EDEN INNOVATIONS LTD — Capital/Financing Update 2008

May 5, 2008

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ACN 109 200 900
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Australian Securities Exchange Announcement

6 May 2008

INDIAN HYTHANE® TARGET MARKET PROJECTIONS FOR AUSTRALIAN GREEN ENERGY SPECIALIST

For the past three years, ASX-listed and Perth-based Eden Energy Ltd (“Eden”) (ASX code “EDE”) has been active in India promoting Hythane®, (a premium blend of natural gas comprising 80% natural gas and 20% hydrogen) as an ultra low emission, high efficiency fuel. Significant progress has been made and several strategic agreements have been entered into. However, whilst there are still many contingencies and variables that are not yet certain, Eden’s significant progress in this high demand energy market has now enabled the Company to compile its initial target market projections for the Indian market, which the Company believes is necessary for the market to be fully informed and to appreciate the potential size of the Indian Hythane® market.

TARGET MARKET PROJECTIONS

KEY ASUMPTIONS	2009	2011	2013
Cumulative Number of Hythane® Buses	150	2150	17650
Cumulative Number of Hythane® Dual Fuel Generators	5	155	655
Cumulative Number of Dual Fuel Kits	20	160	480

If these projections are achieved with the targeted profit margins which Eden believes are reasonably achievable, based on a conservative base case scenario, Eden’s Indian Hythane® operations should deliver a small maiden net after tax profit in Financial Year 2009-2010, that is budgeted to rise significantly over the following years.

THE KEY DRIVING FACTORS FOR THE INDIAN HYTHANE® MARKET.

1. Environmental Concerns

As a rapidly industrialising nation, India faces huge environmental challenges, related not only to local air quality in its major cities, but also resulting from global climate change due to both

Level 40, Exchange Plaza, 2 The Esplanade, Perth, Western Australia 6000 Telephone: (08) 9282 5889 Facsimile: (08) 9282 5866 Email: mailroom@edenenergy.com.au Website: www.edenenergy.com.au

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potential increases in ocean levels and to reduction in the Himalayan icepack, which provides the water for many of India’s major rivers, and much of its water supplies. The World Bank, in 2007, estimated that presently there are more than 500,000 people dying in India annually, as a result of air pollution.

Concern over the severe public health effects from poor air quality led the Indian Supreme Court in 2001 to compel all public transport in Delhi to be converted to natural gas operation , and to also identify a further 12 cities which are required to develop and implement similar plans . As a result of this change to natural gas, emission levels in Delhi went down, but now, with a huge increase in the number of vehicles, the high levels of air pollution have returned

2. Huge increase in motor vehicle numbers India is experiencing a very rapid economic expansion which is accompanied by a huge increase in the number of motor vehicles. This is both contributing to the increasing levels of air pollution, and also consuming ever larger amounts of expensive imported oil . In Delhi alone, the number of new car registrations is reportedly currently running at more than 400 per day, and this trend is mirrored in cities all over the country.

3. Indian Hydrogen Roadmap To address both the local air quality issue and also the longer term issue of global warming, the Indian Government in 2007 established a hydrogen road map, in which it is targeting to have at least one million vehicles operating on hydrogen based fuels by 2020 . As part of this plan, the Government’s initiatives include:-

• 3.1 Establishing a hydrogen dispensing station demonstration project at a prominent petrol/natural gas outlet in New Delhi. This project is aimed at supplying both pure hydrogen and blended Hythane®. The Hythane® Company, a wholly owned subsidiary of Eden, has been awarded the tender to build this station, which is expected to be completed during the second half of 2008.

• 3.2 The Government has also established the fund to develop Hythane® compatible engines with the automotive sector in the first public/private partnership in this technology area. This project aims at optimising the blends of hydrogen with natural gas for various engine types for optimal vehicle performance and minimal emissions.

• 3.3 As part of the hydrogen road map, the Indian Government contemplates the use of Hythane® as the transitional fuel, to bridge between hydrocarbons and hydrogen, by providing an immediate benefit by using hydrogen to enrich natural gas to optimise efficiency and minimise emissions from natural gas, whilst at the same time making pure hydrogen available for hydrogen powered fuel vehicles (both fuel cell and internal combustion) as they become available to the market. As India already has developed natural gas refuelling stations in several cities, and this number is anticipated to be expanded significantly with the rollout of natural gas across the country, this provides an economically viable strategy for developing the necessary infrastructure to support a future hydrogen market.

4.

Significant Increase in Supply of Available Natural Gas

• India has a growing domestic supply of gas, particularly from significant offshore natural gas discoveries during the past few years and in addition has established facilities for importation of significant quantities of liquefied natural gas (See figure 1). On the other hand, India has very little domestic oil, and as a consequence is forced to import almost all of its rapidly expanding vehicle

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fuel requirements.

5. Natural Gas as Vehicle Fuel

Natural gas is already widely used in India as a vehicle fuel, particularly for buses, in the several cities that currently have natural gas available. It sells at approximately 40% cheaper than diesel and with rapidly rising oil prices, this differential is likely to increase and make natural gas an even cheaper alternative fuel. The Indian Government proposes to extend the use natural gas as a major fuel for motor vehicle and power generation applications , and as part of this strategy, already several major cities, including Delhi and Ahmedabad have commenced building extensive Bus Rapid Transit systems, which will operate exclusively on natural gas. It is planned to progressively establish similar systems in over 50 cities.

6. Expansion of Natural Gas Pipeline Network In order to deliver the gas, the Gas Authority of India, together with Reliance Industries Ltd, has commenced major programs to extend the Indian natural gas pipeline grid (see figures 2 and 3).

7. Expansion of City Gas Distribution Networks

• As part of the strategy to make natural gas available throughout India, in addition to the expansion of the trans-national pipeline grid, natural gas distribution networks throughout major cities are also being constructed. The Gas Authority of India has itself developed, in conjunction with joint venture partners , city gas distribution networks in 8 cities and is planning in the medium term a further 20 cities where it proposes to establish city gas distribution networks (see figure 4) and in the long term plans to develop city gas distribution networks in a total of 230 cities.

EDEN’S PROGRESS TO DATE

Within this highly favourable and emerging energy market environment, Eden, on its “first mover basis”, has made significant progress during the past 3 years in marketing Hythane® in India. Highlights to date include:-

1. In March 2007, Eden entered into an agreement with Gujarat State Petroleum to promote Hythane® and to conduct a Hythane® bus demonstration in the state of Gujarat. This project has the support of the Gujarat State Government and is planned to start late in CY 2008 .

2. For the past 15 months, Eden has been working with Ashok Leyland pursuant to an agreement entered into in December 2006, developing Hythane® compatible bus engines .

3. In May 2007, Eden entered into an agreement with Larsen & Toubro, a world class Indian engineering company, to manufacture in India the HyRadix hydrogen reformers which are produced by Eden’s Chicago based wholly owned subsidiary HyRadix Inc. These reformers are now under construction and are scheduled for delivery for 4Q 2008 .

4. Preliminary agreement with Cummins India has been reached and a Cummins diesel powered generator has been taken from India to Hythane® Company’s test facility in Colorado in the United States where the necessary development work for operation of the generator on a combination of diesel and Hythane® is nearing completion . A pilot project to demonstrate the economic and environmental benefits from this is planned for 4Q 2008, when the hydrogen reformers are scheduled for completion.

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RISKS

Whilst many contingencies and variables still remain, Eden is confident because of the facts set out above, that a significant market for Hythane® will develop in India, and has compiled these target market projections for the Indian market based on what is considered to be an achievable and orderly market expansion.

There are however, in addition to the broader economic risks (such as volatile energy and financial markets, world or local unrest, changing attitudes towards climate change and legislative risk) a number of project specific risks:

1. Firstly, the size of the market and the speed of market penetration will depend upon the both the supply of natural gas being adequate to supply the projected market and the rate of rollout of natural gas distribution networks in India for vehicle and power generation fuel continuing as projected by the Gas Authority of India.

2. The second major risk, which will in part be addressed in the demonstration projects planned for late CY 2008, is whether the cost of producing and delivering Hythane® to the market will be commercially acceptable. Whilst the costs of producing the hydrogen are reasonably well known, the actual Indian production costs are still evolving, and the efficiency gains that will be derived from the use of Hythane® in the Indian engines are yet to be finalised. These will clearly impact on the project.

3. The third major risk that may prevent Eden achieving these market projections is whether Eden can arrange sufficient financing for all the equipment that it will need to install on a Build/Own/Maintain basis. This forms the basis of the Company’s financial model. The calculations have been based on third party debt finance on commercial terms for 60% of the required capital costs and being able to secure sufficient additional equity funding. This could come from a variety of possible sources including future joint ventures, issuing new securities, both new shares and also from the exercise of existing listed options ($18.4m), from disposal of other assets or from retained profits from other operations.

4. A final risk could come from competitive pressures with other industry participants or new alternative technologies that may enter the Indian market. Our strategy is to build world’s best equipment at world competitive prices, and to establish strategic alliances with major companies for our mutual benefit and to deliver very cost effective products. We propose to manufacture as much of our equipment in India as possible, and with the added strong advantages of being first to market and also being able to deliver the total integrated package of technology which is required in each case, Eden is confident that it will be competitive, and be able to achieve its conservative projections.

It should be emphasized, however, that Eden’s target market projections are estimates only, subject to a wide range of uncertainty. These assumptions and targets are not guaranteed but, subject to the risks referred to above, the Directors believe that these numbers represent a fair and reasonable projection of Eden’s cumulative market penetration over the next five years in India.

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SUMMARY

Whilst the environmental issues faced by India are similar to many other countries, the initiatives taken in India to date as detailed above, together with a plan to use natural gas as a major vehicle and power generation fuel, provide a very strong market platform for the Hythane® technology in India. Eden is confident that it can play a leading role in the development and rollout of this technology in what is undoubtedly one of the largest markets in the world, and for these reasons, subject to the risks mentioned above, Eden believes that it can achieve the market projections and targets detailed above.

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Gregory H Solomon Executive Chairman

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INDIAN GAS SUPPLY AUGMENTATION

Domestic Gas

• Eastern Cost

• Upcoming LNG Terminals • Dhabol (5 MMTPA)

• Kochi (2.5 MMTPA)

Existing LNG Terminals

• Dahej (5 to 10 MMTPA)

• Hazira (2.5 MMTPA)

Cross Border Pipelines

• Iran-Pakistan-India

• Turkmenistan-

Afghanistan-PakistanIndia

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TURKMENISTAN
DAHEJ I & II
10 MMTPA
IRAN
HAZIRA
2.5MMTPA
DAHEJ
HAZIRA
DABHOL
DABHOL
5 MMTPA
NEW GAS DISCOVERIES
LNG TERM’s- Upcoming
KOCHI LNG TERM’s- Existing
5 MMTPA KOCHI TRANS – NATIONAL P/L
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Courtesy of Gas Authority of India

Figure 1

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INDIAN GAS SECTOR INFRASTRUCTURE Courtesy of Gas Authority of India CURRENT & FUTURE

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NANGAL
BHATINDA
DELHI
BAREILLY
GURGAUN
MATHANIA AGRA AURAIYA LUCKNOW DISPUR
JAGDISHPUR
DAHEJ I & II BARMER GWALIOR KANPUR PATNA
10 mmtpa PHOOLPUR
KOTA JHANSI GAYA
UJJAIN VIJAYPUR VARANASI AGARTALA LNG
RAJKOT BOKARO
BHOPAL Existing
AHMEDABAD
KOLKATA
HAZIRA BHARUCH BARODA CUTTACK Upcoming
2.5 mmtpa SURAT DAMRA
BHUBANESHWAR Transmission Pipelines
MUMBAI PUNE
Existing
RAJAMUNDRY KRISHNAPATNAM
DABHOL SOLAPUR KAKINADA GAIL’s Planned Pipeline
5 mmtpa KOLHAPUR HYDERABAD RIL’s East West Pipeline
VIJAYAWADA RIL’s Planned Pipeline
GOA
NELLORE GSPC’s Planned Pipeline
ENNORE
BANGLORE
HASAN City Gas/ CNG
MANGALORE CHENNAI 2.5 mmtpa
MANGLORE Existing
2.5 mmtpa
Planned
KOCHIKANJIKKOD TIRUCHCHIRAPALLI LNG Terminal
COIMBTORE
5 mmtpa
TUTICORIN Courtesy of Gas Authority of India
Figure 2
Iran-Pak-India Pipeline
Turk-Afg-Pak-India Pipeline
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INTEGRATED GRID TO LINK ANY SOURCE TO ANY MARKET
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GAIL- NEW PIPELINES

Courtesy of Gas Authority of India

Pipeline Project	Capacity (MMSCMD)	Length (KM)	States Being Covered
DVPL PIPELINE UPGRADATION	24 to 60	610	Gujarat and MP
GREP PIPELINE UPGRADATION	20 to 62	505	MP and UP
VIJAIPUR-JAGDISHPUR PIPELINE UPGRADATION	12 to 24	571	MP and UP
DADRI-BAWANA-NANGAL PIPELINE	25	610	UP, Haryana and Punjab
CHAINSA-GURGAON- JHAJJAR- HISSAR PIPELINE	25	310	Haryana and Rajashthan
JAGDISHPUR-HALDIA PIPELINE	12	876	UP, Bihar, Jharkhand and WB.
DHABOL-BANGALORE PIPELINE	12	730	Maharastra and Karnataka.
KOCHI-KANJIRKKOD-MANGALORE / BANGALORE	12	840	Kerala and Karnataka

INVESTMENT OF AROUND US $ 7.0 BILLION IN AUGMENTATION AND CREATION OF NEW INFRASTRUCTURE PLANNED

Figure 3

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GAIL CITY GAS / CNG

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CHANDIGARH
LUDHIANA
PANIPAT
AMRITSAR
GURGAON
DELHI
FARIDABAD NOIDA BAREILLY
GHAZIABAD
JAIPUR
JODHPUR MATHURA LUCKNOW SILCHAR
AGRA VARANASI
UDAIPUR NEEMRANA- KANPUR
BHIWADI ALLAHABAD PATNA
GWALIOR PHOOLPUR
KOTA JHARIA
JHANSI
AGARTALA
UJJAIN
RAJKOT
INDORE
AHMEDABAD
SURENDRANAGAR
VADODRA
KOLKOTA
MUMBAI THANE
NAVI MUMBAI
PUNE
VIJAYWADA
SHOLAPUR
HYDERABAD RAJMUNDARY
BANGALORE
City Gas/ CNG
Existing (8 cities)
Planned (28 Cities)
CHENNAI
KOCHI
Figure 4
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• Growth From Existing Cities to 28 Cities • More Cities as Pipelines Reach New Areas • Target - 230 Cities (Long Term)

Courtesy of Gas Authority of India