Drilling Programe Update

15 July 2013 

Arckaringa Project Update

Drilling Program - Drilling Services Provider Selection and Scope of Program

Altona Energy (AIM: ANR) is pleased to announce details of the test drilling program at Arckaringa, and that the process to select a Drilling Services Provider to manage the program and associated technical analysis work is now underway. The program is an important step in the Bankable Feasibility Study for Altona's flagship Arckaringa 30,000 BPD Clean Energy Coal to Liquids Project in South Australia.

Following the recent renewal of the term of the Arckaringa Exploration Licences by the South Australian Government, Altona's JV partner CNOOC NEIA has today issued an Invitation to Bid ("ITB") to the five pre-qualified companies, each with the required experience in managing coal drilling programs and associated analytical work in Australia. The scope of work for the Drilling Services Provider includes field drilling and drillsite rehabilitation (according to the stringent conditions set under Government permits), core sampling, core transport and management of the offsite testing and analysis of coal and drillcore. Bids will be evaluated on both technical and commercial aspects to select the most suitable candidate.

The bidding and selection process, which is being managed by CNOOC NEIA with the assistance of Altona, involves:

·; Closing Date for bids - within 21 days of the ITB issue date

·; Evaluation of bids - within 14 days of the Closing date

·; Award of Contract - within 14 days of evaluation of bids

Allowing for the mobilisation of drilling equipment and personnel, and the statutory 21 day period for Notices of Entry to landowners and lease holders in the Arckaringa area, the fieldwork component of the program can be underway by October and is expected to last for approximately 12 - 15 weeks.

All the necessary regulatory approvals for the program are in place from South Australian authorities, with the PEPR from the Department of Manufacturing, Innovation, Trade, Resources and Energy (DMITRE) in place and with the Arid Lands Natural Resources Management Board (SAALRM) having recently extended the Water Affecting Activity Permit for 12 months to 24 April 2014. A Work Area Clearance from the relevant Native Title Claimant Group (AMYAC) has also been granted.

 The ITB process represents the first stage of the 30 borehole program covered by the regulatory approvals. The objectives of this first stage are to:

·; Install seven(7) boreholes, totalling 1,678m of drilling, for the purpose of hydro-geological investigation, coal resource assessment and geological investigation, including associated logging and testing works;

·; Complete a hydro-geological investigation, including pumping tests and associated hydro-chemical analysis and isotope tests;

·; Provide information suitable for the ongoing feasibility studies into the design of an open pit mine, and the evaluation of mine drainage and groundwater utilisation.

Two of the seven boreholes will be large diameter, serving the dual purposes of hydro-geological pump testing and of coal core extraction for resource assessment and coal testing. The remaining five boreholes will be for hydro-geological test observation and to extract coal and overburden core for geotechnical and coal quality analysis. Decisions concerning the implementation and function of the remainder of the overall 30 borehole program will depend on the results of the first stage work.

Altona's Managing Director, Chris Schrape, commented from the Adelaide office that: "the results of the drilling program and the associated test work will be pivotal to progressing the BFS, and is therefore an important step on the project's journey. The outcomes will be used to finalise the groundwater management plan and open cut mine design at Wintinna, update coal resource calculations and determine the coal feedstock profiles for the coal to liquids process. The aim of this work is to ensure the mine can produce 10 million tonnes or more of feedstock coal a year on an environmentally sensitive and economically sustainable basis, underpinning the whole coal conversion process over the project's potential 100 year plus life."

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

About Altona Energy

Altona Energy is listed on the London Stock Exchange's AIM market. Its current focus is firmly on the evaluation and development of the Company's 49% interest in its flagship coal-to-liquids Arckaringa Project to exploit the huge coal resources contained in three exploration licences covering 2,500 sq. kms in the northern portion of the Permian Arckaringa Basin in South Australia. The Project is designed to include a modern, combined-cycle power station adding 560Mw to the national grid and to produce clean burning fuel for Australia and the world from a resource equivalent to 7.8 billion barrels. Altona Energy has forged a Joint Venture with CNOOC New Energy Investment Co., Ltd., a subsidiary of the China National Offshore Oil Corporation (CNOOC), to complete the Project Bankable Feasibility Study and expedite the Project's development.

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