White Energy Company Limited

White Energy Company Limited

Appendix 5B Mining Exploration Entity Quarterly Report

Stockpile of dried briquettes produced from wet coal fines at the Cessnock Demonstration Plant, NSW

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White Energy Company Limited

SUMMARY OF ACTIVITY
A summary of the major items of activity for White Energy Company Limited (WEC) during the quarter ended 30 September 2012 is outlined below. HIGHLIGHTS River Energy now in active discussions with all of the major coal producers in South Africa related to recovery and briquetting of bituminous coal fines - currently awaiting a decision to proceed on the Optimum Coal Holdings project U.S. team continues to work on air permit application requirements for Wyoming Projects, and identification of coal fines properties for acquisition White Energy continues to investigate business development opportunities in Indonesia, including coal upgrading opportunities requiring application of the BCB technology Mine planning and feasibility costing work progressing at Lake Phillipson Work continues on legal dispute with Bayan Resources relating to terminated KSC JV

COAL UPGRADING TECHNOLOGY

1. AFRICA RIVER ENERGY - WEC 51% During the September 2012 quarter River Energy continued product sampling and analysis at the Optimum Coal Holdings Limited (Optimum) Colliery, and also commenced a second six month on-site feasibility study at another large mine complex located in South Africa. As at the end of the quarter, Optimum had not completed their final technical analysis of the binderless coal briquetting plant opportunity, and River Energy still awaits a final decision to proceed with the project from Optimum. Other highlights regarding the operations of the River Energy Joint Venture during the quarter include the following: River Energy is now working on specific project opportunities involving all of the major producers in the South African coal industry ; All of these potential projects are very large and represent opportunities for River Energy to engage in projects where the requirement for a technology with the ability to scale is critical and, along with our binderless briquetting process, is a key differentiator for prospective customers ; We have submitted a major proposal for binderless briquetting to Eskom in response to a formal Request for Information (RFI). While it may take Eskom some time to work through the responses they have received, this represents the first opportunity for River Energy to formally engage with Eskom on specific opportunities ; We are currently preparing formal submissions for a number of potential projects that will be presented during the December 2012 quarter ;
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White Energy Company Limited

River Energy now has a team of 7 full-time and 2 part-time staff working across 3 locations in South Africa. While the gestation period for projects in South Africa has been frustrating, the activity in the coal fines recovery/beneficiation market continues to increase, and there is a high recognition of the opportunity and need to recover value from this massive waste stream. 2. NORTH AMERICAN OPERATIONS Buckskin & Peabody Projects, Wyoming The Company, via its wholly owned U.S. subsidiary company White Energy Coal North America Inc., continues to focus on obtaining air permits for its proposed coal upgrading projects in the Powder River Basin. However, future implementation of the BCB technology in the U.S. will be dependent on the coal producers success in obtaining approval for a coal export terminal on the west coast of the country. As reported last quarter, the U.S. team has been investigating ways in which the proposed one million tonne per annum projects in Wyoming can be considered a minor source of emissions which would mean that an application for a Prevention of Significant Deterioration (PSD) permit would no longer be required. In order for this to be achieved, it was necessary to provide evidence that the proposed Wyoming plants emit less than the threshold emissions for a minor source. In this regard, the White Energy technical team has measured actual emissions at the Cessnock Demonstration Plant, as part of coal testing works undertaken at the site. The results of this work have now been submitted to the permitting authorities for further analysis.

North American Coal and Coal Fines Projects As outlined in the previous quarterly report, the U.S. team continues to investigate opportunities associated with coal mining and the recovery and briquetting of coal fines and coarse refuse in the North American market. The majority of the effort is being directed towards metallurgical coal and coal fines. A number of potential project sites in Arkansas, Kentucky, Tennessee, Virginia, West Virginia, and Pennsylvania are currently being investigated.

3. CESSNOCK PRODUCTION PLANT, AUSTRALIA During the September 2012 quarter, testing and development work at the Companys Cessnock Production Plant has continued. A number of Demonstration Plant runs on South African and Australian reclaimed coal fines, along with pilot scale test work on a range of coals including subbituminous, bituminous thermal and bituminous coking coal products have taken place on site. Further test work undertaken in respect of the briquetting of coking coal fines has delivered very promising results, with very high quality briquette product able to be produced. Also, coke oven testing of briquettes blended with coking coal is now being undertaken.
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White Energy Company Limited

The new generation briquetting machine recently delivered to Cessnock will be installed during November 2012 along with a number of other Demonstration Plant upgrades. Upon completion of the upgrades, commercial scale tests will commence during December 2012. In particular, a large scale test on an Indonesian sub-bituminous coal will be undertaken at site, which is aimed at testing the quality of briquettes for use as feedstock in an industrial process. Further Demonstration Plant campaigns are planned to test the new briquetting machine and other equipment used for coal fines upgrading so as to optimise unit operations that will be part of future commercial upgrading plants. The photographs included at the end of this report illustrate some of the coal fines test work undertaken at the Cessnock site during the quarter.

4. OTHER BUSINESS DEVELOPMENT INITIATIVES Indonesia White Energy representatives in Indonesia continue to work with several parties to identify and explore coal deposits in Indonesia. As outlined in previous reports, the coal properties being considered by White Energy comprise a mixture of coal qualities. Most of the resources are likely to be suitable for upgrading using the BCB technology, which has the potential to greatly enhance the value of such projects. In addition, the Company also expects that some of the resources in question will not require application of the BCB technology, and can be mined and sold directly into the export markets.

Other Markets During the September 2012 quarter the Company continued to receive a steady flow of enquiries regarding potential joint venture opportunities relating to the upgrading of coal in overseas markets. Markets currently under review include major coal producers and electricity generators in China, Mongolia, Indonesia and the U.S..

COAL MINING AND EXPLORATION OPERATIONS 1. SOUTH AUSTRALIAN COAL LIMITED (SAC) Mine Plans & Costing Following completion of the 2011 drilling program at Lake Phillipson and the updated JORC resources estimate of 1,130.4 million tonnes as at 31 December 2011, the Company continues to direct its attention to the development of mine plans on two of the most prospective shallow coal areas within the deposit located adjacent to the rail line. This includes the analysis of expected costs for supply of Lake Phillipson coal to the domestic power market in South Australia, which could represent a near-term revenue opportunity for the Company.
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White Energy Company Limited

Coal Gasification In addition to the above, desk top studies are being conducted in respect of coal gasification opportunities at the Lake Phillipson deposit. A previous report issued by the German based company, Lurgi GmbH, has confirmed that the Lake Phillipson coal is suitable for gasification using their process. 2. MINERALS EXPLORATION BRIDGETOWN AMEROD RESOURCES PTY LTD (Amerod) As highlighted in the previous quarterly report, the Company has relinquished 50% of E70/2855 which was compulsory reduction. Further, during the month of September 2012, the Company voluntarily relinquished 42% of E70/2856. Through its wholly owned subsidiary Amerod, the Company continues to evaluate the remainder of these tenements. GENERAL CORPORATE 1. PT KALTIM SUPACOAL (KSC) JOINT VENTURE WITH PT. BAYAN RESOURCES (Bayan) WEC 51% Update on Legal Dispute As previously advised to the market, the shareholders of KSC, BCBC Singapore Pte Ltd (BCBCS), a White Energy subsidiary, and Bayan, are currently in dispute over matters relating to the Tabang coal upgrading plant, located at Bayans Tabang mine in East Kalimantan, Indonesia. On 27 December 2011, BCBCS and Binderless Coal Briquetting Pty Limited (BCBC), commenced legal proceedings in the High Court of the Republic of Singapore against Bayan. The issues in the legal proceedings include a claim by BCBCS and BCBC against Bayan for damages for breach of the Joint Venture Deed between the KSC shareholders, including the obligation to supply coal to KSC and the obligation to provide funding to KSC. Bayan has filed a defence to the claim, and also a counterclaim against BCBCS and White Energy seeking damages. On 21 February 2012 Bayan gave BCBCS notice purporting to terminate the Joint Venture Deed. BCBCS considers that, among other matters, Bayans purported termination amounts to a wrongful repudiation of Bayans obligations, entitling BCBCS to terminate the Joint Venture Deed. BCBCS accepted Bayans repudiation, which brought the Joint Venture to an end. BCBCS is pursuing Bayan for all damages suffered as a result of Bayans wrongful repudiation. The directors believe that BCBCS took all steps to fulfil its joint venture obligations and that the failure of the Joint Venture is due to Bayans failure to supply coal and provide funding to KSC and its purported termination of the Joint Venture Deed.

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White Energy Company Limited

On 5 April 2012, following an application by BCBCS, the Supreme Court of Western Australia made interim freezing orders in respect of Bayans 56% shareholding in Kangaroo Resources Limited, a publicly listed Australian company. On 18 April 2012, following a further hearing in this matter, the Court extended the freezing orders indefinitely. Bayan has sought to challenge the grant and scope of those orders, and in this regard has commenced a challenge to the Courts jurisdiction to make such orders (including on constitutional grounds). Bayan initially commenced its challenge in the High Court of Australia but the High Court remitted the matter back to the Supreme Court of Western Australia. The challenge will be heard by the Supreme Court in February 2013. The orders will remain in place unless and until there is a further order made by the Court. Status of Tabang Operations As a result of the above dispute, KSC suspended operations at the Tabang plant in late November 2011. The Tabang site was subsequently placed on a care and maintenance program. At the time of suspension of operations at Tabang, the various plant modification works being undertaken at site were over 95% complete. Following a petition filed by a number of local creditors of KSC in the Commercial Court of Surabaya, Indonesia, administrators were appointed to KSC. Further to an order of the Court, KSC has now been placed into bankruptcy and Curators have been appointed to manage this process. All KSC staff have now been terminated from the Tabang site and a small number of administrative staff remain in KSCs Balikpapan office in order to assist the Curator with the bankruptcy process. As shareholders are aware, the White Energy Group has previously fully impaired its investment in KSC and as such the bankruptcy process will not have any further impact on the accounting results of the White Energy Group.

2. BALANCE SHEET AND CASH RESERVES As outlined in the attached, the Company had approximately $133 million in cash reserves as at 30 September 2012, which included the $2 million security bond paid to the Supreme Court of Western Australia in April 2012, in support of the freezing orders made against Bayans shareholding in the ASX-listed Kangaroo Resources Limited. During October 2012, the Company repaid in full the $25 million convertible loan note which matured on 12 October 2012. As at the date of this report, the Company has approximately $106 million in cash reserves, providing sufficient capital to take the business forward and capitalise on the many business development initiatives currently in the pipeline.

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White Energy Company Limited

Appendix 5B Mining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/ 2001.

Name of entity

White Energy Company Limited

ABN Quarter ended (current quarter)

62 071 527 083

30 September 2012

Consolidated statement of cash flows

Cash flows related to operating activities 1.1 Receipts from product sales and related debtors Payments for (a) exploration and evaluation (b) development (c) production (d) administration * Dividends received Interest and other items of a similar nature received Interest and other costs of finance paid Income taxes paid Other (provide details if material) Staff costs, legal and accounting, administration Net Operating Cash Flows Cash flows related to investing activities Payment for purchases of: (a)prospects (b)equity investments (c) other fixed assets Proceeds from sale of:(a)prospects (b)equity investments (c)other fixed assets Loans to other entities Loans repaid by other entities Other (provide details if material) Net investing cash flows Total operating and investing cash flows (carried forward) * includes legal fees incurred in respect of KSC dispute Current quarter $A000 57 Year to date (3 months) $A000 57

1.2

1.3 1.4 1.5 1.6 1.7

(a) (101) (b) (984) (c) (237) (d) (5,824) Nil 2,407 Nil Nil Nil

(a) (101) (b) (984) (c) (237) (d) (5,824) Nil 2,407 Nil Nil Nil

(4,682)

(4,682)

1.8

1.9

1.10 1.11 1.12

(a) Nil (b) Nil (c) (999) (a) Nil (b) Nil (c) Nil Nil Nil Nil (999) (5,681)

(a) Nil (b) Nil (c) (999) (a) Nil (b) Nil (c) Nil Nil Nil Nil (999) (5,681)

1.13

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White Energy Company Limited

1.13

Total operating and investing cash flows (brought forward) Cash flows related to financing activities Proceeds from issues of shares, options, etc. Proceeds from sale of forfeited shares Proceeds from borrowings Repayment of borrowings Dividends paid Other (provide details if material) Net financing cash flows Net increase (decrease) in cash held

(5,681)

(5,681)

1.14 1.15 1.16 1.17 1.18 1.19

Nil Nil Nil Nil Nil Nil Nil (5,681) 139,020 Nil 133,339

Nil Nil Nil Nil Nil Nil Nil (5,681) 139,020 Nil 133,339

1.20 1.21 1.22

Cash at beginning of quarter/year to date Exchange rate adjustments to item 1.20 Cash at end of quarter **

** includes $2 million WA Supreme Court Security Bond relating to the freeze order obtained in respect of Bayan Resources shareholding in Kangaroo Resources Limited

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities
Current quarter $A'000 1.23 1.24 1.25 Aggregate amount of payments to the parties included in item 1.2 (d) Aggregate amount of loans to the parties included in item 1.10 Explanation necessary for an understanding of the transactions N/A 383 Nil

Non-cash financing and investing activities

2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows N/A

2.2

Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest N/A

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White Energy Company Limited

Financing facilities available

Add notes as necessary for an understanding of the position.

3.1 3.2

Loan facilities Credit standby arrangements

Amount available $A000 Nil Nil

Amount used $A000 Nil Nil

Estimated cash outflows for next quarter

4.1 4.2 4.3 4.4 Exploration and evaluation Development Production Administration $A000 100 750 225 5,250

Total

6,325

Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows. 5.1 5.2 5.3 5.4 Cash on hand and at bank Deposits at call Bank overdraft Other (provide details) - WA Supreme Court Security Bond relating to legal dispute with Bayan Resources Total: cash at end of quarter (item 1.22) 2,000 2,000 Current quarter $A000 3,609 127,730 Previous quarter $A000 1,478 135,542

133,339

139,020

Changes in interests in mining tenements

Tenement reference 6.1 Interests in mining tenements relinquished, reduced or lapsed E70/2855 E70/2856 Nature of interest (note (2)) Interest at beginning of quarter 100% 100% Interest at end of quarter 50% 58%

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White Energy Company Limited

6.2

Interests in mining tenements acquired or increased

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

Total number

Number quoted

Issue price per security (see note 3) (cents) N/A

7.1

7.2

7.3

Preference +securities (description) Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buybacks, redemptions +Ordinary securities Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buybacks +Convertible debt securities (description)

N/A

N/A

Amount paid up per security (see note 3) (cents) N/A

N/A

N/A

N/A

N/A

7.4

Opening 322,974,494 (a) N/A

Opening 322,974,494 (a) N/A N/A N/A

(b) N/A Closing 322,974,494 (a) Unlisted convertible note with face value of $250,000, 7.90%pa coupon convertible at $3.22 per share, maturing on 12/10/2012

(b) N/A Closing 322,974,494 (a) Not listed

N/A

N/A

7.5

$250,000

$250,000

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White Energy Company Limited

7.6

7.7

Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted Options (description and conversion factor)

Opening 100 (a) N/A (b) N/A Closing 100

Opening 0 (a) N/A (b) N/A Closing 0

N/A

N/A

(a) Standard Closing 2,000,000 (b) Standard Closing 750,000 (c) Director / ESOP Closing 1,218,334 (d) Executive Retention Plan Closing 5,400,000 Rights

(a) Not Listed 2,000,000 (b) Not Listed 750,000 (c) Not Listed 1,218,334

Exercise price (a) $3.65

Expiry date (a) 07/10/13

(b) $3.65

(b) 31/10/13

(c) $3.50

(c) 31/03/14

(d) Not Listed 5,400,000 Rights

(d) 30 day VWAP pre vesting

7.8

Issued during quarter

(a) (b) (c) (d) (a) (b) (c) (d)

Nil Nil Nil 5,400,000 Nil Nil Nil Nil

(a) (b) (c) (d) (a) (b) (c) (d)

Nil Nil Nil 5,400,000 Nil Nil Nil Nil

N/A

(d) vest 30/06/14 subject to performance and other conditions N/A

7.9

Exercised during quarter

(a) $3.65 (b) $3.65 (c) $3.50 (d) 30 day VWAP pre vesting

7.10

Expired during quarter

(a) (b) (c) (d)

Nil Nil Nil Nil

(a) (b) (c) (d)

Nil Nil Nil Nil

(a) $3.65 (b) $3.65 (c) $3.50 (d) 30 day VWAP pre vesting

(a) 07/10/13 (b) 31/10/13 (c) 31/03/14 (d) vest 30/06/14 subject to performance and other conditions (a) 07/10/13 (b) 31/10/13 (c) 31/03/14 (d) vest 30/06/14 subject to performance and other conditions

7.11

Debentures (totals only)

N/A

N/A

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White Energy Company Limited

7.12

Unsecured notes (totals only)

N/A

N/A

Compliance statement 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4). 2 This statement does give a true and fair view of the matters disclosed.

Sign here:

............................................................ Director Brian Flannery

Date 30 October 2012

Print name: Notes 1

The quarterly report provides a basis for informing the market how the entitys activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report. The Nature of interest (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2. Issued and quoted securities: The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities. The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report. Accounting Standards: ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

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White Energy Company Limited

For further information please contact: Brian Flannery Managing Director & CEO WHITE ENERGY COMPANY LIMITED Level 20, 201 Kent Street Sydney, NSW, 2000 Ph: +612-9959-0000 Fax: +612-9959-0099 www.whiteenergyco.com Ivan Maras Chief Financial Officer WHITE ENERGY COMPANY LIMITED Level 20, 201 Kent Street Sydney, NSW, 2000 Ph: +612-9959-0000 Fax: +612-9959-0099

The information in this report which relates to Exploration Results, Mineral Resources or Ore Reserves at EL 4534, for coal, is based on information compiled by Jonathan Barber, who is a member of the Australasian Institute of Mining and Metallurgy. Jonathan Barber is an employee of Jon Barber Mining Consultants Pty Ltd and is engaged as a consultant to South Australian Coal Limited. Jonathan Barber has sufficient experience which is relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Jonathan Barber consents to the inclusion in this announcement of the matters based on his information in the form and context in which it appears. The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves at the Bridgetown project is based on information compiled by Richard Monti, who is a member of The Australasian Institute of Mining and Metallurgy. Richard Monti is employed as a consultant to the Company. Richard Monti has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Richard Monti consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

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White Energy Company Limited

Dried briquettes produced from wet coal fines during the September 2012 quarter at the Cessnock Demonstration and Pilot Plants, NSW Photos courtesy of Jonathan Carroll Newcastle Herald

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