FIRST LITHIUM LIMITED — Capital/Financing Update 2010

Feb 22, 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

23 February 2010

Dear Optionholder

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. All shareholders registered in Australia, New Zealand, Hong Kong and Malaysia as at the record date will be eligible to participate.

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.

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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Under the terms and conditions of the options that you currently hold, there is no entitlement to participate in the Rights Issue. In order to participate in the Rights Issue in relation to any vested options that you hold, you must exercise those options in accordance with the terms of your options, prior to the Record Date. Only vested options may be exercised. Please note that it is not compulsory to exercise your vested options. If you do wish to exercise your vested options, you may do so by completing all of the steps required by the terms and conditions of those options, including payment of the relevant exercise price.

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

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