LARK DISTILLING CO. LTD — Capital/Financing Update 2007

Mar 20, 2007

Monter International Limited ABN: 62 104 600 544

Level 6, 55 York Street Sydney NSW 2000 Australia

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

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

21 March 2007

[#insert shareholder's address]

Dear Shareholder,

Montec International Limited Rights Issue

Montec International Limited (Montec or Company) lodged a prospectus with the Australian Securities and Investments Commission (ASIC) and the Australian Securities Exchange (ASX) on 20 March 2007 in relation to its pro-rata renounceable rights issue to raise approximately \$3.7 million from the issue of 74,316,002 shares (assuming no options are exercised before the record date) (Rights Issue). A copy of the prospectus is available on the ASX website or the Company website www.montec-international.com.au.

The prospectus contains an offer to holders of ordinary shares in the Company with registered addresses in Australia and New Zealand to subscribe for fully paid ordinary shares in Montec on the basis of 1 new share along with 1 ASX listed option for every share held on the record date at a subscription price of \$0.05 per share, payable in full upon application. Fractional entitlements will be rounded up to the nearest whole new share. Each attaching option will have an exercise price of \$0.10 and expiry date of 30 June 2008.

The offer applies to shareholders with registered addresses in Australia and New Zealand as at the record date, being 5.00pm (Sydney time) on 28 March 2007. Existing option holders will not be entitled to participate in the offer unless they have exercised their options and their shares have been issued on or before the record date. Notice of the offer was sent separately to option holders on 20 March 2007.

The Company considers it would be unreasonable to extend the offer to shareholders in other iurisdictions (being the United Kingdom, Thailand and Hong Kong) having regard to the small number of such shareholders, the small number and value of securities that would be offered in such jurisdictions and the costs of complying with legal and regulatory requirements in those jurisdictions. The entitlement that would otherwise have been offered to shareholders with a registered address outside of Australia and New Zealand will become part of the shortfall available for subscription by shareholders who wish to subscribe for shares in addition to their full entitlement.

The proceeds raised will be used to fund the Company's capital requirements, including financing the "in store" marketing drive for "dairypure" milk products in the Chinese market, providing working capital for the launch of "dairypure" yoghurts and ice creams, and providing for working capital needs arising from improving markets for Montec's business generally.

Purpose	ហេតាធារាកា Subscription	Maximum Subscription
Marketing "dairypure" milk products in the Chinese market	\$0.532 million	\$2.397 million
Launch of "dairypure" yoghurts and ice creams	\$0.500 million	\$1.000 million
Working capital	\$0.500 million	\$0.500 million
Offer costs	$$0.243$ million	\$0.394 million
Total	$$1.775$ million *	\$4.291 million*

The breakdown of the use of the funds will be as follows:

* The Company has also received commitments to subscribe for 11,500,000 million shares at \$0.05 per share, with 11,500,000 million attaching options, to raise an additional \$575,000 from sophisticated investors (Placement). The Placement is subject to shareholder approval in a general meeting to be held on 23 April 2007. If shareholders do not approve the Placement these amounts will be reduced by \$575,000 (and the other amounts reduced proportionately). Shareholder approval is not required for the Rights Issue.

The effect of the Rights Issue on the capital structure of the Company is set out in the table below:

Description	Shares (million)	Percentage	Options: $(m$ illion $)$	Percentage
Shares and Options currently on issue	74.3	46.4%	4.6	5.1%
Maximum number of New Shares and Options to be issued under Placement	11.5	7.2%	11.5	12.7%
Maximum number of New Shares and Attaching Options to be issued under Rights Issue	74.3	46.4%	74.3	82.2%
Maximum number of Shares and Options at completion of Placement and Rights Issue	160.1	$100\%$	90.4	100%

The above assumes no options are exercised prior to the record date and does not include 20.8 million options proposed to be issued to directors and senior management, some of which are subject to approval at the general meeting of the Company on 23 April 2007 (as detailed in the prospectus).

The Prospectus and the accompanying Entitlement and Acceptance Form will be mailed out on 3 April 2007 to shareholders registered as at the record date. If you are in doubt as to the course you should follow, you should consult your stockbroker, solicitor, accountant or other professional adviser immediately.

Indicative Timetable*

The key dates for the Rights Issue are set out in the table below.

Event	Date
Announcement of Offer	15 March 2007
Lodgement of Prospectus	20 March 2007
Trading in Rights commences (shares quoted on an ex basis)	22 March 2007
Record Date to determine entitlements under the Rights Issue	28 March 2007
Prospectus and Entitlement and Acceptance Forms Despatched	3 April 2007
Rights trading ceases	12 April 2007
Closing Date for acceptance and payment of subscription price	19 April 2007
Shareholder Meeting to approve Placement	23 April 2007
Issue of Placement Shares	23 April 2007
Shortfall notification	24 April 2007
Allotment and despatch of holding statements for New Securities	30 April 2007
Normal trading of New Shares on the ASX	30 April 2007

*All dates are indicative and subject to change. Montec reserves the right to amend the timetable without prior notice. Any extension of the Closing Date will have a consequential effect on the date of issue of the new securities.

Holdings on different registers (or subregisters) will be aggregated for calculating entitlements.

Patersons will be paid a maximum total of \$317,448 for partially underwriting and managing the Rights Issue and Placement.

In order to be equitable to all shareholders in Montec, the directors have determined that the Rights Issue will be renounceable as this may allow shareholders to realise value through the market for any rights they do not wish to exercise. This means that if you do not wish to take up your rights you can sell all or part of your entitlement, subject to market demand, through the financial market operated by ASX or by way of an off market transfer. Trading of rights on the financial market operated by ASX is expected to commence on 22 March 2007. Sale of your rights through ASX is only capable of being completed on or before 12 April 2007 when rights trading ceases. Your rights may have value. You should carefully consider how to deal with your rights (rather than allow them to lapse). If you do not wish to take up any part of your entitlement to shares and options, you are not required to take any action, in which case you will receive no new shares and your rights will lapse.

Like all investments in the share market, there pertains a certain amount of risk. The directors urge you to carefully read the prospectus and the accompanying Entitlement and Acceptance Form in conjunction with all publicly available information relating to the Company before deciding whether to subscribe for new shares.

The offers of the shares and attaching options will be made in the prospectus. Eligible shareholders who wish to acquire the shares and options will need to complete the Entitlement and Acceptance form that will accompany the prospectus.

If you have any questions in respect of the rights issue please contact the Company Secretary, Mr. Nicholas Geddes on (02) 9252 1933.

Yours faithfully

Terry Cuthbertson Chairman Montec International Limited