STUART STAGE I PROJECT COMPLETES FIRST RUN UNDER NEW OPERATING GROUP

In Progress Report No. 17, dated June 18, 2001, Southern Pacific Petroleum N.L. and Central Pacific Minerals N.L. (SPP/CPM) advised that the Stuart Stage I plant had produced 60,000 barrels of naphtha and Medium Shale Oil (MSO) since the Suncor buyout on April 6, 2001. This brings total oil production from the plant to about 95,000 barrels.

The first plant run under new SPP/CPM leadership was completed over the April 9 to May 11, 2001, period and demonstrated progress in improving plant reliability and emissions performance. Over the 32-day run period, the plant processed shale for about 19 days (60 percent availability) and achieved an average oil production rate over the total period of 1,450 barrels per day.

A self-imposed restriction was placed on shale processing rates of 160 tonnes per hour (64 percent capacity) to minimize odor emissions from the shale dryer. At higher rates and associated higher dryer furnace temperatures, odors from the dryer increase, most likely due to some premature pyrolysis of shale fines. Further work is under way on options to cost-effectively remove this drying capacity and odor generation bottleneck in the Stage I research and development plant.

The companies say this encouraging operational progress has helped to build confidence in being able to achieve operating cash flow break-even in the fourth quarter of 2001. This requires an average oil production rate of about 1,600 barrels per day.

In May 2001 the first sale of 40,000 barrels of MSO was shipped to Singapore to serve the Southeast Asian fuel oil market. The MSO received a premium over the fuel oil market price in this region due to its lower sulfur content and higher API gravity.

On May 31, 2001, the Aviation Fuels Committee of the United Kingdom Ministry of Defense classified oil shale as a suitable feedstock in the manufacture of aviation jet fuel. This complements a similar United States standard that already included oil shale.

This is an important milestone in achieving broad market acceptance of shale oil naphtha as a high-quality feedstock that can be processed in a conventional oil refinery to make jet fuel, gasoline and diesel.

The companies expect to make their first shipment of 40,000 to 50,000 barrels of hydrotreated naphtha in July 2001.

With an additional 6 to 9 months of operational and emissions experience in 2001, including a higher rate test of the AOSTRA Taciuk Process later this year, the companies believe they will have the necessary information to enable the ramp-up of engineering work on the Stage 2 commercial module.