Atlantic Coal Regulatory News (ATC)

21 December 2015

Atlantic Coal plc ("Atlantic Coal" or the "Company")

Suspension of Trading on AIM

and

Notice of General Meeting

The Board of Atlantic Coal (the "Board"), the AIM listed anthracite coal mining company operating in Pennsylvania, USA, announces that the Ordinary Shares of the Company have been suspended from trading on AIM as of 7:30 a.m. today. This is due to the Company contemplating a potential acquisition of a company with anthracite mining operations in Pennsylvania that would be deemed to be a reverse takeover under the AIM Rules. Further details of the potential acquisition can be found in a Circular which is due to be posted to Shareholders today, extracts of which can be found below.

The Directors currently believe that this potential acquisition is in the best interests of the Company. However, the Directors do not consider the significant expense and timeline associated with a reverse takeover to represent an efficient or cost effective way for Atlantic Coal to pursue its acquisition strategy.

As announced by the Company on 2 December 2015, the Board has received a notice requisitioning a general meeting of the Company from Stuart James Thomas, who has a beneficial interest in approximately 7.7 per cent. of the Company's issued ordinary share capital. The proposed GM Resolutions seek Shareholders' approval to cancel the admission of the Ordinary Shares to trading on AIM. In addition, the GM Resolutions seek approval to change the Company's name to Atlantic Carbon Group plc.

After careful consideration the Board believe that it is in the best interests of the Company and Shareholders as a whole if the admission of the Company's Ordinary Shares to trading on AIM is cancelled. Accordingly, the Board believes that the GM Resolutions are in the best interests of Shareholders and urge all Shareholders to vote in favour of the GM Resolutions, particularly Resolution 1. Fuller details of why the Board support the GM Resolutions can be found further in the extracts from the Circular set out below.

The Directors intend to vote in favour of the GM Resolutions, and procure the same in respect of members of their respective families (as defined in the AIM Rules), in respect of the aggregate of 646,501,390 Ordinary Shares beneficially owned by the Directors and their connected persons (representing approximately 13.16 per cent. of the Company's issued ordinary share capital).

The AIM Rules for Companies require that completion of the potential acquisition is, amongst other things, conditional upon the publication of an AIM admission document containing a notice of general meeting of the Company and is subject to the approval of the Company's shareholders at such general meeting. Trading in the Ordinary Shares will remain suspended from trading on AIM, until an AIM admission document has been published or an announcement is made that the potential acquisition is not proceeding.

In light of the proposal to delist from AIM the Directors do not currently contemplate that an AIM admission document would be published in relation to the enlarged group, should the potential acquisition proceed. On that basis, unless the Company is in a position to make an announcement that the potential acquisition is not proceeding, the Ordinary Shares will remain suspended from trading on AIM up until Cancellation (should Shareholders vote in favour of Resolution 1) and there will therefore be no opportunity for Shareholders to deal in their Ordinary Shares on AIM before Cancellation.

The above summary should be read in conjunction with the full text of this announcement and the Circular (which includes a notice convening the General Meeting), which is being posted to Shareholders today and will also be made available to view shortly on the Company's website, www.atlanticcoal.com. Extracts from the circular are set out below.

Defined terms used in this announcement have the meaning as set out at the end of this announcement.

For further information on the Company, visit: www.atlanticcoal.com or contact:

Extracts from the Circular

(References to pages or paragraphs below refer to the relevant pages or paragraphs of the Circular)

EXPECTED TIMETABLE OF EVENTS

Notes:

Shareholders should note that with effect from 7.30 am on 21 December 2015, the Ordinary Shares were suspended from trading on AIM, due to the Company announcing that it was contemplating a potential acquisition that would be deemed to be a reverse takeover under the AIM Rules.

Each of the times and dates above is subject to change. Dates set after the General Meeting assume that the General Meeting is not adjourned and that Resolution 1 is passed. Any change to the above times and/or dates will be notified by an announcement on a Regulatory Information Service.

Unless otherwise stated, all references to time in this document are to London time.

LETTER FROM THE CHAIRMAN OF ATLANTIC COAL PLC

1. Introduction

I am writing to provide you with notice of a requisitioned general meeting of the Company, which is to be held at 3.00 p.m. at the Cornhill Room, 1 Royal Exchange, London EC3V 3LL on 11 January 2016.

This letter provides Shareholders with details of the GM Resolutions that are to be put to Shareholders at the GM, the background to the GM and sets out your Board's response to the GM Resolutions. The proposed GM Resolutions seek Shareholders' approval to cancel the admission of the Ordinary Shares to trading on AIM. In addition, the GM Resolutions seek approval to change the Company's name to Atlantic Carbon Group plc.

Your Board believes that the proposed GM Resolutions are in the best interest of the Company and Shareholders as a whole.

Accordingly, the Board strongly recommends that Shareholders vote in favour of the GM Resolutions at the forthcoming GM.

On 21 December 2015 the Ordinary Shares were suspended from trading on AIM as a result of the Company announcing that it is contemplating a potential acquisition that would be deemed to be a reverse takeover under the AIM Rules.

The AIM Rules require that completion of such potential acquisition is, amongst other things, conditional upon the publication of an AIM admission document containing a notice of general meeting of the Company's shareholders and is subject to the approval of the Company's shareholders at such general meeting.

Under the AIM Rules, the Ordinary Shares on AIM will remain suspended until either an AIM admission document has been published or an announcement is made by the Company stating that the potential acquisition is not proceeding.

2. The GM and GM Resolutions

As announced by the Company on 2 December 2015, the Board received a notice requisitioning a general meeting of the Company from Stuart James Thomas, who has a beneficial interest in approximately 7.7 per cent. of the Company's issued ordinary share capital as at the Latest Practicable Date. Mr Thomas is also a consultant to the Company in connection with acquisition opportunities and general services. The GM is being convened for the purpose of asking Shareholders to consider and, if thought fit, pass the GM Resolutions. The Notice of GM can be found at the end of this document.

The Board believes that the GM Resolutions are in the best interests of Shareholders and urge all Shareholders to vote in favour of the GM Resolutions, particularly Resolution 1. The Directors intend to vote in favour of the GM Resolutions, and procure the same in respect of members of their respective families (as defined in the AIM Rules), in respect of the aggregate of 646,501,390 Ordinary Shares beneficially owned by the Directors and their connected persons (representing approximately 13.16 per cent. of the Company's issued ordinary share capital). After careful consideration the Board, including myself, believe that it is in the best interests of the Company and Shareholders as a whole if the admission of the Company's Ordinary Shares to trading on AIM is cancelled. Pursuant to Rule 41 of the AIM Rules, the Directors have notified the London Stock Exchange of the date of the proposed Cancellation.

Should Cancellation be approved by Shareholders at the GM, the Company intends to put in place a matched bargain settlement facility to be administered by Capita Asset Services which should facilitate Shareholders in buying and selling Ordinary Shares following Cancellation. Further information is provided below.

Pursuant to The AIM Rules Cancellation is conditional upon the approval of Resolution 1 by not less than 75 per cent of the votes cast, whether in person or by proxy, by shareholders in a general meeting.

The purpose of this letter is to explain why the Directors consider the GM Resolutions, in particular Resolution 1, to be in the best interests of the Company and its Shareholders as a whole and to recommend that Shareholders vote in favour of the GM Resolutions at the GM scheduled to take place at 3.00 p.m. on 11 January 2016, notice of which is enclosed at the end of this document.

Reasons the Board is supporting the GM Resolutions

Proposed delisting from AIM

The Directors are delighted with the Stockton mine's performance in 2015. However, the remaining anthracite reserves available at the Stockton mine are finite and will eventually be depleted and become harder to mine on a cost-effective basis. On 26 May 2015 the Company announced that international mining consultants Wardell Armstrong International Ltd had re-assessed the Stockton mine reserve and estimated its reserves to be 2.22 million tons* as at 31 December 2014.

* Julian Spears, BSc (Geol), MSc (MinGeol), CEng, CEnv, FIMMM, ACSM, Consultant Geologist, a Chartered Engineer and Fellow of the Institution of Materials, Minerals and Mining, who is a Technical Director - Mining/Geology for Wardell Armstrong International Ltd, who meets the criteria of a qualified person under the AIM Rules - Note for Mining, Oil and Gas Companies, reviewed and approved the technical information contained within the Company's announcement of 26 May 2015.

The Directors believe that with the above recoverable reserves at the Stockton mine and the current mining rates there are approximately nine years of mining remaining at Stockton. The Directors are of the view that, as in all mining operations, there is a level of uncertainty that could reduce this figure and/or give rise to mining conditions which could temporarily adversely affect production over the short term. The Directors therefore believe that for Atlantic Coal to continue operations with only one active mine is not in the Company's best interests and that Atlantic Coal will therefore need to acquire significant new anthracite mining assets in order to generate value for Shareholders.

The Directors believe that the Company's Pott and Bannon reserve site in Pennsylvania cannot be brought into production in the timescale required to provide continuity and certainty of the high production levels now being achieved at the Stockton mine. This position could present a particular issue for Atlantic Coal in the event that the Company encounters mining problems at the Stockton mine.

Atlantic Coal's market capitalisation at the Latest Practicable Date was approximately £4.4 million. It is therefore likely that the acquisition of any significant anthracite mining assets would be classified as a reverse takeover under the AIM Rules. The Directors do not consider the significant expense and timeline associated with a reverse takeover to represent an efficient or cost effective way for Atlantic Coal to pursue an acquisition strategy.

Although AIM enables companies to raise monies by way of equity fundraisings, the Directors believe that an equity fundraising is unlikely to be a feasible option for Atlantic Coal at the Company's current market capitalisation, as Shareholders would experience excessive levels of dilution. Like many other small listed companies, the Company also suffers from a lack of demand for its shares. The Board believes that this is also a factor in there being no reasonable prospect of the Company being able to use its listing to raise a significant amount of funds from investors.

The Directors further believe that the current low market capitalisation has an adverse effect on the Company, in terms of its business reputation, especially given the Company's positive underlying trading performance that has been reported during 2015.

Potential acquisition opportunity

On 18 November 2015 the Company entered into a memorandum of understanding with the Target and its owner in respect of a potential acquisition of the entire issued share capital of the Target, which is the holding company for certain anthracite mining assets in Pennsylvania. The memorandum of understanding contains a number of precedent conditions and does not commit Atlantic Coal to complete the potential acquisition, although the Directors currently believe that the potential acquisition is in the best interests of the Company.

The Target, wholly and in partnership, is the operator of anthracite mines in Pennsylvania and also possesses processing plants, various mining equipment, a share of local preparation business and maintenance and storage facilities. In common with Atlantic Coal, the Target sells the majority of its anthracite into the spot market.

There is currently limited information available to the Directors on the Target, but a study prepared for the vendor indicates that the recoverable anthracite reserves on the Target's properties amounts to over 7,000,000 tons of clean coal, although further due diligence would be required to confirm this and these reserves figures have not yet been reviewed by a qualified person in accordance with the AIM Guidance Note for Mining, Oil and Gas Companies.

The Directors have reviewed Target's mining assets and, on the basis of the information currently available, consider that, post-acquisition, the Target's annual production of anthracite could be brought up to a level equal to or in excess of that at Stockton mine.

Following an initial review of the limited available information on the Target's mining assets the Company has also received two offers of finance for mining equipment in excess of US$20 million, on similar terms as those secured by Atlantic Coal for the Stockton mine in 2014. The Directors believe that with new mining equipment, the Target's assets could deliver production levels that are similar to those recently reported at the Stockton mine.

The Target's unaudited results for the year ended 31 December 2014 recorded total revenues of approximately US$10.1 million (31 December 2013: US$6.4 million) and a net income of approximately US$0.3 million (31 December 2013: net loss of US$1.1 million). The Target's unaudited net assets as at 31 December 2014 were approximately US$5.7 million (31 December 2013: US$5.4 million), with unaudited gross assets of approximately US$13.4 million (31 December 2013: US$13.6 million) as at the same date.

Subject to the results of further due diligence, the finalisation of financing agreements, and the structuring of the potential acquisition, it is currently anticipated that the total consideration for the Target could be approximately US$25 million, which is anticipated to be payable both upon completion and via deferred consideration, and which is anticipated to include cash, a loan note in favour of the vendor and the settlement of outstanding debt within the Target. Should the potential acquisition be completed, it is anticipated that the principal of the Target will enter into a five-year service agreement with Atlantic Coal, however, it has not yet been determined whether the principal will join the board of directors of Atlantic Coal.

The memorandum of understanding provides for a series of non-refundable exclusivity payments, to be made by Atlantic Coal to the vendor over a period of approximately eight months. The maximum sum payable by Atlantic Coal under the memorandum of understanding in respect of exclusivity payments could potentially be US$800,000, with such payments being offset against the total consideration payable. As at the date of this document exclusivity payments totalling US$250,000 have been made to the vendor. There can, however, be no guarantee that the potential acquisition will be completed.

At present, the Company is exploring a number of options in respect of financing this potential acquisition, including the use of debt financing. Due to his position as a consultant to the Company, Stuart Thomas, the Requisitioner, is aware of the above memorandum of understanding.

Shareholders should note that the potential acquisition is at a very preliminary stage and that no material due diligence has yet been undertaken by the Company on the Target. For the avoidance of doubt, the Company has not commissioned a competent person's report on the Target's assets, nor performed accounting due diligence, commercial due diligence nor legal due diligence. There can be no certainty that the acquisition, either on the basis set out in this Circular or another basis, will conclude.

The potential acquisition and the future strategy of the Company

Given the finite nature of the remaining anthracite reserves available at the Stockton mine, the Directors believe that making significant acquisitions will need to form a key part of the Company's strategy going forward if the high production levels achieved by the Company over 2015 are to be sustained in the medium-term.

The acquisition of the Target (if it completes) would result in the Company operating three mines, two primary processing plants and a secondary processing plant, and potentially having aggregate reserves of over nine million tons of anthracite. This would potentially give rise to a number of operational advantages and the ability to generate significant additional value, including the following:

· the Company would potentially be able to substantially increase production capacity, enabling access to new markets which it is currently unable to access;

· an increased reserve base would provide for long-term security of production and the potential to access finance for new plant and equipment;

· the ability to maintain production at optimum levels, due to the flexibility of having three mines and thereby avoiding the potential uncertainties associated with being a "one mine" operating company; and

· operating three mines and three processing plants in close geographical proximity provides the potential for substantial economies of scale in terms of administration, procurement of plant, equipment, consumables and services and sales.

Other matters

By reason of the size of the consideration for the Target relative to Atlantic Coal's market capitalisation, the potential acquisition would constitute a reverse takeover under the AIM Rules. The Ordinary Shares are currently suspended from trading on AIM, due to the Company announcing today that it is contemplating a potential reverse takeover. The AIM Rules require that completion of the potential acquisition is, amongst other things, conditional upon, and subject to, the approval of Shareholders and the Company would have to produce an Admission Document in relation to the enlarged business.

The Board considers that the significant expense and timeline associated with pursuing this potential acquisition as a reverse takeover are not in the best interests of the Company or its Shareholders. The Directors believe that it would now be better for the Company to effect the Cancellation and complete the potential acquisition and/or pursue an acquisition strategy as a private company. As a result, the Board believes that Resolution 1 is in the interests of Shareholders and urges all Shareholders to vote in favour of Resolution 1 at the GM.

The Directors may consider a re-listing of the Ordinary Shares in the future, once Atlantic Coal's mining operations have been significantly expanded.

The Company has notified the London Stock Exchange of the proposed Cancellation. Pursuant to AIM Rule 41, Cancellation can only be effected by the Company after the passing of Resolution 1 by Shareholders and the expiry of a period of twenty Business Days from the date upon which Notice of Cancellation is given in accordance with the AIM Rules. Subject to the passing of Resolution 1, the Cancellation will occur no earlier than five clear Business Days after the GM, with Cancellation being anticipated to take effect at 7.00 a.m. on 21 January 2016.

As summarised above, in light of the proposal to delist from AIM the Directors do not currently contemplate that an AIM admission document would be published in relation to the enlarged group should the potential acquisition proceed. On that basis, unless the Company is in a position to make an announcement that the potential acquisition is not proceeding, the Ordinary Shares will remain suspended from trading on AIM until Cancellation (should Shareholders vote in favour of Resolution 1) and there will therefore be no opportunity for Shareholders to deal in their Ordinary Shares on AIM before Cancellation.

Should Shareholders vote against Resolution 1 and Cancellation not occur the Directors will consider the most appropriate options for the Company, which may include not proceeding with the potential acquisition.

Proposed change of name

Resolution 2 proposes that the Company's name be changed to Atlantic Carbon Group plc.

Atlantic Coal's Stockton mine produces anthracite, which is a high quality coal, characterised by a high carbon content, low sulphur, high calorific coefficient and clean burning characteristics with low emissions and ash. Anthracite has a number of niche applications, particularly in the fields of metallurgical processing, a wide array of high-performance industrial furnaces and water filtration. As such, the Directors view the market for anthracite as being significantly different to that for bituminous coal and, historically, anthracite has generally sold at a highly significant price premium to bituminous coal.

The Directors also are mindful of the current depressed market for bituminous coal and have therefore sought to distinguish the Company's anthracite production operations from bituminous coal.

The Requisitioner originally proposed that the Company's name be changed to Atlantic Carbon plc. This will not be possible, as there is already a UK-incorporated company registered with this name. Consequently, and in line with the Directors views as regards the market for bituminous coal as laid out above, the Company has reached agreement with the Requisitioner that the resolution concerning a change of the Company's name should propose that the Company's name be changed to Atlantic Carbon Group plc. Should Shareholders vote in favour of Resolution 2, it is anticipated that the change of the Company's name to Atlantic Carbon Group plc will become effective on or shortly after 24 January 2016.

For the reasons laid out above, the Board believes that Resolution 2 is in the interests of Shareholders and recommends that all Shareholders vote in favour of Resolution 2 at the GM.

3. Current trading

As announced on 1 October 2015, 8 October 2015 and 9 November 2015, Atlantic Coal's anthracite production and sales over the second half of 2015 has been encouraging. In particular, October 2015 was a record month for clean anthracite product sales. Additionally, on 12 October 2015, the Company raised the prices of all of its anthracite grades by $10 a ton.

During the second half of 2015, Atlantic Coal made good use of its recently established rail loading facility and realised results from the Company's investment in new plant and excavation equipment. In addition improvements have been made to the Stockton mine's washing plant.

The current mining cut at the bottom of the basin at the Stockton mine has uncovered a part of the Mammoth seam which is almost solid anthracite and averages 30 feet in thickness. The Company has also introduced a new blasting pattern, which is providing a much more effective fracturing of the overburden rock which, in turn, enables higher production rates from its excavators.

Reflecting these developments the Directors can also report a production and sales update for the period to 30 November 2015.

Anthracite production to the end of November 2015

For the eleven months to 30 November 2015, the Stockton mine's clean anthracite production was 185,298 tons. This represents a 28 per cent. increase relative to the eleven months to 30 November 2014, where production was 144,440 tons and represents 112.3 per cent. of the total production of 165,052 tons achieved in the full year ended 31 December 2014.

Monthly raw (run of mine) production in November 2015 was a record 168,247 tons, representing an increase of approximately 250 per cent. on the previous monthly record. To put this in perspective, the November 2015 production figure represents 49.3 per cent. of the Stockton mine's total 2014 raw anthracite production of 341,155 tons.

Anthracite sales

Clean anthracite product sales from the Stockton mine for the eleven months to 30 November 2015 were 169,854 tons and raw (run of mine) sales were 74,598 tons, representing a combined total of 244,452 tons. With respect to the clean anthracite product, this represents an 18.5 per cent. increase on the eleven months to 30 November 2014 figure of 139,030 tons and represents 110.5 per cent. of the total sales for the full year ended 31 December 2014 of 153,662 tons. Raw anthracite sales only commenced in the spring of 2015.

The Directors report that the performance of the Stockton mine continues with not only record year-to-date production and sales but with a month of production and sales remaining in 2015, the Stockton mine has already exceeded previous annual production and sales records (production record: 165,052 tons of clean anthracite product in 2014; and sales record: 166,781 tons clean anthracite product in 2013). With a month of production and sales remaining in 2015, the Stockton mine looks likely to beat previous record production and sales.

In November 2015, the Stockton mine also achieved record monthly raw anthracite production which reflects not only the good mining conditions in the Mammoth seam at the bottom of the basin but also the efforts of the Stockton mine's production team. This high level of raw anthracite production and its high quality, with clean coal recovery rates at a record level of over 55 per cent., stands the Company in good stead for the remainder of the year and going into 2016 in terms of clean anthracite production.

Prospects for 2016

The Board is mindful that, thus far, the available forecasts for the North-Eastern USA indicate that the current winter season may be milder than that which is typically experienced by the region. If this is the case it will almost certainly have a negative influence on the Company's anthracite sales activity and the Directors believe it unlikely that the recent sales and trading being experienced in 2015 will be repeated in 2016. Should demand and anthracite prices be depressed by the mild weather the Board will need to consider reducing the number of shifts being worked, thus significantly reducing production and cashflow in 2016.

4. Effect of Cancellation

Market for the Company's Ordinary Shares

If Resolution 1 is passed and Cancellation takes effect, the Ordinary Shares will cease to be traded on AIM. However Shareholders will still own their Ordinary Shares. One of the principal effects of Cancellation is that there would no longer be a formal market mechanism enabling Shareholders to trade their Ordinary Shares on AIM or any other recognised market or trading exchange. Following Cancellation there will be limited opportunity for Shareholders to realise their investment in the Company and, as a result, the underlying liquidity in the Ordinary Shares will be extremely limited.

Loss of shareholder protections provided by the AIM Rules

Shareholders should also be aware that the Company will no longer be bound by the AIM Rules following Cancellation. As a consequence, investors will not be able to benefit from certain of the protections provided by the AIM Rules. For example, the Company will no longer be required to announce material events or transactions (including related party transactions) and certain previously prescribed corporate governance procedures may not be adhered to by the Company in the future. Shareholder approval will also not be required for reverse takeovers and/or fundamental changes in the Company's business, which means that if Cancellation takes effect Shareholder approval will not be required for the potential acquisition of the Target (if that transaction proceeds to completion).

The Company would also no longer be required to have a nominated adviser, nor be required to retain a broker. However, following Cancellation, the Directors intend to:

1. hold an annual general meeting and, when required, other general meetings, in accordance with applicable statutory requirements and the articles of association of the Company;

2. make available to all Shareholders an annual report and the Company's annual financial statements;

3. maintain an "investors" section on the Company's website at www.atlanticcoal.com (or on a new website should the Company's name change) providing information on any significant events or developments in which Shareholders may be interested. Shareholders should, however, be aware that there will be no obligation on the Company to update this section of the website as is presently required under the AIM Rules.

Takeover Code

The Takeover Code is issued and administered by the Takeover Panel (the "Panel"). The Company is presently a company to which the Takeover Code applies and its Shareholders are accordingly entitled to the protections afforded by the Takeover Code. The Directors current intention is that, following Cancellation, the Company will remain a public limited company but without having its shares admitted to trading on a public market or multilateral trading facility. The Board anticipates that the Takeover Code will continue to apply to the Company.

The Takeover Code and the Panel operate principally to ensure that shareholders are treated fairly and are not denied an opportunity to decide on the merits of a takeover and that shareholders of the same class are afforded equivalent treatment by an offeror. The Takeover Code also provides an orderly framework within which takeovers are conducted. In addition, it is designed to promote, in conjunction with other regulatory regimes, the integrity of the financial markets.

The General Principles and Rules of the Takeover Code

The Takeover Code is based upon a number of "General Principles" which are essentially statements of standards of commercial behaviour. The General Principles apply to all transactions with which the Takeover Code is concerned. They are expressed in broad general terms and the Takeover Code does not define the precise extent of, or the limitations on, their application. They are applied by the Panel in accordance with their spirit to achieve their underlying purpose. In addition to the General Principles, the Takeover Code contains a series of "Rules", of which some are effectively expansions of the General Principles and examples of their application and others are provisions governing specific aspects of takeover procedure. Although most of the Rules are expressed in more detailed language than the General Principles, they are not framed in technical language and, like the General Principles, are to be interpreted to achieve their underlying purpose. Therefore, their spirit must be observed as well as their letter. The Panel may derogate or grant a waiver to a person from the application of a Rule in certain circumstances.

Under the Takeover Code: (i) all holders of Ordinary Shares must be afforded equivalent treatment and, moreover, if a person acquires 30 per cent. or more of the Ordinary Shares in the Company (other than in the context of a voluntary offer to all Shareholders) such person would be required to make a mandatory offer to all of the other Shareholders; (ii) the holders of Ordinary Shares must have sufficient time and information to enable them to reach a properly informed decision on any bid; where it advises the holders of Ordinary Shares, the Board must give its views on the effects of implementation of the bid on employment, conditions of employment and the locations of the Company's place of business; and (iii) the Board would be required to act in the interests of the Company as a whole and must not deny any holders of Ordinary Shares the opportunity to decide on the merits of a bid for the Company.

UK Company law

Following the Cancellation, the Company would remain subject to the relevant provisions of the Act which contain various provisions for the protection of minority shareholders and mandates shareholder approval for certain matters, including the issue of new shares on a non pre-emptive basis. In accordance with English company law, the Directors would also continue to be subject to various duties in relation to the Company, including to promote the success of the Company for the benefit of the Shareholders as a whole. No changes are currently proposed to be made to the Company's articles of association.

6. Trading in the Ordinary Shares after Cancellation

Whilst the Board believes that the Cancellation is in the interests of the Shareholders as a whole, it recognises that the current suspension of trading in the Ordinary Shares on AIM and the Cancellation will make it more difficult for Shareholders to buy and sell Ordinary Shares in the future should they wish to do so. Following the Cancellation, although the Ordinary Shares will remain transferable, they will no longer be tradeable on AIM.

Accordingly, following the Cancellation, the Board intends to make available to Shareholders an off-market trading facility for the Ordinary Shares, which will be administered by Capita Asset Services, based on matching bargains, where buyers' and sellers' price expectations match. Under this third party facility, Shareholders or persons wishing to acquire or dispose of Ordinary Shares will be able to leave an indication with Capita Asset Services that they are prepared to buy or sell Ordinary Shares at an agreed price. In the event that Capita Asset Services is able to match that order with an opposite sell or buy instruction, it would contact both parties and then effect the bargain. This service is subject to Capita Asset Services terms and conditions.

It is currently anticipated that this matched bargain facility will be in place shortly after the date of Cancellation. More details of the facility will be made available on the Company's website at that time. The Board intends to monitor the popularity of this arrangement amongst Shareholders following Cancellation and will review it at regular intervals to consider whether it remains cost-effective and in the best interests of Shareholders as a whole. The Company's CREST trading facility will remain in place for so long as it remains economic to do so.

This is not a recommendation to buy or sell shares. If you have any doubts about whether to act, you should seek advice from an appropriately qualified financial advisor. Neither Capita Asset Services nor Capita IRG will be able to provide any advice and please remember that the value of shares may fall as well as rise and you may not recover your original investment.

7. General Meeting

The notice convening the General Meeting to be held at the Cornhill Room, 1 Royal Exchange, London EC3V 3LL at 3.00 p.m. on 11 January 2016 is set out at the end of this document. The purpose of the General Meeting is for the Shareholders to consider and, if thought fit, pass Resolution 1 and Resolution 2. The GM Resolutions, neither of which is conditional on the other, will be proposed as special resolutions requiring approval of not less than 75 per cent. of the votes cast in person or by proxy by Shareholders at the General Meeting. Resolution 1 is to approve the cancellation of admission of the Ordinary Shares to trading on AIM, and Resolution 2 is to approve the Company's name being changed to Atlantic Carbon Group plc.

8. Taxation

Cancellation may have either positive or negative taxation consequences for Shareholders. Shareholders who are in any doubt about their tax position should consult with their own independent professional adviser as soon as possible.

9. Action to be taken

A Form of Proxy for use in connection with the GM is enclosed with this document. Whether or not you intend to be present at the GM in person, it is important that you duly complete, execute and return the Form of Proxy, by hand or by post, to the Company's agent Capita Asset Services, PXS1, The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4ZF by not later than 3.00 p.m. on 7 January 2016, in accordance with the instructions printed thereon.

To be valid, a completed Form of Proxy must be executed in accordance with the instructions printed thereon and returned as soon as possible and, in any event, so as to be received by the Company's agent not later than 3.00 p.m. on 7 January 2016. Completion and return of a Form of Proxy will not prevent you from attending and voting at the GM in person should you wish to do so.

10. Recommendation

The Directors consider the GM Resolutions to be in the best interests of the Company and the Shareholders as a whole. Accordingly, the Directors strongly recommend that Shareholders vote in favour of the GM Resolutions. The Directors intend to vote in favour of the GM Resolutions, and procure the same from members of their respective families (as defined in the AIM Rules), in respect of the Directors' own beneficial shareholdings and the shareholdings of their connected persons and family members which, in aggregate, comprise 646,501,390 Ordinary Shares, representing approximately 13.16 per cent. of the issued ordinary share capital of the Company at the Latest Practicable Date.

Yours faithfully,

Adam Richard Wilson

Executive Chairman

DEFINITIONS

The following definitions apply throughout this document, unless it is otherwise specifically provided:

**ENDS**