cmq, page-5

re: cmq what is new? There was nothing new in the ASX release today. Informed CMQ shareholders should already know all of the “apparent good news” as far back as December 04 or earlier that:

1) Chemeq has a AU$1.5 million contract to supply a South African customer which was due for shipment in the year ending 30 June 2005 and the buyer has indicated a willingness to accept delivery later than agreed in the sale contract.

2) Chemeq is still working to obtain the unconditional Australian Pesticides and Veterinary Medicines Authority (APVMA) license for its manufacturing facility.

3) The current output levels is between 15% – 25% of the name plate capacity of 20,000 kg per annum of Active Pharmaceutical Ingredient (API) which formulates into 60,000 – 100,000 litres of the finished product and 400,000 litres at 100% name plate capacity.

4) CMQ had been working from as early as October 04 to overcome the filtration problem.

The only news in the whole ASX release is: "Work is focusing on analysis of alternative solutions including improving the existing filtration technology and moving to other technologies. Chemeq anticipates it will be in a position to provide a further update on these developments in about a month".

It is rumored that CMQ is abandoning the existing filtration technology with ‘other technologies’ which will set back achieving the 20tpa name plate capacity substantially and “Chemeq anticipates it will be in a position to provide a further update on these developments in about a month”.

If this rumor is correct (the ASX release appears to confirm rather than contradict this), the ASX statement is a masterpiece of drafting bad news to read like apparent good news!

I hope the company will update shareholders on the APVMA license and the filtration problem before the special meeting.