FIRST LITHIUM LIMITED — Interim / Quarterly Report 2009

Jul 30, 2009

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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 July 2009

Company Announcements Office The Australian Stock Exchange Limited By: e-lodgement (ASX code ACE)

June 2009 - Quarterly Activities Summary

The June 2009 quarter was another difficult trading period for Advanced Engine Components Ltd’s (“ACE” or “the Company”). The quarter was similar to the preceding two quarters in terms of slow sales, slow customer payments and deferred deliveries.

ACE’s sales for FY 2009 will be slightly higher than FY 2008. As a result, this will be the fourth financial year in a row that ACE has achieved year on year sales growth. However, sales slowed significantly through the year as a result of the global financial crisis. Approximately 34% of FY 2009 sales occurred in the September 2008 quarter with the following three quarters each contributing around 22% of the annual sales for FY2009.

The make up of ACE sales, in the September 2008 quarter, also reflect the change in world economic conditions through the balance of FY 2009. In the September quarter, 84% of ACE sales were natural gas vehicle systems (“NGVS”) and natural gas vehicle (“NGV”) engines. The 16% balance represents sales of spares and consumables to existing vehicles using the ACE NGVS. For the following three quarters, only 27% of sales related to the sale of NGVS and NGV engines with approximately 73% representing sales of spares and consumables.

Spares and consumable sales is a very important revenue source to ACE. It ensures recurring revenue regardless of the economic conditions. However, more importantly, consistent sales of NGVS and NGV engines create the base for exponential growth in the sales of spares and consumables. ACE’s major focus remains involvement with key original equipment heavy duty engine manufacturer clients, in China and India, to generate ongoing and increasing sales of NGVS and NGV engines.

In the June 2009 quarter ACE made its first sale, of 100 NGVS, through its Strategic Alliance Agreement with Norinco Equipment Co Ltd of China. In addition, the development of the Tata Motors Limited NGV engines progressed with the first of the reference engines, received in Perth, being run on the same calibration as developed in Pune, India. The fifth generation electronic control unit (ECU5) also moved from a working proto type to production of the first 200 commercial units.

Cash flow for the Company remains tight. Management emphasis is on collecting outstanding receivables, reducing stock levels and minimising costs. To assist with cash flow 698 Capital Asia Pacific Ltd, a related party to ACE’s major shareholder, increased their Sales Financing Facility by A$670,000 to A$3 million. These funds are being used for the production and sale of the first 200 commercial ECU5’s.

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		Quarter ended (“current quarter”) 30 June 2009	Quarter ended (“current quarter”) 30 June 2009
	ADVANCED ENGINE COMPONENTS LIMITED
	ABN 67 009 081 770 Consolidated statement of cash flows
			30 June 2009
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 of Government Grants Net operating cash flows			Current quarter $A’000	Year to date (12 months) $A’000
			559 (224) (3) (181) - (436) - - (29) - 98	4,003 (1,080) (109) (806) - (4,131) - 4 (157) - 266
			(216)	(2,010)

• See chapter 19 for defined terms.

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

	Current quarter $A’000	Year to date (12 months) $A’000
1.8 Net operating cash flows (carried forward)	(216)	(2,010)
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	- - - - (233) - - - - - - - -	- - - (8) (1009) - - - - - - - -
	(233)	(1,017)
	(449)	(3,027)
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	- - 697 (90) - (8)	873 - 3,218 (938) - (87)
	599	3,066
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	150 122 -	39 233 -
	272	272

• 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
		36
		-
1.26	Explanation necessary for an understanding of the transactions
	Salary of Executive Director

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

• Norvest Corporate Pty Ltd, an associate of a related party, has provided a $240,000 short term facility through direct payment of invoices for components to be calibrated and on sold to Irisbus in France. The facility and associated costs will be repaid directly from Irisbus payments. During the June Quarter the draw down of the facility was reduced to $46,000. Subsequent to year end the outstanding balance was repaid in full.

• 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
	3,000	2,797
	-	-

• 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	272	122
	-	-
	-	-
	-	-
Total: cash at end of quarter(item 1.23)	272	122

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.

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Sign here:

..................................................... Date: 31 July 2009 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.

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