Corrected Third Quarter Financial Results

    RNS Number : 8290I
  Energem Resources Inc.
  25 November 2008
   

    

 TSX/AIM: ENM                                                                 
                                                For release 7am
    CORRECTED MD&A FOR THIRD QUARTER FINANCIAL RESULTS TO 
    SEPTEMBER 30, 2008 
    London, UK, 25 November 2008 - Further to the announcement of 18 November 2008, Energem Resources Inc ("Energem" or "the Company") has
set out below an amended version of its Management Discussion and Analysis ("MD&A"). The only change to the amended MD&A is the deletion of
the sentence "Related party receivables are covered by a bank guarantee" that was inadvertently included in the penultimate paragraph under
item 5.2.1 of the interim MD&A for the period ended September 30, 2008.  

    The paragraph now reads as follows:
    Cash flow in the quarter reflects operating outflows of ($5.9 million). However, accounting convention treats payments received from
associated companies as investment inflows. Payments from an associated company, which is the Nigerian tank farm and distribution facility,
totalled $7.1 million ($8.6m - YTD) and this facility remained part of the Company operating activities in the second quarter. On the basis
of including this inflow, operations were cash flow positive.  

    On a year to date basis, operations, before working capital outflows of $14.8 million, were cash generative to the extent of $2.6
million and $11.3 million if one includes the payments from the associate.

    Working capital outflows persisted at high levels due to continued reductions in accounts payable levels and outflows to accounts
receivable, mainly related parties, on a year to date basis.  

    Capital expenditure in the quarter, mainly on the bio-fuels development programme, totalled $2.6 million ($5.5m YTD) on property, plant
and equipment and $197,000 ($1.2m YTD) on the Stiegler's Gorge feasibility study. For the same period in 2007, $4.7 million capital
expenditure had been incurred.  

    The full text of the amended MD&A is set out in the Appendix below and is also available on SEDAR at www.sedar.com under the Company
symbol "ENM" and on the Company's website, www.energem.com.

    This news release contains forward-looking statements which address future events and conditions which are subject to various risks and
uncertainties. The actual results could differ materially from those anticipated in such forward-looking statements as a result of numerous
factors, some of which may be beyond the Company's control. These factors include: the availability of funds; the costs and availability of
product; fluctuations in fuel product sale prices; currency fluctuations; changes in production costs; fluctuation in shipping costs;
availability of shipping; general market and industry conditions; political and regulatory instability and risks associated with rights to
title and ownership of assets.
    Forward-looking statements are based on the expectations and opinions of the Company's management on the date the statements are made.
The assumptions used in the preparation of such statements, although considered reasonable at the time of preparation, may prove to be
imprecise and, as such, undue reliance should not be placed on forward-looking statements.
    About Energem:
    Energem Resources Inc (TSX/AIM:ENM). is an Africa focussed company listed on the Toronto Stock Exchange and on the London Stock
Exchange's AIM market and the holding company of a group of companies engaged in, mainly, several African countries in the bio-fuels, oil
and related sectors including logistics and supply to the mining industry in South and Central Africa and development of an up-stream oil
exploration asset. The Company has offices and/or logistics and support infrastructure in Johannesburg, London and a number of African
countries.

    For further information, please contact:
    Rob Rainey: [phone]; Fax: [phone] or email: [e-mail]; 
    Refer to our website:  www.energem.com

    Canaccord Adams Limited -Robert Finlay/Andrew Chubb [phone]

    Smithfield - Reg Hoare/Will Henderson [phone]

      APPENDIX:

    November 20, 2008                           

    ENERGEM RESOURCES Inc.

    Amended Management Discussion and Analysis of Financial Condition and Results of Operations for the Quarter and Nine Months Ended
September 30, 2008 
    ($ refers to US dollars unless otherwise stated)

    1.     Nature of Business and RECENT DEVELOPMENTS

    Energem Resources Inc ("Energem", "the Company" or "the Group") is listed on the Toronto Stock Exchange and on the London Stock
Exchange's Alternate Investment Market ("AIM") and is the holding company of a group of companies engaged in, mainly, several African
countries in the renewable energy, mid- and up-stream oil industries and operates off an integrated logistics, trading and manufacturing
platform. 

    In the previous financial year the Company embarked upon a strategic realignment and divested itself of a number of assets not
considered core to this realignment, including all its mining assets. The Company now focuses on renewable and alternate energy, related
infrastructure and on the acquisition and development of niche high margin related project opportunities. 
    The Group's activities are organized into divisions within the Company, reporting through its subsidiaries to a central executive
providing overall strategic direction. The Company is now primarily engaged in the renewable and clean energy sector with a particular
emphasis on:

    * Bio-fuels - ethanol and potable alcohol production from the Kenyan Kisumu ethanol plant and continuing development of the jatropha
based bio-diesel project in Mozambique and elsewhere in Africa;

    * Progressing with the updating of a bankable feasibility study for the potential Stiegler's Gorge 900mw hydro-electricity project in
Tanzania; and the pursuit of similar related projects elsewhere in Africa;

    * Mid-stream oil - refined oil product distribution, sales and storage in Malawi;  the Company having successfully and profitably sold
its interest in its Nigerian mid stream asset in the fourth quarter 2008;

    * Logistics - sub-Saharan Africa focused manufactured and procured supply and logistics services and product to the Group and, mainly,
the mining industry;

    * The continued pursuit and evaluation of other Africa based resource and energy related projects of long term revenue or capital profit
potential, excluding mining projects;

    * Up-stream oil - exploration and development of an oil and gas field in Chad.
This management discussion and analysis (MD&A) should be read in conjunction with the MD&A and annual financial statements for the year
ended December 31, 2007 filed on SEDAR on April 8, 2008 and interim financial statements and MD&A for the first quarter 2008 filed on SEDAR
on May 15, 2008 and its second quarter filed on SEDAR on August 14, 2008.


    2.     Activities in the third quarter

    The Company in 2008 is focussed on improving business unit profitability and expanding its operating divisions and on the further
development of its bio-fuels and hydro-electric projects and with the pursuit of new projects following the disposal of other assets in the
past two years. 

    Disposal of interest in Nigerian mid-stream asset

    The Company sold a 20% interest in its hitherto 50% held Nigerian refined fuel storage and distribution facility ("the Facility") during
the second quarter for a gross cash consideration of US$32.3 million.  In the fourth quarter 2008, the Company sold its remaining 30%
interest in the Facility for a gross cash consideration of US$42.7 million.
    A net profit, after de-consolidating the historic results of the investment in the Facility, of $27.2 million was earned on this
transaction in the second quarter and an estimated profit of US$34 million will likely be recorded on the disposal of the remaining 30%
interest in the fourth quarter.
    Also in the fourth quarter 2008, the Company acquired from minority stakeholders a further 30% interest in its Mozambiquan jatropha
based bio-diesel project for US$500,000, increasing the Company's interest in this project from 70% to 100%.

    3.    RESULTS OF OPERATIONS, KEY FINANCIAL DATA, Quarterly InfoRMATION, 
         Comparative Figures and Share Information

       (Expressed in thousands of US Dollars except share and per share information)

                                                                                             Quarters ended                 Nine months
ended
                                           Sept.     Sept.     Sept.     Sept.
                                            2008      2007      2008      2007
 Earnings                                  $'000     $'000     $'000     $'000

 Revenue - sales                           8,357    18,450    41,044    45,049
 Gross profit                              2,670    10,001    21,903    24,212
 Depreciation and amortization             (437)   (1,281)     2,976   (4,253)
 General and administrative costs        (5,083)   (7,875)  (16,924)  (21,922)
 Share of associated company income        1,623         -     3,167         -
 Insurance proceeds - business                 -     5,388         -     5,388
 interruption
 Interest income                             186       373     1,496     1,589
 Gain/(loss) on disposal of investment         -         -    27,244   (4,218)
 Net foreign exchange (loss)/gain          (668)       387     (691)       334
 Settlement loss on contract revision          -         -   (1,013)         -
 Asset write offs and impairments              -         -         -  (18,169)
 Recovery of amounts previously written      125         -       361         -
 off
 Interest and financing costs              (201)   (1,597)   (1,126)   (5,064)
 Taxation                                   (15)   (1,780)   (3,582)   (3,051)
 Non controlling interests                  (79)   (4,288)   (3,709)   (6,580)
 Net (loss)/earnings attributable to     (2,037)  (16,725)    23,685  (31,735)
 shareholders

 Cash flow

 Cash (used by) operations               (5,901)   (9,221)  (12,177)  (27,524)
 Cash from investing activities            4,354    14,992    25,944    24,235
 Cash from (to) financing activities         686  (10,217)   (6,841)     1,767
 NET CASH (OUTFLOW) / INFLOW               (861)   (4,446)     6,926   (1,522)
 Cash and cash equivalents - end of                           15,932    14,576
 period
 Shares in issue ('000)                                      175,288   174,883


    Quarterly Data
    ($M = U.S. Dollar millions)

    
                                                             2008                                                    2007                   
                        2006
                                           Q3        Q2        Q1            Q4            Q3            Q2            Q1        Q4       
Q3            Q2            Q1
 Revenue         $M                       8.4      11.9      20.8          16.5          16.1          11.9          14.2     206.2    
232.0         226.0         118.9
 Gross profit   $M                        2.7       5.4      13.9          10.2            10           5.0           9.2       7.5      
5.1           5.2           2.9
 Net (loss) / earnings   $M             (2.0)      24.7       1.0         (4.2)        (14.5)         (7.3)        (10.5)       0.8     
11.3         (3.9)         (4.4)
 Cash provided/(used) by                (5.9)    (11.7)       5.4         102.4         (9.2)         (5.4)        (10.2)    (27.6)     
18.8        (11.8)        (19.8)
 operations    $M
                                                                                                                                            
                            
  (Loss) / Income                              0.140.11  0.010.01  (0.01)(0.01)  (0.08)(0.08)  (0.04)(0.04)  (0.07)(0.07)  0.000.00 
0.070.07  (0.02)(0.02)  (0.03)(0.03)
 per share                       (0.01)(0.01)
 -      Basic           $-     
 Diluted        $


    (The basic and diluted income/(loss) per share is determined separately for each quarter based on the weighted number of shares
outstanding in the quarter. Consequently, the sum of the quarterly amounts may differ from the year to date amount disclosed in interim
consolidated financial statements as interim calculations use interim averages.)


    3.1   Revenue, Income AND COSTS - SEPTEMBER 30, 2008

 Quarter ended September 30,       Group  Corporate  BioFuel  Mid Stream  Trading
 2008
                                   $'000      $'000    $'000       $'000    $'000
 REVENUE                           8,356        373    2,078       2,376    3,529
 COST OF SALES                   (5,686)          0    (951)     (2,343)  (2,393)
 GROSS PROFIT                      2,670        373    1,128          33    1,136
 Depletion, depreciation and       (437)       (22)    (144)        (52)    (219)
 amortization 
 Share of associated company       1,623          0        0       1,623        0
 income
 Operating lease expenses          (155)      (155)        0           0        0
 General and administrative      (5,084)    (2,991)    (759)       (720)    (615)
 expenses
 (LOSS) / PROFIT BEFORE OTHER    (1,382)    (2,795)      225         885      303
 INCOME / EXPENSES
 OTHER (EXPENSES) / INCOME         (559)      (364)    (251)          81     (24)
 Other income                                                                    
   Interest income                   185        (2)       61         102       23
   Gain on disposal of                 0          0        0           0        0
 long-term investment 
   Recovery of amounts written       124        166        0           0     (42)
 off previously
 Other expenses                                   0        0           0        0
   Settlement loss on contract         0          0        0           0        0
 revision
   Foreign exchange gain/(loss)    (667)      (362)    (303)         (3)        2
 Interest and financing costs                     0        0           0        0
   - long term debt                    0          0        0           0        0
   - short-term debt               (201)      (167)      (9)        (19)      (6)
 PROFIT / (LOSS) BEFORE INCOME   (1,941)    (3,158)     (26)         965      279
 TAXES AND NON CONTROLLING
 INTERESTS
 TAXATION                           (15)          0        0         (0)     (15)
 EARNINGS / (LOSS) BEFORE        (1,956)    (3,158)     (26)         965      264
 NON-CONTROLLING INTERESTS
 NON-CONTROLLING INTERESTS          (80)          0       35         (0)    (114)
 ATTRIBUTABLE TO SHAREHOLDERS    (2,036)    (3,159)       10         965      149


 Capital expenditure for the       2,587         31    2,867       (364)       53
 period
 Total Assets - September 30,    146,250     82,914   24,266      18,751   20,319
 2008






 Nine months ended September        Group  Corporate  BioFuel  Mid Stream  Trading
 30, 2008
                                    $'000      $'000    $'000       $'000    $'000
 REVENUE                           41,044        621    6,510      20,899   13,014
 COST OF SALES                   (19,141)          0  (3,011)     (6,664)  (9,467)
 GROSS PROFIT                      21,903        621    3,500      14,235    3,547
 Depletion, depreciation and      (2,976)       (66)    (559)     (1,705)    (646)
 amortization 
 Share of associated company        3,167          0        0       3,167        0
 income
 Operating lease expenses           (465)      (465)        0           0        0
 General and administrative      (16,924)    (9,192)  (1,852)     (4,049)  (1,832)
 expenses
 (LOSS) / PROFIT BEFORE OTHER       4,706    (9,102)    1,089      11,649    1,070
 INCOME / EXPENSES
 OTHER (EXPENSES) / INCOME         26,270     27,126    (268)       (850)      263
 Other income                                                                     
   Interest income                  1,495      1,143      (3)         266       88
   Gain on disposal of             27,244     27,244        0           0        0
 long-term investment 
   Recovery of amounts written        361          0        0           0      361
 off previously
 Other expenses                                                                   
   Settlement loss on contract    (1,013)    (1,013)                        
 revision
   Foreign exchange gain/(loss)     (691)        206    (256)       (461)    (179)
 Interest and financing costs                                               
   - long term debt                 (598)          0        0       (598)        0
   - short-term debt                (528)      (455)      (9)        (58)      (6)
 PPOFIT / (LOSS) BEFORE INCOME     30,976     18,025      821      10,798    1,333
 TAXES AND NON CONTROLLING
 INTERESTS
 TAXATION                         (3,582)          0        0     (3,155)    (427)
 EARNINGS / (LOSS) BEFORE          27,393     18,025      820       7,642      906
 NON-CONTROLLING INTERESTS
 NON-CONTROLLING INTERESTS        (3,709)          0    (425)     (3,101)    (182)
 ATTRIBUTABLE TO SHAREHOLDERS      23,684     18,024      396       4,541      723
                                         
                                         
 Capital expenditure for the        5,479         59    4,722         606       92
 period
 Total assets - September 30,     146,250     82,914   24,266      18,751   20,319
 2008





                                    Group  Corporate  BioFuel  Mid Stream   Trading
 Nine month ended September 30,
 2007
                                    $'000      $'000    $'000       $'000     $'000
 REVENUE                           45,049               6,120      25,353    13,576
 COST OF SALES                   (20,837)             (2,686)     (7,857)  (10,294)
 GROSS PROFIT                      24,212          0    3,434      17,496     3,282
  Depletion, depreciation and     (4,253)       (44)    (406)     (3,215)     (588)
 amortization 
  Insurance proceeds for            5,388                           5,388
 business interruption
  General and administrative     (21,922)   (14,491)  (1,885)     (4,404)   (1,142)
 expenses
 (LOSS) / PROFIT BEFORE OTHER       3,425   (14,535)    1,143      15,265     1,552
 INCOME / EXPENSES
 OTHER (EXPENSES) / INCOME       (25,529)   (23,893)       86     (1,777)        55
 Other income                                                                      
   Interest income                  1,589      1,318       51         151        69
 Other expenses                                                                    
   Mining exploration interest   (15,313)   (15,313)                        
 written off
   Loss on disposal of            (4,218)    (4,218)                        
 long-term investment
   Impairment of project          (2,856)    (2,856)                        
 development costs
   Foreign exchange gain/(loss)       334        285       49               
 Interest and financing costs                                               
   - long term debt               (5,037)    (3,109)              (1,928)          
   - short-term debt                 (28)                (14)                  (14)
 PPOFIT / (LOSS) BEFORE INCOME   (22,104)   (38,428)    1,229      13,488     1,607
 TAXES AND NON CONTROLLING
 INTERESTS
 TAXATION                         (3,051)        668        0     (3,199)     (521)
 EARNINGS / (LOSS) BEFORE        (25,155)   (37,760)    1,229      10,289     1,086
 NON-CONTROLLING INTERESTS
 NON-CONTROLLING INTERESTS        (6,580)          0    (695)     (5,551)     (334)
 ATTRIBUTABLE TO SHAREHOLDERS    (31,735)   (37,760)      534       4,738       752
                                                    
 Capital expenditure for the        4,668      2,066      220       2,382         0
 period
 Total assets - September 30,     166,168     61,413   15,314      70,205    19,236
 2007

    3.2    OVERALL PERFORMANCE

    The disposal of almost half of the Company's interest in its Nigerian fuel storage and distribution facility during the second quarter,
allowing inclusion thereafter of 30% of that facility's earnings on an equity basis as opposed to consolidating a previous 50% interest, has
led to a drop in gross and net income in the third quarter 2008 compared to the second quarter and the comparable period for 2007. The
Company reported a loss of $2 million for the quarter compared to profits in the prior quarters in 2008 at operating level before other
income and expenses.

    Results for the nine month period, exclusive of capital gains in 2008 and capital losses in 2007, remain positive and improved in 2008
over 2007.


    With effect from May 1, 2008, the financial results of the Nigerian fuel storage and distribution facility have been accounted for using
the equity method of accounting. Turnover and costs for this operation were therefore included on a gross basis with appropriate adjustments
made for outside shareholders interest up to end April. With effect from May, the net earnings attributable to Energem (30%) from this
operation are included as a single line item as the Company's share of associated company income.

    Interest and finance charges continue to decline in comparable terms as debt is reduced and the long term debt in respect of the
Nigerian Facility is no longer consolidated into group results. General and administrative costs have been reduced, not only because of
non-consolidation of the Nigerian Facility, but due to other structured and on-going attention to cost reduction measures and despite costs
being incurred in the pursuit and development of new assets.

    The profit on disposal of part of the Company's interest in its Nigerian asset of $27.2 million, is included under other income and
expenses in the second quarter and nine months to September 2008 as a gain on disposal of investment. This compares to a loss on disposal of
investments and other asset impairments of ($20.2 million) in the same period in 2007.

    Net earnings for the nine months have therefore amounted to $23.7 million inclusive of capital gains compared to a net loss of ($31.7
million) for the same period last year.

    Despite the fall in profits in the third quarter, operations remained cash generative at operating level inclusive of payments from the
associated company and before working capital adjustments and exclusive of capital gains in the nine months to September 2008.

    4.    OVERVIEW OF ACTIVITIES BY DIVISION

    4.1   Bio-Fuels

    4.1.1  Jatropha cultivation as a feedstock for bio-diesel production 

    The Company has continued with the development of its now 100% owned jatropha based agricultural development activities in Mozambique
and is actively pursuing the acquisition of further suitable land for future development in Mozambique and a number of other African
countries. The jatropha plant produces seeds from which is extracted oil suitable for blending with diesel as a substitute for diesel oil
extracted from fossil fuels.

    The Company is focusing on the cultivation of jatropha curcas L, which does not compete with food crop production, has limited direct
environmental impact and is efficient in reducing carbon emissions when used as a feedstock for the production of bio-diesel fuel. The
Company has been granted rights to 60,000 hectares of land in Gaza Province, Mozambique and is pursuing a programme of land surveying to
register those lands within the 60,000 hectares best suited for the cultivation of jatropha.

    The Company had aimed to have cleared and planted approximately 2,000 hectares of land with jatropha by the end of 2008. Based on
progress in the third quarter, slightly less than the 2,000 hectares is likely to be planted by end 2008. Seedlings for these initial
operations are provided by in-house nurseries and the plantations are supporting ongoing research and development into best practice for the
cultivation of jatropha. The Company aims to expand from this original footprint into an aggressive growth phase from 2009 with a view to
producing substantial volumes of jatropha oil as a feedstock for the production of bio-diesel. It is anticipated that in the early years,
this oil will be destined primarily for export markets. 

    The Company has recruited suitably qualified management and research staff to supplement its existing management and skills base.
Research facilities are being established on the central farms in Mozambique and on leasehold land being acquired in Malawi to optimise
agricultural methods and yield performance for jatropha. 

    The Company is establishing "Centres of Excellence" at various key points on its agricultural holdings to promote best practice and to
provide training to staff and potential affiliated contract out-growers involved in jatropha farming. 

    A number of key independent consultants have been engaged to assist in the process of evaluation and business planning and in the
formulation of project plans for the roll out of the clearing, planting and harvesting processes for long term economic and sustainable
commercial operations. Certain of these evaluations will likely be concluded in the fourth quarter 2008.

    Activities in the third quarter continued mainly on the development of these programmes and with the gathering and evaluation of
scientific data from current experimentation with existing growing crops of jatropha.

    The Company has expended $6.7 million ($4.3 million in 2008) on these activities to end September 2008, the bulk of which has been
capitalised and is included, mainly, under property, plant and equipment per balance sheet as the bulk of expenditures to date relate to
farm equipment and infrastructural development costs.

    4.1.2   Kisumu Ethanol Plant (Kenya - 55% owned) and overall divisional results.

    Operating performance of the Kisumu ethanol plant in Kenya continued to improve in the third quarter following a slow start in the first
half of 2008 when Kenya was experiencing political unrest. The plant contributes profit towards the bio-fuels division which has recorded
net income of $396,000 for the nine months to September 30, 2008 and a loss of $26,000 in the quarter. The division's loss in the quarter
results from increased uncapitalised bio-fuels costs written off and negative currency performance in operational currencies versus the US
Dollar, resulting in significant foreign exchange losses in the division.  

    The Kisumu plant in the third quarter operated at higher capacity than the second quarter, with this trend continuing into the fourth
quarter with October being its best sales month since commissioning. Experimentation with sweet sorghum as a supplement to main plant
molasses feedstock continued satisfactorily. The plant currently produces predominantly potable and industrial alcohol. Plans to upgrade
plant capacity with the intention of producing product for bio-diesel blending remain the intended long term objective for this plant and
awaits enabling legislation in Kenya before implementation. 

    4.2    Midstream Oil

    4.2.1   Nigerian Oil Storage and Distribution facility, Apapa, Nigeria (30% equity interest at September 30, 2008)

    The Company sold portion of its interest in this asset in May, 2008, reducing its interest from 50% to 30% and its final 30% interest in
November 2008 for a combined gross cash consideration of US$75 million. With effect from May 1, 2008 the results for the operation were
accounted for on the equity basis of accounting which will continue to date of effective disposal of the final 30% interest on November 6th,
2008.  

    4.2.2   Malawi Oil Storage and Distribution facilities (100% owned) and overall divisional performance

    The mid-stream division has continued with its plan of expanding its wholesale and retail refined fuel distribution operations in
Malawi. Results for the first nine months of 2008, whilst improved over the same period last year, have been restrained by shortages of the
refined fuel in the Central African region. Third quarter results are marginally improved over the second quarter.

    The mid-stream division continued as the Company's major income earner up to September 30, 2008 and operating cash flow generator as is
evident from the divisional results set out above where the division has recorded net income of $4.7 million in the nine months to September
2008 and $2.9 million in the quarter. This matches 2007 performance in the same 2007 period, despite reduced participation in the Nigerian
facility.

    4.3    Trading

    The trading division continued to develop its manufacturing and logistics business as well as its mining spares and equipment business.
The division has reported net income of $723,000 for the nine months to September 30, 2008 and $149,000 in the quarter. Contraction in the
mining industry following the fall in commodity prices is now, however, beginning to negatively impact on this division's results but it
retains important strategic price advantages versus its competitors.

    4.4    Upstream Oil Asset

    The Company has incurred minor expenditure on this asset this year. The implementation of a planned in fill 2D seismic programme in the
current year has not commenced and it is likely that this will be further delayed. The delay in the implementation of the exploration and
development programme as required in terms of the licensing arrangements is understood by the Government of Chad and has not had impact upon
title to the asset.  

    4.5  Corporate

    The Corporate "division" includes those central activities which do not logically fall under another division and includes all central
group indirect overhead and certain investment and corporate activity.

    Corporate encompasses the activities of wholly owned subsidiary Anglo African Finance Ltd. ("AAF"), a company set up in 2005 to pursue
African venture capital, insurance and project finance opportunities and which was instrumental in the creation of McCroft Tobacco Holdings
Limited ("McCroft"), now named Westhouse Tobacco Limited, in which entity the Company continues to hold an investment interest.  

    Certain uncapitalised costs associated with limited activities at the Chad up-stream oil exploration asset are included under Corporate
expenses as are all costs associated with pursuit of new projects. Costs associated with the Company's interest in the Tanzanian Stiegler's
Gorge hydro-electric project amounted to $1.248 million to end September 2008 have been capitalised and are included under long term
investments per balance sheet. 

    Indirect costs incurred at corporate level in respect of the management of divisional activities are not re-charged to divisional cost
centres.

    The level of general and administration expenses across the group has reduced versus the same period in 2007 and is reduced on the
second quarter 2008 from US$6.3 million in the second quarter to US$5.1 million in the third quarter. These indirect costs of $5.1 million
in the third quarter 2008 compare to $7.9 million in the same period last year. (YTD - $16.9m vs. $21.9m for 2007).

    5.    BALANCE SHEET, CASH FLOW, FINANCING AND COMMITMENTS

    5.1   Balance Sheet Changes

    The Company balance sheet reflects an increase in net assets from $102.8 million at December 31, 2007 to $126.5 million at September 30,
2008, slightly down from the $128.5 million at June 30, 2008 due to net losses in the third quarter. This increase in the nine months is a
reflection of profit earned in the period which comprises, in the main, the net gain made on the partial disposal of the Company's interest
in its Nigerian asset. 

    The profit earned on this disposal is indicative of the value the Company has been able to add to assets which it has developed over the
past few years.

    Other changes in the balance sheet, the reduction in property, plant and equipment, concomitant increase in long term investments and
significant reduction in short and long term liabilities is mainly as a result of the de-consolidation of the Company's interest in its
Nigerian asset which now reflects as a long term investment equity interest in the asset.


    5.2   Liquidity And Capital Resources 
    5.2.1   Cash Balances and cash flows 
                                                Nine months         Year ended
                                               to Sept. 30,       December 31,
                                                       2008               2007
                                                      $'000              $'000
 Net cash provided by (used in)
  Operating activities                             (12,177)         ( 34,860) 
  Investing activities                             (11,850)            21,414 
  Asset disposal                                     29,206                  -
  Associate company receipts                          8,588                  -
  Financing activities - debt settlement            (6,841)              6,354
 - net
 Increase/(decrease) in cash and cash                 6,926            (7,092)
 equivalents 
 Cash balances at beginning of period                 9,006             16,098
 Cash balances at end of period                      15,932              9,006

    Cash flow in the quarter reflects operating outflows of ($5.9 million). However, accounting convention treats payments received from
associated companies as investment inflows. Payments from an associated company, which is the Nigerian tank farm and distribution facility,
totalled $7.1 million ($8.6m - YTD) and this facility remained part of the Company operating activities in the second quarter. On the basis
of including this inflow, operations were cash flow positive.  

    On a year to date basis, operations, before working capital outflows of $14.8 million, were cash generative to the extent of $2.6
million and $11.3 million if one includes the payments from the associate.

    Working capital outflows persisted at high levels due to continued reductions in accounts payable levels and outflows to accounts
receivable, mainly related parties, on a year to date basis.  

    Capital expenditure in the quarter, mainly on the bio-fuels development programme, totalled $2.6 million ($5.5m YTD) on property, plant
and equipment and $197,000 ($1.2m YTD) on the Stiegler's Gorge feasibility study. For the same period in 2007, $4.7 million capital
expenditure had been incurred.  
                
    5.2.2  Financing Activities
    Other than in respect of an aircraft acquisition approved by shareholders in November 2008, no other significant finance raising
activities have taken place in 2008. Debt of $6.8 million was settled in the nine months to September 2008 and a note payable of $6.9
million was settled in the fourth quarter. The acquisition of the aircraft for US$8 million will be financed over 5 years by a South African
bank and will reflect in the fourth quarter. In the main, the Company has reduced debt and current liabilities from available cash flows
from operations and the disposal proceeds on the Nigerian asset sale. Other than in respect of the $8 million for the aircraft raised in the
fourth quarter, the Company has no other debt in the fourth quarter.
    
5.2.3    Liquidity Going Forward
    
    The Company intends to fund its on-going operations in the short-term from cash flows from on-going operations and cash on hand
following the disposal of its Nigerian assets.  
    The long-term capital development of the Company's up-stream oil asset in Chad is dependent upon the Company finding a suitable farm in
partner to fund its commitments or on other finance raising. Some limited initial development will be possible from available cash
resources. The uncommitted but intended medium term expansion and development of the bio-fuels division is dependent for its fully intended
expansion upon funds being raised via debt or equity but initial development will be possible from available cash resources.  
    The pace of development will be matched to available funding. 
    The Company has sufficient cash resources to meet the shorter term immediate funding of its ongoing activities and projects. 
    The Company is engaged in a number of discussions and negotiations for the potential future funding of its expansion and development
activities. These matters in some instances are well advanced. There appears, from this, that there is a promising likelihood that
substantial funding can be secured on reasonable terms for these funding needs, despite the current negative capital market sentiment and
worldwide economic concerns.
    Other than in respect of the Chad exploration license, the Company has no significant unfunded contractual liability in respect of
capital commitments. A summary of approved and committed capital expenditures and other debt is approximately as follows at end September
2008:
                                                    Payments due by period 
 Contractual Obligations                 Less than 1 year                        After 5 years
 (US$'000)                        Total                    1-3 years  4-5 years
 Operating leases                 1,343               583        760          -              -
 Work programme - Chad           27,262            15,881     11,381          -              -
 Aircraft purchase                8,000             8,000
 Bio-diesel project                 500               500          -          -              -
                                 37,105            24,964     12,141          -              -
 Other debt:
 Short-term note - payable on
 demand
                                  6,915             6,915          -          -              -
 Total debt and commitments      44,020            31,879     12,141          -              -

    The Company intends expending in excess of the $0.5 million commitment in respect of its bio-fuels development which $500,000 commitment
was expended in the fourth quarter for the acquisition of the remaining 30% interest in the Mozambiquan asset. The expenditure on bio-fuels
development is accelerating in the latter part of 2008 but it is unlikely that any requirement in 2008 cannot be funded from available cash
resources. The amount as may be expended from 2009 onward will depend upon the terms and ability to conclude satisfactory funding
arrangements. The purchase of an aircraft for $8 million in the fourth quarter 2008 will be fully financed by bank debt.

    The Company is unlikely to expend the $15.9 amount committed by licence arrangements in respect of the Chad work programme commitment in
2008 and remains comfortable that the delays in expenditure on this asset has not prejudiced the Company's rights in respect of the asset.
    The operating lease commitments are in respect of two property leases for provision of offices.
    The work programme commitments relating to the Chad up-stream production sharing agreement commitments are likely to be moved out into
later years.
    The Company settled the $6.9 million short term note in November 2008.
    5.3      Off Balance Sheet Arrangements
    The Company has no significant off balance sheet assets or liabilities.
    5.4          Related Party Transactions

    The Company conducts business with companies in which shareholders and /or directors of the Company have a significant interest, namely
A1 Holdings Limited, Lyndhurst Racing Limited and Diamond Air Charters (Proprietary) Limited. Other than in respect of fees charged by
Energem which included an element of profit, these transactions are undertaken at cost by and between the parties. Interest is charged
annually, at market rates, on late payments. The Company has right of off-set for amounts due to/from related parties. The Company has taken
covering security in the form of an assignment of the cash receivable benefits of certain material revenue generating agreements between a
related party and it's customers that will, on demand, accrue directly to the Company in the event of the related party's failure to pay the
amounts due to the Company. 
                                               Nine Months Ended    Year Ended
                                                At September 30,  December 31,
                                                            2008          2007
                                                           $'000         $'000
 Due by related parties at beginning of                   17,047           129
 period
  Charges                                                  4,164        24,630
  Refund due resulting from pre-payment for                6,000           -  
 BioFuel promotion cancelled
  Secured deposit on transaction - concluding              4,700           -  
 November 2008
  Funds received from related parties                      (426)       (7,712)
 Due by related parties at end of period                  31,485        17,047

    Fee income and charges levied from and to the company in respect of services included in the amounts noted above amounted to:
                                               Nine Months Ended    Year Ended
                                                   September 30,  December 31,
                                                            2008          2007
                                                           $'000         $'000
 Income
 Aircraft costs recovered from A1 Holdings                 2,250         3,000
 Expenses
 Aircraft exclusive use rental paid to                     (357)       (2,441)
 Diamond Air Charter
                                                           1,893           559


    6.    Financial Instruments

    6.1    Currency risks

    The Company is exposed to currency fluctuation risk in respect of certain monetary assets which arises in the normal course of the
Company's business. The Company does not mitigate these risks through the use of derivative instruments as it is generally not possible to
do so for these specific risks. 

    The Group is exposed to foreign currency risk on certain sales, purchases, assets and liabilities that are denominated in a currency
other than the functional currency of the Group, the US Dollar.  The currencies giving rise to this risk are primarily Pounds Sterling, the
South African Rand, the Kenyan Shilling and a number of other African currencies. 

    The US Dollar equivalent of cash and receivables balances held in foreign currencies at Sept. 30, 2008 amounted to $16.6 million.    

    6.2    Interest Rate Risk 

    The Company is exposed to interest rate risk on its overdrafts and notes payable. The Company does not mitigate these risks through the
use of derivative instruments as, generally, it is not possible to do so for these specific risks. 
    The Group's variable-rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. Investments in
equity securities and short-term receivables and payables are not exposed to interest rate risk.

 Balances exposed to interest rate risk comprise:
                                                        September 30,
                                                        2008     2007
                                                       $'000    $'000
 Short-term borrowings - rate 12% (2007 - 6% to 12%)   6,915   23,367
 Bank overdraft - Malawi - rate 25%                      855      918
 Long-term debt - rate 9%                                  -    7,162
                                                       7,770   31,447


    6.3   Credit Risk

    The Company is exposed to credit risk on sales made in respect of its logistics and manufacturing activities and sales of ethanol
manufactured and in respect of certain other significant receivables noted in its balance sheet.

    Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are
performed on all customers requiring credit over a certain amount. The Group does not normally require collateral in respect of financial
assets, but in the case of any purchaser which the Company regards as high risk, payment is required on delivery or in advance of delivery
of product or service, or other collateral is required.

    Investments are allowed in liquid securities and only with counterparties that have a credit rating equal to or better than the Group.
Management does not expect any counterparty to fail to meet its obligations.

    The maximum exposure to credit risk is represented by the carrying amount of each financial asset.
        
    6.4    Derivatives

    The fair values of the Company's financial instruments at December 31, 2007 and September 30, 2008, which comprise cash and cash
equivalents, accounts receivable, overdrafts and short - term borrowings, accounts payable and notes payable are estimated to approximate
their carrying values.


    7.    sHARE CAPITAL

    7.1    Common Shares

    The authorised share capital of the Company consists of an unlimited number of common shares. A summary of common share transactions is
as follows:

 Common shares in issue comprise:                          Number   Amount
                                                        of Shares    $'000
 Balance, November 30, 2005                           154,883,220  142,883
 Issued for cash:  
   Broker warrants exercised                              705,818      862
   Share options exercised                                100,000       70
   Share purchase warrants exercised                        5,000        5
 Non-cash issues:
   Staff bonus shares issued                              254,997      328
   Shares issued - debt settlement                        245,368      300
 Balance - December 31, 2006                          156,194,403  144,448
   Private placement  - issue for cash                 18,793,600   12,047
   Valuation of private placement of warrants issued            -   (4016)
   Staff bonus shares issued                              300,000      108
 Balance - September 30, 2008 and December 31, 2007   175,288,003  152,587

    The Company's common shares are listed on both the Toronto Stock Exchange ("TSX") and the London Stock Exchange Alternative Investment
Market ("AIM"). The shares trade in Canadian Dollars (Cad.$) on the TSX and Pounds Sterling (£) on AIM.  (Refer Note 8 below).

    No issues of shares took place between December 31, 2007 and the date of this report.

    8.    TORONTO STOCK EXCHANGE (TSX) REMEDIAL REVIEW

    The Company is currently listed on the mining sector list of the TSX and was advised by the TSX in December 2007 that it no longer meets
the mining issuer listing maintenance requirements due to the substantial change in the nature of its activities.  The TSX has placed
Energem under a remedial review process during which period of review Energem is required to demonstrate to the TSX that it continues to
qualify for listing under the original listing requirements for an industrial issuer, for which purpose the Company has delivered a number
of submissions to the TSX.

    In May 2008 the Company was advised that the TSX had extended the continued listing review, initially set to be complete by April 1,
2008, to March 31, 2009 - subject to certain interim conditions of deferral being met. The TSX had granted an initial deferral period until
August 21, 2008 and upon satisfaction of conditions of deferral for the initial deferral period, the TSX will extend the review an
additional 120 days for each deferral period until March 31, 2009.  

    However, in light of the recent disposal of the Nigerian asset in the main, the Company was advised on November 4, 2008 that the review
had been extended by a period of only a further 30 days and any further extension would be subject to a hearing to be conducted in early
December 2008.  

    In the event that the outcome of this hearing is negative, the Company intends to apply for alternate listing on the Toronto Venture
Exchange.

    The listing of the Company's shares on the London Stock Exchanges AIM is unaffected by this development.  

    9.    Critical Accounting Policies, Use of Estimates and Assumptions & changes in 
       accounting  policies and adoption of accounting policies

    9.1    New Accounting Standards Adopted 

    As disclosed in the year end MD&A, the Company adopted the Canadian Institute of Chartered Accountants ("CICA") Handbook Section 3031
"Inventories", Section 3863 "Financial Instruments- Presentation", Section 3862 "Financial Instruments - Disclosures" and Section 1535
"Capital Disclosures" on January 1, 2008. The adoption of these standards has had no material impact on the Company's Net earnings or Cash
Flows. 

    9.2    Recent Accounting Pronouncements

    As of January 1, 2009 Energem will be required to adopt the CICA Handbook Section 3064, "Goodwill and Intangible Assets" which will
replace the existing Goodwill and Intangible Assets standard. The new standard revises the requirement for recognition, measurement,
presentation and disclosure of intangible assets. The adoption of this standard should not have a material impact on Energem's Consolidated
Financial Statements.

    In January 2006, the CICA Accounting Standards Board ("AcSB") adopted a strategic plan for the direction of accounting standards in
Canada. As part of that plan, the AcSB confirmed in February 2008 that International Financial Reporting Standards ("IFRS") will replace
Canadian GAAP in 2011 for profit-oriented Canadian publicly accountable enterprises.

    9.3    Use of Estimates

    In arriving at certain values contained in its financial statements the Company relies upon use of certain estimates and assumptions.
Actual results upon ultimate realisation of value may differ.

    10.    SUBSEQUENT EVENTS AND PROPOSED TRANSACTIONS

    Following receipt of shareholder approval on November 6th, 2008, Energem has:
    - disposed of its remaining 30% interest in its Nigerian refined fuel product storage and distribution facility 
  for gross cash proceeds of US$42.7 million; 
    - acquired the remaining 30% minority interest in its Mozambiquan bio-fuels project for $500,000, increasing 
  ownership in this project to 100%;
    - acquired a used commercial jet aircraft for a consideration of US$8 million, the aircraft acquisition being 
  fully funded by bank finance repayable over five years;
    -  settled short term debt included in the balance sheet under current liabilities of $6.9 million (note 7) at 
   September 30, 2008. 
    - advanced to Westhouse Tobacco International Limited, for their working capital purposes, an interest 
   bearing amount of $3.6million that is repayable on demand.

    Other than these transactions concluded post September 30, 2008, there are no other material proposed transactions. However, the Company
is engaged in discussions and negotiations which could lead to significant transactions in relation to:
        - acquisition of new assets;
        - expansion to existing business;
       -  third party participation in and/or financing of existing assets development.

    11.    OUtlook

    The Company in 2007 undertook a major strategic re-alignment, since disposing of a number of its assets and re-focussing itself on
renewable energy, including bio-fuels.
    The Company's principal future thrust is into its re-focus on renewable energy and related projects where the established Kenyan ethanol
plant and Mozambiquan bio-diesel project have provided a strategic edge. This will not preclude the Company from considering other
opportunities it may identify.
    Development of clean and renewable energy is receiving considerable attention internationally and the projects Energem has secured have
potential to become considerable in both size and momentum and because they are inherently eco-friendly and do not compete with food crops,
they are sustainable in the long-term.
    The Company will seek to continue to develop its bio-fuel operations in Kenya and Mozambique and profitably operate and expand its other
operating assets and seek to acquire new projects.

    12.     Risk Factors
    Asset management, ownership and development risks in Africa may be markedly more significant than in non-African jurisdictions for
similar activities, which risks include higher business and political risks. Trading and manufacturing and the marketability of commodities
acquired, discovered, grown or manufactured by Energem may be affected by numerous factors which are beyond the control of Energem and which
cannot be accurately predicted, such as market fluctuations, agricultural conditions and risks, the proximity and capacity of logistical
facilities, markets, processing equipment, and such other factors as government regulations, including regulations relating to allowable
production, importing and exporting limitations and environmental protection issues, the combination of which factors may result in Energem
not receiving an adequate return on invested capital. Other risks specific to the operations of Energem would include political and
regulatory instability in developing countries, protection of Energem's assets in areas of instability and risks associated with rights to title of Energem's properties, assets, project investments and
trading licences and arrangements.
    The Company's exposure to financial risks, including currency, credit and interest rate risk and how it mitigates this risk is disclosed
above under Financial Instruments. In addition, the Company addresses operational risks by maintaining a comprehensive insurance programme
which is subject to regular review.
    As a result of the continuing growth and need to fund trade and capital requirements, the Company will likely continue to require
support from trade and project financiers, possible equity raisings and participating partner farm in joint venture or partner
contributions. Liquidity and funding issues will remain a constraint and risk to the Company in its development and growth for the
foreseeable future.
    13.    ADVISORY /CAUTION

    This report contains forward-looking statements that include risks and uncertainties. The factors that could cause actual results to
differ materially from those indicated in such forward-looking statements include political and security-related concerns adversely
impacting the Company's ability to safely conduct its operations in certain developing countries, changes in the prevailing prices for the
products the Company farms, manufactures, extracts or trades, variations in the yields and recoverability of product produced, market
conditions, competitive, changing environmental criteria and political intervention. 
    All statements other than statements of historical facts included in this document, including (without limitation) those regarding the
Group's financial position, business strategy, plans and objectives of management for future operations or statements relating to
expectation in relation to dividends, returns and/or any statements preceded by, followed by or that include the words "targets",
"believes", "expects", "aims", "intends", "plans", "will", "may", "anticipates", "would", "could" or similar expression or their negative,
are forward-looking statements. Those and all other forward-looking statements involve known and unknown risks, uncertainties and other
important factors beyond the Group's control that could cause the actual results, performance, achievement or dividends paid by the Company
to be materially different from any future results, performance or achievements or dividend payments expressed or implied by such
forward-looking statements. Forward-looking statements are based on numerous assumptions regarding the Group's present and future business strategies and the environment in which the Group will operate in the future.
Forward-looking statements speak only as of the date of this document. The Company expressly disclaims any obligation or undertaking to
disseminate any updates or revisions to any forward-looking statements contained in this document or to reflect any change in the Company's
expectations with regard to these, any new information or any change in events, or any conditions or circumstances on which any such
statements are based, unless required to do so by a stock exchange on which the Company's shares are listed or by any regulations to which
the Company is subject.



This information is provided by RNS
The company news service from the London Stock Exchange
 
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IR PUGBAGUPRGQC