THORNEY TECHNOLOGIES LTD — Capital/Financing Update 2013

Feb 17, 2013

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AUSTRALIAN RENEWABLE FUELS LIMITED ABN 66 096 782 188 Level 5, 409 St Kilda Road Melbourne VIC 3004 TEL: +61 (3) 9981 0010 FAX: +61 (3) 9981 0020 www.arfuels.com.au

18 February 2013

ASX Announcement

Opening of Entitlement Offer

Australian Renewable Fuels Limited (ASX: ARW) refers to its announcement of 7 February 2013 and advises that it is in the process of despatching the following documents to shareholders in relation to its underwritten 3 for 8 non-renounceable Entitlement Offer with the right to apply for additional shares at 0.7 cents per share to raise $8 million. The Entitlement Offer closes on 5 March 2013.

1. Chairman's Letter

2. Entitlement Offer Booklet (including sample Entitlement and Acceptance Form)

3. ARfuels Quarterly Newsletter (as announced to ASX on 8 February 2013)

4. Letter to Ineligible Foreign Shareholders (which is being sent to Excluded Shareholders)

5. Letter to Nominee Shareholders (which is being sent to Nominee Shareholders)

Yours faithfully,

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Mark Licciardo Company Secretary Australian Renewable Fuels Limited

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AUSTRALIAN RENEWABLE FUELS LIMITED ABN 66 096 782 188 Level 5, 409 St Kilda Road Melbourne VIC 3004 TEL: +61 (3) 9981 0010 FAX: +61 (3) 9981 0020 www.arfuels.com.au

18 February 2013

Dear ARfuels Shareholder

Entitlement Offer

We refer to the letter to shareholders on 7 February 2013 relating to our capital raising. As contemplated, we enclose an Entitlement Offer Booklet and your personalised Entitlement and Acceptance Form in relation to the 3 for 8 underwritten non-renounceable entitlement offer priced at 0.7 cents per Share to raise $8 million before costs. This is at the same price as the $4.27 million placement which has recently completed.

Shareholders may, in addition to taking up their entitlement in full, apply for oversubscriptions by way of additional shares in excess of their entitlement at the same price of 0.7 cents per Share.

You have the following choices available to you:

• take up all of your Entitlement;

• take up all of your Entitlement and apply for further shares under the Top-Up Facility;

• take up part of your Entitlement; or

• do nothing and allow your Entitlement to lapse.

The Entitlement Offer is not renounceable and therefore your entitlements are not tradeable on ASX and are not otherwise transferable.

Wentworth Holdings Limited and Thorney Holdings Pty Ltd have underwritten the Entitlement Offer as to 50% each, with Lignol Energy Corporation providing $1.75 million sub-underwriting support. This means that ARfuels expects to receive the full $8 million (before costs) under the Entitlement Offer, even if not all Shareholders accept their Entitlements.

Quarterly Update

On 8 February ARfuels released its Quarterly Update for the period to December 2012 and a copy of this is enclosed for your reference. Of particular note is the positive cashflow and net profit result reported by the business for the half year to December 2012 (un-audited) amongst a number of other very encouraging developments in the business. I encourage you to read this document.

The Entitlement Offer Booklet contains important information, including instructions on how to participate in the Entitlement Offer if you choose to do so, a timetable of key dates and your personalised Entitlement and Acceptance Form which details your Entitlement and should be completed in accordance with the instructions provided if you wish to participate in the Entitlement Offer.

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The Entitlement Offer closes at 5.00pm on 5 March 2013. To participate in the Entitlement Offer, you must ensure that applications for Shares are received in accordance with the Entitlement and Acceptance Form by this date.

If you have any questions about the Entitlement Offer, please contact ARfuels on +61 3 9981 0010.

Yours faithfully

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Philip Garling Chairman

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Australian Renewable Fuels Limited ABN 66 096 782 188

Entitlement Offer

Details of a 3 for 8 non renounceable entitlement offer of shares in ARfuels at 0.7 cents per New Share with the right to apply for Additional Shares

The Entitlement Offer is underwritten and closes on 5 March 2013

NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES

THIS IS AN IMPORTANT DOCUMENT WHICH IS ACCOMPANIED BY AN ENTITLEMENT AND ACCEPTANCE FORM FOR YOU TO SUBSCRIBE FOR NEW FULLY PAID ORDINARY SHARES IN AUSTRALIAN RENEWABLE FUELS LIMITED. PLEASE READ THIS DOCUMENT CAREFULLY AND CALL YOUR PROFESSIONAL ADVISER IF YOU HAVE ANY QUERIES.

Important information

This booklet and the accompanying information (Information) has been prepared by Australian Renewable Fuels Limited ABN 66 096 782 188 (ARfuels).

The Information is not a prospectus under the Corporations Act and has not been lodged with the Australian Securities and Investments Commission.

The Information relates to a 3 for 8 non renounceable entitlement offer to subscribe for New Shares at the Issue Price set out in this Offer Booklet and the Entitlement and Acceptance Form, and announced to ASX by ARfuels on 7 February 2013 (Entitlement Offer).

Not financial product advice

The Information is not financial product advice, does not purport to contain all the information that you may require in evaluating a possible acquisition of New Shares in ARfuels and has been prepared without taking into account the investment objectives, financial situation and needs of you or any particular investor.

You should conduct your own independent review, investigation and analysis of ARfuels and the New Shares which are the subject of the Entitlement Offer. You should obtain any professional advice you require to evaluate the merits and risks of an investment in ARfuels before making any investment decision based on your investment objectives.

Information about ARfuels

The Information includes information about ARfuels and ARfuels’ activities current as at 18 February 2013. It is information in a summary form and does not purport to be complete. It should be read in conjunction with ARfuels’ other periodic and continuous disclosure announcements available at www.asx.com.au and www.arfuels.com.au.

Foreign jurisdictions

The Information is being sent to all Shareholders on the ARfuels share register as at 7.00pm (Melbourne time) on Friday, 15 February 2013 with an address on the share register in Australia, New Zealand, Canada, Switzerland, United Kingdom, Hong Kong and Ireland.

The Information does not constitute an offer in any jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer and no action has been taken to register the New Shares or otherwise permit a public offering of the New Shares in any jurisdiction other than Australia, New Zealand, Canada, Switzerland, United Kingdom, Hong Kong and Ireland. Acceptance of the Entitlement Offer shall be taken by ARfuels to constitute a representation by you that there has been no breach of any such laws. Eligible Shareholders who are nominees, trustees or custodians should refer to section 8 of "Other important information" for further information. The distribution of this document outside Australia may be restricted by law.

Future performance

The Information may contain certain forward-looking statements. The words "anticipate", "believe", "expect", "project", "forecast", "estimate", "likely", "intend", "should", "could", "may", "target", "plan" and other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements. Due care and attention has been used in the preparation of forecast information. Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors (many of which are beyond the control of ARfuels) that may cause actual results to differ materially from those expressed or implied in such statements. There can be no assurance that actual outcomes will not differ materially from these statements. You should also have regard to the risks in section 9 of "Other important information".

Past performance

Past performance information given in this Information is provided for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance.

Financial data

All dollar values are in Australian dollars (A$).

Disclaimer of representatives

No person is authorised to give any information, or to make any representation, in connection with the Entitlement Offer that is not contained in this Offer Booklet.

Any information or representation that is not in this Offer Booklet may not be relied on as having been authorised by ARfuels or its related bodies corporate in connection with the Entitlement Offer. Except as required by law, and only to the extent so required, none of ARfuels, or any other person, warrants or guarantees the future performance of ARfuels or any return on any investment made pursuant to this Offer Booklet.

Defined terms

Terms used in this Offer Booklet are defined in the glossary on page 12.

Other important information

Further important information is set out on pages 6 to 11.

Please refer to sections 8 and 9 of "Other important information" for further information.

Governing law

The Information, the Entitlement Offer and the contracts formed on receipt of your Application are governed by the law applicable in Victoria. Each Shareholder who applies for New Shares submits to the jurisdiction of the courts of Victoria.

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Key dates and Offer Metrics

**Key Offer dates ***

Announcement of the Entitlement Offer	Thursday, 7 February 2013
Record Date for determining Entitlement to subscribe for New Shares	7.00pm (Melbourne time), Friday, 15 February 2013
Entitlement Offer opens	Monday, 18 February 2013
Closing date for Entitlement Offer	5.00pm (Melbourne time), Tuesday, 5 March 2013
New Shares quoted on ASX on deferred settlement basis	Wednesday, 6 March 2013
Issue of New Shares, despatch of confirmation of issue	Thursday, 14 March 2013
Normal trading of New Shares on ASX	Friday, 15 March 2013

* All times and dates refer to Melbourne Time and are subject to change without notice. Any material changes will be notified to ASX. The commencement of quotation of New Shares is subject to confirmation from ASX.

ARfuels reserves the right, subject to the Corporations Act, the Listing Rules and other applicable laws, to vary the dates of the Entitlement Offer, including extending the Entitlement Offer or accepting late applications, either generally or in particular cases, without notice. Applicants are encouraged to submit their Application as soon as possible after the Entitlement Offer opens.

Key Offer metrics

Entitlement basis	3 Shares for every 8 ARfuels Shares held as at the
	Record Date of 15 February 2013 with the right to
	apply for Additional Shares
Offer Issue Price	0.7 cents per New Share
Shares to be issued pursuant to the Entitlement Offer	1,144,237,636
Total ARfuels Shares on issue following the Entitlement Offer	4,195,537,997
Entitlement Offer funds raised (before costs)	$8.0 million

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How to apply

1. Please read the whole of this Offer Booklet including the Entitlement and Acceptance Form and other information made available

The Entitlement Offer is not being made under a disclosure document or prospectus. Rather, the Entitlement Offer is being made pursuant to provisions in the Corporations Act that allow rights issues to be offered by providing certain updates and confirmations to the market. As a result, it is important for Shareholders to read and understand the publicly available information on ARfuels and the Entitlement Offer prior to accepting their Entitlements. In particular, please refer to the attached materials, plus ARfuels’ annual reports, half yearly reports and other announcements made available at www.arfuels.com.au and www.asx.com.au.

2. Consider the Entitlement Offer in light of your particular investment objectives and circumstances

Please consult with your stockbroker, accountant or other independent financial adviser if you have any queries or are uncertain about any aspect of the Offer. In particular, please refer to section 9 of "Other important information" which describes some of the key risks in relation to an investment in ARfuels.

3. Who is eligible to participate

The Entitlement Offer is being extended to Eligible Shareholders who are Shareholders that meet all of the following criteria:

• they were registered as a holder of Shares on the ARfuels share register at 7.00pm (Melbourne time) on the Record Date of Friday, 15 February 2013;

• they have an address on the ARfuels share register in Australia, New Zealand, Canada, Switzerland, United Kingdom, Hong Kong and Ireland;

• they are not in the United States or acting for the account or benefit of a person in the United States; and

• they are eligible under all applicable securities laws to receive an offer under the Entitlement Offer.

By returning a completed Entitlement and Acceptance Form, or making a payment by BPAY, you will be taken to have represented and warranted that you satisfy each of the above criteria. In addition, if you are acting as nominee or custodian, you will be taken to have represented that each beneficial holder on whose behalf you are submitting an Entitlement and Acceptance Form is resident in Australia or New Zealand. Eligible Shareholders who are nominees, trustees or custodians should refer to section 8 of "Other important information" for further information.

ARfuels reserves the right to reject any Application that it believes comes from a person who is not an Eligible Shareholder.

4. Your choices

If you are an Eligible Shareholder, you may take the following actions:

• take up all of your Entitlement;

• take up all of your Entitlement and apply for Additional Shares under the Top-Up Facility;

• take up part of your Entitlement; or

• do nothing and allow your Entitlement to lapse.

• Further information is provided below.

Shareholders who do not take up their Entitlements in full will not receive any payment or value for those Entitlements they do not take up. Shareholders who do not take up their Entitlements in full will have their percentage interest in ARfuels reduced.

Fractions arising in the calculation of Entitlements have been rounded up to the next whole number of New Shares.

5. Complete the accompanying Entitlement and Acceptance Form or pay by BPAY

If you decide to participate in the Entitlement Offer, you may do so by completing and returning the Entitlement and Acceptance Form and attaching payment by following the instructions set out on the Entitlement and Acceptance Form (see sections 6-8 below for more details).

Alternatively, you may participate by making payment via BPAY in accordance with the instructions set out on the personalised Entitlement and Acceptance Form (which includes the biller code and your unique customer reference number).

If you take no action you will not be allocated any New Shares.

The issue of New Shares is scheduled to occur on 14 March 2013. Note that ARfuels reserves the right to change dates in relation to the Entitlement Offer without prior notice to Shareholders.

6. Acceptance of the Entitlement Offer

You may take up all or part of your Entitlement by completing the Entitlement and Acceptance Form and attaching payment or by paying by BPAY (see below for more details).

Your completed Entitlement and Acceptance Form must be accompanied by a cheque, bank draft or money order in Australian currency drawn on an Australian bank for the amount of your application money, payable to “Australian Renewable Fuels Limited – Entitlement Offer” and crossed “Not Negotiable.”

You should ensure that sufficient funds are held in relevant account(s) to cover the application monies. If the amount of your cheque for application monies (or the amount for which the cheque clears in time for allocation) is insufficient to pay in full for the number of New Shares

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How to apply (continued)

you have applied for in your Entitlement and Acceptance Form, you will be taken to have applied for such lower number of whole New Shares as your cleared application monies will pay for (and to have specified that number of New Shares on your Entitlement and Acceptance Form).

Alternatively, your Application will not be accepted.

If your payment is being made by BPAY:

• you do not need to submit the personalised Entitlement and Acceptance Form but are taken to make each of the statements and representations on that form;

• if you subscribe for less than your Entitlement or do not pay for your full Entitlement, you are taken to have accepted your Entitlement in respect of such whole number of New Shares which is fully covered by your application money; and

• it is your responsibility to ensure that your BPAY payment is received by the Registry prior to the closing time for the Entitlement Offer (5.00pm (Melbourne time) on Tuesday, 5 March 2013). You should be aware that your financial institution may implement earlier cut-off times with regards to electronic payment, and you should therefore take this into consideration when making payment.

No interest will be paid to applicants on any payment received or refunded.

7. Top-Up Facility

Eligible Shareholders may, in addition to taking up their Entitlements in full, apply for Additional Shares in excess of their Entitlements. Additional Shares will only be available where there is a Shortfall between applications received from Eligible Shareholders and the number of New Shares proposed to be issued under the Entitlement Offer. Additional Shares will be issued at the offer price of 0.7 cents per share.

The allocation policy for Additional Shares subscribed pursuant to the Top-Up Facility will be as follows:

• In the event that there is a Shortfall, each Eligible Shareholder who has applied for Additional Shares through the Top-Up Facility will be entitled to receive Additional Shares on a proportionate basis having regard to their holdings as at the Record Date, provided that no Eligible Shareholder is permitted to increase a person’s relevant interest to more than 20% of the Shares on issue following the Entitlement Offer through an application for Additional Shares under this mechanism.

• The allocation process described above will be repeated in relation to any remaining Shortfall and any subsequent Shortfall, until either all new shares proposed to be issued have been allocated or all Shortfall applications have been satisfied in full.

• If any Shortfall remains, it will be allocated to the Underwriters and sub-underwriters.

Accordingly, Eligible Shareholders who apply for Additional Shares may be allocated a lesser number of Additional Shares than applied for, or may be allocated

no Additional Shares at all, in which case excess application money will be refunded without interest.

If you wish to subscribe for Additional Shares in addition to your Entitlement then you should nominate the maximum number of Additional Shares you wish to subscribe for on the Entitlement and Acceptance Form and make corresponding payment for your full Entitlement plus the Additional Shares (at 0.7 cents per Additional Share).

The practical effect of the allocation policy above is that an Eligible Shareholder can potentially increase its relevant interest, but no Eligible Shareholder can increase a person’s relevant interest to more than 20% by way of application for Additional Shares under the TopUp Facility. It is only if any Shortfall remains following allocation of applications for Additional Shares under the Top-Up Facility that such Shortfall will be allocated to the Underwriters or sub-underwriters, which may increase their relevant interests above 20% as potentially contemplated in the table appearing in section 3 of "Other important information".

8. Mail or deliver

It is important to note that the Entitlement Offer closes at 5.00pm (Melbourne time) on 5 March 2013. To participate in the Entitlement Offer, your payment must be received no later than this time and date. Your completed Entitlement and Acceptance Form, together with application money, should be mailed to:

Australian Renewable Fuels Limited

C/- Computershare Investor Services Pty Limited Yarra Falls GPO Box 505 MELBOURNE VIC 3001 AUSTRALIA

If your payment is being made by BPAY, you do not need to mail or deliver the personalised Entitlement and Acceptance Form. If your payment is being made by BPAY:

• you do not need to submit the personalised Entitlement and Acceptance Form but are taken to make each of the statements and representations on that form; and

• if your payment exceeds the amount payable for your full Entitlement, you are taken to have accepted your Entitlement in full and to have applied for such number of Additional Shares which is covered in full by your application money.

9. If you wish to do nothing and allow your Entitlements to lapse

If you do not wish to take up your Entitlement you can simply do nothing.

If you have not completed your personalised Entitlement and Acceptance Form and it has not been received by the Registry at the address above by 5.00pm (Melbourne time) on the Entitlement Offer close date of 5 March 2013, or your BPAY payment has not been received by the

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How to apply (continued)

Registry from your financial institution on or prior to 5.00pm (Melbourne time) 5 March 2013, you will be deemed to have renounced your Entitlement and it will lapse.

10. When will I receive my New Shares?

It is currently expected that the New Shares will be issued, and that confirmation of the issue of the New Shares will be despatched, on 14 March 2013.

It is the responsibility of each Applicant applying for New Shares to confirm their holding before trading in those New Shares. Any person who sells New Shares before receiving confirmation of their holding in the form of their confirmation statement will do so at their own risk. ARfuels and the Registry disclaim all liability, whether in negligence or otherwise, to any person who trades in New Shares before receiving their confirmation statement.

Information about your shareholding is available on Computershare's secure Investor Centre website, www.investorcentre.com. You will need your Securityholder Reference Number or Holder Identification Number and pass a security challenge to gain access to the Investor Centre website.

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Other important information

1. Quotation and trading

ARfuels will apply to ASX for the official quotation of the New Shares in accordance with the Listing Rules. Subject to approval being granted by ASX, it is expected that normal trading of New Shares will commence on Friday, 15 March 2013.

2. Underwriting Deed

The Entitlement Offer is underwritten by Thorney and Wentworth on a 50:50 basis each pursuant to an Underwriting Deed entered into between ARfuels, Thorney and Wentworth on 6 February 2013. Under the Underwriting Deed:

• ARfuels has agreed to keep each of Thorney and Wentworth, its related bodies corporate, directors, officers and employees indemnified from and against all third party claims and proceedings arising in any way out of the Underwriting Deed, including reasonable legal costs on a solicitor and client basis.

• ARfuels must pay Thorney and Wentworth an aggregate fee of $120,000 to be divided equally between them.

The Underwriting Deed between ARfuels, Thorney and Wentworth includes the following events which cause relief of Thorney and Wentworth's underwriting obligations:

• ( Default ) ARfuels is in default of any of the terms and conditions of the Underwriting Deed or breaches any warranty or covenant given or made by it under the Underwriting Deed and that default or breach is either incapable of remedy or is not remedied within 5 Business Days after it occurs.

• ( Failure to comply ) ARfuels or any Related Body Corporate fails to comply with any of the following:

• (a) a clause of its constitution;

• (b) the Corporations Act;

• (c) any policy or guideline of ASIC or any other requirement, order or request made by or on behalf of ASIC or any governmental agency; or

• (d) any material agreement entered into by it (which in the case of the material agreement includes termination by any part to it).

• ( Insolvency Event ) an Insolvency Event occurs with respect to ARfuels or a Related Body Corporate of ARfuels.

• ( Listing Rules ) ARfuels commits a material breach of the Listing Rules.

• ( Change to business ) ARfuels or a Related Body Corporate ceases or threatens to cease to carry on business or disposes or agrees to dispose of a substantial part of its business.

• ( Material Adverse change ) ARfuels suffers an event of a material adverse nature that prevents it from being able to carry on its business on a prolonged basis in a manner substantially consistent with its conduct prior to the date of the Underwriting Deed.

Lignol Energy Corporation has committed to provide $1.75 million of sub-underwriting support in connection with the Entitlement Offer shared evenly between Wentworth and Thorney's underwriting commitments.

3. Potential effect on control

The potential effect of the Entitlement Offer on the control of ARfuels is as follows:

• If all Eligible Shareholders take up their entitlements under the Entitlement Offer, then the Entitlement Offer will have no effect on the control of ARfuels.

• If some Eligible Shareholders do not take up all of their entitlements under the Entitlement Offer, then the interests of those Eligible Shareholders in ARfuels will be diluted.

• The proportional interests of shareholders with registered addresses outside Australia, New Zealand, Canada, Switzerland, United Kingdom, Hong Kong and Ireland will be diluted because such shareholders are not entitled to participate in the Entitlement Offer. Having regard to the share register as at the date of this document, ARfuels expects there to be a minimal number of Shares held by Excluded Shareholders.

• Eligible Shareholders may apply for additional New Shares in excess of their entitlement and the percentage interests of shareholders who receive such shares will increase. Any entitlements not taken up will revert to the Underwriters and may be allocated to persons who have provided sub-underwriting commitments and those persons who receive New Shares will also increase their interest in ARfuels.

The theoretical maximum possible voting power of all known substantial shareholders of ARfuels, at the date of this notice (and assuming no change to those shareholdings prior to the close of the Entitlement Offer) both currently and following the Entitlement Offer, is set out in the table below, assuming no Eligible Shareholders take up their rights under this Entitlement Offer and there is a 100% Shortfall as a result:

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Other important information

Substantial shareholder	Current number of shares over which holder has voting power	Current voting percentage	Maximum possible number of shares over which holder may have voting power	Maximum possible voting percentage
Thorney1	407,632,010 (607,632,010)	13.36% (19.91%)	854,060,581 (1,500,489,152)	20.36% (35.77%)
Wentworth2	200,000,000	6.55%	646,428,571	15.41%
Lignol3	541,571,429	17.75%	791,571,429	18.87%

Thorney is a 26% shareholder in Wentworth. The figures above in brackets treat Thorney as having a relevant interest in the ARfuels Shares held by Wentworth and therefore represents its aggregate interests in ARfuels.

Notes:

1. This takes into account the $3.125 million of Shares underwritten under the Entitlement Offer (having regard to the Lignol sub-underwriting). 2. This takes into account the $3.125 million of Shares underwritten under the Entitlement Offer (having regard to the Lignol sub-underwriting).

2. This takes into account the $1.75 million of Shares sub-underwritten under the Entitlement Offer.

4. Continuous disclosure

ARfuels is a disclosing entity for the purposes of the Corporations Act. As such, it is subject to regular reporting and disclosure obligations including an obligation under the ASX Listing Rules (subject to certain exceptions) to disclose to ASX any information of which it is or becomes aware concerning ARfuels and which a reasonable person would expect to have a material effect on the price or the value of shares. All such disclosures are available at www.asx.com.au. You have the opportunity to access any information about ARfuels which has previously been disclosed to ASX. In particular, please refer to ARfuels’ Annual Report for the year ended 30 June 2012. You should also have regard to any further announcements which may be made by ARfuels to ASX after the date of this Entitlement Offer Booklet.

5. No cooling off rights

Cooling off rights do not apply to an investment in New Shares. You cannot withdraw your Application once it has been accepted. Further, Entitlements cannot be traded on the ASX or any other exchange, nor can they be privately transferred.

6. Taxation

Taxation implications will vary depending upon the individual circumstances of individual Eligible Shareholders. Eligible Shareholders should obtain their own professional advice before deciding whether to invest.

7. Excluded shareholders

The Entitlement Offer is not being extended to any shareholder with an address recorded on the ARfuels share register outside Australia, New Zealand, Canada, Switzerland, United Kingdom, Hong Kong and Ireland having regard to the small number and value of New Shares that would be offered in such jurisdictions and the cost of complying with the legal and regulatory requirements in those jurisdictions.

However, in accordance with section 615 of the Corporations Act, ARfuels will appoint an ASIC-approved nominee (the "Nominee") to arrange for the sale on ASX of the New Shares which may have been issued to Excluded Shareholders. The Nominee will direct the net proceeds (if any, after deduction of the Issue Price and the costs of sale) to the Registry to facilitate pro rata payments of any net proceeds to Excluded Shareholders.

The Nominee will have the absolute and sole discretion to determine the timing and the price at which the New Shares issued to it may be sold and the manner in which any sale is made. Any interest earned on the proceeds of the sale of these New Shares will firstly be applied against expenses of such sale, including brokerage, and any balance will accrue to ARfuels.

The proceeds of sale (if any) will be paid in Australian dollars to the Excluded Shareholders for whose benefit the New Shares have been sold in proportion to their shareholdings (after deducting brokerage, commission and other expenses). If any such net proceeds of sale are less than the reasonable costs that would be incurred by ARfuels for distributing those proceeds, such proceeds may be retained by ARfuels.

Notwithstanding that the Nominee may sell New Shares, Excluded Shareholders may nevertheless receive no net proceeds if the Issue Price plus the costs of the sale are greater than the sale proceeds. Neither ARfuels nor the Nominee will be liable for a failure to obtain any net proceeds, or to sell New Shares at any particular price.

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Other important information

8. Notice to nominees and custodians

Nominees and custodians may not distribute any part of the Information in the United States or in any other country outside Australia and New Zealand, except to beneficial shareholders in another country (other than the United States) where ARfuels may determine it is lawful and practical to make the Entitlement Offer. Any person in the United States with a holding through a nominee may not participate in the Entitlement Offer.

9. Foreign jurisdictions

The New Shares may not be offered or sold in any jurisdiction outside Australia except to persons to whom such offer or sale is permitted under applicable law, as set forth below. Any failure to comply with restrictions could constitute a violation of applicable securities laws.

Canada

The Information constitutes an offering of New Shares only in the Province of British Columbia (the "Province") and to those persons to whom they may be lawfully distributed in the Province, and only by persons permitted to sell such New Shares. The Information is not, and under no circumstances is to be construed as, an advertisement or a public offering of securities in the Province. This document may only be distributed in the Province to persons that are "accredited investors" within the meaning of NI 45-106 – Prospectus and Registration Exemptions , of the Canadian Securities Administrators.

No securities commission or similar authority in the Province has reviewed or in any way passed upon the Information, the merits of the New Shares or the offering of New Shares and any representation to the contrary is an offence.

No prospectus has been, or will be, filed in the Province with respect to the offering of New Shares or the resale of such securities. Any person in the Province lawfully participating in the offer will not receive the information, legal rights or protections that would be afforded had a prospectus been filed and receipted by the securities regulator in the applicable Province. Furthermore, any resale of the New Shares in the Province must be made in accordance with applicable Canadian securities laws which may require resales to be made in accordance with exemptions from dealer registration and prospectus requirements. These resale restrictions may in some circumstances apply to resales of the New Shares outside Canada and, as a result, Canadian purchasers should seek legal advice prior to any resale of the New Shares.

The Company, and the directors and officers of the Company, may be located outside Canada, and as a result, it may not be possible for Canadian purchasers to effect service of process within Canada upon the Company or its directors or officers. All or a substantial portion of the assets of the Company and such persons may be located outside Canada, and as a result, it may not be possible to satisfy a judgment against the Company or such persons in Canada or to enforce a judgment obtained in Canadian courts against the Company or such persons outside Canada.

Any financial information contained in the Information has been prepared in accordance with Australian Accounting Standards and also comply with International Financial Reporting Standards and interpretations issued by the International Accounting Standards Board.

Unless stated otherwise, all dollar amounts contained in the Information are in Australian dollars.

Statutory rights of action for damages and rescission

Securities legislation in the Province may provide purchasers with, in addition to any other rights they may have at law, rights of rescission or to damages, or both, when an offering memorandum that is delivered to purchasers contains a misrepresentation. These rights and remedies must be exercised within prescribed time limits and are subject to the defenses contained in applicable securities legislation. Prospective purchasers should refer to the applicable provisions of the securities legislation of their respective Province for the particulars of these rights or consult with a legal adviser.

These rights are in addition to and not in derogation from any other right the purchaser may have.

Certain Canadian income tax considerations . Prospective purchasers of the New Shares should consult their own tax adviser with respect to any taxes payable in connection with the acquisition, holding, or disposition of the New Shares as any discussion of taxation related maters in the Information is not a comprehensive description and there are a number of substantive Canadian tax compliance requirements for investors in the Province.

Hong Kong

WARNING: The contents of the Information have not been reviewed by any Hong Kong regulatory authority. You are advised to exercise caution in relation to the offer. If you are in doubt about any contents of the Information, you should obtain independent professional advice.

Ireland

The Information does not constitute a prospectus under any Irish laws or regulations and the Information has not been filed with or approved by any Irish regulatory authority as the information has not been prepared in the context of a public offering of securities in Ireland within the meaning of the Irish Prospectus (Directive 2003/71/EC) Regulations 2005, as amended (the "Prospectus Regulations"). The New Shares have not been offered or sold, and will not be offered, sold or delivered directly or indirectly in Ireland by way of a public offering, except to (i) "qualified investors" as defined in Regulation 2(l) of the Prospectus Regulations and (ii) fewer than 150 natural or legal persons who are not qualified investors.

8

Other important information

The Information does not constitute a prospectus under any Irish laws or regulations and the Information has not been filed with or approved by any Irish regulatory authority as the information has not been prepared in the context of a public offering of securities in Ireland within the meaning of the Irish Prospectus (Directive 2003/71/EC) Regulations 2005, as amended (the "Prospectus Regulations"). The New Shares have not been offered or sold, and will not be offered, sold or delivered directly or indirectly in Ireland by way of a public offering, except to "qualified investors" as defined in Regulation 2(l) of the Prospectus Regulations.

New Zealand

The New Shares are not being offered or sold to the public within New Zealand other than to existing shareholders of the Company with registered addresses in New Zealand to whom the offer of New Shares is being made in reliance on the Securities Act (Overseas Companies) Exemption Notice 2002 (New Zealand).

The Information has not been registered, filed with or approved by any New Zealand regulatory authority under the Securities Act 1978 (New Zealand). The Information is not an investment statement or prospectus under New Zealand law and is not required to, and may not, contain all the information that an investment statement or prospectus under New Zealand law is required to contain.

United Kingdom

Neither the Information nor any other document relating to the offer has been delivered for approval to the Financial Services Authority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financial Services and Markets Act 2000, as amended ("FSMA")) has been published or is intended to be published in respect of the New Shares. The Information is issued on a confidential basis to fewer than 150 persons (other than "qualified investors" (within the meaning of section 86(7) of FSMA)) in the United Kingdom, and the Shares may not be offered or sold in the United Kingdom by means of the Information, any accompanying letter or any other document, except in circumstances which do not require the publication of a prospectus pursuant to section 86(1) FSMA. The Information should not be distributed, published or reproduced, in whole or in part, nor may its contents be disclosed by recipients to any other person in the United Kingdom.

Any invitation or inducement to engage in investment activity (within the meaning of section 21 FSMA) received in connection with the issue or sale of the New Shares has only been communicated or caused to be communicated and will only be communicated or caused to be communicated in the United Kingdom in circumstances in which section 21(1) FSMA does not apply to the Company.

United States

The Information or any copy of it may not be released into or distributed in the United States.

The Information does not constitute an offer to sell, or the solicitation of an offer to buy, any New Shares in the United States. The Entitlements may not be taken up by persons in the United States or by persons who are, or are acting for the account or benefit of, a person in the United States. The New Shares may not be offered or sold in the United States absent registration or in a transaction not subject to, or exempt from registration under the US Securities Act. The New Shares have not been and will not be registered under the US Securities Act or under the securities laws of any state or other jurisdiction of the United States. Accordingly, the Entitlements may only be taken up and the New Shares may only be offered and sold outside the United States, to persons that are not acting for the account or benefit of persons in the United States.

10. Risks

Below is a summary of material risks associated with an investment in ARfuels. As circumstances change, some risks may take on greater importance and others may become less relevant.

Sale price of biodiesel

The sale price of biodiesel is directly linked to the market price of mineral diesel and price fluctuations in the Singaporean benchmark price. Terminal gate prices for mineral diesel regularly fluctuate and are driven by several factors including the price of global crude oil.

Sales contracts, market competition and consumer demand

ARfuels reliance on continuing current sales contracts and executing new sales contracts will be critical in achieving the company’s revenue growth.

At present ARfuels has a high reliance on a select number of fuel customers, distributors and mining companies. The introduction of new biodiesel producers to the Australian market or the importation of biodiesel fuel to Australia could result in ARfuels facing increased competition which may adversely affect margins.

Whilst the market and demand for alternative and environmentally friendly fuels remains buoyant, any negative view with this sentiment may adversely affect ARfuels.

Commodities/feedstock

The production of biodiesel is based on the conversion of agricultural commodity by-products into fuel, with ARfuels primary feed stock being tallow and used/waste vegetable oils. ARfuels may be affected should there be significant shortages of raw materials required to manufacture biodiesel.

9

Other important information

Economic uncertainties

General economic conditions affect markets in which ARfuels operates, including the consequences of a prolonged downturn in economic conditions and credit and financial markets. Although ARfuels cannot predict future economic activity, should there be a combination of an economic downturn, with other negative economic factors in the global economy it may make it difficult for ARfuels to achieve its stated objectives.

Government legislation policy changes

Government legislation and policies such as renewable fuel production incentives are subject to review and change from time to time. Such changes are likely to be beyond the control of ARfuels and may affect industry profitability.

The operation of the plants is subject to extensive environmental laws and regulations and ARfuels is required to obtain a licence to operate in a manner designed to promote safety and to prevent the release of hazardous substances from the plants.

Violations of these requirements could result in liabilities that affect ARfuels’ financial condition. Revenue and expenditure of ARfuels may be affected by change in international, federal, state or local government laws, regulations or policies, or in taxation legislation.

Banking facilities

In light of the recently completed $4.27 million share placement and this underwritten Entitlement Offer, ARfuels has recently renegotiated its banking facility which now expires on 31 March 2013. ARfuels is currently in discussion with prospective lenders to establish a new working capital facility. Notwithstanding the discussions with prospective debt providers, completion of this fully underwritten Entitlement Offer of $8.0 million will mean that ARfuels will have sufficient working capital to continue operations.

Insurance

ARfuels may, where economically practicable and available, endeavour to mitigate some project and business risks by procuring relevant insurance cover. However, such insurance cover may not always be available or economically justifiable and the policy provisions and exclusions may render a particular claim by ARfuels outside the scope of the insurance cover.

While ARfuels will undertake all reasonable due diligence in assessing the creditworthiness of its insurance providers there will remain the risk that an insurer defaults in payment of a legitimate claim by ARfuels under an insurance policy.

Foreign exchange rates

Whilst ARfuels’ operations are Australian domiciled the company has exposure to foreign exchange risk from its commercial activities. Foreign exchange risk arises from future commercial transactions relating to the procurement of feedstock from international markets or the export of biodiesel to international markets.

Management and reliance on key personnel

There have been changes of substance to the overall management of ARfuels as well as to the construction of the ARfuels board, and although the benefits of the same are expected to be positive to the business, it is also possible that the same could impact on the business of ARfuels.

ARfuels is reliant on key management and personnel and senior management to achieve profitable growth for ARfuels. Whilst the board and management put in place policies and procedures to reward and retain key employees, ARfuels may be adversely affected should key or senior staff exit the organisation.

Technology

Although ARfuels invested in a defined and proven technology, this does not reduce the risk that an alternate technology (or low cost alternative feed stock) may become commercially available to the market and adversely affect ARfuels ability to continue operating in its current business form.

Production and operation risks

The production of biodiesel may be curtailed, delayed or cancelled as a result of mechanical difficulties, equipment failures, human error, labour disputes or shortages, delays or shortages in the delivery of feedstock, weather conditions and natural disasters. In addition, the occurrence of fire, explosions, blow-outs, pipe failure, and environmental hazards such as accidental spills or leakages could cause ARfuels substantial loss due to the cost of personal injury or loss of life, damage to or destruction of property and the environment, clean-up responsibilities, regulatory investigation, litigation and penalties.

10

Other important information

ARfuels financial information

The Independent Auditor's Report to the members of ARfuels for the financial year ended 30 June 2012 noted, as a matter of emphasis without modifying the audit opinion, the existence of a material uncertainty which may cast significant doubt about ARfuels' ability to continue as a going concern. The ARfuels board considers that the Entitlement Offer (together with the $4.27 million placement announced on 7 February 2013) represents a material capital raising for ARfuels and provides the cash resources required for a number of purposes, including working capital, funding future growth and paying down debt. With the Entitlement Offer being fully underwritten, the ARfuels board does not consider that any similar emphasis of matter statement will appear in the Independent Auditor's Report for the financial year ending 30 June 2013.

General market risks

Securities investment and share markets

The market price of the Shares may fall as well as rise and may be subject to varied and unpredictable influences on the market for equities in general and energy stocks in particular.

Further, the stock market has experienced extreme price and volume volatility that has often been unrelated or disproportionate to the operating performance of such companies. There can be no guarantee that current trading prices will be sustained. The price of securities may also be affected by market sentiment arising from factors including changes in interest rates and economic conditions and movements in the Australian and international financial markets. These factors may materially affect the market price of Shares, regardless of ARfuels' operational performance.

In addition, investors should appreciate that the value of ARfuels' securities on ASX may rise or fall depending on a range of factors beyond the control of ARfuels.

Economic risk

Changes in customer preference for alternative energy sources or the general economic climate in which ARfuels operates may adversely affect the financial performance of ARfuels. Factors which may contribute to that general economic climate include the level of direct and indirect competition against ARfuels, industrial disruption, the rate of global growth, interest rates and the rates of inflation.

Macro economic and political factors

Apart from exchange risks, there are a wide range of other macro economic and political factors beyond the control of ARfuels which may affect its operations. These include the consequences of terrorist and other activities, which themselves impact adversely on the global economy, demand for commodities and share market conditions and share prices generally.

Market price

The ASX share market price of Shares will fluctuate due to various factors including general movements in commodity prices, currencies, the Australian and international investment markets, economic conditions, global geopolitical events and hostilities, investor perceptions and other factors that may affect ARfuels’ financial performance and position. It should be noted that ARfuels Shares have performed below the market average over the recent past.

Relative market illiquidity of ARfuels’ Shares

Shares in ARfuels are relatively illiquid in comparison with other ASX listed public companies. As a result ARfuels’ trading share price may be impacted by fluctuations in shareholder investment demand.

11. Queries

If you have any questions, please contact ARfuels on +61 3 9981 0010.

If you have any doubt as to whether you should participate you should consult your stockbroker, accountant or other independent financial adviser.

11

Glossary

Term	Meaning
Additional Shares	New Shares applied for by an Eligible Shareholder that are in excess of the Eligible
	Shareholder’s Entitlement.
Application	an application for New Shares lodged in accordance with the instructions in this Offer
	Booklet and the Entitlement and Acceptance Form.
ASX	ASX Limited or the financial products market operated by it as the context requires.
ARfuels	Australian Renewable Fuels Limited ABN 66 096 782 188.
Corporations Act	Corporations Act 2001 (Cth).
Eligible Shareholder	has the meaning given in section 3 of “How to Apply”.
Entitlement	the number of New Shares for which an Eligible Shareholder is entitled to subscribe
	under the Entitlement Offer.
Entitlement and Acceptance	the personalised Entitlement and Acceptance Form accompanying this Offer Booklet.
Form
Entitlement Offer	the 3 for 8 non-renounceable entitlement offer to subscribe for New Shares at the Issue
	Price set out in this Offer Booklet and the Entitlement and Acceptance Form, and
	announced to ASX on 7 February 2013 by ARfuels.
Excluded Shareholder	a shareholder at the Record Date who has an address on the ARfuels share register
	which is not in Australia, New Zealand, Canada, Switzerland, United Kingdom, Hong
	Kong and Ireland.
Insolvency Event	means in relation to any person:
	(a) a receiver, receiver and manager, administrator, trustee or similar official is appointed
	over any of the assets or undertaking of the person;
	(b) an application or order is made for the winding up or dissolution of, or the
	appointment of a provisional liquidator to the person or a resolution is passed or
	steps are taken to pass a resolution for the winding up of dissolution of the person
	otherwise than for the purpose of an amalgamation or reconstruction which has the
	prior written consent of the Underwriters; or
	(c) an administrator is appointed under Division 2 of Part 5.3A of the Corporations Act.
Issue Price	0.7 cents per New Share.
Lignol	Lignol Energy Corporation.
Listing Rules	the Listing Rules of ASX, except as waived or modified from time to time.
New Shares	a Share issued under the Entitlement Offer (and, for the avoidance of doubt, any
	Additional Shares issued will be New Shares).
Offer Booklet	this booklet setting out the terms of the Entitlement Offer and other important information
	relating to the Entitlement Offer.
Offer Documents	the documents issued or published by or on behalf of ARfuels in respect of the
	Entitlement Offer, including this Offer Booklet, any letter to ARfuels' shareholders, the
	Entitlement and Acceptance Form, any cleansing statement in relation to the Entitlement
	Offer and any other document related to the Entitlement Offer.
Record Date	7.00pm (Melbourne time) on Friday, 15 February 2013.
Registry	Computershare Investor Services Pty Limited.
Related Body Corporate	a body corporate that is related to another body by virtue of the Corporations Act.

12

Glossary

Share	a fully paid ordinary share in the capital of ARfuels.
Shareholder	a registered holder of a Share.
Shortfall	a positive difference between the maximum number of New Shares offered under the
	Entitlement Offer and the total number of New Shares and Additional Shares subscribed
	for by Eligible Shareholders.
Thorney	Thorney Holdings Pty Ltd ABN 37 006 262 835
Top-Up Facility	the mechanism by which Eligible Shareholders (other than ARfuels directors) can apply
	for Additional Shares as described in section 7 of “How to Apply”.
Underwriters	Thorney and Wentworth.
US Securities Act	the US Securities Act of 1933, as amended.
Wentworth	Wentworth Holdings Limited ABN 41 080 167 264.

13

Australian Renewable Fuels Limited

For all enquiries:

ABN 66 096 782 188

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Phone:

(within Australia) 1300 850 505 (outside Australia) 61 3 9415 4000 Web: www.investorcentre.com/contact

T 000001 000 ARW

MR SAM SAMPLE 123 SAMPLE STREET SAMPLETOWN VIC 3000

Make your payment:

See over for details of the Offer and how to make your payment

Non-Renounceable Entitlement Offer — Entitlement and Acceptance Form (including Additional Shares)

� [Your payment must be received by 5.00pm (Melbourne time) on 5 March 2013]

This is an important document that requires your immediate attention. It can only be used in relation to the shareholding represented by the details printed overleaf. If you are in doubt about how to deal with this form, please contact your financial or other professional adviser.

Step 1: Registration Name

Please check the details provided and update your address via www.investorcentre.com if any of the details are incorrect.

If you have a CHESS sponsored holding, please contact your Controlling Participant to notify a change of address.

Step 2: Make Your Payment

You can apply to accept either all or part of your Entitlement. Enter the number of New Shares you wish to apply for and the amount of payment for those shares. You may also apply for Additional Shares in excess of your Entitlement.

Choose one of the payment methods shown below. BPAY ®: See overleaf. Do not return the slip with BPAY payment. By Mail: Complete the reverse side of this payment slip and detach and return with your payment. Make your cheque or bank draft payable in Australian dollars to "ARfuels Limited NRE A/C". The cheque must be drawn from an Australian bank. Cash is not accepted.

Payment will be processed on the day of receipt. Receipts will not be forwarded. Funds cannot be debited directly from your account.

Entering your contact details is not compulsory, but will assist us if we need to contact you.

Turn over for details of the Offer è

By making your payment you confirm that you agree to all of the terms and conditions as detailed in the Entitlement Offer Booklet dated 18 February 2013.

Australian Renewable Fuels Limited Non-Renounceable Entitlement Offer Payment must be received by 5.00pm (Melbourne time) on 5 March 2013

® Registered to BPAY Pty Limited ABN 69 079 137 518

916CR_0_Sample_CA/000001/000001

Entitlement and Acceptance Form with Additional Shares

Registration Name & Offer Details

MR SAM SAMPLE Registration Name: 123 SAMPLE STREET SAMPLETOWN VIC 3000

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

X 9999999991 I ND
----- End of picture text -----

�[For your security keep your SRN/] HIN confidential.

Entitlement No: 12345678

Offer Details:

Existing shares entitled to participate as at 7.00pm (Melbourne time) 15 February 2013: Entitlement to New Shares on a 3 for 8 basis: Amount payable on acceptance at $0.07 per share:

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You may apply for Additional Shares in excess of your Entitlement by completing the Additional Shares details below.

Make Your Payment

Pay by Mail:

Biller Code: 00000 Ref No: 1234 5678 9123 4567 89 �

Make your cheque, money order or bank draft payable to "ARfuels Limited NRE A/C".

Return your cheque with the below slip to: Computershare Investor Services Pty Limited GPO BOX 505 Melbourne Victoria 3001 Australia

Contact your financial institution to make your payment from your cheque or savings account.

Privacy Statement

Personal information is collected on this form by Computershare Investor Services Pty Limited (CIS) as registrar for the securities issuer (the issuer), for the purpose of maintaining registers of securityholders, facilitating distribution payments and other corporate actions and communications. Your personal information may be disclosed to our related bodies corporate, to external service companies such as print or mail service providers, or as otherwise permitted by law. If you would like details of your personal information held by CIS, or you would like to correct information that is inaccurate, incorrect or out of date, please contact CIS. In accordance with the Corporations Act 2001, you may be sent material (including marketing material) approved by the issuer in addition to general corporate communications. You may elect not to receive marketing material by contacting CIS using the details provided above or email privacy@computershare.com.au

Detach here

Acceptance Payment Details

Entitlement taken up:

Number of Additional Shares applied for: Amount enclosed at $0.07 per New Share: A$ .

Payment must be received by 5:00pm Melbourne Time on 5 March 2013

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12345678
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Entitlement No: 12345678

MR SAM SAMPLE 123 SAMPLE STREET SAMPLETOWN VIC 3000

Contact Details

Contact Daytime Name Telephone Cheque Details Drawer Cheque Number BSB Number Account Number Amount of Cheque

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123456789123456789+0000000001-3051+14

DECEMBER QUARTER SHAREHOLDER NEWSLETTER FIRST PROFIT RESULT

Dear Shareholder,

We are pleased to provide you with an update on the business activities and progress of Australian Renewable Fuels Limited (ARfuels) for the quarter ending 31 December 2012. The quarter included the 12 month anniversary of the acquisition of Biodiesel Producers Limited and the continued improvement in the performance of the ARfuels business, including a first ever profit result of $1.4m for the half year (subject to audit clearance).

Highlights

• The half year financial result for 31 December 2012 will be a Net Profit After Tax of approximately $1.4m (subject to audit clearance).

• For the quarter ended 31 December 2012 ARfuels generated net operating cash inflows of $431k, as reported in the Appendix 4C Cash Flow Report. This is attributable to the continued improved trading results, notwithstanding a below average sales result for December due to the industry wide diesel shortage in Victoria and NSW during that month.

• As advised in yesterday’s ASX releases, ARfuels will undertake a capital raising of $12.3m with a placement of $4.27m fully subscribed and a fully underwritten rights issue for $8.01m. This completes the recapitalisation of the business, provides working capital as the Picton and Largs Bay plants come back on line and enables the senior debt facility to be repaid.

• The rebuild program at the Largs Bay plant was completed on time and under budget and the plant is back on-line producing biodiesel. The arrival of an improved loading gantry will facilitate in-line blending for customers directly from the Largs Bay gantry. This will be installed in February 2013.

• We are in the process of finalising the business interruption/loss of profits claim which is expected to be completed during February 2013.

• ARfuels continue to develop reliable and sustainable sources of waste vegetable oil feedstocks. During the quarter we received and processed a number of trial shipments. This developing supply chain, whilst in the early stages, is very promising and we have to date processed over 200 tonnes of these feedstocks through the Barnawartha plant with a high quality product that meets our biodiesel standards and no impact on plant performance;

• During the December quarter we completed a further export shipment to the USA, bringing total exports to 12 million litres over the past 12 months. Negotiations are currently in progress for the next export shipments with the Largs Bay plant now back on line.

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AUSTRALIAN RENEWABLE FUELS LIMITED (ABN 66 096 782 188) Level 5, 409 St Kilda Road, Melbourne VIC 3004 Tel +61 3 9981 0010 | Fax +61 3 9981 0020 E-mail info@arfuels.com.au Web www.arfuels.com.au

• ARfuels growth trajectory was recognised by Deloitte in awarding ARfuels second place in its annual ‘Deloitte Technology Fast 50, Australia 2012”, a ranking of Australia’s fastest growing and uniquely positioned companies in the technology arena.

• During December ARfuels was awarded preferred supplier status to Australian Councils via a tender process. This recognises the quality of the ARfuels business and our product, and will allow increased exposure and sales to the important Local Government sector.

Production

The plants are running below nameplate capacity and this is a function of sales. We have employed Anthony Guy as Business Development Manager, to focus on sales and business growth in South Australia and Western Australia. Production volumes are expected to increase over the next six months and as mentioned earlier demand from export markets are also expected to provide a base line level of sales out of Picton and Largs Bay during 2013.

ARF Production Litres ‘000

Sales

Sales volumes during the month of December were negatively impacted by the mineral diesel shortage in Victoria and NSW. Demand for biodiesel continued to grow during the quarter with the major oil companies biodiesel facilities in Sydney and Melbourne providing a strong sales base.

We are in the process of installing biodiesel storage and blending facilities in Perth and this will provide the necessary infrastructure for the long term blending of biodiesel with the major diesel suppliers in WA.

The Largs Bay plant came back on line in November and a blending facility will be installed in February to provide B5 and B20 blending options at that plant.

Negotiations are in progress for a series of export shipments out of Adelaide and Perth. On completion these orders will provide a material step up in the sales and production levels of the Largs Bay and Picton plants.

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5,000
4,000
3,000
2,000
1,000
0
Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12
Adelaide Barnawartha Picton
----- End of picture text -----

Feedstock

Delivered feedstock prices throughout the quarter averaged A$750 to A$800 per tonne. Levels in the current quarter are approximately $50 per tonne lower and we are not seeing significant upward pressure on tallow and UCO pricing in the first quarter of 2013. We continue to investigate all feedstock options for used and waste vegetable oils and low grade tallows.

The successful processing of waste vegetable oil feedstocks at the Barnawartha plant during the quarter has proven that these feedstocks are a viable addition to our business mix and we continue to develop this side of the operations.

ARF Biodiesel Sales Litres ‘000

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6,000
5,000
4,000
3,000
2,000
1,000
0
Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12
Oil Majors Industry Export
----- End of picture text -----

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AUSTRALIAN RENEWABLE FUELS LIMITED (ABN 66 096 782 188) Level 5, 409 St Kilda Road, Melbourne VIC 3004 Tel +61 3 9981 0010 | Fax +61 3 9981 0020 E-mail info@arfuels.com.au Web www.arfuels.com.au

Financial Position

An update of the company’s cash position was provided in the Appendix 4C Cash Flow Report for the December quarter, which reported a positive net operating cash flow. The total cash position of the quarter was an outflow of $2.1m driven by the final payment for the acquisition of Biodiesel Producers Limited of $2.4m.

The 31 December half yearly accounts are currently being audited and they will be released around 21 February 2013. As stated the preliminary unaudited result is a Net Profit After Tax of $1.4m. This does not include any result for the Business Interruption insurance claim arising from the fire at the Largs Bay plant. The outcome of that claim is expected to be confirmed during February 2013.

If there are any queries in relation to the business of the company or the matters outlined above, please do not hesitate to contact Andrew White on 03 9981 0010 or info@arfuels.com.au. If you would like to receive the Quarterly Newsletter via email please forward your name and email address to info@arfuels.com.au.

Yours sincerely,

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ANDREW WHITE Managing Director and Chief Executive Officer 8 February 2013

Proposed Merger with Wentworth Holdings Limited (WWM)

The ASX and Shareholders releases on 7 February 2013 announced the takeover of WWM will not proceed and we will complete a capital raising of $12.3m via a placement and rights issue. We are delighted that this raising has been supported by our largest shareholders and also a number of new corporate and institutional investors. This raising recapitalises the business and provides the necessary funding for working capital as the business continues to grow and for repayment of the senior debt facility to Suncorp Metway Limited.

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AUSTRALIAN RENEWABLE FUELS LTD (ABN 66 096 782 188) Level 5, 409 St Kilda Road, Melbourne VIC 3004 Tel +61 3 9981 0010 | Fax +61 3 9981 0020 E-mail info@arfuels.com.au Web www.arfuels.com.au

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18 February 2013

AUSTRALIAN RENEWABLE FUELS LIMITED ABN 66 096 782 188 Level 5, 409 St Kilda Road Melbourne VIC 3004 TEL: +61 (3) 9981 0010 FAX: +61 (3) 9981 0020 www.arfuels.com.au

Dear Ineligible Shareholder

Entitlement Offer – Notification to Ineligible Shareholders

As you may be aware, on 7 February 2013, Australian Renewable Fuels Limited (ASX:ARW) announced a 3 for 8 non-renounceable entitlement offer of ARfuels shares at an offer price of 0.7 cents per share ("Entitlement Offer").

The Entitlement Offer comprises an offer to shareholders who have a registered address in Australia, New Zealand, Canada, Switzerland, United Kingdom, Hong Kong or Ireland on the basis of 3 new shares for every 8 existing ARfuels ordinary shares held at 7.00 pm (Melbourne time) on Friday, 15 February 2013.

As your ARfuels shares are registered with an address outside of Australia, New Zealand, Canada, Switzerland, United Kingdom, Hong Kong and Ireland you do not satisfy the eligibility criteria to be classified as an eligible shareholder ("Ineligible Shareholder"). Under the terms of the Entitlement Offer, you are not eligible to subscribe for new shares and you will not be sent a copy of the Entitlement Offer documents.

What will happen to your entitlement?

As you are an Ineligible Shareholder, you will not receive entitlements under the Entitlement Offer. However, in accordance with section 615 of the Corporations Act 2001 (Cth), ARfuels will appoint a nominee approved by the Australian Securities and Investments Commission to arrange for the sale on ASX of the new shares which represent the full entitlement of ARfuels shareholders with registered addresses outside of Australia, New Zealand, Canada, Switzerland, United Kingdom, Hong Kong and Ireland. The nominee will be required to direct the net proceeds (if any, after deduction of the subscription price and the selling fee) to ARfuels' registrar to facilitate pro rata payments of any net proceeds to you and other Ineligible Shareholders.

The nominee will be instructed to sell the new shares on ASX as soon as practicable following allotment of the new shares, in such manner and at such price or prices as the nominee determines. The new shares will be allotted at the same time as the allotment of shares under the Entitlement Offer.

The proceeds of sale (if any) will be paid in Australian dollars to the Ineligible Shareholders for whose benefit the new shares have been sold in proportion to their shareholdings (after deducting any selling fee). Notwithstanding that the nominee may sell the new shares, Ineligible Shareholders may nevertheless receive no net proceeds if the subscription price plus any selling fee is greater than the sale proceeds.

Yours sincerely

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Philip Garling Chairman

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AUSTRALIAN RENEWABLE FUELS LIMITED ABN 66 096 782 188 Level 5, 409 St Kilda Road Melbourne VIC 3004 TEL: +61 (3) 9981 0010 FAX: +61 (3) 9981 0020 www.arfuels.com.au

18 February 2013

Dear Nominee Shareholder

Entitlement Offer – Notification to Nominees

On 7 February 2013, Australian Renewable Fuels Limited (ASX:ARW) announced a 3 for 8 nonrenounceable entitlement offer of ARfuels shares at an offer price of 0.7 cents per share ("Entitlement Offer").

The Entitlement Offer comprises an offer to shareholders who have a registered address in Australia, New Zealand, Canada, Switzerland, United Kingdom, Hong Kong or Ireland on the basis of 3 new shares for every 8 existing ARfuels ordinary shares held at 7.00 pm (Melbourne time) on Friday, 15 February 2013.

The Entitlement Offer Booklet, together with a personalised entitlement and acceptance form as released to ASX on Monday, 18 February 2013 ("Offer Documents") is being sent to eligible shareholders. As a nominee, you will be sent a copy of the Offer Documents.

ARfuels advises you not to:

• (a) send any Offer Documents to any person in the United States;

• (b) send any Offer Documents to any person with an address in any other country outside Australia or New Zealand except, with the written consent of ARfuels and to the extent permitted under applicable securities laws, to beneficial shareholders in such other country; or

• (c) submit any entitlement and acceptance form or otherwise subscribe for shares on behalf of any person referred to in paragraphs (a) or (b) above.

If you have any queries, please contact Computershare Investor Services Pty Limited on +61 3 9415 4000.

Yours sincerely

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Philip Garling Chairman