Frontier Energy : Quarterly Activities Report / Appendix 4C

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ASX ANNOUNCEMENT

29 July 2022 | ASX:FHE

QUARTERLY ACTIVITY REPORT

30 June 2022

HIGHLIGHTS

• Preliminary results from the Hydrogen Study indicate green hydrogen production can be achieved at the BSS Project earlier than originally anticipated
  o Ownership of a renewable energy asset and the existing infrastructure surrounding the Project enhanced the potential for hydrogen production
• Alkaline Water Electrolysis (AWE) has been selected as preferred technology for green hydrogen production due to its technical maturity compared to current alternative solutions
• Multiple existing water sources suitable for hydrogen production have been identified negating the requirement for a desalination plant, which would add significant capital costs
• • Water is an essential element for green hydrogen production with approximately 10 litres required for every kilogram of hydrogen (H2) produced
• A Memorandum of Understanding (MOU) was signed with global hydrogen experts, Nel Hydrogen Electrolyser AS (Nel) and ENGV to assist regarding the Company's hydrogen strategy
• The Hydrogen and Expansion Studies are on track to be released during August 2022
• The Company's cash position as at 30 June 2022 was $4.8 million

• The Company holds a major position in Metallum Resources Inc (TSXV.MZN). This position has a current valuation of approximately A$8.0m (share price C$0.055 per share - 25 July 2022)

Frontier Energy Limited (ASX: FHE) (Frontier or the Company) is pleased to provide its quarterly

activities report for the quarter ended 30 June 2022.

Frontier is developing the Bristol Spring's Solar Project (BSS Project or the Project) located 120km Southwest of Perth in Western Australia. The Project will be the major source of renewable energy to provide power as part of the Company's strategy to become a green hydrogen producer.

Preliminary Results indicate Green Hydrogen production at BSS

The BSS Project is a large, utility-scale solar energy project located in the southwest of Western Australia. Development is well advanced and is designed to produce 114MWdc of renewable electricity in Stage One with land acquisition opportunities to expand beyond this.

During the March 2022 quarter, the Company engaged Xodus Group (part of the Subsea 7 Group of companies), to complete a Study assessing the potential for green hydrogen production (Hydrogen Study) at the Project as well as assess the growth potential (Expansion Study).

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Preliminary results indicate that due to the Project's location, the initial capital required and time to first green hydrogen production is both cheaper and quicker than originally anticipated. Key reasons for this include:

• • Connection to the SWIS - access to this power grid, only 3.5km from the Stage One site, allows the Company to sell power in excess of requirements for green hydrogen into the SWIS.
    Importantly, it also provides the opportunity for the Company to purchase renewable energy from other providers (eg. wind energy) during low or no-sun periods when the solar plant is not generating power. Using other sources of clean energy and power arbitrage or swaps, the SWIS may be able to provide a 'virtual' battery for the project.
• Multiple fresh water sources exist in the region avoiding the need for a desalination facility. The requirement for desalination materially increases capital and operating costs and involves significantly more complex approvals extending timelines to achieve first production.

Image 1: Flow sheet for green hydrogen production

In addition, the Project is surrounded by major infrastructure and industries that are likely to be early movers regarding the transition from fossil fuels to green hydrogen. These include:

• Hydrogen blending in natural gas networks - The Dampier to Bunbury Natural Gas Pipeline (DBNGP) is Western Australia's most significant gas transmission asset and provides natural gas to Western Australia.

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Importantly, a possible connection point to the DBNGP is located approximately 3km from the BSS Project where the pipeline branches off to provide gas to Alcoa's Wagerup Alumina Refinery.

The Western Australian government announced in May 2022 that to support the renewable hydrogen industry in Western Australia they have commenced investigating the implementation of a Renewable Hydrogen Target1. This would involve setting targets for retailers to procure a certain percentage of energy fuelled by renewable hydrogen. This would create the first local market which would support emerging hydrogen projects and improve energy grid stability. The work is targeted for completion by late 2022.

• Replace diesel in the long-haul transportation industry - Given advancements in hydrogen fuel cell electric vehicles (FCEV), most notably in long-haulvehicles, it is likely that long-haultransportation will be an early adopter for the hydrogen industry.
  The Western Australia government identified domestically produced green hydrogen as a key part of the strategy to reduce the reliance on diesel, which is all imported. Currently WA imports approximately 6.7 billion litres of diesel per year2. The importance of energy security has been accelerated during 2022, most notably in Europe due to the Russia - Ukraine conflict.

The Company is nearing completion of the Hydrogen Study with results to be announced during August 2022.

Multiple existing water solutions identified throughout Southwest WA for future green hydrogen production

One of the key elements for green hydrogen production is access to purified water. As part of the Study, Xodus performed a water related technology assessment across water import, treatment and disposal.

Given the Study assumes power will be sourced from the BSS Project and it is connected to the Southwest Interconnected System (SWIS), the electricity grid covering the southwest of Western Australia, there is the potential for the green electrons to be transferred anywhere across the region. This provides greater flexibility regarding a location for a future hydrogen facility.

Given this and the forecast water consumption of approximately 0.002GL, for the initial facility being considered, the following existing solutions were considered as offering both suitable water as well as sufficient capacity.

• Yarragadee freshwater aquifer
• Bunbury Wastewater Treatment plant
• Existing desalination in Kwinana and Bunningup

• www.mediastatements.wa.gov.au/Pages/McGowan/2022/05/Renewable-hydrogen-target-to-be-investigated-for-Western-Australia.aspx

2 The West Australian - 6 June 2022

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Details regarding the current preferred strategy regarding water will be released as part of the Hydrogen Study.

Alkaline Water Electrolysis (AWE) selected as preferred technology for green hydrogen production

As part of the Green Hydrogen study, Xodus Group, performed a technology assessment to determine the most appropriate hydrogen plant design. Multiple features were assessed, including the timeframe to first hydrogen production, initial plant size and scalability, input power characteristics, electricity cost as well as rate of the hydrolyser's technological development.

From this assessment five technologies were initially considered:

1. Alkaline Water Electrolyser ("AWE"),
2. Proton Exchange Membrane ("PEM") Electrolyser,
3. Solid Oxide Electrolyser ("SOE"),
4. Anion Exchange Membrane ("AEM") Electrolyser, and
5. Capillary-FedElectrolyser ("CFE").

Of these, only AWE and PEM were assessed further due to their industry maturity and their potential for commercial scale. Following this, AWE was selected as the preferred technology, based on its lower overall cost and robustness to produce green hydrogen at purity >99.98. As hydrolyser plants are modular, the selection of AWE at this time does not lock the company in to a particular technology in the event of future technology advances.

AWE Overview

AWE is a mature green hydrogen technology having been available at MW-scale for longer than other leading technologies, including PEM. As such, it offers the lowest cost per kW of installed capacity, long-term operational stability and plant life. Whilst also offering the lowest cost per kW, where the reduced price compared to PEM is largely explained by the maturity of the technology and the use of precious metals within the PEM the stack.

Further information regarding this will be included as part of the Hydrogen Study.

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Corporate

Cash at the end of the Quarter

As at 30 June 2022, Frontier had cash on hand of $4.8 million (unaudited, excludes Metallum cash balance).

During the quarter the Company sold its shareholding in Athena Resources Limited, realising proceeds of $250,734.

Metallum Resources Inc.

As part of the divestment of the Superior Lake zinc asset, Frontier owns 128.9 million shares in TSXV listed, Metallum Resources Inc (MZN.TSXV). This holding has a current valuation of approximately A$8m (share price C$0.055 per share - 25 July 2022). As a result of the Group having control over MZN, the cash flows of MZN are included in the cash flow report.

Memorandum of Understanding (MOU) with leading hydrogen experts

As previously mentioned, the Company signed an MOU with Nel Hydrogen Electrolyser AS (NEL) and ENGV to assist in developing the green hydrogen production plant and market distribution.

NEL is widely regarded as a global leader in solutions to produce, store and distribute hydrogen and is listed on the Oslo Stock Exchange with a NOK20.3bn (A$3bn) market capitalisation. ENGV is a leader in the deployment of hydrogen technologies in Australia with a reputation of delivering high quality, multifaceted projects on time and on budget.

Annual General Meeting

The Company's Annual General Meeting was held on the 31 May 2022 and all resolutions were passed via a poll. Resolutions were:

1. Adoption of Remuneration Report
2. Re-electionof Director - Mr Grant Davey
3. Appointment of Auditor
4. Approval of Employee Share Option Plan
5. Grant of Options to Mr Mike Young
6. Grant of Options to Mr Chris Bath
7. Approval of 10% Placement Capacity.

Change to Board and Management Team

During the quarter Mr Chris Bath was appointed Company Secretary following the resignation of Mr Stuart McKenzie as Company Secretary.

Subsequent to the end of the quarter, Managing Director and CEO, Mr Mike Young, stepped down from his positions. Mr Young stepped down immediately from the board and will work through a transition period.

Non-Executive Chairman, Grant Davey will assume the position of Executive Chairman moving forward. The Company has commenced a process to appoint a new independent board member.

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