LARK DISTILLING CO. LTD — Fund Information / Factsheet 2005

Sep 29, 2005

MontecNews

ISSUETHREE AUGUST 2005

ATIOTETROMII THE CHAIRVAN INSIDE THIS ISSUE National Product Rollout
Commences in China dairyoure
The New Generatio
Fat-Modified Milk

orosiyat Roqovar

Dear Shareholder.

Welcome to issue three of Montec News.

The last three months have proven very rewarding for Montec, with some excíting goals being realised particularly in relation to our activities in China.

Most significantly, the first stage of the national product rollout within China commenced in August, with the first delivery of Montec's Meng Tai brand to the National Agency Network (NAN). destined for the southern city of Shenzhen. This initial shipment of 20 metric tonnes consisted of plain monounsaturated milk, as well as strawberry, melon and chocolate flavours. A report on this important milestone and its anticipated follow-on is contained in this edition.

From a marketing perspective, we also provide details about the importance of Montec's cross-branding strategy in China and how this will enhance awareness of our brands within the various audience groups. Plus, there's an update on the proven health benefits our product provide to consumers.

Finally, as shareholders will no doubt understand, part of the monounsaturated milk manufacturing process involves the removal of saturated fat from raw milk. Normally, this milk fat would be treated as a waste product, the disposal of which would have represented a cost to Montec. However, under a recent agreement, this is about to change. Our report in this issue explains why.

Our next communication with you will be in the form of the Montec 2005 Annual Report, which will include an invitation to attend the AGM, scheduled for 18th November. I look forward to speaking with you then.

Yours sincerely,

Terry Cuthbertson Chairman

NATIONAL PRODUCT ROLLOUT IN CHINA COMMENCES

Montec International Limited is pleased to announce that the first stage of its national product rollout in China commenced in August, with the first delivery of Meng Tai branded product to the southern city of Shenzhen.

This inaugural delivery of 20 metric tonnes of finished Meng Tai product, sold to the National Agency Network (NAN) for the Shenzhen market, is destined solely for supermarket distribution. At last count, the Meno Tail product was on retail shelves in 22 of the 78 major stores in Shenzhen city that are on the stock roster.

The initial shipments for this market are being processed under arrangements

with Tianjin Haihe Dairy. Shipment volumes and repeat order systems are strictly managed to ensure only freshproduct is on the shelves at all times.

Due to the high demand for western brands, partícularly in northern Chinese cíties, Montec's international brand, dairypure^ne, will be produced in Ultra Heat Treated (UHT) form by the end of the year for delivery to Shanghai, and then to Beijing. The initial stores in Shanghai that are expecting deliveries of dairypure™ against firm orders from agents and scheduled production are Carrefour, Metro Hymall, Walmart, Citysupermarket, Pines, Parkson, Le-Go, Ou Shang, Mai De Long, Shì Dai, Qian Ja MontecNews

Hui, Shan Mu Shi and Le Ke Duo. All of these stores represent chains, so each comprises multiple outlets.

The initial order to commence stocking these stores is 60 metric tonnes and comprises only two SKUs, 1 litre and 250ml

plain UHT milk. This will be followed shortly by UHT flavoured milk and, in the new year along with fresh milk in 1.5 litre PET plastic bottles as well as fresh yoghurt under the dairypure¹ brand. These products will be processed principally by Beijing Sanyuan Foods (BSF).

Once these two major cities and their surrounding regions have distribution arrangements in place, they will represent more than 50% of Montec's identified market and sales potential.

dairvoure³⁰ and Mend Tai: Cross-promoting the two brands.

While dairypure™ will be Montec's flaoship brand in Shanghai and Beijing, Meng Tai has been introduced in the southern China city of Shenzhen following its introduction in Oingdao previously. This dual-brand strategy allows Montec to effectively target consumers in the various territories through brand development and market positioning.

In the interest of building strong brand awareness and as a foundation for the expanding product range, Montec crosspromotes both its brands on all of its packaging, dairypure³⁴ packs feature the Meng Tai branding in Chinese characters and Meng Tai packs also bear the dairypure¹³⁴ logo.

A range of Montec's dairypure^t™ packaging. The Chinese characters alongside the dairypure^rM logo say "Meng Tai" as part of Montec's cross-brand promotion strategy

In addition, fresh milk and UHT milk are displayed separately within the supermarket environment in China, in much the same way as they are in Australia. Fresh milk requires refrigeration, whereas UHT occupies non-refrigerated shelf space.

The physical separation of product facings allows Montec the opportunity for dual location promotion within a single outlet, bringing additional credibility through the ability to offer wider product choice to customers.

BY-PRODUCT RECOVERY

An important part of the manufacturing process used in the application of Montec's monounsaturated technology is the removal of the saturated animal fat from the raw milk input. The resultant fat is a waste material which, under normal circumstances, would be disposed of at Montec's cost.

Under contract processing arrangements now in place with Beijing Sanyuan Foods (BSF), however, this milk fat will be purchased by BSF rather than discarded, creating an unexpected but entirely welcome additional income stream for the company.

Montec International Limited ACN: 104 600 544

Level 6 55 York Street Sydney NSW 2000 Australia

Head Office Phone: + 61 2 9299 0011 Email: montec@montec-international.com.au

Montec Investor Relations

Emails: investors@montec-international.com.au

daliyoure^uw. THE NEW GENERATION FARMODITED MIK

dairypure^tte, to be Montec's flagship. brand in the northern Chinese cities of Shanghai and Beijing, is a lat-modified milk, processed using Montectechnology in a standard dairy. processing environment. It combines natural raw materials including local fresh milk, with an imported puresunflower oil that contains a highconcentration of monounsaturated latty acids.

dairypure^to benefits from three essential. elements. low fat (1.3%) which is nearly. all monounsaturated, low saturated far-(dailyoure^tivitys whole milk: 0.3% vs. 2.0%) and low cholesterol (dairypureTM. vs whole milk: <3mg/100ml vs 14mg/100ml), dairypure^twi is fortified. with vitamins A and D, the essential fat soluble vitamins, and still provides the creamy taste and goodness that consumers expect from regular milk.

Replacing the saturated animal fatwith monounsaturated fat creates a product that has been shown to have beneficial effects on the management. of blood lipids, blood sugar levels and the prevention and control of cardiovascular disease.

Cardiovascular disease is a leading cause of death. In 1999, it reportedly contributed to one third of all deaths. worldwide. Moreover, by 2010, authorities' estimates suggest that cardiovascular disease will be the leading cause of death in developing. countries. National quidelines in several countries, including China, recommenda reduction in the intake of fats, with particular focus on targeting the reduction of saturated fats. With the healthy daily formula contained in dairypure^tiv, Montec is able to provide. dairy processors with a practical and effective means of responding to the health requirements of their consumers.