Spitfire Oil Limited (“Spitfire” or “the Company”) is a mining and investment company, incorporated in Bermuda, whose shares are quoted on the Alternative Investment Market of the London Stock Exchange (“AIM”).

Spitfire, through its wholly owned subsidiary Spitfire Oil Pty Ltd, was formed to pursue the production of liquid hydrocarbons, including fuels and distillates, from the Salmon Gums Lignite Deposit (“the Deposit”) in Western Australia. Lignite is a low-rank form of brown coal which has properties that allow it to be converted into oil. Spitfire Oil Pty Ltd intially secured exploration licences and in September 2012 a retention licence over both the Deposit and adjacent ground prospective for extensions of the Deposit. Funds raised to date have been primarily used to establish the technical and economic potential of the Deposit and define the potential resource. Additional funding will be required to establish commercial scale mining and processing.

The Deposit is characterised by its relatively high kerogen content. Kerogen is a hydrocarbon compound which converts into oil. Original test work prior to Admission to AIM in July 2007 indicated that oil may be recoverable from the Deposit at an average yield of approximately 69 litres per tonne of lignite (in situ) or 0.43 barrels per tonne or better. After adjustments for average moisture content and other variables, GHD (the Independent Person at time of Admission) estimated the Deposit to contain an extractable volume of approximately 200 million barrels of oil, should the JORC code calculated Inferred Resource of just over 500 million tonnes of lignite (assuming a 5 metre thickness cut-off) be proven to be economic.

Over the period since Admission to AIM in July 2007, resource assessment work in the field at Salmon Gums and laboratory test work at Curtin University of Technology in Western Australia, as well as company economic analyses, have increased the original estimate of a commercial resource. Under the latest Australian Code for Reporting Exploration Results, Mineral Resources and Ore Reserves (the “JORC Code”) estimate there are 876 million tonnes (406 million indicated and 470 million tonnes inferred) of lignite in the Deposit, which applying test work yields would contain in excess of 300 million barrels of oil.

The completed work has also demonstrated that the company’s proposed low temperature pyrolysis coal-to-liquids process generates low carbon emissions which are of the same order of magnitude as those associated with producing and refining typical heavy oils. This contrasts with the more conventional (Gasification and Fischer-Tropsch based) coal-to-liquids processes that generate at least four times that amount of carbon emissions.

Test work and other investigations at Spitfire’s research and development laboratories at Curtin University of Technology have highlighted the expanding complexity and growth in the scope of research required in refining and finalising the Company’s proprietary L2VTM lignite to liquids process. Consequently, in September 2009 the directors ordered a complete financial and technical reappraisal of the project including an analysis of other competing coal-to-liquids and coal to gas to liquids technologies. Spitfire continues to evaluate competing technologies in the processing of lignite into synthetic oil and gas. Technological progress has still not proceeded fast enough in attaining a proven alternative processing methodology, particularly in dealing with the salt content in the lignite, 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, to date, no process has been demonstrated which provides the economic returns expected by Spitfire. Discussions remain ongoing on this subject. In the mean time Spitfire has been granted a retention licence over the Deposit in order to retain the rights to the Deposit whilst minimising expenditure commitments.

Spitfire continues to search for a suitable alternative or complimentary oil and gas project. Despite the continuing world financial turmoil, attractive resource projects remain either extremely scarce or significantly overpriced. To date, none have met the economic or geological criteria set by the Company.