FIRST LITHIUM LIMITED — Capital/Financing Update 2007

Nov 22, 2007

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ADVANCED ENGINE COMPONENTS LIMITED

ACN: 009 081 770

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14 ENERGY STREET PO BOX 3126 MALAGA 6090 WESTERN AUSTRALIA

TEL: +61 8 9209 6900 FAX: +61 8 9209 6999

ISO 9001 Lic.13705 SAI Global

23 November 2007

Company Announcements Office The Australian Stock Exchange Limited

By: e-lodgement (ASX code ACE)

APPENDIX 3B - RIGHTS ISSUE ALLOTMENT

Advanced Engine Components Limited (“ACE” or “the Company”) is pleased to advise that, further to its announcement yesterday, a total of 14,339,644 fully paid ordinary shares and 7,169,883 unlisted options exercisable at 12.8 cents each on or before 30 November 2009 were allotted and issued effective 22 November 2007. The Appendix 3B is attached to this announcement.

As referred to in the Prospectus dated 17 October 2007, the Rights Issue was underwritten by the Company’s major shareholder, 698 Capital International Ltd. Pursuant to the underwriting commitment, 698 Capital International Ltd was allotted 8,516,305 shares and 4,258,153 options. Accordingly, 698 Capital International Ltd now holds a total of 63,849,018 shares representing 44.5% of the Company’s expanded capital.

Despatch of holding statements will occur on 26 November 2007 with trading of the shares expected to commence on ASX on 28 November 2007.

For further information please contact: Tony Middleton (Managing Director) on (08) 9209 6900; or email shares@advancedengine.com

1

Appendix 3B New issue announcement

Advanced engine componentsRule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX’s property and may be made public.

Introduced 1/7/96. Origin: Appendix 5. Amended 1/7/98, 1/9/99, 1/7/2000, 30/9/2001, 11/3/2002, 1/1/2003, 24/10/2005.

Name of entity

ADVANCED ENGINE COMPONENTS LIMITED

ACN

009 081 770

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

1 +Class of+securities issued or to be issued 2 Number of+securities issued or to be issued (if known) or maximum number which may be issued 3 Principal terms of the+securities (eg, if options, exercise price and expiry date; if partly paid +securities, the amount outstanding and due dates for payment; if +convertible securities, the conversion price and dates for conversion)	a) Ordinary shares b) Unlisted options c) Unlisted options d) Unlisted options
	a) 14,339,644 shares b) 7,169,883 unlisted options c) 5,859,375 unlisted options d)1,180,000 unlisted options
	a) Fully paid ordinary shares b) Unlisted options exercisable at 12.8 cents on or before 30 November 2009 c) Unlisted options exercisable at 12.8 cents on or before 31 October 2008 d) Unlisted options exercisable at 18 cents on or before 31 December 2010

• See chapter 19 for defined terms.

24/10/2005 Appendix 3B Page 1

Appendix 3B New issue announcement

4 Do the+securities rank equally in all respects from the date of allotment with an existing+class of quoted +securities? If the additional securities do not rank equally, please state: • the date from which they do • the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment • the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment 5 Issue price or consideration 6 Purpose of the issue (If issued as consideration for the acquisition of assets, clearly identify those assets) 7 Dates of entering+securities into uncertificated holdings or despatch of certificates 8 Number and+class of all+securities quoted on ASX (_including_the securities in clause 2 if applicable)	a) Yes - fully paid ordinary shares b) No – new class of unlisted options. c) No – replaces existing 3,750,000 unlisted options expiring 31 October 2008. d) No – new class of unlisted options.	a) Yes - fully paid ordinary shares b) No – new class of unlisted options. c) No – replaces existing 3,750,000 unlisted options expiring 31 October 2008. d) No – new class of unlisted options.
	a) $0.16 b) Nil. Free attaching option c) Nil d) Nil
	a) and b): Issue of 14,339,644 shares and 7,169,883 unlisted options pursuant to the Company’s rights issue prospectus dated 17 October 2007. The funds raised will be used by the Company to provide working capital support for its ongoing sales commitments and to reduce loan commitments. c) Issue of 5,859,375 unlisted options to replace 3,750,000 existing 31 October 2008 options. d) Issue of 1,180,000 unlisted options pursuant to the Company’sESOP.
	a) and b) and c): 22 November 2007 d) 23 November 2007
	Number	+Class
	143,391,858	Shares

• See chapter 19 for defined terms.

24/10/2005

Appendix 3B Page 2

Appendix 3B New issue announcement

9 Number and +class of all +securities not quoted on ASX (_including_the securities in clause 2 if applicable) 10 Dividend policy (in the case of a trust, distribution policy) on the increased capital (interests)	Number	+Class
	7,169,883 5,859,375 1,180,000 4,361,529 440,000 20,000,000 3,000,000	Options exercisable at $0.128 on or before 30 November 2009. Options exercisable at $0.128 on or before 31 October 2008. Note - These options replace the 3,750,000 options expiring on 31 October 2008 and exercisable at the lower of $0.20 or a 20% discount to a share placement price, should a placement take place before 31 October 2008. As the Company has now completed the rights issue, the actual option exercise price and number of these options can be determined. Options exercisable at $0.18 on or before 31 December 2010. Options exercisable at $0.20 on or before 30 June 2008. Options exercisable at $0.19 on or before 31 December 2008. Options exercisable at $0.20, to be exercised on or before 15 April 2008 subject to the Company’s 30 day volume weighted average share price exceeding $0.50. Convertible Notes convertible into Shares at $0.40 per Share on or before 31 December 2009.
	NA

• See chapter 19 for defined terms.

Appendix 3B Page 3

1/1/2003

Appendix 3B New issue announcement

Part 2 - Bonus issue or pro rata issue

11 Is security holder approval required? 12 Is the issue renounceable or non- renounceable? 13 Ratio in which the+securities will be offered 14 +Class of+securities to which the offer relates 15 +Record date to determine entitlements 16 Will holdings on different registers (or subregisters) be aggregated for calculating entitlements? 17 Policy for deciding entitlements in relation to fractions 18 Names of countries in which the entity has+security holders who will not be sent new issue documents Note: Security holders must be told how their entitlements are to be dealt with. Cross reference: rule 7.7. 19 Closing date for receipt of acceptances or renunciations 20 Names of any underwriters 21 Amount of any underwriting fee or commission 22 Names of any brokers to the issue 23 Fee or commission payable to the broker to the issue

• See chapter 19 for defined terms.

Appendix 3B Page 4

1/1/2003

Appendix 3B New issue announcement

24	Amount of any handling fee
	payable to brokers who lodge
	acceptances or renunciations on
	behalf of+security holders
25	If the issue is contingent on
	+security holders’ approval, the
	date of the meeting
26	Date entitlement and acceptance
	form and prospectus or Product
	Disclosure Statement will be sent to
	persons entitled
27	If the entity has issued options, and
	the terms entitle option holders to
	participate on exercise, the date on
	which notices will be sent to option
	holders
28	Date rights trading will begin (if
	applicable)
29	Date rights trading will end (if
	applicable)
30	How do+security holders sell their
	entitlements_in full_through a
	broker?
31	How do+security holders sell_part_
	of their entitlements through a
	broker and accept for the balance?
32	How do+security holders dispose
	of their entitlements (except by sale
	through a broker)?
33	+Despatch date

Part 3 - Quotation of securities

You need only complete this section if you are applying for quotation of securities

• 34 Type of securities ( tick one )

• (a)[Securities described in Part 1 - Only 14,339,644 shares ]

• See chapter 19 for defined terms.

Appendix 3B Page 5

1/1/2003

Appendix 3B New issue announcement

(b)[All other securities ]

Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible securities

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

Tick to indicate you are providing the information or documents

35 If the[+] securities are[+] equity securities, the names of the 20 largest holders of the additional[+] securities, and the number and percentage of additional[+] securities held by those holders

36 If the[+] securities are[+] equity securities, a distribution schedule of the additional +securities setting out the number of holders in the categories 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over 37 A copy of any trust deed for the additional[+] securities

Entities that have ticked box 34(b)

38 Number of securities for which NA +quotation is sought 39 Class of +securities for which quotation is sought

40 Do the[+] securities rank equally in all respects from the date of allotment with an existing[+] class of quoted +securities?

If the additional securities do not rank equally, please state:

• the date from which they do

• the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment

• the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment

• See chapter 19 for defined terms.

Appendix 3B Page 6

1/1/2003

Appendix 3B New issue announcement

41 Reason for request for quotation now Example: In the case of restricted securities, end of restriction period (if issued upon conversion of another security, clearly identify that other security)

Number +Class

42 Number and[+] class of all[+] securities quoted on ASX ( including the securities in clause 38)

• See chapter 19 for defined terms.

Appendix 3B Page 7

1/1/2003

Appendix 3B New issue announcement

Quotation agreement

• 1 +Quotation of our additional +securities is in ASX’s absolute discretion. ASX may quote the[+] securities on any conditions it decides.

• 2 We warrant the following to ASX.

• The issue of the[+] securities to be quoted complies with the law and is not for an illegal purpose.

• There is no reason why those[+] securities should not be granted[+] quotation.

• An offer of the[+] securities for sale within 12 months after their issue will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act.

Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

• Section 724 or section 1016E of the Corporations Act does not apply to any applications received by us in relation to any[+] securities to be quoted and that no-one has any right to return any[+] securities to be quoted under sections 737, 738 or 1016F of the Corporations Act at the time that we request that the[+] securities be quoted.

• If we are a trust, we warrant that no person has the right to return the +securities to be quoted under section 1019B of the Corporations Act at the time that we request that the[+] securities be quoted.

• 3 We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.

• 4 We give ASX the information and documents required by this form. If any information or document not available now, will give it to ASX before[+] quotation of the[+] securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

Sign here: (Company secretary)

Date: 23 November 2007

Print name: Susan Hunter

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• See chapter 19 for defined terms.

Appendix 3B Page 8

1/1/2003