ELIXIR ENERGY LIMITED — Capital/Financing Update 2007

Jul 17, 2007

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ASX RELEASE

18 July, 2007

UPDATE ON GAWLER MERGER

Elixir Petroleum Limited (“Elixir”) (ASX: EXR, AIM: ELP) and Gawler Resources Limited (“Gawler”) (ASX: GRL) are pleased to provide an update on the status of their proposed merger announced on 23 March 2007.

Placement and Funding Facility

In accordance with the agreed funding facility that Elixir is providing Gawler to progress the latter’s Gulf of Mexico High Island oil and gas project, Elixir has subscribed for a share and option placement in Gawler totaling 12,487,500 shares at $0.20 per share and an equivalent number of options at $0.01 per option (exercisable at $0.20 before 31 March 2009). These placements raised approximately $2.6 million for Gawler and increased Elixir’s shareholding in Gawler to 20%.

A further $2.4 million has subsequently been advanced to Gawler in the form of a bridging loan to meet cash calls associated with High Island development activities.

Pompano Project and Increased Funding Facility

On 15 June 2007 Gawler announced the acquisition of a 25% working interest in the Pompano gas field, Gawler’s second development project in the Gulf of Mexico. Elixir has agreed to increase the loan facility by approximately $2.5 million sourced from the net funds of an Elixir convertible note issue announced last week. The funds will be utilised in both the High Island and Pompano field developments.

Gawler to Spin Out Mineral Assets

It is intended that the merged company will be dedicated to the oil and gas industry. Hence it has been decided that Gawler will spin out its hard rock mineral assets into a new company (“NewCo”).

Amendments to Merger Documents

To reflect the various changes that have occurred since the Merger Implementation Agreement and associated Loan Facility Agreement were signed on 23 March 2007, a

number of minor changes have been made to the agreements. The key amendments include:

• A change to the option Scheme previously announced such that Gawler option holders will receive 1 unlisted Elixir option exercisable at $0.001 (previously 1 Elixir share) for every 5 Gawler options held at the record date. The Elixir options will expire 3 months after the Scheme record date. This amendment will see Gawler option holders potentially being able to avail themselves of scrip-for-scrip rollover relief thus deferring tax on this element of the Scheme.

• An increase in the loan facility provided by Elixir by approximately $2.5 million to accommodate both the High Island and Pompano projects as outlined above.

• The proposed demerger of Gawler’s existing mineral exploration assets into NewCo to be owned by Gawler shareholders (including Elixir). It is intended that the new company will undertake an IPO and that Gawler shareholders will receive an in-specie distribution of shares in the new company along with a priority share allocation to subscribe for additional shares in the IPO.

• An extension of the merger completion date (“Scheme End Date”) until 30 November 2007.

Convertible Note Issue

The terms of the Elixir convertible note issue have been modified such that the notes will be unsecured at all times.

Scheme Documents

Preparation of the extensive documentation associated with the merger Scheme of Arrangement is nearing completion. The draft documents are expected to be lodged with the Australian Securities and Investments Commission (“ASIC”) for review by 31 July 2007. Court approval will then be sought prior to convening a Gawler shareholders’ meeting to vote on the Scheme.

Gawler Operations Update

Gawler recently provided an operational update on progress and planned activities on its High Island A268 oil and gas project in the shallow Gulf of Mexico offshore Texas. The company holds a 30% working interest in the High Island field.

In summary:

• an unmanned production platform has been installed on the field;

• laying of the 5km pipeline to the nearby offtake facility is currently underway;

• • a jackup drilling rig has been contracted to drill and complete Well No. A-2 and is expected to be on location before the end of July;

• the rig will then complete Well No. A-1 drilled earlier this year; and

• initial production from HI A268 is anticipated in August.

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More details are given in Gawler’s ASX release to be found on the company’s website (www.gawlerresources.com.au).

Russell Langusch Managing Director Elixir Petroleum Ltd

+44 207 484 5623 (UK office) +44 7840 523 771 (UK cell) +61 411 725 858 (Aust cell) rlangusch@elixirpetroleum.com

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