SOURCE: Synthesis Energy Systems

March 13, 2007 14:45 ET

SES and Golden Concord Sign Memorandum of Understanding to Join Forces to Deliver High-End Syngas to Methanol to DME From Low Cost Coals in Inner Mongolia

Companies Plan Definitive Agreement

HOUSTON, TX -- (MARKET WIRE) -- March 13, 2007 --Synthesis Energy Systems, Inc. ("SES" or the "Company") (OTC: SYMX), a provider in creating high-value chemical feedstocks and clean energy from a wide array of low-end fuels, and Golden Concord Holdings Ltd. ("Golden Concord"), a leading private provider of electricity, steam and chilling water in China, have signed a Memorandum of Understanding ("MOU") for the construction of an integrated coal gasification to methanol to Dimethyl Ether ("DME") plant (the "Plant") in Inner Mongolia to be mutually owned through a joint venture company ("JVC").

The JVC will construct, own and operate the Plant, which will use the Company's licensed U-GAS® technology to convert low cost lignite from Golden Corcord's coal mine in Xilinguole, Inner Mongolia, to produce synthesis gas ("syngas") which will feed a methanol plant. The methanol created will feed the JVC's DME Plant. The parties are also considering additional syngas production for the local town gas network.

SES and Golden Concord are currently in negotiations to finalize the full transaction, including agreements for the JVC, coal purchase, operations and management for the Plant, and other related agreements. These agreements remain subject to approval of the board of directors of both companies, as well as approval from the relevant government authorities in Inner Mongolia.

Asia and the U.S., with their vast coal reserves, need clean transportation fuel from a secure source. DME, manufactured from coal-derived methanol and biomass, 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.

Donald Bunnell, President and CEO of SES - Asia Pacific, stated, "We are extremely pleased to announce this MOU with Golden Concord. Our partnership represents progress in our growth strategy to develop alternative energy and chemical projects, technologies and systems based on the gasification of low cost fuel sources and to establish U-GAS® as a reliable and efficient alternative source of energy and chemical products to manufacturers worldwide."

Commenting further, Mr. Bunnell stated, "Golden Concord is a prestigious player in the Asian energy market, and like SES, they are committed to the provision of clean and sustainable energy. We believe that we will be able to provide the U-GAS® technology to produce a cleaner, high-quality fuel, at a lower cost using Golden Concord's low value coals from its Xilinguole coal mine."

Mr. Zhu Gong Shan, Chairman of Golden Concord, stated, "We are looking forward to working together with SES on this important project. Both companies believe that utilizing low cost coal from Inner Mongolia will allow us to be one of the world's lowest cost methanol and DME producers. The government is very supportive of projects that can utilize low cost coals in an environmentally-friendly manner to produce methanol and DME and this project will be the foundation for further cooperation between our companies."

The Plant is expected to break ground by the end of this summer and be in operation by late 2008. The design of this Plant is intended to be used as a standard for any future plants that the JVC constructs. 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.

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