News 27 October 2011

PRELIMINARY RESULTS

Spitfire Oil Limited (“Spitfire Oil” or the “Company”), has today published its results for the period ended 30 June 2011, a summary of which is attached.

Spitfire Oil and its subsidiary Spitfire Oil Pty Ltd (together "the Group") principal activity is the pursuance of the production of fuel oil and distillate from the Salmon Gums Lignite deposits in Western Australia.

Spitfire Oil has reported a consolidated loss before tax for the year ended 30 June 2011 of A$272,427 (2010 A$1,202,916). The Group benefited from interest received of A$364,462 (2010 A$313,905) and research and development tax concession income of A$206,417 (2010 A$324,688). Operating costs have been reduced to A$843,306 from A$1,852,367 in 2010. In addition expenditure has been incurred and capitalised on further exploration work at the Salmon Gums tenement licences of A$134,232 (2010 A$658,376), whilst A$348,865 (2010 nil) was received on the refund of tenement rents. Cash balances at 30th June 2011 amounted to A$7,985,012 (2010 A$7,926,723).

Chairman’s Statement:

Whilst the actions in minimising expenditure on the Salmon Gums lignite deposit and its historical process development has stabilised the Company's finances, progress has not proceeded fast enough in attaining a proven alternative processing methodology which meets the economic criteria set by the Company. Interest has been forthcoming by third parties in working with Spitfire in joint venture to apply certain technologies to the Salmon Gums lignite but nothing attractive or viable has been presented which warrants acceptance by the Company.

The Company continues to believe there is real value in the Salmon Gums lignite deposit. Such optimism is warranted considering the announcement on 21 September 2011 by Blackham Resources Limited, a company listed on the Australian Stock Exchange and which holds the adjoining Scaddens lignite tenements, that it had received a substantial cash offer for its Scaddens project with an ongoing royalty payment per tonne of lignite mined. In order to secure Spitfire's tenement areas at Salmon Gums, application is being made for retention licences which will allow Spitfire to hold the rights to the Salmon Gums deposits in the longer term whilst minimising required expenditure. The Salmon Gums deposits would appear to meet the criteria for retention licences which are designed specifically for those deposits where the technology does not yet exist or is not fully developed to process the contained deposits commercially.

In the later part of 2009, the potential for the occurrence of gold within Spitfire's tenements was recognised and the Company commissioned a reconnaissance gold exploration programme which continued in 2011. This allowed the Company to spend its minimum expenditure requirements under the terms of the tenement licences whilst also more thoroughly testing the known gold occurrences. The results from that work have been disappointing and it is therefore unlikely that Spitfire will pursue any further gold exploration work at Salmon Gums. However, base metal anomalies have also been uncovered at Salmon Gums and the Company has yet to decide whether to investigate these occurrences further.

With Spitfire's finances and assets secured, the Company continues to seek ways to not only realise the full potential of the Salmon Gums lignite deposits, but also, in a world with increasing energy demand and declining fossil fuel resources, other energy related ventures. To date, a number of alternative, gas and oil related ventures that would bring near term cash flow have been investigated, but none have met the criteria set by the Company. The Company’s journey to deliver true shareholder wealth continues.

SPITFIRE OIL LIMITED
Consolidated Statement of Comprehensive Income
For the year ended 30 June 2011
(expressed in Australian dollars)

2011

2010

A$

A$

OTHER REVENUE

570,879

649,451

EXPENDITURE

Corporate expenses

(691,630)

(1,275,932)

Technology and development

-

(394,613)

Other expenses

(151,676)

(181,822)

LOSS BEFORE INCOME TAX

(272,427)

(1,202,916)

INCOME TAX

-

-

LOSS FOR THE YEAR

(272,427)

(1,202,916)

OTHER COMPREHENSIVE INCOME

Exchange differences on translation of foreign operations

-

(55,271)

Other comprehensive income for the year, net of tax

-

(55,271)

TOTAL COMPREHENSIVE (LOSS)/INCOME FOR THE YEAR
ATTRIBUTABLE TO OWNERS OF SPITFIRE OIL LIMITED

(272,427)

(1,258,187)

Basic and diluted loss per share for loss attributable
to the ordinary equity holders of the Company (cents per share)

(0.6)

(2.8)

SPITFIRE OIL LIMITED
Consolidated Statement of Financial position
For the year ended 30 June 2011
(expressed in Australian dollars)

2011

2010

A$

A$

CURRENT ASSETS

Cash and cash equivalents

7,985,012

7,926,723

Trade and other receivables

8,051

295

Other current assets

67,268

64,705

TOTAL CURRENT ASSETS

8,060,331

7,991,723

NONCURRENT ASSETS

Plant and equipment

2,432

7,954

Capitalised exploration and evaluation costs

8,034,656

8,249,289

TOTAL NONCURRENT ASSETS

8,037,088

8,257,243

TOTAL ASSETS

16,097,419

16,248,966

CURRENT LIABILITIES

Trade and other payables

44,333

73,390

TOTAL CURRENT LIABILITIES

44,333

73,390

TOTAL LIABILITIES

44,333

73,390

NET ASSETS

16,053,086

16,175,576

EQUITY

Issued capital

20,854,412

20,854,412

Reserves

149,937

790,001

Accumulated losses

(4,951,263)

(5,468,837)

TOTAL EQUITY

16,053,086

16,175,576

SPITFIRE OIL LIMITED
Consolidated Statement of Changes in Equity
For the year ended 30 June 2011
(expressed in Australian dollars)

Issued Capital

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)

17,433,763

Loss for the year

-

-

-

(1,202,916)

(1,202,916)

OTHER COMPREHENSIVE LOSS

Exchange differences on translation of foreign operations

-

-

(55,271)

-

(55,271)

TOTAL COMPREHENSIVE LOSS

-

-

(55,271)

(1,202,916)

(1,258,187)

BALANCE AT 30 JUNE 2010

20,854,412

790,001

-

(5,468,837)

16,175,576

Loss for the year

-

-

-

(272,427)

(272,427)

TOTAL COMPREHENSIVE LOSS

-

-

-

(272,427)

(272,427)

TRANSACTIONS WITH OWNERS IN THEIR CAPACITY AS OWNERS

Transfer of reserve upon expiry of options

-

(790,001)

-

790,001

-

Issuance of share options

-

149,937

-

-

149,937

BALANCE AT 30 JUNE 2011

20,854,412

149,937

-

(4,951,263)

16,053,086

SPITFIRE OIL LIMITED
Consolidated Statement of Cash Flows
For the year ended 30 June 2011
(expressed in Australian dollars)

2011

2010

A$

A$

CASH FLOWS FROM OPERATING ACTIVITIES

Payments to suppliers and employees

(720,027)

(1,464,319)

Interest received

364,757

313,610

Research and development tax concession received

206,417

324,688

NET CASH OUTFLOW FROM OPERATING ACTIVITIES

(148,853)

(826,021)

CASH FLOWS FROM INVESTING ACTIVITIES

Payments for exploration and evaluation expenditure

(119,711)

(1,213,195)

Refund of tenement rents

348,865

-

NET CASH INFLOW/(OUTFLOW) FROM INVESTING ACTIVITIES

229,154

(1,213,195)

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS

80,301

(2,039,216)

Cash and cash equivalents at the beginning of the financial year

7,926,723

9,974,229

Effects of exchange rate changes on cash and cash equivalents

(22,012)

(8,290)

CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR

7,985,012

7,926,723

SPITFIRE OIL LIMITED
Notes to the Preliminary Results to 30th June 2011

1. This statement has been prepared using accounting policies and presentation consistent with those applied in the preparation of the statutory accounts of the Group.

2. 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 summarised consolidated statement of financial position at 30 June 2011 and the summarised consolidated statement of comprehensive income, consolidated statement of changes in equity and the summarised consolidated statement of cash flows for the year then ended have been extracted from the Group’s 2011 statutory financial statements upon which the auditors’ opinion is unqualified. The statutory financial statements for the year to 30 June 2011 have been prepared in accordance with the requirements of International Accounting Standard IAS1: Presentation of Financial Statements as adopted in Australia. The results for the year ended 30 June 2010 have been extracted from the statutory accounts for that period, which contain an unqualified auditors’ report.

3. The annual report and accounts for 2011 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.

4. The calculation of the basic and diluted losses per share is based on the loss attributable to ordinary shareholders of A$272,427 divided by the weighted average number of shares in issue during the year of 42,550,668. There is no dilutive effect of share purchase options.