Lignol Provides Business Update and Comments on Government Funding Initiatives

    VANCOUVER, Oct. 3 /CNW/ - Lignol Energy Corporation ("Lignol") (TSX-V:
LEC), a leading technology company in the cellulosic ethanol and biorefining
sector, today provided an update on its recent progress in advancing its
strategic objectives in 2007 and commented on government funding initiatives.

    Strategic Objectives

    Earlier in 2007, Lignol identified several key objectives to enhance
shareholder value and accelerate the path to commercialization for its unique
cellulose to ethanol biorefining process, which included:

    -   Building intellectual property strategy and portfolio;
    -   Increasing access to government funding;
    -   Developing commercial interest from potential strategic partners in
        the forestry, energy and chemical sectors;
    -   Establishing primary commercial operating conditions for selected
        cellulosic feedstocks;
    -   Engaging third party engineering support for commercial plant
        designs; and
    -   Improving balance sheet and access to capital.

    Lignol's year-to-date progress on these primary objectives:

    -   Filed five provisional patent applications to complement Lignol's
        three existing patents;
    -   Obtained an additional $1.0 million in government funding agreements
        and filed $37.0 million in new funding applications;
    -   Signed a Memorandum of Understanding ("MOU") with Suncor Energy
        Products Inc. and its affiliate, Suncor Energy (U.S.A.)
        (collectively, "Suncor") to recognize Suncor as Lignol's "lead energy
        partner" and to provide support for its U.S. Department of Energy
        ("DOE") application for funding support for a commercial scale
        demonstration plant;
    -   Signed MOU with Huntsman International LLC ("Huntsman") to
        investigate novel uses of Lignol's high purity lignin (HP-L(TM)) for
        Huntsman's product applications;
    -   Established process conditions for a range of hardwood and softwood
    -   Developed third party engineering designs for a range of plant
        configurations; and
    -   Completed private placements of approximately $20.0 million, year-to-
        date (including the exercise of warrants).

    "Since 2005, Lignol has grown from three full-time employees to a staff
of 21. Our research and engineering teams consist of leading professionals who
are regarded as being among the best in the industry, and our progress has
accelerated in recent months as the team has grown," said Ross MacLachlan,
President and CEO of Lignol. "We have recently completed upgrades to our
existing pilot plant, which is now operating with two shifts per day for up to
six days per week, conducting trial runs on behalf of certain organizations."
    "We believe we have established one of the most advanced laboratories in
North America for cellulosic ethanol development and lignin application work,"
continued Mr. MacLachlan. "Our laboratory and pilot plant provides us with the
ability to obtain an increasing database of operating conditions across a wide
range of feedstocks that can be used to develop engineering designs for
commercial scale plants."
    Lignol is now poised to launch a new industrial scale pilot plant in the
first half of 2008, which will establish the operating conditions and scale-up
parameters for each of the major unit operations of the Lignol process. The
facility is expected to provide the means by which Lignol's technology can
progress to a commercial scale more efficiently, in less time and with less
risk. Discussions are underway with potential corporate partners and various
governments with a view to establishing the scope, scale, location and timing
of a subsequent commercial plant.

    Government Funding

    In the last few years Lignol has been awarded approximately $3 million in
funding from several government agencies in both Canada and the United States
that are supporting the development of environmentally-friendly renewable
fuels. To date, Lignol has confirmed funding of:

    -   1.7 million from Sustainable Development Technology Canada ("SDTC");
    -   Up to $870,000 from the Government of Alberta.

    These funds will be received in stages and are conditional upon the
completion of certain agreed upon work plans. Lignol has also applied for and
is currently in discussions with, several government and government-funded
agencies for additional funding of approximately $7.0 million in aggregate.
Additionally, Lignol recently applied for a US$30.0 million grant from the
U.S. Department of Energy to work with Suncor to jointly construct a
commercial scale demonstration plant in the State of Colorado.
    On September 12, 2007, SDTC, with funding support from the Government of
Canada, launched the new $500 million NextGen Biofuels Fund(TM) to support the
development of large-scale demonstration facilities that produce renewable
fuels from Canadian biomass. The NextGen Biofuels Fund(TM) will support up to
40% of eligible project costs for the establishment of first-of-kind large
demonstration-scale facilities for the production of next-generation renewable
fuels. Lignol is now working closely with its corporate partners to determine
how best to approach this major opportunity.

    About Lignol

    Lignol (TSX-V: LEC) is a Canadian company undertaking the development of
biorefining technologies for the production of fuel-grade ethanol and other
biochemical co-products from cellulosic biomass feedstocks. Lignol's modified
solvent based pre-treatment technology, originally developed by a former
affiliate of General Electric, and then further developed and commercialized
for wood-pulp applications by a subsidiary of Repap Enterprises Inc.,
facilitates the rapid, high-yield conversion of cellulose to ethanol and the
production of value-added biochemical co-products, including High Purity
Lignin (HP-L(TM)). Lignol is executing on its development plan through
strategic partnerships to further develop and integrate the core technologies
on a commercial scale. Lignol also intends to invest in, or otherwise obtain,
equity interests in energy related projects which have synergies with its
biorefining technology. For more information about Lignol, please visit our
website at

    The TSX Venture Exchange Inc. has not reviewed and does not accept
    responsibility for the adequacy or accuracy of this release.

    Caution concerning forward-looking statements:

    Certain statements contained in this document may constitute
"forward-looking statements". When used in this document, the words "may",
"would", "could", "will", "intend", "plan", "anticipate", "believe",
"estimate", "expect", "investigate", "looking at" as they relate to Lignol or
its management, are intended to identify forward-looking statements or
information. Such statements or information reflect Lignol's current views
with respect to future events and are subject to certain risks, uncertainties
and assumptions. Forward-looking statements and information are necessarily
based upon a number of estimates and assumptions that, while considered
reasonable by management, are inherently subject to significant business,
economic and competitive uncertainties and contingencies. Many factors could
cause Lignol's actual results, performance or achievements to be materially
different from any future results, performance or achievements that may be
expressed or implied by such forward-looking statements or information,
including among other things, those risk factors which are discussed elsewhere
in documents that Lignol files from time to time with securities regulatory
authorities. Should one or more of these risks or uncertainties materialize,
or should assumptions underlying the forward-looking statements or information
prove incorrect, actual results may vary materially from those described
herein as intended, planned, anticipated, believed, estimated or expected. The
Company expressly disclaims any intention or obligation to update or revise
any forward looking statements and information whether as a result of new
information, future events or otherwise. All written and oral forward-looking
statements and information attributable to us or persons acting on our behalf
are expressly qualified in their entirety by the foregoing cautionary

    %SEDAR: 00004360E

For further information:

For further information: Lignol Energy Corporation, Ross MacLachlan,
President, Tel: (604) 222-9800 ext. 107, Email:; The Equicom
Group, Bruce Wigle, Investor Relations, Tel: (416) 815-0700 ext. 228, Email:

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