ACQUISITION, SUBSCRIPTION & ADMISSION TO AIM

ACQUISITION, SUBSCRIPTION & ADMISSION TO AIM

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this documentand what action you should take, you should consult your stockbroker, bank manager, solicitor, accountant or other independent financial adviser (being in thecase of persons resident in the United Kingdom, an organisation or firm authorised under the Financial Services and Markets Act 2000 (“FSMA”)) immediately.The whole of the text of this document should be read. Investment in the Company is speculative and involves a high degree of risk.If you have sold or transferred your Existing Ordinary Shares in the Company you should send this document at once to the purchaser or transferee or thestockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.This document is an admission document in relation to AIM. It has been drawn up in accordance with the AIM Rules published by London Stock Exchangeplc and has been issued in connection with the proposed admission to trading on AIM of the Enlarged Share Capital. This document does not constitutea prospectus for the purposes of the Prospectus Rules and has not been approved by or filed with the Financial Conduct Authority. This document doesnot constitute, and the Company is not making, an offer to the public within the meaning of sections 85 and 102B of FSMA or otherwise. This documentis exempt from the general restriction set out in Section 21 of FSMA on the communication of invitations or inducements to engage in investment activityand has not been approved by a person who is authorised under FSMA.The Directors, whose names appear on page 3 of this document, and the Company accept responsibility, both individually and collectively, for the informationcontained in this document. To the best of the knowledge and belief of the Directors and the Company (who have taken all reasonable care to ensure thatsuch is the case), the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of suchinformation. To the extent information has been sourced from a third party, this information has been accurately reproduced and, as far as the Directorsand the Company are aware, no facts have been omitted which may render the reproduced information inaccurate or misleading. In connection with thisdocument, no person is authorised to give any information or make any representation other than as contained in this document.AIM is a market designed primarily for emerging or smaller companies to which a higher investment risk tends to be attached than to larger or more establishedcompanies. AIM securities are not admitted to the Official List of the UKLA (the “Official List”). A prospective investor should be aware of the risks ofinvesting in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with an independent financialadviser. Each AIM company is required pursuant to the AIM Rules for Companies, to have a nominated adviser. The nominated adviser is required to make adeclaration to the London Stock Exchange on admission in the form set out in Schedule Two to the AIM Rules for Nominated Advisers. The London StockExchange has not itself examined or approved the contents of this document.Application will be made for the Enlarged Share Capital to be admitted to trading on AIM. It is expected that Admission will become effective and dealingsfor normal settlement in the Enlarged Share Capital will commence on 4 July 2013.

Zoltav Resources Inc.(Incorporated in the Cayman Islands under the Companies Law (2003 Revision) of the Cayman Islands with registered number 130605)

Proposed Acquisition of CenGeo Holdings LimitedProposed Share Consolidation

Subscription of 18,198,362 New Ordinary Shares at 70 pence per New Ordinary Share to raise US$20 million (£12.7 million)

Proposed adoption of new Articles of AssociationAdmission to trading on AIM

Notice of Annual General Meeting

Nominated Adviser BrokerShore Capital & Corporate Limited Shore Capital Stockbrokers Limited

Shore Capital

Share capital on AdmissionIssued

Number US$New Ordinary Shares of US$0.20 each 55,341,302 11,068,260.40

Shore Capital & Corporate Limited (“SCC”), which is authorised and regulated by the Financial Conduct Authority, has agreed to act as nominated adviserto the Company for the purposes of the AIM Rules for Companies. Shore Capital Stockbrokers Limited (“SCS”), which is a member of the London StockExchange and is authorised and regulated by the Financial Conduct Authority, has agreed to act as broker for the purposes of the AIM Rules for Companiesexclusively to the Company and no one else in connection with the Proposals. Persons receiving this document should note that, in connection with theProposals, SCC and SCS are acting exclusively for the Company and no one else and will not be responsible to anyone, other than the Company, forproviding the protections afforded to customers of SCC and SCS or for advising any other person on the transactions and arrangements described in thisdocument. No representation or warranty, express or implied, is made by SCC or SCS as to any of the contents of this document in connection with theProposals, or otherwise.The New Ordinary Shares being issued pursuant to the Proposals will, on Admission, rank in full for all dividends and other distributions declared, madeor paid on the New Ordinary Shares after Admission and will otherwise rank pari passu in all respects with the then issued Existing Ordinary Shares.The distribution of this document into jurisdictions other than the United Kingdom may be restricted by law. Any failure to comply with any of therestrictions may constitute a violation of the securities law of any such jurisdiction. In particular this document should not be distributed, forwarded to ortransmitted to the United States or any Restricted Jurisdiction. The Existing Ordinary Shares have not been, and the New Ordinary Shares will not be,registered under the United States Securities Act 1933, as amended, or under the securities laws of any state, district or other jurisdiction of the UnitedStates, or under the securities laws of any other Restricted Jurisdiction or any state, province or territory thereof or any other jurisdiction outside the UnitedKingdom. There will be no public offer in the United States or any Restricted Jurisdictions. Accordingly, the New Ordinary Shares may not be taken up,offered, sold, resold, delivered or distributed, directly or indirectly, through CREST or otherwise, within, into or from the United States or any of theRestricted Jurisdictions or to, or for the account of, any person with a registered address in, or who is resident in, or a citizen of such jurisdictions or to anyperson in any country or territory where to do so would or might contravene local securities laws or regulations except pursuant to an applicable exemption.Prospective investors are advised to read, in particular, Part I “Letter from the Chairman of Zoltav Resources Inc.” and Part II “Risk Factors” for a morecomplete discussion of the factors that could affect the Enlarged Group’s future performance and the industry in which it will operate.Completion of the Proposals is subject, inter alia, to Admission taking place on or before 4 July 2013 (or such later date as may be agreed between the Companyand SCC). A notice convening a Annual General Meeting of Zoltav Resources Inc. to be held at Ogier House, The Esplanade, St Helier, JE4 9WG, Jersey on3 July 2013 commencing at 2.00 p.m. is set out at the end of this document. The Form of Proxy for use at the meeting is enclosed with this document and shouldbe returned as soon as possible and, in any event, so as to be received at the offices of the Company’s registrars, Computershare Investor Services (Cayman) Ltd,c/o The Pavilions, Bridgwater Road, Bristol, BS99 6ZY as soon as possible but in any event not later than 2.00 p.m. on 1 July 2013, being 48 hours before thetime appointed for the holding of the meeting. The completion and depositing of a Form of Proxy will not preclude you from attending and voting in person atthe Annual General Meeting should you wish to do so.If you are a holder of Depositary Interests, a form of instruction is enclosed. To be valid, the form of instruction should be completed, signed and returned inaccordance with the instructions printed thereon to the Company’s depositary, Computershare Investor Services PLC, The Pavilions, Bridgwater Road, BristolBS99 6ZY as soon as possible but in any event should arrive not later than 4.00 p.m. on 28 June 2013.

CONTENTS

Page

DIRECTORS, SECRETARY AND ADVISERS 3

EXPECTED TIMETABLE OF PRINCIPAL EVENTS 5

STATISTICS RELATING TO THE PROPOSALS 6

FORWARD-LOOKING STATEMENTS 7

PART I LETTER FROM THE CHAIRMAN OF ZOLTAV RESOURCES INC. 8Introduction 8Background information on the Company 9Background information on the CenGeo Group 9Strategy of the Enlarged Group 17Structure of the Acquisition 18Share Consolidation 18Details of the Subscription, related party transaction and use of proceeds 18Information on the Directors and Senior Management 20Dividend Policy 21Lock-in and orderly market arrangements 21Share Options and Warrants 22ARA Convertible Loan Note 22Corporate Governance 23The City Code on Takeovers and Mergers 24New Articles of Association 24Taxation 25Admission, CREST and Depositary Interests 25Annual General Meeting 26Irrevocable undertakings to approve the Proposals 26Further information 26Action to be taken 26Recommendation 27

PART II RISK FACTORS 28

PART III COMPETENT PERSON’S REPORT 39

PART IV FINANCIAL INFORMATION OF ZOLTAV RESOURCES INC. 87

PART V ACCOUNTANTS’ REPORT ON AND THE FINANCIAL 88INFORMATION OF CENGEO HOLDINGS & SIBGECO

PART VI UNAUDITED PRO FORMA STATEMENT OF FINANCIAL 125POSITION OF THE ENLARGED GROUP

PART VII ADDITIONAL INFORMATION 127

DEFINITIONS 172

GLOSSARY OF TECHNICAL TERMS 178

NOTICE OF ANNUAL GENERAL MEETING 183

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DIRECTORS, SECRETARY AND ADVISERS

Directors Symon Roderick Drake-Brockman (Executive Chairman)Stephen Jonathan Lowden (Non-executive Director)Michael Francis Lombardi (Non-executive Director)John Grimshaw (Non-executive Director)Oliver Edmund Donagher (Non-executive Director)

Company Secretary Ogier Corporate Services (Jersey) LimitedOgier HouseThe EsplanadeSt Helier, JE4 9WGJersey

Registered Office 89 Nexus WayCamana BayGrand Cayman, KY1-9007Cayman Islands

Nominated Adviser Shore Capital & Corporate LimitedBond Street House14 Clifford StreetLondon, W1S 4JUUnited Kingdom

Broker Shore Capital Stockbrokers LimitedBond Street House14 Clifford StreetLondon, W1S 4JUUnited Kingdom

Reporting Accountants PricewaterhouseCoopers LLP1 Embankment PlaceLondon, WC2N 6RHUnited Kingdom

Legal advisers to the Company Pinsent Masons LLPas to English Law 30 Crown Place

London, EC2A 4ESUnited Kingdom

Legal advisers to the Company Salans FMC SNR Denton Europe ZAOas to Russian Law Balchug Plaza

Ul. Balchug, 7115035 MoscowRussian Federation

Legal advisers to the Company Ogieras to Cayman Law 89 Nexus Way

Camana BayGrand Cayman, KY1-9007Cayman Islands

Legal advisers to the Company Ogieras to Jersey Law Ogier House

The EsplanadeSt HelierJersey JE4 9WG

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Legal advisers to the Company Antis Triantafyllides & Sons LLCas to Cypriot Law 2-4 Arch Makarios Avenue

Capital Centre, 9th FloorPO Box 21255Nicosia 1505Cyprus

Legal advisers to Shore Capital Field Fisher Waterhouse LLP35 Vine StreetLondon EC3N 2AAUnited Kingdom

Competent Person DeGolyer and MacNaughton Corp.5001 Spring Valley RoadSuite 800, East DallasTexas 75244United States

Registrars Computershare Investor Services (Cayman) LtdR&H Trust Co. Ltd., Windward 1,Regatta Office Park,West Bay Road,Grand Cayman KY1-1103,Cayman Islands

Company website www.zoltav.com

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EXPECTED TIMETABLE OF PRINCIPAL EVENTS

Dispatch of this document 10 June 2013

Recommencement of trading in the Existing Ordinary Shares 8.00 a.m. on 10 June 2013on AIM

Latest time and date for receipt of Forms of Instruction from 4.00 p.m. on 28 June 2013DI Holders for the Annual General Meeting

Record Date for the Share Consolidation close of business on 3 July 2013

Latest time and date for receipt of Proxy Forms for the 2.00 p.m. on 1 July 2013Annual General Meeting

Annual General Meeting 2.00 p.m. on 3 July 2013

Completion of the Acquisition 4 July 2013

Cancellation of admission to trading on AIM of Existing 8.00 a.m. on 4 July 2013Ordinary Shares

Admission and commencement of dealings in the 8.00 a.m. on 4 July 2013New Ordinary Shares

CREST accounts credited with Depositary Interests 4 July 2013

Dispatch of definitive share certificates in respect of week commencing 8 July 2013New Ordinary Shares

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STATISTICS RELATING TO THE PROPOSALS

Number of Existing Ordinary Shares 397,090,979

Number of New Ordinary Shares in issue following the Share Consolidation* 19,854,497

Number of Consideration Shares to be issued 23,657,870

Number of First Tranche Subscription Shares to be issued 11,828,935

Enlarged Share Capital following the issue of the First Tranche Subscription 55,341,302Shares and the Consideration Shares

Total Number of Subscription Shares to be issued upon Subscription 18,198,362being completed in full

Issued share capital following completion of the Subscription and 61,710,729the Acquisition**

Subscription Price per New Ordinary Share 70.0 pence

Gross proceeds of the First Tranche of the Subscription US$13 million (£8.3 million)

Gross proceeds of the Subscription*** US$20 million (£12.7 million)

Market capitalisation of the Company at the Subscription Price US$60.8 million (£38.7 million)immediately following Admission

First Tranche Subscription Shares expressed as a percentage of 21.4%the Enlarged Share Capital

Subscription Shares expressed as a percentage of the issued share capital 29.5%following completion of the Subscription and the Acquisition**

Consideration Shares expressed as a percentage of the Enlarged 42.7%Share Capital

Consideration Shares expressed as a percentage of the issued share capital 38.3%following completion of the Subscription and the Acquisition**

EPIC/TIDM ZOL

ISIN following the Share Consolidation KYG9895N1198

SEDOL following the Share Consolidation BBG9XR5

Exchange rate £:US$**** 1.57

* Prior to implementation of the Acquisition and the Subscription.

** Assuming no further issue of shares between Admission and completion of the Subscription.

*** The Subscription is to be made by ARA Capital in three tranches, with the second tranche due on or before the last businessday of 2013 and the third tranche due on or before 1 April 2014, this amount is the total to be subscribed by ARA Capital by1 April 2014.

**** An exchange rate of US$1.57:£1.00 was agreed in the Subscription Agreement and the Acquisition Agreement, and is usedto convert all US$ amounts to £ throughout this document.

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FORWARD-LOOKING STATEMENTS

All statements other than statements of historical facts included in this document, including, withoutlimitation, those regarding the Enlarged Group’s financial position, business strategy, plans andobjectives of management for future operations or statements relating to expectations in relation todividends or any statements preceded by, followed by or that include the words “targets”, “believes”,“expects”, “aims”, “intends”, “plans”, “will”, “may”, “anticipates”, “would”, “could” or similarexpressions or the negative thereof, are forward looking statements. Such forward looking statementsinvolve known and unknown risks, uncertainties and other important factors beyond the EnlargedGroup’s control that could cause the actual results, performance, achievements of or dividends paid by,the Enlarged Group to be materially different from future results, performance or achievements, ordividend payments expressed or implied by such forward looking statements. Such forward lookingstatements are based on numerous assumptions regarding the Enlarged Group’s present and futurebusiness strategies and the environment in which the Enlarged Group will operate in the future. Theseforward looking statements speak only as of the date of this document.

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PART I

LETTER FROM THE CHAIRMAN OF ZOLTAV RESOURCES INC.

Zoltav Resources Inc.(Incorporated in the Cayman Islands under the Companies Law (2003 Revision) of the Cayman Islands with registered number 130605)

Directors: Registered Office:Symon Roderick Drake-Brockman (Executive Chairman) 89 Nexus WayStephen Jonathan Lowden (Non-executive Director) Camana BayMichael Francis Lombardi (Non-executive Director) Grand Cayman, KY1-9007John Grimshaw (Non-executive Director) Cayman IslandsOliver Edmund Donagher (Non-executive Director)

10 June 2013

Dear Shareholder,

Proposed Acquisition of CenGeo Holdings LimitedProposed Share Consolidation

Subscription of 18,198,362 New Ordinary Shares at 70 pence per New Ordinary Share to raise US$20 million (£12.7 million)

Proposed adoption of new Articles of AssociationAdmission to trading on AIM

Notice of Annual General Meeting

1. IntroductionThe Company announced on 20 March 2013 that it had entered into a conditional agreement to acquirethe entire issued share capital of CenGeo Holdings for a consideration of US$26 million (approximately£16.6 million) to be satisfied by the issue of the Consideration Shares. CenGeo Holdings, through itswholly-owned subsidiary SibGeCo, holds the Koltogorsky Production Licence (which contains theundeveloped Koltogor oil discovery), and the legacy Koltogorsky Exploration Licences. The Licencesare located in the Khantiy-Mansisk Autonomous Okrug, an autonomous region in Western Siberia.The Koltogorsky Production Licence came into effect upon its registration by the Russian Agency forSubsoil Use on 21 February 2013, and is valid until 15 February 2033. Further information on CenGeoHoldings is set out below in this Part I.

In order to meet the conditions of the Acquisition Agreement, the Company entered into a conditionalagreement with ARA Capital, the Company’s largest shareholder, obliging ARA Capital to subscribefor US$20 million (approximately £12.7 million) of New Ordinary Shares at the Subscription Price toprovide working capital to fund the work programme on the Koltogorsky Production Licence. ARACapital is a ‘related party’ as defined by the AIM Rules for Companies. Further, the Subscription is arelated party transaction for the purposes of AIM Rule 13. The Directors consider, having consultedwith SCC, the Company’s Nominated Adviser, that the terms of the Subscription are fair and reasonableinsofar as the Company’s Shareholders are concerned. Further details of the terms of the Acquisitionand the Subscription are set out below under the headings “Principal Terms of the Acquisition” and“Details of the Subscription, related party transaction and the use of proceeds”, respectively.

The Acquisition will result in a fundamental change in the business of the Company due to the size ofthe Acquisition relative to the current size of the Company and will consequently constitute a reversetakeover under the AIM Rules. The Acquisition will also result in the Company transitioning from anAIM ‘Investing Company’ into an operational oil and gas exploration and development company. As aresult, Shareholder approval is being sought for the Proposals at the Annual General Meeting, at whichthe Company will also propose the adoption of new Articles of Association. Irrevocable undertakingsto vote in favour of the Resolutions have been obtained from certain existing Shareholders and Directorsin respect of their respective beneficial shareholdings, amounting to, in aggregate, 203,842,141 ExistingOrdinary Shares, representing 51.3 per cent. of the Existing Share Capital.

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The Proposals are conditional, inter alia, on the passing of the Resolutions and on Admission. It isexpected that Admission will become effective and dealings in the Enlarged Share Capital will commenceon AIM on 4 July 2013.

The main purpose of this document is to give you the reasons for, and details of, the Proposals, to explainwhy the Directors consider that they are in the best interests of the Company and its Shareholders as awhole and to recommend that you vote in favour of the Resolutions.

2. Background information on the CompanyThe Company was incorporated on 18 November 2003. It was established to build, largely throughacquisition, a group specialising in the provision of investment banking services and the managementof third party funds, principally in Asia. The Company’s shares were admitted to trading on AIM on9 March 2004. It disposed of its operating businesses to Crosby Capital Limited on 4 October 2010 andbecame classified as an investing company under Rule 15 of the AIM Rules.

In June 2011, the Company changed its name to Zoltav Resources Inc. following the acquisition by ARACapital, a company beneficially owned by Arkadiy Abramovich, in April 2011 of 95,200,000 ExistingOrdinary Shares (equivalent to 25.4 per cent. of the then issued share capital). ARA Capital acquired afurther 54,897,737 Existing Ordinary Shares on 2 August 2011 increasing its shareholding to 40 per cent.of the then issued share capital. The Board of the Company was reconstituted during this period withSymon Drake-Brockman appointed as Executive Chairman and Stephen Lowden and David Francisappointed as Non-Executive Directors. ARA Capital subsequently purchased 18,762,216 ExistingOrdinary Shares on 10 November 2011 increasing its shareholding to 45 per cent. of the then issuedshare capital. Michael Lombardi and John Grimshaw were appointed as Non-Executive Directors inMarch 2013, and Oliver Donagher was subsequently appointed as a Non-Executive Director on 7 June2013 following David Francis’ resignation.

Since the initial investment in Zoltav by ARA Capital and the changes to the Board, the Company’sstated strategy has been to focus on acquiring oil and gas assets in the CIS. Since August 2011, the Boardhas reviewed a number of possible acquisition opportunities in the CIS to generate shareholder value.The Directors believe that the acquisition of CenGeo Holdings meets the Company’s investment criteriaand has the potential to generate shareholder value. As a result, the Directors are recommending thatShareholders approve the Acquisition.

Summary historical financial information on ZoltavSet out below is a summary of the audited results of the Company for the years ended 31 December2010, 31 December 2011 and 31 December 2012, which has been extracted from the Company’spublished audited historical financial information, which has been incorporated by reference in Part IVof this Document. Investors should read the whole of the Company’s published audited historicalfinancial information and should not rely solely on the summarised information set out below.

31 December 31 December 31 December (US$ million) 2010 2011 2012

Loss from operations (0.92) (2.34) (3.53)Loss before taxation (0.94) (2.34) (3.53)Cash and cash equivalents 0.07 0.34 0.11Net (Liabilities)/Assets (0.26) 1.43 0.13

3. Background information on the CenGeo Group3.1 Introduction and backgroundCenGeo Holdings was incorporated on 18 October 2012 and was established to acquire SibGeCo whichwas previously owned by Gregory Trading SA. The Gazprom Neft Group acquired control of SibGeCoin June 2009 when it became the holder of a majority interest in Sibir, the ultimate parent company ofSibGeCo. SibGeCo holds the Koltogorsky Production Licence (which contains the undevelopedKoltogorskoye oil field) and the legacy Koltogorsky Exploration Licences. The Koltogorsky ProductionLicence came into effect upon its registration on 21 February 2013 and is valid until 15 February 2033.

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This licence will be the primary asset of the Enlarged Group. The legacy Koltogorsky ExplorationLicences expire on 31 December 2013. The Company will not to seek to extend the legacy KoltogorskyExploration Licences as the Directors do not believe that there is any commercial hydrocarbon potentialin the Jurassic accumulations in these licences. As such the Company does not consider that the legacyKoltogorsky Exploration Licences represent material assets or liabilities of the Enlarged Group.

The shareholders of CenGeo Holdings include Bandbear, (a company controlled by Mr ValentinBukhtoyarov), Alexander Sokolov and Dmitry Kamyshev, who each have extensive natural resourcesand Russia-related experience.

Valentin Bukhtoyarov was one of the four co-founders of OOO Sibuglemet, Holding, a coal miningcompany that is among the largest coal suppliers in Russia.

Alexander Sokolov was the original founder of SibGeCo in November 1999 and was a shareholder ofSibGeCo when the legacy Koltogorsky Exploration Licences were issued in its name, or those of itssubsidiaries and affiliates, in April 2004 (in the case of licences 14 and 15) and in August 2005 (in thecase of licences 7, 10, 11 and 12). He ceased to be a shareholder of SibGeco after it was acquired bySibir and was appointed as the exploration director of Sibir Energy plc upon SibGeCo’s acquisition bythe Sibir group. Prior to this he was involved in a number of oil exploration projects in KhMAOincluding JV Chernogorskoye (Anderman Smith) and Chumpasneftedobycha (Heritage Oil).Mr Sokolov is currently the General Director of SibGeCo and will be appointed as Director Explorationof the Enlarged Group following completion of the Acquisition.

Dmitry Kamyshev was previously a Director in Barclays Capital Moscow Office with responsibility forstructured commodity products and, prior to that, the First Vice President at OAO ‘AK’Transnefteproduct immediately after its acquisition by OAO ‘AK’ Transneft, the Russian national oiland oil product pipeline operator. Prior to joining OAO ‘AK’ Transnefteproduct, Mr Kamyshev workedfor a number of companies in Russia’s natural resource sector, primarily within the oil and gas industry.It is envisaged that Mr Kamyshev will be appointed as Director Russia of the Enlarged Group followingcompletion of the Acquisition.

On Admission, the CenGeo Group’s assets will include the Licences, which comprise the KoltogorskyProduction Licence and the legacy Koltogorsky Exploration Licences. Further details of the CenGeoGroup’s assets are set out below.

3.2 Summary historical financial information on SibGeCoSet out below is a summary of the audited results of SibGeCo for the years ended 31 December 2010,31 December 2011 and 31 December 2012, which has been extracted from the audited historical financialinformation on SibGeCo set out in Part V of this Document. Investors should read the whole of thisDocument and should not rely solely on the summarised information set out below.

31 December 31 December 31 December (US$ million) 2010 2011 2012

Operating (expenses)/income (6.17) (8.96) 0.54Loss before tax (12.92) (15.64) (4.44)Cash and cash equivalents 0.01 0.00 0.00Net Assets (44.65) (55.97) (63.97)

3.3. Licences

LocationThe Licences are located in the Nizhnevartovsk Region of the Khanty-Mansisk Autonomous Okrug,an autonomous Okrug of the Tyumen Oblast, in West Siberia. The Licences are approximately130 kilometres east of the city of Nizhnevartovsk.

The West Siberian Basin is the largest oil and gas producing region in the CIS both in the geographicalarea it covers and the recoverable oil and gas that it contains. The basin covers an area of approximately2.2 million square kilometres.

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Topographically, the basin is one of the world’s largest areas of unbroken terrain. The region ischaracterised by water logged soils, shallow lakes and extensive swamps. This precludes work involvingheavy machinery (including seismic acquisition and drilling of wells) when the ground is not frozenunless year round access roads have been constructed. Winters are severe and last seven to nine monthsof the year with mean temperatures ranging from about −15° C to −30° C.

The US Geological Survey estimates volumes of discovered hydrocarbons in the basin are 144 billionbarrels of oil and more than 1,300 trillion cubic feet of gas. Estimated ultimate recovery is estimated atalmost 232 billion barrels of oil. Approximately 70 per cent. of the oil produced in Russia comes fromthe West Siberian Basin.

The Koltogorsky Production Licence covers a contiguous area of 528 square kilometres, within theoriginal footprint of the legacy Koltogorsky Exploration Licences. The original Koltogorsky explorationlicences (including licences 8 and 9 which have subsequently expired) covered 2,100 square kilometres.The Licences are located close to a number of major fields, including Samotlor, the largest in the RussianFederation.

The Licences are close to infrastructure including a Transneft-owned oil pipeline, a wet gas pipe line, aswell as a Federal highway and power lines passing through the licence area.

Figure 1: Licences held by SibGeCo

Asset

Operator

Interest

(%)

Status

Licence Expiration

Date

Licence Area (km 2)

Comments Koltogorskoye,

Nizhnevartovsk, Russia

SibGeCo 100.0 Exploration and

Production

15 February 2033 528 Further appraisal

Koltogor # 7, Nizhnevartovsk,

Russia

SibGeCo 100.0 Exploration 31 December 2013 353 Excluded from the Koltogorsky

Production Licence Koltogor # 10,






Production Licence Koltogor # 12¸



Production Licence Koltogor # 14¸






Production Licence

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Figure 2: Map showing the Koltogorsky Production Licence and the legacy Koltogorsky ExplorationLicences (this figure has been extracted from the Competent Persons Report in Part III of this document).

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Figure 3: Map showing the location of the Koltogorskoye field and local infrastructure (this figure has beenextracted from the Competent Persons Report in Part III of this document).

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History and prospectivitySibGeCo began exploration of the Koltogorskoye field area by acquiring 640 km of 2D seismic overthe area covered by Licences 14 and 15,779 kilometres over the area covered by Licences 10, 11, and 12,1,154 kilometres over the area covered by Licences 7 and 9 and 180 line kilometres over the area coveredby Licence 8. Eleven exploration wells were subsequently drilled on all the legacy licences with oildiscovered in the YuV1 sand in four wells: the 71 well in Licence 7, the 101 well in Licence 10, the 111well in Licence 11, and the 141 well in Licence 14. The Oil/Water Contact for this reservoir was estimatedat a depth of 3,000 metres subsea. This Oil/Water Contact is approximately two sand thicknesses belowthe lowest known occurrence of oil estimated at 2,978 metres subsea in the 111 well.

The 141 well was tested in the YuV1 reservoir over an interval from 2,944 to 2,949 metres subsea. Thewell flowed 29 cubic metres per day (m3/d) or 182.4 barrels per day (bbl/d) of fluid (47 per. cent oil at13.6 m3/d or 85.5 bbl/d and 53 per cent. formation water at 15.4 m3/d or 96.9 bbl/d) following hydraulicstimulation. The 101 well has been found to indicate reservoir qualities analogous to the 141 well.

In May 2007, SibGeCo was acquired for cash consideration of approximately US$50 million by amember of the Sibir Group. Following much publicised shareholder and management issues at Sibir inthe second half of 2008, the Gazprom Neft Group acquired control of SibGeCo in June 2009 when itbecame the holder of more than a 50 per cent. majority interest in Sibir, the ultimate parent companyof SibGeCo.

The four successful wells drilled within the boundaries of the new Koltogorsky Production Licenceformed the basis of the registration of the discovery with the Russian Federal Government StateCommission on Mineral Reserves (“GKZ”) of the Koltogorskoye field in 2009.

The oil tested in the 141 well is over 40 degrees API, with low paraffin and asphaltine content. TheKoltogorsky Production Licence is situated in close proximity to an existing trunk pipeline system, withestablished roads and electric grid infrastructure. The Directors believe that this existing infrastructurearound the Koltogorsky Production Licence should limit eventual capital expenditure outlays andthereby facilitate earlier production should the Company’s planned development program be successful.

There has been no further exploration work completed on the Licences since 2009.

Reserves and ResourcesThe Enlarged Group’s Reserves and Contingent Resources are summarised in the tables below whichare based on information extracted from the CPR, which can be found in its entirety in Part III of thisdocument.

Reserves(all figures in bbl or scf)

Gross OperatorProved Probable Possible

Koltogorsky Production Licence 1,627,000 73,531,000 174,030,000 SibGeCoTotal for Oil & Liquids 1,627,000 73,531,000 174,030,000Koltogorsky Production Licence 521,000,000 23,532,000,000 55,695,000,000 SibGeCoTotal for Gas 521,000,000 23,532,000,000 55,695,000,000

Source: DeGolyer and MacNaughton

Notes:

1. Probable and possible reserves have not been risk adjusted to make them comparable to proved reserves.

2. Zoltav has an ownership interest of 100 percent in the evaluated field; therefore, net reserves equal gross reserves.

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Contingent Resources(all figures in bbl or scf)

Gross Risk Factor OperatorLow Best High

Estimate Estimate Estimate(1C) (2C) (3C)

Koltogorsky Production Licence 329,000 2,708,000 29,531,000 N/A SibGeCoTotal for Oil & Liquids 329,000 2,708,000 29,531,000 N/AKoltogorsky Production Licence 106,000,000 883,000,000 9,429,000,000 N/A SibGeCoTotal for Gas 106,000,000 883,000,000 9,429,000,000 N/A

Source: DeGolyer and MacNaughton

Notes:

1. Application of any risk factor to contingent resources quantities does not equate contingent resources with reserves.

2. There is no certainty that it will be commercially viable to produce any portion of the contingent resources evaluated herein.

3. Zoltav has an ownership interest of 100 percent in the evaluated field; therefore, net contingent resources equal grosscontingent resources.

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Figure 4: Net oil isopach map of the YuV1 reservoir of the Koltogorskoye field, showing the location ofwells 71, 101, 111 and 141 that formed the basis for the registered discovery (this figure has been extractedfrom the Competent Persons Report in Part III of this document).

Work programme following Admission until December 2014Following completion of the Acquisition, the Company intends to acquire up to 500 square kilometresof 3D seismic during the winter season 2013/2014 period and to subsequently process and interpret thatdata. Immediately following Admission, the Company intends to tender to suitably qualified andexperienced local seismic contractors to carry out the seismic acquisition programme. A number ofsuitable candidate firms have already been identified.

Following the completion of the seismic acquisition programme (expected during H1 2014, but prior tothe end of the winter season which is on or around end Q1 2014), the Company expects that the

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processing and interpretation of the data will be outsourced to a suitably qualified and experiencedinternationally recognised firm. The subsequent analysis of the interpreted data will be conducted bythe Company’s technical team, headed by Alexander Sokolov. Alexander Sokolov has extensiveknowledge of both the geology and the history of exploration of the area of the Koltogorskoye field,being the founder of SibGeCo and the exploration director of Sibir Energy plc when it was the parentcompany of SibGeCo. The focus of this work will be to better understand the characteristics of theKoltogorskoye field and to identify optimal locations for appraisal wells.

The Directors estimate that the interpretation of the seismic data will take approximately six months.As a result the Company does not expect to have sufficient time to apply for the relevant permissions tocommence any appraisal drilling before the winter season 2015/2016.

The Company plans to commence test production by reopening the 141 well during 2014. Zoltav intendsto either sell any production from testing (which is not expected to be meaningful) at the well head ortruck it to a TNK-BP custody transfer station, which is approximately 25 kilometres from the 141 well,accessible via roads which allow year-round access.

Appraisal drilling programme from 2015/16It is envisaged that the initial appraisal drilling programme in 2015/2016 will comprise up to four wells.Until the development of infrastructure that allows year round access, drilling and seismic operationscan only be conducted during the winter season on the Licence area. Additional funding will need to besourced by the Company to conduct the appraisal drilling programme.

Infrastructure and routes to marketSubject to the success of its appraisal programme, Zoltav’s current field development plan is to drill,from 2016, a number of development wells in clusters from well pads. It is the Company’s intention tolink the well clusters to a booster pump station (“DNS”) with two separators for degassing and transportof oil emulsion by means of centrifugal pumps to the central processing facility (“CPF”) of the nearbyKhokhryakovskoye field, this will include the construction of the necessary in-field infrastructure. Thepower supply to the Koltogorskoye field will be provided by two existing 220 kilovolt overhead lines,which are marked in Figure 3 of this document. The distance between the well clusters and the DNSvaries from 4 to 15 kilometres. It is the Company’s intention for the DNS to be linked via a new pipelineto the CPF in the Khokhryakovskoye field. It is also intended that associated gas will be fed into theSibur-owned wet gas pipeline (that passes the southern boundary of the Koltogorsky ProductionLicence) and transported to its gas processing facilities.

SibGeCo is not subject to any requirements to sell oil on the domestic market.

Further details of the Koltogorsky Production Licence minimum work programme are set out inparagraph 10.19 in Part VII of this document.

4. Strategy of the Enlarged GroupThe Board’s strategy is for the Enlarged Group to become a significant oil and gas exploration andproduction company through the acquisition of a portfolio of oil and gas properties in the CIS. TheDirectors plan that over time the Company will acquire a portfolio that will include assets at variousstages of development. The Board will continue to review opportunities across the CIS although itcurrently expects that a majority of the opportunities will be in the Russian Federation.

The Board intends to augment the current management team. Future appointments to the Board and/ormanagement team, if any, are likely to be dependent upon the Board’s ability to execute its acquisitionstrategy.

From an operational perspective the focus of Zoltav will be on further appraisal of the KoltogorskoyeField with the aim to bringing the field into production.

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5. Structure of the AcquisitionUnder the terms of the Acquisition Agreement, the Company has conditionally agreed to acquire theentire issued share capital of CenGeo Holdings from the Sellers together with the assignment of thebenefit of certain shareholder loans made by the Sellers to CenGeo Holdings, for a consideration to besatisfied by the issue of 23,657,870 New Ordinary Shares at the Subscription Price, representingapproximately 42.7 per cent. of the Enlarged Share Capital and approximately 38.3 per cent. (assumingno further issue of shares between Admission and completion of the Subscription) of the Company’sissued share capital immediately following completion of the Subscription and the Acquisition, and thepayment to the Sellers of US$47,500 to cover cost and expenses in relation to the Acquisition.

Further details of the Acquisition Agreement are set out in paragraph 10.7 of Part VII of this document.

The Acquisition Agreement is conditional, inter alia, on the passing of the Acquisition Resolutionsproposed at the Annual General Meeting to approve the Acquisition and Admission.

6. Share ConsolidationThe Company’s Existing Ordinary Shares currently have a nominal value of US$0.01 each (1 US cent).When trading in the Existing Ordinary Shares was suspended on 20 March 2013, the price of the ExistingOrdinary Shares was 4.6 pence. A reorganisation of the Existing Share Capital is proposed whereby eachholding of 20 Existing Ordinary Shares, whether issued or unissued, will be consolidated into one NewOrdinary Share. Resolution 9 will effect the Share Consolidation.

Holders of fewer than 20 Existing Ordinary Shares will not be entitled to receive a New Ordinary Sharefollowing the Share Consolidation. Shareholders with a holding in excess of 20 Existing Ordinary Shares,but which is not exactly divisible by 20, will have their holding of New Ordinary Shares rounded downto the nearest whole number of New Ordinary Shares following the Share Consolidation. Fractionalentitlements, whether arising from holdings of fewer or more than 20 Existing Ordinary Shares, will besold in the market and the proceeds will be retained for the benefit of the Company.

Following the Share Consolidation, the Existing Ordinary Shares will no longer be in issue. New sharecertificates in respect of New Ordinary Shares are expected to be posted, at the risk of Shareholders, inthe week commencing 8 July 2013 to those Shareholders who currently hold their Existing OrdinaryShares in certificated form (and who hold more than 20 Existing Ordinary Shares). These will replaceexisting certificates which should be destroyed. Pending the receipt of new certificates, transfers of NewOrdinary Shares held in certificated form will be certified against the register of members of theCompany.

The New Ordinary Shares have been allocated new stock identification codes as follows: SEDOL codeBBG9XR5 and ISIN code KYG9895N1198.

The New Ordinary Shares will be in registered form. Securities issued by non-UK registered companiessuch as the Company cannot be held or transferred in the CREST system. CREST is a computerisedpaperless share transfer and settlement facility enabling securities to be evidenced otherwise than by acertificate and transferred otherwise than by written instrument in accordance with the CRESTRegulations. To enable investors to settle such securities through the CREST system, a depositary orcustodian can hold the relevant securities and issue dematerialised depositary interests representing theunderlying securities which are held on trust for the holders of the depositary interests. Application willbe made for the DIs in respect of the underlying Ordinary Shares to be admitted to CREST with effectfrom Admission. Holders of Ordinary Shares in certificated form who wish to hold DIs through theCREST system may be able to do so and should contact the Registrar

The record date of the Share Consolidation will be 3 July 2013. The rights attaching to the New OrdinaryShares will be identical in all respects to those of the Existing Ordinary Shares.

7. Details of the Subscription, related party transaction and use of proceedsThe Company is raising a total of US$20 million (£12.7 million) through the issue of a total of18,198,362 New Ordinary Shares at the Subscription Price. On Admission the Company will issue

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11,828,935 Subscription Shares in consideration for US$13 million (£8.3 million), being the First TrancheSubscription Shares. An exchange rate of US$1.57: £1.00 was agreed in the Subscription Agreement.The First Tranche Subscription Shares will represent approximately 21.4 per cent. of the Enlarged ShareCapital on Admission. The First Tranche Subscription Shares will rank pari passu in all respects withthe New Ordinary Shares including the rights to all dividend and other distributions declared, made orpaid following Admission and will be issued fully paid.

The balance of the Subscription is payable in two further tranches. The consideration for the SecondTranche Subscription Shares is payable by the last business day of 2013 and will result in the paymentof US$2 million (£1.3 million) in consideration for the issue of 1,819,836 New Ordinary Shares.

The consideration for the Third Tranche Subscription Shares is payable by 1 April 2014 and will resultin the payment of US$5 million (£3.2 million) in consideration for the issue of 4,549,591 New OrdinaryShares. On the issue of the Second Tranche Subscription Shares, ARA Capital will pledge to theCompany New Ordinary Shares which have a market value of US$5 million as security for its obligationto pay the consideration for the Third Tranche Subscription Shares.

ARA Capital has the right to subscribe for: (i) Existing Ordinary Shares at a price per share of £0.035in respect of any subscriptions prior to the Share Consolidation; or (ii) New Ordinary Shares at theSubscription Price in respect of any subscriptions following the Share Consolidation, in each case equalin aggregate to a maximum of US$20,000,000 at any time from the date of the Subscription Agreementuntil 1 April 2014. To the extent ARA Capital exercises its option to subscribe for either ExistingOrdinary Shares or New Ordinary Shares (as the case may be) then such subscription shall reduce itsoverall subscription obligation under the Subscription Agreement of US$20,000,000.

The proceeds of the Subscription will be used as follows:

First Tranche:

● Acquisition and initial processing of up to 500 square kilometres of 3D seismic data over the Khokhryakovskoye field US$ 8.0 million

● Expenses associated with Admission US$ 1.2 million

● Re-enter well 141 US$ 0.3 million

● General working capital and financing requirements for the Enlarged Group US$ 3.5 million

–––––––––––––––––––––

US$ 13.0 million

Second and Third Tranche:

● Seismic data processing and completion of interpretation US$ 3.5 million

● General working capital and financing requirements for the Enlarged Group US$ 3.5 million

–––––––––––––––––––––

US$ 7.0 million–––––––––––––––––––––

Total US$ 20.0 million––––––––––––––––––––––––––––––––––––––––––

The Subscription is conditional upon completion of the Acquisition.

ARA Capital is a ‘related party’ as defined by the AIM Rules for Companies. Further, the Subscriptionis a related party transaction for the purposes of AIM Rule 13. The Directors consider, having consultedwith SCC, that the terms of the Subscription are fair and reasonable insofar as the Company’sShareholders are concerned.

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8. Information on the Directors and Senior ManagementBrief summaries of the biographies of each of the Directors are set out below:

8.1. DirectorsSymon Drake-Brockman (aged 51), Executive ChairmanSymon Drake-Brockman was appointed Executive Chairman of the Company in August 2011. He wasformerly chief executive officer of RBS Global Banking and Markets in the Americas and chief executiveofficer of RBS Greenwich Capital, Global head of RBS’ Debt Markets division and board member ofRBS Global Banking and Markets. Symon Drake-Brockman previously held senior positions with INGBarings and JP Morgan in London, New York, Tokyo and Hong Kong. He is currently a Non-ExecutiveDirector of Nexus Energy in Australia, and the Managing Partner of Pemberton Capital Advisors LLP,a London-based investment advisory firm.

Stephen Lowden (aged 53), Non-executive DirectorStephen Lowden was appointed as a Non-executive Director of the Company in August 2011. He hasover 25 years’ experience in the international oil and gas industry across exploration, development,production and gas liquefaction. Throughout his career in the oil and gas industry, Stephen Lowdenhas worked around the world but has spent a considerable time working on projects in the CIS. StephenLowden has previously held positions with Premier Oil plc, including chief petroleum engineer, generalmanager for development and production and an executive director of the board and, more recently, atMarathon Oil Company as president of Marathon International, head of corporate businessdevelopment and an officer of the company. Stephen Lowden is also involved with two private energybusinesses.

Michael Lombardi (aged 56), Non-executive DirectorMichael Lombardi, was appointed as a Non-executive Director of the Company in March 2013. He isqualified as a Jersey solicitor and is a senior partner of Ogier, one of the world’s largest offshore lawfirms, headquartered in Jersey. As a partner for over fifteen years, providing integrated legal andadministration services on an international basis, Michael Lombardi has a wealth of experience inadvising on risk management and governance structures. He is a director of Ogier Fund Administration(Jersey) Limited, which has over US$20 billion in assets under administration and a subsidiary of OgierFiduciary Services Limited, which has total assets under administration exceeding US$250 billion. Heis a founder director of the Channel Islands Stock Exchange and the author of a guide to corporategovernance in Jersey. Ogier are the Company’s legal advisers as to Cayman law and Jersey law, and actas Company Secretary.

John Grimshaw (aged 49), Non-executive DirectorJohn Grimshaw was appointed as a Non-executive Director of the Company in March 2013. He beganhis career with Jardine Matheson in Hong Kong where he was authorised as an investment advisor bythe Hong Kong Securities Commission prior to returning to Jersey in 1995, where he was born, tobecome Managing Director of Bentley Trust (Jersey) Limited. In 2003, he became an equity partnerand served as a director of Nautilus Trust Company, an independent trust company, until 2012 when heleft to form his own consultancy company offering advice on corporate governance, dispute managementand marketing to corporate entities. He continues to advise Nautilus as a consultant. John Grimshaw isa member of the Society of Trust and Estate Practitioners and the Institute of Directors.

Oliver Donagher (aged 37), Non-executive DirectorOliver Donagher has had a 15 year career in the financial services sector. He is currently a Senior TrustOfficer with Ariannol Trustees (Suisse) SA. Prior to joining Ariannol Trustees, he spent approximately10 years working for Lincoln Trust Company in Jersey, leaving in 2008 to join the Horizon Group, anindependent provider of wealth management services, working as an associate director. Oliver has beeninvited to join the Board of Directors of Ariannol, approval of which is awaiting formal shareholderapproval and registration with the authorities in Geneva.

8.2. TermsDetails of the terms of the Directors’ service contract and letters of appointment are summarised inparagraph 9 of Part VII of this document.

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8.3. Senior managementAlistair Stobie (aged 46), Group Director of FinanceAlistair Stobie has 17 years’ experience in developing oil & gas companies in emerging markets. He ledBaring Vostok Capital Partner’s investment in Burren Energy plc, which was sold to Eni S.pa in 2008for US$1.8bn. He also led Baring Vostok Capital Partners investments in the privatisations of Yukos,Slavneft, and Sidanco. He co-founded Volga Gas plc which had oil and gas assets in European Russiaand was CFO and Senior Vice-President, Business Development at Pan-Petroleum (Cyprus) HoldingsLimited where he acquired an interest in the multi-billion oil in place Mengo, Kunji and Bindi licence inCongo Brazzaville, prior to its merger with Panoro Energy ASA. Most recently, he advised OandoExploration and Production Ltd., on its acquisition of Shell licences onshore in Nigeria and Turkey’slargest private licence holder.

Dmitry Kamyshev (aged 44), Director RussiaDmitry Kamyshev has initiated and managed projects in mining, oil exploration and oil productinfrastructure and logistics in Russia. Dmitry Kamyshev has worked with a number of internationaland domestic Russian financial institutions; international investors and consultancies. His recentexecutive positions include Director in Barclays Capital’s Moscow office with responsibility for structuredcommodity products and First Vice President of OAO ‘AK’ Transnefteprodukt, the Russian petroleumproduct pipeline operator, where he was responsible for finance, strategy and running the companyduring 2008-2009 and its merger with OAO ‘AK’ Transneft. Dmitry Kamyshev holds a Master’s degreefrom Moscow High Technical University and Master in Finance from London Business School.

Alexander Sokolov (aged 50), Director Exploration and interim General Director of SibGeCoAlexander Sokolov began his professional career in 1984 with Urengoineftegazgeologia as a well loganalyst where he continued work on his Ph.D. in geology. After receiving his Ph.D. in 1990, AlexanderSokolov headed the reserves evaluation department for Meggionneftegazgeologia (now part of TNK-BP), and in 1992 became leader of exploration drilling for the Siberian Oil Corporation. Later, he servedas deputy director of the Russian State Institute for Geology and Development of Combustible Minerals(IGIRGI) and conducted reserve evaluation projects for various oil companies including one of the firstRussian/American oil joint ventures, Chernogorskoye. Since becoming an independent geologicalconsultant in 1995, Alexander Sokolov has been a co-founder of three exploration and productionindependents where he was engaged in a non-executive capacity, including serving as Director ofChumpasneftedobycha (Heritage Oil) in 2005/6. In 1999, he established SibGeCo and later, after thecompany was acquired by Sibir, he joined Sibir’s management team as Head of the ExplorationDepartment. He has authored 25 publications and is a member of the Russian Society of Subsoil UseExperts.

9. Dividend PolicyThe Board’s objective is to grow the Enlarged Group’s business. Future income generated by the EnlargedGroup is likely to be re-invested to implement its growth strategy. In view of this, it is unlikely that theBoard will recommend a dividend in the years immediately following Admission. However, the Boardintends that the Company will recommend or declare dividends at some future date once they considerit commercially prudent for the Company to do so, bearing in mind the financial position and resourcesrequired for the Enlarged Group’s development.

10. Lock-in and orderly market arrangementsARA Capital (which will hold an aggregate of 21,364,274 New Ordinary Shares representingapproximately 38.6 per cent. of the Enlarged Share Capital at Admission and 27,733,701 New OrdinaryShares representing approximately 44.9 per cent. of the issued share capital of the Company oncompletion of the Subscription and the Acquisition) has entered into a lock-in deed pursuant to whichit has undertaken to not (and to use its reasonable endeavours to procure that any person with whom itis connected will not) dispose of any interest in New Ordinary Shares held by it or persons connected toit for a period of one year from Admission, save in those circumstances permitted by Rule 7 of the AIMRules.

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Bandbear (which will hold an aggregate of 17,979,981 New Ordinary Shares representing approximately32.5 per cent. of the Enlarged Share Capital at Admission and approximately 29.1 per cent. of the issuedshare capital of the Company on completion of the Subscription and the Acquisition) has entered intoa lock-in deed pursuant to which it has undertaken to not (and will procure, insofar as it is able, thatany of its associates will not) dispose of any interest in New Ordinary Shares held by it or its associatesfor a period of one year from Admission, save in those circumstances permitted by Rule 7 of the AIMRules. Bandbear has also undertaken that it will not dispose of any interest in New Ordinary Shares, fora period of six months following the first anniversary of Admission, without giving the Company priorwritten notice.

Mr Sokolov and Mr Kamyshev (who will respectively hold 2,271,155 and 3,406,733 New OrdinaryShares, together representing approximately 10.3 per cent. of the Enlarged Share Capital at Admissionand approximately 9.2 per cent. of the issued share capital of the Company following completion of theSubscription and the Acquisition) have each separately entered into lock-in deeds pursuant to whichthey have each undertaken that they will not (and will procure, insofar as they are able, that any of theirassociates will not) dispose of any interest in New Ordinary Shares held by them or their associates fora period of one year from Admission, save in those circumstances permitted by Rule 7 of the AIM Rules.In addition, under the terms of their service contracts, during the term of their employment, Mr Sokolovand Mr Kamyshev will each undertake not to sell any of their Consideration Shares before 1 January2015. Thereafter, but prior to 31 March 2016, they may each sell up to 25 per cent. of their ConsiderationShares and may each sell a further 25 per cent. of their Consideration Shares after 1 April 2016.Following the cessation of their employment both Mr Sokolov and Mr Kamyshev will be able to disposeof their Consideration Shares at their discretion.

The Directors (who will hold an aggregate of 469,055 New Ordinary Shares representing approximately0.8 per cent. of the Enlarged Share Capital at Admission) have each entered into a lock-in deed pursuantto which they have each undertaken that they will not (and to use their respective reasonable endeavoursto procure that any person with whom they are connected will not) dispose of any interest in NewOrdinary Shares held by them or persons connected to them for a period of one year from Admission,save in those circumstances permitted by Rule 7 of the AIM Rules.

Further details of the lock-in and other arrangements described above are set out in paragraph 10.3 ofPart VII of this document.

11. Share Options and WarrantsThe Company has in issue options over, in aggregate, 47,350,000 Existing Ordinary Shares; exercisableat prices between 1.0 pence and 95.2 pence per Existing Ordinary Share. Following the ShareConsolidation, these options will apply in aggregate to 2,367,500 New Ordinary Shares and will havean exercise price of between 20.0 pence and £19.04 per New Ordinary Share. Further details of theseoptions are set out in paragraph 16 of Part VII of this document.

The Company has in issue warrants over, in aggregate, 10,550,000 Existing Ordinary Shares; all of suchwarrants being exercisable at 5.0 pence per Existing Ordinary Share. Following the Share Consolidation,these warrants will apply in aggregate to 527,500 New Ordinary Shares and will have an exercise priceof £1.00 per New Ordinary Share. Further details of these warrants are set out in paragraph 16 of PartVII of this document.

12. ARA Convertible Loan NoteThe Company has drawn down a total of £500,000 pursuant to the ARA CLN in two separate tranches.ARA Capital served a conversion notice on the Company within the prescribed timeframe requestingthat the full amount drawn down plus accrued interest on the principal be converted into ExistingOrdinary Shares at the conversion price of £0.023 on 7 June 2013. Accordingly, 21,846,635 ExistingOrdinary Shares were authorised to be issued to ARA Capital on 7 June 2013 and application has beenmade for those shares to be admitted to trading on AIM on 10 June 2013.

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13. Corporate GovernanceThere is no mandatory corporate governance regime in the Cayman Islands with which the Companymust comply. However, the Board recognises the importance of sound corporate governance and, saveas disclosed below, the Company will, from Admission take into consideration the main provisions ofthe Corporate Governance Code insofar as they are appropriate given the Company’s size and stage ofdevelopment. The Company also proposes to take into consideration the recommendations on corporategovernance of the Quoted Companies Alliance for companies with shares traded on AIM.

The Company does not comply fully with the Corporate Governance Code, to the extent that, amongstother things, the Company has an Executive Chairman and no Chief Executive Officer. As such it is notpossible to separate the responsibilities of Chairman and Chief Executive Officer. The Board hasappointed Stephen Lowden as Senior Independent Director as an alternate route for investors tocommunicate with the Board.

BoardThe Board is responsible for formulating, reviewing and approving the Company’s strategy, budget andcorporate actions. The Company intends to hold Board meetings as required and not less than quarterly.

CommitteesThe Directors have established an Audit Committee, Remuneration Committee and NominationCommittee with formally delegated duties and responsibilities.

Audit CommitteeThe Audit Committee will, on Admission, comprise Stephen Lowden and John Grimshaw with MichaelLombardi as chairman and will meet up to three times a year. The Audit Committee is responsible forensuring that the Group’s financial performance is properly monitored, controlled and reported. TheAudit Committee is responsible for the scope and effectiveness of the external audit, the work of theinternal audit function and compliance by the Group with statutory and regulatory requirements.

The Audit Committee will also advise the Board on the appointment of the external auditors, reviewtheir fees and the audit plan. It will approve the external auditors’ terms of engagement, theirremuneration and any non-audit work.

The Audit Committee will also meet the Company’s auditors and review reports from the auditorsrelating to accounts and internal control systems. The Audit Committee will meet with the auditors asand when the Audit Committee requires.

Remuneration CommitteeOn Admission, the Remuneration Committee will comprise John Grimshaw and Michael Lombardi,with Stephen Lowden as chairman and will meet once a year. It will set and review the scale and structureof the executive Directors’ remuneration packages, including share options and the terms of their servicecontracts. The remuneration and terms and conditions of the non-executive Directors will be determinedby the Directors with due regard to the interests of the Shareholders and the performance of the Group.The Remuneration Committee will also make recommendations to the Board concerning the allocationof share options to employees.

Nomination CommitteeOn Admission, the Nomination Committee, will comprise Michael Lombardi, and Stephen Lowden aschairman and will meet once a year. The Nomination Committee will lead the process for Boardappointments and identify and recommend candidates for appointment to the Board.

It will also develop and review the Group’s approach to governance practices, make recommendationsto the Board on establishing appropriate policies and practices as well as reviewing structure, size andcomposition of the Board (including the balance of executive and non-executive directors).

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The Nomination Committee will also consider all matters relating to directors’ conflicts of interest withthe Company and is authorized to investigate any activity within its terms of reference and seekinformation from any employee, director, or service provider to the Company.

The composition of these committees may change over time as the composition of the Board changes.

Relationship AgreementImmediately following Admission, ARA Capital will be entitled to exercise control over voting rights inrespect of 38.6 per cent. of the Enlarged Share Capital and will have the ability to exercise a controllinginfluence on the business of the Company and may cause or take actions that are not in, or may conflictwith, the best interests of the Group or its Shareholders as a whole. Accordingly, the Company, SCCand ARA Capital have entered into a relationship agreement which regulates the relationship betweenARA Capital and the Company and ensures that the Company is capable of carrying on its businessindependently of ARA Capital. The principal terms of the relationship agreement are summarised inparagraph 10.2 of Part VII of this document.

Share dealing codeAdditionally, the Company has a share dealing code for directors and other employees of the Company,which is appropriate for a Company with its shares admitted to trading on AIM. The Board will complywith Rule 21 of the AIM Rules relating to directors’ dealings and will ensure compliance by theCompany’s “applicable employees” (as defined in the AIM Rules).

Anti-Corruption PolicyThe Company operates in accordance with its Anti-Bribery & Corruption Policy (the “Policy”) adoptedpursuant to the Bribery Act 2010. The Policy applies to all employees and officers of the Group as wellas all third parties, such as consultants, customers, agents, government bodies and other advisers,contracting with the Group.

The Policy contains a general prohibition not to engage in any type of bribery and requires compliancewith all applicable anti-corruption laws. Facilitation payments and the issuing of bribes to public officialsand private parties are prohibited, as well as receipt by such persons of improper payments. The Policysets out restrictions on gifts and hospitality and provides guidance on what is considered by the Companyto be acceptable.

14. The City Code on Takeovers and MergersAs a company incorporated in the Cayman Islands, the Company will not be subject to the City Code.As a result, certain protections that are afforded to shareholders under the City Code, for example inrelation to a takeover of a company or certain stake-holding activities by shareholders, do not apply tothe Company.

15. New Articles of AssociationAs part of the Proposals the Company is taking this opportunity to update its Articles of Association.A full summary of the new Articles of Association is set out in paragraph 5 of part VII of this document.The key changes introduced by the new Articles of Association are set out below.

Disclosure and Transparency RulesThe provisions of DTR 5 shall be deemed to apply to Company so that Shareholders are required underthe Articles to notify the Company of the percentage of their voting rights if the percentage of votingrights which they hold as a shareholder or through their direct or indirect holding of financialinstruments falling within paragraph 5.1.3R of DTR 5 (or a combination of such holdings) reaches,exceeds or falls below three per cent., four per cent., five per cent., six per cent., seven per cent., eightper cent., nine per cent., ten per cent. and each one per cent. threshold thereafter up to 100 per cent., orreaches or exceeds or falls below any of these thresholds as a result of events changing the breakdownof voting rights. If any Shareholder fails to comply with these requirements, the Directors may, by noticeto the holder of the shares, suspend their rights as to voting, dividends and transfer.

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Such suspension shall have effect from the date set out in the default notice until a date that is not morethan seven days after the Board has determined that the holder of the shares has resolved the non-compliance. During the period of such suspension any dividend or other amount payable in respect ofthe shares shall be retained by the Company without any obligation to pay interest thereon.

The Directors have the power, by giving notice, to require any Shareholder to disclose to the Companythe identity of any person other than the Shareholder who is interested in the shares held by theShareholder who has been at any time during the preceding three years been so interested, in both casestogether with the nature of such interest.

If any Shareholder has been duly served with such a notice and is in default of the prescribed period insupplying the information required then certain restrictions shall apply. A disclosure notice may directthat the Shareholder shall not be entitled to vote at a general meeting or meeting of the holders of anyclass of shares of the Company or exercise any other right conferred by membership in relation to themeetings of the Company or holders of any class of shares.

Where the default shares represent at least 0.25 per cent. of the issued shares of that class, any dividendor other money which would otherwise be payable may also be retained by the Company and transfersof default shares will be restricted until the restrictions cease to apply.

Directors’ Authority to Allot and Pre-emption RightsThe Company is a Cayman Islands company and is subject to Cayman Islands law which differs fromthe Act in relation to statutory pre-emption rights.

There are no provisions in Cayman Islands law equivalent to section 551 of the Act relating to the abilityof directors to allot and issue shares and there are no provisions in Cayman Islands law equivalent tosection 561 of the Act which, subject to certain exceptions, confers pre-emption rights on existingShareholders in connection with the allotment of shares for cash.

The Articles provide that the level of the Directors’ authority to allot and issue shares generally will bethe subject of an ordinary resolution to be proposed at the annual general meeting of the Companyeach year.

In relation to pre-emption, New Ordinary Shares issued wholly for cash by the Company must first beoffered to existing Shareholders in proportion to their respective holdings of New Ordinary Shares (i.e.the principal provisions relating to statutory pre-emption rights under the Act have been broadlyreplicated in the Articles) except that such pre-emption rights shall not apply: (i) where they are disappliedby way of a resolution passed by a simple majority of the holders of the shares of the class who (beingentitled to do so) vote in person or by proxy at a separate general meeting of Shareholders; (ii) wherethe shares to be issued are bonus shares; (iii) where the shares to be issued are in connection with anemployee share scheme; or (iv) in connection with a particular share issue if these are, or are to be fullypaid up or partly paid up otherwise than in cash. Further details of these pre-emption rights aresummarised in paragraph 5.7 of Part VII of this document.

16. TaxationInformation regarding taxation is set out in paragraph 18 of Part VII of this document. That informationis intended only as a general guide to the current tax position under the relevant law. If you are in anydoubt as to your tax position you should consult your own independent financial adviser immediately.

17. Admission, CREST and Depositary InterestsApplication will be made to the London Stock Exchange for all of the New Ordinary Shares to beadmitted to trading on AIM. It is expected that Admission will become effective and dealings in theEnlarged Share Capital will commence at 8.00a.m. on 4 July 2013.

The New Ordinary Shares are in registered form. Securities issued by non-UK registered companiessuch as the Company cannot be held or transferred in the CREST system. CREST is a computerisedpaperless share transfer and settlement facility enabling securities to be evidenced otherwise than by a

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certificate and transferred otherwise than by written instrument in accordance with the CRESTRegulations. To enable investors to settle such securities through the CREST system, a depositary orcustodian can hold the relevant securities and issue dematerialised depositary interests representing theunderlying securities which are held on trust for the holders of the depositary interests. Application willbe made for the DIs in respect of the underlying Ordinary Shares to be admitted to CREST with effectfrom Admission. Holders of Ordinary Shares in certificated form who wish to hold DIs through theCREST system may be able to do so and should contact the Registrar.

CREST is a voluntary system and Shareholders who wish to receive and retain share certificates will beable to do so.

18. Annual General MeetingSet out at the end of this document is a notice convening the Annual General Meeting to be held atOgier House, The Esplanade, St Helier, JE4 9WG, Jersey at 2.00 p.m. on 3 July 2013, for the purposesof considering and, if thought fit, passing Resolutions to:

(a) approve the financial statements of the Company for the year ended 31 December 2012 and theauditors’ report thereon;

(b) re-elect the Directors of the Company;

(c) appoint the Company’s auditors to hold office until the close of the next annual general meeting;

(d) approve the Acquisition for the purpose of Rule 14 of the AIM Rules;

(e) approve the Share Consolidation;

(f) adopt the new Articles of Association;

(g) authorise the directors to allot equity securities; and

(h) authorise the directors to allot equity securities free of pre-emption rights.

19. Irrevocable undertakings to approve the ProposalsEach of those Directors who hold Shares has irrevocably undertaken to vote in favour of the Resolutionsto be proposed at the Annual General Meeting, in respect of their beneficial holdings totalling 9,381,108Existing Ordinary Shares in aggregate, which represent approximately 2.4 per cent. of the Existing ShareCapital.

ARA Capital has irrevocably undertaken to vote in favour of the Resolutions to be proposed at theAnnual General Meeting, in respect of its holding totalling 190,706,789 Existing Ordinary Shares inaggregate, which represents approximately 48.0 per cent. of the Existing Share Capital.

In addition the Company has received irrevocable undertakings to vote in favour of the Resolutions tobe proposed at the Annual General Meeting, in respect of holdings totalling 3,754,244 Existing OrdinaryShares in aggregate, which represent approximately 0.9 per cent. of the Existing Share Capital.

The Company has therefore received irrevocable undertakings to vote in favour of the Resolutions tobe proposed at the Annual General Meeting, in respect of holdings totalling 203,842,141 ExistingOrdinary Shares in aggregate, which represent approximately 51.3 per cent. of the Existing Share Capital.

20. Further informationYour attention is drawn to Parts II to VII of this document which provide additional information.

21. Action to be takenA Form of Proxy is enclosed for use by Shareholders at the Annual General Meeting. Shareholders areasked to complete, sign and return the Form of Proxy to the Company’s Registrars, ComputershareInvestor Services (Cayman) Ltd, c/o The Pavilions, Bridgwater Road, Bristol, BS99 6ZY, as soon aspossible but in any event so as to arrive no later than 2.00 p.m. on 1 July 2013, being 48 hours before the

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time appointed for the holding of the Annual General Meeting.

If you are a holder of Depositary Interests, a form of instruction is enclosed. To be valid, the form ofinstruction should be completed, signed and returned in accordance with the instructions printed thereonto the Company’s depositary, Computershare Investor Services PLC, The Pavilions, Bridgwater Road,Bristol BS99 6ZY as soon as possible but in any event should arrive not later than 4.00 p.m. on 28 June2013.

The completion and return of a Form of Proxy will not preclude Shareholders from attending the AnnualGeneral Meeting and voting in person should they wish to do so. Accordingly, whether or notShareholders intend to attend the Annual General Meeting they are urged to complete and return theForm of Proxy as soon as possible.

22. RecommendationThe Directors believe that the Proposals are in the best interests of the Company and its Shareholdersas a whole. Accordingly, the Directors unanimously recommend that Shareholders approve theResolutions as they have undertaken to do in respect of their beneficial holdings of 9,381,108 ExistingOrdinary Shares representing approximately 2.4 per cent. of the Existing Share Capital.

Yours faithfully

Symon Drake-BrockmanExecutive Chairman

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PART II

RISK FACTORS

Any investment in the Enlarged Group is subject to a number of risks. Potential investors should be awareof and carefully consider the factors and risks associated with any investment in the Enlarged Group, theEnlarged Group’s business and the industry in which it operates (as described below), together with all otherinformation contained in this document before making a decision to invest in the Enlarged Group.Accordingly, you are strongly recommended to consult an investment adviser authorised under the FSMA,who specialises in the acquisition of shares and other securities before making a decision to invest.

If any of the following risks actually occur, the Enlarged Group’s business, financial condition, results orfuture operations could be materially affected. In such circumstances, the price of the Enlarged Group’sNew Ordinary Shares could decline and investors could lose all or part of their investment.

In addition to the other information in this document, the Directors consider the following risk factors areof particular relevance to the Enlarged Group’s activities and to any investment in the Enlarged Group. Itshould be noted that this list is not exhaustive and that additional risks and uncertainties not presentlyknown to the Directors or which they currently believe to be immaterial may also have an adverse effect onthe Enlarged Group. Any one or more of these risk factors could have a materially adverse impact on thevalue of the Enlarged Group and should be taken into consideration when assessing the Enlarged Group.The information set out below and the risks described therein are not intended to be presented in any assumedorder of priority.

RISKS RELATING TO THE ENLARGED GROUP AND ITS BUSINESSLimited operating historyThe Enlarged Group does not have an established trading record as an oil and gas company and it istherefore difficult to evaluate the Enlarged Group’s business and future prospects. The Enlarged Groupis expected to be loss making for the foreseeable future and there can be no assurance that the EnlargedGroup will be profitable in the future, success will depend on the Board’s ability to manage the EnlargedGroup and to take advantage of further opportunities which may arise.

The Company’s objectives may not be fulfilledThe value of an investment in the Company is dependent upon the Enlarged Group, achieving successin its work and acquisition programme and achieving the aims set out in this document. There can beno guarantee that the Enlarged Group will achieve the level of success that the Board expects.

Requirement for further fundsThe existing resources of the Enlarged Group may not be sufficient for the future working capitalrequirements of the Enlarged Group, beyond the first twelve months following Admission, or allow theEnlarged Group to exploit new opportunities. It may therefore be necessary for the Enlarged Group toraise additional funds in the future. If additional funds are raised through the issuance of new equity orequity-linked securities of the Enlarged Group other than on a pro rata basis to existing Shareholders,the percentage ownership of the existing Shareholders may be reduced. Shareholders may also experiencesubsequent dilution and/or such securities may have preferred rights, options and pre-emption rightssenior to the New Ordinary Shares. The Company may also issue New Ordinary Shares as considerationshares on acquisitions or investments that would also dilute Shareholders’ respective shareholdings.

Attraction and retention of key employeesThe Enlarged Group’s success will depend on its current and future executive management team. If anykey person resigns, there is a risk that no suitable replacement with the requisite skills, contacts andexperience would be found to replace such person. Some of the senior personnel will have equity interestsin the Enlarged Group. Notwithstanding this, if key personnel were to leave the Enlarged Group, it couldhave a material adverse effect on the Enlarged Group’s business, financial condition and operating results.

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ARA Capital will exercise significant influence over the Enlarged GroupFollowing completion of the Subscription and the Acquisition Agreement, the maximum aggregateshareholding in the Company of ARA Capital will amount to 27,733,701 New Ordinary Shares,representing approximately 44.9 per cent. of the issued share capital of the Company on completion ofthe Subscription and the Acquisition. Notwithstanding the terms of the Relationship Agreement enteredinto by ARA Capital as described in paragraph 10.2 of Part VII of this document, ARA Capital willremain/still be in a position to have significant influence over the Enlarged Group’s operations andbusiness strategy. Potential new investors may be disinclined to invest in the Enlarged Group because ofthe perceived disadvantages of ARA Capital’s significant shareholding. Such disadvantages may includea lack of liquidity in the Ordinary Shares as a result of the proportion of Ordinary Shares held by ARACapital and the Sellers.

The Sellers will exercise significant influence over the Enlarged GroupFollowing completion of the Acquisition Agreement and the Subscription, the maximum aggregateshareholding in the Company of the Sellers could amount to 23,657,870 New Ordinary Shares,representing approximately 38.3 per cent. of the issued share capital of the Company on completion ofthe Subscription and the Acquisition. The Sellers will be in a position to have significant influence overthe Enlarged Group’s operations and business strategy. Potential new investors may be disinclined toinvest in the Enlarged Group as a result of the perceived disadvantages of the Sellers’ significantshareholding in the Company.

Taxation frameworkAny change in the Enlarged Group’s tax status or in taxation legislation could affect the EnlargedGroup’s ability to provide returns to Shareholders or alter post tax returns to Shareholders. It is theBoard’s intention to operate in such a way that it is subject to tax in Cyprus, Russia and the ChannelIslands. The actual taxation status of the Enlarged Group is dependent on the activities of the EnlargedGroup going forward. If CenGeo Holdings is not solely Cyprus tax resident other tax consequencesmight arise. Commentaries in this document concerning the taxation of investors in New OrdinaryShares are based on current tax law and practice, as it applies to UK tax resident investors, which issubject to change. The taxation of an investment in the Enlarged Group depends on the individualcircumstances and the tax residence status of investors.

Tax residencyManagement intends to operate the Company such that it is tax resident in Jersey. Changes to the taxregime in Jersey may make it beneficial for the Company to change its tax residency. There can be noguarantee that an alternative tax residency will be as appropriate or beneficial to the interest of theEnlarged Group.

Management intends to operate CenGeo Holdings such that it is tax resident in Cyprus. Changes to thetax regime in Cyprus may make it beneficial for CenGeo Holdings to change its tax residency. Therecan be no guarantee that an alternative tax residency will be as appropriate or beneficial to the interestof the Enlarged Group.

Net liabilities in Russian operating companiesSibGeCo, the proposed Russian operating company of the Enlarged Group, reported net liabilities underRussian generally accepted accounting principles in its Russian statutory financial statements for eachof the years ended 31 December 2010, 31 December 2011 and 31 December 2012. These statutoryfinancial statements are filed annually with the Ministry of Finance of the Russian Federation.

Russian company law provides that involuntary liquidation procedures may be commenced against acompany with net liabilities by any of its creditors or by the Russian tax authorities until such time asany net liability position is rectified.

Thin capitalisation related to Russian companiesIn accordance with the Russian Tax Code, Russian thin capitalisation rules may apply to interest payableby a Russian legal entity on loans received from a foreign legal entity owning directly or indirectly more

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than 20 per cent. of the charter capital of the Russian entity or by a Russian legal entity that is affiliatedwith a foreign legal entity. Thin capitalisation rules apply if the amount of the outstanding loan is atleast 3 times higher than the amount of the borrower’s net assets.

The Russian Tax Code establishes rules for the calculation of the portion of interest, which can bededucted for profits tax purposes in the Russian Federation where an entity is determined to be thinlycapitalised. The remaining part of the interest is treated as dividends paid for tax purposes and thereforesubject to Russian withholding income tax on dividends and disallowed for profits tax deduction.

Should the Russian tax authorities successfully challenge interest deductions previously made for profitstax purposes in the Russian Federation then additional taxes and related penalties could be assessedagainst SibGeCo.

Repayment of Russian VAT previously recoveredThe Russian Tax Code provides that VAT suffered in relation purchases can be recovered from theFederal Budget. SibGeCo has previously recovered VAT in relation materials and services provided toit by a previously related oilfield services company.

Should the timing or quantum of such VAT claims be successfully challenges by the Russian taxauthorities then the SibGeCo could be liable to refund VAT previously claimed and could be subject toassociated interest and penalties.

Internal systems and controlsThe Enlarged Group does not currently have all the internal systems and controls which investors wouldexpect from a larger, more established business. The Board intends to take steps to ensure that systemsand controls (appropriate for a group of the size and of the nature of the Enlarged Group) are adoptedand reviewed regularly.

The Russian legal system and Russian legislation continue to develop and this may create an uncertainenvironment for investment and for business activityThe Russian Federation is still developing an adequate legal framework required for the properfunctioning of a market economy. Several fundamental Russian laws have only recently become effective.The recent nature of much Russian legislation and the rapid evolution of the Russian legal system mayplace the enforceability and underlying constitutionality of laws in doubt and result in ambiguities,inconsistencies and anomalies in their application. In addition, Russian legislation sometimes leavessubstantial gaps in the regulatory infrastructure.

Among the possible risks of the current Russian legal system are:

● inconsistencies among (i) federal laws, (ii) decrees, orders and regulations issued by the president,the Russian Government, federal ministries and regulatory authorities and (iii) regional and locallaws, rules and regulations;

● limited judicial and administrative guidance on interpreting Russian legislation;

● limited court personnel with the ability to interpret new principles of Russian legislation,particularly business and corporate law;

● gaps in the regulatory structure due to delay in legislation or absence of implementing legislation;

● a high degree of discretion on the part of governmental authorities; and

● the inadequacy of bankruptcy procedures and certain violations in bankruptcy proceedings.

All of these factors make judicial decisions in the Russian Federation difficult to predict and effectiveredress uncertain. Additionally, court claims are often used to further political aims. The Enlarged Groupmay be subject to these claims and may not be able to receive a fair hearing. Additionally, courtjudgments are not always enforced or followed by law enforcement agencies. All of these weaknessescould affect the Group’s ability to enforce its rights or to defend itself against claims by others, whichcould have a material adverse effect on the Enlarged Group’s business, prospects, financial condition

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and results of operations, and the trading price of the Ordinary Shares and could also reduce theprotections available to investors as holders of the Ordinary Shares.

Political conditionsAlthough the political environment in Russia, the country in which the Enlarged Group will operate onAdmission, is generally stable, changes may occur in its political, fiscal and legal systems, which mightaffect the ownership or operation of the Enlarged Group’s interest including, inter alia, changes inexchange rates, control regulations, expropriation of oil and gas rights, changes in government and inlegislative and regulatory regimes.

The Enlarged Group hopes to avail itself of new opportunities in the CIS where certain of the Directorshave significant knowledge, contacts and experience. Should the Enlarged Group locate an opportunityin the CIS, the Enlarged Group may operate in some countries where political, economic and socialtransition is taking place. Changes in politics, laws and regulations could affect the Enlarged Group’soperations and earnings. Such circumstances may include forced divestment of assets; limits onproduction; import and export restrictions; international conflicts, including war; civil unrest and localsecurity concerns that threaten the safe operation of the Enlarged Group’s facilities; price controls, taxincreases and other retroactive tax claims; expropriation (including “creeping” expropriation) andnationalisation of property; terrorism; outbreaks of infectious diseases; cancellation of contract rights;and environmental regulations.

In addition, the Enlarged Group may then operate in countries which have transportation,telecommunications and financial services infrastructures that may present logistical challenges notassociated with doing business in more developed locations. The Enlarged Group may have difficultyascertaining its legal obligations and enforcing any rights that it may have. Certain governments in othercountries have in the past expropriated or nationalised property of hydrocarbon production companiesoperating within their jurisdictions. Sovereign or regional governments could require the Enlarged Groupto grant to them larger shares of hydrocarbons or revenues than previously agreed. Furthermore, it maybe expensive and logistically burdensome to discontinue hydrocarbon exploration and/or productionoperations in a particular country should economic, political, physical or other conditions subsequentlydeteriorate. All of these factors could materially adversely affect the Enlarged Group’s business, resultsof operations, financial condition or prospects.

Exposure to currency fluctuationsAs an international oil and gas company with operations in Russia, most of the Enlarged Group’srevenues and a significant portion of its costs will be denominated in US Dollars or Roubles and it willreport in US Dollars. In addition, as commodity prices are likely to be denominated in US Dollars orRoubles, most of the Enlarged Group’s income will be received in US Dollars and Roubles and theEnlarged Group is therefore exposed to volatility in exchange rates. As a result, the Enlarged Group’srevenue is subject to exchange rate movements. The Enlarged Group does not engage in any foreigncurrency hedging to minimise exchange rate risk.

RISKS ASSOCIATED WITH THE OIL & GAS INDUSTRYThe Enlarged Group’s business depends on exploration and production licences issued by Russian authorities.If any of these licences are suspended, restricted, terminated or not extended prior to expiry, this wouldhave a material adverse effect on the Enlarged Group.

The licensing regime in Russia for the exploration, development and production of crude oil, naturalgas and gas condensate is governed primarily by the Federal Law “On Subsoil” No. 2395-1 dated21 February 1992, as amended (the “Subsoil Law”) and numerous regulations issued thereunder. TheEnlarged Group intends to conduct its oil and gas development and exploration activities under theKoltogorsky Production Licence and the legacy Koltogorsky Exploration Licences, which are held bySibGeCo. These licences were issued before the Enlarged Group owned or controlled SibGeCo. TheCompany believes that all of the Group’s licences, representing all of the Group’s reserves, were eitherissued, re-issued or amended with the approval of the licensing authorities. However, because theEnlarged Group did not own or control SibGeCo when it obtained the licences, the Company cannotbe certain that all of the licences were issued, or the preceding and current licences were re-issued, in

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accordance with all applicable law and regulations at the time. If it is determined that any of the subsoillicences held by the Group were issued and/or re-issued and/or entered into in violation of applicablelaws, such licences would be subject to revocation. A loss of any such licence would have a materialadverse effect on the Group’s business, results of operations, financial condition and prospects.

The Russian licensing authorities have a high degree of discretion in determining the validity of a licenceor whether or not licence holders are in compliance with their legal obligations. Moreover, vague andinconsistent requirements of the Subsoil Law and the regulations thereunder can make it difficult toconclude that any given subsoil licence has been issued in full compliance with applicable law. While thelaw may be read to permit revocation of a licence based only on defects relating to the issuance of thatlicence, a more aggressive interpretation of the law would suggest that defects in the issuance of anypredecessor licences could also constitute a basis for challenging an existing or successor licence.Therefore, there can be no assurance that the Enlarged Group’s licences will not be challenged or revoked,for prior breaches or in the future.

In addition, if any of the Enlarged Group’s licences were issued, re-issued or amended in violation ofthe applicable legal requirements, the applicable acts of the licensing authorities could be challenged byany person whose rights or lawful interests were harmed by the violation within three months after theclaimant learns of the violation. Although all of the Enlarged Group’s licences were issued, re-issued oramended more than three months ago, the statute of limitations begins to run only when knowledge ofthe violation arises. The licensing authorities involved in issuing, re-issuing or amending the licences, aswell as third parties who participated in the tenders for the licences, would presumably be aware of thecircumstances of the licence issuances or amendments, although there can be no assurance that thisstatute of limitations will prevent a challenge to the Enlarged Group’s licences. If the validity of thelicences were to be challenged by a third party, such licences may be subject to suspension or revocation.The suspension and/or loss of any such licence would require the Enlarged Group to stop its activitiesin relation to the field covered by the relevant licence and, if the Enlarged Group were unsuccessful inlifting such suspension or re-obtaining the licence, the Enlarged Group would lose its right to extract oilfrom the field altogether. Accordingly, any suspension or loss of a licence would materially adverselyaffect the Enlarged Group’s business, results of operations, financial condition and prospects and thetrading price of the New Ordinary Shares.

The Koltogorsky Production Licence expires in February 2033, while the legacy Koltogorsky ExplorationLicences expire in December 2013, it is not the intention of the Enlarged Group to seek to extend thelegacy Koltogorsky Exploration Licences. The Subsoil Law, as currently in effect, allows for the extensionof a production licence at the request of the licence holder if such extension is necessary to finishproduction in the field(s) covered by the licence, provided that the licence holder has not violated theterms of the licence. Although the Enlarged Group plans to extend the Koltogorsky Production Licenceto the end of the currently estimated economic life of the field on or prior to its scheduled expiry, andthe Directors believe that the licence will be so extended, if the licensing authorities were to determinethat the Enlarged Group has not complied with the terms of the licence, the authorities may refuse toextend the licence. In addition, private individuals and the public at large have the right to comment onand otherwise influence the licensing process, which may include court intervention and politicalpressure. Moreover, requirements imposed by the applicable regulatory authorities, includingrequirements to comply with numerous industrial standards, recruit qualified personnel andsubcontractors, maintain necessary equipment and quality control systems, monitor the operations ofthe Enlarged Group, make appropriate filings and, upon request, submit appropriate information to thelicensing or other regulatory authorities may also be costly and time-consuming and may result in delaysin the commencement or continuation of exploration or production operations. Competitors of theGroup may also seek to impede the rights of the Enlarged Group to develop certain natural resourcedeposits by challenging the Enlarged Group’s compliance with tender and auction rules and proceduresor with the terms of the relevant licence. Any alleged non-compliance by the Enlarged Group withlicensing regulations and the terms of the relevant licences could lead to suspension, restriction ortermination of the licences and to administrative, civil and criminal liability.

The Enlarged Group may be unable to, or may voluntarily decide not to, comply with certain licencerequirements for some or all of its licence areas. If the authorities in Russia determine that the EnlargedGroup has failed to fulfil the terms of its licences, or if the Enlarged Group operates in its licence areasin a manner that violates Russian law, such authorities may impose fines on the Enlarged Group, suspendor terminate its licences or refuse to extend the term of the licences. Furthermore, the Enlarged Group

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may have to increase spending to comply with licence terms. Any suspension, restriction, terminationor non-extension of the Enlarged Group’s licences could have a material adverse effect on the EnlargedGroup’s business, results of operations, financial condition and prospects.

The Enlarged Group must also maintain, extend and/or obtain from time to time other permits andauthorisations including land and mining allotments, approvals of design and feasibility studies, pilotproduction projects and development plans and permits for the construction of facilities. If the EnlargedGroup fails to receive necessary permits and authorisations in the future, or current permits orauthorisations are terminated or not renewed, the Enlarged Group may have to delay or cancelinvestment or development programmes, which could materially adversely affect the Enlarged Group’sbusiness, results of operations, financial condition and prospects, and the trading price of the OrdinaryShares.

Current reserves in this document are only estimates and are inherently uncertain; the Enlarged Group’stotal reserves may decline in the future and the Enlarged Group may not achieve estimated production levelsthat have been used to calculate the value of the reserves

The crude oil reserves data set forth in this document is estimated, based primarily, on internalengineering data that has been independently verified by an independent reservoir engineer.

Petroleum engineering is a subjective process of estimating underground accumulations of crude oil andassociated gas that cannot be measured in an exact manner. Estimates of the value and quantity ofeconomically recoverable crude oil and gas reserves, rates of production, net present value of future cashflows and the timing of development expenditures necessarily depend upon several variables andassumptions, including:

● historical well test data from the area;

● interpretation of geological and geophysical data;

● assumed effects of regulations adopted by governmental agencies;

● assumptions concerning future crude oil and gas prices;

● the availability and application of new technologies;

● capital expenditures; and

● assumptions concerning future operating costs, taxes on the extraction of commercialminerals, development costs and workover and remedial costs.

Because all reserves estimates are subjective, each of the following items may differ materially fromthose assumed in estimating the Enlarged Group’s reserves:

● the quantities and qualities of crude oil and/or gas that are ultimately recovered;

● the production and operating costs incurred;

● the amount and timing of additional exploration and future development expenditures; and

● future crude oil and/ or gas sales prices.

Many of the factors, assumptions and variables used in estimating reserves are beyond the EnlargedGroup’s control and may prove to be incorrect over time. Evaluations of reserves necessarily involvemultiple uncertainties. The accuracy of any reserves or resources evaluation depends on the quality ofavailable information and petroleum engineering and geological interpretation. Exploration drilling,interpretation and testing and production after the date of the estimates may require substantial upwardor downward revisions in the Enlarged Group’s reserves or resources data. Moreover, different reservoirengineers may make different estimates of reserves and cash flows based on the same available data.Actual production, revenues and expenditures with respect to reserves and resources will vary fromestimates, and the variances may be material. The estimation of reserves may also change because ofacquisitions and disposals, new discoveries and extensions of existing fields as well as the application ofimproved recovery techniques.

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Forestry and land use right risksThe Enlarged Group is required to enter into lease agreements with the relevant district forestrydepartment in order to conduct its operations in its licence areas. The relevant lease agreements aresubject to state registration if concluded for a period of more than one year and may be concluded fora period of up to forty-nine years. Certain of the Enlarged Group’s short term forest leases may requireregistration and could be deemed to be invalid on the basis that prior registration should have beenmade.

Exploration and production risksThere is no assurance that the Enlarged Group’s appraisal and exploration activities will be successfulor, if they are successful, that commercial quantities of oil and/or gas can be recovered from the EnlargedGroup’s licenced areas. No assurance can be given that, if commercial reserves are confirmed, theEnlarged Group will be able to realise such reserves as intended. Few properties that are explored areultimately developed into producing hydrocarbon fields. The Enlarged Group may face delays inobtaining governmental approval. Negative results from initial exploration programmes may result indowngrading of the prospectivity. As a result, an area may therefore be considered not to merit furtherinvestment and licences could be surrendered (subject to the approval of the licensing authority) priorto the drilling of any exploratory wells.

Early stage of commercialisationThe Board’s strategy is for the Enlarged Group to become a mid-cap oil and gas exploration andproduction company. The Enlarged Group has not yet begun to generate revenues and is not yet tradingprofitably. The Board does not expect the Enlarged Group to achieve profitability in the short term.

Regulatory changesThe Enlarged Group’s strategy has been formulated in the light of the current regulatory environmentand with regard to likely future regulatory changes. The regulatory environment may change in the futureand such changes may have a material adverse effect on the Enlarged Group.

Licences and contractual risksThe Enlarged Group’s activities are dependent upon the maintenance and grant of appropriate licenceconcessions, leases, permits and regulatory consents (“Authorisations”) which may not be granted ormay be withdrawn or made subject to limitations. Unforeseen circumstances or circumstances beyondthe control of the Enlarged Group may lead to commitments given to licensing authorities not being ontime. Although the Enlarged Group believes that the Authorisations will be renewed following expiryor grant (as the case may be), there can be no assurance that such Authorisations will be renewed orgranted or as to the terms of such grants or renewals. The areas covered by the Authorisations are ormay be subject to agreements. If such agreements are terminated, found void or otherwise challenged,the Enlarged Group may suffer significant damage through loss of the opportunity to identify andextract hydrocarbons.

Decommissioning and RestorationThe Enlarged Group has provided for the potential costs of dismantling tangible assets and restoringthe environment. This provision is based on SibGeCo’s internal estimates and assumptions, based onthe current economic environment, which the Directors believe are a reasonable basis on which toestimate future liability.

The actual decommissioning costs will ultimately depend upon future market prices for the necessarydismantlement works required which will reflect market conditions at the relevant time.

Because it is not the intention of the Enlarged Group to seek to extend the legacy KoltogorskyExploration Licences, the costs relating to decommissioning and restoration may increase in the future.

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Natural EnvironmentThe Licences are located in the Nizhnevartovsk Region of the Khanty-Mansisk Autonomous Okrug,an autonomous Okrug of the Tyumen Oblast, in West Siberia. The region is characterised by waterlogged soils, shallow lakes and extensive swamps. This precludes work involving heavy machinery,including seismic acquisition and drilling of wells, after the ground is no longer frozen, unless year roundaccess roads have been constructed. Winters are severe and last seven to nine months of the year withmean temperatures ranging from about −15° C to −30° C. It is common for extreme cold weather orsnowfall to prevent work during the winter months and it is possible that the Company’s operationscould be delayed by an extended period of unsuitable weather.

Limited Environmental due diligence was possible on acquisition due to the conditions prevailing duringthe winter season, as such the Company was not able to inspect for any potential environmental damagethat could have occurred on the Licence areas prior to the Acquisition.

Operational and environmental risksDrilling, appraisal, exploration, construction, development and production activities may involvesignificant risks and operational hazards and environmental, technical and logistical difficulties. Theseinclude, inter alia, the possibility of uncontrolled hydrocarbon emissions, fires, earthquake activity,extreme weather conditions, coastal erosion, explosions, blowouts, cratering, over-pressurised formations,unusual or unexpected geological conditions, unpredictable drilling-related problems, equipment failure,labour disputes and the absence of economically viable reserves. These hazards may result in delays orinterruption to production, cost overruns, substantial losses and/or exposure to substantialenvironmental and other liabilities.

Existing and possible future environmental legislation, regulations and actions could cause additionalexpense, capital expenditures, restrictions and delays in the activities of the Enlarged Group, the extentof which cannot be predicted. No assurance can be given that new rules and regulations will not beenacted or that existing rules and regulations will not be applied in a manner which could limit or curtailproduction or development.

Ability to exploit successful discoveriesIt may not always be possible for the Enlarged Group to participate in the exploitation of successfuldiscoveries made in areas in which the Enlarged Group has an interest. Such exploitation may involvethe need to obtain licences or clearances from the relevant authorities, which may require conditions tobe satisfied and/or the exercise of discretion by such authorities. It may, or may not, be possible for suchconditions to be satisfied. Furthermore, the decision to proceed to further exploitation may require theparticipation of other companies whose interest and objectives may not be the same as those of theEnlarged Group. Such further work may also require the Enlarged Group to meet, or commit to,financing obligations, which it may not have anticipated or may not be able to commit to, due to lack offunds, or inability to raise funds.

Environmental regulationEnvironmental and safety legislation in jurisdictions in which the Enlarged Group operates, may changein a manner that may require stricter or additional standards than those now in effect, a heighteneddegree of responsibility for companies and their directors and employees and more stringent enforcementof existing laws and regulations. There may also be unforeseen environmental liabilities resulting fromoil and gas activities, which may be costly to remedy. In particular, the acceptable level of pollution andthe potential clean up costs and obligations and liability for toxic or hazardous substances for which theEnlarged Group may become liable as a result of its activities, may be impossible to assess against thecurrent legal framework and current enforcement practices of the various jurisdictions in which theEnlarged Group operates, or in which it may operate in the future.

Market riskIn the event of successful exploration and development of oil and gas reserves, the marketing of theEnlarged Group’s prospective production of oil and gas from such reserves will be dependent on marketfluctuations and the availability of processing and refining facilities and transportation infrastructure,including access to ports, shipping facilities, pipelines and pipeline capacity at economic tariff rates, over

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which the Enlarged Group may have limited or no control. Pipelines may be inadequately maintainedand subject to capacity constraints and economic tariff rates may be increased with little or no noticeand without taking into account producer concerns. The right to export oil and gas may depend onobtaining licences and quotas, the granting of which may be at the discretion of the relevant regulatoryauthorities. There may be delays in obtaining such licences and quotas, leading to the income receivableby the Enlarged Group being adversely affected, and it is possible that, from time to time, export licencesmay be refused.

CompetitionA number of other oil and gas companies may seek to establish themselves in areas in which the EnlargedGroup operates and may be allowed to bid for exploration and production licences and other services,thereby providing competition to the Enlarged Group. Larger companies in particular may have accessto greater resources than the Enlarged Group, which may give them a competitive advantage. In addition,actual or potential competitors may be strengthened through the acquisition of additional assets andinterests.

Volatility of prices for oil and gasThe demand for, and price of, oil and gas is highly dependent on a variety of factors, includinginternational supply and demand, weather conditions, the price and availability of alternative fuels,actions taken by governments and international cartels, and global economic and political developments.Geographic location and a lack of adequate infrastructure may also result in any oil or gas producedbeing sold at a discount to world market prices for oil and gas. International oil and gas prices havefluctuated widely in recent years and are likely to continue to fluctuate significantly in the future.

RISKS RELATING TO THE ORDINARY SHARESFluctuations in the price of Ordinary SharesThe market price of the Ordinary Shares may be subject to fluctuations in response to many factors,including variations in the operating results of the Enlarged Group, divergence in financial results fromanalysts’ expectations, changes in earnings estimates by stock market analysts, general economicconditions, legislative changes in the Company’s sector and other events and factors outside of theEnlarged Group’s control.

In addition, stock markets have from time to time experienced extreme price and volume fluctuations,which, as well as general economic and political conditions, could adversely affect the market price forthe Ordinary Shares.

The value of Ordinary Shares may go down as well as up. Investors may therefore realise less than orlose all their original investment.

Liquidity of the Ordinary Shares cannot be guaranteedThe price of the Ordinary Shares may be volatile, influenced by many factors, some of which are beyondthe control of the Company, including the performance of the overall stockmarket, other Shareholdersbuying or selling large numbers of Ordinary Shares, changes in legislation or regulations and generaleconomic conditions. Therefore, a return on an investment in the Ordinary Shares cannot be guaranteed.Admission to AIM should not be taken as implying that there will be a liquid market for the OrdinaryShares. It may be more difficult for an investor to realise their investment in the Enlarged Group thanin a company whose shares are quoted on the Official List.

Suitability of Ordinary Shares as an investmentThe Ordinary Shares may not be suitable for all the recipients of this document. Before making anyinvestment, prospective investors are advised to consult, in the case of persons resident in the UnitedKingdom, an organisation or firm authorised or exempted pursuant to the FSMA and in the case of aresident in any other jurisdiction an appropriately authorised or exempted adviser for that jurisdiction,before making any investment decision. As the Directors believe the Company is unlikely to paydividends in the foreseeable future, the Ordinary Share(s) are not suitable for investors requiring income.

36

DividendsPayments of dividends by the Enlarged Group to Shareholders will depend on a number of factors,including its financial condition and results of operations, contractual restrictions, and other factorsconsidered relevant by the Directors. All final dividends to be distributed by the Enlarged Group mustbe recommended by the Board from time to time under the authority granted to them in the Articles.

Although the Board intends to pay dividends to Shareholders in the future, there can be no assurancethat the Enlarged Group will declare and pay, or have the ability to declare and pay, any dividends onthe Ordinary Shares in the future.

Realisation of investmentPotential investors should be aware that the value of the Ordinary Shares and income from theseOrdinary Shares can go down as well as up and that Admission should not be taken as implying thatthere will be a liquid market in the Ordinary Shares. An investment in the Ordinary Shares may thus bedifficult to realise.

In the event of a winding up of the Company, the Ordinary Shares will rank behind any liabilities ofthe Company and therefore any return for Shareholders will depend on the Enlarged Group’s assetsbeing sufficient to meet prior entitlements of creditors.

A disposal of Ordinary Shares by major Shareholders could adversely impact the market price ofOrdinary SharesSales of a substantial number of Ordinary Shares in the market, whether from investors or Shareholderswho acquired Ordinary Shares in the Acquisition or the Subscription or from pre-existing Shareholders,or the perception that these sales might occur, could adversely impact the market price of the OrdinaryShares.

Forward-looking statementsThis document contains forward-looking statements that involve risks and uncertainties. The EnlargedGroup’s results could differ materially from those anticipated in the forward-looking statements as aresult of many factors, including the risks faced by the Enlarged Group, which are described above andelsewhere in the document. Additional risks and uncertainties not currently known to the Board mayalso have an adverse effect on the Enlarged Group’s business.

Economic, political, judicial, administrative, taxation or other regulatory mattersThe Enlarged Group may be adversely affected by changes in economic, political, judicial, administrative,taxation or other regulatory factors, as well as other unforeseen matters.

Market informationThe market price of the Ordinary Shares may not reflect the underlying value of the Enlarged Group’snet assets.

Potential investors should be aware that the value of Ordinary Shares can rise or fall and that there maynot be proper information available for determining the market value of an investment in the Companyat all times. An investment in a share which is traded on AIM, such as the Ordinary Shares, may bedifficult to realise and carries a high degree of risk. The ability of an investor to sell Ordinary Shareswill depend on there being a willing buyer for them at an acceptable price. Consequently, it might bedifficult for an investor to realise his/her investment in the Company and he/she may lose all his/herinvestment.

Rights of shareholders are more limited under Cayman Islands law than under United Kingdom lawThe Company’s corporate affairs are governed by its memorandum and articles of association, theCompanies Law, as amended, and the common law of the Cayman Islands. The rights of Shareholdersto take action against the Directors, the rights of minority Shareholders to institute actions and thefiduciary responsibilities of Directors under Cayman Islands law are to a large extent governed by the

37

common law of the Cayman Islands. The common law of the Cayman Islands is derived in part fromcomparatively limited judicial precedent in the Cayman Islands as well as from English common law,which has persuasive, but not binding, authority on a court in the Cayman Islands. The rights ofShareholders and the fiduciary responsibilities of Directors under Cayman Islands law are not as clearlyestablished as they would be under statutes or judicial precedent in some jurisdictions. In particular, theCayman Islands have a less developed body of securities laws than the United Kingdom.

The Company is organised under the laws of the Cayman Islands. As a result, a Shareholder may notbe able to enforce a judgment against the Company or some or all of the Directors and executive officersoutside the Cayman Islands. It may not be possible for a Shareholder to effect service of process uponthe Directors and executive officers within the Shareholder’s country of residence or to enforce againstthe Directors and executive officers judgments of courts of the Shareholder’s country of residence basedon civil liabilities under that country’s securities laws. There can be no assurance that a Shareholder willbe able to enforce any judgments in civil and commercial matters against the Directors or executiveofficers who are residents of countries other than those in which judgment is made.

Disclosure and transparency rulesWhile the Company is taking steps to introduce provisions similar in effect to DTR5 in its new Articlesof Association, nevertheless statutory disclosure of significant shareholdings will be different than thatunder DTR5 and will not always ensure compliance with the requirements of AIM Rule 17.

No Takeover Code protectionAs a company incorporated in the Cayman Islands, the Company will not be subject to the City Code.As a result certain protections that are afforded to shareholders under the City Code, for example inrelation to a takeover of a company or certain stake-holding activities by shareholders, do not apply tothe Company.

Any takeover offer for the Company or consolidation of control in the Company will not, therefore, beregulated by the City Code or any other takeover regime.

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DDeGolyer and MacNaughton

5001 Spring Valley Road

Suite 800 East

Dallas, Texas 75244

This is a digital representation of a DeGolyer and MacNaughton report. This file is intended to be a manifestation of certain data in the subject report and as such are subject to the same conditions thereof. The information and data contained in this file may be subject to misinterpretation; therefore, the signed and bound copy of this report should be considered the only authoritative source of such information.

PART III

COMPETENT PERSON’S REPORT

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PART IV

FINANCIAL INFORMATION ON ZOLTAV RESOURCES INC. FOR THE FINANCIAL YEARS ENDED 31 DECEMBER 2010, 31 DECEMBER 2011

AND 31 DECEMBER 2012

1. Statutory Accounts for Financial Periods Ended 31 December 2010, 31 December 2011 and31 December 2012

Statutory accounts of Zoltav Resources Inc. prepared in accordance with International FinancialReporting Standards (IFRS) issued by the International Accounting Standards Board and as adoptedby the European Union for the financial periods ended 31 December 2010, 31 December 2011 and31 December 2012. The financial statements are prepared in United States Dollars. In respect of thoseaccounts, Zoltav Resources Inc.’s respective auditors gave reports that were unqualified and did notcontain a statement under section 498 (2) or (3) of the Companies Act 2006.

2. Published Report and Accounts for Financial Periods Ended 31 December 2010, 31 December 2011and 31 December 2012

(a) Historical financial InformationThe published annual report and audited accounts of Zoltav Resources Inc. for the financial periodsended 31 December 2010, 31 December 2011 and 31 December 2012, (which have beenincorporated in this document by reference) included, on the pages specified in the table below, thefollowing information:

For the For the For the year to year to year to

31 December 31 December 31 December2010 2011 2012

Nature of information Page No(s) Page No(s) Page No(s)

Consolidated Income Statement 15 12 13Consolidated Balance Sheet 17 14 14Consolidated Statements of Changes in Equity 18 – 19 15 – 16 15Consolidated Cash Flow Statements 20 17 16Accounting policies 21 – 34 18 -26 17 – 26Notes to the financial statements 34 – 59 26 – 38 26 – 40Independent auditor’s report 14 11 12

(b) The published accounts can be viewed at www.Zoltav.com. Recipients of this document may requesta hard copy of the financial information of Zoltav Resources Inc. by writing to Ogier CorporateServices (Jersey) Limited, Company Secretary at Ogier House, The Esplanade, St Helier, JE4 9WG,Jersey. Relevant documents will be posted within two Business Days of receipt of such a request.

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PART V

SECTION A

ACCOUNTANTS’ REPORT ON THE FINANCIAL INFORMATION OF CENGEO HOLDINGS

The DirectorsZoltav Resources Inc.89 Nexus WayCamana BayGrand CaymanCayman IslandsKY1-9007

Shore Capital and Corporate Limited (the “Nominated Adviser”)Bond Street House14 Clifford StreetLondonW1S 4JU

10 June 2013

Dear Sirs

IntroductionWe report on the special purpose financial information set out below (the “Financial Information ofCenGeo Holdings”). The Financial Information of CenGeo Holdings has been prepared for inclusionin the admission document of the Company dated 10 June 2013 (the “Admission Document”) on thebasis of the accounting policies set out in Note 1. This report is required by Schedule Two of the AIMrules for Companies published by the London Stock Exchange plc (the “AIM Rules”) and is given forthe purposes of complying with that schedule and for no other purpose.

ResponsibilitiesThe Directors of the Company are responsible for preparing the Financial Information of CenGeoHoldings in accordance with International Financial Reporting Standards as adopted by the EuropeanUnion.

It is our responsibility to form an opinion as to whether the Financial Information of CenGeo Holdingsgives a true and fair view, for the purposes of the Admission Document and to report our opinion toyou.

Save for any responsibility which we may have to those persons to whom this report is expressly addressedand for any responsibility arising under paragraph (a) of Schedule Two of the AIM Rules to any person

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PricewaterhouseCoopers LLP, 1 Embankment Place, London WC2N 6RHT: +44 (0) 20 7583 5000, F: +44 (0) 20 7822 4652, www.pwc.co.uk

PricewaterhouseCoopers LLP is a limited liability partnership registered in England with registered number OC303525. The registered office of PricewaterhouseCoopers LLP

is 1 Embankment Place, London WC2N 6RH. PricewaterhouseCoopers LLP is authorised and regulated by the Financial Services Authority for designated investment business.

as and to the extent there provided, to the fullest extent permitted by law we do not assume anyresponsibility and will not accept any liability to any other person for any loss suffered by any such otherperson as a result of, arising out of, or in connection with this report or our statement, required by andgiven solely for the purposes of complying with Schedule Two of the AIM Rules, consenting to itsinclusion in the Admission Document.

Basis of opinionWe conducted our work in accordance with Standards for Investment Reporting issued by the AuditingPractices Board in the United Kingdom. Our work included an assessment of evidence relevant to theamounts and disclosures in the Financial Information of CenGeo Holdings. It also included anassessment of significant estimates and judgments made by those responsible for the preparation of theFinancial Information of CenGeo Holdings and whether the accounting policies are appropriate toCenGeo Holdings circumstances consistently applied and adequately disclosed.

We planned and performed our work so as to obtain all the information and explanations which weconsidered necessary in order to provide us with sufficient evidence to give reasonable assurance thatthe Financial Information of CenGeo Holdings is free from material misstatement, whether caused byfraud or other irregularity or error.

OpinionIn our opinion, the Financial Information of CenGeo Holdings gives, for the purposes of the AdmissionDocument dated 10 June 2013, a true and fair view of the state of affairs of CenGeo Holdings as at31 December 2012 and of its losses, cash flows and changes in equity for the period ended 31 December2012 in accordance with International Financial Reporting Standards as adopted by the EuropeanUnion.

DeclarationFor the purposes of Paragraph (a) of Schedule Two of the AIM Rules we are responsible for this reportas part of the Admission Document and declare that we have taken all reasonable care to ensure thatthe information contained in this report is, to the best of our knowledge, in accordance with the factsand contains no omissions likely to affect its import. This declaration is included in the AdmissionDocument in compliance with Schedule Two of the AIM Rules.

Yours faithfully

PricewaterhouseCoopers LLPChartered Accountants

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SECTION B

FINANCIAL INFORMATION ON CENGEO HOLDINGS

Cengeo Holdings Limited

Statement of Comprehensive IncomeFor the period ended 31 December 2012

18 October2012 to

31 December2012

€

ExpenditureLegal and professional fees (107,697)Bank charges (90)Loss on foreign exchange (2)

–––––––––––––

(107,789)–––––––––––––

Loss for the period from continuing operations (107,789)–––––––––––––

Total comprehensive loss for the period (107,789)––––––––––––––––––––––––––

All items included in arriving at the loss for the period relate to continuing activities.

There were no components of other comprehensive income which are required to be separately disclosedduring the current period.

90


Statement of Financial PositionAs at 31 December 2012

31 December2012

Notes €

AssetsCurrent assetsLoans and receivables 3 189,632Sundry debtors 240Cash and cash equivalents 668

–––––––––––––

190,540–––––––––––––

Total assets 190,540––––––––––––––––––––––––––

EquityShare capital 7 1,000Accumulated loss (107,789)

–––––––––––––

Shareholders’ deficit (106,789)

LiabilitiesCurrent liabilitiesTrade and other payables 4 107,697Loans payable 5 189,632

–––––––––––––

Total current liabilities 297,329–––––––––––––

Total equity and liabilities 190,540––––––––––––––––––––––––––

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Statement of Changes in EquityFor the period ended 31 December 2012

Share AccumulatedCapital loss Total

€ € €

Issue of shares 1,000 – 1,000Total comprehensive loss for the period – (107,789) (107,789)

––––––––––––– ––––––––––––– –––––––––––––

Balance at 31 December 2012 1,000 (107,789) (106,789)––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– –––––––––––––

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Statement of Cash FlowsFor the period ended 31 December 2012

18 October2012 to

31 December2012

Notes €

Net cash generated in operating activities 8 (189,722)

Cash flows from financing activities:Issue of shares 760Receipt of loan proceeds 189,632

–––––––––––––

Net cash flows from financing activities 190,392–––––––––––––

Net increase in cash and cash equivalents 670Cash and cash equivalents at beginning of period –Exchange losses on cash and cash equivalents (2)

–––––––––––––

Cash and cash equivalents at end of period 668––––––––––––––––––––––––––

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Notes to the financial informationFor the period ended 31 December 2012

1. Basis of preparationCenGeo Holdings Limited (“CenGeo Holdings” or “CenGeo”) was incorporated on 18 October2012 in the Republic of Cyprus as a private limited company with a company registration numberHE 313630.

CenGeo Holdings is incorporated in the Republic of Cyprus under the Cyprus Companies Law,Cap. 113. The address of the registered office is Suite 305, Tamiel Centre, 58 Ellados Avenue, 8020Paphos, Cyprus. The principal activity of CenGeo is to pursue the commercial opportunity ofacquiring ZAO Sibirsky Gelogicheskaya Kompanya.

Going ConcernAt 31 December 2012, CenGeo incurred a loss of €107,758 primarily related to initial setup costs.The proposed acquisition of CenGeo by Zoltav Resource Inc. (“ZRI”) for US$26 million will besatisfied through the issue of new ZRI shares in CenGeo. Conditional on completion of theacquisition, ARA Capital has committed to provide US$20 million of working capital pursuantto a subscription agreement between ZRI and ARA Capital dated 19 March 2013. The explorationwork will be performed by SibGeCo. (refer to note 11). The forecasts indicate sufficient cashbalances remain throughout the period to 30 June 2014. For this reason, the Directors continue toadopt the going concern basis in preparing the financial information.

The Directors have a reasonable expectation that CenGeo will continue in existence for theforeseeable future. The Directors are satisfied that, at the time of approving the financialinformation, it is appropriate to adopt the going concern basis in preparing the financialinformation.

Statement of complianceThis historical financial information has been prepared in accordance with International FinancialReporting Standards as adopted by the European Union (“IFRS”) and IFRIC interpretations. Thefinancial information has been prepared under the historical cost convention, as modified by therevaluation of financial assets and financial liabilities at fair value through profit or loss.

(a) Amendments early adopted by CenGeo:There were no standards, amendments and interpretations adopted early by CenGeo.

(b) Standards, Amendment to Standards and Interpretations effective and relevant to CenGeo’soperations:

There were no standards, amendments and interpretations effective that were relevant to CenGeo’soperations.

(c) New Standards, Amendment to Standards and Interpretations effective but not relevantIAS 1 Financial Statement Presentation – Presentation of Items of Other Comprehensive

IncomeIAS 12 Income TaxesIFRS 7 Financial Instruments: Disclosures — Enhanced Derecognition Disclosure

RequirementsIFRS 1 Severe hyperinflation and removal of fixed dates for first-time adoptersAmendment

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(d) Standards, Amendments and Interpretations not yet effectiveIAS 19 Employee Benefits (amendment) 01-Jan-13IAS 27 Separate Financial Statements (as revised in 2011) 01-Jan-13IAS 28 Investments in Associates and Joint Ventures (as revised in 2011) 01-Jan-13IFRS 9 Financial Instruments – classification and measurement 01-Jan-15IFRS 10 Consolidated financial statements 01-Jan-13IFRS 11 Joint Arrangements 01-Jan-13IFRS 12 Disclosure of involvement with other entities 01-Jan-13IFRS 13 Fair value measurement 01-Jan-13IAS 32 Offsetting financial assets and financial liabilities (amendments) 01-Jan-14IFRS 1 Government loans (amendments) 01-Jan-13IFRIC 20 Stripping costs in the production phase of a surface mine 01-Jan-13

Annual Improvements May 2012 01-Jan-13

The Directors do not expect that the adoption of these Standards, Amendments and Interpretationsin future periods will have a material impact on the operations of CenGeo.

2. Significant Accounting PoliciesCenGeo’s significant accounting policies, all of which have been consistently applied throughoutthe current period, are described below.

Foreign currenciesThe financial information of CenGeo is presented in Euros as this is the currency of the primaryeconomic environment in which it operates (its functional currency). In preparing the financialinformation, transactions in currencies other than CenGeo’s functional currency are recorded atthe rates of exchange prevailing on the dates of the transactions. At each reporting date, monetaryitems that are denominated in foreign currencies are retranslated into Euros at the rate prevailingon such date. Non-monetary items that are measured in terms of historical cost in a foreigncurrency are not re-translated.

Exchange differences arising on the settlement of non-monetary items, and on the retranslation ofmonetary items, are recognised in the Statement of Comprehensive Income in the period in whichthey arise.

Revenue recognitionInterest income is accrued on a time basis, by reference to the principal outstanding and at theeffective interest rate applicable. CenGeo generated no revenue in the period presented.

ExpensesExpenses are charged in the period to which they relate and accounted for on an accruals basis.

Financial InstrumentsFinancial assets and financial liabilities are recognised in the statement of financial position whenCenGeo becomes a party to the contractual provisions of the instrument.

Trade and other receivablesTrade and other receivables are recognised initially at fair value plus any directly attributabletransaction costs. Subsequent to initial recognition loans and receivables are measured at amortisedcost using the effective interest method, less any impairment losses.

Cash and cash equivalentsCash and cash equivalents comprise cash in hand and on demand deposits that are readilyconvertible to a known amount of cash and are subject to an insignificant risk of changes in value.In order to be classified as cash and cash equivalents, the maturity of the cash and cash equivalentsinstruments is three months or less at the time of acquisition.

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Financial liabilities and equityFinancial liabilities and equity instruments are classified according to the substance of thecontractual arrangements entered into. An equity instrument is any contact that evidences a residualinterest in the assets of CenGeo after deducting all of its liabilities.

TaxationCurrent tax and deferred tax are recognised in profit or loss except to the extent that it relates to abusiness combination, or items recognised in other comprehensive income or directly in equity.

In determining the amount of current and deferred tax, CenGeo takes into account the impact ofuncertain tax positions and whether additional taxes, penalties and late-payment interest may bedue. CenGeo believes that its accruals for tax liabilities are adequate for all open tax years basedon its assessment of many factors, including interpretations of tax law and prior experience. Thisassessment relies on estimates and assumptions and may involve a series of judgments about futureevents. New information may become available that causes CenGeo to change its judgmentregarding the adequacy of existing tax liabilities; such changes to tax liabilities will impact the taxexpense in the year that such a determination is made.

Current taxCurrent tax assets and liabilities for current and prior periods are measured at the amount expectedto be recovered from or paid to relevant taxation authorities. The tax rates and tax laws used tocompute the amount are those that are enacted or substantively enacted by the date of thestatements of financial position.

Deferred taxDeferred tax is recognised in respect of temporary differences between the carrying amounts ofassets and liabilities for financial reporting purposes and the amounts used for taxation purposes.Deferred tax is not recognised for the following temporary differences:

● the initial recognition of assets or liabilities in a transaction that is not a business combinationand that affects neither accounting nor taxable profit;

● differences relating to investments in subsidiaries to the extent that it is probable that they willnot reverse in the foreseeable future.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differenceswhen they reverse, based on the laws that have been enacted or substantively enacted by thereporting date.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset currenttax assets and liabilities, and they relate to income taxes levied by the same tax authority on thesame taxable entity, or on different tax entities, but they intend to settle current tax liabilities andassets on a net basis or their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised for unused tax losses, tax credits and deductable temporarydifferences to the extent that it is probable that future taxable profits will be available against whichtemporary difference can be utilised. Deferred tax assets are reviewed at each reporting date andare reduced to the extent that it is no longer probable that the related tax benefit will be realised.

CenGeo is tax resident in Cyprus and is subject to Corporation Tax at a rate of 10 per cent. Asthere has been no taxable income for the period, it will not be subject to any tax. No deferred taxasset has been recognised for the losses incurred for the period from inception to 31 December 2012.

Critical accounting estimates and judgementsThe preparation of financial information in accordance with International Financial ReportingStandards requires management to make estimates and assumptions that affect the reportedamounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of

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financial information and the reported amounts of income and expense during the period. Actualresults could differ from those estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions toaccounting estimates are recognised in the period in which the estimate is revised if the revisionaffects only that period, or in the period of the revision and further periods if the revision affectsboth current and future periods.

3. Loans and receivables2012

€

Escrow payment for assignment 189,632––––––––––––––––––––––––––

Under the terms of a Share Purchase Agreement dated 17 December 2012, CenGeo was requiredto make a payment of US$250,000 to Gregory Trading S.A. as an escrow payment for assignmentof debt payable by Siberian Geological Company (“SibGeCo”) to Gregory Trading S.A. Thisamount will be deducted from the total consideration to be paid on the closing date of thetransaction. Please see note 11 for details. This amount is receivable from SibGeCo.

4. Trade and other payables2012

€

Accrued expenses 107,697––––––––––––––––––––––––––

Accruals and payables mainly comprise Legal and professional fees due in relation to the proposedacquisition of SibGeCo.

5. Loans payable2012

€

Bond loan – Bandbear Limited (US$250,000) 189,632––––––––––––––––––––––––––

The bond loan payable to Bandbear Limited is unsecured, interest free and repayable on settlementof the escrow payment for assignment by Gregory Trading S.A. as per note 3 and the Funding andShareholders’ Agreement dated 17 December 2012.

6. Financial Risk Management

OverviewCenGeo’s activities expose it to a variety of risks. The Director has overall responsibility for theestablishment and oversight of the CenGeo risk management framework by identifying andanalysing the risks faced by the company, to set appropriate limits and controls, and to monitorrisks and adherence to limits.

Credit riskCenGeo’s principal financial assets are loans and other receivables. The maximum exposure tocredit risk is €189,632.

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Currency riskCenGeo has assets and liabilities denominated in US Dollars. (see note 3 and 5). Consequently,CenGeo is exposed to currency risk, as the value of the assets and liabilities denominated in othercurrencies will fluctuate due to changes in exchange rates and may result in changes to the profitor loss of CenGeo.

Market price riskAs Cengeo does not currently hold any investments, it is therefore not exposed to market price risk.

Interest rate riskCenGeo has no interest bearing borrowings and only cash and cash equivalents that attract interest.The maximum exposure to interest risk is €668. This risk is mitigated by banking with recognisedmultinational banks.

Liquidity riskCenGeo manages its liquidity through the parent company indicating their willingness to continueto support the company to enable it to meet its financial liabilities. At 31 December 2012 thefinancial liabilities have a maturity date shorter than one year.

7. Share capital2012

€

Authorised:1,000 €1 Ordinary shares each 1,000

Issued:1,000 €1 Ordinary shares each 1,000

Capital ManagementThe Director believes that CenGeo’s capital is not subject to significant risks as it is not subject toexternally imposed capital requirements.

8. Note to the statement of cash flows2012

€

Loss for the period from continuing operations (107,789)Net foreign exchange loss 2

–––––––––––––

Operating cash flows before movements in working capital (107,787)

Increase in trade and other receivable (189,632)Increase in trade and other payables 107,697

–––––––––––––

Net cash outflow from operating activities (189,722)––––––––––––––––––––––––––

9. Related party transactionsCenGeo’s related parties are its Director, shareholders and any companies which are subsidiariesof its ultimate parent company.

The only related party transactions during the period is the bond loan payable to the shareholderas disclosed in note 5.

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10. Ultimate parent company and controlling entityThe immediate parent company and controlling entity of CenGeo Holdings Limited is BandbearLimited, a company incorporated in the British Virgin Islands. On 20 March 2013, it was announcedthat the ultimate parent company and controlling entity may change, as disclosed in note 11.

11. Post reporting date eventsOn 17 December 2012, CenGeo entered into a Share Sale Purchase and Assignment Agreementwith Gregory Trading S.A. The purpose of the agreement was for CenGeo to purchase 100 percent. of the share capital of ZAO Siberian Geologicheskaya Kompanya (SibGeCo), a companyestablished under Russian Federation Law. The acquisition of SibGeCo was completed on22 February 2013.

SibGeCo holds the Koltogor Licence located in the Khantiy-Mansisk region of western Siberia.The Koltogor Licence contains the undeveloped Koltogor oil field. SibGeCo has also successfullyobtained a 25 year exploration and production licence covering the Koltogor oil field. The KoltogorLicence was issued by the Russian Federal Agency for Subsoil Use (Rosnedra) on 15 February2013.

Under the terms of the Share Sale Purchase and Assignment Agreement, the total debt of SibGeCopayable to Gregory Trading SA of RR3,150,610,878 (€78,322,554) was assigned to CenGeo.

The purchase consideration under the Share Sale and Purchase Agreement amounts toUS$4,500,000 (€3,404,250) and includes payment for the reassignment of the debt payable.

The Purchase consideration and other ancillary costs were satisfied by way of shareholder loans inthe aggregate amount of $200,000 (€151,300) entered prior to the completion of the acquisition.An additional payment of US$14,500,000 (€10,969,250) was made to Rosnedra in respect of thegranting of the Koltagor licence.

On 20 March 2013, Zoltav Resources Inc (ZRI) announced the proposed acquisition of theCompany for US$26 million (€20,106,720), to be satisfied by the issue of 23,657,870 ConsiderationShares.

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SECTION C

ACCOUNTANTS’ REPORT ON THE FINANCIAL INFORMATION OF SIBGECO

The DirectorsZoltav Resources Inc.89 Nexus WayCamana BayGrand CaymanCayman IslandsKY1-9007

Shore Capital & Corporate Limited (the “Nominated Adviser”)Bond Street House14 Clifford StreetLondonW1S 4JU

10 June 2013

Dear Sirs

We report on the financial information set out below (the “Financial Information of SibGeCo”). TheFinancial Information of SibGeCo has been prepared for inclusion in the admission document of theCompany dated 10 June 2013 (the “Admission Document”) on the basis of the accounting policies setout in Note 1. This report is required by Schedule Two of the AIM rules for Companies published bythe London Stock Exchange plc (the “AIM Rules”) and is given for the purpose of complying with thatSchedule and for no other purpose.

ResponsibilitiesThe Directors of the Company are responsible for preparing the Financial Information of SibGeCo inaccordance with International Financial Reporting Standards as adopted by the European Union.

It is our responsibility to form an opinion as to whether the Financial Information of SibGeCo gives atrue and fair view, for the purposes of the Admission Document and to report our opinion to you.

Save for any responsibility which we may have to those persons to whom this report is expressly addressedand for any responsibility arising under paragraph (a) of Schedule Two of the AIM Rules to any personas and to the extent there provided, to the fullest extent permitted by law we do not assume anyresponsibility and will not accept any liability to any other person for any loss suffered by any such otherperson as a result of, arising out of, or in connection with this report or our statement, required by andgiven solely for the purposes of complying with Schedule Two to the AIM Rules, consenting to itsinclusion in the Admission Document.

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PricewaterhouseCoopers LLP, 1 Embankment Place, London WC2N 6RHT: +44 (0) 20 7583 5000, F: +44 (0) 20 7822 4652, www.pwc.co.uk

PricewaterhouseCoopers LLP is a limited liability partnership registered in England with registered number OC303525. The registered office of PricewaterhouseCoopers LLP

is 1 Embankment Place, London WC2N 6RH. PricewaterhouseCoopers LLP is authorised and regulated by the Financial Services Authority for designated investment business.

Basis of opinionWe conducted our work in accordance with the Standards for Investment Reporting issued by theAuditing Practices Board in the United Kingdom. Our work included an assessment of evidence relevantto the amounts and disclosures in the financial information. It also included an assessment of significantestimates and judgments made by those responsible for the preparation of the financial information andwhether the accounting policies are appropriate to SibGeCo’s circumstances, consistently applied andadequately disclosed.

We planned and performed our work so as to obtain all the information and explanations which weconsidered necessary in order to provide us with sufficient evidence to give reasonable assurance thatthe financial information is free from material misstatement whether caused by fraud or other irregularityor error.

OpinionIn our opinion, the Financial Information of SibGeCo gives, for the purposes of the AdmissionDocument dated 10 June 2013, a true and fair view of the state of affairs of SibGeCo as at the datesstated and of its losses, cash flows and changes in equity for the periods then ended in accordance withInternational Financial Reporting Standards as adopted by the European Union.

DeclarationFor the purposes of paragraph (a) of Schedule Two of the AIM Rules we are responsible for this reportas part of the Admission Document and declare that we have taken all reasonable care to ensure thatthe information contained in this report is, to the best of our knowledge, in accordance with the factsand contains no omission likely to affect its import. This declaration is included in the AdmissionDocument in compliance with paragraph (a) of Schedule Two of the AIM Rules.

Yours faithfully

PricewaterhouseCoopers LLPChartered Accountants

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SECTION D

FINANCIAL INFORMATION ON SIBGECO

SIBGECO

Statements of Comprehensive Incomefor the years ended 31 December 2012, 31 December 2011, and 31 December 2010

(in US dollars, unless otherwise stated)Note 2012 2011 2010

Operating income/(expenses) 6 535,144 (8,958,192) (6,171,612)––––––––––––– ––––––––––––– –––––––––––––

Profit/(Loss) from operating activity 535,144 (8,958,192) (6,171,612)––––––––––––– ––––––––––––– –––––––––––––

Finance costs 7 (4,970,163) (6,684,986) (6,751,442)––––––––––––– ––––––––––––– –––––––––––––

Loss before income tax (4,435,019) (15,643,178) (12,923,054)––––––––––––– ––––––––––––– –––––––––––––

Income tax (expense)/benefit 8 (95,213) 626,895 (659,939)––––––––––––– ––––––––––––– –––––––––––––

Loss for the year (4,530,232) (15,016,283) (13,582,993)––––––––––––– ––––––––––––– –––––––––––––

Other comprehensive (loss)/incomeForeign exchange translation differences (3,465,026) 3,690,679 345,478

––––––––––––– ––––––––––––– –––––––––––––

Total other comprehensive (loss)/income for the year (3,465,026) 3,690,679 345,478––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– –––––––––––––

Total comprehensive loss for the year (7,995,258) (11,325,604) (13,237,515)––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– –––––––––––––

Loss per share – basic and diluted 15 (4,530) (15,016) (13,583)––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– –––––––––––––

All items included in arriving at the loss for the years relate to continuing activities.

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SIBGECO

Statements of Financial Positionas at 31 December 2012, 31 December 2011, 31 December 2010, and 1 January 2010

(in US dollars, unless otherwise stated)

31 December 31 December 31 December 1 JanuaryNote 2012 2011 2010 2010

ASSETSNon-current assetsExploration and evaluation assets 9 45,913,397 43,938,965 55,339,701 60,447,046

––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total non-current assets 45,913,397 43,938,965 55,339,701 60,447,046––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Current assetsOther receivables 11 21,395 6,159,284 11,889,663 12,279,496Cash and cash equivalents 12 988 248 9,876 20,275

––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total current assets 22,383 6,159,532 11,899,539 12,299,771––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

TOTAL ASSETS 45,935,780 50,098,497 67,239,240 72,746,817––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

EQUITY AND LIABILITIESShare capital 13 265 265 265 265Accumulated losses (64,541,483) (60,011,251) (44,994,968) (31,411,975)Translation reserve 571,131 4,036,157 345,478 –

––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total equity (63,970,087) (55,974,829) (44,649,225) (31,411,710)––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Non-current liabilitiesBorrowings 16 – 89,621,404 92,158,448 85,781,895Decommissioning and environmental restoration provision 17 4,954,318 7,201,324 8,028,343 7,423,425Deferred tax liabilities 10 1,209,313 1,048,961 1,712,737 1,065,169

––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total non-current liabilities 6,163,631 97,871,689 101,899,528 94,270,489––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Current liabilitiesBorrowings 16 97,544,564 2,405,645 2,431,294 2,332,689Other taxes payable – 18,723 22,255 51,205Trade and other payables 18 6,197,672 5,777,269 7,535,388 7,504,144

––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total current liabilities 103,742,236 8,201,637 9,988,937 9,888,038––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

TOTAL LIABILITIES 109,905,867 106,073,326 111,888,465 104,158,527––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

TOTAL EQUITY AND LIABILITIES 45,935,780 50,098,497 67,239,240 72,746,817

––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

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SIBGECO

Statements of Cash Flowsfor the years ended 31 December 2012, 31 December 2011, and 31 December 2010


Note 2012 2011 2010Cash flows from operating activitiesLoss before income tax (4,435,019) (15,643,178) (12,923,054)Adjustments for:Net finance costs 7 4,970,163 6,684,986 6,751,442Unsuccessful exploration expenditure derecognised 6 – 9,097,164 5,605,586Reversal of decommissioning and environmental restoration provision in excess of cost incurred 6 (13,426) – –Reversal of decommissioning provision 6 – (92,125) (84,077)Net change in estimates of environmental restoration provision for liquidated exploration wells and decommissioning asset 6 (640,966) (185,841) 41,069Interest paid (1,317,700) – –

––––––––––––– ––––––––––––– –––––––––––––

Operating cash outflows before working capital changes (1,436,948) (138,994) (609,034)Decrease in VAT receivable 6,628,730 5,651,366 394,749Decrease/(increase) in prepayments 4,620 (6,879) 1,148Increase/(decrease) in trade and other payables 71,899 (1,484,932) 103,439Decrease in other taxes payable (19,399) (2,566) (28,554)

––––––––––––– ––––––––––––– –––––––––––––

Net cash generated/(used in) operating activities 5,248,902 4,017,995 (138,252)

Cash flows from investing activitiesCapital expenditure in relation to exploration and evaluation activities (239,597) (14,322) (223,716)

––––––––––––– ––––––––––––– –––––––––––––

Net cash used in investing activities (239,597) (14,322) (223,716)––––––––––––– ––––––––––––– –––––––––––––

Cash flows from financing activitiesProceeds from borrowings 221,203 221,015 351,737Repayment of borrowings (5,229,778) (4,234,671) –Net cash (used in)/generated from financing activities (5,008,575) (4,013,656) 351,737

––––––––––––– ––––––––––––– –––––––––––––

Net increase/(decrease) of cash and cash equivalents 730 (9,983) (10,231)Cash and cash equivalents at the beginning of the year 248 9,876 20,275Translation adjustments 10 355 (168)

––––––––––––– ––––––––––––– –––––––––––––

Cash and cash equivalents at the end of the year 988 248 9,876––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– –––––––––––––

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SIBGECO

Statements of Changes in Equityfor the years ended 31 December 2012, 31 December 2011, and 31 December 2010


Share Accumulated Translation Totalcapital losses reserve equity

As at 1 January 2010 265 (31,411,975) – (31,411,710)––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total loss for the year – (13,582,993) – (13,582,993)

Other comprehensive incomeForeign exchange translation differences – – 345,478 345,478

––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total comprehensive (loss)/income – (13,582,993) 345,478 (13,237,515)––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

As at 31 December 2010 265 (44,994,968) 345,478 (44,649,225)––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total loss for the year – (15,016,283) – (15,016,283)

Other comprehensive incomeForeign exchange translation differences – – 3,690,679 3,690,679

––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total comprehensive (loss)/income – (15,016,283) 3,690,679 (11,325,604)––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

As at 31 December 2011 265 (60,011,251) 4,036,157 (55,974,829)––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Loss for the year – (4,530,232) – (4,530,232)

Other comprehensive lossForeign exchange translation differences – – (3,465,026) (3,465,026)

––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total comprehensive loss – (4,530,232) (3,465,026) (7,995,258)––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

As at 31 December 2012 265 (64,541,483) 571,131 (63,970,087)––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

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SIBGECO

Notes to the Financial Statementsfor the years ended 31 December 2012, 31 December 2011, and 31 December 2010


Note 1. Background

The Company and its operationsClosed-Joint Stock Company “Siberian Geological Company” (hereinafter “SibGeCo”) wasincorporated on 15 November 1999 in the Russian Federation in compliance with the decision of thesole founder dated 25 October 1999.

In 2007, 100 per cent. of the shares in SibGeCo were purchased by Glafeta Holdings Limited, a companyincorporated and domiciled in Cyprus. As at 1 January 2010, Glafeta Holdings Limited was the soleshareholder of SibGeCo.

On 21 November 2012 Glafeta Holdings Limited sold 100 per cent. of the share capital of SibGeCo toGregory Trading S.A. incorporated and domiciled in British Virgin Islands.

SibGeCo’s registered office is located at office 18, Building 2-D, 60th Anniversary of October Street,Nizhnevartovsk, Khanty-Mansi Autonomous Area – Yugra, Tyumen Region, Russian Federation,628606.

SibGeCo’s principal activity is the geological exploration in the Nizhnevartovsk region of Khanty-MansiAutonomous Area, Tyumen region.

Russian business environmentSibGeCo’s operations are located in the Russian Federation. Consequently, SibGeCo is exposed to theeconomic and financial markets of the Russian Federation which display characteristics of an emergingmarket. The legal, tax and regulatory frameworks continue to develop, but are subject to varyinginterpretations and frequent changes which, together with other legal and fiscal aspects, contribute tothe challenges faced by entities operating in the Russian Federation. The historical financial informationreflects management’s assessment of the impact of the Russian business environment on the operationsand the financial position of SibGeCo. The future business environment may differ from management’sassessment.

Note 2. Basis of preparationThis historical financial information has been prepared in accordance with International FinancialReporting Standards as adopted by the European Union (“IFRS”) and IFRIC interpretations. Thefinancial information has been prepared under the historical cost convention, as modified by therevaluation of financial assets and financial liabilities at fair value through profit or loss.

The preparation of the financial information in conformity with IFRS requires the use of certain criticalaccounting estimates. It also requires management to exercise its judgment in the process of applyingSibGeCo’s accounting policies. The areas involving a higher degree of judgment or complexity, or areaswhere assumptions and estimates are significant to the historical financial information are disclosed innote 4.

Going concernSibGeCo currently meets its day-to-day working capital requirements through arrangements with relatedparties. SibGeCo’s forecasts and projections, taking into account reasonably possible changes in activities,show that it should be able to operate within the boundaries of its current arrangements. After makingenquiries and having considered the proposed acquisition of the parent company, the directors have areasonable expectation that SibGeCo has adequate resources to continue its exploration activities forthe foreseeable future. SibGeCo therefore continues to adopt the going concern basis in preparing this

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financial information. Further information on SibGeCo’s borrowing arrangements is given in note 16and proposed acquisition of the parent company in Note 23.

Functional and presentation currencyThe national currency of the Russian Federation is the Russian Rouble, RUR, which is SibGeCo’sfunctional currency. The currency in which this historical financial information is presented is UnitedStates Dollars, USD.

As the presentation currency differs from the functional currency of SibGeCo, exchange differencesresulting from translation of operations and financial position into the reporting currency are recognisedas other comprehensive income/loss.

RUB/USD exchange rate as at 31 December 2012 was 30.3727:1; The RUB/USD average rate used totranslate the periodic items in 2012 was 31.0742:1.

The RUB/USD exchange rate as at 31 December 2011 was 32.1961:1; The RUB/USD average rate usedto translate the periodic items in 2011 was 29.3948:1.

The RUB/USD exchange rate as at 31 December 2010 was 30.4769:1; The RUB/USD average rate usedto translate the periodic items in 2010 was 30.3765:1.

The RUB/USD exchange rate as at 1 January 2010 was 30.1851:1.

First time adoptionThis historical financial information is SibGeCo’s first historical financial information prepared inaccordance with IFRSs.

This historical financial information has been prepared following the requirements of IFRS 1 First-timeAdoption of International Financial Reporting Standards (IFRSs).

The date of transition to IFRS is 1 January 2010.

An explanation of how the transition to IFRSs has affected the reported financial position and financialperformance of SibGeCo is provided in note 22.

Business and geographical segment reportingIn the opinion of the directors, the operations of SibGeCo comprise one class of business, being oilexploration and evaluation, and in only one geographic area, which is the Russian Federation.

Note 3. Significant accounting policiesThe accounting policies set out below have been applied consistently to all years presented in thehistorical financial information, and have been applied consistently.

(a) Exploration and evaluation assetsSibGeCo applies the successful efforts method of accounting for Exploration and Evaluation (“E&E”)costs, in accordance with IFRS 6 “Exploration for and Evaluation of Mineral Resources”. Costs areaccumulated on a field-by-field basis. Costs directly associated with an exploration well, including certaingeological and geophysical costs, and exploration and property leasehold acquisition costs, are capitaliseduntil the determination of reserves is evaluated. If it is determined that a commercial discovery has notbeen achieved, these costs are charged to expense after the conclusion of appraisal activities. Explorationcosts such as geological and geophysical costs that are not directly related to an exploration well areexpensed as incurred.

Tangible assets used in exploration and evaluation activities (such as vehicles, drilling rigs, seismicequipment and other plant and property and equipment used by SibGeCo’s exploration function) areclassified as tangible assets. However, to the extent that a tangible asset is consumed in developing an

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intangible exploration and evaluation asset, the amount reflecting that consumption is recorded as partof the cost of the intangible asset. Such intangible costs include directly attributable overheads togetherwith materials consumed during the exploration and evaluation phases.

Once commercial reserves are found, exploration and evaluation assets are tested for impairment andtransferred to development tangible and intangible assets. No depreciation or amortisation is chargedduring the exploration and evaluation phase.

(b) Current and deferred taxationCurrent tax and deferred tax are recognised in profit or loss except to the extent that it relates to abusiness combination, or items recognised in other comprehensive income or directly in equity.

In determining the amount of current and deferred tax SibGeCo takes into account the impact ofuncertain tax positions and whether additional taxes, penalties and late-payment interest may be due.SibGeCo believes that its accruals for tax liabilities are adequate for all open tax years based on itsassessment of many factors, including interpretations of tax law and prior experience. This assessmentrelies on estimates and assumptions and may involve a series of judgments about future events. Newinformation may become available that causes SibGeCo to change its judgment regarding the adequacyof existing tax liabilities; such changes to tax liabilities will impact the tax expense in the year that sucha determination is made.

Current taxCurrent tax assets and liabilities for current and prior years are measured at the amount expected to berecovered from or paid to relevant taxation authorities. The tax rates and tax laws used to compute theamount are those that are enacted or substantively enacted by the date of the statements of financialposition.

Deferred taxDeferred tax is recognised in respect of temporary differences between the carrying amounts of assetsand liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferredtax is not recognised for the following temporary differences:

● the initial recognition of assets or liabilities in a transaction that is not a business combination andthat affects neither accounting nor taxable profit;

● differences relating to investments in subsidiaries to the extent that it is probable that they will notreverse in the foreseeable future.

Deferred tax is measured at the tax rates that are expected to be applied to the temporary differenceswhen they reverse, based on the laws that have been enacted or substantively enacted by the reportingdate.

Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current taxassets and liabilities, and they relate to income taxes levied by the same tax authority on the same taxableentity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basisor their tax assets and liabilities will be realised simultaneously.

A deferred tax asset is recognised for unused tax losses, tax credits and deductable temporary differencesto the extent that it is probable that future taxable profits will be available against which temporarydifference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to theextent that it is no longer probable that the related tax benefit will be realised.

(c) Financial instruments

(i) Non-derivative financial assetsSibGeCo initially recognises loans and receivables and deposits on the date that they are originated. Allother financial assets are recognised initially on the date at which SibGeCo becomes a party to thecontractual provisions of the instrument.

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SibGeCo derecognises a financial asset when the contractual rights to the cash flows from the assetexpire, or it transfers the rights to receive the contractual cash flows on the financial asset in a transactionin which substantially all the risks and rewards of ownership of the financial asset are transferred. Anyinterest in transferred financial assets that is created or retained by SibGeCo is recognised as a separateasset or liability.

SibGeCo has the following category of non-derivative financial assets:

Loans and receivablesLoans and receivables are financial assets with fixed or determinable payments that are not quoted inan active market. Such assets are recognised initially at fair value plus any directly attributable transactioncosts. Subsequent to initial recognition loans and receivables are measured at amortised cost using theeffective interest method, less any impairment losses.

Loans and receivables comprise VAT reclaimed.

Cash and cash equivalentsCash and cash equivalents comprise cash balances, cash deposits and highly liquid investments withmaturities of three months or less from the acquisition date that are subject to insignificant risk ofchanges in their fair value.

(ii) Non-derivative financial liabilitiesSibGeCo initially recognises debt securities issued on the date that they are originated. All other financialliabilities are recognised initially on the date at which it becomes a party to the contractual provisionsof the instrument.

SibGeCo derecognises a financial liability when its contractual obligations are discharged or cancelledor expire.

SibGeCo classifies non-derivative financial liabilities into the other financial liabilities category. Suchfinancial liabilities are recognised initially at fair value less any directly attributable transaction costs.Subsequent to initial recognition, these financial liabilities are measured at amortised cost using theeffective interest method.

Other financial liabilities comprise trade and other payables and borrowings.

(d) Share capitalOrdinary shares are classified as equity. Incremental costs directly attributable to issue of ordinary sharesand share options are recognised as a deduction from equity, net of any tax effects.

(e) Provision for decommissioning and environmental restorationProvision is made for the cost of decommissioning assets and environmental restoration at the time whenthese obligations arise. Such provision represents the estimated discounted liability (the discount rateused currently being the interest rate of Federal loan bonds of Russia) for costs which are expected tobe incurred in removing production facilities and site restoration at the end of the producing life of eachfield. A corresponding item of exploration and evaluation assets is also created at an amount equal tothe provision. Any change in the present value of the estimated expenditure attributable to changes inthe estimates of the cash flow or the current estimate of the discount rate used are reflected as anadjustment to the provision and the property, plant and equipment. The unwinding of the discount isrecognised as a finance cost.

(f) Impairment

(i) Financial assetsA financial asset is assessed at each reporting date to determine whether there is any objective evidencethat it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has

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occurred after the initial recognition of the asset, and that the loss event had a negative effect on theestimated future cash flows of that asset that can be estimated reliably.

Objective evidence that financial assets (including equity securities) are impaired can include default ordelinquency by a debtor, restructuring of an amount due to SibGeCo on terms that it would not considerotherwise, indications that a debtor or issuer will enter bankruptcy, adverse changes in the paymentstatus of borrowers or issuers, economic conditions that correlate with defaults or the deterioration ofan active market for a security. In addition, for an investment in an equity security, a significant orprolonged decline in its fair value below its cost is an objective evidence of impairment.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as thedifference between its carrying amount, and the present value of the estimated future cash flowsdiscounted at the asset’s original effective interest rate. Losses are recognised in profit or loss and reflectedin an allowance account against receivables. Interest on the impaired asset continues to be recognisedthrough the unwinding of the discount. When a subsequent event causes the amount of impairmentloss to decrease, the decrease in impairment loss is reversed through profit or loss.

(ii) Non-financial assetsThe carrying amounts of SibGeCo’s non-financial assets, other than deferred tax assets, are reviewed ateach reporting date to determine whether there is any indication of impairment. If any such indicationexists, then the asset’s recoverable amount is estimated. An impairment loss is recognised if the carryingamount of an asset exceeds its recoverable amount.

The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell.In assessing value in use, the estimated future cash flows are discounted to their present value using apre-tax discount rate that reflects current market assessments of the time value of money and the risksspecific to the asset. For the purpose of impairment testing, assets that cannot be tested individually aregrouped together into the smallest group of assets that generates cash inflows from continuing use thatare largely independent of the cash inflows of other assets.

Impairment losses are recognised in profit or loss.Impairment losses recognised in prior years are assessed at each reporting date for any indications thatthe loss has decreased or no longer exists. An impairment loss is reversed if there has been a change inthe estimates used to determine the recoverable amount. An impairment loss is reversed only to theextent that the asset’s carrying amount does not exceed the carrying amount that would have beendetermined, net of depreciation or amortisation, if no impairment loss had been recognised.

(iii) Exploration and evaluation assetsExploration and evaluation assets are tested for impairment prior to reclassification to developmenttangible or intangible assets, or whenever facts and circumstances indicate that an impairment conditionmay exist. An impairment loss is recognised for the amount by which the exploration and evaluationassets’ carrying amount exceeds their recoverable amount. The recoverable amount is the higher of theexploration and evaluation assets’ fair value less costs to sell and their value in use. When the fields enterproduction in future periods, for the purposes of assessing impairment, the exploration and evaluationassets subject to testing will be grouped with existing cash-generating units of production fields that arelocated in the same geographical region.

(g) Borrowing costsBorrowing costs directly attributable to the acquisition, construction or production of an asset thatnecessarily takes a substantial period of time to get ready for its intended use or sale (a qualifying asset)are capitalised as part of the cost of the respective asset. Borrowing costs consist of interest and othercosts that an entity incurs in connection with the borrowing of funds.

Even though exploration and evaluation assets can be qualifying assets, they generally do not meet the“probable economic benefits” test. Any related borrowing costs incurred during this phase are thereforegenerally recognised in profit or loss in the year they are incurred. All other borrowing costs arerecognised in profit or loss in the year in which they are incurred.

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(h) Recent accounting developmentsThe following amendments to existing standards have been published and are mandatory for the first timefor the financial year beginning 1 January 2012 but had no significant impact on SibGeCo.

● Amendments to IFRS 7 Financial Instruments: Disclosure – derecognition

The following new standards, amendments to standards and interpretations have been issued, but are noteffective (and in some cases had not yet been adopted by the EU) for the financial year beginning 1 January2012 and have not been early adopted.

SibGeCo plans to adopt the following pronouncements when they become effective. SibGeCo has notyet analysed the likely impact of the new Standard on its financial position or performance.

Effective for periods beginning on or after:

● Amendments to IFRS 7 Financial Instruments: Disclosures – Offsetting Financial Assets and Financial Liabilities. 1 January 2013

● IFRS 9 Financial Instruments 1 January 2015● IFRS 13 Fair Value Measurement 1 January 2013● Amendment to IAS 1 Presentation of Financial Statements:

Presentation of Items of Other Comprehensive Income 1 July 2012● Amendments to IAS 32 Financial Instruments: Presentation –

Offsetting Financial Assets and Financial Liabilities 1 January 2014● Improvements to IFRSs 1 January 2013

Note 4. Critical accounting estimates and judgementsThe preparation of the historical financial information in conformity with IFRSs requires managementto make judgments, estimates and assumptions that affect the application of accounting policies andthe reported amounts of assets, liabilities, income and expenses. Actual results may differ from theseestimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accountingestimates are recognised in the year in which the estimate are revised and in any future years affected.The estimates and assumptions that have a significant risk of causing a material adjustment to thecarrying amounts of assets and liabilities within the next financial year are discussed below:

(a) Income taxesSibGeCo is subject to income and other taxes. Significant judgement is required in determining theprovision for income tax and other taxes due to complexity of the tax legislation of the RussianFederation. The taxation system in the Russian Federation continues to evolve and is characterised byfrequent changes in legislation official pronouncements and court decisions which are sometimescontradictory and subject to varying interpretation by different tax authorities. Taxes are subject toreview and investigation by a number of authorities which have the authority to impose severe finespenalties and interest charges. A tax year remains open for review by the tax authorities during the threesubsequent calendar years; however under certain circumstances a tax year may remain open longer.

Deferred tax assets are recognised to the extent that it is probable that SibGeCo will generate enoughtaxable profits to utilise deferred income tax recognised. Significant management judgement is requiredto determine the amount of deferred tax assets recognised, based upon the likely timing and the level offuture taxable profits. Management prepares cash-flow forecasts to support recoverability of deferredtax assets. Cash flow models are based on a number of assumptions relating to oil prices, operatingexpenses, production volumes, etc. These assumptions are consistent with those, used by independentreserve engineers. Management also takes into account uncertainties related to future activities of thecompany and going concern considerations. When significant uncertainties exist, deferred tax losses arenot recognised even if recoverability of these is supported by cash flow forecasts. Refer to further detailsin note 10.

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(b) Provision for decommissioning and environmental restorationThis provision is significantly affected by changes in technology, laws and regulations which may affectthe actual cost of decommissioning and environmental restoration to be incurred at a future date. Theestimate is also impacted by the discount rates used in the provisioning calculations. The discount ratesused are the Russian Government Bond Rates. As at 31 December 2012 the provision has been estimatedusing a discount rate of 7.3 per cent. (31 December 2011: 6.4 per cent.; 31 December 2010: 5.0 per cent.;1 January 2010: 6.6 per cent.) and a core inflation rate of 4.4 per cent. as at 31 December 2012).

(c) Impairment of assetsExploration:An impairment exercise will be performed at the end of the exploration and evaluation process.

When, at the end of the exploration and evaluation stage, commercial reserves are determined to existin respect of a particular field SibGeCo will perform an impairment test in relation to costs capitalised.Where reserves are determined in sufficient quantity to justify development, the associated assets aretransferred to property plant and equipment. Until conclusion of the exploration phase, there can beno certainty that commercial reserves exist. Where commercial reserves are determined not to exist,capitalised E&E expenditure is expensed.

Development and Production:When the fields enter the production phase, the recoverable amounts of cash-generating units andindividual assets will bedetermined based on the higher of value-in-use calculations and fair values lesscosts to sell. These calculations will require the use of estimates and assumptions. It is reasonably possiblethat the oil price assumption may change which may then impact the estimated life of the field and maythen require a material adjustment to the carrying value of long-term assets.

SibGeCo monitors internal and external indicators of impairment relating to its tangible and intangibleassets. There were no such indicators of possible impairment identified during the reporting yearscovered by this historical financial information.

(d) Evaluation of reserves and resourcesEstimates of proved and probable reserves are used in the determination of impairment charges andreversals for development and producing assets. Proved and probable reserves are estimated by anindependent international Oil and Gas Engineering Firm, by reference to available geological andengineering data, and only include volumes for which access to market is assured with reasonablecertainty.

When the fields enter the production phase, estimates of reserves are inherently imprecise, require theapplication of judgments and are subject to regular revision, either upward or downward, based on newinformation such as from the drilling of additional wells and changes in economic factors, includingproduct prices, contract terms or development plans. Changes to SibGeCo’s estimates of proved andprobable reserves affect prospectively the amounts of the exploration and evaluation assets,decommissioning assets and provisions

Note 5. Determination of fair valueA number of SibGeCo’s accounting policies and disclosures require the determination of fair value, forboth financial and non-financial assets and liabilities. Fair values have been determined for measurementand/or disclosure purposes based on the following methods. When applicable, further information aboutthe assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.

(a) Other receivablesThe fair value of other receivables is estimated as the present value of future cash flows, discounted atthe market rate of interest at the reporting date. This fair value is determined for disclosure purposes.

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(b) Non-derivative financial liabilitiesFair value, which is determined for disclosure purposes, is calculated based on the present value of futureprincipal and interest cash flows, discounted at the market rate of interest at the reporting date.

Note 6. Operating expenses2012 2011 2010

Unsuccessful exploration expenditure written off – 9,097,164 5,605,586Reversal of decommissioning and environmental restoration provision in excess of cost incurred (13,426) – –Reversal of decommissioning provision – (92,125) (84,077)Net change in estimates of environmental restoration provision for abandoned exploration wells and decommissioning asset* (640,966) (185,841) 41,069Property tax 57,334 64,357 67,105Exploration and evaluation services 18,760 21,348 25,059Salaries 10,510 18,768 28,797Consulting, legal and audit services 10,089 17,387 13,779Payment to social funds 3,258 6,845 7,136Rent expenses 17,787 6,708 14,770Other expenses** 1,510 3,581 452,388

––––––––––––– ––––––––––––– –––––––––––––

Total (535,144) 8,958,192 6,171,612––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– –––––––––––––

* The reason for the change in the environmental restoration provision were changes in the discount rates used in determiningthe amounts. At 31 December 2012, the discount rate was 7.3 per cent. (31 December 2011: 6.4 per cent.; 31 December 2010:5.0 per cent.; 1 January 2010: 6.6 per cent.). In addition, the 2012 estimate also accounted for the extension of licences for5 exploration land plots which were initially due to expire in 2013, which were extended to 2033.

** Other expenses for the year ended 31 December 2010 mainly comprise the write-off of unrecoverable input VAT.

Note 7. Net finance costs2012 2011 2010

Interest on borrowings 4,532,157 6,555,454 6,445,546Fair value difference on initial recognition of borrowings – (232,100) (258,882)Unwinding of the discount on decommissioning and environmental restoration provision 438,006 361,632 564,778

––––––––––––– ––––––––––––– –––––––––––––

Total 4,970,163 6,684,986 6,751,442––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– –––––––––––––

The amounts in respect of the fair value difference on initial recognition of borrowings in 2011 and 2010relate to the borrowing from Glafeta Holdings Limited which was entered into in 2007 and subsequentlyextended in 2009, 2010 and 2011. The borrowing from Glafeta Holdings Limited was not extended in 2012and was consolidated into a single debt instrument between the Company and Gregory S.A. (Note 16)

Note 8. Income tax expense/(benefit)2012 2011 2010

Deferred income tax (expense)/benefit– Origination and reversal of temporary differences (95,213) 626,895 (659,939)

––––––––––––– ––––––––––––– –––––––––––––

Income tax (expense)/benefit (95,213) 626,895 (659,939)––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– –––––––––––––

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Reconciliation of effective tax rate:2012 2011 2010

Loss before income tax (4,435,019) (15,643,178) (12,923,054)––––––––––––– ––––––––––––– –––––––––––––

Income tax at applicable income tax rate of 20% (2011: 20%) (2010: 20%) 887,004 3,128,636 2,584,611Unrecognised deferred tax asset 293,439 (1,242,263) (2,007,261)Tax effect of items which are not deductible or taxable for taxation purposes (1,275,656) (1,259,478) (1,237,289)

––––––––––––– ––––––––––––– –––––––––––––

Total income tax (expense)/benefit (95,213) 626,895 (659,939)––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– –––––––––––––

Note 9. Exploration and evaluation assetsLicences Evaluation Decom- Construction

and other and other missioning work inintangibles tangibles asset progress Total

Year ended 31 December 2010Opening net exploration and evaluation assets 4,781,195 8,161,695 4,993,823 42,510,333 60,447,046Additions – – – 905,570 905,570Transfer from construction work in progress 2,665,227 4,638,363 – (7,303,590) –Change in the estimates of decommissioning provision – – 156,457 – 156,457Unsuccessful exploration expenditure written off – (4,964,146) (641,440) – (5,605,586)Exchange difference (54,554) (77,071) (46,216) (385,945) (563,786)

––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Closing net exploration and evaluation assets at 31 December 2010 7,391,868 7,758,841 4,462,624 35,726,368 55,339,701

––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Year ended 31 December 2011Opening net exploration and evaluation assets 7,391,868 7,758,841 4,462,624 35,726,368 55,339,701Additions – 14,322 – 352,210 366,532Change in the estimates of decommissioning provision – – (519,949) – (519,949)Unsuccessful exploration expenditure written off (3,216,561) (371,611) (693,656) (4,815,336) (9,097,164)Exchange difference (114,848) (383,218) (132,702) (1,519,387) (2,150,155)

––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Closing net exploration and evaluation assets at 31 December 2011 4,060,459 7,018,334 3,116,317 29,743,855 43,938,965

––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Year ended 31 December 2012Opening net exploration and evaluation assets 4,060,459 7,018,334 3,116,317 29,743,855 43,938,965Additions – 374,241 – – 374,241Transfer from construction work in progress – 30,817,752 – (30,817,752) –Change in the estimates of decommissioning provision – – (1,022,673) – (1,022,673)Exchange difference 243,767 1,141,733 163,467 1,073,897 2,622,864

––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Closing net exploration and evaluation assets at 31 December 2012 4,304,226 39,352,060 2,257,111 – 45,913,397

––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

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Note 10. Deferred tax assets and liabilities

Movements in temporary differences during the yearRecognised

31 December in profit Exchange 31 December2012 or loss difference 2011

Exploration and evaluation asset (1,209,310) (139,121) (63,610) (1,006,579)Borrowings (3) 43,908 (1,529) (42,382)

––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Deferred tax liabilities (1,209,313) (95,213) (65,139) (1,048,961)––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Net deferred tax liabilities (1,209,313) (95,213) (65,139) (1,048,961)––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Recognised31 December in profit Exchange 31 December

2011 or loss difference 2010

Exploration and evaluation asset (1,006,579) 619,811 34,742 (1,661,132)Borrowings (42,382) 7,084 2,139 (51,605)

––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Deferred tax liabilities (1,048,961) 626,895 36,881 (1,712,737)––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Net deferred tax liabilities (1,048,961) 626,895 36,881 (1,712,737)––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Recognised31 December in profit Exchange 1 January

2010 or loss difference 2010

Exploration and evaluation asset (1,661,132) (674,150) 11,782 (998,764)Borrowings (51,605) 14,211 589 (66,405)

––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Deferred tax liabilities (1,712,737) (659,939) 12,371 (1,065,169)––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Net deferred tax liabilities (1,712,737) (659,939) 12,371 (1,065,169)––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Deferred income tax assets are not recognised for tax losses carry forwards to the extent that therealisation of the related tax benefit through future taxable profits are not probable. SibGeCo did notrecognise deferred income tax assets of US$7,255,314 (2011: US$7,127,628) (2010: US$6,331,541) inaccordance with SibGeCo’s accounting policy.

Note 11. Other receivables31 December 31 December 31 December 1 January

2012 2011 2010 2010

VAT receivable 19,255 6,152,806 11,889,455 12,278,131Other taxes prepaid 214 229 208 315Advances/prepayments 1,926 6,249 – 1,050

––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total 21,395 6,159,284 11,889,663 12,279,496––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Note 12. Cash and cash equivalentsAll cash and cash equivalents are represented by cash at bank and denominated in RUB.

SibGeCo’s exposure to credit risk and impairment losses related to cash and cash equivalents aredisclosed in Note 19.

115

Note 13. Share capital31 December 31 December 31 December 1 January

2012 2011 2010 2010

Number of ordinary shares authorised, issued and fully paid 1,000 1,000 1,000 1,000Par value 0.265 0.265 0.265 0.265

––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total share capital 265 265 265 265––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Note 14. DividendsIn accordance with the Russian legislation SibGeCo’s distributable reserves are limited to the balanceof retained earnings as recorded in SibGeCo’s statutory financial statements prepared in accordancewith Russian Accounting Principles. For all comparable years SibGeCo had accumulated losses inaccordance with the statutory financial statements and therefore no dividends could be declared or paid.

Note 15. Loss per shareThe calculation of basic loss per share was based on the loss attributable to ordinary shareholders anda weighted average number of ordinary shares outstanding during the year, calculated as shown below:

2012 2011 2010

Weighted average number of ordinary shares issued 1,000 1,000 1,000Loss attributable to the shareholders (4,530,232) (15,016,283) (13,582,993)Weighted average loss per ordinary share – basic and diluted (4,530) (15,016) (13,583)

––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– –––––––––––––

Note 16. Borrowings

Non-current borrowingsEffective

interest rate 31 December 31 December 31 December 1 January% 2012 2011 2010 2010

BorrowingsOJSC “NK Magma” 7.75 – 8.85 – 89,621,404 92,158,448 85,781,895

––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total non-current debt – 89,621,404 92,158,448 85,781,895––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Current borrowingsEffective

interest rate 31 December 31 December 31 December 1 January% 2012 2011 2010 2010

BorrowingsGregory Trading S.A. 0 97,544,564 – – –Glafeta Holdings Limited 10.38-15.28 – 2,381,272 2,431,294 2,332,689Others 0 – 24,373 – –

––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total current debt 97,544,564 2,405,645 2,431,294 2,332,689––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

All borrowings during the reporting and comparable years disclosed were received from the relatedparties of SibGeCo (refer to Note 21).

As at 31 December 2012, the borrowing from Gregory Trading S.A. represented the borrowings novatedfrom Glafeta Holdings Limited and OJSC “NK Magma” which were purchased from the lenders byGregory Trading S.A. in 2012 by way of novation. The borrowing from Gregory Trading S.A. was notinterest bearing. The novation of the loan did not result in any cash flows.

116

All borrowings disclosed were denominated in RUB. The borrowings presented were not subject to anyfinancial covenants.

As at 31 December 2012, 31 December 2011 and 31 December 2010, SibGeCo had no borrowings undercollateral.

The borrowings from Glafeta Holdings Limited include a fair value difference on initial recognition ofUS$211,908 as at 31 December 2011(2010: US$258,030).

SibGeCo’s exposure to liquidity risk related to borrowings is disclosed in Note 19.

Note 17. Decommissioning and environmental restoration provisionThe decommissioning and environmental restoration provision represents the net present value of theestimated future obligations for abandonment and site restoration costs which are expected to be incurredat the end of the production lives of the oil fields.

2012 2011 2010

Provision as at 1 January 7,201,324 8,028,343 7,423,425Change in estimates (1,663,639) (705,790) 197,526Unwinding of discount 438,006 361,632 564,778Reversal of decommissioning and environmental restoration provision (1,393,215) (92,125) (84,077)Exchange difference 371,842 (390,736) (73,309)

––––––––––––– ––––––––––––– –––––––––––––

Provision as at 31 December 4,954,318 7,201,324 8,028,343––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– –––––––––––––

This provision has been created based on SibGeCo’s internal estimates. Assumptions, based on thecurrent economic environment, have been made which the directors believe are a reasonable basis uponwhich to estimate the future liability. These estimates are reviewed regularly to take into account anymaterial changes to the assumptions. However, actual decommissioning costs will ultimately dependupon future market prices for the necessary dismantlement works required which will reflect marketconditions at the relevant time. Furthermore, the timing is likely to depend on when the fields cease toproduce at economically viable rates. This in turn will depend upon future oil prices and future operatingcosts which are inherently uncertain.

The provision reflects two liabilities: one is to dismantle the tangible assets and the other is to restorethe environment. The decommissioning part of the provision is reversed when an oil well is abandonedand corresponding capitalised costs are expensed .The environmental part of the provision is reversedwhen the expenses on restoration are actually incurred.

The reversal of provision arises when the corresponding capitalised costs directly attributable to anexploration and evaluation asset are expensed as it is determined that a commercial discovery has notbeen achieved and the restoration of the corresponding environment has been made.

The discount rates used to determine the Decommissioning and environmental restoration provision isbased on the Russian Government Bond Rates. The provision has been estimated using a discount rateof 7.3 per cent. (31 December 2011: 6.4 per cent.; 31 December 2010: 5.0 per cent.; 1 January 2010: 6.6per cent.). The change is estimate above is solely as a result of the change in the discount rates.

117

Note 18. Trade and other accounts payable31 December 31 December 31 December 1 January

2012 2011 2010 2010

Trade payables 6,197,672 5,777,269 7,534,432 7,503,469Payables to employees – – 956 675

––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total 6,197,672 5,777,269 7,535,388 7,504,144––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

SibGeCo’s exposure to liquidity risk related to trade and other payables is disclosed in Note 19.

The trade payables amounts mainly comprise payables to the constructors which provided explorationand evaluation services.

Note 19. Financial risk management

OverviewSibGeCo has exposure to the following risks from its use of financial instruments:

● credit risk

● liquidity risk

● market risk

● SibGeCo does not have any significant exposure to foreign currency risk as no significant sales,purchases and borrowings are denominated in a currency other than the functional currency ofSibGeCo, which is the RUB.

This note presents information about SibGeCo’s exposure to each of the above risks, its objectives,policies and processes for measuring and managing risk, and its management of capital. Furtherquantitative disclosures are included throughout this historical financial information.

SibGeCo’s risk management policies deal with identifying and analysing the risks faced by it, settingappropriate risk limits and controls, and monitoring risks and adherence to limits. Risk managementpolicies and systems are reviewed regularly to reflect changes in market conditions and its activities.SibGeCo, through its internal policies, aims to develop a disciplined and constructive controlenvironment in which all employees understand their roles and obligations.

Credit riskCredit risk is the risk of financial loss to SibGeCo if a customer or counterparty to a financial instrumentfails to meet its contractual obligations. The carrying amount of financial assets represents the maximumcredit exposure. The maximum exposure to credit risk at 31 December 2012, 31 December 2011,31 December 2010, and 1 January 2010 is equal to the amount of other receivables balances.

The credit quality of financial assets that are neither past due nor impaired can be assessed by referenceto external credit ratings (if available) or to historical information about counterparty default rates. Themajority of the other receivables balances relates to receivables from the Russian government, which hasa BBB rating.

Liquidity riskLiquidity risk is the risk that SibGeCo will not be able to meet its financial obligations as they fall due.SibGeCo monitors the risk of cash shortfalls by means of current liquidity planning. SibGeCo’sapproach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidityto meet its liabilities when due, under both normal and stressed conditions, without incurringunacceptable losses or risking damage to its reputation. This approach is used to analyse payment datesassociated with financial assets, and also to forecast cash flows from operating activities. The contractualmaturities of financial liabilities presented including estimated interest payments.

118

Under the terms of the Koltagor licence, SibGeCo is not obliged to make non-discretionary paymentsrelated to the licence in the period of the next 12 months from the date of the approval of this financialinformation. Refer to further disclosures in note 23 and the going concern paragraph of note 2.

Carrying Contractual Less thanamount cash flows 1 year 1-2 years Over 5 years

Financial liabilities as at 31 December 2012Unsecured borrowings 97,544,564 97,544,564 97,544,564 – –Trade and other payables 6,197,672 6,197,672 6,197,672 – –

––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total 103,742,236 103,742,236 103,742,236 – –––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––


Financial liabilities as at 31 December 2011Unsecured borrowings 92,027,049 276,115,866 2,665,009 – 273,450,857Trade and other payables 5,777,269 5,777,269 5,777,269 – –

––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total 97,804,318 281,893,135 8,442,278 – 273,450,857––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––


Financial liabilities as at 31 December 2010Unsecured borrowings 94,589,742 100,769,850 78,506,453 22,263,397 –Trade and other payables 7,535,388 7,535,388 7,535,388 – –

––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total 102,125,130 108,305,238 86,041,841 22,263,397 –––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––


Financial liabilities as at 1 January 2010Unsecured borrowings 88,114,584 95,089,096 78,051,098 17,037,998 –Trade and other payables 7,504,144 7,504,144 7,504,144 – –

––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Total 95,618,728 102,593,240 85,555,242 17,037,998 –––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

Market riskMarket risk is the risk that changes in market prices, such as foreign exchange rates and interest rateswill affect SibGeCo’s income or the value of its holdings of financial instruments. The objective ofmarket risk management is to manage and control market risk exposures within acceptable parameters,while optimising the return.

Interest rate riskSibGeCo received the borrowings from OJSC “NK Magma” at CBR refinancing rate that is establishedby Central Bank of Russia and represents the interest rate on an annualised basis, payable to the CentralBank for loans provided to credit institutions. As at 31 December 2011 SibGeCo had borrowings receivedonly at fixed rate.

As at 31 December 2011, if the market interest rates had increased/decreased by 1 percent with all othervariables held constant, post-tax profit for the year would have been USD 547,295 (as at 31 December2010: USD 596,916; as at 1 January 2010: USD 611,995) lower/higher.

119

Foreign exchange rate riskSibGeCo operates within the Russian Federation when all of its costs and financing are denominated inRUB. SibGeCo is not exposed to foreign exchange movements in its operations.

Fair valuesManagement believes that at the reporting date the fair value of SibGeCo’s financial assets and liabilitiesapproximates their carrying amounts.

Capital managementIn accordance with the legal framework in the Russian Federation creditors and tax authorities mayinitiate bankruptcy procedure against an entity with net liabilities. SibGeCo reported net liabilities underlocal GAAP at 31 December 2012, 2011 and 2010. However, no such bankruptcy procedures have beeninitiated either by the creditors or the tax authorities against SibGeCo. The Directors consider the netliability position normal given that the ompany is still at the exploration stage, and it fulfills itsobligations to creditors and tax authorities that minimises the risk of forced liquidation of SibGeCo.Also refer to disclosures in note 23.

Note 20. Commitments and contingents

Capital commitmentsAs at 31 December 2012, 31 December 2011, 31 December 2010, and 1 January 2010 SibGeCo did nothave capital commitments.

InsuranceThe insurance industry in the Russian Federation is in a developing state and many forms of insuranceprotection common in other parts of the world are not generally available. SibGeCo does not have fullcoverage for its business interruption or third party liability in respect of property or environmentaldamage arising from accidents on SibGeCo’s property or relating to its operations. Until SibGeCoobtains adequate insurance coverage there is a risk that the loss or destruction of certain assets couldhave a material adverse effect on its operations and financial position.

Taxation contingenciesThe taxation system in the Russian Federation continues to evolve and is characterised by frequentchanges in legislation official pronouncements and court decisions which are sometimes contradictoryand subject to varying interpretation by different tax authorities. Taxes are subject to review andinvestigation by a number of authorities which have the authority to impose severe fines, penalties andinterest charges. A tax year remains open for review by the tax authorities during the three subsequentcalendar years; however under certain circumstances a tax year may remain open longer. Recent eventswithin the Russian Federation suggest that the tax authorities are taking a more assertive and substance-based position in their interpretation and enforcement of tax legislation.

These circumstances may create tax risks in the Russian Federation that are substantially more significantthan in other countries. Management believes that it has provided adequately for tax liabilities based onits interpretations of applicable Russian tax legislation, official pronouncements and court decisions.However the interpretations of the relevant authorities could differ and the effect on this historicalfinancial information if the authorities were successful in enforcing their interpretations could besignificant.

Environmental mattersSibGeCo operates in the upstream oil industry in the Russian Federation and its activities may have animpact on the environment. The enforcement of environmental regulations in the Russian Federation isevolving and the enforcement posture of government authorities is continually being reconsidered.SibGeCo periodically evaluates its obligations related thereto. The outcome of environmental liabilitiesunder proposed or future legislation, or as a result of stricter interpretation and enforcement of existinglegislation, cannot reasonably be estimated at present, but could be material.

120

Under the current levels of enforcement of existing legislation, management believes there are nosignificant liabilities in addition to amounts which are already accrued and which would have a materialadverse effect on the financial position of SibGeCo.

Note 21. Related parties transactions

Control relationshipsRelated parties include shareholders, affiliates and entities under common ownership and control withSibGeCo and key management personnel. SibGeCo’s immediate parent as at 1 January 2010,31 December 2010, and 31 December 2011 was Glafeta Holdings Limited. On 21 November 2012Glafeta Holdings Limited sold its 100 per cent. interest in the share capital of SibGeCo to GregoryTrading S.A. that was an immediate parent of SibGeCo as of 31 December 2012. During the reportingand all comparable years presented the party with the ultimate control over the Company was OJSCGazprom Neft that produces publicly available financial statements.

SibGeCo was financed by the funds provided by the immediate parents (refer to Note 16). There wereno other outstanding balances with the immediate parents except for the payables to Gregory TradingS.A. in amount of 97,544,564 US dollars as at 31 December 2012 that represents payables of theCompany purchased by Gregory Trading S.A. from OJSC NK Magma, LLC Sibresurs-Sever and LLCSibresurs-Ug in 2012.

Transactions with the companies under common control of the ultimate parentTransactions with the companies under common control were as follows:

2012 2011 2010

Purchases of exploration and evaluation services from OJSC “NK Magma” 374, 241 366,532 905,570

Outstanding payable balances with the companies under common control were as follows:

31 December 31 December 31 December 1 January2012 2011 2010 2010

OJSC NK Magma 5,224 1,089,192 1,184,495 1,080,163LLC Sibresurs-Sever – 2,091,080 2,870,850 2,898,805LLC Sibresurs-Ug – 2,551,211 3,439,065 3,472,512

––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––––––––––––––– ––––––––––––– ––––––––––––– –––––––––––––

SibGeCo was also financed by the funds provided by the companies under common control (refer toNote 16).

Management remunerationThere are no transactions or balances with key management and their close family members, except forremuneration in the form of salary and bonuses.

Due to the small organisational structure of SibGeCo all salaries expenses are related to the keymanagement personnel (refer to Note 6).

Note 22. Explanation of transition to IFRSsThis historical financial information is the first time financial information is being prepared inaccordance with IFRSs.

The accounting policies set out in note 3 have been applied in preparing the historical financialinformation for the year ended 31 December 2012, the comparative information presented in thishistorical financial information for the year ended 31 December 2011, the year ended 31 December 2010,

121

and in the preparation of an opening IFRS statement of financial position at 1 January 2010 (theCompany’s date of transition).

In preparing its opening IFRS statement of financial position, SibGeCo has adjusted amounts reportedpreviously in financial statements prepared in accordance with Russian GAAP. An explanation of howthe transition from Russian GAAP to IFRSs has affected SibGeCo’s financial position and financialperformance is set out below and in the accompanying tables. There was no effect on the cash flowstatement as a result of the transition to IFRS.

(a) The cost of exploration and evaluation assets at 1 January 2010, the date of transition to IFRSs,was determined by reference to its historic cost as adjusted for IFRS recognition and measurementprinciples. The main difference in the cost of exploration and evaluation assets under RussianGAAP and IFRS included in the US$35,372,324 adjustment to E&E assets in 2010 are:

(i) Reclassification of Construction in Progress from “Other receivables” to Construction inProgress within E&E assets of US$44,090,103 (dr);

(ii) Derecognition of capitalised interest under Russian GAAP of $10,461,464 (cr);

(iii) Write off of amount not meeting the recognition criteria under IFRS of US$3,250,138 (cr);and

(iv) Inclusion of the decommissioning asset of US$4,993,823 (dr).

(b) This adjustment relates to the reclassification of Construction in Progress from “Other receivables”under Russian GAAP to E&E assets of US$44,090,103 under IFRS.

(c) The various transitional adjustments and different definition of temporary differences underRussian GAAP and IFRS (being that the requirements to recognise a deferred tax asset previouslymet under Russian GAAP are not met under IFRS) lead to recalculation of deferred taxes.

(d) SibGeCo recognised decommissioning and environmental restoration provision as liability againstthe cost of the exploration and evaluation assets. At transition, the Russian GAAP financialstatements did not contain a decommissioning and environmental restoration provision. In themost recent financial statements of SibGeCo prepared under the Russian GAAP, SibGeCorecognised similar liabilities, but calculated these under different assumptions than those permittedby IFRS.

(e) The interest expenses on SibGeCo’s borrowings under IFRS were all expensed in the years whenthey were accrued. Further, some borrowings were recalculated in order to be recognised atamortised cost.

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Reconciliation of equity1 January 2010 31 December 2012

Effect of Effect ofRussian transition Russian transition

Note GAAP to IFRSs IFRSs GAAP to IFRSs IFRSsASSETSNon-current assetsExploration and evaluation assets a 25,074,722 35,372,324 60,447,046 65,824,474 (19,911,077) 45,913,397Deferred tax assets c 2,141,752 (2,141,752) – 8,685,234 (8,685,234) –

–––––––––––– –––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––

Total non-current assets 27,216,474 33,230,572 60,447,046 74,509,708 (28,596,311) 45,913,397

–––––––––––– –––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––

Current assetsOther receivables b 56,369,599 (44,090,103) 12,279,496 21,395 – 21,395Cash and cash equivalents 20,275 – 20,275 988 – 988

–––––––––––– –––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––

Total current assets 56,389,874 (44,090,103) 12,299,771 22,383 – 22,383–––––––––––– –––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––

TOTAL ASSETS 83,606,348 (10,859,531) 72,746,817 74,532,091 (28,596,311) 45,935,780–––––––––––– –––––––––––– –––––––––––– –––––––––––– –––––––––––– –––––––––––––––––––––––– –––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––

EQUITY AND LIABILITIESShare capital 265 – 265 265 – 265Accumulated losses (14,435,400) (16,976,575) (31,411,975) (34,362,799) (30,178,684) (64,541,483)Translation reserve – – – – 571,131 571,131

–––––––––––– –––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––

Total equity (14,435,135) (16,976,575) (31,411,710) (34,362,534) (29,607,553) (63,970,087)–––––––––––– –––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––

Non-current liabilitiesBorrowings 85,781,895 – 85,781,895 – – –Decommissioning and environmental restoration provision d – 7,423,425 7,423,425 3,722,882 1,231,436 4,954,318Deferred tax liabilities c 2,039,546 (974,377) 1,065,169 1,429,507 (220,194) 1,209,313

–––––––––––– –––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––

Total non-current liabilities 87,821,441 6,449,048 94,270,489 5,152,389 1,011,242 6,163,631

–––––––––––– –––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––

Current liabilitiesBorrowings e 2,664,693 (332,004) 2,332,689 97,544,564 – 97,544,564Other taxes payable – 51,205 51,205 – – –Trade and other payables 7,555,349 (51,205) 7,504,144 6,197,672 – 6,197,672

–––––––––––– –––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––

Total current liabilities 10,220,042 (332,004) 9,888,038 103,742,236 – 103,742,236–––––––––––– –––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––

TOTAL LIABILITIES 98,041,483 6,117,044 104,158,527 108,894,625 1,011,242 109,905,867–––––––––––– –––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––

TOTAL EQUITY AND LIABILITIES 83,606,348 (10,859,531) 72,746,817 74,532,091 (28,596,311) 45,935,780

–––––––––––– –––––––––––– –––––––––––– –––––––––––– –––––––––––– –––––––––––––––––––––––– –––––––––––– –––––––––––– –––––––––––– –––––––––––– ––––––––––––

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Reconciliation of accumulated losses1 January 31 December

Note 2010 2012

Accumulated losses and other reserves under Russian GAAP (14,435,400) (34,362,799)

Adjustments for:Adjustment for net book value of Exploration and evaluation assets a,b (8,717,779) (19,911,077)Recalculation of deferred tax assets c (2,141,752) (8,685,234)Recalculation of deferred tax liabilities c 974,377 220,194Provision for decommissioning d (7,423,425) (1,231,436)Recalculation of financial liabilities at amortised cost e 332,004 –

––––––––––––– –––––––––––––

Accumulated losses and other reserves under IFRS (31,411,975) (63,970,352)––––––––––––– –––––––––––––––––––––––––– –––––––––––––

Note 2012

Loss for the year under Russian GAAP (15,361,053)Effect of transition to IFRSs

Operating expenses:– adjustment of exploration expenditure derecognised a 15,353,261– adjustment for decommissioning provision d 3,424,500– other adjustments 5,399Finance costs:– interest expenses on borrowings e (4,532,157)– adjustment for decommissioning provision d (438,006)Income tax expense:– recalculation of deferred taxes c (2,982,176)

–––––––––––––

Loss for the year under IFRS (4,530,232)Translation differences (from functional currency into presentational currency) (3,465,026)

–––––––––––––

Total comprehensive loss for the year under IFRS (7,995,258)––––––––––––––––––––––––––

Note 23. Events after reporting date

Purchase of the CompanyOn 22 February 2013, Gregory Trading S.A. sold its wholly-owned share in SibGeCo to CengeoHoldings Limited (“Cengeo”) incorporated and domiciled in Cyprus. Under the terms of the Share SalePurchase and Assignment Agreement, the total debt of SibGeCo payable to Gregory Trading SAamounting to RR 3,150,610,878 (US$103,501,648) was assigned to Cengeo. Cengeo does not intend tocall payment on this loan amount from the Company in the foreseeable future, being a period of notless than 12 months from the date of the approval of this financial information.

In consideration, Cengeo made a payment for the assignment which was included in the overall purchaseconsideration under the Share Sale and Purchase agreement.

Licence extensionSibGeCo has successfully obtained a 25 year exploration and production licence covering the Koltogoroil field. The Koltogor Licence was issued by the Russian Federal Agency for Subsoil Use (Rosnedra)on 15 February 2013. The terms of the licence require SibGeCo to acquire 500km2 of seismic datarelated to the licence area with the acquisition commencing not later than 2 years from the date of thegrant of the licence and concluding on or before the third anniversary of the date of the grant.

Proposed acquisition of parent companyOn 20 March 2013, Zoltav Resources Inc. (ZRI) announced the proposed acquisition of Cengeo forUS$26 million, to be satisfied by the issue of 23,657,870 Consideration Shares.

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PART VI

UNAUDITED PRO FORMA FINANCIAL INFORMATION

The unaudited pro forma statement of net assets of the Enlarged Group set out below has been preparedfor illustrative purposes only, in accordance with Annex II of the PD Regulation and on the basis of thenotes set out below. The unaudited pro forma statement of net assets has been prepared to illustrate theeffect of (i) consolidating the net assets of Zoltav Resources Inc. (“ZRI”) as at 31 December 2012 withthe net assets of CenGeo Holdings Limited (“CenGeo Holdings”) and ZAO Sibirsky GeologicheskayaKompaniya (“SibGeCo”) as at 31 December 2012, (ii) the Share Subscription by ARA Capital to theGroup’s net assets scheduled to take place in July 2013 and (iii) the conversion of the ARA Capitalconvertible loan note into equity that took place on 7 June 2013.

The unaudited pro forma statement of net assets has been prepared for illustrative purposes only and,because of its nature, addresses a hypothetical situation and does not represent the Enlarged Group’sactual financial position. It may not, therefore, give a true picture of the Enlarged Group’s financialposition nor is it indicative of the results that may, or may not, be expected to be achieved in the future.The pro forma statement of net assets has been prepared under IFRS adopted by the EU and on thebasis of the accounting policies of ZRI. Shareholders should read the whole of this circular and notrely on the summarised financial information in this Part VI.

Unaudited pro forma

total for theZoltav Cengeo Enlarged

Resources Inc. Holdings SibGeCo Elimination Group as atas at Limited as at as at of inter- Other 31 December

31 December 31 December 31 December company pro forma 20122012 2012 2012 balances adjustments (Note 6)

(Note 1) (Note 2) (Note 3) (Note 4) (Note 5) (Note 7)US$’000 US$’000 US$’000 US$’000 US$’000 US$’000

ASSETSNon-current assetsExploration and evaluation assets – – 45,913 – – 45,913

–––––––– –––––––– –––––––– –––––––– –––––––– ––––––––– – 45,913 – – 45,913

Current assetsTrade and other receivables 44 250 21 (250)(i) – 65Financial assets at fair value through profit or loss 404 – – – – 404Cash and cash equivalents 108 1 1 – 11,803 11,913

–––––––– –––––––– –––––––– –––––––– –––––––– ––––––––556 251 22 (250) 11,803 12,382

–––––––– –––––––– –––––––– –––––––– –––––––– ––––––––Total assets 556 251 45,935 (250) 11,803 58,295

–––––––– –––––––– –––––––– –––––––– –––––––– –––––––––––––––– –––––––– –––––––– –––––––– –––––––– ––––––––LIABILITIESCurrent liabilitiesTrade and other payables 81 142 6,198 – – 6,421Borrowings – 250 97,545 (97,545)(ii) – 250

–––––––– –––––––– –––––––– –––––––– –––––––– ––––––––81 392 103,743 (97,545) – 6,671

Non-current liabilitiesBorrowings 345 – – – (345) –Decommissioning and environmental

restoration provision – – 4,954 – – 4,954Deferred tax liabilities – – 1,209 – – 1,209

–––––––– –––––––– –––––––– –––––––– –––––––– ––––––––345 – 6,163 – (345) 6,163

–––––––– –––––––– –––––––– –––––––– –––––––– ––––––––Total liabilities 426 392 109,906 (97,545) (345) 12,834

–––––––– –––––––– –––––––– –––––––– –––––––– –––––––––––––––– –––––––– –––––––– –––––––– –––––––– ––––––––Net Assets 130 (141) (63,971) 97,295 12,148 45,461

–––––––– –––––––– –––––––– –––––––– –––––––– –––––––––––––––– –––––––– –––––––– –––––––– –––––––– ––––––––

(1) The financial information has been extracted, without material adjustments, from the auditedfinancial statements for ZRI as incorporated by reference in Part IV, prepared in accordance withIFRS as adopted by the European Union.

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(2) The financial information has been extracted, without material adjustments, and translated at theEUR:USD exchange rate at 31 December 2012 of 1:1.3184 from the financial information forCenGeo Holdings as set out in Part V “Financial Information of CenGeo Holdings”, prepared inaccordance with IFRS as adopted by the European Union.

(3) The financial information has been extracted, without material adjustments, from the financialinformation for SibGeCo as set out in Part V “Financial Information of SibGeCo”, prepared inaccordance with IFRS as adopted by the European Union.

(4) (i) On 17 December 2012, CenGeo Holdings paid Gregory Trading S.A. US$250,000 as anearnest payment for the assignment of debt payable by SibGeCo to Gregory Trading S.A. Asat 31 December 2012, CGH’s receivable of US$250,000 was therefore due from SibGeCo, andhas been eliminated.

(ii) As at 31 December 2012, SibGeCo had a borrowing balance of US$97,545,000 with GregoryTrading S.A. CenGeo Holdings became the owner of this loan upon completion of thetransaction as part of the sales purchase agreement between CenGeo Holdings and GregoryTrading S.A., which was signed on 17 December 2012, and has been eliminated

(5) Other pro forma adjustments are as follows:

a. Receipt of share subscription proceeds of US$13,000,000 from ARA Capital, net ofUS$1,197,000 of transaction costs; and

b. Extinguishment of the ARA Capital loan liability of US$345,000 upon its conversion toequity on 19 March 2013

The acquisition will be accounted for as an asset-acquisition under IFRS as adopted by theEuropean Union. Therefore no goodwill will be generated upon acquisition.

(6) The unaudited pro forma statement of net assets does not reflect any trading activity or othertransactions undertaken by the Group since 31 December 2012.

(7) This pro forma statement of net assets, prepared in accordance with IFRS as adopted by theEuropean Union, does not constitute financial statements within the meaning of section 434 ofthe Companies Act 2006.

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PART VII

ADDITIONAL INFORMATION

1. Responsibility1.1 The Company and the Directors, whose names and functions appear on page 3 of this document,

accept responsibility, individually and collectively, for the information contained in this document.To the best of the knowledge and belief of the Directors (having taken all reasonable care toensure that such is the case) the information contained in this document, for which they areresponsible, is in accordance with the facts and does not omit anything likely to affect the importof such information.

2. The Company2.1 The Company was incorporated as an exempted company with limited liability in the Cayman

Islands under the Companies Law (2003 Revision) on 18 November 2003, with the name “SkiddawCapital Inc.” and with registered number 130605. On 6 July 2004 the Company changed its nameto “Crosby Capital Partners Inc.” and on 2 May 2008 the Company changed its name to “CrosbyAsset Management Inc.”. On 21 June 2011, the Company changed its name to “Zoltav ResourcesInc.”.

2.2 The principle legislation under which the Company operates is the Cayman Companies Law andregulations made thereunder.

2.3 The issued share capital of the Company as at the date of this document is US$3,970,909.79consisting of 397,090,979 Existing Ordinary Shares which are all fully paid. The par value of eachExisting Ordinary Share is US$0.01. Immediately following Admission, the issued share capitalof the Company will be as set out in paragraph 4.2 of this Part VII below.

2.4 The Company’s registered office is at 89 Nexus Way, Camana Bay, Grand Cayman, KY1-9007,Cayman Islands. The telephone number of the Company’s registered office is +1 345 949 9876.TheCompany’s principal place of business is at Ogier House, The Esplanade, St Helier, JerseyJE4 9WG. The telephone number of the Company at its principal place of business is+44 (0) 1534 504 000. The Company’s website address is www.zoltav.com. Information displayedon the Company’s website does not constitute a part of this document.

3. The Group3.1 As at the date of this document, the Company has the following subsidiaries which are wholly

owned:

Company Date and place Name of Subsidiary Number of incorporation Principal activities

Zoltav Resources Holdings 112204 9 January 2013, Jersey Holding company(Jersey) Limited

ZRI Services (UK) Limited 8379026 29 January 2013, England Administrative support

3.2 Following completion of the Acquisition, the Company would have the following additionalsubsidiaries, each of which would be wholly owned:

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Company Date and place Name of Subsidiary Number of incorporation Principal activities

CenGeo Holdings Limited HE 313630 18 October 2012, Holding companyRepublic of Cyprus

Closed Joint Stock 1028600954722 15 November 1999, Oil and gas Company “Sibirsky Russian Federation exploration andGeologicheskaya production companyKompaniya”

4. Share Capital of the Company4.1 The Company is the holding company of the Group.

4.2 The authorised and issued share capital of the Company: (i) as at the date of this document; and(ii) immediately following Admission is/will be:

Authorised share capital Issued share capitalNumber of Number of

Existing ExistingOrdinary Shares Amount Ordinary Shares Amount

At the date of this document 5,000,000,000 US$50,000,000 397,090,979 US$3,970,909.79

Number of New Number of New Ordinary Shares Amount Ordinary Shares Amount

Immediately following Admission 250,000,000 US$50,000,000 55,341,302 US$11,068,260.40

4.3 The following changes in the share capital of the Company occurred during the period coveredby the historical financial information in Part IV of this document:

4.3.1 The issued share capital of the Company on 1 January 2010 was US$2,434,750comprising 243,475,000 Existing Ordinary Shares.

4.3.2 On 4 October 2010, the Company issued 66,367,043 Existing Ordinary Shares to CrosbyCapital Limited by way of satisfaction of a loan owed by the Company.

4.3.3 On 13 January 2011, the Company issued 12,500,000 Existing Ordinary Shares to certaininvestors by way of a subscription.

4.3.4 On 14 January 2011, the Company issued 25,000,000 Existing Ordinary Shares to certaininvestors by way of a subscription.

4.3.5 On 10 February 2011, the Company issued 18,750,000 Existing Ordinary Shares to certaininvestors by way of a subscription.

4.3.6 On 19 April 2011, the Company issued 9,152,301 Existing Ordinary Shares pursuant toan exercise of warrants.

4.3.7 As at 31 December 2012, the Company’s issued share capital was US$3,752,443.44comprising 375,244,344 Existing Ordinary Shares.

4.4 The authorised share capital of the Company at the date of this document is US$50,000,000divided into 5,000,000,000 Existing Ordinary Shares of which 397,090,979 Existing OrdinaryShares have been issued, credited as fully paid as at the date of this document and it is anticipatedthat immediately following Admission the authorised share capital of the Company will beUS$50,000,000 divided into 250,000,000 New Ordinary Shares, of which 55,341,302 NewOrdinary Shares will have been issued, credited as fully paid.

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4.5 Save as disclosed in this document, no commissions, discounts, brokerages or other special termshave been granted by the Company or its subsidiaries in connection with the issue or sale of anyshare or loan capital of the Company or its subsidiaries.

4.6 There are no shares in the Company which are held by, or on behalf of, the Company and theCompany’s subsidiaries do not hold any shares in the Company.

4.7 Save as disclosed in this document, no person has any rights to purchase the authorised butunissued share capital of the Company and no person has been given an undertaking by theCompany to increase its authorised share capital.

4.8 No shares in the Company are currently in issue with a fixed date on which entitlement to adividend arises and there are no arrangements in force whereby future dividends are waived oragreed to be waived.

4.9 The Existing Ordinary Shares are in registered form. Following Admission, the New OrdinaryShares may be held in either certificated form or, through Depositary Interests, in uncertificatedform and may be delivered, held and settled in CREST by means of the creation of dematerialisedDepositary Interests representing such New Ordinary Shares, details of which are set out inparagraph 20 of this Part VII. Following Admission, a register of New Ordinary Shares will bemaintained by the Registrar and a register of Depositary Interests will be maintained by theDepositary.

4.10 The Company had 397,090,979 Existing Ordinary Shares in issue on the date of this document.The Company has not used more than 10 per cent. of the issued share capital for the purchase ofassets other than cash during the period of the financial information set out in Part IV of thisdocument.

4.11 Save as disclosed in this document:

4.11.1 the Company does not have in issue any securities not representing share capital nor arethere any outstanding convertible securities issued by the Company; and

4.11.2 no share capital of the Company is under option or has been granted conditionally orunconditionally to be put under option.

4.12 The ISIN number for the Existing Ordinary Shares is KYG9895N1016. The ISIN number for theNew Ordinary Shares and the Depositary Interests is KYG9895N1198.

5. Memorandum and Articles

5.1 Memorandum5.1.1 The memorandum of association of the Company and the articles of association of the

Company summarised in this document (“Memorandum” and “Articles” respectively)will be adopted conditionally upon Admission.

5.1.2 Subject to the Cayman Companies Law, the Company may, by special resolution, amendthe provisions of the Memorandum and Articles in whole or in part.

5.1.3 Certain of the provisions of the Memorandum and Articles are summarised below.

5.2 Objects5.2.1 The Company’s objects are included in clause 3 of the Memorandum and are unrestricted.

The Company shall have full power to carry out any object not prohibited by applicablelaw.

5.3 Voting Rights5.3.1 Subject to any rights or restrictions as to voting attached to any shares, unless any share

carries special voting rights, on a show of hands every member who is present in personand every person representing a member by proxy shall have one vote. On a poll, every

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member who is present in person and every person representing a member by proxy shallhave one vote for each share of which he or the person represented by proxy is the holder.In addition, all members holding shares of a particular class are entitled to vote at ameeting of the holders of that class of shares.

5.3.2 Votes may be given either personally or by proxy.

5.4 Variation of Rights5.4.1 Whenever the capital of the Company is divided into different classes of shares, the rights

attaching to any class of share (unless otherwise provided by the terms of issue of theshares of that class) may be varied either with the consent in writing of the holders ofnot less than two-thirds of the issued shares of that class, or with the sanction of aresolution passed by a majority of not less than two-thirds of the holders of shares ofthe class present in person or by proxy at a separate general meeting of the holders ofshares of that class.

5.4.2 Unless the terms on which a class of shares were issued state otherwise, the rightsconferred on the member holding shares of any class shall not be deemed to be varied bythe creation or issue of further shares ranking pari passu with the existing shares ofthat class.

5.5 Alteration of share capital5.5.1 Subject to the Cayman Companies Law, the Company may, by ordinary resolution:

(a) increase its share capital by new shares of the amount fixed by that ordinaryresolution and with the attached rights, priorities and privileges set out in thatordinary resolution;

(b) consolidate and divide all or any of its share capital into shares of larger amountthan its existing shares;

(c) convert all or any of its paid up shares into stock, and reconvert that stock intopaid up shares of any denomination;

(d) sub-divide its shares or any of them into shares of an amount smaller than thatfixed by the Memorandum, so, however, that in the sub-division, the proportionbetween the amount paid and the amount, if any, unpaid on each reduced shareshall be the same as it was in case of the share from which the reduced share isderived; and

(e) cancel shares which, at the date of the passing of that ordinary resolution, havenot been taken or agreed to be taken by any person and diminish the amount ofits share capital by the amount of the shares so cancelled or, in the case of shareswithout nominal par value, diminish the number of shares into which its capital isdivided.

5.5.2 Subject to the Cayman Companies Law and to any rights for the time being conferredon the members holding a particular class of shares, the Company may, by specialresolution, reduce its share capital in any way.

5.6 Redemption and purchase of own shares5.6.1 Subject to the Cayman Companies Law, the AIM Rules and any rights for the time being

conferred on the members holding a particular class of shares, the Company may by itsdirectors:

(a) issue shares that are to be redeemed or liable to be redeemed, at the option of theCompany or the member holding those redeemable shares, on the terms and in themanner its directors determine before the issue of those shares;

(b) with the consent by special resolution of the members holding shares of aparticular class, vary the rights attaching to that class of shares so as to providethat those shares are to be redeemed or are liable to be redeemed at the option of

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the Company on the terms and in the manner which the directors determine at thetime of such variation; and

(c) purchase all or any of its own shares of any class including any redeemable shareson the terms and in the manner which the directors determine at the time of suchpurchase.

5.6.2 The Company may make a payment in respect of the redemption or purchase of its ownshares in any manner authorised by the Cayman Companies Law, including out of anycombination of capital, its profits and the proceeds of a fresh issue of shares.

5.6.3 When making a payment in respect of the redemption or purchase of shares, the directorsmay make the payment in cash or in specie (or partly in one and partly in the other) if soauthorised by the terms of the allotment of those shares or by the terms applying to thoseshares, or otherwise by agreement with the member holding those shares.

5.7 Allotment of securities and pre-emption rights5.7.1 Subject to the provisions of the Cayman Companies Law and the Articles regarding

redemption and purchase of the shares, the level of the directors’ authority to allotunissued shares shall be the subject of an ordinary resolution to be proposed at the annualgeneral meeting of the Company each year. No share may be issued at a discount exceptin accordance with the provisions of the Cayman Companies Law.

5.7.2 Subject to the Articles and unless the Company shall by ordinary resolution otherwisedirect (and for the avoidance of doubt such direction shall expire at the next followingannual general meeting or such earlier time as is specified in the ordinary resolution),unissued shares in the capital of the Company shall only be allotted for cash and, unlessthe relevant shares are being issued: (i) as bonus shares; (ii) in connection with anemployee share scheme; or (iii) in connection with a particular allotment of shares whichare to be fully paid up or partly paid up otherwise than in cash:

(a) such shares to be allotted shall first be offered to the members in proportion totheir existing holdings of shares (but subject to such exclusions or otherarrangements as the directors may deem necessary or expedient in relation tofractional entitlements or legal or practical problems under the laws of, or therequirements of any recognised regulatory body or any stock exchange in, anycountry or jurisdiction); and

(b) such offer to the members shall be made by written notice from the directorsspecifying the number and price of the shares the subject of the offer (“offershares”) and shall invite each relevant member to state in writing within a period,not being less than fourteen clear days, whether they are willing to accept any offershares and, if so, the maximum number of offer shares they are willing to take.

At the expiration of the time specified for acceptance in the offer notice the directors shallallocate the offer shares to or amongst the relevant members who shall have notified tothe directors their willingness to take any of the offer shares but so that no relevantmember shall be obliged to take more than the maximum number of shares notified byhim in his response to the offer by the directors. If any offer shares remain unallocatedafter the offer, the directors shall be entitled to allot, grant options over or otherwisedispose of those shares to such persons on such terms and in such manner as they thinkfit save that those shares shall not be disposed of on terms which are more favourable totheir subscribers than the terms on which they were offered to the relevant members.

5.8 Share Certificates5.8.1 Subject to the Articles, the Cayman Companies Law, the AIM Rules (as applicable) and/or

as required by the London Stock Exchange, upon being entered in the register of membersas the holder of a share, a member shall be entitled, without payment, to one certificatefor all the shares of each class held by that member (and, upon transferring a part of themember’s holding of shares of any class, to a certificate for the balance of that holding).Every certificate shall specify the number, class and distinguishing numbers (if any) ofthe shares to which it relates and whether they are fully paid up or partly paid up. A

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certificate may be executed under seal or executed in such other manner as the directorsdetermine.

5.8.2 A share certificate which is defaced, worn-out, lost or destroyed, may be renewed on suchterms (if any) as the directors may determine, and in the case of defacement or wearing-out, on delivery to the Company of the old certificate.

5.9 Calls on shares and forfeiture5.9.1 Subject to the terms of allotment, the directors may make calls on the members in respect

of any monies unpaid on their shares including any premium and each member shall(subject to receiving at least fourteen clear days’ notice specifying when and wherepayment is to be made), pay to the Company the amount called on his shares. Membersregistered as the joint holders of a share shall be jointly and severally liable to pay all callsin respect of the share. If a call remains unpaid after it has become due and payable theperson from whom it is due and payable shall pay interest on the amount unpaid fromthe day it became due and payable until it is paid at the rate fixed by the terms of allotmentof the share or in the notice of the call or if no rate is fixed, at the rate of ten per cent.per annum. The directors may, at their discretion, waive payment of the interest whollyor in part.

5.9.2 The Company has a first and paramount lien on all shares (whether fully paid up or not)registered in the name of a member (whether solely or jointly with others). The lien is forall monies payable to the Company by the member or the member’s estate:

(a) either alone or jointly with any other person, whether or not that other person is amember; and

(b) whether or not those monies are presently payable.

5.9.3 At any time the directors may declare any share to be wholly or partly exempt from thecalls and forfeiture provisions of the articles.

5.9.4 The Company may sell, in such manner as the directors may determine, any share onwhich the sum in respect of which the lien exists is presently payable, if due notice thatsuch sum is payable has been given (as prescribed by the Articles) and, within fourteendays of the date on which the notice is deemed to be given under the Articles, such noticehas not been complied with.

5.10 Untraceable Member5.10.1 Subject to the Cayman Companies Law, the Company may sell, subject to certain

conditions, any share of a member who cannot be traced if, during a period of twelveyears, at least three cash dividends in respect of the share have become payable and nosuch dividend during that period has been claimed.

5.11 Forfeiture or surrender of shares5.11.1 If a member fails to pay any call the directors may give to such member not less than

fourteen clear days’ notice requiring payment and specifying the amount unpaid includingany interest which may have accrued, any expenses which have been incurred by theCompany due to that person’s default and the place where payment is to be made. Thenotice shall also contain a warning that if the notice is not complied with, the shares inrespect of which the call is made will be liable to be forfeited.

5.11.2 If such notice is not complied with, the directors may, before the payment required bythe notice has been received, resolve that any share the subject of that notice be forfeited(which forfeiture shall include all dividends or other monies payable in respect of theforfeited share and not paid before such forfeiture).

5.11.3 A forfeited share may be sold, re-allotted or otherwise disposed of on such terms and insuch manner as the directors determine and at any time before a sale, re-allotment ordisposition the forfeiture may be cancelled on such terms as the directors think fit.

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5.11.4 A person whose shares have been forfeited shall cease to be a member in respect of theforfeited shares, but shall, notwithstanding such forfeit, remain liable to pay to theCompany all monies which at the date of forfeiture were payable by him to the Companyin respect of the shares, together with all expenses and interest from the date of forfeitureor surrender until payment, but his liability shall cease if and when the Company receivespayment in full of the unpaid amount.

5.11.5 A declaration, whether statutory or under oath, made by a director or the secretary shallbe conclusive evidence that the person making the declaration is a director or secretaryof the Company and that the particular shares have been forfeited or surrendered on aparticular date.

5.11.6 Subject to the execution of an instrument of transfer, if necessary, the declaration shallconstitute good title to the shares.

5.12 Share premium account5.12.1 The directors shall establish a share premium account and shall carry the credit of such

account from time to time to a sum equal to the amount or value of the premium paidon the issue of any share or capital contributed or such other amounts required by theCompanies Law.

5.13 Transfer of shares5.13.1 All transfers of certificated shares shall be effected by an instrument of transfer, in a

common form or in a form approved by the directors and shall be signed by or on behalfof the transferor. If the share is partly paid up, the transfer shall also be signed by thetransferor and the transferee. Transfers of uncertificated shares shall be effected withouta written instrument in accordance with the CREST Regulations.

5.13.2 The directors may refuse to register the transfer of a share to any person. They may doso in their absolute discretion, without giving any reason for their refusal, and irrespectiveof whether the share is fully paid up or the Company has no lien over it. The board ofdirectors shall not, however, refuse to register any transfer or renunciation of anycertificated shares listed on AIM on the ground that they are partly paid up incircumstances where such refusal would prevent dealings in such shares from taking placeon an open and proper basis.

5.13.3 The board of directors shall register a transfer of title to any uncertificated share or therenunciation or transfer of any renounceable right of allotment of a share which is aParticipating Security held in uncertificated form in accordance with the UncertificatedSecurities Regulations, except that the board of directors may refuse (subject to anyrelevant requirements of (to the extent applicable) the AIM Rules and/or the LondonStock Exchange) to register any such transfer or renunciation which is in favour of morethan four persons jointly or in any other circumstance permitted by the UncertificatedSecurities Regulations.

5.13.4 The Company shall register the transfer of any shares represented by depositary interestsin accordance with the Uncertificated Securities Regulations and any other applicablelaws and regulations.

5.13.5 Where permitted by the Uncertificated Securities Regulations and any other applicablelaws and regulations, the board of directors may, in its absolute discretion and withoutgiving any reason for its decision, refuse to register any transfer of any share representedby a depositary interest.

5.14 Disclosure of interests in shares5.14.1 The provisions of DTR5 shall be deemed to apply to the Company, so that members are

required under the Articles to notify the Company of their interests in shares of theCompany and any indirect interests in the shares they hold in the Company, whether suchindirect interest inures at the relevant time or has so inured in the previous three years. Ifany member fails to comply with these requirements, the directors may, by notice to theholder of the shares, suspend their rights as to attendance and voting at general meetings

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or to be reckoned in a quorum, dividends and transfer. Such suspension shall have effectfrom the date on which the default notice is given to the member until a date that is notmore than seven days after the board of directors has determined that the holder of theshares has cured the non-compliance. During the period of such suspension any dividendor other amount payable in respect of the shares shall be retained by the Companywithout any obligation to pay interest thereon.

5.15 Dividends5.15.1 Subject to the provisions of the Cayman Companies Law and any rights for the being

attaching to any class or classes of shares, the directors may declare dividends ordistributions out of funds of the Company which are lawfully available for that purpose.

5.15.2 Subject to the provisions of the Cayman Companies Law and any rights for the beingattaching to any class or classes of shares, the Company may, by ordinary resolution,declare dividends but no such dividend shall exceed the amount recommended by thedirectors.

5.15.3 Subject to the requirements of the Cayman Companies Law regarding the application ofa company’s share premium account and with the sanction of an ordinary resolution,dividends may also be declared and paid out of any share premium account. The directorswhen paying dividends to members may make such payment either in cash or in specie.

5.15.4 Unless provided by the rights attached to a share, no dividend shall bear interest againstthe Company.

5.16 General meetings5.16.1 The Company shall hold an annual general meeting in each calendar year, which shall be

convened by the board of directors, but so that the maximum period between such annualgeneral meetings shall not exceed fifteen months. All general meetings other than annualgeneral meetings shall be called extraordinary general meetings.

5.16.2 The directors may convene general meetings whenever they think fit. General meetingsshall also be convened on the written requisition of one or more of the members entitledto attend and vote at general meetings of the Company who (together) hold not less thanfive per cent. of the paid up voting share capital of the Company deposited in accordancewith the notice provisions in the Articles, specifying the purpose of the meeting and signedby each of the members making the requisition. If the directors do not convene suchmeeting for a date not later than twenty-one clear days’ after the date of receipt of thewritten requisition, those members who requested the meeting may convene the generalmeeting themselves within three months after the end of such period of twenty-one cleardays in which case reasonable expenses incurred by them as a result of the directors failingto convene a meeting shall be reimbursed by the Company.

5.16.3 At least fourteen days’ notice of an extraordinary general meeting and twenty-one days’notice of an annual general meeting shall be given to members entitled to attend and voteat such meeting. The notice shall specify the place, the day and the hour of the meetingand, subject to the AIM Rules, the general nature of that business. In addition, if aresolution is proposed as a special resolution, the text of that resolution shall be given toall members. Notice of every general meeting shall also be given to the directors andauditors.

5.16.4 Subject to the Cayman Companies Law and with the consent of the members who,individually or collectively, hold at least ninety per cent. of the voting rights of all thosewho have a right to vote at a general meeting, a general meeting may be convened onshorter notice.

5.16.5 The presence of two members, whether in person or represented by proxy, shall constitutea quorum at a general meeting.

5.16.6 If, within fifteen minutes from the time appointed for the general meeting, or at any timeduring the meeting, a quorum is not present, the meeting, if convened upon therequisition of members, shall be cancelled. In any other case it shall stand adjourned to

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the same time and place seven days or to such other time or place as is determined by thedirectors.

5.16.7 The chairman may, with the consent of a meeting at which a quorum is present, adjournthe meeting. When a meeting is adjourned for seven days or more, notice of the adjournedmeeting shall be given in accordance with the Articles.

5.16.8 At any general meeting a resolution put to the vote of the meeting shall be decided on ashow of hands, unless a poll is (before the declaration of the result of the show of hands)demanded by the chairman of the meeting or by at least two members having the rightto vote on the resolutions or one or more members present who together hold not lessthan ten per cent. of the voting rights of all those who are entitled to vote on theresolution. Unless a poll is so demanded, a declaration by the chairman as to the resultof a resolution and an entry to that effect in the minutes of the meeting of the Company,shall be conclusive evidence of the outcome of a show of hands, without proof of thenumber or proportion of the votes recorded in favour of, or against, that resolution.

5.16.9 If a poll is duly demanded it shall be taken in such manner as the chairman directs andthe result of the poll shall be deemed to be the resolution of the meeting at which the pollwas demanded.

5.16.10 In the case of an equality of votes, whether on a show of hands or on a poll, the chairmanof the meeting at which the show of hands takes place or at which the poll is demanded,shall not be entitled to a second or casting vote.

5.17 Directors5.17.1 The Company may by ordinary resolution, from time to time, fix the maximum and

minimum number of directors to be appointed. Under the Articles, the minimum numberof directors shall be three and the maximum number of directors shall be eleven.

5.17.2 A director may be appointed by ordinary resolution or by the directors. Any appointmentmay be to fill a vacancy or as an additional director.

5.17.3 The remuneration of the directors shall be determined by the Company by ordinaryresolution, except that the directors shall be entitled to such remuneration as the directorsmay determine not exceeding US$ three hundred thousand (or its equivalent in anycurrency) per annum or such larger amount as the Company may by ordinary resolutiondecide).

5.17.4 Any director may appoint another person, including another director, to act in his placeas an alternate director. No appointment shall take effect until the director has givennotice in writing or in an Electronic Record (as defined therein) (if permitted) of theappointment to the board of directors. All notices of meetings of directors shall continueto be given to the appointing director and not to the alternate. An alternate director shallbe entitled to attend and vote at any board of directors meeting or meeting of a committeeof the directors at which the appointing director is not personally present, and generallyto perform all the functions of the appointing director in his absence. An alternatedirector, however, is not entitled to receive any remuneration from the Company forservices rendered as an alternate director. A director may at any time revoke theappointment of an alternate director appointed by him.

Shareholding Qualification5.17.5 The shareholding qualification for directors may be fixed by the Company by ordinary

resolution and unless and until so fixed no share qualification shall be required.

Retirement and removal of directors5.17.6 The first directors of the Company and all subsequent directors shall submit themselves

for re-election by the members at the first annual general meeting after their appointment.No director shall remain in office for longer than three years since their last election orre-election without submitting themselves for re-election. At each annual general meeting,the directors subject to retirement shall retire from office. A director retiring at suchmeeting shall retain office until the dissolution of such meeting and accordingly on

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retiring, a director who is re-elected or deemed to have been re-elected will continue inoffice without a break.

5.17.7 The directors to retire by rotation shall be:

(a) any director who wishes to retire and not to offer himself for re-election;

(b) any director who has been, or who by the time of the next annual general meetingwill have been, in office for three years or more; and

(c) such number of additional directors (if any) as, when added to those directorsreferred to above, equal one-third of the directors (or, if the number of directors isnot three or a multiple of three, the number nearest to but not exceeding one-thirdof the directors), provided that such additional directors shall be those who havebeen longest in office. As between two or more directors who have been in officean equal length of time, the directors to retire shall in default of agreement betweenthem be determined by lot. The length of time a director has been in office shallbe computed from the date of his last election or appointment when he haspreviously vacated office.

5.17.8 As between two or more directors who have been in office an equal length of time, thedirectors to retire shall in default of agreement between them be determined by lot. Thelength of time a director has been in office shall be computed from the date of his lastelection or appointment when he has previously vacated office.

5.17.9 A retiring director shall be eligible for re-election.

5.17.10 The Company at the meeting at which a director retires in the manner aforesaid may fillthe vacated office by appointing a person thereto by ordinary resolution and in defaultthe retiring director shall, if willing to act, be deemed to have been re-appointed unlessat such meeting it is expressly resolved not to fill the vacated office or a resolution for there-appointment of such director shall have been put to the meeting and lost. TheCompany at such meeting may also, subject to the Articles, fill any other vacancies.

5.17.11 A director may be removed by ordinary resolution.

5.17.12 A director may at any time resign or retire from office by giving to the Company noticein writing. Unless the notice specifies a different date, the director shall be deemed to haveresigned on the date that the notice is delivered to the Company.

5.17.13 Subject to the provisions of the Articles, the office of a director may be terminatedforthwith if:

(a) he is prohibited by the law of the Cayman Islands from acting as a director;

(b) he is made bankrupt or makes an arrangement or composition with his creditorsgenerally;

(c) he resigns his office by notice to the Company;

(d) he only held office as a director for a fixed term and such term expires;

(e) in the opinion of a registered medical practitioner by whom he is being treated hebecomes physically or mentally incapable of acting as a director;

(f) he is given notice by the majority of the other directors (not being less than two innumber) to vacate office (without prejudice to any claim for damages for breachof any agreement relating to the provision of the services of such director);

(g) the Company receives notice of his removal by the member who nominated himas a director pursuant to an agreement entered into between the Company and thatmember in connection with that member’s subscription for shares in the Company;

(h) he is made subject to any law relating to mental health or incompetence, whetherby court order or otherwise;

(i) without the consent of the other directors, he is absent from meetings of directorsfor continuous period of six months.

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Compensation for loss of office5.17.14 The provisions contained in certain of the Act in relation to payments made to directors

(or a person connected to such directors) for loss of office and the circumstances in whichsuch payments would require the approval of members broadly apply to the Company,and the Company shall comply with such provisions as if it were a company incorporatedin the United Kingdom.

Powers and duties of directors5.17.15 Subject to the provisions of the Cayman Companies Law, the Memorandum and the

Articles, the business of the Company shall be managed by the directors, who may exerciseall powers of the Company. No prior act of the directors shall be invalidated by anysubsequent alteration of the Memorandum or the Articles. However, to the extent allowedby the Cayman Companies Law, members may by special resolution validate any prioror future act of the directors which would otherwise be in breach of their duties.

5.17.16 The directors may delegate any of their powers to any committee consisting of one ormore persons who need not be members and may include non-directors so long as themajority of those persons are directors; any committee so formed shall in the exercise ofthe powers so delegated conform to any regulations that may be imposed on it by thedirectors.

5.17.17 The board of directors may establish any local or divisional board of directors or agencyand delegate to it its powers and authorities (with power to sub-delegate) for managingany of the affairs of the Company whether in the Cayman Islands or elsewhere and mayappoint any persons to be members of a local or divisional board of directors, or to bemanagers or agents, and may fix their remuneration.

5.17.18 The directors may from time to time and at any time by power of attorney or in any othermanner they determine appoint any person, either generally or in respect of any specificmatter, to be the agent of the Company with or without authority for that person todelegate all or any of that person’s powers.

5.17.19 The directors may from time to time and at any time by power of attorney or in any othermanner they determine appoint any person, whether nominated directly or indirectly bythe directors, to be the attorney or the authorised signatory of the Company and for suchperiod and subject to such conditions as they may think fit. The powers, authorities anddiscretions, however, must not exceed those vested in, or exercisable, by the directors underthe Articles.

5.17.20 The board of directors may remove any person so appointed and may revoke or vary thedelegation.

Proceedings of directors5.17.21 The directors may meet together to discuss any matters of the Company (either within

or outside the Cayman Islands) and, subject to the provisions of Articles, may regulatetheir meetings and proceedings as they think fit.

5.17.22 Any director and the Company secretary may at the requisition of a director, summon ameeting of the directors.

5.17.23 All matters discussed at meetings of the directors shall be decided by a majority of votes.In the case of an equality of votes the chairman may, if he wishes, exercise a casting vote.The quorum for the transaction of the business of the board of directors shall be twounless the directors fix some other number.

5.17.24 A resolution in writing agreed by and signed by all the directors entitled to receive noticeof and vote at a meeting of the board of directors shall be as valid and effectual as if ithad been passed at a meeting of the board of directors or (as the case may be) a committeeof the board of directors duly convened and held.

5.17.25 A person entitled to be present at a meeting of the board of directors shall be deemed tobe present for all purposes if he takes part in the meeting by way of a conferencetelephone, video or any other form of communications equipment which allowseverybody participating in the meeting to speak to and be heard by all those present or

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deemed to be present simultaneously. A director so deemed to be present shall be entitledto vote and be counted in a quorum accordingly.

5.17.26 The directors may fill any casual vacancy in the office of auditors to the Company.

Borrowing powers of directors5.17.27 The directors may exercise all of the powers of the Company to borrow money and to

mortgage or charge its undertaking, property and assets both present and future anduncalled capital or any part thereof, to issue debentures and other securities whetheroutright or as collateral security for any debt, liability or obligation of the Company orits parent undertaking (if any) or any subsidiary undertaking of the Company or of anythird party.

Interests of directors and restrictions on voting5.17.28 A director shall not, as a director, vote in respect of any contract, transaction,

arrangement or proposal in which he has an interest which (together with any interest ofany person connected with him) is a material interest (otherwise then by virtue of hisinterests, direct or indirect, in shares or debentures or other securities of, or otherwise inor through, the Company) and if he shall do so his vote shall not be counted, nor inrelation thereto shall he be counted in the quorum present at the meeting, but (in theabsence of some other material interest than is mentioned below) none of theseprohibitions shall apply to:

(a) the giving of any security, guarantee or indemnity in respect of:

(i) money lent or obligations incurred by him or by any other person for thebenefit of the Company or any of its subsidiaries; or

(ii) a debt or obligation of the Company or any of its subsidiaries for which thedirector himself has assumed responsibility in whole or in part and whetheralone or jointly with others under a guarantee or indemnity or by the givingof security;

(b) where the Company or any of its subsidiaries is offering securities in which offerthe director is or may be entitled to participate as a holder of securities or in theunderwriting or sub-underwriting of which the director is to or may participate;

(c) any contract, transaction, arrangement or proposal affecting any other bodycorporate in which he is interested, directly or indirectly and whether as an officer,member, creditor or otherwise howsoever, provided that he (together with personsconnected with him) does not to his knowledge hold an interest representing oneper cent. or more of any class of the equity share capital of such body corporate(or of any third body corporate through which his interest is derived) or of thevoting rights available to members of the relevant body corporate;

(d) any act or thing done or to be done in respect of any arrangement for the benefitof the employees of the Company or any of its subsidiaries under which he is notaccorded as a director any privilege or advantage not generally accorded to theemployees to whom such arrangement relates; or

(e) any matter connected with the purchase or maintenance for any director ofinsurance against any liability or (to the extent permitted by law) indemnities infavour of directors, the funding of expenditure by one or more directors indefending proceedings against him or them or the doing of any thing to enablesuch director or directors to avoid incurring such expenditure.

5.17.29 A director may, as a director, vote (and be counted in the quorum) in respect of anycontract, transaction, arrangement or proposal in which he has an interest which is nota material interest or as described above.

Indemnity5.17.30 To the extent permitted by law, the Company shall indemnify each existing or former

secretary, director (including alternate director), and other officer of the Company

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(including an investment adviser or an administrator or liquidator) and their personalrepresentatives against:

(a) all actions, proceedings, costs, charges, expenses, losses, damages or liabilitiesincurred or sustained by the existing or former secretary or officer in or about theconduct of the Company’s business or affairs or in the execution or discharge ofthe existing or former secretary’s or officer’s duties, powers, authorities ordiscretions; and

(b) without limitation to paragraph (a), all costs, expenses, losses or liabilities incurredby the existing or former secretary or officer in defending (whether successfully orotherwise) any civil, criminal, administrative or investigative proceedings (whetherthreatened, pending or completed) concerning the Company or its affairs in anycourt or tribunal, whether in the Cayman Islands or elsewhere.

5.17.31 No such existing or former secretary or officer, however, shall be indemnified in respectof any matter arising out of his own dishonesty.

5.17.32 To the extent permitted by law, the Company may make a payment, or agree to make apayment, whether by way of advance, loan or otherwise, for any legal costs incurred byan existing or former secretary or officer of the Company in respect of any matteridentified in above on condition that the secretary or officer must repay the amount paidby the Company to the extent that it is ultimately found not liable to indemnify thesecretary or that officer for those legal costs.

5.18 Capitalisation of profits5.18.1 The directors may resolve to capitalise:

(a) any part of the Company’s profits not required for paying any preferential dividend(whether or not those profits are available for distribution); or

(b) any sum standing to the credit of the Company’s share premium account or capitalredemption reserve, if any.

5.18.2 The amount resolved to be capitalised must be appropriated to the members who wouldhave been entitled to it had it been distributed by way of dividend and in the sameproportions.

5.19 Distribution of assets in a liquidation5.19.1 If the Company is wound up, the members may, subject to the Articles and any other

sanction required by the Cayman Companies Law, pass a special resolution allowing theliquidator to do either or both of the following:

(a) to divide in specie among the members the whole or any part of the assets of theCompany and, for that purpose, to value any assets and to determine how thedivision shall be carried out as between the members or different classes ofmembers; and

(b) to vest the whole or any part of the assets in trustees for the benefit of membersand those liable to contribute to the winding up.

5.19.2 The directors have the authority to present a petition for the winding up of the Companyto the Grand Court of the Cayman Islands on behalf of the Company without thesanction of a resolution passed at a general meeting.

6. Squeeze Out Rights under Cayman Islands LawCompulsory AcquisitionWhere an offer is made by a company for the shares of another company and, within four months ofthe offer, the holders of not less than 90 per cent. in value of the shares which are the subject of theoffer accept, the offeror may at any time within two months after the expiration of the said four months,by notice in the prescribed manner require the dissenting shareholders to transfer their shares on theterms of the offer. A dissenting shareholder may apply to the Grand Court of the Cayman Islands withinone month of the notice objecting to the transfer.

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7. Disclosure of Interests7.1 Directors’ and other interests

7.1.1 As at the date of this document and immediately following Admission, the interests(including related financial products as defined in the AIM Rules) of the Directors(including persons connected with the Directors within the meaning of section 252 ofthe Act and any member of the Director’s family (as defined in the AIM Rules)) in theissued share capital of the Company are as follows:

Number of Number New Ordinary

of Existing Shares Ordinary Percentage to be held

Shares of Existing immediately Percentage held at Share following of Enlarged

Name of Director Admission Capital Admission Share Capital

Symon Drake-Brockman 9,381,108 2.36 469,055 0.8Stephen Lowden – – – –John Grimshaw – – – –Michael Lombardi – – – –Oliver Donagher – – – –

7.2 As at the date of this document the following options have been granted to the Directors and areoutstanding:

Number of New Ordinary

Number of Shares Existing under option, Exercise Price

Ordinary following following Shares the Share Exercise Exercise the Share

Name of Director under option Consolidation Period Price Consolidation

Symon Drake-Brockman1 25,000,000 1,250,000 31 October 2012 – £0.01 £0.20

30 October 2015

Stephen Lowden 10,000,000 500,000 31 October 2012 – £0.01 £0.2030 October 2015

John Grimshaw – – – – –Michael Lombardi – – – – –Oliver Donagher – – – – –

1 Symon Drake-Brockman’s options are held by the trustee of the Boris Trust, of which Symon Drake-Brockman isthe sole beneficiary.

7.3 Save as stated above or as otherwise disclosed in this document:

7.3.1 none of the Directors (nor any person connected with any of them within the meaningof section 252 of the Act) has any interest, whether beneficial or non-beneficial, in theshare or loan capital in the Group or in any related financial product (as defined in theAIM Rules) referenced to the Ordinary Shares;

7.3.2 there are no outstanding loans granted or guarantees provided by any member of theGroup to or for the benefit of the Directors or provided by any Director to any memberof the Group;

7.3.3 none of the Directors has any interest, direct or indirect, in any assets which have beenor are proposed to be acquired or disposed of by, or leased to, any member of the Group;

7.3.4 none of the Directors has any option or warrant to subscribe for any shares in theCompany; and

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7.3.5 none of the Directors has any interest, direct or indirect, in any contract or arrangementwhich is or was unusual in its nature or conditions or significant to the business of theGroup taken as a whole, which were effected by any member of the Group and whichremains in any respect outstanding or unperformed.

7.3.6 Save for the material contracts described in paragraph 10 of this Part VII, the serviceagreements and letters of appointment referred to in paragraph 9 of this Part VII, thelock-in arrangements referred to in paragraph 10.3 of this Part VII and the related partytransactions described in paragraph 11 of this Part VII, there are no agreements,arrangements or understandings between any of the Directors, recent Directors,Shareholders or recent Shareholders of the Company connected with or dependent uponAdmission.

7.4 Substantial Shareholders7.4.1 As at the date of this document and so far as the Directors are aware other than the

Directors and their connected persons (whose interests are set out in paragraph 7.1 ofthis Part VI above), the persons set out below are, at the date of this document, and willimmediately following Admission, be interested (as defined in Part VI of FSMA and theDTR), directly or indirectly, jointly or severally in three per cent. or more of the issuedshare capital of the Company:

Current Following AdmissionNumber Percentage Number Percentage

of Existing of Existing of New of EnlargedOrdinary Share Ordinary Share

Name of Shareholder Shares Capital Shares Capital

ARA Capital Limited 190,706,789 48.0 21,364,274 38.6Bandbear Limited – – 17,979,981 32.5Mark Nicholas Tompkins 45,100,000 11.4 2,255,000 4.1Dmitry Kamyshev – – 3,406,734 6.2Alexander Sokolov – – 2,271,155 4.1

7.4.2 Prior to and immediately following Admission, the voting rights of the Company’ssubstantial shareholders do not differ from the voting rights of any other shareholder inthe Company.

7.4.3 While the Articles provide for Shareholders to notify the Company of any holdings ofthree per cent. or more and any changes in such interests which result in a Shareholder’sholding passing through one whole per cent., there are no equivalent requirements underthe Cayman Companies Law. As a result, the Company may not always be able toascertain the identity of all holders of three per cent. or more of the Company’s sharecapital, and therefore the Company may not always be able to comply with Rule 17 ofthe AIM Rules.

7.4.4 Immediately following Admission ARA Capital will control 38.6 per cent. of the votingrights in the Company. The Company, SCC and ARA Capital have entered into theRelationship Agreement to regulate the relationship between them following Admission,as is more fully described in paragraph 10.2 of this Part VII.

8. Additional information on the Directors8.1 In addition to their directorships in the Company, the Directors hold, or have during the five years

preceding the date of this document held, the following directorships or partnerships:

Director Current Directorships/Partnerships Past Directorships/Partnerships

Symon Roderick Nexus Energy Ltd Smart Network SolutionsDrake-Brockman Pemberton Capital Advisors LLP Eclipse Film Partners No. 35

TCI Renewables Limited LLP

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Stephen Jonathan New Age (African Global Gas Plus Khalakan LtdLowden Energy) Ltd Gas Plus Erbil Ltd

Invicta Cayman LtdNexus EnergySarabi Oil & Gas LtdBowleven plc

John Grimshaw DWC Limited Nautilus Trust Company GCL Limited LimitedPenjo Limited Nautilus Corporate Services Black Gold Khalakan Limited Limited

Nautilus Nominee ServicesLimited

Nautilus Nominees (No2) Limited

Nautilus Fund Services Limited

Nautilus Fiduciary Services Limited

Nautilus Council LimitedNautilus Guardian LimitedLa Ville Trustees LimitedEnergy Edge International

LimitedSeawind LimitedStratnet LimitedSimwell Investments LimitedFirst Europe Associates

LimitedFentrol LimitedGilbrook LimitedBrahma Limited

Michael Francis Blackstone/GSO Debt Funds 47 Quay LimitedLombardi Europe Holdings Ltd Abbie Limited

Blackstone/GSO Debt Funds Afton LimitedEurope Limited ALIS Finance a.r.l.

Greenhills Asset Management Alpha Group Jersey Limited(Jersey) Limited Altisafe Active Allocation 1

Greenhills Real Estate Finance LimitedLimited Altisafe Active Allocation 2

Greenhills Real Estate Finance LimitedNo. 2 Limited Altisafe Aspect Allocation

Greenhills Real Estate Limited EUR 1 LimitedHutchin Hill Liquid Credit Master Altisafe Aspect Allocation

Fund Limited USD 1 LimitedHutchin Hill Liquid Credit Alvie Limited

Offshore Fund Limited Amathea ICC Cell 72 Hutchin Hill Liquid Credit Trading Navins IC

Vehicle Limited Amathea ICC Cell 1 Rue de laMezzanine Investors Jersey SPV Paix IC

Limited Amathea ICC Cell 10 AvenueICAP Mezzanine 2005 GP Foch ICICAP Mezzanine Opportunity Amathea ICC Cell 100

2005 GP Skygarden Lane ICICG European Fund 2006 Amathea ICC Cell 101

GP Limited Smithers Street ICICG Minority Partners Fund 2008 Amathea ICC Cell 102

GP Limited Solander Street IC

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Michael Francis ICG Recovery Fund 2008 (Jersey) 2 Amathea ICC Cell 103 SprusonLombardi Limited Street IC(continued) ICG Recovery Fund 2008 (Jersey) Amathea ICC Cell 104 Sturt

Limited Street ICIntermediate Capital Asia Pacific Amathea ICC Cell 105 Suttor

2008 GP Limited Street ICIntermediate Capital Asia Pacific Amathea ICC Cell 106

2008 GP Limited Taggarts Lane ICIntermediate Capital GP 2003 Amathea ICC Cell 107

Limited Talfourd Lane ICIntermediate Capital GP 2003 Amathea ICC Cell 108

No 1 Limited Tambua Street ICInvesco Leveraged High Yield Amathea ICC Cell 109 Tangara

Fund Limited Street ICNATIXIS Structured Products Amathea ICC Cell 11 Rue de

Limited Courcelles ICTensyr Limited Amathea ICC Cell 110Nordic Finance Limited Tarpelan Way ICViking Asset Purchaser No 10 IC Amathea ICC Cell 111 TangsViking Asset Purchaser No 11 IC Lane ICViking Asset Purchaser No 6 Amathea ICC Cell 112 Telopea

Limited Lane ICViking Asset Purchaser No 7 IC Amathea ICC Cell 113Viking Asset Purchaser No 9 IC Thurlow Lane ICViking Asset Purchaser No. 12 IC Amathea ICC Cell 114 ToxtethViking Asset Purchaser No.8 IC Lane ICViking Asset Securitisation Holdings Amathea ICC Cell 115 Trefle

Limited Road ICViking Asset Securitisation Limited Amathea ICC Cell 12 Quai Viking Global Finance ICC Gustave Ador ICSwiss Re Jersey Capital Ltd Amathea ICC Cell 12 Quai UBS (Jersey) Real Estate Gustave Ador IC

Euro Core Fund Limited Amathea ICC Cell 13 UBS (Jersey) Real Estate Euro Spitalgasse IC

Core Fund (EUR) Limited Amathea ICC Cell 14 Rue de la UBS Opportunistic Realty Fund Crolx-d’Or IC

Limited Amathea ICC Cell 14 Rue de la UBS Property Holding Conduit Limited Croix-d’Or ICUBS Strategic Realty Fund Limited Amathea ICC Cell 15 Quai UBS Wealth Management – UK Wilson IC

Property Fund Limited Amathea ICC Cell 15 Quai UBS Wealth Management – Global Wilson IC

Prop Fund Limited Amathea ICC Cell 18 Place deUBS Wealth Management – la Madeleine IC

N. American Prop Fund Limited Amathea ICC Cell 17 Gare deOGLP (GP) Limited Lyon IC

Amathea ICC Cell 18 Porta Ticinese IC

Amathea ICC Cell 19 Place dela Bourse IC

Amathea ICC Cell 2 Place St-Francois IC

Amathea ICC Cell 20 Avenue Louise IC

Amathea ICC Cell 20 Avenue Louise IC

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Michael Francis Amathea ICC Cell 21 La rue le Lombardi Masurier IC(continued) Amathea ICC Cell 22

Holbergsgade ICAmathea ICC Cell 22

Holbergsgade ICAmathea ICC Cell 23 Avenue

Roche ICAmathea ICC Cell 23 Avenue

Roche ICAmathea ICC Cell 24

Landstrasse ICAmathea ICC Cell 25 Rue de la

Poste ICAmathea ICC Cell 26 Place

Longemane ICAmathea ICC Cell 27

Birmensdorfstrasse ICAmathea ICC Cell 28 Brickell

Avenue ICAmathea ICC Cell 28 Brickell

Avenue ICAmathea ICC Cell 29 Park

Avenue ICAmathea ICC Cell 3 Boulevard

des Moulins ICAmathea ICC Cell 30 Madison

Avenue ICAmathea ICC Cell 31

Montegue Place ICAmathea ICC Cell 32 Clarence

Street ICAmathea ICC Cell 33 Avenue

Mozart ICAmathea ICC Cell 33 Avenue

Mozart ICAmathea ICC Cell 34

Boulevard de la Miele ICAmathea ICC Cell 34

Boulevard de In Vilette ICAmathea ICC Cell 35

Hauptgasse ICAmathea ICC Cell 35

Hauptgasse ICAmathea ICC Cell 36 Gadigal

ICAmathea ICC Cell 37 Goderich

ICAmathea ICC Cell 38

Goodchap ICAmathea ICC Cell 39 Gowrie


Bahnhofstrasse ICAmathea ICC Cell 40 Guihen

ICAmathea ICC Cell 41 Anzac IC

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Michael Francis Amathea ICC Cell 42 Lombardi Greenknowe IC(continued) Amathea ICC Cell 43 Hanslow

ICAmathea ICC Cell 44 Hayden


Hourlgan ICAmathea ICC Cell 46 Herberto

ICAmathea ICC Cell 47 Hennings

ICAmathea ICC Cell 48 Illawarra

ICAmathea ICC Cell 49 Iredale

ICAmathea ICC Cell 5 Rues des

Eaux-Vives ICAmathea ICC Cell 50 Iverys ICAmathea ICC Cell 51 Jamison

ICAmathea ICC Cell 52 Jarocin

ICAmathea ICC Cell 53 Jesson ICAmathea ICC Cell 54

Josephson ICAmathea ICC Cell 55 Joynton

ICAmathea ICC Cell 56 Kepos ICAmathea ICC Cell 57 Kerridge

ICAmathea ICC Cell 58 Kersy ICAmathea ICC Cell 59 Kidman

ICAmathea ICC Cell 6 Boulevardde Belleville ICAmathea ICC Cell 60

Kingsclear ICAmathea ICC Cell 61 KippaxICAmathea ICC Cell 62 Lackey ICAmathea ICC Cell 63 Lacrozla

ICAmathea ICC Cell 64 Lambie ICAmathea ICC Cell 65 Leinster


Matterson ICAmathea ICC Cell 67 Maurie ICAmathea ICC Cell 66Mccauley ICAmathea ICC Cell 69

Mcelhone ICAmathea ICC Cell 7 Rue de

Bourg ICAmathea ICC Cell 70

Merriman IC

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Michael Francis Amathea ICC Cell 71 MinogueLombardi IC(continued) Amathea ICC Cell 73 Nesbitt IC

Amathea ICC Cell 74 Nithsdale IC

Amathea ICC Cell 75 Oatley Lane IC

Amathea ICC Cell 76 Outram Street IC

Amathea ICC Cell 77 Oswald Lane IC

Amathea ICC Cell 78 Palings Lane

Amathea ICC Cell 79 Parbury Lane

Amathea ICC Cell 8 Gare Saint-Lazarre IC

Amathea ICC Cell BO Parkham Lane

Amathea ICC Cell 81 Pendrill Street

Amathea ICC Cell 82 Pericles Terrace

Amathea ICC Cell 83 Pirrama Road

Amathea ICC Cell 84 Poste Lane

Amathea ICC Cell 85 Pottinger Street

Amathea ICC Cell 86 Randwick Road IC

Amathea ICC Cell 87 Raphael Place IC

Amathea ICC Cell 88 Rawson Place IC

Amathea ICC Cell 89 Reeve Street IC

Amathea ICC Cell 9 Utoquai ICAmathea ICC Cell 90 Reiby

Place ICAmathea ICC Cell 91 Robey

Street ICAmathea ICC Cell 92 Rochford

Street ICAmathea ICC Cell 93 Rockwall

Place ICAmathea ICC Cell 94 Schlmel

Street ICAmathea ICC Cell 95 Seamer

Street ICAmathea ICC Cell 96 Selwyn

Street ICAmathea ICC Cell 96 Selwyn

Street ICAmathea ICC Cell 97 Sheas

Lane ICAmathea ICC Cell 97 Sheen

Lane IC

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Michael Francis Amathea ICC Cell 96 Lombardi Sherbrooke Street IC(continued) Amathea ICC Cell 99 Shorter

Lane ICAmathea Lending Limited ICCArcole LimitedB.L.C.T. (12455) LimitedB.L.C.T. (13640) LimitedB.L.C.T. (30100) LimitedB.L.C.T. (50025) LimitedBauhaus Securities LimitedBirch Capital Jersey LimitedBlackcomb LimitedCairngorm LimitedCalm Seas Shipping Company

LimitedCarina LimitedCharitable Trustee (C.I.)

LimitedCharlotte Shipping Company

LimitedChatterton LimitedChrome Funding LimitedCurzon Funding LimitedDanad Shipping Company

LimitedDelta Shipping Company

LimitedEast-Fleet Finance LimitedEcho Shipping Company

LimitedEmporiki Funding LimitedERB Hellas Funding LimitedFea LimitedFirst Base LimitedFlame Creek LimitedFree Mobility Holdings LimitedFree Mobility No 3 LimitedFree Mobility No 4 LimitedGarboard Shipping LimitedGazelle LimitedGlobal SPV Services (C.I.)

LimitedGrampian Purchasing No. 12

LimitedHarmonics LimitedHazel Shipping Company

LimitedHexagon Finance a.r.l.Hudson-Thames Capital

LimitedHypercube Investments

Limited ICCHypercube Syracuse 3XL EUR

ICHypercube Syracuse EUR ICInv. Foundation 3- AST3

Global Real Estate Jsy Ltd

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Michael Francis Jalousie LimitedLombardi Kathmandu Shipping (continued) Company Limited

Kayla II Jersey LimitedKelso LimitedKieron Shipping Company

LimitedKlmlee LimitedKooper LimitedLac Noir LimitedLagostar LimitedLehman Bro Offshore Real

Estate Mezz Assoc II LtdLehman Brothers European

Mezzanine Assoc II LtdLochside LimitedLothian Trustees LimitedMagpie Shipping Company

LimitedMalden Over LimitedMaisie LimitedMandolin LimitedMerestones LimitedMillerfleld LimitedMistral Finance LimitedMullen Shipping Company

LimitedNickel Funding LimitedNightingale Finance LlmttedNorscan Acom LimitedOctans LimitedOgier Corporate Director

(Jersey) 1 LimitedOgier Corporate Director

(Jersey) 2 LimitedOgier Corporate Trustee

(Jersey) LimitedOgier Executor and Trustee

Company LimitedOgier Fiscal Trustee a.r.l.Ogier Real Estate Services

LimitedOgier SPV Services LimitedOpera Structured Credit

Offshore Jersey LimitedPatriot LimitedPhenix CFO LimitedPicture Financial Jersey (No. 2)

LimitedPicture Financial Jersey LimitedPlough Navigation LimitedPrelude Credit Alpha Cayman

LimitedPrelude Credit Alpha Jersey

LimitedPrevie Long Terme LimitedPrompt Holding LimitedPye Shipping Company Limited

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Michael Francis Resolution Harlow (C.I.) Lombardi Limited(continued) Resolution Kirkgate Limited

Rising Bridge LimitedRMF Four Seasons CFO

LimitedSalta LimitedSanta Fe Shipping Company

LimitedSeaward LimitedSilver Rock LimitedSOMF LimitedSonata LimitedSophie Shipping Company

LimitedSoprano LimitedSpeed Shipping Company

LimitedSt James Shipping Company

LimitedSt James Shipping Company

LimitedStacchold LimitedStatuette LimitedStrike Out LimitedSyracuse Funding EUR LimitedSyracuse Funding LimitedSYZ & Co Finance LimitedSYZ & Co Finance LimitedTopgallant Shipping LimitedUBS (Jsy) Real Estate – Euro

Core Fund (CHF) LtdVeronese LimitedWater Fountain LimitedWD Fairway Shipping LimitedWD Fairway Shipping Trustee

LimitedWinter Jasmine LimitedZublin Immobilien LimitedZurich Financial Services

Jersey LimitedZurich Insurance (Jersey)

Limited

Oliver Donagher Snowdon Partners Limited Snowdon Advisory ServicesLimited

8.5 Save as set out in this document, none of the Directors has:

8.5.1 any unspent convictions relating to indictable offences;

8.5.2 had a bankruptcy order made against him or entered into any individual voluntaryarrangements;

8.5.3 been a director of a company which has been placed in receivership, compulsoryliquidation, creditors’ voluntary liquidation or administration or entered into a companyvoluntary arrangement or any composition or arrangement with its creditors generallyor any class of its creditors whilst he was a director of that company at the time of, orwithin the twelve months preceding, such events;

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8.5.4 been a partner of a firm which has been placed in compulsory liquidation oradministration or which has entered into a partnership voluntary arrangement whilst hewas a partner of that firm at the time of, or within twelve months preceding, such events;

8.5.5 had any asset belonging to him placed in receivership or been a partner of a partnershipwhose assets have been placed in receivership whilst he was a partner at the time of, orwithin twelve months preceding, such receivership;

8.5.6 been publicly criticised by any statutory or regulatory authority (including any recognisedprofessional body); or been disqualified by a court from acting as a director of a companyor from acting in the management or conduct of the affairs of any company.

8.6 Save as disclosed in this document (including paragraphs 7.1 and 11 of this Part VII), no Directorhas been interested in any transaction with the Company, which was unusual in its nature orconditions or significant to the business of the Company during the current or previous financialyear or during any previous financial year that remains outstanding or unperformed.

8.7 Save as disclosed in this document, no loan has been granted to, nor any guarantee provided forthe benefit of, any Director by the Company.

8.8 Save as disclosed in this document, the Company is not aware of any person or persons whodirectly or indirectly, jointly or severally, exercise(s) or could exercise control of the Company orany arrangements the operation of which may, at a subsequent date, result in a change in thecontrol of the Company.

8.9 Save as disclosed in this document, there are no contracts, existing or proposed, between anyDirector and the Company or any of its subsidiaries.

8.10 Save as disclosed in this document, there is no arrangement under which any Director has agreedto waive future emoluments nor has there been any waiver of emoluments during the financialyear immediately preceding the date of this document.

9. Directors’ Service Agreements and letters of appointment9.1 Symon Drake-Brockman has entered into an agreement with the Company dated 2 August 2011,

pursuant to which he was appointed as Executive Chairman of the Company for an initial periodof twelve months and continuing thereafter until terminated by either party on twelve months’notice or for cause. The appointment may be immediately terminated for cause by the Company,inter alia, in the event that Mr. Drake-Brockman is in material breach of his obligations underthe letter or any of his fiduciary duties owed to the Company or commits any fraud or dishonesty.Mr. Drake-Brockman is entitled to remuneration of £150,000 per annum, which is payablemonthly in arrears, and reimbursement of all out of pocket expenses incurred in the performanceof his duties. Mr. Drake-Brockman’s time commitment is to be determined by the needs of theCompany, but with a minimum time commitment of one day per week. Mr. Drake-Brockman hasagreed not to be directly or indirectly employed, engaged, concerned or interested in any businessor undertaking which competes with any business of the Company or any of its subsidiaries, savewith the prior sanction of the Board and save for the businesses expressly permitted under theagreement.

9.2 Stephen Lowden has entered into a letter of appointment with the Company dated 6 June 2013,pursuant to which he was appointed as a non-executive Director of the Company until such timeas his appointment is terminated by either party on three months’ notice or for cause. Theappointment may be immediately terminated for cause by the Company, inter alia, in the eventthat Mr. Lowden is in material breach of his obligations under the letter or any of his fiduciaryduties owed to the Company or commits any fraud or dishonesty. Mr. Lowden is entitled toremuneration of £84,000 per annum, which is payable monthly in arrears, and reimbursement ofall out of pocket expenses incurred in the performance of his duties. Mr. Lowden has agreed notto be directly or indirectly employed, engaged, concerned or interested in any business orundertaking which competes with any business of the Company or any of its subsidiaries, savewith the prior sanction of the Board.

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9.3 John Grimshaw has entered into a letter of appointment with the Company dated 19 March 2013,pursuant to which he was appointed as a non-executive Director of the Company until such timeas his appointment is terminated by either party on three months’ notice or for cause. Theappointment may be immediately terminated for cause by the Company, inter alia, in the eventthat Mr Grimshaw is in material breach of his obligations under the letter or any of his fiduciaryduties owed to the Company or commits any fraud or dishonesty. Mr Grimshaw is entitled toremuneration of £36,000 per annum, which is payable monthly in arrears, and reimbursement ofall out of pocket expenses incurred in the performance of his duties. Mr Grimshaw has agreednot to be directly or indirectly employed, engaged, concerned or interested in any business orundertaking which competes with any business of the Company or any of its subsidiaries, savewith the prior sanction of the Board.

9.4 Michael Lombardi has entered into a letter of appointment with the Company dated 19 March2013, pursuant to which he was appointed as a non-executive Director of the Company until suchtime as his appointment is terminated by either party on three months’ notice or for cause. Theappointment may be immediately terminated for cause by the Company, inter alia, in the eventthat Mr Lombardi is in material breach of his obligations under the letter or any of his fiduciaryduties owed to the Company or commits any fraud or dishonesty. Mr Lombardi is entitled toremuneration of £36,000 per annum, which is payable monthly in arrears, and reimbursement ofall out of pocket expenses incurred in the performance of his duties. Mr Lombardi has agreednot to be directly or indirectly employed, engaged, concerned or interested in any business orundertaking which competes with any business of the Company or any of its subsidiaries, savewith the prior sanction of the Board.

9.5 Oliver Donagher has entered into a letter of appointment with the Company dated 7 June 2013,pursuant to which he was appointed as a non-executive Director of the Company until such timeas his appointment is terminated by either party on three months’ notice or for cause. Theappointment may be immediately terminated for cause by the Company, inter alia, in the eventthat Mr. Donagher is in material breach of his obligations under the letter or any of his fiduciaryduties owed to the Company or commits any fraud or dishonesty. Mr. Donagher is entitled toremuneration of £30,000 per annum, which is payable monthly in arrears, and reimbursement ofall out of pocket expenses incurred in the performance of his duties. Mr. Donagher has agreednot to be directly or indirectly employed, engaged, concerned or interested in any business orundertaking which competes with any business of the Company or any of its subsidiaries, savewith the prior sanction of the Board.

10. Material contractsThe following contracts (i) not being contracts entered into in the ordinary course of business, have beenentered into by the Enlarged Group in the two years prior to the date of this document; or (ii) aresubsisting agreements which are included within, or which relate to, the assets and liabilities of theEnlarged Group (notwithstanding whether such agreements are within the ordinary course or wereentered into prior to the two years immediately preceding the publication of this document), and are, ormay be, material:

The Company10.1 Admission Agreement

Pursuant to an agreement dated 10 June 2013 between (1) the Company, (2) the Directors and (3)SCC, SCC has agreed to act as the Company’s nominated adviser for the purposes of Admission.The obligations of SCC are conditional upon the occurrence of certain events including, interalia, the completion of the Acquisition, the publication of this document no later than the dateof the Admission Agreement, the passing of the Resolutions, the issue and allotment of theConsideration Shares and the Subscription Shares, and Admission having occurred no later than8.00am on 4 July 2013 (or such later time as may be agreed between the Company and SCC, butin any event not later than 31 July 2013). If such conditions are not fulfilled, the obligations ofthe parties in respect of the Admission Agreement shall cease. In consideration of SCC’s servicesin connection with Admission, the Company shall pay to SCC a fee equal to £175,000 (togetherwith reasonably incurred expenses) plus £12,500 in respect of each full calendar month beyond

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31 May 2013 up to Admission. The Admission Agreement contains certain warranties given bythe Company and the Directors and indemnities given by the Company, together with provisionswhich enable SCC to terminate the Admission Agreement in certain circumstances prior toAdmission including where any of the warranties are found to be inaccurate in any materialrespect. In addition, SCC may give written notice to the Company to terminate the AdmissionAgreement should certain events take place including, inter alia, the failure by the Company tocomply in any material respect with any of its obligations under the Admission Agreement or onthe occurrence of an insolvency event affecting the Company.

10.2 Relationship AgreementOn 7 June 2013, the Company, SCC and ARA Capital entered into a relationship agreementpursuant to which, conditional on Admission, ARA Capital undertakes that, for as long as ARACapital or any member of the ARA Group, Affiliate or Connected Person of ARA (all as definedtherein) holds 25 per cent. or more of the voting rights attaching to the Ordinary Shares of theCompany, it will exercise such voting rights to ensure that, inter alia, the Company is capable atall times of carrying on its business independently of them, the Board is not influenced by themand acts in the best interests of all Shareholders, and that all transactions between them and theCompany are and will be made at arm’s length and on normal commercial terms. In addition, forso long as ARA Capital holds shares in the capital of the Company representing not less than 25per cent. of the Ordinary Shares in issue, ARA Capital is entitled to nominate two representativesto be appointed as non-executive directors of the Company (or one representative to be appointedas a non-executive director of the Company if ARA Capital’s holding represents less than 25 percent. but not less than 14 per cent. of the Ordinary Shares in issue), provided that ARA Capitalrefrains from exercising its voting rights in relation to the election, re-election or removal of anyperson from the Board if such election, re-election or removal would result in there ceasing to beat least 2 directors of the Board who are Directors Independent (as defined therein) of ARACapital. The agreement will terminate automatically upon either (a) ARA Capital or any memberof the ARA Group, Affiliate or Connected Person of ARA (all as defined therein) ceasing to havean interest in 25 per cent. or more of the voting rights attaching to the Company’s New OrdinaryShares or (b) following Admission, the New Ordinary Shares ceasing to be traded on AIM (otherthan pursuant to certain circumstances including a reverse takeover).

10.3 Lock-in deeds and orderly market arrangement10.3.1 On 7 June 2013, the Company, SCC and, (in the case of the lock-in deed in respect of

ARA Capital only) SCS and each of the Locked-in persons entered into lock-in deedspursuant to which each of each of the Locked-in persons have undertaken that they willnot (without the prior written consent of each of the Company, SCC and (in the case ofARA Capital only) SCS (acting in their absolute discretion)) dispose of an interest in theNew Ordinary Shares for the period of 12 months following Admission, except wherepermitted pursuant to Rule 7 of the AIM Rules (other than in the case of ARA Capitalwhich may dispose of New Ordinary Shares in such 12 month period pursuant to itsobligations in the deed of pledge further details of which are set out in paragraph 10.9 ofthis Part VII).

10.3.2 In addition, under the terms of its lock-in deed Bandbear has undertaken that it will notdispose of any interest in New Ordinary Shares for a period of six months following thefirst anniversary of Admission without giving the Company prior written notice.

10.4 Nomad and Broker AgreementPursuant to an agreement dated 10 August 2011 between (1) the Company and (2) Shore Capital,SCC agreed to act as nominated adviser and SCS to act as broker to the Company with effectfrom 15 August 2011. The Company agreed to pay Shore Capital an annual fee of £45,000(together with reasonably incurred out of pocket expenses incurred by Shore Capital in the courseof carrying out its duties). The agreement is subject to termination on three months’ notice byeither party at any time after the initial 12 month period. Shore Capital shall provide, inter alia,such independent advice and guidance to the directors of the Company and the Company as theymay require from time to time, as to the nature of their responsibilities and obligations to ensurecompliance by the Company on a continuing basis with the AIM Rules. The agreement also

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contains provisions for early termination in certain circumstances (including the Company’s failureto comply with any material legal or regulatory requirement and Shore Capital being removedfrom the list of nominated advisers maintained by the London Stock Exchange) and an indemnitygiven by the Company to Shore Capital in relation to the provision by Shore Capital of its services.

10.5 Depositary AgreementOn 7 June 2013, the Company and Computershare Investor Services PLC (the “Depositary”)entered into an agreement for the provision of Depositary services and custody services (the“Depositary Agreement”), pursuant to which the Company appointed the Depositary to act asdepositary and custodian in respect of the Depositary Interests and to provide the services set outin the Depositary Agreement. The Company has agreed to pay the Depositary an annual fee of£2,500 (which shall be reviewed annually) and to reimburse the Depositary for all reasonable out-of-pocket expenses. The Depositary’s maximum liability under the Depositary Agreement inrespect of any twelve month period is capped at an amount equal to twice the Depositary’s feesearned in that twelve month period. The parties are required under the Depositary Agreement toindemnify each other in certain circumstances. Neither party is liable to indemnify the other inrespect of any loss arising from the fraud, negligence or wilful default of the other party or as aresult of a breach by the other party of the Depositary Agreement. Subject to earlier termination,the appointment of the Depositary shall continue in force until terminated by either party givingto the other not less than six months’ notice.

10.6 Registrar AgreementOn 7 June 2013, the Company and Computershare Investor Services (Cayman) Limited (the“Registrar”) entered into an agreement (the “Registrar Agreement”), pursuant to which theCompany appointed the Registrar to act as its registrar and, amongst other things, to maintainthe register of members of the Company in the Cayman Islands. The Company has agreed to paythe Registrar a fixed annual fee of £3,605 (such fee to be reviewed annually) and to reimburse theRegistrar for all reasonable out-of-pocket expenses. The Registrar’s maximum liability under theRegistrar Agreement in respect of any twelve month period is capped at an amount equal to twicethe Registrar’s fees earned in that twelve month period. The parties are required under theRegistrar Agreement to indemnify each other in certain circumstances. Neither party is liable toindemnify the other in respect of any loss arising from the fraud, negligence or wilful default ofthe other party or as a result of a breach by the other party of the Registrar Agreement. Subjectto earlier termination, the Registrar Agreement shall continue in force until terminated by theCompany giving to the Registrar not less than six months’ notice.

10.7 Acquisition AgreementOn 19th March 2013, the Company entered into the Acquisition Agreement (as subsequentlyamended) for the acquisition of CenGeo Holdings Limited. The following is a summary of certainterms and conditions of the Acquisition Agreement:

10.7.1 Zoltav Resources has conditionally agreed to acquire the entire issued share capital ofCenGeo Holdings Limited together with certain shareholder loans made to it by theSellers. Each of the Sellers has agreed to sell their shares in CenGeo Holdings Limitedwith full title guarantee and free from any and all encumbrances to Zoltav Resources andto assign the benefit of the shareholder loans referred to in paragraph 10.16 of thePart VII of this document.

10.7.2 The aggregate consideration for the purchase of the entire issued share capital of CenGeoHoldings Limited and the assignment of the shareholder loans is US$26,000,000 to besatisfied by the allotment and issue to the Sellers of New Ordinary Shares as set out inthe Acquisition Agreement, credited as fully paid and ranking pari passu with the ExistingOrdinary Shares.

10.7.3 Completion of the Acquisition Agreement is conditional on (i) the publication of an AIMadmission document approved by the Board, (ii) Shareholders approving the Acquisitionin a general meeting and (iii) the Articles being approved by Company’s Shareholders atthe same meeting. Subject to the termination rights described in paragraph 10.7.6 below,

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if all of the conditions have not been satisfied by 31 July 2013 the Acquisition Agreementwill automatically terminate, unless agreed otherwise by the parties.

10.7.4 The Sellers provided the Company and Zoltav Resources with warranties as to title andcapacity and certain other limited warranties. The Company and Zoltav Resourves alsogave certain warranties and undertakings to the Sellers as to capacity and authority andcertain other limited warranties. CenGeo Holdings Limited has the benefit of thewarranties provided to it by Gregory Trading S.A. under the SibGeCo share purchaseagreement, described in more detail at paragraph 10.14 of this Part VII.

10.7.5 Under the Acquisition Agreement, the Sellers, Zoltav Resources and the Company havelimited rights to terminate their obligations arising thereunder between the date on whichthe Acquisition Agreement is signed and its completion. Zoltav Resources has the rightto terminate (i) if the Sellers are in material breach of the Acquisition Agreement(material breach being a breach resulting in a liability equal to or more thanUS$2,000,000), (ii) if at completion the Sellers make a disclosure against the warrantieswhich would constitute a material breach of such warranties; or (iii) if the KoltogorskyProduction Licence is cancelled, revoked or materially or detrimentally amended.Similarly, the Sellers have the right to terminate if (i) the Company or Zoltav Resourcesis in material breach of the Acquisition Agreement (material breach being a breachresulting in a liability of equal to or more than US$2,000,000), (ii) there is a materialbreach of certain commercial warranties or any breach whatsoever of warranties whichconfirm the Company’s share capital position at completion (issued and to be issued) or(iii) the Company or Zoltav Resources is in breach of certain undertakings in the periodbetween the date on which the Acquisition Agreement was signed and completionincluding in relation to the group structure, the Subscription, share option issuance andtaking on additional liabilities in excess of US$2,000,000.

10.8 Subscription AgreementOn 19th March 2013, the Company entered into the Subscription Agreement with ARA Capital(as subsequently amended), pursuant to which and subject to completion of the Acquisition, ARAcommitted to provide up to US$20,000,000 of funds principally to support the working capitalrequirements of the Enlarged Group, such funding to be made at a price per Existing OrdinaryShare of £0.035 in respect of any subscriptions prior to the Share Consolidation taking effect, ora price per New Ordinary Share of £0.70 in respect of subscriptions following the ShareConsolidation taking effect and as a minimum as to US$13,000,000 on or before 3 July 2013,US$2,000,000 on the last business day of 2013 and US$5,000,000 on 1 April 2014. However, ARACapital has the right to subscribe for up to a maximum of US$20,000,000 worth of ExistingOrdinary Shares at a price per Existing Ordinary Share of £0.035 or the same value of NewOrdinary Shares at a price per share of £0.70 at any time from the date of the SubscriptionAgreement until 1 April 2014. To the extent ARA Capital exercises its option to subscribe foreither Existing Ordinary Shares or New Ordinary Shares (as the case may be) then suchsubscription shall reduce its overall subscription obligation under the Subscription Agreement ofUS$20,000,000.

10.9 ARA Share PledgeOn 19th March 2013, the Company entered into a deed of pledge with ARA Capital in order topartially secure ARA Capital’s performance of its funding obligations under the SubscriptionAgreement. Pursuant to that deed, ARA Capital has pledged from the date on which it completesthe funding of the Second Tranche Subscription Shares (as set out in paragraph 7 of Part I ofthis document) until the date on which the Company is satisfied that ARA Capital has completedthe funding of the Third Tranche Subscription Shares (as set out in paragraph 7 of Part I of thisdocument) such number of New Ordinary Shares held by it as is equal (or nearest) to, but doesnot exceed, US$5,000,000 calculated at a fixed exchange rate of £1:US$1.57.

10.10 ARA Irrevocable UndertakingOn 19th March 2013, ARA Capital entered into a deed in favour of the Company and SCCwhereby it has irrevocably undertaken to vote in favour of the resolution relating to theAcquisition Agreement at the Annual General Meeting and to exercise its right to convert all

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principal and outstanding interest owing under the ARA CLN on the day immediately precedingthe publication of this document.

ARA Capital also provided certain customary warranties as regards its beneficial holdings in theCompany and its ability to enter into and perform its obligations under the deed. ARA Capitalalso agreed not to: (i) sell, encumber or otherwise dispose of, or permit the sale or other dispositionor the creation or grant of any encumbrance over all or any interest in the Existing OrdinaryShares held by it from time to time; or (ii) enter into any agreement or arrangement, or permitany agreement or arrangement to be entered into which would or might restrict or impede itsability to vote in favour of the resolution relating to the Acquisition Agreement, until such timeas the undertakings have lapsed or the resolution relating to the Acquisition Agreement has beenput to Shareholders at the Annual General Meeting and the Annual General Meeting havingconcluded. The deed is subject to English law.

10.11 ARA CLNThe ARA CLN is a convertible loan dated 15 September 2012 between the Company and ARACapital whereunder ARA Capital provided the Company with an aggregate loan of £500,000 witha coupon of one per cent. of principal per annum. ARA Capital has the right to convert theoutstanding principal and interest into Existing Ordinary Shares at price of 2.3 pence per share.Under this agreement the Company provided ARA Capital with representations and warrantiesusual for such instrument. Further details of the ARA CLN and the arrangements for ARA toexercise its conversion right pursuant to it are set out in paragraph 7 of Part I of this document.

10.12 ARA LoanOn 9 April 2013 the Company and ARA entered into the ARA Loan pursuant to which ARAlent the company £250,000 with a coupon of 50 basis points above LIBOR per annum. The loanis to be repaid on or before 31 December 2013. The parties intend that the Company’s obligationto repay the amount drawn down on the ARA Loan plus accrued interest shall be set off againstthe relevant portion of the subscription monies due from ARA pursuant to the Subscription.

10.13 Corporate Services AgreementPlease refer to paragraph 11.1.1 of this Part VII for a summary of the contract between theCompany’s wholly owned subsidiary ZRI Services (UK) Limited and Pemberton AssetManagement Services UK Limited. Pemberton Asset Management Services UK Limited is apartner of Pemberton Capital Advisors LLP, of which Symon Drake-Brockman, the Company’sExecutive Chairman, is also a partner. This agreement will be terminated pursuant to a deed oftermination, conditional on Admission.

CenGeo Holdings Limited

10.14 SibGeCo share purchase agreementOn 17 December 2012, CenGeo Holdings Limited entered into a share purchase agreement withGregory Trading S.A. for the purchase of the entire issued share capital of SibGeCo.

The acquisition was conditional on the issue of the Koltogorsky Production Licence. Limitedvendor warranties were given by Gregory Trading S.A. to CenGeo Holdings Limited, specificallyand among other things as to capacity, absence of litigation, title, good standing, accuracy ofSibGeCo’s balance sheet and the intra-group reorganisation. The acquisition becameunconditional upon the issue of the Koltogorsky Production Licence.

The acquisition also included the assignment to CenGeo Holdings of:

(1) SibGeCo’s intra group indebtedness to Gregory Trading S.A. under loan assignmentagreement between Glafeta Holdings Limited and Gregory Trading S.A. dated 31 August2012;

(2) an assignment of rights of claim between Open Joint Stock Company Magma OilCompany (“Magma”) and Gregory Trading S.A. dated 8 November 2012, relating to the

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right under loan agreement no 11 between Magma as lender and SibGeCo as borrowerdated 19 February 2007;

(3) the rights and obligations under Contract No. 1 on Assignment of Rights and Transferof Obligations between SibGeCo and Limited Liability Company “Sibresource – Sever”(“SRS”) as original seller, and Gregory Trading as new seller, dated 31 August 2012 inrespect of an Agreement of Sale and Purchase of Property No. 7 dated 22 April 2008between SibGeCo and SRS;

(4) the rights and obligations under Contract No. 2 on Assignment of Rights and Transferof Obligations between SibGeCo and Limited Liability Company “Sibresource – Yug”(“SRY”) as original seller, and Gregory Trading as new seller, dated 31 August 2012 inrespect of an Agreement of Sale and Purchase of Property No. 8 dated 22 April, 2008between SibGeCo and SRY;

(5) rights and obligations under Contract No. 3 on Assignment of Rights and Obligationsbetween SibGeCo and Magma as original seller, and Gregory Trading as new seller, dated1 October 2012 in respect of an the Agreement of Sale and Purchase of Property No.168/MGM-2012 dated 29 June 2012 between SibGeCo and Magma and

(6) rights and obligations under Contract No. 4 on Assignment of Rights and Obligationsbetween SibGeCo and Magma as original seller, and Gregory Trading as new seller, dated1 October 2012 in respect of an Agreement of Sale and Purchase of Property No. 16/09dated 1 January 2009 between SibGeCo and Magma.

In connection with the SibGeCo Share Purchase Agreement, CenGeo Holdings entered into adeed of indemnity with Gregory Trading S.A. and Magma on 17 December 2012 to indemnifySibGeCo against potential claims from the tax authorities as regards to the value added tax whichwas reimbursed to SibGeCo. Pursuant to the deed of indemnity Gregory Trading S.A. indemnifiedSibGeCo and Magma acted as guarantor of Gregory Trading S.A.’s obligations thereunder.

In connection with the Deed of Indemnity, SibGeCo also entered into a Russian law loanagreement with Gregory Trading S.A. as lender, dated 17 December 2012 and a Russian lawsuretyship agreement of even date, securing the obligations of CenGeo Holdings under the Deedof Indemnity.

10.15 Loan to SibGeCoFollowing the aquisition of CenGeo by SibGeCo in February 2013, in order to consolidate intra-group indebtedness, on 11 March 2013, CenGeo Holdings and SibGeCo entered into a loanagreement pursuant to which CenGeo Holdings granted a loan in the amount of 445,000,000Rubles to SibGeCo at a rate of 0 per cent. interest. The loan was made for the purpose of payingthe licence fee under the Production Licence described in paragraph 10.17 of this Part VII below.

10.16 Funding and Shareholders’ Agreement and Deed of TerminationOn 17 December 2012, Bandbear, Dmitry Kamyshev, Alexander Sokolov and CenGeo Holdingsentered into a funding and shareholders’ agreement pursuant to which Bandbear and AlexanderSokolov purchased certain shares in CenGeo Holdings from Dmitry Kamyshev and allshareholders undertook to make certain shareholder loans to CenGeo Holdings. The benefit ofthese loans will be assigned to Zoltav Resources under the terms of the Acquisition Agreementset out in paragraph 10.7 of this Part VII of this document. The Funding and Shareholders’Agreement governs the relations of the shareholders of CenGeo Holdings and will be terminatedpursuant to a deed of termination, with effect from completion of the Acquisition Agreement.

SibGeCo

10.17 Forest Lease AgreementsSibGeCo is a party to the nine forest plot lease agreements with the Khanty-MansiiskAutonomous District-Yugra Forestry Department, represented by Aganskoye / NizhnevartovskoeForestry, namely (1) Forest Lease Agreement No. 225/07-09-KA dated 12 December 2007; (2)Forest Lease Agreement No. 226/07-09-KA dated 12 December 2007 (3) Forest Lease Agreement

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No. 003/08-09-KA dated 16 January 2008; (4) Forest Lease Agreement No. 178/08-08-KA dated27 February 2008; (5) Forest Lease Agreement No. 028/08-01 dated 17 March 2008; (6) ForestLease Agreement No. 564/08-08-KA dated 24 October 2008; (7) Forest Lease Agreement No.191/08-01 dated 11 November 2008; (8) Forest Lease Agreement No. 077/08- dated 26 February2009; (9) Forest Lease Agreement No. 013/09-01 dated 27 February 2009.

These leases permit geological subsurface exploration, development of mineral deposits and insome cases logging. In most cases rent is paid on a quarterly basis.

10.18 LicencesKoltogorksy Production Licence10.18.1 SibGeCo holds licence KHMN 15501 NE for the right to use subsoil for the purpose of

exploration and production of hydrocarbons from the Koltogorskoye deposit located inthe Nizhnevartovsk Municipality of the Khanty-Mansiysk – Ugra Autonomous Region(the “Production Licence”). The Production Licence came into effect upon its registrationon 21 February 2013, and is valid until 15 February 2033.

10.18.2 SibGeCo is required to perform the following work programme under the ProductionLicence:

10.18.2.1 procure by the relevant authorities the approval of the Exploration WorkProject (as defined therein) by no later than 21 February 2014;

10.18.2.2 commencing the acquisition of 3D seismic data by no later than 21 February2015;

10.18.2.3 completing the acquisition of 3D seismic data over an area not less than 500sq. km by no later than 21 February 2016;

10.18.2.4 constructing at least four exploration wells by no later than 21 February2020, with at least one well to be constructed annually by 21 February;

10.18.2.5 subject to the accomplishment of the work referred to above, preparing andsubmitting to the relevant authorities a reserve estimation report by no laterthan 21 February 2022;

10.18.2.6 commencing the first stage of development operations by no later than21 February 2023; and

10.18.2.7 commencing subsequent stages of development operations within the termsestablished by the relevant authorities, and subject to approval of therelevant development projects.

The other material terms of the Production Licence include on-going complianceobligations of SibGeCo, including, inter alia, including, in particular:

(a) formalising the land rights; and

(b) paying taxes (including applicable subsoil tax).

Under Russian subsoil legislation, the effective term of the Production Licence may beprolonged for the purpose of developing the licensed deposit through the life of suchdeposit, provided that the subsoil user complies with the terms of the subsoil licence andthe mandatory requirements of the subsoil legislation.

The breach by SibGeCo of the above-mentioned material terms of the ProductionLicence, or its failure to observe the requirements of the subsoil, industrial safety,environmental or land legislation, may cause the revocation of the Production Licence,subject to a three month prior notice of breach (unless such breach has been rectifiedwithin the said period of time), or immediately – in the event of threat to human life orhealth, or in the event of natural disasters, war or other emergencies.

Koltogorksy Exploration Licences10.18.3 SibGeCo holds the following licences for the right to use the subsoil for the purpose of

geological study for prospecting and appraising deposits of hydrocarbons on six subsoil

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blocks located in the Nizhnevartovsk Municipality of the Khanty-Mansiysk – UgraAutonomous Region:

10.18.3.1 Licence KHMN 14452 NP for Koltogorskiy Block 7 effective from 24 April2008;

10.18.3.2 Licence KHMN 14455 NP for Koltogorsky Block 10, effective from 24 April2008;



10.18.3.5 Licence KHMN 14457 NP for the right to use subsoil for the purpose ofgeological study for prospecting and appraising deposits of hydrocarbonson the Koltogorsky 12 subsoil block, effective from 24 April 2008; and

10.18.3.6 Licence KHMN 12324 NP for the right to use subsoil for the purpose ofgeological study for prospecting and appraising deposits of hydrocarbonson the Koltogorsky 15 subsoil block, effective from 20 April 2004,

(together the “Koltogorksy Exploration Licences”).

10.18.4 In accordance with the terms of the Koltogorksy Exploration Licences, transfers of thesubsoil use rights between affiliates is allowed by law, provided that certain applicablerequirements are met.

10.18.5 The Koltogorksy Exploration Licences are due to expire on 31 December 2013.

10.19 Please refer to paragraph 10.15 of this Part VII for details of a loan agreement between SibGeoCoand CenGeo Holdings.

11. Related Party transactions11.1 The Enlarged Group has entered into the following transactions with related parties during the

period covered by the financial information set out in Parts IV and V of this document:-

11.1.1 Symon Drake-Brockman is the Executive Chairman of the Company and a senior partnerin Pemberton Capital Advisors LLP (“PCA”). Pemberton Asset Management ServicesUK Limited (“PAMS”) is also a partner in PCA. On 1 February 2013, ZRI Services UKLimited (“ZRI”), a wholly owned subsidiary of the Company, entered into a corporateservices agreement with PAMS (the “Corporate Services Agreement”). Pursuant to theCorporate Services Agreement, ZRI delegated the performance of certain advisory andgeneral administrative support services that it had been providing to its offshore affiliates,including the Company, to PAMS. The services include, inter alia, the provision of staff,the maintenance of certain leased premises, arranging insurance, IT support services andcompany secretarial services. ZRI will pay PAMS a fee of £10,233 (exclusive of VAT) percalendar month and reimburse PAMS for any incidental or out of pocket expensesincurred through the provision of the services. The Corporate Services Agreement has aterm of one year and can be extended or terminated as agreed in writing by both parties.ZRI may assign the Corporate Services Agreement to the Company or any other memberof the same group of companies. The Corporate Services Agreement will be terminatedpursuant to a deed of termination conditional on Admission.

11.1.2 Please refer to note 9 to the Accountant’s Report on the Financial Information ofCenGeo Holdings in Section A of Part V of this document for details of a loan made toCengeo Holdings by Bandbear in connection with the payment of a performance bondof US$250,000 made by CenGeo Holdings under the terms of the sale and purchaseagreement in relation to the acquisition of the entire issued share capital of SibGeCodated 17 December 2012, further details of which are set out in paragraph 10.14 of thisPart VII. This loan was repayable to Bandbear upon completion of that agreement.

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12. Working capitalThe Directors, having made due and careful enquiry, are of the opinion that the working capital availableto the Company and to the Enlarged Group will be sufficient for its present requirements, that is for atleast twelve months from the date of Admission.

13. LitigationNo member of the Enlarged Group has been involved in any governmental, legal or arbitrationproceedings during the 12 months preceding this document, which may have, or have had in the recentpast, significant effects on the Company’s and/or the Enlarged Group’s financial position or profitabilityand there are no such proceedings of which the Company is aware which are pending or threatened.

14. Employees14.1 As at the date at the end of the period covered by the financial information set out in Part IV of

this document, the Group as a whole had no employees.

14.2 As at the date at the end of the period covered by the financial information set out in Part V ofthis document, the CenGeo Group as a whole had 4 employees.

15. Intellectual property rights15.1 Save as disclosed in this document including the material contracts referred to in paragraph 10 of

this Part VII, the Enlarged Group does not have any intellectual property rights.

15.2 Domain NamesThe Enlarged Group holds the domain name www.zoltav.com.

15.3 TrademarksThe Enlarged Group has no registered trademarks.

16. Share Options and Warrants

16.1 Share OptionsAs at 7 June 2013, being the latest practicable date prior to publication of this document, therewere outstanding options over a total of 47,350,000 Existing Ordinary Shares representingapproximately 12.6 per cent, of the issued share capital of the Company as at such date. Detailsof the options and awards outstanding are set out below:

Options Options Exercise Exercise outstanding outstanding Price, Price,

prior to following prior to following Scheme/Option the Share the Share the Share the Share Exerciseholders Date of grant Consolidation Consolidation Consolidation Consolidation Period

Executive Scheme 11 January 2005 2,350,000 117,000 21.15p £4.23 11/1/2005 – 11/1/2015

Executive Scheme 23 March 2006 200,000 10,000 95.20p £19.04 23/3/2006 – 23/3/2016

Executive Scheme 23 February 2007 150,000 7,500 32.65p £6.53 23/2/2007 – 23/2/2017

Executive Scheme 11 January 2008 4,650,000 232,500 22.25p £4.45 11/1/2008 – 11/1/2018

Individual Awards 31 October 2012 40,000,000 2,000,000 1.00p £0.20 31/10/2012 – 31/10/2015

Total 47,350,000 2,367,000

The above table represents the total aggregate number of share options outstanding in respect ofthe Company’s Existing Ordinary Shares following the Share Consolidation and includes theoptions granted to Directors, as set out in paragraph 7.2 of the this Part VII.

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16.2 WarrantsAs at the date of this document, the Company has issued warrants to subscribe for 10,550,000Existing Ordinary Shares with an exercise price of 5 pence per Existing Ordinary Share. Followingthe Share Consolidation, and assuming none of the warrants are exercised, 527,500 warrants tosubscribe for New Ordinary Shares would be outstanding with an exercise price of £1.00 per NewOrdinary Share. Each of the warrants is capable of being exercised during the period 2 August2011 to 2 August 2014.

18. TaxationThe information below, which is of a general nature only and which relates only to UK and Cayman Islandsand Jersey and Cypriot taxation, is applicable to the Company and to persons who are resident in the UK(except where indicated) and who hold Ordinary Shares as an investment. It is based on existing law andpractice and is subject to subsequent changes thereto. Shareholders who are in any doubt as to their taxposition or who are subject to tax in a jurisdiction other than the UK are strongly advised to consult theirown professional advisers immediately.

18.1 United Kingdom taxationAny person who is in any doubt as to their tax position or who may be subject to tax in any jurisdictionother than the United Kingdom should consult their own professional adviser.

General18.1.1 The following paragraphs are intended as a general guide only and summarise comments

received by the Directors about the UK tax position of Shareholders who are resident inthe UK, holding shares as investments and not as securities to be realised in the courseof a trade.

The paragraphs below are based on current UK legislation and published HMRCpractice. It should be noted that although a number of UK tax treatments referred tobelow refer to unquoted shares, shares on AIM are generally treated as unquoted for thesepurposes.

18.1.2 The information in these paragraphs is intended as a general summary of the UK taxposition and should not be construed as constituting advice.

The Company18.1.3 The following information is based on the law and published HMRC practice currently

in force in the UK.

18.1.4 Provided that the Company is not resident in the UK for taxation purposes and does notcarry out any trade in the UK (whether or not through a permanent establishmentsituated there), the Company should not be liable for UK taxation on its income andgains, other than in respect of interest and other income received by the Company froma UK source (to the extent that it is subject to withholding taxes in the UK).

18.1.5 It is the intention of the Directors to conduct the affairs of the Company so that thecentral management and control of the Company is not exercised in the UK in order thatthe Company does not become resident in the UK for taxation purposes. The Directorsintend, insofar as this is within their control, that the affairs of the Company areconducted so the Company is not treated as carrying on a trade in the UK through apermanent establishment.

Tax treatment of UK Investors18.1.6 The following information, which relates only to UK taxation, is applicable to the

Company and to persons who are resident in the UK and who beneficially own OrdinaryShares as investments and not as securities to be realised in the course of a trade. It isbased on the law and published HMRC practice currently in force in the UK. Theinformation is not exhaustive and does not apply to potential investors:

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● who intend to acquire, or may acquire (either on their own or together with personswith whom they are connected or associated for tax purposes), more than 10 percent. of any of the classes of shares in the Company; or

● who intend to acquire New Ordinary Shares as part of tax avoidance arrangements;or

● who acquire any shares or rights over shares in connection with an employmentcontract; or

● who are in any doubt as to their taxation position.

18.1.7 Such Shareholders should consult their professional advisers without delay. Shareholdersshould note that tax law and interpretation can change and that, in particular, the levels,basis of and reliefs from taxation may change. Such changes may alter the benefits ofinvestment in the Company.

18.1.8 Shareholders who are neither resident nor temporarily non-resident in the UK and whodo not carry on a trade, profession or vocation through a branch, agency or permanentestablishment in the UK with which the Ordinary Shares are connected will not normallybe liable to UK taxation on dividends paid by the Company or on capital gains arisingon the sale or other disposal of Ordinary Shares. Such Shareholders should consult theirown tax advisers concerning their tax liabilities.

Taxation of dividends18.1.9 A UK tax resident individual Shareholder is entitled to a tax credit in respect of the

dividend received and will be subject to UK income tax on the aggregate of the dividendreceived and the related tax credit (the “gross dividend”), which will be treated as the topslice of the individual’s income.

18.1.10 The value of the tax credit is currently an amount equal to one ninth of the dividendreceived (or 10 per cent. of the gross dividend). A basic rate taxpayer will be subject totax on the gross dividend at the rate of 10 per cent., so that the tax credit will satisfy infull such Shareholder’s liability to income tax on the dividend, and such Shareholder willhave no further income tax to pay in respect of the dividend. A higher rate taxpayer willbe subject to income tax on the gross dividend at the rate of 32.5 per cent. but will beable to set the tax credit against this liability. Such Shareholders will have to account foradditional tax equal to 25 per cent. of the cash dividend received to the extent that thegross dividend when treated as the top slice of the Shareholder’s income falls above thethreshold for higher rate income tax. UK tax resident individual Shareholders who havetaxable income over £150,000 will be subject to income tax on their gross dividends atthe additional rate of 37.5 per cent. but will be able to set the tax credit against thisliability. Such Shareholders would have to account for additional tax equal to 30.6 percent. of the cash dividend received, to the extent that the gross dividend when treated asthe top slice of the Shareholder’s income falls above the £150,000 threshold for additionalrate income tax.

18.1.11 Individual shareholders may be able to claim relief for withholding tax suffered ondividends paid to them.

18.1.12 UK resident individuals who are not domiciled in the UK and pay tax on a remittancebasis, will be taxed on dividends paid by the Company, but only if they are remitted tothe UK. Such investors should consult their own tax advisers regarding their UK taxliability.

18.1.13 Shareholders who are subject to corporation tax should generally, and subject to certainanti-avoidance provisions, be able to claim exemption from UK corporation tax in respectof any dividend received but will not be entitled to claim relief in respect of any underlyingtax or withholding tax imposed.

18.1.14 Trustees of discretionary or accumulation trusts receiving dividends from shares are alsoliable to account for income tax at the dividend trust rate, currently 37.5 per cent. of thegross dividend.

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18.1.15 UK pension funds and charities are generally exempt from tax on dividends that theyreceive.

Taxation of chargeable gains18.1.16 Any gain arising on the sale, redemption or other disposal of Ordinary Shares will be

taxed at the time of such sale, redemption or disposal as a capital gain.

18.1.17 For Shareholders within the charge to UK corporation tax, indexation allowance mayreduce any chargeable gain arising on disposal of Ordinary Shares but will not create orincrease an allowable loss.

18.1.18 Individual shareholders who are UK resident or only temporarily non-UK resident maybe subject to capital gains tax on any gain made on disposal of shares, subject to theavailability of any annual exempt amount or allowable losses. The rate of tax is currently18 per cent. for taxpayers taxable at the basic rate and 28 per cent. for taxpayers subjectto taxation at the higher or additional rate.

18.1.19 A shareholder who is an individual resident in the UK and who is not domiciled in theUK who makes gains on the disposal of Ordinary Shares where the proceeds are notremitted to the UK may benefit from the remittance basis of UK taxation. Suchindividuals should consult their own tax advisers concerning their UK tax liability.

Inheritance Tax18.1.20 Individuals and trustees subject to inheritance tax in relation to a shareholding in the

Company may be entitled to business property relief of up to 100 per cent. after a holdingperiod of two years providing that all the relevant conditions for the relief are satisfied atthe appropriate time.

Stamp Duty and Stamp Duty Reserve Tax18.1.21 The following comments are intended as a guide to the general UK Stamp Duty and

Stamp Duty Reserve Tax (“SDRT”) position and do not relate to persons such as marketmakers, brokers, dealers, intermediaries and persons connected with depositaryarrangements or clearance services, to whom special rules apply.

Ordinary Shares held in certificated form18.1.22 No stamp duty or SDRT should be payable on the allotment and issue of Ordinary

Shares.

18.1.23 In respect of a subsequent transfer of shares, stamp duty at the rate of 0.5 per cent.(rounded up to the next multiple of £5) of the amount or value of the consideration givenis generally payable on an instrument transferring Ordinary Shares. A special rate of 1.5per cent. is payable on an instrument transferring Ordinary Shares into a clearance ordepositary system (rounded up to the next multiple of £5).

18.1.24 An exemption from stamp duty is available on an instrument transferring Ordinary Shareswhere the amount or value of the consideration is £1,000 or less, and it is certificated onthe instrument that the transaction effected by the instrument does not form part of alarger transaction or series of transactions in respect of which the aggregate amount orvalue of the consideration exceeds £1,000.

18.1.25 In practice, no charge to stamp duty will arise in relation to a subsequent transfer ofOrdinary Shares held in certificated form provided that all instruments relating to thetransfer are executed and retained outside the UK and relate to matters or actionsperformed in the UK. However any instrument effecting or evidencing a transfer ofOrdinary Shares held in certificated form whether executed in the UK or offshore willnot be admissible as evidence in UK civil proceedings unless duly stamped.

18.1.26 Interest on unpaid stamp duty will accrue from 30 days after the date the instrument wasexecuted.

18.1.27 No charge to SDRT will arise in respect of an agreement to transfer Ordinary Sharesheld in certificated form, provided such shares are not registered in any register kept in

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the UK by or on behalf of the Company and are not paired with shares issued by a bodycorporate incorporated in the UK.

Ordinary Shares held in uncertificated formDue to the restrictions of the CREST system, shares of companies incorporated outside the UK,such as the Company, may not be settled directly on the CREST system. Accordingly, shouldOrdinary Shares be held within the CREST system in uncertificated form, they will be held in theform of Depositary Interests issued by the Depositary. Agreements to transfer depositary interestsin shares of companies listed on AIM are liable to SDRT at the rate of 0.5 per cent. of the valueof the consideration for the transfer. The charge is generally borne by the purchaser unless otherarrangements have been put in place.

18.2 Cayman Islands TaxPursuant to section 6 of the Tax Concessions Law (2011 Revision) of the Cayman Islands, on16 December 2003 the Company was granted an undertaking from the Governor in Cabinet:

18.2.1 that no law which is enacted in the Cayman Islands after the date of grant of theundertaking imposing any tax to be levied on profits, income, gains or appreciations shallapply to the Company or its operations; and

18.2.2 in addition, that no tax to be levied on profits, income, gains or appreciations or which isin the nature of estate duty or inheritance tax shall be payable:

18.2.2.1 on or in respect of the shares, debentures or other obligations of the Company;or

18.2.2.2 by way of withholding in whole or in part of any relevant payment as defined inSection 6(3) of the Tax Concessions Law (2011 Revision).

18.2.3 The undertaking has been granted for a period of twenty years from the date of the grant.

18.2.4 The Cayman Islands currently levy no taxes on individuals or corporations based uponprofits, income, gains or appreciations and there is no taxation in the nature of inheritancetax or estate duty. There are no other taxes likely to be material to the Company leviedby the Government of the Cayman Islands save certain stamp duties which may beapplicable, from time to time, on certain instruments executed in or brought within thejurisdiction of the Cayman Islands

18.2.5 The Cayman Islands has entered into a limited double taxation arrangement for theavoidance of double taxation and the prevention of fiscal evasion with the UnitedKingdom on 15 June 2009 which came into force on 20 December 2010 and is effective(in both the United Kingdom and in the Cayman Islands) from 1 April 2011 forcorporation tax, from 6 April 2011 for income tax and capital gains tax and from20 December 2010 for other taxes.

18.3 Jersey taxationGeneral18.3.1 The following information does not deal with certain types of person, such as persons

holding or acquiring shares in the course of trade, collective investment schemes orinsurance companies, how Jersey tax law and practice applies to land and buildingssituated in Jersey or persons who are tax resident in Jersey. The following is intended onlyas a general guide and is not intended to be, nor should it be considered to be, legal ortax advice to any particular holder.

Taxation of the Company18.3.2 The Company is regarded as resident for tax purposes in Jersey and on the basis that the

Company is neither a financial services company nor a utility company for the purposesof the Income Tax (Jersey) Law 1961, as amended or is in receipt of profits arising frominterests in real property in Jersey (as specified under Article 51(1) of the Income Tax(Jersey) Law 1961, as amended) the Company is subject to income tax in Jersey at a rateof zero per cent. Dividends on New Ordinary Shares may be paid by the Company

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without withholding or deduction for or on account of Jersey income tax and holders ofNew Ordinary Shares (other than residents of Jersey) will not be subject to any tax inJersey in respect of the holding, sale or other disposition of such New Ordinary Shares.

Goods and services tax18.3.3 Jersey charges a tax on goods and services supplied in the Island (“GST”). On the basis

that the Company has obtained international services entity status, GST is not chargeableon supplies of goods and/or services made by the Company. The Directors intend toconduct the business of the Company such that no GST will be incurred by the Company.

Stamp duty18.3.4 In Jersey, no stamp duty is levied on the issue or transfer of the Ordinary Shares except

that stamp duty is payable on Jersey grants of probate and letters of administration, whichwill generally be required to transfer Ordinary Shares on the death of a holder of suchOrdinary Shares. In the case of a grant of probate or letters of administration, stampduty is levied according to the size of the estate (wherever situate in respect of a holderof Ordinary Shares domiciled in Jersey, or situate in Jersey in respect of a holder ofOrdinary Shares domiciled outside Jersey) and is payable on a sliding scale at a rate ofup to 0.75 per cent. of such estate. Jersey does not otherwise levy taxes upon capital,inheritances, capital gains or gifts nor are there other estate duties.

EU Code of Conduct18.3.5 In late 2009, it was reported that concerns had been raised by some members of the

ECOFIN Code of Conduct Group as to whether the current zero-ten business tax regimefor companies in Jersey could be interpreted as being outside the spirit of the EU Codeof Conduct for Business Taxation. At that time, the Treasury and Resources Minister ofthe States of Jersey confirmed that he understood the fundamental importance of taxneutrality to Jersey’s financial services industry and the requirement that this bemaintained. ECOFIN met on 7 December 2010 and confirmed the report of the CodeGroup on Jersey’s zero-ten tax regime, which found that the combination of deemeddistributions and zero-ten could give rise to harmful effects and proposed a review by theEU High Level Working Party on tax issues. In response, the Jersey Council of Ministersannounced on 15 February 2011 that Jersey is to maintain its zero-ten tax regime.However, to address ECOFIN’s concerns, it is proposed that deemed distribution andattribution rules will be removed with effect from January 2012. It is possible that, throughconsultation, other changes to the zero-ten tax regime may be considered by the Jerseygovernment. If you are in any doubt as to your tax position you should consult yourprofessional adviser.

18.4 Cypriot tax considerationsThe comments included below relate to the Cyprus tax resident company on the basis of theproposed structure, as well as its obligations which are applicable by virtue of the Cypruslegislation as a consequence of the fact that its shareholder is a non Cyprus tax resident company.

18.4.1 Tax residencyA company is considered to be a resident of Cyprus for tax purposes if its managementand control is exercised in Cyprus.

18.4.2 Key Cyprus Taxes:18.4.2.1 Corporate Income tax: a Cyprus tax resident company is subject to corporate

income tax on its worldwide income, taking into account certain exemptions(including dividends and profit on sale of shares) at the rate of 12,5 per cent.on profits emanating from its trading activities.

18.4.2.2 Special Defence Contribution (“Cypriot Defence Tax”): is levied on certaintypes of income of tax residents of Cyprus

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18.4.2.3 Capital gains tax: is imposed at the rate of 20.0 per cent. only on gains fromthe disposal of immovable property situated in Cyprus including gains fromthe disposal of shares in companies which own such immovable property.Shares listed in any recognised stock exchange are excluded from capitalgains tax. Capital gains tax applies to both Cyprus and non-Cyprusresidents, subject to the provisions of an applicable double tax treaty.

18.4.2.4 Inheritance Tax: there is no Cyprus inheritance tax.

18.4.2.5 Key sources of income for a Cyprus resident company:

(i) Trading income: a Cyprus tax resident company will be subjectto Income Tax at the rate of 12.5 per cent. on profits emanatingfrom its trading activities, after the deduction of expenses.

(ii) Expenses treated as tax deductible: as per the legislation,expenses wholly and exclusively incurred for the generation oftaxable income are treated as deductible for tax purposes.

(iii) Expenses treated as non deductible: In accordance with acircular issued by the Cyprus Tax Authorities, all directexpenses relating to income from exempt activities should bededucted from such income (i.e. disallowed for CorporateIncome Tax purposes) in arriving at the income to be treatedas tax exempt.

18.4.2.6 Deductibility of interest expense of 100 per cent. subsidiary: Interest expenseincurred on acquisition (including increase in the shareholding) of shares of acompany from 1 January onwards, that is a 100 per cent. owned subsidiary(whether directly or indirectly and irrespective of whether the subsidiary is aCyprus or foreign company), will be tax deductible, provided:

(i) the deduction will only apply if the subsidiary does not own assets thatare not used in the business; and

(ii) if the subsidiary holds such assets, the deductibility of interest expensewill be limited to correspond to the amount of assets used in the business.

18.4.2.7 Deductibility of overheads based on a pro-rata basis: all general administrationexpenses should be allocated to the activities of the company proportionatelyusing either the balance sheet method (for example, cost of investments/totalassets * administration expenses) or the profit and loss method (income fromexempt activities/total income * administration expense). If both of the twomethods are considered as unfair then another method can be discussed withthe Cyprus Tax Authorities.

18.4.3 Gains from the disposal of securities18.4.3.1 Any gain from disposal by the Company of securities (the definition of

securities includes shares and bonds of companies or legal persons whereverincorporated and options thereon) shall be exempt from Corporate Income Taxirrespective of the trading nature of the gain, the number of shares held or theholding period and shall not be subject to the Cypriot Defence Tax.

18.4.3.2 Such gains are also outside of the scope of capital gains tax provided that thecompany whose shares are disposed of does not own any immovable propertysituated in Cyprus or such shares are listed in any recognised stock exchange.

18.4.4 Dividends to be received by the Company18.4.4.1 Dividend income (whether received from Cyprus resident or non-resident

companies) is exempt from Corporate Income Tax in Cyprus.

18.4.4.2 Dividend income from Cyprus resident companies is exempt from the CypriotDefence Tax whereas dividend income received from non-Cypriot residentcompanies is exempt from the Cypriot Defence Tax provided that either (i) notmore than 50.0 per cent. of the paying company’s activities result, directly or

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indirectly, in investment income, or (ii) the foreign tax suffered is notsignificantly lower than the tax rate payable in Cyprus (currently interpreted tomean an effective tax burden of at least 5.0 per cent.). If the exemption for theCypriot Defence Tax does not apply, dividends receivable from non-Cypriotresident companies are taxed at a rate of 20.0 per cent. subject to credit reliefavailable either under the provisions of a double tax treaty or through unilateralrelief, as per the Cyprus tax provisions.

18.4.5 Interest income

18.4.5.1 The tax treatment of interest income of any company which is a tax resident ofCyprus will depend on whether such interest income is treated as “active” or“passive.”

18.4.5.2 Interest income which consists of interest which has been derived by a companywhich is a tax resident of Cyprus in the ordinary course of its business, includinginterest which is closely connected with the ordinary course of its business willbe taxed as trading income under s Corporate Income Tax only, at the rate of12.5 per cent., after the deduction of any allowable business expenses.

18.4.5.3 Any other interest income (e.g. interest income from bank deposits) will besubject to the Cypriot Defence Tax only at the rate of 30.0 per cent. on the grossamount of interest.

18.4.5.4 Specifically, interest income arising in connection with the provision of loansto related or associated parties should be generally considered as income arisingfrom activities closely connected with the ordinary carrying on of a businessand should, as such, be exempt from Defence Tax and only be subject toCorporate Income Tax at the rate of 12,5 per cent.

18.4.6 Other tax considerations:

18.4.6.1 Withholding taxes:

(i) DividendsUnder Cyprus legislation there is no withholding tax on dividends paidto non-residents of Cyprus. The dividend will be paid free of any tax tothe shareholder who will be taxed according to the laws of the countryof residence or domicile of the shareholder. Shareholders must consulttheir own tax advisors on the consequences of their domicile or residencein relation to the payment of dividends.

Cyprus tax resident companies are exempt from Cypriots Defence Tax.Although there is a specific exception to this rule, such rule does not applyto the proposed structure.

(ii) InterestNo withholding taxes shall apply in Cyprus with respect to payments ofinterest by the Company to non-Cyprus tax resident lenders (bothcorporations and individuals).

There should be no withholding tax in Cyprus on interest paid by theCompany to Cyprus tax resident company lenders when the interest isconsidered as interest accruing from the ordinary carrying on of theirbusiness, or interest closely connected with the ordinary carrying on oftheir business.

Any payment of interest which is not considered as interest accruing fromthe ordinary carrying on of a business or interest income closelyconnected with the ordinary carrying on of a business by the Companyto Cypriot tax resident company lenders shall be subject to Defence Taxat the rate of 30 per cent.,whereby the Company is required to withholdsuch tax from the interest.

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(iii) Deemed Dividend DistributionsThe Cypriot Defence Tax, at a rate of 20 per cent., would be payable bythe Company on deemed dividends to the extent that its shareholders(both individuals and companies) are Cyprus tax residents. As per arelevant circular issued by the tax authorities, profits of a Cyprus taxresident company which are attributable either directly or indirectly toshareholders that are not Cyprus tax residents will not be subject to theDDD provisions.

(iv) Arm’s length principleThere are no specific transfer pricing rules, or any transfer pricingdocumentation requirements, in the Cyprus Tax Laws.

Under the arm’s length principle, where conditions are made or imposedupon the commercial or financial relations of two businesses which differfrom those which would have been made between independent parties,to the extent that such profits would have accrued to one of the partyhad the two businesses been independent, the tax authorities have theright to deem such income in the profits of that business and taxedaccordingly.

18.4.6.2 Stamp dutyStamp duty (SD) applies on documents relating to assets located in Cyprusand/or transactions or events that will take place in Cyprus (irrespective ofwhere the documents are signed).

Documents relating to assets situated outside Cyprus or transactions or eventsthat are done or executed outside Cyprus are not subject to SD in Cyprus.

The crystallisation of the SD liability occurs when the documents which aresigned and kept outside Cyprus that could be argued to be subject to SD inCyprus are remitted in Cyprus.

SD is calculated on the value of the contract at the following rates:

€1 – €5.000 @ 0%€5.001 – €170.000 @ 0,15%over €170.001 @ 0,2%

For documents executed from 1 March 2013 onwards the SD duty is capped to€20,000 per document subject to SD.

A liability to stamp duty may arise on acquisition of Shares and such stampduty would be payable where the Shares acquisition documents are executed inCyprus or later brought into Cyprus as the Cyprus company’s shares areconsidered by the Commissioner of Stamp Duty to be assets located in Cyprus.In such a case, the purchaser of the shares is liable to Cyprus SD unlessotherwise stated in the document.

Also a loan financing transaction between two Cypriot companies or oneCypriot company and a foreign company could be subject to SD in Cyprus. Insuch a case, the lender of the funds is liable for the payment of the SD unlessotherwise stated in the document.

18.4.6.3 Capital dutyCapital duty is payable to the Registrar of Companies in respect of theregistered authorised and issued share capital of a Cypriot company upon itsincorporation and upon subsequent increases thereon.

Upon incorporation of the company, the capital duty rates are as follows:

● Authorised share capital – €102,52 plus 0,6 per cent. on the authorisedshare capital

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● Issued share capital – there is no capital duty payable if the shares areissued at nominal value. There is a 17,09 flat duty if the shares are issuedat a premium

Upon subsequent increases, the capital duty rates are as follows:

● Authorised share capital – 0.6 per cent. on the additional share capital;and

● Issued share capital – €17,09 flat duty on every issue, whether the sharesare issued at their (par) nominal value or at a (share) premium.

19. The City CodeThe Company is incorporated in the Cayman Islands and is managed and controlled outside the UK.Accordingly the provisions of the City Code will not apply to the Company on Admission. It isemphasised that, although the Ordinary Shares will trade on AIM, the Company will not be subject totakeover regulation in the UK.

Until such time as the position changes or management and control of the Company takes place withinthe UK, Shareholders will not be afforded the protections of the City Code that they would otherwisehave if they were shareholders in a company where a takeover is regulated by the Panel.

20. CREST and Depositary InterestsIntroduction20.1 CREST is a paperless settlement system allowing securities to be transferred from one person’s

CREST account to another without the need to use share certificates or written instruments oftransfer. Securities issued by non-UK registered companies, such as the Company, cannot be heldor transferred in the CREST system. However, to enable investors to settle such securities throughCREST, a depositary or custodian can hold the relevant securities and issue dematerialised DIsrepresenting the underlying securities which are held on trust for the holders of the DIs.

With effect from Admission, it will be possible for CREST members to hold and transfer interestsin Ordinary Shares within CREST pursuant to a DI arrangement established by the Companywith the Depositary. CREST is a voluntary system and holders of Ordinary Shares who wish toreceive and retain share certificates will also be able to do so. No temporary documents of titlewill be issued.

The Ordinary Shares will not themselves be admitted to CREST. Instead the Depositary will issueDIs in respect of the underlying Ordinary Shares. The DIs will be independent securitiesconstituted under English law which may be held and transferred through CREST. DIs will havethe same international security identification number (ISIN) as the underlying Ordinary Sharesand will not require a separate listing on AIM. The DIs will be created and issued pursuant to theDI Deed Poll, which will govern the relationship between the Depositary and the holders of DIs.

Application will be made for the DIs in respect of the underlying Ordinary Shares to be admittedto CREST with effect from Admission. Holders of Ordinary Shares in certificated form who wishto hold DIs through the CREST system may be able to do so and should contact the Registrar.

20.2 Summary of the DI Deed PollThe DI Deed Poll was originally made between the Company and Capita IRG Trustees Limitedon 26 February 2004 and was subsequently transferred to the Depositary (Computershare InvestorServices PLC) on 10 March 2009. Pursuant to the DI Deed Poll, the Depositary has appointedthe Custodian to hold such number of Ordinary Shares as the relevant member of the Companytransfers to it and the Depositary has agreed to issue to the relevant participating member ofCREST an equivalent number of DIs. The Depositary holds (itself or through the Custodian) asbare trustee, the underlying Ordinary Shares deposited with it, and any cash or other propertyderived from such Ordinary Shares, for the benefit of the DI holders as tenants in common. TheDepositary has agreed (itself or through the Custodian) to pass on to and, so far as it is reasonablyable, exercise on behalf of the relevant DI holder all rights and entitlements (including voting

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rights) which it receives, or is entitled to, in respect of the underlying Ordinary Shares. The relevantDI holder is entitled to cancel the DIs held by it and request that the Ordinary Shares, and anycash or other property derived from such Ordinary Shares, are transferred to it, at which pointthe Ordinary Shares must be held in certificated form. The Depositary is entitled to cancel theDIs of any particular DI holder and transfer such Ordinary Shares to that holder in certain limitedcircumstances, including where the DI holder ceases to be a participating member in CREST orthe DI’s cease to be capable of being held in the CREST system. The Depositary’s liability isexcluded save to the extent that such liability results from the negligence, wilful default or fraudof the Depositary or any person for whom the Depositary is vicariously liable. Except in the caseof personal injury or death, the Depositary’s liability is limited to the lesser of: (i) the value of theNew Ordinary Shares and any cash or other property derived from such New Ordinary Sharesthat would have been properly attributable to that DI holder; or (ii) the proportion of the sum of£10 million which corresponds to the proportion which the Depositary would otherwise be liableto pay to the DI holder bears to the aggregate of the amounts the Depositary would otherwise beliable to pay to all such DI holders in respect of the same act, omission or event or, if there are nosuch amounts, £10 million. Each DI holder is liable to indemnify the Depositary and theCustodian and their respective agents, officers and employees from and against any and allliabilities arising from the performance of their services or in connection with the DI Deed Poll,except for liabilities caused by or resulting from any wilful default, negligence or fraud of theDepositary, the Custodian or any agent of either of them (provided that such agent is a memberof the same group of companies). The Depositary may terminate this Deed by giving not lessthan 45 days prior notice to the DI holders. The DI Deed Poll is governed by English law.

21. General21.1 It is estimated that the total costs and expenses payable by the Company in connection with or

incidental to the Admission including London Stock Exchange fees, printing, advertising anddistribution costs, legal, accounting and corporate finance fees are estimated to amount toapproximately £760,000 (excluding any VAT payable thereon).

21.2 Shore Capital & Corporate Limited, the nominated adviser to the Company and Shore CapitalStockbrokers Limited, the broker of the Company, have given and not withdrawn their writtenconsent to the inclusion in this document of references to their names in the form and context inwhich they appear.

21.3 DeGolyer & MacNaughton, has given and not withdrawn its written consent to the inclusion ofits reports in the document and to the inclusion of references to the firm herein in the form andcontext in which they appear and have confirmed that as at the date of this document, they havenot become aware of any matter affecting the validity of such report.

21.4 PricewaterhouseCoopers LLP, the reporting accountants of the Company, has given and notwithdrawn its written consent of the accountants’ report on the Target and the accountants’ reporton SibGeCo in the form and context in which they are included, as required by Schedule Two ofthe AIM Rules.

21.5 Grant Thornton UK LLP of Enterprise House, 115 Edmund Street, Birmingham B3 2HJ, whichis a member of the Institute of Chartered Accountants in England and Wales, audited theCompany’s statutory accounts for the period ended 31 December 2010. Deloitte LLP of LordCoutanche House, 66-68 The Esplanade, St Helier, Jersey, JE4 8WA, Channel Islands, St Helier,Jersey, which is a member of the Institute of Chartered Accountants in England and Wales,audited the Company’s statutory accounts for the periods ended 31 December 2011 and 31December 2012.

21.6 Save as disclosed in this document, there are no patents or other intellectual property rights, know-how, licences or industrial, commercial or financial contracts which are or may be of fundamentalimportance to the Enlarged Group’s business.

21.7 Save as disclosed in this document, the Directors are not aware of any environmental issues thatmay affect the Enlarged Group’s utilisation of its tangible fixed assets.

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21.8 There has been no significant change in the financial or trading position of ZRI since 31 December2012 save in relation to the items disclosed in paragraph 10.8, 10.10, 10.12, 10.13 and 10.14 ofPart VII.

There has been no significant change in the financial or trading position of SibGeCo since 31December 2012 save in relation to the items disclosed in note 23 of Section D of Part V andparagraph 10.7 of Part VII.

There has been no significant change in the financial or trading position of CenGeo Holdingssince 31 December 2012 save in relation to the items disclosed in note 11 of Section B of Part V

21.9 The Existing Ordinary Shares are in registered form and may be held in certificated or, throughDepositary Interests, uncertificated form. No temporary documents of title will be issued. TheISIN number of the Existing Ordinary Shares is KYG9895N1016. The New Ordinary Shares willalso be in registered form and may be held in certificated, or through Depositary Interests, inuncertificated form. The ISIN number for the New Ordinary Shares is KYG9895N1198.

21.10 Save as disclosed in this document, no person (excluding professional advisers otherwise disclosedin this document and trade suppliers) has within the twelve months preceding the Company’sapplication for Admission received directly or indirectly from the Company, or has entered intocontractual arrangements (not otherwise disclosed in this document) to receive, directly orindirectly, from the Company on or after Admission:

(a) fees totalling £10,000 or more; or

(b) securities in the Company with a value of £10,000 or more calculated by reference to theexpected opening price of the Ordinary Shares on Admission; or

(c) any other benefit with a value of £10,000 or more at the date of Admission.

21.11 Save as disclosed in this document, since the period of the financial information set out in PartsIV and V of this document, the Enlarged Group has made no investments and there are noinvestments in progress of the Enlarged Group which are or may be significant.

21.12 Save as disclosed in this document, the Directors are not aware of any exceptional factors thathave influenced the Company’s activities.

21.13 The Company’s accounting reference date is 31 December.

21.14 The financial information for the relevant accounting period set out in the Accountants’ Reporton the Company and the Enlarged Group in Parts IV and V of this document does not constitutestatutory accounts of the Company within the meaning of section 434 of the Act and no financialinformation contained in this document is intended by the Company to represent or constitute aforecast of profits by the Company or any member of the Enlarged Group.

21.15 No financial information contained in this document is intended by the Company to represent orconstitute a forecast of profits by the Company or any member of the Enlarged Group or toconstitute publication of accounts by it.

21.16 Save as disclosed in this document, the Company is not aware of any arrangements which may ata subsequent date result in a change of control of the Company.

21.17 Save as disclosed, there are no provisions in the Articles which would have the effect of delaying,deferring or preventing a change of control of the Company.

21.18 Save as disclosed in this document, no public takeover bids have been made by third parties inrespect of the Company’s issued share capital since its incorporation up to the date of thisdocument.

21.19 Insofar as the Directors are aware, the percentage of Ordinary Shares not in public hands (as thatexpression is defined in the AIM Rules) at the date of this document is approximately 50.4 percent, and on Admission is expected to be approximately 82.2 per cent.

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21.20 Save as disclosed in this document, there are not, either in respect of the Company or itssubsidiaries, any known trends, uncertainties, demands, commitments or events that are reasonablylikely to have a material effect on the Company’s prospects for at least the current financial year.

21.21 Save as disclosed in this document, there are no mandatory takeover bids and/or squeeze out andsell-out rules in relation to the New Ordinary Shares.

21.22 Save for the information incorporated by reference in Part IV of this document, no other auditedinformation is included in this document.

22. Third Party InformationWhere information has been sourced from a third party, the information has been accurately reproducedand, as far as the Company and the Directors are aware and are able to ascertain from informationpublished by that third party, no facts have been omitted which would render the reproduced informationinaccurate or misleading. Reference materials include various historical and recent publications. Acomprehensive list of reports and information used in the preparation of this document is available ifrequired.

23. Copies of this documentCopies of this document will be available free of charge during normal business hours on any day (exceptSaturdays, Sundays and public holidays) at the offices of Pinsent Masons LLP, 30 Crown Place, LondonEC2A 4ES, United Kingdom from the date of this document for a period of at least one month fromAdmission. This Document is also available on the Company’s website at www.zoltav.com.

10 June 2013

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DEFINITIONS

“Acquisition Agreement” the conditional agreement dated 19 March 2013 between (1) theCompany (2) the Sellers and (3) Zoltav Resources (as amended),a summary of which is set out in paragraph 10.7 of Part VII ofthis document;

“Acquisition” the proposed acquisition of the entire issued share capital ofCenGeo Holdings Limited;

“Acquisition Resolutions” resolutions numbered 8, 9, 10 and 11 as set out in the Notice;

“Act” the Companies Act 2006;

“Admission” admission of the New Ordinary Shares to trading on AIM andsuch admission becoming effective in accordance with the AIMRules;

“Admission Agreement” the conditional agreement dated 7 June 2013 and made between(1) the Company (2) the Directors and (3) SCC, a summary of theprincipal terms of which are set out in paragraph 10.1 of Part VII;

“AIM” the AIM Market operated by the London Stock Exchange;

“AIM Rules” the AIM Rules for Companies published by the London StockExchange governing admission to, and the operation of, AIM andthe AIM guidance note for Mining and Oil & Gas Companies,each as in force as at the date of this document or, where thecontext so required, as amended or modified after the date of thisdocument;

“Annual General Meeting” or the annual general meeting of the Company convened for “AGM” 2.00 p.m. on 3 July 2013;

“ARA Capital” ARA Capital Limited, a company incorporated in the BritishVirgin Islands with its address at Suite 305, Tamiel Centre,58 Ellados Avenue, Paphos, CY 8020, Cyprus;

“ARA CLN” the convertible loan note instrument dated 15 September 2012between (1) the Company and (2) ARA Capital, a summary ofwhich is set out in paragraph 10.11 of Part VII of this document;

“ARA Loan” the unsecured loan facility of up to £250,000 provided by ARACapital to the Company pursuant to a loan agreement enteredinto by them on 9 April 2013;

“Articles” or “Articles of the new articles of association of the Company to be adopted at Association” the Annual General Meeting;

“Audit Committee” the audit committee of the board of directors of the Companyfrom time to time;

“Auditors Report” the report of the auditors of the Company on the financialstatements of the Company for the year ended 31 December 2012;

“Bandbear” Bandbear Limited, a company incorporated in the British VirginIslands with company registration number 1742745, whoseregistered office is at Nerine Chambers, Road Town, Tortola,British Virgin Islands;

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“Board” the board of directors of the Company from time to time;

“CenGeo Holdings” CenGeo Holdings Limited, a private limited company registeredin the Republic of Cyprus under number HE 313630;

“CenGeo Group” CenGeo Holdings Limited, and its subsidiary, being SibGeCo asat the date of this document;

“Cayman Companies Law” the Cayman Islands Companies Law (2012 Revision);

“certificated” or “in certificated a share or security which is not in uncertificated form;form”

“CIS” the Commonwealth of Independent States;

“City Code” or “Code” the UK City Code on Takeovers and Mergers;

“Company” or “Zoltav” Zoltav Resources Inc., a company incorporated in the CaymanIslands under the Companies Law (2003 Revision) of the CaymanIslands with registered number 130605;

“Computershare” Computershare Investor Services (Cayman) Ltd, at R&H TrustCo. Ltd., Windward 1, Regatta Office Park, West Bay Road,Grand Cayman KY1-1103, Cayman Islands;

“Consideration Shares” the 23,657,870 New Ordinary Shares to be allotted and issued tothe Sellers as consideration pursuant to the terms of theAcquisition Agreement;

“Corporate Governance Code” the UK Corporate Governance Code issued from time to time bythe Financial Reporting Council;

“CPR” the competent person report on the Licences set out in Part III ofthis document;

“CREST” the Relevant System (as defined in the CREST Regulations) inrespect of which Euroclear is the Operator (as defined in theCREST Regulations);

“CREST Regulations” the Uncertificated Securities Regulations 2001 (SI 2001/3755), asamended;

“Custodian” any custodian or any nominee of any such custodian of thedeposited property as may from time to time be appointed by theDepositary for the purposes of the DI Deed Poll;

“DeGolyer & MacNaughton” DeGolyer and MacNaughton Corp., the competent personresponsible for the preparation of the CPR;

“Depositary” Computershare Investor Services PLC, a company incorporatedin England & Wales with registered number 3498808;

“Depositary Interest” or “DI” a depositary interest in uncertificated form representing OrdinaryShares issued to a holder on the terms of the DI Deed Polldescribed at paragraph 20.2 of Part VII of this document;

“DI Deed Poll” the trust deed poll constituted by the Depositary in respect of theDIs;

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“Directors” the directors of the Company whose names are set out on page 3of this document;

“DI Holder” the holder of a DI issued pursuant to the terms of the DI DeedPoll;

“DTR” the Disclosure Rules and Transparency Rules of the FCA, as thesame may be amended from time to time;

“DTR 5” Chapter 5 of the DTR;

“Enlarged Group” the Company as enlarged by the Acquisition;

“Enlarged Share Capital” the New Ordinary Shares in issue immediately followingAdmission, which includes the Consideration Shares and the FirstTranche Subscription Shares;

“Euroclear” Euroclear UK & Ireland Limited;

“Existing Ordinary Shares” the ordinary shares of US$0.01 each in the capital of theCompany prior to the Share Consolidation;

“Existing Share Capital” the 397,090,979 Existing Ordinary Shares in issue at the date ofthis document (which includes 21,846,635 Existing OrdinaryShares issued pursuant to the Conversion of the ARA CLN);

“FCA” the Financial Conduct Authority of the United Kingdom;

“Financial Statement” the financial statements of the Company for the year ended31 December 2012;

“First Tranche Subscription 11,828,935 Subscription Shares to be allotted and issued by the Shares” Company to ARA Capital pursuant to the Subscription on

completion of the Acquisition;

“Form of Proxy” or “Proxy Form” the form of proxy enclosed with this document for use byShareholders in connection with the AGM;

“Form of Instruction” the form of instruction enclosed with this document for use by DIHolders in connection with the AGM;

“FSMA” the Financial Services and Markets Act 2000 (as amended);

“Group” the Company and its subsidiaries as at the date of this document;

“Investing Company” any AIM company which has as its primary business or objectivethe investing of its funds in securities businesses or assets of anydescription;

“HMRC” HM Revenue & Customs;

“KhMAO” the Khantiy-Mansisk Autonomous Okrug, an autonomous regionin western Siberia, Russia;

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“Koltogorsky Exploration the six subsoil licences to explore for oil and gas registered in the Licences” name of SibGeCo:

No. 7 (state registration number: XMH14452НП);No. 10 (state registration number XMH14455НП);No. 11 (state registration number XMH14456НП);No. 12 (state registration number XMH14457НП);No. 14 (state registration number XMH12323НП);No. 15 (state registration number XMH12324НП);

“Koltogorsky Production Licence” the 25 year exploration, appraisal and production licence (stateregistration number XMH15501НЭ) issued by Rosnedra on15 February 2013 and registered in the name of SibGeCo.;

“Licences” the Koltogorsky Production Licence and the legacy KoltogorskyExploration Licences held by SibGeCo and located in theKoltorgorsky region of the Russian Federation;

“Locked-in persons” the Directors, ARA Capital and each of the Sellers;

“London Stock Exchange” London Stock Exchange plc;

“New Ordinary Shares” the ordinary shares of US$0.20 each in the capital of theCompany after the Share Consolidation;

“Nomination Committee” the nomination committee of the board of directors of theCompany from time to time;

“Notice” the notice of the AGM as set out at the end of this document;

“Official List” the official list of the UKLA;

“Panel” the UK Panel on Takeovers and Mergers;

“Proposals” the Acquisition, the Subscription, Admission, the ShareConsolidation and adoption of the Articles;

“Prospectus Rules” the Prospectus Rules brought into effect on 1 July 2005 pursuantto Commission Regulation (EC) No. 809/2004;

“Remuneration Committee” the remuneration committee of the board of directors from timeto time of the Company;

“Resolutions” the resolutions set out in the Notice;

“Restricted Jurisdiction” each and any of Australia, Canada (and its territories andpossessions), Japan, and the Republic of South Africa;

“Rosnedra” the Russian Agency for Subsoil Use;

“Russia” the Russian Federation;

“RUB” or “rubles” Russian Rubles, being the lawful currency of the RussianFederation;

“SCC” Shore Capital & Corporate Limited;

“SCS” or “Shore Capital Shore Capital Stockbrokers Limited;Stockbrokers”

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“Second Tranche Subscription 1,819,836 Subscription Shares to be allotted and issued by the Shares” Company to ARA Capital, on payment of US$2 million (£1.3

million) by the last business day of 2013;

“Sellers” the current shareholders of CenGeo Holdings Limited, beingBandbear, Alexander Sokolov and Dmitry Kamyshev;

“Shareholder” a holder of ordinary shares in the capital of the Company fromtime to time;

“Share Consolidation” the reorganisation of the share capital of the Company wherebyeach holding of 20 Existing Ordinary Shares will be consolidatedinto one New Ordinary Share;

“Shore Capital” SCC and/or SCS as the context permits;

“SibGeCo” ZAO Sibirsky Geologicheskaya Kompaniya, a companyincorporated in the Russian Federation, with its registered addressat 628606, Russian Federation, Tyumen Oblast, Khanty-MansiyskAutonomous Okrug – Yugra, Nizhnevartovsk, ul. 60 letOktyabrya, 2-D, office 1;

“Sibir” Sibir Energy plc;

“Sibir Group” Sibir Energy plc and its subsidiaries;

“Sibur” OAO Sibur Holding;

“Subscription” the conditional subscription pursuant to the SubscriptionAgreement for the Subscription Shares at the Subscription Priceby ARA Capital;

“Subscription Agreement” the conditional agreement dated 19 March 2013 concludedsimultaneously with the Acquisition Agreement, between (1) theCompany and (2) ARA Capital (as subsequently amended);

“Subscription Price” 70.0 pence per Subscription Share;

“Subscription Shares” 18,198,362 New Ordinary Shares to be issued and allotted by theCompany pursuant to the Subscription;

“Subsoil Law” the Federal Law “On Subsoil” No. 2395 1 dated 21 February 1992,as amended;

“Third Tranche Subscription 4,549,591 Subscription Shares to be allotted and issued by the Shares” Company to ARA Capital, on payment of US$5 million

(£3.2 million) by 1 April 2014.

“Transneft” a Russian state-owned oil and petroleum product pipelinecompany OAO ‘AK’ Transneft, natural monopoly;

“Transnefteprodukt” a Russian state-owned petroleum product pipeline company OAO‘AK’ “Transnefteprodukt”;

“UK” or “United Kingdom” the United Kingdom of Great Britain and Northern Ireland;

“United Kingdom Listing the UK Listing Authority, being the Financial Conduct Authority Authority” or “UKLA” acting in its capacity as the competent authority for the purposes

of the Financial Services and Markets Act 2000;

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“uncertificated” or recorded on the relevant register of the shares or securities of the “in uncertificated form” company concerned as being held in uncertificated form in

CREST and title to which by virtue of the CREST Regulations,may be transferred by means of CREST;

“US”, “USA” or “United States” the United States of America, each State thereof (including theDistrict of Columbia), its territories, possessions and all areassubject to its jurisdiction;

“US$” or “USD” the lawful currency of the USA;

“Zoltav Resources” Zoltav Resources Holdings (Jersey) Limited, a company organizedand existing under the laws of Jersey, whose registered office islocated at Ogier House, The Esplanade, St Helier, Jersey,JE4 9WG.

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GLOSSARY OF TECHNICAL TERMS

The following glossary of technical terms applies throughout this document unless the context requiresotherwise:

“1C” denotes low estimate scenario of contingent resources;

“2C” denotes best estimate scenario of contingent resources;

“3C” denotes high estimate scenario of contingent resources;

“3P” proved-plus-probable-plus-possible reserves;

“2D seismic” geophysical data that depicts the subsurface strata in twodimensions;

“3D seismic” geophysical data that depicts the subsurface strata in threedimensions. 3D seismic typically provides a more detailed andaccurate interpretation of the subsurface strata than 2D seismic;

“3P” proven plus probable plus possible reserves;

“accumulation” an individual body of moveable petroleum. A knownaccumulation (one determined to contain reserves or contingentresources) must have been penetrated by a well;

“oAPI” measurement of oil gravity

“API” American Petroleum Institute;

“appraisal well” well drilled in order to assess characteristics (such as flow rate,volume) of a proven hydrocarbon accumulation;

“associated gas” gas initially held in solution in the reservoir crude oil which isreleased from solution when the extracted reservoir crude oil isprocessed at the extraction stage;

“barrel” or “b” or “bbl” a stock tank barrel, a standard measure of volume for oil,condensate and natural gas liquids, which equals 42 US gallons;

“block” an area of licensed territory comprising one or more licences;

“bopd” barrels of oil per day;

“Brent” a particular type of crude oil that is light, sweet oil produced inthe North Sea with most of it being refined in Northwest Europe.Brent is a benchmark oil;

“Contingent Resources” those quantities of petroleum estimated, as of a given date, to bepotentially recoverable from known accumulations by applicationof development projects, but which are not currently consideredto be commercially recoverable due to one or more contingencies;

Based on assumptions regarding future conditions and their impact on ultimate economic viability,projects currently classified as Contingent Resources may be broadly divided into three groups:

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“Marginal Contingent Resources” those quantities associated with technically feasible projects thatare either currently economic or projected to be economic underreasonably forecasted improvements in commercial conditions butare not committed for development because of one or morecontingencies;

“Sub-Marginal Contingent those quantities associated with discoveries for which analysisResources” indicates that technically feasible development projects would not

be economic and/or other contingencies would not be satisfiedunder current or reasonably forecasted improvements incommercial conditions. These projects nonetheless should beretained in the inventory of discovered resources pendingunforeseen major changes in commercial conditions;

“Undetermined Contingent where evaluations are incomplete such that it is premature to Resources” clearly define ultimate chance of commerciality, it is acceptable to

note that project economic status is “undetermined;

“crude oil” unrefined oil;

“deltaic” related to, or like a river delta and often shaped like the Greekletter “Δ”. A delta is a deposit formed where a river flows into anocean, sea, desert, lake or estuary. Deltaic sediments have highpotential as hydrocarbon reservoirs;

“exploration well” a well drilled to find hydrocarbons in an unproved area or toextend significantly a known oil or natural gas reservoir;

“field” an area consisting of either a single reservoir or multiplereservoirs, all grouped on or related to the same individualgeological structural feature and/or stratigraphic condition;

“formation” a body of rock that is sufficiently distinctive and continuous thatit can be mapped;

“ft” feet;

“future gross revenue” future gross revenue is defined as that revenue to be realized fromthe production and sale of the estimated gross reserves;

“future net revenue” future net revenue is calculated by deducting estimated operatingexpenses, capital and abandonment costs, production and othertaxes, and profit tax, from future gross revenue;

“gross reserves” the total estimated petroleum to be produced from a field;

“gross resources” the total estimated petroleum that is potentially recoverable;

“hydraulic Stimulation” a treatment to increase production from a well by using a fluid tofracture or split the reservoir formation;

“hydrocarbons” compounds formed primarily from the elements hydrogen andcarbon and existing in solid, liquid or gaseous forms;

“km” kilometre;

“km2” square kilometre;

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“license area” the particular subsoil plot specified in the subsoil license issuedby the applicable Russian federal authority, which the licenseholder has the right to use for the purpose and on the termsspecified in the subsoil license. A license area may contain one ormore fields or may encompass only a portion of a field;

“Lowest Known Occurrence” lowest known occurrence of oil in a reservoir;or “LKO”

“m” metres;

“mmbbl” million barrels of oil;

“mmboe” million barrels of oil equivalent;

“net pay” net pay represents that portion of the reservoir containing oil andgas reserves that are anticipated to be economically recoverablefor the particular reservoir drive mechanism;

“NGL” natural gas liquids;

“Oil Water Contact” or “OWC” a bounding surface in a reservoir above which predominantly oiloccurs and below which predominantly water occurs;

“OOIP” original oil in place;

“petroleum system” geologic components and processes necessary to generate andstore hydrocarbons, including a mature source rock, migrationpathway, reservoir rock, trap and seal. Exploration plays andprospects are typically developed in basins or regions in which acomplete petroleum system has some likelihood of existing;

“PRMS” Petroleum Resources Management System;

“present value” present value is defined as future net revenue discounted at anarbitrary rate over the expected period of realization;

“production” the cumulative quantity of petroleum that has been recovered ata given date;

“production well” a well drilled to obtain production from a proven oil or gas field.Production wells may be used either to extract hydrocarbons froma field or to inject water or gas into a reservoir in order to improveproduction;

“prospect” a project associated with a potential accumulation that issufficiently well defined to represent a viable drilling target;

“Reserves” those quantities of petroleum anticipated to be commerciallyrecoverable by application of development projects to knownaccumulations from a given date forward under definedconditions. Reserves must further satisfy four criteria: they mustbe discovered, recoverable, commercial, and remaining (as of theevaluation date) based on the development project(s) applied.Reserves are further categorized in accordance with the level ofcertainty associated with the estimates and may be sub-classifiedbased on project maturity and/or characterized by developmentand production status;

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“Proved Reserves” those quantities of petroleum which, by analysis of geoscienceand engineering data, can be estimated with reasonable certaintyto be commercially recoverable, from a given date forward, fromknown reservoirs and under defined economic conditions,operating methods, and government regulations. If deterministicmethods are used, the term reasonable certainty is intended toexpress a high degree of confidence that the quantities will berecovered. If probabilistic methods are used, there should be atleast a 90 per cent. probability that the quantities actuallyrecovered will equal or exceed the estimate;

“Unproved Reserves” based on geoscience and/or engineering data similar to that usedin estimates of Proved Reserves, but technical or otheruncertainties preclude such reserves being classified as Proved.Unproved Reserves may be further categorized as ProbableReserves and Possible Reserves;

“Probable Reserves” those additional Reserves which analysis of geoscience andengineering data indicate are less likely to be recovered thanProved Reserves but more certain to be recovered than PossibleReserves. It is equally likely that actual remaining quantitiesrecovered will be greater than or less than the sum of the estimatedProved plus Probable Reserves (2P). In this context, whenprobabilistic methods are used, there should be at least a 50 percent. probability that the actual quantities recovered will equal orexceed the 2P estimate;

“Possible Reserves” those additional reserves which analysis of geoscience andengineering data suggest are less likely to be recoverable thanProbable Reserves. The total quantities ultimately recovered fromthe project have a low probability to exceed the sum of Provedplus Probable plus Possible Reserves (3P), which is equivalent tothe high estimate scenario. In this context, when probabilisticmethods are used, there should be at least a 10 per cent.probability that the actual quantities recovered will equal orexceed the 3P estimate;

“Reserves Status Categories” Reserves status categories define the development and producingstatus of wells and reservoirs;

“Developed Producing Reserves” Developed Producing Reserves are expected to be recovered fromcompletion intervals that are open and producing at the time ofthe estimate. Improved recovery reserves are considered producingonly after the improved recovery project is in operation;

“Developed Non-Producing Developed Non-Producing Reserves include shut-in and behind-Reserves” pipe Reserves. Shut-in Reserves are expected to be recovered from

(1) completion intervals which are open at the time of the estimatebut which have not yet started producing, (2) wells which wereshut-in for market conditions or pipeline connections, or (3) wellsnot capable of production for mechanical reasons. Behind-pipeReserves are expected to be recovered from zones in existing wellswhich will require additional completion work or futurerecompletion prior to the start of production. In all cases,production can be initiated or restored with relatively lowexpenditure compared to the cost of drilling a new well;

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“Undeveloped Reserves” Undeveloped Reserves are quantities expected to be recoveredthrough future investments: (1) from new wells on undrilledacreage in known accumulations, (2) from deepening existing wellsto a different (but known) reservoir, (3) from infill wells that willincrease recovery, or (4) where a relatively large expenditure (e.g.when compared to the cost of drilling a new well) is required to(a) recomplete an existing well or (b) install production ortransportation facilities for primary or improved recovery projects;

“reservoir” a subsurface body of rock having sufficient porosity andpermeability to store and transmit fluids. A reservoir is a criticalcomponent of a complete petroleum system;

“sales gas” is the deliverable quantity of separator gas available for sales afterdeductions for fuel usage and shrinkage;

“Siberia light” Siberian light crude oil;

“seismic survey” a method by which an image of the earth’s subsurface is createdthrough the generation of shockwaves and analysis of theirreflection from rock strata. Such surveys can be done in two orthree dimensional form;

“separator gas” is defined as the gas to be remaining after field separation butprior to gas processing and shrinkage for fuel use or flare;

“solution gas” is the gas that is liberated from the oil stream during the depletionof an oil reservoir. It exists as a liquid and is part of the oil volumeat initial reservoir conditions. Solution gas may be produced tothe surface with the oil stream or released into the reservoir ifreservoir pressure declines below bubblepoint pressure;

“ton (crude oil)” 7.671 barrels, reflecting the weighted average density of crude oilreserves;

“two-dimensional (2–D) seismic” geophysical data that depict the subsurface strata in twodimensions;

“upstream” activities related to the exploration, appraisal, development andextraction of crude oil, condensate and gas;

“Urals” a benchmark Russian crude oil (used as a basis for pricing Russianexport oil mixture), which trades at a discount to Brent crude, aninternational benchmark oil blend;

“YuV1 sand” a sand within the upper Jurassic Mesozoic period sand;

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NOTICE OF ANNUAL GENERAL MEETING

Zoltav Resources Inc. 89 Nexus Way, Camana Bay,

Grand Cayman, KY1 9007, Cayman Islands

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS

NOTICE IS HEREBY GIVEN THAT an annual general meeting (the “Meeting”) of the holders ofordinary shares (“Ordinary Shares”) of Zoltav Resources Inc. (the “Company”) will be held at OgierHouse, The Esplanade, St Helier, JE4 9WG, Jersey on 3 July, 2013 at 2.00 p.m. for the following purposes:

Ordinary Business

Resolution 1 – Receipt of Financial Statement and Auditors ReportTo propose the following resolution as an ordinary resolution of the Company:

1. That the financial statements of the Company for the year ended 31 December 2012 and the reportof the auditors thereon be approved.

Resolutions 2 to 6 – Re-election of DirectorsTo propose each of the following resolutions as separate ordinary resolutions of the Company:

2. That Symon Drake-Brockman be re-elected as a director of the Company, to hold office until thedate of the annual general meeting of the Company to be held in 2014.

3. That Stephen Lowden be re-elected as a director of the Company, to hold office until the date ofthe annual general meeting of the Company to be held in 2014.

4. That Michael Lombardi be re-elected as a director of the Company, to hold office until the date ofthe annual general meeting of the Company to be held in 2014.

5. That John Grimshaw be re-elected as a director of the Company, to hold office until the date ofthe annual general meeting of the Company to be held in 2014.

6. That Oliver Donagher be re-elected as a director of the Company, to hold office until the date ofthe annual general meeting of the Company to be held in 2014.

Resolution 7 – Appointment of AuditorsTo propose the following resolution as an ordinary resolution of the Company:

7. That Deloitte LLP be appointed as auditors of the Company, to hold office until the close of the nextannual general meeting of shareholders and that their compensation be fixed by the board of directors.

Special BusinessResolution 8 – Approval of the AcquisitionTo propose the following resolution as an ordinary resolution of the Company:

8. THAT the acquisition by the Company of the entire issued share capital of CenGeo HoldingsLimited in accordance with the terms of the Acquisition Agreement (as such term is defined in theadmission document of the Company dated 10 June 2013 of which this notice forms part(Admission Document)), be and is hereby approved for the purpose of Rule 14 of the AIM Rulesfor Companies and that the Directors be and are hereby authorised to complete such agreement,subject to such modifications as the Directors may deem appropriate, and to execute, sign and doall such other documents, deeds, acts and things as may be necessary or desirable to complete theaforesaid transaction.

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Resolution 9 – approve designation of shares, adoption of the New Articles of Association adoption ofthe Revised Memorandum of Association and consolidation of share capitalTo propose the following resolution as a special resolution of the Company:

9. That, subject to approval of resolution 8:

(a) the shares of the Company be designated as shares with the rights and subject to thelimitations provided for in the form of revised articles of association annexed to theseresolutions (New Articles);

(b) the New Articles be adopted as the Company's articles of association in substitution for andto the exclusion of the existing articles of association of the Company (Existing Articles);

(c) the revised memorandum of association of the Company in the form annexed to theseresolutions be adopted as the Company's memorandum of association in substitution for andto the exclusion of the existing memorandum of association of the Company; and

(d) that the 5,000,000,000 ordinary shares of a par value of US $0.01 each in the authorised sharecapital (whether issued or otherwise) of the Company (being US $50,000,000 in aggregate)be consolidated and divided into 250,000,000 ordinary shares with a par value of US $0.20,such shares having the rights and being subject to the restrictions set out in the New Articles(New Ordinary Shares).

Resolution 10 – Directors’ authority to allotTo propose the following resolution as an ordinary resolution of the Company:

10. Subject to the approval of resolutions 8 and 9, and in accordance with Article 2.1 of the NewArticles, that the Directors be granted an authority to allot:

(a) up to 2,367,500 New Ordinary Shares for the purpose of satisfying options granted prior tothe date of the Meeting;

(b) up to 527,500 New Ordinary Shares for the purpose of satisfying warrants issued prior to thedate of the Meeting;

(c) up to 23,657,870 New Ordinary Shares for the purpose of the Acquisition (as such term isdefined in the Admission Document)

(d) up to 18,198,362 New Ordinary Shares for the purpose of the Subscription (as such term isdefined in the Admission Document);

(e) up to 9,513,165 New Ordinary Shares for any other purpose approved by the Directors;

in each case subject to the new provisions of the New Articles (including Article 2.3 of the NewArticles, save to the extent dis-applied by resolution 11 or otherwise);

Resolution 11 – Authority to allot free of pre-emption rightsTo propose the following resolution as an ordinary resolution of the Company:

11. Subject to the approval of resolutions 8, 9 and 10, that the Directors be empowered to allot theNew Ordinary Shares described in paragraphs (a) to (d) of resolution 10, pursuant to the authorityconferred by resolution 10, as if Article 2.3 of the New Articles did not apply to such allotment (tothe extent that Articles 2.3 would otherwise apply to such allotment).

DATED 10 June 2013.

BY ORDER OF THE BOARD OFDIRECTORS

89 NEXUS WAYCAMANA BAYGRAND CAYMAN, KY1-9007CAYMAN ISLANDS

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Proxies and Form of Instruction for Depositary Interest Holders1. A member entitled to attend and vote at the meeting may appoint a proxy. A proxy need not be a

member of the Company and such appointment will not preclude a member from attending andvoting at the meeting in person.

2. The Form of Proxy for use at the meeting is enclosed with this document and should be returnedas soon as possible and, in any event, so as to be received at the offices of the Company’s registrars,Computershare Investor Services (Cayman) Ltd, c/o The Pavilions, Bridgwater Road, BristolBS99 6ZY as soon as possible but in any event not later than 2.00 p.m. on 1 July 2013, being48 hours before the time appointed for the holding of the meeting. The completion and depositingof a Form of Proxy will not preclude you from attending and voting in person at the AnnualGeneral Meeting should you wish to do so.

3. If you are a holder of Depositary Interests, a form of instruction is enclosed. To be valid, the formof instruction should be completed, signed and returned in accordance with the instructions printedthereon to the Company’s Depositary, Computershare Investor Services PLC, The Pavilions,Bridgwater Road, Bristol BS99 6ZY as soon as possible but in any event should arrive not laterthan 4.00 p.m. on 28 June 2013.

4. The Form of Proxy must be signed by the member or, in the case of joint holders, any one of them.The notice of meeting shall prevail over any description of the business of the meeting set out inthe Form of Proxy.

5. In the case of joint holders, the vote of the senior holder who tenders a vote, whether in person orby proxy, shall be accepted to the exclusion of the votes of the other joint holders and, for thispurpose, seniority shall be determined by the order in which the names stand in the register ofmembers of the Company in respect of the relevant joint holding.

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Perivan Financial Print 228915

ACQUISITION, SUBSCRIPTION & ADMISSION TO AIM