FIRESTONE SIGNS KEY INVESTMENT AGREEMENT WITH ARIONA Firestone Signs Key Investment Agreement 25 July 2012 On 7 May 2012 the Board of Firestone Energy Limited (ASX/JSE: FSE) (the “Company” or “Firestone”) announced that it had entered into a conditional termsheet for the provision of A$30.7million of funding by Ariona Company SA (Ariona). Firestone is now pleased to announce that the Company has executed an Investment Agreement with Ariona to provide funding to the Company for the increased amount of A$40.7million. Ariona is a special purpose vehicle representing a consortium of international institutional and private investors focusing on global resource opportunities. Funding Facility Through the execution of this agreement, Ariona will provide A$40.7million to the Company under a secured convertible note facility replacing the current convertible notes. As previously announced on 7 May 2012, Ariona will provide this funding to Firestone with an initial A$30.7million by way of a replacement of the current convertible note facility. An additional $10million convertible note facility will also be made available to the Company on the same terms as the initial facility. JSE: FSE With this increased facility, and based on current Budgeted expenditure, Firestone is fully funded up to and including the completion of the Bankable Feasibility Study (BFS). Post the finalisation of the BFS, project funding will be required to undertake development and operation of the Waterberg Coal Project and Ariona have undertaken to procure funding of up to US$400m for this purpose. It is confirmed that the terms of the convertible notes will be: Term 4 years Coupon 8.0% pa Interest Payments Payable half yearly. For the first 24 months interest is to be paid in cash or capitalised at the election of FSE and after the first 24 months interest to be paid in cash or capitalised as agreed by the Company and Ariona. Conversion Price A$0.025 per share Conversion Terms Convert into ordinary shares at the election of the noteholder. The Funds raised will be applied in approximately the manner set out below. A$ Million Redeem existing convertible notes (ECNs) at face value 21.30m Pay outstanding interest on the ECNs 0.85m Working Capital 16.65m Expenses of the transaction (estimate) 1.90m Total A$40.70m The new convertible note facility is subject to certain conditions precedent, the most significant of which are: 1) completion of technical, legal and financial due diligence, satisfactory to Ariona; 2) Obtaining all necessary regulatory approvals in Australia and South Africa; and 3) Obtaining Firestone shareholder approval to the issue and for the conversion of the new convertible notes to be issued to Ariona. Other significant terms are: • Ariona will now be entitled to nominate up to three directors to the Board of the Company; • The Company will, subject to necessary shareholder approval, offer those existing convertible note holders who agree to the early redemption of their notes, incentive options exercisable over 2 years at a price of A$0.025 per share. The number of incentive options to be issued to an accepting ECN Holder shall be pro rata to its holding of ECNs on the basis that 300 million incentive options would be issued in the case of 100% acceptance of early redemption of ECNs; and • Until completion of the transaction, the interest payments on the ECNs will be calculated on a monthly basis and at the election of the ECN holders, either converted into shares on a monthly basis at a 10% discount to the 5 day VWAP or capitalising the interest until completion of the transaction. As a result of this transaction and a separate transaction between Ariona and Sekoko Resources Pty Ltd (as announced to the market on 29 June 2012), Ariona will become Firestone’s largest shareholder initially holding 25.69% in Firestone Shares (and up to approximately 50.00% on a fully diluted basis) and Sekoko Resources will now maintain an interest of 8.1% in the Company. The ownership of the Waterberg Joint Ventures will be: FSE 60% Sekoko 40%* *Includes an indirect 10% interest in the Joint venture for Ariona 2 Shareholder Approval There are several aspects of the transactions which will require shareholder approval including, Ariona acquiring more than 20% of Firestone, as an exception to Ariona making a formal takeover offer for Firestone. As advised the Company will convene a general meeting of shareholders in Q3 to approve the transactions. The Company will commission a report from an independent expert to assess whether the transactions are fair and reasonable for those shareholders of the Company not participating in the transactions. The independent experts report will accompany the notice of meeting and information memorandum to be sent to shareholders. David Knox, the CEO of Firestone commented that “This transaction marks a significant event in the development of both the Company and the Waterberg Project.” Firestone’s corporate finance adviser is BBY Limited and Kelly & Co are its corporate lawyers. Yours sincerely, David Knox Chief Executive Officer david.knox@firestoneenergy.com.au www.firestoneenergy.com.au Tel: Australia (+61 08 9287 4600) South Africa (+27 11 706 3542) About Firestone Energy Firestone Energy Limited is an independent, Australian exploration and development company listed on the Australian Stock Exchange Ltd (ASX) and the Johannesburg Stock Exchange (JSE). Firestone Energy has entered into a Joint Venture with Sekoko Resources (Pty) Ltd through which Firestone Energy has acquired the right to 60% participation interests in the Waterberg Coal Project located in Lephalale area, Limpopo Province, South Africa. The first stage of the project is to develop the Smitspan mine which has a substantial measured thermal coal resource and to develop the Vetleegte mine which is a substantial metallurgical coal deposit. Firestone Energy is committed to becoming a profitable independent coal and energy producer at its projects in South Africa, thereby making a substantial contribution to the social and economic development of the Lephalale area and South Africa. Corporate Details ASX: FSE JSE: FSE Issued Capital: 3,114 million ordinary shares Major Shareholders: Sekoko Resources (Pty) Ltd Linc Energy Ltd BBY Nominees Pty Ltd Bell Potter Nominees Ltd Directors and Officers Non Executive Directors: Mr Tim Tebeila (Chairman) David Perkins (Deputy Chairman) Dr Pius Kasolo Ben Mphahlele Kobus Terblanche Officers: Mr David Knox CEO Mr Jerry Monzu Company Secretary Contact: Suite B9, 431 Roberts Road, Subiaco, Western Australia 6008 Tel: +61 (08) 9287 4600 Web: www.firestoneenergy.com.au About Sekoko Resources Sekoko Resources (Pty) Ltd is a South African-based black-owned energy and minerals company developing the coal, magnetite iron ore and PGMs Projects in the Limpopo Province of South Africa. This includes a significant exploration program and development of the Waterberg Coal Joint Venture Project based on significant Coal Zone Resources. Johannesburg 25 July 2012 Sponsor River Group 3 Date: 25/07/2012 07:45:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.