Synthesis Energy Systems and The North American Coal Corporation Enter Into Joint Development Agreement to Evaluate Gas-To-Liquids Project Near Red Hills Mine in Mississippi

    HOUSTON, July 16 /EMWNews-FirstCall/ -- Synthesis Energy Systems,

Inc. ("SES") (Nasdaq: SYMX) and The North American Coal Corporation

("NAC"), a subsidiary of NACCO Industries, Inc. (NYSE: NC), have entered

into a joint development agreement through which the two companies will

conduct a pre-feasibility study to explore the development of a coal-based

gasification facility utilizing SES's proprietary U-GAS(R) technology. The

location for the study is NAC's Red Hills Mine Operations near Ackerman,

Mississippi. If constructed, it is expected that the facility will produce

synthetic gasoline, chemical feedstocks and/or synthetic natural gas.

Following the completion of the pre-feasibility study, the companies will

determine if they will engage in a front-end engineering design study to

further develop the opportunity. This joint development agreement will be

in addition to SES's on-going development work with Consol Energy in the

U.S., and Hai Hua, Golden Concord and YIMA in China.



    "We are pleased to be working with NAC on the potential development of

our second coal gasification project in the United States," said Tim Vail,

President and CEO of SES. "By utilizing lignite coal as the raw material in

the gasification process, we believe that SES will demonstrate the

versatility of its U-GAS(R) technology, a key operational advantage," Vail

added.



    Lignite is a high ash and high moisture feedstock that is abundant

throughout the southern states, in addition to other areas in the United

States, and is well suited for conversion in SES's U-GAS(R) technology.

U-GAS(R) is advantaged over other commercially available gasification

technology in that it can efficiently convert low-rank lignite coals into

high value commodity products such as synthetic gasoline and synthetic

natural gas.

    About The North American Coal Corporation



    With 2.3 billion tons of lignite coal reserves, NAC is the nation's

largest miner of lignite coal, and the eighth largest coal producer

nationwide as of December 31, 2007, delivering 33.7 million tons of lignite

coal in 2007. NAC operates six surface lignite coal mines and markets

lignite coal primarily as fuel for power generation and provides selected

value-added mining services for other natural resources companies in the

United States. The company also provides dragline mining services operating

under the "North American Mining Company" for independently owned limerock

quarries in Florida.



    About Synthesis Energy Systems, Inc.



    SES is an energy and technology company that builds, owns and operates

coal gasification plants that utilize its proprietary U-GAS(R) fluidized

bed gasification technology to convert low rank coal and coal wastes into

higher value energy products, such as transportation fuels, industrial

chemicals, ammonia and synthetic natural gas. The U-GAS(R) technology,

which SES licenses from the Gas Technology Institute gasifies coal in an

environmentally friendly manner. The primary advantages of U-GAS(R)

relative to other gasification technologies are (a) greater fuel

flexibility provided by our ability to use all ranks of coal (including low

rank, high ash and high moisture coals, which are significantly cheaper

than higher grade coals), many coal waste products and biomass feed stocks;

and (b) our ability to operate efficiently on a smaller scale, which

enables us to construct plants more quickly, at a lower capital cost, and,

in many cases, in closer proximity to coal sources. SES currently has

offices in Houston, Texas and Shanghai, China. For more information on SES,

visit http://www.synthesisenergy.com or call (713) 579-0600.



    Forward Looking Statements



    The matters discussed in this press release contain forward-looking

statements within the meaning of Section 27A of the Securities Act of 1933,

as amended, and Section 21E of the Securities Exchange Act of 1934, as

amended, that involve substantial risks and uncertainties. When used in

this press release, the words "expects," "will" and similar expressions

identify certain of such forward-looking statements. Actual results,

performance or achievements could differ materially from those

contemplated, expressed or implied by the forward-looking statements

contained herein. These forward- looking statements are based largely on

the expectations of the Company and are subject to a number of risks and

uncertainties that are subject to change based on factors which are, in

many instances, beyond the Company's control. These include, but are not

limited to, risks and uncertainties associated with: our early stage of

development, the success of our development projects with industry

partners, the limited history and viability of our technology, our results

of operation in foreign countries, our ability to maintain production from

our first plant in its Hai Hua project and the sufficiency of our internal

controls. The Company cautions that the foregoing factors are not

exclusive. The Company assumes no obligation to update the information

contained in this press release.