Rose Petroleum plc

Operations Update

23-January-2017

Rose is pleased to provide an update on the operational activity currently taking place within the Group.

The executive team is currently working on three major fronts: Oil and Gas, Mining and Exploration in Mexico and the USA and business development opportunities in Cuba.

Oil & Gas

In the Oil and Gas division, we continue to review potential opportunities in the US oil & gas sector and, following the recent news from OPEC and the outcome of the US Presidential Election, the Board believes the US energy sector has a far more favourable outlook.

The permitting process of the 3D seismic shoot in the Paradox Basin in Utah continues to progress well. We have been working closely with Dawson Geophysical Inc. and HRL Compliance Solutions Inc. on providing the Bureau of Land Management ("BLM") with the documentation required for the permits and on completing the required studies to gain the approval. The permit is expected to be approved and granted in H1 2017 and we are still planning for the physical shoot to commence in H2 2017.

The shoot is designed to cover an area of 61 sq. miles covering the southern-most area of our circa. 90,000 net acres total land position in the Paradox Basin. The proposed shoot area is the area of Rose's acreage closest to the acreage that was successfully developed by Fidelity Exploration and Production (now owned by Wesco Operating Inc.) which, in Q1 2015, produced an average of 2,100 barrels of oil per day and in 2012 held the record for the US's highest producing onshore oil well.

Rose's acreage has considerable potential as evidenced by the resource estimate calculated by independent consultants Ryder Scott Company ("Ryder Scott") announced on 23 May 2014. Ryder Scott estimated 100% Gross Volumes Unrisked Prospective (Recoverable) Hydrocarbon Resources (Estimated Ultimate Recoverable Reserves - EUR) in the Paradox basin formations of a collective total of mean 1,115.29 MMBO EUR Oil/Condensate and 2,187.46 BCF EUR Gas. The 3D seismic shoot will go a long way towards having a better understanding of the potential of the basin, identifying potential drill targets, and therefore is of significant value to Rose. The directors of Rose look forward to updating the market on the progress of the permit application over the coming months.

Mining and Exploration

Mexico

Custom milling of third-party ore continued at the Company's SDA Mill in Mexico while efforts are being made to identify joint-venture opportunities that would generate better returns than custom milling. The focus of this effort is to identify advance-stage projects located in the vicinity of the SDA Mill and on which historical mining has taken place, where there is access to evaluate the mine workings and to conduct confirmation drilling as necessary, and where the project would sustain a minimum of 3,000 tonnes per month production to the SDA mill.

Several confidentiality/non-disclosure agreements were signed on prospective underground narrow-vein properties resulting in five projects having been reviewed. Evaluations are continuing on two of these projects as preliminary results indicate the potential for production grades of greater than our in-house estimate of a cut-off grade of 5.0 g/T gold equivalent for projects of this type.

One is primarily a gold resource and the other, primarily silver. Ninety-one (91) samples were collected from the gold project during two visits which yielded assay results of up to 24.5 g/T Au. Work on this project indicates a complex vein system with a number of mine openings and efforts continue to understand the geology. The silver project consists of historic workings on a single vein. A total of 38 samples were collected during two visits which yielded results above 6,000 g/T Ag with an average of 919 g/T Ag. Assay results also yielded gold values up to 0.5 g/T. However, a historic mill production report indicated a mine grade of 1.25 g/T Au with a recovered grade of 1.0 g/T Au on a lot of 700 tonnes of ore. Evaluation work is ongoing on these two projects to determine if a suitable drilling and/or test mining programme is feasible.

On the Tango project, we are in discussions with the project partner, Minera Camargo, on the dynamics of initiating the permitted drill programme to explore the porphyry targets and the San Agustin vein for gold-silver production, which we hope to be able to move ahead if agreement on how to proceed with the partner can be found.

On an administration point, the Company is actively pursuing the recovery of IVA (value added tax) and tax totalling MX$16.5 million (circa. US$760,000) from the Mexican tax authority, Servicio de Administracion Tributaria ("SAT"). Rose has been in detailed discussions with SAT regarding the reclamation of the sums owed to Minerales VANE SA de CV, a subsidiary of Rose, dating back to 2013. We have made significant progress in this process over the past few months and are confident of a positive outcome.

USA - Uranium

The Company continues to maintain its US based uranium assets on care and maintenance. The issues surrounding the 20-year withdrawal of federal lands in northern Arizona in July 2009 continue to impact these assets. The lawsuit of the National Mining Association and American Exploration and Mining Association which challenges the legality of the withdrawal continues to progress through the 9th Circuit Court of Appeals in San Francisco, California. Fortunately, outgoing President Obama declined to convert the withdrawn area to a National Monument as was recommended by his administration and incoming President Trump has expressed support for nuclear energy.

Cuba

Gypsum

The Group's current activity in Cuba was introduced by Earth Source Investment Inc. in May 2016, who also contributed to and helped secure the funding for the project.

As announced on 4th July 2016, Rose, with the assistance of its technical team supported by both Grenzebach BSH (GmbH) ("Grenzebach") and GPM engineering ("GPM"), has been negotiating with Empressa Materiales de Construccion ("EMC"), the local state company, for the past six months to construct the proposed gypsum processing and manufacturing facilities to supply the domestic and Caribbean market with various gypsum products including, but not limited to, gypsum wall and ceiling panels. Multiple models and plant facilities have been discussed involving various end products and production rates and Rose put forward its proposal on the agreed capacity and products at the end of the year, although the process is no longer exclusive to Rose. Having been through multiple versions of both capacity and end product requirements, it was an extremely challenging process and the Board of Rose would like to take this opportunity to thank the technical team, especially Grenzebach and GPM, for their continuing support. We are now awaiting official response to our proposal and look forward to updating the market accordingly.

Oil & Gas

As a result of the Group developing good relationships in Cuba, we have now engaged with the Cuban national oil company, CUPET, and are in early stage discussions regarding oil & gas licenses. We feel that the oil and energy sectors in Cuba offer excellent potential and hope to be able to progress our discussions.

Matthew Idiens, CEO, commented: "We have been making progress on all fronts and with the change in political regime in the US, we feel the incoming administration will be very supportive of our industry and feel the future is encouraging for US energy, both in terms of oil and gas and nuclear industries. We hope to be able to announce the granting of the 3D permit in coming months which will enable us to commence the realisation of the significant potential value of our Paradox acreage.

"The Mexican mining operations team continue to evaluate potential JV partners for our SDA Mill with two projects showing sufficient grade/geology to be of interest.

"Having presented our proposal on the Cuban gypsum project, we are awaiting the official response and we have opened up discussion with CUPET in respect of oil & gas licenses, which we hope we can develop further."

Kristopher K. Hefton, BSc Geology, Chief Operating Officer Rose Petroleum plc who meets the criteria of a qualified person under the AIM Rules - Note for Mining and Oil & Gas Companies, has reviewed and approved the technical information contained within this announcement.