Fundraising for Cuba opportunities

Rose Petroleum plc ("Rose" or the "Company")

Rose secures £800,000 to pursue gypsum related opportunities in Cuba

Rose Petroleum plc, the AIM quoted (AIM: ROSE) natural resources company, is pleased to announce that it has raised £800,000 (before expenses), primarily to further develop opportunities that have arisen in Cuba, specifically around the processing and manufacturing of gypsum and associated building materials.

Having announced the restructuring of the Company's oil and gas portfolio to focus on the Paradox basin, the Board believes that there are significant near term opportunities in the Cuban construction industry, which would complement the existing asset base and enable the Company to seek to create value in this rapidly expanding market. While there is no certainty that any transaction will complete, the Company has had, and is in direct discussions with, a Cuban Government owned company, which has extensive gypsum resources and reserves for exploitation, together with the relevant Ministries in Havana, about a potential transaction. At this stage, no terms or specific timing of any transaction have been agreed.

Matthew Idiens, CEO commented: "We have been reviewing numerous additional opportunities since the downturn in the oil price, looking to create value ahead of the recovery of the oil sector. The Cuba project is a very exciting development for Rose which we believe could deliver significant value in the short term, in isolation of the oil price environment. We believe this investment highlights the strength of the potential opportunities in Cuba and confidence in the Rose management to deliver.

The overall economic and political changes afoot in Cuba present a significant opportunity, with direct foreign investment now being a priority to realise the anticipated growth. In the tourism industry alone the planned expansion of hotel developments from both domestic and international brands is considerable. Rose could be well positioned to benefit from this should we successfully complete our negotiations.

It is worth noting that, at present, there is no domestic supply or production of gypsum panels or wallboard for the construction of internal walls and providing domestic sources is naturally very important for Cuba and its development. We are delighted to be part of this process and look forward to updating the market on our progress."

The opportunity was introduced to Rose by Earth Source Investment Inc ("Earth Source"), who had made initial contacts with the Cuban government. The founders of Earth Source and other associated parties have agreed to fund due diligence and transaction fees related to this opportunity and also general working capital by subscribing for, in aggregate, 500,000,000 new ordinary shares of 0.1p each in Rose (the "New Shares") at a price of 0.16 pence per share (the "Issue Price"), raising a total of £800,000 (before expenses) (the "Fundraising"), conditional on, inter alia, Admission (as defined below).

The Issue Price represents the closing mid-market price of 0.16p pence of ordinary shares of 0.1p each in Rose ("Ordinary Shares") on 29 April 2016, being the last dealing day immediately prior to the release of this announcement. Having considered the price at which the Ordinary Shares are currently traded and other market factors, the directors of Rose (the "Directors") have resolved that the Issue Price is appropriate. The New Shares will represent approximately 16.4 per cent. of the Company's share capital as enlarged by the Fundraising ("Enlarged Share Capital").

The New Shares will rank pari passu with the existing Ordinary Shares and be issued under the Company's existing share issuance authorities. Application will be made for the New Shares to be admitted to trading on AIM ("Admission") and Admission is expected to occur on 6 May 2016.

As a result of the Fundraising, certain of the subscribers in the Fundraising will be become significant or substantial shareholders (as defined in the AIM Rules for Companies) in the Company on Admission, as set out below:

Subject to the conclusion of successful negotiations with the Cuban counterparty, concluding with a signed transaction agreement and subject to shareholder approval as necessary, Rose will grant Earth Source options over 357,142,860 new Ordinary Shares at an exercise price of 0.14p per share (the "Options"), being the market price of Ordinary Shares at the time of the Options being agreed in principle. The Options will be exercisable in two equal tranches, the first tranche exercisable within six months of the date of completion of a transaction and the second trance within twelve months of the date of completion of a transaction. The Options represent approximately 11.7 per cent. of the Company's share capital as enlarged by the Fundraising ("Enlarged Share Capital").

In addition, upon completion of a transaction, in respect of services provided to Rose in connection therewith and for its successful introduction and reimbursement of expenses incurred in respect of identifying the Cuban opportunity, Rose will issue Earth Source with 65,700,000 new Ordinary Shares in the Company at par (the "Earth Source Shares"). The Earth Source Shares represent approximately 2.2 per cent. of the Enlarged Share Capital.

The issuance of the Options and the Earth Source Shares will be subject to the approval of Shareholders at a General Meeting to provide the directors with sufficient authority to issue such securities. A Circular will be sent to shareholders in due course to seek such authority in a General Meeting, once the final terms of a transaction are known.

The Company has also agreed to make a non-executive Board seat available to the founders of Earth Source upon the completion of a successful transaction in Cuba related to their introduction and investment, provided they and their associates hold Ordinary Shares representing more than 10 per cent. of the Enlarged Share Capital.

The Company will keep the market updated on progress in respect of any transaction related to the Cuban opportunity.

Total Voting Rights

Upon Admission, the issued share capital (including the Subscription Shares) will consist of 3,050,185,127 Ordinary Shares with one voting right per share. The Company does not hold any Ordinary Shares in treasury. Therefore the total number of Ordinary Shares and voting rights is 3,050,185,127. This figure may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.

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