Synthesis Energy Systems Executes Joint Venture Agreement with YIMA Coal Group to...

Synthesis Energy Systems Executes Joint Venture Agreement with YIMA Coal Group
to Advance Coal Gasification Project in Henan Province, China
Project ready to move forward pending receipt of final government approvals

HOUSTON, Oct. 23 /PRNewswire-FirstCall/ -- Synthesis Energy Systems, Inc.
("SES") (Nasdaq: SYMX), a global industrial gasification company, today
announced that it has entered into the primary joint venture agreement with
YIMA Coal Croup ("YIMA"), a large Chinese integrated coal company, for the
development of a coal gasification plant (the "Plant") which will feed
downstream process for the production of transportation fuels and chemicals
intermediates in Henan Province, China. The joint venture agreement includes
a provision whereby YIMA will guarantee the debt financing for the Plant. SES
expects this guarantee will allow debt financing to be obtained from domestic
Chinese banking sources.
SES and YIMA will continue to work on the development of the project, but
will not be required to make capital contributions to the joint venture,
pending final government approvals. The preliminary estimate of the total
required capital of the joint venture is approximately $350 million. In
exchange for their capital contributions, SES will own a 49% interest in the
joint venture and YIMA will own a 51% interest.
Additionally, SES announced that coal testing for this project, utilizing
coal from YIMA's Yaojin mine, is scheduled to commence at SES's Hai Hua
facility in Zaozhuang City, China. Data from the testing will be used to
verify process simulation calculations and ensure proper design of the Plant.
"The execution of the joint venture agreement with YIMA underscores our
current focus on projects in China where traditional bank financing remains
accessible. We are fortunate to have a partner like YIMA that has the ability
to provide a guarantee for the financing which we believe will allow SES and
YIMA to advance this project despite these turbulent financial times,"
commented Tim Vail, president and CEO of Synthesis Energy Systems. "From an
operational perspective, the ability to conduct coal testing in our Hai Hua
commercial facility as opposed to a pilot plant will be invaluable to the
design process."
"YIMA is very pleased to have signed the joint venture contract with SES.
Despite the downturn in the international financial markets, Chinese banks
have recently decreased interest rates and the central government has reduced
reserve ratios for banks, enhancing the ability of Chinese banks to lend to
projects. We are committed to ensuring the financing for this project as this
is an encouraged industry in China with excellent government support. We
believe this is an opportunistic time to be building new capacity and we
expect this project to be just the first step in a series of projects with
SES," commented YIMA's Chairman, Mr. Wu Luyu.
The Plant will utilize SES' licensed U-GAS(R) technology to convert low-
quality, high-ash sub-bituminous coal into syngas and downstream products that
will help supply the region's growing needs for transportation fuels and
chemical intermediates. The Plant will be constructed in a phased approach
that takes advantage of the U-GAS(R) technology's ability to economically
scale the build-out of capacity. Phase one of the Plant is designed to
process 2,000 tonnes per day of sub-bituminous coal into syngas for downstream
chemical and fuel products while phase two, if constructed, is expected to
double the design output.
The primary advantages of U-GAS(R) relative to other gasification
technologies is its overall low cost, made possible by fuel flexibility, low
operational cost, and the technology's ability to economically scale projects
to meet the needs of industrial customers. U-GAS(R) technology produces lower
levels of regulated emissions, including sulfur oxides, nitrous oxides and
particulates, than conventional coal combustion plants. It also allows for
the low-cost capture of greenhouse gases such as carbon dioxide.
About Synthesis Energy Systems, Inc.
SES is an energy and technology company that builds, owns and operates
coal gasification plants that utilize its proprietary U-GAS(R) fluidized bed
gasification technology to convert low rank coal and coal wastes into higher
value energy products, such as transportation fuel and ammonia. The U-GAS(R)
technology, which SES licenses from the Gas Technology Institute, gasifies
coal without many of the harmful emissions normally associated with coal
combustion plants. The primary advantages of U-GAS(R) relative to other
gasification technologies are (a) greater fuel flexibility provided by our
ability to use all ranks of coal (including low rank, high ash and high
moisture coals, which are significantly cheaper than higher grade coals), many
coal waste products and biomass feed stocks; and (b) our ability to operate
efficiently on a smaller scale, which enables us to construct plants more
quickly, at a lower capital cost, and, in many cases, in closer proximity to
coal sources. SES currently has offices in Houston, Texas and Shanghai, China.
For more information on SES, visit http://www.synthesisenergy.com or call
(713) 579-0600.
Forward Looking Statements
This press release includes "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. All statements, other
than statements of historical facts, included in this press release that
address activities, events or developments that SES expects or anticipates
will or may occur in the future, including such things as business strategy
and measures to implement strategy, competitive strength, goals, expansion and
growth of the business and operations, plant expansion and growth of the
quantity of methanol production, references to future success, reference to
intentions as to future matters and other such matters are forward-looking
statements. These statements are based on certain assumptions and analyses
made by SES in light of its experience and its perception of historical
trends, current conditions and expected future developments as well as other
factors it believes are appropriate in the circumstances. Forward-looking
statements are subject to certain risks, trends and uncertainties that could
cause actual results to differ materially from those projected. Among those
risks, trends and uncertainties are the project's early stage of development,
estimates of costs to complete the project, receipt of final government
approvals, availability of bank financing and the ability to successfully
expand the project in the future. Although SES believes that in making such
forward-looking statements its expectations are based upon reasonable
assumptions, such statements may be influenced by factors that could cause
actual outcomes and results to be materially different from those projected.
SES cannot assure you that the assumptions upon which these statements are
based will prove to have been correct. SES has no intention, and disclaim any
obligation, to update or revise any forward-looking statements, whether as a
result of new information, future results or otherwise.
SOURCE Synthesis Energy Systems, Inc.

Ann Tanabe, Vice President of Investor Relations, Synthesis Energy Systems,
Inc., +1-713-579-0600, Ann.tanabe@synthesisenergy.com