Synthesis Energy's Yima Joint Venture plant has started to produce methanol, moving the Company closer to generating meaningful financial results from its China business in 2013. The plant will be ramping up methanol production to full capacity as the Yima Joint Venture completes all remaining commissioning and start-up steps throughout the first half of 2013.

Located in Henan Province, China, the state-of-the-art, $250 million coal-to-methanol facility uses SES' patented and proprietary gasification technologies. It has been constructed through a 75/25 percent owned joint venture between Yima Coal Industry Group Co. Ltd., a large, integrated Chinese coal company, and SES, respectively.

When it reaches full capacity later this year, the plant is expected to cleanly convert some 2,400 tonnes per day of high ash Yima coal into 300,000 tonnes per year of refined methanol. There is a large and growing market for refined methanol in China as the demand for non-traditional utilization of methanol for production of olefins and transportation fuels is rapidly increasing in the country.

"We are pleased our Yima JV generated the first methanol production by the end of 2012, as planned. This project represents a significant accomplishment for SES and is expected to generate meaningful cash flows for the Company.

"We expect the Yima Joint Venture to quickly ramp up methanol production rates and sales this year in order to achieve sustainable full capacity production levels," said Robert Rigdon, president and CEO, SES.

"The Yima project is being carefully monitored by other potential partners and customers of SES. We believe the production of methanol will be a major catalyst for further commercialization of our technology and enable us to realize the value of the significant pipeline of Chinese and global opportunities we have built over the past three years while this project has been under construction," said Mr. Rigdon.

In August 2009, SES and Yima entered into amended joint venture contracts for the gasification, methanol/methanol protein production and utility island components of the plant, collectively referred to as the Yima Joint Ventures. Government approvals were received and detailed design engineering and construction of the plant began in 2009.

The project is phase one of the Maozhuang Industrial Park - a planned $4B USD industrial park in Henan Province, China. This phase one project is a $250 million integrated coal-to-methanol plant, with facilities to develop production of methanol protein. When phase one is completed, the plant is expected to produce a minimum of 300,000 tonnes of refined methanol annually.

Two additional phases of coal gasification projects are planned to start at this location upon successful completion of the phase one plant.

Phase two is expected to add additional capacity of 300,000 tonnes per annum of refined methanol or methanol equivalent products, and phase three is expected to add additional capacity of 600,000 tonnes per annum of refined methanol or methanol equivalent products. These three phases together make up approximately 50 percent of the planned investment at the Maozhuang Industrial park.

Photographs and an artist's rendering of the Yima Joint Venture Project in China are available upon request.

SES' Advanced Gasification Technology
SES has the only commercially available gasification technology proven to economically process the lowest quality coal feed stocks, which represent approximately 50 percent of total recoverable global coal reserves. The company has developed significant intellectual property protecting its advanced fluidized bed gasification technology, which is based upon the U-GAS fluidized bed gasification technology licensed exclusively from the Gas Technology Institute.

Its primary advantages, relative to other gasification technologies, are much greater fuel flexibility provided by the ability to use all types of coal and many coal waste products as well as renewable biomass and municipal waste feed stocks. These feed stocks which include low quality, high ash and high moisture coals are available and significantly cheaper than higher grade coals. The technology cleanly converts these feedstocks into synthesis gas (syngas) in a cost effective and environmentally friendly manner.

It has low water consumption and does not produce any harmful byproducts. The technology can be modularized and installed on a small scale or large scale enabling the rapid construction of plants at a lower capital cost, and in many cases, in closer proximity to coal sources.