Elixir issues notice of default to Prontinal

Elixir has issued a notice of default to Prontinal Ltd., its joint venture partner in block SL-4, offshore the Republic of Sierra Leone.

Offshore staff

SYDNEY, Australia -- Elixir has issued a notice of default to Prontinal Ltd., its joint venture partner in block SL-4, offshore the Republic of Sierra Leone. The notice of default relates to Prontinal's failure to meet outstanding payments for a recently concluded 3D seismic acquisition project.

As a result of Prontinal's default, a letter of demand has been received by a subsidiary of Elixir from the seismic contractor in relation to the unpaid amount of approximately $9 million. Elixir is seeking clarification from the seismic contractor in relation to the alleged debt and the letter of demand and is also seeking legal advice.

Elixir understands that Prontinal is in negotiations with third party funding sources to secure the necessary funds to meet its outstanding obligations and future foreseeable commitments with respect to block SL-4. Elixir is endeavoring to work with Prontinal to seek the timely resolution of these issues and has been advised that arrangements to resolve these matters are advanced, the company says.

Were Prontinal ultimately unable to meet its obligations and remedy the default with regard to Block SL-4, Elixir has certain rights to have forfeited to it the equity held in the license by Prontinal.

10/01/2008

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