FIRST LITHIUM LIMITED — Capital/Financing Update 2010

Feb 23, 2010

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

24 February 2010

Dear Ineligible Shareholder

RIGHTS ISSUE

On 23 February 2010, Advanced Engine Components Limited (“ACE” or “the Company”) announced a non-renounceable rights issue (Rights Issue) under which eligible shareholders will be offered 1 new share for every 3 shares held as at 5.00pm (WST) on 3 March 2010 at an issue price of 5.5 cents per share. All shareholders registered in Australia, New Zealand, Hong Kong and Malaysia as at the record date will be eligible to participate.

The number of shares to be issued under the Rights Issue, if fully subscribed, is approximately 56,958,926. The shares will rank equally with all other shares of the Company from date of allotment. The Company will apply to have the Shares quoted on ASX.

Eligible shareholders will be given the right to apply for additional shares at the same price from any shortfall under the Rights Issue. Allocation of any shortfall will be at the discretion of the Directors. The Directors also reserve the right to place any shortfall within three months of the close of the Rights Issue.

The Rights Issue is not underwritten. The Company’s major shareholder, 698 Capital International Ltd (698) has agreed to take up 20,000,000 shares of its 21,474,577 share entitlement under the Rights Issue being $1,100,000. All ACE Directors have confirmed their intention to subscribe for their full personal share entitlements in the Rights Issue.

The Rights Issue will raise up to approximately $3,132,741 if fully subscribed. The funds raised will be used by the Company to provide working capital support for its ongoing sales commitments with $1,100,000 used to pay the accrued interest on the expired convertible notes held by 698 (or its related party). Other than 698’s $1,100,000 Rights Issue subscription, 698 has agreed that monies raised through the Rights Issue will not be called upon to repay any of its existing loan or accrued interest facilities.

The Company has decided that it is unreasonable to make the offer to shareholders outside Australia, New Zealand, Hong Kong and Malaysia having regard to:

• the small number of shareholders with addresses outside these countries;

• the number and value of the shares they hold; and

• the cost of complying with the legal requirements and the requirements of the regulatory authorities in each of the countries concerned.

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ADVANCED ENGINE COMPONENTS LIMITED ACN: 009 081 770

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We regret that the Rights Issue is therefore not extended to you and you will not receive a copy of the Offer Document and Entitlement and Acceptance Form. No action has been taken to register or qualify the Offer Document and Entitlement and Acceptance Form, the Rights Issue, or the shares or to otherwise permit a public offering of the shares in any other jurisdiction. The Company has not appointed a nominee to sell the shares which would have otherwise been issued to you if you had accepted the offer.

Yours faithfully

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Tony Middleton Managing Director

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