Independent Directors' Election, Tranche 1 Placing

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES, AUSTRALIA, CANADA OR JAPAN

4 March 2016

MADAGASCAR OIL LIMITED

("Madagascar Oil" or the "Company")

Independent Directors' Election and Tranche 1 Placing

Madagascar Oil announces that, further to its announcement of 2 March 2016, the Independent Directors have elected to draw down the Tranche 1 Placing for the provision of, in aggregate, US$2.0 million (gross) by way of the issue of 143,636,885 new Common Shares at a price of 1.00p per Common Share, via a cash box placing with the Relevant Lenders, pursuant to the terms of the Framework Agreement.

All capitalised terms used herein shall have the same meaning, unless stated or the context requires otherwise, as given to them in the Framework Agreement, appended as Appendix I to the announcement of 2 March 2016.

Following the Independent Directors' Election, pursuant to the terms of the Framework Agreement, the Tranche 1 Placing will be offered to the Other Major Shareholders according to their Pro-Rata Share and they will have up to 10 days to elect to participate in the Tranche 1 Placing.

Should the Other Major Shareholders elect to participate in the Tranche 1 Placing, the size of the Tranche 1 Placing will be increased according to the participating Other Major Shareholders' Pro-Rata Share. A further announcement with regard to the progress of the Tranche 1 Placing will be made as and when appropriate.

As announced on 2 March 2016, following the Independent Directors calling the Tranche 1 Placing, the Company now has the obligation to convene a Special General Meeting to table resolutions to seek Shareholder approval to cancel the admission of its Common Shares to trading on AIM. A circular convening a Special General Meeting to propose resolutions to approve the Delisting and the adoption of new Bye-Laws will be dispatched to Shareholders shortly.

The Independent Directors' Election to draw down on the Tranche 1 Placing is the conclusion of an extensive and thorough process during which the Company and its advisers have discussed short term financing options with a very wide range of potential counterparties. As a result of those discussions, the Company has concluded that drawing down on the Tranche 1 Placing is the only viable option available to the Company to enable it to continue as a going concern.

Related Party Transaction

Given that the Tranche 1 Placing has been entered into with the Relevant Lenders, two of which, Outrider and BMK, are substantial Shareholders in the Company, entering into the Tranche 1 Placing with those parties constitutes a related party transaction under AIM Rule 13 of the AIM Rules for Companies.

Accordingly, the Independent Directors, as defined by the AIM Rules for the purposes of AIM Rule 13 (being Robert Estill, Michael Duginski and Iain Patrick), having consulted with the Company's nominated adviser, Strand Hanson Limited, consider that the terms of the Tranche 1 Placing are fair and reasonable insofar as the Company's Shareholders are concerned.

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