Alkemy Capital. Regulatory News (ALK)

 10 June 2011

Alkane Energy plc

("Alkane", "the Group" or "the Company")

Update on the Acquisition of Gas Exploration Licences:

DECC Licence Confirmation Received

On 26 May 2011 Alkane announced that it had agreed to acquire interests in two onshore gas exploration licences ("Licences") via the conditional acquisition of the entire issued share capital of Seven Star Natural Gas Ltd ("Seven Star"). The acquisition was completed on admission to AIM of the Acquisition Shares on 27 May 2011.

The standard conditions which apply to the Licences mean that they can be revoked on a change of control of Seven Star and Seven Star fails to comply with any instruction from the Department of Energy and Climate Change ("DECC") requiring a further change of control.

Alkane are pleased to announce that confirmation was received from DECC on 6 June 2011 that the Secretary of State, based on the information currently available to him, does not intend to exercise his powers to revoke either of the Licences or to seek any further changes of control of Seven Star following its acquisition by the Company.

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Background Information

Alkane has the UK's leading portfolio of coal mine methane ("CMM") licences, enabling the Company to extract gas from abandoned coal mines. Alkane started extracting CMM in 1999 with sites at Shirebrook, Steetley and Markham. Shirebrook and Markham are still operational today, a decade after they were opened. Shirebrook is still producing CMM and surplus capacity has been deployed to conventional peak load along with capacity at Markham.

The Group now generates power from 12 mid size (less than 10MW) plants across the UK and sells this power through the electricity distribution network. The electricity is generated using standard modular reciprocating engines, and these units and other ancillary plant are designed to be flexible and transportable. This allows additional capacity to be brought onto growing sites and underutilised plant to be moved to new sites to maximise efficiency.

Alkane's skills and ambitions are not limited to CMM. The operating model has already been transferred to demand response running at peak periods using conventional gas. Alkane currently operates 10MW across two sites on conventional gas with our trading partners GDF SUEZ Energy UK.

The Biogas market also provides a potential new business stream which will require the same power assets and core gas and electricity skills as CMM.

Coal Bed Methane ("CBM") and Shale Gas are potential longer term opportunities where Alkane has 500km2 of DECC petroleum licences and contingent CBM resource estimates of circa 350 billion cubic feet.