Fertoz : Quarterly Activities Report December 2021

28 January 2022	ASX RELEASE / MEDIA RELEASE

QUARTERLY ACTIVITIES REPORT DECEMBER 2021

HIGHLIGHTS

• Carbon partnerships performing well with multiple projects underway and carbon team expanding
• Carbon credit price increases and forecasts show strong demand and a lack of suitable, high quality nature based credits available to emitters looking to offset their emissions
• Record winter 2021 fertilizer orders support significantly improving cashflow dynamics, headlined by $1.74 million in December quarter cash receipts
• New fertiliser products well-accepted by the market - increasing orders exceeding budget
• Cash balance as at 31 December 2021 of $5.2 million

Sustainable land management company Fertoz Ltd ("Fertoz" or the "Company", ASX: FTZ) is pleased to provide an update of activities during the quarter ending 31 December 2021.

Fertoz Executive Chairman Patrick Avery stated:

"We are now well into the winter season in North America and our forward orders are exceeding expectations. Rising prices for conventional fertilizers and a lack of supply are encouraging conventional farming businesses to look into organic supply to save money and help offset greenhouse gas emissions. We are noticing changes in farming decision-making that are driven by rapidly increasing awareness of the weight of emissions generated across the sector, including nitrous oxide and carbon dioxide. We expect this shift in purchasing decisions to continue and accelerate into 2022 and beyond.

"Our carbon team and partners are working well and we have multiple carbon sequestration projects underway and in development. Indeed, not a week goes by that we are not in discussions on a carbon sequestration project - either trapping carbon in vegetation and/or soil, in blending organic fertilizers with conventional fertilizer to reduce a carbon footprint, or researching ways to accredit new farming practices that lead to a reduction in nitrous oxide, carbon dioxide and methane.

"In light of carbon credit prices setting record highs and the lack of quality nature-based carbon sequestration projects that can generate high value carbon credits, we expect prices to continue to climb. Co-benefits are becoming increasingly important for emitters looking to purchase carbon credits, and to respond to this unmet need we are in discussions with our partners to undertake carbon sequestration projects incorporating ESG initiatives to meet the needs of emitters.

"Looking forward, 2022 is shaping up to be our best year yet - with new fertilizer sales personnel already hitting home runs, multiple carbon projects underway or in development, and an expanding team that is fast becoming well known in the agricultural carbon space in both North America and Australia. We enter 2022 with confidence in our team, the market and in our approach to environmentally friendly sustainable land management practices."

ASX : FTZ	Registered Office	Board of Directors		Key Projects
	Suite 103, Level 1,	Executive Chairman	P. Avery	Wapiti	Ownership: 100%
	2 Queen Street	Non-Executive Director	S. Richardson	Fernie	Ownership: 100%
	Melbourne VIC 3000	Non-Executive Director	J. Chisholm
	Ph: [phone]	NED/Company Secretary	J. Stedwell
	[e-mail]			Fertoz Ltd	A.C.N. 145 951 622
	www.fertoz.com

Carbon Projects: Update

During the quarter, Fertoz achieved and announced breakthroughs in the carbon sector developing accredited no-till farming protocols. These allow farmers to generate carbon credits from adopting no-till and low-till farming practices. Fertoz's partner Trimble Inc (NASDAQ: TRMB) took the lead on this development, with assistance from Fertoz personnel. Both Fertoz and Trimble are now rolling out this protocol across Canada and generating significant interest and enquiries from farmers and retailers.

When this protocol is combined with the nitrous oxide emissions reduction protocol (NERP) which is currently being finalised by Trimble and Fertoz, farmers in Canada will be able to stack carbon emissions reductions protocols to claim multiple sources of carbon credits if they register with the Trimble/Fertoz partnership and follow the detailed protocols. To encourage adoption of these protocols, Trimble and Fertoz follow the 4R approach to nitrogen fertilizer application management (applying the Right Source at the Right Rate at the Right Time in the Right Place). This promotes nitrogen use efficiency while reducing nitrous oxide emissions, improving nutrient management within a framework of environmental, social and economic goals for the farm.

To this end, Fertoz offers sustainable fertilizer solutions that farmers can use to accrue relevant NERP offset credits. The Company already has buyers for these carbon credits, so revenue from such activity is expected in the coming months as farmers improve their land management strategies accordingly with the agronomic support from Fertoz. Once all documentation is collected and producer acres are agglomerated, Fertoz and Trimble will calculate and report the total carbon credits accrued.

Carbon credits from crop plantings in 2021 are expected to be generated after harvest, estimated in late Q2 of CY22. Fertoz will also collect 2020 cropping season data from producers who are eligible. The Fertoz team have engaged a leading forestry company that will assist with planning, reporting, monitoring, and verification of improved forestry management and reforestation projects. Registration of these long term projects is expected in 2022, with generation of carbon credits expected over the next 20 to 50 years.

The Company is researching a number of additional protocols suitable for carbon credit generation, including protocols suitable for semi-arid lands, protocols relating to cattle grazing and grass growth and mixed leguminous grasses, shrubs and trees that could be planted in marginal pastureland in Australia and the USA to significantly increase greenhouse gas sequestration. Mass planting in semi-arid environments looks particularly interesting, with some research suggesting that certain native species can sequester amounts of carbon per acre similar to rainforests.

The Company continues its research and development of scope 1 (on farm) and scope 3 (upstream) protocols on rock phosphate use on the farm, intended to increase carbon sequestration potential and reduce upstream conventional fertilizer emissions.

Carbon Projects: Pipeline and Outlook

With so much going on in the carbon sector, the Company has introduced regular meetings of staff to keep abreast of the pipeline of reforestation projects in Kentucky, Virginia, Montana and West Virginia in the USA, British Columbia and Alberta in Canada, and projects in Australia and South America. Fertoz Carbon plans to commence reforestation projects from this pipeline by Q2 CY22.

The Company and its partners are extending their work on the no-till protocol into other areas that show potential for carbon credit generation, most notably the NERP, supported by additional scientific studies to further develop protocols in carbon-in-soil and carbon-in-vegetation for crops and grasses. Cover crop carbon sequestration is also of major interest to the Company's carbon and fertilizer partners, and as such, Fertoz is working to assist farm operators in the generation of carbon credits from cover crop management practices. Fertoz is also exploring joint opportunities on feedlot enhancements to reduce methane emissions.

Fertoz Carbon added key personnel in late 2021 to boost the in-house capability to design carbon projects and collect documentation required to obtain third party verification. The enhanced team continues to

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further develop a range of agricultural based protocols to grow the generation of carbon credits for producers. Fertoz continues to target consultants and employees that can offer an end-to-end capability to ensure Fertoz develops and manages carbon projects to the highest recognized standards worldwide.

Fertilizer Sales and Outlook

Fertoz's sales personnel are making good progress for Q1 CY22, with multiple sales in negotiation at present - a record for this time of year. The 2021 year saw Fertoz achieve record sales, with forecasts for 2022 expected to build on the 2021 volumes.

The new products (Phosul and Nutrient Vigor Plus) have been accepted into the market and sales are performing well, with early pre-order indications exceeding budget. The Humi(K) product is yet to be released to the wider market but this is expected to occur in the coming weeks. Early indications are that this product will also exceed expectations.

Australian and Asia-Pacific sales are also tracking well, with a number of marketing initiatives planned for H1 CY22 to further sales growth in the year ahead.

CORPORATE

Cash / Appendix 5B Commentary

The Company had $5.2 million in cash at 31 December 2021, including $285k as an advance on sales received for 2022, with no loan balances owing.

The balance sheet remains strong, with net trade receivables of $225k (net of trade payables), leaving the Company able to comfortably fund the record order flows on its books commencing Q1 2022.

Appendix 5B, Section 6.1 - description of payments

During the December 2021 quarter, the Company paid director's fees totaling A$6K for non-executive director services, A$61K to the Executive Chairman and $10K to a company connected to a director for Corporate Secretarial services.

Although cash outflows for the December quarter totaled $475k, the working capital position remained very solid, and cashflow dynamics were sound when stripping out inventory build and netting against prepayments. Inventory on hand at year end was 15,981 tonnes of finished product, and costs associated with this inventory build were incurred in the September and December quarters. This record level of inventory build is reflective of the forward order book for 2022 and ensures Fertoz has fertilizer on hand to meet demand from Q1 CY22 onwards.

2H CY21 operating cash outflows of $860k (not including inventory spend) were materially lower than the first half, reflecting improved sales volumes and positive margin improvements. Fertilizer inventory paid and on hand amounted to $886k, netted by $285,000 in a payment which relates to a receipt in advance of a Q1 sale (referenced above).

Fertoz Tenements

A list of tenements is provided in Appendix 1.

Approval

This release has been approved by the Board of Fertoz Ltd.

For further information, please contact:

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Pat Avery	Tim Dohrmann
Executive Chairman	Investor and Media Enquiries
Fertoz Limited	NWR Communications
m: [phone]	m: [phone]

APPENDIX 1 - TENEMENT

	Project Name			Tenement			Ownership			Approx. Area (ha)			Expiry Date			Registered Holder
			Number
	Canada
	Wapiti Project - British Columbia, Canada
	Wapiti East
	WK-1	851942		100%		450.83		4/21/22		Fertoz International
	WK-2	851948		100%		451.02		4/21/22		Fertoz International
	WK-3	851952		100%		375.66		4/21/22		Fertoz International
	WK-4	851958		100%		451.2		4/21/22		Fertoz International
	WK-5	941760		100%		450.83		4/21/22		Fertoz International
	WK-6	941761		100%		469.87		4/21/22		Fertoz International
	WK-7	941762		100%		432.07		4/21/22		Fertoz International
	WK-8	941763		100%		413.49		4/21/22		Fertoz International
	WK-9	941764		100%		451.33		4/21/22		Fertoz International
	WK-10	941769		100%		432.53		4/21/22		Fertoz International
	WK-11	955278		100%		470.31		4/21/22		Fertoz International
	WK-12	956829		100%		37.56		4/21/22		Fertoz International
	WK-One	982744		100%		18.8		4/21/22		Fertoz International
	Wapiti NE	1015556		100%		375.54		4/21/22		Fertoz International
	Wapiti Two	1015557		100%		168.93		4/21/22		Fertoz International
	Wapiti South	1015558		100%		376.35		4/21/22		Fertoz International
	WAP S2	1018104		100%		451.82		4/21/22		Fertoz International
	WAP S3	1018106		100%		451.75		4/21/22		Fertoz International
	WAP S4	1018107		100%		451.93		4/21/22		Fertoz International
	WAP S5	1018108		100%		452.09		4/21/22		Fertoz International
	WAP S6	1018109		100%		452.3		4/21/22		Fertoz International
	Red Deer 1	1023921		100%		150.2		4/21/22		Fertoz International
	Red Deer 2	1023922		100%		206.3		4/21/22		Fertoz International
	Red Deer 3	1023923		100%		150.1		4/21/22		Fertoz International
	Munok	1029417		100%		207.38		4/21/22		Fertoz International
	Munok 1	1015626		100%		169.58		4/21/22		Fertoz International
	Belcourt 1	1015627		100%		113.27		4/21/22		Fertoz International
	Munok 2	1024783		100%		603.05		4/21/22		Fertoz International
	Belcourt 2	1024803		100%		301.76		4/21/22		Fertoz International
	Belcourt 3	1024806		100%		188.7		4/21/22		Fertoz International
	Belcourt 4	1024805		100%		339.78		4/21/22		Fertoz International
	Belcourt Link	1027037		100%		282.59		4/21/22		Fertoz International

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	WAP 11	1027038		100%		168.94		4/21/22		Fertoz International
	South 1	1029488		100%		112.64		4/21/22		Fertoz International
	South 2	1029489		100%		376.16		4/21/22		Fertoz International
	South Road 2	1030777		100%		413.66		4/21/22		Fertoz International
	Wapiti Project total								11,870.32
	Project Name		Tenement			Ownership			Approx. Area (ha)			Expiry Date			Registered Holder
		Number
	Fernie Project
	Barnes (formerly Barnes Lake)
	Barnes Lake	1011319		100%		608.98		5/19/22		Fertoz International
	BL 2	1020873		100%		629.88		4/18/22		Fertoz International
	BL 3	1046619		100%		524.89		1/12/22		Fertoz International
	Barnes Lk West	1055454		100%		83.97		10/09/22		Fertoz International
	South of Alberta 1	1059393		100%		309.31		3/17/22		Fertoz International
	Barnes 5	1059412		100%		104.96		3/18/22		Fertoz International
	Coal Mountain 1	1059422		100%		230.78		3/19/22		Fertoz International
	Barnes Subtotal						2,492.77

Pump Station (formerly known as Crows Nest)

Crows Nest	1023062	100%	1450.89	10/15/2021	Fertoz International
Crows 2	1023064	100%	38.67	10/15/2021	Fertoz International
Pump Station Subtotal			1,489.56
Marten
Marten 1	1024365	100%	754.32	6/29/21	Fertoz International
Marten 2	1025533	100%	460.86	6/28/21	Fertoz International
Marten Nth	1029979	100%	334.99	8/01/21	Fertoz International
Marten E	1031107	100%	188.48	9/23/21	Fertoz International
Marten Subtotal			1,738.65
Graves Lake
Graves Lake 1	1046685	100%	499.54	10/14/22	Fertoz International
Graves 2	1058774	100%	208.29	10/22/22	Fertoz International
Graves Subtotal			707.83
Big Horn
RAM 1	1047502	100%	126.72	29/10/2021	Fertoz International
Bighorn Southwest	1057281	100%	211.28	10/29/21	Fertoz International
BIG HORN Subtotal			338.00
Fernie Project Total			6,766.81
Crowsnest, Alberta,
Canada
TWP	9318030431	100%			Fertoz International
TWP	9318100162	100%			Fertoz International
Alberta Subtotal

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