THORNEY TECHNOLOGIES LTD — Capital/Financing Update 2007

Nov 1, 2007

AUSTRALIAN RENEWABL FUELS LIMITED

AUSTRALIAN RENEWABLE FUELS LIMITED

ABN 66 096 782 188

SUITE 1B. LEVEL 5 SOUTH SHORE PIAZZA 85 SOUTH PERTH ESPLANADE SOUTH PERTH WA 6151

P.O.BOX 837 SOUTH PERTH WA 6951

TEL +61 8 9363 3500 FAX +61 8 9363 3511 E-MAIL info@arfuels.com.au WER www.arfuels.com.au

Friday 2 November 2007

ASX Release

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

Dear Sir/Madam,

Australian Renewable Fuels switches focus to United States

Australian Renewable Fuels Limited (ARF, ASX: ARW) announces a major change of strategic direction as a result of rapidly escalating feedstock prices for its production facilities in Western Australia and South Australia.

The Board of ARF has decided to immediately place the Australian plants on care and maintenance pending a strategic review of the Company's options in conjunction with adviser Macquarie Bank.

Tallow feedstock in Australia has increased in price from less than \$600 per tonne to prices above \$900 per tonne in the past 6 months as a result of burgeoning demand from China.

As a consequence, production of biodiesel from ARF's two processing plants has become uneconomic with no indication of material improvement in feedstock prices in the immediate future.

The core focus of the Company's activities will now be the United States where it believes its world class technology potentially has a better commercial future.

For some time ARF has being undertaking pre-feasibility and opportunity assessment in the US. In September ARF Inc closed its equity raising in the US having raised USD 2.274M to undertake a bankable feasibility study.

The strategic review is anticipated to take a maximum of six weeks with key evaluation milestones within this timeframe. The strategic review will seek to bring forward the assessment of the feasibility of the US plant and to determine how to best deal with the Australian assets to the benefit of shareholders.

It is anticipated that the outcome of the strategic review will focus the Company's resources on the US operations and will require a reallocation of resources and review of the Company's structure.

ARF Chairman Alan Mulgrew said it was the Board's overriding priority to protect shareholder value.

"We have made significant progress in our efforts to sign up long term supply contracts with oil majors and other customers," said Mr Mulgrew.

"However, feedstock pricing has moved in the Australian market to such a level that ARF is now not in a position to enter into those contracts with certainty that it will be able to operate on a cashflow positive basis.

"This movement has coincided with a rising Australian dollar which has negatively impacted the benefit of increasing crude oil prices which forms the basis of our pricing structure. This situation is further exacerbated by the demand by major oil companies for ARF to fund multi million dollar capital improvements within their terminal facilities."

Without access to cheaper feedstocks, government policy intervention or a willingness by customers to pay at a rate that recognises the full cost inputs of biodiesel production in Australia, commercial operation in the current environment is not possible. ARF intends to discuss these fundamentals with government, oil majors, suppliers and customers

Mr Mulgrew said the Board and management of ARF has moved proactively to substantially reduce all operating and staff costs to focus on the development of the opportunities in the United State's biodiesel market.

"There is a particular opportunity in New Mexico where there is greater feedstock diversity and where there is legislation to mandate the use of biodiesel.

"The other key difference is that the pricing pressure from Chinese demand is not-present due to export prohibitions relating to US tallow."

In the interim, ARF will work with its financiers and major shareholders to determine the best way to facilitate the pursuit of the US opportunity. The Company has been advised by its financiers that based on its current assets and liabilities it will continue to support the Company through to a further review on 31 January 2008 and the directors are satisfied that the Company will be in a position to retire its liabilities and retain value in its significant fixed assets represented by the two plants, land, and the investment in ARF Inc.

Mr Mulgrew said the decision to place both Australian plants on care and maintenance was very frustrating but was in the best interests of shareholders. It is particularly disappointing for staff who have shown tremendous loyalty and the Board appreciates their understanding of the above decisions.

"Our focus now is on assessing how best we can capture value for our shareholders from ARF's ownership of world class technology, expertise and development rights for the North American Free Trade Agreement zone" he said.

"We will report back to the market within the next month."

Should you have any queries in relation to this announcement, please do not hesitate to contact;

Australian Renewable Fuels Limited Max Ger – Acting General Manager (Australian Operations) and Company Secretary T: 08 9363 3500 E:: info@arfuels.com.au

ENDS