Dragon Energy Limited (ASX:DLE) Announces Underwritten A$21.4m Rights Issue And Option Entitlement Issue

Perth, Jan 12, 2011 AEST (ABN Newswire) - Dragon Energy Ltd (ASX:DLE) is pleased to announce an underwritten 1 for 2 non-renounceable rights issue to raise approximately A$21.35 million (Rights Issue). The Company will also undertake a 1 for 3 pro-rata non-renounceable entitlement issue of options (exercisable at A$0.35 each and expiring 18 November 2014) (New Options) to shareholders, to raise approximately A$47,460 (Option Entitlement Issue). Together, the Rights Issue and Option Entitlement Issue will raise up to A$21.4 million (the Offers).

The Rights Issue will be offered to existing shareholders on the basis of one (1) new share for every two (2) shares held at the record date at an issue price of A$0.30 per share (New Share) to raise approximately A$21.35 million (before costs).

The Option Entitlement Issue will be offered to existing shareholders on the basis of one (1) New Option for every three (3) shares held at the record date at an issue price of A$0.001 per New Option to raise approximately A$47,460 (before costs). The Company will apply for quotation of the New Options on the Australian Securities Exchange.

Based on the Company's current issued capital the Offers will result in 71,189,854 New Shares and 47,459,902 New Options being issued.

The Company's major shareholder, Shandong Taishan Sunlight Group Company Limited (Shandong Group), has committed to underwrite a minimum of A$18.0 million for the Rights Issue. The Shandong Group has also confirmed their intention to subscribe for their full entitlement under both the Rights Issue and Option Entitlement Issue.

Part of the funds raised from the Offers will be applied to finance the acquisition of the Rocklea Project. The balance of the funds will be applied to new acquisitions and general working capital. The Rocklea Project (as announced to the market on 22 October 2010) has a JORC inferred Resource of 63.1Mt grading 53.4% Fe (60.4% caFe), including a higher grade component of 28.2Mt grading 55.6% Fe (62% caFe). This project together with the recently acquired Nameless Project will be Dragon Energy's flagship projects.

Commenting on the Offers, Dragon Energy's Managing Director Mr Gang Xu said: "We are very pleased to offer our shareholders the opportunity to participate in these capital raisings. We will fast track our flagship projects and continue to build a quality portfolio of mineral projects."

"We are very privileged to secure underwriting support from our major shareholder the Shandong Group. The funds from these capital raisings will underpin an exciting future for Dragon Energy."

Further details of the Offers including the timetable and the full terms and conditions of the New Options will be detailed in a prospectus proposed to be lodged with ASIC on or about 18 January 2011.

Contact

Gang Xu Managing Director Tel: +61-8-9322-6009 Mob: +61-411-039-645 Mark Hafer Exploration Manager Tel: +61-8-9322-6009 Mob: +61-403-966-776 http://www.dragonenergyltd.com/