MEC RESOURCES LIMITED — Interim / Quarterly Report 2019

Apr 30, 2019

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30 April 2019

Australian Securities Exchange 10th Floor, 20 Bridge Street SYDNEY, NSW 2000

via e-lodgement

Dear Sir/Madam

APPENDIX 4C - QUARTERLY CASH FLOW REPORT

MEC Resources Ltd (ASX: MMR, ACN 113 900 020) ( “MEC” or “the Company” ) is pleased to provide its Appendix 4C (Quarterly Cashflow Report) for the quarter ended 31 March 2019 (“Q3”).

Management continue to monitor and minimise all costs of the Company. Operating expenses were significantly reduced on a year-by-year comparison with March 2018. While some of the reduction in expenses of the Company can be attributed to the completion of the 2D seismic activities in the prior year, it should also be noted that that the Company has implemented further controls to ensure expenditure is scrutinised and where possible reduced.

On 9 April 2019 the Company announced a pro rata entitlement issue (“ Rights Issue ”) to raise up to $1.7M before costs. As announced in the prospectus, all eligible Directors of MEC Resources intend to participate in the Rights Issue by way of cash consideration.

Eligible shareholders in the Company will have the opportunity to subscribe for 1 new fully paid ordinary share in the Company for every 1 share in the Company held at 5:00pm (AEDT) on Friday 12 April 2019 at an issue price of $0.005 per New Share.

The proceeds of the Rights Issue will be used primarily to expand and diversify the Company’s asset base in accordance with its approved investment mandate, and/or as modified from time to time following any necessary approval from AusIndustry, ASX and/or Shareholders (as applicable). In addition, the funds will also be used to continue to support the ongoing exploration efforts, through the provision of ongoing funding to Advent Energy Limited ( Advent Energy ), one of the Company’s investee companies. Funds deployed to Advent Energy will be used for any additional costs it may incur toward planned exploration works within its petroleum titles. The balance will be allocated for the working capital requirements of the Company. The offer will close on 10 May 2019 and all shareholders are encouraged to submit their application prior to this date.

We once again thank you for your continued support and welcome your questions/comments regarding the Company.

If you have any questions, please do not hesitate to contact the Company on 08 9245 6187 info@mecresources.com.au.

Yours faithfully

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Mr Michael Sandy Chairman

MEC Resources Ltd

ACN 113 900 020 PO Box 882, West Perth, WA 6872 Level 3, Suite 2, 1111 Hay Street, West Perth WA 6005 T: +61 8 9245 6187 F: +61 8 9200 6193 info@mecresources.com.au www.mecresources.com.au

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About MEC Resources Ltd (ASX:MMR)

MEC is registered as a Pooled Development Fund under the Pooled Development Fund Act (1992). It has been formed to invest into a variety of industries, including companies that are targeting potentially large energy and mineral resources.

MEC will provide carefully selected companies with development and exploration funding. MEC intends to identify investment opportunities with a number of specific characteristics including: near to medium term revenue opportunities; large targets; a stage of development that permits a strategic investor or IPO within several years; strong and experienced management team and a definitive competitive advantage.

MEC’s major investment lies in unlisted Australian oil and gas exploration company, Advent Energy Ltd who owns 100% of Asset Energy Pty Ltd and Onshore Energy Pty Ltd.

Asset Energy Pty Ltd – PEP 11

• Undiscovered gross prospective recoverable gas resources for structural targets within the PEP11 offshore permit have been estimated at 5.7 Tcf (at the Best Estimate level). A Low Estimate of 0.3 Tcf and High Estimate of 67.8 Tcf has been assessed by Pangean Resources in 2010. PEP 11 lies adjacent to the most populous region of Australia and the major industrial hub and port of Newcastle.

• Signed Farmin agreement with RL Energy Pty Ltd on 4 May 2018.

• Under the agreement, RL Energy will acquire 3D seismic data to meet the future 500km2 PEP11 permit work commitment (inclusive of acquisition, processing and interpretation), by carrying Asset Energy’s participating interest share of these costs up to a capped amount of $4 million.

Onshore Energy Pty Ltd – EP386/RL1

• A conventional 2C Contingent Resource of 11.5 Bcf (1C is 0.3 Bcf and 3C is 45.8 Bcf) for the Weaber Gas Field (RL1) has been assessed by an independent third party as a component of Advent’s drive to commercialise its 100% owned onshore Bonaparte Basin assets. Included in these assets is EP386, with conventional recoverable resource estimates ranging from 53.3 Bcf (Low) to 1,326.3 Bcf (High) of Prospective Resources, with a Best Estimate of 355.9 Bcf of gas.

• Signed a binding and exclusive term sheet for the majority (90%) sale of Onshore Energy to Bonaparte Petroleum on 28 September 2018.

Pooled Development Status – Benefits to Shareholders

Pooled Development Funds raise capital and make equity investments in small and medium-sized (SMEs) enterprises after complying with a structure established under the Australian Government’s PDF Act, enacted in 1992.

Companies with PDF status are taxed at 15% on their income and capital gains received from their investments.

Resident shareholders are exempt from capital gains tax after selling shares. Investors will not be entitled to deductions or capital loss on the sale of their shares.

Shareholders receiving franked and unfranked dividends are also exempt from tax, with shareholders having an option to use the imputation credits attached to the franked dividends to offset other tax obligations.

Shareholders should seek professional advice from their tax advisor regarding pool developments funds and the benefits specifically available to their situation.

MEC Resources Ltd

ACN 113 900 020 PO Box 882, West Perth, WA 6872 Level 3, Suite 2, 1111 Hay Street, West Perth WA 6005 T: +61 8 9245 6187 F: +61 8 9200 6193 info@mecresources.com.au www.mecresources.com.au

Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

+Rule 4.7B

Appendix 4C

Quarterly report for entities subject to Listing Rule 4.7B

Introduced 31/03/00 Amended 30/09/01, 24/10/05, 17/12/10, 01/09/16

Name of entity

MEC Resources Limited

ABN 44 113 900 020

Quarter ended (“current quarter”)

31 March 2019

Consolidated statement of cash flows	Current quarter $A’000	Year to date (9 months) $A’000
1. Cash flows from operating activities 1.1 Receipts from customers 1.2 Payments for (a) research and development (b) product manufacturing and operating costs (c) advertising and marketing (d) leased assets (e) staff costs (f) administration and corporate costs 1.3 Dividends received (see note 3) 1.4 Interest received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Government grants and tax incentives 1.8 Other (provide details if material) 1.9 Net cash from / (used in) operating activities*	- - - - - (55) (148) - 4 - - - -	- - - (7) - (180) (971) - 11 - - 385 -
	(199)	(762)

*includes operational expense support for Advent Energy Ltd

2. Cash flows from investing activities 2.1 Payments to acquire: (a) property, plant and equipment (b) businesses (see item 10) (c) investments	- - -	- - -

• See chapter 19 for defined terms

1 September 2016

Page 1

Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

Consolidated statement of cash flows	Current quarter $A’000	Year to date (9 months) $A’000
(d) intellectual property (e) other non-current assets 2.2 Proceeds from disposal of: (a) property, plant and equipment (b) businesses (see item 10) (c) investments (d) intellectual property (e) other non-current assets 2.3 Cash flows from loans to other entities 2.4 Dividends received (see note 3) 2.5 Other (provide details if material) 2.6 Net cash from / (used in) investing activities	- - - - - - (16) - - -	- - (6) - - - (45) - - -
	(16)	(51)
3. Cash flows from financing activities 3.1 Proceeds from issues of shares 3.2 Proceeds from issue of convertible notes 3.3 Proceeds from exercise of share options 3.4 Transaction costs related to issues of shares, convertible notes or options 3.5 Proceeds from borrowings 3.6 Repayment of borrowings 3.7 Transaction costs related to loans and borrowings 3.8 Dividends paid 3.9 Other (provide details if material) 3.10 Net cash from / (used in) financing activities	- - - - - - - - -	- - - - - - - - -
	-	-
4. Net increase / (decrease) in cash and cash equivalents for the period 4.1 Cash and cash equivalents at beginning of quarter/year to date 4.2 Net cash from / (used in) operating activities (item 1.9 above) 4.3 Net cash from / (used in) investing activities (item 2.6 above) 4.4 Net cash from / (used in) financing activities (item 3.10 above)	465 (199) (16) -	979 (762) (51) 84

• See chapter 19 for defined terms 1 September 2016

Page 2

Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

Consolidated statement of cash flows	Current quarter $A’000	Year to date (9 months) $A’000
4.5 Effect of movement in exchange rates on cash held 4.6 Cash and cash equivalents at end of quarter	-	-
	250	250
5. Reconciliation of cash and cash equivalents at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts	Current quarter $A’000	Previous quarter $A’000
5.1 Bank balances 5.2 Call deposits 5.3 Bank overdrafts 5.4 Other (provide details) 5.5 Cash and cash equivalents at end of quarter (should equal item 4.6 above)	250 - - -	465 - - -
	250	465
6. Payments to directors of the entity and their associates Current quarter $A'000 6.1 Aggregate amount of payments to these parties included in item 1.2 30 6.2 Aggregate amount of cash flow from loans to these parties included in item 2.3 - 6.3 Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2
		Current quarter $A'000
		30
		-

Ms Ambrosini has a consulting contract with MEC Resources to provide accounting and company secretarial services. Charges are capped at a maximum of 4 days per week and additional hours provided by Ms Ambrosini are unpaid and provided in kind.

7.	Payments to related entities of the entity and their	Current quarter
	associates	$A'000
7.1	Aggregate amount of payments to these parties included in item 1.2	50
7.2	Aggregate amount of cash flow from loans to these parties included	-
	in item 2.3
7.3	Include below any explanation necessary to understand the transactions included in
	items 7.1 and 7.2

Net balance of operational expense support to MEC investee Advent Energy Ltd – 5k Repayment of accrued director fees to Mr Goh Hock and Mr KO Yap – 45k

• See chapter 19 for defined terms 1 September 2016

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

8. Financing facilities available Add notes as necessary for an understanding of the position 8.1 Loan facilities 8.2 Credit standby arrangements 8.3 Other (please specify)	Total facility amount at quarter end $A’000	Amount drawn at quarter end $A’000
	-	-
	-	-
	-	-

• 8.4 Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well.

9. Estimated cash outflows for next quarter	$A’000
9.1 Research and development 9.2 Product manufacturing and operating costs 9.3 Advertising and marketing 9.4 Leased assets 9.5 Staff costs 9.6 Administration and corporate costs 9.7 Other (provide details if material) 9.8 Total estimated cash outflows	- - - - 55 120 50
	225

• On 9 April 2019 the Company announced a pro rata entitlement issue to raise up to $1.7M before costs. The offer will close on Friday 10 May 2019.

10. Acquisitions and disposals of business entities (items 2.1(b) and 2.2(b) above)	Acquisitions	Disposals
10.1 Name of entity	-	-
10.2 Place of incorporation or registration	-	-
10.3 Consideration for acquisition or disposal	-	-
10.4 Total net assets	-	-
10.5 Nature of business	-	-

• See chapter 19 for defined terms 1 September 2016

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Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B

Compliance statement

• 1 This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

• 2 This statement gives a true and fair view of the matters disclosed.

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Sign here: ... .... Date: 30 April 2019
(Chairman)
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Print name: Michael Sandy

Notes

1. The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.

2. If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standard applies to this report.

3. Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

4. See chapter 19 for defined terms 1 September 2016

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