Project

Flex Fuels Energy (the ‘Company’) plans to develop a large scale rapeseed oil processing plant at its port-side location in Cardiff, South Wales.

Because of the current market uncertainty for biofuels, Flex Fuels Energy has evolved a two-phase strategy, replacing its previous plan, which was to build a fully integrated oilseed process and biodiesel plant. The core project for Phase 1, comprises a mechanical press, solvent extraction plant, food-grade processing plant, seed silos, meal and oil store and ancillary equipment. The Company will complete an outline design for layout, footprint and key interfaces for its Phase 2, biodiesel plant. However, it now intends to defer detailed design and development of the biodiesel facility until more favourable market conditions emerge.

This phased approach has been developed in response to the UK Government’s Gallagher Report on Biofuels, published in July 2008, and the current illiquidity in financial markets. The Phase 1 project reflects the strong premium market for food-grade rapeseed oil and the global shortfall in its production capacity. Against this highly positive background, Flex Fuels Energy is particularly well placed to achieve substantial efficiencies, even in the current difficult and uncertain financial climate. The Company intends to complete a detailed design programme for Phase 1 in January 2009 and to award an engineering, procurement and construction (EPC) contract during Q2 of 2009.

Flex Fuels Energy will continue to closely monitor developments in the UK Renewable Road Transport Fuel Obligation (RTFO) market to maintain an early mover advantage in developing Phase 2 when this is appropriate. The Company remains confident of the geographic and technical advantages of its integrated biodiesel plant philosophy.

Flex Fuels Energy has evolved a dialogue with Blue Chip international agri-trading companies and is on track to reach agreement on a joint venture partnership. The partner company will undertake management of all feedstock inputs to the plant, sale of co-products and supply of vegetable oil output to food markets. To date discussions are proceeding very well with the heads of terms defiining the framework for the detailed supply and off-take contract currently under negotiation.