ELIXIR ENERGY LIMITED — M&A Activity 2007

Jul 17, 2007

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Telephone: +61 8 9440 2650 Facsimile: +61 8 9440 2699

18 July 2007

Company Announcements Office ASX Limited

By e-Lodgement

Dear Sir / Madam

UPDATE ON ELIXIR – GAWLER MERGER

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

Placement and Funding Facility

In accordance with the funding arrangements agreed between Elixir and Gawler, Elixir has subscribed for a share and option placement in Gawler of 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 by Elixir to Gawler in the form of a loan facility to meet cash calls associated with development activities currently being undertaken on the High Island project.

On 15 June 2007 Gawler announced the acquisition of a 25% working interest in the Pompano gas field, the Company’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 proceeds of an Elixir convertible note issue announced on 9 July 2007. The funds advanced will be utilised by Gawler in both the High Island and Pompano field developments.

Gawler to De-merge Mineral Assets

As previously announced, it is intended that the enlarged group will be dedicated to the oil and gas industry. It has therefore been agreed that following the Merger, the Gawler mineral exploration assets will be de-merged into a new company (“NewCo”).

Gawler Resources Ltd Level 20, 77 St Georges Terrace, Perth WA 6000 GPO Box 2530 Perth WA 6001

Amendments to Merger Documents

To reflect the various developments that have occurred in Gawler’s and Elixir’s businesses since the Merger Implementation Agreement and associated Loan Facility Agreement were signed on 23 March 2007, several amendments 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 is intended to provide Gawler option holders with the ability to avail themselves of scrip for scrip rollover relief in relation to the options. Gawler option holders should however seek independent advice in relation to this aspect of the Scheme and specifically, whether scrip for scrip rollover relief will be available in their particular circumstances.

• An increase in the loan facility provided by Elixir by approximately $2.5M 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, to the extent of its shareholding interest in Gawler). It is intended that NewCo will undertake an IPO and that Gawler shareholders will receive an in specie distribution of shares in NewCo, together with a priority share allocation to subscribe for additional shares in the IPO.

• An extension of Merger completion date until 30 November 2007.

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 for review by 31 July 2007. Court approval will then be sought prior to convening a Gawler shareholders’ meeting to vote on the Scheme.

Yours sincerely

Gawler Resources

Alex Neuling COMPANY SECRETARY

This report contains some references to forward looking assumptions, estimates and outcomes. These are uncertain by nature and no assurance can be given by Gawler that its expectations, estimates and forecast outcomes will be achieved.

Gawler Resources Ltd Level 20, 77 St Georges Terrace, Perth WA 6000 GPO Box 2530 Perth WA 6001