FIRST LITHIUM LIMITED — Capital/Financing Update 2014

Aug 28, 2014

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ADVANCED ENGINE COMPONENTS LIMITED

ACN: 009 081 770

Palisade Business Consulting 22 Lindsay Street Perth, WA, 6000 PO Box 8546 Perth BC, WA, 6849 08 9328 6262 info@pbconsult.com.au

29 August 2014

Market Announcements Office Australian Securities Exchange

Via e-lodgement (ASX code ACE)

Recapitalisation Proposal

The Board has today accepted an offer from Otsana Pty Ltd trading as Otsana Capital ( Otsana ) to recapitalise the Company that will result in all the outstanding debts of the Company being compromised via a Deed of Company Arrangement ( DOCA ) and sufficient cash being injected into the Company to support its nearterm business objectives.

The implementation of the recapitalisation deed will be subject to receipt of all the necessary regulatory approvals.

The proposal from Otsana can be summarised as follows:

Material Terms

• (a) The Company being formally restructured via voluntary administration and a DOCA to compromise creditor claims and cleanse the Company of its debts;

• (b) Otsana (or nominees of the Syndicate) will provide up to $300,000 cash towards the non-related party creditors and 10m post consolidation shares to related party creditors at a deemed issue price of $0.01 ($100,000) of the Company ( Creditor Payment ).

• (c) The Company intends to consolidate its existing shares on a one (1) for (15) basis ;

• (d) The Creditor Payment will be raised through one or more capital raisings by the Company (which will be subject to the receipt of shareholder approval). It is proposed that the capital raisings will be as follows:

Palisade Business Consulting PO Box 8546, Perth BC, WA, 6849

08 9328 6262

ADVANCED ENGINE COMPONENTS LIMITED

ACN: 009 081 770

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• (i) Up to 250,000,000 shares at not less than $0.01 to raise up to $2,500,000;

• (ii) Up to 50,000,000 shares at not less than $0.00001 to raise $500; and

• (iii) Up to 50,000,000 options to acquire shares with an exercise price of not less than $0.01 each with an expiry date of 4 years from the date of issue to raise $500;

It should be noted that the proposed capital structure and reconstruction (including consolidation, share/option issues and share/option prices) may be varied at Otsana’s discretion, but subject to both ASX and shareholder approval.

• (e) All of the directors of the Company will be removed and replaced by nominees of Otsana.

• (f) The Company retaining sufficient assets to enable the Company to obtain reinstatement to trading of its securities on the ASX without the requirement to re-comply with Chapters 1 and 2 of the ASX listing rules.

The Board believes that Otsana will assist the Company in expanding the Company’s existing core business, as well as identifying and evaluating other potential opportunities that could create additional shareholder value.

The Board is pleased that Otsana and its group of investors will inject new life into the Company. As indicated above, the recapitalisation is subject to shareholder approval and all other regulatory approvals that may be required.

All further enquiries should be directed to the Administrators at Palisade Business Consulting.

-Ends-

Palisade Business Consulting PO Box 8546, Perth BC, WA, 6849

08 9328 6262