Liberty Electric Cars Limited

18 October 2010

Clarification of the Liberty Electric Cars proposal to the Board of the Tanfield Group Plc ("Tanfield")

In the light of recent media speculation, the board of Liberty Electric Cars Ltd (Liberty) seeks to clarify 2 issues.

1. Liberty has not made, and does not intend to make, an offer to acquire all of the shares in Tanfield, for the purpose of The City Code on Takeovers and Mergers (the "Code")

2. Liberty confirms, however, that it has tabled a proposal - to the Tanfield Board of Directors - which aims to maximize value for Tanfield's shareholders.

The proposal

Liberty's proposal, which would require a waiver of Rule 9 of the Code, following the approval of the majority of Tanfield and Liberty shareholders, is to combine the Liberty and Tanfield business by

i. Liberty acquiring a majority interest in the enlarged issued share capital of Tanfield through the issue to Liberty - by Tanfield - of new Tanfield shares, in exchange for Tanfield acquiring a minority interest in the issued share capital of Liberty; and

ii. Liberty arranging a £15 million loan to Tanfield to assist with working capital (the Loan).

The Loan is priced at an indicative overall interest rate of Libor plus 8.5%pa, which compares favourably to the rate at which certain directors of Tanfield recently provided a one month bridge loan to the Company. And the proposed £15 million loan is almost equal to Tanfield's entire current market capitalization. It should, therefore, provide in terms of both amount and tenor a comfortable breathing space to address the proper resolution of the real problems facing Tanfield's two core businesses.

Liberty strongly believes that the proposed combination of Tanfield's and Liberty's electric vehicles businesses makes inherent business logic; that a combined business could obtain greater commercial opportunities in the global market for Electric Vehicles. For example, Liberty has developed proprietary electric powertrain technology and has an agreement for the potential supply of this technology for 10,000 buses to the Chinese central government agency CETC. Further, such a combined venture could secure jobs, furthering Liberty's objective to make the North East of England the epicenter of global electric vehicle research, innovation, and production.

The Board of Tanfield has informed Liberty that is does not support the proposal. Without the Board of Tanfield's support, Liberty's proposal cannot be successful. Therefore, Liberty wishes to appeal to Tanfield's investors with the message that Liberty believes it has a reasonable proposal.

Important Notice

This announcement is a Rule 2.8 announcement for the purpose of the Code. For the purposes of Rule 2.8 of the Code, Liberty reserves the right (on behalf of itself and anyone acting in concert with it) to announce an offer or possible offer for Tanfield and/or to take any other action which would otherwise be restricted under Rule 2.8 of the Code within the six months following the date of this announcement in the event that:

1. the agreement or recommendation of the board of Tanfield is given to the making of such an announcement or the taking of any such other action; or

2. a third party announces an offer for Tanfield; or

3. Tanfield announces a competing 'whitewash proposal' (for the purposes of Note 1 on the Notes on Dispensations from Rule 9 of the Code) or a 'reverse takeover' (as set out in Note 2 on Rule 3.2 of the Code); or

4. Tanfield announces the proposed sale, disposal or transfer of all or a substantial part of its assets, business or undertaking; or

5. with the consent of the Panel, if there is a material change in circumstances.

Enquiries:

Ian Hobday

Managing Director,

Liberty Electric Cars Limited

Tel: +44 7872 464 263

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