SOURCE: Metal Storm Limited

October 01, 2007 03:12 ET

Metal Storm Limited -- Advice From Company's Major Shareholder

BRISBANE, AUSTRALIA--(Marketwire - October 1, 2007) - Metal Storm Limited (ASX: MST) (NASDAQ: MTSX)

Metal Storm Limited advises that the company has received the attached advice from Mr. JM O'Dwyer, the company's largest shareholder, in relation to Mr. O'Dwyer and his associates' intentions for their shareholding in the company. Mr. O'Dwyer has consented to his letter being released to the market. Mr. O'Dwyer's advice does not impact the operations of the Company.

The board of directors advises that the Company's development programs are proceeding on track and it is pleased with this progress.

Notes:

Metal Storm's Australian Stock Exchange trading code: MST

Metal Storm's NASDAQ Small Cap ticker symbol: MTSX

About Metal Storm

Metal Storm Limited is a multi-national defence technology company engaged in the development of electronically initiated ballistics systems using its unique "stacked projectile" technology. The company is headquartered in Brisbane, Australia, and incorporated in Australia, with an office in Arlington, Virginia. Metal Storm is working with government agencies and departments, as well as industry, to develop a variety of systems utilising the Metal Storm non-mechanical, electronically fired stacked ammunition system. Metal Storm's weapon technology uses computer-controlled electronic ignition and a system of stacked projectiles, to achieve a completely non-mechanical gun that is very lightweight and compact, providing a very high firepower to weight ratio. The Metal Storm weapons system utilizes multiple barrels mounted together on one platform which allows varying munitions types to be deployed in a single, low cost, lightweight weapon system. Firing the weapons by electronic ignition requires no moving parts, allowing reliable long term unattended weapon operation.

Safe Harbour

Certain statements made herein that use the words "estimate," "project," "intend," "expect," "believe" and similar expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks and uncertainties which could cause the actual results, performance or achievements of the company to be materially different from those which may be expressed or implied by such statements, including, among others, risks or uncertainties associated with the development of the company's technology, the ability of the company to meet its financial requirements, the ability of the company to protect its proprietary technology, potential limitations on the company's technology, the market for the company's products, government regulation in Australia and the US, changes in tax and other laws, changes in competition and the loss of key personnel. For additional information regarding these and other risks and uncertainties associated with the company's business, reference is made to the company's reports filed from time to time with the Securities and Exchange Commission, including the company's Form 20-F.

To:  Metal Storm Limited                                  1  October 2007

Attention: Peter Wetzig
Company Secretary

Rhonda and I congratulate the Company on recent progress, particularly the ongoing successful development of the 3GL and Redback systems, and the success of the earlier June 30 technical and financial Milestone deliverables. We are pleased with the expansion of engineering capability, and with recent changes that seem to reflect an uncluttered clear focus on first-product development, applied with good urgency.

Our increasing confidence is also based on objectives regarding the 3GL released at the Annual General Meeting, that the Company expects:

--  3GL will be tested on an M-16 by the end of  2007
    
--  3GL and its munitions will be certified for man firing in the second
    half of 2007
    
--  Limited release prototypes by early 2008
    
--  Field demonstration and munitions that prospective customers can trial
    by mid 2008
    

Our confidence contrasts to some concern we held in recent years, because of changes to Company strategy which appeared to us to carry with them a slowing of some development and outcomes, and along with that a negative impact on Shareholder wealth.

If our own improved expectation for the future is concurrent with that of the Board and the Executive, we ask that the Company takes action to review and upgrade Investor and Market communications, as it is disappointing to note that the Company has been largely unsuccessful in communicating a clearly understood, continuous and frequently updated pathway of sustained progress toward fielded product.

On the matter of our shareholding in the Company, over time Rhonda and I have continued to receive proposals for placement of a large parcel of our shares, but to this time we have declined each, as none seemed to us to add the value to the future of the Company that we would wish.

We will continue discussions with interested parties, and will also continue to examine additional opportunities as they become available. We will progress them only if we believe they are likely to add future value to the company.

In the meantime, to support some specific family objectives, we will begin to progressively release some stock in the Australian and US markets over coming months, as we judge trading volumes will support. That preparation includes the conversion of 25 million Metal Storm shares into 1.25 million ADRs.

We will though, continue to hold the majority of our stock to provide a potentially far greater return in the future, given the success that we expect can result from the present activities of the Company, and from the tighter product focus and schedules that appear to have been put in place by the Company CEO, Dr. Lee Finniear.

In our view, the delivery of fielded product is also strongly enhanced by the important technical and marketing relationship that the Company has developed with Singapore Technology Kinetics (STK). STK's capabilities and technical excellence with 40mm grenades, seem to us to provide a reliable and rapid path for Metal Storm first-product, and with a partner who appears hungry to achieve international market growth.

J. Mike O'Dwyer

Contact Information

  • Company Contacts:

    Peter Wetzig
    Company Secretary

    Lee Finniear
    Chief Executive Officer

    Metal Storm Limited
    Ph: +61 (0) 7 3123 4700