SCIDEV LTD — Interim / Quarterly Report 2019

Jul 30, 2019

Unit 1 8 Turbo Road Kings Park NSW 2148 Australia ABN 25 001 150 849

Email: admin@scidev.com.au Website: www.scidev.com.au ASX code: SDV

Companies Announcements Office Australian Stock Exchange

31 July 2019

Quarterly Activities Report: Appendix 4C – June 2019

• Record revenues for the June quarter, with sales to customers exceeding AUD $1m
• SciDev FY 19 revenue exceeds AUD $3m, compared with FY 18 AUD $2m
• Lewis Utting commences as CEO & Managing Director, April 2019
• Jon Gourlay appointed to SciDev Board as Non-Executive Director
• SciDev (US) LLC provides platform for growth into North America
• SciDev and Nuoer cement and expand relationship
• OptiFlox® expands into base metals through Kemtec relationship

SciDev Ltd (ASX: SDV) ('SciDev' or 'the Company') is pleased to provide its Quarterly Activities Report for the period ended 30 June 2019. The quarter saw major leadership changes, with a new CEO & Managing Director and also a new Non-Executive Director added to the board. During the quarter,some early outcomes of initial business development efforts were evident, with significant sales growth, diversification into the base metal market and the establishment of SciDev (US) LLC in the United States.

Operational report

Sales to customers during the quarter were significantly higher (at $1,180,000); however, a substantial component of cash receipts from these sales will fall in the September 2019 quarter. The cash receipts from customers during the June 2019 quarter ($766,000) were comparable to the March 2018 quarter ($760,000), with receipts adequately covering the gap following the loss of the Lion business.

The record quarterly revenue can be attributed to organic growth in the water sector (ref ASX 24 April 2019) and sales pull-through from the Nuoer transaction (ref ASX 24 April 2019 and 20 May 2019). FY 2018 revenues were $2.04 million and included the Lion Dairy and Drinks business that ceased early in the March 2019 quarter (ref ASX 31 January 2019). The unaudited FY 2019 revenues exceeded $3 million, representing significant growth year on year and a greater run rate than previous quarters, setting a strong foundation for FY 20.

It is important for parties reviewing this report and the attached Appendix 4C to understand the difference between cashflow reporting (as provided in Appendix 4C) and accruals-based accounting, as underpins SciDev's key revenue announcements (refer ASX 26 June 2019). The attached Appendix 4C is footnoted at various sections to highlight this distinction as it relates to timing.

North American initiatives

SciDev established a corporate presence in the United States to facilitate growth opportunities through SciDev (US) LLC (ref ASX 23 May 2019). SciDev (US) LLC enables SciDev to support its existing customer, Peabody Energy, in addition to aggressively pursuing other opportunities, including in the oil and gas sector. An initial order has been supplied to the company's MOU partner, Phoenix Equipment Company Inc (ref ASX 26 June 2019), and SciDev expects these volumes to grow.

Nuoer & SciDev Relationship

During May (ref ASX 20 May 2019) Lewis Utting, SciDev's Managing Director and CEO, joined Nuoer China's owner and Chairman, Mr Rong Minjie, and Dr Jeffrey Zhang, General Manager of Nuoer's Australian operations (now engaged by SciDev), in an inspection at the Nuoer Group manufacturing facilities in Dongying, China. Mr Utting and Mr Rong signed a framework agreement for future strategic cooperation. Through the framework agreement, SciDev and Nouer Group identified key areas for market opportunities within Oceania and in other markets such as oil and gas in the United States.

Mineral sands progress

Additional analysis from the heavy mineral sands trials continued into the quarter following the 15 metric-tonne chemical trial completed in February 2019. The final phase of the Optiflox® system trial concluded in March 2019. The program of work in mineral sands started in March 2018 and included an extensive evaluation program where SciDev technical personnel spent considerable time with site operations to support the initiative. Subsequent to the end of the June quarter the company discussions are still underway, and the company expects a conclusion in the September quarter.

Base and precious metal activities

During the quarter, an OptiFlox® system was leased to Kemtec Mineral Processing (ref ASX 2 May 2019) for installation at a copper-gold operation in mainland Asia. Following extensive factory acceptance testing (FAT) at SciDev's Kings Park facility, the system was shipped, with installation occurring during the last week of the quarter. Commissioning is underway, and the company looks forward to updating the market on the three-month trial as it aligns with the mine's operational plan.

SciDev technical personnel spent considerable time working on a large-scale gold project in PNG. The programs were executed over several site visits consisting of processing reviews and intensive laboratory evaluations of the SciDev chemical portfolio. SciDev looks forward to updating shareholders during the September quarter.

Coal opportunities

Additional evaluations were conducted across several coal projects in both the Bowen Basin and NSW coal fields with tier-one producers. SciDev is confident that some of these projects will further develop into commercial opportunities for both chemical solutions and the OptiFlox® system.

The OptiFlox® system trial continued at a major coking coal operation in the Bowen Basin. After the initial phase of the trial, an extensive engineering review was conducted on the application, with modifications implemented to allow for extended operation of the system without operator intervention. The trials continued to the end of the June quarter with successful results. Additional commercial discussions will continue into the September 2019 quarter and SciDev is looking forward to updating shareholders as discussions materialise into commercial outcomes.

Management focuses for the September quarter

• Mineral sands commercial conversion
• Push into precious metals and execution of base metal trial in mainland Asia
• Large-scale field evaluations in the US oil and gas sector
• Build on considerable momentum in the Australian coal industry
• Further develop relationship with US MoU partner
• Continued efforts in the Australian wastewater sector

Tartana Resources Limited

During the quarter, Tartana Resources Limited released results of mineral exploration activities at its flagship Tartana and Zeehan projects (ref ASX 4 June 2019) and subsequently lodged a prospectus for its proposed ASX IPO raising (refer ASX 2 July 2019). SciDev currently holds 19.9% of Tartana and will remain a significant shareholder on completion of the ASX IPO raising. Tartana anticipates completing its IPO over the coming quarter.

Corporate

During the quarter, Lewis Utting assumed the role of CEO & Managing Director for SciDev limited and its subsidiaries. In addition, Jon Gourlay joined the SciDev board as Non-Executive Director (ref ASX 28 May 2019).

A shareholders meeting was held subsequent to the end of the quarter, approving the re-election of Mr Gourlay to the Board and approving an issue of options to Directors of the Company, as part of a broader issue of options to the Board and senior executive team (ref ASX 23 July 2019).

Lewis Utting CEO & Managing Director

+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

SciDev Limited

25 001 150 849 30 June 2019

ABN Quarter ended ("current quarter")

	Consolidated statement of cash flows	Current quarter$A'000	Year to date(12 months)$A'000
1	Cash flows from operating activities
1.1	Receipts from customers*	766	2,781
1.2	Payments for
	(a) research and development	-	-
	(b) product manufacturing and operating costs	(679)	(3,530)
	(c) advertising and marketing	-	-
	(d) leased assets	-	-
	(e) staff costs	(375)	(1,182)
	(f) administration and corporate costs	-	-
1.3	Dividends received (see note 3)	-	-
1.4	Interest received	3	16
1.5	Interest and other costs of finance paid	-	(5)
1.6	Income taxes paid	-	(32)
1.7	Government grants and tax incentives	-	333
1.8	Other (provide details if material)	-
1.9	Net cash from / (used in) operatingactivities*	(285)	(1,619)
2	Cash flows from investing activities
2.1	Payments to acquire:
	(a) property, plant and equipment	(49)	(116)
	(b) businesses (see item 10)	-	-

* As per ASX requirements, this is a cashflow receipts reporting standard. Normal accounting processes requiring accrual accounting deliver different results and, in particular, receipts include accrual of revenues earned and invoiced but not received during the relevant period. SciDev's announcement of 26 June 2019 reported that the Company was on track to deliver record revenues of over $1M for the current quarter and $3M for the year. These record revenues were achieved, however SciDev notes that these revenues, on an accrual basis, differ to the revenues reported in this Appendix 4C and expect to fully receive the cash payment in Quarter three of 2019.

(c) investments - -

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

	Consolidated statement of cash flows	Current quarter$A'000	Year to date(12 months)$A'000
	(d) intellectual property	(10)	(38)
	(e) other non-current assets	-	-
2.2	Proceeds from disposal of:		-
	(a) property, plant and equipment	190	240
	(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) investingactivities	131	86
3	Cash flows from financing activities
3.1	Proceeds from issues of shares	578	2,730
3.23.3	Proceeds from issue of convertible notesProceeds from exercise of share options	--	--
3.4	Transaction costs related to issues of shares,	-	-
	convertible notes or options
3.53.6	Proceeds from borrowingsRepayment of borrowings	-(46)	73(82)
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) financingactivities	532	2,721
4	Net increase / (decrease) in cash and cash
	equivalents for the period
4.1	Cash and cash equivalents at beginning of quarter/yearto date	1,378	568
4.2	Net cash from / (used in) operatingactivities (item 1.9 above)	(285)	(1,619)
4.3	Net cash from / (used in) investingactivities (item 2.6 above)	131	86
4.4	Net cash from / (used in) financingactivities (item 3.10 above)	532	2,721

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

	Consolidated statement of cash flows	Current quarter$A'000	Year to date(12 months)$A'000
4.5	Effect of movement in exchange rates oncash held	-	-
4.6	Cash and cash equivalents at end ofquarter	1,756	1,756

5	Reconciliation of cash and cashequivalents	Current quarter$A'000	Previous quarter$A'000
	at the end of the quarter (as shown in theconsolidated statement of cash flows) to therelated items in the accounts
5.1	Bank balances	1,756	1,378
5.2	Call deposits	-	-
5.3	Bank overdrafts	-	-
5.4	Other (provide details)	-	-
5.5	Cash and cash equivalents at end ofquarter (should equal item 4.6 above)	1,756	1,378

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*	185
6.2	Aggregate amount of cash flow from loans to these parties included initem 2.3

6.3 Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2

* This figure includes non - recurring payment of $74k to the previous Managing Director Mr Kieran Rodgers, whoofficially stepped down in April 19.
7	Payments to related entities of theentity and their associates	Current quarter
		$A'000
7.1	Aggregate amount of payments to these parties included in item 1.2	-
7.2	Aggregate amount of cash flow from loans to these parties included initem 2.3	-
7.3	Include below any explanation necessary to understand the transactionsincluded in items 7.1 and 7.2

8	Financingfacilities availableAdd notes as necessary for anunderstanding of the position	Total facility amountat quarter end	Amount drawn at quarterend
		$A'000	$A'000
8.1	Loan facilities	500	-
8.2	Credit standby arrangements
8.3	Other (please specify)
8.4	Include below a description of each facility above, including the lender, interest rate and whether it is securedor unsecured. If any additional facilities have been entered into or are proposed to be entered into afterquarter end, include details of those facilities as well.
	Lender: Kanins International Pty LtdInterest Rate: 15% pa

9	Estimated cash outflows for next quarter	$A'000
9.1	Research and development
9.2	Product manufacturing and operating costs	-1623
9.3	Advertising and marketing
9.4	Leased assets
9.5	Staff costs	-550
9.6	Administration and corporate costs	0
9.7	Other (Receipts from customer)	2217
9.8	Total estimated cash outflows	44

10	Acquisitions and disposals ofbusiness entities	Acquisitions	Disposals
	(items 2.1(b) and 2.2(b) above)
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

Security: Secured against inventory.

1 September 2016 Page 4

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.

Sign here:

31072019

Print name: Lewis Utting

(Director)

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.

• See chapter 19 for defined terms