RESEARCH REPORT

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Malahat Energy Corporation
Symbol: MAHT
Recommended: 10/22/01
Price at 10/22/01: $1.70
Target: $6.24  for FY2003
52 Week Range: $1.10 - $3.75
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* Financial Summary

Malahat Energy Corporation (Malahat) is a development stage
company engaged in the development of a bio fuel system to
convert organic waste material into an economical, synthesized fuel
gas for energy consumption. For the eight months ended 3/31/01,
the Company reported no revenue. The Company is coming out of
the R&D stage and launching into initial production and sales.
Net loss decreased 8% to $100,480. Lower loss reflects lower
general and administrative expenses due to reduced costs related to
the issuance of stock for compensation. Revenue projection for
FY2002 is $1,943,689, with a net profit of $492,495.

More from Market Guide: Balance Sheet
(http://yahoo.marketguide.com/MGI/mg.asp?target=%2Fstocks%2F
companyinformation%2Fbalancesheet%2Fqbalancestd&Ticker=M
AHT) and Income Statement
(http://yahoo.marketguide.com/MGI/mg.asp?target=%2Fstocks%2F
companyinformation%2Fincomestmt%2Fqincomestd&Ticker=MA
HT)

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* Share-Related Items

Recent Price (10/22/01) - $1.70
Market Capitalization - $26.35M
Shares Outstanding - 15.5M
Float - 3.40M
Daily Volume (3-month avg) - 15.0K
Daily Volume (10-day avg) - 25.0K
Delayed Quote -  http://quote.yahoo.com/q?s=maht.ob&d=v1

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* Business Description

- Introduction

Malahat manufactures BioFuel(TM) Systems capable of
economically producing a green, renewable fuel gas from biomass
fuel such as wood and agricultural waste. Malahat's proprietary,
patent-pending waste-to-energy BioFuel(TM) Systems produce both
natural gas and electricity and are designed specifically, to meet the
power requirements of those businesses and industries hit hardest by
the world's developing energy crisis.

The M500 is the first in the M-Series of BioFuel(TM) Systems that
Malahat has designed and developed to convert biomass waste
materials (like wood) into a useable, SynGas(TM). Malahat's
SynGas(TM) can deliver on-site power or heat flexibly and can be
used instantly or compressed, cooled and stored for consumption at
a later date. Go to www.malahatenergy.com/s/Product.asp and
www.malahatenergy.com/s/Technology.asp for more product
details.

- Power Market

It is estimated that the US will increase its biomass power generation
from current levels of 7GW annually to over 30GW annually by the
year 2020. The driving forces behind this dramatic growth profile
are the rising cost of power generation and transmission, the
demand for low environmental impact power sources and the
economic benefits to small to medium size businesses of on-site
power generation. President Bush, speaking to Sacramento business
leaders on 10/17/01 said, "Our country needs greater energy
independence."  Malahat offers a means to achieving that goal.

- Sales and Marketing

During the first phase of the Company's sales and marketing
program, Malahat has targeted North America's greenhouse
industry, which currently has in excess of 14,000 operations across
the continent. With the potential to save even small greenhouse
operators as much as 50% in annual power costs, the initial interest
in Malahat's proprietary technology has been overwhelming.
Malahat has already received commitments from North American
greenhouse growers for 69 units.

- Management and Growth

Malahat has assembled a management team consisting of key
individuals with qualifications and experience in power generation,
mechanical engineering and software development. Leveraging a
proprietary, clean power generation technology, Malahat is poised to
become a leader in the field of low cost, on-site, biomass power
generation. Go to www.malahatenergy.com/s/Management.asp for
more details on the management team.

Web site: www.malahatenergy.com/s/Home.asp

More from Market Guide: Expanded Business Description -
http://yahoo.marketguide.com/mgi/busidesc.asp?rt=busidesc&rn=A2
E4C

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* Analyst Summary

"Around $5 billion of tax credits are being extended to renewable
sources...."

Energy policy
Not half bad
May 17th 2001
From The Economist print edition

Malahat's proprietary, patent pending BioFuel(TM) System enables
it to deliver low cost power to high energy consumption industries.
The BioFuel(TM) System converts biomass waste to produce a
green renewable fuel replacement for natural gas yielding thermal
and electrical energy at a fraction of the prevailing market price.

Malahat's proprietary low cost distributed system with on site energy
production offers clean power generation. It is a cost effective
energy solution to the agricultural, horticultural and timber industries
and to municipalities with abundant biodegradable waste resources
for recycling.

Malahat's initial foray into the greenhouse industry with its on-site
power supply brings the benefit of substantially reduced energy
costs with the added advantage of carbon dioxide enrichment, to
meet the increasing demands for an alternate energy resource in the
climate of escalating energy prices.
Malahat is a development stage company that has completed its
research and development with respect to its M500 biofuel system
and is launching its commercial units for the M500 biofuel systems
in the greenhouse industry. The Company was formed in May 2001
via a reverse acquisition with Sarenghetti Enterprises. Earlier in May
2001, Sarenghetti had acquired all the assets, liabilities and
properties of Malahat Systems Corporation, a producer of thermal
and electrical energy using biomass waste as fuel.
Alternative energy is definitely a sector still in its infancy. But
investors need to realize that the demand for the Company's
products are real and necessary.

Net profit projections show an impressive growth rate of:

1141.06% between FY 2002 and FY 2003 to $6,112,152,

386.95% between FY 2003 and FY 2004 to $29,763,139,

145.33% between FY 2004 and FY 2005 to $73,016,737 and

60.48% between FY 2005 and FY 2006 to $117,174,908.

The associated Earnings Per Share will grow from $0.03 to $0.39 in
year 2, to $1.92 in year 3, to $4.71 in year 4, and to $7.56 in year 5.
Utilizing a conservative 9 to 1 Price to Earnings Ratio (applicable to
Malahat's industry; Oil & Gas Operation), by the end of FY 2003
Malahat's share price forecasts in the $3.50 range, a 106% return on
investment from the current share price and by the end of FY 2006
Malahat's share price forecasts in the $68.00 range, a 3900% return
on investment from the current share price.

We see Malahat's new technology as being best represented by the
broader Energy sector. If we use this sector's Price to Earnings ratio
of 16 to 1, Malahat is targeted for even more impressive share price
forecasts:

$6.24 for FY2003, 267% return

$30.72 for FY2004, 1707% return

$75.36 for FY2005, 4333% return

$120.96 for FY2006, 7015% return

Note: To meet the suggested target prices, the Company would have
to trade at least at the Oil & Gas Operation Industry multiples and
the Company would have to achieve earnings and revenue estimates
provided by management in this report. A divergence either up or
down from the projections could materially affect the target prices.

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* Comparison of Alternate Energy Companies
www.investorstool-kit.com/maht/mahtcomp.htm

Within the alternate energy sector on the Comparisons of Alternate
Energy Companies
(www.investorstool-kit.com/maht/mahtcomp.htm), there are nine
companies with annual sales between $5 million and $35 million.
The average price to sales ratio of these companies is over 20.

Estimated annual revenue for Malahat based upon existing lease
commitments of 69 units is $10,350,000.  The present market
capitalization of Malahat at $1.70 per share is $26,350,000.

Based on the anticipated commitments of 69 units, the price/sales
ratio for Malahat Energy Corporation is 2.55 which represents a
vastly substantial discount from its peer group.  It would appear
likely that as Malahat progresses with the execution of its business
plan and the delivery of its first commercial units of M500
BioFuel(TM) systems to customers, early investors will be heavily
rewarded by this large discount to market as the price sales ratio
elevates to meet that of its peer group.

On an assumption of a future share price of say, $4.00 per share,
the forecasted price/sales ratio will then be at 6 which shall remain
conservatively lower than the average price/sales ratio in excess of
20 in the alternate energy sector defined at
www.investorstool-kit.com/maht/mahtcomp.htm.

Additionally the anticipated sales revenue for Malahat does not take
into account any additional revenue achieved through carbon credit
trading or from the removal of biomass waste.

Note: The information herein does not purport to be all-inclusive or
to contain all of the information that a prospective recipient may
desire. No representation or warranty is made as to the accuracy or
completeness of any of the information contained herein. Neither
the information herein nor its delivery to any prospective recipient,
shall constitute an offer to sell or the solicitation of an offer to buy
any securities of the Company, nor shall the information contained
herein be construed to indicate that there has been no change in the
affairs of Malahat Energy Corporation since the date hereof.
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* Related Information

- Summary Report - Publisher: Malahat Energy Corporation
www.malahatenergy.com/i/pdf/summaryreport.pdf

- The Business of Energy - Author: Tony Wanless
www.malahatenergy.com/i/pdf/bizofenergy-tonywanless.pdf

- Malahat Energy Corporation, Open House a Success - The
Province Newspaper
www.malahatenergy.com/s/Events.asp

- Financial Radio Hour with Dr. David Wiles
www.yesinternational.com/radio/malahat.html

- Energy Excerpts
www.malahatenergy.com/s/Excerpts.asp

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* Recent News

Oct 12, 2001 - Malahat Taps Wei for Commercialization Phase
(http://biz.yahoo.com/bw/011012/120072_1.html)

Oct 10, 2001 - Malahat Starts Commercialization
(http://biz.yahoo.com/bw/011010/100029_1.html)

Jun 6, 2001 - Malahat Energy Corporation Retains Yes
International, Inc.
(http://www.malahatenergy.com/s/News.asp?ReportID=24010)

May 30, 2001 - Malahat Energy Corporation Announces New
Listing
(http://www.malahatenergy.com/s/News.asp?ReportID=23744)

Nov 30, 2000 -
Malahat Systems Develops Technology to Convert Waste into Fuel
Gas (http://www.malahatenergy.com/s/News.asp?ReportID=22982)

____________________________________


* Contact Information

Investor Relations:
K. Williams
1-866-404-3311
ir@malahatenergy.com

Visit the Company Website at www.malahatenergy.com/s/Home.asp

____________________________________

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