TALIUS GROUP LIMITED — Interim / Quarterly Report 2010

Jan 30, 2011

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ADVANCE ENERGY LIMITED ACN 111 823 762

QUARTERLY REPORT

31 DECEMBER 2010

ADVANCE ENERGY LIMITED - QUARTERLY REPORT – 31 DECEMBER 2010

HIGHLIGHTS

• Sold the Martin West, Possum Kingdom and Mother Lode 1 projects for US$11.3m.

• Redeemed unlisted convertible notes and repaid all bank debt.

• Line of credit facility of US$40 million retained with Sterling Bank.

• Completed a non-renounceable rights issue of Options raising more than $202,000.

CORPORATE OVERVIEW

Sale of Interest

The Company’s subsidiaries, Advance Exploration and Production Inc (AEPI) and Advance Wolfberry Inc (AWI) entered Purchase and Sale Agreements for the sale of their Mother Lode 1, Possum Kingdom and Martin West projects for a combined total of US$11.3m. This transaction has now settled.

Debt Reduction

In accordance with its announced strategy, the Company has retired its most expensive debt by redeeming the $5.25m in unlisted convertible notes. AEPI has also repaid all its debt with Sterling Bank of Texas, which stood at approximately US$3m before the sale of the assets. It has, however, retained the US$40 million line of credit facility for possible utilisation on future acquisitions.

After retiring all this debt the group has retained cash at bank of $2.5 million. This will allow it both to participate in future drilling programmes on its Mother Lode Phase 3 project and to secure possible future energy projects, not necessarily restricted to US based opportunities.

Non-Renounceable Rights Issue of Options

Advance undertook a non-renounceable issue of options on the basis of one option for every share held on the record date. 202,931,768 options were issued at a price of $0.001 (0.1 cents) per option raising almost $203,000 (before costs). The options are listed and are exercisable at $0.03 per option on or before 31 August 2012.

114,660,244 of the available options were taken up as entitlements by existing shareholders. The 88,271,524 shortfall securities were subsequently subscribed for.

OPERATIONS OVERVIEW

Mother Lode Phase 3 Project

Advance has retained its 50% interest in the Mother Lode Phase 3 project. During the second half of 2010, the Roman 27-1 well was successfully drilled and completed as a producer by the operator, Endeavor Energy Resources LLP. AEPI will consider participation in future development wells on this project.

For further information contact:

Mr Anthony Short (Managing Director)

Telephone: 08 9486 1122 Facsimile: 08 9486 1011

ADVANCE ENERGY LIMITED ASX CODE: AVD www.advanceenergyltd.com.au

pg. 1

Appendix 5B Mining exploration entity quarterly report

Rule 5.3

Appendix 5B

Mining exploration entity quarterly report

Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001, 01/06/10.

Name of entity

Advance Energy Limited

ABN 62 111 823 762	Quarter ended (“current quarter”)
62 111 823 762	31 December 2010

Consolidated statement of cash flows

Cash flows related to operating activities 1.1 Receipts from product sales and related debtors 1.2 Payments for (a) exploration & evaluation (b) development (c) production (d) administration 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‐ Lead manager fee (listed notes) Net Operating Cash Flows	Current quarter $A’000	Year to date (12 months) $A’000
	‐ ‐ ‐ (114) (243) ‐ 3 (317) ‐ ‐	2,286 ‐ (1,072) (1,636) (881) ‐ 14 (1,553) ‐ (69)
	(671)	(2,911)
Cash flows related to investing activities 1.8 Payment for purchases of:(a) prospects (b) equity investments (c) other fixed assets 1.9 Proceeds from sale of: (a) prospects (b) equity investments (c) other fixed assets 1.10 Loans to other entities 1.11 Loans repaid by other entities 1.12 Other (provide details if material) Net investing cash flows 1.13 Total operating and investing cash flows (carried forward)	‐ ‐ (3) 11,075 ‐ ‐ ‐ ‐ ‐	‐ ‐ (3) 11,075 ‐ ‐ ‐ 676 ‐
	11,072	11,748
	10,401	8,837

• See chapter 19 for defined terms.

Appendix 5B Page 1

30/9/2001

Appendix 5B

Mining exploration entity quarterly report

Appendix 5B Mining exploration entity quarterly report
1.13 Total operating and investing cash flows (brought forward)	10,401	8,837
Cash flows related to financing activities 1.14 Proceeds from issues of shares and notes 1.15 Proceeds from sale of forfeited shares 1.16 Proceeds from borrowings 1.17 Repayment of borrowings 1.18 Dividends paid 1.19 Other (over subs & capital raising expenses) Net financing cash flows	204 ‐ (25) (8,113) ‐ ‐	817 ‐ 250 (8,589) ‐ ‐
	(7,934)	(7,522)
Net increase (decrease) in cash held 1.20 Cash at beginning of quarter/year to date 1.21 Exchange rate adjustments to item 1.20 1.22 Cash at end ofquarter	2,467 71 7	1,315 1,220 10
	2,545	2,545

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

1.23 1.24	Aggregate amount of payments to the parties included in item 1.2 Aggregate amount of loans to the parties included in item 1.10	Current quarter $A'000
		12
		‐
1.25	Explanation necessary for an understanding of the transactions

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

2.2	Details of outlays made by other entities to establish or increase their share in projects in which the reportingentityhas an interest

• See chapter 19 for defined terms.

Appendix 5B Page 2

30/9/2001

Appendix 5B Mining exploration entity quarterly report

Financing facilities available

Add notes as necessary for an understanding of the position.

3.1 Loan facilities 3.2 Credit standby arrangements- line of credit	Amount available $A’000	Amount used $A’000
	-	-
	US$40 mil*	-

* This facility is held with Sterling Bank in the US. When utilised it bears interest at US Prime plus 1% and is secured against oil and gas properties. The facility was renewed in March 2009 and expires in March 2012.

Estimated cash outflows for next quarter

4.1 Exploration and evaluation 4.2 Development 4.3 Production 4.4 Administration	$A’000
	‐
	100
	50
	200
Total	**350 **

Reconciliation of cash

Reconciliation of cash at the end of the quarter (as Current quarter Previous quarter shown in the consolidated statement of cash flows) $A’000 $A’000 to the related items in the accounts is as follows. 5.1 Cash on hand and at bank 2,545 71 5.2 Deposits at call ‐ ‐ 5.3 Bank overdraft 5.4 Other (provide details): Security deposit 30 30 2,575 101

Total: cash at end of quarter (item 1.22)

Changes in interests in mining tenements

6.1 Interests in mining tenements relinquished, reduced or lapsed	Tenement reference	Nature of interest (note (2))	Interest at beginning ofquarter	Interest at end of quarter

• See chapter 19 for defined terms.

Appendix 5B Page 3

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Appendix 5B Mining exploration entity quarterly report

6.2 Interests in mining tenements acquired or increased

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

	Total number	Number quoted	Issue price per security (see note 3) (cents)	Amount paid up per security (see note3) (cents)
7.1 Preference +securities (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases‐ capital returns, buy‐backs or redemptions	9	Unquoted
7.3 +Ordinary securities 7.4 Changes during quarter (a) Increases‐ through issues (b) Decreases‐ capital returns or buy‐backs	217,676,895	217,676,895		Fully paid
7.5 +Convertible debt securities (description) 7.6 Changes during quarter (a) Increases through issues (b) Decreases‐ maturing or conversion of securities	6,675,000	6,675,000	9.5% coupon, expires Dec 2014.
7.7 Options (description and conversion factor) 7.8 Issued during quarter 7.9 Exercised during quarter	202,931,768	202,931,768	Expire 31 August 2012. Exercise price of3cents
	202,931,768	202,931,768
	‐	‐

• See chapter 19 for defined terms.

Appendix 5B Page 4

30/9/2001

Appendix 5B Mining exploration entity quarterly report

7.10 Expired during quarter	250,000 13,850,000	Unquoted Unquoted	Exercise price 40cents 25 cents	Expiry date 31 Dec 2010 31 Dec 2010
7.11 Debentures (totals only)
7.12 Unsecured notes(totals only)

Compliance statement

• 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).

• 2 This statement does /does not* (delete one) give a true and fair view of the matters disclosed.

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Sign here: ............................................................ Date: ..30 January 2011....... (Director/Company secretary)

Print name: David Ballantyne

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 “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

• 3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities .

• 4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.

• 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.

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• See chapter 19 for defined terms.