AustChina : Half Yearly Financial Statements 31 December 2023

AUSTCHINA HOLDINGS LIMITED

ABN 20 075 877 075

HALF-YEAR REPORT - 31 DECEMBER 2022

DIRECTORS' REPORT

FOR THE HALF-YEAR ENDED 31 DECEMBER 2022

Your directors present their report on AustChina Holdings Limited (referred to hereafter as the 'consolidated entity' or 'group') for the half-year ended 31 December 2022.

DIRECTORS

The following persons were directors of AustChina Holdings Limited during the whole of the half-year and up to the date of this report, unless otherwise stated:

Daniel Chan

George Lam

Andrew MacIntosh

David Morris

Bernard Ripoll

James Dick was appointed as a Director on 4 December 2022 and continues in office at the date of this report.

PRINCIPAL ACTIVITIES

During the financial half-year, the principal activity of the Group consisted of exploration and investment in energy and resources.

REVIEW OF OPERATIONS

The loss for the consolidated entity after providing for income tax amounted to $570,268 (2021: profit $556,546).

Strategic Direction

The Company's key strategic focuses are:

1. Continued exploration and development of existing coal projects for the creation of longer-term shareholder value.
2. Continue to review technology's and processes that could provide alternate use or add value for use of the coal at the Blackall Coal Project.
3. Seek opportunities in the resources sector, and
4. Development of a suitable project to provide cash flow in the short to medium term.

Blackall Coal Project

AustChina holds two current exploration permits for coal (EPCs), located near Blackall in Central Queensland. The EPCs (1719 and 1993) comprise a single project-based administration area approved by the Department of Natural Resources, Mines and Energy.

A schedule of the Exploration Permits held on 31 December 2022 by AustChina is provided in Table 1.

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DIRECTORS' REPORT

FOR THE HALF-YEARENDED 31 DECEMBER 2022 (continued)

		OWNERSHIP
TENEMENT	PROJECT NAME	%	DATE GRANTED	EXPIRY DATE
EPC 1719	BARCOO RIVER-BLACKALL RAIL	100	28/07/2010	27/07/2025
EPC 1993	BLACKALL SOUTH CORNER	100	17/03/2010	16/03/2026

Table 1: AustChina Holdings Limited Tenement Portfolio

Exploration Activities

The company outlined its exploration programme for 2023 for its Blackall Coal Project. Resource upgrade planning will incorporate the results of the mining scoping study which will assist in designing a drilling programme in Q3 2023 to upgrade the current JORC resource data for the project. The programme will provide infill drilling within the existing drilling grid over an area to be identified during the mining scoping study.

Laboratory analysis is planned to continue to year's end ahead of a JORC resource upgrade anticipated in Q1 2024.

Austchina Holdings Limited - Blackall Coal Project Exploration Activities 2023

Review of geological database Mining scoping study Resource upgrade planning Drilling programme on site Coal quality testing

2023

Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec

Technologies for Alternative Use of Blackall Coal

The potential of the Blackall Coal Project is considered to lie in alternative technologies for the use for the coal on-site to produce products including ammonia, methanol, hydrogen, and energy, with other by-products. The company is looking to take advantage of opportunities within the developing "hydrogen economy". The company's focus is the long-term production of energy products.

On 15 October 2021, AUH announced it had entered into a non-binding Memorandum of Understanding with Fortress Capital Limited to conduct due diligence on a new technology that could enhance AustChina's energy portfolio through the conversion of solid fuels including coal, municipal household and commercial waste, biomass, and other material to generate cleaner environmentally responsible electricity. This process has the potential to reduce carbon emissions and utilise fuel sources such as coal, municipal household and commercial waste that would otherwise go to landfill to produce energy for its own purposes or for sale to the electricity grid.

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DIRECTORS' REPORT

FOR THE HALF-YEAR ENDED 31 DECEMBER 2022

(continued)

Investment in Biogas Renewable Energy Sector

AustChina holds 25.12% of Queensland based bioenergy developer Utilitas Group Pty Ltd and is well positioned in the bioenergy and bioproducts field in Australia. Utilitas and key project delivery partners have advanced Bankable Feasibility Studies on its top three priority projects Bundaberg, Hunter & Packenham, and have defined a future pipeline of projects to follow.

The company successfully undertook an assessment identifying a new significantly larger scale project model it calls a Biorefinery, which is approximately scale magnitude of ten to the previous model. This has now become the default project size with the company's pipeline adapting to the new larger scale. This adaptation boasts significantly better returns and lower a feedstock risk profile. Support for the sector and Utilitas projects continues to strengthen, prompting more intensive project funding activities.

During the half-year period, the Company determined to write-down the value of its investment in Utilitas to nil on the basis that Utilitas is deficient in net assets. Until such time as Utilitas is in a position to capitalize upon the project activities, the Company's investment is likely to remain at nil. Once Utilitas has been able to return to a positive net asset position, the Company will then determine whether a reversal of the impairment expense is appropriate.

Investment in Revolver Resources Holdings Limited (ASX: RRR)

On 23 September 2021, Sector merged with Dianne Mining Corporation Pty Ltd and listed on the ASX as Revolver Resources Holdings Limited. (Revolver)

Revolver updated the market in December 2022 advising of maiden Copper Mineral Resource at Dianne Mine. The resource combines a shallow high-grade Primary and Supergene sulphide component encompassed within a broad near surface lower grade halo of supergene oxide mineralisation. This mineralization is amenable to low-cost heap leach processing with the sulphide mineralization amenable to floatation to produce potentially saleable copper and zinc concentrates.1

AUH congratulates Revolver on these results and continues to see long term potential in the copper sector.

SUBSEQUENT EVENTS OCCURRING AFTER THE BALANCE SHEET DATE

No matters or circumstances have arisen since 31 December 2022 that have significantly affected, or may significantly affect, the operations of the consolidated entity, the results of those operations or the state of affairs of the consolidated entity in future financial years.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

There were no other significant changes in the state of affairs of the consolidated entity during the financial half-year.

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AUDITOR'S INDEPENDENCE DECLARATION

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on the following page.

This report is made in accordance with a resolution of directors, pursuant to section 306(3)(a) of the Corporations Act 2001.

1. Chan Chairman

16 March 2023

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