FIRST LITHIUM LIMITED — Capital/Financing Update 2007

Oct 4, 2007

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ADVANCED ENGINE COMPONENTS LIMITED

ACN: 009 081 770

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

5 October 2007

Company Announcements Office The Australian Stock Exchange Limited

By: e-lodgement (ASX code ACE)

UNDERWRITTEN RIGHTS ISSUE

Advanced Engine Components Limited (“ACE” or “the Company”) is pleased to announce a proposed prorata non-renounceable rights issue (Rights Issue) to raise approximately $2.29 million before costs. The Rights Issue will offer one new share for every nine shares held at an issue price of $0.16 per new share to all shareholders registered in Australia and New Zealand.

In addition, one free attaching option will be issued for every two shares subscribed under the Rights Issue. The options will be exercisable at 12.8 cents each on or before 30 November 2009. The options will be unlisted.

Full details will be provided in the Rights Issue prospectus and personalised Entitlement and Acceptance Form to be despatched to all eligible shareholders registered at the record date which will be on or about 26 October 2007.

The Rights Issue will be underwritten to $2.25 million by the Company’s major shareholder, 698 Capital International Ltd (or related body corporate).

The funds raised will be used by the Company to provide working capital support for its ongoing sales commitments as well as reducing loan commitments to 698 Capital Asia Pacific Ltd.

The Rights Issue provides an opportunity for participation by all eligible shareholders. The underwriting commitment ensures the success of the Rights Issue and illustrates the continuous support of the major shareholder.

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

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