19 August 2013

LEC increases its ownership in Territory Biofuels Limited, owners of the largest biodiesel plant in Australia

Company working with TBF to restart plant in late 2013 with an appropriate project funding package

Lignol Energy Corporation (TSXV: LEC) (“LEC” or the “Company”), a leading technology company in the advanced biofuels and renewable chemicals sectors, is pleased to announce that it will invest up to a further A$1,000,000 in Territory Biofuels Limited (“TBF”), the owner of the largest biodiesel plant in Australia. Upon completion, LEC will increase its majority holding to up to approximately 66% of the issued and outstanding shares of TBF and up to approximately 68% on a fully diluted basis.

“We are excited to be increasing our ownership in such a large scale biofuels project. This investment represents the opportunity for our company to have a substantial majority equity interest in potentially a very profitable business”, said Ross MacLachlan, CEO and Chairman of LEC. “Our goal remains to work with TBF with a view to restarting the plant in late 2013 with an appropriate project funding package in place. Once operational, we plan to incorporate plant upgrades to process lower cost feedstocks that should further enhance margins in 2014.”

LEC has agreed to provide TBF with equity funding of up to A$1,000,000 over the course of the next several months. The first tranche of A$500,000 is payable in two instalments: the first instalment of A$200,000 has now been made and the second instalment of A$300,000 is due on or before September 15, 2013. The opportunity to subscribe for the remaining A$500,000 worth of shares of TBF will be offered to existing shareholders of TBF (other than LEC) who may subscribe on the basis of their proportionate entitlement and LEC has agreed to fund any amounts not subscribed by those existing shareholders and to close this round of financing no later than October 31, 2013. The closing of this entire transaction is subject to regulatory approval.

This investment will be funded by LEC through accessing funds available to the Company from the recently secured revolving credit facility (the “Note”) of up to $12,500,000 with Difference Capital Financial Inc. (“DCF”), which was announced on August 14, 2013.

About Territory Biofuels Limited (“TBF”)
TBF owns a large scale biorefining facility located in Darwin, Northern Territory which includes a Lurgi-designed biodiesel plant and the largest glycerine refinery in Australia. The facility was commissioned in 2008 at a cost of A$80 million, along with 38 million litres of related tankage, now leased by TBF. The biodiesel plant is the largest in Australia with a rated capacity of 140 million litres per year. The plant was originally built to run on palm oil and food-grade vegetable oil, however the plant was shut down in 2009 due to economic and market conditions. To take advantage of current market opportunities, TBF is in the process of raising funds to restart the existing facility utilizing a specific grade of palm oil; environmentally certified, Refined Bleached & Deodorized (RBD) palm oil. In 2014, TBF plans to integrate new feedstock pre-treatment technologies and catalysts to process a broader range of feedstocks such as lower quality tallow, used cooking oil and palm sludge oil; a waste product from palm oil mill extraction.

About Lignol Energy Corporation (“LEC”)
LEC (TSXV: LEC) is an emerging producer of biofuels, biochemicals and renewable materials from waste biomass. LEC owns 100% of the issued and voting shares of Lignol Innovations Ltd. (“LIL”); a Canadian biorefining company with an integrated pilot plant demonstrating its technology for the production of cellulosic ethanol, high value cellulose and high performance lignin. LEC owns approximately a 55% controlling interest in TBF prior to the transaction described above. LEC also owns approximately 21% of Australian Renewable Fuels Limited (ASX: ARW); currently the largest biodiesel producer in Australia with three plants having a combined 150 million litres per annum capacity. LEC also intends to invest in, or otherwise obtain, equity interests in energy related projects which have synergies with the Company and have the potential to generate near term cash flow.

Source: Lignol Energy Corporation, press release, 2013-08-19.

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