Clean TeQ Water : June 2022 Quarterly Activities Report and Appendix 4C

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ASX Announcement

29 July 2022

Quarterly Activities Report and Appendix 4C to

30 June 2022

For personal use

Clean TeQ Water Limited

ACN: 647 935 948

ASX:CNQ

OTCQX:CNQQF

Corporate Information#

Ordinary shares: 44.7M Performance rights: 3.5M

Cash at bank: A$5.9M

Executive Chairman

Peter Voigt

CEO

Willem Vriesendorp

Non-Executive Directors

Ian Knight

Sam Riggall

Robyn McLeod

Company Secretary

Anita Addorisio

Contact Details

12/21 Howleys Road, Notting Hill VIC 3168

P [phone]

F [phone]

1. [e-mail]:www.cleanteqwater.com

# As at 30 June 2022

QUARTER HIGHLIGHTS

Key financial highlights for Q4 FY22 include:

• Quarterly cash receipts of $2.5m up by 60% from the previous quarter ($1.6m)
• Net cash used in operating activities was $2m, down from $3.3m in March 2022 quarter
• The Company had $5.9m cash on hand as at 30 June 2022

Key Operational highlights include:

• New $5 million contract signed with Power and Water Corporation (PWC) for a Bore Water Treatment Plant in the Northern Territory
• Ordos flagship 12,000 tons/day BIONEX™ nitrate removal project handed over to customer for ongoing operation of the main resin circuit
• Continued progress across projects under implementation:

o Koumala drinking water supply project in commissioning phase

o Hassall EVAPX® agricultural by-product wastewater recycling site construction started

• 1. NESR HIROX® bore water treatment and reinjection water supply project design and manufacturing completed
• NematiQ progressed towards field piloting by converting recently produced membrane sheets into membrane elements and skids
• Repeat work including service fees, aftermarket sales, test work and piloting was $208k for the quarter
• Total FY21/22 cash receipts were $9.2m

Clean TeQ Water Limited (ACN 647 935 948)
12/21 Howleys Road, Notting Hill VIC 3168
T [phone] F [phone]	ASX: CNQ
[e-mail] | cleanteqwater.com	Page 1 of 12

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Group Financial Outlook

• Strong Group revenue outlook for FY23 is led by an order of around $10 million for the delivery of a Recycled Water Treatment Facility at Cleveland Bay for Townsville City Council and the implementation of the recently awarded PWC contract for the Northern Territory
• Forecast revenues from contracts secured in Q1 of FY23 already exceed total FY22 revenue
• Group profitability outlook is expected to improve in FY23 led by additional projects, higher margins and increased aftermarket sales

Message from the CEO

This past quarter we have seen continued progress across all our projects under implementation. Our flagship BIONEX™ project in Ordos (China) is now continuously operating in automatic mode removing nitrate from the incoming water, while we are commissioning the biological circuit of the plant. The Koumala drinking water project (Queensland) is also in the commissioning phase, and our industrial water treatment projects in the Middle East and in New South Wales have entered the construction phase. While these projects have been subject to supply chain bottlenecks, resulting in delays and some cost inflation, we expect these issues to diminish going forward. Once fully operational, these projects will demonstrate the benefits of our unique technologies at scale, greatly supporting our ability to sell our technology to new customers.

NematiQ has continued its path towards commercialisation by turning the 1,000m of Graphene Membranes that were produced last quarter into membrane elements and incorporating these elements into modules and skids. Meanwhile, NematiQ continues to do lab testing and have discussions with prospective customers to select the optimal sites and counterparties for our first pilot sites.

On the commercial front, we are very pleased with two large new projects that were added recently. Power Water Corporation (PWC) awarded the Company a contract for removal of uranium from ground water in the Northern Territory. This project is the first in a much larger program

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from PWC to improve water security for aboriginal communities in the Northern Territory. Early July, we also received the order from our civil partner for the design and delivery of a recycled water facility in Cleveland Bay as part of Townsville council's long-term strategy to improve water security.

Only a month into the new financial year, the value of these two new projects already exceeds our combined revenue of the past two years. Besides the commercial benefits these projects provide for the future of the Company, we are also proud to be supporting projects which are critical for the long-term development of these regions.

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Q4 FY22 CASH FLOW

Net cash used in operating activities was $2m, down from $3.3m in the previous quarter. Cash received from projects in Q4 FY2022 was $2.5m, up from $1.3m in Q3 (total Q3 cash inflow was $1.6m, including a $0.3m R&D rebate). Payments for product manufacturing and operating costs in Q4 FY2022 were $2.2m, compared to $2.5m in Q3.

During the quarter, a $5m contract was signed with Power Water Corporation in the Northern Territory with the first two payment milestones claimed and received prior to 30 June 2022.

Across our six projects (including PWC but excluding the Townsville order which was received in July 2022) we have now received approximately $7.7m in payments from the $15.9m expected.

As of 30 June 2022 the Company had cash reserves of $5.9m. The Company has no debt or convertible instruments. A summary of the revenue and expenditure incurred during the quarter is detailed in the attached unaudited Appendix 4C.

Q4 FY22 TRADING AND OPERATIONAL HIGHLIGHTS AND OUTLOOK

Trading Highlights

The PWC uranium removal project in the Northern Territory and the Recycled Water Treatment Facility for the Townsville City Council Project represent major milestones for the Company due to the size of these projects and their regional strategic importance. The award of these projects demonstrates the Company's ability to bid for and win large and complex projects in a competitive environment. The Projects Update section below describes these projects in more detail.

Our pipeline of potential future projects, both in Australia and internationally, remains strong. Several of our international customers are awaiting the commissioning of delivered equipment, particularly the HIROX® plant with NESR in the Middle East, and the nitrate removal BIONEX™ plant in China. Once these projects are operating, we anticipate an increase in international conversion rate, fuelling international growth.

The Company continues to pursue metals recovery projects. In these projects we are aiming to deliver technical solutions and receive a share in the value created by our technology through licence fee, equity in the project or some other revenue sharing mechanism.

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Projects Update

Ordos BIONEX™ Nitrate Removal Project

The 12,000 tons per day BIONEX™ nitrate removal plant in Ordos will be the Company's first large scale plant in China

The BIONEX™ nitrate removal plant combines the Company's unique continuous ionic filtration (CIF®) technology with its BIOCLENS® technology to treat 12,000 tons per day of mining wastewater. The CIF® portion of the plant is now operating continuously and removing nitrate to levels to below the specified 1ppm level. The biological (BIOCLENS®) section of the plant is awaiting delivery and installation of a chemical dosing system that has been delayed due to COVID related lockdowns in China. Installation of this equipment will further reduce the cost of operation and result in full zero liquid discharge.

This BIONEX™ plant is the first of its kind in China and will act as a demonstration site for other prospective customers. The market for BIONEX™ nitrate removal technology is large and includes treating effluents from mining, industrial processes, and municipal water treatment facilities located in ecologically sensitive areas such as the Yellow River basin in Northern China.

Middle East HIROX® Bore Water Treatment Project

This project applies the Company's HIROX® technology to treat non-potable bore water to the quality required for well completions. Treatment involves the removal of the sulphate to prevent gypsum formation which can clog the well and using a brine recovery circuit to recycle the salt and achieve the required density for reinjection. The end-user is a multinational oil company and the solution being provided is expected to dramatically reduce not only the volume of water withdrawn, but also the energy and chemicals used per ton of treated water produced.

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