REG - Argos Resources Ltd - Proposed Sale of PL001 Interests and Cancellation

Argos ResourcesAnnouncement

03/05/2023 07:00

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RNS Number : 1897Y  Argos Resources Ltd  03 May 2023

This announcement contains inside information

 

ARGOS RESOURCES LIMITED

("Argos", the "Group" or "the Company")

Proposed Sale of North Falkland Basin Interests to JHI Associates Inc

Proposed Cancellation of Admission to Trading on AIM

and

Notice of General Meeting

On 15(th) December 2022, Argos Resources Limited (AIM: ARG.L), the Falkland
Islands based exploration company focused on the North Falkland Basin,
announced that the Company and JHI Associates Inc. ("JHI"), a private company
incorporated in Ontario, Canada, had entered into an agreement pursuant to
which it is proposed that JHI will acquire Argos' PL001 Production Licence
interests in the North Falkland Basin (the "Disposal").

The Board is pleased to report that the Company has now entered into the
Licence Acquisition Agreement (LAA) pursuant to which the Licence (and related
assets) will be transferred from Argos Exploration Limited (AEL), the
Company's 100% owned subsidiary in which the Licence is held, to the purchaser
subject to, inter alia, the approval of the Company's shareholders.  As
consideration for the Licence, the Company is to be issued with 8,467,820 JHI
Common Shares credited as fully paid and £303,500 in cash (of which a
non-refundable payment of £151,750 has already been made).

As the Licence is the Company's principal asset, upon completion of the
Disposal the Company will be regarded as an AIM Rule 15 cash shell, having
ceased to own, control or conduct all or substantially all, of its existing
trading business, activities or assets. The Disposal is therefore conditional
on the consent of Shareholders at a general meeting of the Company.

Assuming completion of the LAA, the Company's sole asset would be its holding
of JHI Common Shares.  The Directors have concluded that in this scenario it
is in the best interests of the Company and its Shareholders to seek
Shareholder approval for cancellation of the admission of the Ordinary Shares
to trading on AIM.

Shareholder approval for the Disposal and Cancellation will be sought at a
general meeting of the Company to be held at The Chamber of Commerce, West
Hillside, Stanley, Falkland Islands at 5 pm (Falkland Islands time) on 26 May
2023.

In the event that Shareholder approval for the Disposal and Cancellation are
obtained, it is the intention of the Board that the Company should then be
wound up by way of a members voluntary liquidation. The Company has agreed
with certain creditors of the Company to settle those liabilities in JHI
Common Shares (up to approximately 475,000 JHI Common Shares). Thereafter,
approximately 8 million JHI Common Shares are expected to be available for
distribution to Shareholders pro rata to their holding in the Company at that
time.

A copy of the Circular containing more information regarding the Disposal,
Cancellation and Notice of General Meeting will be posted to Shareholders on 4
May 2023 and will be available on the Company's website www.argosresources.com
(http://www.argosresources.com) shortly.

A summary of the key information contained in the Circular, including a
timetable of events, is set out below.

For further information:

Argos Resources Ltd (+500 22685)

www.argosresources.com

Ian Thomson, Chairman

John Hogan, Managing Director

 

Cenkos Securities plc, Nomad & Broker (+44 131 220 6939)

Derrick Lee

Neil McDonald

 
Proposed disposal of the Licence, cancellation of admission of Ordinary Shares to trading on AIM, and Notice of General Meeting
1.         Introduction

On 15 December 2022 the Company announced that it had reached preliminary
agreement with JHI for JHI to acquire the Group's sole principal asset -
offshore production licence PL001 in the North Falkland Basin and related
data.

Today, we are pleased to report that the Company has now entered into the
Licence Acquisition Agreement (LAA) for the Buyer to acquire the Licence (and
related assets) from AEL for a consideration of 8,467,820 JHI Common Shares to
be issued to the Company credited as fully paid and £303,500 in cash (of
which a non-refundable payment of £151,750 has already been made).
Completion of the LAA is scheduled to take place on or around 31 May 2023,
with a long stop date of 28 June 2023, subject to:

·    Falkland Islands Government consent to the transfer of the Licence by
AEL to the Buyer; and

·    Shareholder consent as referred to below.

The JHI Common Shares to be issued to the Company would represent some 9.68%
of the enlarged issued capital of JHI as at the date of the Circular and are
expected to represent between approximately 7.21% and 6.01% of JHI's enlarged
share capital on a fully diluted basis depending on the outcome of the Plan of
Arrangement JHI is currently undertaking.

JHI is a private limited company incorporated in Ontario, Canada.  JHI's
principal asset is a 17.5% interest in the Canje Block, offshore Guyana, which
is operated by Esso Exploration & Production Guyana Ltd (35%), a
subsidiary of ExxonMobil Corp.  JHI's partners in the Canje Block are
TotalEnergies E&P Guyana BV (35%) and Mid-Atlantic Oil & Gas Inc
(12.5%).

The Canje Block is a large and significant licence area adjacent and
immediately east of multiple ExxonMobil discoveries in the Stabroek block.
Covering approximately 4,800 square kilometres, the Canje Block is located
approximately 180 to 300 kilometres offshore Guyana in water depths ranging
from 1,700 to 3,000 metres. Over 7,000 square kilometres of 3D seismic data
has been shot over the Canje Block, from which over three dozen prospects have
been mapped in four proven plays in the Lower Tertiary and Upper Cretaceous
confined channels, Lower Cretaceous carbonate structures and, with the recent
drilling of Sapote-1 well and Stabroek discoveries including Fangtooth SE-1,
the block now offers the opportunity of yet deeper prospectivity.

As of 31 December 2022, JHI's unaudited consolidated financial statements
indicated gross assets of approximately USD24,375,839, of which approximately
USD18,919,157 is cash or cash equivalents, with no debt. The Company
understands that JHI's sole purpose is its participation in the Canje Block
and that it has no other significant assets or interests.

Further information on JHI can be found at www.jhiassociates.com.(( 1 
(#_ftn1) ))

Since the Licence is the Company's principal asset, the Disposal will result
in a fundamental change in the business of the Company for the purpose of Rule
15 of the AIM Rules and it is therefore conditional upon the approval of
Shareholders, amongst other matters. Shareholder approval for the Disposal
will be sought at a general meeting of the Company to be held at The Chamber
of Commerce, West Hillside, Stanley, Falkland Islands at 5 pm (Falkland
Islands time) on 26 May 2023. The notice convening that General Meeting is set
out at the end of the Circular. The actions that Shareholders should take to
vote on the Disposal Resolution and the recommendations of the Board are set
out below.

Assuming completion of the LAA, the Company's sole asset would be its holding
of JHI Common Shares.  The Directors have concluded that in this scenario it
is in the best interests of the Company and its Shareholders to seek
Shareholder approval for cancellation of the admission of the Ordinary Shares
to trading on AIM, for the reasons set out in the Circular. In accordance with
Rule 41 of the AIM Rules, the Company has notified the London Stock Exchange
of the date of the proposed Cancellation which is expected to be on 6 June
2023.

Accordingly, the Company is also seeking Shareholders' approval for the
Cancellation which is conditional upon the consent of not less than 75 per
cent. of the votes cast by Shareholders (whether present in person or by
proxy) at the General Meeting.  If the Cancellation Resolution is passed at
the General Meeting, and assuming completion of the LAA on or around 31 May
2023, it is anticipated that the Cancellation will become effective at 7 a.m.
on 6 June 2023.

If the Cancellation proceeds, Shareholders who wish to buy or sell the Company's Ordinary Shares on AIM must do so prior to the Cancellation date, which is expected to be 6 June 2023 (with the last date for trading being 5 June 2023).

Assuming completion of the LAA and the Cancellation, the Board has concluded
that it would be in Shareholders best interests for the Company to be wound up
and for the JHI Common Shares to be distributed proportionately to the
Company's shareholders on the register of members at the relevant time.
Shareholders will be written to separately on this in due course to provide
further details and to seek Shareholder approval at a further general meeting
of the Company for the Company to be wound up and a liquidator appointed.

Shareholders should be aware that following the Cancellation there will be
limited opportunities to trade in JHI Common Shares as JHI is a private
company whose shares are not listed on any stock exchange.  Furthermore, any
transfer of JHI Common Shares will be subject to the approval of the board of
directors of JHI in accordance with JHI's constitutional documents.

JHI's management has confirmed to the Board of ARL that it is their intention
to complete a liquidity event concerning JHI within 5 years of Completion,
however there is no guarantee that a liquidity event will take place within
this period, or at all.

The purpose of the Circular is to provide Shareholders with the background to,
reasons for and details of the Disposal and Cancellation and to explain why
the Directors consider the Disposal and Cancellation to be in the best
interests of the Shareholders as a whole.

2.         Background to and reasons for Disposal
2.1        Background

The Company has had an interest in the Licence since 1997.  In 2015 the
Company assigned its interest in the Licence to Noble Energy Falklands Limited
and Edison International Spa (Noble/Edison), for a participating interest in
future income streams from the Licence. Following a change in strategy by
Noble/Edison, Noble/Edison decided they wanted to exit their investments in
the Falkland Islands and assigned the Licence back to AEL and the parties
agreed to terminate the participation agreement.  The Company secured a
2-year extension to the Licence in December 2022 (the Licence now continues
until 31 December 2024). However, during this extended period the Company is
required to carry out a work program for which it is not funded and there is
no certainty, in the Board's view, that capital to fund the work program will
be available to the Company.  JHI has the cash reserves to fund this work
program and is enthusiastic as to the identified prospects in the Licence
area.  It is the Board's view that Shareholders' interests are best served by
transferring the Company's interest in the Licence to JHI in return for an
equity interest in JHI (and some cash) which would provide Shareholders with
an ongoing interest in the outcome of future work carried out on the Licence,
with upside potential through exposure to JHI's interest in the Canje Block.

If the Resolutions are not passed, the Disposal will not proceed.  If the
Board is unable to secure alternative funding to cover the costs of the work
program required under the Licence to be completed by 31 December 2024 the
Licence would be forfeited.  In light of this, if the Disposal was not to go
ahead and alternative funding could not be secured quickly, there is a risk
that the Board would feel obliged to wind up the Company.

2.2        Summary terms of the Disposal

Pursuant to the LAA, AEL will transfer its interest in the Licence (and
certain other assets) to the Buyer in return for a cash payment of £305,500
(of which £151,750 has already been paid as a non-refundable deposit) and the
issue to ARL of 8,467,820 new common shares of no par value in the capital of
JHI to be issued credited as fully paid to ARL, subject to:

·     Falkland Islands Government consent to the transfer of the Licence
to the Buyer; and

·     The Shareholders passing the Disposal Resolution at the General
Meeting.

The JHI Common Shares to be issued to the Company would represent some 9.68%
of the enlarged issued capital of JHI as at the date of the Circular. JHI are
currently undertaking a Plan of Arrangement, completion of which is subject to
a Final Order of the Ontario Superior Court of Justice.  On (and subject to)
receipt of the Final Order the JHI Common Shares to be issued to the Company
are expected to represent up to approximately 7.21 % of the enlarged issued
capital of JHI.  If the Plan of Arrangement was not to complete, the JHI
Common Shares to be issued to the Company would still represent some 9.68% of
JHI's enlarged issued capital (or 6.01% of the enlarged capital on a fully
diluted basis). 2  (#_ftn2)

ARL is providing the Buyer with standard representations and warranties,
primarily relating to the Licence. Any warranty claims by the Buyer may in
ARL's option, be settled in JHI Common Shares at a value of USD 0.71 per JHI
Common Share.

JHI value the JHI Common Shares at USD 0.71 each, which equates to USD
6,012,152 for all the JHI Common Shares to be issued to the Company pursuant
to the LAA (£0.582 per JHI Common Share and a total of £4,928,271 using an
exchange rate as of the 15 December 2022 (the date of the announcement of the
proposed transaction) of £1.00 : USD1.22). The value of the JHI Common Shares
together with the cash consideration equals approximately 2.23p per Ordinary
Share (a premium of approximately 27% to the closing share price of the
Ordinary Shares on 14 December 2022).

The Directors have reviewed the basis of the valuation being applied to the
JHI Common Shares for the purposes of this transaction and consider it to be
appropriate.

The Licence is subject to an annual licence fee payable to the Falkland
Islands Government of USD 78,300.  AEL earns no income from the Licence and
is currently loss making.

The effect of the Disposal on the Company will be that it becomes a dormant
investment company (its sole asset being the JHI Common Shares) and it is the
intention of the Board that the Company should then delist and be wound up by
way of a members voluntary liquidation. The Company has agreed with certain
creditors of the Company to settle those liabilities in JHI Common Shares (up
to approximately 475,000 JHI Common Shares). Thereafter, approximately 8
million JHI Common Shares are expected to be available for distribution to
Shareholders pro rata to their holding in the Company at that time.

2.3        Use of Proceeds

The net cash proceeds of the Disposal will be placed on deposit and used by
the Company in payment of expenses until it is liquidated as intended (see
below).

3.         AIM Rule 15

In accordance with AIM Rule 15, the Disposal constitutes a fundamental change
of business of the Company.  Accordingly, as set out in AIM Rule 15, the
Disposal is conditional on the consent of shareholders at a general meeting of
the Company.

Further, on Completion, the Company would cease to own, control or conduct
all, or substantially all, of its existing trading business, activities or
assets. Following Completion therefore, the Company will become an AIM Rule 15
cash shell and as such will be required to make an acquisition or acquisitions
which constitutes a reverse takeover under AIM Rule 14 (including seeking
re-admission as an investing company (as defined under the AIM Rules)) on or
before the date falling six months from Completion or be re- admitted to
trading on AIM as an investing company under the AIM Rules (which requires the
raising of at least £6 million) failing which, the Ordinary Shares would then
be suspended from trading on AIM pursuant to AIM Rule 40. Admission to trading
on AIM would be cancelled six months from the date of suspension should the
reason for the suspension not have been rectified.

As there is no intention by the Directors to make an acquisition or
acquisitions which constitute a reverse takeover under AIM Rule 14 (including
seeking re-admission as an investing company (as defined under the AIM Rules))
on or before the date falling six months from Completion of the Disposal or be
re-admitted to trading on AIM as an investing company under the AIM Rules
(which requires the raising of at least £6 million), the Directors are
seeking Shareholder approval for Cancellation, as detailed below.

4.         Background to and reasons for the Cancellation
4.1        Background
The Directors have conducted a review of the benefits and drawbacks to the Company and its Shareholders of continuing to maintain the Company's admission to trading on AIM following completion of the Disposal.  The Directors have concluded that in the event that the Disposal proceeds, Cancellation is in the best interests of the Company and its Shareholders as a whole. In reaching that conclusion, the Directors have considered the following key factors, amongst others:

·      the significant time and cost of identifying a suitable
acquisition or acquisitions which constitute(s) a reverse takeover under AIM
Rule 14 and the appetite of the existing management to do so;

·      the recurring costs per annum of around £350,000 (in respect of,
amongst other things, management time and the legal and regulatory costs)
associated with maintaining the Company's admission to trading on AIM which,
in the Directors' opinion, are disproportionate to the benefits to the Company
of remaining admitted to trading on AIM;

·      admission of the Ordinary Shares to trading on AIM does not
necessarily offer investors the opportunity to trade in meaningful volumes per
se or with frequency within an active market. With low trading volumes and
liquidity, the Company's share price can move up or down significantly
following trades of small volumes of Ordinary Shares; and

·      the limited ability of the Company to access capital on AIM.

4.2           Cancellation process

Under the AIM Rules it is a requirement that, unless the London Stock Exchange
otherwise agrees, the Cancellation must be conditional upon the consent of not
less than 75 per cent. of votes cast by the Shareholders at a general meeting.
Accordingly, the Company is proposing the Cancellation Resolution at the
General Meeting. In addition, the Company is required to give a notice period
of not less than 20 Business Days from the date on which notice of the
intended Cancellation is notified via a Regulatory Information Service and is
given to the London Stock Exchange. Accordingly, on 3 May 2023, the Company
notified the London Stock Exchange of the Company's intention, subject to the
Cancellation Resolution being passed at the General Meeting, to cancel the
admission of the Ordinary Shares to trading on AIM with effect from 7 a.m. on
6 June 2023.

4.3          Principal effects of the Cancellation

The Board considers the principal effects of the Cancellation will be:

·       there will no longer be a public market mechanism for
Shareholders to trade in the Ordinary Shares and no price will be publicly
quoted for the Ordinary Shares;

·       the Ordinary Shares will remain freely transferable subject to
there being a willing buyer;

·       it is possible that, following publication of the Circular, the
liquidity and marketability of the Ordinary Shares may be reduced and the
value of the Shares may be adversely affected, although, as previously stated,
the Directors believe that the liquidity of the Ordinary Shares on AIM is at
present very limited;

·       in the absence of a formal market for the Ordinary Shares
following Cancellation, it may be difficult for Shareholders to determine the
market value of their investment in the Company at any given time;

·       whilst the Company's CREST facility will remain in place
following the Cancellation, the Company's CREST facility may be cancelled in
the future and, although the Ordinary Shares will remain transferable, they
may cease to be transferable through CREST. In the event the Ordinary Shares
are no longer transferable in CREST, Shareholders who hold Ordinary Shares in
CREST at such time will receive share certificates;

·       the AIM Rules will no longer apply to the Company and,
accordingly, Shareholders will no longer be afforded the protections given by
the AIM Rules. In particular, the Company will not be bound to:

-        make any public announcements of material events, or to
announce interim or final results;

-        comply with any of the corporate governance practices
applicable to AIM companies;

-        comply with the requirement to obtain Shareholder approval for
certain corporate actions, where applicable, including substantial
transactions, related party transactions, reverse takeovers and fundamental
changes in the Company's business; or

-        comply with AIM Rule 26, obliging the Company to publish
prescribed information on its website;

·       the Company will cease to retain a nominated adviser and a
broker;

·       as an unlisted and non-traded company, the Company will be
subject to less stringent accounting disclosure requirements;

·       the Company would no longer be subject to UK MAR regulating
inside information and other matters;

·       the Company will no longer publicly disclose any change in
major shareholdings in the Company under DTR;

·       as from the date of the Cancellation, stamp duty will be due on
transfers of shares and agreements to transfer shares unless a relevant
exemption or relief applies to a particular transfer as a result of prevailing
Shareholder circumstances;

·       some Shareholders might not be able to hold shares in a private
Canadian company and accordingly may wish to sell their Ordinary Shares before
the Cancellation; and

·       the Cancellation might have personal taxation consequences for
Shareholders. Shareholders who are in any doubt about their tax position
should consult their own professional independent adviser immediately.

In the event that the Cancellation proceeds, it is expected that the
non-executive directors will resign as directors of the Company shortly after
the date on which the Cancellation becomes effective. Following this, Ian
Thomson (executive chairman), John Hogan (managing director), and Andrew
Irvine (finance director) intend to remain as directors of the Company for the
purposes of placing the Company into members voluntary liquidations, further
details on which are set out in the Circular.

The considerations set out above are not exhaustive, and Shareholders should seek their own independent advice when assessing the likely impact of the Cancellation on them.

The Company will continue to communicate information about the Company
(including annual accounts) to its Shareholders, as required by the Companies
Act.

4.4          Transactions in the Ordinary Shares prior to and post
the proposed Cancellation

If Shareholders wish to buy or sell Ordinary Shares on AIM they must do so
prior to the Company's Ordinary Shares being cancelled, with the expected last
day of dealing in Ordinary Shares on AIM expected to be 5 June 2023. As noted
above, in the event that Shareholders approve the Cancellation, it is
anticipated that Cancellation will become effective on 6 June 2023.

As soon as possible following the Cancellation, it is the Board's intention to
proceed with the members voluntary liquidation process described in the
Circular.

It is not the Board's intention to implement a matched bargain facility and
there will be no formal market for Shareholders to effect transactions in the
Ordinary Shares following Cancellation.

5.         Members Voluntary Liquidation

Assuming the Resolutions are passed, Completion takes place, and the
Cancellation occurs, the Directors believe that it will be in Shareholders'
best interests for the Company to be placed into members voluntary liquidation
(MVL) and the surplus assets of the Company (after satisfying the Company's
liabilities) be distributed to Shareholders.  The Board intends to settle
certain of the Company's liabilities of up to approximately £276,000 in JHI
Common Shares.  This will require approximately 475,000 JHI Common Shares,
leaving a balance of approximately 8 million JHI Common Shares remaining for
distribution to holders of Ordinary Shares. The cash portion of the
consideration payable by JHI for the Licence is expected to cover the
Company's remaining liabilities.

The appointment of a liquidator and the Company entering into a MVL process is
dependent on Shareholder consent in a subsequent general meeting of the
Company, which it is proposed is held following the Cancellation.

It is also the Company's intention to liquidate its subsidiary AEL.

6.         Non-United Kingdom Shareholders

The distribution of the Circular in certain jurisdictions may be restricted by
law. Persons into whose possession the Circular comes should inform themselves
about and observe any such restrictions.

Shareholders who are not resident in the United Kingdom should note that they
should satisfy themselves that they have fully observed any applicable legal
requirements under the laws of their relevant jurisdiction in relation to the
Disposal and Cancellation.

7.         General Meeting

The Disposal is conditional upon, amongst other things, Shareholder approval
being obtained at the General Meeting.  The Cancellation is conditional upon
Shareholder approval being obtained at the General Meeting.  At the end of
the Circular is a notice convening the General Meeting to be held at The
Chamber of Commerce, West Hillside, Stanley, Falkland Islands, at 5 p.m.
(Falkland Islands time) on 26 May 2023, at which the Resolutions will be
proposed.

8.         Recommendation

The Directors consider the Disposal and the Cancellation to be in the best
interests of the Company and the Shareholders as a whole.  Accordingly, the
Board unanimously recommends that you vote in favour of the Resolutions, as
the Directors intend to do in respect of their beneficial holdings, which
represent in aggregate approximately 18.95 per cent. of the issued share
capital of the Company.

 
EXPECTED TIMETABLE OF EVENTS
 
 Notice provided to the London Stock Exchange of the proposed Cancellation  3 May 2023
 Publication and posting of the Circular                                    4 May 2023
 Latest time and date for completion of receipt of Forms of Instruction     5 p.m. on 23 May 2023
 Latest time and date for completion of receipt of Forms of Proxy           9 p.m. on 24 May 2023
 General Meeting                                                            5 p.m. on 26 May 2023 (Falkland Islands time)
 Expected Completion of the Disposal                                        31 May 2023
 Expected last day of dealings in Ordinary Shares on AIM                    5 June 2023
 Expected date of Cancellation ((1))                                        7 a.m. on 6 June 2023

 
Notes

All references to time in the Circular are to London time unless specifically
stated otherwise.

Each of the times and dates in the above timetable is subject to change. If
any of the above times and/or dates change, the revised times and dates will
be notified to Shareholders by an announcement through a Regulatory
Information Service.

(1)          The Cancellation is conditional upon the LAA completing
in accordance with its terms and requires the approval of not less than 75 per
cent. of the votes cast (in person or by proxy) by Shareholders at the General
Meeting

 

 

DEFINITIONS

 

The following definitions apply throughout the Circular, unless the context
otherwise requires:

"AEL"
Argos Exploration Limited, a wholly owned subsidiary of the Company;

"AIM"
the AIM market, being a market of that name and operated by the London Stock
Exchange;

"AIM
Rules"
the AIM Rules for Companies (as amended from time to time);

"ARL" or
"Company"
Argos Resources Limited;

"Board" or
"Directors"
the board of directors of the Company;

"Business
Day"
a day (excluding Saturday, Sunday and public holidays in England and Wales) on
which banks are generally open for business in London for the transaction of
normal banking business;

"Buyer"
JHI Falkland, Inc., a private limited company incorporated in Ontario, Canada
having its registered office at 130 Adelaide Street West, Toronto, Ontario M5H
3P5, Canada;

"Cancellation"
the proposed cancellation of admission of the Ordinary Shares to trading on
AIM subject to the passing of the Cancellation Resolution and in accordance
with Rule 41 of the AIM Rules;

"Cancellation Resolution"
Resolution 2 to be proposed to Shareholders at the General Meeting to approve
the Cancellation;

"Canje
Block"
the petroleum licence area offshore Guyana in which JHI has a 17.5% interest;

"Cenkos"
Cenkos Securities plc, the Company's nominated advisor and broker;

"Circular"
 
the circular published by the Company containing details of the Disposal and
Cancellation;

"Companies
Act"
the Companies Act 1948 of the United Kingdom as it applies to the Falkland
Islands:

"Completion"
completion of the Disposal in accordance with the LAA, expected to occur on or
about 31 May 2023;

"CREST"
the computerised settlement system (as defined in the CREST Regulations)
operated by Euroclear UK & International Limited which facilitates the
transfer of title to share in uncertificated form;

"CREST
Regulations"
the Uncertificated Securities Regulations 2001 (SI 20013755);

"Disposal"
the proposed sale of the Licence (and related assets) to the Buyer pursuant to
the LAA;

"Disposal
Resolution"
Resolution 1 to be proposed to Shareholders at the General Meeting to approve
the Disposal;

"DTR"
the disclosure guidance and transparency rules made by the FCA pursuant to
section 73A of the Financial Services and Markets Act 2000;

"FCA"
the UK Financial Conduct Authority;

"Final
Order"
the final order of the Ontario Superior Court of Justice (Commercial List)
approving the Plan of Arrangement under section 182(5) of the OBCA;

"Form of
Instruction"
voting form to be used by Depository Interest holders to submit votes via the
custodian;

"Form of
Proxy"
voting form to be used by Shareholders to submit votes;

"General
Meeting"
the general meeting of the Company to be held at The Chamber of Commerce, West
Hillside, Stanley, Falkland Islands, at 5 p.m. on 26 May 2023 (Falkland
Islands time);

"Group"
the Company and its wholly owned subsidiary, AEL;

"JHI"
JHI Associates, Inc., a private limited company incorporated in Ontario,
Canada having its registered office at 130 Adelaide Street West, Toronto,
Ontario M5H 3P5, Canada;

"JHI Common
Shares"
common shares of no par value in the capital of JHI to be issued to the
Company as part consideration for the Licence and related assets in accordance
with the terms of the LAA;

"LAA"
the licence acquisition agreement dated 2 May 2023 between ARL, AEL, JHI and
the Buyer relating to the sale and transfer of the Licence (and related
assets) by AEL to the Buyer;

"Licence"
offshore petroleum production licence PL001 in the North Falkland Basin
granted by the Falkland Islands Government and currently held by AEL;

"Notice"
the notice set out at the end of the Circular convening the General Meeting;

"OBCA"
the Business Corporations Act (Ontario);

"Ordinary
Shares"
ordinary shares of 2 pence each in the capital of the Company;

"Plan of
Arrangement"
the arrangement being undertaken by JHI pursuant to section 182 of the OBCA;

"Resolutions"
the resolutions to approve the Disposal and the Cancellation to be proposed at
the General Meeting;

"Shareholders"
holders of Ordinary Shares;

"UK
MAR"
the UK version of the Market Abuse Regulations (EU) (No 596/2014) which is
part of the UK law by virtue of the European Union (Withdrawal) Act 2018 as
amended by the Market Abuse (Amendment) (EU Exit) Regulations 2019;

"USD"
the lawful currency of the United States of America; and

"£"
the lawful currency of the United Kingdom.

 

 

Notes to Editors

 

Argos Resources is an oil and gas exploration company listed on AIM and
based in the Falkland Islands. The Company's principal asset is a 100 per
cent interest in Production Licence PL001 covering an area of approximately
1,126 square kilometres in the North Falkland Basin.

 A 3D seismic survey has been acquired over the entire licence area. The
quality of the seismic data acquired is excellent and has led to the
identification of 52 prospects and 40 leads within the licence area. An
independent Competent Person's Report attributes to these prospects a total
unrisked potential of 3.1 billion barrels of prospective recoverable resource
in the most likely case and up to 10.4 billion barrels in the upside case.

The licence area is immediately adjacent to the giant Sea Lion oil discovery
which contains over 500 million barrels of recoverable resource. A decision to
proceed with the development of the Sea Lion field is awaited.

The licence is held under the name of Argos Exploration Ltd, which is a wholly
owned subsidiary of the Company.

The Company has a strong and experienced management team with extensive
experience in both the oil and gas industry and the Falkland Islands.

This statement has been approved by John Hogan, Managing Director of Argos
Resources, and a qualified geologist with over 40 years of experience in the
petroleum industry.

Information on JHI

JHI is a private company incorporated in Ontario and headquartered in Toronto,
Canada. JHI owns a 17.5 per cent. interest in the Canje block, offshore
Guyana, operated by Esso Exploration & Production Guyana Ltd. (35 per
cent.), a subsidiary of ExxonMobil Corp. The other partners in the block are
TotalEnergies E&P Guyana BV (35 per cent.) and Mid-Atlantic Oil & Gas
Inc. (12.5 per cent.). The Canje block covers approximately 4,800 square
kilometres and is located approximately 180 to 300 kilometres offshore Guyana
in water depths ranging from 1,700 to 3,000 metres.

The Canje block is a large and significant licence adjacent and immediately
east of multiple ExxonMobil discoveries in the Stabroek block. 6,100 square
kilometres of 3D seismic data has been shot over the Canje block, from which
over three dozen prospects have been mapped in four proven plays in the Lower
Tertiary and Upper Cretaceous confined channels, Lower Cretaceous carbonate
structures and, with the recent drilling of Sapote-1 well and Stabroek
discoveries, the block now offers the opportunity of yet deeper prospectivity.

As of 31 December 2021, JHI's audited financial statements indicate total
gross assets of approximately US$30.7 million, of which approximately US$27
million in cash and investments, and total liabilities of approximately
US$500,000.

 

 1  (#_ftnref1) Whilst the Company has no reason to doubt the veracity of this
information (as at the date of this Circular), it is provided by JHI and has
not been independently verified. No representation, warranty, assurance or
undertaking is made, and no responsibility or liability is or will be
accepted, by the Company (or by its officers, employees or agents) in relation
to the adequacy, accuracy, completeness or fairness of the information and/or
opinions available at www.jhiassociates.com.

 2  (#_ftnref2) The Company has not had sight of JHI's register of
shareholders or the Plan of Arrangement, which may in any event be subject to
amendment or modification in the Final Order, and the figures in this
paragraph are based on the warranties given by JHI in the LAA as well as the
Board's understanding of the Plan of Arrangement.

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