Quarterly Activity Report Quarter Ending 31 March 2024

Frontier Energy Limited (ASX: FHE; OTCQB: FRHYF) (Frontier or the Company) is pleased to provide its quarterly activity report for the quarter ending 31 March 2024. The Company’s Waroona Renewable Energy Project (Project) is located in the South West region of Western Australia, approximately 120km from Perth and 8km from the town of Waroona.

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HIGHLIGHTS

• Frontier released its Definitive Feasibility Study (DFS) for a 120MWdc Solar Facility with integrated 80MW 4-hour battery (Stage One). DFS Highlights included:
  • Stage One generates average EBITDA¹ of $68 million pa over first five years of production and $63m pa over first 10 years of production
  • Post-tax payback1 of 5.8 years (4.6 years pre-tax) based on $304m total initial capital cost
  • Leveraged² post-tax Internal Rate of Return (IRR) is 21.6%1 and pre-tax IRR is 27.3%1.
• Procurement and EPC contracts nearing conclusion with all equipment selection being with tier one providers
  • Tender process resulted in cost estimates for all major long lead items in line with or lower than DFS estimates
  • Final equipment selection and contract negotiations on track for conclusion in Q2
• Phase One of the debt process confirmed strong interest from banks to provide debt funding solutions in line with the terms outlined in the DFS, including approval of debt carrying capacity of 70% which equates to $225 million
• A select number of leading Australian and international banks have been shortlisted (Phase 2) as part of the debt financing process
  • The Company anticipates credit approved terms to be provided during the next 8 to 12 weeks, assuming successful completion of due diligence
• The strategic equity investor process is ongoing, with NDAs in place with a number of Australian and international groups
• WA peak electricity operational demand reached a new record of 4.23GW in February 2024, and exceeded the record peak six times during the March quarter
  • A significant rise in peak prices (4pm – 9pm) occurred during the March quarter, increasing by 65% to $172/MWh compared to the previous yea
  • The average energy price in 1Q24 was $78.5/MWh, 6% higher than 1Q23 ($74.2/MWh)
  • On 14 occasions during the quarter, the Australian Energy Market Operator paid for demand reduction to ensure stability and reliability of the system
• As at 31 March 2024, Frontier had cash of $10.3m (unaudited)

Stage One DFS confirms strong financial returns

The Company’s Stage One DFS highlights Frontier's unique opportunity to be a near-term major renewable energy producer in Western Australia, at a time when energy demand continues to outpace supply in WA, resulting in electricity prices reaching record highs. The key project assumptions determined by the DFS are highlighted in Table 1 below.

The DFS forecasts annual renewable electricity generation of approximately 258GWh (year one). Of this, 120GWh is stored in integrated DC coupled batteries and sold in the Wholesale Electricity Market (WEM) at peak demand times, with a charging and discharging efficiency loss of 15% or 18GWh.

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