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DUXTON WATER QUARTERLY ACTIVITIES REPORT Appendix 4C June 2021 Duxton Water Limited ( ASX : D2O ) ( " Duxton Water " or " the Company " ) is pleased to provide the Quarterly Activities Report for the period ended 30 June 2021. The purpose of this report is to provide an update on key areas of business activity during the quarter ended 30 June 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 30 June 2021 , the Company held approximately 78.7GL of permanent water entitlements across 18 different asset types and classes . Duxton Water has settled a number of permanent water transactions this year which has enabled the Company to strategically re - deploy capital into regions where the Company sees intrinsic value or future strategic benefits . This also unlocks statutory retained earnings which can be used to pay dividends to shareholders . 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 continued to strengthen throughout the June 2021 quarter . These value increases will be reflected in the Company's independent valuations when evidence of these higher prices are reflected in the public water registers , usually 4-6 weeks later . This is particularly the case across some NSW general security and groundwater entitlements . The appreciation of water entitlements over the last 2-3 years is reflective of long - term drivers rather than short - term climatic conditions . 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 annual highs that were experienced in July 2020 of $ 300- $ 335 / ML . Above average rainfall , improved soil moistures and a wetter than average outlook saw allocation prices fall to $ 60- $ 100 by the end of the 20/21 water year . There were also a number of Murrumbidgee - Murray IVT openings that increased the supply of water to the lower Murray . March to June is typically quieter than usual as irrigators balance accounts and settle any over - usage that may have occurred during the year . As a result , less demand and an increase in supply of available water saw allocation pricings soften throughout the June quarter . Lower Murray allocation sold for between $ 50- $ 100 / ML throughout April - June . Pricing in the Goulburn followed a similar pattern , trading at $ 40- $ 100 / ML throughout the same period . Pricing in the Goulburn fell to as low as $ 40 / ML towards the end of June . The Murrumbidgee market traded between $ 65- $ 80 / ML for most of the June quarter however trades as low as $ 20 / ML were seen towards the end of the water year . Duxton Water locked - in six forward allocation sale contracts during the June quarter . These contracts provide a level of hedging against future allocation pricing movements . This delivers Duxton Water with another visible and reliable revenue stream . LEASES The leased portion of the portfolio increased from 64 % ( April ) to 66 % ( June ) . A number of negotiations around new leases are currently in the pipeline . 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 both wet and dry years . FINANCIAL UPDATE NAV During the June 2021 quarter , the Company's Net Asset Value ( " NAV " ) increased from $ 1.62 per share in March to $ 1.63 per share in June , after the Company's 8th successive dividend was paid in April 2021. The portfolio has seen both high and general security asset values appreciate over the last 2-3 months . High security values have been supported as permanent irrigators look for long term water security ahead of the next dry period . Demand for general security assets has returned as these assets will attract a yield this year as we return to a wetter part of the climatic cycle . Total water assets reduced by 1 % between March 2021 ( $ 314 million ) and June 2021 ( $ 310 million ) due to a softening in allocation pricing , and the Company entering into three permanent water sales . Proceeds from these permanent water sales have been earmarked for deployment into both high and general security assets in areas where the Duxton Water currently sees strong demand for long - term leases moving forward . DEBT At 30 June 2021 , the Company had drawn debt of $ 106 million . The Company's interest rate swap position remained unchanged during the June 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 30 June 2021 , the Company's LVR ( Debt to Water Assets ) is 30 % . DUXTON WATER LTD DUXTON HOUSE . 7 POMONA ROAD STIRLING SA AUSTRALIA 5152 [ +61 ] 8 8130 9500 page 1 of 2