Ann: Proposed Exercise of Options & Change in Substanial Holding, page-56

Just to add a few notes after the Sydney preso today to Ildsrud's excellent summary of the Melbourne presentation earlier this week :

Ross MacLachlan the MD opened with how valuable and supportive Harrington Global was as a shareholder. Harrington Global acknowledge the substantial opportunity that the Kalina technolgy presents and were instrumental in supporting KPO financially and administratively. They have opened many door for Ross and his team that would have been difficult to open otherwise. They have substantial connections in the power industry. It was good to clear the air on Harrington Global after the past few weeks.

Ormat Technologies are the big competitor listed on the NYSE with a $2 billion plus market cap. The Kalina Cycle tech is 20 to 40% more efficient and there is applications we can do that Ormat cannot. We can also tailor construct our plant to the clients requirements whilst Ormat can only provide a set format that the client has to work around.

The China opportunity is obviously massive. Waste heat to power has been identified by the Chinese Government as part of an effective solution in aiming to reduce greenhouse gas emissions by 40 to 45% by 2020. This is an opportunity that needs to be moved on right now and KPO has the ready technology to do it. The way China is set up is that Kalina Power has 49% of the Chinese company. The other 51% is owned by 2 senior party members and State Owned companies. KPO has executive and board control. The Chinese subsidiary will be 100% self financing. The company is engaged with several Chinese funders to fund the subsidiary (think CITIC and others of similar ilk). KPO will pull money out of the company by way of a charge for services and royalties. It is aimed to list the subsidiary in China over time. It costs US$12 mil per 4 mw and this will be funded by third parties and in Sinopecs case it is anticipated that they will just draw a cheque. This Chinese subsidiary has the potential to be a major company. The Chinese are also interested in investing in Africa where they have a big presence.

There is also plenty of opportunities in North America, Japan (where they are already established and have had plant in operation their for over a decade with no issues), France and others. Canadian oil sands is an obvious target as is ageing coal fired plants all over the world. Their website has been hit with enquiries non stop for 2 years and they are now in a position to respond. The appointment of Geoff Scott is key here. Ross stated he was an outstanding recent appointment. Previously engineers had been dealing with the sales process but Ross has the ability to take that sales process to new and expanded levels.

Infrastructure funding outside of China would be from several possible sources such as the Gates Foundation and the Hank Paulson Fund. The Jeffry Myers connection to Stonepeak Infrastructure Partners was mentioned as was the fact Stonepeak committed a US$500 mil cheque to the ASX listed LNG Ltd for their infrastructure project in the USA. But Ross emphasised that their were several other infrastructure options and not limited to any Stonepeak funding which they have no agreement with. Myers expertise and experience though in infrastructure funding was obviously very valuable in dealing with any infrustructure fund.

It was reiterated how important the Technip report is, which concluded that "KALINA Cycle technology is robust, its advantages substantial and given the extent of technology validation, there is potential for the KALINA Cycle to be adopted on an industrial scale worldwide."

"Technip S.A. is a company that carries out project management, engineering and construction for the energy industry. Its headquarters are in the 16th arrondissement of Paris. It has about 38,000 employees and operates in 48 countries" I think that the Technip report is as credible as you can get.


Ross MacLachlan came across as very experienced, capable and confident of taking KPO forward and making big profitable inroads. I think we are in excellent hands going forward.

At the current share price KPO is a very exciting opportunity that rarely presents itself on the ASX imo.

I am looking forward to watching their progress over the next year.

Cheers