SOURCE: Synthesis Energy Systems

June 06, 2007 10:07 ET

SES and Golden Concord Sign Joint Venture Contract to Build Coal Gasification, Methanol and DME Plant in Inner Mongolia, China

Plant to Optimize Coal Reserves to Meet China's Growing Need for Clean Transportation Fuels and Chemical Feedstocks

HOUSTON, TX--(Marketwire - June 6, 2007) - Synthesis Energy Systems Investments, Inc., a subsidiary of Synthesis Energy Systems, Inc. ("SES" or the "Company") (OTC: SYMX), a coal gasification company involved in the conversion of low cost fuels into clean energy and chemical products, and Inner Mongolia Golden Concord (Xilinhot) Energy Co., Ltd., a subsidiary of Golden Concord Holdings Ltd. ("Golden Concord"), a private provider of electricity, steam and chilling water in China, have signed a co-operative joint venture contract to build an integrated coal gasification plant and methanol and Dimethyl Ether ("DME") production plant (the "Plant"). Located in the Inner Mongolia Autonomous Region of China, the Plant will optimize low value, abundant lignites from coal mines to meet the region's growing need for clean, affordable non-petroleum-based fuels and petrochemical feedstocks.

Tim Vail, President and Chief Executive Officer of SES, said, "Working together, SES and Golden Concord are demonstrating their commitment to develop cleaner, high-quality fuels, at a lower cost based on the utilization of the U-GAS® technology to gasify low quality, high-ash coals to supply China's growing appetite for clean fuels and petrochemicals that fuel economic development. The application of the U-GAS® technology offers significant economical and environmental advantages that are encouraged by the Chinese government including increased output and efficiency as well as the ability to reduce emission levels below conventional coal and the option to capture and sequester greenhouse gases responsible for global warming."

Vail went on to say, "Our joint investment in this Plant with Golden Concord exhibits SES' ability to establish mutually beneficial cooperative relationships with strategic partners in China, the most important emerging chemicals market in the world."

SES and Golden Concord will own 51% and 49% respectively of the joint venture named SES-GCL (Inner Mongolia) Coal Chemical Company Ltd. (the "JV Company"), based at the Lignite Coal Chemical Industrial Base of Xilinguole Economic and Technology Development Zone in the Inner Mongolia Autonomous Region.

"The establishment of this project will provide wider clean energy choices in the future by supplying high-quality methanol and DME products to Beijing and other cities in North East China," said Mr. Zhang Wei, Chief Administration Officer for Golden Concord.

The JV Company will develop, construct, own, operate, and manage the Plant, which will utilize the Company's licensed U-GAS® technology to convert low-quality, high-ash lignite coals made available from Golden Concord's coal mine in Xilinguole, Inner Mongolia and other mines in the area into a clean gaseous mixture called synthesis gas ("syngas"). The Plant is expected to produce about 84,000 Normal cubic meters per hour of gross syngas. The syngas produced will then be used as a feedstock for the production of a 225,000 ton/year methanol plant. Methanol is a basic building block used in manufacturing for a wide variety of chemical products including plastics, paints, construction materials, as a hydrogen carrier for fuel cell applications, and can be blended with gasoline. In this application, the coal-derived methanol will also be used to produce 150,000 ton/year of DME, an alternative to liquefied petroleum gas, liquid natural gas, diesel and gasoline.

Donald Bunnell, President and CEO of SES - Asia Pacific, stated, "We are honored to partner with Golden Concord and excited about this business model to utilize low cost coals to provide clean and sustainable energy in China in an environmentally friendly manner. It is a model we expect to apply to future business opportunities in this region as well as the U.S."

Coal is the most abundant energy resource in both China and the U.S. -- together making up approximately 40% of world coal reserves. Producing clean energy and transportation fuels from indigenous coal sources is critical to both China and the U.S. Once an exporter, China now imports at least 43% of its oil supply, most of which is needed to supply its rising transportation fuel demands. According to the National Statistics Bureau, the number of private cars in China nearly tripled between 2000 and 2005, from 6.25 million to 17 million vehicles.

DME, manufactured from methanol, is a clean multi-purpose fuel and is also becoming accepted as a synthetic liquefied petroleum gas blendstock in China. Using coal-derived methanol to produce DME, and other clean fuels, can help meet the world's need for non-petroleum-based fuels and petrochemical feedstocks.

Both SES and Golden Concord have begun discussing future plans for expanding the syngas-methanol-DME Plant to further capture economic opportunities.

About Synthesis Energy Systems

Synthesis Energy Systems, Inc. is an energy and technology company that deploys proprietary systems and technology to gasify low value fuels to replace high cost energy and chemical products sold to major global markets. The U-GAS® technology, which the Company licenses from the Gas Technology Institute, is designed to turn waste coal products into high value synthesis gas for use in power and chemical applications. The technology performs this gasification without many of the harmful emissions normally associated with coal fired energy production. SES currently has offices in Houston, Texas, Shanghai and Beijing, China. For more information on SES, visit www.synthesisenergy.com or call (713) 579-0600.

Forward-Looking Statements

Except for historical information contained herein, the matters discussed in this press release contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended that involve substantial risks and uncertainties. When used in this press release and in any documents incorporated by reference herein, the words "expects," "will" and similar expressions identify certain of such forward-looking statements. Actual results, performance, or achievements could differ materially from those contemplated, expressed, or implied by the forward-looking statements contained herein. These forward-looking statements are based largely on the expectations of SES and are subject to a number of risks and uncertainties that are subject to change based on factors which are, in many instances, beyond SES's control. These include, but are not limited to, risks and uncertainties associated with: our early stage of development, the limited history and viability of our technology and our results of operation in foreign countries. SES cautions that the foregoing factors are not exclusive. SES assumes no obligation to update the information contained in this press release.

Contact Information