It is with pleasure that I enclose an update below on your companies activities and events that have occurred that are significant to us all.

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1 LATROBE FERTILISERS Latrobe Fertilisers Limited ABN: Powlett Street East Melbourne VIC 3002 Australia Tel: Fax: ablood@latrobefertilisers.com.au 5 th July 2017 Dear Shareholder It is with pleasure that I enclose an update below on your companies activities and events that have occurred that are significant to us all. Firstly, let me start by welcoming to Australia our CEO Elect in Mr Richard (Dick) Lyon who arrived in Melbourne on Tuesday, 20 th June from his adopted state of Texas in the United States. Dick was here for two weeks which included some house hunting prior to returning to the US to bring his wife Trudi back to Melbourne. Dick has spent most of his 30 plus year career with the US major energy group Chevron wherein he implemented as project executive in charge, many of that company s multi $ billion complex projects around the world. I have had the pleasure of working with Dick on a prior project and he is regarded by his peers as one of the most complete project management executives in the world. Dick will obviously work hand in glove with our incoming Chairman Elect in Mr Rob Neale who has also just been appointed as Chairman of the Port of Newcastle in New South Wales which is the world s largest coal exporting port with annual tonnage of over 160 million tonnes. Dick is already making a significant contribution to our project. MAJOR EVENTS PROJECT FUNDING The large Chinese stated owned investment and trading group in CITIC (China International Trade & Investment Corporation) have been undertaking an intensive due diligence on the company and project for nearly four months. This has now advanced further and we have now received their draft terms sheet on which we are discussing the terms with them. Thus far, this is very positive. The amount of equity being sought is $45 million which will take the project to the starting line. As part of their due diligence, CITIC have also engaged with a group in Hong Kong called Bauhinia Capital on their ability to source the equity and debt of finance for the $810 million needed to build the project so that there is a seamless integration of their equity into the Value Add to be achieved by also having access to the total project finance package. LISTING The Company has commenced the process to list the Company. This may be a compliance listing as distinct from an IPO. The outcome in terms of a public listing on the ASX and stock liquidity are identical. Page 1

2 There are some administrative rules that differ on prior and subsequent equity raisings to the listing date but these have no impact on the listing of each individual s shares. The scheduled listing date is October this year. CUMMINS DIESEL MOU ADBLUE OFFTAKE The Company entered into an MOU on the 4th November 2016 with the large American owned Cummins Diesel Group on offtake of AdBlue. AdBlue made from pure urea, is the product required by Australian Federal Government Regulation to be used in all on-road diesel engine vehicles. It negates the carcinogenic emissions caused by the nitrogen oxide content in the diesel exhaust fumes. The MOU contained Take or Pay provisions to go into the Commercial Agreement. GO BLUE PTY LTD ADBLUE SALES The Company signed an MOU on the 8th January 2017 to acquire 60% of this company which is the fastest growing local manufacturer and seller of AdBlue in Australia. The company also works closely with and shares facilities with Cummins on an Australia wide basis. Go Blue is trading profitably with increasing profits month by month. LFL and Go Blue have now begun discussion on the Commercial Agreement to cement the MOU intent. The result of this will be that LFL will have a profitable majority owned subsidiary leading into its listing with operations Australia wide. These operational bases will form the logistics chain for LFL s own AdBlue production which will be the lowest cost/highest margin in Australia and make a significant impact on the Company s future EPS. The margins to LFL on AdBlue production are up to three (3) times higher than agricultural urea. KAWASAKI HEAVY INDUSTRIES OF JAPAN (KHI) The Company has recently entered into a non-binding MOU to work with a consortium headed by KHI which also includes Shell, who are in negotiation with the Australian and Victorian State Governments on a major project to manufacture and export hydrogen to Japan produced from the gasification of Victorian brown coal. The front end of the Latrobe process also produces hydrogen from the gasification of brown coal which is critical in the urea production. The intent of the Japanese government is to hydrogenise Tokyo with hydrogen fuelled power stations generating electricity (no emissions) and only have hydrogen cell powered vehicles (no emissions). Hydrogen is the most energy intensive of all fuels except nuclear. Whilst there is a lot of attention on battery powered vehicles, we should not forget that batteries are charged from electricity and if the production of that electricity gives off emissions, the world is not achieving much if the objective is to reduce total emissions. Page 2

3 An alignment with this Japanese project when our project will already be producing hydrogen may provide us with an additional commercial opportunity for shareholders in the future. GROUP OF FOUR UNIVERSITIES LFL is in review of a terms sheet (3rd draft) under which it can become an owner of and have access to a technology development that converts carbon dioxide and water to methane (natural gas) or methanol. The benefit to LFL is firstly that it could take its own stream of pure CO2 (for which it will already have offsets) and convert this into methane to generate its own low cost electricity or then extract the hydrogen from the methane (CH4) for use in our own urea process. The second benefit is that this technology could change the world s environmental perspective wherein CO2 from a variety of industrial applications can be captured and put through the patented process. This can have a very meaningful impact on world environmental issues. From a commercial perspective, its potential is very significant to LFL shareholders. Final contractual terms are yet to be defined and will come out in current negotiations. The patent is for global application. For example, the giant KHI proposed project in the Latrobe Valley could produce up to 10 million tonne of CO2 by-product per annum. If this were converted to methane, it could either be exported as LNG or used in base load power production. This could potentially open up a mega opportunity for LFL if we have an ownership interest directly or indirectly in this technology. A CONCERN RAISED Several shareholders have contacted us to ask how the recent changes in the dynamics of the electricity market have impacted on our project. The recent electricity price increases, the closure of the Hazelwood Power Station in Victoria and reliability concerns with base load electricity are now well publicised issues. Electricity is our largest single operating cost. These issues would have a material impact on our project unless addressed and so a considerable input is going into technical options to ensure our project maintains its globally low operating cost advantage. The company has always had a plan to oversize its coal gasification capacity to produce a gas stream to enable it to make its own electricity and this is now being brought forward. In addition, we are doing studies to replace electric driven equipment within the process plant with steam drives. The project makes a lot of steam in its processes and is capable of producing more with different equipment line ups. The net result is that we will likely incur a capital cost increase at the outset of the project but we will counter this by having a lower operating cost and ensure that the project can never be held captive to higher electricity costs for duration of its entire project life. Base load power costs have risen from $45/MWh to as high as $115/MWh in recent weeks. Our original budgeted cost was $50/MWh. Every $1.00 increase in power costs reduces our urea profit margin by $1.00/tonne. PROJECT LOCATION AND COAL SUPPLY Since our project was first initiated, there has been the assumption that we would locate it in the Latrobe Valley, south east of Melbourne because of the large low cost coal resources there and the acccess to low cost, long term reliable base load power. Page 3

4 Both of these form the cornerstone of our project. With the change in power costs and reliability, the inability of government to be able to set a long term reliable framework to work within, and a concern with the large corporates that own the three coal mines in the Latrobe Valley on their views on alternate uses for coal, we have decided to relocate our project from the south east of Melbourne to the north west, near the small town of Bacchus Marsh which has a small privately owned operating coal mine with sufficient tonnage to supply our project for our 50 year project life. There are pluses and minuses in the coal chemistry in this location but with a major logistics benefit in that the plant site will be circa 200 kms closer to 80% of our designated market area. The freight saving on the 80% of our urea impacted will be circa $20/tonne. A further logistics benefit is that we will be very close (40 kms) from the Port of Geelong which is equipped to both import and export fertiliser. We also believe that we will secure a superior commercial agreement on the long term supply of coal. This is being drafted at present. There will be no impact on timing in any aspect that the company is engaged in. WEBSITE UPDATE For those who have not looked at our website, it can be accessed at It will be updated in the next few weeks as advancement on some of the above is progressed. VALE: JOHN PAUL It is with sadness that I advise our shareholders of the recent sudden death of our Chief Engineer in Mr John Paul. John went home on a Wednesday evening, went to bed and did not wake up the next morning. John was our technical rock and had developed and assembled large quantums of technical data on all facets of the project during the four years that he was with us. He is terribly missed on both a personal and professional level. Our thoughts are very much with his family and his two children whom he was devoted to. He was a great friend to all of us and to our project. With best regards Allan Blood Chairman Page 4

5 Key Stakeholders and Status of Agreements Stakeholder Shell Global Solutions (Division of Royal Dutch Shell) Wuhuan Engineering Co. Ltd (Subsidiary of the Chinese state owned CNCEC China National Chemical Engineering Corp.) Hubei Yihua Group (HYG) HYG is Asia s largest urea producer, the largest Chinese producer and the largest shareholder in LFL. Cummins Diesel (Cummins) Cummins are one of the world s major diesel engine builders and suppliers to a range of global names like Kenworth, Komatsu and Iveco. Go Blue Pty Ltd A private company that is the fastest growing manufacturer and seller of AdBlue in Australia. Go Blue has invested in AdBlue manufacturing facilities in every Australian capital city and a number of major regional cities. Go Blue has now been cash flow positive for the last six consecutive months with profitability increasing month on month. Agreement Agreement on the provision of the latest Shell coal gasification technology signed 3 rd November 2016 (see Wuhuan Engineering are Shell s technical partner in the area of coal gasification. They have built 60% of China s fertiliser plants over the last 50 years as well as plants in 19 other countries. Agreement for the provision of EPC services and lump sum guaranteed price of project signed 19 th July 2016 and revised 29 th December HYG own 15% of the equity in LFL. They will provide ongoing management support and assist with an advisory team through the commissioning process. MOU with Cummins, that will revert to a take or pay contract on an exclusive basis, to purchase a major portion of the LFL AdBlue production. Agreement signed 4th November LFL has signed an MOU with Go Blue to acquire an initial 60% interest for A$4 million. (N.B. The $4 million to go into Go Blue as working capital to continue growth. The remaining 40% can be acquired from the vendors by the payment of 12 x the average after tax profit over any consecutive 3 year period within the next five years. The agreement was signed on 4th January The benefit of this agreement is that when LFL s urea plant commences production as one of the world s lowest cost urea producers, and thus lowest cost AdBlue producers, LFL will have a ready made Australia wide, profitable, distribution network already in place. Agrow International Pty Ltd LFL has signed an agreement for the sale and distribution of its total agricultural urea production. The agreement was signed on 23rd October Page 5