FIRST LITHIUM LIMITED — Capital/Financing Update 2008

Aug 11, 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

12 August 2008

ISO 9001 Lic.13705 SAI Global

The Company Announcements Office ASX Limited

By: e-lodgement (ASX code: ACE)

SALES FINANCING FACILITY

Advanced Engine Components Limited (“ACE”) is pleased to announce that 698 Capital Asia Pacific Ltd (“698”), a party related to ACE’s major shareholder, has agreed to provide a $2 million Sales Financing Facility (“Facility”).

Draw down of the Facility will be available upon execution of the formal documentation. Execution should occur on or around 14 August 2008. The key terms of the Facility are:

• (a) ACE can draw down in whole or in part at any time up until 31 May 2009;

• (b) Interest will be charged at the Base Rate shown by “National Australia Bank Indicator Rate – Business Lending” as at the date of execution;

• (c) a $17,500 facility fee is payable on execution;

• (d) all monies drawn down must be repaid by 30 June 2009 or earlier should ACE complete a capital raising in excess of $2 million;

• (e) the amount of draw down must not exceed 80% of the sum total of outstanding debtors and cash on hand; and

• (f) normal Events of Default provisions will apply.

In addition, subject to ACE shareholder approval at the 2008 Annual General Meeting, ACE will issue 698 with 5 million options to acquire shares at 20 cents per share on or before 31 December 2010. Should ACE shareholders approve the option issue the Facility interest rate will be reduced to 0.75% below the NAB Base Rate.

Provision of the Facility comes on the back of year on year sales growth from FY2005 to FY2008, an upward sales trend quarter on quarter since December 2005, record sales in the June 2008 Quarter and sufficient orders on hand to exceed (subject to delivery) June quarter sales in the September 2008 quarter.

ACE appointed Mike Hill as Chief Operating Officer in July 2008. Mike’s key strengths include sales, marketing, logistics and organizational management. Mike will oversee the appointment of the China Sales Manager (announced 30 May 2008) and enhance ACE’s product delivery capability to cope with the increasing sales.

The ongoing growth in sales demand has increased working capital requirements. The Facility provides suppliers and customers with confidence in ACE’s financial capability to meet commitments on a timely basis. In addition, the Facility and the exercise price of the share options demonstrate the confidence of 698, the major shareholder, in the immediate and long term future of ACE.

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

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