News 01 October 2008

PRELIMINARY RESULTS

Spitfire Oil Limited (“Spitfire Oil” or the “Company”), has today published its results for the period ended 30 June 2008, a summary of which is attached.

Spitfire Oil was incorporated on 2 May 2007 and on 11 July 2007 acquired the entire issued capital of Spitfire Oil Pty Ltd (formerly Hurricane Fuels Pty Ltd) (together “the Group”) by way of a share swap. On 18 July 2007 Spitfire Oil’s shares were admitted to trading on the Alternative Investment Market ("AIM") of the London Stock Exchange. At the same time the Company placed 16,666,667 new Ordinary Shares at 60p per share to raise £10,000,000 (A$23,298,000).

The Group’s principal activity is the pursuance of the production of fuel oil and distillate from the Salmon Gums Lignite deposits in Western Australia. As of 30 June 2008, the Company controlled 6 exploration tenements totalling 519 km2 near Salmon Gums, near Esperance, in the south east of Western Australia. The tenements contain a large lignite (brown coal) deposit with an Inferred Resource, calculated according to the JORC Code, of 500 million tonnes of lignite. The lignite has a high Kerogen (hydrocarbon) content convertible into oil using low temperature pyrolysis at a yield of 0.43 bbl / tonne. Extractable commercial oil reserves are estimated to exceed 200 million barrels.

The Group has reported a loss before tax A$2,828,901 in the period from incorporation to 30 June 2008.

During the period the Group:

The near term objectives of Spitfire are now to:

Chairman’s Statement

“For an entity only admitted to trading on the Alternative Investment Market of the London Stock Exchange in July 2007, its progress towards proof of concept and commercialization has been impressive.

Although the events of the past month have been particularly devastating for the world financial system which, to some extent has been or will be passed through to the world economy, the gratifying aspect for the Company of these calamitous events has been the continuing high price for crude oil and distillates. This, coupled with the ever decreasing size of the world’s recoverable oil reserves, gives real hope that the Company will reap significant financial rewards should the Salmon Gums project come into commercial operation.

It has been heartening to see the progress that has been made to move the Company ever closer to commercialization. Resource delineation, exploration and environmental approvals have all made sizeable move forwards. The focus this year shifts to the laboratory to ensure oil yields are extractable and by products of the Pyrolysis process do not cause any negative impacts to either the extraction process or the environment. We remain ever hopeful of that those results will be extremely positive.

Needless to say, the Company also has not been blinded to other means to grow shareholder value. In that respect, the Company has evaluated a number of other oil and gas projects. At this stage, most of these projects do not meet the risk profile or the financial returns required by the Company.”

SPITFIRE OIL PTY LIMITED
Income Statement For the period ended 30 June 2008
(expressed in Australian dollars)

Consolidated Group Parent Entity
2008 2008
A$ A$
Other Revenue 1,251,885 949,590
Corporate expenses (1,410,557) (1,035,345)
Impairment of goodwill (534,439) -
Technology and development (1,883,681) -
Other expenses (234,326) (2,743,146)
Promotion and investor relations (17,783) -
Loss before income tax (2,828,901) (2,828,901)
Income tax expense - -
Loss for the period (2,828,901) (2,828,901)
Basic loss per share (cents per share) (7.06)
Diluted loss per share (cents per share) (7.06)

Spitfire Oil pty Limited
Balance Sheet As at 30 June 2008
(expressed in Australian dollars)

Consolidated Group Parent Entity
2008 2008
A$ A$
ASSETS
CURRENT ASSETS
Cash and cash equivalents 14,100,639 14,037,046
Trade and other receivables 194,553 -
Other current assets 36,270 36,270
TOTAL CURRENT ASSETS 14,331,462 14,073,316
NON-CURRENT ASSETS
Trade and other receivables - 2,556,540
Other assets - 1,465
Property, plant and equipment 41,220 -
Intangible assets 3,416,172 -
TOTAL NON-CURRENT ASSETS 3,457,392 2,558,005
TOTAL ASSETS 17,788,854 16,631,321
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 1,172,319 14,786
TOTAL CURRENT LIABILITIES 1,172,319 14,786
   
TOTAL LIABILITIES 1,172,319 14,786
NET ASSETS 16,616,535 16,616,535
EQUITY
Issued capital 20,854,412 20,854,412
Reserves (1,408,976) (1,408,976)
Accumulated loss (2,828,901) (2,828,901)
TOTAL EQUITY 16,616,535 16,616,535

Spitfire Oil Pty Limited
Statement of Changes in Equity For the period ended 30 June 2008
(expressed in Australian dollars)

Consolidated Group
Issued Capital Foreign Currency Translation Accumulated Losses Share Based Remuneration Total
A$ A$ A$ A$ A$
Balance at 2 May 2007 - - - - -
Shares issued 23,300,973 - - - 23,300,973
Share issuance costs (2,446,561) - - - (2,446,561)
Share based remuneration - - - 592,667 592,667
Translation of Foreign currency - (2,001,643) - - (2,001,643)
Net (Loss) for the period - - (2,828,901) - (2,828,901)
Balance at 30 June 2008 20,854,412 (2,001,643) (2,828,901) 592,667 16,616,535
Parent Entity
Issued Capital Foreign Currency Translation Accumulated Losses Share Based Remuneration Total
A$ A$ A$ A$ A$
Balance at 2 May 2007 - - - - -
Shares issued 23,300,973 - - - 23,300,973
Share issuance costs (2,446,561) - - - (2,446,561)
Share based remuneration - - - 592,667 592,667
Translation of Foreign currency - (2,001,643) - - (2,001,643)
Net (Loss) for the period - - (2,828,901) - (2,828,901)
Balance at 30 June 2008 20,854,412 (2,001,643) (2,828,901) 592,667 16,616,535

Spitfire Oil Pty Limited
Cash Flow Statement For the period ended 30 June 2008
(expressed in Australian dollars)

Consolidated Group Parent Entity
2008 2008
A$ A$
CASH FLOWS RELATED TO OPERATING ACTIVITIES
Payments to suppliers and employees (2,818,468) (570,515)
Interest received 965,664 949,590
R&D tax concession received 277,788 -
CASH FLOWS USED IN OPERATING ACTIVITIES (1,577,016) 379,075
CASH FLOWS RELATED TO INVESTING ACTIVITIES    
Advances to subsidiary - (5,193,333)
Payment for purchases of plant and equipment (45,262) -
Payment for purchases of equity investments - (1,465)
Exploration Expenditure (3,131,852) -
CASH FLOWS USED IN INVESTING ACTIVITIES (3,177,114) (5,194,798)
CASH FLOWS RELATED TO FINANCING ACTIVITIES    
Proceeds from issues of securities 20,854,412 20,854,412
CASH FLOW FROM FINANCING ACTIVITIES 20,854,412 20,854,412
NET INCREASE IN CASH AND CASH EQUIVALENTS 16,102,282 16,038,689
Cash and cash equivalents at the beginning of the year - -
Effects of exchange rate changes on cash and cash equivalents (2,001,643) (2,001,643)
CASH AND CASH EQUIVALENTS AT THE END OF THE YEAR 14,100,639 14,037,046

Notes:

  1. Spitfire Oil Limited was incorporated on 2 May 2007.
  2. This statement has been prepared using accounting policies and presentation consistent with those applied in the preparation of the statutory accounts of the Group.
  3. The summary accounts set out above do not constitute statutory accounts as defined by Section 84 of the Bermuda Companies Act 1981 or Section 240 of the UK Companies Act 1985. The summarised consolidated and parent balance sheets at 30 June 2008 and the summarised consolidated and parent income statements, consolidated and parent statements of changes in equity and the summarised consolidated and parent cash flow statements for the period then ended have been extracted from the Group’s 2008 statutory financial statements upon which the auditors’ opinion is unqualified. The statutory financial statements for the period 2 May 2007 to 30 June 2008 have been prepared in accordance with the requirements of International Accounting Standard IAS1: Presentation of Financial Statements as adopted in Australia.
  4. The annual report and accounts for 2008 are being sent by post to all registered shareholders. Additional copies of the annual report and accounts are available from the Company’s London correspondent office, 6th Floor, 60 St James’s Street, London, SW1A 1LE.
  5. The calculation of the basic losses per share is based on the loss attributable to ordinary shareholders of A$2,828,901 divided by the weighted average number of shares in issue during the year of 40,050,309. There is no dilutive effect of share purchase options.