Australian Pacific Coal : Quarterly Activites and Cashflow Reports

ASX RELEASE (ASX: AQC)

Quarterly Activities Report for the period ended 30 June 2021

Dartbrook Mine

Modification 7 Appeal

As previously disclosed, the Board of Australian Pacific Coal Limited (ASX: AQC) resolved to lodge an appeal against the determination made on 9 August, 2019, by the NSW Independent Planning Commission (IPC), acting as the delegate for the Minister of Planning, Infrastructure and Environment (MPIE), with respect to AQC's Modification 7 Submission.

AQC previously announced that it had reached agreement with the NSW Minister for Planning and Public Spaces in the Land and Environment Court proceedings the Company had commenced about the determination of its application to modify the development consent for the Dartbrook Coal Mine. As announced such agreement only becomes effective, and the development consent is only modified, once the Land and Environment Court disposed of the proceedings in accordance with the agreement.

As previously reported, subsequent to reaching agreement AQC received notice of a proposed application by the Hunter Thoroughbred Breeders Association (HTBA) to join the proceedings. Judgment on the HTBA's application was delivered on 20 November 2020 and the HTBA were joined to the proceedings on a limited basis.

AQC subsequently sought leave to appeal the decision of the Land and Environment Court to join the HTBA to the proceedings. The application for leave to appeal has now been decided by the NSW Court of Appeal. The Court of Appeal has granted leave, allowed the appeal, and removed the HTBA as a party to the Land and Environment Court proceedings. It has also ordered the HTBA to pay AQC's costs of the appeal.

Following the Court of Appeal's decision, AQC entered into a revised agreement with the Minister for Planning and Public Spaces under s34(3) of the Land and Environment Court Act 1979 (LEC Act) about the 5 year extension of mining operations under the development consent for the Dartbrook Coal Mine. The revised agreement does not change the conditions proposed under the previous s34 agreement but addresses a potential jurisdictional issue arising from the Court of Appeal's judgment.

The HTBA, although now not a party to the litigation, have made a further application the Land and Environment Court to participate in the Land and Environment Court proceedings under s38(3) of the LEC Act (to assist the Court in determining the proceedings) or as an amicus curiae (friend of the Court).

Although AQC opposed HTBA's application the Land and Environment Court has permitted HTBA to a short submission on specified jurisdictional issues associated with the Court's power to impose conditions on the determination of the Mod 7 application. The submission is limited to 10 pages. AQC will see a resumption of the s34 conference as soon as possible where it will be asking the Court to dispose of the proceedings in accordance with the revised s34 agreement. If the Court disposes of the proceedings on that basis it will have the effect of extending the operation of the development consent for the Dartbrook mine by 5 years.

Australian Pacific Coal Limited	ABN 49 089 206 986
Level 15, 344 Queen Street, Brisbane QLD 4000	∙	PO Box 16330, City East QLD 4002
Tel: [phone] ∙ Fax: [phone]	∙	Web: www.aqcltd.com

Corporate

Offer for Proposed Sale of Property

On 14 May 2021 AQC announced that it had received from its major shareholder and creditor Trepang Services Pty Ltd (Trepang), an offer for Trepang and entities associated with it to purchase certain real properties and water rights owned by the Company (through its wholly owned subsidiaries AQC Dartbrook Management Pty Ltd and AQC Dartbrook Pty Ltd) that underly its Dartbrook coal mine, and associated water rights.

The offer has been made by Trepang on the basis that proceeds will be used to repay debt that the Company owes to Trepang and its associates (as directed by Trepang).

As shareholders are aware, early this year the Board of AQC advised that a strategic review would be undertaken of the Company's operations and in particular the major asset of the Dartbrook underground thermal coal mine. This asset has been non-operational since 2006.

Fluctuating commodity prices, changing community, corporate and government views on the sector have created enormous challenges broadly and to our Company's drive to realise shareholders' investment in the underground coal operation.

Recently the NSW State Government announced that several possible open cut opportunities within the Hunter Valley will not be approved if sought including that at Dartbrook.

As has also been recently announced the company has been successful in its recent appeal to prevent the Hunter Thoroughbred Horse Breeders Association to join proceedings relating to the MOD 7 application. We continue to liaise with the NSW Government to move ahead in relation to underground coal mining opportunities.

The Board has engaged widely with varying coal operators, financiers, stakeholders and advisors to seek advice that can inform and provide clarity on viable options for consideration. The Board is advanced in its discussions on a range of resource and related enterprise opportunities that is feels provide potential for the Company to pursue. Critical to this must be the reduction of its debt and liabilities.

The proposed land sale to Trepang and continued discussions with our cornerstone shareholder Trepang and its related parties on debt is the priority of the Board to enable us to deal with future opportunities for the Company.

The terms of the proposed sale for consideration by shareholders are set out in a Notice of Meeting of the Company's shareholders held at 10:00am (Brisbane time) on Friday, 30 July 2021.

The Non-Interested Directors (being David Conry and Tony Lalor) have given detailed consideration to the Proposed Sale as outlined in the Notice of Meeting. The Non-Interested Directors consider that the Proposed Sale is in the best interests of the Company and recommended the Proposed Sale to Shareholders.

Other Corporate

At quarter end the Company held $0.52 million in cash reserves. Funds during the quarter were primarily used to progress the modification appeal ($0.15 million), care & maintenance holding costs ($0.69million) and corporate administration ($0.40 million). The Board continues to evaluate the short-term cash flow requirements of the Company.

The Company's accompanying Appendix 5B (Quarterly Cashflow Report) includes an amount in item 6.1 of $125k which constitutes executive and non-executive directors' fees paid during the quarter.

Australian Pacific Coal Limited (ABN 49 089 206 986) ASX: AQC
Quarterly Report for the period ending 30 June 2021	Page 2 of 4

This announcement has been authorised for release by the Board.

All enquiries:

Company Secretary

1. [e-mail]

1. [phone]

Australian Pacific Coal Limited (ABN 49 089 206 986) ASX: AQC
Quarterly Report for the period ending 30 June 2021	Page 3 of 4

The Company provides the following additional information in accordance with ASX Listing Rule 5.3.3.

Mining tenements held at the end of the quarter and their location

Name	Number	Status	Interest Held
Dartbrook Project, Hunter Valley NSW
AUTH 256	AUTH 256	Renewal Pending *	100%
EL 4574	EL 4574	Renewal Pending *	100%
EL 4575	EL 4575	Renewal Pending *	100%
EL 5525	EL 5525	Renewal Pending *	100%
CL 386	CL 386	Granted	100%
ML 1381	ML 1381	Renewal Pending *	100%
ML 1456	ML 1456	Renewal Pending *	100%
ML 1497	ML 1497	Granted	100%
Mount Hillalong Project, Glenden QLD
Mount Hess	EPC 1645	Granted	100%
Mount Hess West	EPC 1867	Granted	100%
Matuan Downs Bentonite Project, Alpha
Mantuan	ML 70360	Granted	100%

* The Company has lodged renewal applications for certain Dartbrook Project Authorities,

EL's and ML's as noted above.

Mining tenements acquired during the quarter and their location

Not applicable.

Mining tenements disposed of during the quarter and their location

During the quarter the Company relinquished EPC 1859 (Coororah Project, Blackwater).

Beneficial percentage interests held in farm-in or farm-out agreements at the end of the quarter

The Company's 100% owned subsidiary Mining Investments One Pty Ltd holds a 10% interest in each of the following Blackwood Resources Pty Ltd JV tenements.

	Name	Number	Status	Interest Held
	Blackwood Joint Venture, Miles QLD
	Bungaban Creek	EPC 1955	Granted	10%
	Quondong	EPC 1987	Granted	10%

Beneficial percentage interests in farm-in or farm-out agreements acquired or disposed of during the quarter

Not applicable.

Australian Pacific Coal Limited (ABN 49 089 206 986) ASX: AQC
Quarterly Report for the period ending 30 June 2021	Page 4 of 4

Rule 5.5

Appendix 5B

Mining exploration entity or oil and gas exploration entity

quarterly cash flow report

Name of entity

AUSTRALIAN PACIFIC COAL LIMITED
ABN	Quarter ended ("current quarter")
49 089 206 986	30 JUNE 2021

Consolidated statement of cash flows	Current quarter	Year to date
			$A'000	(12 months)
				$A'000
1.	Cash flows from operating activities
1.1	Receipts from customers	61	355
1.2	Payments for
	(a)	exploration & evaluation	-	-
	(b)	development	(156)	(713)
	(c)	production	-	-
	(d)	staff costs	(140)	(587)
	(e) administration and corporate costs	(283)	(888)
1.3	Dividends received (see note 3)	-	-
1.4	Interest received	-	-
1.5	Interest and other costs of finance paid	-	-
1.6	Income taxes paid	-	-
1.7	Government grants and tax incentives	-	-
1.8	Other (mine care and maintenance)	(696)	(3,781)
1.8	Other (GST refunds received)	99	478
1.8	Other (Transaction costs)	(139)	(139)
1.9	Net cash from / (used in) operating	(1,254)	(5,275)
	activities

ASX Listing Rules Appendix 5B (01/12/19)	Page 1
+ See chapter 19 of the ASX Listing Rules for defined terms.