Mountainside Coal Company Inc.

In October 2013, the White Energy Group successfully completed the purchase of 100% of the capital stock of Mountainside Coal Company Inc. (“MCC”). Since being acquired by White Energy, up until a new wash plant was constructed and commissioned in February 2015, the majority of MCC’s operations were focused at two open cut mine sites; Hatfield Gap and Flag Ridge. The coal produced at both sites has predominately been sold into the domestic power and industrial markets, where selling prices have remained under significant pressure due to depressed market conditions in the U.S. coal market.

While the purchase of MCC provides White Energy with an immediate revenue stream, the key rationale for acquiring the company was to increase the quantum of sales of premium low-ash coal product into niche markets delivering attractive commercial returns, as well as providing an opportunity to showcase the BCB technology in a key U.S. market, through the planned construction of a BCB plant to briquette coal fines produced as part of MCC’s operations.

Mountainside Coal Company provides an immediate revenue stream and the opportunity to showcase the BCB technology in the key U.S. market

It is White Energy’s intention to expand the MCC business in a stepped process, including the commissioning of a new coal wash plant (which occurred in February 2015) and BCB plant at the site.

MCC has seen an uplift in the overall product quality following the commissioning of the new coal wash plant (which occurred in February 2015) whereby a much larger portion of the coal produced is able to be sold into the silicon and ferro-silicon markets. The commissioning of the new coal wash plant coincided with the opening of a mine at Flat Creek in December 2014 which contains high quality, low-ash Blue Gem coal resources.

MCC management anticipates a further uplift in the quantity of higher quality sales once the proposed BCB plant is operational. The final stages of BCB plant design planning is being supplemented by commercial scale product trials at White Energy’s Cessnock Demonstration Plant.

In June 2015, MCC signed a sales contract with a major U.S. silicon metal producer, to supply up to 13,000 tons per month of low ash stoker coal product for use in their silicon and ferro-silicon plants located in the U.S.

In addition to its current coal mining operations, MCC remains focused on completing an exploration program which is aimed at accurately identifying coal resources at existing mines, as well as other potential new resources across the number of leased areas which have been earmarked by MCC for future mining.

Introduction of an Equity Partner

In January 2014, the White Energy Group successfully completed a transaction with a third party investor in MCC, which will helped to finance the construction of the proposed new coal wash plant and proposed BCB plant. A fund managed by Black River purchased a 49% equity interest in a UK holding company called River Energy JV UK Limited (REUK), as part of the expanded joint venture arrangement entered into between White Energy and Black River.

Under the agreement, Black River paid US$17.8 million for the 49% interest in REUK. REUK holds exclusive rights for the BCB technology, as applied to bituminous coal fines processing, in the U.S.A, Canada, Australia and New Zealand and is the owner of MCC.

Black River’s investment in REUK provided a substantial capital base from which to grow the MCC business and also target other coal fines investment opportunities in North America and Australasia.

Completion of Commissioning of a new Coal Wash Plant

In February 2015, MCC completed the commissioning of the new coal wash plant at the Indian Gap site. Several thousand tonnes of product coal has now been produced through the new coal wash plant.

Washing and screening of the low-ash speciality Blue Gem coal, sourced from MCC’s Flat Creek mine, commenced in early March 2015 and sales of the washed product were initiated shortly thereafter.