FIRST LITHIUM LIMITED — Capital/Financing Update 2010

Jun 1, 2010

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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

Company Announcements Office Australian Securities Exchange By: e-lodgement (ASX code ACE)

2 June 2010

CO-OPERATION AGREEMENT WITH NORINCO EQUIPMENT

Advanced Engine Components Limited (“ACE”) entered into a Strategic Alliance Agreement with Norinco Equipment Co Ltd (“Norinco Equipment”) in April 2009.

ACE is pleased to announce it has now signed a Co-operation Agreement with Norinco Equipment. This new agreement supplements the earlier Strategic Alliance Agreement. With the Co-operation Agreement, ACE will receive a royalty on Norinco Equipment’s gross sales revenue generated from the Strategic Alliance. The royalty is in addition to the revenue ACE receives from selling its NGV components, at normal commercial rates, to Norinco Equipment, Norinco Equipment related entities and Norinco Equipment customers.

Through the Strategic Alliance Agreement the parties agreed to jointly develop business within the natural gas vehicle (“NGV”) industry. This included industry representation; technical co-operation and training; joint marketing activities; co-operating in sourcing NGV technical solutions; developing new NGV products and equipment; facilitating NGV and natural gas engine production through Norinco Equipment’s related entities; and Norinco Equipment using ACE NGV components exclusively.

All intellectual property, other than that developed jointly, remains the property of the respective parties.

The Strategic Alliance has been working very well. Activities to date include:

• (a) joint development of the North Huade Diesel Engine Company BF6M1015 diesel engine to run on natural gas;

• (b) ACE’s collaboration with Norinco Equipment related entities including Beijing University of Technology and other research centres; North Benchi Truck; North Huade Neoplan Bus Co; Henan Shaolin Auto; and various CNG cylinder factories; and

• (c) joint presentations to major potential customers for significant contracts in Egypt, Pakistan, Thailand, China and other countries.

The Co-operation Agreement continues until December 2015.

The Strategic Alliance Agreement was a very important link to ACE for its ongoing development in China and China export markets. The Co-operation Agreement strengthens those links and provides ACE with a revenue stream additional to the sale of NGV systems, components and associated engines.

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

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ADVANCED ENGINE COMPONENTS LIMITED ACN: 009 081 770

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About Norinco Equipment Co Ltd

Norinco Equipment is involved in the development, sale and export of natural gas vehicles, engines, related products and CNG refuelling stations. Norinco Equipment has established a global operation and information network. It has a worldwide marketing network and reputation for quality and service.

Norinco Equipment is a wholly owned subsidiary of China North Industries Group Corporation (“CNGC”).

CNGC, a State owned enterprise, was formally established in 1980 with the approval of the Chinese Government. It is a major international conglomerate engaged in a wide range of industries including defence equipment, chemical products, vehicle and machinery production, international engineering contracts, real estate, hotels and travel services.

CNGC has 133 owned or related entities including companies and research institutions.

CNGC has more than 80 overseas economic and trade offices, with branches in over 30 countries and regions.

About Advanced Engine Components Limited (ASX code ACE):

ACE has been listed on the Australian Stock Exchange since February 2002. The corporate and research headquarters are in Perth, Western Australia. Branch offices for marketing, procurement and production are in Beijing and Dalian, China. Additional strategic partnerships and markets are in Thailand, Indonesia, Australia, France and India.

ACE was established in 1984 to undertake research, development and commercialisation of electronic fuel injection and engine management technologies designed to increase engine power while meeting, or improving, international exhaust emission standards (Euro 4).

ACE's flagship product is the patented Natural Gas Vehicle System (NGVS) a multi-point sequential electronic gas injection system. The NGVS enables diesel engines to be adapted, on the production line or in retro-fit, to use natural gas.

The ACE NGVS is ideally suited for the city bus and truck fleets, where its low emission levels and operating economies are key benefits.

Further information is available at www.advancedengine.com

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