Issue of Equity

Gulf Keystone Petroleum Ld
17 August 2006


Gulf Keystone Petroleum Limited ("Gulf Keystone" or the "Company")

17 August 2006

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO
                 THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN

  THIS IS NOT AN OFFER OF SECURITIES FOR SALE INTO THE UNITED STATES, CANADA,
                               AUSTRALIA OR JAPAN

              PROPOSED PLACING TO RAISE APPROXIMATELY £14 MILLION

Gulf Keystone announces that it is today placing up to 21,600,000 new common
shares of US$0.01 each ("Placing Shares"), representing approximately 8.5 per
cent. of Gulf Keystone's existing issued share capital (the "Placing").

The Placing, which is being effected by Hoare Govett Limited ("Hoare Govett")
and Tristone Capital Limited ("Tristone Capital", and, together with Hoare
Govett, the "Agents"), will be the subject of an accelerated bookbuild. Hoare
Govett and Tristone Capital are acting as joint lead managers and joint brokers
in relation to the Placing, and Hoare Govett is acting as sole bookrunner.

The proceeds of this fundraising will be used primarily to meet the Company's
near term, upstream investment needs. Specifically it is the Company's intention
to target early first oil production from Block 126a, pending award of a
Production Licence from the Algerian authorities, and progress the further
evaluation of its northern Algerian, Constantine Basin licences, in particular
Blocks 126a and 129. In addition, the Company proposes an immediate acceleration
of its business development initiatives, both in Algeria and, selectively,
elsewhere within its Middle East / N.Africa focus area.

The books will open with immediate effect. The books are expected to close no
later than 6.00 p.m. today, 17 August 2006, and pricing and allocations are
expected to be announced by 6.00 p.m. today, 17 August 2006. The timing of the
closing of the books, pricing and allocations may be accelerated or delayed at
the sole discretion of the Agents (acting jointly), but shall not extend beyond
8.00 a.m. on 31 August 2006. The placing price in respect of the Placing Shares
(the "Placing Price") will be determined by Hoare Govett (as sole bookrunner) at
the close of the bookbuilding process.

The Placing is conditional upon, inter alia, the admission of the Placing Shares
to trading on AIM, a market of the London Stock Exchange plc ("Admission")
becoming effective by 8.00 am on 24 August 2006 (or by such later time and date
as Hoare Govett, Tristone Capital and the Company may agree but not later than
8.00 am on 31 August 2006). The Placing is also conditional on the placing
agreement made between the Company, Hoare Govett and Tristone Capital not being
terminated prior to such date.

The Placing Shares will rank pari passu in all respects with the existing common
shares of US$0.01 each of Gulf Keystone, including the right to receive all
future dividends and other distributions declared, made or paid after the date
of issue of the Placing Shares.

Application will be made for the Placing Shares to be admitted to trading on
AIM. It is expected that Admission will become effective and that dealings in
the Placing Shares will commence at 8.00 a.m. on 22 August 2006.

Attention is drawn to the detailed terms and conditions of the Placing described
in the Appendix to this announcement.

This announcement is for information purposes only and does not constitute an
offer or invitation to acquire or dispose of any securities or investment advice
in any jurisdiction.

Hoare Govett Limited, which is authorised and regulated by the Financial
Services Authority, is acting exclusively for Gulf Keystone and for no one else
solely in connection with the Placing and will not be responsible to anyone
other than Gulf Keystone for providing the protections afforded to the customers
of Hoare Govett Limited or for providing advice in relation to the Placing.
Tristone Capital Limited, which is authorised and regulated by the Financial
Services Authority, is acting exclusively for Gulf Keystone and for no one else
solely in connection with the Placing and will not be responsible to anyone
other than Gulf Keystone for providing the protections afforded to the customers
of Tristone Capital Limited or for providing advice in relation to the Placing.
Past performance is no guide to future performance and persons needing advice
should consult an independent financial adviser.

This announcement is not an offer for sale or a solicitation of any offer to
purchase the Placing Shares in the United States. The Placing Shares may not be
offered or sold in the United States absent registration under the US Securities
Act of 1933, as amended (the "US Securities Act") or an exemption therefrom. The
Company does not intend to register any portion of the Placing under the US
Securities Act or to conduct a public offering of the Placing Shares in the
United States. The Placing Shares have not been and will not be registered with
any regulatory authority of any state or other jurisdiction within the United
States.

Mr. Todd Kozel, Chief Executive Officer of Gulf Keystone, commented:

"This fundraising is being pursued at an exciting time in the Company's
development. It will enable us not only to accelerate the full evaluation of,
and crystallisation of value from, our existing portfolio, but will also allow
us to pursue business development opportunities within our focus area. We look
forward to a rewarding period ahead."

Enquiries

Gulf Keystone Petroleum Limited
Todd Kozel, Chief Executive Officer                     020 7514 1400
Bill Guest, President
Jon Cooper, Finance Director

Hoare Govett Limited
Andrew Foster / Bertie Whitehead                        020 7678 8000
John MacGowan                                           020 7678 1084

Tristone Capital Limited
Nick Morgan / Majid Shafiq                              020 7399 2486
Charles Lesser / Chris Grudniewicz                      020 7399 2485

Citigate Dewe Rogerson
Martin Jackson / George Cazenove                        020 7638 9571
Nina Soon


                 APPENDIX: TERMS AND CONDITIONS OF THE PLACING

THIS ANNOUNCEMENT, INCLUDING THIS APPENDIX (TOGETHER, "THIS ANNOUNCEMENT"), IS
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO
THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN.

                      IMPORTANT INFORMATION ON THE PLACING

Notice to prospective investors regarding United Kingdom securities laws

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THIS
ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT HEREIN ARE DIRECTED ONLY AT
PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE THEM IN ACQUIRING, HOLDING, MANAGING
AND DISPOSING OF INVESTMENTS (AS PRINCIPAL OR AGENT) FOR THE PURPOSES OF THEIR
BUSINESS AND WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS
AND WHO FALL WITHIN ARTICLE 19(1) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000
(FINANCIAL PROMOTION) ORDER 2005, AS AMENDED (THE "ORDER") OR ARE PERSONS WHO
FALL WITHIN ARTICLE 49(2)(A) TO (D) ("HIGH NET WORTH COMPANIES, UNINCORPORATED
ASSOCIATIONS, ETC") OF THE ORDER OR TO WHOM IT MAY OTHERWISE LAWFULLY BE
COMMUNICATED (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT
PERSONS"). THIS ANNOUNCEMENT AND THE TERMS AND CONDITIONS SET OUT HEREIN MUST
NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. PERSONS
DISTRIBUTING THIS ANNOUNCEMENT MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO
SO. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THIS APPENDIX AND THE TERMS
AND CONDITIONS SET OUT HEREIN RELATES IS AVAILABLE ONLY TO RELEVANT PERSONS AND
WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS.

THIS ANNOUNCEMENT DOES NOT CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY
SECURITIES IN GULF KEYSTONE PETROLEUM LIMITED (THE "COMPANY"). THE NEW COMMON
SHARES THAT ARE THE SUBJECT OF THE PLACING (THE "PLACING SHARES") ARE NOT BEING
OFFERED OR SOLD TO ANY PERSON IN THE UNITED KINGDOM, OTHER THAN TO QUALIFIED
INVESTORS ("QUALIFIED INVESTORS") AS DEFINED IN SECTION 86(7) OF THE FINANCIAL
SERVICES AND MARKETS ACT 2000 ("FSMA"), BEING PERSONS FALLING WITHIN ARTICLE 2.1
(E)(I), (II) OR (III) OF DIRECTIVE 2003/71/EC (THE "PROSPECTUS DIRECTIVE"),
WHICH INCLUDES LEGAL ENTITIES WHICH ARE REGULATED BY THE FINANCIAL SERVICES
AUTHORITY OR ENTITIES WHICH ARE NOT SO REGULATED WHOSE CORPORATE PURPOSE IS
SOLELY TO INVEST IN SECURITIES.

General

This Announcement does not constitute an offer to sell or issue or the
solicitation of an offer to buy or subscribe for Placing Shares in any
jurisdiction including, without limitation, the United Kingdom, the United
States, Canada, Australia or Japan or any other jurisdiction in which such offer
or solicitation is or may be unlawful. This Announcement and the information
contained in it are not for release, publication or distribution, directly or
indirectly, to persons in the United States, Canada, Australia or Japan or in
any jurisdiction in which such publication or distribution is unlawful. Any
failure to comply with these restrictions may constitute a violation of US,
Canadian, Australian or Japanese securities laws. Persons receiving this
Announcement must not distribute, mail or send it in, into or from, the United
States or use the United States mails, directly or indirectly, in connection
with the Placing and by doing so may invalidate any purported application for
Placing Shares.

The distribution of this Announcement and the Placing and/or issue of the
Placing Shares in certain jurisdictions may be restricted by law. No action has
been taken by the Company or the Agents that would permit an offer of Placing
Shares or possession or distribution of this Announcement or any other offering
or publicity material relating to such Placing Shares in any jurisdiction where
action for that purpose is required. Persons to whose attention this
Announcement is drawn are required by the Company and the Agents to inform
themselves about and to observe any such restrictions.

Notice to prospective investors regarding US securities laws

This announcement is not an offer for sale or a solicitation of any offer to
purchase the Placing Shares in the United States. The Placing Shares may not be
offered or sold in the United States absent registration under the US Securities
Act, as amended (the "US Securities Act") or an exemption therefrom. The Company
does not intend to register any portion of the Placing under the US Securities
Act or to conduct a public offering of the Placing Shares in the United States.
The Placing Shares have not been and will not be registered with any regulatory
authority of any state or other jurisdiction within the United States.

The Placing Shares have not been and will not be registered under the US
Securities Act and may not be offered or sold except (i) within the United
States in reliance on Rule 144A under the US Securities Act, or (ii) to certain
persons in offshore transactions in reliance on Regulation S under the US
Securities Act ("Regulation S"). Accordingly, each Agent has represented and
agreed that it has not offered or sold, and will not offer or sell, any of the
Placing Shares as part of its allocation at any time other than to "qualified
institutional buyers" (as defined in Rule 144A) in the United States in
accordance with Rule 144A or outside the United States in accordance with Rule
903 of Regulation S. The term "United States," as used in this Announcement, has
the meaning given to it by Regulation S. Until the expiration of 40 days after
the closing of the Placing, an offer or sale of the Placing Shares within the
United States by a dealer, whether or not participating in the Placing, may
violate the registration requirements of the US Securities Act if such offer or
sale is made otherwise than in accordance with Rule 144A of the US Securities
Act.

The Placing Shares have not been approved or disapproved by the US Securities
and Exchange Commission, any state securities commission in the United States or
any other US regulatory authority, nor have any of the foregoing authorities
passed upon or endorsed the merits of the Placing or the accuracy of adequacy of
this Announcement. Any representation to the contrary is a criminal offence in
the United States.

Placing Shares initially offered and sold to investors in the United States in
accordance with Rule 144A will be subject to certain restrictions contained in a
separate investor letter (the "Investor Letter") provided to it by the Company,
the Agents or any of their respective Affiliates (as defined below) in
connection with the Placing.

Representations and warranties of Placees

Persons (including individuals, corporate entities, funds or others) who are
invited to and who choose to participate in the Placing by making an oral offer
to subscribe for Placing Shares (referred to in this Announcement as "Placees"),
will be deemed to have read and understood this Announcement in its entirety and
to be making such offer on the terms and conditions, and to be providing the
representations, warranties, agreements, acknowledgements and undertakings,
contained in this Appendix and, in the case of Placees of Placing Shares offered
in reliance on Rule 144A, the Investor Letter. In particular, each such Placee
represents, warrants and acknowledges that it:

(a)     is a Relevant Person and a Qualified Investor and undertakes that it 
        will acquire, hold, manage or dispose of any Placing Shares that are
        allocated to it for the purposes of its business; and

(b)     is subscribing for the Placing Shares for its own account or is
        subscribing for the Placing Shares for an account with respect to 
        which it exercises sole investment discretion and in either case not 
        with a view to, or for resale in connection with, the distribution 
        thereof, in whole or in part, in the United States and, except for 
        Placees of Placing Shares offered in reliance on Rule 144A, that it 
        (and any such account) is outside the United States, within the 
        meaning of Regulation S.

Details of the Placing Agreement and the Placing Shares

The Agents have today entered into a placing agreement (the "Placing Agreement")
with the Company whereby the Agents have, on and subject to the terms and
conditions set out therein, agreed as agents for and on behalf of the Company,
to use their reasonable endeavours to procure Placees to subscribe for the
Placing Shares in accordance with the provisions of the Placing Agreement.
The Placing Shares will, when issued, be credited as fully paid and will rank
pari passu in all respects with the existing issued common shares of US$0.01
each in the capital of the Company (the "Common Shares"), including the right to
receive all dividends and other distributions declared, made or paid on or in
respect of the Common Shares after the date of issue of the Placing Shares.
The Company, through its registrars, has established a depositary arrangement
whereby depositary interests ("DIs") (established pursuant to a deed of trust
executed by the registrars, acting as depositary) representing Common Shares are
issued to shareholders in the Company who wish to hold their Common Shares in
electronic form within the CREST system. Pursuant to this arrangement, one DI
represents one Common Share. Placees who wish to hold their Placing Shares in
electronic form within the CREST system will receive DIs representing the number
of Placing Shares they are allocated in the Placing. In this Appendix,
therefore, the term "Placing Shares" shall be deemed to mean or to include (as
applicable) DIs representing such shares.

Application for admission to trading

Application will be made to the London Stock Exchange plc (the "London Stock
Exchange") for admission to trading of the Placing Shares on AIM, a market of
the London Stock Exchange ("Admission"). It is expected that Admission will
become effective and that dealings in the Placing Shares will commence at 8.00
a.m. on 22 August 2006.

Bookbuild

Commencing today Hoare Govett (as sole bookrunner) is conducting an accelerated
bookbuilding process (the "Bookbuilding Process") to determine demand for
participation in the Placing. This Appendix gives details of the terms and
conditions of, and the mechanics of participation in, the Bookbuilding Process
and the Placing. No commissions will be paid to Placees or by Placees in respect
of any Placing Shares or their subscription therefore.

The Agents will be entitled to effect the Placing by such alternative method to
the Bookbuilding Process as they may, following consultation with the Company,
determine. To the fullest extent permissible by law, neither Agent nor any
holding company thereof, nor any subsidiary, branch or affiliate of either Agent
or any holding company of any of the foregoing (each an "Affiliate") shall have
any liability to Placees (or to any other person whether acting on behalf of a
Placee or otherwise). In particular, neither Agent nor any Affiliate thereof
shall have any liability in respect of the conduct of the Bookbuilding Process
or of such alternative method of effecting the Placing as the Agents may
determine.

Participation in, and principal terms of, the Bookbuilding Process

By participating in the Bookbuilding Process and the Placing, Placees will be
deemed to have read and understood this Announcement in its entirety and to be
participating and making an offer for Placing Shares on the terms and
conditions, and to be providing to the Company and the Agents the
representations, warranties, agreements, acknowledgements and undertakings,
contained in this Appendix. A further announcement will be made following the
close of the Bookbuilding Process detailing the Placing Price (as defined below)
at which the Placing Shares are being placed and the number of Placing Shares
placed (the "Pricing Announcement").

The Agents (whether through themselves or their respective Affiliates) are
arranging the Placing as agents of the Company.

Hoare Govett and its Affiliates are, subject to the Company's approval, entitled
to participate as principals in the Bookbuilding Process.

The Bookbuilding Process will establish a single price (the "Placing Price")
payable to Hoare Govett (on behalf of the Agents) by all Placees. The Placing
Price is subject to the approval of the Company.

The Bookbuilding Process is expected to close no later than 6.00 p.m. London
time today, 17 August 2006, but at the sole discretion of the Agents (acting
jointly) the timing of the closing of the books, pricing and allocations may be
accelerated or delayed (but shall not extend beyond 8.00 a.m. on 31 August
2006). The Agents may at their sole discretion (acting jointly) accept bids that
are received after the Bookbuilding Process has closed.

A bid in the Bookbuilding Process will be made on the terms and conditions in
this Appendix and will not be capable of variation or revocation after the close
of the Bookbuilding Process.

A person who wishes to participate in the Bookbuilding Process should
communicate its bid by telephone to its usual sales contact at:

ABN AMRO Bank N.V. (London branch) or John MacGowan at Hoare Govett 
on [phone]

-or-

at Tristone Capital on [phone] or Adrian Penny on [phone].

If successful, an allocation will be confirmed orally to such person following
the close of the Bookbuilding Process, and a conditional contract note will be
dispatched as soon as possible thereafter. An Agent's oral confirmation will
constitute an irrevocable legally binding commitment upon such person (who will
at that point become a Placee) to subscribe for the number of Placing Shares
allocated to that Placee (such number to be at the discretion of the Agents) at
the Placing Price set out in the Pricing Announcement and otherwise on the terms
and conditions set out in this Appendix and in accordance with the Company's
bye-laws.

Each Placee's obligations will be owed to the Company and to the Agents. Each
Placee will also have an immediate, separate, irrevocable and binding
obligation, owed to the Agents, to pay to Hoare Govett (on behalf of the
Agents), or as it may direct, in cleared funds an amount equal to the product of
the Placing Price and the number of Placing Shares such Placee has agreed to
subscribe for.

All obligations under the Placing will be subject to fulfilment of the
conditions referred to below under "Conditions of the Placing".

Conditions of the Placing

The Placing is conditional upon the Placing Agreement becoming unconditional in
all respects and not having been terminated in accordance with its terms.

The obligations of the Agents under the Placing Agreement are conditional upon,
inter alia:

    (a)    the Pricing Announcement being published through a Regulatory
           Information Service by not later than 6:00 p.m. today, 17 August 
           2006; and
 
    (b)    Admission becoming effective by not later than 8.00 a.m. on 
           24 August 2006.

If (a) any of the conditions contained in the Placing Agreement is not fulfilled
or waived by the Agents (acting jointly) by the respective time or date where
specified (or such later time or date as the Agents and the Company may agree
but in any event not later than 8.00 a.m. on 31 August 2006), (b) any such
condition becomes incapable of being fulfilled and the Agents inform the Company
that they will not waive such condition or (c) the Placing Agreement is
terminated in accordance with its terms (as summarised below), the Placing will
lapse and the Placees' rights and obligations hereunder shall cease and
terminate at such time and each Placee agrees that no claim can be made by or on
behalf of the Placee (or any person on whose behalf the Placee is acting) in
respect thereof.

By participating in the Bookbuilding Process, each Placee agrees that its rights
and obligations cease and terminate only in the circumstances described above
and under "Right to terminate under the Placing Agreement" below and will not be
capable of rescission or termination by it.

The Agents may (acting jointly), at their discretion and upon such terms as they
think fit, waive compliance by the Company with, or extend the time and/or date
for fulfilment by the Company of, the whole or any part of any of the Company's
obligations in relation to the conditions in the Placing Agreement, save that
condition (b) above will not be waived. Any such extension or waiver will not
affect Placees' commitments as set out in this Announcement.

Neither of the Agents nor the Company shall have any liability to any Placee (or
to any other person whether acting on behalf of a Placee or otherwise) in
respect of any decision it may make as to whether or not to waive or to extend
the time and/or date for the satisfaction of any condition to the Placing nor
for any decision it may make as to the satisfaction of any condition or in
respect of the Placing generally.

Right to terminate under the Placing Agreement

Either Agent may, at any time before Admission, terminate the Placing Agreement
in accordance with the terms of the Placing Agreement in certain circumstances,
including circumstances of force majeure or material adverse changes in the
financial condition of the Company, as more particularly described in the
Placing Agreement.

If the obligations of the Agents under the Placing Agreement are terminated in
accordance with its terms, the rights and obligations of each Placee in respect
of the Placing as described in this Announcement shall cease and terminate at
such time and no claim can be made by any Placee in respect thereof.
By participating in the Placing each Placee agrees with the Agents that the
exercise by the Agents of any right of termination or other discretion under the
Placing Agreement shall be within the absolute discretion of the Agents and that
the Agents need not make any reference to any such Placee and the Agents shall
have no liability whatsoever to any such Placee (or to any other person whether
acting on behalf of a Placee or otherwise) in connection with the exercise of
such rights.

No prospectus

No prospectus, admission document or other offering document has been or will be
submitted to be approved by the FSA in relation to the Placing and Placees'
commitments will be made solely on the basis of the information contained in
this Announcement and any Exchange Information (as referred to in paragraph 4
below under "Representations and warranties"). Each Placee, by participating in
the Placing, agrees that the content of this Announcement and the Pricing
Announcement is exclusively the responsibility of the Company and confirms that
it has neither received nor relied on any other information, representation,
warranty, or statement made by or on behalf of the Agents or the Company and
neither of the Agents nor the Company will be liable for any Placee's decision
to participate in the Placing based on any other information, representation,
warranty or statement which the Placees may have obtained or received. Each
Placee acknowledges and agrees that it has relied on its own investigation of
the business, financial or other position of the Company in participating in the
Placing and with respect to the Placing Shares. Nothing in this paragraph shall
exclude the liability of any person for fraudulent misrepresentation.

Registration and settlement

Settlement of transactions in the Placing Shares (ISIN: BMG4209G1087) following
Admission will take place within the CREST system, subject to certain
exceptions. Hoare Govett (on behalf of the Agents) reserves the right to require
settlement for and delivery of the Placing Shares to Placees by such other means
that it deems necessary if delivery or settlement is not possible or practicable
within the CREST system within the timetable set out in this Announcement or
would not be consistent with the regulatory requirements in any Placee's
jurisdiction.

Each Placee allocated Placing Shares in the Placing will be sent a trade
confirmation stating the number of Placing Shares allocated to it, the Placing
Price, the aggregate amount owed by such Placee to Hoare Govett and settlement
instructions. ABN AMRO Bank N.V. (London branch) is acting as settlement agent
on behalf of the Agents and Placees should settle against CREST ID: 521. It is
expected that such trade confirmation will be despatched today, 17 August 2006
and that this will also be the trade date. Each Placee agrees that it will do
all things necessary to ensure that delivery and payment is completed in
accordance with either the standing CREST or certificated settlement
instructions which it has in place with Hoare Govett. Where a Placee is not
registered with ABN AMRO Bank N.V. and is unable to settle transactions with ABN
AMRO Bank N.V., the Agents reserve the right to enter into different settlement
arrangements with such Placee.

It is expected that settlement will be on 22 August 2006 on a T+3 basis in
accordance with the instructions set out in the trade confirmation.

Interest is chargeable daily on payments not received from Placees on the due
date in accordance with the arrangements set out above at the rate of two
percentage points above prevailing LIBOR as determined by Hoare Govett (on
behalf of the Agents).

Each Placee is deemed to agree that if it does not comply with these
obligations, Hoare Govett may (on behalf of the Agents) sell any or all of the
Placing Shares allocated to that Placee on such Placee's behalf and retain from
the proceeds, for the Company's account and benefit, an amount equal to the
aggregate amount owed by the Placee plus any interest due. The relevant Placee
will, however, remain liable for any shortfall between the net proceeds of such
sale and the placing proceeds of such Placing Shares and may be required to bear
any stamp duty or stamp duty reserve tax (together with any interest or
penalties due pursuant to the terms set out or referred to in this Announcement)
which may arise upon the sale of such Placee's Placing Shares on its behalf.
If Placing Shares are to be delivered to a custodian or settlement agent,
Placees should ensure that the trade confirmation is copied and delivered
immediately to the relevant person within that organisation.

Insofar as Placing Shares are registered in a Placee's name or that of its
nominee or in the name of any person for whom a Placee is contracting as agent
or that of a nominee for such person, such Placing Shares should, subject as
provided below, be so registered free from any liability to UK stamp duty or
stamp duty reserve tax. No Placee (or any nominee or other agent acting on
behalf of a Placee) will be entitled to receive any fee or commission in
connection with the Placing.

Representations and warranties

By participating in the Bookbuilding Process, each Placee (and any person acting
on such Placee's behalf):

1.                    represents and warrants that it has read this Announcement
in its entirety and acknowledges that its participation in the Placing will be
governed by the terms of this Announcement;

2.                    represents and warrants that it has received this
Announcement solely for its use and has not redistributed or duplicated it;

3.                    represents and warrants that it has not received a
prospectus, admission document or other offering document in connection with the
Placing and acknowledges that no prospectus, admission document or other
offering document has been prepared in connection with the Placing;

4.                    acknowledges that the Common Shares are admitted to
trading on AIM, and that the Company is therefore required to publish certain
business and financial information in accordance with the rules and practices of
AIM (collectively, the "Exchange Information"), which includes a description of
the nature of the Company's business and the Company's most recent balance sheet
and profit and loss account, and similar statements for preceding financial
years;

5.                    acknowledges that neither of the Agents, nor the Company,
nor any of their respective Affiliates nor any person acting on behalf of either
or both of the Agents, or the Company, or their respective Affiliates has
provided, and will not provide it with, any material regarding the Placing
Shares or the Company other than this Announcement; nor has it requested either
Agent or the Company, any of their respective Affiliates or any person acting on
either or both of the Agents' behalves or that of their respective Affiliates or
that of the Company to provide it with any such information;

6.                    acknowledges that the content of this Announcement is
exclusively the responsibility of the Company and that neither of the Agents,
nor any of their respective Affiliates nor any person acting on behalf of either
or both of the Agents or their respective Affiliates has or shall have any
liability for any information, representation or statement contained in this
Announcement or any information previously published by or on behalf of the
Company and will not be liable for any Placee's decision to participate in the
Placing based on any information, representation or statement contained in this
Announcement or otherwise. Each Placee represents, warrants and agrees that the
only information on which it is entitled to rely and on which such Placee has
relied in committing to subscribe for the Placing Shares is contained in this
Announcement and any Exchange Information, such information being all that it
deems necessary to make an investment decision in respect of the Placing Shares
and that it has relied on its own investigation with respect to the Placing
Shares and the Company in connection with its decision to subscribe for the
Placing Shares and acknowledges that it is not relying on any investigation that
either Agent, any of their respective Affiliates or any person acting on either
or both of the Agents' behalves or that of their respective Affiliates may have
conducted with respect to the Placing Shares or the Company and none of the
Company or any such persons has made any representations to it, express or
implied, with respect thereto;

7.                    acknowledges that it has not relied on any information
relating to the Company contained in any research reports prepared by either
Agent, any of their respective Affiliates or any person acting on either or both
of the Agents' behalves or that of their respective Affiliates and understands
that neither of the Agents, nor any of their respective Affiliates nor any
person acting on behalf of either or both of the Agents or their respective
Affiliates: (i) has or shall have any liability for public information or any
representation; (ii) has or shall have any liability for any additional
information that has otherwise been made available to such Placee, whether at
the date of publication, the date of the announcement or otherwise; and (iii)
makes any representation or warranty, express or implied, as to the truth,
accuracy or completeness of such information, whether at the date of
publication, the date of the announcement or otherwise;

8.                    represents and warrants that it, and/or the beneficial
owner, as applicable, is entitled to subscribe for and/or purchase Placing
Shares under the laws of all relevant jurisdictions which apply to it, and/or
the beneficial owner, as applicable, and that it has fully observed such laws
and obtained all such governmental and other guarantees and other consents in
either case which may be required thereunder and complied with all necessary
formalities;

9.                    represents and warrants that it has the power and
authority to carry on the activities in which it is engaged, to subscribe for
the Placing Shares and to execute and deliver all documents necessary for such
subscription;

10.                represents and warrants that, unless it can, and does, make
the representations, warranties and acknowledgements contained in the Investor
Letter provided to it in connection with the Placing, it will be the beneficial
owner of such Placing Shares and that the beneficial owner of such Placing
Shares will not at the time the Placing Shares are acquired be a resident of
Australia, Canada or Japan;

11.                acknowledges that the Placing Shares have not been and will
not be registered under the US Securities Act or under the securities laws of
any of the States of the United States, or under the securities legislation of
Australia, Canada or Japan and, subject to certain exceptions, may not be
offered, sold, taken up, renounced or delivered or transferred, directly or
indirectly, within those jurisdictions;

12.                represents and warrants that, unless it can, and does, make
the representations, warranties and acknowledgements contained in the Investor
Letter provided to it in connection with the Placing, it is not a resident of
the United States and is purchasing the Placing Shares in an "offshore
transaction" in accordance with Regulation S under the US Securities Act;

13.                acknowledges (and confirms that each beneficial owner of the
Placing Shares has been advised) that the Placing Shares have not been and will
not be registered under the US Securities Act or under any applicable state
securities laws, nor approved or disapproved by the US Securities and Exchange
Commission, any state securities commission in the United States or any other
United States regulatory authority;

14.                represents and warrants that if it is a pension fund or
investment company, its purchase of Placing Shares is in full compliance with
applicable laws and regulations;

15.                represents and warrants that the allocation, allotment, issue
and delivery to it, or the person specified by it for registration as holder, of
Placing Shares will not give rise to a liability under any of sections 67, 70,
93 or 96 of the Finance Act 1986 (depositary receipts and clearance services)
and that the Placing Shares are not being subscribed for by it in connection
with arrangements to issue depositary receipts or to transfer Placing Shares
into a clearance system;

16.                represents and warrants that it has complied with its
obligations in connection with money laundering and terrorist financing under
the Proceeds of Crime Act 2002, the Terrorism Act 2003 and the Money Laundering
Regulations 2003 (the "Regulations") and, if making payment on behalf of a third
party, that satisfactory evidence has been obtained and recorded by it to verify
the identity of the third party as required by the Regulations;

17.                represents and warrants that it and any person acting on its
behalf is a person falling within Article 19(1) and/or 49(2) of the Financial
Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended, and
undertakes that it will acquire, hold, manage or dispose of any Placing Shares
that are allocated to it for the purposes of its business;

18.                represents and warrants that it is a qualified investor as
defined in section 86(7) of the FSMA, being a person falling within Article 2.1
(e)(i), (ii) or (iii) of the Prospectus Directive;

19.                represents and warrants that it has not offered or sold and
will not offer or sell any Placing Shares to persons in the United Kingdom prior
to Admission except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purposes of their business or otherwise in circumstances which have not
resulted and which will not result in an offer to the public in the United
Kingdom within the meaning of section 85(1) of the FSMA;

20.                represents and warrants that it has only communicated or
caused to be communicated and will only communicate or cause to be communicated
any invitation or inducement to engage in investment activity (within the
meaning of section 21 of the FSMA) relating to the Placing Shares in
circumstances in which section 21(1) of the FSMA does not require approval of
the communication by an authorised person;

21.                represents and warrants that it has complied and will comply
with all applicable provisions of the FSMA with respect to anything done by it
in relation to the Placing Shares in, from or otherwise involving the United
Kingdom;

22.                represents and warrants that it and any person acting on its
behalf is entitled to subscribe for the Placing Shares under the laws of all
relevant jurisdictions and that it has all necessary capacity and has obtained
all necessary consents and authorities to enable it to commit to participating
in the Placing and to perform its obligations in relation thereto (including,
without limitation, in the case of any person on whose behalf it is acting, all
necessary consent and authorities to agree to the terms set out or referred to
in this Announcement) and will honour such obligations;

23.                undertakes that it (and any person acting on its behalf) will
make payment for the Placing Shares allocated to it in accordance with this
Announcement on the due time and date set out herein, failing which the relevant
Placing Shares may be placed with other subscribers or sold as Hoare Govett (on
behalf of the Agents) may in its sole discretion determine and it will remain
liable for any shortfall below the net proceeds of such sale and the placing
proceeds of such Placing Shares and may be required to bear any stamp duty or
stamp duty reserve tax (together with any interest or penalties due pursuant to
the terms set out or referred to in this Announcement) which may arise upon the
sale of such Placee's Placing Shares on its behalf;

24.                acknowledges that neither of the Agents, nor any of their
respective Affiliates nor any person acting on behalf of either or both of the
Agents or their respective Affiliates is making any recommendations to it,
advising it regarding the suitability of any transactions it may enter into in
connection with the Placing nor providing advice in relation to the Placing nor
in respect of any representations, warranties, undertakings or indemnities
contained in the Placing Agreement nor the exercise or performance of any of the
Agents' rights and obligations thereunder including any rights to waive or vary
any conditions or exercise any termination right;

25.                undertakes that the person who it specifies for registration
as holder of the Placing Shares will be (i) itself or (ii) its nominee, as the
case may be. Neither of the Agents nor the Company will be responsible for any
liability to stamp duty or stamp duty reserve tax resulting from a failure to
observe this requirement. Each Placee and any person acting on behalf of such
Placee agrees to participate in the Placing and it agrees to indemnify the
Company and each of the Agents in respect of the same on the basis that the
Placing Shares will be credited to the CREST stock account of ABN AMRO Bank N.V.
(London branch) (CREST ID: 521) who will hold them as nominee for the
subscribers of such shares until settlement in accordance with its standing
settlement instructions;

26.                acknowledges that any agreements entered into by it pursuant
to these terms and conditions shall be governed by and construed in all respects
in accordance with English law and it submits (on behalf of itself and on behalf
of any person on whose behalf it is acting) to the exclusive jurisdiction of the
courts of England as regards any claim, dispute or matter arising out of any
such contract, except that enforcement proceedings in respect of the obligation
to make payment for the Placing Shares (together with any interest chargeable
thereon) may be taken by the Company or the Agents in any jurisdiction in which
the relevant Placee is incorporated or in which any of its securities have a
quotation on a recognised stock exchange;

27.                agrees that it has no right to enforce or rely upon any terms
of the Placing Agreement, including (without limitation) any warranties or
indemnities given by the Company in favour of the Agents under the Placing
Agreement, and undertakes to the Company that it will not seek to rely upon any
such terms;

28.                agrees that the Company, the Agents and their respective
Affiliates and others will rely upon the truth and accuracy of the foregoing
representations, warranties, agreements, acknowledgements and undertakings which
are given to the Agents on their own behalves and on behalf of the Company and
are irrevocable; and

29.                agrees to indemnify and hold the Company and each of the
Agents harmless from any and all costs, claims, liabilities and expenses
(including legal fees and expenses) arising out of or in connection with any
breach of the representations, warranties, agreements, acknowledgements and
undertakings in this Appendix and further agrees that the provisions of this
Appendix shall survive after completion of the Placing.

Tax matters

No UK stamp duty or stamp duty reserve tax should be payable to the extent that
the Placing Shares are issued into CREST to, or to the nominee of, a Placee who
holds those shares beneficially (and not as agent or nominee for any other
person) within the CREST system and registered in the name of such Placee or
such Placee's nominee.

Any arrangements to issue or transfer the Placing Shares into a depositary
receipts system or a clearance service or to hold the Placing Shares as agent or
nominee of a person to whom a depositary receipt may be issued or who will hold
the Placing Shares in a clearance service, or any arrangements subsequently to
transfer the Placing Shares, may give rise to UK stamp duty and/or stamp duty
reserve tax, for which neither of the Agents nor the Company will be responsible
and the Placee to whom (or on behalf of whom, or in respect of the person for
whom it is participating in the Placing as an agent or nominee) the allocation,
allotment, issue or delivery of Placing Shares has given rise to such UK stamp
duty or stamp duty reserve tax undertakes to pay such UK stamp duty or stamp
duty reserve tax forthwith and to indemnify on an after-tax basis and to hold
harmless the Company and each of the Agents in the event that the Company and/or
either of the Agents has incurred any such liability to UK stamp duty or stamp
duty reserve tax.

In addition, Placees should note that they will be liable to pay stamp duty and
all other stamp, issue, securities, transfer, registration, documentary or other
duties or taxes (including any interest, fines or penalties relating thereto)
payable outside the UK by them or any other person on the subscription by them
for any Placing Shares or the agreement by them to subscribe for any Placing
Shares.

General

All times and dates in this Announcement may be subject to amendment. The Agents
shall notify the Placees and any person acting on behalf of the Placees of any
changes.

This Announcement has been issued by the Company and is the sole responsibility
of the Company.

Hoare Govett Limited, which is authorised and regulated by the Financial
Services Authority, is acting exclusively for the Company and for no one else
solely in connection with the Placing and will not be responsible to anyone
other than the Company for providing the protections afforded to the customers
of Hoare Govett Limited or for providing advice in relation to the Placing.
Tristone Capital Limited, which is authorised and regulated by the Financial
Services Authority, is acting exclusively for the Company and for no one else
solely in connection with the Placing and will not be responsible to anyone
other than the Company for providing the protections afforded to the customers
of Tristone Capital Limited or for providing advice in relation to the Placing.
When a Placee or person acting on behalf of the Placee is dealing with an Agent,
any money held in an account with such Agent on behalf of the Placee and/or any
person acting on behalf of the Placee will not be treated as client money within
the meaning of the rules and regulations of the Financial Services Authority
made under the FSMA. The Placee acknowledges that the money will not be subject
to the protections conferred by the client money rules; as a consequence, this
money will not be segregated from the relevant Agent's money in accordance with
the client money rules and will be used by the relevant Agent in the course of
its own business; and the Placee will rank only as a general creditor of the
relevant Agent.

Past performance is no guide to future performance and persons needing advice
should consult an independent financial adviser.




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