LARK DISTILLING CO. LTD — Interim / Quarterly Report 2011

Jul 28, 2011

Montec International Limited ABN: 62 104 600 544

==> picture [199 x 66] intentionally omitted <==

Level 4 Unit 3 436-484 Victoria Road, Gladesville NSW 2111 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

ACTIVITIES UPDATE

29 July 2011

The directors of Montec International Limited (ASX: MTI) provide this status report of the Company’s current operational and capital raising activities.

Further to the announcement of 24 December 2010, although the ability to actively pursue sales opportunities in China has been limited by financial resources, investigations are continuing regarding the use of the Company’s wholly owned subsidiary by a third party seeking to import and distribute Australian wines in China. In addition, the Company maintains the arrangement with Beijing Allied Faxi Food Co. Ltd, a subsidiary of the Beijing Sanyuan Group, whereby Faxi produces and markets monounsaturated ice cream under licence in China. In Australia, the Company continues to earn a royalty for Dairy Farmers brand “Farmers Best” monounsaturated milk sold under the licence held by Dairy Farmers. The Board has conducted investigations of several opportunities for business acquisitions, both within the food and beverage industry and unrelated to it and is presently pursuing investigations into several opportunities that may be of benefit to shareholders.

Interest in Bligh Mining Pty Ltd

As discussed during the Company’s Annual General Meeting presentation on 19 November 2010, a number of investment opportunities have been offered to the Company, including opportunities within the resources area. An opportunity that has arisen from these offers involves the acquisition of an indirect interest in Bligh Mining Pty Ltd (Bligh), the details of this acquisition are set out below.

In May 2011, the Company acquired a loan in the amount of $350,000 from Nebral Pty Ltd (Nebral) and Trandara Pty Ltd (Trandara). The funds acquired under this loan were advanced by the Company to Ellsar Investments Pty Ltd (Ellsar) for the purposes of Ellsar subscribing for 1,750,000 fully paid ordinary shares in the capital of Bligh. Ellsar is a special purpose vehicle that was established specifically for the purpose of investing in Bligh.

The terms of the loan arrangement between the Company and Ellsar (described further below) will allow the Company to acquire either all or part of the issued capital of Ellsar together with an indirect interest in the capital of Bligh.

m110729 ASX Announcement - Bligh Interest/FM

Bligh is a private company that was established to investigate and exploit mineral mining opportunities in the Republic of Indonesia. It currently holds operational licenses over two projects on the Indonesian island of Flores. The Directors of Bligh have stated that they intend to focus the company’s exploration strategy on these two projects with a view to exercising options to acquire the tenements, establishing a JORC Code 2004 compliant mineral resource estimate, establishing a mining operation and preparing for the exportation of acquired mineral resources. If Bligh is successful in these endeavours, it intends to conduct an initial public offering of its shares on the ASX.

The terms of each of the loan agreements are set out below.

Loan between Nebral, Trandara and the Company

The terms of the loan agreement between Nebral and Trandara are as follows:

• the loan amount must be repaid within 18 months of the date of the agreement;

• the loan amount will accrue interest at a rate of 8% per annum, calculated daily from the date the facility was advanced. The interest is payable quarterly in arrears;

• the Company may repay the loan amount by either:

• making cash repayments to Nebral and Trandara;

• subject to the Company obtaining all requisite regulatory approvals (including approvals required under the ASX Listing Rules and the Corporations Act 2001), issuing Nebral and Trandara shares in the Company at an issue price which is the lower of $0.0025 or if the Company carries out a pro-rata rights issue, the issue price of the shares being offered under that rights issue; or

• assigning all of the Company’s rights under the loan agreement and call option agreement it entered into with Ellsar (described below) to Nebral and Trandara.

Loan between the Company and Ellsar

The terms of the loan agreement between the Company and Ellsar are as follows:

• the loan amount must be repaid within 18 months (less 7 days) of the date of the agreement;

• the loan amount will accrue interest at a rate of 8% per annum, calculated daily from the date the facility was advanced. The interest is payable quarterly in arrears;

• the Company may require Ellsar to repay the loan amount by either:

• requiring Ellsar to issue the Company such number of shares as is required to satisfy the loan amount and any outstanding interest at a deemed issue price of $0.0000001 each; or

• exercising a call option to acquire all of the issued capital of Ellsar at a purchase price of $1.00.

Convertible Notes

The Company proposes to raise up to $1million via the issue of convertible notes to sophisticated and professional investors. The issue of the notes will be subject to the Company obtaining the prior approval of shareholders.

Page 2

m110729 ASX Announcement - Bligh Interest/FM

The funds raised from the issue of the notes will be applied towards the Company’s working capital requirements and new investment opportunities for the Company.

Terry Cuthbertson Chairman Montec International Limited Te: +61 2 8752 7866

Page 3

m110729 ASX Announcement - Bligh Interest/FM

Appendix 4C Quarterly report for entities admitted on the basis of commitments

Rule 4.7B

Appendix 4C

Quarterly report for entities admitted on the basis of commitments

Introduced 31/3/2000. Amended 30/9/2001, 24/10/2005.

Name of entity
Montec International Limited
ABN 62 104 600 544	Quarter ended (“current quarter”)
62 104 600 544	30 June 2011

Consolidated statement of cash flows

	Cash flows related to operating activities 1.1 Receipts from customers 1.2 Payments for (a) staff costs (b) advertising and marketing (c) research and development (d) leased assets (e) other working capital 1.3 Dividends received 1.4 Interest and other items of a similar nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Other (provide details if material) Net operating cash flows	Current quarter $A’000	Year to date (12 months) $A’000
		35 (27) - (4) - (24) - - - -	137 (240) (1) (5) - (241) 6 - - -
		(20)	(344)

• See chapter 19 for defined terms.

Appendix 4C Page 1

30/9/2001

Appendix 4C Quarterly report for entities admitted on the basis of commitments

	Current quarter $A’000	Year to date (12 months) $A’000
1.8 Net operating cash flows (carried forward)	(20)	(344)
Cash flows related to investing activities 1.9 Payment for acquisition of: (a) business (item 5) (b) equity investments (c) intellectual property (d) physical non-current assets (e) other non-current assets 1.10 Proceeds from disposal of: (a) business (item 5) (b) equity investments (c) intellectual property (d) physical non-current assets (e) other non-current assets 1.11 Loans to other entities 1.12 Loans repaid by other entities 1.13 Other (provide details if material) Net investing cash flows 1.14 Total operating and investing cash flows	- - - 4 - - - - - - (350) - -	- - - - - - - - - - (350) - -
	(346)	(350)
	(366)	(694)
Cash flows related to financing activities 1.15 Proceeds from issues of shares, options, etc. 1.16 Proceeds from sale of forfeited shares 1.17 Proceeds from borrowings 1.18 Repayment of borrowings 1.19 Dividends paid 1.20 Other – Capital raising cost Net financing cash flows	- - 350 - - -	70 - 350 - - -
	350	420
Net increase (decrease) in cash held 1.21 Cash at beginning of quarter/year to date 1.22 Exchange rate adjustments to item 1.20 1.23 Cash at end ofquarter	(16) 147 -	(274) 405 -
	**131 **	**131 **

• See chapter 19 for defined terms.

Appendix 4C Page 2

30/9/2001

Appendix 4C Quarterly report for entities admitted on the basis of commitments

Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the related entities

1.24 1.25	Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to the parties included in item 1.11	Current quarter $A'000
1.26	Explanation necessaryfor an understandingof the transactions
	Salary and superannuation paid to Executive Director of Montec International Limited.

Non-cash financing and investing activities

• 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

Not Applicable

• 2.2 Details of outlays made by other entities to establish or increase their share in businesses in which the reporting entity has an interest

Not Applicable

Financing facilities available

Add notes as necessary for an understanding of the position. (See AASB 1026 paragraph 12.2).

3.1 Loan facilities 3.2 Credit standby arrangements	Amount available $A’000	Amount used $A’000
	-	-
	-	-

• See chapter 19 for defined terms.

Appendix 4C Page 3

30/9/2001

Appendix 4C Quarterly report for entities admitted on the basis of commitments

Reconciliation of cash

Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.	Current quarter $A’000	Previous quarter $A’000
4.1 Cash on hand and at bank 4.2 Deposits at call 4.3 Bank overdraft 4.4 Other (provide details)	84	101
	47	46
	-	-
	-	-
Total: cash at end of quarter(item 1.22)	131	147

Acquisitions and disposals of business entities

5.1 Name of entity 5.2 Place of incorporation or registration 5.3 Consideration for acquisition or disposal 5.4 Total net assets 5.5 Nature of business	Acquisitions (Item 1.9(a))	Disposals (Item 1.10(a))
	Not applicable	Not applicable

Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act.

• 2 This statement does give a true and fair view of the matters disclosed.

Original signed 29 July 2011 Sign here: ............................................................ Date: .......................... (Company Secretary)

Print name: .............. NJV Geddes..........................

• See chapter 19 for defined terms.

Appendix 4C Page 4

30/9/2001

Appendix 4C Quarterly report for entities admitted on the basis of commitments

Notes

1. The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

2. The definitions in, and provisions of, AASB 1026: Statement of Cash Flows apply to this report except for the paragraphs of the Standard set out below.

3. 6.2 - reconciliation of cash flows arising from operating activities to operating profit or loss

4. • 9.2 - itemised disclosure relating to acquisitions • 9.4 - itemised disclosure relating to disposals • 12.1(a) - policy for classification of cash items • 12.3 - disclosure of restrictions on use of cash • 13.1 - comparative information

5. Accounting Standards. ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

6. See chapter 19 for defined terms.

Appendix 4C Page 5

30/9/2001