Harworth Gp Regulatory News (HWG)

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED IN IT IS NOT FOR PUBLICATION, RELEASE OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES OF AMERICA, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA AND NEW ZEALAND OR ANY OTHER JURISDICTION IN WHICH IT WOULD BE UNLAWFUL TO DO SO.

THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS EQUIVALENT DOCUMENT AND IS NOT AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES. NEITHER THIS ANNOUNCEMENT NOR ANYTHING HEREIN FORMS THE BASIS FOR ANY CONTRACT OR COMMITMENT WHATSOEVER. INVESTORS SHOULD NOT SUBSCRIBE FOR OR PURCHASE ANY SECURITIES REFERRED TO IN THIS ANNOUNCEMENT EXCEPT ON THE BASIS OF INFORMATION CONTAINED IN THE COMBINED PROSPECTUS AND CIRCULAR PUBLISHED BY THE COMPANY IN CONNECTION WITH THE ACQUISITION AND FIRM PLACING AND PLACING AND OPEN OFFER (TOGETHER, THE "TRANSACTION"). COPIES OF THE COMBINED PROSPECTUS AND CIRCULAR WILL BE AVAILABLE FROM THE COMPANY'S REGISTERED OFFICE AND, SUBJECT TO APPLICABLE SECURITIES LAWS, ON THE COMPANY'S WEBSITE.

3 March 2015

Coalfield Resources plc ("Coalfield Resources" or the "Company")

Acquisition of 75.1% of Harworth Estates

Firm Placing and Placing and Open Offer to raise £115.0 million

Coalfield Resources announces that it has agreed terms with the Board of the Pension Protection Fund ("PPF") to acquire the 75.1 per cent. of Harworth Estates Property Group Limited ("Harworth Estates" or "HEPGL") (the "Acquisition") that it does not already own for £150.0 million (the "Consideration"). The Consideration will be satisfied by a combination of the issue by the Company of 730,674,465 new ordinary shares of 1p each in the Company ("Ordinary Shares") to the PPF (which will represent approximately 25.0 per cent. of the Enlarged Issued Share Capital) and the payment to the PPF of approximately £97.0 million in cash. The Company proposes to raise approximately £115.0 million by a Firm Placing and Placing and Open Offer by issuing 1,586,566,912 ordinary shares at 7.25 pence per share ("Offer Price"). Of this, £97.0 million will be used to fund the cash component of the consideration to the PPF, with the remaining net proceeds to be used to provide additional investment capital.

Key Highlights:

· The Consideration of £150 million represents an approximate 20 per cent. discount to the net asset value of Harworth Estates as at 31 December 2014

· The Company proposes to raise gross proceeds of £115.0 million through the Firm Placing and Placing and Open Offer

· Offer Price of 7.25p represents a 19.5 per cent. discount to the unaudited pro forma NAV per share of the Enlarged Group of 9.00p

· Harworth Estates is one of the largest property and regeneration businesses across the East Midlands, Yorkshire and the North of England, owning and/or managing a diversified portfolio of approximately 27,000 acres across some 200 sites, valued at approximately £298.5 million with net assets of approximately £248.6 million

· The Firm Placing and Placing and Open Offer are being fully underwritten by Investec

· On completion of the Transaction, the Company proposes that its name be changed to Harworth Group plc to reflect properly the change to the Company's underlying operations

The Prospectus containing further details of the Transaction, including a notice of General Meeting, is expected to be published and posted to Qualifying Shareholders later today, after which the Company's Ordinary Shares are expected to recommence trading on the London Stock Exchange and suspension lifted on the Official List (Standard Listing) of the UK Listing Authority.

Jonson Cox, Chairman of Coalfield Resources said:

"Coalfield Resources is delighted to announce this transaction with the Pension Protection Fund. It re-establishes under single ownership the property business of Harworth Estates and we welcome the PPF as a 25% investor. It will complete the transformation of the company to a specialist brownfield property developer. We will be in a strong position to take full advantage of our proven skills in the property and regeneration markets and to deliver value. I would like to thank our existing and new shareholders for their support in achieving an important milestone for the business."

This summary should be read in conjunction with, and is subject to, the full text of this announcement as well as the Prospectus relating to the Transaction which will be sent to Qualifying Shareholders and will also be made available on the Company's website, www.coalfieldresources.com. Further details are set out in this announcement and in the Prospectus. A copy of the Prospectus will be submitted to the National Storage Mechanism and will be available for inspection later today.

Capitalised terms used in this announcement and not defined shall have the same meanings as in the Prospectus.

Enquiries:

If you have any queries on the procedure for application and payment under the Open Offer, you should contact Equiniti Limited at Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA or the UK Shareholder Helpline on 0871 384 2503 (from inside the United Kingdom or +44 121 415 0873 (from outside the United Kingdom). This Shareholder Helpline is available from 8.30 a.m. to 5.30 p.m. (London time) Monday to Friday (except bank holidays). Calls to the UK Shareholder Helpline cost 8 pence per minute, excluding VAT plus network extras. Calls to the UK Shareholder Helpline from outside the United Kingdom will be charged at the applicable rates. Please note that for legal reasons, the UK Shareholder Helpline is only able to provide information contained in the Prospectus and information relating to Coalfield Resources' register of members and is unable to give advice on the merits of the Firm Placing and Placing and Open Offer or provide legal, financial, tax or investment advice.

Important Notices:

This announcement is not for release, publication or distribution, directly or indirectly, in or into the United States, Canada, Australia, New Zealand, Japan, the Republic of South Africa or any other jurisdiction where the availability of the Firm Placing and Placing and Open Offer would breach any applicable law.

This announcement is an advertisement and not a prospectus and investors should not subscribe for or purchase any New Ordinary Shares, the Open Offer Entitlements and the Excess Open Offer Entitlements referred to in this announcement except on the basis of information in the Prospectus which is expected to be published by the Company today in connection with the Firm Placing and Placing and Open Offer. Copies of the Prospectus will, following publication, be available from the Company's registered office and subject to applicable securities laws, on the Company's website. This announcement does not constitute, or form part of any offer or invitation to purchase, otherwise acquire, subscribe for, sell, otherwise dispose of or issue, or any solicitation of any offer to sell, otherwise dispose of, issue, purchase, otherwise acquire or subscribe for, any security in the capital of the Company in any jurisdiction. Any decision to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any New Ordinary Shares, the Open Offer Entitlements and the Excess Open Offer Entitlements should only be made on the basis of information contained in and incorporated by reference into the Prospectus which contains further details relating to the Company in general as well as a summary of the risk factors to which an investment in the New Ordinary Shares is subject. Nothing in this announcement should be interpreted as a term or condition of the Firm Placing and Placing and Open Offer.

This announcement is not directed to, or intended for distribution or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability, or use would be contrary to law or regulation which would require any registration or licensing within such jurisdiction.

This announcement does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities in the United States, Canada, Australia, New Zealand, Japan or South Africa. The New Ordinary Shares, the Open Offer Entitlements and the Excess Open Offer Entitlements have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), or under the securities laws of any state or other jurisdiction of the United States and, may not be offered, sold, resold, taken up, delivered or distributed, directly or indirectly, within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and any applicable state or local securities laws. There will be no public offer of the New Ordinary Shares, the Open Offer Entitlements and the Excess Open Offer Entitlements in or into the United States. No money, securities or other consideration from any person inside the United States is being solicited and, if sent in response to the information contained in this announcement, will not be accepted.

This announcement does not constitute an offer of New Ordinary Shares, the Open Offer Entitlements and the Excess Open Offer Entitlements to any person with a registered address in, or who is resident in, Australia, New Zealand, Canada, Japan or South Africa. None of the New Ordinary Shares, the Open Offer Entitlements and the Excess Open Offer Entitlements has been or will be registered under the relevant laws of any state, province or territory of Australia, New Zealand, Canada, Japan or South Africa. Subject to certain limited exceptions, neither the Prospectus nor this announcement will be distributed in or into Australia, New Zealand, Canada, Japan or South Africa.

The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this announcement is released, published or distributed should inform themselves about and observe such restrictions.

The statements contained in this announcement that are not historical facts are "forward-looking" statements. These forward-looking statements are subject to a number of substantial risks and uncertainties, many of which are beyond the Company's control and actual results and developments may differ materially from those expressed or implied by these statements for a variety of factors. These forward-looking statements are statements based on the Company's current intentions, beliefs and expectations about among other things, the Company's financial condition, prospects, growth, strategies and the industry in which the Company operates. Forward-looking statements are typically identified by the use of forward-looking terminology such as "believes", "expects", "may", "will", "could", "should", "intends", "estimates", "plans", "assumes" or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. In addition, from time to time, the Company or its representatives have made or may make forward-looking statements orally or in writing. Furthermore, such forward-looking statements may be included in, but are not limited to, press releases or oral statements made by or with the approval of an authorised executive officer of the Company. No assurance can be given that such future results will be achieved; actual events or results may differ materially from those expressed in or implied by these statements as a result of risks and uncertainties facing the Company and its subsidiaries. Many of these risks and uncertainties relate to factors that are beyond the Company's ability to control or estimate precisely, such as changes in taxation and fiscal policy, future market conditions, currency fluctuations, the behaviour of other market participants, the actions of governmental regulators and other risk factors such as the Company's ability to continue to obtain financing to meet its liquidity needs, changes in the political, social and regulatory framework in which the Company operates or in economic or technological trends or conditions, including inflation and consumer confidence, on a global, regional or national basis. Such risks and uncertainties could cause actual results to vary materially from the future results indicated, expressed or implied in such forward-looking statements. The forward-looking statements contained in this announcement speak only as of the date of this announcement and the Company undertakes no duty to update any of them publicly in light of new information or future events, except to the extent required by applicable law or regulation.

Investec Bank plc who is authorised in the United Kingdom by the Prudential Regulation Authority and regulated in the United Kingdom by the Prudential Regulation Authority and the Financial Conduct Authority, is acting solely for the Company and no one else in connection with the Firm Placing, the Placing and Open Offer and the Acquisition and will not regard any other person (whether or not a recipient of this announcement) as a client in relation to the Acquisition and will not be responsible to anyone other than the Company for providing the protections afforded to its clients or for providing advice in connection with the Firm Placing, the Placing and Open Offer and Acquisition or any other matter referred to in this announcement.

Investec may, in accordance with applicable legal and regulatory provisions, engage in transactions in relation to the New Ordinary Shares, the Open Offer Entitlements and the Excess Open Offer Entitlements and/or related instruments for its own account for the purpose of hedging its underwriting exposure or otherwise. Except as required by applicable law or regulation Investec does not propose to make any public disclosure in relation to such transactions.

This announcement should not be considered a recommendation by Investec or any of its directors, officers, employees, advisers or any of its affiliates in relation to any purchase of or subscription for securities. None of Investec and its directors, officers, employees, advisers or any of its affiliates accepts any responsibility or liability whatsoever for/or makes any representation or warranty, express or implied, as to this announcement, including the truth, accuracy, fairness, sufficiency or completeness of the information or the opinions or the beliefs contained in this announcement (or any part hereof). None of the information contained in this announcement has been independently verified or approved by Investec or any of its directors, officers, employees, advisers or any of its affiliates. Save in the case of fraud, no liability is accepted by Investec or any of its directors, officers, employees, advisers or any of its affiliates for any errors, omissions or inaccuracies in such information or opinions or for any loss, cost or damage suffered or incurred howsoever arising, directly or indirectly, from any use of this announcement or its contents or otherwise in connection with this announcement. No person has been authorised to give any information or to make any representations other than those contained in this announcement and, if given or made, such information or representations must not be relied on as having been authorised by the Company or Investec. Subject to the Listing Rules, the Prospectus Rules and the Disclosure and Transparency Rules, the issue of this announcement shall not, in any circumstances, create any implication that there has been no change in the affairs of the Group since the date of this announcement or that the information in it is correct as at any subsequent date.

No statement in this announcement is intended as a profit forecast or a profit estimate and no statement in this announcement should be interpreted to mean that earnings per Ordinary Share for the current or future financial years would necessarily match or exceed the historical published earnings per Ordinary Share. Prices and values of, and income from, shares may go down as well as up and an investor may not get back the amount invested. It should be noted that past performance is no guide to future performance. Persons needing advice should consult an independent financial adviser.

This announcement has been prepared for the purposes of complying with applicable law and regulation in the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of the United Kingdom.

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

Acquisition of the remaining 75.1% of Harworth Estates, Firm Placing of £108.8 million and Firm Placing and Open Offer of £6.3 million

1. Introduction

The Acquisition

The Company announces that it has entered into the Acquisition Agreement with the PPF to acquire the 75.1 per cent. of the shares in Harworth Estates Property Group Limited ("HEPGL") that it does not already own, for an aggregate consideration of £150.0 million. The Consideration will be satisfied by a combination of the issue by the Company of 730,674,465 Consideration Shares to the PPF (which will represent approximately 25.0 per cent. of the Enlarged Issued Share Capital) and the payment of £97.0 million in cash to the PPF, which will be funded by the Firm Placing and Placing and Open Offer. Following the completion of the Acquisition, the Company will own 100 per cent. of the share capital of HEPGL and the PPF will hold approximately 25.0 per cent. of the issued share capital in the Company. Pursuant to and conditional upon Completion, it is proposed that the Company will change its name to Harworth Group plc, to reflect properly the change to the Company's underlying operations.

The Firm Placing and Placing and Open Offer

The Company announces that it proposes to raise approximately £115.0 million (gross) (approximately £110.6 million net of expenses) by the issue of 1,500,073,129 New Ordinary Shares through a Firm Placing (the "Firm Placing") and 86,493,783 New Ordinary Shares through a Placing and Open Offer, all at the Offer Price of 7.25 pence per New Ordinary Share (the "Open Offer"). The Offer Price of 7.25 pence per New Ordinary Share represents an approximate 33.6 per cent. premium to the Closing Price of 5.425 pence on 17 November 2014 (being the last business day prior to the suspension of trading in the Ordinary Shares) and an approximate 19.5 per cent. discount to the unaudited pro forma NAV per share of 9.00p.

Shareholder approval

The Acquisition of HEPGL is of sufficient size relative to the Company to constitute a Reverse Takeover and is, therefore, conditional on, among other things, Shareholder approval of the Acquisition. The Firm Placing and Placing and Open Offer and the change of name referred to above also require Shareholder approval. The Resolutions will be proposed at a General Meeting to be held on 23 March 2015 at 11.00 a.m.

The Company has received irrevocable undertakings from Goodweather Holdings Limited (a member of the Peel Group), Invesco Asset Management and Pelham Capital Management Ltd; and from Jonson Cox, Jeremy Hague and Steven Underwood (being the only Directors who hold Ordinary Shares) and from Owen Michaelson, one of the Proposed Directors, who, as at 2 March 2015, being the last practicable date prior to the publication of the Prospectus, together held in aggregate 322,635,230 Ordinary Shares, representing approximately 53.3 per cent. of the Company's current issued share capital, to vote in favour of the Resolutions to be proposed at the General Meeting.

The Transaction Resolutions which are required in respect of the Firm Placing and Placing and Open Offer and the Acquisition are inter-conditional. If the Transaction Resolutions are not passed, the Firm Placing and Placing and Open Offer and the Acquisition will not proceed. The Resolution in respect of the Change of Name is conditional on Shareholder approval of the Acquisition and the Firm Placing and Placing and Open Offer and upon Completion.

2. Background to and reasons for the Acquisition, Firm Placing and Placing and Open Offer

The Directors believe that completion of the Transaction will provide additional capital for the business of HEPGL and simplify its ownership structure, as well as improve the Company's access to new capital in the future. This is expected to enable the Company to deliver value to Shareholders over the medium term by being better positioned to pursue new growth opportunities in the redevelopment of brownfield land in the Midlands and the North of England and to accelerate the execution of existing investment opportunities.

The current ownership structure in relation to HEPGL was put in place in December 2012 when the business of the then named UK Coal plc underwent a solvent restructuring (the "Restructuring") and split into a mining division (of which the parent company was UK Coal Mine Holdings Limited) and a property division (the Harworth Estates Group), isolating the pension liability of the former mining operations of UK Coal from the property division's assets and liabilities. As part of the Restructuring, the Company retained a 24.9 per cent. shareholding in HEPGL, with the remaining 75.1 per cent. being transferred to the Pension Trustees to meet UK Coal plc's debts to the Pension Schemes. The 75.1 per cent. shareholding in Harworth Estates held by the Pension Trustees was transferred to the PPF in August 2014.

Since December 2012, the Company has been an active investor, participating strongly in the governance of the business of the Harworth Estates Group, on behalf of itself, the Pension Trustees and the PPF pursuant to the terms of the HEPGL Shareholders' Agreement. However, the Directors believe that the minority position in the capital structure of HEPGL may have restricted the recognition of the value of the business to the Company. The Company has been working since late 2013 alongside the PPF and the Pension Trustees to optimise the capital structure of HEPGL and to drive growth for the benefit of all shareholders. As a result, as announced on 18 November 2014, the Company agreed non-binding heads of terms with the PPF with regard to the Acquisition.

The Firm Placing and Placing and Open Offer will raise gross proceeds of approximately £115.0 million. Approximately £97.0 million will be used to fund the Cash Consideration pursuant to the Acquisition, with the remainder of the net proceeds of approximately £13.6 million to be used to fund the Enlarged Group's growth strategy and provide additional working capital and financial flexibility for the Company. This does not qualify the statements made as to the sufficiency of working capital.

3. Overview of the Harworth Estates Group

The Harworth Estates Group is one of the largest property and regeneration businesses across the East Midlands, Yorkshire and the North of England, owning and/or managing a diversified portfolio of approximately 27,000 acres across some 200 sites, valued at approximately £298.5 million with net assets of approximately £248.6 million as at 31 December 2014. Due to the historic portfolio of land the Harworth Estates Group currently holds, much of which is former colliery sites and associated land, the business has a set of specialist skills in transforming often difficult parcels of brownfield land, which frequently have environmental legacy issues requiring remediation and/or incomplete legal title, into new residential,

commercial and low carbon developments.

The business operates with two business segments, respectively focussed on capital growth and income generation.

The Capital Growth Segment focuses on maximising value by developing the underlying portfolio, and includes planning and development activity, value engineering, proactive asset management and strategic land acquisitions, including putting in the necessary infrastructure and then bringing these sites to market. This segment is made up of three teams, being:

(1) major developments - the commercial delivery of large scale mixed use development sites;

(2) strategic land - the promotion of strategic housing and commercial development land through the planning process; and

(3) engineering and construction - delivery of remediation and infrastructure, and the construction of buildings.

The Income Generation Segment focuses on retaining selected land and property assets to generate growth and a long-term recurring income stream. The segment comprises three teams, being:

(1) business space - the letting and development of commercial business space;

(2) natural resources - the management of the agricultural estate, the promotion of low carbon energy developments and rental and royalty income from the last two remaining deep mines and other third party mineral operations; and

(3) operations - the recycling of secondary aggregates and coal fines during site remediation works. In addition, a business support function covers estates management, safety, environmental protection, finance, administration and human resources.

In the last two years the following key milestones have been achieved:

· the implementation of the Waverley residential planning consent with the sale of the first 571 plots of the 3,890 unit consent in seven phases to Taylor Wimpey Homes, Barratt Homes and Harron Homes. Further commercial land has now been sold to Rolls-Royce, Nikken, Maher, University of Sheffield and Rotherham Council as a continuation of the successful Advanced Manufacturing Park;

· the granting and implementation of planning consent for Logistics North, a significant regional employment and distribution hub in Greater Manchester of 4 million square feet, with the first plot sales secured to ALDI for a 600,000 square feet regional headquarters and distribution centre and to MBDA (a defence supplier) for their 125,000 square feet UK manufacturing headquarters;

· planning consent for 971 residential units and 265,000 square feet of commercial and employment development, together with the residential allocation of up to a further 300 units at the former Prince of Wales Colliery in Pontefract;

· the granting and implementation of a planning consent for 1,200 residential units and ancillary retail and roadside uses at the former Rossington Colliery in Doncaster;

· the granting of planning consent for five solar parks across the portfolio totalling 41 megawatts, two of which are built and generating, with one ready to commence generation and with the other two scheduled for construction in 2015. Three further sites have planning applications submitted pending determination;

· the re-gearing of a number of business park leases resulting in an average lease term across the business park portfolio of approximately nine years;

· the acquisition of the 115 acre former Daw Mill colliery site in Warwickshire from the Crown Estate; and

· the acquisition of the 149 acre former Skelton Grange power station in Leeds, which has outline planning consent for 60 acres of employment land and a 300,000 tonnes capacity 26 megawatt per annum energy from waste plant.

4. Strategy for the Enlarged Group

The Company's principal investment is its holding in HEPGL. Following completion of the Transaction the Enlarged Group will develop the business of the Harworth Estates Group as a specialist in regenerating former colliery sites and other brownfield land as demonstrated by the Harworth Estates Group, through the historic management of its existing portfolio. The Harworth Estates Group adds value through remediation and achieving planning consent, and then either selling sites to third parties or directly developing commercial buildings and holding them for investment purposes.

The Directors anticipate that, following completion of the Transaction, the Enlarged Group will be able to access capital on better terms than HEPGL has been able to do in the recent past. As such, the Directors expect HEPGL to be able to accelerate existing investment opportunities and capture a greater portion of any uplift in value on each project, whilst pursuing new growth opportunities, including acquiring new land for redevelopment. This may include investing its own capital in acquiring new sites and developing its own projects, thus capturing any potential development profit as well as holding certain income producing assets for investment purposes. The Directors expect the potential increase to the Group's investment income from such opportunities to support its dividend policy, further details of which are set below.

In the event that the proposals put before Shareholders are not approved, the Company will work with the PPF to seek an alternative way to realise value for both HEPGL Shareholders. The prospects of the Company remain interlinked with the performance of HEPGL as its sole investment.

5. Principal Terms of the Acquisition

The Company has entered into the Acquisition Agreement to acquire the 75.1 per cent. of the issued share capital of HEPGL that it does not already own, for consideration of £150.0 million, which represents an approximate 19.6 per cent. discount to the net asset value of the Harworth Estates Group at 31 December 2014 (taken from the audited accounts of HEPGL at 31 December 2014). The Consideration will be satisfied by a combination of the issue of the Consideration Shares to the PPF and payment of £97,026,101.29 in cash to the PPF which will be raised by the Firm Placing and Placing and Open Offer.

The Acquisition is conditional upon, amongst other things:

(i) Coalfield Resources' shareholders passing the Transaction Resolutions in general meeting without material amendment;

(ii) the Underwriting Agreement having been entered into and remaining in full force and effect and becoming unconditional in all respects (other than as to Admission and any conditions of the Acquisition Agreement that will be satisfied by Admission) and not having been terminated or lapsed in accordance with its terms prior to Admission;

(iii) the Firm Placing and Placing and Open Offer becoming unconditional in all respects (other than as to Admission and any conditions of the Acquisition Agreement that will be satisfied by Admission);

(iv) Admission occurring in respect of the Firm Placed Shares, the Placing Shares, the Open Offer Shares and the Consideration Shares; and

(v) publication of the Prospectus by no later than 3 March 2015.

Accordingly, if any of such conditions are not satisfied or, if applicable, waived, the Acquisition will not proceed. The terms of the Acquisition Agreement are summarised in more detail in the Prospectus.

6. Principal terms of the Firm Placing and Placing and Open Offer

The Company intends to issue 1,500,073,129 New Ordinary Shares through the Firm Placing and 86,493,783 New Ordinary Shares through the Placing and Open Offer, all at the Offer Price of 7.25 pence per New Ordinary Share to raise gross proceeds of approximately £115.0 million.

The Offer Price of 7.25 pence per New Ordinary Share represents:

· an approximate 33.6 per cent. premium to the Closing Price of 5.425 pence on 17 November 2014 (being the last business day prior to the suspension of trading of the Ordinary Shares);

· an approximate 25.2 per cent. discount to the Company's net asset value per share as at 31 December 2014; and

· an approximate 19.5 per cent. discount to the Company's pro forma net asset value per share as at 31 December 2014 as set out in the Prospectus.

Firm Placing

The Firm Placees have agreed to subscribe for 1,500,073,129 New Ordinary Shares at the Offer Price (representing gross proceeds of approximately £108.8 million). The Firm Placed Shares are not subject to clawback and are not part of the Open Offer.

Open Offer

Subject to the fulfilment of the conditions set out in the Prospectus, Qualifying Shareholders are being given the opportunity to subscribe for New Ordinary Shares pro rata to their existing shareholdings at the Offer Price on the basis of:

1 New Ordinary Share for every 7 Existing Ordinary Shares

held and registered in their name at the Record Date. Qualifying Shareholders may apply for any whole number of New Ordinary Shares up to the total number of Open Offer Shares. Excess applications will be satisfied only to the extent that corresponding applications by other Qualifying Shareholders are not made or are made for less than their pro rata entitlements. If there is an oversubscription resulting from excess applications, allocations in respect of such excess applications will be scaled down according to the Directors' discretion in consultation with Investec, having regard to the pro rata number of Excess Shares applied for by the Qualifying Shareholders.

Under the Open Offer, Coalfield Resources intends to issue up to 86,493,783 New Ordinary Shares at the Offer Price (representing gross proceeds of up to approximately £6.3 million).

Fractions of Ordinary Shares will not be allotted and each Qualifying Shareholder's entitlement under the Open Offer will be rounded down to the nearest whole number. Any fractional entitlement will be aggregated and sold for the benefit of the Company.

The New Ordinary Shares when issued and fully paid, will rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends or other distributions made, paid or declared after the date of their issue.

Qualifying Shareholders with holdings of Existing Ordinary Shares in both certificated and uncertificated form will be treated as having separate holdings for the purpose of calculating their entitlements under the Open Offer.

The Open Offer is being made on a pre-emptive basis to Qualifying Shareholders and is not subject to scaling back. The Placing Shares have been placed conditionally with certain investors at the Offer Price subject to clawback to satisfy valid applications by Qualifying Shareholders under the Open Offer. Any New Ordinary Shares that are available under the Open Offer and are not taken up by Qualifying Shareholders pursuant to the Open Offer Entitlements and Excess Open Offer Entitlements will be issued in the Placing.

Goodweather Holdings, Invesco and Pelham have agreed to invest in the Firm Placing and have irrevocably undertaken not to take up their Open Offer Entitlements representing in aggregate approximately 44,974,061 Open Offer Shares. Smaller Qualifying Shareholders should, therefore, have the opportunity to subscribe for more than their Open Offer Entitlements up to the maximum of 86,493,783 Open Offer Shares.

Application has been made for the Open Offer Entitlements and Excess Open Offer Entitlements to be admitted to CREST. It is expected that the Open Offer Entitlements and Excess Open Offer Entitlements will be admitted to CREST at 8.00 a.m. on 4 March 2015. The Open Offer Entitlements and Excess Open Offer Entitlements will also be enabled for settlement in CREST at 8.00 a.m. on 4 March 2015. Applications through the means of the CREST system may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim.

Qualifying non-CREST Shareholders will have received an Application Form with the Prospectus which sets out their maximum entitlement to Open Offer Shares as shown by the number of Open Offer Entitlements allocated to them. Qualifying Shareholders may apply for Excess Shares pursuant to the Excess Application Facility.

The Firm Placing and Placing and Open Offer are being fully underwritten by Investec on, and subject to, the terms and conditions of the Underwriting Agreement, further details of which are set out in the Prospectus.

General

The Firm Placing and Placing and Open Offer is subject to the satisfaction of the following material

conditions:

(i) the passing of the Transaction Resolutions;

(ii) Admission of the New Ordinary Shares becoming effective by not later than 8.00 a.m. on 24 March 2015 (or such later time and/or date as Investec and the Company may agree, not being later than 8.00 a.m. on 24 April 2015); and

(iii) the Underwriting Agreement becoming unconditional in all respects and not having been terminated in accordance with its terms prior to Admission.

Accordingly, if any of such conditions are not satisfied or, if applicable, waived, the Firm Placing and Placing and Open Offer will not proceed and any Open Offer Entitlements and Excess Open Offer Entitlements admitted to CREST will thereafter be disabled.

7. Use of proceeds

The Directors intend to use the net proceeds of the Firm Placing and Placing and Open Offer to:

· fund the Cash Consideration under the Acquisition of approximately £97.0 million; and

· provide additional working capital of approximately £13.6 million and financial flexibility to fund the growth strategy of the Company.

8. Effect of the Transaction

As a result of Completion, the Company will own 100 per cent. of HEPGL and the PPF will hold a 25.0 per cent. interest in the Enlarged Share Capital of the Company. As at 31 December 2014, the net assets of HEPGL were £248.6 million, including total assets of £326.7 million and net debt of £40.0 million. As at 31 December 2014, the net assets of the Company were £58.7 million, including total assets of £64.7 million and net cash of £1.5 million. Of this, assets of £56.9 million were attributable to the Company's shareholding in HEPGL. The unaudited pro forma net assets of the Enlarged Group are £263.2 million and the unaudited pro forma net debt is £25.7 million, taking into account the effect of the Transaction as though it had been completed at 31 December 2014.

The unaudited pro forma revenue of the Enlarged Group is £13.9 million and the unaudited pro forma profit of the Enlarged Group is £60.4 million for the year ended 31 December 2014, taking into account the effect of the Transaction as though it had been completed at 28 December 2013. This includes a £47.8 million gain on acquisition of subsidiaries in respect of negative goodwill. Excluding the goodwill adjustment, pro forma profit would be £12.6 million.

An unaudited pro forma statement of net assets and an unaudited proforma income statement for the year ending 31 December 2014, illustrating the effect of the Transaction, are set out in the Prospectus.

Upon Admission and following Completion, the Enlarged Share Capital is expected to be 2,922,697,857 Ordinary Shares. On this basis, New Ordinary Shares issued through the Firm Placing and Placing and Open Offer will represent approximately 54.3 per cent. of the Enlarged Share Capital.

9. Current trading and prospects for Coalfield Resources

The Company announced on 19 February 2015 its financial results for the year ended 31 December 2014. Based on its investment in HEPGL the Company had audited net assets of approximately £58.7 million at 31 December 2014 and generated a net profit before tax for the year ended 31 December 2014 of approximately £3.5 million.

Following the Restructuring, the Company currently has no operational role, outside the provision of governance and certain management services to the Harworth Estates Group and, absent Completion taking place, would remain an active investor in the Harworth Estates Group (through its 24.9 per cent. shareholding in HEPGL), which has performed well following the Restructuring. If Completion does not take place, the Company would continue to seek ways to maximise value for Shareholders through other means.

It is the Company's strategy to create and realise medium and long term value from its investment in HEPGL. The Acquisition is expected to enable further value creation from HEPGL, which might not have been possible under the current ownership structure.

10. General Meeting

You will find set out in the Prospectus a notice convening the General Meeting to be held at the offices of Eversheds LLP, One Wood Street, London EC2V 7WS on 23 March 2015 at 11.00 a.m. where the Resolutions will be proposed.

If the Transaction Resolutions are not approved, the Acquisition and the Firm Placing and Placing and Open Offer will not proceed. The Directors consider the Acquisition and the Firm Placing and Placing and Open Offer to be in the best interests of Shareholders and the Company as a whole. The Directors believe that there are limited opportunities for growth available to the Company under its current ownership structure and if the Acquisition does not proceed the Directors will need to consider alternative means of optimising the model for the HEPGL business and driving growth for the benefit of all shareholders of HEPGL. The Directors cannot be confident that any alternative will be successful or will be on terms as attractive as the proposed Acquisition for Shareholders.

10. Proposed changes to the Board and Management

Conditional upon Completion the Company intends to make the changes to the Board which going forwards will be constituted as set out below to properly reflect the change of the Company's business to being the sole owner and operator of HEPGL.

Existing Appointments

• Jonson Cox (Chairman)

• Lisa Clement (Non-executive Director)

• Peter Hickson (Senior Independent Non-executive Director)

• Steven Underwood (Non-executive Director) - Peel Group representative

As announced in the Company's annual results announcement on 19 February 2015, the current Finance Director, Jeremy Hague has agreed to step down from the Board and leave the Company with effect from 30 April 2015 to facilitate the additional appointments to the Board referred to below. Michael Richardson will assume the role of Finance Director of the Company and, on Completion, of the Enlarged Group.

New Appointments 

• Owen Michaelson (CEO)

• Michael Richardson (Finance Director)

• Anthony Donnelly (Non-executive Director)

• Martyn Bowes (Non-executive Director) - PPF nominee

Intentions of Directors and Proposed Directors

Each of Jonson Cox, Jeremy Hague and Steven Underwood (being the only Directors who hold Ordinary Shares) and Owen Michaelson (being the only Proposed Director who holds Ordinary Shares) has undertaken to take up his full pro rata entitlement to subscribe for New Ordinary Shares under the Open Offer in respect of his beneficial holding. Jeremy Hague, Peter Hickson, Steven Underwood, Owen Michaelson and Mike Richardson have further subscribed for in aggregate 1,162,812 New Ordinary Shares pursuant to the Firm Placing. Details of the Directors' and Proposed Directors' participation in the Firm Placing and Placing and Open Offer are set out below:

11. Corporate Governance

The Directors intend to seek, subject to meeting the required eligibility criteria, admission to the Premium Segment of the Official List for the Company at the next appropriate opportunity following completion of the Transaction. Until this can be achieved, the Directors intend that the Company will comply with the provisions of the Listing Rules applicable to companies admitted to the Premium Segment in respect of Related Party transactions and standards of corporate governance (save as disclosed in the Prospectus). Further, pursuant to the PPF Relationship Agreement the Company undertakes to put to Shareholder vote any transaction that constitutes a Class 1 Transaction (as defined in Rule 10 of the Listing Rules) and not to apply for the Ordinary Shares to be removed from the Official List without seeking Shareholder approval in accordance with Listing Rule 5.2.5 (notwithstanding that the Company is listed on the Standard Segment of the London Stock Exchange).

Any such compliance with the provisions of the Listing Rules applicable to companies admitted to the Premium Segment (as described in the Prospectus) will be on a voluntary basis only and will not be monitored by the UKLA.

Further, at the next appropriate opportunity, the Company intends, subject to obtaining Shareholder approval, to undertake a share consolidation such that the Existing Ordinary Shares, the New Ordinary Shares and the Consideration Shares are consolidated in order to reduce the total number of Ordinary Shares in issue.

PPF Relationship Agreement

The Company and the PPF have entered into a conditional relationship agreement governing the ongoing relationship between the Company and the PPF having regard to the PPF's interest in the Ordinary Shares of the Company in order to ensure that the Company is capable of carrying on its business independently of the PPF (the "PPF Relationship Agreement"). Pursuant to the PPF Relationship Agreement, the PPF will be entitled to nominate a director to the Board, the identity of such representative to be approved in advance by the Chairman of the Board. The undertakings pursuant to the PPF Relationship Agreement shall remain in force for such time, inter alia, as the PPF, the PPF's Custodian (on the PPF's behalf) and/or any of the PPF's Associates holds 16.67 per cent. or more of the issued share capital of the Company and the Ordinary Shares are admitted to any recognised investment exchange or any regulated or prescribed market. Further details of the PPF Relationship Agreement are set out in the Prospectus.

PPF Lock-in Deed

The Company and the PPF have entered into a conditional Lock-in Deed, pursuant to which the PPF has, (i) undertaken to the Company that the issue to the PPF by the allotment to the PPF's Custodian of the Consideration Shares will not place the PPF or the PPF's Custodian (in respect of the allotment to it of the Consideration Shares only) in a position where it is required to make an offer pursuant to Rule 9 of the City Code, (ii) undertaken for the period of twelve months commencing on Admission not to acquire any Interest in the Enlarged Share Capital in circumstances where to do so would require it to make an offer pursuant to Rule 9 of the City Code, (iii) agreed for a period of six months following Admission, not to, and to procure that the PPF's Custodian will not, transfer or reduce its interest in the Enlarged Share Capital and (iv) during the period commencing on the date being six months following Admission and ending on the date being twelve months following Admission not to transfer or reduce its interest in the Enlarged Share Capital below 487,116,310 Ordinary Shares (being two-thirds of those shares issued to the PPF as Consideration Shares).

12. Dividend policy

Subject to Completion, the Company will adopt a dividend policy which has due regard to sustainable levels of dividend cover and reflects the Directors' view on the outlook for sustainable earnings.

Subject to Completion, applicable law, and the availability of sufficient distributable reserves, the Company is targeting declaring a financial dividend distribution in the region of £1.5 million for the year ending 31 December 2015 representing the part-year ownership of HEPGL (equivalent to approximately £2.0 million on an annualised basis) which it will aim to grow thereafter broadly in line with earnings as set out in further detail in the Prospectus.

13. Recommendation

The Board considers the Acquisition, the Firm Placing and Placing and Open Offer and the Resolutions to be proposed at the General Meeting of the Company to be in the best interests of the Company and its Shareholders as a whole.

Accordingly, the Board unanimously recommends that Shareholders vote in favour of all of the Resolutions to be proposed at the General Meeting as the Directors intend to do in respect of their own holdings amounting as at, 2 March 2015 (being the latest practicable date prior to the publication of the Prospectus) to 7,516,788 Ordinary Shares in aggregate, representing approximately 1.2 per cent. of the Company's current issued ordinary share capital.

Expected Timetable

Notes:

Each of the times and dates in the above timetable is subject to change, in which event details of the new times and/or dates will be notified to the FCA and the London Stock Exchange and, where appropriate, Shareholders.

Please note that any Existing Ordinary Shares sold prior to close of business on 2 March 2015, the date on which the Existing Ordinary Shares will trade with entitlement, will be sold to the purchaser with the right to receive entitlements under the Open Offer.