FINANCIAL RESTRUCTURE UPDATE FIRESTONE ENERGY LIMITED (Incorporated in Australia) (Registration number ABN 058 436 794) Share code on the JSE Limited: FSE Share code on the ASX: FSE ISIN: AU000000FSE6 (SA company registration number 2008/023973/10) ("FSE" or "the Company") About Firestone Energy Firestone Energy Limited is an independent, Australian exploration and development company listed on the 20 November 2012 Australian Stock Exchange Ltd (ASX) and the Johannesburg Stock Exchange (JSE). Firestone Energy has entered into a Joint Financial Restructure Update Venture with Sekoko Resources (Pty) Ltd through which Firestone Energy has acquired the right to 60% participation interests in the Waterberg Coal Project The Board of Firestone Energy Limited (ASX/JSE: FSE) (the “Company” or located in Lephalale area, Limpopo Province, “Firestone”) is pleased to update shareholders with the progress of the financial South Africa. restructuring and the Investment Agreement that it has executed with Ariona The first stage of the project is to develop the Company SA (“Ariona”). Smitspan mine which has a substantial measured thermal coal resource and to As previously communicated to the market on 7 May 2012, Firestone announced develop the Vetleegte mine which is a it entered into an Investment Agreement with Ariona for a financial restructure of substantial metallurgical coal deposit. Firestone. The Company has received shareholder approval for the proposed financial restructure which included A$40.7 million funding facility from Ariona. Firestone Energy is committed to becoming a profitable independent coal and energy Ariona has since requested, and the Board of Firestone have approved, a term producer at its projects in South Africa, sheet to effect a variation to the Investment Agreement to reflect the changed thereby making a substantial contribution to the social and economic development of the settlement terms, which can be summarised as follows; Lephalale area and South Africa. Settlement is now to occur in a two stage process, namely; Corporate Details ASX: FSE JSE: FSE • Stage 1 settlement involves Firestone issuing approximately A$26million of new convertible notes (“NCN’s”) to Ariona which will comprise: Issued Capital: o the injection of A$4million of cash into Firestone; and 3,114 million ordinary shares o the replacement of the A$22.1million of existing convertible Major Shareholders: notes ("ECNs"). Sekoko Resources (Pty) Ltd Linc Energy Ltd • Stage 1 Settlement is to occur within 2 Business days of all parties BBY Nominees Pty Ltd entering into a Deed of Variation reflecting the variations agreed in the Bell Potter Nominees Ltd Termsheet; Directors and Officers Stage 2 Settlement which is scheduled to occur before 7 December 2012, involves Firestone issuing approximately A$12.50million of NCNs to Non Executive Directors: Mr Tim Tebeila (Chairman) Ariona which will be applied to additional working capital. David Perkins (Deputy Chairman) • In addition, Ariona will interim fund the working capital requirements of Dr Pius Kasolo Firestone by providing A$250,000 per week, up to a maximum of A$1 million Ben Mphahlele Kobus Terblanche Officers: The working capital component of the Ariona amended settlement will be loaned Mr David Knox CEO Ms Amanda Matthee CFO to Firestone on an interest free and unsecured basis until the stage 1 settlement Mr Jerry Monzu Company Secretary occurs. In the event that stage 1 settlement does not occur then the amount of working capital loaned (of up to A$1million) will convert into equity at the Contact: prevailing market price on the date of conversion. Upon completion of the stage Suite B9, 431 Roberts Road 1 settlement process the full amount of working capital that has been drawn down Subiaco, Western Australia 6008 (of up to A$1 million) will roll into the NCN's. Tel: +61 (08) 9287 4600 Web: www.firestoneenergy.com.au Conditions The variation of the Investment Agreement to a two stage settlement process (but not the interim funding) is subject to a number of conditions, the principal ones being: • a review to ensure that it is compliant with the shareholder approvals received at a General Meeting of the Firestone held on 5 October 2012; and • execution of a formal Deed of Variation by 28 November 2012. The net effect of the variations on Firestone are that: • The Company will receive A$17.55million of net new funding compared with A$18.55 million under the current Investment Agreement; and • All the net new funding will be received by 7 December 2012 rather than over 12 months from 5 October 2012 i.e. by 5 October 2013. The two stage settlement provides more working capital for Firestone in this calendar year which will be applied to the advancement of the Waterberg Coal Project. Yours sincerely, David Knox Chief Executive Officer www.firestoneenergy.com.au Tel: Australia (+61 08 9287 4600) South Africa (+27 11 706 3548) SPONSOR River Group Johannesburg 20 November 2012 2 Date: 20/11/2012 08:19:00 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.