TALIUS GROUP LIMITED — Capital/Financing Update 2012

Sep 3, 2012

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ASX ANNOUNCEMENT

4 September 2012

Update on the Acquisition of the Ortynytska Gas Project in Ukraine

Highlights

• First stage of acquisition complete with completion of due diligence on Epic Energy Ukraine Ltd and the execution of a Final Purchase and Sale Agreement for the acquisition of Celiastad

• Immediate re-entry proposition within a proven hydrocarbon belt with production over 13 different payzones

• Well site on trend with field with historical production of 134 BCF

• Advance to capitalize on current Ukraine gas price of USD11.80/ MCF

• Advance has commissioned the design of a 2D seismic program and has had initial discussions with proposed drilling engineers

The Company is pleased to advise that it has completed due diligence on Epic Energy Ukraine Ltd (Epic) and that the Purchase and Sale Agreement between Celiastad Holdings Ltd and the vendor of Epic has now been executed.

Figure 1: Ortynytska-3 Immediate Re-entry Proposition

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ADVANCE ENERGY LIMITED Update on the Acquisition of the Ortynytska Project ASX CODE: AVD www.advanceenergyltd.com.au

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About the Ortynytska Project

The Ortynytska Prospect is located in the North Carpathian Basin which stretches in an arc from Ukraine through southern Poland and Slovakia through to the Czech Republic and Austria. Figure 2 (below) shows the North Carpathian Province and the location of the principal gas fields.

Figure 2: Ortynytska License and its Location in Ukraine

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Ortynytska
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Source: US Geological Survey

ADVANCE ENERGY LIMITED Update on the Acquisition of the Ortynytska Project ASX CODE: AVD www.advanceenergyltd.com.au

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The Ortynytska Prospect is immediately south of the Zaluzhany gas field which was discovered in 1969 and, at peak, had over 27 wells producing from 13 horizons. The Zaluzhany field produced over 134BCF of its total recoverable reserves of 1TCF between 1975 and 1993 with an average daily production of 1 MMCFD per well. The Zaluzhany field is considered analogous to the Ortynytska Prospect, as it shares many of the same horizons.

The Ortynytska Prospect is a Miocene gas play comprising thermogenic and microbial gas. The primary target is the Lower Dashava 15 (LD-15) sand which is located at approximately 3,500m and there are two deeper secondary (GA) sands at approximately 4,500m and 4,700m.

The LD-15 is crossed by the east-west Stebnyk Thrust which dips strongly to the south eliminating some of the shallower sands that have produced in the Zaluzhany field. However, the Stebnyk Thrust does appear to provide an excellent closure for the LD15 sand (See Figure 3).

Figure 3: Ortynytska License – Principal Gas-bearing Horizons

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The Ortynytska-3 well was drilled to 3,577m in 1993-4 and discovered gas in the LD-15 sand. The operator experienced a number of mechanical problems and, consequently, did not bring the well into production or drill to the lower GA horizons.

Since announcing the proposed acquisition, the Company has made significant progress in acquiring further information about the project, planning future activities and undertaking due diligence. At a general meeting on 20 July 2012, shareholders approved the acquisition of Celiastad Pty Ltd and the offer of up to 600m shares at no less than 0.5 cents per share to raise $3,000,000.

ADVANCE ENERGY LIMITED Update on the Acquisition of the Ortynytska Project ASX CODE: AVD www.advanceenergyltd.com.au

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Figure 4: Access Road to Ortynytska-3 wellhead

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Site Visit to Ukraine

In July 2012, the Company’s Managing Director, Anthony Short, and In-Country Manager, Steve Fast, undertook a site visit to Ukraine where they achieved the following:

• Site visit to the Ortynytska Prospect and Ortynytska -3 well

• Meetings with ZUG with regard to the work program

• Meetings with potential contractors for the proposed 2D seismic shoot

• Meetings with the geologists who worked on the original Ortynytska-3 drill program

• Due diligence meeting with legal advisors in Kyiv

• Meetings with Head of Ukrainian State Service of Geology and Mineral Resource

The site visit provided further confidence that the suspended Ortynytska-3 well is in good condition and is suitable for the proposed re-entry procedure.

Seismic Program

The seismic data that was acquired before the well was initially drilled was acquired using the Pulkovo 1942 co-ordinate system. This system cannot be precisely implemented into Kingdom and Petrosys software, which is the ‘gold standard’ for seismic design and results in a potential difference of up to 130m (longitude) with the WGS84 co-ordinate system. The Company therefore plans to undertake a limited 2D seismic program to eliminate this potential differential, to assist with the design of the re-entry program and to supplement and further delineate the prospect’s gas in place. It has engaged ISIS Petroleum Consultants to design a 20km seismic program and is now awaiting proposals from potential contractors.

ADVANCE ENERGY LIMITED Update on the Acquisition of the Ortynytska Project ASX CODE: AVD www.advanceenergyltd.com.au

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On completion of the seismic program, the Company intends to engage a suitably qualified independent firm to prepare a reserve statement.

Drilling Engineers

Advance has also held preliminary discussions with the firm it plans to engage as drilling engineers to design the re-entry program. During the visit to Ukraine, it was able to source a considerable amount of technical information about the original well including well passports, drill logs and repair logs.

Additional Ukrainian Assets

As part of the due diligence process, the Company has discovered that Epic was previously party to two Joint Activity Agreements (JAA) for a producing oil project in the Crimean region of Ukraine. Epic was in default of the JAAs and, consequently, Advance has taken steps to quarantine any potential liabilities associated with this project as part of the Share Purchase Agreement. However, the Company is advised that the license holder is prepared to reactivate the JAAs giving Advance the potential to acquire a second asset and to diversify its asset base.

Advance has also held discussions with the relevant parties with regard to acquiring additional acreage in the Ortynytska region.

FOR FURTHER INFORMATION CONTACT

Mr Anthony Short (Managing Director) Telephone: 08 9429 2900 Facsimile: 08 9486 1011

ADVANCE ENERGY LIMITED Update on the Acquisition of the Ortynytska Project ASX CODE: AVD www.advanceenergyltd.com.au

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Background to the Transaction

On 12 June 2012, Advance Energy Ltd (Company) announced that it had executed a binding Terms Sheet to acquire Celiastad Pty Ltd - a Company that had the right to acquire Epic Energy Ukraine Ltd (Epic) which, in turn, was party to a Joint Activity Agreement to develop the Ortynytska natural gas project.

Transaction Structure

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Advance Energy Ltd
Binding Heads of Agreement Executed
Offer and Acceptance to Celiastad Shareholders
Celiastad Pty Ltd
100%
Celiastad Holdings Ltd (Cyprus)
Purchase & Sale
Agreement
Epic Energy Ukraine Ltd Joint Activity
ZakhidUkrGeologiya
Agreement
Ortynytska Special Permit
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Advance expects to receive the remaining acceptances for its offer to acquire the shares in Celiastad Pty Ltd later this week and will then proceed with the issue of 500,000,000 shares to the vendors of Celiastad Pty Ltd.

ADVANCE ENERGY LIMITED Update on the Acquisition of the Ortynytska Project ASX CODE: AVD www.advanceenergyltd.com.au