News 02 March 2011

INTERIM STATEMENT FOR THE SIX MONTHS ENDED 31st DECEMBER 2010

Spitfire Oil Limited is pleased to publish its unaudited interim results for the six months ended 31st December 2010, a summary of which is attached.

Introduction

Spitfire Oil Limited (“Spitfire” or “the Company”) and its subsidiaries (together “the Group”) recorded a loss before tax for the six months ended 31 December 2010 of A$189,684 (2009 A$1,093,816). The decrease in losses arises as a result of action taken in the period to reduce costs. With cash balances of A$8m the Group has benefited from interest receipts of A$178,000 in the period.

In 2010 a thorough review of the Salmon Gums project (the “Project”) concluded that a saleable distillate could not be produced economically at prevailing world crude oil prices through the proprietary L2VTM lignite to liquids process. As a consequence, a conscious decision was made to minimize all activities by the Company on the Project including suspending any further work on the L2VTM process, minimizing any additional geological work and reducing all overhead costs, including the redundancy of all personnel. These actions have stabilised the Company's finances whilst maintaining the security of its assets, allowing the directors time to pursue options for the development of the Company's Project and the investigation of other energy related projects.

Licence Management

As the exploration licences comprising the Project were due to expire during the reporting period, application was made to extend their term. The Department of Mines and Petroleum has granted a two year “Extension of Term” for the four exploration licences in the main tenement block (E63/934, 035,947 & 961) until the 6th July 2012. Since the applications were approved, and as the exploration licences continue to provide secure title over the lignite resources previously reported, the six mining lease applications were withdrawn to reduce holding costs. The non-contiguous exploration licence to the east of the main tenement area (E63/960) was relinquished on the 7th July 2010 as it was considered to have no further lignite mineralisation potential.

Gold Programme

In the later part of 2009, the potential for the occurrence of gold within Spitfire's Project tenements was recognised and the Company commissioned a reconnaissance gold exploration programme to test the north-eastern part of the Project’s license areas. Several zones of anomalous gold values were delineated. These anomalies cover only some 10 kilometres of the 55 kilometres of the regional fault system. These encouraging results will require further drilling to ascertain the extent of the mineralization over the Company’s exploration licences. The Company has committed to this further drilling programme in 2011. In the interim, due to the vast area in which the anomalous results occur, the Company has been investigating identifying a joint venture partner to commit the necessary significant resources required for this further exploration work. To date, this search has been unsuccessful.

Other Business Opportunities

Although Spitfire’s primary objective remains the commercialisation of its L2VTM lignite to liquids technology over the large resource at the Project, management continues to evaluate other energy related opportunities and other possible synergistic business opportunities.


SPTIFIRE OIL LIMITED
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE HALF-YEAR ENDED 31 DECEMBER 2010
(expressed in Australian dollars)

Half-year Full-year
Note 31 December
2010
Unaudited A$
31 December
2009
Unaudited A$
30 June
2010
Audited A$
REVENUE 177,970 176,147 649,451
EXPENDITURE
Technology and development (10,045) (430,681) (1,275,932)
Corporate expenses (257,407) (728,522) (394,613)
Other expenses (100,202) (110,760) (181,822)
LOSS BEFORE INCOME TAX (189,684) (1,093,816) (1,202,916)
Income tax benefit / (expense) - - -
LOSS FOR THE HALF-YEAR (189,684) (1,093,816) (1,202,916)
OTHER COMPREHENSIVE INCOME
Exchange differences on translation of
foreign currency
- (55,271) (55,271)
Other comprehensive income for the period,
net of tax
- (55,271) (55,271)
TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD ATTRIBUTABLE TO
MEMBERS OF SPITFIRE OIL LIMITED
(189,684) (1,149,087) (1,258,187)
Basic and diluted loss per share (cents) 6 (0.4) (2.6) (2.8)

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

SPITFIRE OIL LIMITED
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 December 2010
(expressed in Australian dollars)

Note 31 December
2010
Unaudited A$
31 December
2009
Unaudited A$
30 June
2010
Audited A$
CURRENT ASSETS
Cash and cash equivalents 7,996,690 8,582,902 7,926,723
Trade and other receivables 3,876 29,480 295
Other current assets 76,757 38,676 64,705
TOTAL CURRENT ASSETS 8,077,323 8,651,058 7,991,723
NON-CURRENT ASSETS
Plant and equipment 4,925 10,837 7,954
Intangible assets 7,942,618 7,985,848 8,249,289
TOTAL NON-CURRENT ASSSETS 7,947,543 7,996,685 8,257,243
TOTAL ASSETS 16,024,866 16,647,743 16,248,966
CURRENT LIABILITIES
Trade and other payables 38,974 324,782 73,390
Provisions - 38,285 -
TOTAL CURRENT LIABILITIES 38,974 363,067 73,390
TOTAL LIABILITIES 38,974 363,067 73,390
NET ASSETS 15,985,892 16,284,676 16,175,576
EQUITY
Issued capital 5 20,854,412 20,854,412 20,854,412
Reserves 790,001 790,001 790,001
Accumulated losses (5,658,521) (5,359,737) (5,468,837)
TOTAL EQUITY 15,985,892 16,284,676 16,175,576

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

SPITFIRE OIL LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE HALF-YEAR ENDED 31 DECEMBER 2010
(expressed in Australian dollars)

Contributed Equity Options Reserve Foreign Currency Translation Reserve Accumulated Losses Total
A$ A$ A$ A$ A$
BALANCE AT 1 JULY 2009 20,854,412 790,001 55,271 (4,265,921) 15,135,589
Total comprehensive income for the period - - (55,271) (1,093,816) (1,149,087)
BALANCE AT 31 DECEMBER 2009 20,854,412 790,001 - (5,359,737) 16,284,676
Total comprehensive income for the period - - - (109,100) (109,100)
BALANCE AT 30 JUNE 2010 20,854,412 790,001 - (5,468,837) 16,175,576
Total comprehensive income for the period - - - (189,684) (189,684)
BALANCE AT 31 DECEMBER 2010 20,854,412 790,001 - (5,658,521) 15,985,892

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

SPITFIRE OIL LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2010
(expressed in Australian dollars)

Half-year Full-year
31 December 2010 Unaudited A$ 31 December 2009 Unaudited A$ 30 June 2010 Audited A$
CASH FLOWS FROM OPERATING ACTIVITIES
Payments to suppliers and employees (394,869) (903,707) (1,464,319)
Interest received 178,265 149,868 313,610
R&D tax concession received - - 324,688
Net cash (outflow) from operating activities (216,604) (753,839) (826,021)
CASH FLOWS FROM INVESTING ACTIVITIES
Refund of tenement rents 348,865 - -
Exploration expenditure (41,117) (674,874) (1,213,195)
Net cash inflow/(outflow) from investing activities 307,748 (674,874) (1,213,195)
CASH FLOWS FROM FINANCING ACTIVITIES
Net cash inflow/(outflow) from financing activities - - -
Net increase/(decrease) in cash and cash equivalents 91,144 (1,428,713) (2,039,216)
Cash and cash equivalents at the beginning of the period 7,926,723 10,019,229 9,974,229
Effects of exchange rate changes on cash and cash equivalents (21,177) (7,614) (8,290)
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD 7,996,690 8,582,902 7,926,723

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

SPITFIRE OIL LIMITED
Notes to the CONDENSED CONSOLIDATED financial statements

NOTE 1: BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL REPORT

This general purpose financial report for the interim half-year reporting period ended 31 December 2010 has been prepared in accordance with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Australian Corporations Act 2001.

The summary accounts set out above do not constitute statutory accounts as defined by Section 84 of the Bermuda Companies Act 1981 or Section 435 of the UK Companies Act 2006. The condensed consolidated statement of financial position at 30 June 2010 and the condensed consolidated statement of comprehensive income, condensed consolidated statement of changes in equity and the condensed consolidated statement of cash flows for the year then ended have been extracted from the Group’s 2010 statutory financial statements upon which the auditors’ opinion is unqualified. The condensed consolidated statement of comprehensive income has been prepared using information extracted from the Group’s 2010 statutory financial statements.

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2010 and any public announcements made by Spitfire Oil Limited during the interim period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

Copies of this interim report are being sent to all registered shareholders. Additional copies are available from the Company’s London office, 60 St James’s Street, London, SW1A 1LE.

The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (the AASB) that are relevant to their operations and effective for the current reporting period.

New and revised Standards and amendments thereof and Interpretations effective for the current reporting period that are relevant to the Group include:

AASB 2009-5 introduces amendments into Accounting Standards that are equivalent to those made by the IASB under its program of annual improvements to its standards. A number of the amendments are largely technical, clarifying particular terms, or eliminating unintended consequences. Other changes are more substantial, such as the classification of expenditures on unrecognised assets in the statement of cash flows.

The adoption of these amendments has not resulted in any changes to the Group's accounting policies and have had no affect on the amounts reported for the current or prior periods.

NOTE 2: SEGMENT INFORMATION

The Group operates in predominantly one operating segment, being the exploration and mining for valuable resources that produce energy in Australia.

NOTE 3: DIVIDENDS

The Company has not declared any dividends in the period ended 31 December 2010.

NOTE 4: CONTINGENCIES

There has been no change in contingent liabilities or contingent assets since the last annual reporting date.

NOTE 5: ISSUED CAPITAL

31 December 2010 31 December 2009 30 June 2010
No A$ No A$ No A$
Issued and Paid Up Capital
Fully Paid Ordinary Shares 42,550,668 20,854,412 42,550,668 20,854,412 42,550,668 20,854,412
Total Issued Capital 20,854,412 20,854,412 20,854,412

NOTE 6: LOSS PER SHARE

31 December 2010 31 December 2009 30 June 2010
Basic and diluted loss per share (cents) (0.4) (2.6) (2.8)
a) Net loss used in the calculation of basic and diluted loss per share (189,684) (1,093,816) (1,202,916)
b) Weighted average number of ordinary shares outstanding during the period used in the calculation of basic and diluted loss per share 42,550,668 42,550,668 42,550,668

Options that are considered to be potential ordinary shares are excluded from the weighted average number of ordinary shares used in the calculation of basic loss per share. Where dilutive, potential ordinary shares are included in the calculation of diluted loss per share.

All the options on issue do not have the effect to dilute loss per share. Therefore they have been excluded from the calculation of diluted loss per share. There have been no other conversions to, call of, or subscriptions for ordinary shares since the reporting date and before the completion of this report.

NOTE 7: NET TANGIBLE ASSETS

31 December 2010 31 December 2009 30 June 2010
Net Tangible Assets (A$) 8,082,248 8,298,828 7,999,677
Shares (No) 42,550,668 42,550,668 42,550,668
Net Tangible Assets (cents) 19.0 19.5 18.8

NOTE 8: SUBSEQUENT EVENTS

No matter or circumstance has arisen since 31 December 2010, which has significantly affected, or may significantly affect the operations of the Group, the result of those operations, or the state of affairs of the Group in subsequent financial years.