State Gas Limited (STGSF) Secured $3.2 million via Structured Loan Notes at a Premium

State Gas Limited (ASX:GAS) (OTCMKTS:STGSF) announced it has received firm commitments of $3.2 million from sophisticated and professional investors to subscribe for new convertible notes ("the Note Transaction").

HIGHLIGHTS:

- $3.2 million raised through issue of unsecured convertible notes at a 33% premium to the closing price on 3 December 2025

- Convertible notes issued are convertible into fully paid ordinary shares of State Gas Limited.

- In addition to the $3.2 million raised, Directors convert $0.5 million of their debt into Convertible notes, reinforcing their confidence in the Company and paving the way for a simplified balance sheet.

- Funds raised from new and existing sophisticated and professional investors

- Provides funding to accelerate predevelopment activities for the Rolleston West Project, further to the recent maiden 2P Reserve certification


The issue of the convertible notes is subject to Shareholder approval at a general meeting, which the Company intends to convene as early as practicable in calendar year 2026. Until the convertible notes are issued following Shareholder approval, the subscription funds will be treated as loan funds.

State Gas' Managing Director, Mr Doug McAlpine said, "Proceeds from the Note Transaction enable State Gas to rapidly advance its planning and pre-development activities for the Rolleston West Project. With the conversion price of the notes and strike price of attaching options both at a premium to the Company's current share price, it is strong recognition of the intrinsic value in the Company's assets after the Company's recent maiden 2P reserve announcement."

Note Transaction Details

Each unlisted, unsecured convertible note ("the Notes") has a face value of $25,000. The Notes have a conversion price of $0.04 (4.0 cents) for the first 16 weeks after the payment date and thereafter have a conversion price which is the lesser of $0.04 (4.0 cents) or a 20% discount to the 15-day VWAP of State Gas shares at the time.

In lieu of interest, and subject to State Gas shareholder approval, State Gas will issue each Note holder unlisted options ("Options"). Note holders will receive one (1) attaching option for every (2) ordinary share entitlements under the issue, assuming share entitlements are calculated at a conversion price of $0.03 per share, being the closing price of GAS shares on the trading day immediately prior to this announcement. Options are exercisable at $0.05 (5.0 cents) and expire 30 months from the date of issue.

State Gas can require conversion of the Notes if the Company's share price is greater than $0.10 (10 cents) for ten consecutive trading days. State Gas can also redeem the notes at any time if the shares are trading either below $0.045 or above $0.10, by repaying the face value of the Notes plus a twenty percent premium and issuing noteholders a further tranche of unlisted options of the same quantum and on the same terms as the original issue. The issue of additional options in an early redemption scenario would be made within the placement capacity available to the Company under ASX Listing Rule 7.1 at the time or require the Company to seek shareholder approval.
Detailed terms of the Notes and Options are set out in Appendix 1 and 2 respectively.

To demonstrate their support for this transaction and State Gas' plans for Rolleston West entering its commercialisation stage, the Directors have agreed to convert $0.5 million of their existing Director loans to Notes subject to shareholder approval. This is in addition to the $3.2 million of new funds raised.

Use of Funds

Strong support for the Note Transaction reflects increased investor confidence in the commercialisation strategy for the Rolleston West Project post the announcement of a maiden 2P Reserve for the Project of 30PJ. The Company is now focused on accelerating pre-development activities at Rolleston West and securing a Project partner who can support the delivery of a new gas project at a time of substantial increasing demand for natural gas on the East Coast of Australia. As part of this process the Company also intends to engage with potential partners about strategic and financial support for the project through potential farm-out, joint venture participation, off-take and/or gas presale. State Gas will also commence initial engagement around project infrastructure finance opportunities from both private and public sector lenders.

Proceeds from the Note Transaction will be specifically used to fund:

- Internal engineering and commercial resources to support field development plans;

- Third party costs of gas processing plant and pipeline connection concept studies;

- Third party consultants and advisors to support the application for permanent production tenure including the commencement of baseline environmental studies; and

- Corporate overheads, legal costs and working capital.
Ignite Equity

The Board would like to thank Ignite Equity for their hard work and initiative in bringing this innovative funding opportunity to the Company. The Note Transaction is an efficient and less dilutive funding mechanism than traditional equity and allows the Company to accelerate the Rolleston West development while preserving strategic funding optionality. The funds raised materially enhance the Company's capacity to meet its next phase of technical, regulatory, and commercial milestones. Ignite Equity Pty Ltd has acted as sole lead manager and cornerstone investor for the Note Transaction. Mr Shaun Factor and Mr Greg Lowe (Founders - Ignite Equity), said "We're excited to support State Gas with this funding and to join the Company as shareholders. We introduced this structure because we understand the Board's desire to minimise dilution at a time when the share price is materially depressed, while still ensuring the Company is appropriately funded to execute its strategy. We have deployed similar structures across multiple companies, and when combined with strong management and consistent, positive news flow, they have supported excellent outcomes for all stakeholders. With the Company having recently announced its maiden 2P Reserve, we see a clear pathway toward a stronger balance sheet, including the potential to become debt-free. We also welcome the continued financial support shown by Directors and existing shareholders, including the conversion of $0.5 million of the Director loans into the note structure, which we view as a meaningful sign of confidence and alignment with shareholders."

Ignite Equity Pty Ltd will receive fees for their services as Lead Manager consisting of 6% of cash proceeds from the note transaction plus 9.6M options exercisable at $0.05 and expiring 30 months from issue.

Doug McAlpine
Managing Director
Phone: 0439 557 400
Email: doug@stategas.com
Web: www.stategas.com

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