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Synthesis Energy Systems Announces Equity Investments Totaling $15.5 Million

HOUSTON, June 18, 2012 /PRNewswire/ -- Synthesis Energy Systems, Inc. (NASDAQ: SYMX) ("SES") today announced that it has signed agreements with Hongye International Investment Group Co., Ltd. ("Hongye") and Shanghai Zhongmo Investment Management Co., Ltd. ("Zhongmo") for a total investment of approximately US$15.5 million in newly issued shares of SES common stock to support the Company's SES China business.

Under the terms of the agreement, Hongye will receive 6,175,093 newly issued shares of common stock of SES at closing, representing an approximately 9.9% interest in SES, and Zhongmo will receive 4,177,335 newly issued shares of common stock, representing an approximately 6.7% ownership interest in SES. Hongye and Zhongmo will invest in SES through Qualified Domestic Institutional Investors (QDII) approved by China's Securities Regulatory Commission. The purchase price per share is $1.50 and the transactions are scheduled to close by the end of July 2012. SES will increase the size of its Board of Directors from six members to eight, with two individuals to be appointed by Hongye, including Mr. Feng Gao, Hongye's Chairman.

Hongye has a strong presence in the coal industry in Inner Mongolia and is looking to expand its coal to chemicals business there and elsewhere in China. This investment, in combination with SES' unique coal gasification technology, provides SES and Hongye the ability to develop additional projects in China. Potential cooperation includes the expansion of SES' Zao Zhuang Joint Venture project to produce glycol, the repurposing of SES' Golden Concord project in Inner Mongolia to glycol, and Hongye's current coal to chemicals project under development in Wuhai, Inner Mongolia. Glycol produced from coal is of strategic interest to Hongye, and SES' technology can provide the low cost, efficient means to grow such a business.

"These agreements are an important step in advancing our current and future operations in China," stated Colin S. Tam, Managing Director of SES China. "We are pleased that Hongye and Zhongmo have agreed to invest in SES, which we view as a further validation of the potential of our technology to unlock the value of low quality, low cost coals in China. We believe that our gasification technology represents a significant opportunity for Hongye and others to develop their coal to chemicals business and to add value to their coal mining operations in Inner Mongolia and other regions with abundant low quality and low cost coals. Chairman Gao's track record in China business is impressive and we believe his entrepreneurial spirit and visionary leadership will accelerate the progress of SES in China."

Robert Rigdon, President and CEO of SES, said, "With these investments from Hongye and Zhongmo, timed with the pending startup of our Yima Joint Venture project this summer, we believe that our SES China business is well positioned for near term growth.  This important strategic and financial accomplishment in China is indicative of the increasing interest we are seeing in our ability to add value to our partners' and customers' businesses.  SES is advancing additional similar initiatives outside of China around specific key business verticals such as transportation fuels, steel manufacturing, small scale power, and renewables."

Chairman Gao of Hongye, said, "SES' advanced coal gasification technology is strategically important and uniquely well suited to very low quality coals such as those in Inner Mongolia.  We believe it offers great promise to developing China's future coal to chemicals and energy industries, and to advancing our growth plans in Inner Mongolia. We look forward to a strong and growing partnership with SES and SES China."

Crystal Vision Energy acted as management advisors to SES, Roth Capital Partners acted as financial advisors and King & Wood Mallesons (PRC) and Porter Hedges LLP acted as legal advisors to SES.

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