White Energy : Quarterly-Activities-and-Cashflow-Report-Appendix-5B-2091667

White Energy Company Limited

White Energy Company Limited

Mining Exploration Entity Quarterly Activity Report

and

Appendix 5B

June 2020

Page 1 of 12

White Energy Company Limited

Quarterly Activity Report June 2020

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 2020 is outlined below.

HIGHLIGHTS

• Negotiations to sell 51% interest in Mountainside Coal Company (USA) continuing
• Yankuang Group is investigating the use of BCB technology in China
• River Energy is pursuing opportunities for BCB projects in South Africa

1. 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 African reject tailings. Proterra is pursuing opportunities on mine sites in South Africa to secure access to fine coal to support BCB projects. During the quarter, a 6 tonne sample of fines from a mine in the Middelburg region was briquetted at Cessnock and re-shipped to a large South African power producer for testing.

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.

2. NORTH AMERICA - MOUNTAINSIDE COAL COMPANY ("MCC") - WEC 51%

MCC had no coal sales revenue during the June 2020 quarter, with coal production suspended since April 2018.

MCC's management are currently planning for future mining activities.

Reclamation activity continues, with applications being made for bond releases as rehabilitation work in each area is completed. Expenditure related to production and development activities of $234,000 was incurred during the quarter.

MCC currently has additional permits in various stages of approval and many acres containing low ash Blue Gem coal resources in Kentucky that are in the final permitting phase. MCC continues to advance the permitting process and additional leases are being sought as mine plans for new areas are progressed.

White Energy has previously announced that it would sell its 51% interest in MCC. Negotiations to purchase the Group's interest are continuing and being advanced to a finalisation.

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White Energy Company Limited

Quarterly Activity Report June 2020

3. AUSTRALIA

South Australia - EL5719 and PELA674

During the quarter, work continued on examining coal gasification and emerging hydrogen opportunities from coal, planning for future exploration activities, and lodging the EL5719 licence renewal application. Capital expenditure related to exploration activities of $7,000 was incurred during the quarter.

BCB

WEC is 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 despatched for larger scale tests in China.

Yankuang Group have 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. It is planned to test several Chinese coals in this plant over the coming months. Design of a 200,000 tonnes per annum BCB plant for a mine site in Shanxi Province is well advanced, and a contract for construction of the plant, that is funded by the customer, will be under White Energy's design and engineering supervision. The travel restrictions imposed by the Australian Government due to COVID-19 has slowed the contractual discussions and the ability of WEC Engineers to visit the various sites in China.

SUBSTANTIALLY COMPLETE SMALL PILOT		WHITE ENERGY BCB MACHINE TESTING AT
PLANT, CHINA		PILOT PLANT, CHINA

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White Energy Company Limited

Quarterly Activity Report June 2020

COVID-19 Update

White Energy maintains 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, with no material adverse impact on financial performance. The measures put in place by governments to control the spread of the virus are causing worldwide economic activity to contract. Such effects are creating risks for WEC and its customers, and the outlook for general economic conditions is uncertain in the short to medium term.

4. GENERAL CORPORATE

The Company has no significant secured corporate debt. Non-recourse shareholder loans provided to the Group's 51% owned operations in the USA and South Africa by both White Energy and the minority shareholders in proportion to their ownership interests were extended during the quarter to January 2023.

Proceeds from the Entitlement Offer undertaken in March 2020 of $15.5 million were received during the quarter. In April 2020, Brian Flannery and Travers Duncan, were each paid an underwriting fee to underwrite the Entitlement Offer of $155,071 through their private companies Ilwella Pty Ltd and Gaffwick Pty Ltd atf Duncan Family Trust respectively. The underwriting agreements are based on normal commercial terms and conditions.

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 $107,000.

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.

The claim for damages can be broadly summarised as follows:

1. BCBCS claims approximately USD99 million in 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 claims for loss of the chance of expanding the capacity of the joint venture to at least 3 million tonnes per annum which profits are estimated to amount to approximately USD54 million; and
3. Interest on any damages award and costs.

As such, the total value of BCBCS' claim may be estimated to amount to USD153 million plus interest and costs. The quantum of damages payable to BCBCS will be determined by the SICC in the third tranche of the proceedings which has been set for 21 September to 30 September 2020.

The only issues remaining to be determined by the SICC in the third tranche relate to the damages which may be payable to BCBCS. The SICC has, in the earlier tranche of the proceedings, already made a conclusive determination that Bayan has both breached and repudiated the joint venture deed.

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White Energy Company Limited

Quarterly Activity Report June 2020

5. INTERESTS IN MINING TENENMENTS

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. There were no changes during the quarter.

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

Tenement	Locality	Licensee	Interest
Coal Permit
861-0528	Flat Creek, Kentucky, USA	Mountainside Coal Company Inc.	100%
861-0543	Hubbs Hollow, Kentucky, USA	Mountainside Coal Company Inc.	100%
861-5357	Washer, Kentucky, USA	Mountainside Coal Company Inc.	100%
918-0464	Round Mountain, Kentucky, USA	Mountainside Coal Company Inc.	100%
918-0465	Flag Ridge, Kentucky, USA	Mountainside Coal Company Inc.	100%
918-0467	Jellico Creek, Kentucky, USA	Mountainside Coal Company Inc.	100%
Coal Exploration
Licence and
Retention Lease
EL5719 and	Lake Phillipson, South Australia	South Australian Coal Pty Ltd	100%
RL104
Petroleum
Application
PELA674	Lake Phillipson, South Australia	White Energy Company Limited	100%

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White Energy Company Limited

Rule 5.5

Appendix 5B

Mining exploration entity or oil and gas exploration entity

quarterly cash flow report

Name of entity
White Energy Company Limited
ABN	Quarter ended ("current quarter")
62 071 527 083	30 June 2020

Consolidated statement of cash flows	Current quarter	Year to date (12
			$A'000	months)
				$A'000
1.	Cash flows from operating activities
1.1	Receipts from customers	37	131
1.2	Payments for
	(a)	exploration & evaluation	-	-
	(b)	development	(33)	(238)
	(c)	production	(81)	(767)
	(d)	staff costs	(595)	(2,871)
	(e) administration and corporate costs (*)	(5,635)	(8,420)
1.3	Dividends received (see note 3)	-	-
1.4	Interest received	3	35
1.5	Interest and other costs of finance paid	(10)	(67)
1.6	Income taxes paid	-	-
1.7	Government grants and tax incentives	-	-
1.8	Other (provide details if material)(**)	(33)	1,799
1.9	Net cash from / (used in) operating	(6,347)	(10,398)
	activities

1. Includes legal fees incurred in respect of KSC dispute, payment to the CSIRO of $3.2 million for BCB technology and MCC administration costs.

1. YTD includes $422,000 of restricted cash received for bonded reclamation obligations and $1,125,000 insurance claim settlement.

2. Cash flows from investing activities

2.1 Payments to acquire or for:

(a) entities

(b) tenements

-

-

ASX Listing Rules Appendix 5B (17/07/20)	Page 6 of 12
+ See chapter 19 of the ASX Listing Rules for defined terms.

White Energy Company Limited

Appendix 5B Mining exploration entity or oil and gas exploration entity quarterly cash flow report

Consolidated statement of cash flows	Current quarter	Year to date (12
			$A'000	months)
				$A'000
	(c)	property, plant and equipment	-	(6)
	(d)	exploration & evaluation	(4)	(44)
	(e)	investments	-	-
	(f)	other non-current assets	-	-
2.2	Proceeds from the disposal of:
	(a)	entities (***)	-	(309)
	(b)	tenements	-	-
	(c)	property, plant and equipment	-	31
	(d)	investments	-	-
	(e)	other non-current assets	-	-
2.3	Cash flows from loans to other entities	22	66
2.4	Dividends received (see note 3)	-	-
2.5	Other (provide details if material)	-	-
2.6	Net cash from / (used in) investing	18	(262)
	activities

1. YTD amount represents the cash disposed of on sale of subsidiary River Energy South Africa Pty Limited.

3.	Cash flows from financing activities
3.1	Proceeds from issues of equity securities	15,490	15,490
	(excluding convertible debt securities)
3.2	Proceeds from issue of convertible debt	-	-
	securities
3.3	Proceeds from exercise of options	-	-
3.4	Transaction costs related to issues of equity	(487)	(490)
	securities or convertible debt securities
3.5	Proceeds from borrowings (****)	682	1,583
3.6	Repayment of borrowings	(34)	(178)
3.7	Transaction costs related to loans and	-	-
	borrowings
3.8	Dividends paid	-	--
3.9	Other (provide details if material)	(24)	(229)
3.10	Net cash from / (used in) financing	15,627	16,176
	activities

(****) Current quarter and YTD amounts represent shareholder loans from Proterra Investment Partners for its 49% equity interest in MCC and River Energy.

ASX Listing Rules Appendix 5B (17/07/20)	Page 7 of 12
+ See chapter 19 of the ASX Listing Rules for defined terms.

White Energy Company Limited

Appendix 5B Mining exploration entity or oil and gas exploration entity quarterly cash flow report

Consolidated statement of cash flows	Current quarter	Year to date (12
	$A'000	months)
		$A'000

4. Net increase / (decrease) in cash and cash equivalents for the period

4.1	Cash and cash equivalents at beginning of	1,344	5,056
	period
4.2	Net cash from / (used in) operating	(6,347)	(10,398)
	activities (item 1.9 above)
4.3	Net cash from / (used in) investing activities	18	(262)
	(item 2.6 above)
4.4	Net cash from / (used in) financing activities	15,627	16,176
	(item 3.10 above)
4.5	Effect of movement in exchange rates on	(56)	14
	cash held
4.6	Cash and cash equivalents at end of	10,586	10,586
	period

5.	Reconciliation of cash and cash	Current quarter	Previous quarter
	equivalents	$A'000	$A'000
	at the end of the quarter (as shown in the
	consolidated statement of cash flows) to the
	related items in the accounts
5.1	Bank balances	1,011	872
5.2	Call deposits	9,575	472
5.3	Bank overdrafts	-	-
5.4	Other (provide details)	-	-
5.5	Cash and cash equivalents at end of	10,586	1,344
	quarter (should equal item 4.6 above)

In addition to the cash and cash equivalents at the end of the quarter, $1.7 million of cash is held as security for reclamation bonds in the USA and $2.0 million is held as a security bond by the Supreme Court of Western Australia as security for the freezing order held by BCBCS in relation to Bayan's shares in Kangaroo Resources Limited (refer section 4 of the Summary of Activity).

6.	Payments to related parties of the entity and their	Current quarter
	associates	$A'000
6.1	Aggregate amount of payments to related parties and their	107
	associates included in item 1
6.2	Aggregate amount of payments to related parties and their	Nil
	associates included in item 2

Note: if any amounts are shown in items 6.1 or 6.2, your quarterly activity report must include a description of, and an explanation for, such payments

ASX Listing Rules Appendix 5B (17/07/20)	Page 8 of 12
+ See chapter 19 of the ASX Listing Rules for defined terms.

White Energy Company Limited

Appendix 5B Mining exploration entity or oil and gas exploration entity quarterly cash flow report

7. Financing facilities

Note: the term "facility' includes all forms of financing arrangements available to the entity.

Add notes as necessary for an understanding of the sources of finance available to the entity.

7.1 Loan facilities

7.2 Credit standby arrangements

7.3 Other (please specify)

7.4 Total financing facilities

Total facility	Amount drawn at
amount at quarter	quarter end
end	$A'000
$A'000
68,928	68,928
-	-
-	-
68,928	68,928

7.5 Unused financing facilities available at quarter end

7.6 Include in the box below a description of each facility above, including the lender, interest rate, maturity date and whether it is secured or unsecured. If any additional financing facilities have been entered into or are proposed to be entered into after quarter end, include a note providing details of those facilities as well.

7.1 Represents shareholder loans from minority shareholders with a 49% interest in MCC and River Energy which are repayable in January 2021 and bear interest at fixed rates between 5.01% and 7.71% pa, payable on maturity. Additional loans may be drawn-down as agreed between the shareholders to fund future activities of MCC and River Energy.

8.	Estimated cash available for future operating activities	$A'000
8.1	Net cash from / (used in) operating activities (item 1.9)	(6,347)
8.2	Payments for exploration & evaluation classified as investing	(4)
	activities (item 2.1(d))
8.3	Total relevant outgoings (item 8.1 + Item 8.2)	(6,351)
8.4	Cash and cash equivalents at quarter end (item 4.6)	10,586
8.5	Unused finance facilities available at quarter end (item 7.5)	-
8.6	Total available funding (item 8.4 + item 8.5)	4,235
8.7	Estimated quarters of funding available (item 8.6 divided by	1
	item 8.3)
	Note: if the entity has reported positive relevant outgoings (ie a net cash inflow) in item 8.3, answer item 8.7 as
	"N/A". Otherwise, a figure for the estimated quarters of funding available must be included in item 8.7.

8.8 If item 8.7 is less than 2 quarters, please provide answers to the following questions:

8.8.1 Does the entity expect that it will continue to have the current level of net operating cash flows for the time being and, if not, why not?

ASX Listing Rules Appendix 5B (17/07/20)	Page 9 of 12
+ See chapter 19 of the ASX Listing Rules for defined terms.

White Energy Company Limited

Appendix 5B Mining exploration entity or oil and gas exploration entity quarterly cash flow report

Answer: White Energy expects it will continue to have negative operating cash flows in the near to medium term, based on the current activities being undertaken by WEC, being:

• the ongoing development and exploitation of WEC's binderless coal briquetting technology ("BCB");
• the evaluation of mining exploration assets; and
• the continuing engagement in legal proceedings against PT Bayan Resources TBK and Bayan International Pte Ltd.

Net operating cash outflows are expected to be lower than the current quarter for the next two quarters, mainly due to there being no further payments to the CSIRO of $3.2 million during these quarters. On this basis, there are estimated to be more than the following two quarters of funding available.

8.8.2 Has the entity taken any steps, or does it propose to take any steps, to raise further cash to fund its operations and, if so, what are those steps and how likely does it believe that they will be successful?

Answer: The steps in place to raise further cash to fully fund operations and the likelihood of success are set out below:

• White Energy is currently running a sale process for its 51% interest in Mountainside Coal Company Inc. ("MCC"), negotiations with interested parties to purchase the interest are continuing and are expected to be concluded and settled in the near term;
• White Energy has designed a 200,000 tonne per annum BCB plant for a mine site in China and the contract to allow construction to commence is under discussion. Once finalised, WEC will receive funds for the sale of equipment and an ongoing royalty;
• As previously foreshadowed, the Company plans to raise additional equity funds for the ongoing activities of WEC, as required. The Company has been successful in raising equity funds through the issue of new shares recently and in the past;
• WEC's 51% owned subsidiaries MCC, River Energy JV Ltd and River Energy JV UK Limited continue to have access to funds from their 49% minority shareholder under existing shareholder loan agreements (in conjunction with WEC's 51% contributions) to enable them to meet their debts as and when they fall due; and
• The Directors believe, based on past experience, that they can raise third party debt financing to part fund any future project capital expenditure requirements.

8.8.3 Does the entity expect to be able to continue its operations and to meet its business objectives and, if so, on what basis?

Answer: The Company expects to be able to continue its operations and to meet its business objectives on the basis of the information disclosed in 8.8.2 above.

Note: where item 8.7 is less than 2 quarters, all of questions 8.8.1, 8.8.2 and 8.8.3 above must be answered.

ASX Listing Rules Appendix 5B (17/07/20)	Page 10 of 12
+ See chapter 19 of the ASX Listing Rules for defined terms.

White Energy Company Limited

Appendix 5B Mining exploration entity or oil and gas exploration entity quarterly cash flow report

Compliance statement

1. This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.
2. This statement gives a true and fair view of the matters disclosed.

Sign here: ............................................................

Date: 31 July 2020

Authorised by: Brian Flannery, Managing Director

Notes

1. This quarterly cash flow report and the accompanying activity report provide a basis for informing the market about the entity's activities for the past quarter, how they have been financed and the effect this has had on its cash position. An entity that wishes to disclose additional information over and above the minimum required under the Listing Rules is encouraged to do so.
2. If this quarterly cash flow report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly cash flow report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.
3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.
4. If this report has been authorised for release to the market by your board of directors, you can insert here: "By the board". If it has been authorised for release to the market by a committee of your board of directors, you can insert here: "By the [name of board committee - eg Audit and Risk Committee]". If it has been authorised for release to the market by a disclosure committee, you can insert here: "By the Disclosure Committee".
5. If this report has been authorised for release to the market by your board of directors and you wish to hold yourself out as complying with recommendation 4.2 of the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations, the board should have received a declaration from its CEO and CFO that, in their opinion, the financial records of the entity have been properly maintained, that this report complies with the appropriate accounting standards and gives a true and fair view of the cash flows of the entity, and that their opinion has been formed on the basis of a sound system of risk management and internal control which is operating effectively.

ASX Listing Rules Appendix 5B (17/07/20)	Page 11 of 12
+ See chapter 19 of the ASX Listing Rules for defined terms.

White Energy Company Limited

For Further Information Call:

Brian Flannery

Managing Director & CEO White Energy Company Limited + 61 7 3229 9035

Level 7, 167 Eagle Street BRISBANE QLD 4000 Tel [phone]

Fax [phone]

Email:[e-mail]:www.whiteenergyco.com

ABN 62 071 527 083

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