re: Ann: Update on Green Resources Liuzhou Pr... Hi Healyn,Below...

re: Ann: Update on Green Resources Liuzhou Pr... Hi Healyn,

Below is Dave's response to your question on Green Resources;

RE: Green Resources
Response from Dave Sammut, Intec Ltd

Hi Healyn,

We agree that the arrangements with Green Resources are harder to understand than some other agreements, and we welcome the opportunity to clarify them here on the Forum.

As you know, Joe Lam has been addressing Intec's interests via the Chinese Representative Office for approximately 18 months. One of his key tasks was to advance project opportunities in China, with a particular focus on opportunities which could generate Intec shareholder value without drawing heavily on Intec's limited financial resources. Put another way, project opportunities under consideration in China - at least for the near term - need to bring Intec value from our technology using capital that is financed directly out of China/Hong Kong.

This is the principle of the agreement with Green Resources. Intec has received a 5% interest in Green Resources in return for providing a technology licence for the use of the Intec Process at its projects. Green Resources has identified multiple potential projects, and in developing the first of these (the Liuzhou Project) it has also identified and made preliminary agreements (subject to the successful outcomes of the feasibility study) to put in place the required capital for the engineering, development, construction and operation of the Liuzhou Project. Put another way, the bulk of the RMB 43 million (~A$7 million, subject to Intec's staged investments described below) capital will be sourced locally to the project, without putting an unnecessary strain on Intec's shareholders. While we are all inclined to caution at this stage, we certainly view this progress with cautious optimism.

Now, in addition to the initial 5% interest in Green Resources, Intec has also agreed (via the Subscription Agreement announced on 5 November 2009) to a series of staged investments in Green Resources to successively increase our percentage participation in Green Resources (on a fully diluted basis) up to 30%. At the third investment, Intec also receives a seat on the Green Resources board, increasing our control in the multiple developing Green Resources projects. The capital to fund these investments into Intec is sourced from Chinese and Hong Kong investors identified by Joe Lam via our Chinese Representative Office and Green Resources. Today's announcement represents the first of these Asian investments into Intec, and Intec has in turn used this capital to increase our shareholding in Green Resources to a total of 7%, as agreed in the Subscription Agreement Stage 1. Similar arrangements are associated with Stages 2 and 3.

We hope that this clarifies the network of arrangements that underpins the Green Resources Subscription Agreement. In terms of the future ramifications for Intec's shareholders, we are obviously constrained in what we can say on this Forum. However, it seems pretty intuitive that the development and implementation of multiple projects using the Intec Process can only be a positive for Intec's shareholders. Our investors stand to benefit from the direct value of Intec's shareholding in Green Resources, the establishment of a toe-hold in one of the largest and fastest growing industrial sectors in the world, and the indirect benefits that accrue from successful demonstration of the Intec Process technology at the large commercial scale.

Cheers.