RMP.L Regulatory News (RMP)

RED EMPEROR RESOURCES NL - JV Agreement on Georgian CBM Project

PR Newswire

London, February 18

JOINT VENTURE AGREEMENT ON GEORGIAN CBM PROJECT

Red Emperor Resources NL ("Red Emperor" or "the Company") is pleased toannounce that the Company, along with its joint venture partners, Strait Oiland Gas UK Limited ("Strait") and Range Resources Limited ("Range") (together "the Consortium") have executed a heads of agreement with the GeorgianIndustrial Group ("GIG") with respect to the joint development of the Coal BedMethane project (CBM) and conventional gas potential around the Tkibuli–ShaoriCoal Field ("Tkibuli Project") in the Republic of Georgia.

Terms of Agreement

GIG and the Consortium will jointly establish a Development Company on a 50:50basis. The Development Company will be commencing feasibility and technicalstudies, followed by an initial three or four well pilot project. The appraisal/ pilot production wells will be drilled first to clarify flow rates and otherkey parameters including optimum well construction / completion strategy, wellspacing and water treatment and disposal requirements prior to full scaledevelopment. Based on a study by Advanced Resources International ("ARI") fulldevelopment would involve 6 CBM wells per annum that are forecast to producebetween 0.3-0.5 mmcf/d per well. It is anticipated that over the first 3 years,production will build to rates that will fund further expansion of the CBMproject.

The initial pilot project will focus on appraising area already known to beventing methane, thus ensuring a higher chance of success. The work programmeis anticipated to commence in the second half of 2013 and will be predominantlydebt financed, resulting in limited capital commitments for Red Emperor movingforward. New wells will target

horizons at depths between 500 and 2,000 metres and can be drilled withinapproximately 45 days. The fast-track program is designed for gas productionand sales to begin within 18 months given the existing infrastructure andlogistics. GIG have agreed a take or pay arrangement for all gas produced bythe Development Company at a 5% discount to a regional indexed price lesstransportation, thus removing the monetization risk so often faced withprospective CBM projects in the region. Over the last few years regional priceshave averaged between US$8 - US$10 / mcf.

It is the intention of the Consortium to ensure that the first well of thepilot program counts as the commitment well with respect to retaining BlockVIb. Red Emperor will be free carried for the full costs of this first well.

Tkibuli Project Overview

Tkibuli has been estimated by ARI to contain Contingent Resources (mean) ofapproximately 400billion cubic feet ("bcf") of CBM gas. Sand horizons have alsobeen identified around the coal beds, which could add additional, conventionalhydrocarbon resources to those estimated for CBM at Tkibuli alone. Over 400exploration and non-hydrocarbon wells have been drilled in the Tkibuli area,many encountering hydrocarbons and one producing gas for over 35 years.

CBM has become an increasingly important source of energy around the world andproduction is well established in the US, Australia and China. Access to marketis key to commercialisation and, although major pipelines transect the country,Georgia remains almost entirely dependent on imports of foreign natural gas.CBM production from Tkibuli, therefore, could immediately be fed into the localenergy market.

Georgia Industrial Group Partnership

The Georgian Industrial Group was established in 2006 and has extensivelyinvested in the local economy and continues to support prospective businesses.GIG operates the 200MW gas-fired power station located in Gardabani, as well asimporting 25% of gas currently used in Georgia. The power station currentlydoes not use any gas sourced locally in Georgia.

GIG is the largest holding company within Georgia and embraces a number ofsubsidiary companies operating in the energy sector, acquiring and processingof natural resources, production of building materials, logistics service andreal estate development. GIG's operations are concentrated on the acquiring andprocessing of the Country's resources, which in turn fosters the long-termdevelopment and success of Georgian industries.

For and on behalf of the Board

For further information please visit www.redemperorresources.com or contact:

Fox-Davies Capital Limited (Nominated Adviser and Broker)Susan Walker / Simon Leathers +44 20 3463 5000Daniel Fox-Davies / Richard Hail +44 20 3463 5000

Background

Red Emperor Resources NL (ASX: RMP | AIM: RMP) is a natural resourcesexploration company with interests in the frontier state of Puntland, Somaliaand the Republic of Georgia.

In Puntland, Red Emperor holds a 20% working interest in two licencesencompassing the highly prospective Dharoor and Nugaal valleys. These twoexploration areas cover over 36,000km2. Horn Petroleum, the operator and 60%interest holder, has completed a two well program with the JV having nowentered the next phase of the two Production Sharing Contracts across bothblocks.

In the Republic of Georgia, Red Emperor has a 20% working interest in onshoreblocks VIa and VIb, covering approximately 6,500km2. After the drilling of thefirst well in July 2011 Mukhiani -1 the JV has focused on evaluating the largeunconventional CBM potential of the area, as it is seen to be relatively lowrisk and has the potential to contribute cash flow to fund further explorationif successful.

The Contingent Resource estimate quoted above of 400bcf of CBM gas at theTkibuli project is sourced from the publically available report by AdvancedResources International's ("ARI") prepared in 2009: CMM and CBM development inthe Tkibuli-Shaori Region, Georgia. Advanced Resources International, Inc.,2009. Prepared for GIG/Saknakhshiri and U.S. Trade and Development Agency. Thereport can be viewed at: http://www.globalmethane.org/documents/toolsres_coal_overview_ch13.pdf

The Joint Venture technical consultants have not yet reviewed the details ofARI's resource estimate and the reliability of this estimate and its compliancewith the SPE reporting guidelines or other standard is uncertain. Red Emperorand its JV partners will be seeking to confirm this resource estimate, and seekto define reserves, through its appraisal program and review of historical dataduring the next 12 months.

Competent Person

Subject to the Caveat above regarding the ARI report: All of the technicalinformation, including information in relation to reserves and resources thatis contained in this document has been reviewed internally by the Company'stechnical consultant, Mr Alexander Parks. Mr Parks is a Petroleum Engineer whois a suitably qualified person with over 15 years' experience in assessinghydrocarbon reserves and has reviewed the release and consents to the inclusionof the technical information.