CPT.L Regulatory News (CPT)

For immediate release

17 March 2015

FRONTIER RESOURCES INTERNATIONAL PLC

("Frontier" or the "Company")

Conditional share subscription for £1.7 million

Interim US$200,000 loan facility

The Board of Frontier (AIM: FRI), the onshore oil and gas explorer with assets in Oman, Zambia and Namibia, is pleased to announce that it has today entered into a conditional subscription agreement ("Subscription Agreement") with AGR Energy Limited No. II ("AGR Energy") pursuant to which the Company has agreed to issue 170,000,000 new ordinary shares of 1p each ("Ordinary Shares") to AGR Energy ("Subscription Shares") at a subscription price of 1 penny per new share ("Subscription Price") and to grant AGR Energy 53,250,000 new warrants ("New Warrants") to subscribe for new Ordinary Shares at any time in the next five years for new Ordinary Shares at the Subscription Price (together the "Subscription").

The Subscription Agreement is conditional, inter alia, on the approval of the independent shareholders of the Company, on a poll at a general meeting of the waiver of any obligations of AGR Energy to make a general offer to shareholders pursuant to Rule 9 of the City Code on Takeovers and Mergers.

The gross proceeds immediately on completion of the Subscription ("Completion") will amount to £1.7 million and will be used to provide funding for the further development and evaluation of the Company's exploration projects in Oman, Namibia and Zambia and for general working capital for the Company.

In addition, AGR Energy has agreed to provide an interim secured short term loan facility of US$200,000 to the Company to provide additional working capital prior to Completion whilst the conditions of the Subscription Agreement are met ("Loan Agreement"). The Company intends that the Loan Agreement will be repaid from the proceeds of the Subscription.

Neil Herbert, Chairman of Frontier, said:

"AGR Energy brings significant oil and gas expertise and experience to Frontier. We look forward to working together as we progress with our existing projects in Oman and southern Africa, and as we evaluate new opportunities."

Background to the Subscription

Frontier, which was founded in April 2008, is focused on onshore oil and gas exploration in the Middle East and Southern Africa where the Company currently has three exploration projects in Oman, Namibia and Zambia. As reported to Shareholders at the time of the Company's admission to AIM in July 2013, the Company and its subsidiaries (the "Group") needs substantial financial resources to develop its assets.

While the Group has since Admission to AIM in 2013 progressed its work programmes in Oman, Zambia and Namibia, the Company needs to raise further funding for its ongoing work programme commitments and future working capital requirements. The Group is not revenue generating so it is therefore reliant on the continuing support from its existing and future shareholders, through private and public placings of its Ordinary Shares. In common with many companies in the oil and gas exploration and development stages, the Group raises its cash for exploration and development programmes in discrete tranches to finance its work programme commitments.

Frontier has also been actively engaged in seeking industry partners to participate in its projects in Oman, Namibia and Zambia. As part of this farm-out process, the Company established online data-rooms and industry presentations by the Company's technical staff have been ongoing. The Company raised £600,000 in June 2014 under a private placing of Ordinary Shares to provide additional working capital for the Company to progress these farm-out discussions (and enable some additional technical analysis in Oman in the second half of 2014). As previously announced, the placing proceeds were not anticipated to provide sufficient working capital to fund the Group's planned activities for the next 12 months, and the Company anticipated funding its further exploration activity and general working capital from the proceeds of a farm-out of one or more of its interests during the second half of 2014. While there has been has been a good response to date from potentially interested parties, discussions are continuing and no farm-out has yet been completed.

Whilst the Directors believe that they are taking all the necessary steps to progress a farm-out opportunities, there can be no guarantee or certainty if or when a farm-out will be completed. Against this background, the Board believes that the proceeds of the Subscription will provide significant new funding for the Company to:

(a) continue to progress its farm-out discussions with potential partners;

(b) enable further exploration activity on each of its projects during 2015; and

(c) provide additional working capital for the Company.

The Board believes that the experience of AGR Energy's shareholders, the Assaubayev family, in natural resources make AGR Energy a well-placed partner to assist the Company's development and growth ambitions with both operational and financial support. Under the terms of the Subscription, it is anticipated that immediately following Completion, John O'Donovan will resign as a Director of the Company and it is anticipated that Aidar Assaubayev and Sanzhar Assaubayev will be appointed as new Directors of the Company.

Subscription  

The Company today entered into a conditional subscription agreement with AGR Energy (which currently has no interest in the Company) to subscribe for 170,000,000 new Ordinary Shares at the Subscription Price of 1 penny per new Ordinary Share to raise £1.7 million to provide funding for the further development and evaluation of the Group's exploration projects in Oman, Namibia and Zambia and for general working capital for the Company. In addition, the Company has conditionally granted AGR Energy 53,250,000 New Warrants. Each New Warrant entitles AGR Energy to subscribe for one new Ordinary Share at a subscription price of 1 penny per new Ordinary Share at any time on or before the fifth anniversary of completion of the Subscription. Immediately on Completion, AGR Energy would be interested in 49.87 per cent. of the enlarged issued share capital of the Company. On exercise of the New Warrants, AGR Energy would be interested in 56.64 per cent. of the diluted enlarged issued share capital of the Company.

The Subscription Price of 1 penny represents a 28.5 per cent. premium to the 30 day volume weighted average closing mid-market price of an Ordinary Share of 0.778 pence as at 16 March 2015 (the last practicable date prior to this announcement). The Subscription Shares will, when issued and fully paid, rank in all other respects pari passu with the Ordinary Shares in issue including the right to receive all dividends and other distributions declared, made or paid after the date of their issue.

Completion of the Subscription is conditional inter alia upon:

(a) the approval by the Panel on Takeovers and Mergers ("Panel") of a circular (the "Circular") to be sent to Shareholders in connection with the Subscription, including a waiver in respect of the obligation of the AGR Energy to make a mandatory offer for the entire issued share capital of the Company not already held by the AGR Energy which might otherwise be imposed on the AGR Energy under Rule 9 of the Takeover Code as a result of the issue of Subscription Shares and the New Warrants;

(b) the posting of the Circular in a form satisfactory to the AGR Energy, including the unanimous recommendation of the Directors to vote in favour of the resolutions, by not later than 30 April 2015;

(c) the passing of the Resolutions (including the approval of the independent shareholders of the Company on a poll at a general meeting of the waiver of any obligations of the AGR Energy to make a general offer to shareholders pursuant to Rule 9 of the City Code on Takeovers and Mergers); and

(d) approval of the appointment of the AGR Energy Directors by the Company's Nominated Adviser.

Under the terms of the Subscription Agreement the conditions must be fulfilled or waived in all respects on or before the long stop date, being 31 May 2015.

Loan Agreement 

AGR Energy has also agreed to provide an interim secured short term loan facility of US$200,000 to the Company to provide additional working capital prior to Completion. The Loan Agreement is repayable on the earlier of 17 September 2015 and the date on which the Company raises at least US$200,000 by the issue of new equity. Interest is chargeable from drawdown at the rate of 9 per cent. per annum. The Loan Agreement is secured over the share capital of the Group's wholly-owned subsidiary, Frontier Resources Namibia Limited, which holds a 90 per cent. participating interest in the Petroleum Agreement between the Government of Namibia and Frontier Namibia dated 17 October 2011.

Under the Loan Agreement, Frontier has provided certain undertakings to AGR Energy that unless otherwise agreed by AGR Energy (and such agreement must not be unreasonably withheld or delayed) from first drawdown of the Loan Agreement until the Loan Agreement is repaid, Frontier shall, and shall procure that each group company (the "Group") shall:

1. ensure that the business of the Group in conducted only in the ordinary and usual course and that no payment relating to such business is made or agreed to be made other than routine payments in the ordinary and usual course of business;

2. ensure that all reasonable steps are taken to preserve and protect the business assets of the Group and to preserve and retain the goodwill of the business of the Group;

3. subject to AGR Energy agreeing to confidentiality obligations reasonably requested by Frontier, allow AGR Energy, upon reasonable notice, access to the books and records and to the premises and management of the Group;

4. not dispose of any material assets used or required for the operation of its business;

5. not allot or issue or agree to allot or issue any share or loan capital of any Group company, or create or grant any option over, or right to subscribe for or purchase, any interest in securities in any Group company, or repurchase, redeem, or agree to repurchase or redeem, any of its shares or securities convertible into shares;

6. not enter into, modify or agree to terminate any contract material to its business, including any variation of any of its licences;

7. not make any additional borrowings or enter into any further indebtedness in the nature of borrowings;

8. not pay any dividend or make any other distribution of its assets;

9. not make, or agree to make, material alterations to the terms and conditions of employment (including benefits) of any of its directors, officers or employees;

10. not provide or agree to provide any non-contractual benefit to any director, officer, employee or their dependants;

11. not create any encumbrance over any of its assets or its undertaking; and

12. not institute, settle or agree to settle any legal proceedings relating to its business, except debt collection in the normal course of business.

Proposed General Meeting 

The Circular containing full details of the Subscription Agreement and notice of a general meeting of Shareholders to approve, inter alia, the waiver to make a general offer to shareholders will be prepared by the Company and sent to shareholders as soon as practical, which the Board currently expects to be during early April 2015.

About AGR Energy

AGR Energy is owned by the Assaubayev family. The Assaubayev family are long-term investors in natural resources and metals and mining, and have a track record of investment and support of enterprises, particularly in Central Asia and other emerging markets. The Assaubayev family led a consortium of investors in becoming the strategic 65.12% shareholder of Goldbridges Global Resources plc (formerly Hambledon Mining plc) which in 2014 moved from AIM to a Standard Listing on the Official List and admission to trading on the Main Market of the London Stock Exchange. In addition, the Assaubayev family is the controlling 76.14% shareholder of AIM-traded Kemin Resources plc.

Enquiries:

About Frontier

Frontier Resources International Plc, which was founded in April 2008, is focused on onshore oil and gas exploration and development in the Middle East and Southern Africa where the Company has technical knowledge and expertise. The Company currently has three exploration projects; in Oman, Zambia and Namibia.

Frontier's immediate objectives are to continue developing its core exploration projects towards first production particularly in Oman where the Company's knowledge base is most advanced because of the block's proximity to other producing oil and gas fields and the availability of existing seismic and well data.

The Company is incorporated in the United Kingdom with its registered office in London. It also maintains a technical and commercial office in the United States in Houston, Texas. Additionally, to support its regional operations in Southern Africa and the Middle East, offices are maintained in Oman, Namibia and Zambia.

The Company's shares were admitted to AIM of the London Stock Exchange on 5 July 2013.

Copies of this release are available from the Company's website at www.friplc.com

Important Information

Neither the content of the Company's website (or any other website) nor any website accessible by hyperlinks on the Company's website (or any other website) is incorporated in, or forms part of, this announcement.

Any person receiving this announcement is advised to exercise caution in relation to the contents. If in any doubt about any of the contents of this announcement, independent professional advice should be obtained.

This document does not comprise an offer to sell or the solicitation of an offer to buy a security.

Beaumont Cornish, which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting for the Company and no one else in connection with the Subscription and Loan Agreement and will not be responsible to any person other than the Company for providing the regulatory and legal protections afforded to clients of Beaumont Cornish nor for providing advice in relation to the contents of this document or any matter, transaction or arrangement referred to in it. Beaumont Cornish has not authorised the contents of, or any part of, this document and no liability whatsoever is accepted by Beaumont Cornish for the accuracy of any information or opinion contained in this document or for the omission of any information.

The Ordinary Shares will not be registered under the United States Securities Act of 1933, as amended, or under the securities legislation of, or with any securities regulatory authority of, any state or other jurisdiction of the United States or under the applicable securities laws of the Republic of South Africa, Australia, or Japan. Accordingly, subject to certain exceptions, the Ordinary Shares may not be offered or sold, directly or indirectly, in or into the United States, the Republic of South Africa, Australia, or Japan or to or for the account or benefit of any national, resident or citizen of the Republic of South Africa, Australia, or Japan or any person located in the United States. This Document does not constitute an offer to issue or sell, or the solicitation of an offer to subscribe for or buy, any of the Ordinary Shares to any person in any jurisdiction to whom it is unlawful to make such offer or solicitation in such jurisdiction. The distribution of this Document in certain jurisdictions may be restricted by law. In particular, this Document should not be distributed, published, reproduced or otherwise made available in whole or in part, or disclosed by recipients to any other person, and in particular, should not be distributed, subject to certain exceptions, to persons with addresses in the United States of America, the Republic of South Africa, Australia, or Japan. No action has been taken by the Company or by Beaumont Cornish that would permit a public offer of any of the Ordinary Shares or possession or distribution of this Document where action for that purpose is required. Persons into whose possession this Document comes should inform themselves about, and observe, any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of such jurisdictions.

Qualified Persons Statement

The scientific and technical information contained within this announcement has been reviewed and approved by Michael (Jack) Keyes, CEO of the Company. Mr Keyes has over 30 years' experience in the international oil industry specialising in exploration operations, project management and corporate management. Mr. Keyes completed his formal education at the University of Tulsa, Oklahoma with a Master's Degree in Exploration Geophysics, and is a member, inter alia, of the American Association of Petroleum Geologists (AAPG), Society of Petroleum Engineers (SPE), Society of Exploration Geophysicists (SEG), Petroleum Exploration Society of Great Britain (PESGB), AIPN (Association of International Petroleum Negotiators), EI ("Energy Institute") and is the Qualified Person for the purposes of the AIM Guidance Note on Mining and Oil & Gas Companies dated June 2009.

Forward Looking Statements

Certain statements in this announcement are, or may be deemed to be, forward looking statements. Forward looking statements are identified by their use of terms and phrases such as ''believe'', ''could'', "should" ''envisage'', ''estimate'', ''intend'', ''may'', ''plan'', ''will'' or the negative of those, variations or comparable expressions, including references to assumptions. These forward looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Company's future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward looking statements reflect the Directors' current beliefs and assumptions and are based on information currently available to the Directors. A number of factors could cause actual results to differ materially from the results discussed in the forward looking statements including risks associated with vulnerability to general economic and business conditions, competition, environmental and other regulatory changes, actions by governmental authorities, the availability of capital markets, reliance on key personnel, uninsured and underinsured losses and other factors, many of which are beyond the control of the Company. Although any forward looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions, the Company cannot assure investors that actual results will be consistent with such forward looking statements.

ENDS