Altona Energy Regulatory News (ANR)

Embargoed until 7.01am 14 November 2014

Altona Energy Plc

("Altona" or "the Company")

Final Results

Altona (AIM: ANR) is today pleased to announce its final results for the year ended 30 June 2014 and gives notice that its Annual General Meeting is to be held at the offices of BDO LLP, 55 Baker Street, London, W1U 7EU on 16 December 2014 at 11am. The Company issued an RNS relating to its new joint venture agreement at 7am today.

Highlights

· New Joint Venture agreement signed on 13 November

- Committed investment of AUD33 million by the JV partners

- JV partners to provide Altona with additional working capital of £2 million

- Product focus is Coal-to-Methanol, coal-chemical and synthetic gas production, due to global market demand

- Arckaringa BFS to projected be completed within 2 years

· Completed placing agreement with Wintask to subscribe for 230,000,000 shares for gross proceeds of £3.22 million

· Terminated joint venture agreement with CNOOC and MoU with Duwa

· Michael Zheng appointed Interim CEO

· Welcomed Mr Qinfu Zhang to the board of Directors as representative of Wintask

· Cash in bank as at 30 June 2014 of £1.9 million

Michael Zheng, Executive Chairman and Interim CEO of Altona, commented, "2014 has become a pivotal year in the history of Altona, following today's announcement regarding the new joint venture agreement with our partners Sino-Aus and Wintask. Although the past 12 months have been a testing time for the Company and its shareholders, we believe this next phase in development will provide us with a solid foundation for increasing shareholder value over the next two years."

For further information, please visit www.altonaenergy.com or contact:

About Altona Energy

Altona is listed on the London Stock Exchange's AIM market. Its focus is firmly on the evaluation and development of the Company's coal-to-chemicals Arckaringa Project to exploit the huge coal resources, equivalent to 7.8 billion barrels, contained in three exploration licences covering 2,500 sq. kms in the northern portion of the Permian Arckaringa Basin in South Australia.

Chairman's Statement

As reported in the Interim Statement earlier this year we suggested that 2014 would be a pivotal year for Altona and, following today's announcement regarding the signing of the new joint venture agreement with our partners Sino-Aus Energy Group Limited ("Sino-Aus") and Wintask Group Limited ("Wintask"), this has proven to be the case.

After a long period of negotiation we are delighted to be able to announce that an agreement has been reached with our two partners to form a joint venture entity, Arckaringa Coal Chemical Joint Venture Co Pty Ltd. The focus of the joint venture will initially be on the completion of the test drilling programme at our Arckaringa project and the Bankable Feasibility Study ("BFS"). Following the successful completion of this work the joint venture will then focus on the development of a Coal-to-Methanol (CTM), coal-chemical and synthetic gas production facility at Arckaringa.

Subject to certain conditions our partners will contribute AUD$ 33 million to the project, as well as subscribing for 200,000,000 shares in Altona, at a price of 1p over two tranches, to provide the Company with £2 million in working capital.

Review of the Year

On 31 January 2014, the Company terminated, by mutual consent, its joint venture agreement with CNOOC New Energy International (Australia) Pty Ltd (CNOOC), whereby Altona received back its 51% interest in the Arckaringa project. On 19 March 2014 Altona received approval from the South Australian Government for the return of the 51% interest in the project.

The Company also terminated its MOU with Xinjiang Hetian Duwa Industry Limited (Duwa) due to insurmountable legal issues.

Following the termination of the CNOOC joint venture the Company proceeded to quickly identify and agree a new Memorandum of Understanding (MoU) with its new partners, Sino-Aus and Wintask and the Company is delighted that this MoU has now been consummated into a new joint venture agreement.

In May, the Company was informed that its Programme for Environmental Protection and Rehabilitation (PEPR) had been renewed by the South Australian Government. The PEPR identifies all relevant environmental, social and economic impact events that may result from proposed exploration activities and how each of the identified impacts are to be managed or avoided. The approval was granted by the Department for Manufacturing, Innovation, Trade, Resources and Energy (DMITRE).

The Company also received an extension, until 19 May 2015, to its Water Affecting Activity Permit (WAAP), which defines water management procedures for the proposed drilling programme. This Permit was granted by the Department for Environment, Water and Natural Resources (DEWNR) via the South Australian Arid Lands Natural Resources Management Board (SAALNRMB).

On 16 May 2014, the Company advised of the sad passing of its Technical Director, Peter Fagiano, following a long illness. Peter had been with the Company since 2010 and made an enormous contribution during his time with the Company, especially with regards to his completion of the Technical Feasibility Study (TFS) for CTM in August 2013.

Peter enjoyed a career spanning over 45 years and held a number of positions of seniority at respected engineering firms, including his role immediately prior to joining Altona at Jacobs Engineering where he was operations director of the process & technology division for 12 years.

The board considered it appropriate to wait until it had found new partners before re-assigning the role of Technical Director, and it can now advise shareholders that, with the signing of the new JV agreement, the Company is looking to find a suitable replacement to join the Altona board.

Arckaringa Project

During the year under review, the Company commissioned a TFS to demonstrate that CTM could be capable of augmenting the BFS for Altona's flagship Arckaringa Clean Energy Coal-to-liquids (CTL) project. Part of the reasoning behind this was the continued growth in global methanol demand, particularly in Asia, with methanol being used increasingly as a fuel additive and feedstock for a wide range of high value products including acetic acid, Di-Methyl Ether, formaldehyde, olefins and gasoline. Methanol prices have been averaging more than US$400/tonne in recent years. Further, the Company is more confident that the technology used in this process is far more advanced, commercially sound and proven that that for CTL. These technologies also offer the opportunity to enhance the inherently low in-situ value and cost of Arckaringa coal beyond CTL and accordingly the Company will focus its attention on the utility value of coal mining and synthetic gas production.

The original CTL proposal was for a 45,000 Barrels per day ("BPD") CTL facility developed in three separate 15,000 BPD/ 280MW phases over a 10 year period. The CTM study proposed that one 15,000 BPD train is replaced by a 6,200 Methanol Tonne per day CTM Plant to be built in tandem with a 15,000 BPD CTL Plant rather than building the first two CTL plants in series.

The joint venture partners (Altona, Sino-Aus and Wintask) agree that the high returns and diverse markets for methanol, combined with Arckaringa's coal resource, which is capable of sustaining a wide range of coal conversion options or projects for a hundred years or more, make CTM, coal-chemical and synthetic gas production the natural choices for the project.

Altona believes the rationale for the development of the Arckaringa project remains as compelling as ever. The project's strong fundamentals include the size of the resource (7.8 billion tonnes, including 1.3 billion tonnes JORC compliant), a coal quality which is suitable for gasification and synthetic fuels production, attractive economics, combined with a very supportive South Australian government and a location which favours both domestic use and international export.

Financial Review

The financial loss of the Group for the year ended 30 June 2014 was £2,281,000 (2013: £1,398,000), which is inclusive of a £790,000 provision in respect of tax liabilities as described in detail below. The loss for the year excluding the one-off effects of the tax provision was £1,491,000 (2013: £1,398,000), which is in line with internal expectations and consistent with the prior year.

During the year the Group entered into an agreement with Wintask to issue up to 230,000,000 shares at a price of 1.4 pence to raise a total of £3.22million. The Company also welcomed Mr Qinfu Zhang to the board of Directors as representative of Wintask following this transaction.

As at 30 June 2014, the Group had cash of £1,913,000 (2013 - £679,000). Subsequent to the year end the Group entered into an agreement for the placing of 200,000,000 new Ordinary Shares, conditional inter alia on shareholder approval and government approvals relating to the joint venture, at a price of 1.0 pence to raise a total of £2 million to provide additional working capital.

The Group has been vigorous in cutting unnecessary costs out of the business for the past six months, the full effect of which is not recognised in these financial results. However we are confident that future financial results will evidence that the Company is committed to making shareholder's funds stretch as far as possible while the important BFS work is completed.

The balance sheet as at 30 June 2014 includes a provision amounting to £790,000 (2013: £Nil) in respect of a potential anticipated liability to HMRC for income tax not deducted and accounted for under the PAYE system, and National Insurance Contributions not accounted for, in each case in respect of payments made on a gross basis to private companies for the provision of the services of a former director.

The precise amount of the Company's liability to HMRC is currently under negotiation. The sum provided represents, in the view of the directors, having taken professional advice, a reasonable estimate of the Company's probable current liability in this context. While the quantum of the provision represents their best estimate, of the ultimate liability, no assurance can be given that the estimate will prove to be accurate.

The Company has submitted arguments which, if accepted, would result in a significantly lower liability. It is not however, anticipated that the liability could be entirely eliminated even if the Company's assertions are accepted in full.

The Company having taken professional advice, considers that it has potential claims against third parties, whereby they may be found liable to compensate the Company for a material part of any liability to HMRC which the Company is found to have. If it is necessary to pursue such claims by legal proceedings, some element of irrecoverable costs would inevitably be incurred. It is anticipated that the quantum of any such irrecoverable costs would not be substantial relative to the potential recovery.

Outlook

With the signing of the new joint venture agreement, the Company enters this historic phase of its development with confidence. Although there are many issues still to negotiate, the board offers shareholders its assurance that its focus will be on working closely with its partners to complete the test drilling programme and submit the BFS within the two year timeframe agreed.

We wish to thank our shareholders for the patience they have shown over the difficult period of the past 12 months, and look forward to seeing them at the AGM next month.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year ended 30 June 2014

STATEMENTS OF FINANCIAL POSITION

As at 30 June 2014

STATEMENTS OF CASH FLOWS

For the year ended 30 June 2014

STATEMENTS OF CHANGES IN EQUITY

For the year ended 30 June 2014

The following described the nature and purpose of each reserve within owners' equity:

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. ACCOUNTING POLICIES

BASIS OF PREPARATION

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated. Both the parent company financial statements and the Group financial statements have been prepared and approved by the Directors in accordance with International Financial Reporting Standards IFRSs and IFRIC interpretations, issued by the International Accounting Standards Board (IASB) as endorsed for use in the EU ('IFRSs') and those parts of the Companies Act 2006 that are applicable to companies that prepare their financial statements under IFRS.

The financial information for the years ended 30 June 2014 and 30 June 2013 does not constitute statutory accounts as defined by section 435 of the Companies Act 2006 but is extracted from the audited accounts for those years. The 30 June 2013 accounts have been delivered to the Registrar of Companies. The 30 June 2014 accounts will be delivered to Companies House within the statutory filing deadline. The auditor's report on the 30 June 2013 financial statements was unqualified and did not contain any statement under section 498(2) or (3) of the Companies Act 2006. The auditor's report on the 30 June 2014 financial statements was unqualified although an emphasis of matter was included in the accounts to draw attention to going concern.

As at the date of these financial statements, the ability of the Company, and therefore the group, to continue as a going concern is dependent on securing shareholder approval for both the share issue and the joint venture transaction and completing the process to obtain the necessary regulatory and government approvals. The Directors are confident that the necessary approvals and consents will be received, accordingly the financial statements have been prepared on a going concern basis. No statement was included under section 498(2) or (3) of the Companies Act 2006.

2. PROVISIONS

Current year:

The balance sheet as at 30th June 2014 includes a provision amounting to £790,000 (2013: £Nil) in respect of a potential anticipated liability to HMRC for income tax not deducted and accounted for under the PAYE system, and National Insurance Contributions not accounted for, in each case in respect of payments made on a gross basis to private companies for the provision of the services of a former director.

The precise amount of the Company's liability to HMRC is currently under negotiation. The sum provided represents, in the view of the directors, having taken professional advice, a reasonable estimate of the Company's probable current liability in this context. While the quantum of the provision represents their best estimate, of the ultimate liability, no assurance can be given that the estimate will prove to be accurate.

The Company has submitted arguments which, if accepted, would result in a significantly lower liability. It is not however, anticipated that the liability could be entirely eliminated even if the Company's assertions are accepted in full.

The Company having taken professional advice, considers that it has potential claims against third parties, whereby they may be found liable to compensate the Company for a material part of any liability to HMRC which the Company is found to have. If it is necessary to pursue such claims by legal proceedings, some element of irrecoverable costs would inevitably be incurred. It is anticipated that the quantum of any such irrecoverable costs would not be substantial relative to the potential recovery.

Prior year:

Upon completion of stage 1 and stage 2 of the BFS by CNOOC as operator of the project the Group were due to pay Michael Zheng £100,000 and upon the completion of stage 2 of the BFS, the Group will pay Michael Zheng £200,000. Following the termination of the CNOOC agreement during the year, the amount is no longer payable. As a result the provision has been reversed.

3. SHARE CAPITAL

During the period the Company issued the following Ordinary 0.1 pence fully paid shares for cash:

4. RELATED PARTY TRANSACTIONS

The Key Management personnel are considered to be the Directors. Details of their remuneration are included in Note 6 to the financial statements.

During the period, the Company paid £225,000 (2013: £225,000) to CJL Consultants Limited, a company related to Christopher Lambert, for Director Fees. These fees are included in the numbers disclosed in Note 6 Staff Costs, no amounts were payable at the end of the year (2013: £22,500).

During the period, the Group paid £30,000 (2013: £30,000) in respect of Directors fees to Sutherland People Pty limited, a company related to the Group by Phil Sutherland, a common Director. At 30 June 2014, there was £2,500 owing/owed (2013: £Nil).

5. POST REPORTING DATE EVENTS

On 13 November 2014 Altona, Sino-Aus Energy Group Limited ("Sino-Aus") and Wintask Group Limited ("Wintask") signed an agreement in respect of the terms of the Arckaringa project joint venture ("joint venture agreement" or "the JV").

In exchange for Altona investing 100% of the Arckaringa project licences into the joint venture entity, Altona will receive 45% equity interest in the joint venture. Furthermore under the terms of the transaction Wintask and Sino-Aus will make total contributions to fund the Bankable Feasibility study up to a total of AUD$33 million alongside the investment of up to 200,000,000 ordinary shares in Altona Energy Plc. Both investments are subject to certain third party approvals including Altona shareholder approval and Australian government approval for the formation of the joint venture.

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