Altona Energy Regulatory News (ANR)

5 August 2013

Altona Energy Plc

("Altona")

Arckaringa Project

Coal to Methanol - Technical Feasibility Study

Altona Energy (AIM:ANR) is pleased to announce that it commissioned the UK branch of a leading international engineering firm to conduct a Technical Feasibility Study ("TFS") for a Coal to Methanol ("CTM") plant based on the Arckaringa coal resources. The TFS has now been received and a summary is set out below.

Background

Arckaringa in South Australia is a prime location for a Coal-to-Liquids ("CTL") and Power project, which remains the current focus of the ongoing CNOOC joint venture. However the board has observed the continued growth in global methanol demand, particularly in Asia, with methanol being used increasingly as a fuel additive and feedstock for a wide range of high value products including acetic acid, Di-Methyl Ether, formaldehyde, olefins and gasoline. Methanol prices have been averaging more than US$400/tonne in recent years.

With the use of well proven and commercially available CTM technologies, there is an opportunity to enhance the inherently low in situ value and cost of Arckaringa coal beyond CTL and Power.

The high returns and diverse markets for Methanol, combined with Arckaringa's coal resource, which is capable of sustaining a wide range of coal conversion options or projects for a hundred years or more, make CTM a potentially valuable additional option for the Project. Furthermore methanol production could also provide a hedge against oil and gas price volatility in the future.

Technical Feasibility Study

The recently completed TFS demonstrated that CTM could be a viable project capable of augmenting the Bankable Feasibility Study ("BFS") for Altona's flagship Arckaringa Clean Energy CTL and Power Project in South Australia. The original CTL proposal was for a 45,000 Barrels per day ("BPD") CTL facility developed in three separate 15,000 BPD/ 280MW phases over a 10 year period. The CTM study proposes that one 15,000 BPD train is replaced by a 6,200 Methanol Tonne per day ("MTPD") CTM Plant to be built in tandem with a 15,000 BDP CTL Plant rather than building the first 2 CTL plants in series. 

Altona will now present the CTM project to the Arckaringa JV partner CNOOC for further evaluation. The highlights of the study are as follows:

·; The CTM project is still essentially based on the conversion of Arckaringa coal into syngas via above ground coal gasification and the study confirmed that:

o The same quantity of gasified coal needed to make 15,000 barrels per day of FT liquids could instead produce 6,200 Tonnes per day of methanol.

o The available power was sufficient to operate the CTM plant - The retained 15,000 BPD CTL plant produces 280 MWhr of excess electricity with the CTM Plant expected to utilise ~95% of this.

o The CO₂ emissions from the CTM plant were 0.3 tonnes of CO₂ per tonne of methanol.

o The investment costs for CTL / CTM plant were essentially the same as the two train CTL plant.

·; Furthermore Altona's in house study estimated that the CTL/CTM plant would potentially increase annual project revenue significantly, when compared to a CTL only plant, by approximately US$ 212 million, or 18%.

A copy of the report is available on the Company's website. The report can be accessed via the 'Feasibility Studies - CTM' link on the Project Development page on the website (www.altonaenergy.com/project.php)

Altona's Executive Director Technology, Peter Fagiano, commented: "CTM offers a real opportunity to further enhance the already favourable project economics at Arckaringa. The study has confirmed our preliminary views, and Altona will now present the project to the Joint Venture for evaluation at the BFS level and potentially to other external parties with a special interest in the growing market for methanol production."

For further information, please visit www.altonaenergy.com or contact:

About Altona Energy

Altona Energy is listed on the London Stock Exchange's AIM market. Its current focus is firmly on the evaluation and development of the Company's 49% interest in its flagship coal-to-liquids Arckaringa Project to exploit the huge coal resources contained in three exploration licences covering 2,500 sq. kms in the northern portion of the Permian Arckaringa Basin in South Australia. The Base Case Project is designed to include a modern, combined-cycle power station adding electricity to the national grid and to produce clean burning fuel for Australia and the world from a resource equivalent to 7.8 billion barrels. Altona Energy has forged a Joint Venture with CNOOC New Energy Investment Co., Ltd., a subsidiary of the China National Offshore Oil Corporation (CNOOC), to complete the Project Bankable Feasibility Study and expedite the Project's development.

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