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Past ASX Release
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31 October 2007 QUARTERLY ACTIVITIES SUMMARY In the first quarter of the 2008 financial year Advanced Engine Components Ltd ("ACE") has continued to build international momentum in terms of sales and demand for ACE natural gas vehicles systems ("NGVS"), patented spare parts and consumables and completed natural gas engines. ACE’s move from research and development to manufacture and marketing was independently acknowledged in September 2007 when Engineers Australia announced that ACE was a winner of the 2007 WA Engineering Excellence Awards in the category "Products and Manufacturing" for its project "Natural Gas Engine Technology for China". Further activity highlights for the September 2007 quarter include: ACE, in conjunction with a Chinese engine builder, has commenced development of 240
and 260hp, 6 cylinder, natural gas ("NG") engines, using the ACE NGVS. ACE and the
manufacturer also propose a 4 cylinder engine in the 140 – 160hp range. Once development
of these engines is complete, expected to be early 2008, ACE will be able to offer a
complete range of NG engines from 110hp to 380hp. Weichai Weifang Peterson Gas Engine Co Ltd ("Weichai"), of China, have commenced
building Weichai/ACE NG engines for export to Iran with deliveries to commence in the
December 2007 quarter. A major truck company in China has successfully completed road trials using the
Weichai/ACE 280hp NG engine. Commercial sales quantities are expected to commence
in the December 2007 quarter. Sales of First Auto Works ("FAW") 6.6 litre and 7.1 litre FAW/ACE NG engines to
customers in China and throughout Asia have been increasing steadily. These sales have
significantly reduced FAW's stockpile of ACE NGVS purchased in late 2006. FAW are
expected to recommence ordering ACE NGVS kits early in the 2008 calendar year. Development of the Dongfeng Nanchong Automobile Co Ltd ("Dongfeng")/ACE 6 cylinder
230 hp and 4 cylinder 120hp NG engines are now complete. The first 230 hp engine is being
prepared for trials by a customer in Indonesia. Dongfeng is fitting two FAW subsidiary
manufactured buses with 120hp engines for export to Thailand. A Wuxi Xilian Diesel Limited Company ("Xilian")/ACE LNG engine has been successfully
trialled in a FAW manufactured garbage truck for use during the Beijing Olympics Games.
Commercial deliveries will commence in the March 2008 quarter. The decision on Thailand's Bangkok Mass Transit Authority tender for re-powering over
2,000 buses from diesel to NG has been deferred until December 2007. ACE is well positioned
to benefit from the final decision as a high proportion of the short listed NG engine
suppliers are using the ACE NGVS. Once let, the re-powering contract must be completed
within 10 months. ACE's joint venture partner in Thailand, Monika Motors, has successfully re-powered and
commissioned two trucks with NG engines using the ACE NGVS. Road trials have commenced and
if satisfactorily completed, expected in the December 2007 quarter, an immediate order for
a minimum 200 engines will be received. Union Bus Company of Thailand has ordered 40 NG engines, incorporating the ACE NGVS, from
ACE. The engines will be delivered, prior to 31 December 2007, when the impending letter of
credit has been received. ACE has entered into a co-operation agreement with Vialle Alternative Fuel Systems BV
("Vialle") of Holland for ACE to supply components and engineering support to Vialle's LPG
conversion of 2.4 litre light duty trucks in Korea. ACE will be supplying components, spares
and consumables to Vialle's Korean target market of in excess of 600,000 vehicles. Force Motors ("Force") of India have agreed to contribute to ACE's development costs in
relation to the 2.6 litre Force/ACE NG engine. Development work has been completed with the
first five NGVS kits purchased by Force to be delivered in January 2008. Subject to
certification and validation by Force, purchases of commercial quantities of ACE NGVS kits
will commence prior to 30 June 2008. In Australia, a Perth based transport company has committed to purchase the first 11
Isuzu/ACE LNG vehicles. The purchase commitment is subject to the Isuzu/ACE engine meeting
applicable Australian emission standards. New model Isuzu vehicles will not be available
to ACE for conversion and testing until early 2008. Therefore, ACE's delivery of the NG
vehicles will most likely occur in the last quarter of FY 2008. Final road trials in Malaysia, of two Volvo prime movers incorporating the ACE NGVS,
are continuing. Sales of spare parts and consumables to Irisbus in France continue to generate around
$250,000 in sales to ACE each quarter. The Thailand Bus and Truck 2007 exhibition will be held in Bangkok from 8 to 10 November
2007. A large Chinese truck manufacturer is exhibiting 5 NG powered trucks of which 4 use
the Weichai/ACE NG engine. The Asia Pacific Natural Gas Vehicle Association (ANGVA) conference and exhibition is
held every two years. The 2007 conference is to be held from 26 to 29 November 2007 in
Bangkok, Thailand. ACE Managing Director, Tony Middleton, and a representative of ACE's
Thai joint venture partner, Monika Motors, have been invited to present separate papers
to the conference. In addition, Weichai of China will exhibit 6 NG engines 5 of which
use the ACE NGVS and a Chinese truck manufacturer will display 4 NG trucks utilising the
ACE NGVS.
For further information please contact:
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