Clontarf Regulatory News (CLON)

4 February 2011

Persian Gold plc ("Persian Gold" or the "Company")

Restoration of trading on AIM

Proposed acquisition of Hydrocarbon Exploration plc (the "Acquisition")

Proposed placing of 41,688,171 new ordinary shares at 6p per share (the "Placing")

Subscription for 3,775,500 new ordinary shares at 6p per share (the "Subscription")

Proposed change of name to Clontarf Energy plc

Application for Re-admission of the Enlarged Group to AIM ("Re-Admission")

Notice of General Meeting

·; Following the completion of documentation and the subsequent raising of finance the Persian Gold suspension on AIM has been lifted

·; A fundraising of £2.7m at 6p a share has been finalised

·; Following court and shareholder approvals, Persian Gold will acquire Hydrocarbon Exploration plc ("HyEx") for £4.56m in an all-share deal on the basis of 2,800 new Persian Gold ordinary shares for every one HyEx share. This is expected to be completed in early April

·; The Company proposes to change its name to 'Clontarf Energy'. The enlarged group is expected to have a market cap of approximately £12m

·; Since the Acquisition was announced, HyEx has won two exploration blocks in Peru and there has been a significant gas discovery on HyEx ground in El Dorado, Bolivia

·; Clontarf Energy will be an oil and gas focused venture with operations in Bolivia, Peru and Ghana

·; The existing gold / copper activities in Iran are also being retained

·; Shore Capital appointed as Nomad and Joint Broker to the Company; Optiva Securities to act as Joint Broker to the Company

John Teeling, Chairman, commented:

"Patience is a virtue, which I hope will be rewarded. The new Persian Gold, when it is renamed Clontarf Energy, will be an aggressive oil and gas explorer in some of the most attractive energy areas in the world. The revitalised company will have 60% of the Tano 2A block in Ghana, close to the massive Tullow / Kosmos discoveries. HyEx has recently been awarded two exploration blocks in Peru, 183 and 188, both of which are close to producers. Each block has a history of exploration. In Bolivia, there has been a further discovery on what will be our 10% owned El Dorado gas discovery. Production has already begun from existing wells on the licence.

We are not ignoring the other activities in the portfolio. We continue to monitor and press our case for discovery certificates in Iran; while in the US negotiations are ongoing to resolve the dispute of certain assets. Neither of these are material to the future.

 Completing legal, financial and technical due diligence in three continents, combined with holiday periods extended the time to completion, but we are there now. A weighty prospectus will be dispatched to all shareholders and following shareholder and court approvals, the deal will be finalised.

Delay is always frustrating, but the new Peruvian blocks and Bolivian gas discoveries are excellent compensation."

Enquiries:

Further information in relation to the proposals

On 22 June 2010, the Company announced that it had entered into an implementation agreement with Hydrocarbon Exploration plc ("HyEx") whereby it agreed to acquire all of the shares in HyEx not owned by the Company (the "Implementation Agreement"). The Implementation Agreement was subsequently amended on 3 February 2011 whereby the number of consideration shares to be issued for each HyEx share was increased from 2,500 consideration shares to 2,800 consideration shares ("Consideration Shares"). The Acquisition, to be achieved by way of a scheme of arrangement proposed by HyEx to its shareholders (the "Scheme"), will involve the issue of 67,513,600 Consideration Shares by the Company to HyEx shareholders (excluding the Company), giving a value for the transaction of approximately £4.56 million (based on the Company's share price of 6.75p immediately prior to the announcement of the Acquisition).

HyEx, a UK-incorporated company, was formed to acquire certain exploration and production assets from Pan Andean Resources plc. HyEx has a portfolio of assets including oil production interests in the US, oil and gas production interests in Bolivia, an oil exploration interest in Ghana and oil and gas exploration interests in Peru.

The rationale for the Acquisition is that the Persian Gold Board believes that the development prospects for the Company's Iranian assets (which have been the main focus of the Group's activities heretofore) are likely to continue to be constrained by licensing and administrative issues and that the Acquisition represents an opportunity to acquire a diversified portfolio of exploration and production assets which have the potential to generate value for shareholders in the future.

The Company also announced today that it has conditionally placed 41,688,171 shares at a price of 6p per share with investors to raise £2.1 million before expenses (the placing commitments of the Directors in the amount of £420,750 are being offset against salaries accrued by those Directors and loans made to the Company in 2010). The Placing, which is not being underwritten, has been arranged by Shore Capital Stockbrokers Limited and Optiva Securities Limitedand is conditional upon completion of the Acquisition and Re-admission. In addition, the Company has received subscriptions for 3,775,500 shares to raise approximately £225k.

The Acquisition constitutes a 'reverse takeover' under the AIM Rules and is therefore conditional, inter alia, upon the approval of shareholders at the General Meeting. A circular comprising an AIM Admission Document in relation to the Company (as enlarged by HyEx) (the "Admission Document") and containing notice of a General Meeting to approve, inter alia, the Acquisition has today been sent to shareholders. John Teeling, James Finn and David Horgan are directors and shareholders of both the Company and HyEx. Jack Teeling, a Director of the Company, is also a HyEx shareholder. As such, the Acquisition is a 'related party transaction' pursuant to Rule 13 of the AIM Rules. Manouchehr Takin, being the Independent Director for the purposes of the acquisition resolution , having consulted with Shore Capital & Corporate Limited (the Company's nominated adviser), considers that the terms of the Acquisition are fair and reasonable insofar as shareholders are concerned. Application will be made to have the enlarged issued share capital of Persian Gold re-admitted to AIM following completion of the Acquisition in accordance with its terms.

Information on HyEx

HyEx was incorporated in February 2010 to acquire certain assets from Pan Andean Resources plc prior to its acquisition by Petrominerales Ltd for approximately US$31 million. HyEx has interests in four countries: Ghana, Peru, Bolivia and the US.

Ghana

HyEx has (through its 30 per cent. shareholding in Pan Andean Resources Limited ("PARL") a 30 per cent. interest in the Tano 2A Block. Persian Gold also has a 30% interest in this block.

In December 2008, PARL entered into the Tano Agreement in respect of the Tano 2A Block oil exploration concession in respect of onshore and shallow near-shore Ghana ("Tano 2A Block"). This agreement, which was renegotiated on 27 January 2010, remains subject to ratification by the Ghanaian parliament. HyEx has a 30 per cent. shareholding in PARL. The Tano 2A Block consists of 1,532km2 of onshore and shallow near-shore acreage close to the recent discoveries in the deeper Tano basin by a consortium including Tullow Oil plc, Kosmos Energy LLC. and Ghanaian National Petroleum Company ("GNPC"). The other shareholders of PARL are the Company (30 per cent.), Petrel Resources plc (30 per cent.) and Ghanaian holders (10 per cent.).

Extensive data regarding the Tano 2A Block has been purchased by PARL from GNPC including 42 geological reports and 676km of 2D seismic data. PARL has identified a significant number of Leads from an initial review of the data. The initial interpretation of the main seismic surveys acquired is now underway by PARL's technical experts and contractors.

The Directors view Ghana as attractive for exploration and development and view agreement terms as not yet reflecting recent exploration success and large exploration potential compared with other countries with more established hydrocarbon resources.

As stated above, the Tano Agreement was renegotiated on 27 January 2010 and remains subject to ratification by the Ghanaian parliament. The revised agreement reduces the technology grant payment to a one-off payment of US$500k, reduces the training grant to an annual payment of US$250k and amended some other conditions which PARL considered onerous. The Directors anticipate that ratification will occur in Q1 2011. Following such ratification, PARL intends to find a suitable partner to assist in the development of the Tano 2A Block.

Peru

Peru is now seen as a target area by the international exploration and production industry because of its pro-business government, attractive fiscal terms, proven hydrocarbon systems yet relatively limited exploration history. HyEx was awarded two exploration blocks by the Peruvian authorities in the October 2010 Peruvian bid round, being Blocks 188 and 183. The signing ceremony to formalise the award of these blocks is expected to occur in early 2011.

Block 188, is close to the Camisea field which has an estimated 16 TCF of gas and over 400 million barrels of hydrocarbon liquids (condensate and natural gasoline). The play-type (or geologically-defined target) in this block is similar to the Camisea field based on historic data that has recently been reprocessed with modern equipment and techniques by the prior operator. The HyEx Directors believe that Block 188 is also prospective for medium-size shallower fields.

Block 183 lies in the Maranon Basin in central Peru (which has been a source of oil production). The block is located beside blocks with existing oil production. The Directors believe that any discovery on this block could connect to existing gas-condensate infrastructure including processing plants and pipelines.

The HyEx management team delivered (while at Pan Andean) four exploration blocks and three farm-outs in Peru. Having invested circa US$3 million (a significant proportion of which was later recovered from farm-in partners), Pan Andean (after divesting certain assets to HyEx) was sold for US$31 million in cash in 2010. HyEx's intention is to repeat this success in Peru by adding value to properties which it intends to farm out, joint venture or sell.

Bolivia

In April 2010, HyEx acquired Petrolex S.A. ("Petrolex") from Pan Andean. Petrolex has interests in (1) the El Dorado gas/condensate producing field in Bolivia ("El Dorado Field") on which significant exploration success was enjoyed in the second half of 2010, and (2) the Monteagudo oil/gas producing field in Bolivia ("Monteagudo Field"). Both of these projects are proven projects close to existing export pipelines which provides an opportunity to be connected to existing infrastructure in order to sell on the international market. The El Dorado Field is located approximately 29km from the entrance to the massive Bolivia-Brazil export line at Rio Grande and 6km away from the existing gas pipeline of Transredes S.A. ("Transredes") which feeds gas into the Bolivia-Brazil export line and into the gas export line to Argentina. The Monteagudo Field has a gas pipeline, owned by the Monteagudo consortium, which takes natural gas from the Monteagudo Field to the Cerrillos facilities, owned by Transredes. From there, the natural gas is transported to Chorety (approximately 59km in a 6-inch pipeline), which is on the main Transredes trunk gas pipeline which takes natural gas to Argentina, or transports it to Rio Grande, the entrance to the Bolivia-Brazil gas export pipeline.

Petrolex holds a 10 per cent. stake in the El Dorado Field, located 55km south of Santa Cruz and covering an area of 18,250 hectares. The remaining 90 per cent. stake is held by YPFB Chaco S.A. ("Chaco"), formerly part of the BP group (as Chaco S.A.). In 2007, Chaco S.A. was nationalised by the Bolivian state oil company, Yacimientos Petrolíferos Fiscales Bolivianos ("YPFB"). The wells in this field are currently producing approximately 14 MMscf/d of gas and 321 bcpd.

Petrolex has initiated a civil lawsuit against Chaco, for the alleged non-fulfilment of the joint operating agreement in respect of the El Dorado Field. An injunction or restraining order has been made against Chaco and YPFB ordering that no unilateral modifications may be made by either party to the contract while the case is being heard.

Pending the fulfilment of the operations contract Petrolex ceased payment of cash calls. As a result Chaco is claiming for unpaid cash calls from Petrolex under the operations contract.

Negotiations are ongoing in respect of this dispute and the Directors are reasonably confident of a satisfactory and negotiated outcome. However, an unsatisfactory outcome to this dispute from Petrolex's perspective could affect Petrolex's continued participation in the field.

Petrolex holds a 30 per cent. interest in the Monteagudo Field in Central Bolivia, approximately 240km from Santa Cruz. This project is operated by Repsol (holding a 30 per cent. interest). The remaining interests are held by Petrobas Bolivia S.A. ("Petrobras") (holding a 20 per cent. interest) and YPFB Andina S.A. (holding a 20 per cent. interest). The Monteagudo Field currently produces around 120 bopd. The Directors believe the Monteagudo Field has gas exploration potential at depth in the Devonian age rocks which have delivered multi-TCF gas discoveries in nearby blocks operated by Total S.A., Petrobras and Repsol. This has been identified by 3D seismic data and is similar to the nearby multi-TCF discoveries. The Directors believe that such a deep gas play could contain up to 3 TCF of gas.

Petrolex is also in dispute with Repsol in relation to the administration of the Monteagudo Field. Arising from this dispute and litigation instigated by Petrolex, Repsol discontinued demands for cash calls from October 2008. As a result of non-payment of cash calls, Petrolex's continued participation in the Monteagudo Field could be affected. A potential settlement of this dispute is currently under consideration.

Further detail in relation to the disputes on Petrolex's Bolivian interests is set out in the Admission Document. As a result of the legal disputes Petrolex is currently receiving no income from its holdings in Bolivia.

The US

HyEx has interests in five oil fields in the US held through the company's subsidiary Endeavour Oil & Gas Inc. ("Endeavour"). Of the five fields, three are offshore in the Gulf of Mexico and two are onshore in Texas; four fields are currently in production. Endeavour's main interest is through two producing assets in the Gulf of Mexico: High Island 52 and High Island 30L. Endeavour receives approximately US$35k monthly income from its royalty interests in High Island 52.

Endeavour also has a 67.87 per cent. working interest in High Island 30L which is currently producing up to 35 bopd, however, due to a dispute between Endeavour and the operator of High Island 30L Field, Hunt Oil Company, no income is being received from Endeavour's interest. Further details of this dispute are set out in the Admission Document.

Endeavour also receives royalties from one of its onshore holdings. Oil production from all of these interests is declining and the Directors expect that revenue associated with the US assets will be immaterial by 2013.

Reasons for the Acquisition

The rationale for the Acquisition is that the Board believes that the development prospects for the Company's Iranian assets (which have been the main focus of the Group's activities heretofore) may continue to be constrained by licensing and administrative issues and that the Acquisition represents an opportunity to acquire a diversified portfolio of exploration and production assets which have the potential to generate value for Shareholders in the future.

The Acquisition

The Company has agreed to acquire all of the HyEx shares (save for the HyEx shares already owned by the Company) to be achieved by way of the Scheme. The Company will issue 2,800 Consideration Shares for every one HyEx share (save for the HyEx shares already owned by the Company). This will result in the issue of 67,513,600 Consideration Shares giving an effective total consideration for the transaction of approximately £4.56 million (based on the Company's share price of 6.75p immediately prior to the announcement of the Acquisition).

The terms of the Acquisition are set out in the Implementation Agreement, further details of which are set out in the Admission Document. The Implementation Agreement was subsequently amended on 3 February 2011, whereby the number of Consideration Shares to be issued for each HyEx share was increased from 2,500 Consideration Shares to 2,800 Consideration Shares. The Acquisition is conditional on, inter alia:

1. approval by Persian Gold shareholders;

2. approval by HyEx shareholders;

3. approval of the Scheme of Arrangement and related proposals by the Court; and

4. Re-admission of the enlarged issued share capital to AIM.

John Teeling, James Finn and David Horgan are directors of both the Company and HyEx. The following Directors are interested in the HyEx shares as follows:

John Teeling - 1,818 HyEx shares (equivalent to 7.12% of the issued share capital of HyEx)

James Finn - 351 HyEx shares (equivalent to 1.37% of the issued share capital of HyEx)

David Horgan - 713 HyEx shares (equivalent to 2.79% of the issued share capital of HyEx)

Jack Teeling - 221 HyEx shares (equivalent to 0.87% of the issued share capital of HyEx)

As a result, the Acquisition is a 'related party transaction' pursuant to Rule 13 of the AIM Rules. Manouchehr Takin, being the Independent Director for the purposes of the Acquisition Resolution, having consulted with Shore Capital (the Company's nominated adviser), considers that the terms of the Acquisition are fair and reasonable insofar as Shareholders are concerned.

The Scheme requires, among other things, the approval of the Scheme Shareholders at a HyEx Court Meeting and also the passing of special resolutions at a General Meeting of HyEx shareholders to be held immediately after the HyEx Court Meeting. It also requires the sanction of the High Court. It is expected that the Scheme will become effective and Re-admission to AIM will take place of ordinary shares in the Enlarged Group on 6 April 2011.

Nominated Adviser and Joint Broker

Shore Capital & Corporate Limited was appointed as nominated adviser to the Company and Shore Capital Stockbrokers Limited was appointed as joint broker to the Company today. Optiva Securities Limited will also act as joint broker to the Company.

The Placing

Shore Capital Stockbrokers Limited and Optiva Securities Limited have conditionally agreed to use their respective reasonable endeavours to place, as agent for the Company, a total of 41,688,171 Placing Shares at 6p with institutional investors, which will represent approximately 17.6 per cent. of the Enlarged Issued Share Capital of the Company following Re-admission. It is anticipated that the Placing, which is not being underwritten or guaranteed, will raise £2.1 million before expenses.

The Placing Shares will be issued paid up and, following allotment, will rank in full for all dividends or other distributions hereafter declared, made or paid on the ordinary share capital of the Company and will rank pari passu in all other respects with all other Ordinary Shares in issue on Re-admission. Application will be made for the Enlarged Issued Share Capital to be admitted to trading on AIM. It is expected that trading in the Enlarged Issued Share Capital will commence on 6 April 2011.

The Placing is conditional, inter alia, upon:

(a) the passing of the Resolutions;

(b) the passing of the HyEx Court Resolution;

(c) the passing of the HyEx Resolutions;

(d) the Acquisition becoming wholly unconditional save for Admission; and

(e) Admission having become effective on or before 8.30 a.m. on 5 April 2011 (or such later date as the Company and SCC may agree, not being later than 5.00 p.m. on 5 May 2011).

The Directors are subscribing for 7,012,500 Placing Shares in the Placing. The aggregate amount of £420,750 due by the Directors to the Company for these Placing Shares will be offset against Directors' fees which have been accrued in 2010 and loans made by the Directors to the Company in August 2010.

Subscription for the Subscription Shares

The Company has received subscriptions for 3,775,500 Subscription Shares at 6p per Subscription Share conditional on completion of the Acquisition and on Admission for an aggregate subscription amount of £224,270.04. It is intended that 3,775,500 Subscription Shares will be allotted to the subscribers immediately prior to Admission.

Use of Proceeds

The gross proceeds of the Placing and the Subscription are expected to be £2.3 million and the net cash proceeds to the Company of the Placing and the Subscription (after deduction of expenses estimated in total at approximately £0.55 million (excluding VAT) and assuming full subscription) are expected to be £1.7 million.

The Directors intend that the net funds raised through the Placing and the Subscription will be used as follows:

• Ghana: interpretation of the main seismic surveys acquired by the Company on the Tano 2A Block together with local training costs (£0.4 million);

• Bolivia: settlement of dispute in respect of the El Dorado Field and in-country administration expenses (£0.5 million);

• Peru: payment of bonds on exploration licences on Blocks 188 and 183, initial data review and in-country administration expenses (£0.2 million); and

• head office costs and general working capital (£0.6 million).

Current trading and prospects

On 17 September 2010 Persian Gold announced its interim results for the six months ended 30 June 2010, The unaudited loss before tax for that period was £143,000 compared to a loss before tax of £161,000 for the equivalent period in 2009. On 30 June 2010 Persian Gold had unaudited net assets of £1,419,000.

The Company continues its efforts to secure exploration permits for its projects in Iran. In relation to the oil exploration concession in Ghana, the Directors believe that the formal ratification of the agreement will occur in Q1 2011. The Company then intends to find a suitable partner to assist in the development of the concession. As stated above, HyEx was awarded two exploration blocks by the Peruvian authorities in the October 2010 Peruvian bid round, being Blocks 188 and 183. The signing ceremony to formalise the award of these blocks is expected to occur in early 2011.

Following Re-admission, the Enlarged Group will be a diversified group with resources exploration and production activities in Ghana, Peru, Bolivia, the US and Iran.

Future Strategy of the Enlarged Group

The Directors' intended strategy for the Enlarged Group is:

• to capitalise on management experience in successfully acquiring high potential hydrocarbon;

exploration acreage and thereafter adding value by obtaining the necessary permits to explore and drill with value being added through farm-out arrangements on such assets to larger companies at a premium;

• to develop the Tano 2A Block in Ghana in accordance with the revised terms of the Tano Agreement negotiated on 27 January 2010;

• to acquire exploration licences in Peru. It is expected that in early 2011 these licences will be formally signed on the two blocks awarded to HyEx in October 2010. Initial work on past data is already underway on Blocks 188 and 183. The Directors believe that the work is likely to attract interest from larger potential partners;

• to conclude negotiations with Chaco to resolve outstanding issues in respect of HyEx's participation in the El Dorado Field;

• to facilitate the acquisition of Repsol's operating 30 per cent. of the Monteagudo Field with a view to drilling by a new external partner the 3D identified gas target at depths greater than 4,000 metres; and

• to bid for marginal projects in countries where the Company has expertise, providing the technical and economic conditions are appropriate.

General Meeting

Shareholders have today been sent a notice convening a general meeting of the Company to be held at The City of London Club, 19 Old Broad Street, London EC2N 1DS at 11.30 a.m. on 15 March 2011 at which the following resolutions will be proposed:

Resolution 1 is an ordinary resolution to approve the Acquisition, conditional on the passing of the HyEx Resolutions and the HyEx Court Resolution;

Resolution 2 is an ordinary resolution to give the Directors the requisite share capital authorities for the purpose of allotting Ordinary Shares in connection with the Acquisition, the Placing and the Subscription, and also generally to authorise an allotment of Ordinary Shares of up to an aggregate nominal value £250,000 until the first anniversary of the Resolution;

Resolution 3 is a special resolution to give the Directors the power to disapply statutory pre-emption rights to allot Ordinary Shares in connection with the Acquisition, the Placing and the Subscription and for the purpose of allotting Ordinary Shares of up to an aggregate nominal value £250,000 until the first anniversary of the Resolution;

Resolution 4 is a special resolution to adopt the New Articles; and

Conditional on the passing of Resolution 1, Resolution 5 is a special resolution to change the name of the Company to Clontarf Energy plc.

Irrevocable Undertakings

John Teeling, David Horgan and James Finn have irrevocably undertaken to HyEx and Persian Gold to vote in favour of the HyEx Resolutions in respect of all of their beneficial holdings of 2,882 HyEx Shares, representing in aggregate approximately 11.28 per cent. of the anticipated issued share capital of HyEx entitled to vote at the HyEx GM at the Voting Record Time.

The company has irrevocably undertaken to HyEx to vote in favour of the HyEx Resolutions in respect of its beneficial holding of 1,425 HyEx Shares representing approximately 5.58 per cent. of the anticipated issued share capital of HyEx entitled to vote at the HyEx GM at the Voting Record Time.

Mauricio Gonzalez has irrevocably undertaken to Persian Gold to vote in favour of the HyEx Court Resolution and the HyEx Resolutions in respect of all of his beneficial holdings of 80 HyEx Shares representing approximately 0.31 per cent. of the anticipated share capital of HyEx at the Voting Record Time entitled to vote at the HyEx Court Meeting.

Jack Teeling has irrevocably undertaken to HyEx to vote in favour of the HyEx Resolutions in respect of his beneficial holding of 221 HyEx Shares representing approximately 0.87 per cent. of the anticipated issued share capital of HyEx entitled to vote at the HyEx GM at the Voting Record Time.

John Teeling, David Horgan and James Finn will abstain from voting at the HyEx Court Meeting as they are directors and shareholders in the Company. The Company will not be entitled to vote at the HyEx Court Meeting as the shares which it holds in HyEx do not form part of the Scheme.

These undertakings shall lapse and be of no further effect and no party thereto shall have any claim against the other except in relation to any breach of any provision of such undertaking prior to the relevant date or time if:

1. the HyEx Directors recommend a superior acquisition proposal in accordance with the terms of the Implementation Agreement; or

2. either the Company or HyEx pays the non completion fees, when, and if, due under the Implementation Agreement and the Implementation Agreement is terminated in accordance with its terms.

Enquiries:

www.persiangoldplc.com

Note to Editors:

Information on Persian Gold

Persian Gold was incorporated in 2003 as a gold exploration company focused on identifying gold mineralisation in Iran (in particular, 'Yanacocha-type' high sulphidator epithermal mineralisation). The Company was listed on AIM in 2005 since when assets have been added such that the Group now has interests in three countries: Ghana, Iran and Bolivia.

Ghana

As stated above, the Company has a 30% interest in the Tano 2A Block (further details of which are set out above).

Iran

The Company's strategy in Iran has been to seek significant porphyry copper-gold and volcanic hosted gold deposits similar to those found in the Andes of South America in the past 10 years. Persian Gold, through its interest in its local Subsidiaries, conducted significant exploration work, including drilling, as well as desktop research based on existing data, on two projects:

(i) Chah-e-Zard, a gold/silver discovery near Yazd in south-central Iran ("Chah-e-Zard Project"); and

(ii) Dalli, a copper/gold porphyry in north-central Iran, south west of Tehran ("Dalli Project").

Chah-e-Zard project

Chah-e-Zard is located approximately 550km southeast of Tehran in the province of Yazd. The project, which covers an area of 39.5 km2, is on the general Tethyan volcanic belt, which is prospective for copper and gold, and stretches from Armenia/Turkey over Iran to Pakistan. The largest undeveloped copper/gold deposit in the world, Reko Diq, which is across the Iranian border in Pakistan, is also on this belt.

The Company entered into an option agreement in June 2007 with Hamid Deihimi whereby it earned a 70 per cent. interest in Talaye Pars Yazd, an Iranian-incorporated company. As a result of 4,135m of drilling and 3,380m of trenching a 'reserve' has been calculated by Persian Gold in accordance with the "Islamic Republic of Iran - Instructions for Mineral Reserves Classification - No. 379" for Chahe- Zard quoting a Proven figure of 2.2Mt at 1.7g/t Au and 12.7g/t Ag and a further Probable amount of 6.2Mt at 0.77g/t Au and 10.8g/t Ag. Wardell Armstong International have reviewed this work. These estimates have not been prepared according to an internationally recognised reporting standard such as the JORC Code (2004); hence they are included for information only. A discovery certificate for the Chah-e-Zard Project was applied for in September 2008 but has not yet been issued. It is expected that if the discovery certificate for this project is granted, the licence in respect of this project will be transferred to Talaye Pars Yazd and, subject to funding and further work such as a feasability study, an open pit and heap leach mine to extract the mineral deposits will be developed.

Dalli Project

 The Dalli Project licence area covers 9km2 and is located 200km southwest of Tehran. It is located on the central volcanic belt, the UDMA (Urimieh Dokhtar Magmatic AVC), which hosts other major porphyry systems. It is a copper and gold deposit that was discovered by Rio Tinto in 2002. Persian Gold's joint venture partner Dorsa Pardazeh Company ("Dorsa") undertook field work on the project and entered into an agreement in August 2007 with Persian Gold's Subsidiary, Persian Gold Limited in relation to the Dalli Project. Dorsa granted an option to Persian Gold Limited to acquire 70 per cent. of the shares in an Iranian incorporated joint venture company to which the licence in respect of the Dalli Project is to be transferred.

The Dalli project is an advanced exploration project, with demonstrated mineralisation which, the Directors believe, should be economic at current prices, costs and taxes. Two phases of drilling have been completed with, what the Directors believe, are generally encouraging results. A preliminary Proven reserve of 5.6Mt at 0.377 per cent. Cu and 0.5g/t Au and a further Probable reserve of 7.8Mt at 0.3 per cent. Cu has been calculated by Persian Gold in accordance with the "Islamic Republic of Iran - Instructions for Mineral Reserves Classification - No. 379". Wardell Armstong International have reviewed this work. These estimates have not been prepared according to an internationally recognised reporting standard such as the JORC Code (2004); hence they are included for information only. The Company's proposal, subject to funding and further work such as a feasability study, is to develop a small open pit heap leach operation.

A discovery certificate for the Dalli Project has been applied for but has not yet been granted. Pending the grant of the discovery certificate in respect of this project, the Board does not intend to invest any further substantial funds in the Dalli Project. It is expected that if the discovery certificate for this project is granted the licence in respect of this project will be transferred to the joint venture vehicle.

Bolivia

In May 2010, Persian Gold entered into a memorandum of understanding ("MoU") with Quimbabol, a company owned by the Bolivian armed forces ("Quimbabol"), the state of Potosi and local communities (residing in the area) to study certain evaporates deposits in salt-lakes in Bolivia over which Quimbabol has concessions. The scope of study includes a variety of potentially economic minerals, including lithium. Bolivia accounts for approximately 50 per cent. of the world's lithium reserves. Persian Gold has identified 5 salt lakes feasible for exploration and production of carbonates and sulphates containing commercial lithium (in particular, the Lake Uyuni and Coipasa salt pans in the Andes).

Under the MoU, Persian Gold has agreed to prepare a scoping study on industrial projects associated with the salt-lakes, namely a soda ash plant and borax derived deposits. This project is currently at a very early stage and the Directors expect that it will involve relatively low costs and commitments in 2011. The next steps intended for this project are laboratory tests on samples already taken to determine the chemical and physical properties of the constituent minerals with a view to then marketing to key customers.

Ends