Altona Energy Regulatory News (ANR)

17th October 2013

Alternative Fuels

Industry - Potential

In South Australia

Peter Fagiano, Executive Technical Director at Altona Energy ("the Company") puts the case

for the alternative fuels industry and its potential in South Australia

Altona Energy (AIM: ANR) is pleased to announce the launch of a major report from Peter Fagiano, the company's Executive Technical Director, entitled "Alternative Fuels Industry Potential in South Australia". The Report analyses the role that alternative fuels has to play in the future energy mix of the South Australian region as well as providing economic analysis. The Executive Summary is reproduced below and the full report is available from the Company's web site at http://www.altonaenergy.com/pdfs/Alternative%20Fuels%20in%20SA.pdf

EXECUTIVE SUMMARY

· High hydrocarbon prices have resulted in alternative sources of energy being developed to meet the ever-increasing demand especially in Non-Member countries of Organisation for Economic Cooperation and Development (OECD).

· Coal is considered to be able to service this demand as there are abundant reserves globally, which will not be subject to price volatility as experienced with crude oil.

· This report puts forward the strategy of co-development of Coal to Liquids (CTL) and Coal to Methanol (CTM) at the Arckaringa mine development in South Australia. The products from a CTL/CTM complex lend themselves to being substantial blend components for conventional refinery based diesel and gasoline. The high specification diesel produced can be used as a blend with refinery diesel to improve performance and reduce contaminants or be upgraded to jet fuel standards for the aviation industry.

· The Methanol product can be blended in the range up to 15%-20% (M15 and M20) with conventional refinery gasoline with the same benefits, reduced contaminants and enhanced performance.

· Conventional new oil discoveries represent only some 50% of daily consumption and there is a major concern on a future oil supplied meeting demand as many existing giant oil fields are now past their peak oil production.

· Current solutions are focused on new technology to develop 'tight' shale oil and gas discoveries using processes such as 'fracking' to release the hydrocarbons from the petroleum/gas rock formations, which may not be universally acceptable due to environmental issues.

· Altona's Arckaringa project offers an alternative solution. At Arckaringa, the original studies focussed on developing 2x15,000 BPD trains for CTL development at Arckaringa. However, a combination of a single 15,000 BPD CTL Plant in conjunction with a single 6,200 TPD CTM Plant represents a better economic solution with a 18% increase in gross revenue.

· Both the total coal consumption and the overall investment of CTL/CTM complex is the same magnitude as the original two train CTL plant.

· One train of 15,000 BPD CTL plant is capable of providing a third of the diesel demand for South Australia and Northern territories. One train of CTM can supply 90% of the methanol to make M15 grade gasoline for the Australian domestic market. Globally, methanol consumption was 32 million Tonnes per Year (TPY) in 2000 and is anticipated to be at 60 million TPY in 2013/14.

· Of this, 20 million TPY is utilised primarily in gasoline and diesel blending. The Capital Expenditure (CAPEX) and Operating Expenditure (OPEX) of coal based plants manufacturing CTL and CTM are comparable to conventional/unconventional hydrocarbon feedstocks when recognising the total investment for feedstocks delivery.

The paper's author, Executive Technical Director Peter Fagiano, commented: "It's clear that a range of alternative fuels will be necessary to service South Australia's energy needs now and in the future. At Arckaringa, we have a project that, through a mix of Coal to Liquid and Coal to Methanol, will play a vital role in providing that energy."

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 Project is designed to include a modern, combined-cycle power station adding 560Mw 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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