Re Agreement

PRESS RELEASE

19 DECEMBER 2006 - IMMEDIATE

                                   MICROFUZE INTERNATIONAL PLC (MFZ)
 Co-operation Agreement entered into with Applied Thermal Coatings (ATC) for commercialisation of MDT
                                              technology

MicroFuze International plc ("MicroFuze", "MFZ" or "the Company") today announces the signing of a
strategic co-operation agreement with ATC to further develop and assist the commercial roll-out of its
Microwave Diffusion Treatment (MDT) technology. MFZ, through MicroFuze Americas, Inc, its 85% owned
subsidiary, holds the sole licence to commercialise the US Department of Energy's patented process for
MDT.

ATC, based in Chattanooga, Tennessee is an established player in surface treatment technologies which
include conventional diffusion, thermal coating, solution annealing and specialist heat treatment. ATC
has immediate access to substantial clients currently using materials diffused in a conventional oven,
and who are looking for improvement in their surface metals treatment.

MicroFuze and ATC will form MicroFuze Energy LLC which will be the vehicle to license the technology
for the energy sector; initially, boron diffused turbine blades. MicroFuze will own 90% of the company
and ATC 10%.  ATC will dedicate the time and expertise of its principals in lieu of cash as its
contribution to the joint venture vehicle. The Company is considering putting in place similar joint-
venture structures in future to exploit other industries and applications such as medical,
aeronautics, electronics, automotive and defence.

Doug Parrish, CEO of MicroFuze, said: "We are delighted to formalise our relationship with ATC who
will help drive this platform technology to the next level and provide market penetration in a shorter
timeframe. In the longer term, ATC, through its industry knowledge, credibility, and customer contacts
will help MicroFuze expand the technology to new markets and applications."

Harley Grant, CEO of ATC said: "The MicroFuze MDT technology has exciting prospects and, importantly,
has immediate application for the US energy sector and for the power generation industry globally. ATC
has been assisting with the development of MDT for some time on a consulting basis and welcomes the
opportunity to now proactively drive the technology across other industries and customers."

Update on Technology

The diffusion of boron into hard steel turbine blades continues to bring encouraging results. At
present the company is obtaining independent testing results on its finished products and it is also
continuing with increasing scale by testing multiple turbine blades in the development microwave. The
company is on target to provide its customer with finished products for testing by the end of January.

Cost Reductions and Board Restructure

As part of the new focus for the company in working with ATC and in order to reduce expenditure until
revenues begin, the following changes are made to the Board with immediate effect. Duncan Clegg
(Chairman) and Sandy Barblett (Executive Director) will retire from the board - Mr Barblett will
consult to the company on an as needed basis. Peter Marks, currently a Non-executive director, has
been appointed Non-executive Chairman while Doug Parrish as CEO and Tim Wall as Finance Director
remain in their current positions as Executive Directors. Other cost reduction initiatives have also
been implemented as part of an ongoing drive to ensure expenditures continue only in areas where there
is a demonstrable value to the project.
                                                                                                                                                                                     to commercialise the US Department of Energy's patented process for
Microwave Diffusion Treatment ("MDT") discovered by their Oak Ridge, Tennessee Nuclear Research
Facility.  The US Department of Energy retains a 10% interest in MicroFuze Americas and Harley Grant,
the Oak Ridge inventor of the process, holds the remaining 5% of MicroFuze Americas shares.
Because MDT is quicker, cheaper and cleaner than all known existing surface treatments of metals, it
provides significant physical, economic and environmental advantages.  MDT can make cheap steel nearly
impenetrable and has a large number of potential uses for parts, components and accessories which
require hardening, lubricity, wear resistance and corrosion protection.  Industries that will benefit
from MDT include power generation, automotive, aeronautical and general manufacturing in a global
market worth US$6 billion annually.

Applied Thermal Coatings

ATC, based in Chattanooga, Tennessee is an established player in surface treatment technologies which
include conventional diffusion, thermal coating, solution annealing and specialist heat treatment.
ATC's clients are some of the largest corporations in the US southeast, including Babcock and Wilcox,
Southern Corp., KordSA/DUSA/Dupont, and the Tennessee Valley Authority. The principals of ATC are Jeff
Henry and Harley Grant.

ATC was created by Mr Grant as a sole proprietorship in 1989. Financing it himself, he purchased land
and buildings at 200 Compress St., Chattanooga, Tennessee to start a thermal coating business, using
his metallurgical experience from 15 years with Alstom Power, Inc., and its predecessors. Mr Grant has
pioneered the diffusion of aluminium, silicon and chrome compounds, and now has five patents to his
name. He is a co-inventor named on the patent for the MDT technology and also a 5% shareholder in
MicroFuze Americas.

Mr Henry is recognised as one of the leading metallurgists in the US in surface treatment technology.
Before joining ATC earlier this year he was the Director of Alstom Power Inc's worldwide Material
Research Centre where he was engaged in materials failure analysis and remedial treatment.  Mr Henry
led initiatives to position Alstom in the market as a one stop solution for complex and unusual
materials failures in the power generation industry. He brings 33 years of experience to ATC to drive
new surface engineering solutions to the market.

Contact: Doug Parrish, CEO, MicroFuze International plc, 020-7016-5100
         Henry Gewanter, PR, Positive Profile, 020-7489-2028

MicroFuze International plc