Half Yearly Report

19 February 2013

Altona Energy Plc

("Altona" or the "Company")

Interim Results for the six months ended 31 December 2013

Altona Energy Plc, the AIM-quoted energy company, today announces its results for the six month period ended 31 December 2013.

Period Highlights

- The commissioning of a Technical Feasibility Study ("TFS") into Coal to Methanol ("CTM") for the Arckaringa project. The study highlighted the following information:

o The investment costs for Coal to Liquid ("CTL") / CTM plant were essentially the same as the planned two train CTL plant

o The same quantity of gasified coal needed to make 15,000 barrels per day ("BPD") of FT liquids could instead produce 6,200 Tonnes per day of methanol

o The available power generated by the 15,000 BPD/CTL plant would be sufficient to operate the CTM plant

o Altona's in house study estimated that the CTL/CTM plant had the potential, when compared to a CTL only plant, to increase annual revenues by approximately US$212 million, or 18%

- Initiated discussions with China National Offshore Oil Corporation ("CNOOC") about their future involvement in the Arckaringa project;

- Entered into placing agreement with Wintask Group Limited ("Wintask") to subscribe for 230,000,000 shares for gross proceeds of £3.22million; and

- Completed the first tranche of the Wintask placing of 59,700,000 shares for gross proceeds of £835,800.

Post Period Highlights

- Completed placing with Wintask where second tranche shares of 170,300,000 were admitted for gross proceeds of £2,384,200;

- Terminated the Joint venture with CNOOC by mutual consent whereby CNOOC return their 51% interest in the project to Altona;

- Identified and started discussions with potential new partners culminating in the Memorandum Of Understanding ("MOU") signed with Sino-Aus Energy Group Limited ("Sino-Aus Energy") and Wintask;

- Submitted regulatory approvals required for the reassignment of CNOOC's 51% interest

- Parsons Brinckerhoff working with Altona to ensure that the bankable feasibility study ("BFS") project with the maximum potential value is selected; and

- Welcomed Mr Qinfu Zhang to the board of Directors as representative of Wintask.

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

I am pleased to report that during the second half of 2013 we made real progress towards our objectives at the Arckaringa project.

We arranged a meeting with CNOOC in January in Beijing and the outcome of this meeting was that we mutually agreed to the termination of the joint venture. The agreement resulted in the agreement to return CNOOC's 51% interest in the project to Altona, the return of all the key study materials that CNOOC had prepared under its operatorship and the assumption by Altona of 100% of the licence obligations going forward.

Importantly, the recently completed £3.22million investment into Altona by our cornerstone investor Wintask, gives the Company the financial stability to meet its licence commitments throughout the current licence period.

Since agreeing the termination with CNOOC we have worked together with some urgency, and have now jointly submitted the necessary approvals for the return of the interest to Altona to the South Australian Government.

In anticipation of the joint venture termination we also started discussions with interested third parties about the possibility of them investing in the project once CNOOC had terminated their involvement. Our focus has therefore been to find future potential investors into the project who are motivated, dynamic and capable of taking the Arckaringa project through to BFS completion.

We were therefore delighted to announce earlier in February this year that we had entered into a MOU with Sino-Aus Energy Group Limited (Sino-Aus Energy) and Wintask for them to make a potential 300 million RMB (approximately £30million) investment into the project. This investment remains subject to due diligence and we look forward to updating investors further in due course.

Arckaringa project

During the period we commissioned a TFS to demonstrate that CTM could be a project capable of augmenting the BFS for Altona's flagship Arckaringa Clean Energy CTL and Power Project in South Australia. The original CTL proposal was for a 45,000 Barrels per day ("BPD") CTL facility developed in three separate 15,000 BPD/ 280MW phases over a 10 year period. The CTM study proposed that one 15,000 BPD train is replaced by a 6,200 Methanol Tonne per day CTM Plant to be built in tandem with a 15,000 BPD CTL Plant rather than building the first two CTL plants in series. 

We also continued to work with CNOOC to try and influence the work programme during the period. However we were ultimately unsuccessful and CNOOC, then the sole operator of the Arckaringa joint venture did not substantially progress the project during the period.

During the period, bid documents were received by CNOOC from three of the five pre-qualified companies for the drilling programme however the programme was ultimately cancelled because the relevant permits lapsed. In our new position as 100% owner and operator of the project Altona will bear the responsibility of executing the drill programme, once we have been successful in securing the necessary government approvals. Work has already commenced in preparing our applications but we must first receive government approval relating to the return of the 51% interest.

Altona believes the rationale for the development of the Arckaringa project remains as compelling as ever. The project's strong fundamentals include the size of the resource (7.8 billion tonnes, including 1.3 billion tonnes JORC compliant), a coal quality which is suitable for gasification and synthetic fuels production, attractive economics, combined with a very supportive South Australian government and a location which favours both domestic use and international export.

Duwa update

We provide the following update to shareholders as to our progress since October 2013 with respect to the MOU with Xinjiang Hetian Duwa Industry Limited ("Duwa") ("Duwa MOU"). As we reported in October 2013 we had completed initial technical and legal due diligence that had identified that additional legal due diligence on the ownership status of the licences was required.

However, whilst both parties have worked to try and rectify the situation, our due diligence since October has encountered a series of issues and we have been unable to adequately prove valid title for the asset.

Prior to the termination of the joint venture with CNOOC, the rationale for the Duwa MOU was to purchase a project capable of generating cash flows, such as the Duwa mine, as we recognized that whilst CNOOC controlled the pace of delivery of the BFS, we needed an operating coal mine to contribute to our working capital requirements during this period. However the legal issues associated with Duwa have proved to be insurmountable and this, coupled with the termination of the joint venture with CNOOC means that the board has decided to terminate the Duwa MOU and give the Arckaringa project the full attention and resources that it merits.

Financial results

The financial loss of the Group for the six months ended 31 December 2013 was £704,000 (2012: £885,000).

During the period we entered into an agreement with Wintask Group Limited to issue 230,000,000 new ordinary shares for £3.22million gross proceeds in two tranches. The first tranche of £835,800 completed during the period and as at 31 December 2013 the Group cash and cash equivalents totaled £639,000 (2012: £213,000)

Since year end our financial position has been further boosted by the completion of the second tranche placing for £2.384million. In Wintask, we have a new Chinese cornerstone investor who brings expertise, enthusiasm and financial commitment to the Group.

Outlook

2014 will be a pivotal year for Altona. We have taken control of our flagship project once again, and we are in detailed talks with new partners about how we can maximise the potential of this world class development. I look forward to being able to further update shareholders in the future on progress in this regard and in respect of the BFS on Arckaringa.

Finally I would like to thank both our shareholders and the Board for their ongoing commitment, patience and support for the Company.

Michael Zheng

Chairman

Altona Energy

Consolidated Statement of Comprehensive Income

For the half year ended 31 December 2013

Consolidated Statements of financial position

At 31 December 2013

Consolidated Statement of Cashflows

For the half year ended 31 December 2012

Consolidated Statement of Changes in Equity

For the half year ended 31 December 2013

Notes to the Interim Report

For the half year ending 31 December 2013

1. GENERAL INFORMATION

Altona Energy Plc (the Company) is a company domiciled in England. The condensed consolidated interim financial statements of the Company for the six months ended 31 December 2013 comprise the result of the Company and its subsidiaries (together referred to as the "Group").

The condensed interim financial information for the period 1 July 2013 to 31 December 2013 is unaudited. In the opinion of the Directors the condensed interim financial information for the period presents fairly the financial position, and results from operations and cash flows for the period in conformity with the generally accepted accounting principles consistently applied. The condensed interim financial information incorporates unaudited comparative figures for the interim period 1 July 2012 to 31 December 2012 and extracts from the audited financial statements for the year to 30 June 2013.

The financial information contained in this interim report does not constitute statutory accounts as defined by section 435 of the Companies Act 2006.

The comparatives for the full year ended 30 June 2013 are not the Company's full statutory accounts for that year. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditor¡¯s report on those financial statements was unqualified but did include a reference to the uncertainties surrounding going concern, to which the auditors drew attention by way of emphasis and did not contain a statement under s498 (2) - (3) of Companies Act 2006.

2. ACCOUNTING POLICIES

The condensed interim financial information has been prepared using International Financial Reporting Standards (IFRS and IFRIC interpretations) issued by the International Accounting Standards Board ("IASB") as adopted for use in the EU. The condensed interim financial information has been prepared using the accounting policies which will be applied in the Group's statutory financial information for the year ended 30 June 2014.

Basis of preparation

The accounts have been prepared on a going concern basis. Following a review of the Group's financial position and its budgets, plans and considering the recently completed share capital placing's, disclosed in note 5, the Directors remain confident that the Group's current cash position will enable the Group to fully finance its current commitments beyond the period of 12 months of the date of this report.

The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the Group's latest annual audited financial statements, except as described below:

The financial statements have been drawn up on the basis of accounting standards, interpretations and amendments effective at the beginning of the accounting period.

(i) The following new standards, interpretations and amendments to published standards effective in the year have been adopted by the Group:

(ii) Standards, amendments and interpretations, which are effective for reporting periods beginning after the date of these financial statements and which have not been adopted early:

The Group is evaluating the impact of the above pronouncements and will consider the potential impact of IFRS 11. No other pronouncement is expected to have a material impact on the Group's earnings or shareholders' funds.

3. TAXATION

The Group has recognised a £6,000 tax credit (31 December 2012: £nil and 30 June 2013: £6,000) in respect of the concession for research and development available to the Group. No current taxation has been provided due to losses in the period.

4. LOSS PER SHARE

The basic loss per share is derived by dividing the loss for the period attributable to ordinary shareholders by the weighted average number of shares in issue.

As the inclusion of the potential ordinary shares would result in a decrease in the loss per share they are considered to be anti-dilutive and, as such, the diluted loss per share calculation is the same as the basic loss per share.

5. POST REPORTING DATE EVENTS

On 15 January 2014 the Group completed the placing of 170.3 million shares at a price of 1.4 pence per share raising a total of £2,384,200 before expenses.