August 14, 2009

Terra Nova Minerals Acquires Australian Montana CTL Plant Developer

Terra Nova Minerals (TGC) will acquire all of the share capital of the Australian Energy Co. (AEC), which owns 90.91% of the Australian-American Energy Co. (AAEC). AAEC is the developer for the proposed $7.4 billion Many Stars Coal-to-liquids (CTL) Project in Montana.

The CTL plant will be built on the Crow Indian Reservation in the southeastern part of the state. AAEC has a 70-year project lease agreement with the Crow Nation. The project property has a national instrument 43-101 compliant inferred coal resource of 936 million short tons (849 million metric tons). There are existing coal mines to the north and south of the resource.

TGC will also acquire the remaining 9.09% of AAEC, giving it 100% interest in the firm. It entered into a support agreement with AEC, an unlisted Australian public company, pursuant to which Terra Nova has agreed to acquire all of the issued and outstanding ordinary
shares of AEC through a takeover conducted under Australian law.

TGC entered into a unit purchase agreement (UPA) with Brian Zarker, the owner of the other 9.09% interest in AAEC, pursuant to which Terra Nova will acquire the UPA. AAEC is a party to a master lease agreement with the Crow Nation in respect of lands and mineral rights owned by the Crow Nation in Montana.

AAEC and the Crow Nation have agreed to collaborate to jointly develop the project. The existing data provide strong indications that a substantial amount of coal underlies the project area. Further exploration and evaluation work are likely to substantially increase the amount and classification of reported coal resources.

The plant will initially convert 14 million t/y of coal to 50,000 b/d of diesel, jet fuel, and naphtha. Its capacity will be expanded to 125,000 b/d, and the plant will have a 95% CO2- capture rate. Construction is planned to begin in 2012, with plant start-up scheduled for 2016. AAEC will spend $100 million on engineering and environmental work.

AEC in Australia is the primary investor in AAEC, which is the party to the project agreement and related definitive agreements with the Crow Nation in respect to the Many Stars CTL Project.

The proposed acquisition of AEC by TGC, when final, will create a combined TGC and AEC that will be traded publicly in Canada under the anticipated nameplate of Great Western Energy Inc. AAEC will continue to be an American company, headquartered in Houston, though now with Canadian investors as well as Australian and American.

The new company's board of directors will primarily comprise AEC and AAEC senior executives. Allan Blood, current chairman of AEC and AAEC, will be appointed chairman of Great Western Energy. As such, AAEC's focus on the Many Stars CTL Project remains unchanged.

"We consider this commercial transaction as a routine and common business endeavor at an investor level that has no adverse impact on the Many Stars CTL Project," said Dick Lyon, CEO, AAEC. "In fact, we believe this will be a very good thing for the project, as it will further widen the shareholder base that will be funding our needed activities into the future."

AEC signed an agreement last year with Crow leaders to develop the reservation's coal reserve. Terra Nova is using a reverse take over (RTO) that will leave AEC executives in key leadership positions. AEC's Blood will retain his title, and company shareholders will control 67% of the
new entity to be called Great Western Energy Inc. Terra Nova CEO Willie McLucas will be Great Western's president. The deal must be approved by shareholders.

The bid acquisition and the UPA acquisition are expected to constitute an RTO of the company as defined in the policies of the TSX Venture Exchange. Following completion of the RTO, the company will change its name to Great Western Energy.

In connection with completion of the acquisition, the company also intends to complete a private placement of up to $12 million before expenses. The RTO financing proceeds will be used principally to delineate an updated resource calculation for the project.

"This is the culmination of over six months of work and represents an exciting acquisition for Terra Nova," McLucas said. "The Many Stars project is not only a world-ranking large-scale resource, but it offers the opportunity for shareholders to participate in a project offering sustained growth in the asset value of the project. I strongly encourage shareholders to support this initiative. I intend to vote for it with my personal shareholding."

The AEC shareholders, Brian Zarker, the RTO financing participants, and the current Terra Nova shareholders will own about 67.05%, 6.71%, 19.85% and 6.39% of the firm, respectively. It is anticipated that the following people will be appointed as directors of the company: Allan Blood, Evan Edwards, Dick Lyon and Brian Zarker. Willie McLucas, Tom Allen and Grant Sawiak will remain as company directors.

In addition, it is expected that the following people will be appointed to positions as company executive officers: Allan Blood (chairman), Willie McLucas (president), Dick Lyon (executive director/CEO) and Grant Sawiak (secretary).

Gameday Enterprises Pty Ltd. which is associated with Allan Blood, will hold 12.71%, calculated on an undiluted basis, of the issued and the company's outstanding common shares. No other corporation will hold more than 10% of the company.

"I agree totally with the comments of Mr. McLucas. We have been working on the Many Stars Project for two years, and it represents part of the culmination of a previous 12 years on similar developments in Australia, Blood said.

"We are excited by the scale of the resource, its potential for very serious incremental increase subject to appropriate geological development, and the technology routes that we propose to initially evaluate for the very substantial economic development of this project," he said. "I, too, will be enthusiastically recommending that the shareholders in AEC support this initiative, and companies associated with both me and our finance director intend to vote for this transaction."

The plant will have access to water from the Little Bighorn and the Bighorn rivers that run through the Crow Nation. The deal requires the Crow to commit up to 50,000-acre-feet/year of water to the plant. Once the plant is expanded, water consumption will be cut to 8.5 to 1.

The Bureau of Indian Affairs (BIA) has approved the contract between the Crow Tribe and AAEC. This does not replace the permitting process, and the project must receive permits before construction can begin.

- Zeus Syngas Refining