FIRST LITHIUM LIMITED — Interim / Quarterly Report 2009

Apr 29, 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

30 April 2009

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

March 2009 - Quarterly Activities Summary

Advanced Engine Components Ltd’s (“ACE” or “the Company”) focus on cash generation and cost reductions is reflected in the following March 2009 quarterly report. Cash received from customers was 80% higher than received in the previous quarter. The net operating cash flow, at A$302,000, was a positive result for only the second time since ACE listed in February 2000.

In addition, sales for the 9 months to 30 September 2009 are approximately 85% higher than for the corresponding period in FY 2008. As a result, and with known demand, the Board remain confident that FY 2009 will be ACE’s fourth financial year of year on year sales growth.

However, the effect of the global financial crisis continues to impact on ACE’s customers with ongoing slow demand, delayed payments and deferred deliveries. ACE continues to work on repayment plans with major customers, to systematically reduce the amounts outstanding, and introduce cost reductions where ever possible.

Although cash flow remains tight, all major interest bearing and secured debt is provided by related entities. As such, ACE is reasonably protected from unexpected and unrealistic demand for repayment of that debt.

During the March 2009 quarter ACE settled the terms of a Strategic Alliance Agreement with Norinco Equipment Co Ltd (“Norinco”) of China. Norinco is a subsidiary of China North Industries Group Corporation (“CNGC”). CNGC is a State Owned Enterprise established in 1980 with the approval of the State Council of the People’s Republic of China. CNGC has over 400,000 employees and in excess of A$5 billion in registered capital. Through its 133 domestic and international entities, CNGC combines technology, manufacture and trade businesses with import and export of commodities and technologies including vehicles and mechanical products.

Norinco is involved in the development and export of compressed natural gas (“CNG”) vehicles and engines. Norinco will utilise its brand and CNGC’s extensive domestic and international distribution network to promote CNG trucks, buses, chassis, engines, components and other natural gas related products.

Pursuant to the Strategic Alliance, ACE and Norinco will work together in the development of natural gas vehicle applications, facilitate production with CNGC’s subsidiary companies and cooperate in the marketing and sale of those products.

The Strategic Alliance will benefit ACE through the development of new engines, introduction to new markets and sales of existing engines using ACE’s natural gas vehicle system.

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	31 March 2009

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 of Government Grants Net operating cash flows	Current quarter $A’000	Year to date (9 months) $A’000
	1,305 (252) (8) (200) - (544) - - (43) - 44	3,444 (856) (107) (625) - (3,694) - 4 (128) - 168
	302	(1,794)

• 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 (9 months) $A’000
1.8 Net operating cash flows (carried forward)	302	(2,096)
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	- - - - (215) - - - - - - - -	- - - (8) (776) - - - - - - - -
	(215)	(784)
	87	(2,578)
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	- - 311 (345) - (4)	873 - 2,521 (848) - (79)
	(38)	2,467
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	49 73 -	(111) 233 -
	122	122

• 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.

• 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
	2,330	2,150
	-	-

• 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	122	73
	-	-
	-	-
	-	-
Total: cash at end of quarter(item 1.23)	122	73

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: 30 April 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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