Zoltav 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. 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.

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."

KeyFacts Energy: Zoltav Resources Russia country profile