Cash Placing

29th Nov 2005 08:15

Asia Energy PLC29 November 2005 29 November 2005 THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR PUBLICATION,RELEASE OR DISTRIBUTION IN OR INTO THE UNITED STATES, CANADA, AUSTRALIA, JAPAN,FRANCE, NEW ZEALAND OR THE REPUBLIC OF IRELAND. This announcement does not and these materials do not constitute an offer tosell or issue or the solicitation of an offer to buy or subscribe new OrdinaryShares in any jurisdiction in which any such offer or solicitation would beunlawful and the information contained herein is not for publication ordistribution, directly or indirectly, in or into the United States, Canada,Australia, Japan, France, New Zealand or the Republic of Ireland or anyjurisdiction in which such publication or distribution is unlawful. Asia Energy PLC 29 November 2005 Cash Placing to raise approximately US$52m (the "Placing") Asia Energy makes further progress in the development of its Phulbari CoalProject and announces a cash placing to raise approximately US$52m (beforeexpenses) to fund certain initial development activities, purchase of start upcapital equipment and deposits to secure long lead time capital equipment. Highlights Placing • Placing of new Ordinary Shares (the "Placing Shares") toinstitutional investors to raise approximately US$52m (before expenses). Underthe Placing, 4,143,976 new Ordinary Shares are available to be placed firm (the"Firm Placing Shares") and an additional number of new Ordinary Shares (the "Conditional Placing Shares") are available to be placed subject to shareholderapproval at an EGM to be convened for 22 December 2005. The precise number ofConditional Placing Shares in the Placing will be finally determined such thatthe gross proceeds arising from the Placing amount to approximately US$52m.Based on last night's closing share price of 470 pence, the Placing wouldrepresent approximately 15.5% of Asia Energy's existing issued share capital. • Institutions participating in the placing will receive Firm PlacingShares and Conditional Placing Shares on a pro-rata basis. • The Firm Placing will be in no way conditional upon the ConditionalPlacing. • Preferential treatment in the allocation process will be given toexisting institutional shareholders. EGM The Company is today sending out a notice to shareholders convening an EGM toseek authority to issue, on a non pre-emptive basis 4,530,833 new OrdinaryShares which represents approximately 11% of the existing issued share capitalof the Company. It is intended that part of this authority will be utilised forthe purposes of the Placing. The Conditional Placing is conditional, inter alia,on shareholders voting in favour of resolutions to this effect at the EGM. TheDirectors, who hold 3% of the current issued share capital, have confirmed theywill vote in favour of the resolutions and intend to apply to subscribe for27,000 shares. Progress on the development of the Phulbari Coal Project ("Phulbari Project" orthe "Project), Bangladesh • 572 million tonne high quality Coal Resource defined to JORC Codewith approximately 93% in Measured and Indicated categories • Drilling results and Geophysics suggest that the coal basin extendsfurther southward and thus remains open • Diverse product mix with Thermal and Semi Soft Coking Coal • Comprehensive Study completed for 15Mtpa of saleable coal • Projected life-of-mine is greater than 30 years • Rail and river barge routing and port infrastructure requirementshave been established for coal export • Environmental Site Clearance obtained for the Project from theGovernment of Bangladesh ("GoB") in September 2005 • Feasibility Study and Scheme of Development submitted to the GoB inearly October 2005 • Anticipated mining operations to start in late 2006 with first coalto be extracted in 2008. Full production is anticipated to occur in 2013 • Estimated life-of-mine operating costs for the Project of less thanUS$25 per tonne of coal to point of sale • Market studies carried out by the Company's consultants indicate thatthe Project would be positioned in the lowest quartile cost producers in theworld export seaborne trade Next Steps • Commence initial development activity • Final Project approval from the GoB (following assessment of the Feasibility Study and Scheme of Development) • Completion of the Banking Project Information Memorandum • Project Funding Commenting on today's announcement, the Company Chairman, Chris Eager said; "Significant progress has been made with the overall development and funding ofthe Phulbari Coal Project. This Placing will enable us to continue to takePhulbari to its next stage of development while we finalise the overall fundingof the Project. This process will commence in 2006." JPMorgan Cazenove Limited ("JPMorgan Cazenove") is acting as sole bookrunner forthe Placing. The proposed issue of Placing Shares will be at a price establishedthrough an institutional Bookbuilding Process. Potential participants will beinvited to tender for Firm Placing Shares and Conditional Placing Shares on apro-rata basis, such that each Placee offering to subscribe Placing Shareswould, in the event of such offer being accepted in full, be entitled tosubscribe Placing Shares split between Firm Placing Shares and ConditionalPlacing Shares in the same proportion as other successful applicants. It isexpected that the books will close no later than 4:30pm on 29 November 2005 andpricing and allocations are expected to be set and announced on or before 8.00amon 30 November 2005. JPMorgan Cazenove reserves the right to close theBookbuilding Process and announce pricing and allocations at any earlier orlater time. The Placing will take place in accordance with the terms andconditions set out in the Appendix to this announcement. The Placing Shares will be credited as fully paid and will rank pari passu inall respects with the existing Ordinary Shares in the share capital of AsiaEnergy, including the right to receive all dividends and other distributionsdeclared, made or paid after the date of issue, and the Company confirms that nosuch dividend or declaration will be made prior to the date of admission of theConditional Placing Shares (or termination of the Placing Agreement, ifearlier). Application will be made for the Placing Shares to be admitted totrading on AIM. Settlement for any Firm Placing Shares issued pursuant to the Placing as well asadmission to trading on AIM will take place on 5 December 2005. In respect tothe Conditional Placing, settlement will be conditional, inter alia, onshareholder approval of the necessary resolutions at the EGM and it is currentlyexpected that such settlement as well as admission to trading on AIM will takeplace on 23 December 2005 following approval of the resolutions at the EGM. This summary should be read in conjunction with the full text of the followingannouncement. A presentation for analysts and investors will take place at 9.30 am on 29November at JPMorgan Cazenove 20 Moorgate London EC2R 6DA. Enquiries Asia Energy PLC Tel: +44 (0)20 7079 1798 David Lenigas - Joint Managing DirectorMichael Frayne - Joint Managing Director JPMorgan Cazenove Tel: +44 (0)20 7588 2828 Michael Wentworth-StanleyJonathan Wilcox Parkgreen Communications Tel: +44 (0)20 7493 3713 Justine HowarthCathy Malins Asia Energy Plc Asia Energy PLC ("Asia Energy" or the "Company") announces a cash placing toraise approximately US$52 million (before expenses) to fund certain initialdevelopment activities, purchase of start up capital equipment and placedeposits to secure long lead time capital equipment for the next phase of thePhulbari Project's development. 1. Introduction Asia Energy today announces its intention to raise approximately US$52m (beforeexpenses) by way of a placing of new Ordinary Shares (the "Placing Shares") withinstitutional investors. Under the Placing, 4,143,976 new Ordinary Shares areavailable to be placed firm (the "Firm Placing Shares") and an additional numberof new Ordinary Shares (the "Conditional Placing Shares") are available to beplaced subject to shareholder approval at the EGM to be convened for 22 December2005. The precise number of Conditional Placing Shares will be determined suchthat the gross proceeds arising from the Placing amount to approximately US$52m.Based on last night's closing share price of 470 pence, the Placing wouldrepresent approximately 15.5% of Asia Energy's existing issued share capital.The proposed issue of the Placing Shares will be at a price established throughan institutional Bookbuilding Process and the Placing is not underwritten. The Placing marks the next stage in the Company's financing strategy for thedevelopment through to production of the Phulbari Project. The proceeds from thePlacing will be used to fund certain initial development activities, purchasestart up capital equipment and make deposits to secure long lead time capitalequipment. Background Asia Energy is a London-based AIM quoted company whose primary activity is thedevelopment of the coal basin at Phulbari in Northwest Bangladesh into an openpit coal mine through its wholly owned subsidiary Asia Energy Corporation(Bangladesh) Pty Ltd, which is Asia Energy's contracting entity in Bangladesh. The Company was incorporated in the UK in September 2003 and its shares wereadmitted to the London Stock Exchange's AIM in April 2004. At the same timeapproximately £14 million was raised through placings of Ordinary Shares. Theseproceeds enabled the Company to embark on a Definitive Feasibility Study ("DFS")of the Phulbari Coal Project. A Scheme of Development Report which includes aFeasibility Study for the Government of Bangladesh ("GOB") ("Scheme ofDevelopment") has been submitted to the GOB as per the Company's contractualobligations. As indicated in the Scheme of Development, the Company's objective is to startmining activity in 2006 adhering to the highest national and internationalenvironmental and social standards. At full production, the mine is expected toproduce 15 million tonnes a year of mostly export quality thermal andmetallurgical coal. Exploration and mining contract Asia Energy Corporation (Bangladesh) Pty Ltd has a contract with the GoB forexploration and mining of coal in Northern Bangladesh. The Contract (11/C-94)was originally made by and between the GoB and BHP Minerals InternationalExploration Inc. ("BHP") on 20 August 1994, (the "Contract"). BHP explored thearea during the years 1995-1997 and confirmed the presence of coal. With the agreement of the GoB, in February 1998 BHP assigned the Contract infull to Asia Energy Corporation (Bangladesh) Pty Ltd, together with the coalexploration licences for the B and G areas which contains a majority of the coalresources. Asia Energy Corporation (Bangladesh) Pty Ltd was also granted anexploration licence for Area H, covering the Northern extent of the coal basinin 2002. The GoB granted a mining lease in April 2004 over Area B. Under the Contract and the Mines and Minerals Rules of Bangladesh, the Companyis able to make additional applications requesting extensions to the Projectarea which will also be subject to the Contract. In June 2004, Asia Energy applied for additional exploration licences over partof the Project area as a way of establishing rights to certain co-products, suchas silica sand, gravel and kaolin that may be recovered from the overburdenmaterial removed to access the coal. It also applied for exploration licencesand a mining lease over several adjoining tenements to further exploreextensions to the coal basins and in order to assess additional mining options.A summary of Asia Energy's mining leases and exploration licences granted, underconversion and under application is detailed below: Licence Title Area ( ha ) Status Coal Mining Lease Area 'B' 1,921 Granted Exploration Licence Area 'G' for mine development 1,447 Grantedand infrastructure Exploration Licence area G, Coal Mining Lease 1,447 Under conversion Exploration Licence Area 'H' 2,112 Granted Exploration Licence Area 'H', Coal Mining Lease 2,112 Under conversion Exploration Licence Area 'I' for mine development 10,371 Under applicationand extension of Phulbari Coal Basin Exploration Licences 'J' to 'Q' covering various Under applicationpotential co-products from overburden Exploration Licence Area 'T' 1,775 Under application Coal Mining Lease Area 'U' 286 Under application Total area for approved coal licences and coal 17,912lease and new application areas The Contract contains an Investment Agreement which specifies certain investmentincentives for the Company covering the key Project areas of importation,marketing and coal export, choice of suppliers and contractors, banking andcurrency arrangements and tax benefits. The Contract's stability clause statesthat the Company is protected from any adverse changes that might otherwise bemade to the terms of the Investment Agreement by GoB under their powers asprovided in Article 5 to the Foreign Investment (Promotion and Protection) Act1980. However, the Company is entitled to the benefit from any changes to theBangladeshi tax regime or other legislation that have a positive impact on theProject. The Contract also states that on commencement of commercial production of coal,Asia Energy will be obliged to pay the GoB, every six months, a royalty of 6% ofthe sale value of all coal produced and sold in the preceding six monthspursuant to a mining lease. Scheme of Development In accordance with the Contract, the granting of Area B mining lease in April2004, triggered an obligation on Asia Energy to complete the Scheme ofDevelopment within two years. The Company submitted the Scheme of Development tothe Director of the Bureau of Mineral Development at the Ministry of Energy inDhaka on 2 October 2005, six months ahead of schedule. The Company employed theservices of more than twenty leading international and Bangladeshi companies andconsultants to undertake the study. The Contract requires that the Scheme of Development contains certain specificinformation, subject to which the GoB has three months from submission toapprove the Scheme of Development. In the event that the GoB approval is notreceived under the Contract, the Company will work with the GoB and seek toaddress the issues preventing approval. The GoB has formed a technical committee to review the Scheme of Development.The GoB is also in the process of drafting a Coal Policy that will provide thevision and guidance for the emerging coal sector. Asia Energy has providedinput to the Coal Policy and the GoB has stated publicly its intention to seecoal become an important new energy source for the country. To date the Company has not received any indication from the GoB that the Schemeof Development will not be approved within the three month period. Once theScheme of Development is approved by the GoB, Asia Energy will have 36 months tocommence mining operations. The Company is finalising the Definitive Feasibility Study which will be used tosupport the banking project information memorandum for the project financeprocess. It is proposed that the project finance will be used to fund furtherdevelopment of the Project. This process is expected to start in Q1 2006. TheDFS will be a culmination of all the studies and work the Company and itsconsultants and advisers have been preparing to date and will comprise of anumber of reports detailing: • Resource Definition - includes exploration drilling, coal sampling,resource modelling • Groundwater investigation - includes water drilling and groundwatermodelling • Mine Design - includes pit planning, equipment selection, materialshandling, mine rehabilitation, mine infrastructure, water management and "Life-of-Mine Financial Model" • Processing - includes coal processing concept studies, productdefinition, coal plant design and co-products plant design • Marketing - includes coal specification, coal marketing survey, coalsales revenue model and co-product specification, marketing survey and salesrevenue survey • Environment and Social Studies - includes surface water modelling,noise monitoring, town planning, resettlement action plan and land procurementplan • Land and Data Management - includes a land Geographical InformationSystem and database administration • Infrastructure - includes rail and roads at the Phulbari site, coalshipments and rail transport, Life-of-Mine power generation, surface watermanagement and town design issues. Environment and Social Impact Environmental clearance for the Project was granted by the Department ofEnvironment of the GoB in September 2005. The Company is committed to meetingthe highest standards in environmental and social management. It has used andwill continue to use specialist employees and consultants to manage thisprocess. During 2004 and 2005, the Company engaged and managed these specialistconsultants to prepare both the Environmental Impact Assessment ("EIA") asrequired by the GoB and the Environmental and Social Impact Assessment ("ESIA")in line with international standards. All work has been carried out to thestandards set by the World Bank/International Finance Corporation ("IFC"), theAsian Development Bank ("ADB") and to the Equator Principles of the IFC. Thework has also followed the IFC's environmental and social safeguard policieswith respect to the World Bank's specific guidelines on coal mining. Resettlement Plan The Directors are aware that proper management of the resettlement process is akey issue for the successful implementation of the Project. The Company has anongoing consultation process with the communities which may be affected andmaintains an information centre in Phulbari. Included in the EIA is theResettlement Plan which defines Asia Energy's commitment to ensure that peoplewho are relocated as a result of the mine are resettled and rehabilitated andcompensated fairly and fully. Project Benefits for Bangladesh The Directors believe the Phulbari Project is a major foreign investment forBangladesh. When production starts, Phulbari is expected to feed coal to Asia'smajor seaborne and Bangladesh's domestic markets. The mine should significantlyboost the country's economy through job creation and regional infrastructureenhancement. As outlined in the Scheme of Development, the GoB will earn revenues fromroyalties, taxes, service and freight charges and port dues. The Project willdirectly employ over 1,200 people on a long term basis and should createsubstantial additional indirect employment in Bangladesh. Asia Energy has also submitted to GoB a proposal to establish a 500 MWcoal-fired power plant at the Phulbari mine site in October 2005. The Directorsview this as a separate project to be independently funded and managed. AsiaEnergy currently intends to attain a free carried interest in the power projecttogether with suitable off-take agreements for Phulbari's domestic thermal coaland favourable electricity supply rates. 2. Reasons for the Placing The expected proceeds from the Placing of approximately US$50 million (afterexpenses) represents approximately one third of next year's anticipatedexpenditure and will be used to fund the next phase of the Company's initialdevelopment activities, the purchase of start up capital equipment and theplacing of deposits to secure long lead time capital equipment. The currentintention of the Directors is to apply the net proceeds from the Placing to thefollowing items in approximate amounts: Item US$millions Mining Equipment and Deposits 23 De-watering 8 Administration & Development 9 Resettlement & Community 10 Total Use of Funds 50 • Mining Equipment and Deposits - The Company will purchase equipmentand place deposits to secure key mining equipment expected for delivery in Q42006, following payment of the balances due. • Dewatering - The Company will purchase pumps and associated equipmentto commence dewatering of the aquifers found in the shallow sands and gravelsoverlying the coal measures. • Administration and Development Costs - The Company will continue tobuild its project development team and commence detailed mine planning andproduction scheduling and establish appropriate support facilities. • Resettlement and Community - Following GoB approval, the Company willcommence the process of acquiring the land needed for the purpose of theProject, initially focusing on construction of a model village and areas forinitial mine workings and infrastructure. The Directors believe that this additional capital will provide the Company withflexibility in the timing of discussions with, and securing project financefrom, interested parties. 3. The Placing 3.1 Details of the Placing It is proposed that the Placing will be undertaken by the placing of newOrdinary Shares with institutional investors. Under the Placing, 4,143,976 newOrdinary Shares are available to be placed firm and an additional number of newOrdinary Shares are being placed subject to shareholder approval at the EGM tobe convened for 22 December 2005. The precise number of Conditional PlacingShares of the Placing will be determined such that the gross proceeds arisingfrom the Placing amount to approximately US$52m. The Firm Placing Shares willbe placed with the same institutional investors as the Conditional PlacingShares and the allocation of Placing Shares between Firm Placing Shares andConditional Placing Shares will be on a pro-rata basis, such that each Placeeoffering to subscribe Placing Shares would, in the event of such offer beingaccepted in full, be entitled to subscribe Placing Shares split between FirmPlacing Shares and Conditional Placing Shares in the same proportion as othersuccessful applicants. If approved by shareholders and the Conditional PlacingShares are admitted to trading, the Conditional Placing Shares will haveidentical rights to the Firm Placing Shares and those of existing OrdinaryShares. Based on last night's closing share price of 470 pence, the Placingwould represent approximately 15.5% of Asia Energy's existing issued sharecapital. The proposed issue of the Placing Shares, which is not underwritten, will takeplace at a set price which will be established through an institutionalBookbuilding Process. The gross proceeds of the Placing are expected to be approximately US$52m beforededuction of the commission, fees and expenses of approximately US$2m which areexpected to be payable by the Company in connection with the Placing. Bookbuild To enter a bid into the Bookbuilding Process, institutional investors will berequired to communicate their bid to JPMorgan Cazenove, specifying the number ofPlacing Shares which it wishes to offer to subscribe and any price limit towhich its offer to participate is subject. The Placing Price will ultimately beestablished by the Company and JPMorgan Cazenove following closure of the books.Institutions participating in the Placing will receive both the Firm PlacingShares and Conditional Placing Shares in each case subject to the satisfactionof the conditions contained in, and the non-termination of the PlacingAgreement. Preferential treatment in the allocation process will be given toexisting institutional shareholders. The Placing Shares will be allocated prorata between the Firm Placing and the Conditional Placing. The ConditionalPlacing will be subject to shareholder approval of the resolutions to be passedat the EGM but the Firm Placing will not. It is expected that the books willclose no later than 4:30pm on 29 November 2005 but may be closed earlier orlater at the discretion of JPMorgan Cazenove. An announcement detailing theplacing price and the proceeds will be made as soon as practicable after theclose of the Bookbuilding Process. Settlement When admitted, the Placing Shares will be credited as fully paid and will rankpari passu in all respects with the existing Ordinary Shares, including theright to receive all dividends and other distributions declared, made or paidafter the date of issue. Application will be made for the Placing Shares to beadmitted to trading on AIM. It is currently expected that settlement for any Firm Placing Shares acquired aswell as admission to trading on AIM will take place on 5 December 2005. Inrespect of the Conditional Placing, settlement will be conditional , inter alia,on shareholders approving the necessary resolutions at the EGM and it iscurrently expected that such settlement as well as admission to trading on AIMwill take place on 23 December 2005. Full details of the terms and conditions of the Placing are set out in AppendixA. Placees participating in the Placing will be deemed to have read andunderstood the full terms and conditions relating to the Placing and to beparticipating on the basis that they accept these in full. 3.2 Placing Agreement The Company has entered into an agreement with JP Morgan Cazenove and J.P.Morgan Securities Ltd under which JP Morgan Cazenove has, on the terms andsubject to the conditions set out therein, undertaken to use all reasonableendeavours to seek to arrange Placees for the Placing Shares. The obligations of JP Morgan Cazenove and J.P. Morgan Securities Ltd under theagreement are conditional upon, inter alia, (i) in respect of obligationsrelating to Conditional Placing Shares and Firm Placing Shares separately, theWarranties given by the Company being accurate and not misleading at all timesup until the admission of all the Placing Shares; (ii) in relation to itsobligations relating to all Placing Shares, admission of the Firm Placing Sharesto AIM occurring no later than 8.00am on 5 December 2005 and (iii) in relationto its obligations in relation to the Conditional Placing Shares only, thepassing of the resolutions at the EGM and admission of the Conditional PlacingShares to AIM occurring no later than 8.00am on 23 December 2005. Further, JP Morgan Cazenove and J.P. Morgan Securities Ltd may terminate thePlacing Agreement, inter alia, for breach of warranty by the Company or if therehas been a material adverse change in the financial or trading position orprospects of the Company's group taken as a whole. 3.2 Director's participation Directors have committed to apply to participate in the Placing, as follows: Directors Participation in Placing (total number of shares) David Lenigas 10,000 Michael Frayne 10,000 Gary Lye 2,000 Jonathan Malins 5,000 Total 27,000 3.3 Placing authority Asia Energy has an authorised share capital of £20,000,000 divided into200,000,000 Ordinary Shares of 10p each. As at 28 November 2005, Asia Energyhad issued 41,164,357 of such shares. On 30 March 2004, prior to the Company being admitted to AIM, the shareholdersof the Company passed resolutions which authorised the Directors to allot andgrant rights to subscribe for shares of the Company up to a maximum of30,000,000 shares on a non pre-emptive basis including shares issued on the dateof admission to AIM,with such authority expiring five years after the passingof the resolutions. On the date of admission to AIM,18,602,636 further OrdinaryShares were subscribed for. Subsequently, 3,561,719 Ordinary Shares have beenissued pursuant to options and warrants. As at 28 November 2005, there remainsan existing unused authority to issue on a non pre-emptive basis 4,143,976 newOrdinary Shares representing 10.07% of the existing issued share capital of theCompany and 9.28% of the issued share capital of the Company includingunexercised options and warrants, prior to the Placing. It is proposed thatthese 4,143,976 shares will be deemed to be the Firm Placing Shares. Asia Energy is also today posting a notice to shareholders convening the EGM toseek approval for the non pre-emptive issue of 10% of the enlarged issued sharecapital. It is intended that part of this authority will be utilised for thepurposes of the Placing. The Conditional Placing is conditional on shareholdersvoting in favour of the resolutions at the EGM. The Directors who holdapproximately 3% of the current issued share capital have also confirmed theywill vote in favour of the participation and intend to apply to subscribe for27,000 shares. The Placing Shares will rank pari passu in all respects with the existingOrdinary Shares as well as rank in full for all dividends and otherdistributions declared, made or paid on the Ordinary Shares after the admissionto trading on AIM. 4. Funding Strategy Based on the current Life-of-Mine Financial Model estimates, it is anticipatedthat the Company will have a total funding requirement of approximately US$1.07 billion (excluding financing costs) prior to the Project becoming cash flowpositive during the third year of coal production in 2010. This anticipatedtotal funding requirement consists of direct capital expenditure ofapproximately US$850 million and start up net operating costs of approximatelyUS$220 million to be expended prior to 2010. This estimate is also based upon aweighted average coal price of US$50 per tonne. These estimates are provisionaland will continue to be optimised by the Company, in conjunction with itsbankers and consultants, prior to finalisation of the banking informationmemorandum. The profile of the total required funds is estimated to be approximately asfollows: 14% for 2006, 44% in 2007, 34% in 2008 and 8% in 2009. The equity/debtsplit has not yet been determined. The Company appointed Barclays Capital in August 2004 as its financial advisors.The Company is continuing to evaluate a number of finance options including butnot limited to equity, project debt, debentures, convertible debentures, exportcredit agencies, multi and bi-lateral agencies, off-take agreements and jointventure partners. The Directors believe that the final financing structure for the Project will bedetermined after completion of the DFS and as part of the project financeprocess to be undertaken in 2006. While there remains flexibility in the final composition of the financialstructure, the Directors intend it will be in line with general project financestructures as adopted for projects of this scale. The Company has also received a number of approaches from major coal producers,coal consumers and coal trading partners who have all expressed interest inparticipating in the further development of the Project. 5. Overview of the Project 5.1 Resources and Reserves The estimated coal resources of the project in accordance with Australia's JointOre Reserve Committee ("JORC") standards have been confirmed as 572 milliontonnes. Project life-of-mine is greater than 30 years. The overburden alsocontains potentially valuable co-products including kaolin, aggregate, clay andsand. An intensive programme of drilling and geophysical testing was conducted as partof the DFS and completed in June 2005. The work was managed and supervised byGHD Pty Ltd, an Australian based consultancy, whilst drilling was undertaken byDrillcorp Sdn Bhd (Malaysia) and by Falgu Sandhani (Bangladesh). The drillingachieved over 100 boreholes located throughout the coal deposit. A large numberof core samples were transported to the laboratories of ACIRL Pty Ltd inBrisbane, Australia and tested to confirm the quality of the coal. Thecomprehensive database established was sufficient to define the resource to JORCstandard classification. The JORC Code estimates were signed off by GHD'sgeology specialist Mr Frans Bos, MSc. FAusIMM (CP) as the Competent Person andhis latest report in August 2005 put the resources at 572 million tonnes whichis comprised of the following: Category Tonnes (millions) Measured 288 Indicated 244 Inferred 40 Total 572 Five coal seams were identified: Top, Upper, Main, Lower and Base. Of these, themost significant are the Upper and Main seams which account for approximately90% of the JORC resources. The position of the Upper and Main seams influencesthe mining method. They are generally dipping at approximately 6degrees west toeast and in the north-south direction they dip at approximately 4degrees towardsa central low point. The total coal thickness from the drilling informationwithin the planned mining area varies between 20-65 metres in combinedthickness, located some 165-270 metres beneath the surface. The deposit ischaracterised as deep multiple seam and moderately dipping and the nearhorizontal nature of the coal structure makes it suitable for excavation usingconventional mining methods that progress in a staged fashion from one end ofthe deposit to the other. Mining studies assessing recoverable coal have been included in the DFS. Theseconsider the Measured and Indicated and Inferred Resources that lie within thepit shell that has been defined on the basis of mine design, physical andeconomic parameters. Marketable Coal recoveries are computed after allowing forcoal losses and dilution plus recovery through the coal processing plant. TheMarketable Coal recovered has been assessed as totalling 431 million tonnes. AJORC statement has also been prepared which reconciles the Measured Indicatedand Inferred resources and quotes 401 million tonnes of "Marketable Open CutReserves". The 30 million tonne difference is due to small quantities ofInferred Resources and other coal, which has been included in the practical pitdesign (in particular at the south end and on the margins) and hence will bemined in any case but cannot be quoted as a "reserve" by JORC standards. Theestimate was completed by Paul Westcott BE (Mining, Hons) FAusIMM, CPMin, MMICA,MAIME, who is a director and full time employee of MineConsult Pty Ltd. He hassufficient experience which is relevant to the style of mineralisation and typeof deposit under consideration and to the activity he is undertaking to qualifyhim as a Competent Person as defined in the JORC Code. 5.2 Development of the Open Pit Mine The coal will be mined by the open pit method using truck and shovel.Underground mining was rejected due to poor resource recovery, as this wouldhave reduced the mineable coal to as little as 50 million tonnes. There wasalso a major concern over flooding of any underground workings due to the closeproximity of the overlying aquifer sequence. Open cut methods generally ensuregreater coal recovery of the resource and groundwater management throughpumping will ensure safe dry production conditions. Current schedules indicate a life-of-mine of over 30 years with an expectedaverage rate of mining of 16 million tonnes of Run-of-Mine (ROM) coal per annumonce in full production, which will yield 15 Mtpa of product coal at an averagestrip ratio of 7.5 bcm/t (bank cubic metres of overburden per tonne of coalmined). A small quantity of overburden is scheduled to be removed in late 2006with the majority of overburden excavation commencing in 2007. Timely GoB approval will enable mining activity to commence in late 2006 withfirst coal expected to be produced in 2008 and full production anticipated in2013. 5.3 Life-of-Mine Operating Costs The Company's current estimates of the Project indicate that total life-of-mineoperating costs equate to less than US$25 per tonne of coal to point of sale. Market studies by the Company's consultants indicate that Phulbari would bepositioned in the lowest quartile cost producers in the world export seabornetrade. 5.4 Products A comprehensive analysis of all exploration slim-core samples and the two LargeDiameter core samples specifically extracted to determine representative coalquality across the major coal seams was undertaken by ACIRL Ltd in Australia,under the supervision of Asia Energy's coal evaluation consultant, QCC ResourcesPty Ltd ("QCC"). QCC has determined that through conventional, efficient coalwashing and preparation processes, the Phulbari ROM coal is capable of yieldinga wide range of coal products with differing levels of ash and energy. QCC hasdefined the quality parameters for three products categories - Export ThermalCoal ("ETC"), Low Ash Metallurgical Coal ("LAMC") to be marketed as a Semi-SoftCoking Coal ("SSCC") and Domestic Thermal Coal ("DTC"). Typical specification of the export products expected to be produced areillustrated below: Phulbari Export Coal Product Specifications Provisional Typical Specification Unit of Analysis Low Ash Export Measurement Basis Metallurgical Thermal Coal Coal LAMC ETC Total moisture % ar 10.0 8.5Proximate analysis % ad Moisture 2.8 2.4 Ash 6.8 12.0 Volatile matter 33.7 31.4 Fixed carbon 56.7 54.2Total sulphur % ad 0.75 0.80Chlorine % ad 0.02 0.02Phosphorus % 0.03 0.04Hardgrove grindability index 45 43Crucible swelling No 4 1Top Size mm 50 50Specific energy Gross: kcal/kg ad 7420 6930 Net: kcal/kg ar 6580 6240Nitrogen % daf 1.8 1.8Analysis of ash % SiO2 47 48 Al203 37 40 Fe203 6.5 5.3 CaO 0.9 0.4 MgO 0.2 0.2 Na2O 0.1 0.1 K2O 0.9 0.7 TiO2 5.6 3.4 Mn3O4 0.01 0.01 P2O5 1.10 0.73 SO3 0.1 0.1Ash fusibility Hemisphere degreesC,red,atm 1550 >1600 ar: as received ad: air dried daf: dry ash free Output of all products will vary slightly from year to year in line with themine plan and natural in-situ quality variation, but in most years the productmix from the 15 million tonnes expected to be produced per year will be asfollows: • 60% ETC• 20% SSCC; and• 20% DTC Phulbari Export Thermal Coal Thermal Coal is primarily used in coal fired power generation and in raisingheat for industrial processes such as cement clinker. Phulbari ETC has beenfound to rank highly in terms of those characteristics which maximise combustionefficiency. It has high energy, low moisture, low ash, manageable volatiles,high fixed carbon and benign ash chemistry. Phulbari Low Ash Metallurgical Coal Metallurgical coals are mainly used to produce coke for blast furnace input inthe integrated iron and steel industry worldwide. SSCC is blended with higherpriced Hard Coking Coal to make cost effective coke. The key qualities of Phulbari LAMC are its low ash and mid-range phosphorus.Phulbari also has a major freight advantage to the Indian market in terms ofdistance and costs, compared to competing suppliers. Phulbari Domestic Thermal Coal DTC can be produced from the coal washing and preparation process with varyinglevels of ash from 19% up to 33% and consequent reduced energy content. PhulbariDTC will be an ideal fuel for additional coal fired electricity generatingcapacity in Bangladesh to help meet the country's growing power demand. Inaddition there is a significant opportunity to supply coal to the Bangladeshbrick-making industry. Co-Products Co-products available are gravel, kaolin and silica (glass) sand. Alsoavailable are clay for brick-making, construction sand, and hard rock foraggregate and dimension stone. There are domestic markets for these products,particularly gravel and clay for bricks. Transportation of the coal It is intended that the bulk of the coal will be transported by rail to aloading terminal at or near the River Port of Khulna, some 360 km from the mine.It will then be barged 100km down the Pussur River or Sibsa River to a floatingterminal in a sheltered anchorage near the Bay of Bengal at Akram Point fromwhere it will be loaded onto ocean going bulk carriers. Some exports to Indiawill also be transported and delivered on the same rail corridor via the landport of Darsana on the India/Bangladesh border, and from there to consumers inthe nearby Indian states of West Bengal, Bihar and Orissa. Significantinfrastructure upgrading will be required and the Company has budgetedaccordingly. 6.0 Marketing Strategy Of the 15 million tonnes of saleable coal expected to be produced in any oneyear, it is anticipated that an average of 9 million tonnes will be ExportThermal Coal, 3 million tonnes will be Low Ash Metallurgical Coal (SSCC) forexport and 3 million tonnes will be Domestic Thermal Coal. Market research by Asia Energy's consultants has confirmed that Phulbari coalsare similar in specifications to a number of well-established export brands andthe export coal will be attractive to international buyers seeking to diversifytheir sources of supply. The Project's anticipated low production costs,comfortably in the lowest cost quartile, and proximity to growing regionalmarkets for thermal and metallurgical coal, especially India, are addedstrategic advantages. Discussions and briefings on the Phulbari Project have been initiated withpotential off-takers and agents in various Asian markets. The Directorsanticipate that off-take commitments, at the Letter of Intent or Memorandum ofUnderstanding stage, will be pursued during the first part of 2006 as part ofthe project finance process. Asia Energy does not proffer a particular view of future coal prices. TheDirectors believe that low operating costs and locational advantage are vital tomaximising margins and staying profitable in all market conditions, and believethat the Phulbari Project has both of those attributes. Important Notice This announcement has been issued by, and is the sole responsibility of AsiaEnergy plc. Members of the general public are not eligible to take part in the Placing. Inthe United Kingdom, this announcement, in so far as it constitutes an invitationor inducement to participate in the Placing, is directed exclusively at personswho have professional experience in matters relating to investments who fallwithin: (i) article 19(5) (investment professionals) of the FinancialServices and Markets Act 2000 (Financial Promotion) Order 2001 (as amended) (the"Order") or are persons falling within article 49(2)(a) to (d) (high net worthcompanies, unincorporated associations etc) of the Order (all such personstogether being referred to as 'relevant persons'); and (ii) section 86(7) (Qualified Investors) of Financial Services andMarkets Act 2000 This announcement, in so far as it constitutes an invitation or inducement toparticipate in the Placing, must not be acted on or relied on by persons who arenot relevant persons. Any investment or investment activity to which thisannouncement or the Placing relates is available only to relevant persons andwill be engaged in only with relevant persons. As regards all persons other thanrelevant persons, the details of the Placing and the Bookbuilding Process setout in this announcement are for information purposes only. JPMorgan Cazenove is acting for Asia Energy plc and no one else in connectionwith the offer and will not be responsible to any other person for providing theprotections afforded to their respective clients, or for providing advice inrelation to the proposed offer. This announcement is not an offer for sale of the securities in the UnitedStates, and the securities may not be sold in the United States absentregistration or an exemption from registration under the U.S. Securities Act of1933, as amended. This announcement is not for distribution directly or indirectly in or into theUnited States, Canada, Australia, Japan, France, New Zealand or the Republic ofIreland. This announcement does not constitute an offer to sell or issue or thesolicitation of an offer to buy or acquire ordinary shares in the capital ofAsia Energy plc in the United States, Canada, Australia, Japan, France, NewZealand or the Republic of Ireland or any jurisdiction in which such an offer orsolicitation is unlawful. No public offering of securities will be made. Appendix A - Terms and Conditions of the Placing APPENDIX TERMS & CONDITIONS IMPORTANT INFORMATION FOR INVITED PLACEES ONLY ON THE PLACING MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACING. THEANNOUNCEMENT AND THIS APPENDIX (OF WHICH IT FORMS PART) AND THE TERMS ANDCONDITIONS SET OUT HEREIN ARE FOR INFORMATION PURPOSES ONLY AND ARE DIRECTEDONLY AT PERSONS WHO: (A) HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TOINVESTMENTS FALLING WITHIN ARTICLE 19(1) OF THE FINANCIAL SERVICES AND MARKETSACT 2000 (FINANCIAL PROMOTION) ORDER 2005 (THE "ORDER") OR ARE PERSONS FALLINGWITHIN ARTICLE 49(2)(a) TO (d) (HIGH NET WORTH COMPANIES, UNINCORPORATEDASSOCIATIONS, ETC) OF THE ORDER; AND (B) ARE QUALIFIED INVESTORS WITHIN THEMEANING OF SECTION 86(7) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000; AND (C)HAVE BEEN INVITED TO PARTICIPATE IN THE PLACING BY JP MORGAN CAZENOVE LIMITED(SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS"). THIS APPENDIXAND THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BYPERSONS WHO ARE NOT RELEVANT PERSONS. ANY INVESTMENT OR INVESTMENT ACTIVITY TOWHICH THIS APPENDIX AND THE TERMS AND CONDITIONS SET OUT HEREIN RELATES ISAVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANTPERSONS. NEITHER THIS APPENDIX NOR THE ANNOUNCEMENT OF WHICH IT FORMS PARTCONSTITUTES AN OFFER OR AN INVITATION TO ACQUIRE OR DISPOSE OF ANY SECURITIES INASIA ENERGY PLC. If you have been invited and choose to participate in the Placing by making anoral offer to acquire Placing Shares you will be deemed to have read andunderstood this Appendix and the announcement of which it forms part in theirentirety and to be making such offer on the terms and conditions, and to beproviding the representations, warranties and acknowledgements, contained inthis Appendix. In particular you represent, warrant and acknowledge that youare a Relevant Person. Further, you represent and agree that you are either (a)a qualified institutional buyer (as defined in Rule 144A under the SecuritiesAct) or (b) you are outside the United States and are subscribing for PlacingShares in an "offshore transaction" (within the meaning of Regulation S). See "Representations and Warranties" elsewhere in this Appendix for furtherrepresentations and warranties you will be deemed to make by participating inthe Bookbuilding. This Appendix and the announcement of which it forms part do not constitute anoffer to sell or the invitation or solicitation of an offer to buy or subscribefor ordinary shares in the capital of Asia Energy plc ("Asia Energy" or the "Company") in the United States, Canada, Australia, Japan, France, New Zealand,the Republic of Ireland or in any jurisdiction in which such offer orsolicitation is unlawful (the "Restricted Jurisdictions") and the informationcontained herein is not for publication or distribution, directly or indirectly,to persons in any Restricted Jurisdiction. In particular, this appendix and theannouncement of which it forms part are not an offer for sale of the securitiesin the United States, and the securities may not be sold in the United Statesabsent registration or an exemption from registration under the U.S. SecuritiesAct of 1933, as amended. The relevant clearances have not been, and nor willthey be, obtained from the securities commission of any province or territory ofCanada; no prospectus has been lodged with, or registered by, the AustralianSecurities and Investments Commission or the Registrar of Companies in theRepublic of Ireland or the Japanese Ministry of Finance; and the Placing Shareshave not been, and nor will they be, registered under or offered in compliancewith the securities laws of any state, province or territory of Canada,Australia, the Republic of Ireland or Japan. Accordingly, the Placing Sharesmay not (unless an exemption under the relevant securities laws is applicable)be offered, sold, resold or delivered, directly or indirectly, in or into theUnited States, Canada, Australia, the Republic of Ireland or Japan or any otherjurisdiction outside the United Kingdom and Jersey. Overseas Shareholders(including, without limitation, nominees and trustees) who have a contractual orother legal obligation to forward a copy of this Appendix or the announcement ofwhich it forms part to a jurisdiction outside the United Kingdom should seekappropriate advice before taking any action. The distribution of this announcement and the placing of Ordinary Shares incertain other jurisdictions may be restricted by law. No action has been takenby JP Morgan Cazenove or the Company that would permit an offer of such ordinaryshares or possession or distribution of this announcement or any other offeringor publicity material relating to such ordinary shares in any jurisdiction whereaction for that purpose is required. Persons into whose possession thisannouncement comes are required by JP Morgan Cazenove and the Company to informthemselves about and to observe any such restrictions. Details of the Placing Agreement and the Placing Shares JP Morgan Cazenove has been appointed as sole bookrunner to the Placing. JP Morgan Cazenove and J.P. Morgan Securities Ltd. ("JPMSL") have entered intothe Placing Agreement with the Company under which JP Morgan Cazenove has, onthe terms and conditions set out therein, undertaken to use all reasonableendeavours to seek to arrange Placees for new Ordinary Shares (the "PlacingShares"). Under the Placing 4,143,976 of the Placing Shares are available to beplaced firm (the "Firm Placing Shares") and an additional number of new OrdinaryShares (subject to the maximum amount comprised in the authorities in theShareholder Resolutions) are available to be placed subject to shareholderapproval at the EGM (the "Conditional Placing Shares). The Placing is not beingunderwritten. The Firm Placing Shares and the Conditional Placing Shares are to be placed on apro-rata basis, such that each Placee offering to subscribe for Placing Shareswould, in the event of such offer being accepted in full, be entitled tosubscribe for Placing Shares split between Firm Placing Shares and ConditionalPlacing Shares in the same proportion as other successful applicants. The Placing Shares will, as from the date when they are issued, rank pari passuin all respects with the existing Ordinary Shares of 10 pence each in thecapital of the Company, and will be allotted and issued fully paid up under thePlacing together with the right to receive all dividends and other distributionsdeclared, made or paid in respect of such ordinary shares after the date ofissue. The Company has undertaken in the Placing Agreement not to make ordeclare any dividends in respect of Ordinary Shares before the date of admissionto trading on AIM of the Conditional Placing Shares (or if earlier the date oftermination of the Placing Agreement). Admission Application for all the Placing Shares to be admitted to trading on AIM will bemade. Settlement for any Firm Placing Shares issued and allotted pursuant to thePlacing will take place on admission of such shares to trading on AIM which isexpected to be 5 December 2005. Settlement for any Conditional Placing Sharesissued and allotted pursuant to the Placing will, subject to the approval of theShareholder Resolutions, take place on the date of admission of such shares totrading on AIM which is expected to be 23 December 2005. In this Appendix, unless the context otherwise requires, "Placee" or "you" meansa Relevant Person (including individuals, funds or others) on whose behalf anoffer to subscribe for Placing Shares has been, or is proposed to be, given. Bookbuild Commencing today, JP Morgan Cazenove will be conducting an acceleratedbookbuilding process (the "Bookbuilding Process") to determine demand for thePlacing Shares. This Appendix gives details of the terms and conditions of, andthe mechanics of participation in, the Bookbuilding Process. No commissionswill be paid to Placees or payable by Placees in respect of any Placing Shares. Participation in the Bookbuilding Process Only Relevant Persons who are invited to do so may participate in theBookbuilding Process. Invitations to participate will be made by telephonethrough usual sales contacts at JP Morgan Cazenove. If you are invited toparticipate, your allocation (if any) of Firm Placing Shares and ConditionalPlacing Shares will be confirmed to you orally following the close of theBookbuilding Process and contract notes confirming your agreement to subscribefor Firm Placing Shares and your agreement to subscribe for Conditional PlacingShares will be dispatched as soon as possible thereafter. JP Morgan Cazenove'soral confirmation to you will constitute acceptance of your offer to acquireboth Firm Placing Shares and, subject to shareholder approval, ConditionalPlacing Shares, and create a legally binding commitment upon you (who will atthat point become a Placee) to subscribe for the number of Firm Placing Sharesand Conditional Placing Shares allocated to you on the terms and conditions setout in this Appendix and in accordance with the Company's constitutionaldocuments. JP Morgan Cazenove will make a further announcement following the close of theBookbuilding Process detailing the number of Firm Placing Shares and ConditionalPlacing Shares (if any) to be sold and the price at which the same are to beplaced (the "Pricing Announcement"). Principal terms of the Bookbuilding Process 1. JP Morgan Cazenove is arranging the Placing as an agent of theCompany. 2. Participation will only be available to Relevant Persons invitedto participate by JP Morgan Cazenove. JP Morgan Cazenove and its Affiliates areentitled to enter bids as principal in the Bookbuilding Process. 3. The Bookbuilding Process will establish a single price in PoundsSterling payable by all Placees (the "Placing Price"). The Placing Price willbe determined by the Company, JP Morgan Cazenove and JPMSL following completionof the Bookbuilding Process. 4. Once you have been invited to bid in the Bookbuilding Process,you should communicate your bid by telephone to your usual sales contact at JPMorgan Cazenove. Your bid should state the number of Placing Shares (which willbe apportioned by JPMC as between Firm Placing Shares and Conditional PlacingShares on a pro-rata basis in the same proportions for all applicants, with theprecise split depending on the aggregate number of Placing Shares ultimately tobe issued) or total monetary amount which you are offering to subscribe forPlacing Shares at either the Placing Price which is ultimately established or atprices up to a price limit specified in your bid. 5. JP Morgan Cazenove reserves the right not to accept bids or toaccept bids in part rather than in whole. The acceptance of bids shall be at JPMorgan Cazenove's absolute discretion. 6. The Bookbuilding Process is expected to close no later than 4.30p.m. (London time) on 29 November 2005, but may be closed earlier or later, onthat or any other day, at the sole discretion of JP Morgan Cazenove. JP MorganCazenove may, at its sole discretion, accept bids that are received after theBookbuilding Process has closed. 7. A bid in the Bookbuilding Process will be made on the terms andconditions in this Appendix and will be legally binding on the Placee by which,or on behalf of which, it is made and will not be capable of variation orrevocation by the Placee after the close of the Bookbuilding Process. Conditions of the Placing The obligations of JP Morgan Cazenove and JPMSL under the Placing Agreement inrelation to the Placing of the Firm Placing Shares and the Conditional PlacingShares are conditional (inter alia) on: (a) pricing occurring and publication of the Pricing Announcement onor by 8:00 a.m. 30 November 2005; (b) the warranties contained in the Placing Agreement ("Warranties")being true and accurate and not misleading on and as of the date of the PlacingAgreement and at all times (by reference to the facts then subsisting) before: (i) in relation to obligations relating to the Firm Placing Shares,Admission thereof; and (ii) in relation to obligations relating to the Conditional PlacingShares, Admission thereof; (c) the Company complying with its obligations under the agreement; (d) in relation to the obligations relating to both the Firm PlacingShares and the Conditional Placing Shares, Admission of the Firm Placing Sharesoccurring not later than 8.00 a.m. on 5 December 2005 or such other date as maybe agreed between the Company and JP Morgan Cazenove, not being later than twoBusiness Days after 5 December 2005; and (e) in relation to the obligations relating to the Conditional PlacingShares: (i) the passing without amendment of the Shareholder Resolutions atthe EGM; and (ii) admission of the Conditional Placing Shares occurring not laterthan 8.00 a.m. on 23 December 2005 or such other date as may be agreed betweenthe Company and JP Morgan Cazenove, not being later than the two Business Daysafter 23 December 2005. If (a) the conditions in the Placing Agreement relating to the Firm Placing arenot satisfied or waived by JP Morgan Cazenove and JPMSL within the stated timeperiod (or such later time and/or date as JP Morgan Cazenove and JPMSL maydecide) or (b) the Placing Agreement is terminated in the circumstancesspecified below prior to Admission of the Firm Placing Shares, the Placing (bothfirm and conditional) will not take place and your rights and obligationshereunder in respect hereof shall cease and determine at such time and no claimcan be made in respect thereof. The Firm Placing is not conditional on theConditional Placing in any way. If (a) the conditions in the Placing Agreement relating to the ConditionalPlacing are not satisfied or (where applicable) waived by JP Morgan Cazenove andJPMSL within the stated time period (or such later time and/or date as JP MorganCazenove and JPMSL may decide) or (b) the Placing Agreement is terminated in thecircumstances specified below prior to Admission of the Conditional PlacingShares, the Conditional Placing will not take place and your rights andobligations hereunder in respect thereof shall cease and determine at such timeand no claim can be made in respect thereof. By participating in the Bookbuilding Process you agree that your rights andobligations hereunder in relation to each of the Firm Placing and theConditional Placing are conditional upon the Placing Agreement becomingunconditional in all respects in relation to each of them and not beingterminated and will terminate only in the circumstances described above (orotherwise in circumstances in which JP Morgan Cazenove and/or JPMSL is entitledto terminate them) and will not be capable of rescission or termination by you. JP Morgan Cazenove and JPMSL reserve the right to waive or to extend the timeand/or date for fulfilment of any of the conditions in the Placing Agreement(other than conditions (d) and (e) above). JP Morgan Cazenove and JPMSL shallhave no liability to any Placee (or to any other person whether acting on behalfof a Placee or otherwise) in respect of any decision they may make as to whetheror not to invoke, waive or to extend the time and/or date for the satisfactionof any condition in the Placing Agreement, and by participating in theBookbuilding Process you agree that any such decision is within the absolutediscretion of JP Morgan Cazenove and JPMSL. Right to terminate under the Placing Agreement JP Morgan Cazenove and JPMSL will be entitled to terminate the obligations of JPMorgan Cazenove and JPMSL under the Placing Agreement if (inter alia) at anytime before Admission of the Firm Placing Shares or the Conditional PlacingShares (as the case may be): (a) the Warranties or any of them are not true, accurate and are notmisleading as at the date of the Placing Agreement (or would not be true andaccurate or would be misleading if they were repeated at any time beforeadmission of the Placing Shares by reference to the facts from time to timesubsisting); or (b) any statement in any announcement made by the Company prior toadmission of the Placing Shares is untrue, incorrect or misleading when made orbecomes untrue, inaccurate or misleading at any time prior to admission of thePlacing Shares by reference to the facts or circumstances from time to timesubsisting or any matter arises which would, had it arisen prior to the date ofthe relevant announcement, have constituted an omission from such announcement;or (c) the Company fails to comply with any of its obligations under thePlacing Agreement; or (d) in the opinion of JP Morgan Cazenove or JPMSL (acting in goodfaith), there has been a material adverse change in the financial or tradingposition or prospects of the Company's group of companies taken as a whole(whether or not the same is foreseeable as at the date of the PlacingAgreement); or (e) in the opinion of JP Morgan Cazenove or JPMSL (acting in goodfaith), there has been a change in national or international financial, political, economic or stockmarket conditions (primary or secondary); an incident of terrorism, outbreak or escalation of hostilities, war,declaration of martial law or any other calamity or crisis; a suspension or material limitation in trading of securities generally on anystock exchange; or any change in currency exchange rates or exchange controls or a disruption ofsettlement systems or a material disruption in commercial banking, as would, in the opinion of JP Morgan Cazenove or JPMSL (acting in good faith),(had it occurred prior to the date of the Placing Agreement) have been likely tohave prejudiced the success of the Placing. Notwithstanding admission of the Firm Placing Shares, JP Morgan Cazenove andJPMSL retain their rights under the Placing Agreement to terminate the placingof the Conditional Placing Shares in accordance with the terms thereof. Anysuch termination after completion of the Firm Placing will not, for theavoidance of doubt, affect the completed Firm Placing. By participating in the Bookbuilding Process you agree that the exercise by JPMorgan Cazenove and JPMSL of any right or termination or other discretion underthe Placing Agreement shall be within the absolute discretion of JP MorganCazenove and JPMSL and that they need not make any reference to you and thatneither of them shall have any liability to you whatsoever in connection withany such exercise. No Prospectus The Placing Shares are being offered to a limited number of specifically invitedpersons only and will not be offered in such a way as to require a prospectus inthe United Kingdom. No prospectus has been or will be submitted to be approvedby AIM or the FSA in relation to the Placing and the Placees' commitments willbe made solely on the basis of the information contained in this announcement.Each Placee, by participating in the Placing, agrees that the content of thisannouncement is exclusively the responsibility of the Company and confirms thatit has neither received nor relied on any other information, representation,warranty or statement made by or on behalf of JP Morgan Cazenove or the Companyand it will not be liable for any Placee's decision to accept this invitation toparticipate in the Placing based on any other information, representation,warranty or statement. Each Placee acknowledges and agrees that it has reliedon its own investigation of the business, financial or other position of theCompany in deciding to participate in the Placing. Nothing in this paragraphshall exclude the liability of any person for fraudulent misrepresentation. Registration and Settlement Settlement for all Placing Shares will be made through CREST. Settlement forany Firm Placing Shares issued and allotted pursuant to the Placing will takeplace on the date of admission of such shares to trading on AIM which isexpected to be 5 December 2005. Settlement for any Conditional Placing Sharesissued and allotted pursuant to the Placing will, subject to the approval of theShareholder Resolutions take place on the date of admission of such shares totrading on AIM which is expected to be 23 December 2005. JP Morgan Cazenove reserves the right to require settlement for and delivery ofthe Placing Shares to Placees by such other means as it deems necessary ifdelivery or settlement is not possible as described above within the timetableset out in this announcement or would not be consistent with the regulatoryrequirements in the Placee's jurisdiction. If you are allocated any Placing Shares in the Bookbuilding Process you will besent two contract notes, one which will confirm the number of Firm PlacingShares to be subscribed for by you and a second which will confirm the number ofConditional Placing Shares to be subscribed for by you, in each case alsoconfirming the Placing Price and the aggregate amount owed by you to JP MorganCazenove as agent for the Company in relation to the settlement of such FirmPlacing Shares and Conditional Placing Shares. By participating in the Placing,you agree that you will do all things necessary to ensure that delivery andpayment is completed in accordance with the standing settlement instructionswhich you have in place with JP Morgan Cazenove. If Placing Shares are to be delivered to a custodian or settlement agent, pleaseensure that the contract note is copied and delivered immediately to therelevant person within that organisation. Interest is chargeable daily on payments to the extent that value is receivedafter the due date at the rate of 5 percentage points above prevailing LIBOR.If you do not comply with your obligations, JP Morgan Cazenove may sell yourPlacing Shares on your behalf and retain from the proceeds, for its own accountand benefit, an amount equal to the Placing Price plus any interest due (insettlement of your liability in respect of JP Morgan Cazenove's payment to theCompany on your behalf of the Placing Price of the relevant Placing Shares underclause 8.2 of the Placing Agreement). You will, however, remain liable on thesame basis for any shortfall below the Placing Price and you may be required tobear any interest or penalties which may arise upon the sale of your PlacingShares on your behalf. You will not be entitled to receive any fee or commission in connection with thePlacing. Representations and Warranties By participating in the Bookbuilding Process you (and any person acting on yourbehalf): 1. represent and warrant that you have read this Appendix and theannouncement of which it forms part and have not redistributed it; 2. acknowledge that you have been invited to participate in theBookbuilding Process on the basis of this announcement and that no offeringdocument or prospectus or any other document has formed the basis of the placingof the Placing Shares with you; 3. acknowledge that the content of this Appendix and theannouncement of which it forms part is exclusively the responsibility of theCompany; 4. represent and warrant that you have neither received nor reliedon any information, representation, warranty or statement made by or on behalfof JP Morgan Cazenove or the Company other than the information contained inthis announcement and that neither JP Morgan Cazenove nor the Company will beliable for any Placee's decision to accept an invitation to participate in thePlacing (and any resulting investment) based on any other information,representation, warranty or statement. Each Placee acknowledges and agrees thatit has relied on its own investigation of the business, financial or otherposition of the Company in deciding to participate in the Placing (and in makingany resulting investment); 5. represent and warrant that you (and/or any beneficial owner onwhose behalf you are making a subscription) are entitled to subscribe forPlacing Shares under the laws of all relevant jurisdictions which apply to you(and/or such beneficial owner) and that you (and/or such beneficial owner) havefully observed such laws and obtained all such governmental and other guaranteesand other consents which may be required thereunder and complied with allnecessary formalities; 6. acknowledge that where you are subscribing for Placing Shares forone or more managed accounts, you represent and warrant that you are authorisedin writing by each managed account (i) to subscribing for the Placing Shares foreach managed account, (ii) to make on its behalf the representations, warrantiesand agreements in this Appendix and the announcement of which it forms part, and(iii) to receive on its behalf any investment letter relating to the Placing inthe form provided to you by JP Morgan Cazenove. You agree to indemnify and holdthe Company, JP Morgan Cazenove and their respective Affiliates harmless fromany and all costs, claims, liabilities and expenses (including legal fees andexpenses) arising out of or in connection with any breach of the representationsand warranties in this paragraph 6. You agree that the provisions of thisparagraph 6 shall survive the resale of the Placing Shares by or on behalf ofthe managed accounts; 7. undertake to pay any capital duty, stamp duty or stamp dutyreserve tax and all other stamp, issue, securities, transfer, registration,documentary or other similar duties or taxes payable or otherwise required to bepaid in respect of the allotment, issue, delivery or transfer of the PlacingShares or any interest therein to or by you, or the acquisition or disposal of,or in connection with any agreement to subscribe or for the allotment, issue,delivery or transfer of, the Placing Shares or any interest therein to you or byyou pursuant to or as a result of the arrangements contemplated by the PlacingAgreement or this Appendix or in connection with the issue, execution ordelivery of the Placing Agreement or this Appendix and any interest or penaltiespayable in respect thereof and to indemnify (on an after tax basis) and holdharmless JP Morgan Cazenove Limited, JPMSL, the Company and their respectiveagents to the extent that JP Morgan Cazenove Limited, JPMSL and/or the Companypay or are or become liable to pay any amount in respect of such duties andtaxes. References in this paragraph 7 to Placing Shares include any interestin, or rights to allotment of, or rights to subscribe for or options tosubscribe, Placing Shares. Neither JP Morgan Cazenove Limited nor JPMSL shallbe liable to pay any amount pursuant to this paragraph 7; 8. represent and warrant that: (i) you are aware of and have complied with your obligations inconnection with money laundering under the Proceeds of Crime Act 2002, theTerrorism Act 2003 and the Money Laundering Regulations 2003 and, if you aremaking payment on behalf of a third party, that satisfactory evidence has beenobtained and recorded by you to verify the identity of the third party asrequired by the Regulations; and (ii) you have complied and will comply with, and have not breached andwill not breach, any and all applicable provisions of FSMA with respect toanything done by you in relation to the Placing Shares in, from or otherwiseinvolving the United Kingdom; 9. represent and warrant that you fall within paragraph 3(a) ofSchedule 11 to FSMA, being a person whose ordinary activities involve you inacquiring, holding, managing or disposing of investments (as principal or agent)for the purposes of your business, and within Article 19(1) and/or 49(2)(a) to(d) of the Financial Services and Markets Act 2000 (Financial Promotion) Order2005, as amended, and undertake that you will acquire, hold, manage or disposeof any Placing Shares (or ADSs representing Placing Shares) that are allocatedto you for the purposes of your business; 10. represent that you are a "Qualified Investor" as such term isdefined in section 86(7) FSMA; 11. represent and warrant that you have not offered or sold and, priorto the expiry of a period of six months from the relevant settlement date, willnot offer or sell any Placing Shares to persons in the United Kingdom except toqualified investors (as defined in section 86(7) or otherwise in circumstanceswhich have not resulted and which will not result in an offer to the public inthe United Kingdom within s.85(1) of FSMA; 12. represent and warrant that you have only communicated or caused tobe communicated and will only communicate or cause to be communicated anyinvitation or inducement to engage in investment activity (within the meaning ofsection 21 of FSMA) relating to the Placing Shares in circumstances in whichsection 21(1) of FSMA does not require approval of the communication by anauthorised person; 13 represent and warrant that as far as you are aware you are notacting in concert (within the meaning given in the City Code on Takeovers andMergers) with any other Placee in relation to the Company 14. represent and warrant that you have all necessary capacity and haveobtained all necessary consents and authorities to enable you to commit to thisparticipation and to perform your obligations in relation thereto (including,without limitation, in the case of any person on whose behalf you are acting,all necessary consents and authorities to agree to the terms set out or referredto in this announcement);. 15. undertake that you will pay for the Placing Shares acquired by youin accordance with this announcement on the due time and date set out herein,failing which the relevant Placing Shares may be placed with other subscribersor sold as JP Morgan Cazenove determine; 16. acknowledge that participation in the Placing is on the basis thatyou are not and will not be a client of JP Morgan Cazenove and it has no dutiesor responsibilities to you for providing the protections afforded to its clientsor customers or for providing advice in relation to the Placing nor in respectof any representations, warranties, undertakings or indemnities contained in thePlacing Agreement; 17. undertake that the person whom you specify for registration asholder of the Placing Shares will be (i) the Placee or (ii) a nominee of thePlacee, as the case may be. Each Placee and any person acting on behalf of thePlacee agrees to subscribe on the basis that the Placing Shares will beallocated to a stock account of JPMSL who will hold them as nominee on behalf ofthe Placee until settlement in accordance with its standing settlementinstructions; 18. acknowledge that any agreements entered into by the Placee pursuantto these terms and conditions shall be governed by and construed in accordancewith the laws of England and you submit (on behalf of yourself and on behalf ofany Placee on whose behalf you are acting) to the exclusive jurisdiction of theEnglish courts as regards any claim, dispute or matter arising out of any suchcontract. 19. will be deemed to acknowledge, represent and agree with the Companyand JPMorgan Cazenove as follows: (a) you are subscribing for the Placing Sharesfor your own account or an account with respect to which you exercise soleinvestment discretion and that it and any such account is either (x) a QIB andis aware that the sale to it is being made in reliance on Rule 144A; or (y)subscribing for the Placing Shares in an offshore transaction in compliance withRegulation S; (b) you acknowledge that the Placing Shares have not beenregistered under the Securities Act and that they may not be offered or soldexcept as set forth below. Each subscriber of Placing Shares that are offered and sold in reliance on Rule144A will be deemed to have acknowledged, represented to and agreed with theCompany and JP Morgan Cazenove as follows: (a) it shall not resell or otherwise transfer any of the PlacingShares within two years after the original issuance of the Placing Shares except(1) to the Company or any of its affiliates as defined in Rule 501(b) of theSecurities Act; (2) to a QIB in compliance with Rule 144A; (3) in offshoretransactions in compliance with Regulation S under the Securities Act; (4)pursuant to the exemption from registration provided by Rule 144 adopted underthe Securities Act (if available); or (5) pursuant to an effective registrationunder the Securities Act; (b) it agrees that it will give to each person to whom it transfersthe Placing Shares notice of any restrictions on transfer of the Placing Shares;and (c) it understands that its certificated Placing Shares (if any) willbear a legend substantially to the following effect, until the expiration of theapplicable holding period with respect to the Placing Shares set forth in Rule144(k) of the Securities Act: "THIS SHARE HAS NOT BEEN REGISTERED UNDER THE US SECURITIES ACT OF 1933, ASAMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT BE OFFERED, SOLDPLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATIONSTATEMENT UNDER, OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF, THESECURITIES ACT, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATEOF THE UNITED STATES." Each subscriber of Placing Shares will be deemed to acknowledge that theCompany, JPMorgan Cazenove, JPMSL their affiliates and others will rely upon thetruth and accuracy of the foregoing representations and agreements and agreesthat if any of the representations or agreements deemed to have been made by itssubscription of the Placing Shares are no longer accurate, it shall promptlynotify us and the initial subscribers. If it is acquiring Placing Shares as afiduciary or agent for one or more investor account, it represents that it hassole investment decision with respect to each account and it has full power tomake the foregoing representations and agreements on behalf of each account. You agree to indemnify and hold harmless the Company and JP Morgan Cazenove andJPMSL from any and all costs, claims, liabilities and expenses (including legalfees and expenses) arising out of or in connection with any breach by you (orany person on whose behalf you are acting) of the representations, warranties,acknowledgements, agreements and undertakings in this Appendix and further agreethat the provisions of this Appendix shall survive after completion of thePlacing. JP Morgan Cazenove, JPMSL and others will rely upon the truth and accuracy ofthe foregoing representations, warranties and acknowledgements. General This Appendix and the announcement of which it forms part are not fordistribution directly or indirectly in or into the United States, Canada,Australia, Japan, France, New Zealand or the Republic of Ireland. Neither thisAppendix nor the announcement of which it forms part constitutes an offer tosell or issue or the solicitation of an offer to buy or acquire ordinary sharesin the capital of the Company in any Restricted Jurisdictions. No publicoffering of securities will be made in the United Kingdom, the United States orelsewhere. In particular, this appendix and the announcement of which it formspart are not an offer for sale of the securities in the United States, and thesecurities may not be sold in the United States absent registration or anexemption from registration under the U.S. Securities Act of 1933, as amended. This Appendix and the announcement of which it forms part have been issued bythe Company and are the sole responsibility of the Company. JP Morgan Cazenove is acting for the Company and no one else in connection withthe Placing and will not be responsible to any other person for providing theprotections afforded to their respective clients nor for providing any advice inrelation to the Placing or any other matters referred to in this Appendix or theannouncement of which it forms part. Appendix B - Definitions "AIM" means the Alternative Investment Market of the London Stock Exchange Plc; "Asia Energy" or "Company" means Asia Energy Plc; "Bookbuilding Process" or "Bookbuild" means the accelerated bookbuilding process to be undertaken by JPMorgan Cazenove in relation to the Placing; "Business Day" means a day (other than a Saturday or a Sunday) on which clearing banks are open for a full range of banking transactions in London; "Conditional Placing Shares" means new Ordinary Shares being placed subject to shareholder approval of certain resolutions at the EGM to be held on 22 December 2005 with the actual number being determined at the close of the Bookbuilding Process. "Director" means a director of the Company "EGM" means an extraordinary general meeting of the shareholders of the Company proposed to be held on 22 December 2005 in order to consider and if thought fit approve the non pre-emptive issue of additional Ordinary Shares "Firm Placing Shares" means up to 4,143,976 new Ordinary Shares proposed to be issued pursuant to the placing with the actual number being determining at the close of the Bookbuild Process "FSA" means the Financial Services Authority "GoB" Government of Bangladesh "JPMSL" JP Morgan Securities Ltd. "LOM" Life of Mine "Ordinary Shares" means ordinary shares of 10 pence each in the share capital of the Company "Placees" means certain professional and institutional investors "Placing" means the placing of the Placing Shares "Placing Agreement" means the agreement entered into by JP Morgan Cazenove, JPMSL and the Company dated on 29 November 2005 in relation to the Placing "Placing Announcement" means the press announcement giving the results of the Bookbuild and the Placing Price "Placing Price" means the price per share at which any Placing Shares are to be subscribed by Placees "Placing Shares" means new Ordinary Shares proposed to be issued pursuant to the placing in accordance with the terms and conditions set out in this announcement and comprising the Firm Placing Shares and the Conditional Placing Shares "Project" means the Company's coal mining project at Phulbari, Bangladesh "Shareholder resolutions" means the resolutions of the shareholders of the Company set out in the EGM Notice, which relate to the increase of the Director's authority to allot and issue Ordinary Shares and the disapplication of pre-emption rights in relation to the issue of such shares This information is provided by RNS The company news service from the London Stock Exchange

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