market reaction to update, page-3

I ask the company a few questions just before we received the announcement.Most of the stuff is nothing new but you may find some of it interesting.

What is the companies plan of attack?

To meet the current market challenges, NFL is implementing an Asset Utilisation Strategy to maximise utilisation of its assets, mitigate market risks and provide the foundation for future growth.

The key to this Strategy is NFL’s ability to swing into refining of external crude glycerine at Singapore to generate cash flows even when biodiesel production is uneconomic. This advantage, combined with a restructuring of fixed costs, will allow NFL to optimally manage its cash flow position. NFL is also continuing to focus on long-term alternative feedstock contracts such as jatropha.

NFL’s Singapore facility is comprised of three biodiesel processing units - or trains - each consisting of a 200,000 metric tonnes per annum (mta) biodiesel production unit (BD1, BD2, BD3) and three independent glycerine processing units – each consisting of a 20,000 mta glycerine refining unit (GLY1, GLY2, GLY3). The Jurong Island facility – the world’s largest - is one of few biodiesel plants with independent glycerine refining capabilities.

Since biodiesel production is currently uneconomic due to the high cost of vegetable oil feedstocks, biodiesel unit BD1 will only be operated to complete testing. Biodiesel units BD2 and BD3 will be completed to a state of production-readiness, but will not be commissioned until the price of vegetable oils declines to the point where biodiesel production is once again economic.

In the interim, the Company’s strategy is to focus on glycerine refining. The schedule for construction of Glycerine Units GLY2 and GLY3 has been accelerated, and the units are expected to be mechanically complete and ready for commissioning in February and March 2008, respectively.



Is the supply of feed stock required looking brighter?

Companies such as GEM Biofuels, in which NFL holds a 3.9% interest, have already entered into agreements to establish jatropha plantations. GEM has 452,500 hectares of suitable land for the establishment of plantations in Madagascar. To date, approximately 13,300 hectares have been planted. NFL has signed a supply agreement with GEM which will allow for the sale of up to 55% of GEM’s crude jatropha oil production in Madagascar to NFL at an initial fixed five-year free on board delivery price of US$500 per tonne. NFL has also negotiated an irrevocable first right of refusal to purchase up to 40% of the oil produced from any new plantations developed or acquired by GEM at a similar price. NFL will begin using jatropha at Singapore next year.



How is the general feeling of the company with the current oil prices helping popularize Biodiesel?

Biodiesel is a much greener alternative to petroleum diesel and has been well met by the US and Europe, amoung others, who have legislated biodiesel mandates.



What is the companies opinion on a possible take over of NFL? Unfortunately, I'm unable to provide any information here.