LARK DISTILLING CO. LTD — Capital/Financing Update 2006

Oct 3, 2006

Montec International Limited ABN: 62 104 600 544

Level 6, 55 York Street Sydney NSW 2000 Australia

montec@montec-international.com www.montec-international.com

Telephone: +61 2 9299 0011 Facsimile: +61 2 9299 1499

4 October 2006

ASX RELEASE

FIRST OUTPUT UNDER PRODUCT COLLABORATION AGREEMENT

Montec International Limited ("Montec") is able to advise of the production of 55 tonnes (55,000 litres) of the Company's "Dairy Pure" and "Meng Tai" brand monounsaturated UHT milk by Beijing Sanyuan Foods Co., Ltd ("BSF") in Beijing. This is the initial processing of milk by BSF under the recently completed Product Collaboration Agreement and provides startup inventory for distribution of the "Dairy Pure" brand by BSF through their established retail channels in Beijing and Shanghai, plus ongoing supply to the existing distribution channels, including those in Shenzhen and Qingdao. It is expected that the number of retail outlets will exceed 2,500 before calendar year-end.

The Company remains confident that, with appropriate funding, the previously advised near term availability target of 6,000 retail outlets by mid 2007 is achievable and planned consumer marketing support will grow sales volume in each of these outlets. The Montec distribution network co-ordinated by Montec's China agent MTR, now includes BSF's retail channels in Beijing and Shanghai to support Montec's sales development team and wider geographical coverage provided by the NAN. Equally important, the establishment of this distribution base for UHT milk provides the platform for extension into other dairy products.

At this time the pace of the rollout in China is constrained by the Company's working capital reserves, given the requirement under the agreement with BSF to fund pipe-line fill through its China agent Qingdao Meng Tai Rui Trading and Commercial Co., Ltd ("MTR") during the first six months of the roll-out. As indicated in the Company's ASX Release of 7 September 2006, the Company will require further funding as it pursues the exploitation of the China market through commercialization of its monounsaturated dairy technology in milk and the extension into other dairy products.

The Board will advise the market as further developments are made with the business, including the timing and nature of funding arrangements, as appropriate.

Ends
For Further enquiries:
Terry Cuthbertson	F
Chairman	Ŋ
02 9299 0011

Peter Herd Managing Director 02 9299 0011