JATCORP LIMITED - Capital/Financing Update 2007

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jatO I L
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Prospectus

Jatoil Limited ABN 31 122 826 242

For the offer of up to 35,000,000 Shares at an issue price of $0.20 each to raise up to $7,000,000.

Oversubscriptions of up to a further 15,000,000 Shares at an issue price of $0.20 each to raise up to a further $3,000,000 may be accepted.

Important notice

This is an important document that should be read in its entirety. If you do not understand it you should consult your professional advisers without delay. The Shares offered under this Prospectus should be considered speculative.

Important information

This Prospectus is dated 8 November 2007 and was lodged with ASIC on that date. ASIC and its officers take no responsibility for the contents of this Prospectus nor the merits of the investment to which the Prospectus relates.

The expiry date of this Prospectus is at 5.00pm AWST on that date which is 13 months after the date this Prospectus was lodged with ASIC ( Expiry Date ). No securities may be issued on the basis of this Prospectus after the Expiry Date.

Application will be made to ASX within seven days after the date of this Prospectus for Official Quotation of the Shares that are the subject of this Prospectus.

The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law, and persons who come into possession of this Prospectus should seek advice on and observe any of these restrictions. Failure to comply with these restrictions may violate securities laws. Applicants who are resident in countries other than Australia should consult their professional advisers as to whether any governmental or other consents are required or whether any other formalities need to be considered and followed.

This Prospectus does not constitute an offer in any place in which, or to any person to whom, it would not be lawful to make such an offer.

It is important that investors read this Prospectus in its entirety and seek professional advice where necessary. The Shares that are the subject of this Prospectus should be considered speculative.

must only access the Prospectus from within Australia.

The Corporations Act prohibits any person passing onto another person an application form unless it is attached to a hard copy of this Prospectus or it accompanies the complete and unaltered version of this Prospectus. Any person may obtain a hard copy of this Prospectus free of charge by contacting the Company.

Exposure period

This Prospectus will be circulated during the Exposure Period. The purpose of the Exposure Period is to enable this Prospectus to be examined by market participants prior to the raising of funds. Potential investors should be aware that this examination may result in the identification of deficiencies in the Prospectus and, in those circumstances, any application that has been received may need to be dealt with in accordance with Section 724 of the Corporations Act.

Applications for shares under this Prospectus will not be processed by the Company until after the expiry of the Exposure Period. No preference will be conferred on persons who lodge applications prior to the expiry of the Exposure Period.

Summary of important dates

	Lodgement of Prospectus with	8 November 2007
	ASIC
	OpeningDate	16November 2007
	Closing Date	30 November 2007
	Expected date of dispatch of	6 December 2007
	Holding Statements
	Expected date of listing on ASX	12 December 2007

The above dates are indicative only and may change without notice. The Company reserves the right to extend the Closing Date or close the Offer early without notice.

Web site—electronic prospectus

A copy of this Prospectus can be downloaded from the website of the Company at www.jatoil.net. Any person accessing the electronic version of this Prospectus for the purpose of making an investment in the Company must be an Australian resident and

Key information

Investment highlights

Investment in Jatropha curcas —a crop suitable for producing biodiesel feedstock

Potential for high oil yield—over 1.6 t/ha.
Cheaper biodiesel feedstock than many alternatives.
Non-edible and able to grow on marginal farming land, so does not compete with food crops.
Hardy and long-lived plant that yields oil seeds for up to 30 years.
Valuable by-products, including seedcake for fuel and glycerine for cosmetics and pharmaceuticals.

Large and relatively new market with significant growth potential

Global biodiesel market annual value now over $8 billion.
EU directive stipulates biodiesel to comprise 5.75% of diesel fuel on market by 2010, with proposals to increase this to 10% by 2020.
Rapidly growing biodiesel markets throughout the world, particularly in Europe and Asia.
Biodiesel market growth is being driven by:
environmental concerns
high crude oil prices
national targets for uptake of biodiesel (particularly in Europe)
tax exemptions and incentives
growing penetration of diesel-powered cars (now almost 50% of all new vehicles sold in Europe)
support from car manufacturers for biodiesel blends
new feedstocks and technologies for biodiesel production.

Ethical investment with benefits to the environment

Reduced use of non-renewable fossil fuels.
Reduced greenhouse gas emissions and improved air quality.
Potential for land remediation and reclamation, arresting desertification and restoring depleted soils.
Potential to earn carbon credits.
Company committed to operations that are sustainable, with low environmental impact.

Ethical investment with benefits to the developing world

Company committed to social sustainability, to ensure operations directly benefit local communities.
Jatropha crops to be established across several developing countries, supporting economic development and ongoing employment opportunities for impoverished communities.
Every 10,000 hectares planted could potentially support up to 10,000 jobs in areas with high levels of poverty and unemployment.
A portion of production expected to be sold domestically, reducing pollution, reducing dependence on imported fossil fuels and enhancing energy security.
Opportunities to intercrop jatropha with other crops.

Sound business strategy

Clear strategies for establishing and developing jatropha crops to generate revenues.
Crops to be established across geographically diverse regions to mitigate risks.

JATOIL LIMITED

PROSPECTUS 2007

Company committed to becoming a dominant player in the Asian jatropha industry.

A management team with long term vision

Management team offers a depth of experience and understanding in agricultural and biodiesel industries.
Local managers selected with a wealth of on-the-ground experience and know-how in agricultural industries and chemical processing across Asia.
Team includes pioneers in the development of jatropha cultivation techniques.

Investment risks

The above highlights are a summary only and must be read in conjunction with the remainder of the Prospectus. In particular, investors are directed to Section 7 of this Prospectus, which sets out the risks associated with making an investment in the Company. These risks include sovereign risk, land security, growing risks, government policy risk, sales risk and legal risk (to name a few).

While the Board is confident of the success of the Company, an investment in Shares should be considered a speculative investment.

“The fact that oils from vegetable sources can be used may seem insignificant today, but such oils may perhaps become in course of time of the same importance as some natural mineral oils … are now … In any case, they make it certain that motor-power can still be produced from the heat of the sun, which is always available for agricultural purposes, even when all our natural stores of solid and liquid fuels are exhausted.”

—Rudolf Diesel, 1912

PROSPECTUS 2007

JATOIL LIMITED

[2]

1	Executive Chairman’s letter _________4
2	Investment overview _________5
3	Details of the offer ___________8
4	Business summary _________11
5	Directors and corporate governance _______22
6	Investigating Accountant’s Report_________26
7	Risk factors _________37
8	Summary of material contracts ___________41
9	Additional information_____________45
10	Directors’ authorisation ___________51
11	Glossary ____________52
12	Corporate directory _________57

JATOIL LIMITED

PROSPECTUS 2007

1 Executive Chairman’s letter

Dear investor,

Jatoil Limited ( Company or Jatoil ) is a new company formed to pursue opportunities in the emerging markets for biodiesel and biodiesel feedstock. Biodiesel is a renewable and non-toxic alternative to diesel derived from petroleum sources, and can be used as a direct or blended replacement for petrodiesel with little or no engine modification. Whereas burning petrodiesel releases ancient carbon into the atmosphere, the carbon of Jatoil’s biodiesel will be captured from the atmosphere by growing jatropha plants, making it a potent weapon in the fight against climate change.

Biodiesel is already in widespread use around the globe, particularly in Europe where diesel vehicles are prevalent and mandated targets ensure increasing demand. Growth of the market for biodiesel is also being driven by environmental concerns, tax incentives, high crude oil prices, and concerns about the security of global oil production. The world market for biodiesel has already reached an annual turnover of $8 billion, and is growing strongly, in part because of an ambitious EU target for biodiesel to comprise 5.75% of diesel sales by 2010.

Jatoil is positioning itself to supply some of the world’s demand for biodiesel. We are seeking to avoid the problems encountered by other Australian entrants into the biodiesel market by focussing on producing lowcost feedstock oils in Asia to meet growing demand from Europe and emerging Asian markets.

Most of the world’s biodiesel is currently produced from edible oils such as rapeseed, soybean and palm, disadvantaging those depending on these crops for food, rendering valuable fertile farming land unavailable for food production, and in some cases causing destruction of tropical rainforests.

Jatoil is seeking to avoid these problems by cultivating jatropha, a hardy and long-lived bush that produces a non-edible oil suitable for biodiesel production. Because jatropha can be grown on marginal land with poor soils and low rainfall, it can be planted in relatively arid areas not currently used for food production.

Jatoil’s objective is to become a dominant player in the jatropha market across Asia, and we have developed sound business strategies to pursue this goal. The Company has entered into an agreement to acquire projects involving planting of jatropha in Indonesia, and is exploring opportunities for developing jatropha projects in Sri Lanka and other countries. These acquisitions will provide us with the capability to produce jatropha oil, seed, seedcake and biodiesel made from jatropha oil. We are also looking to establish ourselves as a significant trader of jatropha and its products. As Executive Chairman of Jatoil, my role will be to manage the Company’s early operations. I am joined on the Company’s Board by non-executive directors Ross Kestel and Tom Hancock. Ross is a Chartered Accountant and CPA, and is chairman and director of a number of public companies in the resources, property, manufacturing and technology sectors. Tom Hancock is a chemical engineer with more than 20 years’ experience in the environmental and wasteto-energy fields, and has extensive experience working in Asia.

Jatoil has also assembled a highly qualified team of industry experts and area managers to guide the company during its early operations. This team possesses a wealth of on-the-ground experience and knowhow in agricultural industries and chemical processing and includes pioneers in the development of jatropha cultivation techniques.

Details of the Offer, including information on the Company’s projects, business strategy, markets, management, risk factors and finances, are set out in this Prospectus, which I encourage you to read before making a decision to invest.

On behalf of the Board, I am pleased to present this Prospectus to you and invite you to take part in this exciting investment opportunity.

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Michael Taverner EXECUTIVE CHAIRMAN

8 NOVEMBER 2007

PROSPECTUS 2007

JATOIL LIMITED

[4]

2 Investment overview

2.1 Important notice

This section is not intended to provide full information for investors intending to apply for Shares offered pursuant to this Prospectus. This Prospectus should be read and considered in its entirety.

2.2 Objectives

The strategic objectives of the Company are to:

(a) plant large areas of the oil-bearing crop Jatropha curcas for the production of jatropha oil as biodiesel feedstock, jatropha seed and jatropha seedcake;
(b) develop a capability to produce biodiesel from jatropha oil; and
(c) establish operations for trading jatropha oil, seed, seedcake and biodiesel.

On completion of the Offer, the Board believes the Company will have sufficient working capital to achieve these objectives.

2.3 Indicative timetable

Lodgement of Prospectuswith ASIC	8November 2007
OpeningDate	16November 2007
ClosingDate	30November 2007
Expected date ofdispatchof holding statements	6December 2007
Expected date of listing on ASX	12 December 2007

The above dates are indicative only and may change without notice. The Company reserves the right to extend the Closing Date or close the Offer early without notice.

2.4 Purpose of the Offer and use of proceeds

If the minimum subscription of $7,000,000 is raised from the Offer, these funds, together with the Company’s existing cash reserves of approximately $5,000,000, are intended to be applied as follows:

Description	Year 1	Year 2	Year 3	Total
	A$	A$	A$	A$
Initial land preparation and planting—Indonesia	1,000,000	–	–	1,000,000
Initial land preparation and planting—Other projects	1,000,000	1,000,000	–	2,000,000
Development expenses—Indonesia	200,000	200,000	100,000	500,000
Development expenses—Other projects	400,000	400,000	200,000	1,000,000
Expenses of Offer (including transaction costs)	432,593	–	–	432,593
Broker handling fees	350,000	–	–	350,000
Total expenses	3,382,593	1,600,000	300,000	5,282,593
General working capital
Investment in Biodiesel Australia Limited	500,000	–	–	500,000
Salaries	565,888	795,696	835,480	2,197,064
Rent and other overheads	1,162,050	1,150,600	1,208,130	3,520,780
Unallocated working capital	166,521	166,521	166,521	499,563
Total general working capital	2,394,459	2,112,817	2,210,131	6,717,407
Total	5,777,052	3,712,817	2,510,131	12,000,000

JATOIL LIMITED

PROSPECTUS 2007

If oversubscriptions of $3,000,000 are accepted (taking the total amount raised under the Offer to $10,000,000), these funds, together with the Company’s existing cash reserves of approximately $5,000,000, are intended to be applied as follows:

Description	Year 1	Year 2	Year 3	Total
	A$	A$	A$	A$
Initial land preparation and planting—Indonesia	1,000,000	1,000,000	–	2,000,000
Initial land preparation and planting—Other projects	1,000,000	1,000,000	–	2,000,000
Development expenses—Indonesia	200,000	400,000	200,000	800,000
Development expenses—Other projects	400,000	400,000	200,000	1,000,000
Expenses of Offer (including transaction costs)	435,332	–	–	435,332
Broker handling fees	500,000	–	–	500,000
Total expenses	3,535,332	2,800,000	400,000	6,735,332
General working capital
Investment in Biodiesel Australia Limited	500,000	–	–	500,000
Salaries	565,888	795,696	835,480	2,197,064
Rent and other overheads	1,162,050	1,150,600	1,208,130	3,520,780
Unallocated working capital	682,275	682,275	682,274	2,046,824
Totalgeneral working capital	2,910,213	2,628,571	2,725,884	8,264,668
Total	6,445,545	5,428,571	3,125,884	15,000,000

If the amount raised from the Offer is intermediate between the minimum subscription of $7,000,000 and the maximum subscription of $10,000,000, the funds raised from the Offer are intended to be applied as per the first table under Section 2.4 with additional funds applied to broker handling fees (5%) and thereafter in priority to development expenses, with the balance applied to general working capital.

Some of the funds allocated to initial land preparation, planting and development expenses may be advanced by the Company to its joint venture partner(s) as loans.

The Company is currently in negotiations to acquire projects in jurisdictions outside of its main project in Indonesia (including Sri Lanka and other countries). Some of the funds set out in the tables above are intended to be expended on establishing these other projects.

The tables set out above confirm the intended use of funds as at the date of this Prospectus. However, it must be recognised that all budgets may change as the conducted programs provide encouragement or disappointment and new opportunities are identified elsewhere.

2.5 Capital structure

The capital structure of the Company following completion of the Offer is summarised below[1] :

Shares	Number
Shares to be issued to PT Biodiesel Austindo2	20,000,000
Other Shares on issue at date of this Prospectus	69,896,000
Share offered pursuant to this Prospectus3	35,000,000
Total Shares on issue at completion of the Offer	124,896,000
Options	Number
Options on issue at date of this Prospectus4	24,500,000
Director Options to be issued to Directors5	2,500,000
Total Options on issue at completion of the Offer	27,000,000

PROSPECTUS 2007

JATOIL LIMITED

[6]

Notes

1 Refer to Investigating Accountant’s Report in Section 6 for further information.

2 Refer to summary of Share Sale Agreement in Section 8.1 for further information.

3 Assumes that the Offer is fully subscribed but assuming no oversubscriptions are accepted.

4 Refer to Section 9.1.2 for terms and conditions of Options.

5 Refer to Section 9.1.3 for terms and conditions of Director Options.

2.6 Restricted securities

Subject to the Company being admitted to the Official List, certain of the Shares and Options on issue prior to the Offer and certain of the Shares issued on the exercise of the Options on issue prior to the Offer, are likely to be classified by ASX as restricted securities and will be required to be held in escrow.

JATOIL LIMITED

PROSPECTUS 2007

3 Details of the offer

3.1 The Offer

By this Prospectus, the Company offers for subscription up to 35,000,000 Shares at an issue price of $0.20 each to raise up to $7,000,000.

The Shares offered under this Prospectus will rank equally with the existing Shares on issue.

3.2 Applications

Applications for Shares under the Offer must be made using the Application Form.

Payment for the Shares must be made in full at the issue price of $0.20 per Share. Applications for Shares must be for a minimum of 10,000 Shares and thereafter in multiples of 1,000 Shares. Completed application forms and accompanying cheques must be mailed or delivered to:

Security Transfer Registrars PO Box 535 APPLECROSS WA 6953

or;

Security Transfer Registrars 770 Canning Highway APPLECROSS WA 6153

Cheques should be made payable to ‘Jatoil Limited—Share Offer Account’ and crossed ‘Not Negotiable’. Completed Application Forms must reach one of the above addresses by no later than the Closing Date.

The Company reserves the right to close the Offer early.

3.3 Oversubscriptions

The Company may accept oversubscriptions of up to a further $3,000,000 through the issue of up to a further 15,000,000 Shares at an issue price of $0.20 each under the Offer. The maximum amount that may be raised under this Prospectus is therefore $10,000,000.

3.4 Allotment

Subject to ASX granting approval for the Company to be admitted to the Official List, allotment of Shares offered under this Prospectus will take place as soon as practicable after the Closing Date. Prior to allotment, all application monies shall be held by the Company in trust. The Company, irrespective of whether the allotment of Shares takes place, will retain any interest earned on the application monies.

The Directors reserve the right to allot Shares in full for any application or to allot any lesser number or to decline any application. Where the number of Shares allotted is less than the number applied for, or where no allotment is made, the surplus application monies will be returned by cheque to the applicant within seven days of the allotment date.

3.5 Minimum subscription

The minimum subscription to be raised pursuant to this Prospectus is $7,000,000.

If the minimum subscription has not been raised within four months after the date of this Prospectus, all applications will be dealt with in accordance with the Corporations Act.

PROSPECTUS 2007

JATOIL LIMITED

[8]

3.6 ASX listing

The Company will apply to ASX within seven days after the date of this Prospectus for admission to the Official List and for Official Quotation of the Shares offered under this Prospectus. If ASX does not grant permission for Official Quotation of the Shares within three months after the date of this Prospectus, or such longer period as is permitted by the Corporations Act, none of the Shares offered under this Prospectus will be allotted or issued. In that circumstance, all applications will be dealt with in accordance with the Corporations Act.

3.7 Applicants outside Australia

This Prospectus does not, and is not intended to, constitute an offer in any place or jurisdiction where, or to any person to whom, it would not be lawful to make such an offer or to issue this Prospectus. The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law, and persons who come into possession of this Prospectus should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. No action has been taken to register or qualify these Shares or otherwise permit a public offering of the Shares that are the subject of this Prospectus in any jurisdiction outside Australia.

It is the responsibility of applicants outside Australia to obtain all necessary approvals for the allotment and issue of the Shares pursuant to this Prospectus. The return of a completed application form will be taken by the Company to constitute a representation and warranty by the applicant that all relevant approvals have been obtained.

3.8 Underwriter

The Offer is not underwritten.

3.9 Commissions on Application Forms

The Company reserves the right to pay a commission of up to 5% (exclusive of goods and services tax) of amounts subscribed to any Australian Financial Services licensee in respect of valid applications lodged and accepted by the Company and bearing the stamp of the Australian Financial Services licensee. Payments will be subject to the receipt of a proper tax invoice from the licensed securities dealer or Australian Financial Services licensee.

3.10 CHESS

The Company will apply to participate in the Clearing House Electronic Subregister System ( CHESS ). CHESS is operated by ASX Settlement and Transfer Corporation Pty Limited ( ASTC ), a wholly-owned subsidiary of ASX, in accordance with the Listing Rules and the ASTC Settlement Rules.

Under CHESS, the Company will not issue certificates to investors. Instead, Share and Option holders will receive a statement of their holdings in the Company. If an investor is broker sponsored, ASTC will send a CHESS statement.

3.11 Risk factors

Prospective investors in the Company should be aware that subscribing for Shares that are the subject of this Prospectus involves a number of risks. These risks are set out in Section 7 of this Prospectus and investors are urged to consider those risks carefully (and if necessary, consult their professional adviser) before deciding whether to invest in the Company.

The risk factors set out in Section 7, and other general risks applicable to all investments in listed securities not specifically referred to, may in the future affect the value of the Shares. Accordingly, an investment in the Company should be considered speculative.

JATOIL LIMITED

PROSPECTUS 2007

3.12 Privacy statement

If you complete an application for Shares, you will be providing personal information to the Company. The Company collects, holds and will use that information to assess your application, service your needs as a Shareholder, and to facilitate distribution payments and corporate communications to you as a Shareholder.

The information may also be used from time to time and disclosed to persons inspecting the register, including bidders for your securities in the context of takeovers, regulatory bodies, including the Australian Taxation Office, authorised securities brokers, print service providers, mail houses and the Share Registry.

You can access, correct and update the personal information that we hold about you. If you wish to do so, please contact the Share Registry at the relevant contact number set out in this Prospectus.

Collection, maintenance and disclosure of certain personal information is governed by legislation including the Privacy Act 1988 (as amended), the Corporations Act and certain rules such as the ASTC Settlement Rules. If you do not provide the information required on the Application Form, the Company may not be able to accept or process your application.

3.13 Financial forecasts

The Directors have considered the matters set out in ASIC Regulatory Guide 170 and believe that they do not have a reasonable basis to forecast future earnings because the operations of the Company are inherently uncertain. Accordingly, any forecast or projection information would contain such a broad range of potential outcomes and possibilities that it is not possible to prepare a reliable best estimate forecast or projection.

PROSPECTUS 2007

JATOIL LIMITED

[10]

4 Business summary

4.1 Company overview

Jatoil Limited ( Jatoil or Company ) is a new company formed to pursue opportunities in the emerging market for biodiesel. Since the Company was incorporated on 23 November 2006, the Directors have raised a total of $6,275,360 in seed capital and have been assessing opportunities to acquire projects capable of generating wealth for shareholders.

Jatoil has recently entered into an agreement to acquire a 50% interest in PT Biodiesel Austindo, a company incorporated in Indonesia with projects involving planting of the biodiesel feedstock crop Jatropha curcas in Indonesia.

Jatoil also intends to purchase 3.05% of Biodiesel Australia Limited, an Australian company with experience in the development and operation of rapid-reaction portable biodiesel production units.

The structure of Jatoil following these acquisitions is illustrated below. The Company is also assessing other jatropha projects that will involve the potential acquisition of further entities.

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Jatoil Ltd
50% 3%
PT Biodiesel Biodiesel
Austindo Australia Ltd
100%
Indonesia
projects
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4.2 Technical background

4.2.1 Biodiesel

Biodiesel is a clean-burning alternative fuel, produced from renewable resources. It can be blended at any ratio with petrodiesel and used in diesel engines with little or no modification, substantially reducing emissions of carbon dioxide. Unlike petrodiesel, biodiesel is renewable, biodegradable and non-toxic.

Biodiesel is typically produced using a process called transesterification in which vegetable oils or animal fats, containing mono-, di- and tri-glycerides, react with an alcohol, such as methanol, in the presence of a catalyst. This reaction yields mono-alkyl esters, which constitute biodiesel, and a glycerine byproduct, which can be separated out and sold for applications in the food, cosmetic and pharmaceutical industries.

JATOIL LIMITED

PROSPECTUS 2007

Biodiesel can be used in most modern conventional diesel engines and, subject to the engine manufacturer’s advice, can be used as a direct replacement or blend stock component for petrodiesel.

Addition of biodiesel to diesel offers a number of advantages, including:

improved ignition and combustion, because of biodiesel’s higher Cetane number, which allows the engine to run more smoothly;
improved lubricity, which reduces engine wear;
reduced emissions of unburned hydrocarbons, carbon monoxide, and particulate matter, because of the presence of naturally-occurring oxygen, which enables the fuel to burn more completely;
reduced emissions of sulphur dioxide, because biodiesel is naturally free of sulphur;
reduced net emissions of the greenhouse gas carbon dioxide, which is absorbed from the air during plant growth;
higher flashpoint, which makes the fuel safer to handle; and
increased biodegradability, which is particularly important in marine applications.

The energy content of biodiesel depends on the fatty acid profile of the feedstock but is similar to that of petrodiesel.

Current potential feedstocks for biodiesel include an array of edible and non-edible vegetable oils, animal fats, and used cooking oils. Feedstock is the main cost component of biodiesel, comprising as much as 70% of total production costs.

4.2.2 Jatropha

Most biodiesel is currently produced using edible oils such as rapeseed, soybean and palm as feedstocks. This has contributed to price escalation of these food products and criticism that biodiesel production competes with food production for valuable fertile farming land. Jatoil aims to address this issue by growing the non-edible seed oil crop Jatropha curcas on land that is unused or unsuitable for food crops.

Jatropha is a hardy bush, able to grow in areas with poor soils and rainfall as low as 300 mm/year. It has grown across Asia for many years and has been used as a natural hedge and for producing traditional medicines. At present there are few large-scale commercial operations involving jatropha, although the Company is aware of considerable commercial interest. The plant can produce commercial seed yields within two years of planting. It reaches maturity in 4–5 years and is usually productive for at least 30 years. When ripe, the fruit is collected by hand and the seeds are separated from the fruit. The residual fruit biomass can be used as an organic crop fertiliser. The seeds, with an oil content of up to 40%, are then pressed to extract the oil, leaving a residue or oil seedcake. The seedcake is valuable as a fuel for domestic or export markets. After filtration, the crude jatropha oil is suitable for processing into biodiesel that complies with European and US standards.

Estimates of oil yield from jatropha vary depending on plant genetics and growing conditions. Under rainfed conditions, yields in excess of 1.6 t/ha have been reported. Current breeding programs aim to improve oil yield well beyond this level.

4.3 The biodiesel market

4.3.1 Market overview

Biodiesel has been in commercial production in Europe since 1991 and in the USA since 1998. Key drivers for the increased use of biodiesel in recent years include:

growing concerns about the environmental impact of burning fossil fuels, particularly on climate change, and the dwindling reserves of petroleum;

PROSPECTUS 2007

JATOIL LIMITED

[12]

record high prices for crude oil and consequently diesel fuel, as illustrated in Figure 1;
national targets for uptake of biodiesel (particularly in Europe);
tax exemptions and incentives;
growing penetration of diesel-powered cars (now almost 50% of all new vehicles sold in Europe);
support from car manufacturers for biodiesel blends; and
new technologies for biodiesel production.

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----- Start of picture text -----

100 4.00
crude oil
diesel
80 3.20
60 2.40
40 1.60
20 0.80
0 0.00
1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
oil price (US$/bbl)
diesel price (US$/gal)
----- End of picture text -----

Figure 1. Historical price of crude oil (WTI spot Cushing) and diesel fuel (US retail average).

4.3.2 European market

Europe leads the world in the use of biodiesel, accounting for more than half of world biodiesel consumption.

Biodiesel is commonly used in low concentration blends with petroleum products, such as B5 (5% biodiesel) or B20 (20%), although pure biodiesel (B100) is also widely available in several countries, particularly Germany. Blends of up to 5% are permitted with the EN590 mineral diesel specification across Europe and do not need to be labelled.

A 2003 EU directive stipulates that biofuels are to comprise 2% of all transport fuels on market in 2005, rising to 5.75% in 2010. There are proposals to increase this to 10% by 2020.

JATOIL LIMITED

PROSPECTUS 2007

Table 1. EU target blend rates for biodiesel in diesel transport fuel.

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Year Blend rate
(%)
2005 2.00
2010 5.75
2020 (proposed) 10.00
4
3
2
1
0
2002 2003 2004 2005 2006
EU biodiesel consumption (Mt/year)
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Figure 2. European biodiesel demand, 2002–2006.

The EU is expected to remain the dominant market for biodiesel for many years. However, the EU’s production capacity is unlikely to be able to expand rapidly enough to meet projected demand over the next few years. The EU will therefore need to import a major portion of its biodiesel from outside Europe.

The EU currently imposes a 6.5% duty on imported biodiesel. Despite this duty, developing nations are expected to offer a significant cost advantage over European producers as a result of lower feedstock and conversion costs.

4.3.3 American market

In 2005, the size of the biodiesel market in North and Latin America combined was estimated at 0.4 Mt, modest compared to the European market. Nevertheless, there are numerous projects throughout America to produce and promote biodiesel. The USDA, for example, has offered grants for biodiesel production through the Commodity Credit Corporation, while the transportation bill passed by the US Senate in 2004 includes a tax credit of US$1/gallon and US$0.50/gallon for biodiesel blending produced from virgin oil and non-virgin oil, respectively. The biodiesel market in Latin America is currently still in its infancy; however, the Brazilian government has mandated a 2% biodiesel blend by 2008 and 5% by 2013.

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4.3.4 Asian market

While Asia has enjoyed strong economic growth in the past 50 years, many countries in the region are still confronted with significant poverty. Growing biodiesel feedstock provides the opportunity for these nations to enjoy economic improvements via the enhancement of their agricultural industries.

Asia currently consumes more than 2 billion tonnes of fossil oil per year. Demand for biodiesel in Asia was 100,000 tonnes in 2005, although this is expected to grow rapidly. The Indian government has introduced programs to promote biodiesel development and production, and is mandating blending of biodiesel with petrodiesel at levels of 5% (equivalent to demand of 2.5 Mt), increasing to 20% by 2020 (16 Mt).

The Philippine government has mandated all government vehicles to use a 1–2% biodiesel blend. The Thai government has legislated a 10% biodiesel blend to be introduced nationally from 2012 and there are proposals to increase the target to 20%. The Thai Ministry of Energy is now actively investigating the creation of a national biodiesel industry.

Malaysia and Indonesia are the world’s largest producers of palm oil and are expected to play a major role in the production of biodiesel, much of which is expected to be exported to developed countries. The Malaysian government has approved 52 licences for biodiesel refineries, with a cumulative output capacity of 5 Mt/year, although not all of this potential capacity is expected to be realised. In Indonesia, 17 biodiesel projects have been announced, with a combined output capacity of over 1.6 Mt/year. Indonesia’s National Energy Policy has set a target for biodiesel to replace 2% of petrodiesel by 2010. A B5 (5%) biodiesel blend is also being marketed in Indonesia as ‘Bio Solar’.

China’s estimated biodiesel production capacity for 2006 was 0.6 Mt/year, although this is a small fraction of China’s annual diesel consumption, which surpassed 100 Mt in 2004. China is aiming to produce 12–20 Mt of biofuel by 2020, of which 2–5 Mt will be biodiesel.

4.4 Projects

4.4.1 Overview of projects

Jatoil has recently entered into an agreement to acquire a 50% interest in an Indonesian company to produce and trade oil grown from Jatropha curcas in Indonesia. The Company has also signed a letter of intent relating to acquisition of similar jatropha projects in Sri Lanka.

4.4.2 PT Biodiesel Austindo

Jatoil has entered into an agreement to acquire 50% ownership of PT Biodiesel Austindo ( Biodiesel Austindo ), a company incorporated in Indonesia. In return, Jatoil will issue 20,000,000 Jatoil Shares to the shareholders of Biodiesel Austindo and will make available to the company a loan of $2,000,000, at an interest rate of 10% per annum, and secured against the assets of Biodiesel Austindo. A summary of the Share Sale Agreement between the Company and Biodiesel Austindo is set out in Section 8.1 of this Prospectus.

As at 31 October 2007, Biodiesel Austindo had entered into memoranda of understanding with farming cooperatives for jatropha cultivation covering over 240,000 ha of land in the Indonesian provinces of Lampung and Nusa Tenggara Timur ( NTT ). The objective is to secure contracts for more than 350,000 ha of additional land, giving Biodiesel Austindo access to a total of more than 600,000 ha of land for jatropha cultivation. Under these arrangements, local farmers provide their land, on which they plant, weed and water their jatropha crops, and then pick and defruit the jatropha seed. In return, Biodiesel Austindo provides the farmers with seed and other farming inputs, training and technical support. To support the start-up, Biodiesel Austindo will provide farmers with a special payment for the first year crop value and guarantee to purchase subsequent seed production at market prices.

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Production of jatropha oil is labour-intensive. For each 10,000 hectares of land used to cultivate jatropha, up to 10,000 jobs could potentially be created in regions of Indonesia where there is currently high unemployment and poverty.

The key strategic objectives of Biodiesel Austindo’s programs are to:

(a) develop jatropha into a cultivated commercial crop;
(b) breed superior strains of jatropha seed;
(c) establish key technology platforms and methods to maximise oil supply and the value of byproducts available after oil extraction;
(d) establish jatropha crops in selected areas;
(e) expand its farming cooperative planting program for growing jatropha and other vegetate oilproducing crops; and
(f) employ and train Indonesians in the selected growing and processing areas of operation.

To assist it in meeting its strategic objectives, Biodiesel Austindo has signed a joint alliance and research agreement with the Surfactant and Bioenergy Research Center ( SBRC ) at the Institut Pertanian Bogor, a research institution based in West Java. The SBRC is a world-leading research group in jatropha development, cultivation and processing. A summary of the Alliance Agreement is contained in Section 8.2 of this Prospectus.

Biodiesel Austindo has also signed a memorandum of understanding ( MOU ) with Biodiesel Australia Limited ( BDA ), an Australian company with experience in the development and operation of rapidreaction portable biodiesel production units. Under the MOU, BDA will develop and install its biodiesel production units throughout Indonesia to process the oil from Biodiesel Austindo, which in turn will promote BDA’s technology to the government of Indonesia, as well as its agencies and farmers’ associations. A summary of this MOU is contained in Section 8.6 of this Prospectus.

4.4.3 Biodiesel Australia Limited

Following listing, Jatoil intends to acquire 3.05% of Biodiesel Australia Limited (BDA) for $500,000.

Biodiesel Australia Limited was incorporated in 1994 and converted to a public company in 2004. The company claims to possess patents and in-house knowledge covering a unique rapid reaction process for producing biodiesel from feedstock tallow and oils. The company has implemented this process in the form of small, portable and integrated biodiesel production units. The units are modular and can be operated singly or linked in parallel to increase production output.

BDA has installed a demonstration unit in Malaysia to process palm oil, and plans to manufacture commercial units with a production capacity of 5–10 ML/year.

Set out below is a list of the potential advantages for BDA’s technology:

(a) low operating costs;
(b) compatible with a wide range of animal tallow and vegetable oils;
(c) modest operating temperatures and pressures;
(d) high conversion factor with modest residual waste;
(e) low capital costs compared to other technologies;
(f) possible truck or skid mounting of production units, allowing them to be transported close to areas of feedstock production; and
(g) modularity, allowing rapid scale-up.

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BDA plans to lend its production units to biodiesel producers, including Biodiesel Austindo, whereby it will supply, service and maintain the units and provide supporting infrastructure and training, in return for a processing royalty on each unit’s output.

4.4.4 Potential acquisitions

Jatoil has signed a letter of intent with Jatropha Energy Limited ( Jatropha Energy ), a Sri Lankan company that is negotiating the long term lease of 130,000 ha of land in Sri Lanka for the establishment of jatropha projects. Subject to due diligence and entering into a binding agreement, Jatoil intends to acquire 100% of Jatropha Energy in return for the issue of 23,750,000 Shares and a $250,000 cash payment to the shareholders of Jatropha Energy. Jatoil would then provide funding of up to $2,000,000 to initially establish about 2,000 hectares of jatropha in Sri Lanka.

If the above transaction occurs (which is not guaranteed because it is currently not binding and subject to conditions), it will be after the Company has listed on ASX.

Other potential transactions are also under consideration and will be progressed by the Company following its successful listing on ASX.

4.5 Business strategy

4.5.1 Strategy overview

In developing its strategies, Jatoil has built on the strategies and experiences of other Australian companies that have recently entered the biodiesel market. Several of these companies have pursued a business model involving the purchase and processing of feedstock oils into biodiesel for domestic consumption. For some, this approach has resulted in substantial losses because of higher than expected feedstock prices (exacerbated by Australia’s ongoing drought), a lack of government support and weaker than expected domestic demand.

Jatoil intends to avoid these problems by producing and trading jatropha oil, seed and seedcake, as well as biodiesel, operating in tropical countries where crop yields are potentially high and labour costs are low, and by selling into markets with strong demand, particularly Europe and Asia.

Jatoil aims to become a dominant producer and trader in the jatropha market across Asia. In pursuit of this objective, the Company has entered into agreements to acquire the assets described above. Jatoil’s proposed investment in Biodiesel Austindo provides the Company with access to large tracts of land in Indonesia for contract farming of jatropha while avoiding the high start-up costs associated with full land ownership and development. It also provides Jatoil with access to:

(a) SBRC, a world-leading research group, to assist with jatropha cultivation, nursery development, farm practices and farmer training; and

(b) Biodiesel Australia, a company with expertise in biodiesel production.

Jatoil aims to use this investment to develop expertise in the cultivation and processing of jatropha and allow it to establish a dominant trading platform in Indonesia and a business model that can be applied to other countries such as Sri Lanka and other locations in Southeast Asia. As well as producing its own jatropha products, Jatoil intends to purchase jatropha oil, seed and seedcake from other growers and either process or on-sell these products to customers. The Company is looking to establish a dominant trading position in the countries in which it operates to enable it to maintain a significant degree of control over the prices at which it buys and sells jatropha products.

Jatoil’s proposed investments in Indonesia (as well as potentially Sri Lanka and other countries) will provide Jatoil with access to land and other resources to enable the Company to build its operations in Asia. Operations outside Indonesia are likely to incur greater establishment costs than in Indonesia, but are also likely to produce greater margins, since the Company will own more of the jatropha crop.

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New operations will be established using know-how, genetic material and business strategies initially developed with the support of the Company’s Indonesian operations.

4.5.2 Partnerships and agreements

To assist the Company in generating shareholder value, Jatoil intends to enter into a number of partnerships and other agreements in the course of establishing its operations. These agreements are expected to include:

(a) agreements with large, global agriculture and commodity trading companies to secure key inputs and technologies as well as important trading opportunities;
(b) off-take agreements with local and international biodiesel producers;
(c) research agreements with local universities and agriculture departments for the acquisition of jatropha germplasm and the establishment of jatropha breeding programs to develop higheryield, lower-maintenance cultivars; and
(d) agricultural partnerships with local contractors.

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jatropha
pick &
shell fruit
biomass dry seed
press seed
& filter
crude jatropha
seed cake oil (CJO)
refine CJO
crude glycerol biodiesel
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Figure 3. Potential product stream from cultivation of Jatropha curcas .

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4.5.3 Carbon credits

Jatropha is a species listed within the Kyoto Protocol as eligible for trade in carbon credits. On the order of 4–8 kg of carbon dioxide is absorbed from the atmosphere per year by each tree, which is capable of being converted into carbon credits and traded with emitters of greenhouse gases under the Kyoto Clean Development Mechanism.

4.6 Social and ethical responsibility

Jatoil is committed to conducting its operations in a socially and environmentally sustainable manner. The Company will engage local communities during the planning and implementation of its projects. Jatoil will also provide economic development and ongoing employment opportunities for impoverished communities.

Jatoil is committed to contributing to the reduction of global reliance on non-renewable energy resources, which are contributing to climate change through the emission of greenhouse gases. Jatoil will plan and direct its operations to avoid environmental damage, misuse of water or other natural resources, or loss of biodiversity.

4.7 Management structure

Jatoil’s proposed management structure is illustrated in Figure 4. The Company expects to appoint a General Manager/Chief Operating Officer soon after listing. The Company will then also begin the process of recruiting a Chief Executive Officer.

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Board of Directors
Mike Taverner
Ross Kestel
Tom Hancock
Company Secretary
Emmanuel Correia
Executive Chairman
Mike Taverner
Business Development
Office Manager
Tony Crimmins TBA
David Roche
Financial Control Legal
Derek Bolling Steinepreis Paganin
General Manager/COO
TBA
Management— Management— Agronomy/IP
other countries Indonesia Graham Brown
TBA Kevin Parker Erliza Hambali
----- End of picture text -----

Figure 4. Jatoil’s proposed management structure.

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4.8 Key personnel

Michael Taverner MAGRICSCI PHD MAICD FAIAST

EXECUTIVE CHAIRMAN

The Executive Chairman of Jatoil is Dr Michael Taverner. See Section 5.1 for details of Mike’s qualifications and experience.

Tony Crimmins BE ME MBA GRADDIP (MARKETING)

BUSINESS DEVELOPMENT MANAGER

Tony Crimmins has been actively involved in the business development of numerous start-up companies that have been funded and listed on the Australian Securities Exchange. He was fundamental in identifying projects and businesses that could be successfully listed. Most notable of these is BluGlass Limited, a semiconductor technology business listed on ASX in 2006. Prior to this he worked for six years as an environmental engineer and business development manager in Asia, obtaining a working fluency in Mandarin and an understanding of Asian business practices.

Tony has a Master of Chemical Engineering and a Master of Business Administration, and has previously worked as a general manager, project manager, and commercialiser of technology-based products and services.

Tony is a director of the ASX-listed companies DVM International Limited and Reco Financial Services Limited.

David Roche BE BA MSC MIEAUST

ANALYST (RENEWABLE ENERGY)

David Roche has expertise across a range of renewable energy technologies and has consulted on renewable energy projects in the areas of technology development and commercialisation, corporate communications, training, standardisation and government policy development. He has been involved as a board member and management consultant in the successful capital raising and listing on the Australian Securities Exchange of several start-up companies, including Medical Therapies Limited, Freshtel Holdings Limited, BluGlass Limited and Xstate Resources Limited.

Derek Bolling BBUS MBA FCPA FCIS

FINANCIAL CONTROLLER

Derek Bolling has over 20 years’ experience as a financial controller, chief financial officer and accountant in a wide range of ASX-listed, public unlisted and private companies, spanning genetic engineering, medical diagnostics and devices, pharmaceuticals, healthcare and information technology. He has experience in the implementation and operation of large scale financial systems, financial management of resource projects, contract negotiation and change management of the finance function.

Derek is currently a consultant in accounting and financial management to start-up companies in the biomedical and computer engineering fields, and is company secretary of two private equity–backed medical technology companies.

Kevin Parker

REGIONAL MANAGER—INDONESIA

Kevin Parker is the founder and President Director of PT Biodiesel Austindo. In his long and varied career, Kevin has worked as a fitter and turner, as a marine engineer in the merchant navy, as an engine department marketing manager with Caterpillar dealerships in Western Australia, Indonesia and Abu Dhabi, and as an operations and maintenance engineer in the petroleum industry.

In 1987, Kevin was contracted as a workshop advisor for AusAID for their Nusa Tenggara Timur Integrated Area Development Program in West Timor. He travelled throughout the area, becoming fluent in Bahasa Indonesian and becoming well known within the government and local community.

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In 1990, Kevin moved to Jakarta, where he had several contracts as a manager for electrical contracting companies. In 1996 he moved to Lombok, carrying out contract work on construction of the Newmont copper mine in Sumbawa and working in community development projects.

In 2003, Kevin returned to Indonesia as a technical advisor for a property developer involved in high rise apartments. In 2005 he formed a partnership and registered PT Biodiesel Austindo. The company was initially the Indonesian operating partner for Biodiesel Australia Limited, operating rapid recovery units (RRUs) for the conversion of animal and vegetable oils into biodiesel. The company has since established a program, in cooperation with local farmers, for the growing of jatropha for renewable energy feedstock for the RRUs throughout Indonesia.

Graham Brown BSC

AGRONOMIST

Graham Brown is the Research Manager for NuFlora International Pty Limited and the Horticultural Development Manager for the University of Sydney’s Plant Breeding Institute ( PBI ). He holds a Bachelor of Science from Macquarie University in plant sciences.

Between 1973 and 1998, Graham was involved in wheat breeding, initially in the University of Sydney’s own breeding program and later in the National Cereal Rust Control Program. These programs specialised in breeding cereals for resistance to rust, a potentially devastating disease which the programs have helped control for the past 30 years. During this period he was breeder or co-breeder of 15 wheat varieties, which were bred for high end use quality and superior disease resistance (reducing the need for environmentally dangerous fungicides). He was the first breeder in Australia to successfully incorporate a particular new source of resistance into Australian wheat ( var. Sunbri ) from a wild wheat relative ( Aegilops ventricosa ).

Since 1998, Graham has been managing a number of horticultural projects at the PBI for international plant distribution companies. These projects have had highly successful commercial outcomes, resulting in the release onto world markets of over 100 varieties across a range of genera, including over 50 varieties of ornamental plants bred by himself since 1993.

Erliza Hambali BSC MSC PHD

AGRONOMIST

Erliza Hambali is a world expert on cultivation and processing of jatropha. A process technologist by training, Erliza has a doctorate in process technology from the IPB School of Agriculture and is currently chairperson of the Center for Surfactant Research and Development at the Bogor Institute of Agriculture in Indonesia.

Erliza has published 18 agribusiness books and conducted several seminars based on her jatropha research, and has been working in Indonesia to develop jatropha estates.

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5 Directors and corporate governance

5.1 Directors

Dr Michael Taverner MAGRICSCI PHD MAICD FAIAST

EXECUTIVE CHAIRMAN

Mike Taverner is a company director and scientific consultant. His expertise is in agriculture, corporate governance, research and development, and training.

Mike is chairman of BluGlass Limited, a company listed on ASX in 2006 to commercialise a novel process for manufacturing the semiconductor material gallium nitride. He is a non-executive director of Medical Therapies Limited, a company listed on ASX in 2005 to commercialise anti-inflammatory drugs. Until recently he was a non-executive director of Biosignal Limited, a company listed on ASX in 2004 to commercialise a novel anti-bacterial technology. Mike was a director of these three companies from inception and was involved in their successful capital raising and ASX-listing.

Mike’s career started as an agricultural research scientist where, over 17 years, he developed a considerable international reputation. For the past 19 years, he has managed and directed national research investment organisations. Mike was previously a non-executive director of the Rural Industries R&D Corporation (RIRDC) and, for nearly two years, of the Australian Poultry CRC. For six years he was executive director of the Pig R&D Corporation. He has also served as chairman of national R&D advisory groups for the chicken meat and layer industries reporting to the board of RIRDC. For 10 years he has worked as a technology consultant to the Grains R&D Corporation, and he continues to work on program management for Australian Pork Limited and the Australian Pork Cooperative Research Centre.

Mike has developed and applied skills in leadership and human relations, which he has applied in his Taverner Minds consultancy, and which have complemented his science and corporate activities. He was until recently a non-executive director of the Australian Rural Leadership Foundation. Mike actively supports the development of young scientists and for more than eight years has been the national coordinator of post-graduates for both the pork and poultry industries in Australia.

Mike runs his own consulting business in Canberra, working with national and international clients on research, innovation and commercialisation. He is an internationally-accredited trainer in human resources and operates widely in public sector organisations around Australia.

Ross Kestel BBUS ACA FCPA AICD

NON-EXECUTIVE DIRECTOR

Ross Kestel is both a Chartered Accountant and Certified Practicing Accountant, and has been a director of the accounting practice Nissen Kestel Harford (NKH) since July 1980. He has acted as a director and company secretary of a number of public companies involved in mineral exploration, mining, mine services, property development, manufacturing, and technology industries.

Ross is currently chairman of the ASX-listed companies XState Resources Limited and Reco Financial Services Limited, and director of Jabiru Metals Limited, Equigold NL, VDM Group Limited and Retail Star Limited.

Ross is a member of the audit committees of a number of ASX-listed companies and a member of the compliance committees of a number of managed investment schemes. He has also assisted in the listing of a significant number of companies on ASX.

Ross is a Registered Company Auditor and a member of the Institute of Company Directors.

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Tom Hancock BSC MIEAUST CPENG

NON-EXECUTIVE DIRECTOR

Tom Hancock is a chemical engineer with more than 20 years’ experience in the environmental and waste-to-energy fields in Australia and Asia. He is currently country manager for the Asian subsidiary of a large multinational waste management company headquartered in France, where he is responsible for recycling of electrical equipment and nickel-cadmium batteries.

Tom has considerable experience in the operation of chemical plants. He was previously general manager of waste management for Brambles Asia, where he initiated a successful project for the conversion of waste to energy, and was managing director of Cleanaway Taiwan, Brambles’ first joint venture in Asia.

Tom has previously held the position of national technical manager for Cleanaway Australia, the largest waste management company in Australia at the time, providing technical services and support to Cleanaway state divisions across Australia and preparing the winning bid for construction and operation of a liquid waste treatment plant. He has been a manager for Retec Limited, a subsidiary of ICI Australia, where he was responsible for the division producing exotic and hazardous chemicals, and for marketing and distribution throughout Oceania and Southeast Asia into the explosives, steel, rubber and chemical industries. He has also held management positions with Australian Fertilizers Limited (a subsidiary of ICI Australia), where he was responsible for a large fertiliser factory with 250 employees, and for liaison with the company’s agronomists, agricultural agencies and farmers.

5.2 Company secretary

Emmanuel Correia BBUS ACA

Emmanuel Correia has over 16 years’ experience in public company accounting and the provision of public company compliance services in Australia across a diverse range of industries. Emmanuel also has extensive experience in corporate finance and equity capital markets. Emmanuel provides corporate advice to a diverse client base in relation to capital raisings, corporate strategy and structuring, prospectus preparation, due diligence enquires and various ASX and ASIC regulations and requirements.

5.3 Corporate governance

The Directors monitor the business affairs of the Company on behalf of Shareholders and have formally adopted a corporate governance policy that is designed to encourage Directors to focus their attention on accountability, risk management and ethical conduct.

5.3.1 Board of Directors

The Company’s Board of Directors is responsible for corporate governance of the Company. The Board develops strategies for the Company, reviews strategic objectives and monitors performance against those objectives. The goals of the corporate governance processes are to:

(a) maintain and increase Shareholder value;
(b) ensure a prudential and ethical basis for the Company’s conduct and activities; and
(c) ensure compliance with the Company’s legal and regulatory requirements.

Consistent with these goals, the Board assumes the following responsibilities:

(a) developing initiatives for profit and asset growth;
(b) reviewing the corporate, commercial and financial performance of the Company on a regular basis;
(c) acting on behalf of, and being accountable to, the Shareholders; and

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(d) identifying business risks and implementing actions to manage those risks and corporate systems to assure quality.

The Company is committed to the circulation of relevant materials to Directors in a timely manner to facilitate Directors’ participation in the Board discussions on a fully-informed basis.

5.3.2 Composition of the Board

Election of Board members is substantially the province of the Shareholders in general meetings. However, subject thereto, the Company is committed to the following principles:

(a) the Board is to comprise Directors with a blend of skills, experience and attributes appropriate for the Company and its business; and
(b) the principal criterion for the appointment of new Directors is their ability to add value to the Company and its business.

No formal nomination committee or procedures have been adopted for the identification, appointment and review of Board membership, but an informal assessment process, facilitated by the Executive Chairman in consultation with the Company’s professional advisors, has been adopted by the Board.

5.3.3 Independent professional advice

Subject to the Executive Chairman’s approval (not to be unreasonably withheld), the Directors, at the Company’s expense, may obtain independent professional advice on issues arising in the course of their duties.

5.3.4 Remuneration arrangements

The remuneration of an Executive Director will be decided by the Board, without the affected Executive Director participating in that decision-making process. The total maximum remuneration of non-executive Directors is the subject of a Shareholder resolution in accordance with the Company’s Constitution, the Corporations Act and the ASX Listing Rules, as applicable. The determination of nonexecutive Directors’ remuneration within that maximum will be made by the Board having regard to the inputs and value to the Company of the respective contributions by each non-executive Director. The current limit, which may only be varied by Shareholders in general meeting, is an aggregate amount of $250,000 per annum.

The Board may award additional remuneration to non-executive Directors called upon to perform extra services or make special exertions on behalf of the Company.

5.3.5 External audit

The Company in general meetings is responsible for the appointment of the external auditors of the Company, and the Board from time to time will review the scope, performance and fees of those external auditors.

5.3.6 Audit committee

The Company is to have a separate, constituted audit committee.

5.3.7 Identification and management of risk

The Board’s collective experience will enable accurate identification of the principal risks that may affect the Company’s business. Key operational risks and their management will be recurring items for deliberation at Board meetings.

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5.3.8 Social and ethical responsibility

Jatoil is committed to conducting its operations in a socially and ecologically sustainable manner. The Company will engage local communities during the planning and implementation of its projects. Jatoil will also provide economic development and ongoing employment opportunities for impoverished communities.

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6 Investigating Accountant’s Report

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2 November 2007

The Directors Jatoil Limited Level 16 Suite 1602 87–89 Liverpool Street SYDNEY NSW 2000

Dear Directors

6.1 Introduction

Grant Thornton Corporate Finance Pty Limited ( Grant Thornton Corporate Finance ) has been engaged by Jatoil Limited ( the Company ) to prepare an Investigating Accountant’s Report for inclusion in a Prospectus dated on or around 8 November 2007 ( the Prospectus ) relating to the issue of 35,000,000 fully paid ordinary shares at $0.20 each, amounting to $7,000,000 ( Minimum Subscription ). The Company has reserved the right to accept oversubscriptions of up to 15,000,000 ordinary shares at $0.20 each to raise an additional $3,000,000, which would take the total amount raised under the Offer to $10,000,000 ( Maximum Subscription) .

Expressions defined in the Prospectus have the same meaning in this report.

6.2 Financial information

Grant Thornton Corporate Finance has been requested to prepare a report covering the statutory historical financial information and pro forma historical financial information (together the Historical Financial Information ) as described below and set out in Appendix 1 of this report.

6.2.1 Statutory historical financial information

The statutory historical financial information of the Company, set out in Appendix 1 of this report, comprises the audited balance sheet of the Company as at 30 June 2007.

The Directors of the Company are responsible for the preparation and presentation of the statutory historical financial information, which has been prepared in accordance with Australian equivalents to International Financial Reporting Level 17, 383 Kent Street Standards ( AIFRS ). Sydney NSW 2000

Level 17, 383 Kent Street Sydney NSW 2000 PO Locked Bag Q800 QVB Post Office Sydney NSW 1230 T +61 2 8297 2400 F +61 2 9299 4445 E [email protected] W www.grantthornton.com.au

The statutory historical financial information in the Prospectus is presented in an abbreviated form in so far as it does not include all the disclosures required under AIFRS applicable to annual financial reports prepared in accordance with the Corporations Act 2001 ( Corporations Act ).

Grant Thornton Corporate Finance Pty Limited ABN 59 003 265 987 Holder of Australian Financial Services License No: 247140 Liability limited by a scheme approved under Professional Standards Legislation. Grant Thornton Corporate Finance Pty Limited is an independent business entitled to trade under the

6.2.2 Pro forma historical financial information

The pro forma historical financial information of the Company, set out in Appendix 1 of this report, comprises the reviewed pro forma historical balance sheet of the Company as at 30 June 2007.

international name Grant Thornton.

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The Directors of the Company are responsible for the preparation and presentation of the pro forma historical financial information, which has been prepared in accordance with AIFRS.

The pro forma historical financial information in the Prospectus is presented in an abbreviated form in so far as it does not include all the disclosures required by AIFRS applicable to annual financial reports prepared in accordance with the Corporations Act.

6.3 Scope

6.3.1 Review of the statutory historical financial information

We have reviewed the statutory historical information in order to report whether anything has come to our attention, which causes us to believe that the statutory historical financial information of the Company, as set out in Appendix 1 of this report, does not present fairly the audited historical balance sheet of the Company as at 30 June 2007, in accordance with the recognition and measurement principles prescribed in AIFRS and other mandatory professional reporting requirements in Australia, and accounting policies adopted by the Company as disclosed in Appendix 1—Note 1 of this report.

We have conducted our review of the statutory historical financial information in accordance with the Australian Auditing and Assurance Standard AUS 902 Review of Financial Reports . We made such enquiries and performed such procedures as we, in our professional judgement, considered reasonable in the circumstances including:

a comparison of the consistency in application of the recognition and measurement principles in Accounting Standards and other mandatory professional reporting requirements in Australia, and the accounting policies adopted by the Company disclosed in Appendix 1— Note 1 of this report; and
making enquiries of the Directors, management, auditors and others of the Company.

These procedures do not provide all the evidence that would be required in an audit; thus the level of assurance provided is less than given in an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

6.3.2 Review of the pro forma historical financial information

We have reviewed the pro forma historical financial information in order to report on whether anything has come to our attention that causes us to believe that the pro forma historical financial information of the Company, set out in Appendix 1 of this report, does not present fairly the pro forma historical balance sheet of the Company as at 30 June 2007 on the basis of the pro forma transactions and adjustments described in Appendix 1—Note 2 of this report, and in accordance with the recognition and measurement principles prescribed in AIFRS and other mandatory professional reporting requirements in Australia, and accounting policies adopted by the Company disclosed in Appendix 1— Note 1 of this report.

We have conducted our review of the pro forma historical financial information in accordance with the Australian Auditing and Assurance Standard AUS 902 Review of Financial Reports . We made such enquiries and performed such procedures as we, in our professional judgement, considered reasonable in the circumstances, including:

a review of the pro forma transactions and/or adjustments;
a comparison of consistency in application of the recognition and measurement principles in Accounting Standards and other mandatory professional reporting requirements in Australia, and the accounting policies adopted by the Company disclosed in Appendix 1—Note 1 of this report; and
enquiry of Directors and management of the Company.

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6.4 Conclusion

6.4.1 Review statement on the statutory historical financial information

Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the statutory historical financial information, as set out in Appendix 1 of this report, does not present fairly the audited balance sheet of the Company as at 30 June 2007, in accordance with the recognition and measurement principles prescribed in AIFRS and other mandatory professional reporting requirements, and accounting policies adopted by the Company disclosed in Appendix 1— Note 1 of this report.

6.4.2 Review statement on the pro forma historical financial information

Based on our review, which is not an audit, nothing has come to our attention that causes us to believe that the pro forma historical financial information of the Company, as set out in Appendix 1 of this report, does not present fairly the pro forma historical balance sheet of the Company as at 30 June 2007 on the basis of the pro forma transactions and /or adjustments described in Appendix 1— Note 2 of this report, and in accordance with the recognition and measurement principles prescribed in AIFRS and other mandatory professional reporting requirements in Australia, and accounting policies adopted by the Company as disclosed in Appendix 1—Note 1 of this report.

6.5 Subsequent events

Apart from the matters dealt with in this report, and having regard to the scope of our report, to the best of our knowledge and belief, no material transactions or events outside of the ordinary business of the Company have come to our attention that would require comment on, or adjustment to, the information referred to in our report or that would cause such information to be misleading or deceptive.

6.6 Responsibility

Grant Thornton Corporate Finance has consented to the inclusion of this Investigating Accountant’s Report in the Prospectus in the form and context in which it is included, but has not authorised the issue of the Prospectus. Accordingly, Grant Thornton Corporate Finance makes no representation regarding, and takes no responsibility for, any other statements, or material in, or omissions from, the Prospectus.

6.7 Independence

Grant Thornton Corporate Finance does not have any interest in the outcome of this issue other than in connection with the preparation of this report and participation in due diligence procedures for which normal professional fees will be received. Grant Thornton NSW is the auditor of the Company and, from time to time, Grant Thornton NSW also provides the Company with certain other professional services for which normal professional fees are received

6.8 General advice warning

This report has been prepared, and included in the Prospectus, to provide investors with general information only and does not take into account the objectives, financial situation or needs of any specific investor. It is not intended to take the place of professional advice and investors should not make specific investment decisions in reliance on the information contained in this report. Before

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acting or relying on any information, an investor should consider whether it is appropriate for their circumstances having regard to their objectives, financial situation or needs.

Yours faithfully

GRANT THORNTON CORPORATE FINANCE PTY LIMITED

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NEIL COOKE Director

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SCOTT GRIFFIN Director

JATOIL LIMITED

PROSPECTUS 2007

Appendix 1—Jatoil Limited

Consolidated Balance Sheet

		Audited as at	Pro forma Minimum	Pro forma Maximum
	Note	30 June 20071	Subscription as at 30 June 20072	Subscription as at 30 June 20073
		($)	($)	($)
CURRENT ASSETS
Cash and cash equivalents	3	946,545	11,927,312	14,774,573
Trade and other receivables		1,059	1,059	1,059
Other current assets		6,700	6,700	6,700
TOTALCURRENT ASSETS		954,304	11,935,071	14,782,332
NON-CURRENT ASSETS
Trade and other receivables	4	–	200,000	200,000
Financial assets	5	–	500,000	500,000
Intangible assets	6	–	3,934,319	3,934,319
TOTAL NON-CURRENT ASSETS		–	4,634,319	4,634,319
TOTAL ASSETS		954,304	16,569,390	19,416,651
CURRENT LIABILITIES
Trade and other payables	7	47,507	116,144	116,144
TOTALCURRENT LIABILITIES		47,507	116,144	116,144
TOTAL LIABILITIES		47,507	116,144	116,144
NET ASSETS		906,797	16,453,246	19,450,507
EQUITY
Issued capital	8	1,012,000	16,821,110	19,792,401
Minority interest	9	–	65,682	65,682
Accumulated losses	10	(105,203)	(433,546)	(407,576)
TOTAL EQUITY		906,797	16,453,246	19,300,507

Notes

1 The audited balance sheet has been extracted from the audited financial statements of the Company as at 30 June 2007.
2 The pro forma balance sheet as at 30 June 2007 reflects the application of the minimum funds received from the Offer less costs associated with the Offer and other pro forma adjustments as set out in Note 2.

3 The pro forma balance sheet as at 30 June 2007 reflects the application of the maximum funds received from the Offer less costs associated with the Offer and other pro forma adjustments as set out in Note 2.

The balance sheet should be read in conjunction with the notes set out in the following section.

Notes to the financial information

Note 1—Summary of significant accounting policies

The financial information has been prepared in accordance with the measurement and recognition requirements, but not all of the disclosure requirements of the Corporations Act 2001 including applicable Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board and Australian Accounting Interpretations for the presentation of financial information for inclusion in a Prospectus in Australia. The financial statements of the Company comply with AIFRS interpretations and other applicable financial reporting standards. In the view of the Directors of the Company, the omitted disclosures would provide no further relevant information to potential investors.

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The measurement base adopted is that of historical cost denominated in Australian dollars.

Principles of consolidation

A controlled entity is any entity that Jatoil Limited has the power to control the financial and operating policies of so as to obtain benefits from its activities.

All inter-company balances and transactions between entities in the group, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity.

Where controlled entities have entered or left the group during the year, their operating results have been included/excluded from the date control was obtained or until the date control ceased.

Minority equity interests in the equity and results of the entities that are controlled are shown as a separate item in the consolidated financial report.

Income tax

The charge for current income tax expenses is based on the profit for the year adjusted for any nonassessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the balance sheet date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the Company will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

Financial Instruments

Recognition

Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method.

Financial liabilities

Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and amortisation.

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PROSPECTUS 2007

Impairment

At each reporting date, the Company assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for-sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen. Impairment losses are recognised in the income statement.

Cash and cash equivalents

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of six months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the balance sheet.

Impairment of assets

At each reporting date, the Company reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the income statement.

Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Intangibles

Goodwill

Goodwill and goodwill on consolidation are initially recorded at the amount by which the purchase price for a business or for an ownership interest in a controlled entity exceeds the fair value attributed to its net assets at the date of acquisition.

Employee benefits

Provision is made for the Company’s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits.

Goods and Services Tax ( GST )

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office. In these circumstances, the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the balance sheet are shown inclusive of GST.

Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

Finance

Finance costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

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Research and development

Expenditure during the research phase of a project is recognised as an expense when incurred. Development costs are capitalised only when technical feasibility studies identify that the project will deliver future economic benefits and these benefits can be measured reliably.

Development costs have a finite life and are amortised on a systematic basis matched to the future economic benefits over the useful life of the project.

Note 2—Pro forma adjustments

The consolidated pro forma balance sheet has been prepared to illustrate the effect of the Offer. The pro forma consolidated balance sheet of the Company assumes completion of the Offer and is based on the assumption that the following transactions and events contemplated in this Prospectus, referred to as the pro forma adjustments, which are to take place on or before completion of the Offer, had occurred on or before 30 June 2007:

Minimum subscription

the issue of 32,896,000 fully paid ordinary shares at $0.16 each amounting to $5,263,360 to sophisticated investors after 30 June 2007 and before the date of the Prospectus;
the issue of 20,000,000 fully paid ordinary shares at $0.20 amounting to $4,000,000 in consideration for the acquisition of 50% of the issued share capital of PT Biodiesel Austindo (as set out in Section 9);
the payment of $500,000 in respect of a 3.05% investment in Biodiesel Australia Limited;
the issue of 35,000,000 fully paid ordinary shares at $0.20 each, amounting to $7,000,000 relating to the Offer; and
expenses associated with the offer (including advisory, legal, accounting, listing and administrative fees as well as printing, advertising and other expenses) are estimated to be $782,593. An amount of $454,250 has been charged against share capital and $318,950 against retained earnings.

Maximum subscription

the issue of 32,896,000 fully paid ordinary shares at $0.16 each amounting to $5,263,360 to sophisticated investors after 30 June 2007 and before the date of the Prospectus;
the issue of 20,000,000 fully paid ordinary shares at $0.20 amounting to $4,000,000 in consideration for the acquisition of 50% of the issued share capital of PT Biodiesel Austindo (as set out in Section 9);
the payment of $500,000 in respect of a 3.05% investment in Biodiesel Australia Limited;
the issue of 50,000,000 fully paid ordinary shares at $0.20 each, amounting to $10,000,000 relating to the Offer; and
expenses associated with the offer (including advisory, legal, accounting, listing and administrative fees as well as printing, advertising and other expenses) are estimated to be $935,332. An amount of $632,959 has been charged against share capital and $302,373 against retained earnings.

A deferred tax asset has not been recognised in relation to the capitalised Offer costs owing to uncertainty surrounding the economic benefits that will flow to the Company in future periods.

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PROSPECTUS 2007

Note 3—Cash and cash equivalents

Note 3—Cash and cash equivalents
	Pro forma	Pro forma
	Minimum	Maximum
	Subscription	Subscription
	($)	($)
Audited cash and cash equivalents at 30 June 2007	946,545	946,545
Pro forma transactions:
Proceeds from shares issued to sophisticated investors pre-IPO	5,263,360	5,263,360
Proceeds from shares issued pursuant to the Prospectus	7,000,000	10,000,000
Payment in respect of a 3.05% investment in Biodiesel Australia Limited	(500,000)	(500,000)
Expenses of raising capital under the Prospectus	(454,250)	(632,959)
Expenses associated with listing on ASX	(328,343)	(302,373)
Pro forma cash and cash equivalents at 30 June 2007	11,927,312	14,774,573
Note 4—Trade and other receivables
	Pro forma	Pro forma
	Minimum	Maximum
	Subscription	Subscription
	($)	($)
Audited trade and other receivables at 30 June 2007	–	–
Pro forma transaction:
Trade and other receivables acquired as a consequence of the acquisition of PT Biodiesel Austindo1	200,000	200,000
Pro forma trade and other receivables at 30 June 2007	200,000	200,000

1 This relates to an amount due from a related party of PT Biodiesel Austindo, which is expected to be repaid within 12 months from the date of listing on the ASX.

Note 5 – Financial assets

Note 5 – Financial assets
	Pro forma	Pro forma
	Minimum	Maximum
	Subscription	Subscription
	($)	($)
Auditedfinancialassets at 30 June2007	–	–
Pro forma transaction:
Payment in respect of a 3.05% investment in Biodiesel Australia Limited1	500,000	500,000
Pro forma financial assets at 30 June 2007	500,000	500,000

1 This financial asset comprises an investment in the ordinary issued capital of Biodiesel Australia Limited. There is no fixed return or fixed maturity date attached to this investment. The fair value of this unlisted financial asset cannot be reliably measured as variability in the range of reasonable fair value estimates is significant. As a result, the unlisted investment is reflected at cost.

Note 6—Intangible assets

Note 6—Intangible assets
	Pro forma	Pro forma
	Minimum	Maximum
	Subscription	Subscription
	($)	($)
Audited intangible assets at 30 June 2007	–	–
Pro forma transaction:
Goodwill on consolidation recognised as a consequence of the acquisition of PT Biodiesel Austindo1	3,934,319	3,934,319
Pro forma intangible assets at 30 June 2007	3,934,319	3,934,319

1 At the date of this Prospectus the Directors have not undertaken a full purchase price allocation review in accordance with AASB 3: Business Combinations .

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Note 7—Trade and other payables (current)

Note 7—Trade and other payables (current)
	Pro forma	Pro forma
	Minimum	Maximum
	Subscription	Subscription
	($)	($)
Audited trade and other payables at 30 June 2007	47,507	47,507
Pro forma transaction:
Trade and other payables balance acquired as consequence of the acquisition of PT Biodiesel Austindo1	68,637	68,637
Pro forma trade and other payables at 30 June 2007	116,144	116,144

1 This relates to an amount payable to a related party of PT Biodiesel Austindo which is expected to be repaid within 12 months from the date of listing on the ASX.

Note 8—Issued capital

	Pro forma No. of	Pro forma No. of
	shares Minimum	shares Maximum
	Subscription	Subscription
Auditednumberofsharesissued at 30 June2007	37,000,000	37,000,000
Pro forma transactions:
Shares issued to sophisticated investors pre-IPO	32,896,000	32,896,000
Shares issued in consideration for the acquisition of PT Biodiesel Austindo	20,000,000	20,000,000
Shares on issue at the date of the Prospectus	89,896,000	89,896,000
Shares issued under the Prospectus	35,000,000	50,000,000
Pro forma number of shares issued at 30 June 2007	124,896,000	139,896,000
	Pro forma	Pro forma
	Minimum	Maximum
	Subscription	Subscription
	($)	($)
Audited issued capital at 30 June 2007	1,012,000	1,012,000
Pro forma transactions:
32,896,000 shares issued to sophisticated investors pre-IPO at $0.16	5,263,360	5,263,360
20,000,000 shares issued in consideration for the acquisition of PT
Biodiesel Austindo at $0.20	4,000,000	4,000,000
Issued capital at the date of the Prospectus	10,275,360	10,275,360
Shares issued under the Prospectus	7,000,000	10,000,000
Capital raising costs	(454,250)	(632,959)
Pro forma issued capital at 30 June 2007	16,821,110	19,642,401
Note 9—Minority interest
	Pro forma	Pro forma
	Minimum	Maximum
	Subscription	Subscription
	($)	($)
Audited minority interest at 30 June 2007	–	–
Pro forma transaction:
Minority interest arising from the acquisition of 50% of the issued capital of
PT Biodiesel Austindo	65,682	65,682
Pro forma minority interest at 30 June 2007	65,682	65,682

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PROSPECTUS 2007

Note 10—Accumulated losses

Note 10—Accumulated losses
	Pro forma	Pro forma
	Minimum	Maximum
	Subscription	Subscription
	($)	($)
Audited accumulated losses at 30 June 2007	(105,203)	(105,203)
Pro forma transaction:
Expenses associated with listing on the ASX	(328,343)	(302,373)
Pro forma accumulated losses at 30 June 2007	(433,546)	(407,576)

Note 11—Share options

On completion of the Offer the following share options will be on issue:

							Number of
Tranche					Grant date	Expiry date	options issued	Exercise price
								($)
Tranche	1	1		23	December 2006	31 December 2009	12,000,000	0.20
Tranche	2	1			15 April 2007	31 December 2009	12,500,000	0.20
Tranche	3	1,	2		30 June 2007	30 November 2011	2,500,000	0.20
Total							27,000,000

The exercise of the options and subsequent cash receipt and share issue are not included in the pro forma balance sheet as it is anticipated that the options will be exercised at a date subsequent to listing.

Details of the option holders are set out in Section 9.1 of the Prospectus.

Notes

1 Options have been excluded from the pro forma adjustments as they have not been issued in consideration for the payment of services.
2 Options have been issued in consideration for future services to be performed by the Senior Executives of the Company.

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7 Risk factors

7.1 Introduction

An investment in the Company is not risk free and prospective new investors should consider the risk factors described below, together with information contained elsewhere in this Prospectus, before deciding whether to apply for Shares.

The following is not intended to be an exhaustive list of the risk factors to which the Company is exposed.

7.2 Additional financing requirements

The Directors expect that the proceeds of the Capital Raising will provide sufficient capital resources to enable the Company to achieve its initial business objectives. However, the Directors can give no assurances that such objectives will in fact be met without future borrowings or further capital raisings, and if such borrowings or capital raisings are required, that they can be obtained on terms favourable to the Company.

7.3 Growing risks

As with any agriculture project, crop growth and sustainability can be effected by weather conditions, access to water supply, pests and disease and other natural disasters. Any of these factors have the ability to adversely effect the Company’s harvest and, in turn, revenue.

7.4 Land security

Any project that the Company acquires will most likely involve ownership of land or a lease over land. The security of land tenure may be threatened by many factors including changes in government policy or changes in government control.

7.5 Indonesian farming cooperatives and associated risks

Biodiesel Austindo has entered into numerous Memoranda of Understanding ( MOUs ) with farming cooperatives throughout Indonesia. The farming cooperatives will endeavour to encourage farmers through these MOUs to take up jatropha planting. Given the large number of individual farmers within these farming cooperatives, there is a risk that not all individual farmers will comply with the MOUs.

Very few government records in Indonesia are centralised and/or computerised, with the result that a significant amount of any due diligence work undertaken in relation to any entity or project located in Indonesia requires in-person visits to the relevant government offices followed by manual searching of the available records.

Further, given the remoteness and size of the land holdings with the Indonesia project, confirming land tenure is a major task in its own right since it involves sending several people, for an extended period, to South Sumatra and Nusa Tengarra Timur in order to search a large number of individual titles.

As at the date of this Prospectus, the Company has relied heavily on the representations and warranties provided by its joint venture partner in Indonesia and has not been able to complete all of the underlying due diligence work referred to above.

In the event there prove to be any issues with ownership or control of the land to be planted by the farming cooperatives and/or their members, the Company is confident that other areas can be identified and secured to replace the areas of concern.

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PROSPECTUS 2007

7.6 Government policy changes

Government action or policy change (in particular, Australian or Indonesian governments) in relation to access to lands and infrastructure, compliance with environmental regulations, taxation, royalties and subsidies may adversely affect the Company’s operations and financial performance.

Initially, most of the Company’s operations will be governed by a series of Indonesian laws, regulations and decrees. Breaches or non-compliance with these laws, regulations and decrees can result in penalties and other liabilities. These may have a material adverse impact on the financial position, financial performance, cashflows, growth prospects and share price of the Company.

These laws, regulations and decrees may be amended from time to time, which may also have a material adverse impact on the financial position, financial performance, cashflows, growth prospects and share price for the Company.

While the Company is reasonably familiar with the Indonesian regulatory regime and will undertake all reasonable due diligence in assessing and managing the risks associated with investing and having biodiesel feedstock plantations in Indonesia (and other countries in which it may invest), the legal and political conditions of the country and any changes thereto are outside the control of the Company.

7.7 Unforeseen expenditure risk

Expenditure may need to be incurred that has not been taken into account in the preparation of this Prospectus. Although the Company is not aware of any such additional expenditure requirements, if such expenditure is subsequently incurred, this may adversely affect the expenditure proposals of the Company.

7.8 Economic risks

General economic conditions, movements in interest and inflation rates and currency exchange rates may have an adverse effect on the Company’s activities, as well as on its ability to fund those activities.

In particular, the majority of the Company’s expenses and revenues will be incurred in foreign currencies. Adverse movements in the relevant exchange rates relative to the Australian dollar will materially impact the income and expenditure of the Company in Australian dollars terms.

7.9 Additional requirements for capital

The Company’s capital requirements depend on numerous factors. Depending on the Company’s ability to generate income from its operations, the Company may require further financing in addition to amounts raised under this Prospectus. Any additional equity financing will dilute shareholdings, and debt financing, if available, may involve restrictions on financing and operating activities. If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations and scale back its expansion and development programs. If the Company is successful in meeting its initial objectives, then additional capital may be required to further develop its operations and pursue business opportunities.

7.10 Reliance on key management

The responsibility of overseeing the day-to-day operations and the strategic management of the Company depends substantially on its senior management and its key personnel. There can be no assurance given that there will be no detrimental impact on the Company if one or more of these employees ceases their employment.

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7.11 Competition

There is a risk that the Company will not be able to continue to compete profitably in the competitive industry in which it intends to operate. The potential exists for the nature and extent of the competition to change rapidly, which may cause loss to the Company.

7.12 Management of growth

There is a risk that management of the Company will not be able to implement the Company’s growth strategy after completion of the Acquisition. The capacity of the new management to properly implement and manage the strategic direction of the Company may affect the Company’s financial performance.

7.13 Insurance

The Company may, where economically practicable and available, endeavour to mitigate some project and business risks by procuring relevant insurance cover. However, such insurance cover may not always be available or economically justifiable and the policy provisions and exclusions may render a particular claim by the Company outside the scope of the insurance cover.

While the Company will undertake all reasonable due diligence in assessing the creditworthiness of its insurance providers, there will remain the risk that an insurer defaults in payment of a legitimate claim by the Company under an insurance policy.

7.14 Limited history/start-up company

The Company was only established in November 2006 and, as a result, has no meaningful historical financial information or operating history. This Prospectus must be considered in the light of the risks, expenses and difficulties frequently encountered by companies in their early stages of development, particularly companies in new and rapidly evolving industries.

The Company is subject to operational risks including inter alia:

cash flow problems;
securing supply agreements; and
finalising off-take agreements.

The Company’s future revenues and profitability will depend on, among other things, the successful planting, growing, processing and marketing of any feedstock produced.

7.15 Legal risk

The introduction of new legislation or amendments to existing legislation by governments, developments in existing common law, or the respective interpretation of the legal requirements in any of the legal jurisdictions which govern the Company’s operations or contractual obligations, could impact adversely on the assets, operations and, ultimately, the financial performance of the Company and the value of its Shares. In addition, there is a commercial risk that legal action may be taken against the Company in relation to commercial matters.

7.16 Prices

The prices the Company receives for its products are subject to market forces that are beyond the control of the Company. The Company monitors the stability and trends of market prices closely and, where possible, has and will negotiate agreements to reflect the movements in market prices and maintain underlying profit margins. However, should the market prices for its products fall to uneconomical levels, the financial performance of the Company will be materially adversely affected.

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7.17 Sales risk

If the company fails to secure contracts for all of its products or the Company does not satisfy conditions in any off-take agreements, this may adversely affect the financial conditions and performance of the Company.

7.18 Share market

Share market conditions may affect the value of the Company’s quoted securities regardless of the Company’s operating performance. Share market conditions are affected by many factors such as:

(a) general economic outlook;
(b) interest rates and inflation rates;
(c) currency fluctuations;
(d) changes in investor sentiment towards particular market sectors;
(e) the demand for, and supply of, capital; and
(f) terrorism or other hostilities.

7.19 Investment speculative

The above list of risk factors ought not to be taken as exhaustive of the risks faced by the Company or by investors in the Company. The above factors, and others not specifically referred to above, may in the future materially affect the financial performance of the Company and the value of the securities offered under this Prospectus.

Therefore, the securities to be issued pursuant to this Prospectus carry no guarantee with respect to the payment of dividends, returns of capital or the market value of those securities.

Potential investors should consider that the investment in the Company is speculative and should consult their professional advisers before deciding whether to apply for Shares.

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8 Summary of material contracts

Set out below is a summary of the material contracts to which the Company is a party.

8.1 Share Sale Agreement

On 7 November 2007, the Company entered into a share sale agreement with PT Biodiesel Austindo ( Biodiesel Austindo ) and each of the shareholders of Biodiesel Austindo (together the Shareholders ) pursuant to which the Shareholders agreed to sell, and the Company agreed to purchase, 50% of the issued shares in the capital of Biodiesel Austindo ( BA Shares ) on the following material terms and conditions ( Share Sale Agreement ):

(a) ( Conditions Precedent ): Settlement of the sale of the BA Shares ( Settlement ) is subject to and conditional upon:
(i) the Company completing a financial and legal due diligence on Biodiesel Austindo to its sole and absolute satisfaction;
(ii) the Company obtaining all necessary approvals from the Capital Investment Coordination Board to the transaction contemplated by this Agreement;
(iii) no event, change, condition, matter, result or circumstance occurring, being disclosed or becoming known to the Company which, in the reasonable opinion of the Company, could have a material adverse effect on Biodiesel Austindo;
(iv) the Company being satisfied that there are no legal claims, and no circumstances which may give rise to any claim, against Biodiesel Austindo;
(v) the Company completing a capital raising of no less that $5,000,000 at an issue price of no less than $0.20;
(vi) the Company obtaining conditional approval from ASX to having its securities admitted to the official list of ASX on terms satisfactory to the Company;
(vii) the Company, the Shareholders and Biodiesel Austindo entering into a shareholders’ agreement on terms acceptable to the Company ( Shareholders’ Agreement ); and
(viii) neither the Shareholders nor the Company being prevented from completing the share sale by virtue of any notice received from any regulatory authority in respect of tax.
(b) ( Consideration ): The consideration will be satisfied by the Company issuing 20,000,000 Shares to the Shareholders.
(c) ( Loan ): Upon completion of Settlement, the Company agrees to make available to Biodiesel Austindo a loan in the amount of $2,000,000 ( Loan ) on the following terms:
(i) Biodiesel Austindo must use the Loan for the purpose of funding its day-to-day operations in the normal course of its business and otherwise as provided for in the Shareholders’ Agreement;
(ii) Biodiesel Austindo agrees to secure the Loan by providing the Company with a charge over all of the assets of Biodiesel Austindo;
(iii) Biodiesel Austindo must pay interest on the principal amount of the Loan at a rate of 10% per annum. Interest will accrue from day to day and shall be capitalised into the Loan amount; and
(iv) Biodiesel Austindo shall repay the Loan and any interest accrued in full at such time as Biodiesel Austindo has net positive cash inflow as and in any event no later than 30 June 2012.

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PROSPECTUS 2007

(d) ( Representations and warranties ): The Share Sale Agreement contains standard representations and warranties for a transaction of this nature.
(e) ( Governing law ): the Share Sale Agreement is governed by the laws of New South Wales.

8.2 Joint Alliance and Research Agreement

On 21 September 2007, Biodiesel Austindo entered into a joint alliance and research agreement with the Surfactant and Bioenergy Research Center of Institut Pertanian Bogor (a research institution having its domicile in Bogor of West Java) ( SBRC ) pursuant to which the parties agreed to enter into a strategic alliance for new developments in biofuel feedstock based on Jatropha curcas planting and research, and improvements in biofuel conversion technologies ( Project ) ( Alliance Agreement ).

The parties agreed as follows:

(a) ( Research and development program ): the parties agreed to undertake the Project on the basis that Biodiesel Austindo will appoint SBRC on a retainer basis to advise on new developments in biofuel feedstock on jatropha planting and development. SBRC will prepare a report every three months for Biodiesel Austindo on developments in agreed areas.
(b) ( Term and funding ): Biodiesel Austindo will pay SBRC on a retainer basis 30 million Indonesian Rupiah (IDR30,000,000) per annum (approximately A$3,500), payable monthly in advance. Biodiesel Austindo will also be responsible for travelling expenses and accommodation fees incurred by SBRC to a maximum of IDR1,000,000 per day for experts and IDR500,000 per day for assistants.
(c) ( Term ): the term of the Alliance Agreement is for a period of five years commencing on the date of execution of the Alliance Agreement.
(d) ( Intellectual property ): intellectual property resulting from research jointly undertaken by the parties under the Alliance Agreement will be jointly owned by both parties.
(e) ( Termination ): either party may terminate the Alliance Agreement upon delivery of written notice at least 90 days prior to such termination. Each party shall bare its own costs resulting from any such termination.
(f) ( Warranties and representations ): each party provides standard representations and warranties to the other party in relation to the execution, delivery and performance of its obligations under the Alliance Agreement.
(g) ( Indemnity ): the defaulting party agrees to indemnify and keep indemnified the other party from and against all actions, proceedings, costs and demands that may arise out of or are consequential upon the defaulting party’s act or omission in the performance of its obligations under the Alliance Agreement.
(h) ( Assignment ): the Alliance Agreement may not be assigned by SBRC without the prior written consent of Biodiesel Austindo. Biodiesel Austindo may assign or transfer any part of its rights or obligations under the Alliance Agreement to a third party by written notice to SBRC.
(i) ( Governing law ): the Alliance Agreement is governed by the laws of Indonesia.
(j) ( Areas of research ): the parties may mutually agree to broaden, narrow or abandon new areas of research and development or joint research opportunities from time to time in accordance with the terms and conditions of the Alliance Agreement.

8.3 Farming cooperative agreements

Biodiesel Austindo has entered into memoranda of understanding with farming cooperatives for jatropha cultivation on land covering over 240,000 ha in the provinces of Lampung and Nusa Tenggara Timur (NTT). The objective is to secure contracts for more than 350,000 ha of additional

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land, giving Biodiesel Austindo access to a total of more than 600,000 ha of land for jatropha cultivation. Under these arrangements, local farmers provide their land on which they plant, weed and water their jatropha crops and then pick and defruit the jatropha seed, and transport it to a central collection point. In return, Biodiesel Austindo provides the farmers with seedlings, training, technical support, maintenance and seed collection. To support the start-up, the company will provide farmers with an early payment of 20% of the first year crop value and guarantees to purchase future seed production at market prices.

8.4 Executive Services Agreement

The Company has entered, or intends to enter, into an Executive Services Agreement with Dr Michael Taverner ( Services Agreement ). Under the Services Agreement, Dr Taverner is engaged by the Company to provide services to the Company in the capacity of Executive Chairman. Dr Taverner will be paid a salary of $10,000 per month plus director’s fees of $5,000 per month (excluding statutory superannuation). Dr Taverner will also be reimbursed for all reasonable travelling, accommodation and general expenses.

The Services Agreement commences on the date of the Services Agreement and continues until the Company employs a new Chief Executive Officer or Managing Director. After the Company has engaged a new Chief Executive Officer or Managing Director, the role of Dr Taverner will revert to that of non-executive Chairman, with his remuneration to be agreed by the Board at that time. The Services Agreement contains standard termination provisions under which the Company must give notice of termination, or alternatively, payment in lieu of notice. Dr Taverner is entitled to all unpaid remuneration and entitlements up to the date of termination.

8.5 Letter of Intent with Jatropha Energy Limited

As noted in Section 4.4.4 of this Prospectus, the Company has entered into a Letter of Intent with Jatropha Energy Limited, a Sri Lankan company. The material terms of this document is set out in Section 4.4.4 of this Prospectus.

If this transaction occurs (which is not guaranteed because it is currently not binding and subject to conditions), it will be after the Company has listed on ASX.

8.6 Memorandum of Understanding with Biodiesel Australia Limited

On 1 April 2006, Biodiesel Austindo entered into a memorandum of understanding with Biodiesel Australia Limited ( Biodiesel Australia ) ( MOU ) pursuant to which the parties agreed to work together to:

(a) promote the development of integrated multi-product manufacturing plants for the production of biodiesel and associated products throughout Indonesia; and
(b) actively promote the use of Biodiesel Australia’s technology for the use of biodiesel to the Indonesian government and farmer associations.

The parties entered into the MOU in good faith with the intention that the venture between them will develop a mutually beneficial working relationship between Biodiesel Australia and Biodiesel Austindo, with the objective to establish a long term commercial alliance. The parties agreed as follows:

(a) (Obligations of Biodiesel Australia): Biodiesel Australia will:
(i) prepare proposals for the development of facilities or plants contracted to Biodiesel Austindo;
(ii) finance the total cost of the proposed plants under a mutually acceptable and commercially viable contract;

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PROSPECTUS 2007

(iii) be responsible for the maintenance and operation of the proposed facilities and assets in relation to any production management, toll blending and liquids recovery process, which may be contracted to the facilities;
(iv) provide fully qualified staff and pay all wages, insurance and other costs and taxes as required by law;
(v) ensure the proposed plants’ production capacity is available as required by the various operational contracts, within the limits of the proposed facilities’ design capabilities; and
(vi) provide daily production and logistics reports as required in the normal operational management and good working practice of such plants and any other supporting documentation as may be required to enable accurate production and physical records to be assimilated.
(b) (Obligations of Biodiesel Austindo): Biodiesel Austindo will:
(i) use its best efforts and connections with the Indonesian government, farming and business community to promote biodiesel projects throughout Indonesia;
(ii) liaise with the government of Indonesia and its departments responsible for the implementation and operation of biodiesel projects to ensure a co-operative structure is achieved;
(iii) assist in obtaining the necessary work permits, travel documents and security permits for approved personnel and management;
(iv) be familiar with the Indonesian government’s plans in relation to the exploitation of palm oil reserves and work with the Indonesian government departments and farming associations for the planting, cultivation and processing of biodiesel from crude jatropha oil; and
(v) arrange mutually acceptable payment structures that guarantee production income and fees are paid on time to enable production by the joint venture through a regular cash flow.
(c) ( Formal Joint Venture Agreement ): the parties intend to enter into a separate and formal joint venture agreement in respect of dividends, profit share and proceeds from the proposed joint venture.

8.7 Directors’ Deeds of Indemnity

The Company has entered into, or will enter into, a Deed of Indemnity, Insurance and Access with each of its Directors.

Under these deeds, the Company agrees to indemnify each Director to the extent permitted by the Corporations Act against any liability arising as a result of the Director acting as an officer of the Company. The Company is also required to maintain insurance policies for the benefit of the relevant Director and must also allow the Directors to inspect board papers in certain circumstances.

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9 Additional information

9.1 Rights attaching to Securities

9.1.1 Ordinary Shares

The rights, privileges and restrictions attaching to Shares can be summarised as follows:

General meetings

Shareholders are entitled to be present in person, or by proxy, attorney or representative, to attend and vote at general meetings of the Company.

Shareholders may requisition meetings in accordance with Section 249D of the Corporations Act and the Constitution of the Company.

Voting rights

Subject to any rights or restrictions for the time being attached to any class or classes of shares, at general meetings of shareholders or classes of shareholders:

(a) each shareholder entitled to vote may vote in person or by proxy, attorney or representative;
(b) on a show of hands, every person present who is a shareholder or a proxy, attorney or representative of a shareholder has one vote; and
(c) on a poll, every person present who is a shareholder or a proxy, attorney or representative of a shareholder shall, in respect of each fully-paid share held by them, or in respect of which they are appointed a proxy, attorney or representative, have one vote for the share, but in respect of partly paid shares shall have such number of votes as bears the same proportion to the total of such shares registered in the shareholder’s name as the amount paid (not credited) bears to the total amounts paid and payable (excluding amounts credited).

Dividend rights

Subject to the rights of persons (if any) entitled to shares with special rights as to dividend, the Directors may declare a final dividend out of profits in accordance with the Corporations Act and may authorise the payment or crediting by the Company to the shareholders of such a dividend. The Directors may authorise the payment or crediting by the Company to the shareholders of such interim dividends as appear to the Directors to be justified by the profits of the Company. Subject to the rights of persons (if any) entitled to shares with special rights as to dividend, all dividends are to be declared and paid according to the amounts paid or credited as paid on the shares in respect of which the dividend is paid. Interest may not be paid by the Company in respect of any dividend, whether final or interim.

Winding up

If the Company is wound up, the liquidator may, with the authority of a special resolution of the Company, divide among the shareholders in kind the whole or any part of the property of the Company, and may for that purpose set such value as they consider fair on any property to be so divided, and may determine how the division is to be carried out as between the shareholders or different classes of shareholders. The liquidator may, with the authority of a special resolution of the Company, vest the whole or any part of any such property in trustees upon such trusts for the benefit of the contributories as the liquidator thinks fit, but so that no shareholder is compelled to accept any shares or other securities in respect of which there is any liability. Where an order is made for the winding up of the Company or it is resolved by special resolution to wind up the Company, then on a distribution of assets to members, shares classified by ASX as restricted securities at the time of the commencement of the winding up shall rank in priority after all other shares.

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Transfer of Shares

Generally, shares in the Company are freely transferable, subject to formal requirements, the registration of the transfer not resulting in a contravention of or failure to observe the provisions of a law of Australia, and the transfer not being in breach of the Corporations Act or the Listing Rules.

Variation of rights

Pursuant to Section 246B of the Corporations Act, the Company may, with the sanction of a special resolution passed at a meeting of shareholders, vary or abrogate the rights attaching to shares.

If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class), whether or not the Company is being wound up, may be varied or abrogated with the consent in writing of the holders of three-quarters of the issued shares of that class, or if authorised by a special resolution passed at a separate meeting of the holders of the shares of that class.

9.1.2 Options

The terms and conditions of the Options are as follows:

(a) each Option entitles the holder to one Share in the Company;
(b) the Options are exercisable at any time on or prior to 5.00pm (AWST) on 31 December 2009 (Expiry Date) by completing an option exercise form and delivering it together with the payment for the number of Shares in respect of which the Options are exercised to the registered office of the Company;
(c) the Option exercise price is $0.20 per option;
(d) an Option does not confer the right to a change in exercise price nor a change in the number of underlying securities over which the Option can be exercised;
(e) subject to the Corporations Act, the Listing Rules and the Company’s Constitution, the Options are freely transferable;
(f) all Shares issued on exercise of the Options will rank pari passu in all respects with the Company’s then issued Shares. The Company will apply for quotation on ASX of all Shares issued upon exercise of the Options;
(g) there are no participating rights or entitlements inherent in the Options and holders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least six Business Days after the issue is announced. This will give Option holders the opportunity to exercise their Options prior to the date for determining entitlements to participate in any such issue; and
(h) if at any time the issued capital of the Company is reconstructed, all rights of an Option holder are to be changed in a manner consistent with the Corporations Act and the Listing Rules.

9.1.3 Director Options

It is proposed that Director Options will be issued to each of Michael Taverner, Ross Kestel and Tom Hancock. The material terms of the Director Options are as follows:

(a) each Director Option entitles the holder, when exercised, to one Share;
(b) the Director Options are exercisable at any time on or prior to 5.00pm (AEST) on 30 November 2011 (Expiry Date) by completing an option exercise form and delivering it together with the payment for the number of Shares in respect of which the Director Options are exercised to the registered office of the Company;

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(c) the Director Option exercise price is $0.20 per option;
(d) a Director Option does not confer the right to a change in exercise price or a change in the number of underlying securities over which the Director Option can be exercised;
(e) the Director Options are not transferable;
(f) if the holder ceases to be a director of the Company, any Director Options that have not vested will immediately lapse, unless otherwise agreed by the Board;
(g) all Shares issued upon exercise of the Director Options will rank equally in all respects with the Company’s then issued Shares. Subject to the Company successfully listing on ASX, the Company will apply for quotation of all Shares issued upon exercise of the Director Options on ASX;
(h) there are no participating rights or entitlements inherent in the Director Options and holders will not be entitled to participate in new issues of capital offered to shareholders during the currency of the Director Options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the holder will receive notice in accordance with the requirements of the Listing Rules;
(i) if at any time the issued capital of the Company is reconstructed, all rights of a Director Option holder are to be changed in a manner consistent with the Corporations Act and the Listing Rules; and
(j) notwithstanding any of the terms set out above, upon the occurrence of a Trigger Event, all Director Options that have not vested at that date will immediately vest and become exercisable.

9.2 Disclosure of interests

Directors are not required under the Company’s Constitution to hold any Shares. As at the date of this Prospectus, the Directors have relevant interests in Shares and options to acquire Shares as set out in the following table:

Director	Shares	Options	Director Options
Michael Taverner	637,500	350,000	1,500,000
Ross Kestel	Nil	Nil	500,000
Tom Hancock	625,000	500,000	500,000

The Options referred to in the above table may not have been issued as at the date of this Prospectus. They will all be issued prior to the Company being admitted to the Official List.

9.3 Remuneration

The Company’s Constitution provides that the remuneration of non-executive Directors will be not more than the aggregate fixed sum determined by a general meeting. The aggregate remuneration for non-executive Directors has been set at an amount not to exceed $250,000 per annum.

The only executive Director of the Company is Michael Taverner. A summary of the Executive Services Agreement between the Company and Dr Taverner is set out in Section 8.4 of this Prospectus.

The remuneration paid to the Directors in the last two years and the fees that are currently proposed to be paid to the Directors (excluding superannuation) in relation to holding the position of a Director are set out below:

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PROSPECTUS 2007

Director	Past fees	Future fees
	$	$ pa
Michael Taverner	0	180,000
Ross Kestel	0	36,000
Tom Hancock	0	36,000

9.4 Fees and benefits

Other than as set out below or elsewhere in this Prospectus, no:

(a) Director of the Company;
(b) person named in this Prospectus as performing a function in a professional advisory or other capacity in connection with the preparation or distribution of this Prospectus;
(c) promoter of the Company; or
(d) underwriter (but not a sub-underwriter) to the issue or a financial services licensee named in the Prospectus as a financial services licensee involved in the issue,

has, or had within two years before lodgement of this Prospectus with ASIC, any interest in:

(i) the formation or promotion of the Company;
(ii) any property acquired or proposed to be acquired by the Company in connection with its formation or promotion or in connection with the offer of Shares under this Prospectus; or
(iii) the offer of Shares under this Prospectus,

and no amounts have been paid or agreed to be paid and no benefits have been given or agreed to be given to any of those persons as an inducement to become, or to qualify as, a Director of the Company or for services rendered in connection with the formation or promotion of the Company or the offer of Shares under this Prospectus.

Grant Thornton Corporate Finance Pty Limited has acted as Investigating Accountant and has prepared an Investigating Accountant’s Report, which has been included in Section 6 of this Prospectus. The Company estimates it will pay Grant Thornton Corporate Finance Pty Limited a total of $55,000 for these services. Subsequently, fees will be charged in accordance with normal charge out rates. During the 24 months preceding lodgement of this Prospectus with ASIC, Grant Thornton NSW has received approximately $15,000 for other accounting services provided to the Company.

Steinepreis Paganin has acted as the solicitors to the Company in relation to the Offer and has been involved in due diligence enquiries on legal matters. The Company estimates it will pay Steinepreis Paganin $40,000 for these services. Subsequently, fees will be charged in accordance with normal charge out rates. During the 24 months preceding lodgement of this Prospectus with ASIC, Steinepreis Paganin has received $30,000 for other legal services provided to the Company.

9.5 Consents

Each of the parties referred to in this section:

(a) does not make, or purport to make, any statement in this Prospectus other than those referred to in this section; and
(b) to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any part of this Prospectus other than a reference to its name and a statement included in this Prospectus with the consent of that party as specified in this section.

Grant Thornton Corporate Finance Pty Limited has given its written consent to being named as Investigating Accountant to the Company in this Prospectus and to the inclusion of the Investigating Accountant’s Report in Section 6 in the form and context in which the report is included. Grant

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Thornton Corporate Finance Pty Limited has not withdrawn its consent prior to lodgement of this Prospectus with ASIC.

Grant Thornton NSW has given its written consent to being named as Auditor to the Company in this Prospectus. Grant Thornton NSW has not withdrawn its consent prior to lodgement of this Prospectus with ASIC.

Steinepreis Paganin has given its written consent to being named as the solicitor to the Company in this Prospectus. Steinepreis Paganin has not withdrawn its consent prior to the lodgement of this Prospectus with ASIC.

Security Transfer Registrars has given its written consent to being named the Company’s Share Registry in this Prospectus and has not withdrawn its consent prior to lodgement of this Prospectus with ASIC.

9.6 Restricted Shares

ASX has indicated that certain existing security holders may be required to enter into agreements that restrict dealings in Shares held by them. These agreements will be entered into in accordance with the Listing Rules.

9.7 Expenses of the Offer

The total expenses of the Offer are estimated to be approximately $432,593 and are expected to be applied towards the items set out in the following table:

Item of expenditure	Amount
	($)
ASIC fees	2,010
ASX fees	60,583
Advisers’ fees	185,000
Design, printing and promotion	35,000
Other expenses	150,000
Total	432,593

In addition to the above, the Company may pay commissions of up to 5% (exclusive of goods and services tax) of amounts subscribed to any Australian Financial Services licensee in respect of valid applications lodged and accepted by the Company and bearing the stamp of the Australian Financial Services licensee. On the basis of raising $7,000,000, these fees could total $350,000.

9.8 Litigation

As at the date of this Prospectus, the Company is not involved in any legal proceedings and the Directors are not aware of any legal proceedings pending or threatened against the Company.

9.9 Current Shareholders

The Company currently has approximately 353 Shareholders, with no single Shareholder holding greater than 15.74% of the issued Shares.

The majority of these Shareholders subscribed for securities in the Company pursuant to a prospectus and supplementary prospectus dated 8 June and 20 July 2007, respectively, and paid $0.16 per Share.

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PROSPECTUS 2007

9.10 Electronic Prospectus

Pursuant to Class Order 00/044, ASIC has exempted compliance with certain provisions of the Corporations Act to allow distribution of an electronic prospectus and electronic application form on the basis of a paper prospectus lodged with ASIC, and the publication of notices referring to an electronic prospectus or electronic application form, subject to compliance with certain conditions.

If you have received this Prospectus as an electronic Prospectus, please ensure that you have received the entire Prospectus accompanied by the relevant application forms. If you have not, please email the Company at [email protected] and the Company will send you, free of charge, either a hard copy or a further electronic copy of the Prospectus or both. Alternatively, you may obtain a copy of the Prospectus from the Company’s website at www.jatoil.net.

The Company reserves the right not to accept an application form from a person if it has reason to believe that when that person was given access to the electronic application form, it was not provided together with the electronic Prospectus and any relevant supplementary or replacement prospectus or any of those documents were incomplete or altered.

9.11 Taxation

The acquisition and disposal of Shares in the Company will have tax consequences, which will differ depending on the individual financial affairs of each investor. All potential investors in the Company are urged to obtain independent financial advice about the consequences of acquiring Shares from a taxation viewpoint and generally.

To the maximum extent permitted by law, the Company, its officers and each of their respective advisors accept no liability or responsibility with respect to the taxation consequences of subscribing for Shares under this Prospectus.

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10 Directors’ authorisation

This Prospectus is issued by the Company and its issue has been authorised by a resolution of the Directors.

In accordance with Section 720 of the Corporations Act, each Director has consented in writing to the lodgement of this Prospectus with ASIC.

==> picture [189 x 40] intentionally omitted <==

Michael Taverner

EXECUTIVE CHAIRMAN

FOR AND ON BEHALF OF JATOIL LIMITED

JATOIL LIMITED

PROSPECTUS 2007

11 Glossary

A$ or $ means an Australian dollar.

Agronomy means the science and economics of crop production.

Application Form means the application form accompanying this Prospectus relating to the Offer.

ASIC means the Australian Securities & Investments Commission.

ASTC means ASX Settlement and Transfer Corporation Pty Limited.

ASX means ASX Limited (ABN 98 008 624 691) or the Australian Securities Exchange (as the context requires).

AWST means Australian Western Standard Time, Perth, Western Australia.

Biodiesel means a diesel-like fuel produced from edible or non-edible vegetable oils, used cooking oils or tallow.

Biofuel means any fuel made from non-fossil organic matter and includes biodiesel and ethanol.

Board means the board of Directors as constituted from time to time.

Business Day means a week day when trading banks are ordinarily open for business in Perth, Western Australia.

Capital Raising means the proposed raising of a minimum of $7,000,000 under this Prospectus.

CHESS means Clearing House Electronic Sub-register System, which is operated by ASTC, a wholly owned subsidiary of ASX.

Company means Jatoil Limited (ABN 31 122 826 242).

Closing Date means the closing date of the Offer as set out in Section 2.3.

Constitution means the constitution of the Company.

Corporations Act means the Corporations Act 2001 (Cth).

Directors means the directors of the Company at the date of this Prospectus.

Director Option means an option to acquire a share on the terms set out in Section 9.1.3 of this Prospectus.

Exposure Period means the period of seven days after the date of lodgement of this Prospectus, which period may be extended by ASIC by not more than seven days pursuant to Section 727(3) of the Corporations Act.

Feedstock means vegetable oils (including but not limited to rapeseed, jatropha, soy, sunflower, coconut, and palm oil), cooking oils and tallow (the fat produced from the rendering process) used as input to the biodiesel refining process.

GAAP means Generally Accepted Accounting Principles, a common set of accounting principles, standards and procedures.

Glycerine means a co-product of the biodiesel refining process, commonly used in soaps and cosmetics.

ha means hectares, whereby one hectare equals 10,000 square metres.

Jatoil means Jatoil Limited (ABN 31 122 826 242).

Jatropha means Jatropha curcas , a tree that is native to South America, but widely planted in South and Central America, Africa and Asia.

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Listing Date means the date on which the Company is admitted to the Official List.

Listing Rules means the official listing rules of ASX.

ML means megalitres.

Mt means megatonnes.

Offer means the offer of Shares pursuant to this Prospectus as outlined in Section 3.1 of this Prospectus.

Official List means the Official List of ASX.

Official Quotation means official quotation by ASX in accordance with the Listing Rules.

Option means an option to subscribe for a Share subject to the terms and conditions set out in Section 9.1.2 of this Prospectus.

Prospectus means this prospectus.

R&D means research and development.

Share means a fully paid ordinary share in the capital of the Company.

Shareholder means a holder of Shares.

Share Registry means Security Transfer Registrars.

Transesterification means a process in which vegetable oil reacts with methanol or ethanol to produce biodiesel and glycerine.

Trigger Event means:

(a) the despatch of a notice of meeting to consider a scheme of arrangement between the Company and its creditors or members or any class thereof pursuant to Section 411 of the Corporations Act; or
(b) the date on which a change in control of the Company occurs.

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APPLICATION FORM JATOIL LIMITED

ABN 31 122 826 242

The securities to which this application form ( Application Form ) relates are fully paid ordinary shares ( Shares ) in the capital of Jatoil Limited ( Company ). A prospectus containing information regarding an investment in Shares was lodged with the Australian Securities and Investments Commission on 8 November 2007 ( Prospectus ). It is advisable to read the Prospectus before applying for Shares. Any person who gives another person access to the Application Form must at the same time and by the same means give the other person access to the Prospectus. While the Prospectus is current, the Company will send paper copies of the Prospectus and the Application Form to any person on request and without charge.

PLEASE READ ALL INSTRUCTIONS ON THE REVERSE OF THIS FORM

Full name (PLEASE PRINT) Title, Given Name(s) and Surname or Company Name

Joint Applicant 2 or

Joint Applicant 3 or

Postal Address (PLEASE PRINT) Street number and name

City, suburb or town	Applicant2 Application money enclosed (at $0.20 perShare)	State Applicant 3	Postcode

ABN, TFN or exemption Applicant1 Numberofshares appliedfor

		CHESSHINorexisting SRN(where applicable)

I/We, whose full name(s) and address appear above, hereby apply for the number of Shares shown above (to be allocated to me/us by the Company in respect of this Application) under the Prospectus on the terms set out in the Prospectus.

Cheque details Cheque1drawer Bank BSBorbranch Amount ofcheque A$ Cheque1drawer Contact details Telephone ( ) Broker’s stamp Broker’s companyname (where applicable)	Cheque2drawer

	Bank

	BSBorbranch

	Amount ofcheque
	A$
	Cheque2drawer

	Facsimile
	( )

GUIDE TO THE APPLICATION FORM

Application for Shares

Cheque Details

Make cheques payable to ‘ Jatoil Limited—Share Offer Account ’ in Australian currency and cross them ‘ Not Negotiable ’. Cheques must be drawn on an Australian Bank. The amount of the cheque(s) should agree with the amount shown on the Application Form.

The Application Form must be completed in accordance with the instructions included in the Prospectus.

Name of Applicant

Write the Applicant’s full name. This must be either an individual’s name or the name of a company. Refer to the bottom of this page for the correct form of registerable title. Applications using an incorrect form of registerable title may be rejected.

Cheques will be processed on the day of receipt. Sufficient cleared funds must be held in your account as cheques returned unpaid may not be represented and may result in your Application being rejected. Pin (do not staple) your cheque(s) to the Application Form. Cash will not be accepted. Receipt for payment will not be forwarded.

Name of Joint Applicants or Account Designation

Up to three joint Applicants may register. If applicable, provide details of the account designation in brackets. Refer to the bottom of this page for instructions on the correct form of registerable title.

Declaration

This Application Form does not need to be signed. By lodging this Application Form and a cheque for the application money, you hereby:

Address

apply for the number of Shares specified in the Application Form or such lesser number as may be allocated by the Directors;

Enter your postal address for all correspondence. If the address is not within Australia, specify the country after the city, suburb or town.

agree to be bound by the constitution of the Company;
authorise the Directors of the Company to complete or amend this Application Form where necessary to correct any errors or omissions;

Contact Details

Enter a contact name and daytime telephone number so that the Company can contact you if there are any problems with your application.

acknowledge that you have received a copy of the Prospectus attached to this Application Form or a copy of the Application Form before applying for the Shares; and

CHESS HIN or existing SRN Details

The Company participates in CHESS. If you are already a participant in this system, you may enter your existing CHESS HIN. If you are an existing shareholder with an issuer sponsored account, you may enter your SRN. If you leave this section blank, you will receive a new issuer sponsored account and statement.

acknowledge that you will not provide another person with this Application Form unless it is attached to or accompanied by the Prospectus.

If an applicant has any questions on how to complete this Application Form, please telephone Security Transfer Registrars Pty Ltd on (08) 9315 2333.

Lodgment of Application

Cheques and completed Application Forms should be forwarded, to arrive no later than 5.00pm on 30 November 2007 (or such other date as is determined by the Directors) to:

Jatoil Limited or Jatoil Limited c/- Security Transfer Registrars c/- Security Transfer Registrars PO Box 535 770 Canning Highway APPLECROSS WA 6953 APPLECROSS WA 6153

CORRECT FORMS OF REGISTRABLE TITLE

Only legal entities are allowed to hold securities. Each Application Form must be in the name(s) of one or more natural persons, companies or other legal entities acceptable to the Company. At least one full given name and a surname is required for each natural person. Application Forms cannot be completed by persons under 18 years of age. Examples of the correct form of registrable title are set out below.

Type of investor	Correct formof registration	Incorrect formof registration
Individual	Mr John Alfred Smith	J A Smith
Use given names in full, not initials
Company	ABC Pty Ltd	ABC P/L or ABC Co
Use the company’s full title, not abbreviations
Joint holdings	Mr Peter Robert Williams &	Peter Robert &
Use full and complete names	Ms Louise Susan Williams	Louise S Williams
Trusts	Mrs Susan Jane Smith	Sue Smith Family Trust
Use the trustee(s) personal name(s)
Deceased estates	Ms Jane Mary Smith &	Estate of late John Smith
Use the executor(s) personal name(s)	Mr Frank William Smith	or
		John Smith Deceased
Minor (a person under the age of 18)	Mr John Alfred Smith	Master Peter Smith
Use the name of a responsible adult with an appropriate designation
Partnerships	Mr John Robert Smith &	John Smith and Son
Use the partners personal names	Mr Michael John Smith

Long names	Mr John William Alexander	Mr John W A Robertson-Smith
	Robertson-Smith
Clubs/unincorporated bodies/business names	Mr Michael Peter Smith	ABC Tennis Association
Use office bearer(s) personal name(s)
Superannuation funds	Jane Smith Pty Ltd	Jane Smith Pty Ltd Superannuation
Use the name of the trustee of the fund		Fund

12 Corporate directory

Directors

Michael Taverner (Executive Chairman) Ross Kestel (Non-Executive Director) Tom Hancock (Non-Executive Director)

Company Secretary (part-time) Emmanuel Correia

Australian Business Number 31 122 826 242

Registered and Principal Office World Tower—Commercial Suites Level 16, Suite 1602 87–89 Liverpool Street SYDNEY NSW 2000 Telephone: (02) 9937 2736 Facsimile: (02) 9283 5811

Email: [email protected] Web: www.jatoil.net

Auditor Grant Thornton NSW Level 17 383 Kent Street SYDNEY NSW 2000

Investigating Accountant Grant Thornton Corporate Finance Pty Limited Level 17 383 Kent Street SYDNEY NSW 2000

Solicitors to the Company Steinepreis Paganin Lawyers & Consultants Level 4, Next Building 16 Milligan Street PERTH WA 6000

Share Registry Security Transfer Registrars 770 Canning Highway APPLECROSS WA 6153 Telephone: (08) 9315 2333 Facsimile: (08) 9315 2233

AI assistant

JATCORP LIMITED — Capital/Financing Update 2007

65154_rns_2007-11-25_feff2452-1ca8-45e1-8c04-9702e050ed1f.pdf

Prospectus

Important notice

Important information

Exposure period

Summary of important dates

Web site—electronic prospectus

Key information

Investment highlights

Sound business strategy

Investment risks

While the Board is confident of the success of the Company, an investment in Shares should be considered a speculative investment.

Contents

1 Executive Chairman’s letter

Dear investor,

2 Investment overview

2.1 Important notice

2.2 Objectives

2.3 Indicative timetable

2.4 Purpose of the Offer and use of proceeds

2.5 Capital structure

Notes

2.6 Restricted securities

3 Details of the offer

3.1 The Offer

3.2 Applications

3.3 Oversubscriptions

3.4 Allotment

3.5 Minimum subscription

3.6 ASX listing

3.7 Applicants outside Australia

3.8 Underwriter

3.9 Commissions on Application Forms

3.10 CHESS

3.11 Risk factors

3.12 Privacy statement

3.13 Financial forecasts

4 Business summary

4.1 Company overview

4.2 Technical background

4.2.1 Biodiesel

4.2.2 Jatropha

4.3 The biodiesel market

4.3.1 Market overview

4.3.2 European market

4.3.3 American market

4.3.4 Asian market

4.4 Projects

4.4.1 Overview of projects

4.4.2 PT Biodiesel Austindo

4.4.3 Biodiesel Australia Limited

4.4.4 Potential acquisitions

4.5 Business strategy

4.5.1 Strategy overview

(b) Biodiesel Australia, a company with expertise in biodiesel production.

4.5.2 Partnerships and agreements

4.5.3 Carbon credits

4.6 Social and ethical responsibility

4.7 Management structure

4.8 Key personnel

Michael Taverner MAGRICSCI PHD MAICD FAIAST

Tony Crimmins BE ME MBA GRADDIP (MARKETING)

BUSINESS DEVELOPMENT MANAGER

David Roche BE BA MSC MIEAUST

Derek Bolling BBUS MBA FCPA FCIS

Kevin Parker

Graham Brown BSC

AGRONOMIST

Erliza Hambali BSC MSC PHD

AGRONOMIST

5 Directors and corporate governance

5.1 Directors

Ross Kestel BBUS ACA FCPA AICD

Tom Hancock BSC MIEAUST CPENG

5.2 Company secretary

Emmanuel Correia BBUS ACA

5.3 Corporate governance

5.3.1 Board of Directors

JATCORP LIMITED Capital/Financing Update 2007