Arckaringa Project Update

13th August 2012

ARCKARINGA PROJECT UPDATE

All Required Regulatory Approvals Secured for Test Drilling

Altona Energy ("The Company") is pleased to announce an update to its flagship Arckaringa project in South Australia, the results of which will allow the drilling programme to proceed. The company has recently had its Program for Environmental Protection and Rehabilitation (PEPR) approval extended by six months to November by the South Australian Department of Manufacturing, Innovation, Trade, Resources and Energy (DMITRE) in view of the time taken by the Government to issue the Water Affecting Activity (WAA) permit and time needed to make required changes to the drilling programme as part of the Work Area Clearance (WAC) process.

Also, the WAA Permit -required to cover the hydro-geological test and other drill holes, pursuant to the terms of the PEPR - was recently granted by the South Australian Arid Lands Natural Resources Management Board under the newly expanded and strengthened regulations governing water affecting activities in the Arid Lands regions of South Australia.

Following discussions with the Native Title claimant group Antakarinji Matu-Yankunytjatjara Aboriginal Corporation (AMYAC) and its representatives, the WAC process has also now formally been completed. The discussions have been ongoing since October 2011 and led to a formal acceptance by AMYAC on 12 July that the drilling programme design and drill hole locations meet the terms of the WAC (as required under the PEPR granted by DMITRE ). As a result, all drill hole locations are now cleared for drilling. 

The WAC process involved the relocation and/or redesign of six of the proposed maximum 31 drill holes to protect aboriginal heritage concerns during, and as a result of, the drill programme . These changes were achieved co-operatively and were checked by technical consultants in China and Australia to ensure that the technical objectives of the programme would still be achieved. During discussions, AMYAC and the Arckaringa JV partners have maintained their positive relationship and have agreed to work together to achieve and implement a framework or Memorandum of Understanding (MOU) that can lead to a Native Title Agreement to cover respective rights, responsibilities and economic opportunities during any future mining and development project at Wintinna.

With permits and approvals now in place, CNOOC NEIA is clear to finalise its selection of drilling programme consultants from China and Australia - including drilling contractors and other service providers - to allow the programme to proceed. The key objectives of the programme are:

·; to extract bulk samples of coal to test and extend the coal quality profile

·; to complete in-fill coal and coal geotechnical boreholes to facilitate open cut mine design (especially in an area covering the potential initial box cut)

·; to complete hydro-geological test wells to enable the refinement of the existing hydro-geological model and underpin a groundwater management plan.

Attaining these objectives is essential to the progress of the Bankable Feasibility Study (BFS) for the Arckaringa CTL and Power Project.

Chris Lambert, Executive Chairman of Altona Energy commented: "This is a significant moment for the Arckaringa project. All regulatory approvals are now in place to allow the commencement of the drilling programme. We have also achieved some important regulatory and community relations milestones as we have worked through the approval process, which will stand our future field activities in very good stead . Large scale long-term projects like Arckaringa certainly have their challenges for everyone involved, but it is clear that we have made some very sound progress in the last few months, and we look forward to updating the market with more news on the drilling programme as it becomes available."

For further information, please visit www.altonaenergy.com or contact:

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