FIRST LITHIUM LIMITED — Interim / Quarterly Report 2009

Oct 30, 2008

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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

31 October 2008

Company Announcements Office The Australian Stock Exchange Limited

By: e-lodgement (ASX code ACE)

September 2008 - Quarterly Activities Summary

As disclosed in the attached Appendix 4C, Advanced Engine Components Ltd (“ACE”) recorded $1.4m receipts from customers for the first quarter of FY2009. This represents a 150% increase over the corresponding quarter in FY2008.

Receipts in the current quarter reflect the high level of invoiced sales in the June and September 2008 quarters. Sales in these two quarters total $3.5m which is equivalent to 75% of total sales for the full FY2008. Sales orders, valued in excess of $1m, have been completed ready for delivery in the December 2008 quarter.

With increased sales ACE has had a build up of working capital ie cash, stock and debtors less creditors. At the end of the current quarter working capital was $3.2m compared to $2.0m at 30 June 2008. The build up of working capital has resulted in a net operating cash outflow of $1.1m for the quarter.

The build up of working capital, together with the sales financing facility announced on 12 August 2008, will be beneficial to ACE’s cash flow requirements in meeting current and future sales growth.

ACE has arranged for repayment of the $750,000 loan repayable to CIM Special situation Fund (“CIM”) on 31 October 2008 be deferred to on or before 30 November 2008. The 5,859,379 options exercisable at 12.8 cents per share on or before 31 October 2008, held by CIM, have lapsed.

ACE remains confident in the advantages of natural gas as the alternative fuel of choice. These advantages will continue to drive growth in sales of the ACE NGVS and related components despite global economic concerns. These drivers, particularly in ACE’s key Asia Pacific markets, include environmental concerns, economic benefits and the security for supply of oil.

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

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Appendix 4C Quarterly report for entities admitted on the basis of commitments

Rule 4.7B

Appendix 4C

Quarterly report for entities admitted on the basis of commitments

Introduced 31/3/2000. Amended 30/9/2001

Name of entity

ADVANCED ENGINE COMPONENTS LIMITED

ABN 67 009 081 770	Quarter ended (“current quarter”)
67 009 081 770	30 September 2008

Consolidated statement of cash flows

Cash flows related to operating activities 1.1 Receipts from customers 1.2 Payments for (a) staff costs (b) advertising and marketing (c) research and development (d) leased assets (e) other working capital 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Other: Receipt Net operating cash flows	Current quarter $A’000	Year to date (3 months) $A’000
	1,424 (292) (62) (213) - (1,922) - 2 (40) - -	1,424 (292) (62) (213) - (1,922) - 2 (40) - -
	(1,103)	(1,103)

• See chapter 19 for defined terms.

Appendix 4C Page 1

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Appendix 4C Quarterly report for entities admitted on the basis of commitments

	Current quarter $A’000	Year to date (3 months) $A’000
1.8 Net operating cash flows (carried forward)	(1,103)	(1,103
Cash flows related to investing activities 1.9 Payment for acquisition of: (a) businesses (item 5) (b) equity investments (c) intellectual property (d) physical non-current assets (e) other non-current assets 1.10 Proceeds from disposal of: (a) businesses (item 5) (b) equity investments (c) intellectual property (d) physical non-current assets (e) other non-current assets 1.11 Loans to other entities 1.12 Loans repaid by other entities 1.13 Other (provide details if material) Net investing cash flows 1.14 Total operating and investing cash flows	- - - (1) (283) - - - - - - - -	- - - (1) (283) - - - - - - - -
	(284)	(284)
	(1,387)	(1,387)
Cash flows related to financing activities 1.15 Proceeds from issues of shares, options, etc. 1.16 Proceeds from sale of forfeited shares 1.17 Proceeds from borrowings (item 3.1) 1.18 Repayment of borrowings 1.19 Dividends paid 1.20 Costs associated with issue of shares Net financing cash flows	873 - 1,001 (444) - (69)	873 - 1,001 (444) - (69)
	1,361	1,361
Net increase (decrease) in cash held 1.21 Cash at beginning of quarter/year to date 1.22 Exchange rate adjustments to item 1.20 1.23 Cash at end of quarter	(26) 233 -	(26) 233 -
	207	207

• See chapter 19 for defined terms.

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Appendix 4C Quarterly report for entities admitted on the basis of commitments

Payments to directors of the entity and associates of the directors

Payments to related entities of the entity and associates of the related entities

1.24 1.25	Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to the parties included in item 1.11	Current quarter $A'000
		249
		-
1.26	Explanation necessary for an understanding of the transactions
	- Salary payments to the executive director of the Company amounting to $59,000. - Non-executive director fee for the year ended 30 Jun 08 amounting to $27,500. - Norvest Corp. Pty Ltd made a loan to the Company amounting to $110,000 which was repaid $110,761 during the quarter, and provided various corporate capital raising, accounting and company secretarial services to the Company duringFY2007/08 amounting to $162,738.

Non-cash financing and investing activities

• 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

N/A

• 2.2 Details of outlays made by other entities to establish or increase their share in businesses in which the reporting entity has an interest N/A

Financing facilities available

Add notes as necessary for an understanding of the position. (See AASB 1026 paragraph 12.2).

3.1 Loan facilities 3.2 Credit standby arrangements	Amount available $A’000	Amount used $A’000
	2,000	910
	-	-

• See chapter 19 for defined terms.

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Appendix 4C Quarterly report for entities admitted on the basis of commitments

Reconciliation of cash

Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.	Current quarter $A’000	Previous quarter $A’000
4.1 Cash on hand and at bank 4.2 Deposits at call 4.3 Bank overdraft 4.4 Other	207	233
	-	-
	-	-
	-	-
Total: cash at end of quarter(item 1.23)	207	233

Acquisitions and disposals of business entities

5.1 Name of entity 5.2 Place of incorporation or registration 5.3 Consideration for acquisition or disposal 5.4 Total net assets 5.5 Nature of business	Acquisitions (Item 1.9(a))	Disposals (Item 1.10(a))
	-	-
	-	-
	-	-
	-	-
	-	-

Compliance statement

• 1 This statement has been prepared under accounting policies, which comply with accounting standards as defined in the Corporations Act (except to the extent that information is not required because of note 2) or other standards acceptable to ASX.

• 2 This statement does give a true and fair view of the matters disclosed.

Sign here:

.....................................................

Date: 31 October 2008

Managing Director

Print name: Antony Middleton

• See chapter 19 for defined terms.

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Appendix 4C Quarterly report for entities admitted on the basis of commitments

Notes

1. The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

2. The definitions in, and provisions of, AASB 1026: Statement of Cash Flows apply to this report except for the paragraphs of the Standard set out below.

3. 6.2 - reconciliation of cash flows arising from operating activities to operating profit or loss

4. 9.2 - itemised disclosure relating to acquisitions

5. • 9.4 - itemised disclosure relating to disposals • 12.1(a) - policy for classification of cash items • 12.3 - disclosure of restrictions on use of cash • 13.1 - comparative information

6. Accounting Standards. ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

7. See chapter 19 for defined terms.

Appendix 4C Page 5

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