THORNEY TECHNOLOGIES LTD — Capital/Financing Update 2006

Apr 23, 2006

23 April 2006

STEPHENOMENT STATE

ASX RELEASE

Company Announcements Office Australian Stock Exchange Limited 10^th Floor, 20 Bond Street SYDNEY NSW 2000

Dear Sir/Madam.

RE: Short Form Prospectus

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The Company lodged a Short Form Prospectus on 21 April 2006 with the Australian Securities and Investments Commission to allow secondary trading in the recent allotment of 16,200,000 shares at \$1.65 per share and to offer 1 share at \$1.65 per share.

Attached is the Short Form Prospectus dated 21 April 2006.

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a shi a shekara ta 1970 na matsayin a shekara ta 1971 na shekara ta 1971 na shekara ta 1971 na shekara ta 1971 na shekara ta 1971 na shekara ta 1971 na shekara ta 1972 na shekara ta 1972 na shekara ta 1972 na shekara ta

Yours faithfully,

Darryl J Butcher CEO/Managing Director

ANSTRAINAN RENEWARIE FUELS LIMITED

AUSTRALIAN RENEWABLE FUELS LIMITED

ABN 65 096 782 188

SUITE 1B, LEVEL 5 SOUTH SHORE PIAZZA 85 SOUTH PERTH CSPLANADE SOUTH PERTH WA 6151

P.O.BOX 837 SOUTH PERTH WA 6951

$T\bar{t}1$ +61893633500 FAX. +61893633571 E-MAIL info@arfuels.com.au WES www.arfvels.com.au

AUSTRALIAN RENEWABLE FUELS LIMITED

A.B.N. 66 096 782 188

Short Form Prospectus

This Prospectus has been issued to facilitate the secondary trading of Shares issued pursuant to a Placement. It has also been issued to provide information on the Offer of 1 Share at an issue price of \$1.65 cents to raise \$1.65.

IMPORTANT NOTICE

This Prospectus is a short form prospectus issued in accordance with Section 712 of the Corporations Act 2001. The Prospectus does not of itself contain all the information that is generally required to be set out in a document of this type but refers to other documents, the information of which is deemed to be incorporated in this Prospectus.

This document is important and requires your immediate attention. It should be read in its entirety. If you do not understand its contents or are in doubt as to the course you should follow, you should consult your professional adviser.

CONTENTS AND RESIDENCE IN THE RESIDENCE OF A SECOND RESIDENCE

$\mathbf{1}$ .	INVESTMENT SUMMARY
$\mathbf{2}$	DETAILS OF THE OFFER
3.	FINANCIAL INFORMATION
4.	INFORMATION DEEMED TO BE INCORPORATED IN THIS PROSPECTUS
-5.	COMPANY OVERVIEW
6.	MATERIAL CONTRACTS
$\tau$ .	ADDITIONAL INFORMATION
8.	DEFINITIONS & GLOSSARY
$\Omega$ .	CORPORATE DIRECTORY

A number of terms and abbreviations used in this Prospectus
have defined meanings, which are explained in the Glossary.

Money as expressed in this Prospectus is in Australian dollars
or else as indicated.

Important Notice

This Prospectus is dated 21 April 2006 and was lodged with the Australian Securities and Investments Commission ("ASIC") on that date. Neither the ASIC nor Australian Stock Exchange Limited ("ASX") take any responsibility for the contents of this Prospectus. No securities will be issued on the basis of this Prospectus later than thirteen months after the date of this Prospectus.

The Offer is being made in Australia. No Offer will be made in any overseas jurisdiction where it would not be lawful to do so. It is the responsibility of overseas Applicants to ensure compliance with all laws of any country relevant to their Application.

No person named in this Prospectus, nor any other person, guarantees the performance of Australian Renewable Fuels Limited, the repayment of capital or the payment of a return on the Shares.

Please read this document carefully before you make a decision to invest. An investment in the Company has specific risks, which you should consider before making a decision to invest.

Short Form Prospectus

This Prospectus is a short form prospectus issued in accordance with Section 712 of the Corporations Act 2001. This means that this Prospectus does not of itself contain all the information that is generally required to be set out in a document of this type. Rather, the Prospectus incorporates by reference information contained in documents that have been lodged with ASIC.

This Prospectus refers to parts of the disclosure document lodged by the Company with ASIC on 20 March, 2005 ("IPO Prospectus"), the 30 June 2005 Annual Report ("Annual Report"), the 31 December 2005 Half Year Financial Report ("Half Year Financial Report") and ASX Releases dated 18 April 2006. and 7 April 2006 (together the "ASX Releases"). In referring to the IPO Prospectus, the Annual Report, the Half Year Financial Report and the ASX Releases the Company:

• (a) identifies parts of the IPO Prospectus, the Annual Report, the Half Year Financial Report and the ASX Releases as being relevant to the offer of the Share under this Prospectus and containing information that will provide investors and their professional advisers information to assist them in making an informed assessment of:
• $(i)$ the rights and liabilities attaching to the Share;
• the capacity of the Company to issue the Share; and $(ii)$
• (iii) the assets and liabilities, financial position and performance, profits and losses and prospects of the Company:
• (b) refers investors and their professional advisers to section 4 of this Prospectus which summarises the information in the IPO Prospectus, the Annual Report, the Half Year Financial Report and the ASX Releases deemed to be incorporated in this Prospectus;
• (c) informs investors and their professional advisers that they are able to obtain, free of charge, a copy of the IPO Prospectus, the Annual Report, the Half Year Financial Report and the ASX Releases by contacting the Company at its registered office during normal business hours during the Offer Period; and
• (d) advises that the information in the IPO Prospectus, the Annual Report, the Half Year Financial Report and the ASX Releases will be primarily of interest to investors and their professional advisers or analysts.

INVESTMENT SUMMARY M

The information set out in this section is not intended to be comprehensive and should be read in conjunction with the full text of this Prospectus.

$1.1$ Purpose of the Offer

The Company has issued a total of 16.2m Shares at an issue price of \$1.65 each to raise \$26.73m ("Placement"). This Prospectus has been issued to facilitate secondary trading of Shares issued under the Placement ("Placement Shares"), as these Placement Shares were issued without disclosure to investors under Part 6D.2 of the Corporations Act. A prospectus is required under the Corporations Act to enable persons who were issued Placement Shares to onsell those Shares within 12 months of their issue. The Company did not issue the Placement Shares with the purpose of the persons to whom they were issued selling or transferring their securities, or granting, issuing or transferring interests in, those securities within 12 months of the issue. .]

This Prospectus has also been issued to provide information on the Offer being made under this Prospectus.

The Offer $1.2₁$

A total of 1 Share in ARW at an issue price of \$1.65 per Share will be offered for subscription. The Share will rank equally with the Shares currently on issue.

1.3 Applications

An Application can only be made by completing and lodging the Application Form attached to the back of this Prospectus, Instructions on how to complete the Application Form are attached on the form. Application Forms must not be circulated to prospective investors unless accompanied by this Prospectus.

1.4 Proceeds of the Offer

The proceeds of the Offer will be applied towards working capital.

$1.5$ Capital Structure

The pro forma capital structure of the Company following the Offer pursuant to this Prospectus is set out below:

MARKSURS	executive and the contract of the contract of
Existing	124,200,000
Offer
Total	124,200,001

The Company has 2,185,000 employee options on issue as follows:

MARK AND A SECOND STREET WARDER		Exercise Price Expiry Date Vesting Date
75,000	0.50	18 October 2009	18 October 2005
75,000	1.00	18 October 2009	18 October 2006
75.000	1.50	18 October 2009	18 October 2007
100,000	1.13	30 June 2010	30 June 2006
100.000	1.50	30 June 2010	30 June 2007
100,000	2.00	30 June 2010	30 June 2008
130,000	1.62	24 March 2011	24 March 2007
130.000	1.62	24 March 2011	24 March 2008
140.000	2.00	24 March 2011	24 March 2009
100,000	1.58	17 March 2011	17 March 2007
100,000	1.58	17 March 2011	17 March 2008
100,000	2.00	17 March 2011	17 March 2009
320,000	1.13	30 June 2010	30 June 2006
320.000	1.50	30 June 2010	30 June 2007
320,000	2.00	30 June 2010	30 June 2008
2,185,000

These options were allotted under the Employee Share Option Plan.

1.6 Dividends

The Directors cannot give any assurances as to the extent, timing, level of franking or payment of any future dividends because these are dependent on a number of factors including the level of earnings, the amount of tax paid, the financial position of ARW, operating conditions and the Risk Factors incorporated by reference in this Prospectus, as referred to in Section 4.

DEIZUSTOEIHOEER yä

How to Apply $2.1$

To participate in the Offer, the Application Form attached to this Prospectus must be completed in accordance with the instructions on its reverse side. Cheques should be made payable to "Australian Renewable Fuels Limited Share Offer" and crossed Not Negotiable.

Completed application forms and cheques for the relevant amount should be posted or delivered to ARW at the address listed in the Corporate Directory to the attention of Mr Max Ger.

Applications for the Share offered by the Prospectus must be made, and will only be accepted, on an Application Form attached to the Prospectus.

Applications must be received by 5.00pm on the Closing Day, subject to the right of the Directors to close the Offer at any time without prior notice. The Company reserves the right to accept applications after the Closing Date.

No brokerage or stamp duty is payable by Applicants in respect of their applications for the Share under this Prospectus. The amount payable on application will not vary during the period of the Offer and no further amount is payable on allotment. There is no provision to accept over-subscriptions. Application money will be held in trust in a subscription account until allotment.

2.2 Allotment

If the Company receives Applications for more than the Share being offered under this Prospectus, the Directors will decide, in their absolute discretion, which Application to accept and which Applicant the Share shall be allotted and issued to.

ARW will proceed to allocate the Share as soon as possible after the Closing Date. Where an Application is unsuccessful the Application Monies will be returned to that Applicant within 30 days of the Closing Date. No interest will be paid on refunded Application Monies.

It is the responsibility of Applicants to confirm that the Share has been allocated to them prior to trading in that Share. Applicants who sell the Share before they receive notice of its allocation to them do so at their own risk. The Share will not be allotted or issued on the basis of this Prospectus later than 13 months after the date of issue of this Prospectus.

2.3 ASX Listing

Within seven (7) Business Days after the date of issue of the Prospectus, ARW intends to apply for a listing of the Share issued under this Offer. If granted, quotation of the Share will commence as soon as practicable after allotment.

2.4 Investment Risks

Investors should carefully read the section on Risk Factors incorporated by reference in this Prospectus, as referred to in Sections 4 and otherwise in Section 7.1 of this Prospectus. An investment of this kind involves a number of risks, a number of which are specific to ARW and the industry in which it operates.

2.5 CHESS

ARW will apply to the ASX for the Share to participate in the Securities Clearing House Electronic Subregister System known as CHESS. CHESS is operated by the ASX's Securities Clearing House ("SCH") in accordance with the ASX Listing Rules and the SCH Business Rules. After allotment of the Share, Shareholders who are issuer sponsored holders will receive an issuer sponsored statement and those who are CHESS holders will receive an allotment advice.

The CHESS statements, which are similar in style to bank account statements, will set out the Share allotted pursuant to this Prospectus. The statement will also advise the holder of their holder identification number and explain for future reference the sale and purchase procedures under CHESS. Further statements will be provided to the holder, which reflect any changes in their Shareholding in ARW during a particular month.

2.6 Taxation

Investors should seek and rely on their own taxation advice regarding an investment in ARW.

EINANGIA ENEORMATION E

Proforma Consolidated Statement of Financial Position $3.1$

To illustrate the effect of the Offer and the Placement on ARW the proforma-consolidated statement of financial position has been prepared based on the 31 December 2005 consolidated statement of financial position. The consolidated statement of financial position as provided shows the effect of the Offer and the Placement as if the Offer under this Prospectus and the Placement had been made on 31 December 2005.

The accounting policies adopted in preparation of the proforma-consolidated statement of financial position are consistent with the policies adopted and as described in ARW's Annual Report for the year ended 30 June 2005.

Australian Renewable Fuels Limited	Reviewed	Station of Promis	Prostomalli
Proforma Consolidated Balance Sheet - as at 31	Symptoxy 2006-	and Placement	KKWD:30.PADIERW
December 2005 Section Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract Contract C	SHID	ETHIO	SOAT
CURRENT ASSETS
Cash assets	13,804	25,330	39,134
Receivables	1,418		1,418
Other	604		604
Derivative financial instrument	76		76
Inventories	50		50
TOTAL CURRENT ASSETS	15,952	25,330	41,282
NON-CURRENT ASSETS
Property, plant and equipment	37,679		37,679
Intangible assets	21,887		21,887
TOTAL NON-CURRENT ASSETS	59,566		59,566
TOTAL ASSETS	75,518	25,330	100,848
CURRENT LIABILITIES
Payables	11,834		11,834
Derivative financial instrument	76		76
TOTAL CURRENT LIABILITIES	11,910		11,910
NON-CURRENT LIABILITIES
Other liabilities	1,787		1,787
Deferred tax liabilities	5,889		5,889
TOTAL NON-CURRENT LIABILITIES	7.676		7,676
TOTAL LIABILITIES	19,586		19,586
NET ASSETS	55,932	25,330	81,262
EQUITY
Contributed equity	57,259	25,330	82,589
Reserves	242		242
Retained profits / (losses)	(1, 569)		(1,569)
TOTAL EQUITY	55,932	25,330	81,262

Notes to the Pro-Forma Balance Sheet

The Offer and Placement adjustment consists of the total funds raised of \$26.73m less estimated costs of \$1.4m to result in a cash increase of \$25.33 million.

Construction Cost Update

On 22 November 2005 the Company announced that construction costs on the Adelaide and Picton plants were expected to exceed the IPO Prospectus estimate by 10% to 15% giving a then projected expenditure of between

\$33.77m and \$35.3m. The Company believes that the final construction costs will be approximately \$37.7m due to further cost increases experienced in the Australian engineering and construction industries. Additional expenditure of \$3.5 million on property, plant and equipment for the quarter ended 31 March 2006 is for infrastructure services not directly related to the construction of the Adelaide and Picton plants

Significant Results for the Quarter Ended 31 March 2006

The significant movements in the Company's Consolidated Balance Sheet from 31 December to the 31 March 2005 include the following: (movements are unaudited)

Cash - Decreased \$13.7m

Accumulated Losses - Increase \$1m Losses have been incurred as a result of operations during the construction phase.

Property Plant and Equipment - Increase \$3.5m Infrastructure services not directly related to the construction of the Adelaide and Picton plants.

Deposit - increase \$3m

The Company has paid funds to Energea in part consideration of the acquisition of the Australian Region patents for the Energea technology and the other rights contained in the NAFTA Zone Joint Venture Development Agreement which agreement is referred to in Section 6.2.

Inventories - Increase \$0.8m Commissioning of the plants has required the acquisition of feedstock, reagents and spare parts.

Current Payables - decrease \$6.5m

INEORMATION DEEMED TO BE INGORPORATED ĽÑ INTEISEROSEROTUS

4.1 Short Form Prospectus

This Prospectus is a short form prospectus issued in accordance with Section 712 of the Corporations Act. This means that this Prospectus does not of itself contain all the information that is generally required to be set out in a document of this type, however it incorporates by reference information contained in documents that have been lodged with ASIC.

Pursuant to such provisions:

• sections 11 and 12.1.1 12.1.7 (inclusive), 12.1.12 12.1.16 (inclusive) and 12.1.18, 12.2, 12.4, 12.5, 12.7 $(a)$ and 12.8 of the Company's IPO Prospectus;
• $(b)$ the Annual Report;
• $(c)$ the Half Year Financial Report; and
• $(d)$ the ASX Releases.

are expressly incorporated into this Prospectus.

The information to be incorporated by reference into this Prospectus is summarised below in Section 4.2 and will primarily be of interest to investors and their professional advisers or analysts.

The Company informs investors and their professional advisers that they are able to obtain, free of charge, a copy of the IPO Prospectus, the Annual Report, the Half Year Financial Report and the ASX Releases by contacting the Company at its principal office during normal business hours during the period of the Offer. The IPO Prospectus, the Annual Report, the Half Year Financial Report and the ASX Releases are also available by searching ASIC's records.

4.2 Summary of Information Deemed to be Incorporated

Set out below is a summary of the information contained in the relevant sections of the IPO Prospectus, the Annual Report, the Half Year Financial Report and the ASX Releases that are deemed to be incorporated in this Prospectus to assist investors and their professional advisers to determine whether, for the purposes of making an informed investment decision in relation to the Share, they should obtain from the Company a copy of the IPO Prospectus, the Annual Report, the Half Year Financial Report and the ASX Releases.

The sections referred to below are a reference to sections in the IPO Prospectus, the Annual Report, the Half Year Financial Report and the ASX Releases (as the case may be) of the Company.

IPO Prospectus

Section 11 - Risk Factors

This section notes that an investment in ARW involves risks, which may be higher than risks associated with an investment in some other companies. It identifies the areas the Directors regard as the major risks including risks associated with economic factors, government legislation policy changes, development and continuity of operations, insurance, exchange rates, intellectual property, licences, design and technology, construction of biodiesel plants, production, the environment, key personnel and management, marketing, additional financing requirements, current competition, raw materials, sales, operating costs, lack of diversification, excessive sales of shares, government approvals and government grants. Additional risk factors are set out in Section 7.1.

Sections 12.1.1 - 12.1.7 (inclusive), 12.1.12 - 12.1.16 (inclusive) and 12.1.18

The subsections contain summaries of the relevant current material contracts to which the Company is a party.

Section 12.2 - Company Tax Status

This section contains information relating to the tax status of the Company.

Section 12.5 - Directors' Interests

This section contains information relating to the interests of Directors in relation to their dealings with the Company including interests in Shares, options and remuneration agreements. The Directors' interests are updated in Section 7.3 of this Prospectus.

Section 12.7 - Employee Share Option Plan

This section contains a summary of the Company's Employee Share Option Plan.

Section 12.8 - Rights Attaching to Shares

This section contains a summary of the rights attaching to Shares.

Annual Report - 30 June 2005

Notice of Annual General Meeting and Explanatory Memorandum

This section sets out the details of the Company's annual general meeting, the resolutions to be voted on at that meeting and an explanation of those resolutions.

Corporate Directory

This section of the Annual Report contains the names of the Directors, the Company Secretary, and details of the Company's principal office, registered office, bankers, share registry and auditor.

Chairman's Letter

This section of the Annual Report is a letter from the Company's Chairman on the current activities of the Company and its outlook for the future.

Chief Executive Officers' Report

This section of the Annual Report contains a review of operations by the Company's Chief Executive Officer for the year ended 30 June 2005.

Directors' Report

This section of the Annual Report contains the names of the Directors, and summaries of the nature of operations and principal activities, employees, results of operations, review of operations, significant changes in the state of affairs, likely developments and expected results, dividends and matters subsequent to the end of financial year of the Company for the year ended 30 June 2005.

This section also contains information on the Directors' interests in Shares and options of the Company, meetings of directors, directors' and executives' emoluments and indemnification and insurance of Directors and officers.

Corporate Governance Statement

This section sets out the Company's policy with respect to corporate governance. The section sets out the Company's explanation of why it has departed from a number of ASX's Best Practice Recommendations.

Statement of Financial Performance for the year ended 30 June 2005

This section sets out the consolidated statement of financial performance of the Company for the year ended 30 June 2005.

Statement of Financial Position as at 30 June 2005

This section sets out the consolidated statement of financial position of the Company as at 30 June 2005.

Statement of Cash Flows for the year ended 30 June 2005

This section sets out the consolidated statement of cash flows for the Company for the year ended 30 June 2005.

Notes to and Forming Part of the Financial Statements

This section sets out the notes to and forming part of the financial statements for the vear ended 30 June 2005. This section includes the basis of preparation of the annual report, revenue, operating loss, income tax, receivables, property, plant and equipment, payables, interest bearing liabilities, provisions, contributed equity, share capital movements, accumulated losses, commitments for expenditure, earnings per share, related party disclosures and the impact of adopting Australian equivalents to International Financial Reporting Standards ("IFRS").

Directors' Declaration

This section sets out the Directors' declaration in respect of the financial statements and the ability of the Company to pay its debts as and when they become due and payable.

Independent Audit Report and Auditors Declaration of Independence

This section sets out the independent review report given by Horwath Audit (WA) Pty Ltd to the members of the Company for the year ended 30 June 2005 and Horwath Audit (WA) Pty Ltd's declaration of independence in connection with the review of the financial report for the half year ended 30 June 2005.

Additional ASX Information - Shareholder Information

This section sets out additional ASX information including the distribution of Shares as at 31 August 2005, the 20 largest Shareholders as at 5 September 2005 and substantial Shareholders.

Half Year Financial Report - 31 December 2005

Chief Executive Officer's Report

This section contains a review of operations for the half year ended 31 December 2005.

Directors' Report

This section contains the names of the Directors, principal activities report, results of operations and subsequent events for the half year ended 31 December 2005.

Consolidated Income Statement for the half year ended 31 December 2005

This section sets out the consolidated income statement for the half year ended 31 December 2005.

Consolidated Balance Sheet as at 31 December 2005

This section sets out the consolidated balance sheet as at 31 December 2005.

Consolidated Statement of equity for the half year ended 31 December 2005

This section sets out the consolidated statement of equity for the half year ended 31 December 2005.

Statement of Cash Flows for the half year ended 31 December 2005

This section sets out the statement of cash flows for the Company for the half year ended 31 December 2005.

Notes to and Forming Part of the Financial Statement

This section includes the basis of preparation of the half year financial report, the impact of adopting Australian equivalents to IFRS, operating loss, earnings per share and share capital movements.

Directors' Declaration

This section sets out the Directors' declaration in respect of the financial statements giving a true and fair view of the Company's financial position as at 31 December 2005 and of its performance for the half-vear ended on that date. The Directors also declare there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

Independent Review Report to the Members of Australian Renewable Fuels and Auditors' Independence Declaration to the Directors

This section sets out the independent review report given by Horwath to the members of the Company for the half year ended 31 December 2005 and Horwath's declaration of independence in connection with the review of the financial report for the half year ended 31 December 2005.

ASX Release - 18 April 2006

Pursuant to this ASX Release, the Company announced that it had entered a heads of agreement to form a 50/50 unincorporated joint venture with Transpacific Industries Group Ltd to confirm the feasibility of and then develop a biodiesel production facility in Brisbane, Queensland. The facility will replicate ARW's Adelaide and Picton facilities and be designed to produce 45 Mega litres of biodiesel annually.

ASX Release - 7 April 2006

Pursuant to this ASX Release, the Company announced that it has received acceptance for the placement of 16.2 million Shares at an issue price of \$1.65 per Share.

GOMPANY OVERVIEW M

Overview and Reference to IPO Prospectus, Annual Report, Half Year Financial Report and $5.1$ the ASX Releases

An overview of the Company is set out in the Annual Report, the Half Year Financial Report and the ASX Releases. Investors considering making an Application under this Prospectus should refer to Section 4 of this Prospectus for a summary of the information contained in the documents deemed to be incorporated in this Prospectus and should further refer to those documents which are available to investors upon request.

On 21 March 2005, the Company issued the IPO Prospectus seeking to raise \$20,000,000 by the issue of 20,000,000 Shares at an issue price of \$1.00 each. The issue closed fully subscribed and on 26 April 2005, the Company allotted and issued 20,000,000 Shares.

ARW was admitted to the Official List on 5 May 2005 and commenced trading on ASX on 10 May 2005.

5.2 Review of Operations Subsequent to IPO Prospectus

ARW has achieved several significant milestones subsequent to the issue of its IPO Prospectus. The Company; has completed the construction of the Adelaide plant; is currently commissioning the Picton plant; has agreed the acquisition of the patent rights to Energea's technology in the United States of America, Canada and Mexico (the patents and right to be owned by a company in which ARW will own 50%) and the Australian region; signed its first domestic biodiesel sale agreement and has received funding to be used in the planned roll-out of additional plants in Australia and Europe. The following details these achievements.

ARW has opened Australia's largest biodiesel plant, in Adelaide. This plant has an annual production capability of 45 million litres of biodiesel. ARW has also substantially completed construction of its second biodiesel plant at Picton. Western Australia, with commissioning of this plant underway at the date of this prospectus. The operating teams for each plant have been employed.

ARW also executed its first Australian biodiesel sales agreement with Dermody Petroleum. This sales agreement is for up to the full 45 million litres of annual biodiesel capacity from the Adelaide plant and incorporates quaranteed minimum volumes.

ARW intends to commit to three additional plants by the end of calendar year 2007. The first of these plants is expected to be in Brisbane, Queensland. It is proposed to develop the plant by way of a 50/50 unincorporated joint venture with Transpacific Industries Group Ltd. The purpose of the joint venture is firstly to confirm the feasibility of and then develop the biodiesel production facility. The facility will be similar to ARW's Adelaide and Picton facilities and be designed to produce 45 Mega litres of biodiesel annually.

ARW is also considering expansion into the US and Europe. The Company has agreed to acquire a 25% equity interest in Carbon Cycle Management AG ("CCM") which company intends to establish a 105 Mega litre biodiesel plant at a Danube port in Austria, to be operational in 2007. This agreement is subject to further due diligence. An agreement has also been reached to purchase Energea's biodiesel technology patents for the NAFTA zone, encompassing the United States of America, Canada and Mexico and the Energea technology rights for the Australian region.

ARW has secured funding to be used in the development of the additional Australian plants and the expansion into the US and Europe through the placement of 16.2 million Shares at an issue price of \$1.65 per Share, in order to raise \$26.73 million.

MATERIAL CONTRACTS 【谓

There are a number of current relevant material contracts to which the Company is a party, summaries of which are contained in the IPO Prospectus, and which have been incorporated by reference, as referred to in Section 4 of this Prospectus.

In addition, the Directors consider that certain documents entered into by the Company since the IPO Prospectus are material to the Offer or operation of the Company or otherwise are or may be relevant to prospective investors in the Company. A description of these material documents together with the more important details of these documents is set out below.

Unless otherwise stated all amounts described in this section are exclusive of any goods and services tax payable.

$6.1$ Biodiesel Supply Agreement - Dermody

On 23 March 2006 ARW signed an agreement with Dermody Petroleum Pty Ltd ("Dermody") for the purchase by Dermody of up to 45 million litres of biodiesel per annum from the Adelaide plant with a quaranteed minimum volume component.

Dermody has the exclusive right to purchase biodiesel from ARW's Adelaide plant, subject to meeting minimum quantity requirements. The agreed sale price for the biodiesel is set at a small discount to the Adelaide BP terminal gate price. The term of the agreement is 5 years from 23 March 2006 and is reviewed each 6 months to ensure compliance with performance and contractual obligations.

6.2 Australian Region Patent Transfer and NAFTA Zone Joint Development Agreement

The Company entered into an agreement dated 25 March 2006 with Energea Umwelttechnologie G.m.b.H. ("Energea") pursuant to which Energea grants ARW:

• a right to utilise the Energea technology and know-how for the manufacture of biodiesel within the North American Free Trade Agreement ("NAFTA") zone as it exists at the date of the agreement; and
• a further right to purchase the patent rights for the Energea technology in the Australian region as that region is defined in the Technology Exclusivity Agreement between the parties, a summary of which is contained in Section 12.1.3 of the IPO Prospectus, and which is incorporated by reference as referred to in Section 4 of this Prospectus. This further right is granted for consideration of Euro750,000.

Under the agreement, ARW will incorporate a new United States of America company ("Newco"), which will be owned 50/50 by ARW and Energea. Newco will pay a total fee of US\$7 million within 7 months from the signing of the agreement. The first US\$1 million will be paid within one week of the incorporation of Newco (to Energea Handelsgmbh) and the remaining US\$6 million will be paid to Energea. The US\$6 million to be paid to Energea will consist of US\$4 million in cash and the balance of US\$2 million is the amount already paid to Energea and referred to in Section 3.1 of this Prospectus. The US\$7 million is to be funded by way of Newco completing a seed capital raising of up to US\$10 million. If the full US\$7 million fee has not been paid within 6 months of the incorporation of Newco, then it will be deemed that such outstanding amount has been paid by Energea and the respective shareholdings in Newco will be adjusted to reflect this on a pro rata basis.

ARW will provide management, know-how and expertise to Newco in order to facilitate:

• the seed capital raising of up to US\$10 million as referred to above;
• the completion of feasibility studies by Newco for two biodiesel plants within the NAFTA zone;
• the initial public offering by and listing of Newco on the United States of America equity market within 9 months of the agreement; and
• the development of at least two biodiesel plants in the NAFTA zone, to be owned by Newco.

Consideration for the purchase of the rights to the Energea technology in the Australian region is to be settled by the payment of Euro300,000 within 7 days of execution of the agreement (Euro150,000 of which has already been paid) and the payment of the remaining Euro450,000 as the licence fees for the next two biodiesel plants ordered by ARW from Energea in the Australian region. Energea acknowledges that for each of the next two biodiesel plants ordered by ARW for the Australian region, Euro225,000 of the fee paid will be in partial payment of the patent rights for the

Energea technology in the Australian region. Upon full payment of the agreed Euro750,000, Energea will transfer, or cause the transfer of, the patent rights for the Energea technology in the Australian region to ARW.

Under the agreement, Energea will transfer or cause the transfer of, the ownership of all the patents for the Energea technology within the NAFTA zone, to ARW's solicitors, as trustees and escrow agent pending the incorporation of Newco, Energea acquiring 50% of the shares in Newco, and the full US\$7 million fee being paid. Energea will also transfer, or cause the transfer, of sufficient know-how and intellectual property to allow Newco to design, construct and operate biodiesel plants utilising the Energea technology. The provision by Energea to Newco of technical advice, know-how, assistance and support relating to the Energea technology will be provided on a fee for service basis.

Each of Energea and ARW will provide to each other a pre-emptive right to acquire any part or all of their respective shares in Newco in the event that they desire to sell or otherwise dispose of such shares for any reason whatsoever.

$6.3$ Biodiesel Plant - Heads of Agreement

On 13 April 2006 ARW signed a heads of agreement with Transpacific Industries Group Ltd ("TPI") to form a 50/50 unincorporated joint venture to jointly prepare a feasibility study with a view to the development of a biodiesel production facility in Brisbane, Queensland.

Under the agreement, one representative from each of TPI and ARW will form a committee, which will be responsible for the preparation and completion of the feasibility study. The feasibility study must consider all aspects of the proposed construction, development and operation of the biodiesel production facility.

Within 10 business days after the feasibility study is completed (the feasibility study must be completed by 13 August 2006), the committee must meet to consider the feasibility study and whether to approve, re-scope, or reject the feasibility study and not proceed with the project.

If the parties make a decision to proceed, they must cooperate in good faith and use their best endeavours to negotiate and execute a suite of commercial contracts in relation to the project.

The heads of agreement may be terminated by either party if the committee does not make a decision to proceed with the project by 30 October 2006, if the other party is in material breach of a material term of the agreement and either the breach is not remedied within 5 business days after the first party has given notice to remedy the breach or the breach is incapable of being remedied, either party is not satisfied with or waived satisfaction with their respective due diligence investigations by 30 October 2006 or 3 months have lapsed from the date ARW first provides drafts of the contracts containing the commercial terms after a decision to proceed is made by the committee.

6.4 Leighton Agreement - Adelaide

On 17 December 2004 Leighton entered into the construction contract for the Adelaide plant with Australian Renewable Fuels Adelaide Pty Ltd, a summary of which agreement is referred to in Section 12.1.4 of the IPO Prospectus. On or about July 2005 the parties verbally agreed to vary the construction contract from a guaranteed maximum price contract to an engineering, procurement, construction and management contract. Although the terms of the variation have been broadly agreed, the parties have not executed any formal deed of variation.

$6.5$ Leighton Agreement - Picton

A verbal agreement exists between Leighton and Australian Renewable Fuels Picton Pty Ltd, a subsidiary of ARW with respect to the construction of the Picton plant. This agreement is on substantially the same terms as the Leighton agreement with Australian Renewable Fuels Adelaide Pty Ltd for construction of the Adelaide plant.

ADDITIONALINEORMATION ¥Ø

$7.1$ Risk Factors

There are a number of risk factors which have been incorporated by reference, as referred to in Section 4 of this Prospectus.

In addition to the risks referred to in Section 4.2 of this Prospectus, ARW believes investors should be aware of the following risks:

Australian Region Patent Transfer and NAFTA Zone Joint Development Agreement a)

The Company has advanced funds of approximately \$3m to Energea, being part consideration for acquisition of the patents and the right to utilise the Energea technology and know-how for the manufacture of biodiesel, within the NAFTA zone. A risk exists that should the contract with Energea not be settled or that Newco not be established, or that insufficient seed or public funds are raised to satisfy the funding obligations under the agreement, the Company may not be able to extract value from the purchase or use of these right.

b) Feedstock and New Competition

Since the IPO Prospectus there have been a number of biodiesel facilities both proposed and constructed within the Australian region, Such developments are expected to result in an increased demand for feedstock and eventually the supply of biodiesel. These factors likely result in increased competition for feedstock and sales of biodiesel.

Leighton - Construction of Biodiesel Plants c)

As stated in Section 6.4 of this Prospectus the agreement with Leighton for the construction of the Adelaide plant is a written contract which has been varied by a verbal agreement between the parties.

The Picton plant construction has proceeded on the basis of a verbal agreeement with Leighton, which is substantially on the same terms as for the Adelaide project.

The use of verbal contracts creates potential uncertainties for both parties in the operation and enforceability of those contracts.

Market Price of Shares on ASX $7.2$

The highest and lowest prices of Shares on ASX in the period since quotation commenced on May 10, 2005 until the date of this Prospectus, and the respective dates of those sales, were \$1.98 on 12 April 2006 and \$0.825 on 26 May, 2005.

7.3 Directors' Interests

Other than as set out in Section 12.5 of the IPO Prospectus and Note 28 of the Notes forming part of the accounts contained in the Annual Report which are incorporated by reference into this Prospectus (see Section 4 of this Prospectus) and as set out below, no Director has, or had within 2 years before lodgement of this Prospectus with the ASIC, any interest in:

• the formation or promotion of the Company; $(a)$
• property acquired or to be acquired by the Company in connection with: $(b)$ (i) its formation or promotion; or (ii) the Offer; or
• the Offer. $(c)$

The following additional information is provided in relation to Directors' Interests:

• Mr Graham Scott is a director of SANT, which holds 11.13m Shares in ARW.
• Mr Max Ger has become a Director. Mr Ger has an interest in 20,000 Shares through Picola Holdings Pty Ltd and 525,000 employee options with various vesting dates, exercise prices and expiry dates as follows:

Mumber Exercise Price Expiry Date Vesting Date s and the second second second second second second second second second second second second second second second
75,000	0.50	18 October 2009	18 October 2005
75.000	1.00	18 October 2009.	18 October 2006
75,000	1.50	18 October 2009	18 October 2007
100,000	1.13	30 June 2010	30 June 2006
100,000	1.50	30 June 2010	30 June 2007
100.000	2 N.N	30 June 2010	30 June 2008

Mr Ger also receives \$174,000 per annum for providing executive and Director services to the Company.

• Mr Darryl Butcher, through his interest in NeoProTec Pty Ltd, receives \$320,000 per annum for providing executive and Director services to the Company.
• Mr Robert Scott receives \$54,500 per annum for his role as Chairman of the Company, while Mr Graham Scott, Mr Geoffrey Towner and Mr Glyn Dension receive \$32,700 per annum each for providing nonexecutive Director services to the Company. Mr Denison has an interest in 2,729 Shares through the Denison Superannuation Fund.
• The consultancy agreement with International Business Development Consultants Pty Ltd has concluded.

Other than as set out above or elsewhere in this prospectus, no one has paid or agreed to pay any amount, and no one has given or agreed to give any benefit to any Director or proposed director:

• to induce them to become, or to qualify as, a Director; or $(a)$
• $(b)$ for services provided by a director in connection with:
• $(i)$ the formation or promotion of the Company; or
• the Offer. $(ii)$

Interests of Experts and Advisers $7.4$

Other than as set out below or elsewhere in this Prospectus, no person named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus, promoter or broker to the Company has, or had within 2 years before lodgement of this Prospectus with the ASIC, any interest in:

• the formation or promotion of the Company;
• any property acquired or proposed to be acquired in connection with the formation or promotion of the Company or the Offer; or
• the Offer.

and no amounts have been paid or agreed to be paid and no benefits have been given or agreed to be given to any of those persons for services rendered by him in connection with the formation or promotion of the Company or the Offer.

Blakiston & Crabb has acted as lawyers to the Company and has performed work in relation to the Prospectus for which it will be paid approximately \$20,000 plus disbursements. Blakiston & Crabb has received approximately \$200,000 in fees for professional services provided to the Company in the last 2 years.

Horwath Audit (WA) Pty Limited has acted as auditors to the Company. Horwath Audit (WA) Pty Limited has received approximately \$45,000 in fees for professional services provided to the Company in the last 2 years.

The amounts disclosed above are exclusive of any amount of goods and services tax payable by the Company in respect of those amounts.

7.5 Litigation

The Company is not in any material litigation or arbitration proceedings nor, so far as the Directors are aware, are any such proceedings pending or threatening against the Company. The Company may have certain claims against one or more contractors involved in the design and construction of the Adelaide and Picton plants, which claims arise from the delays and cost overruns which have been experienced by ARW and subsidiaries. The Company is currently awaiting legal advice on the likelihood of success of such claims.

7.6 Expenses of the Offer

All expenses connected with the Offer are being borne by the Company. Total expenses of the Offer are approximately \$50,000.

7.7 Consents and Disclaimers

Each of the parties referred to in this Section 7.7:

• does not make, or purport to make, any statement in this Prospectus or on which a statement made in the $\bullet$ Prospectus is based other than as specified in this Section: and
• to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any part of this ٠ Prospectus other than a reference to its name and a statement included in this Prospectus with the consent of that party as specified in this Section.

Horwath (Audit) Ptv Ltd has given its written consent to the incorporation by reference of the audited financial statements for the year ended 30 June 2005, the Audit Report in relation to those audited financial statements, the reviewed financial statements for the half year ended 31 December 2005 and the Independent Review Report in relation to those reviewed financial statements, and to all statements referring to the audited financial statements for the year ended 30 June 2005, the Audit Report in relation to those audited financial statements, the reviewed financial statements for the half year ended 31 December 2005 and the Independent Review Report in relation to those reviewed financial statements in the form and context in which they are included, and has not withdrawn its consent prior to the lodgement of this Prospectus with ASIC.

Each of the following has consented to being named in the Prospectus in the capacity as noted below and have not withdrawn such consent prior to the lodgement of this Prospectus with the ASIC:

• $(a)$ Blakiston Crabb as the Company's solicitors;
• $(b)$ Horwath Audit (WA) Pty Limited as the Company's auditor; and
• $(c)$ Computershare Investor Services Pty Limited as the share registry to the Company.

7.8 Directors' Statement

This Prospectus is issued by Australian Renewable Fuels Limited. Each director has consented to the lodgment of the Prospectus with ASIC.

Signed on the date of this Prospectus on behalf of Australian Renewable Fuels Limited by

Darryl Butcher Director

DEENITIONS & CONSESSARY

Terms and abbreviations used in this Prospectus have the following meaning:

Applicant	a person who submits an Application
Application	an application for a Share under this Prospectus
Application Form	an application form in the form attached to this Prospectus
Application Monies	\$1.65
ARW or Company	Australian Renewable Fuels Limited A.B.N. 66 096 782 188
ASIC	Australian Securities & Investments Commission
ASX	Australian Stock Exchange Limited
Business Day	a day, other than a Saturday or Sunday, on which banks are open for general banking business in Sydney
Closing Date	the date by which valid acceptances must be received by the Company being 1 May 2006 or such other date determined by the Board
Directors or Board	the board of directors of Australian Renewable Fuels Limited for the time being
Issue	the issue of the Share pursuant to and in accordance with this Prospectus
Leighton	Leighton Contractors Pty Ltd A.B.N. 98 000 893 667
Listing Rules	the official listing rules of ASX
Offer	the Offer of 1 Share pursuant to and in accordance with this Prospectus
Official List	the official list of entities that ASX has admitted and not removed
Opening Date	the date of opening of the Offer, expected to be 21 April 2006
Placement	the placement of 16.2m Shares at \$1.65 to raise \$26.73m
Placement Shares	the 16.2m Shares issued pursuant to the Placement
Prospectus	this prospectus dated 21 April 2006 as modified or varied by any supplementary prospectus made by Australian Renewable Fuels Limited and lodged with the ASIC from time to time and any electronic copy of this prospectus and supplementary prospectus
SANT	Local Government Superannuation Board (ABN 92 930 911 098)
Share(s)	fully paid ordinary share(s) in the capital of the Company
Shareholders	shareholders of Australian Renewable Fuels Limited from time to time

GOREORATEDIREGIORY 9.

DIRECTORS

Mr Robert Scott Mr Darryl Butcher Mr Max Ger Mr Glyn Denison Mr Graham Scott Mr Geoffrey Towner Non-Executive Chairman Managing Director, CEO Finance Director Non Executive Director Non Executive Director Non-Executive Director

COMPANY SECRETARY

Mr Max Ger

REGISTERED OFFICE

Suite 1B Level 5 South Shore Piazza 85 South Perth Esplanade SOUTH PERTH WA 6151

Ph: (08) 9363 3500 Fax: (08) 9363 3511

WEBSITE www.arfuels.com.au

ASX CODE ARW

AUDITOR

Horwath Audit (WA) Pty Ltd 128 Hay Street SUBIACO WA 6008

SOLICITOR TO THE COMPANY

Blakiston & Crabb 1202 Hay Street WEST PERTH WA 6005

APPLICATION FORM

ACCOMPANYING THE PROSPECTUS DATED 21 APRIL 2006

AUSTRALIAN RENEWABLE FUELS LIMITED ABN 66 096 782 188

																															Share Registrars use only
	Please read all instructions on reverse of this form
																															Broker reference - stamp only
А												Number of Shares applied for					в			Total amount payable
																				cheque(s)		to	equal		this
																				amount
1													at \$1.65 per Share					A\$1.65									Broker				Adviser Code
												$\equiv$															code
you may or may not be allocated the Share applied for above
с													Full name details title, given name(s) (no initials) and sumame or company name													D.				Tax file number(s)
																															Or exemption category
Name of applicant 1																														Applicant 1/company
Name of joint applicant 2 or																														Joint applicant 2/ trust
Name of joint applicant 3 or																															Joint applicant 3/exemption
Е																										F		Contact details
Number/street								Full postal address																				Contact name
																												Contact				telephone
																												number		daytime
Suburb/town																				State/postcode										Contact email address
G								CHESS HIN (if applicable)
н																										Cheque payment details please fill out your cheque details and make your cheque payable to "Australian Renewable

Fuels Limited Float Account"

`hoorio

	ALICATO
Drawer	number	BSB , number	Account number	Total amount of cheque

Return of the Application Form with your cheque for the Application monies will constitute your offer to subscribe for $\mathbf{I}$ one Share in the Company. I/We declare that:

this Application is completed according to the declaration/appropriate statements on the reverse of this form $(a)$ and agree to be bound by the Constitution of Australian Renewable Fuels Limited; and

I/we have received personally a copy of this Prospectus accompanied by or attached to the Application $(b)$ Form or a copy of the Application Form or a direct derivative of the Application Form, before applying for the Share. No signature is required.

You should read the Prospectus dated 21 April 2006 carefully before completing this Application Form. The Corporations Act prohibits any person from passing on this Application Form (whether in paper or electronic form) unless it is attached to or accompanies a complete and unaltered copy of the Prospectus and any relevant supplementary prospectus (whether in paper or electronic form).

Guide to the Australia Renewable Fuels Limited Share Offer Application Form

This Application Form relates to the Offer of 1 Share at \$1.65 per Share pursuant to the Prospectus dated 21 April 2006. The expiry date of the Prospectus is the date which is 13 months after the date of the Prospectus.

The Prospectus contains information about investing in Australian Renewable Fuels Limited and it is advisable to read this document before applying for the Share.

A person who gives another person access to this Application Form must at the same time and by the same means give the other person access to the Prospectus, and any supplementary prospectus (if applicable).

While the Prospectus is current, Australian Renewable Fuels Limited will send paper copies of the Prospectus, and any supplementary prospectus (if applicable), and an Application Form, on request and without charge.

Please complete all relevant sections of the Application Form using BLOCK LETTERS. These instructions are cross referenced to each section of the Application Form. Further particulars and the correct forms of registrable titles to use on the Application Form are contained in the table below.

• A Insert the number of Shares you wish to apply for.
• B Insert the relevant amount of Application monies. To calculate your Application monies, multiply the number of Shares applied for by the \$1.65.
• C Write the full name you wish to appear on the statement of shareholdings. This 1 must be either your own name or the name of the company. Up to three joint Applicants may register. You should refer to the table below for the correct forms of registrable title. Applicants using the wrong form of title may be rejected. Clearing House Electronic Sub-Register System (CHESS) participants should complete their name and address in the same format as that are presently registered in the CHESS system.
• D Enter your Tax File Number (TFN) or exemption category. Where applicable, please enter the TFN for each joint Applicant. Collection of TFN(s) is authorised by faxation laws. Quotation of your TFN is not compulsory and will not affect your Application.
• E Please enter your postal address for all correspondence. All communications to you from the Share Registry will be mailed to the person(s) and address as shown. For Joint Applicants, only one address can be entered.
• F Please enter your telephone number(s), area code, email address and contact name in case we need to contact you in relation to your Application.
• G Australian Renewable Fuels Limited will apply to the ASX to participate in CHESS, operated by the ASX Settlement and Transfer Corporation Pty Ltd, a wholly owned subsidiary of Australian Stock Exchange Limited. In CHESS, the Company will operate an electronic CHESS subregister of securities holdings and an electronic issuer sponsored subregister of securities holdings. Together the two subregisters will make up the Company's principal register of securities. The Company will not be issuing certificates to Applicants in respect of securities allotted.

If you are a CHESS participant (or are sponsored by a CHESS participant) and you wish to hold securities allotted to you under this Application in uncertified form on the CHESS subregister, complete Section G or forward your Application Form to

Please complete cheque details as requested: $H$

Make your cheque payable to "Australian Renewable Fuels Limited Float Account" in Australian currency and cross it "Not Negotiable". Your cheque must be drawn on an Australian Bank. The amount should agree with the amount shown in Section B.

Sufficient cleared funds should be held in your account, as cheques returned unpaid are likely to result in your Application being rejected.

Before completing the Application Form the Applicant(s) should read the Prospectus to which the Application relates. By lodging the Application Form, the Applicant(s) agrees that this Application is for shares in Australian Renewable Fuels Limited upon and subject to the terms of this Prospectus, agrees to take any number of Shares equal to or less than the number of Shares indicated in Section A that may be affotted to the Applicant(s) pursuant to the Prospectus and declares that all details and statements made are complete and accurate. It is not necessary to sign the Application Form.

Lodgment of Applications

Return your completed Application Form with cheque(s) attached to: Australian Renewable Fuels Limited PO Box 837 South Perth, WA, 6951

Application Forms must be received no later than 5.00 pm WST time on the Closing Date

your sponsoring participant for completion of this section prior to lodgement.

Otherwise, leave Section G blank and on allotment, you will be sponsored by the Company and an SRN will be allocated to you.

For Further information refer to the relative section of the Prospectus.

Correct form of Registrable Title

Note that only legal entities are allowed to hold Shares. Applications must be in the name(s) of a natural person(s), companies or other legal entities acceptable to Australian Renewable Fuels Limited. At least one full given name and the surname is required for each natural person. The name of the beneficiary or any other non-registrable title may be included by way of an account designation if completed exactly as described in the example of correct forms of registrable title below:

Type of investor	Correct form of	Incorrect form of
	Registrable Title	Registrable Title
Individual	Mr John Alfred Smith	JA Smith
Use names in full, no initials
Minor (a person under the age of 18)	John Alfred Smith	Peter Smith
Use the name of a responsible adult, do not use the name of a minor.
Company	ABC Pty Ltd	ABC PA.
Use company title, not abbreviations		ABC Co
Trusts	Mrs Sue Smith	Sue Smith Family Trust
Use trustee(s) personal name(s), do not use the name of the trust
Deceased Estates	Ms Jane Smith	John Estate οf late
Use executor(s) personal name(s), do not use the name of the deceased	≺Est John Smith A/C≻	Smith
Partnerships	Mr John Smith and Mr Michael Smith	John Smith and Son-
Use partners personal names, do not use the name of the partnership