FIRST LITHIUM LIMITED — Capital/Financing Update 2008

Dec 22, 2008

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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

23 December 2008

Company Announcements Office The Australian Stock Exchange Limited By: e-lodgement (ASX code ACE)

EXTENSION OF CIM SSF LOAN FACILITY

Advanced Engine Components Limited (“ACE”) has executed a Loan Variation to extend repayment of the $750,000 loan from CIM Special Situations Fund Limited (“CIM)” until 30 November 2009.

Pursuant to the revised arrangement interest commenced at 12% pa on 1 December 2008 and will increase by 1% pa for each month the loan, in full or in part, remains unpaid. Interest is payable monthly in arrears calculated on the daily outstanding loan balance. In addition, CIM will be issued with a minimum 5 million and maximum 15 million options exercisable on or before 30 November 2011. The options will be issued in tranches of 1.25 million options at the end of each calendar month, pro rated to the outstanding loan balance, until the loan is fully repaid. The exercise price of each monthly tranche of options will be the VWAP for the calendar month preceding their issue. ACE has the right to repay the loan, in part or in full, at any time on or before 30 November 2009.

ACE’s only other interest bearing debt, other than finance for equipment leases ($50,000) and premium funding ($80,000), is monies owing to parties related to the major shareholder 698 Capital International Ltd.

The current global financial crisis has slowed China’s immediate demand for ACE NGVS. However, demand of State owned, public transport companies, for NG vehicles is expected to be reinvigorated in 2009 as the Government looks to stimulate the economy.

Recent price incentives in China will encourage further demand for NG vehicles. In June 2008, China’s National Development and Reform Commission (“NDRC”) announced an 18 percent increase in China’s diesel retail price. The price of natural gas remained unchanged. On 5 December 2008 the NDRC announced, from 1 January 2009, China’s tax on diesel will increase from 0.1 yuan per litre to 0.8 yuan per litre.

ACE continuously reviews its cost structure and cash flow requirements as a consequence of the effect of the global financial crisis on demand and customer payments.

For further information contact Tony Middleton, Managing Director, on +618 9209 6900; or email shares@advancedengine.com

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