La Jolla, California, SGI International December 6, 1999 -- (OTCBB: SGII) SGI International (SGII) and American Electric Power (NYSE: AEP) have agreed to transport by rail SGII’s upgraded coal from its ENCOAL Demonstration Plant (which SGII is acquiring) located near Gillette, Wyoming to AEP’s Cook Coal Terminal at Metropolis, Illinois, for barge delivery to various SGII customers. Shipments are expected to begin next year and continue through at least 2004.

John W. Hart, SGII’s vice president of marketing, stated: “The agreement with AEP provides an economic transportation rate for our customer, Illinova, while creating a gateway for other utility plants on the rivers to receive SGII’s upgraded coal and coal blends.”

Steve Lewis, senior vice president of AEP Energy Services, stated: “This agreement fits our business development strategy to provide full transportation services to third parties utilizing our coal handling assets. The initial shipments from SGII’s demonstration plant could create increasing volume through our Cook Terminal by blending coals for power plants that seek cleaner burning fuels under the Clean Air Act’s Phase II compliance schedule.”

SGII’s upgraded coal is produced by drying and heat-treating Powder River Basin (PRB) coal in its Liquids From Coal (LFC) patented process. The upgraded coal will contain 30% more Btus and 25% less sulfur than the feed coal and retain the low emissions of NOx inherent in PRB coals. The process also produces a low-temperature coal tar that will be used for chemical feedstocks and fuels to be sold to other customers.

SGII’s core business is developing, commercializing and licensing new energy technologies. Its corporate headquarters are in La Jolla, California.

AEP, a global energy company, is one of the United States’ largest investor-owned utilities, providing energy to 3 million customers in Indiana, Kentucky, Michigan, Ohio, Tennessee, Virginia, and West Virginia. AEP has holdings in the United States, the United Kingdom, China, and Australia. Wholly owned subsidiaries provide power engineering, energy consulting and management services around the world. The company is based in Columbus, Ohio. On December 22, 1997, AEP announced a definitive merger agreement for a tax-free, stock-for-stock transaction with Central and South West Corp., a public utility holding company based in Dallas.

(This news release contains forward-looking statements. Actual results could vary from those expected due to a variety of risk factors, including, but not limited to, the uncertainty of successful completion of contemplated or proposed business transactions.)