White Energy : Quarterly Activities and Cashflow Report - Appendix 5B

White Energy Company Limited

For personal use only

White Energy Company Limited

Mining Exploration Entity Quarterly Activity Report

and

Appendix 5B

June 2022

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For personal use only

White Energy Company Limited

Quarterly Activity Report June 2022

SUMMARY OF ACTIVITY

A summary of the major items of activity for White Energy Company Limited ("White Energy", "WEC" or the "Company") during the quarter ended 30 June 2022 is outlined below.

HIGHLIGHTS

• Entitlement Offer aims to raise $5.4 million
• Appeal submissions lodged in Singapore Court of Appeal for the litigation proceedings against Bayan Resources Tbk
• River Energy is pursuing opportunities for BCB projects in South Africa
• Analysis of iron oxide-copper-gold surveys in South Australia in progress

1. AUSTRALIA

South Australia - EL6566 (previously EL5719) and PELA674

During the quarter, work continued on examining coal gasification and emerging hydrogen opportunities from coal.

Baseline surveys were carried out in December 2021 for iron oxide-copper-gold styles of mineralisation that targeted a new zone of interest in the magnetic corridors of the Hilga Mineral Field and historical anomalies from calcrete sampling programs completed in 2012-2013 and 2018. Further surveys were carried out in May 2022 that targeted areas with historical anomalies identified from calcrete sampling programs completed in 2013 - 2014.The geochemical analysis using biochemical (predominately leaf), calcrete and soil sampling is in progress, and further target areas are planned for survey in 2022.

Capital expenditure related to exploration activities of $51,000 was incurred during the quarter.

BCB

WEC has been investigating the implementation of its BCB technology for use in Yankuang Group's coal briquetting business in China. Testing of coals from Shandong and Shanxi Provinces has been successfully conducted at WEC's test facility in Cessnock and the Company's briquetting machines were used for larger scale tests in China. Yankuang Group constructed a small pilot plant in Shandong Province using WEC's patented BCB technology, and this is the first step in commercialisation of the technology in China. No further work was conducted this quarter.

2. AFRICA - RIVER ENERGY JOINT VENTURE - WEC 51%

White Energy's 51%-owned subsidiary, River Energy JV Limited, through Proterra Investment Partners ("Proterra", 49%), is in discussion with a number of South African coal miners interested in the Group's Binderless Coal Briquetting ("BCB") technology.

Extensive testing by River Energy, including successful briquetting and combustion trials, has previously demonstrated that a saleable export grade coal product can be produced from South

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White Energy Company Limited

Quarterly Activity Report June 2022

African reject tailings. Proterra is pursuing opportunities, from their offices in Johannesburg, on mine sites in South Africa to secure access to fine coal to support BCB projects.

Using the BCB process, a briquetted 6 tonne sample of fines from a mine in the Middelburg region has been successfully tested by a South African power producer. A further bulk sample of up to 50 kt has been requested to carry out a commercial scale trial and a proposal has been submitted. White Energy is assisting Proterra in the design of a small demonstration plant to facilitate this work and other trials in South Africa. During the quarter, a South African coal producer agreed to provide coal fines from one of their mines for briquetting trials at the plant when built.

The BCB process provides an attractive solution for coal producers seeking to maximise mine yield and facing the environmental challenges posed by reject coal fines. In South Africa alone, it is estimated that there are over 1 billion tonnes of discarded coal in tailings facilities, much of which may eventually need to be reclaimed.

3. GENERAL CORPORATE

The Company has no significant secured corporate debt. Limited-recourse shareholder loans provided to the Group's 51% owned operations in the UK and Mauritius by both White Energy and the minority shareholders in proportion to their ownership interests are repayable in January 2025.

Proceeds from the Group's sale of its interest in Mountainside Coal Company ("MCC") are being progressively received. Further instalments of $2.6 million are due and payable now. These payments have been delayed due to the new owner completing their finance arrangements.

An unsecured loan facility of up to $1 million ("the Loan") at the Lender's discretion was provided by Managing Director Brian Flannery's private company, Ilwella Pty Ltd, in July 2022. The loan facility has been put in place for general working capital requirements prior to the receipt of the remaining settlement proceeds from the sale of MCC, and the Loan is repayable within one year of drawdown, or immediately upon demand, or immediately to repay or offset the Loan following receipt of a capital raising's proceeds.

The Company is aiming to raise proceeds of $5.4 million (before costs) from the previously announced Entitlement Offer undertaken in July 2022. The proceeds are intended to be used to fund the Company's ongoing legal proceedings against PT Bayan Resources Tbk and Bayan International Pte Ltd, to repay or offset any unsecured loans made to the Company by Ilwella Pty Ltd, for general corporate purposes and additional working capital, and to pay the costs of the Entitlement Offer.

On 27 July 2022, the Company announced an Extraordinary General Meeting ("EGM"), to be held at 12.00PM (Noon) AEST Monday 29 August 2022, seeking shareholder approval for the Company to consolidate its issued capital through the consolidation of every 30 Shares into 1 Share, every 30 Options into 1 Option and every 30 Incentive Rights into 1 Incentive Right ("Consolidation"). For full details of the EGM and Consolidation, please refer to the Notice of EGM.

As outlined in Section 6 of the Appendix 5B, directors' fees and salaries including superannuation paid during the quarter to Directors and their associates totaled $119,000.

COVID-19 Update

White Energy continues to maintain appropriate measures to ensure the health and safety of its employees, contractors and the public, in compliance with government directives on COVID-19. Operations are continuing normally, although progress on BCB projects has been slowed due to travel restrictions affecting our key potential customers, particularly in China.

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White Energy Company Limited

Quarterly Activity Report June 2022

PT Kaltim Supacoal ("KSC") - WEC 51%

White Energy is engaged in legal proceedings in the Singapore International Commercial Court ("SICC") initiated by subsidiaries of White Energy, BCBC Singapore Pte Ltd ("BCBCS") and Binderless Coal Briquetting Company Pty Limited, against PT Bayan Resources Tbk and Bayan International Pte Ltd (collectively, "Bayan") in connection with the KSC joint venture.

As a result of the SICC dismissing Bayan's counterclaim against BCBCS and BCBC in April 2016, there is no longer any damages claim against the White Energy Group in these proceedings.

The trial for the third tranche of the proceedings was concluded in January 2021, with the only issues remaining to be determined by the SICC relating to the damages which may be payable to BCBCS.

The claim for damages comprised of the following:

1. BCBCS claimed for wasted expenditure, being expenses incurred by BCBCS which were rendered futile by reason of Bayan's breach and repudiation of the joint venture;
2. Further, BCBCS claimed for loss of the chance of expanding the capacity of the joint venture to at least 3 million tonnes per annum; and
3. Interest on damages award and legal costs.

The SICC released its decision on 7 February 2022 in relation to the third tranche of the proceedings. The SICC found in favour of BCBCS on the majority of the issues for determination. The SICC found in BCBCS' favour on all of the preliminary legal issues including in relation to remoteness and reflective loss.

The SICC also concluded that the technology underlying the BCB process would have worked and that the Tabang Plant would have achieved nameplate capacity of 1 million tonnes per annum by June 2012, and that the upgraded coal produced at Tabang would have been a saleable product.

Notwithstanding the above findings, the SICC dismissed BCBCS' claim for damages for wasted expenditure. The SICC concluded that Bayan would have been able to take steps to put KSC into liquidation, thereby bringing the joint venture to and end before the joint venture would have had sufficient cash flows from which BCBCS could recoup its wasted expenditure.

In relation to BCBCS' claim for loss of chance to expand the project, the SICC took the view that there did not exist a real and substantial chance that Bayan would have agreed to expand the capacity of the Tabang project.

On 7 March 2022, BCBCS filed a notice of appeal in the Singapore Court of Appeal in order to appeal certain of the findings made by the SICC in the third tranche of the proceedings. BCBCS filed its Appeal Case with the Court on 23 May 2022, and Bayan filed its Respondents' Case on 6 July 2022. BCBCS filed an Appellant's Reply on 20 July 2022. The Court Registry has advised that the appeal hearing will be set on a date between 10 and 17 October 2022. Both parties will file their skeletal submissions on 19 September 2022.

BCBCS submitted in their Appellant's case that the SICC erred in finding that Bayan could wind up KSC for the following reasons, including:

• Bayan could not unilaterally liquidate KSC for any default of shareholder loans, as among other reasons: (a) Bayan could not unilaterally terminate the joint venture and so had no right to liquidate KSC; and (b) liquidating KSC would be a breach of Bayan's obligation under clause 17.1 and 17.3 of the JV deed to use all reasonable endeavours to promote the business of KSC and to perform its obligations in good faith.

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White Energy Company Limited

Quarterly Activity Report June 2022

• It would not have made commercial sense for Bayan to liquidate KSC as Bayan would not have recovered any money from a liquidation of KSC. To the contrary, Bayan would have enjoyed significant returns had it continued with the joint venture.
• Bayan's claim that it would call on the shareholder loans is unpleaded and unsubstantiated by any factual evidence.
• The Court erred in its construction of the relevant documents.
• In any case, even if Bayan could call upon any loans, WEC/BCBCS would have gifted sums to KSC for repayment and KSC would therefore not be in default of these loans.

Further, BCBCS' Appellant's Case submits that the SICC erred in finding that BCBCS would not have been able to recoup its wasted expenditure from KSC's cash flows even if Bayan did not liquidate KSC. In particular, the SICC erred in failing to take into account the significant amount of cash flows accruing to BCBCS during the life of the project.

In connection with the appeal, BCBCS has filed an application for fresh evidence to be adduced. This evidence relates to the significant increases in coal prices since the conclusion of the trial.

The Appellant's Case requests that the Court of Appeal remit to the SICC for re-assessment of damages with the assistance of experts to revise the damages computation in respect of the findings to be overturned on appeal and for costs to be awarded to BCBCS. On the assumption that the Court of Appeal admits the fresh evidence on the significant increase in coal prices since the conclusion of the trial, BCBCS would seek approximately US$88 million in damages even if certain of the lower Court's findings are not reversed.

The SICC in the third tranche judgement stated that it would hear parties in relation to costs. The parties made their submissions on costs for the proceedings (Tranches 1 to 3) on 21 March 2022, with BCBCS filing its reply submissions on 14 April 2022 and Bayan filing its reply on 28 April 2022. Parties are awaiting the SICC's determination.

Bayan has filed a summons in the Supreme Court in Western Australia seeking costs in relation to the freezing order proceedings. At a directions hearing on 27 May 2022, the Supreme Court has ordered that parties file submissions in relation to costs following the SICC's determination in relation to costs.

4. INTERESTS IN MINING TENEMENTS

Below is a listing of the Company's interest in mining tenements, where they are situated and the percentage interest the Company holds in each.

The Company and its subsidiary hold an interest in the following mining tenements:

Tenement	Locality	Licensee	Interest
Coal Exploration
Licence and
Retention Lease
EL6566 and	Lake Phillipson, South Australia	South Australian Coal Pty Ltd	100%

RL104(a)

Petroleum

Application

PELA674Lake Phillipson, South Australia White Energy Company Limited100%

(a) The renewal of RL104 has been applied for and is pending.

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