Oracle Coalfields plc

December 16, 2009 09:00 ET

MOU signed with Karachi Electric Supply Company


                                       Oracle Coalfields Plc
                                    ("Oracle" or the "Company")

                          MOU signed with Karachi Electric Supply Company
The  Board  of Oracle Coalfields PLC (PLUS: ORCP), the UK developer of a 1.4  billion  tonne  coal
deposit  in  southern  Pakistan,  is pleased to announce that  the  Company  has  entered  into  a
Memorandum  of Understanding (MOU) with the Karachi Electric Supply Company (KESC), a local  power
utility company.

KESC  is  a major supplier of electricity in the Sindh Province, particularly Karachi, a  city  of
almost 17 milion people.  KESC is fast-tracking the development of a number of new power plants in
order to overcome existing and projected energy shortages in Karachi.

Brief background on KESC

KESC is a fully integrated power utility involved in the generation, transmission and distribution
of  1,400 MW of electricity and is one of Karachi's largest employers, with some 17,000 employees.
It  is also one of the oldest companies in Karachi, incorporated on September 13, 1913, under  the
Indian  Companies Act of 1882. The company was nationalised in 1952 but subsequently re-privatised
on November 29, 2005. KESC now has a new and dynamic management team following a capital injection
by Abraaj Capital, a large Dubai-based private equity firm, which holds a significant shareholding
in the power utility.  KESC is listed on the Karachi, Lahore and Islamabad stock exchanges.

Salient features of the MOU

-        KESC is embarking on a fast-track programme to overcome the existing and projected energy
      shortage within its licensed area. These cover Karachi and its suburbs up to Dhabeji and Gharo in
      Sindh  as  well as Hub, Uthal, Vinder and Bela in Baluchistan. The utility has declared  its
      intention to develop and implement several power projects including, but not limited to, coal-
      fired power plant(s).

-       Oracle has proposed to KESC the establishment of a coal-fired power plant, with an initial
      capacity of 300MW and the potential to increase this to 1,100 MW. The power plant will be fuelled
      by lignite coal to be mined from the Company's Block VI project in the Thar Coalfield in the
      Province of Sindh.  Sindh Carbon Energy Limited, Oracle's local subsidiary, will operate the Block
      VI coal mine.

-        Oracle  has  agreed  to secure and provide to KESC long-term coal supply  at  competitive
      prices and of quality and specification as desired for the initial operation of a 300MW coal-fired
      power plant - with a suitable configuration to be setup in accordance with the terms emerging
      subsequent to this MOU.

-       Oracle and KESC will share technical information to assist each other in the completion of
      their respective work, including the Environmental & Social Impact Assessment for the coal mine
      and power plant respectively.  The ultimate objective is to enter into a Joint Venture (equity
      participation) or Joint Development Agreement to establish a mine-mouth power plant  at  the
      Company's Block VI project.

-       KESC has entered into exclusivity with Oracle and shall not during the validity of the MOU
      or Joint Development Agreement enter into an arrangement to develop a mine-mouth power plant at
      Block VI with any other entity so far as Oracle and/or its local subsidiary, Sindh Carbon Energy
      Limited, are in a position to meet their requirement for the delivery of the required coal in the
      desired time frame mutually agreed between Oracle and KESC at a price which does not affect the
      economic viability of the mine mouth power plant.

Shahrukh Khan, Chairman of Oracle Coalfields commented:

"We  are delighted to be working with the Karachi Electric Supply Company as we progress with  the
development of our flagship Block VI project in Pakistan..  By engaging with KESC now, we hope  to
announce  details  of  a  Joint Development Agreement by mid-2010 with the  aim  of  fast-tracking
development of a  coal-fired power plant.  Furthermore, Oracle will be able to enter into a  long-
term coal supply agreement with KESC.

"We  are blessed with a large coal resource which can satisfy the volume of coal required by  KESC
for  a  mine-mouth  power plant. Together, Oracle and KESC will work on the configuration  of  the
mine,  coal  production  rates,  power  plant  capacity,  timing  of  first  coal  production  and
commissioning of the power plant. As part of this, a number of studies will need to  be  completed
in  the  coming months to ensure the timely completion of feasibility studies for the  purpose  of
mine development and power plant construction, respectively.

"This is a significant step for Oracle and also highlights the confidence in our goal to establish
a  major coal mining operation at our Block VI project in Thar, Sindh Province fuelling Pakistan's
electricity requirements and economic prosperity."

The Directors of Oracle are responsible for the contents of this announcement.


Oracle Coalfields PLC
Shahrukh Khan, Chairman
Telephone: +44 (0) 1366500722

St Helens Capital Partners LLP
Duncan Vasey or Mark Anwyl
Telephone: +44 (0) 20 7368 6959

Lothbury Financial
Michael Padley / Ron Marshman
Telephone: +44 (0) 20 7011 9411


About Oracle:

Oracle  Coalfields plc is a UK-based resource exploration and development company with an  80  per
cent  owned  subsidiary (Sindh Carbon Energy Limited) operating in Pakistan. The Company's  shares
are  quoted  on the PLUS markets (symbol: ORCP).  The Company's flagship project is the  Block  VI
coal  project  which  is  located on the Thar coalfield in the eastern Sindh  province,  Pakistan.
Block VI is host to a JORC compliant resource of 1.4 billion tonnes of lignite coal including  371
million tonnes in the proven category.

The  Company  also owns the Indus East coal project in Pakistan.  A pre-feasibility study  carried
out  by Dargo Associates confirmed an inferred resource for the area (in line with the JORC  Code)
of 365 million tonnes, of which the boreholes KHW-1 and KHW-2 give an indicated resource of approx
24 million tonnes.

Oracle Coalfields plc

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