RIVCO AUSTRALIA LTD — Net Asset Value 2017

Jan 12, 2017

Duxton Water Limited Monthly Update

31 December 2016

Net Asset Value per Share $1.08

Duxton Water
ASX Code (Shares)	D2O
ASX Code (Options)	D2OO
Shares on Issue	63,965,406
Options Outstanding	63,965,406
Options Exercise Price	$1.10
Options Expiry	31 May 2018

Entitlement Portfolio Value by Region

Water Portfolio Diversification

Water Security Breakdown

The primary investment objective of Duxton Water is to generate annual income through capitalising on the increasing demand for scarce water resources. Duxton Water derives its income from a diversified portfolio of Australian Water Allocations and Water Entitlements.

Net Asset Value per Share

Duxton Water's NAV as at 31 December 2016 was $1.08 per share.

These figures are not adjusted for any dilution due to the outstanding options which are exercisable at $1.10. The after tax figure takes into account the provision for deferred tax on set-up costs and estimates of net tax provisions that may arise should the entire portfolio be disposed of on the above date.

Net Asset Value per Share - Since Inception

Performance	Gain/Loss
1 Month	0.93%
3 Months	1.75%
6 Months	N/A
12 Months	N/A
Inception	0.93%

Market Update

Market Summary

Early December saw small volumes of isolated rainfall (below 10mm) recorded across the key southern irrigation areas. Drier and warmer weather by mid-December across the southern Murray Darling Basin has seen tributary inflows and soil moisture decrease and summer irrigation demand increase. This resulted in the Hume Reservoir storage declining 8% in December.

Although all carryover water from the 2015/16 financial year held against Victorian Murray High Reliability Water Shares has been lost due to the risk of the dams spilling on the 3rd of October 2016, the authorities announced a 37% risk of spill in the Victorian Murray which eased restrictions for NSW Murray allocation entering northern Victoria. The easing of trade restrictions are implemented once the spill risk is below 50%. This equates to an extra 50GL of potential market supply. In theory, the allowance of extra water into Victoria, where there is currently higher demand and market prices, may result in more equalised prices across both markets (lowering VIC and increasing NSW Murray prices).

Murray System

Total inflows into the Murray system were 570ML, compared to the 10 year average of 469ML. The Hume and Dartmouth reservoirs remain at high storage levels of 90.7% and 77.2%, respectively. The Hume Reservoir received total rainfall of 25.8mm, compared to the long-term average of 50.6mm. The Hume Dam received 796mm in 2016 which exceeded the 10 year average of 587mm.

Although drier and warmer weather positively impacted temporary water prices, the easing of the trade embargo between Victoria and New South Wales pushed prices down in zone 6 and 7. Prices in the Goulburn system slightly increased in December.

Entitlement prices in the Murray system remained broadly stable throughout December. In NSW, zone 10 General Security prices increased 3.8%, however zone 11 General Security prices decreased 3.4%. In Victoria, zone 6 prices were the only notable movement for the month, increasing 5.4%.

Central and Northern NSW (Murrumbidgee and Lachlan Valley)

The central and northern NSW water assets held firm in December, mainly due to the illiquidity of the assets. As noted last month, there still remains significant demand for Lachlan Valley entitlements at a 20% premium to our weighted average price. These transactions will eventually be filled and reflected in our Lachlan Valley valuations.

Duxton Water Limited Monthly Update

31 December 2016

Investment Update

Permanent Water Acquisitions and Divestments

As at 31 December 2016, Duxton Water is invested in approximately $50.9 million of water entitlements, equating to 73.8% of the portfolio, with the remainder of the portfolio held in cash and net current assets. Duxton Water has additionally entered into contracts, agreed terms for contracts or has pending offers for contracts on an additional $14.7 million worth of water entitlements. Excluding pending offers these additional contracts will lead to 85% of the portfolio being invested. If successful with pending offers, Duxton Water's portfolio will be 95% deployed.

Temporary Water Acquisitions and Divestments

In December, 1,330ML of allocations were sold at a weighted average yield of 5.4%. This comprised of water allocations in zone 6, 7 and 10. Once more allocations become available in January, the Company will increase temporary water sales.

Lease Yield

No new leases were entered into in December. The weighted average yield for long-term leases remains at 6.0%.

Dividends

The Company intends to pay dividends twice yearly. We currently anticipate the first dividend will be paid to Shareholders in August 2017.

Valuation Methodology

Total assets of the Company are valued at fair market value based upon independent valuation, or the weighted average price of the last three applicable trades on or prior to the relevant Valuation Day, received from the respective state register, excluding outliers. Outliers are defined as a trade with greater than 10.0% variance from the last weighted average price and transactions that are less than 10ML (unless there are no applicable transactions greater than 10ML) less the total liabilities of the Company excluding provisions for tax payable and Performance Fee.

Market Outlook

The latest Bureau of Meteorology outlooks are suggestive of further hot and dry conditions for the Murray Darling Basin over the next three months. Models are forecasting a 50%-75% chance of below average rainfall across the Basin (see chart below). Current consensus suggests a La Nina is now unlikely to develop during the first half of 2017, although conditions will remain on the La Nina-side of neutral. The continued drier and warmer weather may be a catalyst for temporary water price increases due to higher rates of crop water usage over the summer.

Disclaimer

This factsheet is prepared by Duxton Capital (Australia) Pty Ltd [ACN: 164 225 647; AFSL no. 450218] ("Duxton Capital (Australia)"). Duxton Capital (Australia) is the Investment Manager of Duxton Water Limited [ACN 611 976 517] ("Duxton Water").

This factsheet has been prepared for the purposes of providing general information only and does not constitute an offer, invitation, soliciation or recommendation with respect to the purchase or sale of any securities in Duxton Water. Information from this factsheet must not be issued in any jurisdiction where prohibited by law and must not be used in any way that would be contrary to local law or regulation. The terms of Duxton Water are set out in the prospectus of Duxton Water ("Prospectus"), and should there be any conflict between the terms set out in this factsheet and the Prospectus, the terms in the Prospectus shall prevail.

The forecasts provided are based upon our opinion of the market as at this date and are subject to change, dependent on future changes in the market. Any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets is not necessarily indicative of the future or likely performance. Investments are subject to risks, including possible loss of principal amount invested. The value of shares/ units and their derived income may fall as well as rise. Past performance or any prediction or forecast is not necessarily indicative of future performance. No assurance is given that the investment objective or the targets will be met.

This document does not constitute investment, tax, legal or any other form of advice or recommendation and was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it. Investors should study all relevant information and consider whether the investment is appropriate for them. If you require investment or financial advice please contact a regulated financial adviser. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in this presentation.

The Duxton Group or its affiliates may hold positions in the securities referred. Where stocks are mentioned, it should not be construed that these are recommendations to buy or sell those stocks.

You are not authorized to redistribute this document nor qualified to make any offer, representation or contract on behalf of Duxton Capital (Australia) or its affiliates. Although the information was compiled from sources believed to be reliable, no liability for any error or omission is accepted by Duxton Capital (Australia) or its affiliates or any of their directors or employees. The information and opinions contained may also change. Copyright protection exists in this presentation. To the extent permitted by applicable law, none of the Duxton Group, their affiliates, or any officer or employee of the Duxto Group accepts any liability whatsoever for any direct or consequential loss arising from any use of this factsheet or its contents, including for negligence.

	Duxton Capital (Australia) Pty Ltd

Duxton Capital (Australia) Pty Ltd Duxton House, 7 Pomona Road, Stirling, SA, Australia 5152 T (08) 8130 9500 F (08) 8130 9599

Duxton Water Portfolio SMDB Exposure