September 24, 2003

News Release: Palcan Fuel Cells Receives Funding to Begin Manufacturing Process; Natural Resources Canada to Contribute $175,000 Towards Palcan's Membrane Electrode Assembly

Palcan Fuel Cells Ltd. (TSX-V: PC) is pleased to announce that as a result of Canada's Efficiency and Alternative Energy Program Contribution Agreement with Palcan, the second phase in Palcan's Membrane Electrode Assembly (MEA) automation process has been funded by Natural Resources Canada for an additional $175,000.

The objective of the joint 'Milestones to Commercial Production Program'with Natural Resources Canada, a Federal Government Ministry, is to improve the performance of the membrane electrode assembly and increase the output capacity so that high quality Proton Exchange Membrane (PEM) fuel cells can be mass produced at low, per unit cost. The current density (current produced per unit area) of the MEA is a critical performance factor in fuel cells and a larger current density is superior. The MEA is the 'heart'of the fuel cell and as the computer relies on the 'computer chip'for its performance, similarly a fuel cell relies on the MEA. The total program for the MEA project encompasses a budget upwards of $500,000 for the combined research, development, and hardware costs associated with the work carried out by Palcan's engineering/technical team.

Improved quality and reduced production costs of proton exchange membrane fuel cells will accelerate progress toward viable fuel cell powered systems covering all applications. Palcan's business mandate is to produce fuel cells stacks and systems to replace low output battery and internal combustion engine markets, representing the 100-watt to 5 kW range.

'The Canadian Government's confidence in Palcan and in our unique fuel cell technology allows us to move forward on tooling up for commercialization. This is done by reducing the production costs of our fuel cells and increasing the ultimate performance of the MEA through automation of our production,'stated Dr. John Shen, CEO and Founder of Palcan Fuel Cells. 'This project targets a new material processing and application technology. It is the continuation of an earlier work which is focused on creating a new coating technology which can be computer controlled for designing MEA parameters,'he added.

Palcan CEO Invited to Grove Fuel Cell Conference:

Palcan CEO Dr. John Shen is honoured to demonstrate Palcan's technology at the upcoming (eighth) Grove Fuel Cell Conference &Exhibition (www.grovefuelcell.com) which he will attend in London, UK September 24-26, 2003. Palcan's 2 kW fuel cell powered scooter will be featured at this high profile, international fuel cell industry event, the preeminent event of its kind in the world.

In Memoriam:

The Board of Directors and Staff of Palcan are deeply sorrowed by the passing of one of its directors, Mr. Jin-Ling Qiao, who was instrumental in opening up doors to the Chinese marketplace.

About Palcan

The Company is a leading developer and manufacturer of 100 watt to 5-kilowatt proton exchange membrane (PEM) fuel cells and metal hydride hydrogen storage products. The Company's proprietary and patent pending technologies form the core of the PalPacTM Power Products. A unique and integrated fuel cell power system aimed directly at low output applications where smaller internal combustion engines (ICE) and batteries are the power source. These include personal transport NEV and fleet type vehicles used in closed range environments (airports, amusement parks, factories, golf courses, malls, and delivery circuits), two and three wheeled scooters, in addition to including stationary, marine and portable power applications. The Company's manufacturing, research and development facilities are located in Burnaby, British Columbia and the Company trades on the TSX Venture Exchange under the symbol 'PC'.

John Shen, Ph.D., President &CEO

Certain matters discussed in this press release may contain forward-looking statements that may involve risk and uncertainties. Investors are cautioned that all forward-looking statements involve risks and uncertainties, including but not limited to; product development delays, the ability to attract and retain business partners, competition from other fuel cell manufacturers, competition from existing power technologies, and the ability to provide the capital required for product development, operations and marketing. Investors are encouraged to review the Company's filings on SEDAR at www.sedar.com.

Palcan Fuel Cells Ltd.Daniel GallagherCorporate Communications(604) 422-8868 or Toll Free: 1-866-548-8868Email: This email address is being protected from spambots. You need JavaScript enabled to view it.: www.palcan.comorNatural Resources CanadaIan MacIntyreTransportation Energy Technology(613) 943-2257(613) 996-9416 (FAX)


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