ARG.L Regulatory News (ARG)

This announcement contains inside information

ARGOS RESOURCES LIMITED

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

Proposed Sale of North Falkland Basin Interests to JHI Associates Inc

Argos Resources Limited (AIM: ARG.L), the Falkland Islands based exploration company focused on the North Falkland Basin, is pleased to announce that the Company and JHI Associates Inc. ("JHI"), a private company incorporated in Ontario, Canada, have entered into an agreement pursuant to which it is proposed that JHI will acquire Argos' PL001 Production Licence interests in the North Falkland Basin (the "Transaction").

Highlights

· JHI has agreed to acquire 100 per cent. of the Group's PL001 Production Licence in the North Falkland Basin, immediately to the west of the giant Sea Lion oil field, subject to certain conditions.

· As consideration, JHI is proposing to issue Argos with new shares in JHI (the "Consideration Shares"), plus a cash payment enabling the Company to settle transaction and corporate expenses.

· Following completion of the Transaction, which remains subject to the conditions set out below, the Group would gain exposure to the Canje block, offshore Guyana, which is directly adjacent to the prolific Stabroek block where ExxonMobil has discovered more than 10 billion barrels of oil.

· The Consideration Shares are expected to represent approximately 9.3 per cent. of the enlarged share capital in JHI following completion of the Transaction.

· In the event that the Transaction is completed, the financial strength of JHI is expected to underpin the extension of Licence PL001 by two years to 31 December 2024, which was announced by the Company earlier today.

· The Transaction would diversify both companies' assets and pave the way for further drilling activity in the coming years.

The Transaction remains subject to the satisfactory completion of mutual due diligence and the parties entering into a binding Sale & Purchase Agreement ("SPA"). In the event an SPA is agreed, completion of the Transaction would also be subject to, inter alia, obtaining the necessary approvals from the Falkland Islands Government and Secretary of State to the transfer of Licence PL001 to JHI. Accordingly, there is no certainty that the Transaction will complete on the terms indicated, or at all.

Next Steps & AIM Rule 15

It is anticipated that the proposed Transaction would constitute a fundamental change of business pursuant to AIM Rule 15, as the effect of the Transaction would be to divest the Company of its sole asset. The Transaction would therefore also require the consent of Argos' shareholders being given in general meeting. Upon signing an SPA, the Company will issue a further announcement and publish a circular containing details of the disposal, the proposed change to the business and convene the general meeting.

Next Steps & AIM Rule 41

In the event all conditions associated with the Transaction are satisfied, the Group's sole asset would be a minority shareholding in JHI. The Company's Board of Directors have concluded that in this scenario the costs associated with maintaining an AIM listing would not be justified. Therefore, following completion of the Transaction the Board intends to seek cancellation of the Company's securities from admission to trading on AIM ("Cancellation"). Cancellation would be conditional upon the consent of not less than 75 per cent. of votes cast by the Company's shareholders given in general meeting. Following Cancellation, it would be the Directors intention to liquidate the Company and distribute the Consideration Shares proportionately to Argos' shareholders on the register at the relevant time.

Ian Thomson, Chairman of Argos commented:

"This is an attractive transaction for both companies, and I strongly recommend that ARL shareholders vote in favour when asked to do so in a general meeting. JHI has ample cash reserves which are more than sufficient to cover the investments required to advance the exploration activities on Licence PL001 and to meet the financial capability criteria to support a licence extension to 31 December 2024.

In addition to the North Falkland Basin Licence PL001, the transaction gives ARL shareholders access to potential upside in the Canje licence, offshore Guyana, in a basin that has been the highlight of the oil industry for several years, enjoying prolific success from numerous giant oil discoveries."

Information on JHI

JHI is a private company incorporated in Ontario and headquartered in Toronto, Canada. JHI owns a 17.5 per cent. interest in the Canje block, offshore Guyana, operated by Esso Exploration & Production Guyana Ltd. (35 per cent.), a subsidiary of ExxonMobil Corp. The other partners in the block are TotalEnergies E&P Guyana BV (35 per cent.) and Mid-Atlantic Oil & Gas Inc. (12.5 per cent.). The Canje block covers approximately 4,800 square kilometres and is located approximately 180 to 300 kilometres offshore Guyana in water depths ranging from 1,700 to 3,000 metres.

The Canje block is a large and significant licence adjacent and immediately east of multiple ExxonMobil discoveries in the Stabroek block. 6,100 square kilometres of 3D seismic data has been shot over the Canje block, from which over three dozen prospects have been mapped in four proven plays in the Lower Tertiary and Upper Cretaceous confined channels, Lower Cretaceous carbonate structures and, with the recent drilling of Sapote-1 well and Stabroek discoveries, the block now offers the opportunity of yet deeper prospectivity.

As of 31 December 2021, JHI's audited financial statements indicate total gross assets of approximately US$30.7 million, of which approximately US$27 million in cash and investments, and total liabilities of approximately US$500,000.