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Description of business:
UMC Energy's principal activity is, alongside carefully chosen partners, to undertake oil and gas exploration in Papua New Guinea and uranium exploration in Madagascar. Petroleum Interests In September 2011, the Company acquired one on-shore (PPL 378) and two off-shore (PPLs 374 and 375) Petroleum Prospecting Licences (the "PPLs") in Papua New Guinea ("PNG") through the acquisition of 100 per cent. of PNG Energy Ltd, and that company's wholly owned subsidiary Gini Energy Limited ("Gini Energy"). In May 2012, Gini Energy was awarded a further on-shore PPL (PPL 405) by the government of PNG. On 26 March 2012, the Company entered into agreements with CNOOC Australia Limited ("CNOOC"), a subsidiary of CNOOC Limited, the Chinese multi-national oil and gas company listed on the New York and Hong Kong Stock Exchanges, whereby CNOOC subscribed for a 70 per cent. equity interest in PNG Energy with UMC Energy retaining a 30 per cent. equity interest (the "Agreements"). Pursuant to the Agreements, and in consideration for the share subscription, CNOOC is responsible for funding all expenditure in respect of the PPLs required to comply with the minimum work obligations during the exploration phase of the licences up to commercial development. Such expenditure will be repaid to CNOOC out of production revenues and off take of oil and gas once the assets of Gini Energy enter production, should such production occur. If exploration and appraisal work indicates the probable existence of commercial reservoirs of oil or gas in any part of the PPLs at the end of the exploration phase, the parties must each finance their pro-rata share of all expenditure required in respect of the development plan either themselves or by procuring sufficient finance from a third party. In addition, the Agreements entitle CNOOC to appoint two directors to the boards of each of PNG Energy and Gini Energy, with the Company entitled to appoint one director to each board. Uranium Interests In addition, the Company owns an 80 per cent. equity interest in URAMAD S.A. which owns a number of exploration permits issued by the government of Madagascar (the "Exploration Permits"). The Exploration Permits, which were granted for ten years expiring in 2015 and 2016, are located in the Morondava Basin in western Madagascar, which is infilled and layered with sediments, most notably the Karoo formation that hosts uranium mineralisation. URAMAD is the owner of a database for the Morondava Basin that includes the results of airborne geophysical and radiometric surveys, drill logs for 790 drill holes (approximately 83,000 metres of drilling) with indicated uranium values, and visible uranium mineralisation associated with targets picked from 7,000 radioactive anomalies, recorded and plotted. Due to political upheaval in Madagascar, in 2009 the board of directors of UMC Energy decided to suspend further exploration work in Madagascar and has put its assets into a state of care and maintenance. Capital Reduction The Company is party to a transaction pursuant to which existing shareholders in UMC Energy plc (a company where securities are admitted to trading on the AIM Market of the London Stock Exchange ("AIM")) will be asked to approve a capital reduction ("Capital Reduction") which will involve the cancellation of the entire issued share capital of UMC Energy PLC, such that UMC Energy PLC share holders each receive one new ordinary share in UMC Energy Corporation for each UMC Energy PLC share held at the record date. Following implementation of the Capital Reduction, which is conditional upon, inter alia, shareholder approval and the confirmation of the Court, UMC Energy Plc will be re-registered as a private limited company and will become a wholly owned subsidiary of UMC Energy Corporation. UMC Energy Plc will cancel its admission to trading on AIM and UMC Energy Corporation will apply for admission of its ordinary shares to trading on AIM. The effect of the proposed Capital Reduction is to introduce UMC Energy Corporation as the new holding company of the Group and to redomicile the UMC group of companies to the Cayman Islands.

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UMC Energy Corporation

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