Page 1

DUXTON WATER QUARTERLY ACTIVITIES REPORT Appendix 4C March 2021 Duxton Water Limited ( ASX : D2O ) ( Duxton Water ' or ' the Company ) is pleased to provide the Quarterly Activities Report for the period ended 31 March 2021. The purpose of this report is to provide an update on key areas of business activity during the quarter ended 31 March 2021. This report should be read in conjunction with the Company's respective Quarterly Cash Flow Report ( Appendix 4C ) . WATER PORTFOLIO UPDATE ENTITLEMENTS The Company continues to build a targeted portfolio of water entitlements primarily located in the southern Murray Darling Basin ( ' SMDB ' ) and utilises this portfolio to provide flexible water supply solutions to its Australian farming partners . At 31 March 2021 , the Company held approximately 81GL of permanent water entitlements across 19 different asset types and classes . Throughout the first quarter of 2021 , the Company has taken the opportunity to rebalance parts of the portfolio as opportunities have presented themselves . So far this year the Company has settled three permanent entitlement transactions . This has unlocked statutory earnings and enabled the Company to strategically deploy capital into regions where the Company sees intrinsic value or future strategic benefit . Since 2014 , water entitlements in the SMDB have seen price increases of approximately 250 % to its peak in January / February 2020. Permanent pricing across the portfolio has remained stable through the March 2021 quarter with some indication of price strengthening towards the end of March . This value increase will be reflected when trades are settled and evident on water registers . This is particularly the case across a number of NSW general security entitlements and some VIC high security entitlements . The appreciation of water entitlements over the last few years reflects long - term drivers rather than climatic variability . Irrigators have over the last 10 years significantly enhanced their marginal return per megalitre through both more efficient use of water and conversion to higher value commodities . At the same time , we have seen significant steps taken to return water to the environment with Government purchases of between 20-22 % of entitlements that were previously available to the consumptive pool . The combined impact has seen stronger demand for a reducing available water supply and subsequent increased asset prices . Irrigators themselves have been the greatest beneficiaries from this capital appreciation as they collectively own the majority of water entitlements on issue in the market . ALLOCATION MARKET Since the beginning of 2021 , allocation prices have continued to ease from their July 2020 highs of $ 300- $ 335 / ML . This comes on the back of wetter than average conditions across most of Australia , which has led to improved soil moisture levels and provided much needed relief for irrigators across the country . Market perception around rainfall and inflows has also caused a level of confusion as irrigators bank on storage level improvements . Increased openings of the Murray- Murrumbidgee IVT system has also created greater water supply in the lower Murray . Allocation prices continued to soften throughout the quarter due to an increase of in - valley rainfall and Inter - Valley Trade ( IVT ) openings , shifting lower Murray values from $ 130- $ 150 / ML ( January ) to $ 100- $ 110 / ML ( February ) and finally to $ 70- $ 80 / ML ( March ) . Pricing followed a similar pattern in the Goulburn and Murrumbidgee with prices at the end of March sitting around $ 70- $ 80ML and $ 45- $ 55 / ML respectively . LEASES The leased portion of the portfolio increased from 64 % ( January ) to 65 % ( February ) and back to 64 % ( March ) , based on an increase in the value of the portfolio that occurred during March 2021. The Board maintains its view to have 70-80 % of the Company's permanent water portfolio under lease . This approach delivers a visible and stable revenue stream across the climatic cycle . FINANCIAL UPDATE NAV During the March 2021 quarter , the Company's Net Asset Value ( " NAV " ) remained constant of $ 1.62 per share on the back of stabilising permanent water prices . A slight retracement in entitlement values occurred in January - February however demand for both high security and general security assets saw prices strengthen towards the end of March 2021 . Total water assets reduced by 2 % between December 2020 ( $ 320 million ) and March 2021 ( $ 314 million ) due to a softening in allocation pricing as well as the Company settling three permanent water sales as part of its current rebalancing strategy . Proceeds from these permanent water sales have been earmarked for deployment into high reliability permanent water assets where the Company is cur- rently seeing greater demand for long term leases . DEBT At 31 March 2021 , the Company had drawn debt of $ 106 million . The Company's interest rate swap position remained unchanged during the March 2021 quarter , however Management will continue to monitor long term interest rates and may continue to use Interest Rate Swaps as a tool to hedge against future interest rate changes . At 31 March 2021 , the Company's LVR ( Debt to Water Assets ) is 31 % . DUXTON WATER LTD DUXTON HOUSE . 7 POMONA ROAD STIRLING SA AUSTRALIA 5152 [ +61 ] 8 8130 9500 page 1 of 2