Synthesis Energy Reports MoU with Hongye for Large Scale Glycol Project

Synthesis Energy Systems, Inc.

("SES") announced today that its subsidiary company, SES New Energy Technologies (Shanghai) Co., Ltd., has entered into a Memorandum of Understanding ("MOU") with Hongye International Investment Group Co., Ltd. ("Hongye"), for the supply of SES' gasification technology, equipment and services to Hongye's 600,000 tonnes-per-year glycol plant to be built in the Inner Mongolia Autonomous Region of China. The MOU agreement was formally signed yesterday in Los Angeles, California, at the China Enterprise Council's Seminar on US States - China Provinces Economic and Trade Cooperation and CEC Annual Meeting.  The China delegation was led by Chairwoman Ms. Bu Xiaolin of the Inner Mongolia Autonomous Region. This is a region of strategic importance and the center for the development of China's growing coal-to-chemicals industry as designated in Beijing's twelfth Five-year plan. This large coal-to- chemicals project will be located in the Qianlishan Industrial Zone in Wuhai City, Inner Mongolia, China. Hongye has received pre-approval for this project from the Development and Reform Commission of the Inner Mongolia Autonomous Region, and further approvals required to advance the project are currently being sought. The total project investment is expected to be approximately 9.5 billion RMB, with construction taking place over a two-year period. Under the terms of the MOU, Hongye, the largest shareholder of SES, intends to use SES' Gasification Technology to convert the plant's low quality coal feedstock into syngas, which will then be converted to glycol. Additionally, both companies have agreed to work exclusively on this project for the next 12 months while the technology licensing, equipment supply and technical service agreements are completed. During this period, Hongye will be managing the development of the project, including obtaining the remaining necessary government approvals.