FBR LTD — Capital/Financing Update 2011

Aug 30, 2011

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Dromana Estate Limited

ABN 58 090 000 276 Registered Office and Winery/ Cellar Door Address: 555 Old Moorooduc Road, Tuerong Vic 3933 Postal Address: PO Box 299 Mt Martha Vic 3934 Tel (03) 5974 3899 Fax (03) 5974 1155 Internet address: www.dromanaestate.com.au

31 August 2011

The Manager Company Announcements Office Australian Stock Exchange Limited Level 5, 20 Bridge Street SYDNEY NSW 2000

ANNOUNCEMENT TO THE MARKET

Dromana Estate Limited (“ DMY ”) is pleased to announce that it has entered into a mandate agreement with Cygnet Capital Pty Ltd (“ Cygnet ”) in respect of capital raising initiatives and corporate strategy advice (“ Mandate ”).

Background to the Mandate

Following the transfer of its wine business to Mornington Winery Group Limited (“ Mornington ”) which was approved by shareholders at the general meeting on 30 June 2010, DMY’s major asset is its 13.99% interest in the Tuerong Park Unit Trust (“ Trust ”). Jinalec Pty Ltd is the trustee of the Trust and in that capacity owns the property which is leased to Mornington for the purpose of conducting the wine business. Jinalec has been granted a permit to construct a hotel / conference centre, day spa and restaurant on another part of the property (“ Development ”).

As previously announced to the market on 5 November 2009, DMY would acquire ownership of the Development from Jinalec on the basis of an independent valuation at the time of the transfer of the wine business to Mornington. A softening in the tourism market since that time has resulted in a tightened financing environment for such projects, which in turn has forced DMY to re-assess its involvement in the Development.

In its Half-Year Report for the period ended 31 December 2010, DMY noted:

“The independent Directors of Dromana are in consultation with the Directors of Jinalec, Mr David Craig and Mr Richard Green to determine the most appropriate way for Dromana and its shareholders to participate in the development project. Before the Independent Directors of Dromana are in a position to determine whether to participate directly in the development project, Jinalec needs to undertake further project, evaluations and costings which, once valued, will provide a basis for making an appropriate decision.”

The Directors have also been looking at other investment opportunities for Dromana to participate in, aside from the Development which can add to shareholder value. There are commercial opportunities available to utilize the Dromana corporate structure to benefit all shareholders and these are and will continue to be pursued.

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Mandate

Cygnet is a corporate advisory firm which specialises in providing boutique services to small to medium size enterprises seeking growth opportunities.

Subject to the completion of a due diligence process, Cygnet will arrange for investors to subscribe for secured convertible notes to the value of $500,000. The issue of the notes will require shareholder approval. Those funds will be used to repay the current creditors of DMY, other than $900,000 currently outstanding under a convertible note held by Jinalec.

Cygnet proposes to then arrange a placement of DMY shares (again with shareholder approval) to raise a further $350,000 to provide ongoing working capital for DMY while it assesses its options in regard to the Development and other commercial opportunities.

Depending on the future direction of DMY, Cygnet would then consider underwriting a rights issue in DMY to provide a more secure financial basis for DMY.

In the event that DMY decides not to proceed with the Development, Cygnet will seek new investment opportunities (Cygnet has no other investment opportunity in contemplation at the moment).

More detailed information on the Mandate and capital raising initiatives will be provided to shareholders shortly in a notice of meeting.

If you have any questions in relation to the above information, please contact me on (03) 9855 1700 Monday to Friday between 9.30 am and 5.00 pm.

Yours faithfully

Garry W. Bell Company Secretary

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