Quarterly Report June 2014

23 July 2014 TANGIERS PETROLEUM LIMITED Quarterly Report for Period Ending 30 June 2014 The Directors of Tangiers Petroleum Limited ("Tangiers" or the "Company") arepleased to provide the following report on its activities during the quarterended 30 June 2014. A copy of the full quarterly report, including the diagramsreferred to in the text and the Appendix 5B (Quarterly Cash Flow Report), isavailable on the Company's website at www.tangierspetroleum.com Highlights * The Company announced the appointment of Mr David Wall as Managing Director on 15 April 2014 along with the appointments on 9 April 2014 of Mr Michael Evans as Non-executive Chairman and Dr Stephen Staley as Non-executive Director. * As part of the Galp Energia Farm-Out Agreement ("FOA"), the Association Contract was finalised on 1 May 2014. Under the FOA, Tangiers is due US$7.5 million as reimbursement of back costs and the return of a US$3 million bank guarantee. These funds will contribute to the 33% share of any costs in excess of the US$33 million free carry provided for by the FOA for the drilling of the TAO-1 well, which the Company is contractually obliged to pay. * Tangiers successfully raised A$9 million in total during the month of May in two separate tranches of A$5 million and A$4 million, respectively, to specified wholesale, institutional and sophisticated investors, with the second tranche approved at the Company's AGM on 12 June 2014. * The exploration well TAO-1 in the Tarfaya Offshore Block, Morocco commenced drilling on 26 June 2014 with the Joint Venture partner, Galp Energia, as Operator. * The dry hole cost for the drilling of the TAO-1 exploration well, on a trouble free basis, is estimated at circa US$73 million and on this basis Tangiers are fully covered for the drilling by existing cash and receivables including headroom for material cost overruns. Overview Key operational activities during the quarter were: * The Ralph Coffman Jack-up Rig was mobilised on 22 May 2014 ex Egypt to undertake the exploration drilling of the TAO-1 well in the Tarfaya Offshore Block, Morocco. * The exploration well TAO-1 commenced drilling on 26 June 2014 with the Joint Venture partner, Galp Energia, as Operator. * The TAO-1 well is designed to test three stacked objectives within the Jurassic carbonate fairway; Assaka, Trident and TMA. The youngest objective Assaka(secondary), and the primary objective Trident are scheduled to be intersected within 60 days from the spud date. * Deepening of the TAO-1 well to intersect the TMA objective is contingent on results at the Trident and Assaka objectives. * The dry hole cost for the drilling of the TAO-1 exploration well, on a trouble free basis, is estimated at circa US$73 million and on this basis Tangiers are fully covered for the drilling by existing cash and receivables including headroom for material cost overruns. The key corporate activities for the quarter were: * With the appointments of Michael Evans (Non-executive Chairman) and Dr Stephen Staley (Non-executive Director) on 9 April 2014 the board of Tangiers was again validly constituted. * The Company resumed trading on AIM on 9 April 2014 and on the Australian Securities Exchange (ASX) on 10 April 2014 following lodgement of the Company's audited accounts for the year ended 31 December 2013. * During the quarter the Company raised $9.342 million via the issue of fully paid ordinary shares and the exercise of options held by option holders, net of issue costs. Financial The ASX Appendix 5B attached to this report contains the Company's cash flowstatement for the quarter. The significant elements for the period were: * exploration and evaluation expenditure of A$0.035 million (March 2014 A$0.019 million); * administration and other operating costs of A$1.461 million (March 2014 A$2.268 million); * net proceeds from the issue of shares from placements and option exercises of A$9.342 million; and * a net cash inflow of A$11.085 million recorded by the Company. At the end of the quarter, the Company had net cash reserves of A$14.626million which included the US$3 million currently in Morocco recognised as cashin the quarter due to the release of the bank guarantee. The Company's cashbalance does not include the reimbursement of US$7.5 million in back costsunder the FOA as these remain as a current payable and are likely to be nettedoff against Tangiers' share of the cost of drilling of the TAO-1 well. New Ventures The Company continues to review and evaluate selected new venture opportunitiespredominantly focused in Africa. Tarfaya Offshore Block - Morocco (25%) The Tarfaya Offshore Block, Morocco comprises eight contiguous permits coveringan area of 11,281 sq km. The Tarfaya Offshore Block is situated approximately600 km southwest of Morocco's capital, Rabat, inboard of the Canary Islands onthe Atlantic Margin. The Tarfaya Offshore Block contains multiple prospects andleads within Jurassic sediments as well as potential within the Tertiary,Cretaceous and Triassic Formations. During the quarter, the TAO-1 well commenced drilling on 26 June 2014. Theprimary objective Trident and the shallower secondary objective Assaka areexpected to be intersected within 60 days from spud. A total of four Jurassic prospects have been matured in the carbonate playfairway within the Tarfaya Offshore Block. All of the Jurassic prospects arecovered by 3D seismic data. The Assaka 3D seismic survey, comprising 680 sq km,was acquired by Tangiers in 2012 and covers the TAO-1 prospects; Trident,Assaka and TMA. The La Dam prospect, located in the south of the TarfayaOffshore Block, is covered by a separate 580 sq km 3D seismic survey acquiredby Maersk in 2006 which was reprocessed by the Company in 2011. The gross prospective oil resource for the four Jurassic prospects identifiedin the Tarfaya Offshore Block was independently assessed by Netherland, Sewell& Associates Inc. (NSAI, 2011). The combined total best estimate prospectiveresource net to Tangiers (25%) for the four Jurassic prospects in the TarfayaOffshore Block is *217 million barrels of oil (NSAI, 2011). Cautionary Statement: The estimated quantities of petroleum that may bepotentially recovered by the application of a future development project relateto undiscovered accumulations. These estimates have both an associated risk ofdiscovery and a risk of development. Further exploration, appraisal andevaluation is required to determine the existence of a significant quantity ofpotentially movable hydrocarbons. * Independently certified by NSAI as at 1 May 2011 - see NSAI Assessment ofProspective Oil Resources, market announcement dated 27 May 2011. The information in this announcement relating to estimates of prospectiveresources is based on, and fairly represents, information and supportingdocumentation prepared by, or under the supervision of, Mr Brent Villemarette.Mr Villemarette is a full time employee of the Company with over 30 yearsexperience and is a member of the Society of Petroleum Engineers. MrVillemarette consents to the release of the information in this announcementrelating to estimates of prospective resources in the form and context in whichit appears. The estimates of prospective resources referred to in thisannouncement are reported as at 1 May 2011 and were prepared using acombination of the probabilistic and deterministic methods. Additional Information required under ASX LR 5.4.3 List of petroleum tenements held by Tangiers at quarter ending 30 June 2014: Reference Project Name Location Company Acquired during Disposed of Interest the Quarter during the Quarter Tarfaya Tarfaya Offshore Morocco 25% - - Block Unless stated elsewhere in this report, there were no beneficial interests heldin farm-in or farm-out agreements at the end of the quarter and no beneficialinterest in farm-in or farm-out agreements acquired or disposed of during thequarter, and there have been no activities relating to oil and gas productionor development during the quarter. Hydrocarbons in Place Summary Detailed below are the estimated oil estimates for the Company's projectinterest. Gross (100%) Tangiers Net Attributable InterestProject Low Best/ High Low Best/ High Operator Mean Mean Oil-in-Place Estimates (unrisked) (All figures in millions of barrels) Morocco 1,564 4,335 12,399 25% 391 1,084 3,100 Galp Energia Total 1,564 4,335 12,399 391 1,084 3,100ProspectiveResources Prospective Resources Summary Detailed below are the estimated Prospective Resources delineated across theCompany's project interest. Gross (100%) Tangiers Net Attributable Risk Interest FactorProject Low Best/ High Low Best/ High Operator Mean Mean Prospective Oil Resources (unrisked) (All figures in millions of barrels) Morocco 156 867 4,959 25% 39 217 1,240 unrisked Galp Energia Total 156 867 4,959 39 217 1,240ProspectiveResources Qualified Person The information in this announcement was produced by Mr Brent Villemarette whois an Executive Director of Tangiers. Mr Villemarette is a petroleum engineerwith over 30 years of experience and is a member of the Society of PetroleumEngineers. Mr Villemarette has reviewed this announcement and consents to itsrelease. Terminology and standards adopted by the Society of Petroleum Engineers ("SPE")"Petroleum Resources Management System" have been applied in producing thisdocument. Under these standards: "Undiscovered Oil Initially in Place" is that quantity of oil which isestimated, on a given date, to be contained in accumulations yet to bediscovered. The estimated potentially recoverable portion of Undiscovered OilInitially in Place is classified as Prospective Resources, as defined below;and "Prospective Resources" are those quantities of oil or gas which are estimated,on a given date, to be potentially recoverable from undiscovered accumulations. ROBERT DALTONCompany Secretary Tangiers Petroleum LimitedLevel 2, 5 Ord StreetWest Perth WA 6005, AustraliaPh: + 61 8 9485 0990www.tangierspetroleum.com Contacts RFC Ambrian Limited As Nominated AdviserMr Oliver Morse / Ms Trinity McIntyre+61 8 9480 2500 As Corporate BrokerMr Charlie Cryer+44 20 3440 6800 Mr Ed Portman (Media and Investor Relations - United Kingdom)Tavistock Communications+44 20 7920 3150