DGR Global : Adds Further Strategic Investment in Armour Energy

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DGR Global Limited (ASX: DGR)

ASX Announcement |6 July 2022

DGR GLOBAL FURTHER ADDS TO STRATEGIC INVESTMENT IN ARMOUR ENERGY

The Directors of DGR Global Ltd (DGR or the 'company') are pleased to announce that DGR has reached agreement with Armour Energy Ltd (ASX Code 'AJQ' or 'Armour') to provide a $4.5M finance facility to Armour Energy Ltd (ASX Code 'AJQ' or 'Armour').

Armour is currently undertaking a strategic overview and executing several initiatives to maximise the value of its substantial asset base against a broader context of surging domestic gas prices. DGR is currently the major shareholder of Armour with a current holding equating to 18.37% of the issued capital of Armour. In addition, DGR holds $2.5M (face value) or 10% of Armour's bonds on issue and has a further $2m invested in MacArthur Oil and Gas (MOG) redeemable exchangeable notes.

The facility being provided by DGR is able to be drawn by Armour over the next three months and the funding is to be provided by way of a placement of redeemable exchangeable notes to be issued by Armour's subsidiary, McArthur Oil and Gas Ltd (MOG), at an issue price per note of $1.00 and otherwise on the terms and conditions set out in the Redeemable Exchangeable Note Trust Deed (including those terms as extracted in Annexure A) (MOG Notes). MOG and Armour intend to obtain all necessary approvals and consents to allow for the exchange of the MOG Notes being subscribed for by DGR and the existing MOG Notes already on issue (together with any accrued and unpaid interest) into Armour Convertible Notes on the terms and conditions summarised in Annexure B (Armour Convertible Notes).

Investment Rationale

DGR has long held the view that the East Coast Australian Gas market exhibits compelling long-term fundamentals.

Armour Energy Ltd is well placed over the long term to take advantage of these fundamentals with the company's fully integrated reservoir to grid infrastructure centred on and around the Kincora gas processing facility south of Roma in Queensland's prolific Surat Basin.

Armour has a substantial asset base including the Kincora gas processing facility, a substantial upstream gathering system delivering gas to Kincora and a nameplate processing capacity of up to 30 terajoules (Tjs)of gas per day plus condensate and LPG by products, a substantial resource and series of prospective production leases and authorities to prospect in proximity to the Kincora facility to grow both resource inventory and ultimately production.

Additionally, Armour holds the Newstead gas storage facility which ultimately could provide Armour with the capacity to deliver peak period gas into the East Coast market at its discretion and is an asset of significant strategic value.

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Beyond its substantial reservoir to grid infrastructure and assets, Armour has a significant suite of assets with considerable value including its substantial acreage position in the highly prospective McArthur and South Nicholson basins with a collective acreage position of 96,000 km.

Armour also holds significant acreage positions in the Cooper Basin in South Australia and the Otway Basin in Victoria where Armour holds a 51% interest in PEP 169 just 3 kms north of Beach Energy Ltd (ASX Code BPT) exciting 160 PJ gas find which recently flow tested at 61 Million Standard Cubic Feet per day (MMCFD).

DGR Global

DGR will be utilising existing cash reserves to meet its obligations to Armour under this financing facility.

DGR remains with a robust balance sheet with over $140M in liquid listed equity holdings and cash reserves.

DGR remains adequately provisioned post this transaction and as has previously announced its preference to fund the company's ongoing activities from its balance sheet as opposed to diluting shareholder equity via placement of equity.

For further information please refer to Armour Energy Ltd ASX announcement dated 5 July 2022 and Annexures A and B below.

DGR Chairman, Mr Peter Wright commented,

"Armour has a portfolio with exceptional long-term potential, set against a broader context of challenging domestic gas supply. Armour has articulated a compelling strategy (Refer Armour announcement 6 July 2022) for the coming period and beyond which we support and believe will accelerate Armour realising this value for all stakeholders.

DGR is a long term and committed investor in not only Armour but all its long-term investments".

This ASX Announcement was authorised by the Board of Directors

Geoff Walker | Company Secretary

Electronic copies & more information are available on our website:

1. www.dgrglobal.com.auE:[e-mail] media: @DGRGlobal

For further information contact:

Mr Nicholas Mather	Geoff Walker	Elizabeth Harrison
Managing Director	Company Secretary	Marketing / PR
Ph: 07 3303 0679	Ph: 07 3303 0641	Ph: 07 3303 0677

DGR Global Limited ACN 052 354 837

Address: Level 27, 111 Eagle St Brisbane Post: GPO Box 5261 Brisbane QLD 4001

p [phone] f [phone] e [e-mail] w www.dgrglobal.com.au

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		ANNEXURE A
		SUMMARY TERMS OF ISSUE OF MOG NOTES
		McArthur Oil & Gas Ltd
		Redeemable Exchangeable Note Term Sheet
Issuer	McArthur NT Pty Ltd ACN 649 856 315
Parent Company	McArthur Oil & Gas Ltd (MOG or Parent Company) (or such other company
		that holds all the shares issued in the capital of the Issuer) which intends to
		undertake an IPO raising and apply for quotation on ASX.
Offering	Redeemable Exchangeable Notes (Notes) to be issued by the Issuer pursuant
		to the Note Trust Deed and which will be exchangeable into shares in the
		Parent Company (subject to the Condition Precedent for Exchange).
Issue size	Up to 32,000,000 Notes ($32,000,000). The Notes may be issued in two or more
		tranches.
Purpose	Funds raised by the issue of the Notes will finance a security deposit to Armour
		Energy Limited (Armour) for the acquisition of all of the Northern Basin Assets
		of Armour, exploration work programs, costs of progressing the Parent
		Company towards an IPO, general working capital and costs of the issue.
Issue Price	Face Value of $1.00 per Note
Maturity Date	31 October 2022.
Security / Ranking	Unsecured Subordinated.
		The Notes will constitute direct and unsecured obligations of the Issuer and will
		rank subordinated and be junior to the secured amortising notes issued by
		Armour Energy Limited (Secured Amortising Notes).
		Subject to the subordination to the Secured Amortizing Notes, each Note
		otherwise ranks for payment in a winding up of the Issuer:
		(1) equally and proportionally with each Note; and
		(2) ahead of all subordinated debts of the Issuer and ordinary shareholders.
Status	The Notes are direct and unsecured debt obligations of the Issuer.
Coupon Rate	15% per annum coupon rate accrued and capitalised monthly from the Issue
		Date.
Interest Payment Dates	The coupon on the Notes will be capitalised to Exchange, the Maturity Date
		or Redemption Date.
Exchange	Each Note (and any accrued and unpaid interest due and capitalized) will,
		subject to satisfaction of the Condition Precedent below, exchange into fully
		paid ordinary shares of the Parent Company contemporaneous with the issue
		of the IPO shares such that the shares received in exchange for the Notes will
		be shares offered under an 'Exchange Offer' pursuant to the IPO prospectus.

DGR Global Limited ACN 052 354 837

Address: Level 27, 111 Eagle St Brisbane Post: GPO Box 5261 Brisbane QLD 4001

p [phone] f [phone] e [e-mail] w www.dgrglobal.com.au

		The Exchange price upon automatic exchange will be a 20% discount to the
only		IPO price per share.
Condition Precedent for	The Exchange of the Notes for Parent Company Shares is subject to and
	Exchange	conditional upon Armour obtaining any necessary shareholder approvals for
		the purposes of ASX Listing Rule 11.4.1(b).
	Noteholder Redemption	Repayment of Face Value and any unpaid interest at the Maturity Date or in
		the event an Exit Event occurs, or the Issuer commits an Event of Default.
	Early Redemption Event	The Company may give a Redemption Notice in the event of an Exit Event.
use		Exit Event means that if at any time on or before the Maturity Date, an off-
	market bid, a market bid, scheme of arrangement, or offer or invitation is
	made to all holders of ordinary shares to purchase or otherwise acquire
	ordinary shares and the bid, scheme or offer becomes unconditional, and the
	offeror has at least 50% of the voting power (as defined by the Corporations
	Act) in Armour.
	Notwithstanding the issue of a Redemption Notice, a Holder may give an
	Exchange Notice (which may be expressed to be subject to Exit Event
personal		completing) in respect of any of its Notes which are the subject of the
	Redemption Notice up to the before the relevant Redemption Date (or such
		later time as the Company may agree with the relevant Holder), and only
		Notes for which Exchange Notices have not been so given or are treated as
		having not been given will be Redeemed on the specified Redemption Date.
		In the event of an Exchange Notice being given in relation to an Exit Event,
		the Exchange Price will be equivalent of a 25% discount to the average price
		per ordinary share being paid for Ordinary Shares under the Exit Event
		calculated on a fully diluted basis.
	Transaction Documents	The parties have entered into the following definitive agreements to
		document the Note issuance outlined in this Term Sheet (Transaction
		Documents):
		• Redeemable and Exchangeable Note Deed; and
		• Note Trust Deed.
	Events of Default	Customary events of default are to be incorporated in the Transaction
For		Documents for a transaction of this nature, including but not limited to
	payment, redemption or Exchange breaches, covenant breaches cross
	defaults, and insolvency events.
	Covenants	Customary covenants are to be incorporated in the Transaction Documents
		applicable to the Issuer and the Parent Company for a transaction of this
		nature.
	No Dividends	No dividends may be declared or paid whilst the Notes are on issue.
	ASX Listing	The Parent Company will undertake to use reasonable endeavours to
		undertake an IPO and ASX listing or other liquidity event for Noteholders and
		will provide updates to Noteholders on progress in this regard every 6 months.

DGR Global Limited ACN 052 354 837

Address: Level 27, 111 Eagle St Brisbane Post: GPO Box 5261 Brisbane QLD 4001

p [phone] f [phone] e [e-mail] w www.dgrglobal.com.au

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Escrow	In the event of an IPO and ASX listing, the Noteholder will agree to enter into such
	ASX restriction agreements or voluntary escrow deeds as ASX or the lead managers
	to the ASX IPO require, provided the restriction period does not exceed three
	months following quotation (for voluntary escrow) or as is otherwise required by
	ASX.
Parent Company	The Issuer and the Parent Company are currently wholly owned direct
Interposition	subsidiaries of Armour. The Issuer has been formed to hold all the Northern
	Territory and North Queensland assets of Armour outlined in the Armour Energy
	ASX release of 3 March 2021 and the transfer of these assets has been applied
	for and is pending approval of this transfer with the Northern Territory and the
	Queensland Governments.
	Following the approval and completion of the transfer (and in the case of
	pending permit applications, the grant of the exploration permit and the
	Parent Company is interposed) to the Issuer of the assets, Armour will transfer
	all of the outstanding shares in the Issuer to the Parent Company such that the
	Issuer becomes a wholly owned subsidiary of the Parent Company.
	Until such time as these transfers of the currently granted exploration permits
	in the Northern Territory and interposition is completed, the Parent Company
	must remain dormant so that no stamp duty is incurred either on the transfer
	of the assets to the Issuer or upon the IPO of the Parent Company.
Voting Rights	Until Exchange, the Notes do not give a Noteholder voting rights or dividend
	rights.
Investor Eligibility	The Notes are being offered to 'sophisticated investors', 'professional investors'
	(under the Corporations Act) and investors who are exempt to disclosure
	requirements.
Note Trustee	Centec Securities Pty Ltd

DGR Global Limited ACN 052 354 837

Address: Level 27, 111 Eagle St Brisbane Post: GPO Box 5261 Brisbane QLD 4001

p [phone] f [phone] e [e-mail] w www.dgrglobal.com.au