FIRST LITHIUM LIMITED — Capital/Financing Update 2010

Feb 23, 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

ISO 9001 Lic.13705 SAI Global

24 February 2010

Dear Eligible 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. Fractional entitlements will be rounded up.

The Rights Issue gives shareholders the opportunity to increase their investment in the Company at the same price of 5.5 cents as the $1,200,000 placement completed on 18 February 2010 and without any brokerage fees.

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.

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ADVANCED ENGINE COMPONENTS LIMITED ACN: 009 081 770

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As an eligible shareholder, we look forward to extending the Rights Issue to you. We expect to dispatch the Offer Document and Entitlement and Acceptance Form to eligible shareholders on or around 9 March 2010.

The proposed timetable for the Rights Issue is set out below for your information.

Existing optionholders may participate in the Rights Issue upon exercise of their vested options prior to the Record Date. The Company sent a notice to its optionholders on 23 February 2010 to notify them of their right to participate in the Rights Issue upon exercise of their vested options.

Please consult your stockbroker, solicitor, accountant or other financial adviser if you are in any doubt as to the action (if any) you should take in relation to the Rights Issue. If you have any questions regarding the Rights Issue, please contact the Share Registry, Computershare Investor Services Pty Limited, on 1300 557 010 or +61 3 9415 4000.

Yours faithfully

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Tony Middleton Managing Director

PROPOSED RIGHTS ISSUE TIMETABLE	2010
Announcement Date	23 February
Shares trade ex-entitlements	25 February
Record Date (5.00pm WST) (date for determining entitlements ofeligible shareholders to participate in the Rights Issue)	3 March
Offer Document and Entitlement and Acceptance Form dispatched toeligible shareholders	9 March
Opening Date (9.00am WST)	10 March
Closing Date (5.00pm WST)	30 March
Company to notify ASX of under-subscriptions (if any)	6 April
Allotment and issue of shares	8 April
ASX trading of shares commences	9 April
Dispatch of holding statements	9April
The above timetable is indicative only. The Company reserves the right, subject to ASIC and ASXrequirements, to extend the Closing Date at its discretion. Should this occur, the extension will havea consequential effect on the subsequent dates.

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