Montem Resources : Quarterly Activities and Cashflow Report

12 April 2022

Montem Resources March 2022 Quarterly Activities Report

HIGHLIGHTS

• • Montem progresses its Tent Mountain Renewable Energy Complex ("TM-REX") in Alberta, Canada

• • Engineering firm Hatch is completing engineering and design for Class III cost estimates for the Pump Hydro Energy Storage ("PHES") element of the TM-REX

• • Engineering firm GHD is progressing the business case analysis for the Green Hydrogen Electrolyser element of the TM-REX, which includes Class IV cost estimates that will be used to determine project economics

• • Cost estimates and project economics results for TM-REX will be available at end of Q2 2022

• • Montem submits interconnection application to the Alberta Electric System Operator ("AESO"), advancing progress on securing interconnection to the Alberta electricity grid

• • Government of Alberta releases Coal Policy Committee ("Committee") reports and a new Ministerial Order following the Committee's review of the Alberta 1976 Coal Development Policy

• • Montem's Tent Mountain Mine qualifies as an advanced coal project, and is able to continue unaffected by the Ministerial Order resulting from the Committee's recommendations.

Montem Resources Limited (ASX: MR1) ("Montem" or the "Company") is pleased to report on activities at its portfolio of Canadian assets during the quarter ending in March 2022.

Managing Director Peter Doyle said: "Our continued investigation of Tent Mountain as a renewable energy complex is producing exciting results and is expected to deliver Montem a compelling alternative to the potential to restart the hard coking coal mine"

"The work we completed in Q1 is substantial, and we are on-track to finalise the design and cost estimates for the pumped hydro energy storage and the green hydrogen electrolyser facility by the end of Q2. We are excited to complete this work and present this exciting opportunity to investors."

"In addition, in March, the Alberta Government delivered its update on coal development regulations. As part of this, the Tent Mountain Mine was designated as an advanced coal project, enabling it to continue in the permitting process. We are working with Federal and Provincial regulators on the permitting process for the mine re-start, and continue to look at our options, and refine our mine development strategy."

Tent Mountain Renewable Energy Complex (TM-REX)

Montem is investigating the potential to convert the Tent Mountain Mine to a renewable energy complex.

Montem completed separate independent expert studies in 2019 and 2021 which demonstrated Tent Mountain's strong viability to host a renewable energy complex including:

• • 320 MW Pumped Hydro Energy Storage ("TM-PHES")

• • 100 MW Green Hydrogen Electrolyser

• • 100 MW Wind Farm (offsite)

Montem engaged consultancy Hatch to undertake detailed design and engineering to support Class III cost estimates for the PHES element of the TM-REX. The PHES Class III cost estimates will be coupled with analytics supplied by Boost Energy to provide project economics. The cost estimates and project economics results will be completed at the end of Q2 2022.

Hatch is a world leader in PHES project design and development. They have significant local experience having been involved in the design and development of the Canyon Creek PHES Project, which is located in west-central Alberta. Hatch has a global network of 9,000 professionals working on the world's toughest challenges. Their experience spans over 150 countries around the world in the metals, energy, infrastructure, digital, and investments market sectors.

Throughout Q1, Montem has actively collaborated with Hatch on the TM-PHES gap analysis and configuration options for the powerhouse. This work feeds thorough project economics and cost estimates scheduled to be completed in June 2022. This workstream is a critical and exciting step in the commercialization of the TM-REX, and the Company looks forward to sharing the progress with investors.

Grid Connection

Montem submitted the system access service request ("SASR") grid interconnection application to the AESO in March 2022. The SASR submission is a key project milestone that triggers the AESO stage gate process for securing interconnection capacity to the Alberta transmission system (the grid). The TM-PHES is located less than 10km from the Alberta high voltage electricity grid, which provides logistics and economic advantages for the TM-PHES.

Wind Power

A critical element of the TM-REX is the supply of renewable power to recharge the TM-PHES. Montem continues to work closely with the Piikani Nation ("Piikani") on wind power generation strategies. Tent Mountain is located in the traditional territory of the Piikani, and Piikani's reserve lands lie in the heart of southern Alberta's wind power generating region.

Green Hydrogen

GHD is progressing the analysis for Class IV cost estimates that will be used to determine project economics for the Green Hydrogen Electrolyser element of the TM-REX. The Green Hydrogen Electrolyser Class IV cost estimates and project economics results are both expected in June 2022. GHD is analysing the development steps necessary for pilot and full-scale green hydrogen plants, both of which would produce the lowest carbon intensity hydrogen available in Alberta.

To support the Green Hydrogen Electrolyser element of the TM-REX economic analysis, GHD is completing preliminary engineering design work, including the assessment of land, water, and regulatory requirements for the project. Further, GHD are preparing the technical requirements for production, storage, and transportation of green hydrogen, and establishing the optimum project delivery schedule.

In conjunction with GHD, Montem is exploring potential customers for the green hydrogen produced at TM-REX, aiming to leverage nearby key infrastructure and other major industries.

Grant Funding

Montem has applied for C$5 million in Federal funding from Canada's Clean Fuels Program. Montem has been informed its application is currently being reviewed. Grants are now expected to be announced in Summer 2022 (northern hemisphere). For more information on Canada's Clean Fuels Program and the grant process, see the below link:https://www.nrcan.gc.ca/climate-change-adapting-impacts-and-reducing-emissions/canadas-green-future/clean-fuels-fund/clean-fuels-fund-building-new-domestic-production-capacity/23726

Montem is also investigating other renewable energy grant options, at both the Provincial and Federal level, and is in discussion with several government departments whose mandates are aligned with the benefits offered by TM-REX.

Aerial photograph of the Tent Mountain Mine showing location of PHES

Alberta Coal Policy Update - Montem's Tent Mountain Mine Unaffected

Montem reviewed the Coal Policy Committee reports and recommendations, and the accompanying Ministerial Order, following the Committee's review of the Alberta 1976 Coal Development Policy, as released by the Government of Alberta on 4 March 2022.

As a result of the Committee's recommendations, the Alberta Government designated Montem's Tent Mountain Mine as an advanced coal project. Alberta's advanced coal projects are unaffected by the Ministerial Order's additional coal exploration and development restrictions implemented as a result of the Committee's recommendations.

Montem continues to advance two parallel strategies for developing Tent Mountain:

• 1. restart of the existing coal mine

• 2. transition of the existing coal mine to a renewable energy complex

Work on TM-REX will continue for the remainder of the first half of 2022 until the economic analysis of TM-REX is available, at which point the investment potential of both development pathways can be compared.

Additionally, Montem will continue to advance the existing coal mine restart through the Federal and Provincial permitting processes.

Corporate

Annual General Meeting

A General Meeting was held on 17 March 2022. All resolutions were carried.

Montem will hold the Annual General Meeting on Wednesday, 25 May 2022. The details relating to the meeting will be advised in the Notice of Meeting to be sent to all shareholders in due course..

Cash at Bank

Montem held A$2.874 million cash as at 31 March 2022.

Payments to directors and related parties

In the attached Appendix 5B, the figure of $208,000 - as disclosed in section 6.1 - relates to all fees, salaries and superannuation paid to Montem's Directors for the quarter ended 31 March 2022.

Use of Funds Statement

The current quarter is covered by the Use of Funds Statement outlined in the Prospectus dated 31 July 2020. A summary of expenditure to date is outlined below:

Actual

Per	expenditure to
Prospectus	31 March 2022
Total	Total
(million $)	(million $)
Tent Mtn: Strategic land purchase (Tent Mtn rail)	2.64	0.29
Tent Mtn: Port reservation fee	1.20	0.60
Tent Mtn: permitting (enviro monitoring and liaison)	0.63	4.18
Tent Mtn: pre-production drilling (pit definition & bulk sample)	0.89	0.31
Chinook: exploration, PEA study and environmental work	0.83	1.82
General and administrative expenses	1.72	4.95
Offer costs (broker fees; IPO preparation)	0.83	0.78
Total expenditures in the period	8.74	12.94

In general, spending for the quarter was in line with expectations. In late 2021 Montem raised approximately $3 million for use to investigate the potential of the Tent Mountain Renewable Energy Complex. This analysis, including the necessary cost estimation and engineering design work, as well as work on permitting and social licensing was the predominant use of funds in the March quarter. This is different to the forecast expenditure from the 2020 Prospectus, and is in response to the rapidly changing environment for coal mine permitting in Alberta. Expenditure on the Tent Mountain Renewable Energy Complex are excluded from the table above, as they were note covered in the Use of Funds Statement outlined in the Prospectus dated 31

July 2020.

Expenditures on the Tent Mountain Mine permitting are largely historical, although higher than forecast in 2020. This trend continued throughout 2021, as the project moved into the final stages of provincial permitting, however, spending on permitting is now limited. In the 2020/2021 period Montem spent additionally on Tent Mountain Mine permitting due to negotiating with federal agencies, which required the extensive use of legal and other advisors. General and administrative expenses include direct overheads such as legal and other professional charges related to regulatory applications, stakeholder relations and Indigenous Peoples engagement associated with Tent Mountain Mine permitting. Due to the indirect nature of these expenses, they are recognised as general and administrative expenses in the financial statements. As the process to avoid federal designation for review of the Tent Mountain project reached its conclusion in June 2021, general and administrative expenses due to permitting decreased in the ensuing period.

The Chinook Project exploration and permitting is also historical, and was more than forecast in 2020 due to extra drilling undertaken, in preparation of the Scoping Study released in 2021. Additional