Tern Regulatory News (TERN)

25 August 2011

Silvermere Energy plc

("Silvermere" or "the Company")

Acquisition update

On 15 August 2011, the Company announced that it had received an additional cash call of £250,000 relating to a cost overrun on the re-entry of the I-1 Well in the Mustang Licence Area (all terms in this announcement are as defined in the Company's admission document dated 2 August 2011). The cash call is material in relation to the Company's expected expenditure on the asset and its future working capital requirements.

Since the notification of the cash call, Silvermere has been in discussions with the Core Vendors and is pleased to announce that it has now reached agreement with them whereby they will assist the Company with the cash call which, subject to completion of the associated documentation, will allow the transaction to proceed.

The Company has agreed that it will pay the cash call but the cost thereof will be repaid to the Company by the Core Vendors in twelve approximately equal instalments commencing on 15 January 2012 (intended to coincide with the expected start of production revenues from the I-1 Well). In addition the Core Vendors have confirmed to the Company that they are unaware of any further cash calls other than those of which the Company is already aware.

Under the terms of the acquisition of the Mustang Asset, the Company agreed to issue 676,000 shares to the Core Vendors at Admission. In return for their assistance with the cash call and to facilitate the arrangement referred to below, the Company has agreed to issue 676,000 Placing Warrants to the Core Vendors, on terms identical to those issued to the placees (being one warrant for every share exercisable at 30p for a period of two years following Admission).

In order to fund the cash call ahead of its repayment by the Core Vendors, the Company has agreed with t1ps Investment Management (IOM) Limited ("t1ps") and the Core Vendors that, if requested by the Company, they will exercise or procure the exercise of up to 500,000 Placing Warrants in October 2011 (equally split) and, in the case of t1ps only, up to 333,333 Placing Warrants in December 2011. If such undertakings were called upon by the Company, the aggregate proceeds thereof would equal £250,000.

These arrangements mean that the effective initial consideration payable by Silvermere remains unchanged at £2.8 million. The number of Placing Warrants to be issued will be 6,755,120 (rather than 6,079,120); the number of Ordinary Shares in issue at Admission is unchanged.

T1ps is a substantial shareholder in the Company and as such is a related party under the AIM Rules. In accordance with Rule 13 of the AIM Rules, the Directors, having consulted with the Company's nominated adviser, consider that the undertaking to be given by t1ps as described above, is fair and reasonable insofar as the Company's shareholders are concerned.

The Company expects to complete the associated documentation before the adjourned general meeting scheduled for 30 August 2011 and, assuming that shareholders approve the transaction, immediately thereafter to exercise its option to acquire the Mustang Asset. Dealings in the Company's shares and the Pre-CVA Warrants are expected to commence on 31 August 2011.

The adjourned general meeting of the Company will be reconvened at 10.30 a.m. on 30 August 2011 at the offices of Memery Crystal LLP, 44 Southampton Buildings, London WC2A 1AP.

If shareholders do not approve the transaction and as a result the Company is unable to complete the proposed reverse takeover, pursuant to Rule 15, admission of the Company's securities on AIM is due to be cancelled.