LARK DISTILLING CO. LTD — Capital/Financing Update 2010

Oct 21, 2010

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Montec International Limited ABN: 62 104 600 544

91-95 Victoria Road PO Box 991 Rozelle NSW 2039 Australia

montec@montec-international.com www.montec-international.com.au Telephone:+61 2 8752 7866 Facsimile:+61 2 8752 7860

ASX & MEDIA RELEASE

20[th] October 2010

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

UPDATE ON CHINA BUSINESS STRATEGY

The directors of Montec International Limited (ASX: MTI) provide this status report of activities undertaken by the Managing Director, Andrew Teoh since his appointment in April 2010. As previously advised, Andrew was appointed to drive the Company’s business strategy of establishing partners, primarily in China, to sell and market through their established distribution networks premium quality consumer food products and ingredients sourced in Australia.

2010 China Market Study

Mr. Teoh’s first priority was to establish a clear understanding of existing partnership arrangements within China and to identify new potential channel partners, with a view to gathering an understanding of their product requirements and the potential to source these from Australian and New Zealand manufacturers. During May and June meetings were conducted with a number of wholesalers and manufacturers, stretching from Beijing, Hubei, and Shanghai, to Guangzhou, Hong Kong and Shenzhen. These initial discussions confirmed the view that there is compelling strategic opportunity in securing new products upon which to build a trading operation in China around a range of imported quality food and beverage products.

Product and Supply Chain Study

Between July and August 2010, Mr Teoh revisited existing suppliers as well as potential new suppliers in Australia and New Zealand. The main purpose was to secure allocation of existing dairy ingredient products, progress the manufacture of our mono-ingredient formula and to source the supply of new, unique products based on the demand identified during the May/June China market study. These negotiations have resulted in a broadening of the product portfolio which has now been defined as MTI’s core product offering, a summary of which is provided herein.

Dairy ingredients : These include Full Cream Ingredient Milk Powders, Skim Milk Ingredient Milk Powders and associated dairy products. These products are

generally internationally traded commodities, sold into markets with multiple suppliers, and fluctuating supply/price conditions. We have broadened our supply partners within Australia and now New Zealand so as to improve allocation and to maintain optimum price competitiveness.

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Value- added ingredients : Through co-operation with our supply partner in Australia, MTI has completed pilot plant testing and produced commercial quality samples of our proprietary formula Mono-unsaturated Ingredient Milk Powders. Samples have been supplied to several potential customers in China for testing and evaluation. These products, by substituting saturated fats with monounsaturated fats, allow MTI customers to deliver a healthier ingredient proposition as the base to finished consumer products, including "Growing up powders" and "Specialty Health Products" and the prospect of improved profit margins over standard products. Initial responses to these samples and the indicative prices have indicated a continued interest in the product, although some further product development and refining of formulations to meet specific customer needs may be required. These investigations are currently underway with our supply partner.

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Consumer Products : MTI has secured supply arrangements for a range of proprietary branded food products. In addition to MTI’s own “dairypure” brand UHT monounsaturated milk and infant formula powder these include quality Australian wines to be marketed under MTI’s exclusive “Red Country” label, super premium “Serendipity” ice cream, “Manuka” Honey and “Medical Manuka”, plus quality confectionary products of “Cocoa Farm” wine infused chocolates. The selection of these products and completion of supply arrangements for the specific brands come directly from the discussions held with potential wholesale partners in China during May and June.

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New Corporate Identity and Product offering

During the month of September efforts were directed towards the production of the new product catalogue and new Company website www.montecinternational.com.au as a base to future marketing activities. These provide prospective customers an overview of the Company and guide to the complete product range, including supply and pricing details, in both English and Mandarin.

In October, Mr Teoh returned to China to revisit potential partners and further detail our new range of products. Since assuming his role in MTI, Andrew has refined and implemented the previously announced business strategy of realigning the business model by diversifying our product range beyond dairy products, formalising supply arrangements both in Australia and new Zealand and achieving some initial expressions of interest from a wide range of wholesalers, distributors and dairy manufacturers in China. Our realigned business model will not bear the high entry cost of direct selling to retail channels and will be supported by our suppliers’ objective to gain entry to China's growing food and beverage industry. The company plans to extend this business model to explore partnerships with distribution channels in countries throughout South East Asia.

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The directors recognise and support the considerable efforts and progress made by Andrew in implementing the revised business strategy since his appointment in April. In addition, management and the Board have actively sort and investigated opportunities for merger or acquisition, both to complement and strengthen the China business strategy, or as an alternate direction for the Company. Several of these opportunities are currently the subject of further investigation, the results of which will be advised as appropriate.

Terry Cuthbertson Andrew Teoh Chairman Managing Director Montec International Limited Montec International Limited Tel: +61 2 8752 7866 Tel: +61 2 8752 7866

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