19 November 2013 TANGIERS PETROLEUM LIMITED Letter to Shareholders Dear Shareholder On 8 October 2013, Tangiers Petroleum Limited (the Company) issued an announcement advising the shareholders that it had terminated the Farm-Out Agreement with CWH Resources Limited in relation to the offshore permits WA-442-P and NT/P81 located in the Joseph Bonaparte Gulf, northern Australia (Permits). This letter is to provide background on the farm-out process and provide a history of the Permits and their current status. Farm-out Process The Company commenced a search for a farm-in partner in April 2012 and commissioned a well-regarded and experienced petroleum consultancy to manage the process. 176 companies (both Australian and international) were identified, contacted and followed up in the process. Although a number of companies initially showed some interest and proposed minor contributions, many were deterred by the magnitude of the work commitment of over $60 million in today's costs, and the fact that the work completed to date had not yet confirmed drilling opportunities. CWH Resources was the only company prepared to make a significant contribution of $35 million to the outstanding mandatory work commitment. History of the Permits The Titleholders (the Company - 90%, and Ansbachall Pty Ltd -10%) applied for the Permits in December 2009 and they were granted in early 2010 for a period of six years. The first three years of the work program commitment (to April/ May 2013) is mandatory and comprises of: Year One (ending April/May 2011) - Reprocessing of previously acquired seismic data. Year Two (ending April/May 2012) - 3D seismic surveys in both permits. Year Three (ending April/May 2013) - Two exploration wells (one in each Permit). The work completed to date has been the reprocessing of previously acquired seismic data and technical evaluation. The Year Two and Year Three commitments are relatively significant, especially for a junior company to take on at 90% equity. The failure to complete the Year Two program by April/May 2012 placed the permits in jeopardy and there had already been applications to government for extensions of time prior to the Board changes in September 2012. Current Status The current Board and staff of the Company have made every effort to deal with the legacy of this significant work program commitment, but understandably the government is running out of patience and clearly the Company itself cannot fund the program at 90%. Together with its joint venture partner, Ansbachall Pty Ltd, the Company has applied to the government for a further extension of time for both permits to allow us to try again to identify a company or companies willing to fund the 3D seismic survey, which is expected to cost about $10 million. We are currently awaiting a response from the government as to whether they are prepared to grant any further extension. We hope that this answers some of the questions and concerns that have been raised by the shareholders regarding the Australian permits. EVE HOWELL Executive Chairman Tangiers Petroleum Limited Level 2, 5 Ord Street West Perth WA 6005, Australia Ph: + 61 8 9485 0990 www.tangierspetroleum.com Contacts RFC Ambrian Limited (Nominated Adviser) Mr Stuart Laing +61 8 9480 2506 Peel Hunt LLP (Joint AIM Broker) Mr Richard Crichton Mr Andy Crossley + 44 20 7418 8900 Shore Capital Stockbrokers Ltd (Joint AIM Broker) Mr Jerry Keen Mr Bidhi Bhoma + 44 20 7408 4090 Mr Ed Portman (Media and Investor Relations - United Kingdom) Tavistock Communications +44 20 7920 3150 END -0- Nov/19/2013 07:00 GMT
TANGIERS PETROLEUM LIMITED: Letter to Shareholders
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