LARK DISTILLING CO. LTD — Capital/Financing Update 2008

Nov 12, 2008

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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

ASX & MEDIA RELEASE

13 November 2008

The Manager Company Announcements Office Australian Securities Exchange Limited 20 Bridge Street SYDNEY NSW 2000

CHINA POSITION UPDATE AND REVIEW OF OPPORTUNITIES

The Directors of Montec International Limited (ASX: MTI) provide the following review of its business operations in China and a general update of recent activities. The temporary disruption to, and general slowdown of the dairy industry in China, as a result of the milk contamination issue, has underlined the need to undertake a reorienting of the marketing model and implementation of cost reduction measures already initiated prior to the emergence of this issue. The longer term underlying growth of the industry and, in particular, the growth of premium dairy products continues to present opportunities which are currently being pursued. In addition, opportunities to develop strategic partnerships which offer the opportunity to diversify and strengthen the business have been initiated and are currently being progressed.

Montec’s products get the ‘all clear’

As previously advised to the market on 29[th] September, neither the licenced ice cream products, nor the UHT milk and yoghurt drink products provided by contract suppliers in China have been implicated in the milk contamination contagion which continues to impact the dairy industry in China. The sudden decline in consumer confidence for dairy products has however, resulted in a general slowdown of sales across the dairy sector, with most adverse impact being on UHT milk and infant formula powders.

In addition to the actions already taken to monitor the supply chain and milk processing facilities throughout China, in mid-October, the regulatory authorities also enacted a general market recall and mandatory testing of all UHT milk products produced prior to mid-September, 2008. Although Montec’s products

have, once more been cleared of any contamination, the industry-wide recall, on top of the general slowing of industry sales, has had an impact on our sales efforts, with some stores refusing to restock recalled products or adopting a wait-and-see attitude toward the situation. In response, we have redoubled efforts already being implemented to re-align our business to a lower cost model, utilising wholesale and corporate sales channels and hence being less reliant on direct selling to retail channels.

Review of Operations

During July 2008, prior to the emergence of the contagion issue, management conducted a review of the sales and marketing model in China. This review concluded that, despite some success in developing direct selling to retail sales channels, the overall pace of growth and market penetration was not sufficient, on the existing resource base, to support the cost structure needed to sustain the direct selling approach and provide the returns necessary to build our business in the near term. As a result of this review in August and September 2008, management began implementing reductions in both retail selling and sales administration staff and to concentrate the business in Beijing, Jinhua and Hangzhou, while aligning sales efforts to selected wholesalers and corporate customers.

New opportunities emerging from China and Australia.

The market environment now emerging in China does provide some new opportunities to build on the current business structure and others are being looked at in Australia.

• Monounsaturated Milk Powder. During 2007 discussions were initiated with several companies in China regarding the licencing for local manufacture or direct supply of monounsaturated milk powders from Australia. These opportunities, based on both bulk supply and pre-packaged retail packs have gained greater impetus, moving negotiations towards completion of formal agreement for these companies to market premium powder products based on Australian sourced monounsaturated milk powders.

• UHT milk Export. The current market environment has become increasingly favourable to sourcing our monounsaturated UHT milk from Australia and marketing a premium, value-added product through both the current wholesale channels and previously identified customer opportunities. Initial investigations of this opportunity have proven to be encouraging and also identified other product opportunities appropriate to the organisation structure and distribution channels the Company now has established in China.

• Strategic Partnership. Management and the board have sought to identify opportunities for business expansion beyond the current product base and business model, in both China and Australia. These investigations recognise that the China business base also offers the opportunity of developing business partnerships, either through direct investment or acquisition. Such opportunities can utilise the business structure and trading relationships established in China, whilst expanding Montec’s overall business base and improving prospective returns to shareholders. Of those opportunities identified to date, negotiations are at an advanced stage

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with a Chinese based company with interests in both food catering supply and food retailing. A strategic partnership with this organisation offers the mutually beneficial potential to expand their existing product sourcing operations in Australia and expansion in China, potentially to include the distribution of Montec dairy products through their China distribution network. Directors are confident these arrangements can be concluded successfully in the near term.

In addition, management and the board have reached initial stages in identifying and entering into discussions with a number of Australian based food processing organisations, the nature of which will be briefed to shareholders at the appropriate time.

Terry Cuthbertson

Chairman

Montec International Limited

Tel: +61 2 9299 0011

Peter Herd

Managing Director Montec International Limited Tel: +61 2 9299 0011

Investor Relations & Media Enquires:

Rod North Bourse Communications Pty Ltd Tel: +61 3 9510 8309 Mob: +61 (0) 408 670 706

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ABOUT MONTEC INTERNATIONAL LIMITED (MTI)

Listed dairy products company, Montec International Limited holds certain rights to the manufacture and marketing of monounsaturated, cholesterol-free dairy products. The Company’s current focus is on China, where it is building its range of white and flavoured milks under the registered trademarks “dairypure” and “Meng Tai.” Planned outlet growth, brand development and extensions into monounsaturated ice cream, yoghurts and other products will provide a base for the company’s future growth. A range of yoghurt drinks for children under the brand “Bei Bei” was launched in late 2007 and, in 2008; a monounsaturated ice cream was introduced under a licencing arrangement with a leading Beijing-based ice cream company.

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