Half Year Report and Accounts 31 Dec 2021

White Energy Company Limited

Contents

31 December 2021

General information

These financial statements are for the group consisting of White Energy Company Limited and its subsidiaries. These financial statements are presented in Australian dollars, which is White Energy Company Limited's functional and presentation currency.

White Energy Company Limited is a company limited by shares, incorporated and domiciled in Australia. Its shares are listed on the Australian Securities Exchange (WEC) and also traded on the US based OTCQB exchange (WECFF). Its registered office and principal place of business are:

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2021 and any public announcements made by White Energy Company Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

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White Energy Company Limited

Directors' report

31 December 2021

Your Directors present their report on the consolidated entity (the Group) consisting of White Energy Company Limited (the Company or White Energy) and the entities it controlled at the end of, or during, the half-year ended 31 December 2021.

Directors

The following persons were Directors of White Energy Company Limited during the whole of the financial half-year and up to the date of this report, unless otherwise stated:

Graham Cubbin

Brian Flannery

Travers Duncan (resigned 17 December 2021)

Vincent O'Rourke

Operating and financial review

Coal technology

White Energy is investigating the implementation of its patented Binderless Coal Briquetting (BCB) technology for use in Yankuang Group's coal briquetting business in China. Testing of coals from Shandong and Shanxi Provinces have previously been successfully conducted at White Energy's test facility in Cessnock and larger scale tests were carried out in China using two of the Company's briquetting machines and a small pilot plant constructed in Shandong Province.

Following discussions with Yankuang Group, design of a BCB plant for a mine site in Shanxi Province has been completed. The contract for construction of the plant that will allow construction to commence that is funded by the customer under White Energy's design and engineering supervision has not been finalised yet. It is hoped the contract will be finalised when the travel restrictions imposed for COVID-19 are eased and the Company's engineers are able to visit the plant site in China. Yankuang's interest was in briquetting fine wet coal with a small addition of calcium carbonate to reduce sulphur emissions to sell to civil and domestic customers. The Company has been advised that there is a move away from this concept due to other environmental factors. However, there remains a significant opportunity for the briquetting of fines in China, particularly for semicoke plants.

White Energy and its 49% joint venture partner in the River Energy JV (River Energy), Proterra Investment Partners (Proterra), are in discussion with a number of South African coal miners interested in the Group's BCB technology, and are pursuing opportunities on mine sites in South Africa to secure access to fine coal to support BCB projects.

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. This not only allows for reduction or rehabilitation of the reject tailings, but the briquettes can also be used to provide economical fuel with lower emissions for the local power industry, which would otherwise require coal to be mined and railed over considerable distances due to the depletion of nearby coal resources.

Using the BCB process, a briquetted 6 tonne sample of fines from a mine in the Middelburg region was successfully tested by a South African power producer during the half-year. A further bulk sample of up to 50 kt has been requested to carry out a commercial scale trial. White Energy is assisting Proterra in the design of a small demonstration plant to facilitate this work and other trials in South Africa.

Management continue to actively pursue opportunities globally to briquette discarded coal fines which currently represent an environmental liability to miners. Application of the BCB technology could provide an opportunity for miners to convert waste coal fines into a valuable low moisture coal product.

Coal and minerals exploration

During the half-year, activities in EL6566 (formerly EL5719, in South Australia) and PELA674 focused on examining coal gasification and emerging hydrogen opportunities from coal, and exploration for other minerals.

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White Energy Company Limited

Directors' report

31 December 2021

Baseline surveys commenced in December 2021 for iron oxide-copper-gold styles of mineralisation that are targeting a new zone of interest in the magnetic corridors of the Hilga Mineral Field and historical anomalies from calcrete sampling programs completed from 2012 to 2013 and 2018. The geochemical analysis using biochemical (predominately leaf), calcrete and soil sampling has commenced, and further target areas are planned for survey in 2022.

EL6566 lies entirely within the Olympic Dam G9 Structural Corridor. Past drilling has identified that the geology in the area is similar in age to the mineralisation in the Prominent Hill and Olympic Dam Mines, and gravity and magnetic surveys have identified promising structural features. Previous activity has focused on exploration for iron oxide- copper-gold-uranium styles of mineralisation, and coal, which a study by Lurgi GmbH confirmed is suitable for gasification.

Legal dispute

White Energy's wholly owned subsidiaries, Binderless Coal Briquetting Company Pty Limited (BCBC) and BCBC Singapore Pte Ltd (BCBCS), are currently engaged in legal proceedings against PT Bayan Resources Tbk and Bayan International Pte Ltd (Bayan) in the Singapore International Commercial Court (SICC). The proceedings relate to various disputed matters arising in connection with the company PT Kaltim Supacoal (KSC), which was jointly owned by BCBCS and Bayan, which owned and operated the Tabang coal upgrade plant located at Bayan's Tabang mine in East Kalimantan, Indonesia.

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 Court in the first two tranches of the proceedings and subsequent appeals conclusively determined that Bayan had both breached and repudiated the joint venture.

The trial for the third tranche of the proceedings 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:

• 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;
• 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
• Interest on any damages award and 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 BR would have agreed to expand the capacity of the Tabang project.

On 7 Match 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. The appeal timelines have yet to be set by the Singapore Court of Appeal.

The SICC in the third tranche judgement stated that it would hear parties in relation to costs. The SICC has set 21 March

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White Energy Company Limited

Directors' report

31 December 2021

2022 as the date for the parties' submissions on costs for the proceedings (Tranches 1 to 3), and 14 April 2022 for the parties to file their reply submissions, and will decide the issue on the basis of submissions without a hearing.

General corporate

Proceeds from the Group's sale of its 51% interest in MCC for $5.3 million are being progressively received. Firstly, a deposit of $2.0 million was received prior to 30 June 2021, followed by the release from escrow to the Company of $0.8 million in July 2021, with the remaining instalments of $2.6 million expected by June 2022. This is later than contracted, but the Company has been assured by the purchaser that they will be able to meet their contractual obligation, with the post period end re-start of mining activities by MCC.

The Group has no 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. Recourse to the shareholders is limited to the assets of subsidiaries that are subject to joint venture agreements, with joint shareholder consent customarily given to extend the loans' due dates as required.

Financial position and results for the half-year

The Group had cash reserves including discontinued operations as at 31 December 2021 of $1.4 million (30 June 2021: $2.2 million) excluding restricted cash of $2.0 million (30 June 2021: $2.0 million).

The total assets balance decreased from $17.1 million as at 30 June 2021 to $14.3 million as at 31 December 2021, largely as a result of the losses derived by the Group.

The increase in liabilities from $44.0 million as at 30 June 2021 to $46.2 million as at 31 December 2021 predominantly reflects the increase in the value of shareholder loans due to the weakening of the Australian dollar against the US dollar and accrued interest on the shareholder loans.

The Consolidated Entity's loss before tax for the half-year ended 31 December 2021 was $3.4 million (2020: $10.9 million). The Company's adjusted normalised EBITDA loss for the half-year ended 31 December 2021 was $1.2 million (2020: $2.0 million). The improvement in normalised EBITDA from the comparative period in 2020 is primarily due to the cost reduction initiatives across the Group and the absence of litigation costs.

The normalised EBITDA loss has been determined as follows:

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