Arckaringa Project Update

20 June 2011

Altona Energy Plc / Index: AIM / Epic: ANR / Sector: Exploration & Production

Altona Energy Plc (AIM: ANR)

Arckaringa Project Update

Highlights

·; Arckaringa Exploration Licences (ELs 4511, 4512 and 4513) renewed for a further two years with effect from 6 June 2011

·; Arckaringa coal geology, coal reserves and coal quality confirmed

·; Preparations for resource drilling and hydrogeological field programmes due to commence during the second half of 2011 are well advanced

·; Studies to be undertaken in upgrading coal to reduce capital expenditure of coal-to-liquids ('CTL') plant, which could also facilitate potential exports of upgraded coal product to China

·; Market research studies to commence on off take agreements and product pricing for synthetic fuels, power and water

Altona Energy Plc ('Altona' or 'the Company'), the AIM-listed Australia-based energy company, is pleased to provide an update on the Arckaringa Project including the successful renewal of the Arckaringa Exploration Licences ("ELs") and further progress on the Bankable Feasibility Study ('BFS') being undertaken by the Joint Venture between CNOOC New Energy International (Australia) Pty. Ltd ('CNOOC-NEIA') and the Company's wholly owned subsidiary, Arckaringa Energy Pty Ltd ('Arckaringa Energy').

Renewal of Exploration Licences

Altona has been successful in its application for a two year renewal of the Arckaringa ELs, on behalf of the EL holders and Arckaringa Joint Venture partners, CNOOC-NEIA (51%) and Arckaringa Energy (49%).

The renewal of ELs in South Australia ("SA") is typically for a period of one year within a maximum 5 year timeframe, subject to meeting minimum expenditure commitments and other terms of the Licences. In this instance, however, the Minister for Mineral Resources has granted the renewals for 2 years in recognition of the detailed work programme which will be carried out as part of the BFS. As submitted in Altona's renewal application, the work programme for the first year of the renewal period, whilst not yet fully costed, will by itself involve a substantial proportion of the $12 million allocated to Stage 1 of the BFS and therefore will comfortably exceed the combined minimum expenditure commitment over the three ELs of A$690,000. The Government has also taken into account that the JV Agreement includes a sole funding commitment by CNOOC NEIA for the BFS work programme of A$40 million, the bulk of which is scheduled to be spent over the next two years.

Altona's Managing Director, Chris Schrape, commented that "the SA Government's decision to approve the application will extend secure tenure until June 2013 and provides a strong regulatory foundation for the continuing work of the JV partners on the BFS. The renewal underlines the SA Government's recognition of the significant scope of the BFS and the potential impact of the Arckaringa Project on the State's energy economy, in particular decreasing its dependency on imported fuels and boosting power supply."

Field Programme

Preparations for field programmes, including the submission of the Exploration Works Approval (EWA), are well advanced. In formulating the EWA submission, which requires precise technical descriptions of borehole and hydrogeological test well locations and specifications, CNOOC-NEIA and Altona are taking into account the programme design recommendations included in the geology and hydrogeology review reports commissioned and recently received from the China National Administration for Coal Geology (CNACG) and also the input from other drilling and hydrogeological specialists in Australia and China. In addition, the Company are currently short listing Australian companies to manage the resource drilling and hydrogeological field programmes.

These programmes will involve a network of closely spaced boreholes in the area of the proposed initial box cut at the Wintinna coal deposit and a comprehensive hydrogeological survey covering water pump test wells and several observation wells at locations in and around the area likely to be affected by dewatering of an open cut mine at Wintinna.

It is anticipated that the applications for the EWA and water well permits will be ready for lodging with PIRSA and the Department for Water by the end of June. The approval process is expected to take up to 3 months to complete and during this time the JV partners will be consulting with local communities and stakeholders about the programme, appointing the drilling programme manager and finalising logistics for the fieldwork. On that basis, the field work would commence during the second half of 2011 and will last up to 6 months.

BFS Studies

The Joint Venture has completed the re-evaluation of the Arckaringa coal asset and coal quality profile utilising the expertise of CNACG and the Shenyang Design and Research Institute (part of the China Coal Technology and Engineering Group) respectively.

Both institutes have reported that the work previously carried out by Altona Energy in respect of coal geology, coal reserves and coal quality is an accurate representation of the Arckaringa coal asset.

In addition, the Joint Venture is utilising the vast body of technical knowledge and CTL experience available in China. For example, the CNOOC technical team in Beijing is engaging with the Chinese Design Institutes responsible for the Lu An CTL plant in Shanxi Province (160,000 tonnes per year synfuels production) and the Shen Hua CTL plant in North China (one million tonnes a year of synfuels production) that have been in operation since 2009 and 2010 respectively.

The BFS will include work programmes on technology areas including:

·; The feasibility of upgrading a proportion of the mine's total coal output of up to 15 million tonnes per annum, with part of the upgraded product to be fed into the CTL plant in order to reduce capital cost, and part to be potentially exported to China.

·; The integration and optimisation of mine output, coal upgrading and the CTL process, will form the basis of design and underpin the economic model for the mine development and CTL and power plant.

Following the field programmes, a number of technical reports, including an updated JORC resource estimate and an expanded Hydrogeological Model, will be produced to underpin the proposed Wintinna mine design and the associated Groundwater Management Plan. In parallel, base line environmental studies and a range of transport/infrastructure option studies will be carried out.

Altona and CNOOC-NEIA plan to commence market research on off-take agreements and product pricing for synthetic fuels, power and water. The results of this research will then be used to complete the economic model.

Commenting today Chris Lambert, Executive Chairman of the Company said: "We are pleased with the increasing momentum on the BFS and look forward to reporting on continued further progress in due course."

**ENDS**

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Notes:

Altona Energy Plc is an AIM listed Australian based energy company. Its asset is an estimated 7.8 billion tonne coal resource (non-JORC) in the Arckaringa Basin of South Australia (JORC-compliant: 1.287 billion tonnes). This is considered by the Board to be one of the world's largest untapped energy banks. Per Jacobs Engineering's study for the Company, assuming a 50% conversion of CTL fuels and 50% to synthetic gas ('Syngas'), Arckaringa total coal resources (both JORC and non-JORC) would represent respectively 28% and 29% of current North Sea remaining proven reserves of 10,900mb of oil and 114,800 bcf of natural gas.

Altona has already accomplished a number of key phases in its development:

·; The Company has agreed the terms of a joint venture agreement with CNOOC-NEI, a subsidiary of Chinese oil major China National Offshore Oil Corporation, to accelerate the Arckaringa Project towards commercialisation.

·; Under the terms of the agreement, CNOOC-NEI will fund the bankable feasibility study ('BFS') for a coal mine and an integrated value-added project.

·; CNOOC-NEI will also act as the operator and take responsibility for assessing the full potential of the coal resource, in return for a 51% interest in the exploration licences.

·; It is envisaged that numerous new additional projects may also be opened up to create a multi-project, multi-national business.

CTL

The quality of the Company's coal is suitable for conversion to synthetic gas ('Syngas'), using existing commercial CTL technologies. The process involves two major stages;

1. gasification to produce Syngas rich in hydrogen and carbon,

2. a liquefication stage where the Syngas is reacted over a catalyst to produce high quality, ultraclean synthetic fuels and chemical feedstocks.

CTL is a prime example of clean coal technology - the associated combined cycle units produce negligible sulphur oxides, significantly less nitrogen oxides and 10-20% less CO2 per unit of power generated than a conventional coal fired plant, whilst carbon capture and storage offers the potential to reduce the overall greenhouse gas emissions from CTL to below the 'well to wheel' level of fuels derived from crude oil. The technology is best demonstrated in South Africa, where currently 30% of the country's gasoline and diesel fuel needs are met through CTL plants.