October 2, 2006

Thermal Energy acquires patented bioenergy technology from Mabarex

Thermal Energy International, in Ottawa, has acquired the patented Dry-Rex(tm) bioenergy technology from Mabarex, a Montreal company (www.mabarex.com). The transaction, valued at $3.25 million, gives Thermal Energy immediate ownership of the exclusive worldwide license to the Dry-Rex technology, the transfer of all Dry-Rex patent rights on an earn-out basis over five years, plus sales and marketing leads. Thermal Energy has been actively marketing the new technology for several months and is present in early-stage project development talks with prospective clients.

Acquisition of the Dry-Rex process complements Thermal Energy core Flu-Ace(r) waste heat recovery technology. The company says combining the Dry-Rex process with its waste heat recovery technology will increase the typical value of its projects from $1 to $2 million to between $7 and $15 million.

The use of biomass and biowaste for bioenergy production is one of the fastest-growing components of the renewable energy market. Energy producers and industries such as pulp and paper are increasingly using biomass to reduce their dependence on traditional fossil fuels, meet the demand for green energy and lower waste transportation and disposal costs.

Burning wet or humid biomass is inefficient, however, and severely limits the production of steam from bio-fuels. As a result, biomass users require supplemental fuel injection, typically using expensive and non-renewable fossil fuels, to generate higher combustion temperatures to burn the biomass with any degree of efficiency.

The award-winning Dry-Rex process addresses this problem by drying biomass at a low temperature using waste heat to evaporate water from bark, sludge and other biomass. Reducing the moisture content significantly increases the thermal value of biomass, creates new sources of biomass fuels and substantially reduces greenhouse gas emissions.

Combining the Dry-Rex system with traditional waste heat recovery can add profits of $5 to $15 per ton of paper produced at a mill. Thermal Energy says these profits can be increased even more by using its Flu-Ace system, which recovers greater quantities of usable waste heat. This can save mills and other industries millions of dollars in energy costs, reduce dependence on traditional fossil fuels and even make them energy self-sufficient.

Dry-Rex was developed by Mabarex, a privately-held company founded in 1983. The technology, already in use in the pulp and paper and forestry sectors in North America, was a winner of Canada's energy efficiency awards in 2003 and received Quebec's "PhÈnix 2000" prize as technological innovation of the year.

More information is available on Thermal Energy International's Web site, www.thermalenergy.com.

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