LEC to Acquire Stake in Neutral Fuels to develop Biodiesel Program for Asia Pacific/Middle East/Africa Region

VANCOUVER, Sept. 5, 2013 /CNW/ - Lignol Energy Corporation (TSXV: LEC) ("LEC" or "the Company"), a leading technology company in the advanced biofuels and renewable chemicals sectors, today announced that it will provide funding of A$4,070,000 to acquire a 40% equity stake in Neutral Fuels Parent Company ("Neutral Fuels") and a 51% interest in Neutral Fuels' Australia and New Zealand biodiesel operation, Neutral Fuels (Melbourne) Pty Ltd. ("NFANZ"). This funding is for the deployment of the next phase of a planned rollout of closed loop biorefineries throughout the Asia Pacific/Middle East/Africa region ("APMEA") in an agreement with the McDonald's Restaurants used cooking oil biodiesel program.  Under the agreement with McDonald's, Neutral Fuels currently operates two closed loop biorefineries located in Dubai, United Arab Emirates and Melbourne, Australia.

Neutral Fuels' closed loop business model, which was developed specifically for McDonald's, takes used cooking oil from its local restaurants and in return provides B100 biodiesel to fuel its suppliers' delivery fleets. The company has been featured in print and television media including;

CNN: : http://tinyurl.com/Neutral-Fuels-CNN

BBC : http://tinyurl.com/Neutral-Fuels-BBC

"Neutral Fuels has developed world-class biorefineries employing state-of-the-art processing technology which has established them as an emerging leader in the niche of small scale biofuel operators", said Ross MacLachlan, CEO and Chairman of LEC.  "We are excited to be involved in this commercial venture.  Their novel business model and collaboration with McDonald's is an attractive and sustainable model both in terms of the environment and in commercial terms."

"Partnering with LEC is the logical next step for Neutral Fuels. Our current technology is able to efficiently convert used cooking oil to biodiesel today, and LEC's next generation technology provides us with some exciting options for the future." said Karl W. Feilder, CEO and Chairman of The Neutral Group.

The terms of the agreement between LEC and Neutral Fuels provide for two tranches of funding for a total of A$4,070,000. Each tranche will be comprised of a shareholder loan which will rank pari passu with the existing shareholder loans currently in place, which are for a five year term, interest free and unsecured.  The first tranche will be funded on or before 15 October, 2013 with a A$2,000,000 loan.  On the funding of the first tranche, LEC will be issued a 20% equity stake in Neutral Fuels and a 51% stake in NFANZ.  On the funding of the second tranche of A$2,070,000 on 15 January 2014, LEC will be issued an additional 20% equity stake in Neutral Fuels; resulting in a A$4,070,000 loan owing to LEC and an equity interest of 40% ownership of Neutral Fuels as well as a 51% equity stake in NFANZ.  As part of this agreement LEC has advanced an interest free A$500,000 loan secured against the assets of NFANZ which will be retired and then applied to the first tranche of A$2,000,000 on or before 15 October, 2013.  Neutral Fuels current management team will continue to manage all of the operations with support as required from LEC.

The closing of this transaction is conditional upon regulatory approval. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

About Neutral Fuels

Neutral Fuels owns and manages biorefineries that convert used cooking oil into biodiesel, the modern, sustainable replacement for fossil diesel. On a lifecycle basis, biodiesel accounts for over 80% reduction in carbon dioxide and equivalents, the major contributors to climate change. Neutral Fuels pioneered the closed loop business model which was developed specifically for McDonald's, where used cooking oil is collected from McDonald's restaurants by the same vehicles that deliver the fresh oil. The used oil is then backhauled to the co-located Neutral Fuels biorefinery where it is converted, litre for litre, into biodiesel, which is then pumped back into the delivery fleet in an ongoing recycling process.

In Dubai, used cooking oil is collected from more than 100 McDonald's UAE restaurants each month and their fleet of supply trucks in the UAE has to date driven more than 2 million kilometres on Neutral Fuels B100 biodiesel.  In Victoria, Australia the Neutral Fuels biorefinery currently services the used cooking oil from more than 140 McDonald's restaurants.

Neutral Fuels, headquartered in Dubai, UAE, is a member of The Neutral Group, the international cleantech organisation founded in 2006 to build sustainability strategies for the logistics, energy and hospitality industries and to execute significant reductions in energy spend and CO₂ emissions. CEO and founder, Karl W Feilder, won the Asian Sustainability Leadership Award in September 2012 and was awarded Innovator of the Year 2011 by LOG Magazine for his work in carbon savings in the Middle East. For more information please visit www.biodiesel.ae

About Lignol Energy Corporation ("LEC")

Lignol Energy Corporation is an emerging producer of biofuels, biochemicals and renewable materials from waste biomass.  LEC is actively involved in the management of its wholly owned subsidiary Lignol Innovations Ltd. and in the management of Territory Biofuels Limited, in which it has a controlling interest, but has no influence over the activities of Australian Renewable Fuels Limited.  The Company intends to invest in, or otherwise obtain, equity interests in energy related projects, which have synergies with the company and have the potential to generate near term cash flow.

Lignol Innovations Ltd. ("LIL")

The Company's wholly owned subsidiary, LIL is a leading technology company in the advanced biofuels and renewable chemicals sector undertaking the development of biorefining technologies for the production of advanced biofuels, including fuel-grade ethanol, and other renewable chemicals from non-food cellulosic biomass feedstocks. LIL's modified solvent based pre-treatment technology facilitates the rapid, high-yield conversion of cellulose to ethanol and the production of value-added biochemical co-products, including high purity HP-L^TM lignin. HP-L^TM lignin represents a new class of high purity lignin extractives (and their subsequent derivatives) which can be engineered to meet the chemical properties and functional requirements of a range of industrial applications that until now has not been possible with traditional lignin by-products generated from other processes. LIL is executing on its development plan through strategic partnerships to further develop and integrate its core technologies on a commercial scale.

Territory Biofuels Limited ("TBF")

The Company presently owns a controlling 56% equity stake in TBF (and is in the process of increasing that stake to up to 66% pursuant to the August 19, 2013 news release), a company which owns a large scale biorefining facility located in Darwin, Northern Territory which includes a Lurgi-designed biodiesel plant and the largest glycerine refinery in Australia. The facility was commissioned in 2008 at a cost of A$80 million, along with 38 million litres of related tankage, now leased by TBF. The biodiesel plant is the largest in Australia with a rated capacity of 140 million litres per year. The plant was originally built to run on palm oil and food-grade vegetable oil, however the plant was shut down in 2009 due to challenging technical and economic conditions. To take advantage of current market opportunities, TBF is in the process of raising funds to restart the existing facility utilizing a specific grade of palm oil; environmentally certified, Refined Bleached & Deodorized (RBD) palm oil. In 2014, TBF plans to integrate new feedstock pre-treatment technologies and catalysts to process a broader range of feedstocks such as lower quality tallow, used cooking oil and palm sludge oil; a waste product from palm oil mill extraction. LEC has appointed a majority of the Board of TBF which includes two executives and directors of LEC, one of whom is Chairman of the Board. Since obtaining a controlling interest on April 15, 2013, LEC has been actively engaged in the operations of TBF and in supporting TBF to obtain access to additional finance to restart the Darwin plant and to enable the company to commence commercial operations.

Australian Renewable Fuels ("ARW")

The Company currently owns a 21% investment in ARW, a company listed on the Australian Stock Exchange (ASX: ARW), which is the largest biodiesel producer in Australia owning three plants with a total nameplate capacity of 150 million litres per annum. ARW's three plants were built at an aggregate cost of over A$100 million. ARW has made significant changes in recent years to become a more cost effective producer of high quality biodiesel to address growing biofuel demand in the Australian market. In March 2013, ARW completed an equity financing of A$12.3 million, which was partially funded by LEC, for the purpose of repaying existing debt and to provide additional working capital. Further information about ARW can be found at www.arfuels.com.au

Caution concerning forward-looking statements:

Certain statements contained in this document may constitute forward-looking information within the meaning of applicable securities laws. Such forward-looking statements or information include, without limitation, statements or information about LEC's ability to complete the provision of funding of A$4,070,000 to Neutral Fuels within the agreed timeframes, LEC's ability to invest in, or otherwise obtain, equity interests in energy related projects which have potential synergies with the Company and which have the potential to generate near term cash flow, LEC's ability to increase its stake in TBF in the future,  the ability of The Neutral Fuels Group to complete the transfer of all of its liquid fuels business to Neutral Fuels before the completion of the funding of the transaction, the ability of Neutral Fuels to complete the rollout of closed loop biorefineries in accordance with its agreed timetable, TBF's ability to finance and restart its 140 million litre per year biodiesel plant and glycerine refinery and to commence commercial operations, and TBF's ability to integrate new pretreatment technologies and catalysts to facilitate the processing of a broad range of lower cost feedstocks.

Often, but not always, forward looking statements or information can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes" or variations of such words and phrases or words and phrases that state or indicate that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.

Such statements or information reflect LEC's current views with respect to future events and are subject to certain risks, uncertainties and assumptions including, without limitation, LEC's ability to raise additional capital to fund operations and to support the capital requirements of its affiliates, the requirements of the potential effect of changes in government policy relating to the environment, and incentives for renewable fuels, the potential impact of changes in the prices of feedstock and the market price of liquid fuels including biodiesel, ethanol and renewable chemicals, the ability of LEC's subsidiary, associate and investee company to generate future profits and to pay dividends, and to meet increasing regulatory requirements, LEC's ability to divest the ARW ordinary shares due to modest trading volumes,

Many factors could cause LEC's actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements or information, including among other things, financial market conditions which will impact LEC's ability to finance its operations and to meet future capital and investment requirements, the demand for the market price of liquid fuels including gasoline, biodiesel, ethanol, the market price and demand for renewable chemicals, risks relating to the protection of technology from infringement and those risk factors which are discussed elsewhere in documents that LEC files from time to time with securities and other regulatory authorities. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements or information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Except as required by law, the Company expressly disclaims any intention or obligation to update or revise any forward looking statements and information whether as a result of new information, future events or otherwise. All written and oral forward-looking statements and information attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements.

SOURCE: Lignol Energy Corporation