Launch of Open Offer

RNS Number : 5866F

Petro Matad Limited

19 July 2021

 

THE INFORMATION CONTAINED WITHIN THIS ANNOUNCEMENT IS DEEMED BY PETRO MATAD LIMITED TO CONSTITUTE INSIDE INFORMATION AS STIPULATED UNDER THE UK VERSION OF THE MARKET ABUSE REGULATION (EU) NO. 596/2014 AS IT FORMS PART OF UNITED KINGDOM DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("UK MAR"). ON THE PUBLICATION OF THIS ANNOUNCEMENT VIA A REGULATORY INFORMATION SERVICE ("RIS"), THIS INSIDE INFORMATION IS NOW CONSIDERED TO BE IN THE PUBLIC DOMAIN.

19 July 2021

Petro Matad Limited

Launch of Open Offer, Posting of Circular

and

Notice of Extraordinary General Meeting

Petro Matad Limited (AIM: Matad) ("Petro Matad", the "Company"), t he AIM quoted Mongolian oil company , is pleased to announce the launch of an Open Offer to raise up to approximately US$2 million.

Open Offer

On 15 July 2021, the Company announced that it had conditionally raised approximately US$10.4 (before expenses) from the following sources:

•	a firm placing of 155,240,612 Placing Shares at the Issue Price to existing and new institutional investors by way of an accelerated bookbuild conducted by the Joint Bookrunners on behalf of the Company to raise approximately US$7.5 million;
•	a firm placing of 14,285,714 Retail Shares at the Issue Price to existing and new retail investors to raise approximately US$0.7 million; and
•	conditional subscriptions for, in aggregate, 45,384,218 Subscription Shares at the Issue Price by a Director and Shareholder to raise approximately US$2.2 million.

In order to provide Shareholders who have not taken part in the Placing with an opportunity to participate in the proposed issue of New Shares, the Company is providing all Qualifying Shareholders with the opportunity to subscribe for an aggregate of up to 42,588,894 Open Offer Shares, to raise up to approximately US$2 million (before expenses).

Pursuant to the Open Offer, Qualifying Shareholders will be given the opportunity to subscribe for:

1  Open Offer Share for every  16  Existing Ordinary Shares held by Qualifying Shareholders at the Record Date, at the Issue Price.

Shareholders subscribing for their full entitlement under the Open Offer may also request additional Open Offer Shares through the Excess Application Facility. The Open Offer is not being underwritten. 

The Placing Shares and Retail Shares will be issued pursuant to existing Shareholder authorities granted at the Annual General Meeting (AGM) of the Company held in 2020 and therefore no Shareholder approval is required in respect of the Placing and the Retail Offer. Application has been made for the Placing Shares and the Retail Shares to be admitted to trading on AIM which is expected to occur at 8.00 a.m. on 22 July 2021.

The issue of the Subscription Shares and the Open Offer Shares will require shareholder approval. Each of the Subscriptions and the Open Offer is therefore conditional, inter alia, upon Shareholders approving Resolutions 1 and 3 at the Extraordinary General Meeting that will (if such Resolutions are passed) grant to the Directors the authority to allot the Subscription Shares and the Open Offer Shares for cash on a non-pre-emptive basis. The Resolutions are contained in the Notice of Extraordinary General Meeting set out in Part V of the Circular. Subject to the passing of Resolutions 1 and 3, Admission of the Subscription Shares and the Open Offer Shares is expected to occur at 8.00 a.m. on 6 August 2021 or such later time and/or date as the Banks and the Company may agree. Application will be made for the Subscription Shares and Open Offer Shares to be admitted to trading on AIM which is expected to occur at 8.00 a.m. on 6 August 2021.

The Company has appointed its broker, Shore Capital, to use reasonable endeavours to place any Ordinary Shares not taken up under the Open Offer with institutional investors at the same price as the Open Offer.

The Issue Price represents a discount of 36% to the closing price on 13 July 2021 and 45%  to the average daily volume weighted average price for the 3 months to 13 July 2021, the latest practicable date prior to the date of the Fundraising announcement made on 14 July 2021.

The Open Offer is conditional upon, among other things (i) Resolutions 1 and 3 being duly passed by Shareholders at the Extraordinary General Meeting and (ii) Admission of the Open Offer Shares having become effective at or before 8.00 a.m. on 6 August 2021 (or such later date and/or time as the Company and the Banks may agree, being no later than 8.00 a.m. on 21 August 2021).

Posting of Circular

The Company also confirms that a circular, which contains further details regarding the Open Offer and a notice convening the Extraordinary General Meeting (the "Circular"), has been posted today, along with the Application Form (where applicable).   The Circular will also be made available on the Company's website: www.petromatadgroup.com .

Notice of Extraordinary General Meeting

The Extraordinary General Meeting has been convened for 6.00 p.m. (ULAT / SST) (11.00 a.m. (BST)) on Thursday 5 August 2021 at Legacy Suite, Level 2, Singapore Marriott Tang Plaza Hotel, 320 Orchard Road, Singapore 238865 with a satellite meeting held at Suite 508, Blue Sky Tower, Sukhbaatar District, Ulaanbaatar, Mongolia.

Capitalised terms used in this announcement have the meanings given to them in the Circular, unless the context provides otherwise.

For further information please contact:

Petro Matad Limited Mike Buck, Chief Executive Officer	[phone]
Shore Capital Stockbrokers Limited (Nominated Adviser & Broker) Toby Gibbs / John More (Corporate Advisory) Jerry Keen (Corporate Broking)	[phone]
FTI Consulting (Communications Advisory Firm) Sara Powell / Ben Brewerton / Genevieve Ryan	[phone] [e-mail]

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Record Date for entitlements under the Open Offer	14 July 2021
Announcement of the proposed Fundraising	14 July 2021
Ex-entitlement Date of the Open Offer	15 July 2021
Publication of the Circular, the Application Form and the Form of Proxy	19 July 2021
Open Offer Entitlements and Excess Entitlements credited to stock accounts of Qualifying Shareholders	As soon as possible after 8.00 a.m. on 20 July 2021
Admission and commencement of dealings in the Placing Shares and the Retail Shares on AIM	8.00 a.m. on 22 July 2021
CREST accounts expected to be credited for the Placing Shares and the Retail Shares to be held in uncertificated form	22 July 2021
Recommended latest time and date for requesting withdrawal of Open Offer Entitlements and Excess Entitlements from CREST	4.30 p.m. on 28 July 2021
Latest date for posting of share certificates for the Placing Shares and the Retail Shares in certificated form (if applicable)	29 July 2021
Latest time and date for depositing Open Offer Entitlements and Excess Entitlements into CREST	3.00 p.m. on 29 July 2021
Latest time and date for splitting Application Forms (to satisfy bona fide market claims only)	3.00 p.m. on 30 July 2021
Latest time and date for receipt of completed Forms of Proxy and receipt of electronic proxy appointments via the CREST system for the Extraordinary General Meeting	11.00 a.m. on 3 August 2021
Latest time and date for receipt of completed Application Forms and payment in full under the Open Offer or settlement of relevant CREST instructions (as appropriate)	11.00 a.m. on 3 August 2021
Announcement of result of Open Offer	7.00 a.m. on 5 August 2021
Date and time of Extraordinary General Meeting	11.00 a.m. on 5 August 2021
Announcement of results of Extraordinary General Meeting	5 August 2021
Admission and commencement of dealings in the Subscription Shares and the Open Offer Shares on AIM	8.00 a.m. on 6 August 2021
CREST accounts expected to be credited for the Subscription Shares and the Open Offer Shares to be held in uncertificated form	6 August 2021
Latest date for posting of share certificates for the Subscription Shares and the Open Offer Shares in certificated form (if applicable)	13 August 2021

__________________

Notes: Each of the times and dates referred to above and where used elsewhere in the Circular refer to BST (unless otherwise stated) and are subject to change by the Company (with the agreement of the Banks), in which case details of the new times and dates will be notified to the London Stock Exchange and the Company will make an appropriate announcement through a Regulatory Information Service.

In order to subscribe for Open Offer Shares under the Open Offer, Qualifying Shareholders will need to follow the procedure set out in Part IV of the Circular and, where relevant, complete the accompanying Application Form. If Qualifying Shareholders have any queries on the procedure for acceptance and payment, or wish to request another Application Form, they should contact Computershare Investor Services PLC on [phone] or, if calling from outside the United Kingdom, [phone], where relevant, quoting the entitlement number of their Application Form.

If you have questions on how to complete the Form of Proxy, please contact the Company's Receiving Agent on [phone] or, if calling from outside the United Kingdom, [phone]. Lines are open from 9.00 a.m.to 5.30 p.m. (London time) Monday to Friday (except English and Welsh public holidays).

Calls to the Receiving Agent telephone number from outside the UK are charged at applicable international rates. Different charges may apply to calls from mobile telephones and calls may be recorded and monitored randomly for security and training purposes. The Receiving Agent cannot provide advice on the merits of the Fundraising and cannot give any financial, legal or tax advice.
 

FUNDRAISING STATISTICS

Number of Existing Ordinary Shares in issue as at the date of the Circular (1)	681,422,306
Issue Price	3.5 pence
Number of New Shares to be issued pursuant to the Placing and Retail Offer	169,526,326
Number of Placing Shares	155,240,612
Number of Retail Shares	14,285,714
Enlarged Share Capital immediately following completion of the Placing and Retail Offer*	850,948,632
Market capitalisation of the Company immediately following the Placing and Retail Offer at the Issue Price*	£29.8 million
Number of New Shares to be issued pursuant to the Subscriptions and the Open Offer**	87,973,112
Number of Subscription Shares	45,384,218
Maximum number of Open Offer Shares to be offered pursuant to the Open Offer**	42,588,894
Basis of Open Offer	1 New Share for every 16 Existing Ordinary Shares
Enlarged Share Capital immediately following completion of the Fundraising* **	938,921,744
Market capitalisation of the Company immediately following the Fundraising at the Issue Price* **	£32.9 million
New Shares as a percentage of the Enlarged Share Capital * **	27.4%
Net proceeds of the Fundraising**	US$11.9 million
Gross proceeds of the Fundraising**	US$12.5 million

ISIN for the Ordinary Shares	IM00B292WR19
ISIN for the Open Offer Basic Entitlements	IM00BNT8JY21
ISIN for the Open Offer Excess Entitlements	IM00BNT8JZ38
SEDOL for the Ordinary Shares	B292WR1

_________________

(1)  As at 13 July 2021, being the latest practicable date prior to the announcement of the Fundraising.
*  Assuming no Ordinary Shares are issued following the date of the Circular and prior to Admission.

**  Assuming full take up of the Open Offer

THE FOLLOWING IS AN EXTRACT FROM THE CHAIRMAN'S LETTER TO BE SET OUT IN SUBSTANTIALLY THE SAME FORM IN THE CIRCULAR.

1.  INTRODUCTION

On 15 July 2021, the Company announced that it had conditionally raised approximately US$10.4 (before expenses) from the following sources:

•	a firm placing of 155,240,612 Placing Shares at the Issue Price to existing and new institutional investors by way of an accelerated bookbuild conducted by the Joint Bookrunners on behalf of the Company to raise approximately US$7.5 million;
•	a firm placing of 14,285,714 Retail Shares at the Issue Price to existing and new retail investors to raise approximately US$0.7 million; and
•	conditional subscriptions for, in aggregate, 45,384,218 Subscription Shares at the Issue Price by a Director and Shareholder to raise approximately US$2.2 million.

In addition, in order to provide Shareholders who have not taken part in the Placing with an opportunity to participate in the proposed issue of New Shares, the Company is providing all Qualifying Shareholders with the opportunity to subscribe for an aggregate of up to 42,588,894 Open Offer Shares, to raise up to approximately US$2 million (before expenses), on the basis of 1 Open Offer Share for every 16 Existing Ordinary Shares held on the Record Date, at the Issue Price. Shareholders subscribing for their full entitlement under the Open Offer may also request additional Open Offer Shares through the Excess Application Facility.

The Placing Shares and Retail Shares will be issued pursuant to existing Shareholder authorities granted at the annual general meeting of the Company held in 2020 and therefore no Shareholder approval is required in respect of the Placing and the Retail Offer. Application has been made for the Placing Shares and the Retail Shares to be admitted to trading on AIM which is expected to occur at 8.00 a.m. on 22 July 2021.

The issue of the Subscription Shares and the Open Offer Shares will require shareholder approval. Each of the Subscriptions and the Open Offer is therefore conditional, inter alia, upon Shareholders approving Resolutions 1 and 3 at the Extraordinary General Meeting that will (if such Resolutions are passed) grant to the Directors the authority to allot the Subscription Shares and the Open Offer Shares for cash on a non-pre-emptive basis. The Resolutions are contained in the Notice of Extraordinary General Meeting set out in Part V of the Circular. Subject to the passing of Resolutions 1 and 3, Admission of the Subscription Shares and the Open Offer Shares is expected to occur at 8.00 a.m. on 6 August 2021 or such later time and/or date as the Banks and the Company may agree. Application will be made for the Subscription Shares and Open Offer Shares to be admitted to trading on AIM which is expected to occur at 8.00 a.m. on 6 August 2021.

The Company has appointed its broker, SCS, to use reasonable endeavours to place any Ordinary Shares not taken up under the Open Offer with institutional investors at the same price as the Open Offer.

The Issue Price represents a discount of 36% to the closing price on 13 July 2021 and 45% per cent. to the average daily volume weighted average price for the 3 months to 13 July 2021, the latest practicable date prior to the date of the Fundraising announcement made on 14 July 2021.

Further details of the Fundraising are set out in the Circular, which you are encouraged to read carefully. No part of the Fundraising has been underwritten.

The purpose of the Circular is to provide you with details of and the background to and reasons for the Fundraising and to explain why the Directors believe that the Fundraising is in the best interests of the Company and its Shareholders as a whole.

The action that you should take to vote on the Resolutions, and the recommendation of the Board, are set out in paragraphs 9 and 12, respectively, of this letter.

2.  BACKGROUND TO AND REASONS FOR THE FUNDRAISING

Since making the Heron 1 discovery in October 2019, the Company has been engaged in a process with the Mongolian Government to secure long term tenure to the discovery and the surrounding near-field prospectivity via entry into the Exploitation Period of the Block XX PSC. The approval process for entry into the Exploitation phase was lengthy and involved several key stages including:

•	independent certification of reserves/resources;
•	audit of the Reserves Report by industry experts from the Ministry of Mining and Heavy Industry ("MMHI") and approval by industry regulator the MRPAM and by the Mineral Resources Professional Council ("MRPC");
•	approval of the Detailed Environmental Impact Assessment by the Ministry of Environment;
•	approval of the Exploitation Area by MRPAM;
•	audit of the Plan of Development by experts from MMHI and approval by MRPAM and MRPC; and
•	formal award of the Exploitation Licence for a period of 25 years (extendable by 2 times 5 years) by the Minister of Mining and Heavy Industry.

All of these stages have been successfully completed and the formal award of the Exploitation Licence was granted by the Minister with an effective date of 2 July 2021 and the Block XX exploitation area is fully available for development activities to commence.

3.  USE OF PROCEEDS OF THE FUNDRAISING

The net proceeds of the Fundraising will be used to:

•	Fund the completion of the Heron 1 and install well site production equipment;
•	Drill and complete for production (if successful) H2 and H3 wells;
•	Start production in mid-2022 with processing and export via adjacent Petro China operated facilities;
•	Recruit a farm in partner, if acceptable terms can be agreed, in order to accelerate Heron full field development and to join in exploration efforts;
•	Fund a portion of the Company's Production Sharing Contract (PSC) expenses; and
•	Fund a portion of G&A and other corporate expenses.

On the basis of full take up in the Open Offer (or the Open Offer Placing in the event of any shortfall) the net proceeds of the Fundraising will also be used to acquire 3D seismic on Block XX.

If the Company is able to secure additional financing by way of a farm-in or similar commercial arrangements, the Company will look to fund the following contingent work programme:
 

•	Drill the Velociraptor 1 high impact exploration well on Block V; and
•	Drill the Saiga 1 and Gobi Bear 1 near field exploration wells on Block XX.

4.  DETAILS OF THE FUNDRAISING

The Company announced the Fundraising on 14 July 2021.

Pursuant to the Fundraising the Company has conditionally raised approximately US$10.4 (before expenses) from the following sources:

•	a firm placing of 155,240,612 Placing Shares at the Issue Price to existing and new institutional investors by way of an accelerated bookbuild conducted by the Joint Bookrunners on behalf of the Company to raise approximately US$7.5 million;
•	a firm placing of 14,285,714 Retail Shares at the Issue Price to existing and new retail investors to raise approximately US$0.7 million; and
•	subscriptions for, in aggregate, 45,384,218 Subscription Shares at the Issue Price by a Director and Shareholder to raise approximately US$2.2 million.

Alongside the Placing, Retail Offer and Subscriptions, the Company is making an Open Offer pursuant to which it may raise a further amount of approximately US$2 million (before expenses). The Issue Price per Open Offer Share is the same price as the price at which the Placing Shares, Retail Shares and Subscription Shares are being issued pursuant to, respectively, the Placing, the Retail Offer and the Subscriptions.

The Issue Price represents a discount of 36% to the closing price on 13 July 2021 and 45% per cent. to the average daily volume weighted average price for the 3 months to 13 July 2021, the latest practicable date prior to the date of the Fundraising announcement made on 14 July 2021.

No part of the Fundraising has been underwritten.

Subscriptions

The Company has entered into the Subscription Agreements pursuant to which a Director and Shareholder have agreed to participate in the Subscription. Further details of the Director's participation in the Subscription are contained in paragraph 6 of Part 1 of the Circular.

Each Subscription Agreement is conditional on the following conditions being satisfied:

•	the passing of Resolutions 1 and 3 at the Extraordinary General Meeting;
•	completion of the Placing having taken place in accordance with its terms; and
•	Admission of the Subscription Shares becoming effective by 8.00 a.m. on or around 6 August 2021 (or such later date and/or time as the Company and the Banks may agree, being no later than 8.00 a.m. on 21 August 2021).

The Subscription Shares to be issued pursuant to the Subscriptions will, when issued, rank paripassu in all respects with the Existing Ordinary Shares, including the right to receive dividends and other distributions declared following Admission.

The allotment and issue of the Subscription Shares is conditional on Admission of the Placing Shares but the Placing is not conditional on Admission of the Subscription Shares; if the Placing does not complete, then the Subscriptions will also not complete. However, if the Subscriptions do not complete, then this will not prevent the Placing from completing.

Open Offer

Subject to the fulfilment of the conditions set out below and in Part IV of the Circular, Qualifying Shareholders may subscribe for Open Offer Shares in proportion to their holding of Existing Ordinary Shares held on the Record Date. Shareholders subscribing for their full entitlement under the Open Offer may also request additional Open Offer Shares as an Excess Entitlement, up to the total number of Open Offer Shares available to Qualifying Shareholders under the Open Offer. The Open Offer is not underwritten.

The Open Offer is conditional, amongst other things, on the following conditions being satisfied:

•	the passing of Resolutions 1 and 3 at the Extraordinary General Meeting;
•	completion of the Placing having taken place in accordance with its terms;
•	Admission of the Placing Shares becoming effective by 8.00 a.m. on or around 22 July 2021 (or such later date and/or time as the Company and the Banks may agree, being no later than 8.00 a.m. on 21 August 2021);
•	Admission of the Open Offer Shares becoming effective by 8.00 a.m. on or around 6 August 2021 (or such later date and/or time as the Company and the Banks may agree, being no later than 8.00 a.m. on 21 August 2021).

If these and the other conditions to the Open Offer are not satisfied or waived (where capable of waiver), the Open Offer will lapse and will not proceed and any applications made by Qualifying Shareholders will be rejected. In these circumstances, application monies received by the Receiving Agent in respect of Open Offer Shares will be returned (at the applicant's sole risk), without payment of interest, as soon as reasonably practicable thereafter. Lapsing of the Open Offer cannot occur after dealings in the Open Offer Shares have begun.

The Open Offer Shares to be issued pursuant to the Open Offer will, when issued, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive dividends and other distributions declared following Admission.

The allotment and issue of the Open Offer Shares is conditional on Admission of the Placing Shares but the Placing and Subscriptions are not conditional on Admission of the Open Offer Shares; if the Placing does not complete, then the Open Offer will also not complete. However, if the Open Offer does not complete, then this will not prevent the Placing and Subscriptions from completing.

Basic Entitlement

On, and subject to the terms and conditions of the Open Offer, the Company invites Qualifying Shareholders to apply for their Basic Entitlement of Open Offer Shares at the Issue Price. Each Qualifying Shareholder's Basic Entitlement has been calculated on the following basis:

1 Open Offer Share for every 16 Existing Ordinary Shares held at the Record Date

Basic Entitlements will be rounded down to the nearest whole number of Ordinary Shares.

Excess Entitlement

Qualifying Shareholders are also invited to apply for additional Open Offer Shares (up to the total number of Open Offer Shares available to Qualifying Shareholders under the Open Offer) as an Excess Entitlement. Any Open Offer Shares not issued to a Qualifying Shareholder pursuant to their Basic Entitlement will be apportioned between those Qualifying Shareholders who have applied for an Excess Entitlement at the sole and absolute discretion of the Board, provided that no Qualifying Shareholder shall be required to subscribe for more Open Offer Shares than he or she has specified on the Application Form or through CREST.

The Open Offer Shares will, when issued and fully paid, rank pari passu in all respects with the Ordinary Shares in issue at that time, including the right to receive all dividends and other distributions declared, made or paid after the date of Admission of the Open Offer Shares. The Open Offer is not underwritten.

If and to the extent that the Open Offer is not fully taken up by Qualifying Shareholders, the Company has appointed SCS to use reasonable endeavours to place any Open Offer Shares that have not been subscribed for with institutional investors at the Issue Price.

Qualifying Shareholders should note that the Open Offer is not a "rights issue". Invitations to apply under the Open Offer are not transferable unless to satisfy bona fide market claims. Qualifying non-CREST Shareholders should be aware that the Application Form is not a negotiable document and cannot be traded. Qualifying Shareholders should also be aware that in the Open Offer, unlike in a rights issue, any Open Offer Shares not applied for will not be sold in the market nor will they be placed for the benefit of Qualifying Shareholders who do not apply for Open Offer Shares under the Open Offer.

Settlement and dealings

Application will be made to the London Stock Exchange for Admission of the Open Offer Shares. It is expected that Admission of the Open Offer Shares will become effective and that dealings in the Open Offer Shares will commence at 8.00 a.m. on 6 August 2021 (being the business day following the General Meeting).

Overseas Shareholders

The Open Offer Shares have not been and are not intended to be registered or qualified for sale in any jurisdiction other than the United Kingdom. Accordingly, unless otherwise determined by the Company and effected by the Company in a lawful manner, the Application Form will not be sent to Shareholders with registered addresses in, or who are resident or located in the United States or any other Restricted Jurisdiction since to do so would require compliance with the relevant securities laws of that jurisdiction. The Company reserves the right to treat as invalid any application or purported application for Open Offer Shares which appears to the Company or its agents or professional advisers to have been executed, effected or despatched in a manner which may involve a breach of the laws or regulations of any jurisdiction or if the Company or its agents or professional advisers believe that the same may violate applicable legal or regulatory requirements or if it provides an address for delivery of share certificates for Open Offer Shares outside the UK, or in the case of a credit of Open Offer Shares in CREST, to a CREST member whose registered address would not be in the UK.

Notwithstanding the foregoing and any other provision of the Circular or the Application Form, the Company reserves the right to permit any Qualifying Shareholder to apply for Open Offer Shares if the Company, in its sole and absolute discretion, is satisfied that the transaction in question is exempt from, or not subject to, the legislation or regulations giving rise to the restrictions in question.

Part IV of the Circular together with the accompanying Application Form, in the case of Qualifying non-CREST Shareholders, contains the terms and conditions of the Open Offer. If a Qualifying Shareholder does not wish to apply for Open Offer Shares he or she should not complete or return the Application Form or send a USE message through CREST.

Qualifying non-CREST Shareholders

If you are a Qualifying non-CREST Shareholder you will receive an Application Form, which accompanies the Circular and which gives details of your Basic Entitlement (as shown by the number of the Open Offer Shares allocated to you). If you wish to apply for Open Offer Shares under the Open Offer you should complete the accompanying Application Form in accordance with the procedure for application set out in paragraph 4 of Part IV of the Circular and on the Application Form itself. The completed Application Form, accompanied by full payment, should be returned by post to Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6AH so as to arrive as soon as possible and in any event no later than 11.00 a.m. on 3 August 2021.

Qualifying CREST Shareholders

Application will be made for the Open Offer Entitlements of Qualifying CREST Shareholders to be credited to stock accounts in CREST. It is expected that the Open Offer Entitlements will be credited to stock accounts in CREST on 20 July 2021. Applications through the CREST system may only be made by the Qualifying CREST Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim. If you are a Qualifying CREST Shareholder, no Application Form is enclosed but you will receive credits to your appropriate stock account in CREST in respect of the Basic Entitlements to which you are entitled. You should refer to the procedure for application set out in paragraph 4 of Part IV of the Circular. The relevant CREST instruction must have settled by no later than 11.00 a.m. on 3 August 2021.

5.  EXTRAORDINARY GENERAL MEETING

The Extraordinary General Meeting of the Company, notice of which is set out in Part V of the Circular, is to be held at 6.00 p.m. (ULAT / SST) (11.00 a.m. (BST)) on 5 August 2021 at Legacy Suite, Level 2, Singapore Marriott Tang Plaza Hotel, 320 Orchard Road, Singapore 238865 with a satellite meeting held at Suite 508, Blue Sky Tower, Sukhbaatar District, Ulaanbaatar, Mongolia. The Extraordinary General Meeting is being held for the purpose of considering and, if thought fit, passing the Resolutions which are summarised below:

1.  Resolution 1 is proposed as an ordinary resolution, to authorise the Directors to allot new Ordinary Shares up to an aggregate nominal amount of US$879,731.12 in respect of the Subscriptions, the Open Offer and (if and to the extent the Open Offer is not fully taken up) the Open Offer Placing. To be passed, more than half of the votes cast must be in favour of the Resolution;

2.  Resolution 2 is proposed as an ordinary resolution, to grant a new authority to the Directors to allot Ordinary Shares and grant options, warrants or other rights over Ordinary Shares up to an aggregate nominal amount of US$3,129,739.15. This amount represents approximately 33.3% of the Enlarged Share Capital. The power conferred by this Resolution will expire at the conclusion of the next annual general meeting of the Company or, if sooner, 8 months after the date of the passing of the Resolution. This general authority will be subject to the pre-emption provisions in the Articles (as amended by Resolution 4 if passed). To be passed, more than half of the votes cast must be in favour of the Resolution;

3.  Resolution 3 is proposed as a special resolution to authorise the Directors to allot new Ordinary Shares up to an aggregate nominal amount of US$879,731.12 in respect of the Subscriptions, the Open Offer and (if and to the extent the Open Offer is not fully taken up) the Open Offer Placing, in each case for cash on a non-pre-emptive basis as if article 6.1 of the Company's Articles did not apply to such allotment. To be passed, at least three quarters of the votes cast must be in favour of the Resolution;

4.  Resolution 4 is proposed as a special resolution to approve certain amendments to the Articles to renew the authority to disapply pre-emption rights on the issuing of Ordinary Shares representing approximately 20% of the Enlarged Share Capital. To be passed, at least three quarters of the votes cast must be in favour of the Resolution.

  Resolution 4, if passed will replace the existing disapplication of pre-emption rights set out in Articles 6.4 and 6.5 of the existing Articles with substitute authority to the Directors to disapply the pre-emption rights for issues of Ordinary Shares:

  (a) If they are, or are to be, paid up wholly or partly otherwise than in cash;

    (b) pursuant to awards granted under the Company's long term incentive plan or any other share option scheme adopted by the Company; and

 (c) otherwise than as provided in paragraphs (a) and (b) up to an aggregate nominal amount of US$1,877,843.49.

 Such authority, if given, will expire at the conclusion of the next annual general meeting of the Company, without prejudice to the allotment of shares pursuant to any offer or agreement made or entered into prior to such expiry. The replacement of current Articles 6.4 and 6.5 of the Articles shall be without prejudice to the allotment of shares pursuant to offers or agreements made under the current authority contained in the existing Articles.

Save in respect of the allotment of the New Shares (and, to the extent that the Open Offer is not fully taken up, new Ordinary Shares issued pursuant to the Open Offer Placing) the Directors have no current intention to allot new Ordinary Shares, or rights to subscribe for or convert into Ordinary Shares, in the capital of the Company.

6.    DIRECTOR PARTICIPATION

Michael Buck, a Director, has agreed to participate in the Subscription to raise gross proceeds of approximately US$100,000. Details of the Director's subscription, and his subsequent shareholding following, and subject to, Admission, are set out in the table below:

Director	Holding of Existing Ordinary Shares	Subscription Shares subscribed pursuant to the Subscription	Resultant holding of Ordinary Shares immediately following Admission	Resultant holdings as a % of the enlarged share capital following Admission*
Michael Buck	8,725,006	2,062,919	10,787,925	1.15%

*  Assuming (i) no Ordinary Shares are issued following the date of the Circular and prior to Admission and (ii) full take up of the Open Offer.

7.  RELATED PARTY TRANSACTIONS

Petrovis, by virtue of it holding more than 10 per cent. of the existing issued share capital of the Company is classified as a related party of the Company. The participation by each of Petrovis and Mr Buck in the Subscription element of the Fundraising is considered to be a "related party transaction" under Rule 13 of the AIM Rules. Furthermore, Enkhmaa Davaanyam and Shinezaya Batbold, directors of the Company, are connected to Petrovis. Accordingly, Mr Bushell, being the sole independent Director considers, having consulted with the Company's Nominated Adviser, SCC, that the terms of the participation by each of Petrovis and Mr Buck in the Fundraising are fair and reasonable insofar as Shareholders are concerned.

8.  IRREVOCABLE UNDERTAKINGS

Petrovis and certain of its concert parties, the Directors, and certain members of the Company's senior management team have irrevocably undertaken to vote in favour of Resolutions 1 and 3 in respect of their own beneficial holdings of, in aggregate, 186,816,666 Existing Ordinary Shares, in aggregate representing approximately 27.42% of the Existing Ordinary Shares.

9.  ACTION TO BE TAKEN

In respect of the Extraordinary General Meeting

You will find enclosed with the Circular a Form of Proxy for use by Shareholders at the Extraordinary General Meeting.

Whether or not you intend to be present at the Extraordinary General Meeting, subject to any applicable restrictions imposed by the Singapore or Mongolian Governments (as applicable) in response to the global COVID-19 pandemic, you are requested to complete and return the Form of Proxy in accordance with the instructions printed thereon.

To be valid, completed Forms of Proxy must be sent either by post to the Company's Registered Agent at 6th Floor, Victory House, Prospect Hill, Douglas, Isle of Man, IM1 1EQ, or by email to #[e-mail], or via the CREST system, in each case as soon as possible and in any event not later than 6.00 p.m. (ULAT / SST) (11.00 a.m. (BST)) on 3 August 2021, being 48 hours (not taking into account any part of a day which is not a working day in the Isle of Man) before the time appointed for holding the Extraordinary General Meeting.

Completion of a Form of Proxy will not preclude Shareholders from attending the Extraordinary General Meeting and voting in person if they so choose, subject to any applicable restrictions imposed by the Singapore or Mongolian Governments (as applicable) in response to the global COVID-19 pandemic.

The Company continues to monitor the COVID-19 situation, including the Singapore and Mongolian Governments' legislation and guidance, and will continue to do so in the lead up to the Extraordinary General Meeting. The health of our Shareholders, employees and stakeholders is extremely important to us.

Shareholders are strongly encouraged therefore to appoint the chairperson of the Extraordinary General Meeting as their proxy with directions as to how to cast their vote on the Resolutions proposed. If a Shareholder appoints someone else as their proxy, that proxy may not be able to attend the Extraordinary General Meeting in person or cast that Shareholder's vote, subject to any applicable restrictions imposed by the Singapore or Mongolian Governments (as applicable) in response to the global COVID-19 pandemic.

Should Shareholders wish to ask any questions which they may have otherwise asked at the Extraordinary General Meeting had they been in attendance regarding the Resolutions, they are encouraged to contact the Company prior to the Extraordinary General Meeting by email at [e-mail]. Any such questions should be submitted so as to be received by the Company not later than 24 hours before the time of the Extraordinary General Meeting. An audio recording of the Extraordinary General Meeting will be made available on the Company's website (http://www.petromatadgroup.com) following the Meeting.

In respect of the Open Offer

Qualifying non-CREST Shareholders wishing to apply for Open Offer Shares or the Excess Shares must complete the enclosed Application Form in accordance with the instructions set out in paragraph 4 of Part IV of the Circular and on the accompanying Application Form and return it with the appropriate payment to Computershare Investor Services PLC, The Pavilions, Bridgwater Road, Bristol BS99 6AH, so as to arrive no later than 11.00 a.m. on 3 August 2021.

If you do not wish to apply for any Open Offer Shares under the Open Offer, you should not complete or return the Application Form. If you are a Qualifying CREST Shareholder, no Application Form will be sent to you. Qualifying CREST Shareholders will have Open Offer Entitlements and Excess CREST Open Offer Entitlements credited to their stock accounts in CREST. You should refer to the procedure for application set out in paragraph 4 of Part IV of the Circular. The relevant CREST instructions must have settled in accordance with the instructions in paragraph 4 of Part IV of the Circular by no later than 11.00 a.m. on 3 August 2021.

Qualifying CREST Shareholders who are CREST sponsored members should refer to their CREST sponsors regarding the action to be taken in connection with the Circular and the Open Offer.

10.  ADMISSION, SETTLEMENT AND CREST

Application will be made to the London Stock Exchange for the New Shares to be admitted to trading on AIM.

It is expected that Admission of the Placing Shares and Retail Shares will become effective at 8.00 a.m. on 22 July 2021 (or such later date as the Company and the Banks may agree being not later than 8.00 a.m. on 21 August 2021) and that dealings in the Placing Shares and the Retail Shares will commence at that time.

It is expected that, subject to the passing of Resolutions 1 and 3 at the Extraordinary General Meeting, Admission of the Subscription Shares and the Open Offer Shares will become effective at 8.00 a.m. on 6 August 2021 (or such later date as the Company and the Banks may agree being not later than 8.00 a.m. on 21 August 2021) and that dealings in the Subscription Shares and the Open Offer Shares will commence at that time.

The Articles permit the Company to issue shares in uncertificated form. CREST is a computerised paperless share transfer and settlement system which allows shares and other securities to be held in electronic computerized paper form. The Existing Ordinary Shares are already admitted to CREST and therefore the New Shares will also be eligible for settlement in CREST. CREST is a voluntary system and Placees, Subscribers and subscribers under the Retail Offer and Open Offer who wish to retain certificates will be able to do so upon request.

It is expected that the Placing Shares and the Retail Shares due to uncertificated holders will be delivered in CREST on 22 July 2021.

It is expected that the Subscription Shares and the Open Offer Shares due to uncertificated holders will be delivered in CREST on 6 August 2021.

11.  OVERSEAS SHAREHOLDERS

The distribution of the Circular and the Form of Proxy to persons who have registered addresses in, or who are resident or ordinarily resident in, or citizens of, or which are corporations, partnerships or other entities created or organised under the laws of countries other than the UK or to persons who are nominees of or custodians, trustees or guardians for citizens, residents in or nationals of, countries other than the UK may be affected by the laws or regulatory requirements of the relevant jurisdictions.

Accordingly, any persons into whose possession the Circular comes should inform themselves about and observe any applicable restrictions or requirements. No action has been taken by the Company that would permit possession or distribution of the Circular in any jurisdiction where action for that purpose is required. Any failure to comply with such restrictions or requirements may constitute a violation of the securities laws of any such jurisdiction.

12.  RECOMMENDATION

The Directors believe that the passing of the Resolutions is in the best interests of the Company and Shareholders, taken as a whole. Accordingly the Directors unanimously recommend Shareholders to vote in favour of the Resolutions, as they will do in respect of their direct interests in Ordinary Shares in the Company, representing 2.75 per cent. of the Existing Ordinary Shares.

Shareholders are reminded that the Subscription and Open Offer elements of the Fundraising are conditional, inter alia, upon the passing of Resolutions 1 and 3 at the Extraordinary General Meeting. Shareholders should be aware that if Resolutions 1 and 3 are not approved at the Extraordinary General Meeting, the Subscriptions and Open Offer will not proceed and the Company will not receive the net proceeds of the Subscriptions and Open Offer.

13.  FURTHER INFORMATION

Your attention is drawn to the risk factors set out in Part II of the Circular and the Notice of Extraordinary General Meeting contained in Part V of the Circular. You are advised to read the whole of the Circular.

Yours faithfully

Enkhmaa Davaanyam
Chairperson

 

END

 

 

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