TALIUS GROUP LIMITED — Interim / Quarterly Report 2012

Jul 30, 2012

==> picture [202 x 114] intentionally omitted <==

==> picture [206 x 513] intentionally omitted <==

ADVANCE ENERGY LIMITED ACN 111 823 762

QUARTERLY REPORT 31 JULY 2012

ADVANCE ENERGY LIMITED QUARTERLY REPORT FOR THE PERIOD ENDING 30 JUNE 2012

CORPORATE OVERVIEW

Acquisition of Ukrainian Gas Project

During the quarter, Advance secured the opportunity to acquire an economic interest in the Ortynytska natural gas project in Western Ukraine. The Company executed a binding term sheet to acquire 100% of the shares of Celiastad Pty Ltd which, in turn, has the right to acquire 100% of Epic Energy Ukraine Ltd (Epic), a company incorporated in Ukraine. Epic has executed a Joint Activity Agreement (JAA) with national oil and gas company ZakhidUkrGeologiya (ZUG) to fund the development of the Ortynytska project by undertaking a re-entry of the Ortynytska-3 well that was drilled in 1993.

The key terms of the JAA are as follows:

• Advance will fund all capital and operational commitments and expenses associated with the re-entry of the Ortynytska-3 well;

• Advance will receive 70% of net profits from production until payback; and

• Advance will receive 50% of net profits thereafter.

Advance is currently completing due diligence on the project and expects to complete the transaction and to undertake a $3m capital raising in the third quarter of calendar year 2012.

About the Project

The Ortynytska Project is located in the Carpathian Basin approximately 50km southwest of the city of L’viv in Western Ukraine. The Carpathian Basin (or Pannonian Basin) is the oldest-producing Basin either in or surrounding Ukraine and contains approximately 500 identified fields and more than 2.1 billion barrels of oil and 11.2 TCF of discovered natural gas.

The Ortynytska Project is located in the relatively un-deformed Foreland sediments beneath frontal thrust of the Flysch Belt which stretches from Ukraine through southern Poland and into the Czech Republic and Austria. The US Geological Survey (USGS) 1 states that, as of 1993, 67 oil fields and 15 gas fields had been discovered in that part of the province and makes the following statements with regard to undiscovered hydrocarbon potential of the North Carpathian Province:

• 10-175 fields remain (mean 75.9 fields)

• Field sizes will range from 6- 400 BCF (recoverable), with a median size of 20 BCF

• Approximately 37% of fields will be in Ukraine

The following map shows the location of the province and of existing gas fields in relation to the Ortynytska Project.

1 US Geological Survey (USGS) 1999 Assessment of the Foreland Basin Undiscovered Potential

ADVANCE ENERGY LIMITED Quarterly Report 30 June 2012 ASX CODE: AVD www.advanceenergyltd.com.au

pg. 1

ADVANCE ENERGY LIMITED QUARTERLY REPORT FOR THE PERIOD ENDING 30 JUNE 2012

Figure 1: Ortynytska License and its Location in Ukraine

==> picture [335 x 397] intentionally omitted <==

----- Start of picture text -----

Ortynytska
----- End of picture text -----

The Ortynytska Project 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 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 2).

ADVANCE ENERGY LIMITED Quarterly Report 30 June 2012 ASX CODE: AVD www.advanceenergyltd.com.au

pg. 2

ADVANCE ENERGY LIMITED QUARTERLY REPORT FOR THE PERIOD ENDING 30 JUNE 2012

Figure 2: Ortynytska License – Principal Gas-bearing Horizons

==> picture [358 x 239] intentionally omitted <==

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.

Ukraine is a favourable oil and gas regime, particularly for gas production. Subsoil hydrocarbons are regulated by the Oil and Gas Law with permits either auctioned in a public process or granted to state companies. Royalties, comprising production a production rent charge and a subsoil charge, are less than US$1.00 per MCF enabling many companies to achieve operating netbacks of over $8/MCF. It is close to the major European gas markets of Poland, Slovakia and Hungary and to major pipeline infrastructure.

Mother Lode Phase 3 Project

No further development activities have been undertaken on the Mother Lode III project.

Placement and Issue of Shares

During the period, the Company issued 25m shares at 0.4 cents per share to raise $100,000. The Company also issued 49,544,700 shares to the holders of Listed Convertible Notes in satisfaction of interest that would have been payable for the period ending 31 March 2012. Shares were issued at 80% of the Volume Weighted Average Price of shares in the 5 days prior to the date that interest was payable.

Subsequent Events

Advance’s Managing Director, Anthony Short, travelled to Ukraine to meet with parties involved with the transaction and the proposed development including Epic, the JAA Committee, the Ukrainian legal firm undertaking due diligence and potential contractors.

On 20 July 2012, Shareholders approved the issue of 500m shares in the Company to the shareholders of Celiastad. Advance is currently completing its due diligence on Epic and expects to be able to complete the transaction in the near future.

ADVANCE ENERGY LIMITED Quarterly Report 30 June 2012 ASX CODE: AVD www.advanceenergyltd.com.au

pg. 3

ADVANCE ENERGY LIMITED QUARTERLY REPORT FOR THE PERIOD ENDING 30 JUNE 2012

Anticipated Events

On completion of the acquisition, Advance plans to raise up to $3m by the issue of up to 600m shares at no lower than $0.005 per share. The proceeds will be used to fund the development of the project including the acquisition of a limited amount of additional 2D seismic and the re-entry of the Ortynytska 3 well.

For further information contact:

Mr Anthony Short (Managing Director)

Telephone: 08 9429 2900 Facsimile: 08 9486 1011

ADVANCE ENERGY LIMITED Quarterly Report 30 June 2012 ASX CODE: AVD www.advanceenergyltd.com.au

pg. 4

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”) 30 June 2012

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 (6months) $A’000
	- - (2) - (72) - - - - -	- - (48) - (175) - 2 - - -
	(74)	(221)
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)	- - - - - - -	- - - - - - -
	-	-
	(74)	(221)

• See chapter 19 for defined terms.

Appendix 5B Page 1

30/9/2001

Appendix 5B Mining exploration entity quarterly report

1.13 Total operating and investing cash flows (brought forward)	(74)	(221)
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	73 - - (15) - (4)	293 - - (102) - (9)
	54	182
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	(20) 79 1	(39) 98 1
	60	60

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
		-
		-
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 reporting entity has 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
	-	-
	-	-

Estimated cash outflows for next quarter

$A’000 - -

• 4.1 Exploration and evaluation

Estimated cash outflows for next quarter
4.1 Exploration and evaluation	$A’000
	-
4.2 Development 4.3 Production 4.4 Administration (including interest)	-
	-
	130
Total	**130 **

Reconciliation of cash

Total Reconciliation of cash	Total Reconciliation of cash	**130 **
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	60	79
5.2	Deposits at call
		-	-
5.3	Bank overdraft
5.4	Other (provide details): Security deposit	30	30
	Total: cash at end of quarter(item 1.22)	90	109

Changes in interests in mining tenements

6.1 Interests in mining tenements relinquished, reduced or lapsed 6.2 Interests in mining tenements acquired or increased	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

30/9/2001

Appendix 5B Mining exploration entity quarterly report

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	340,398,150	340,398,150		Fully paid
	74,544,700	74,544,700
7.5 +Convertible debt securities (description) 7.6 Changes during quarter (a) Increases through issues (b) Decreases- maturing or conversion of securities	6,675,500	6,675,500	9.5% coupon, expires Dec 2014.
7.7 Options (description and conversion factor) 7.8 Issued during quarter 7.9 Exercised during quarter 7.10 Expired during quarter	202,931,748	202,931,748	0.03	31/08/2012
			Exercise price	Expiry date
7.11 Debentures (totals only)
7.12 Unsecured notes (totals only)

• See chapter 19 for defined terms.

Appendix 5B Page 4

30/9/2001

Appendix 5B Mining exploration entity quarterly report

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.

==> picture [141 x 95] intentionally omitted <==

Sign here: ............................................................ Date: ..31 July 2012....... ( ~~Director~~ /Company secretary)

Print name: A Jobling

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.

• == == == == ==

• See chapter 19 for defined terms.

Appendix 5B Page 5

30/9/2001