready to ship, hold criteria have been met, the amount due
from the customer is fixed, and collectability of the related receivable is reasonably assured. All of the foregoing requires us to apply
our judgment. Bill-and-hold arrangements most often occur when the customer requests us to hold the product for potential future processing
or until they provide us further instructions at a later date to ship the product to a different location.

Assets
Held-for-Sale

Management
considers whether events and circumstances such as a change in strategic direction and changes in business climate would impact the fair
value of long-lived assets. The Company used critical judgements in analyzing certain market data and estimates to calculate the value
of the assets held-for-sale. Significant assumptions that form the basis of fair value include market comparison of similar properties,
construction cost estimates and using certain dollar per square foot amounts to derive fair value. Our estimates of fair value are based
upon assumptions we believe to be reasonable, but which are inherently uncertain.

Stock-Based
Compensation

The
fair value of share-based payments are subject to the limitations of the Black-Scholes option pricing model that incorporates market
data and involves uncertainty in estimates used by management in the assumptions. Because the Black-Scholes option pricing model requires
the inputs of highly subjective assumptions, including the volatility of share prices, changes in subjective input assumptions can materially
affect the estimate.

Accounting
for Income Taxes

Tax
interpretations, regulations and legislation in the various jurisdictions in which the Company operates are subject to change and interpretation.
As such, income taxes are subject to measurement uncertainty. Assessing the recoverability of deferred tax assets requires the Company
to make estimates related to the expectations of future taxable income and the application of existing tax laws. To the extent that future
taxable income differs significantly from estimates, the ability of the Company to realize deferred tax assets could be impacted.

New
Accounting Pronouncements

New
accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that are adopted by
us as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not
yet effective will not have a material impact on our financial position or results of operations upon adoption. For further discussion
on recent accounting pronouncements, please see Note 3, “Accounting Pronouncements,” to our consolidated financial
statements included in this Annual Report on Form 10-K for additional information.