Bandanna Energy Limited (ASX:BND) Announce Equity Raising to Fund Export Infrastructure Development and Definitive Feasibility Studies

Sydney, Aug 17, 2011 AEST (ABN Newswire) - Bandanna Energy Limited (ASX:BND) today announces an equity raising by way of an accelerated non-renounceable entitlement offer ("Entitlement Offer") to raise up to approximately A$133 million to assist with developing key projects including securing Stage 1 capacity at Wiggins Island Coal Export Terminal ("WICET") and associated rail allocation.

Under the Entitlement Offer, eligible shareholders will be offered the opportunity to purchase Bandanna shares at A$1.00 each ("Offer Price") on the basis of 5 new ordinary shares for every 16 existing ordinary shares held at 7:00pm (AEST) on Monday, 22 August 2011 ("Record Date").

The Offer Price of A$1.00 per share represents a 12.6% discount to the theoretical ex-rights price and a 16.0% discount to the closing price of Bandanna shares on Tuesday, 16 August 2011. New shares issued under the Entitlement Offer will rank equally with existing ordinary shares.

All Bandanna directors with entitlements are intending to participate in the Entitlement Offer in respect of some or all of their entitlements. In addition, SAMTAN Aures Pty Ltd ("SAMTAN"), a wholly-owned subsidiary of a private South Korean coal producer and major shareholder of Bandanna has indicated its commitment to support the Entitlement Offer and at least maintain its current shareholding of approximately 10%, thus continuing its long-standing support of the development of Bandanna's assets.

The Entitlement Offer will be underwritten to A$100 million by UBS AG (NYSE:UBS), Australia Branch ("UBS"), including the commitment from SAMTAN.

Together with Bandanna's existing cash reserves, proceeds raised from the Entitlement Offer will be used to:

- satisfy financial commitments at financial close for Bandanna's 4Mtpa export capacity through Wiggins Island Coal Export Terminal ("WICET") Stage 1;

- provide cash-backing for bank guarantees in respect of above and below rail commitments; and

- fund the Definitive Feasibility Studies ("DFS") at Springsure Creek, Dingo West and South Galilee and other project development expenditure.

Indicative Entitlement Offer timetable

- Trading halt commences: Wednesday, 17 August 2011
- Institutional offer opens: Wednesday, 17 August 2011
- Institutional offer closes: Wednesday, 17 August 2011
- Trading halt lifted; Bandanna shares recommence trading on ASX, Thursday, 18 August 2011
- Record Date: 7:00PM, Monday, 22 August 2011
- Retail offer opens: Thursday, 25 August 2011
- Institutional settlement: Friday, 26 August 2011
- Allotment and normal trading of new shares issued under the institutional offer: Monday, 29 August 2011
- Retail offer closes: Friday, 9 September 2011
- Retail settlement: Friday, 16 September 2011
- Retail allotment: Monday, 19 September 2011
- Trading of new shares issued under retail offer: Tuesday, 20 September 2011

Strategic Review update

Bandanna is currently in discussions with a number of parties regarding a range of potential transactions. These include corporate level transactions and asset level transactions at each of Dingo West, the Golden Triangle and South Galilee. Sales of both entire assets and minority investments in individual assets are being considered.

In addition, Bandanna has received new interest over the last couple of weeks from companies with significant mining operations in Australia and offshore.

However, Bandanna's discussions with third parties may, or may not, result in a proposal being made or recommended by the Board. The market will be advised of any such transaction and the outcome of the Strategic Review process, as appropriate.

In commenting on the current position Managing Director Dr Ray Shaw said "despite the turmoil in financial markets, the fundamentals for the seaborne thermal coal sector and Bandanna remain extremely strong. The medium term requirements in India and China are very large and the report of new export restrictions on lower calorific coals out of Indonesia enhances Australia's relative standing as a source for export thermal coal. The shunning of future nuclear power expansion by countries such as Japan and Germany has created new market growth potential and countries such as Korea also have plans to use significantly more imported coal. Bandanna is well placed in the Korean market thanks to the presence of SAMTAN as a major shareholder with marketing rights into Korea."

Bandanna has a near term requirement to enter into a Take-or-Pay agreement with WICET and provide associated bank guarantees related to port and rail capacity. This Entitlement Offer will provide Bandanna with the ability to cash-back the required bank guarantees.

The Bandanna Board expects that following the completion of the Entitlement Offer and using other funding alternatives which the Company is considering, Bandanna will be able to fund budgeted project expenditure to June 2012. Bandanna will also continue to pursue value maximising transactions at the corporate and/or asset level over coming months, if acceptable terms can be agreed.

Company update

During 2011, Bandanna has reached a number of significant milestones, including:

- increases in reserves at Springsure Creek to 102.6Mt and resources to 374.5Mt;

- resource upgrade at South Galilee (including delineation of a Measured Resource);

- receipt of final Environmental Impact Statement Terms of Reference for Springsure Creek and Arcturus;

- in regard to Strategic Cropping Land, the Queensland Government has proposed a specific legislated transitional framework to apply to the Springsure Creek Project to provide for it to be developed as an underground coal project;

- completion of Feasibility Studies for Springsure Creek, Arcturus and Dingo West;

- completion of the Pre-Feasibility Study for South Galilee; and

- lodgement of Mining Lease Applications for South Galilee and Dingo West.

Contact

Dr Ray Shaw Tel: +61-7-3041-4400 Andrew Crook Mb: +61-419-788-431 http://www.bandannaenergy.com.au