ELIXIR ENERGY LIMITED — Capital/Financing Update 2008

Mar 16, 2008

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ASX RELEASE

17 March, 2008

ENTRY INTO SIGNIFICANT WEST AFRICAN OFFSHORE EXPLORATION OPPORTUNITY

Elixir Petroleum Limited is pleased to announce that it has acquired an interest in, and been appointed operator of, highly prospective Block SL-4, offshore the Republic of Sierra Leone, West Africa (“Block SL-4”).

Block SL-4 is one of six awarded offshore exploration blocks in Sierra Leone. The block comprises 4,429 km[2] in area and is located nearby to exploration blocks held by large international oil and gas companies.

Terms of Acquisition

Elixir is acquiring an interest of up to 35% in Block SL-4 on ground floor terms. This acquisition is comprised of a 15% working interest (“WI”) in exchange for repaying 15% of the costs of a proposed 1,000 sq km 3D seismic programme, and an option to acquire an additional 20% WI on similar terms (“Option”). Elixir is required to pay its 15% share of costs on its 15% WI and to exercise the Option by no later than six months following the commencement of the seismic programme. Elixir is able to satisfy the Option exercise amount through the issue of fully paid ordinary shares in the Company at the then market price.

The planned 3D programme is expected to commence by no later than Q3 2008. Final terms for the 3D seismic acquisition are subject to current negotiations with service providers.

The Government of Sierra Leone has approved Elixir’s participation and its appointment as Operator of the Block.

Sierra Leone Exploration Opportunity – Highlights

• Offshore deep water exploration block with recognised hydrocarbon potential located in the Sierra Leone Basin.

• Block SL-4 covers an area of 4,429 km[2 ] over the continental shelf, slope, and Sierra Leone Basin floor (see Figure 1 below).

• A 2D seismic data set was acquired over Block SL-4 in 2003 which has identified a large number of significant leads and a variety of play types.

Golden Cross House 8 Duncannon Street London WC2N 4JF Tel: +44 207 484 5019 Fax: +44 207 484 4992 Website: www.elixirpetroleum.com

Level 20 77 St George’s Terrace Perth WA 6000 Western Australia +61 8 9440 2650 +61 8 9440 2699 ABN 51 108 230 995

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Figure 1: Location Map

• Only two exploration wells have been drilled offshore Sierra Leone. Each well was drilled in the 1980’s in shallow water and encountered hydrocarbons. One well lies within Block SL-4.

• The offshore region of Sierra Leone is underexplored on the continental shelf and unexplored in deepwater. This can be attributed to the civil conflict in the country during the 1990’s.

• Participants in the six other awarded exploration blocks offshore Sierra Leone include Repsol YPF, Spain’s largest oil company and Woodside Petroleum Limited.

• Geological studies, well data, and seismic data acquired offshore Sierra Leone has established the presence of the essential petroleum system factors, being:

• Multiple oil prone source beds

• Abundant reservoir quality sandstones

• Adequate seals

• Varied and abundant trap types of size, and

• Synchronous timing and coincidence

• The proposed 1,000 km[2 ] 3D survey is designed to validate several potentially significant prospects and a number of leads identified on the existing 2D seismic data set.

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• Sizeable discoveries offshore Ghana and Cote d’Ivoire, including the Jubilee development, may provide analogies from which to target exploration activities in the Sierra Leone Basin.

• Petroleum contract terms are extremely competitive.

Commenting on the announcement, Elixir’s Managing Director, Andrew Ross, said:

“The acquisition of up to a 35% working interest and operatorship of Block SL-4 is a very significant opportunity for Elixir, and one that has the potential to deliver considerable value to shareholders”.

He commented that although offshore Sierra Leone is essentially unexplored, recent major discoveries have resulted in the West African continental margin garnering considerable renewed interest from the international exploration and production industry.

“Block SL-4 represents a relatively low-risk, low-cost entry for Elixir into what we hope will emerge as a new petroleum province. The acquisition of 3D seismic data is a key requirement in evaluating and refining drilling targets identified from the existing 2D seismic data set”, he said.

Mr Ross noted that the proposed 1,000 km[2] 3D seismic survey over Block SL-4 will be undertaken, and the data processed and interpreted, prior to the end of this year.

“Elixir’s strategy of combining near term development opportunities in the shallow water of the US Gulf Coast with large exploration projects internationally provides shareholders with an attractive balance of cashflow, activity and significant upside potential”.

The participants in Block SL-4 and their respective beneficial interests are:

Elixir Petroleum Ltd * 15.0% Elixir Petroleum Ltd Option Equity 20.0% 8 Investments Inc[#] 65.0% 100.0%

• Interest is held indirectly via its shareholding in a wholly-owned subsidiary.

• If Option is exercised, interest will be held via its shareholding in a wholly owned subsidiary. If Option is not exercised, interest will be retained by 8 Investments Inc.

Yours sincerely,

Alex Neuling Company Secretary Elixir Petroleum Ltd

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Background and Key Terms

• Elixir has acquired a 15% WI in Block SL-4, offshore Sierra Leone and an Option to acquire an additional 20% WI. The remaining 65% beneficial interest in the Block is held by, or on behalf of, 8 Investments Inc., a private US incorporated investment company.

• Elixir has assumed operatorship of Block SL-4.

• Sierra Leone Government approval has been received for these working interest arrangements and to the assumption by Elixir of operatorship of the Block.

• The WI arrangements have been approved on the basis that a 1,000 km[2 ] 3D seismic survey over Block SL-4 (“Survey”) is undertaken commencing prior to 19 August 2008. The Survey represents the agreed minimum work programme for the First Exploration Period under the Petroleum Agreement governing Block SL-4. An international seismic acquisition company will be contracted to undertake the Survey on behalf of the joint venture.

• Elixir has agreed to pay its 15% share of the proposed Survey. However, payment is not required to be made until six months following the commencement of the Survey. Elixir will fund a US$500,000 performance bond pending commencement of the Survey.

• Elixir has been granted an option (“Option”) by its JV partner, 8 Investments Inc., to acquire an additional 20% beneficial interest in the Block by reimbursing 20% of the costs of the Survey. This cost shall be satisfied by the issue of fully paid ordinary shares in Elixir issued at the prevailing market price as at the date of exercise of the Option. This 20% WI has been registered in the name of Elixir, however the transfer of beneficial ownership is pending exercise of the Option. The Option can be exercised at any time up to 6 months after the commencement of the Survey.

Background on Sierra Leone and Petroleum Agreement Terms

After a number of years of political instability, democratic elections have been held in Sierra Leone and a new government was elected in late 2007.

Due to previous instability, no petroleum exploration activities occurred in Sierra Leone from the mid-1980’s until 2003. Sierra Leone revived petroleum exploration activities by announcing its first bid round in April 2002 for which approximately 5,700 line kilometres of 2D seismic data was acquired off the southern coast of the country.

The results of that survey, together with the results from the only two offshore exploration wells drilled in Sierra Leone (in 1982 and 1985, which both encountering oil shows) were reprocessed and packaged for licensing by oil companies. The offshore area of Sierra Leone has been divided into seven blocks each between 3,500 km[2] and 5,500 km[2] in area, so as to include both shelftal and deep water plays.

The petroleum exploration and production sector in Sierra Leone is regulated by the Petroleum Exploration and Protection Act, 2001. The Petroleum Agreement over Block SL-4 was originally executed between The Government of Sierra Leone and 8 Investments Inc. in 2003.

Information contained in this report with respect to Block SL-4, was compiled from material reviewed by the Company’s Exploration Director, Mr. I Knott, MSc (Hons), who has had more than 15 years experience in the practice of petroleum geology. Mr Knott consents to the inclusion in this report of the information in the form and context in which it appears.

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