Quarterly Activities Report September 2021

28 October 2021	ASX RELEASE / MEDIA RELEASE

QUARTERLY ACTIVITIES REPORT SEPTEMBER 2021

HIGHLIGHTS

• Solid sales growth continues with existing customers and new customers placing Fall orders
• Launch of three new fertilizer products complements the Company's existing offerings
• Verification of the Company's first series of carbon credits
• Partnerships with Trimble Inc (NASDAQ: TRMB) and Brightspot Climate Inc facilitate offset carbon trading
• Increasing market awareness of Fertoz's products leads to new sales team appointments
• Record fertiliser prices and supply chain disruptions presenting opportunities for Fertoz
• $5 million share placement to develop Fertoz Carbon completed; balance sheet strengthened
• Cash balance at 30 September 2021 of $5.7 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 30 September 2021.

Fertoz Executive Chairman Patrick Avery stated:

"We have seen rapid progress this quarter, highlighted by the successful drone seeding at our showcase site in Fernie, BC (as announced to the ASX on 22 October 2021). This has led to increased inbound interest from mining companies and landowners in the region looking at partnering on carbon sequestration projects.

"Fertoz continues to advance protocol developments with Trimble and Brightspot, leveraging Fertoz`s extensive trial data to support the development of carbon offsets for sustainable agricultural practices in the near future.

"It was also pleasing to see the ramping up of phosphate orders from existing and new clients during the quarter. The rising market awareness of sustainable ag practices, and the long-term cumulative harm of the use of chemicals and synthetic fertilizers, is expected to continue to drive demand for Fertoz solutions. Mining and extraction operations commenced at Fernie following this strong quarter of orders. Fertoz built a solid inventory of finished product in storage in the September quarter as the company ramps up shipments in the December quarter, as well as focusing on a solid order book for Q1 2022.

"The introduction of three new fertilizer products using our certified organic rock phosphate as a key input reflects our commitment to improving sustainability, soil regeneration of carbon, environmental health and combatting climate change.

"There has been a significant increase in awareness of our products and services, especially concerning carbon credits and reforestation. This has led to us seeking to grow our team with the addition of new sales and account management personnel across the USA. We look forward to further advancing the Fertoz Carbon Division in the coming quarter.

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

"Continuing uncertainty on supply chains saw synthetic fertilizer prices hit record levels in September. The major producers of DAP/MAP import phosphate from North Africa, Russia, Saudi Arabia and South America. The Company's deposits are advantageously located close to our major farming districts, and we anticipate increasing demand into CY22 year with the benefit of a pricing advantage."

Launch of three new products featuring Fertoz's certified organic rock phosphate

During the quarter, Fertoz announced the development of three new fertilizer products containing the Company's certified organic rock phosphate as the key fertilizer input (ASX announcement 27 July 2021). These new products complement Fertoz's existing offerings as the Company responds to increasing demand for high-quality,environmentally-friendly phosphate fertilizers and blends. Fertoz's products provide farmers and their crops with high nutrient value, have no run-off or soil salt effects, are carbon neutral and are highly cost-effective based on yield.

• Phosul LLC has manufactured and is launching a new phosphate fertilizer called Phosul 0-16-0-4 Grows with Nature TM. Approved for use in organic production with high P availability, long- lasting source of phosphate, sulphur, calcium and silica; this product has been shown to increase yields.
• In partnership with Western Alfalfa Milling, Fertoz is launching Nutrient Vigour Plus 2-4-4-2, an all-in-one fertilizer designed with sustainable, organic ingredients that provide high analysis, important N-P-K-S nutrients that are essential for crop production.
• Humic Growth Solutions plans to offer a new line of patented Humi[K] Phos products from its new facility, containing humates, rock phosphate and other beneficial ingredients.

Fertoz's commitment to improving sustainability, soil regeneration of carbon, environmental health and combatting climate change has driven the Company to partner with fertilizer manufacturers that operate in a way that contributes to lowering greenhouse gas emissions. Phosul, WAMCO, and Humic are previously-announced Fertoz partners that develop and market low or carbon-neutral phosphate products.

Fertoz will continue to invest in research and development and look into partnering with credible leaders in product manufacturing and agriculture to add more organic nutrients to the Company's rock phosphate and expand the Company's unique organic product lines. Thanks to solid business relationships and collaborative efforts with the three partners mentioned above, Fertoz has successfully developed new product blends suitable for farmers across North America.

Products will be available for purchase through Fertoz's existing sales network, through the Company's website and its partners' distribution channels. Marketing efforts include sharing technical information through Fertoz and partner websites, exposure to social media, current mailing lists and contacts, and product training with existing Fertoz distributors.

Reforestation and carbon credits project

Fertoz has continued to take steps towards becoming an internationally accredited carbon-neutral or carbon-negative operation. As announced to the ASX on 8 September 2021, Fertoz's partners, Trimble and Brightspot, are verifying and accrediting both the Fernie, BC demonstration site as well as advancing a potential new protocol for verifying the carbon credits associated with the sale of Fertoz products.

Fertoz's California-based partner, Trimble Inc (NASDAQ: TRMB), is a US$20B market-cap company that provides software, hardware and services technology. Trimble's Agriculture Division is engaged in carbon credit trading, and Fertoz and Trimble have been working together for a number of months to develop a comprehensive system that will allow the carbon credits generated in the Company's agriculture and reforestation projects to be traded.

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The Company has also engaged Brightspot Climate Inc, a climate change and energy consulting firm, to provide consulting services to Fertoz. The Company expects these services to quantify the carbon sequestered in crops and forests according to a methodology that conforms to the ISO 14064-2 standard.

The Company conducted an efficient, high tech reclamation project at the Fernie project, including the spreading of permit-required tree species and seed mix, including Fernie rock powder for improved reclamation results. A local drone reseeding company has partnered with Fertoz to undertake the drone seeding and Fertoz will track growth regularly by satellite and drone. Several local forestry groups and mines have expressed interest in the Company's reforestation and carbon credit services, and attended and observed the drone reseeding of the Fernie project as an example of a commercial project, potentially generating additional projects for Fertoz Carbon operations.

Discussions are underway on a significant reseeding and carbon credit project that would enable carbon credit generation covering initially around 1,000 ha rising to over 20,000 ha from a number of potential carbon projects in the pipeline.

The Company is finalising plans for larger scale reforestation and reclamation in several Eastern States, and is also talking to companies in BC, Alberta, and Montana. The Company's experience in organic fertilizers and sustainable and regenerative agricultural practices is acting as a key point of difference, prompting forestry groups to contact Fertoz to discuss carbon credit generation as an alternative income stream to timber sales. Land, forestry, and agricultural companies are quickly moving towards adopting sustainable land management practices, and the Company's experience over many years in this area is attracting rising attention and inbound interest in projects.

The Company is also reviewing potential partners for a similar project at an abandoned mine site located on the East Coast USA (ASX announcement 22 October 2021). This project is initially up to 3,600 ha (approx. 9,000 acres). The marketing of Fertoz's services has generated a number of leads, and the Company is progressing discussions in relation to reforestation / carbon credit projects in Australia, Asia and Europe and other projects in the USA and Canada.

Fertoz's Carbon division is advancing a carbon sequestration protocol is collaboration with top scientists for carbon capture, conservation cropping and Scope 3 Manufacturing (mining and processing) calculations. These protocols and will be used in Voluntary carbon trading markets and with partners, and will build the basis for our Regulatory Market approvals.

North America Fertilizer Update

Mining and extraction operations commenced at Fernie during the quarter. Fertoz is the largest supplier of organic rock phosphate in North America, with mining permits in place to access large phosphate resources at Fernie (British Columbia). Fertoz supplies rock phosphate from other locations in Canada, the United States and Mexico providing easy access to Fertoz rock phosphate throughout North America and importantly close to the intended customer.

The Fernie Mining Project makes up over 9,033 hectares, with road access and rail transportation to all major networks in Canada and the USA. Fertoz rock phosphate is from extensive sedimentary deposits, i.e., high quality "soft" rock phosphate deposits, and which are much preferred for beneficial crop production.

Mining and extraction operations are planned to satisfy increasing demand due to a previous strong quarter of orders from customers and an order of a minimum of 3,000 tonnes of organic rock phosphate to be supplied to EarthRenew (ASX announcement 30 June 2021). Total contracts/orders to be delivered now exceed 10,000 tonnes of organic rock phosphate and require filling and delivery into Q3 and Q4 2021, with cashflows to follow post-delivery.

The Company is calculating the Scope 3 emissions from these operations. Given the relatively short timeframe to extract the material and move it to Fort Macleod, Alberta for processing, these emissions

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are not expected to significantly contribute to the Company's overall greenhouse gas emissions, as Fertoz continues to market low carbon and carbon neutral fertilizer blends. Fertoz will look to offset any emissions in operations with carbon credits from either Fertoz carbon projects and/or establishing new protocols that will involve Fertoz fertilizer products.

Other products continue to sell, including the organic N-P-K product designed in conjunction with WAMCO. Additional fertilizer products are being evaluated at present, but given the interest generated by Fertoz Carbon, the carbon credit projects are taking precedence. Most, if not all, of these projects, will use the Company's range of organic fertilizers to accelerate plant growth and carbon dioxide and nitrous oxide sequestration.

Additional personnel for Fertoz Organics Inc

With increasing market awareness of the Company's products and services, especially concerning carbon credits and reforestation, the Company is seeking additional sales and account management personnel across the USA. To this end, the Company has recently established a US-based subsidiary, Fertoz Organics, Inc, which will have a 401k and a family medical plan in place to attract highly experienced candidates. Fertoz recruited in the September quarter two senior sales people in Iowa and Arizona. The Company is working to hire additional sales people and 1-2 carbon scientists.

Australia / Asia

The Company's Australian operations have experienced a solid year in sales tracking to budget. Supply chain issues continue to increase the cost of imported goods: as an indication of the challenge, the cost of freight ex Vietnam has increased by an average US$1,000 per container in the last six months. FertAg has announced price increases effective 1st November 2021 to offset rising costs.

Although Philippines sales are below budget due to COVID Government fertilizer farm subsidies and travel restrictions, retail sales for the home Australian market have been strong in the September quarter and look to continue to grow in 2022.

The focus in the December quarter is on potential carbon projects. The Company is evaluating a number of projects at present.

Outlook and opportunities

Significant media and industry concerns have recently been aired regarding the high price of commercial synthetic fertilizers and their availability. To help to address this industry challenge, Fertoz has tested blending its rock phosphate with commercial monoammonium phosphate, and has seen positive results from blending Fertoz rock in at 20-30% and even as high as 50% with conventional fertilizer.

Fertoz is starting to focus closely on this market opportunity. Blending Fertoz product with conventional synthetic fertilisers will reduce the cost of the mix and offer steady yield results while reducing environmental impacts including water runoff, volatilization and significantly reducing the carbon footprint. Fertoz has sufficient supply of rock for organic and commercial fertilizer dealers and growers.

With growing sales and carbon program interests, Fertoz is expanding on all fronts:

• Fernie: working on the Bulk Sampling Permit for the Barnes lease and working to finalise a Fernie area Small Mining Permit;
• Wapiti: inbound interest from northern Alberta and Saskatchewan customers, asking about supply. We are studying how to finalise a Small Mine Permit at Wapiti.

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• Montana: Moving 6,000-7,000 tonnes from the Deerlodge rock stockpile to Butte for winter and spring 2022 processing and sales. The Company is currently installing a ball mill which will provide consistent feed size for the new granulator. Once the ball mill is done, Fertoz can finish the granulation installation in November 2021, ready for ramping up into CY22.
• Mexico: volumes from the Monterrey Mexico mine moved steadily throughout the year with sales into the USA. Fertoz has recently renewed its exclusive Marketing Agreement with the owners for another two years, plus a second two-year renewal extension.

Fertoz has steady sales indications for CY22 and holds a positive outlook for growth.

CORPORATE

$5 million Placement to develop Fertoz Carbon

As announced on 8 September 2021, Fertoz has completed a $5 million Share Placement to develop Fertoz Carbon. Fertoz received firm bids for a $5 million Share Placement to sophisticated and professional investors via the issue of 33,333,333 shares at $0.15 per Share, to be completed in two tranches ("Share Offer") Tranche 1 (ASX announcement 15 July 2021) and Tranche 2 (ASX announcement 8 September 2021).

Fertoz plans to use funds from the Placement to accelerate the development of its Fertoz Carbon division, which will focus on carbon sequestration, consulting activities, trading and implementation of carbon strategies using Fertoz organic fertilizers, a key input into improving soil health and, therefore, carbon accretion.

The strengthened balance sheet will also empower the Company to recruit additional carbon specialists, expand its North American organic phosphate sales team, and add to its working capital.

The Placement price of $0.15 per Share represented a 0.6% discount to the 15-dayvolume-weighted average price (VWAP) of $0.151 per Share.

The Placement consists of:

1. up to 20,000,000 fully paid ordinary shares in the capital of the Company ("Shares") at an offer price of $0.15 per Share to raise up to approximately $3,000,000 (before costs) ("Tranche 1"), together with;
2. Up to 13,333,333 Shares at an offer price of $0.15 per Share to raise up to approximately $2,000,000 (before costs) ("Tranche 2").

The Tranche 1 Shares issued under the Share Offer were issued pursuant to the Company's existing placement capacity (15%) under ASX Listing Rule 7.1. The issue of Tranche 2 Shares received shareholder approval at an EGM held on 3 September 2021. JP Equity Partners was Lead Manager to the Placement.

Meeting results

Shareholders passed all resolutions put to them at the Company's Annual General Meeting on 23 July 2021 and at Fertoz's General Meeting of shareholders held on 3 September 2021. A summary of voting results is in the ASX announcements dated 23 July 2021 and 3 September 2021.

Cash / Appendix 5B commentary

The Company had A$5.7 million in cash as at 30 September 2021 and no loan balances owing.

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