Felton Coal-to-Liquids Project Revised

A project to convert coal to liquid fuels and power in the Felton region has been substantially revised.

The project’s proponent, Brisbane-based Ambre Energy, has advised local landowners and the
Queensland Government that it will downscale the first stage of its project to a semi-commercial
demonstration plant to prove its new technologies.

The result is that the initial mining lease applications will now encompass only a 2,000 tonnes per day
coal mining operation. Also, the demonstration project will no longer include a coal washing plant, or
the application of Ambre Energy’s proprietary hybrid energy technology for the production of
synthetic crude oil. That technology will now be commercialised by the company in the USA.

The main emphasis for the revised project will be to advance the company’s clean coal technology for
the production of electricity and dimethyl ether or DME. The technology allows CO2 to be
economically and efficiently removed from parts of the production process for sequestration, with the
consequent potential to greatly reduce the carbon footprint normally associated with the use of coal
for power generation. The project will now be known as the Felton Clean Coal Demonstration Project.

In addition to producing 51 MW of electricity, the company will produce 645,000 litres per day of
DME. DME is a clean next generation fuel which has sometimes been described as LPG for diesel
engines. It has a wide range of potential applications, including use as a fuel for fuel cells.

The project was revised for a number of reasons, including a desire to overcome community concern
that the construction of the process plant on a flood plain on the eastern side of Hodgson Creek would
remove premium cropping land from the region’s resources and might affect upstream properties in
the event of a flood. The process plant will now be confined to the western side of Hodgson Creek.

If the demonstration project is successful, the operation at Felton could be expanded in stages to
increase the size of the mine and the process plant to produce over 300 MW of electricity and 4,000
million litres per year of DME.

The Felton project alone could ultimately make a substantial impact on Australia’s diesel market. In
2006-2007, Australia consumed 17,028 million litres of diesel and 77 million litres of biodiesel.

If significant supplies of alternative liquid fuels are not brought to the market within the next few
years, Australia runs the risk of massive fuel price increases as supplies of natural crude oil fail to
keep up with demand.