Scirocco Energy PLC (AIM:SCIR) Ruvuma Divestment and announcement of General Meeting

Scirocco signs binding agreement to divest 25% interest in Ruvuma to Wentworth Resources for a total consideration of up to US$16 million

Scirocco Energy (AIM: SCIR), the AIM investing company targeting attractive assets within the European sustainable energy and circular economy markets, is pleased to announce that it has entered into a conditional binding agreement with Wentworth Resources plc (AIM: WEN) to divest its 25% non-operated interest in the Ruvuma asset, Tanzania, for a total consideration of up to US$16 million.

Ruvuma Transaction Highlights

· Total consideration of up to US$16 million comprised of:

o Initial consideration of US$3 million payable on completion of the Proposed Transaction;

o US$3 million payable upon final investment decision being taken by the parties to the Ruvuma Asset Production Sharing Agreement or the JOA as the case may be;

o Deferred consideration of up to US$8 million payable in the form of a 25% net revenue share from the point when Ruvuma commences delivery of gas to the gas buyer;

o Contingent consideration of US$2 million payable on gross production reaching a level equal to or greater than 50Bcf.

· Wentworth to provide Scirocco with a loan of up to $6,250,000 to meet all cash calls pursuant to the Ruvuma JOA arising between the Economic Date of 1 January 2022 and expected Completion timeline.

· The first $3m to be drawn under the loan is interest free however any amounts drawn in excess of $3m will incur interest at a rate of 7% per annum until such time as the grant of the security in respect of the loan is approved by the Minister for Energy in Tanzania.

· The total consideration represents over 200% premium to Scirocco’s current market capitalisation.

· The deal strengthens Scirocco’s balance sheet and, critically, removes the imminent need to raise capital to fund the Ruvuma work programme.

· Completion of the Proposed Transaction follows a formal sales process for the asset and enables Scirocco to accelerate its strategy of building a portfolio of cash generative assets within the sustainable energy and circular economy sectors.

· Pursuant to Rule 15 of the AIM Rules for Companies, the Proposed Transaction is subject to shareholder approval by way of an ordinary resolution at a General Meeting scheduled for 29th June 2022, the details of which will be included in a shareholder circular published today. Please refer to the end of this announcement for an extract from the circular containing more details on the Proposed Transaction and the General Meeting .

· Those Directors who hold shares, representing 3.2% of the Company’s issued share capital, believe the Proposed Transaction to be in the best interests of the Company and will be voting in favour at the General Meeting.

· In addition the Company has received letters of support for the Proposed Transaction from significant shareholders representing 11.1% of the Company’s issued share capital which confirm that it is their current intention to vote in favour of the resolution at the General Meeting

In line with the requirements of Schedule Four of the AIM Rules, the Company notes that it recorded its interest in the Ruvuma asset at a gross asset value of £14.63 million per its unaudited accounts for the 6 month period ended 30 June 2021. For the audited year ended 31 December 2020, the Company incurred losses relating to Ruvuma asset of £0.81 million.

Capitalised terms are as per the definitions section at the end of the announcement.

Commenting on the Proposed Transaction, Tom Reynolds, Scirocco’s CEO stated:

“This is a transformative deal that follows lengthy engagement with Wentworth and a two-year sales review process. The deal enables Scirocco to crystallise firm value from this asset which can be deployed into compelling opportunities in line with the Company’s strategy to focus on opportunities within sustainable energy and the circular economy. The deal is appropriately structured to reflect the risk profile of the asset and ensures Scirocco retains value exposure to the ongoing success of the project as it reaches various milestones. Critically, it also provides the Company with the funding to meet the imminent cash calls associated with the work programme on the Ruvuma Asset until the deal completes, meaning we avoid the material dilution that would have been required in the event we retained our interest in the project.

The Board has no doubt whatsoever that this is wholly in the best interest of the Company and its shareholders. After an exhaustive sales process over the last couple years, it is evident that this is the best possible deal that we could achieve based on the macro backdrop and the investment required to further de-risk and commercialise our interest in Ruvuma. In Wentworth, we have found the perfect counterparty that can add value to the JV going forward, and their existing profile in Tanzania ensures lower deal execution risk and the best chance of a swift completion.

Upon completion, this deal enables the Board to focus on the execution of its stated strategy, with a significantly stronger balance sheet and cash that can be deployed right away to capitalise on the compelling opportunities that we have within the EAG JV’s deal pipeline. Those opportunities reflect our stated intention to create a cash generative, diversified business model which can grow through acquisition of and/or investment in sustainable energy assets. The divestment of Ruvuma simplifies our investment thesis and enhances our appeal to a broader universe of investors, including ESG investors who we believe will be attracted to our growth strategy.

We look forward to discussing the merits of this proposed transaction with our shareholders at the upcoming shareholder presentation, details on which are set out below.”

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For further information:

Scirocco Energy plc

Tom Reynolds, CEO

Doug Rycroft, COO

+44 (0) 20 7466 5000

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