Jade Gas Provides December 2023 Quarterly Report & Appendix 5B

Source: www.gulfoilandgas.com 1/31/2024, Location: Asia

? Jade completed its 2023 Program with success across wide areas of the TTCBM Project
? Significant results during the quarter continued to highlight the massive potential for commercial scale gas production with gassy intersections including;
• 104.6m of gassy coal intersected (BNG-3);
• 35.52m of gassy coal intersected (Vista-3);
• 38.90m of gassy coal intersected (Vista-4);
• 46.28m of gassy coal intersected (Vista-5); and
• 27.15m of gassy coal intersected (Brownhill-3).
? Key deliverables identified for CY2024 to maximise resource value into huge unmet gas needs on Jade’s doorstep:
• Assess new priority targets at Baruun Naran, Red Lake, Vista, and Brownhill basin areas to extend existing resources further to the east and west;
• Pilot Production Program drilling rescheduled to Q1 CY2024 to avoid well site activities in the extreme winter and minimise operational cost and risk;
• Drilling commenced to expedite appraisal of Baruun Naran area (BNG Project), adjacent to the TTCBM Project, to accelerate the path to securing a Production Sharing Agreement (PSA); and
• Continue assessing partner options for 18,000km2 Eastern Gobi and Shivee Gobi permits.
? Focus remains on commercialising the Company’s gas fields which span over 40km and which currently has a 246 Bcf1 unrisked Gross 2C Contingent Resource with larger upside potential
? A$11M Financing secured with Jade strategic shareholder, UB Metan LLC (UBM), via the issue of unsecured convertible notes at a 22% premium

Jade Gas Holdings Limited provides its December 2023 quarterly activities report for its coal bed methane gas project at the Tavantolgoi basin in Mongolia (TTCBM Project), in the South Gobi region of Mongolia.

CY2023 Program
Following Jade’s $11m capital raise during the quarter with strategic shareholder, UB Metan LLC (UBM) (refer ASX Announcement 2 November 2023), the Company announced that it had completed its 2023 Program successfully with continued delineation of the gas bearing coal seams across wide areas of the TTCBM Project. The Company is preparing for pilot production operations in the Red Lake area and also assessing the coal basin further to the east. A number a key-deliverables were identified which are designed to demonstrate larger potential, maximise resource value among Jade’s projects, and ultimately produce gas economically with commercial scale to service the huge, and currently unmet, gas fired energy requirement of over 500MW on Jade’s doorstep.

• Exploration
With the success of the CY2023 campaign at TTCBM, Jade has collected the essential technical data to identify and prioritise further appraisal and testing of high-graded targets in the area during the current calendar year. Results from the Vista and Brownhill exploration drilling campaigns include the following wells with gassy intersections;

? 35.52m of gassy coal intersected (Vista-3);
? 38.90m of gassy coal intersected (Vista-4);
? 46.28m of gassy coal intersected (Vista-5); and
? 27.15m of gassy coal intersected (Brownhill-3).

The Company is focused on further developing the existing gas fields and extended coal gas accumulations encountered over a distance of 40km. The Company is looking to assess priority targets at Red Lake, Vista, Brownhill and Baruun Naran areas and prove up gas resources further east and west of the current Red Lake, 246 Bcf1 unrisked Gross 2C Contingent Resource. It is expected that a small seismic program in the new year will enhance the ongoing assessment, particularly after good results were achieved from the 2023 seismic program.

• Baruun Naran
Jade holds a Prospecting Agreement Permit over the Baruun Naran coal field (BNG Project) with jointventure partner Khangad Exploration LLC (Khangad), a subsidiary of Mongolia Mining Corporation (MMC),

a public company listed on the Hong Kong Stock Exchange. The Baruun Naran coal field is located immediately adjacent and west of Jade's TTCBM Project. The BNG permit has an active coal mine within it, along with substantial data gathered from historic coal mine drilling.

Jade recorded its second largest intersection with 104.6 metres of gas bearing coal recovered from BNG-3, reaching a total depth of 849.8 metres with multiple gassy coal seams intersected including the last seam which was 28.5 metres thick. The coals are currently undergoing desorption testing.

The first two wells at Baruun Naran recovered 35 metres of gassy coal (BNG-1) (refer ASX Release 8 November 2022), and 26 metres of gassy coal (BNG-2) (refer ASX Release 13 December 2022).

Jade has identified Baruun Naran as a critical area for expedited drilling as a part of its proposed CY2024 plans. This result will be used for the conversion of 2U Prospective Resources to 2C Contingent Resources in the BNG permit, and to support an accelerated path to securing a Production Sharing Agreement (PSA) in 2024.

• Pilot Production Program
Due to a combination of factors, Jade made the decision to re-schedule drilling the first horizontal well at the TTCBM Project. Despite best intentions from all parties, logistics and other issues, a number of service providers were unable to deliver and/or prepare equipment ready for use in line with the original schedule.

This time delay pushed Company operations into the extreme cold temperatures that will be experienced in the South Gobi over the next few months. Whilst originally the first well was forecast to spud in November 2023 and drilling into mid-December, a new date had to be set after extreme cold temperatures heighten operational risk and in turn the slight delay will provide the best chance of success for commercial gas production. The rescheduling will allow time for further refinement and interpretation of the recently completed Red Lake 2D seismic program to better assist well planning and drilling operations now set for Q1 CY2024.

• Eastern Gobi and Shivee Gobi permits
As a part of its CY2024 plans, Jade is focused on the two 100% owned highly prospective and sizeable coal bed methane Prospecting Agreement permits, Shivee Gobi and Eastern Gobi, covering a total area of 18,000km2 , located to the north and east of the TTCBM Project and with an estimated gross unrisked 2U Prospective Resource of 5.4 Tcf2 (refer ASX Announcement 28 April 2022). Since acquiring the permits (refer ASX Announcement 8 February 2022), the Company has received growing interest from potential partners for collaboration. During 2023, Jade held a number of discussions and intends to continue assessing partner options for the Eastern Gobi and Shivee Gobi permits.

• Strategic Partnership with UB Metan LLC
UBM is Mongolia’s largest importer and distributor of natural gas, and largest shareholder of Jade Gas. UBM has been a key partner of Jade since its inception, supporting the Company in both financial and operational activities. The strength of the partnership is demonstrated by the recent announcement of $11 million investment by UBM in Jade (refer ASX Announcement 2 November 2023).

UBM recognise the essential requirement for natural gas during the transition to greener energy supplies in Mongolia. Jade continues commercial negotiations with its strategic shareholder UBM, with the ultimate aim to fast track delivery of gas to customers.


? A$11M Financing Secured
Jade announced the execution of a convertible note deed with one of its largest shareholders, UB Metan LLC (UBM) to raise a total of A$11 million (the Notes).

The Notes will be unsecured, subject to shareholder approval and will be convertible in full at the election of UBM or Jade at a conversion price of A$0.045 per Note. The conversion price represented a 22% premium to Jade’s closing share price on 31 October 2023. The Notes have a maturity date of 12 months from the date of the full subscription amount being transferred and are subject to an interest rate of 10% per annum.

Interest accrued on the Notes will be capitalised and satisfied through the issue of Jade shares on conversion of the Notes. Accordingly, the exact number of shares to be issued on conversion will depend on the amount of interest accrued prior to conversion of the Notes. The subscription funds will be advanced by UBM to the Company in accordance with a payment schedule defined in the financing agreement which requires the final tranche to be paid by 30 April 2024.

Under the financing agreement, the Company agreed to continue to negotiate in good faith to expand, either by way of joint venture or gas supply agreement, its cooperation with UBM established under the Memorandum of Understanding (MOU) in April 2022 (refer ASX Release dated 19 April 2022). Under the MOU, the parties aim to collaborate effectively on the timely and efficient commercialisation of the TTCBM Project. Recent progress under the MOU has seen the two parties investigating the potential to enter a formal joint venture arrangement to facilitate sales of coal seam gas from the TTCBM Project. The Company will keep the market informed in accordance with its continuous disclosure obligations.

Jade intends to use the funds received from the convertible note financing to advance the Company’s portfolio of coal seam gas projects. Primarily for Mongolia’s first horizontal drilling campaign at the Company’s flagship project at the Tavantolgoi basin in Mongolia (TTCBM Project), advancement of the appraisal at the BNG Project (a joint venture with Mongolian Mining Corporation Limited) adjacent to the TTCBM Project, continued assessment of the Shivee Gobi and Eastern Gobi coal seam gas appraisal projects, and general working capital.

? Key Board Appointment Finalised
Mrs Uyanga Munkhkhuyag was appointed as Non-Executive Director (NED), effective 10 October 2023 following the announcement made relating to board enhancements on 28 June 2023. Mrs Munkhkhuyag has over 10 years’ experience in project development and management, specializing in infrastructure projects in the energy, logistics, gas and oil sector in Mongolia. She previously held positions of project coordinator, consultant and project director for several projects representing the project owners with overall management responsibility from development to commission. Mrs Munkhkhuyag is currently project director at Jade’s strategic partner, UB Metan LLC, undertaking roles to develop downstream facilities in the natural gas sector of Mongolia, including the construction of fuelling stations and a storage terminal, and establishing a new market to expand the end-users of natural gas.

Jade also advised that Justin Green resigned from the role of Company Secretary with the gratitude of the board for his contribution to the Company. Aaron Bertolatti was appointed as Company Secretary.

Related Party Payments
In line with its obligations under ASX Listing Rule 5.3.5, the Company confirms the payments to related parties of the Company as per item 6.1 of the attached Appendix 5B was $25k for the period ended 31 December 2023. These payments are for Directors fees, salary and superannuation

Cash at bank as at 31 December 2023 was A$2.13 million. Exploration & evaluation expenditure for the quarter was A$1.69 million and related to the pilot production program.

Schedule of Tenements – Mongolia

Mining Tenements disposed: Nil
Beneficial percentage interests held in farm-in or farm-out agreements: Nil
Beneficial percentage interests in farm-in or farm-out agreements acquired or disposed: Nil

Authorised for release on behalf of the Board by Joseph Burke, Executive Director.

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