Zoltav Resources Inc - Loan Agreement

14 July 2020

Zoltav Resources Inc.

("Zoltav" or the "Company")

Loan Agreement

Zoltav (AIM: ZOL), the Russia-focused oil and gas exploration and production company, announces that the Company has entered into a loan agreement with ARA Capital Holdings Limited under which ARA Capital Holdings Limited has provided a revolving loan facility for up to US$9,000,000 (the "Loan"). ARA Capital Holdings Limited is the parent company of ARA Capital Limited - both entities combined own 44.1 percent of the issued share capital of the Company.

The Loan has been made available for drawdown in two instalments of:

(1) US$ 2,000,000, which is provided unconditionally and has been drawn down by the Company; and

(2) US $7,000,000, which is secured against the shares of Royal Atlantic Energy (Cyprus) Limited (of which Diall Alliance, which holds and operates the Bortovoy Licence, is a wholly owned subsidiary) and has been drawn down by the Company.

The Loan is currently due for repayment by 15 August 2020 unless otherwise extended or converted into equity by mutual agreement, and, in the case of conversion, subject to shareholder approval. The Loan is interest-free save for in the event of a failure to repay on time, in which circumstances the Loan will accrue interest at a rate of 15 percent per annum.

Proceeds from the Loan will be used for general working capital purposes and in support of the operational activities outlined in the Company's Corporate and Operational Update announcement issued on 30 June 2020, including  the development drilling programme ongoing at West Bortovoy and the feasibility study and associated engineering and design work ongoing on East Bortovoy.

As announced on 30 June 2020, management have held preliminary discussions with a number of prospective providers of project finance for developing East Bortovoy, including around any future equity contribution to the project which may be required to secure such project finance. In the event the Company takes a positive final investment decision on this project in due course, it is currently envisaged that the Loan would be restructured in order to facilitate any required equity contribution or a part thereof.

ARA Capital Holdings Limited and ARA Holdings Limited are regarded as related parties as defined by the AIM Rules for Companies. The Loan as described above is a related party transaction for the purposes of Rule 13 of the AIM Rules for Companies. The directors of Zoltav consider, having consulted with the Company's nominated adviser, SP Angel Corporate Finance LLP, that the terms of the related party transaction are fair and reasonable as far as shareholders are concerned.

Lea Verny, Chairman, commented:

"We are pleased to have secured the financial support of a major shareholder. Such financing is necessary both to progress the feasibility study on East Bortovoy to the point at which the board can procure project financing and make a final investment decision, and to support the development drilling programme on West Bortovoy which is necessary to sustain production."

Enquiries:

Market Abuse Regulation (MAR) Disclosure

Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

About Zoltav

Zoltav is an oil and gas exploration and production company focused on Russia.

Zoltav holds the Bortovoy Licence in the Saratov region of South Western Russia, a 3,215 sq km area along the northern margin of the Pre-Caspian basin, one of the largest hydrocarbon basins in the CIS.

The Bortovoy Licence contains a number of productive gas fields in the west of the Licence, a processing plant and significant exploration prospectivity. It holds proven plus probable reserves under the Society of Petroleum Engineers' Petroleum Resources Management System of 750 bcf of gas and 3.8 mmbbls of oil and condensate.

In 2018, Zoltav produced 12.0 bcf (341 mmcm) of gas or 2.0 mmboe (274 mtoe) and 66,558 bbls (7,715 t) of oil and condensate.

The Company is currently evaluating strategies to commercialise the eastern fields of the Bortovoy Licence.

For further information on Zoltav, or to sign up for our news alert service, visit: www.zoltav.com.

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